EXHIBIT 99.2
CREDIT AGREEMENT
DATED AS OF NOVEMBER 1, 2001
AMONG
DATA RETURN CORPORATION
AS BORROWER
AND
DIVINE, INC.
AS LENDER
TABLE OF CONTENTS
PAGE
ARTICLE 1 LOANS..............................................................................................5
1.1 Facility........................................................................................5
1.2 Loans...........................................................................................5
ARTICLE 2 INTEREST...........................................................................................7
2.1 Interest........................................................................................7
2.2 Maximum Interest Rate...........................................................................7
ARTICLE 3 PAYMENTS AND PREPAYMENTS................................................................... .......7
3.1 Loans...........................................................................................7
3.2 Termination of Facility; Prepayment.............................................................7
3.3 Payments by Borrower............................................................................8
3.4 Application and Reversal of Payments............................................................8
3.5 Indemnity for Returned Payments.................................................................8
3.6 Conversion......................................................................................8
ARTICLE 4 TAXES....................................................................................... ......9
4.1 Taxes...........................................................................................9
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.................................................10
5.1 Books and Records..............................................................................10
5.2 Financial and other Information................................................................10
5.3 Notices to Lender..............................................................................10
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS............................................................10
6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents...........10
6.2 Validity and Priority of Security Interest.....................................................11
6.3 Organization and Qualification.................................................................11
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6.4 No Violation of Law............................................................................11
6.5 Regulated Entities.............................................................................11
6.6 Use of Proceeds; Margin Regulations............................................................11
6.7 Outstanding Loans..............................................................................11
6.8 Financial Status...............................................................................11
ARTICLE 7 AFFIRMATIVE, FINANCIAL AND NEGATIVE COVENANTS.....................................................12
7.1 Taxes and Other Obligations....................................................................12
7.2 Legal Existence and Good Standing..............................................................12
7.3 Compliance with Laws...........................................................................12
7.4 Transactions Affecting Collateral or Obligations; Preservation of Collateral...................12
7.5 Insurance......................................................................................13
7.6 Liens..........................................................................................13
7.7 Notice of Involuntary Bankruptcy...............................................................13
7.8 Use of Proceeds................................................................................13
7.9 Further Assurances.............................................................................13
7.10 Limitation on Indebtedness.....................................................................13
7.11 Limitation on Transfers........................................................................14
7.12 Limitation on Subsidiaries.....................................................................14
7.13 Unrestricted Subsidiaries......................................................................14
7.14 Limitation on Investments......................................................................14
7.15 Financial Covenants............................................................................15
7.16 Restricted Payments............................................................................16
ARTICLE 8 CONDITIONS OF LENDING.............................................................................17
8.1 Conditions Precedent to Making of Initial Loans on the Closing Date............................17
8.2 Conditions Precedent to Each Loan..............................................................18
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ARTICLE 9 DEFAULT; REMEDIES.................................................................................18
9.1 Events of Default..............................................................................18
9.2 Remedies.......................................................................................20
ARTICLE 10 TERM AND TERMINATION..............................................................................21
10.1 Term and Termination...........................................................................21
ARTICLE 11 AMENDMENTS; WAIVERS; SUCCESSORS...................................................................21
11.1 Amendments and Waivers............................................................................21
ARTICLE 12 [INTENTIONALLY DELETED]...........................................................................21
ARTICLE 13 MISCELLANEOUS.....................................................................................21
13.1 No Waivers; Cumulative Remedies................................................................21
13.2 Severability...................................................................................21
13.3 Governing Law; Choice of Forum; Service of Process.............................................22
13.4 WAIVER OF JURY TRIAL...........................................................................22
13.5 Notices........................................................................................22
13.6 Binding Effect.................................................................................22
13.7 Indemnity of Lender by Borrower................................................................23
13.8 Final Agreement................................................................................23
13.9 Counterparts...................................................................................23
13.10 Captions.......................................................................................23
13.11 Conflicts with Other Loan Documents............................................................23
ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A - DEFINED TERMS
EXHIBIT A - FORM OF NOTE
EXHIBIT B - FORM OF NOTICE OF BORROWING
SCHEDULE A-1 - LIENS
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CREDIT AGREEMENT
This
Credit Agreement, dated as of November 1, 2001 (this
"AGREEMENT"), among divine, inc., a
Delaware corporation ("LENDER") and Data
Return Corporation, a Texas corporation, with offices at 000 Xxxx Xxx Xxxxxxx
Xxxx., Xxxxx 000, Xxxxxx, Xxxxx 00000 (the "BORROWER").
W I T N E S S E T H:
WHEREAS, Borrower, Lender and a wholly-owned subsidiary of Lender are
entering into the Agreement and Plan of Merger (the "Merger Agreement")
providing for the acquisition of Borrower by Lender;
WHEREAS, Borrower has requested Lender to make available to Borrower
the credit facility described herein, which Borrower will use for the purposes
permitted hereunder;
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed thereto in ANNEX A which is
attached hereto and incorporated herein; the rules of construction contained
therein shall govern the interpretation of this Agreement, and all Annexes,
Exhibits and Schedules attached hereto are incorporated herein by reference;
WHEREAS, Lender has agreed to make available to Borrower a credit
facility upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, Lender, and Borrower hereby agree
as follows.
ARTICLE 1
LOANS
1.1 FACILITY. Subject to all of the terms and conditions of this
Agreement, Lender agrees to make available a term loan credit facility of up to
the Maximum Amount during the periods described in such definition to Borrower
during the term of this Agreement; provided, however, that if requested by the
Borrower, Lender may consent (which consent shall not be unreasonably withheld,
conditioned or delayed) to increase the term loan credit facility at any time by
an amount not to exceed the Additional Amount for the purpose of funding Capital
Expenditures approved by Lender. Any increase in the term loan credit facility
consented to by Lender pursuant to the immediately preceding proviso shall
automatically increase the Commitment and the Maximum Amount by such increase.
1.2 LOANS.
(a) (i) AMOUNTS. Subject to the satisfaction of the conditions
precedent set forth in ARTICLE 8, Lender agrees, upon Borrower's
request from time to time on any Business Day during the period from
the Closing Date to the
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Termination Date, to make loans (the "LOANS") to Borrower in amounts
not to exceed, in the aggregate, the Available Amount.
(ii) Borrower shall execute and deliver to Lender a note to
evidence the Loans made by Lender. The note shall be in the principal
amount of the Commitment, be dated the date hereof and be
substantially in the form of EXHIBIT A (the "NOTE"). The Note shall
represent the obligation of Borrower to pay the amount of the
Commitment, or, if less, the aggregate unpaid principal amount of all
Loans to Borrower together with interest thereon as prescribed herein.
The entire unpaid balance of the Loans and all other non-contingent
Obligations shall be immediately due and payable in full in
immediately available funds on the Termination Date.
(b) PROCEDURE FOR BORROWING.
(1) Each Borrowing shall be made upon Borrower's irrevocable
written notice delivered to Lender in the form of a notice of borrowing in the
form of EXHIBIT B hereto ("Notice of Borrowing"), which must be received by
Lender prior to 11:00 a.m. (Chicago time) one Business Day prior to the
requested Funding Date specifying:
(A) the amount of the Borrowing; and
(B) the requested Funding Date, which must be a Business
Day.
(2) In lieu of delivering a Notice of Borrowing, Borrower
may give Lender telephonic notice of such request for advances to the Designated
Account on or before the deadline set forth above. Lender at all times shall be
entitled to rely on such telephonic notice in making such Loans, regardless of
whether any written confirmation is received.
(c) RELIANCE UPON AUTHORITY. Lender is authorized to transfer
the proceeds of any Loans requested hereunder to the Designated
Account. Borrower may designate a replacement bank account from time
to time by written notice. All such Designated Accounts must be
located in the continental United States of America and must be
reasonably satisfactory to Lender. Lender is entitled to rely
conclusively on any person's request for Loans on behalf of Borrower,
so long as the proceeds thereof are to be transferred to the
Designated Account.
(d) NO LIABILITY. Lender shall not incur any liability to
Borrower as a result of acting upon any notice referred to in SECTIONS
1.2(b) and (c), which Lender believes in good faith to have been given
by an officer or other person duly authorized by Borrower to request
Loans on its behalf. The crediting of Loans to the Designated Account
conclusively establishes the obligation of Borrower to repay such
Loans as provided herein.
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ARTICLE 2
INTEREST
2.1 INTEREST.
(a) INTEREST RATES. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the
extent permitted by law, on interest thereon not paid when due) from
the date made until paid in full in cash at a rate equal to the
Applicable Rate. All interest charges shall be computed on the basis
of a year of 365 days and actual days elapsed. Borrower shall pay to
Lender interest accrued on all Loans on the Termination Date.
(b) DEFAULT RATE. If any Event of Default occurs and is
continuing and Lender in its discretion so elects, then, while any
such Event of Default is continuing, all of the Obligations shall bear
interest at the rate otherwise applicable thereto, plus two percent
(2%) per annum applicable thereto.
2.2 MAXIMUM INTEREST RATE In no event shall any interest rate
provided for hereunder exceed the maximum rate legally chargeable under
applicable law with respect to loans of the type provided for hereunder (the
"Maximum Rate"). If, in any month, any interest rate, absent such limitation,
would have exceeded the Maximum Rate, then the interest rate for that month
shall be the Maximum Rate, and, if in future months, that interest rate would
otherwise be less than the Maximum Rate, then that interest rate shall remain at
the Maximum Rate until such time as the amount of interest paid hereunder equals
the amount of interest which would have been paid if the same had not been
limited by the Maximum Rate. If a court of competent jurisdiction determines
that Lender has received interest and other charges hereunder in excess of the
Maximum Rate, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the Obligations other than interest, in the
inverse order of maturity, and if there are no Obligations outstanding, Lender
shall refund to Borrower such excess.
ARTICLE 3
PAYMENTS AND PREPAYMENTS
3.1 LOANS. Borrower may prepay the Loans at any time, subject to the
terms of this Agreement. Subject to Section 3.6 hereof, Borrower shall repay the
outstanding principal balance of the Loans, plus all accrued but unpaid interest
thereon, on the Termination Date. Borrower may not reborrow any amounts that are
prepaid in accordance with this SECTION 3.1.
3.2 TERMINATION OF FACILITY; PREPAYMENT.
(a) OPTIONAL. Borrower may terminate this Agreement upon at least
three (3) Business Days' notice to Lender, upon the payment in full of all
outstanding Loans, together with all accrued interest thereon, and the payment
in full in cash of all other Obligations then outstanding.
(b) MANDATORY. The Borrower shall prepay in full all outstanding
Loans, together with all accrued interest thereon and all other Obligations then
outstanding, upon the
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occurrence of any Prepayment Event described in clauses (d), (e) or (f) of the
definition of Prepayment Event. Upon the occurrence of any Prepayment Event
described in clauses (a), (b) and (c) of the definition of Prepayment Event, the
Borrower shall use all of the net proceeds received as a result of such
Prepayment Event to prepay outstanding Loans, accrued interest thereon and other
Obligations then outstanding (in such order as is determined by the Lender);
provided, however, that, upon the occurrence of a Prepayment Event described in
clause (b) of such definition, the Borrower shall not be required to use any
proceeds to prepay the Loans, accrued interest and other Obligations that are
reinvested within 30 days from the receipt of such proceeds in substantially
similar property and assets as the property and assets lost or damaged by such
Prepayment Event. Upon payment of all Loans, accrued interest, and other
Obligations pursuant to this Section 3.2(b), this Agreement shall terminate.
3.3 PAYMENTS BY BORROWER. All payments to be made by Borrower shall
be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by Borrower shall be made to Lender, at
the account designated by Lender, in Dollars and in immediately available funds,
no later than 3:00 p.m. (Chicago time) on the date specified herein.
3.4 APPLICATION AND REVERSAL OF PAYMENTS. All such payments not
relating to principal or interest of specific Loans, or not constituting payment
of specific fees, and all proceeds of Collateral received by Lender, shall be
applied, subject to the provisions of this Agreement, FIRST, to pay any fees,
indemnities or expense reimbursements then due to Lender; SECOND, to pay
interest due in respect of all Loans; and THIRD, to pay or prepay principal of
the Loans. Lender shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of the
Obligations.
3.5 INDEMNITY FOR RETURNED PAYMENTS. If after receipt of any payment
which is applied to the payment of all or any part of the Obligations, Lender is
for any reason compelled to surrender such payment or proceeds to any Person
because such payment or application of proceeds is invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
impermissible setoff, or a diversion of trust funds, or for any other reason,
then the Obligations or part thereof intended to be satisfied shall be revived
and continued and this Agreement shall continue in full force as if such payment
or proceeds had not been received by such Person and Borrower shall be liable to
pay to Lender, and hereby does indemnify Lender and hold Lender harmless for the
amount of such payment or proceeds surrendered. The provisions of this SECTION
3.5 shall be and remain effective notwithstanding any contrary action which may
have been taken by Lender in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to
Lender's rights under this Agreement and shall be deemed to have been
conditioned upon such payment or application of proceeds having become final and
irrevocable. The provisions of this SECTION 3.5 shall survive the termination of
this Agreement.
3.6 CONVERSION. (a) Upon termination of the Merger Agreement
pursuant to Sections 8.2(d), 8.3(a) or 8.3(b) thereof (the "Conversion Date"),
all Loans and Obligations shall automatically be converted (the "Conversion")
into the number of shares of Common Stock of Borrower equal to the aggregate
amount of the Loans and Obligations (without duplication) then
8
outstanding, divided by the Exchange Ratio calculated as of the Conversion Date,
as such Exchange Ratio may have been adjusted pursuant to the terms of the
Merger Agreement.
(b) The Conversion shall be deemed to have been made immediately
before the close of business on the Conversion Date, so that the rights of
Lender under this Agreement and the Security Agreement shall cease at such time
(other than those rights that expressly survive the termination of this
Agreement) and Lender shall be treated for all purposes as having become the
record holder or holders of the Common Stock described in Section 3.6(a) at such
time, and the number of shares of Common Stock to be received by Lender shall be
determined at such time.
(c) Borrower covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issuance
upon conversion of the Loans and Obligations as herein provided, such number of
shares of Common Stock as shall be issuable upon the conversion of the entire
Commitment. Borrower covenants that all shares of Common Stock which shall be so
issuable shall be duly and validly issued and fully-paid and non-assessable.
(d) Borrower covenants that if any shares of Common Stock required
to be reserved for issuance upon conversion of the Loans and Obligations require
registration with or approval of any Governmental Authority under any federal or
state law before such shares may be issued upon conversion, Borrower will, at
its expense and as expeditiously as possible, cause such shares to be duly
registered or approved, as the case may be.
(e) The issuance of certificates for shares of Common Stock upon the
Conversion shall be made within one (1) Business Day of the Conversion Date
without charge to Lender for any tax in respect of the issuance of such
certificates, and such certificates shall be issued in the respective names of,
or in such names as may be directed by, the holder of this Term Note.
(f) To the extent that the Loans and Obligations are not converted
into shares of Common Stock, such portion shall remain a secured debt of
Borrower payable in accordance with the terms of this Agreement
ARTICLE 4
TAXES
4.1 TAXES
(a) Any and all payments by Borrower to Lender under this Agreement
and any other Loan Document shall be made free and clear of, and without
deduction or withholding for any Taxes. In addition, Borrower shall pay all
Other Taxes.
(b) Borrower agrees to indemnify and hold harmless Lender for the
full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section) paid by Lender and
any liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted.
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ARTICLE 5
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
5.1 BOOKS AND RECORDS. Borrower shall maintain, at all times, books,
records and accounts which are complete, correct and timely in all material
respects so as to permit the preparation of financial statements in accordance
in all material respects with GAAP applied consistently.
5.2 FINANCIAL AND OTHER INFORMATION. Borrower shall promptly furnish
to Lender, all such financial and other information as Lender shall reasonably
request.
5.3 NOTICES TO LENDER. Borrower shall notify Lender in writing of
the following matters at the following times:
(a) As soon as practicable, after a Responsible Officer becomes
aware of any Event of Default;
(b) As soon as practicable, after a Responsible Officer becomes
aware of any event or circumstance which is reasonably likely to have
a Material Adverse Effect on Borrower; and
(c) Any change in Borrower's name, state of organization,
locations of Collateral, or form of organization, or trade names under
which Borrower creates accounts or to which instruments in payment of
accounts may be made payable, in each case at least thirty (30) days
prior thereto.
ARTICLE 6
GENERAL WARRANTIES AND REPRESENTATIONS
Borrower warrants and represents to Lender that except as
hereafter disclosed to and accepted by Lender in writing:
6.1 AUTHORIZATION, VALIDITY, AND ENFORCEABILITY OF THIS AGREEMENT
AND THE LOAN DOCUMENTS. Borrower and each of its Restricted Subsidiaries has the
corporate power and authority to execute, deliver and perform this Agreement and
the other Loan Documents to which it is a party, to incur the Obligations, and
to grant to Lender Liens upon and security interests in the Collateral. Borrower
and each of its Restricted Subsidiaries have taken all necessary action
(including obtaining approval of its stockholders if necessary) to authorize its
execution, delivery, and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and the other Loan Documents to
which the Borrower or any of its Subsidiaries is a party have been duly executed
and delivered by Borrower and such Subsidiaries, and constitute the legal, valid
and binding obligations of Borrower and such Subsidiaries to the extent a party
thereto, enforceable against it in accordance with their respective terms
(subject to bankruptcy, insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights and to general
principles of equity (regardless of whether that enforceability is considered in
a proceeding at law or in equity)). Borrower's and each of its Restricted
Subsidiaries' execution, delivery, and performance of this Agreement and the
other Loan Documents to which it is a party do not and
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will not conflict with, or constitute a violation or breach of, or (other than
pursuant to the Loan Documents) result in the imposition of any Lien upon the
property of Borrower or any of its Subsidiaries, by reason of the terms of (a)
any material contract, mortgage, lease, agreement, indenture, or instrument to
which Borrower or any of Borrower's Subsidiaries is a party or which is binding
upon any of Borrower or Borrower's Subsidiaries or any of their property, (b)
any Requirement of Law applicable to Borrower or any of its Subsidiaries (other
than any violation, conflict or breach which could not reasonably be expected to
have a Material Adverse Effect), or (c) the certificate or articles of
incorporation or by-laws or the limited liability company or limited partnership
agreement or other constitutive and organizational documents, as applicable, of
Borrower or any of its Subsidiaries.
6.2 VALIDITY AND PRIORITY OF SECURITY INTEREST. The provisions of
this Agreement and the other Loan Documents create legal and valid liens on, and
security interests in, all the Collateral in favor of Lender, and, assuming
appropriate control, possessions, filings and/or recordations are made by
Lender, such Liens constitute perfected and continuing Liens on all the
Collateral, having priority over all other Liens on the Collateral (other than
Permitted Liens), securing all the Obligations, and enforceable against Borrower
and all third parties (subject to equitable principles and the effect of
bankruptcy laws).
6.3 ORGANIZATION AND QUALIFICATION. Borrower and each of its
Subsidiaries is duly organized or incorporated and validly existing in good
standing (or its equivalent) under the laws of the jurisdiction of its
organization or incorporation or formation and is in good standing (or its
equivalent) in each jurisdiction where the lack of good standing (or its
equivalent) would have a Material Adverse Effect on Borrower.
6.4 NO VIOLATION OF LAW. Neither Borrower nor any of its
Subsidiaries is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it which violation could reasonably be
expected to have a Material Adverse Effect on Borrower
6.5 REGULATED ENTITIES. None of Borrower, any Person controlling
Borrower, or any Subsidiary, is an "Investment Company" required to be
registered as such under the Investment Company Act of 1940. Borrower is not
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public utilities code
or law, or any other federal or state statute or regulation limiting its ability
to incur indebtedness.
6.6 USE OF PROCEEDS; MARGIN REGULATIONS. Neither Borrower nor any of
its Subsidiaries is engaged in the business of purchasing or selling Margin
Stock or extending credit for the purpose of purchasing or carrying Margin
Stock.
6.7 OUTSTANDING LOANS. Neither Borrower nor any of its Subsidiaries
has any Indebtedness outstanding in excess of $150,000 with any Person other
than Permitted Indebtedness.
6.8 FINANCIAL STATUS. (a) the Revenues of Borrower and its
Subsidiaries, on a consolidated basis, for the period beginning on October 1,
2001 and ending on October 31, 2001, will not be less than $3,600,000, (b) the
Expenses of Borrower and its Subsidiaries, on a
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consolidated basis, for the period beginning on October 1, 2001 and ending on
October 31, 2001, will not be more than $7,000,000, (c) the Capital Expenditures
of Borrower and its Subsidiaries, on a consolidated basis, for the period
beginning on January 1, 2001 and ending on October 31, 2001, will not be more
than $850,000, and (d) the accounts payable and other accruals of the Borrower
and its Subsidiaries as of the Closing Date are not more than $7,300,000.
6.9 DISCLOSURE. All factual information (taken as a whole) provided
in, or provided in writing by the Borrower or any of its Subsidiaries to Lender
pursuant to, the Loan Documents and/or the Merger Agreement regarding the
Borrower or any of its Subsidiaries, and all other factual information (taken as
a whole) hereafter furnished by the Borrower or any of its Subsidiaries in
writing to the Lender will be, true, accurate and correct in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided.
ARTICLE 7
AFFIRMATIVE, FINANCIAL AND NEGATIVE COVENANTS
Borrower covenants to Lender that so long as any of the Obligations
(other than indemnity Obligations not then due) remain outstanding, the
commitment of Lender to extend credit to or for the account of Borrower exists,
or this Agreement is in effect:
7.1 TAXES AND OTHER OBLIGATIONS. Borrower shall, and shall cause
each of its Subsidiaries to, (a) file when due all material tax returns and
other material reports which it is required to file; (b) pay, or provide for the
payment, when due, of all material taxes, fees, assessments and other
governmental charges against it or upon its property, income and franchises,
make all required material withholding and other tax deposits, and establish
adequate reserves for the payment of all such items; and (c) pay, within two
weeks from the Closing Date to the extent already due on or as of the Closing
Date and if due after the Closing Date when due, all rents, fees, expenses,
liabilities and obligations payable by the Borrower or any of its Subsidiaries
under each lease (whether an operating lease or a capital lease) and, except for
Indebtedness permitted by Section 7.10(ii) of this Agreement, each material
agreement, and provide to Lender, upon reasonable request, satisfactory evidence
of its timely compliance with the foregoing clauses (a), (b) and (c), except, in
the case of clause (a) and (b) only, to the extent the failure of which would
not have a Material Adverse Effect on Borrower or any of its Subsidiaries.
7.2 LEGAL EXISTENCE AND GOOD STANDING. Borrower shall, and shall
cause each of its Subsidiaries to, maintain their legal existence and their
qualification and good standing in their jurisdictions of incorporation and in
each other jurisdiction where the lack of qualification or good standing would
have a Material Adverse Effect on Borrower.
7.3 COMPLIANCE WITH LAWS. Borrower shall, and shall cause each of
its Subsidiaries to comply in all material respects with all Requirements of
Law.
7.4 TRANSACTIONS AFFECTING COLLATERAL OR OBLIGATIONS; PRESERVATION
OF COLLATERAL. Neither Borrower nor any of its Subsidiaries shall enter into any
transaction which
12
would be reasonably expected to have a Material Adverse Effect on Borrower.
Borrower shall, maintain, preserve and protect the Collateral, and shall, and
shall cause each of its Subsidiaries to, refrain from taking any action that
would reasonably be expected to have a Material Adverse Effect on Borrower.
7.5 INSURANCE. Borrower shall, and shall cause each of its
Subsidiaries to, own, procure and maintain insurance in a manner consistent with
past practices or as reasonably requested by Lender.
7.6 LIENS. Neither Borrower nor any of its Subsidiaries shall
create, incur, assume, or permit to exist any Lien on any property now owned or
hereafter acquired by any of them, except Permitted Liens.
7.7 NOTICE OF INVOLUNTARY BANKRUPTCY. Borrower shall, promptly upon
a Responsible Officer learning that an involuntary petition has been filed or an
action or proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of Borrower or any of its
Subsidiaries or for any other relief under the federal Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency act or law, state or
federal, now or hereafter existing, notify Lender that such a petition has been
filed or such action or proceeding has commenced.
7.8 USE OF PROCEEDS. Borrower shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance indebtedness of Borrower or others incurred to purchase or carry
Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (iv) to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act. Borrower shall use Loan
proceeds solely to fund its working capital requirements; provided, however,
that the proceeds of the Additional Amount, if any, shall be used solely to
finance Capital Expenditures of the Borrower.
7.9 FURTHER ASSURANCES. Borrower shall, and shall cause each
Restricted Subsidiary to, execute and deliver, or cause to be executed and
delivered, to Lender such documents and agreements, and shall take or cause to
be taken such actions, as Lender may, from time to time, reasonably request to
(i) carry out the terms and conditions of this Agreement and the other Loan
Documents and (ii) grant a perfected Lien to Lender on the Collateral of
Borrower and the Restricted Subsidiaries and each of their respective property
as contemplated by the Loan Documents.
7.10 LIMITATION ON INDEBTEDNESS. Neither Borrower nor any of its
Subsidiaries shall create, incur, issue, assume or suffer to exist any
Indebtedness other than (i) the Obligations, (ii) trade payables and normal
accruals incurred in the ordinary course of business in an amount not to exceed
at any time in the aggregate $7,300,000 (not including, however, for purposes of
such limitation, that portion of any trade payables and normal accruals with
respect to which the Borrower or such Subsidiary is contesting in good faith the
amount or validity thereof by appropriate proceedings, and then only to the
extent that the Borrower or such Subsidiary has set aside on its books adequate
reserves therefor, in accordance with GAAP), (iii) the indebtedness listed in
Section 5.2 (p) of the Company Disclosure Schedule provided,
13
however, that in no event shall the Capital Lease Obligations under all capital
lease facilities exceed, in the aggregate outstanding at any time, $32,000,000;
(iv) fees and expenses not to exceed $3,500,000 incurred in connection with the
transaction contemplated by the Merger Agreement and the Loan Documents, (v)
loans and advances from the Borrower to Restricted Subsidiaries and Restricted
Subsidiaries to the Borrower or another Restricted Subsidiary, and (vi)
guarantees by the Borrower or any Subsidiary of the Borrower of any Indebtedness
described in clause (i) and (iii).
7.11 LIMITATION ON TRANSFERS. Neither Borrower nor any of its
Subsidiaries shall convey, sell, lease, transfer or otherwise dispose of, any of
its assets or property other than (a) the sale of inventory in the ordinary
course of business, (b) subject to Section 5(c) of the Security Agreement, any
conveyance, sale, lease, transfer or disposition of worn-out, damaged or
obsolete assets and property, and no longer useful property and assets, in each
case in the ordinary course of business, and (c) sales, transfers and
dispositions by the Borrower to any Subsidiary and by any Subsidiary to the
Borrower or any other Subsidiary; provided, however, that in no event shall
Borrower or any Subsidiary convey, sell, transfer or otherwise dispose of any
assets or property to any Unrestricted Subsidiary except for transfers of assets
and property to Unrestricted Subsidiaries that meet the limitation in Section
7.13 for normal operating purposes of such Unrestricted Subsidiaries in an
amount not to exceed, in the aggregate for all Unrestricted Subsidiaries, in any
calendar month $500,000 and in any fiscal quarter of the Borrower $1,200,000.
7.12 LIMITATION ON SUBSIDIARIES. Neither the Borrower nor any of its
Subsidiaries shall own, either directly or indirectly, any Capital Stock in any
Person other than the entities listed on Section 5.2(a) of the Company
Disclosure Schedule.
7.13 UNRESTRICTED SUBSIDIARIES. Borrower shall use its commercially
reasonable best efforts to cause all Unrestricted Subsidiaries deemed to be
material by Lender to become Restricted Subsidiaries and the fair market value
of all assets and property owned by (a) any Unrestricted Subsidiary shall not
exceed at any time $600,000, and (b) all Unrestricted Subsidiaries in the
aggregate but without duplication, shall not exceed at any time $750,000.
Borrower shall pay all costs associated with causing the Unrestricted
Subsidiaries deemed to be material by Lender to become Restricted Subsidiaries.
7.14 LIMITATION ON INVESTMENTS Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly, lend money or credit or make
advances to any Person, or purchase or acquire any Capital Stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any other Person, or purchase or own a futures contract or otherwise become
liable for the purchase or sale of currency or other commodities at a future
date in the nature of a futures contract, or hold any cash or Cash Equivalents
(each of the foregoing an "Investment" and, collectively, "Investments"), except
that the following shall be permitted:
(i) Borrower and its Subsidiaries may acquire and hold accounts
receivables owing to any of them, if created or acquired in the ordinary course
of business and payable or dischargeable in accordance with customary terms, and
the Borrower and its Subsidiaries may own Investments received in connection
with the bankruptcy or reorganization
14
of suppliers and customers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers arising in the ordinary course of
business;
(ii) Borrower and its may acquire and hold cash and Cash
Equivalents;
(iii) Borrower and its Subsidiaries may acquire and hold Capital
Stock of Subsidiaries permitted under Section 7.12.
(iv) Borrower and its Subsidiaries may make intercompany loans
and advances to the Borrower or any Restricted Subsidiary.
7.15 FINANCIAL COVENANTS
(a) As of the end of each calendar month, the Revenues of Borrower
and its Restricted Subsidiaries, on a consolidated basis, for such calendar
month then ended shall not be less than $3,200,000.
(b) As of the end of each calendar month, excluding the Bonus
Payments permitted under Section 7.16(c), the Expenses of Borrower and its
Subsidiaries, on a consolidated basis, for such calendar month then ended shall
not be greater than $7,200,000.
(c) Consolidated Net Income for each period shown below shall not be
less than the amount indicated below for such period:
--------------------------------------------------------------------------------------------------------------------
PERIOD CONSOLIDATED NET INCOME
(THE DATES SHOWN BELOW ARE INCLUSIVE) NOT LESS THAN
--------------------------------------------------------------------------------------------------------------------
October 1, 2001 through October 31, 2001 ($4,000,000)
--------------------------------------------------------------------------------------------------------------------
October 1, 2001 through November 30, 2001 ($7,000,000)
--------------------------------------------------------------------------------------------------------------------
October 1, 2001 through December 31, 2001 ($10,000,000)
--------------------------------------------------------------------------------------------------------------------
October 1, 2001 through January 31, 2001 ($13,000,000)
--------------------------------------------------------------------------------------------------------------------
October 1, 2001 through February 28, 2002 ($16,000,000)
--------------------------------------------------------------------------------------------------------------------
October 1, 2001 through March 31, 2002 ($19,000,000)
--------------------------------------------------------------------------------------------------------------------
October 1, 2001 through April 30, 2002 ($22,000,000)
--------------------------------------------------------------------------------------------------------------------
October 1, 2001 through May 31, 2002 ($25,000,000)
--------------------------------------------------------------------------------------------------------------------
October 1, 2001 through June 30, 2002 ($28,000,000)
--------------------------------------------------------------------------------------------------------------------
October 1, 2001 through July 31, 2002 ($31,000,000)
--------------------------------------------------------------------------------------------------------------------
October 1, 2001 through August 31, 2002 ($34,000,000)
--------------------------------------------------------------------------------------------------------------------
15
(d) Except for Capital Expenditures financed with the proceeds of
the Additional Amount provided pursuant to Section 1.1, Borrower and its
Subsidiaries shall not pay or incur Capital Expenditures, on a consolidated
basis, in excess of $850,000 in any calendar month or in excess of the amounts
shown below for each period indicated below:
-------------------------------------------------------------------------------------------------------------------
PERIOD CAPITAL EXPENDITURES
(THE DATES SHOWN BELOW ARE INCLUSIVE) NOT TO EXCEED
-------------------------------------------------------------------------------------------------------------------
October 1, 2001 through October 31, 2001 $850,000
-------------------------------------------------------------------------------------------------------------------
October 1, 2001 through November 30, 2001 $1,000,000
-------------------------------------------------------------------------------------------------------------------
October 1, 2001 through December 31, 2001 $1,700,000
-------------------------------------------------------------------------------------------------------------------
October 1, 2001 through January 31, 2001 $2,550,000
-------------------------------------------------------------------------------------------------------------------
October 1, 2001 through February 28, 2002 $3,400,000
-------------------------------------------------------------------------------------------------------------------
October 1, 2001 through March 31, 2002 $4,250,000
-------------------------------------------------------------------------------------------------------------------
October 1, 2001 through April 30, 2002 $5,100,000
-------------------------------------------------------------------------------------------------------------------
October 1, 2001 through May 31, 2002 $5,950,000
-------------------------------------------------------------------------------------------------------------------
October 1, 2001 through June 30, 2002 $6,800,000
-------------------------------------------------------------------------------------------------------------------
October 1, 2001 through July 31, 2002 $7,650,000
-------------------------------------------------------------------------------------------------------------------
October 1, 2001 through August 31, 2002 $8,500,000
-------------------------------------------------------------------------------------------------------------------
7.16 RESTRICTED PAYMENTS.
Neither the Borrower nor any Restricted Subsidiary shall, directly or
indirectly, declare, order, pay or make any Restricted Payment or set aside any
sum or property therefor except for the following:
(a) Borrower and each Subsidiary of Borrower may declare, order, pay
or make any Restricted Payment to Lender;
(b) Borrower and each Subsidiary of Borrower may pay salaries (but,
except as provided in clauses (c) and (d) of this Section 7.16, not bonuses,
severance or other compensation) of officers and employees of Borrower and such
Subsidiaries in the ordinary course of business;
16
(c) Borrower may pay its existing severance obligations to certain
former employees of the Borrower in an amount not to exceed, in the aggregate,
$450,000, and may pay bonuses to certain employees of Borrower in an amount not
to exceed, in the aggregate, $300,000 (such bonus payments in an amount not to
exceed $300,000 are referred to herein as the "Bonus Payments");
(d) Borrower and its Subsidiaries may reimburse officers and
employees for expenses incurred in the ordinary course of business to the extent
such expenses are included in the calculation of Expenses under Section 7.15(b)
for the period in which the Borrower pays such reimbursement;
(e) Borrower and each Subsidiary of Borrower may make payments on
trade payables and normal accruals in the ordinary course of business;
(f) Borrower and each Subsidiary of Borrower may make scheduled
payments of Indebtedness permitted to be incurred under Section 7.10; and
(g) Any Subsidiary may declare, order, pay or make any Restricted
Payment to Borrower.
ARTICLE 8
CONDITIONS OF LENDING
8.1 CONDITIONS PRECEDENT TO MAKING OF INITIAL LOANS ON THE CLOSING
DATE. The obligation of Lender to make the initial Loan is subject to the
following conditions precedent having been satisfied in a manner reasonably
satisfactory to Lender:
(a) This Agreement and the other Loan Documents shall have been
executed by each party thereto (other than Lender) and Borrower and
its Subsidiaries shall have performed and complied in all material
respects with all covenants, agreements and conditions contained
herein and the other Loan Documents which are required to be performed
or complied with by Borrower or its Subsidiaries before or on such
Closing Date.
(b) All representations and warranties made hereunder and in the
other Loan Documents shall be true and correct in all material
respects as if made on such date.
(c) No Default or Event of Default shall have occurred and be
continuing.
(d) Lender shall have received an opinion of counsel for
Borrower and its Subsidiaries substantially in the form attached
hereto.
(e) Lender shall have received authenticated copies of proper
financing statements under the UCC of all jurisdictions that Lender
may deem reasonably necessary or desirable in order to perfect
Lender's Liens and all other
17
actions shall have been completed in order to give Lender first
priority perfected Liens in all Collateral (subject in priority only
to Permitted Liens).
The acceptance by Borrower of Loans made shall be deemed to be a
representation and warranty made by Borrower to the effect that all of the
conditions precedent to the making of such Loans have been satisfied, with the
same effect as delivery to Lender of a certificate signed by a Responsible
Officer of Borrower, on behalf of Borrower, dated the Closing Date, to such
effect.
8.2 CONDITIONS PRECEDENT TO EACH LOAN. The obligation of Lender to
make each Loan, including the initial Loan shall be subject to the further
conditions precedent that:
(a) on and as of the date of the making of any Loan, the
following statements shall be true and correct, and the acceptance by
Borrower of any Loan shall be deemed to be a statement to the effect
set forth in CLAUSES (I), (II), (III) and (IV) with the same effect as
the delivery to Lender of a certificate signed by a Responsible
Officer of Borrower, on behalf of Borrower, dated the date of such
Loan, stating that:
(i) The representations and warranties contained in this
Agreement and the other Loan Documents and in the Merger
Agreement are true and correct in all material respects on and
as of the date of such Loan as though made on and as of such
date, other than any such representation or warranty which
relates to a specified prior date, which shall be true and
correct as of such date and except to the extent Lender has been
notified in writing by Borrower that any representation or
warranty is not correct and Lender has explicitly waived, in its
sole discretion, in writing compliance with such representation
or warranty; and
(ii) No event has occurred and is continuing, or would
result from such Loan, which constitutes a Default or an Event
of Default; and
(iii) No event has occurred and is continuing, or would
result from such Loan, which has had or could have a Material
Adverse Effect on Borrower.
(b) Borrower shall have Cash on Hand, free of any liens other
than Permitted Liens described in clauses (ii) and (v) of such
definition of Permitted Liens, in excess of $1,250,000 on the date of
the initial Loan and $2,750,000 on the date of each subsequent Loan.
ARTICLE 9
DEFAULT; REMEDIES
9.1 EVENTS OF DEFAULT. It shall constitute an event of default
("EVENT OF DEFAULT") if any one or more of the following shall occur for any
reason:
18
(a) any failure by Borrower to pay (i) the principal of any Loan
when due, (ii) any sums due pursuant to Section 3.2(b) of this
Agreement when due, or (iii) any other amount hereunder within five
days of the date due, in either case whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by
Borrower in this Agreement or by Borrower or any of its Subsidiaries
in any of the other Loan Documents, shall prove to be untrue in any
material respect as of the date on which made, deemed made, or
furnished;
(c) (i) any default shall occur in the observance or performance
of any of the covenants and agreements contained in Sections 7.1, 7.2,
7.6, 7.7, 7.10, 7.11 or 7.15 of this Agreement, (ii) any default shall
occur in the observance or performance of any of the covenants and
agreements contained in SECTION 5.3 or SECTION 7.13 and such default
shall continue for five (5) Business Days or more; or (iii) any
default shall occur in the observance or performance of any of the
other covenants or agreements contained in any other Section of this
Agreement or any other Loan Document shall continue for fifteen (15)
days or more;
(d) Borrower or any of its Subsidiaries shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or
otherwise commence any action or proceeding seeking reorganization,
arrangement or readjustment of its debts or for any other relief under
the federal Bankruptcy Code, as amended, or under any other bankruptcy
or insolvency act or law, state or federal, now or hereafter existing,
or consent to, approve of, or acquiesce in, any such petition, action
or proceeding; (ii) apply for or acquiesce in the appointment of a
receiver, assignee, liquidator, sequestrator, custodian, monitor,
trustee or similar officer for it or for all or any part of its
property; or (iii) make an assignment for the benefit of creditors;
(e) an involuntary petition shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of Borrower or any of its
Subsidiaries or for any other relief under the federal Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency act or
law, state or federal, now or hereafter existing not dismissed within
60 days;
(f) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for Borrower or any of its
Subsidiaries or for all or any material part of their respective
property shall be appointed or a warrant of attachment, execution or
similar process shall be issued against any material part of the
property of Borrower or any of its Subsidiaries not dismissed within
60 days;
(g) Borrower or any of its Subsidiaries shall file a certificate
of dissolution under applicable state law or shall be liquidated,
dissolved or wound-
19
up or shall commence or have commenced against it any action or
proceeding for dissolution, winding-up or liquidation;
(h) any Loan Document shall be terminated, revoked or declared
void or invalid or unenforceable or challenged by Borrower or any of
its Subsidiaries;
(i) Lender ceases to have a first priority security interest in
the Collateral for any reason other than as a result of a Permitted
Lien or a release by Lender of its Lien thereon;
(j) the holder or holders of any Permitted Lien or Permitted
Liens, in excess of $25,000 either individually or in the aggregate,
on any assets or properties of the Borrower or any of its Subsidiaries
shall take any action or commence any proceeding to realize in all or
any portion thereof; or
(k) One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving in the aggregate for
the Borrower and its Subsidiaries a liability (not paid or not fully
covered by a reputable and solvent insurance) and such judgments and
decrees either shall be final and nonappealable or shall not be
vacated, discharged or stayed or bonded pending appeal for any period
of 30 consecutive days, and the aggregate amount of all such judgments
exceeds $250,000.
9.2 REMEDIES.
(a) If an Event of Default exists and is continuing, Lender may,
in its discretion, do one or more of the following at any time or
times and in any order, without notice to or demand on Borrower: (i)
permanently reduce the Available Amount and/or the Maximum Amount, and
(ii) restrict the amount of or refuse to make Loans. Any permanent
reductions in the Available Amount and/or the Maximum Amount shall not
be reinstated, even if the Event of Default giving rise thereto has
been cured. If an Event of Default exists, Lender may do one or more
of the following, in addition to the actions described in the
preceding sentences, at any time or times and in any order, without
notice to or demand on Borrower: (A) terminate the Commitments and
this Agreement; (B) declare any or all Obligations to be immediately
due and payable; PROVIDED, HOWEVER, that upon the occurrence of any
Event of Default described in SECTIONS 9.1(d), 9.1(e), 9.1(f), or
9.1(g), the Commitments shall automatically and immediately expire and
all Obligations shall automatically become immediately due and payable
without notice or demand of any kind; PROVIDED FURTHER, HOWEVER, that
the Lender shall not declare any Obligations to be immediately due and
payable if the Merger Agreement has not been terminated in accordance
with its terms except with respect to (i) any Event of Default
described in Sections 9.1(d), 9.1(e), 9.1(f) or 9.1(g) (in which event
the Obligations shall automatically become due and payable as
described above) or (ii) any Event of Default described in Sections
9.1(i) and 9.1 (j) but Lender may declare the Obligations to be due
and payable only if, in the case of this clause (ii), in the sole
reasonable discretion of Lender,
20
the failure to declare any Obligations to be immediately due and
payable could reasonably result in (x) Lender's loss of a material
right under the Loan Documents or (y) the material impairment of, or a
material adverse effect upon, Lender's Lien or the value of the
Collateral; and (z) pursue its other rights and remedies under the
Loan Documents and applicable law.
(b) If an Event of Default has occurred and is continuing,
Lender shall have all rights and remedies of a secured party under the
Loan Documents and the UCC.
(c) If an Event of Default has occurred and is continuing,
Borrower hereby waives, to the extent permitted by applicable law, all
rights to notice and hearing prior to the exercise by Lender of
Lender's rights to repossess the Collateral without judicial process
or to reply, attach or levy upon the Collateral without notice or
hearing.
ARTICLE 10
TERM AND TERMINATION
10.1 TERM AND TERMINATION. The term of this Agreement shall end on
the Termination Date unless sooner terminated in accordance with the terms
hereof.
ARTICLE 11
AMENDMENTS; WAIVERS; SUCCESSORS
11.1 AMENDMENTS AND WAIVERS
No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
Lender.
ARTICLE 12
[INTENTIONALLY DELETED]
ARTICLE 13
MISCELLANEOUS
13.1 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Lender to
exercise any right, remedy, or option under this Agreement or any present or
future supplement thereto, or in any other agreement between Borrower and
Lender, or delay by Lender in exercising the same, will operate as a waiver
thereof. No waiver by Lender will be effective unless it is in writing, and then
only to the extent specifically stated.
13.2 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any Loan Document or any instrument or agreement
required hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or any instrument
or agreement required hereunder.
21
13.3 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED
THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE
EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN
ARTICLE 9 OF THE UCC) OF THE STATE OF ILLINOIS, AND PROVIDED FURTHER
THAT ANY TERM HEREOF DEFINED BY REFERENCE TO THE MERGER AGREEMENT
SHALL BE INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF
DELAWARE.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF
THE STATE OF ILLINOIS OR OF THE UNITED STATES OF AMERICA LOCATED IN
XXXX COUNTY, ILLINOIS.
13.4 WAIVER OF JURY TRIAL. BORROWER AND LENDER EACH IRREVOCABLY WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS,
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY.
13.5 NOTICES. Except as otherwise provided herein, all notices,
demands and requests that any party is required or elects to give to any other
shall be in writing, or by a telecommunications device capable of creating a
written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by overnight mail and
courier service, (b) four (4) days after it shall have been mailed by United
States mail, first class, certified or registered, with postage prepaid, or (c)
in the case of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified at the address
set forth on the signature pages hereto or to such other address as each party
may designate for itself by like notice. Failure or delay in delivering copies
of any notice, demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies shall not
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
13.6 BINDING EFFECT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto; PROVIDED, HOWEVER, that no
interest herein may be assigned by either party without the prior written
consent of the other. The rights and benefits of Lender hereunder shall inure to
any party acquiring any interest in the Obligations or any part thereof;
provided, however, that no assignment may be made by Lender except in accordance
with the immediately preceding sentence.
22
13.7 INDEMNITY OF LENDER BY BORROWER. Borrower agrees to defend,
indemnify and hold Lender and each of its officers, directors, employees,
counsel, representatives, agents and attorneys-in-fact (each, an "INDEMNIFIED
PERSON") harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including Attorney Costs) of any kind or nature whatsoever which
may at any time be imposed on, incurred by or asserted against any such Person
in any way relating to or arising out of this Agreement or any document (other
than the Merger Agreement) contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising out of this Agreement,
any other Loan Document, or the Loans or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto but excluding any
matter relating to the Merger Agreement which shall be covered by the terms
thereof (all the foregoing, collectively, the "INDEMNIFIED LIABILITIES");
PROVIDED, that Borrower shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified Liabilities to the extent resulting from the
willful misconduct, bad faith or gross negligence of such Indemnified Person.
The agreements in this Section shall survive payment of all other Obligations
and termination of this Agreement.
13.8 FINAL AGREEMENT. This Agreement and the other Loan Documents are
intended by Borrower and Lender to be the final, complete, and exclusive
expression of the agreement between them with respect to matters covered hereby.
This Agreement and the other Loan Documents supersede any and all prior oral or
written agreements relating to the subject matter hereof. No modification,
rescission, waiver, release, or amendment of any provision of this Agreement or
any other Loan Document shall be made, except by a written agreement signed by
Borrower and Lender.
13.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same document.
13.10 CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
13.11 CONFLICTS WITH OTHER LOAN DOCUMENTS. Unless otherwise expressly
provided in this Agreement (or in another Loan Document by specific reference to
the applicable provision contained in this Agreement), if any provision
contained in this Agreement conflicts with any provision of any other Loan
Document, the provision contained in this Agreement shall govern and control.
23
IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
BORROWER:
DATA RETURN CORPORATION
/s/ Xxxxxx Xxxxxx
-----------------------
By: Xxxxxx Xxxxxx
Title: Senior Vice President and
Chief Financial Officer
Notice Address:
000 Xxxx Xxx Xxxxxxx Xxxx.
Xxxxx 000
Xxxxxx, Xxxxx 00000
Telecopy: 000-000-0000
Attention: General Counsel
with the copy (which shall not constitute notice) to:
Xxxxx Xxxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxx
24
LENDER:
DIVINE, INC.
/s/ Xxxx X. Xxxxxxxx
--------------------
By: Xxxx X. Xxxxxxxx
Title: Senior Vice President & General Counsel
Notice Address:
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Chief Financial Officer and
General Counsel
with the copy (which shall not constitute notice) to:
Xxxx, Xxxx & Xxxxx LLC
00 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Telecopy: 000-000-0000
Attention: D. Xxxx XxXxxxxx
25
ANNEX A
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have the following
respective meanings (unless otherwise defined therein), and all section
references in the following definitions shall refer to sections of the
Agreement:
"ACCOUNT" has the meaning given such term in the UCC.
"ADDITIONAL AMOUNT" means $3,000,000.
"AGREEMENT" means the
Credit Agreement to which this Annex A is
attached, as from time to time amended, restated, supplemented or otherwise
modified.
"APPLICABLE RATE" means ten percent (10%) per annum.
"AVAILABLE AMOUNT" means (i) the Commitment less (ii) the sum of (1)
the principal amount of all Loans made pursuant to Section 1.2 (regardless of
whether such Loans or portions thereof remain outstanding), and (2)(a) from the
Closing Date to but excluding November 15, 2001, $5,500,000, (ii) from November
15, 2001 to but excluding December 15, 2001, $2,750,000, and (iii) from December
15, 2001 to and including the Stated Termination Date, $0. The Available Amount
shall not be reduced by any accrued and unpaid interest on any Loans. In no
event shall the Available Amount exceed the Maximum Amount.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11
U.S.C.Section. 101 ET SEQ.).
"BONUS PAYMENT" has the meaning given such term in Section 7.15(c) of
this Agreement.
"BORROWING" means a borrowing hereunder consisting of a Loan or Loans
made or to be made on the same day by Lender to Borrower.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or a day
on which banks in Chicago, Illinois are required or permitted to be closed.
"CAPITAL EXPENDITURE" means, with respect to any Person, all
expenditures by such Person which should be capitalized on the books and records
of such Person in accordance with GAAP and, without duplication, the amount of
Capitalized Lease Obligations incurred by such Person.
"CAPITALIZED LEASE OBLIGATIONS" of any Person means all rental
obligations which, under generally accepted accounting principles, are or will
be required to be capitalized on the books and records of such Person, in each
case, taken at the amount thereof accounted for as indebtedness in accordance
with such principles.
A-1
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, limited or unlimited liability company units, participations or other
equivalents (however designated, whether voting or nonvoting) in equity of such
Person, whether outstanding on the Closing Date or issued thereafter, including,
without limitation, preferred and common stock, limited liability company
interests and partnership interests.
"CASH ON HAND" means cash and Cash Equivalents.
"CASH EQUIVALENTS" means, as to any Person, (i) securities issued or
directly and fully guaranteed or insured by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six
months from the date of acquisition, (ii) Dollar denominated time deposits and
certificates of deposit of any commercial Lender having, or which is the
principal banking subsidiary of a bank holding company having, a long-term
unsecured debt rating of at least "A" or the equivalent thereof from S&P or "A2"
or the equivalent thereof from Xxxxx'x with maturities of not more than six
months from the date of acquisition by such Person, (iii) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any Lender meeting the
qualifications specified in clause (ii) above, (iv) commercial paper issued by
any Person incorporated in the United States rated at least A1 or the equivalent
thereof by S&P or at least P-1 or the equivalent thereof by Xxxxx'x and in each
case maturing not more than six months after the date of acquisition by such
Person, (v) other Dollar denominated securities issued by any Person
incorporated in the United States rated at least "A" or the equivalent by S&P or
at least "A-3" or the equivalent by Xxxxx'x and in each case either (x) maturing
not more than 90 days after the date of acquisition by such Person or (y) which
are subject to a repricing arrangement (such as a Dutch auction) not more than
90 days after the date of acquisition by such Person which such Person believes
in good faith will permit such Person to sell such security at par in connection
with such repricing mechanism and (vi) investments in money market funds
substantially all of whose assets are comprised of securities of the types
described in clauses (i) through (iv) above.
"CHANGE OF CONTROL" shall mean, other than pursuant to the transaction
contemplated by the Merger Agreement between the Borrower and Lender, (i) any
"person" or "group" (as such terms are used for purposes of Section 13(d) and
14(d) of the Securities Exchange Act as in effect on the Closing Date, whether
or not applicable) (A) is or becomes the "beneficial owner," directly or
indirectly, of more than 50% of the total voting power in the aggregate of all
classes of Capital Stock of the Borrower then outstanding normally entitled to
vote in the elections of directors, or (B) have obtained the power (whether or
not exercised) to elect a majority of the Borrower's Board of Directors, or (ii)
the current Directors of the Borrower cease to consist of a majority of the
Board of Directors of the Borrower..
"CLOSING DATE" means the date of this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means collectively the Collateral defined in the Security
Agreement.
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"COMMITMENT" means $9,800,000; provided, however, that the Commitment
may be increased in accordance with Section 1.1.
"COMPANY DISCLOSURE SCHEDULES" means the Company Disclosure Schedule
attached to the Merger Agreement.
"CONSOLIDATED NET INCOME" means, for any period, the net income of
Borrower and its Subsidiaries for such period determined on a consolidated basis
in accordance with GAAP PLUS, to the extent included in the determination of
such net income, any non-cash expenses and charges of Borrower and its
Subsidiaries for such period PLUS, to the extent included in the determination
of such net income, any Bonus Payment, MINUS, to the extent not included in such
determination of net income, any cash payments made during such period by
Borrower and its Subsidiaries in respect of non-cash expenses and charges of
Borrower and its Subsidiaries for such period or any other period.
"CONVERSION" has the meaning specified in SECTION 3.6.
"CONVERSION DATE" has the meaning specified in SECTION 3.6.
"DEFAULT" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured, waived, or otherwise
remedied during such time) constitute an Event of Default.
"DESIGNATED ACCOUNT" means the bank account of Borrower described on
SCHEDULE 1.2 and any account that replaces such bank account in accordance with
SECTION 1.2(c).
"DOLLAR" and "$" means dollars in the lawful currency of the United
States. Unless otherwise specified, all payments under the Agreements shall be
made in Dollars.
"EVENT OF DEFAULT" has the meaning specified in SECTION 9.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"EXCHANGE RATIO" has the meaning given such term in the Merger
Agreement.
"EXPENSE" means, with respect to any Person, during any period, the
gross expenses of such Person for such period, as determined in accordance with
GAAP, LESS, to the extent included in such determination of gross expense, any
non-cash expenses and charges of such Person for such period PLUS, to the extent
not included in such determination of gross expenses, any cash payments made
during such period by such Person in respect of any non-cash expenses and
charges of such Person for such period or any other period.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"FISCAL YEAR" means Borrower's fiscal year for financial accounting
purposes.
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"FUNDING DATE" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and practices
set forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
Closing Date.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"INDEBTEDNESS" with respect to any Person means, as of the date of
determination thereof, (a) all of such Person's indebtedness for borrowed money,
(b) all indebtedness of such Person or any other Person secured by any Lien with
respect to any property or asset owned or held by such Person, regardless
whether the indebtedness secured thereby shall have been assumed by such Person
or such Person has become liable for the payment thereof, (c) all obligations or
liabilities created or arising under any capital lease of real or personal
property, or conditional sale or other title retention agreement with respect to
property used and/or acquired by such Person to the extent such obligations and
liabilities are required to be capitalized in accordance with GAAP, even though
the rights and remedies of the lessor, seller and/or lender thereunder are
limited to repossession of such property, (d) all unfunded pension fund
obligations and liabilities, (e) all obligations of such Person in respect of
the deferred purchase price of property or services, (f) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (g) all
obligations in respect of letters of credit, whether or not drawn, issued for
the account of such Person, (h) all guarantees by such Person, or any
undertaking by such Person to be liable for, the debts or obligations of any
other Person, and (i) all obligations, contingent or otherwise, of such Person
in respect of banker's acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which 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 provide that such Person is not liable therefor).
"INTEREST RATE" means the interest rates, including the Default Rate,
set forth in SECTION 2.1.
"LENDER" means divine, inc.
"LENDER'S LIENS" means the Liens in the Collateral granted to Lender,
pursuant to this Agreement and the other Loan Documents.
"LIEN" means: (a) any interest in property securing an obligation for
borrowed money owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including a security interest,
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charge, claim, or lien arising from a mortgage, deed of trust, encumbrance,
pledge, hypothecation, assignment, deposit arrangement, agreement, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes; (b) to the extent not included under CLAUSE (a), any
reservation, exception, encroachment, easement, right of way, covenant,
condition, restriction, lease or other title exception or encumbrance affecting
property; and (c) any contingent or other agreement to provide any of the
foregoing.
"LOAN DOCUMENTS" means this Agreement, the Note, the Security
Agreement, and any other agreements, instruments, and documents heretofore, now
or hereafter evidencing, securing, guaranteeing or otherwise relating to the
Obligations, the Collateral, or any other aspect of the transactions
contemplated by this Agreement. For the avoidance of doubt, the Merger Agreement
is not a Loan Document.
"LOANS" has the meaning specified in SECTION 1.2.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, (a) a
material adverse change in, or a material adverse effect upon the Liens granted
to Lender in the Collateral; or (b) a material adverse effect upon the legality,
validity, binding effect or enforceability against such Person or any material
Restricted Subsidiary of such Person of any Loan Document to which it is a
party; or (c) any material adverse effect on or change in the business,
operations, liabilities (contingent or otherwise), results of operations or
financial performance or condition (financial or otherwise) of such Person or
any of its Subsidiaries, taken as a whole; provided, however, that in no event
shall any of the following constitute a Material Adverse Effect: (i) any change
in or effect on the business of such Person or any of its Subsidiaries caused
by, relating to or resulting from, directly or indirectly, the transactions
contemplated by the Merger Agreement or the announcement thereof, known business
conditions (including the state of such person's liquidity and capital
resources) or matters contained in the disclosure schedules to the Merger
Agreement or to this Agreement; (ii) any change in the market price or trading
volume of the shares of such person's Common Stock on or after the date of this
Agreement; or (iii) any adverse change, effect or occurrence attributable to the
United States or European or other foreign economies as a whole, the industries
in which Borrower competes or such other foreign economies where Borrower has
operations or sales.
"MAXIMUM AMOUNT" means (i) from the Closing Date to but excluding
November 15, 2001, $4,300,000, (ii) from November 15, 2001 to but excluding
December 15, 2001, $7,050,000, (iii) from December 15, 2001 to but excluding the
Stated Termination Date, $9,800,000; provided, however, that the Maximum Amount
may be increased in accordance with Section 1.1.
"MERGER AGREEMENT" means Agreement and Plan of Merger of even date
herewith by and among Borrower, Lender and a wholly-owed subsidiary of Lender,
as it may be from time to time amended, restated, supplemented or otherwise
modified.
"NOTE" has the meaning specified in SECTION 1.2.
A-5
"NOTICE OF BORROWING" has the meaning specified in SECTION 1.2(b).
"OBLIGATIONS" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by Borrower or any
of its Subsidiaries to Lender, arising under or pursuant to this Agreement or
any of the other Loan Documents, whether or not evidenced by any note, or other
instrument or document, whether direct or indirect, absolute or contingent, due
or to become due, primary or secondary, as principal or guarantor, and including
all principal, interest, charges, expenses, fees, attorneys' fees, filing fees
and any other sums chargeable to Borrower or any of its Subsidiaries hereunder
or under any of the other Loan Documents.
"OTHER TAXES" means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Loan Documents.
"PERMITTED INDEBTEDNESS" means the Indebtedness described in clauses
(i) through (vi) of Sections 7.10.
"PERMITTED LIENS" (i) the Liens set forth on SCHEDULE A-1, (ii)
inchoate Liens for taxes, assessments or governmental charges or levies not yet
due and payable or Liens for taxes, assessments or governmental charges or
levies being contested in good faith and by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP; (iii) Liens in
respect of property or assets of the Borrower or any of its Subsidiaries imposed
by law, which were incurred in the ordinary course of business and do not secure
Indebtedness for borrowed money, such as carriers', warehousemen's,
materialmen's and mechanics' liens and other similar Liens arising in the
ordinary course of business, and (A) which do not in the aggregate materially
detract from the value of the Borrower's or such Subsidiary's property or assets
or materially impair the use thereof in the operation of the business of the
Borrower or such Subsidiary or (B) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or assets subject to any such Lien; (iv) with
respect to any real property, such exceptions to title (A) which, individually
or in the aggregate, do not materially detract from the value of such real
property or (B) are otherwise acceptable to the Lender in its reasonable
discretion, (v) Liens in favor or Lender, (vi) easements, rights-of-way,
restrictions, encroachments and other similar charges or encumbrances, and minor
title deficiencies, in each case not securing Indebtedness and not materially
interfering with the conduct of the business of the Borrower or any of its
Subsidiaries; (vii) statutory and common law landlords' liens under leases to
which the Borrower or any of its Subsidiaries is a party, (viii) Liens
encumbering property of the Borrower or any of its Subsidiaries incurred in the
ordinary course of business (A) in connection with worker's compensation,
unemployment insurance, or other forms of governmental insurance or benefits, or
to secure performance of bids, tenders, statutory obligations, leases, and
contracts (other than for Indebtedness) entered into in the ordinary course of
business of the Borrower or such Subsidiary or (B) to secure obligations on
surety, performance or appeal bonds, (ix) judgement Liens (A) in existence less
than 30 days after the entry thereof, (B) with respect to which execution has
been stayed, (C) with respect to which the appropriate insurance carrier has
agreed in writing that there is coverage by insurance, or (D) which do not
exceed, in the aggregate with
A-6
all other judgement Liens outstanding for the Borrower and its Subsidiaries,
$250,000, (x) operating leases entered into in the ordinary course of business,
and (xi) banker's Liens in respect of deposit accounts.
"PERSON" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"PREPAYMENT EVENT" means the occurrence of any of the following:
(a) the sale, lease, transfer, or other disposition, of any
assets or properties of the Borrower or any of its Subsidiaries other
than a sale, lease, transfer or disposition in accordance with Section
7.11(a), (b) or (c);
(b) any casualty or other damage to, or any taking under the
power of eminent domain or condemnation or similar proceeding of, any
property or assets of the Borrower or any of its Subsidiaries;
(c) the creation, incurrence, assumption, or sufference, of any
Indebtedness by the Borrower or any of its Subsidiaries other than
Permitted Indebtedness;
(d) except for the transaction contemplated by the Merger
Agreement between the Borrower and Lender, the issuance or sale by the
Borrower or any of its Subsidiaries of any Capital Stock of the
Borrower or any Subsidiary of the Borrower;
(e) except for the transaction contemplated by the Merger
Agreement between the Borrower and the Lender, the sale, merger or
consolidation of the Borrower or any of its Subsidiaries to or with
any other Person; and
(f) the occurrence of any event which results in a Change of
Control.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation of a Governmental Authority or order or
determination of an arbitrator or of a Governmental Authority specifically
applicable to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"RESPONSIBLE OFFICER" means the chief executive officer, president,
chief financial officer or treasurer of Borrower and the Chairman of the Board
of Directors of Borrower, or any other officer or Person having substantially
the same authority and responsibility of the foregoing Persons.
"RESTRICTED PAYMENT" means (i) the payment of any dividend or other
distribution (whether in cash, securities or other property) with respect to any
Capital Stock in the Borrower or any Subsidiary of Borrower (other than a
Subsidiary wholly-owned by Borrower or a Restricted Subsidiary), or any payment
(whether in cash, securities or other property), including
A-7
any sinking fund or similar deposit, on account of, or the purchase, redemption,
retirement, acquisition, modification, cancellation, or termination of, any
Capital Stock in the Borrower or any Subsidiary of Borrower (other than a
Subsidiary wholly-owned by Borrower or a Restricted Subsidiary) or any option,
warrant or other right to acquire any such Capital Stock in Borrower or any
Subsidiary of Borrower (other than a Subsidiary wholly-owned by Borrower or a
Restricted Subsidiary), (ii) any payments (including, without limitation,
payments of consulting or management fees or other similar fees, payments of
salaries, bonuses and other compensation, debt repayments and expense
reimbursements) to officers, members, managers, employees, or Affiliates of
Borrower or any Subsidiary of Borrower, and (iii) any payment, redemption,
repurchase, defeasance or other acquisition or retirement for value, of
Indebtedness of the Borrower or any Subsidiary.
"RESTRICTED SUBSIDIARIES" means each Subsidiary that is a party to the
Security Agreement and has granted a Lien in favor of Lender in all of such
Subsidiary's assets and property.
"REVENUE" means, with respect to any Person, during any period,
without duplication, the gross sales and revenues of such Person for such
period, as determined in accordance with GAAP.
"SECURITY AGREEMENT" means, collectively, the Security Agreement of
even date herewith among Borrower, the Restricted Subsidiaries and Lender and
the Intellectual Property Security Agreement of even date herewith among
Borrower, the Restricted Subsidiaries and Lender, as the same may be amended,
modified and supplemented from time to time.
"STATED TERMINATION DATE" means the date which is three months after
the Termination Date (as defined in SECTION 8.2(a) of the Merger Agreement) if
the Merger Agreement is terminated pursuant thereto; provided, however, that if,
on or prior to March 1, 2002, the Merger Agreement is terminated pursuant to
Section 8.3(c) thereto, the Stated Terminated Date shall be that date that is
180 days after such date of termination.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which more than fifty percent (50%) of the voting stock, partnership or
limited liability company interests or other equity interests, is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of Borrower.
"TAXES" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings in the nature of taxes, and all liabilities
with respect thereto, excluding, in the case of Lender, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by Lender's net
income in the jurisdiction (whether federal, state or local and including any
political subdivision thereof) under which Lender is organized or maintains an
office.
"TERMINATION DATE" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date this Agreement is terminated pursuant to SECTION
3.2, (iii) the date which is 12
A-8
months after the date of closing of the merger contemplated by the Merger
Agreement, and (iv) the date that is three months after the date the Merger
Agreement is terminated pursuant to Sections 8.2(c), 8.4(a) or 8.4(b) thereto,
but in no event later than the Stated Termination Date.
"UCC" means the Uniform Commercial Code, as in effect from time to
time, of the State of Illinois or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection or priority of security interests.
"UNRESTRICTED SUBSIDIARY" means each Subsidiary of Borrower that is
not a Restricted Subsidiary.
ACCOUNTING TERMS. Any accounting term used in the Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations in the Agreement
shall be computed, unless otherwise specifically provided therein, in accordance
with GAAP consistently applied.
INTERPRETIVE PROVISIONS. (a) The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words
refer to the Agreement as a whole and not to any particular provision of the
Agreement; and Subsection, Section, Schedule and Exhibit references are to the
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including,"
the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including."
(iv) The word "or" is not exclusive.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including the Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments, restatements, supplements and other
modifications thereto, but only to the extent such amendments, restatements,
supplements and other modifications are not prohibited by the terms of any Loan
Document, and (ii) references to any statute or regulation are to be construed
as including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(e) The captions and headings of the Agreement and other Loan
Documents are for convenience of reference only and shall not affect the
interpretation of the Agreement.
(f) The Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations,
A-9
tests and measurements are cumulative and shall each be performed in accordance
with their terms.
(g) The Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to Lender and Borrower, and
are the products of all parties. Accordingly, they shall not be construed
against Lender merely because of Lender's involvement in their preparation.
A-10
EXHIBIT A
FORM OF NOTE
NOTE
$12,800,000 ___________, 2001
FOR VALUE RECEIVED, DATA RETURN CORPORATION, a Texas corporation (the
"BORROWER") promises to pay to the order of DIVINE, INC., a
Delaware corporation
("LENDER"), on the Termination Date (as defined in the
Credit Agreement referred
to below), TWELVE MILLION EIGHT HUNDRED THOUSAND and No/100 DOLLARS
($12,800,000) or such lesser amount as may then constitute the unpaid aggregate
principal amount of the Loans made by Lender.
Borrower also promises to pay interest on the unpaid principal amount
hereof until paid at the rates, at the times and from the dates which shall be
determined in accordance with the provisions of that certain
Credit Agreement,
dated as of the date hereof, among Borrower and Lender (as the same now exists
and may hereafter be amended, restated, supplemented or otherwise modified, the
"
CREDIT AGREEMENT"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth in the
Credit Agreement.
Reference is hereby made to the
Credit Agreement for a more complete
statement of the terms and conditions under which the Loans evidenced hereby
have been made and are to be repaid.
This Note and the Loans evidenced hereby are subject to conversion
into Common Shares of Borrower, at the time, and upon the occurrence of certain
events, and upon the conditions, described in Section 3.6 of the Credit
Agreement.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at the
offices of Lender located at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000
or at such other place as shall be designated in writing for such purposes in
accordance with the terms of the Credit Agreement. All amounts due under this
Note shall be payable without defense, setoff or counterclaim and, without
limiting the scope of the waiver, nothing contained in either the Merger
Agreement or any agreement related thereto shall entitle either of Borrower to
any right of defense, setoff or counterclaim with respect to Borrower's
Obligations.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day or as otherwise provided in the Credit Agreement and such extension
of time shall be included in the computation of the payment of interest on this
Note.
This Note is subject to prepayment at the option of Borrower as
provided in the Credit Agreement.
This Note is secured by certain assets pursuant to the Security
Agreement, and the other Loan Documents.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO THE
CONFLICTS OF LAW PROVISIONS) OF THE STATE OF ILLINOIS.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Credit Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of Borrower,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.
Borrower hereby waives presentment, protest, demand and notice of
every kind (except as provided in the Credit Agreement) and, to the full extent
permitted by law, the right to plea any statute of limitations as a defense to
any demand hereunder.
No interest herein may be assigned by Borrower, without the prior
written consent of Lender. The rights and benefits of Lender hereunder shall
inure to any party acquiring any interest in the Obligations or any part
thereof.
[Signature Page Follows]
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered by their duly authorized officers, as of the day and year and the
place first above written.
DATA RETURN CORPORATION
By: ----------------------------
Name: ----------------------------
Title: ----------------------------
EXHIBIT B
NOTICE OF BORROWING
Date: ______________, 2001
To: divine, inc. as Lender under the Credit Agreement dated as of November 1,
2001 (as extended, renewed, amended or restated from time to time, the
"CREDIT AGREEMENT") by and between divine, inc. and Data Return Corporation
Ladies and Gentlemen:
The undersigned (the "BORROWER") refers to the Credit Agreement, the
terms defined therein being used herein as therein defined, and hereby gives you
notice irrevocably of the Borrowing specified below:
1. The Business Day of the proposed Borrowing is _____________, 20___.
2. The aggregate amount of the proposed Borrowing is $______________.
The undersigned hereby certify that the conditions precedent set forth
in Section 8.2 of the Credit Agreement will be, both immediately prior to and
immediately following the proposed Borrowing, satisfied with respect to the
proposed Borrowing.
DATA RETURN CORPORATION
/
-------------------------------------
By: ----------------------------
Title: ----------------------------
SCHEDULE 1.2
Account Information:
[Omitted.]
SCHEDULE A-1 - LIENS
[Omitted.]
