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EXHIBIT 10.10
SECURED CREDIT AGREEMENT
This SECURED CREDIT AGREEMENT (as amended, supplemented or modified from
time to time, this "Agreement") is dated as of October 30, 1998 and is between
PROXICOM, INC. and NATIONSBANK, N.A.
The parties hereto agree as follows:
ARTICLE I
GENERAL DEFINITIONS
SECTION 1.1. DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Acquisition" means any transaction, or any series of related
transactions, consummated after the date of this Agreement, by which the
Borrower or any of its Consolidated Subsidiaries (a) acquires a division or
similar business unit, any going business or all or substantially all of the
assets of any Person, whether through the purchase of assets, merger or
otherwise, (b) directly or indirectly acquires control of at least a majority
(in number of votes) of the securities of a corporation which have ordinary
voting power for the election of directors, or (c) directly or indirectly
acquires control of a majority ownership interest in any Person that is not a
corporation. The terms "Acquire", "Acquired" and "Acquiring" used as verbs
shall have correlative meanings.
"Acquisition Agreement" means (i) the agreement between an Acquisition
Company and a Target or the seller or sellers of a Target, pursuant to which
such Acquisition Company agrees to Acquire a division or similar business unit
from a Target, all or substantially all of the assets, stock or other ownership
interests of a Target, or merge with a Target; (ii) the documents described in
any such agreement and related in any manner to the Acquisition of any Acquired
assets, including, but not limited to, the buy/sell agreement, historical
financial statements of the Target and a detailed description of the Acquired
assets, and every other document, instrument or certificate executed in
connection with such agreement; together with (iii) all amendments to any of the
foregoing.
"Acquisition Analysis" means, with respect to any proposed Acquisition,
an analysis, prepared by the chief financial officer of the Borrower, of the
structure and financial impact of the Acquisition in question, including the
Target's audited financial statements (or other financial statements reasonably
acceptable to the Bank) for the last two fiscal years and a summary of the
material tax and accounting consequences related to the Acquisition, which
analysis shall be in form and substance reasonably satisfactory to the Bank.
"Acquisition Company" means the Borrower or any Consolidated Subsidiary
of the Borrower Acquiring a Target.
"Affiliate" means (i) any Person that directly, or indirectly through one
or more intermediaries, controls the Borrower (a "Controlling Person") or (ii)
any Person (other than the Borrower or a Subsidiary) which is controlled by or
is under common control with a Controlling Person, and if such Person is an
individual, any member of the immediate family (including parent, spouse,
children and siblings) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust. As used herein,
the term "control" means possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Bank" means NationsBank, N.A., a national banking association, and its
successors and assigns.
"Borrower" means Proxicom, Inc., a Delaware corporation, and its
successors.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Virginia are authorized by law to close.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral" means all of the property which is subject or is to be
subject to the Liens granted by the Collateral Documents.
"Collateral Documents" means the Security Agreements, the Pledge
Agreements, the Mortgages, the Intellectual Property Assignments, and all
supplemental assignments, mortgages, deeds of trust and other documents
delivered or to be delivered pursuant thereto.
"Commitment" has the meaning set forth in Section 2.1.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower in
its consolidated financial statements as of such date.
"Debt" means, collectively, and includes, with respect to any specified
Person (a) indebtedness or liability for borrowed money whether by loan, the
issuance and sale of debt securities or the sale of assets to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such assets from such Person, or for the deferred purchase price of property or
services; (b) obligations of a lessee under a capital lease; (c) obligations to
reimburse the issuer of letters of credit or acceptances; (d) Debt of others
guaranteed by such Person; (e) obligations under interest rate swap, cap or
collar agreements or other similar agreements or arrangements designed to
protect that Person against fluctuations in interest rates; (f) obligations
under any foreign exchange contract, currency swap agreements or other similar
agreements or arrangements designed to protect that Person against fluctuations
in currency values; (g) obligations secured by any Lien on property owned by the
specified Person, whether or not the obligations have been assumed, provided
that the amount of such Debt shall be limited to the lesser of (i) the
outstanding principal balance of such Debt or (ii) the fair market value of the
property of such Person securing such Debt; and (h) the purchaser's obligations
under seller-take-back transactions.
"Default" means any condition or event which constitutes an Event of
Default or which, with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Effective Date" means the date on which this Agreement becomes effective
in accordance with Section 9.8.
"Event of Default" has the meaning set forth in Section 8.1.
"GAAP" means generally accepted accounting principles in the United
States.
"Guaranty" means any guaranty of payment executed and delivered by a
Guarantor in accordance with the requirements of Article III and substantially
in the form of Exhibit B hereto, as such guaranty may be amended, modified or
supplemented from time to time, and "Guaranties" means all of said documents.
"Guarantor" means each Subsidiary of the Borrower which becomes a
Guarantor pursuant to the requirements of Section 6.17, and "Guarantors" means
all of such Persons.
"Intellectual Property Assignment" means any security agreement between
the Borrower or a Guarantor and the Bank, substantially in the form of Exhibit C
hereto, as such agreement may be amended, supplemented or modified from time to
time, and "Intellectual Property Assignments" means all of said agreements.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower or a Guarantor shall be deemed
to own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Loan" means a loan made by the Bank to the Borrower pursuant to this
Agreement, and "Loans" means all of such Loans.
"Mortgage" means any mortgage or deed of trust executed and delivered by
the Borrower or a Guarantor in accordance with the requirements of Article III,
as such mortgage or deed of trust may be amended, modified or supplemented from
time to time, and "Mortgages" means all of said documents.
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"Net Income" means, for any Person for any period, the consolidated net
income (or deficit) of such Person and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP; provided that there
shall be excluded from the calculation thereof any extraordinary, unusual or
non-recurring gains or losses during such period in accordance with GAAP.
"Note" has the meaning set forth in Section 2.4(a).
"Permitted Liens" means the Liens referred to in clauses (i) through
(vii) of Section 6.8.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Pledge Agreement" means any pledge agreement executed and delivered by
the Borrower or a Guarantor in accordance with the requirements of Article III
and substantially in the form of Exhibit D hereto, as such agreement may be
amended, modified or supplemented from time to time, and "Pledge Agreements"
means all of said documents.
"Pro Forma Financials" means, with respect to any Acquisition,
consolidated and consolidating balance sheets and income statements of the
Acquisition Company and Target, as of the closing of the applicable Acquisition,
setting forth projections for the three year period following the Acquisition
after giving effect to the closing of the related Acquisition Agreement, and
setting forth in reasonable detail the assumptions underlying such projections,
which assumptions are acceptable to the Bank in its sole discretion.
"Revolving Credit Period" means the period from and including the
Effective Date to but excluding the later of (i) August 31, 2000 or (ii) the
date to which the Revolving Credit Period has been extended pursuant to Section
2.3.
"Security Agreement" means any security agreement between the Borrower or
a Guarantor and the Bank, substantially in the form of Exhibit E hereto, as such
Agreement may be amended, supplemented or modified from time to time, and
"Security Agreements" means all of said agreements.
"Subsidiary" means any corporation or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Borrower.
"Target" means any Person, a majority of the stock (or comparable
ownership interests) of which (directly or indirectly), a division or similar
business unit of which, or all or substantially all of the assets and business
of any of the foregoing of which, are to be Acquired by an Acquisition Company,
pursuant to the terms of an Acquisition Agreement.
"Tax" means any fee (including license, filing and registration fee), tax
(including any income, gross receipts, franchise, sales, use or real, personal,
tangible or intangible property tax), interest equalization or stamp tax,
assessment, levy, impost, duty, charge or withholding of any kind or nature
whatsoever, imposed or assessed by any governmental body, agency or official,
together with any penalty, fine or interest thereon.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated Subsidiary
all of the shares of capital stock or other ownership interests of which (except
directors' qualifying shares) are at the time directly or indirectly owned by
the Borrower.
SECTION 1.2. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with GAAP as
in effect from time to time, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants) with the most
recent audited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Bank.
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ARTICLE II
THE CREDIT
SECTION 2.1. COMMITMENT TO MAKE LOANS. The Bank agrees, on the terms and
conditions set forth in this Agreement, to make loans ("Loans") to the Borrower
from time to time during the Revolving Credit Period in an aggregate principal
amount not to exceed $10,000,000.00 at any one time outstanding (such amount, as
it may be reduced from time to time pursuant to Section 2.6, being herein
referred to as the "Commitment"). Subject to the foregoing, the Borrower may
borrow under this Section 2.1, prepay and reborrow.
SECTION 2.2. METHOD OF BORROWING. The Borrower shall give the Bank notice
not later than 11:00 a.m. (Eastern Time) on the date of each proposed borrowing
hereunder, specifying the date on which it proposes to borrow (which shall be a
Business Day), the amount of the Loan to be borrowed and the Borrower's deposit
account at the Bank into which such amount is to be deposited. Not later than
2:00 p.m. (Eastern Time) on the date so specified, the Bank shall (unless it
determines that any applicable condition specified in this Agreement has not
been satisfied) deposit the amount of the requested loan, in immediately
available funds in McLean, Virginia, to the Borrower in said deposit account.
SECTION 2.3. EXTENSION OF REVOLVING CREDIT PERIOD. The Revolving Credit
Period shall be automatically extended on August 31, 2000 to but excluding
August 31, 2001 unless the Bank shall have given notice not later than ninety
(90) days prior to the date on which the Revolving Credit Period would otherwise
terminate that the Bank has elected not to extend the Revolving Credit Period.
The ability of the Bank not to extend the Revolving Credit Period shall be
unconditional and within its sole discretion, notwithstanding that no Event of
Default exists under this Agreement or the Note and regardless of the adequacy
of the Collateral for the Borrower's performance of its obligations hereunder
and thereunder.
SECTION 2.4. NOTE.
(a) The Loans shall be evidenced by, and repayable with interest in
accordance with, a single note substantially in the form of Exhibit A hereto and
appropriately completed (the "Note").
(b) The Bank shall record, and prior to any transfer of the Note shall
endorse on the schedule forming a part thereof appropriate notations to
evidence, the date and amount of each Loan and the date and amount of each
payment of principal made by the Borrower with respect thereto; Provided,
however, that any failure of the Bank to make such a notation or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of the Note. The Borrower hereby
irrevocably authorizes the Bank so to endorse the Note and to attach to and
make part of the Note a continuation of any such schedule as and when required.
SECTION 2.5. COMMITMENT FEE. During the Revolving Credit Period, the
Borrower shall pay to the Bank a commitment fee at the rate of one-quarter of
one percent (0.25%) per annum on the unused portion of the Commitment. Such
commitment fee shall accrue from and including the Effective Date to but
excluding the last day of the Revolving Credit Period and shall be payable
quarterly in arrears on January 15, April 15, July 15 and October 15 of each
year, commencing January 15, 1999, and on the last day of the Revolving Credit
Period.
SECTION 2.6. OPTIONAL TERMINATION OR PERMANENT REDUCTION OF THE
COMMITMENT. The Borrower may, upon at least three Business Days' notice to the
Bank, (i) terminate at any time, or (ii) permanently reduce, not more frequently
than once per year, by an aggregate amount of $1,000,000 or more, the unused
portion of the Commitment. If the Commitment is terminated in its entirety, any
accrued commitment fee shall be payable on the effective date of such
termination.
SECTION 2.7. OPTIONAL PREPAYMENTS. The Borrower may prepay the Loans in
whole or in part at any time, by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment.
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ARTICLE III
CONDITIONS TO LOANS
The obligation of the Bank to make each Loan is subject to the
satisfaction of the following conditions:
SECTION 3.1. ALL LOANS. In the case of each Loan:
(i) receipt by the Bank of notice of borrowing as required by
Section 2.2;
(ii) the fact that no Default has occurred and is continuing or
would result from such Loan;
(iii) the fact that the representations and warranties of the
Borrower contained in this Agreement and of the Guarantors contained in
the Guaranties shall be true on and as of the date of such Loan (or, with
respect to representations and warranties that speak as of an earlier
date, as of such earlier date); and
(iv) the fact that such Loan will be guaranteed under the
Guaranties and secured by the Collateral Documents.
Each borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date thereof that the facts hereinabove set forth in clauses
(ii), (iii) and (iv) of this Section are true as of such date.
SECTION 3.2. FIRST LOAN. In the case of the first Loan:
(i) receipt by the Bank of a duly executed Note, dated on or
before the date of such Loan, complying with the provisions of Section
2.4;
(ii) all legal matters incident to this Agreement, the Note, the
Collateral Documents and the Guaranties and the transactions
contemplated hereby and thereby shall be reasonably satisfactory to Xxxx
& Valentine, L.L.P., counsel for the Bank;
(iii) receipt by the Bank of (A) a copy of the Borrower's
certificate of incorporation, as amended, certified by the appropriate
office of the State of Delaware; (B) a certificate of such office, dated
as of a recent date, as to the good standing and charter documents of
the Borrower on file; and (C) a certificate of the Secretary or an
Assistant Secretary of the Borrower dated the date of such Loan and
certifying (1) that the certificate of incorporation of the Borrower has
not been amended since the date of the last amendment thereto indicated
on the certificate furnished pursuant to clause (B) above, (2) as to the
absence of dissolution or liquidation proceedings by or against the
Borrower, (3) that attached thereto is a true and complete copy of the
by-laws of the Borrower as in effect on the date of such certification,
(4) that attached thereto is a true, correct and complete copy of
resolutions adopted by the board of directors of the Borrower
authorizing the execution, delivery and performance of this Agreement,
the Notes and the Collateral Documents to which the Borrower is a party
and that said resolutions have not been amended and are in full force
and effect on the date of such certificate and (5) as to the incumbency
and specimen signatures of each officer of the Borrower executing this
Agreement, the Note and any Collateral Documents to which it is a party,
or any other document delivered in connection herewith or therewith;
(iv) receipt by the Bank of duly executed copies of the
Guaranties of all Guarantors in existence on the date of said Loan;
(v) receipt by the Bank of executed copies of the Collateral
Documents of the Borrower, and all Guarantors in existence on the date
of said Loan, granting to the Bank a first Lien in all the Collateral
described therein;
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(vi) receipt by the Bank of certificates representing the shares
of any stock pledged under the Pledge Agreements in effect on the date
of said Loan, duly indorsed in blank or accompanied by stock powers duly
executed in blank;
(vii) receipt by the Bank of an opinion of Xxxxxxxxxxx Xxxxxxx,
general counsel for the Borrower, substantially in the form of Exhibit H
hereto and covering such additional matters relating to the transactions
contemplated hereby as the Bank may reasonably request;
(viii) (A) on or prior to the date of such Loan, each document
(including, without limitation, each Uniform Commercial Code financing
statement but excluding filings with the U.S. Copyright Office and the
U.S. Patent and Trademark Office) required by law or reasonably
requested by the Bank to be filed, registered or recorded in order to
create in favor of the Bank a perfected first priority security interest
in the Collateral shall have been properly filed, registered or recorded
in each jurisdiction in which the filing, registration or recordation
thereof is so required or requested; (B) within 10 days after the date
of such Loan, each filing with the U.S. Copyright Office and the U.S.
Patent and Trademark Office required by law or reasonably requested by
the Bank to be filed, registered or recorded with respect to the
Collateral shall have been properly filed, registered or recorded in the
appropriate office; and (C) the Bank shall have received, within 30 days
after the date of such Loan, an acknowledgment copy, or other evidence
satisfactory to it, of each of the foregoing filings, registrations and
recordations;
(ix) receipt by the Bank of (A) certified copies of Requests for
Information or Copies (Form UCC-11), or equivalent reports, listing the
financing statements referred to in clause (viii) above and all other
effective financing statements that name the Borrower (under its present
names and any previous names) as debtors or sellers and that are filed
in the jurisdictions referred to in clause (viii) above, together with
copies of such other financing statements (none of which shall cover the
Collateral, except as otherwise disclosed in writing to, and accepted
by, the Bank); and (B) completed Lien search requests for all filings in
the U.S. Copyright Office and the U.S. Patent and Trademark Office;
(x) receipt by the Bank of a landlord's waiver with respect to the
Borrower's lease of its office space in Reston, Virginia and of evidence
of the completion of all recordings and filings of the Collateral
Documents as may be necessary or, in the opinion of the Bank, desirable
to perfect the Liens created by the Collateral Documents;
(xi) receipt by the Bank of evidence of the insurance required by
the Collateral Documents;
(xii) receipt by the Bank of a certificate signed by the
President of the Borrower, to the effect set forth in clauses (ii) and
(iii) of Section 3.1; and
(xiii) receipt by the Bank of all documents it may reasonably
request relating to the existence of the Borrower and the Guarantors,
and their respective authority to execute, deliver and perform, as
applicable, this Agreement, the Note, the Guaranties, and the Collateral
Documents and the validity of this Agreement, the Note, the Guaranties
and the Collateral Documents and any other matters relevant hereto or
thereto, all in form and substance reasonably satisfactory to the Bank.
The failure of any action to be taken, or the failure of any documentation to be
delivered to the Bank, required by this Section to be taken or delivered after
the making of the related Loan, shall constitute a breach of covenant under this
Agreement.
SECTION 3.3. ACQUISITIONS. In the case of each Loan made to finance an
Acquisition (and in addition to the requirements of Section 3.1):
(i) The Acquisition Company shall deliver to the Bank a
certificate, dated as of the date of disbursement of said Loan, pursuant
to which the
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Acquisition Company shall warrant and represent to the Bank that (A) to
the best of its knowledge, each of the representations and warranties
made by the sellers of the Target to the Acquisition Company under such
Acquisition Agreement is true and correct; (B) except as specifically
disclosed in writing to the Bank prior to the date of said Loan, no
broker or finder brought about the making or closing of such Loan made
with respect to such Acquisition Agreement, and neither the Acquisition
Company nor the Bank has any obligation to any Person in respect of any
finder's or brokerage fees in connection with such Loan; (C) the parties
to the Acquisition Agreement have complied with all requirements of every
bulk sales or transfer law that may be applicable to the sale of the
Acquired assets to the Acquisition Company, or the Acquisition Company
has obtained indemnification against any and all liability arising from
the failure to so comply; (D) the Acquisition Agreement has not been
amended except as set forth in written amendments thereto delivered to
the Bank prior to the date of said Loan, (E) the applicable Acquisition
Analysis and Pro Forma Financials remain accurate and complete in all
material respects; and (F) as of the date immediately after the
consummation of all the agreements and transactions under and pursuant to
such Acquisition Agreement, the Acquisition Company and its Subsidiaries
will not have any material amount of liabilities, contingent or
otherwise, not reflected in the Pro Forma Financials.
(ii) Termination statements or releases shall have been filed with
respect to any financing statements or Liens covering all or any portion
of the Acquired assets, except for financing statements perfecting Liens
permitted by this Agreement.
(iii) The Bank shall have received evidence satisfactory to it
that, after giving effect to the Loan, neither the Borrower nor any
Subsidiary of the Borrower is or will be rendered insolvent within the
meaning of Section 548 of the Federal Bankruptcy Code and any applicable
state fraudulent conveyance laws. This condition may be satisfied by
delivering to the Bank a Solvency Certificate, in substantially the form
of Exhibit F attached to this Agreement, dated as of the disbursement
date of the Loan.
(iv) The Acquisition shall comply with Section 6.17.
All documents and opinions referred to in this Article shall be in form and
substance reasonably satisfactory to the Bank and its counsel.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.1. CORPORATE EXISTENCE AND POWER. The Borrower is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. The Borrower and each Subsidiary is duly qualified as
a foreign corporation, licensed and in good standing in each jurisdiction where
qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers and in which the
failure to so qualify or be licensed, as the case may be, in the aggregate,
could have a material adverse effect on the business, financial position,
results of operations, properties or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.2. CORPORATE AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION. The
execution, delivery and performance by the Borrower of this Agreement, the Notes
and the Collateral Documents to which it is a party are within its corporate
power, have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute (with or without the giving of
notice or lapse of time or both) a default under, any provision of applicable
law or of the articles of incorporation or by-laws of the Borrower or of any
material agreement, or any judgment, injunction, order, decree or other
instrument binding upon or affecting the Borrower or result in the creation or
imposition of any Lien (other than the Lien of the Collateral Documents) on any
of its assets.
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SECTION 4.3. BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of the Borrower and the Note, when executed and delivered in
accordance with this Agreement, will constitute the valid and binding obligation
of the Borrower, in each case enforceable against the Borrower in accordance
with its terms, except as (i) the enforceability hereof and thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
SECTION 4.4. FINANCIAL INFORMATION.
(a) The consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of December 31, 1997 and the related consolidated statements of
income for the fiscal year then ended, reported on by PWC, LLC, a copy of which
has been delivered to the Bank, fairly present, in conformity with GAAP, the
consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such date and their results of operations and changes in
financial position for such fiscal year. As of the date of such financial
statements, the Borrower and its Consolidated Subsidiaries did not have any
material contingent obligation, contingent liability or liability for Taxes,
long-term lease or unusual forward or long-term commitment, which is not
reflected in any of such financial statements or notes thereto.
(b) The unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of June 30, 1998 and the related unaudited
consolidated statements of income for the six months then ended, a
copy of which has been delivered to the Bank, fairly present, in conformity with
GAAP applied on a basis consistent with the financial statements referred to in
clause (a) of this Section, the consolidated financial position of the Borrower
and its Consolidated Subsidiaries as of such date and their results of
operations and changes in financial position for such six-month period (subject
to normal year-end adjustments).
(c) Since June 30, 1998, there has been no material adverse change in the
business, financial position, results of operations or prospects of the Borrower
and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.5. LITIGATION. Except as set forth on Schedule 4.5 hereto,
there is no action, suit or proceeding pending against, or to the knowledge of
the Borrower threatened against or affecting, the Borrower or any of its
Consolidated Subsidiaries before any court, governmental body, agency or
official in which there is a reasonable possibility of an adverse decision which
could materially adversely affect the business, financial position or results of
operations of the Borrower and its Consolidated Subsidiaries or which in any
manner draws into question the validity of this Agreement, the Note, the
Guaranties or any Collateral Document and there is no basis known to the
Borrower for any such action, suit or proceeding.
SECTION 4.6. MARKETABLE TITLE. The Borrower has good and marketable title
to all its properties and assets subject to no Lien, except Permitted Liens.
SECTION 4.7. FILINGS. Except for the 10-day grace period set forth in
Section 3.2(viii)(B), all actions by or in respect of, and all filing with, any
governmental body, agency or official required in connection with the execution,
delivery and performance of this Agreement, the Note and the Collateral
Documents, or necessary for the validity or enforceability thereof or for the
protection or perfection of the rights and interests of the Bank thereunder,
will, prior to the date of delivery thereof, have been duly taken or made, as
the case may be, and will at all times thereafter remain in full force and
effect.
SECTION 4.8. REGULATION U. The Borrower does not own any "margin stock"
as such term is defined in Regulation U. The proceeds of the Loans will be used
by the Borrower only for the purposes set forth in Section 6.14 hereof. None of
the Loan proceeds will be used, directly or indirectly, for the purpose of (i)
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry
margin stock or for any other purchase which might constitute the Loans a
"purpose credit" within the meaning of Regulation U or Regulation X of the Board
of Governors of the Federal Reserve System; or (ii) acquiring any equity
security of a class which is registered pursuant to Section 12 of the Securities
Exchange Act of 1934.
SECTION 4.9. TAXES. United States Federal income tax returns of the
Borrower and its Subsidiaries have been examined and closed through the fiscal
year ended December 31, 1997. The
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Borrower and its Subsidiaries have filed all United States Federal income tax
returns and all other material tax returns which are required to be filed by
them and have paid (or made adequate provision for the payment of) all Taxes due
pursuant to such returns or pursuant to any assessment received by the Borrower
or any Subsidiary, except where the payment of such Tax is being disputed in
good faith and adequate reserves have been established in accordance with GAAP.
The charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of Taxes or other governmental charges are, in the
opinion of the Borrower, adequate.
SECTION 4.10. SUBSIDIARIES. Each of the Borrower's corporate Subsidiaries
is a corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, and has all corporate powers and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
SECTION 4.11. ENVIRONMENTAL COMPLIANCE. (a) The Borrower (including for
purposes of this Section 4.11, any former or current Affiliate or Subsidiary of
the Borrower) is in material compliance with all applicable laws, rules,
regulations and orders of all governmental bodies, agencies and officials
relating to environmental matters and the release, handling and disposal of
hazardous, toxic and polluting substances.
(b) The Borrower has obtained and is in material compliance with all
required Governmental permits, certificates, licenses, approvals and other
authorizations, and has filed all notifications relating to air emissions,
effluent discharges and solid and hazardous waste storage, treatment and
disposal required in connection with its ownership or use of real estate or the
operation of its business.
(c) There are no outstanding notices of violation, orders, claims,
citations, complaints, penalty assessments, suits or other proceedings,
administrative, criminal or civil, at law or in equity, pending against the
Borrower or its properties that would have a material adverse effect on the
Borrower's business, financial position, results of operations or prospects or
on any facility or the operation of any facility, and no investigation or review
is pending or to the knowledge of the Borrower threatened against the Borrower
by any governmental body, agency or official with respect to any alleged
violation of any governmental environmental law, regulation, ordinance,
standard, permit or order in connection with its ownership or use of any real
estate or the conduct of its business.
(d) All toxic or hazardous substances generated by the Borrower have been
transported in material compliance with law to storage, treatment and disposal
facilities permitted or authorized to handle such substances by the governmental
agency with jurisdiction thereof. No notification of release of a hazardous
substance pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendment and to
Reauthorization Act of 1986 ("CERCLA"), the Federal Clean Water Act or the Clean
Air Act of any other environmental law, regulation or ordinance has been filed
as to any property now or formerly occupied or owned by the Borrower.
(e) No hazardous, toxic or polluting substances have been released,
discharged or disposed of on property now or formerly owned or occupied by the
Borrower that would have a material adverse effect on the Borrower's business,
financial position, results of operations or prospects or any facility or
operation of such facility.
(f) The Borrower has not received from any environmental regulatory
entity any requests for information, notices of claim, demand letters or other
notification that in connection with the ownership or use of any real estate or
the conduct of the Borrower's business it is or may be potentially responsible
with respect to any investigation or clean-up hazardous substances or toxic
waste or pollutants at any sites.
(g) To the best knowledge of the Borrower, no waste generated by the
Borrower has ever been sent, nor is waste generated by the Borrower being sent,
directly or indirectly, to any site listed or formerly proposed for listing on
the National Priority List promulgated pursuant to CERCLA or to any site listed
on any state list of hazardous substances sites requiring investigation or clean
up.
SECTION 4.12. YEAR 2000 COMPLIANCE. The Borrower (i) has begun analyzing
the operations of the Borrower and its Subsidiaries and Affiliates that could be
adversely affected by the failure to become Year 2000 compliant (that is, that
computer applications, imbedded microchips and other systems will be able to
perform date-sensitive functions prior to and after December 31, 1999); and (ii)
has developed a plan for becoming Year 2000 compliant in a timely manner, the
implementation of which is on schedule in all material respects. The Borrower
reasonably believes that
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it will become Year 2000 compliant for its operations and those of its
Subsidiaries and Affiliates on a timely basis except to the extent that a
failure to do so could not reasonably be expected to have a material adverse
effect upon the financial condition of the Borrower. The Borrower reasonably
believes any suppliers and vendors that are material to the operations of the
Borrower or its Subsidiaries and Affiliates will be Year 2000 compliant for
their own computer applications except to the extent that a failure to do so
could not reasonably be expected to have a material adverse effect upon the
financial condition of the Borrower.
SECTION 4.13. DISCLOSURE. None of this Agreement, any Collateral
Document, any schedule or exhibit thereto or document, certificate, report,
statement or other information furnished to the Bank in connection herewith or
therewith or with the consummation of the transactions contemplated hereby or
thereby contains any material misstatement of fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading. There is no fact materially adversely affecting the assets,
business, financial position, results of operations or prospects of the Borrower
which has not been set forth in a footnote included in the financial statements
referred to in Section 4.4(a) or in an exhibit or schedule thereto.
ARTICLE V
FINANCIAL COVENANTS
The Borrower agrees that so long as the Bank is committed to make Loans
hereunder or any amount payable hereunder or under the Note or any Collateral
Document remains unpaid:
SECTION 5.1. CERTAIN DEFINITIONS. As used in this Article V and hereafter
in this Agreement, the following terms have the following meanings:
"Capital Expenditures" shall mean, for any Person for any period,
expenditures made by such Person or any of its Subsidiaries to acquire or
construct fixed assets, plant and equipment (including renewals, improvements
and replacements, but excluding repairs) during such period, computed in
accordance with GAAP.
"Capital Leases" means all leases that should be capitalized on the
balance sheet of the lessee prepared in accordance with GAAP.
"Current Maturities of Long -Term Debt means, as of any date, the
aggregate amount of principal payments (including, without limitation, the
portion of any obligation under Capital Leases allocable to amortization in
accordance with GAAP) in respect of Long-Term Debt which are, in accordance with
GAAP, properly classified as of such date as current liabilities.
"Current Taxes" means, for any period, Taxes paid in such period (rather
than merely accrued or deferred.)
"Dispose" shall mean sell, assign, transfer or otherwise dispose of any
assets (whether now owned or hereafter acquired) by the Borrower or any of its
Subsidiaries to any other Person, excluding any sale, assignment, transfer or
other disposition of any assets sold or disposed of in the ordinary course of
business and on ordinary business terms. The term "Disposed" shall have a
correlative meaning.
"EBITDA" shall mean, for any period, the sum for the Borrower and its
Consolidated Subsidiaries (determined without duplication in accordance with
GAAP) of (a) Net Income for such period, plus (b) taxes, Interest Expense,
depreciation and amortization for such period; provided that (1) if the Borrower
shall have Disposed of a business (or any part thereof) during such period,
EBITDA shall be computed as if such business (or part thereof) had been Disposed
of prior to the first day of such period, and (2) if the Borrower shall have
Acquired a business (or any part thereof) during such period, and if the
Borrower has provided the Bank with audited financial statements (prepared in
accordance with GAAP by an accounting firm acceptable to the Bank) of such
business, or (if such statements are unavailable) other due diligence as to the
financial position of such business acceptable to the Bank, for that portion of
such period preceding the Acquisition, EBITDA shall be computed as if such
business (or part thereof) had been owned by the Borrower for the whole of such
period. If a Target has been generating a negative EBITDA, the adjusted amount
shall be deducted for purposes of calculating compliance with Section 5.4.
"EBITDAR" shall mean, for any period, the sum for the Borrower and its
Consolidated Subsidiaries (determined without duplication in accordance with
GAAP) of (a) Net Income for such
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period, plus (b) taxes, Interest Expense, depreciation, amortization and Lease
Expense, for such period.
"Fixed Charge Coverage Ratio" means, at any time, the ratio of (a)
EBITDAR, minus unfinanced Capital Expenditures and dividends paid to
shareholders, of the Borrower and its Consolidated Subsidiaries, to (b) Current
Maturities of Long-Term Debt, plus Interest Expense, Current Taxes and Lease
Expense, of the Borrower and its Consolidated Subsidiaries.
"Funded Debt" means at any date, with respect to any Person, all senior
debt, letters of credit, stockholder debt, subordinated debt, seller notes and
capitalized leases at such date.
"Funded Debt Ratio" means, at any time, the ratio of (a) Funded Debt of
the Borrower and its Consolidated Subsidiaries, to (b) EBITDA of the Borrower
and its Consolidated Subsidiaries.
"Interest Expense" means, for any period, the sum for the Borrower and
its Consolidated Subsidiaries (determined without duplication in accordance with
GAAP) of the following: (a) all interest in respect of Funded Debt (including
the interest component of any payments in respect of obligations of a lessee
under capital leases) accrued or capitalized during such period plus (b) the net
amount payable (or minus the net amount receivable) under interest rate
protection agreements during such period.
"Lease Expense" means for any period the aggregate lease expense of the
Borrower and its Consolidated Subsidiaries for such period (excluding any
portion of lease expense in respect of Capital Leases).
"Long-Term Debt" means as of any date, those Funded Debts scheduled to
mature more than one year from such date and which are classified properly as
long-term debt in accordance with GAAP.
"Minimum Compliance Level" means $8,000,000, adjusted upward, effective
as of December 31, 1999, and as of the end of each fiscal year thereafter, by an
amount equal to 75% of the consolidated Net Income of the Borrower and its
Consolidated Subsidiaries for such fiscal year, with each of the foregoing
increases being fully cumulative, and with no reduction being made on account of
any negative consolidated Net Income of the Borrower and its Consolidated
Subsidiaries for any fiscal quarter.
"Net Worth" means, at any date, all amounts that, in accordance with
GAAP, would be included under stockholders' equity on the consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries at such time.
SECTION 5.2. NET WORTH. As of the end of each fiscal quarter of the
Borrower, Net Worth shall not be less than the Minimum Compliance Level.
SECTION 5.3. FIXED CHARGE COVERAGE RATIO. For each 12-month period ending
on the last day of each fiscal quarter of the Borrower, a Fixed Charge Coverage
Ratio of not less than 1.20 to 1. The calculation will also include the trailing
twelve months EBITDAR of Acquired entities. For the periods ending on the last
day of each of the first, second and third quarters of 1999, annualized figures
will be used to determine the ratio. Annualization will be calculated as
follows: by multiplying first quarter 1999 figures by 4; by multiplying second
quarter 1999 figures by 2; and by dividing third quarter 1999 figures by 3 and
multiplying the result by 4.
SECTION 5.4. FUNDED DEBT RATIO. For each 12-month period ending on the
last day of each fiscal quarter of the Borrower, a Funded Debt Ratio of not
greater than 3.0 to 1. The calculation will also include the trailing twelve
months EBITDA of Acquired entities. For the periods ending on the last day of
each of the first, second and third quarters of 1999, annualized figures will be
used to determine the ratio. Annualization will be calculated as set forth in
Section 5.3.
ARTICLE VI
OTHER COVENANTS
The Borrower agrees that so long as the Bank is committed to make Loans
hereunder or any amount payable hereunder or under the Notes or any Collateral
Document remains unpaid:
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SECTION 6.1. INFORMATION. The Borrower will deliver or cause to be
delivered to the Bank:
(i) as soon as available and in any event within 120 days after
the end of each fiscal year of the Borrower, a consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries as of the end of such
fiscal year and the related statements of income and cash flow for such
fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail and accompanied by
an opinion thereon by PWC, LLC or other independent public accountants
satisfactory to the Bank, which opinion shall state that such
consolidated financial statements present fairly the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as
of the date of such financial statements and the results of their
operations for the period covered by such financial statements in
conformity with GAAP applied on a consistent basis (except for changes in
the application of which such accountants concur) and shall not contain
any "going concern" or like qualification or exception or qualifications
arising out of the scope of the audit;
(ii) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries and the related consolidated statements of
income and cash flow for such quarter and for the portion of the
Borrower's fiscal year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the corresponding quarter
and the corresponding portion of the Borrower's previous fiscal year, all
certified (subject to normal year-end audit adjustments) as complete and
correct by the chief financial officer or chief accounting officer of the
Borrower;
(iii) simultaneously with the delivery of each set of financial
statements referred to in clauses (i) and (ii) above, a certificate of
the chief financial officer or chief accounting officer of the Borrower,
substantially in the form of Exhibit G hereto and appropriately
completed;
(iv) forthwith upon the occurrence of any Default, a certificate
of the chief financial officer or chief accounting officer of the
Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(v) as soon as reasonably practicable after obtaining knowledge of
the commencement of, or of a material threat of the commencement of, an
action, suit or proceeding against the Borrower or any of its
Subsidiaries which could materially adversely affect the business,
properties, financial position, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole, or
which in any manner questions the validity of this Agreement, the Note,
the Guaranties, any Collateral Document or any of the other transactions
contemplated hereby or thereby, the nature of such pending or threatened
action, suit or proceeding and such additional information as may be
reasonably requested by the Bank;
(vi) promptly upon transmission thereof, copies of all press
releases and other statements made available generally by the Borrower or
its Subsidiaries to the public concerning material developments in the
results of operations, financial condition, business or prospects of the
Borrower or its Subsidiaries;
(vii) promptly upon receipt thereof, copies of each report
submitted to the Borrower or any of its Consolidated Subsidiaries by
independent public accountants in connection with any annual, interim or
special audit made by them of the books of the Borrower or any of its
Consolidated Subsidiaries including, without limitation, each report
submitted to the Borrower or any of its Consolidated Subsidiaries
concerning its accounting practices and systems and any final comment
letter submitted by such accountants to management in connection with the
annual audit of the Borrower and its Consolidated Subsidiaries; and
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(viii) as soon as available, and in any event within 60 days after
the beginning of each fiscal year, a copy of the Borrower's formally
adopted annual budget or other form of Borrower's consolidated financial
projections (but in any event to include, without limitation, pro forma
income and cash flow) for the following fiscal year;
(ix) as soon as available, and in any event within 45 days after
the end of each fiscal quarter, a schedule of all outstanding accounts
receivable of the Borrower and its Subsidiaries showing the initial
invoice date of each such receivable and the age of such receivables in
intervals of 30 days; and
(x) from time to time such additional information regarding the
financial position, results of operations or business of the Borrower or
any of its Subsidiaries as the Bank may reasonably request.
SECTION 6.2. PAYMENT OF OBLIGATIONS. The Borrower will, and will cause
each of its Subsidiaries to, pay and discharge, as the same shall become due and
payable, (i) all their respective obligations and liabilities, including all
claims or demands of materialmen, mechanics, carriers, warehousemen, landlords
and other like persons which, in any such case, if unpaid, might by law give
rise to a Lien upon any of their properties or assets, and (ii) all lawful
Taxes, assessments and charges or levies made upon their properties or assets,
by any governmental body, agency or official except where any of the items in
clause (i) or (ii) of this Section 6.2 may be diligently contested in good faith
by appropriate proceedings, and the Borrower or such Subsidiary shall have set
aside on its books, if required under GAAP, appropriate reserves for the accrual
of any such items.
SECTION 6.3. MAINTENANCE OF PROPERTY; INSURANCE.
(a) The Borrower will keep, and will cause each of its Subsidiaries to
keep, all property useful and necessary in their respective businesses in good
working order and condition, subject to ordinary wear and tear and obsolescence;
will maintain (either in the name of the Borrower or in such Subsidiary's own
name or in the name of the Bank if required by the Security Agreement) with
financially sound and reputable insurance companies, insurance on all their
respective properties in at least such amounts and against at least such risks
(and with such risk retentions) as are usually insured against by companies
engaged in the same or a similar business; and will furnish to the Bank upon
request full information as to the insurance carried.
(b) In addition to the general requirements of subparagraph (a), the
Borrower will keep the Collateral in such condition and will maintain in effect
such insurance on the Collateral as is required by the terms of the Collateral
Documents.
SECTION 6.4. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Except as
otherwise permitted by Section 6.9, the Borrower will continue, and will cause
each of its Subsidiaries to continue, to engage in business of the same general
type as now conducted by the Borrower or such Subsidiary, and will preserve,
renew and keep in full force and effect, and will cause each of its Subsidiaries
to preserve, renew and keep in full force and effect, their respective corporate
existence and their respective rights, privileges and franchises necessary or
desirable in the normal conduct of business.
SECTION 6.5. COMPLIANCE WITH LAWS. The Borrower will remain in material
compliance, and will cause each of its Subsidiaries to remain in material
compliance, with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities (including, without limitation, ERISA
and the rules and regulations thereunder) except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings.
SECTION 6.6. ACCOUNTING; INSPECTION OF PROPERTY, BOOKS AND RECORDS. The
Borrower will keep, and will cause each of its Subsidiaries to keep, proper
books of record and account in which full, true and correct entries in
conformity with GAAP shall be made of all dealings and transactions in relation
to their respective businesses and activities, will maintain, and will cause
each of its Subsidiaries to maintain, their respective fiscal reporting periods
on the present basis and will permit, and will cause each of its Subsidiaries to
permit, representatives of the Bank to visit and inspect any of their respective
properties during the Borrower's normal business hours, to examine and make
abstracts from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their officers, employees and
independent public accountants, all at such reasonable times and as often as may
reasonably be desired.
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SECTION 6.7. DEBT. The Borrower and its Consolidated Subsidiaries will
not incur or at any time be liable with respect to any Funded Debt in excess of
$2,500,000 in the aggregate at any time, except Debt outstanding under this
Agreement and the Note.
SECTION 6.8. RESTRICTION ON LIENS. The Borrower will not, and will not
permit any of its Subsidiaries to at any time create, assume or suffer to exist
any Lien on any property or asset now owned or hereafter acquired by the
Borrower or any of its Subsidiaries or assign or subordinate any present or
future right to receive assets except:
(i) any Liens created by the Collateral Documents;
(ii) any purchase money security interest on any capital asset of
the Borrower or any of its Subsidiaries if such purchase money security
interest attaches to such capital asset concurrently with the acquisition
thereof and if the Debt secured by such purchase money security interest
does not exceed 80% of the lesser of the cost or fair market value as of
the time of acquisition of the asset covered thereby to the Borrower or
such Subsidiary; provided, that no such purchase money security interest
shall extend to or cover any property or asset of the Borrower or such
Subsidiary other than the related asset;
(iii) Liens securing Taxes, assessments or governmental charges or
levies or the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons; provided (A) with respect
to Liens securing state and local Taxes, such Taxes are not yet payable,
(B) with respect to Liens securing claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and the like, such Liens are
unfiled and no other action has been taken to enforce the same, or (C)
with respect to Taxes, assessments or governmental charges or levies or
claims or demands secured by such Liens, payment of which is not at the
time required by Section 6.2;
(iv) Liens not securing Debt which are incurred in the ordinary
course of business in connection with workmen's compensation,
unemployment insurance, social security and other like laws;
(v) any Lien arising pursuant to any order of attachment,
distraint or similar legal process arising in connection with court
proceedings so long as the execution or other enforcement thereof is
effectively stayed and the claims secured thereby are being contested in
good faith by appropriate proceedings;
(vi) Liens existing on Acquired assets or the assets of Acquired
entities at the time of Acquisition, and
(vii) Liens in existence on the Effective Date and set forth on
Schedule 6.8(vii) hereto.
SECTION 6.9. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. Except for
Acquisitions, the Borrower will not (i) consolidate or merge with or into any
other Person or (ii) sell, lease or otherwise transfer all or any substantial
part of its assets to any other Person. The Borrower will not permit any of its
Subsidiaries to consolidate or merge with or into, or transfer all or any
substantial part of its assets to, any Person other than the Borrower or a
Wholly-Owned Consolidated Subsidiary.
SECTION 6.10. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, pay any
funds to or for the account of, make any investment in, engage in any
transaction with or effect any transaction in connection with any joint
enterprise or other joint arrangement with, any Affiliate of the Borrower or any
of its Subsidiaries, except that the Borrower or any Subsidiary of the Borrower
may make payment or provide compensation (including without limitation the
establishment of customary employee benefit plans) for personal services
rendered by employees and other Persons on terms fair and reasonable in light of
the circumstances under which such services were or are to be rendered.
Nothing in this Section 6.10 shall prohibit the Borrower or any
Subsidiary of the Borrower from making sales to or purchases from any Affiliate
and, in connection therewith, extending credit or making payments, or from
making payments for services rendered by any Affiliate, if such
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sales or purchases are made or such services are rendered in the ordinary
course of business and on terms and conditions at least as favorable to the
Borrower or such Subsidiary as the terms and conditions which would apply in a
similar transaction with a Person not an Affiliate, or prohibit the Borrower or
any Subsidiary of the Borrower from participating in, or effecting any
transaction in connection with, any joint enterprise or other joint arrangement
with any Affiliate if the Borrower or such Subsidiary participates in the
ordinary course of its business and on a basis no less advantageous than on the
basis on which such Affiliate participates.
SECTION 6.11. RESTRICTED PAYMENTS. The Borrower will not, and will not
permit any of its Subsidiaries to, (i) declare or pay any dividend or other
distribution on any shares of the Borrower's or such Subsidiary's capital stock
(except dividends payable solely in shares of the Borrower's or such
Subsidiary's capital stock), (ii) make any payment on account of the purchase,
redemption, retirement or acquisition of (A) any shares of the Borrower's or
such Subsidiary's capital stock (except shares acquired upon the conversion
thereof into other shares of the Borrower's or such Subsidiary's capital stock)
or (B) any option, warrant or other right to acquire shares of the Borrower's or
such Subsidiary's capital stock; provided, however, the following may be made:
(a) bona fide payments and redemptions required to be made under the Borrower's
or any of its Subsidiaries' qualified stock option plans, (b) dividends payable
to the Borrower from its Consolidated Subsidiaries, and (c) required payments on
bona fide Debts between the Borrower and a Consolidated Subsidiary or between
Consolidated Subsidiaries.
SECTION 6.12. INVESTMENTS. The Borrower will not, and will not permit
any of its Subsidiaries to, make or acquire any investment in any Person
(whether by share purchase, capital contribution, loan, time deposit or
otherwise) other than (i) in direct obligations of the United States or any
agency thereof, or obligations guaranteed by the United States or any agency
thereof, (ii) in commercial paper rated in the highest grade by a nationally
recognized credit rating agency, (iii) in time deposits with, including
certificates of deposit issued by, any office located in the United States of
any bank or trust company which is organized under the laws of the United States
or any state thereof and has capital, surplus and undivided profits aggregating
at least $200,000,000, provided in each case that such investment matures within
one year from the date of acquisition thereof by the Borrower, (iv) loans and
advances to employees for travel in the ordinary course of business and in an
amount consistent with past practice, (v) Subsidiaries other than Consolidated
Subsidiaries, provided that such investment may not exceed $1,000,000 in the
aggregate at any time, (vi) Acquisitions, (vii) Wholly-Owned Subsidiaries
existing on the date hereof, (viii) deposits required to be maintained with
utility companies, (ix) required security deposits, (x) trade accounts created
in the ordinary course of the Borrower's or any of its Subsidiaries' business,
and (xi) insured money market funds in prudent amounts.
SECTION 6.13. TRANSACTIONS WITH OTHER PERSONS. The Borrower will not,
and will not permit any of its Subsidiaries to, enter into any agreement with
any Person whereby any of them shall agree to any restriction on the Borrower's
right to amend or waive any of the provisions of this Agreement.
SECTION 6.14. USE OF PROCEEDS. The proceeds of the Loans will be used
by the Borrower to support the working capital needs of the Borrower and
Guarantors, and to make Acquisitions. None of the proceeds of the Loans will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any "margin stock" within the meaning of
Regulation U.
SECTION 6.15. INDEPENDENCE OF COVENANTS. All covenants contained
herein shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that such action
or condition would be permitted by an exception to, or otherwise be within the
limitations of another covenant shall not avoid the occurrence of a Default if
such action is taken or condition exists.
SECTION 6.16. RESTRICTIONS WITH RESPECT TO SUBSIDIARIES.
(a) The Borrower will not, and will not permit any of its Subsidiaries
to, sell, assign, transfer or otherwise dispose of (except to the Borrower or to
a Wholly-Owned Subsidiary and except to directors for the purpose of qualifying
them as directors, if required, and except pursuant to presently outstanding
warrants, options or other rights) any shares of stock of any class of such
Subsidiary unless all of the capital stock and the entire Debt of such
Subsidiary at the time owing to the Borrower and to all other Subsidiaries shall
be sold, assigned, transferred or otherwise disposed of at the same time if
permissible under Section 6.11.
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(b) The Borrower will not permit any of its Subsidiaries (i) to issue or
sell any shares of preferred stock except to the Borrower or to a Wholly-Owned
Subsidiary or (ii) to issue or sell any shares of its common stock (except to
directors for the purpose of qualifying them as directors, if required) unless,
after such issue or sale, the Borrower and its Subsidiaries, taken together,
shall retain the same proportionate interest in such Subsidiary.
(c) Notwithstanding subsections (a) and (b) of this Section, the Borrower
and its Subsidiaries may sell, assign, or otherwise dispose of stock pursuant to
the Borrower's or any of its Subsidiaries' qualified stock option plans.
SECTION 6.17. RESTRICTIONS WITH RESPECT TO ACQUISITIONS.
(a) Each Acquisition must comply with all of the following conditions on
or before the date of Acquisition.
(i) An executed letter of intent with respect to such Acquisition,
a pro forma certificate of the Borrower described in Section 6.1(iii)
and supporting Pro Forma Financials, and an Acquisition Analysis shall be
delivered to the Bank at least 20 days prior to the Acquisition. Said
documentation shall reflect that, after giving effect to such
Acquisition, (a) the Borrower and its Subsidiaries will be in compliance
with all of the financial covenants set forth in Article V of this
Agreement, and (a) the Net Income (before any non-cash write-offs or one
time acquisition costs associated with purchase accounting) of the Target
for the 12-month period ending with the last day of the quarter in which
the Acquisition occurred, is not less than $1. True and substantially
complete copies of the applicable Acquisition Agreement shall be
delivered to the Bank at least 10 days prior to the Acquisition.
(ii) The Target shall be in substantially the same or a related
line of business as the Borrower or any of its Subsidiaries.
(iii) The Acquisition shall not have been preceded by an
unsolicited tender offer for the capital stock or other ownership
interests of the Target that was not recommended or approved by the
Target's board of directors or similar governing body.
(iv) The Acquisition Company shall have given the Bank at least 5
Business Days' prior written notice of the closing.
(v) A majority (in number of votes) of the shares of capital stock
or other ownership interests of the Target shall, as a result of said
Acquisition, be directly or indirectly owned by the Acquisition Company.
In the case of a merger, the Acquisition Company must be the surviving
entity.
(vi) No Default shall have occurred and be continuing.
(b) Each domestic Consolidated Subsidiary that is in existence on, formed
or Acquired on or after, the Effective Date, shall become a Guarantor, and the
Borrower shall cause each such Subsidiary to satisfy each of the following
conditions forthwith upon such Subsidiary's formation or Acquisition, except as
otherwise set forth below:
(i) Such Subsidiary shall execute and deliver to the Bank a
Guaranty, and, within 30 days after the Acquisition or formation, a
Pledge Agreement, Security Agreement and an Intellectual Property
Assignment.
(ii) All legal matters incident to such Subsidiary's becoming a
Guarantor shall be reasonably satisfactory to counsel for the Bank, and
the Subsidiary shall execute and deliver to the Bank, within 30 days
after the Acquisition or formation, such additional documents and
certificates relating to the Loans as the Bank reasonably may request.
(iii) The Bank shall have received, within 30 days after the
Acquisition or formation, an opinion of counsel to such Subsidiary,
addressed to the Bank, covering such matters as the Bank may reasonably
request, in form and substance reasonably satisfactory to the Bank.
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(iv) Financing statements in form and substance reasonably
satisfactory to the Bank shall have been properly filed in each office
where necessary to perfect the security interest of the Bank in the
Collateral of such Subsidiary, and, within 30 days after the Acquisition
or formation, (A) termination statements shall have been filed with
respect to any other financing statements covering all or any portion of
such Collateral (except with respect to Liens permitted by this
Agreement), (B) all Taxes and fees with respect to such recording and
filing shall have been paid by such Subsidiary or the Borrower and (C)
the Bank shall have received such Lien searches or reports as it shall
reasonably require confirming that the foregoing filings and recordings
have been completed.
(v) Such Subsidiary shall have delivered the following documents
to the Bank, each of which shall be certified as of the date on which
such Subsidiary is to become a Guarantor, by its secretary or
representative performing similar functions: (1) copies of evidence of
all actions taken by such Subsidiary to authorize the execution and
delivery of the applicable Loan Documents; (2) copies of the articles or
certificate of incorporation and bylaws (or the organizational documents
for a Guarantor that is not a corporation) of such Subsidiary; and (3) a
certificate as to the incumbency and signatures of the officers of such
Subsidiary executing the Loan Documents.
(vi) The Bank shall have received current certificates of good
standing and qualification issued by the appropriate state official of
the state of formation of such Subsidiary and in each jurisdiction in
which it is qualified to do business.
(vii) The Bank shall have received, within 30 days after the
Acquisition or formation, such information and documents the Bank may
reasonably request with respect to the Collateral of such Subsidiary.
(viii) If required by the Bank, the Bank shall have received,
within 30 days after the Acquisition or formation, a satisfactory field
examination of the Collateral and internal control systems of such
Subsidiary performed by a consultant selected by the Bank, and the
Borrower shall have reimbursed the Bank for the cost of such consultant.
(ix) All securities of such Subsidiary owned by the Acquisition
Company after the Acquisition or formation shall be subject to the Lien
of the Acquisition Company's Pledge Agreement, and the certificates
representing such securities shall be delivered to the Bank within 30
days after such Acquisition or formation.
(x) If reasonably required by the Bank, it shall have received a
landlord waiver from each landlord of such Subsidiary, which shall be in
form and substance reasonably acceptable to the Bank.
(xi) Within 30 days after the Acquisition or formation, all
intellectual property of such Subsidiary that is subject to United States
copyright, patent or trademark protection shall have been duly registered
with the Register of Copyrights or the United States Patent and Trademark
Office, as applicable, an Intellectual Property Assignment shall have
been recorded in such office, and the Bank shall have received evidence
that it has a first priority perfected Lien with respect thereto.
(c) The Borrower shall obtain the written consent of the Bank, no later
than 10 Business Days prior to (i) each Acquisition (other than a
stock-for-stock Acquisition) of over $1,000,000, whether or not Loan proceeds
are used in whole or in part, (ii) each (other than a stock-for-stock
Acquisition) Acquisition which would cause the aggregate amount of all
Acquisitions (other than stock-for-stock Acquisitions) to exceed $5,000,000,
whether or not Loan proceeds are used in whole or in part in connection with any
of said Acquisitions, and (iii) any Acquisition of a foreign entity. For all
other Acquisitions, and for any Acquisition which is entirely stock-for-stock
(other than pursuant to clause (iii) above), prior Bank consent is not required,
but prior written notice of each such Acquisition shall be given in accordance
with Section 6.17(a)(iv).
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SECTION 6.18. CHANGE IN MANAGEMENT; CONTROL. Xxxx X. Xxxxxxxxx shall not
for any reason cease to be the President and Chief Executive Officer of the
Borrower. The Borrower shall give the Bank 15 Business Days' prior written
notice of the termination or resignation of Xxxx X. Xxxxxxxxx as President and
Chief Executive Officer of the Borrower. The Borrower shall not make, engage in,
or suffer to exist any change, or any transaction which results or could result
in a change, in the Control of the Borrower or any Guarantor. As used herein,
the term "Control" of a Person means (i) ownership, control, or power to vote
30% or more of any class of voting securities of such Person, directly or
indirectly or acting through one or more other Persons; (ii) control in any
manner over the election or appointment of a majority of the directors,
trustees, managers or general partners (or individuals exercising similar
functions) of such Person; (iii) the direct or indirect power to exercise a
controlling influence over the management or policies of such Person, whether
through the ownership of voting securities, by contract, or otherwise; or (iv)
conditioning in any manner the transfer of 30% or more of any class of voting
securities of such Person upon the transfer of 30% or more of any class of
voting securities of another Person.
SECTION 6.19. YEAR 2000 COMPLIANCE. The Borrower shall promptly notify
the Bank in the event the Borrower determines that any computer application
which is material to the operations of the Borrower, its Subsidiaries, or any of
its material vendors or suppliers will not be fully Year 2000 compliant on a
timely basis, except to the extent that such failure could not reasonably be
expected to have a material adverse effect upon the financial condition of the
Borrower and its Subsidiaries, taken as a whole.
ARTICLE VII
EMPLOYEE BENEFIT PLANS
SECTION 7.1. CERTAIN DEFINITIONS. As used in this Article VII, the
following terms have the following meanings:
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414(b) or 414(c) of the Code.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of a member or members of the Controlled Group or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
"Unfunded Vested Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to the PBGC
or the Plan under Title IV of ERISA.
SECTION 7.2. COMPLIANCE WITH ERISA. Each member of the Controlled Group
has fulfilled its obligations under the minimum funding standards of ERISA and
the Code with respect to each Plan and is in compliance in all material respects
with provisions of ERISA and the Code presently applicable to each Plan. No
member of the Controlled Group has incurred any liability, or has entered into
any transaction that is likely to cause any liability to be incurred, to the
PBGC or any Plan under Title IV of ERISA. No Lien has been attached and, to the
Borrower's knowledge, no Person has threatened to attach a Lien on any property
of the Borrower as a result of the Borrower's failure to comply with ERISA.
SECTION 7.3. PROHIBITED TRANSACTIONS. The Borrower will not at any time
permit any Plan to:
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(i) engage in any "prohibited transaction", as such term is
defined in Section 4975 of the Code or in Section 406 of ERISA;
(ii) incur any "accumulated funding deficiency", as such term is
defined in Section 302 of ERISA, whether or not waived; or
(iii) be terminated in a manner which could result in the
imposition of a Lien on the property of the Borrower pursuant to Section
4068 of ERISA.
SECTION 7.4. INFORMATION. The Borrower agrees that so long as the Bank is
committed to make Loans hereunder, or the Note remains unpaid, the Borrower will
deliver or cause to be delivered to the Bank if and when any member of the
Controlled Group (i) gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA) with respect to any
Plan which might constitute grounds for a termination of such Plan under Title
IV of ERISA, or knows that the plan administrator of any Plan has given or is
required to give notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA, a
copy of such notice; or (iii) receives notice from the PBGC under Title IV of
ERISA of an intent to terminate or appoint a trustee to administer any Plan, a
copy of such notice.
ARTICLE VIII
DEFAULTS
SECTION 8.1. EVENTS OF DEFAULT. If one or more of the following events
("Events of Default") shall have occurred:
(i) the Borrower shall fail to pay, within 10 days after the due
date therefor, any principal of or interest on any Loan, any fee or any
other amount payable hereunder or under the Note;
(ii) the Borrower shall fail to observe or perform any covenant
contained in Article V or in Section 3.2, 6.7, 6.8, 6.9, 6.11, 6.12,
6.14, 6.16, 6.17 or 6.18;
(iii) the Borrower shall fail to observe or perform any covenant
or agreement contained in this Agreement (other than those covered by
clauses (i) or (ii) above) for 30 days after the earlier to occur of (A)
the date written notice thereof is given to the Borrower by the Bank, or
(B) the date notice thereof should have been given to the Bank pursuant
to Section 6.1(iv);
(iv) any representation, warranty, certification or statement made
by the Borrower in this Agreement or any Collateral Document to which it
is a party or by any Guarantor in a Guaranty or Pledge Agreement to which
it is a party or by the Borrower or a Guarantor in any certificate,
financial statement or other document delivered pursuant hereto or
thereto shall prove to have been incorrect in any material respect when
made;
(v) the Borrower, any Subsidiary of the Borrower or any Guarantor
shall fail to make any payment in respect of any Debt in excess of
$100,000 (other than the Note) when due or within any applicable grace
period, unless waived by the creditor;
(vi) any event or condition shall occur which results in the
acceleration of the maturity of any Debt in excess of $100,000 of the
Borrower, any Subsidiary of the Borrower or any Guarantor or enables (or,
with the giving of notice or lapse of time or both, would enable) the
holder of such Debt or any Person acting on such holder's behalf to
accelerate the maturity thereof;
(vii) the Borrower, any Subsidiary of the Borrower or any
Guarantor shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other
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similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession
by any such official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due,
or shall take any corporate action to authorize any of the foregoing;
(viii) an involuntary case or other proceeding shall be commenced
against the Borrower, any Subsidiary of the Borrower or any Guarantor
seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Borrower, any Subsidiary of the
Borrower or any Guarantor under the federal bankruptcy laws as now or
hereafter in effect;
(ix) any member of the Controlled Group shall fail to pay when due
an amount or amounts aggregating in excess of $100,000 which it shall
have become liable to pay to the PBGC, any Plan or any Plan trustee under
Title IV of ERISA or Section 412 of the Code; or notice of intent to
terminate a Plan or Plans having aggregate Unfunded Vested Liabilities in
excess of $100,000 (collectively, a "Material Plan") shall be provided
under Title IV of ERISA by any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Material Plan or a proceeding
shall be instituted by a fiduciary of any Material Plan against any
member of the Controlled Group to enforce Section 515 of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter; or a
condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be terminated;
(x) one or more judgments or orders for the payment of money in
excess of $500,000 (except for any judgment or order arising from the
matter disclosed in Schedule 4.5 hereof and except for any judgment or
order which has been disclosed to and approved in writing by the Bank as
an exception to this Default provision within 5 Business Days after the
rendering thereof) shall be rendered against the Borrower or any
Subsidiary of the Borrower and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days;
(xi) (A) any Collateral Document shall cease for any reason to be
in full force and effect or shall cease to be effective to grant a
perfected security interest in the Collateral with the priority stated to
be created thereby or such security interest shall cease to be in full
force and effect or shall be declared null and void, or the validity or
enforceability of such security interest or any Collateral Document shall
be contested by the Borrower, any Subsidiary of the Borrower or any
Guarantor, or the Borrower, any Subsidiary of the Borrower or any
Guarantor shall deny that it has any further liability or obligation
under a Collateral Document to which it is a party, or the Borrower, any
Subsidiary of the Borrower or any Guarantor shall fail to perform any of
its obligations under the Collateral Documents, or (B) any creditor of
the Borrower, any Subsidiary of the Borrower or any Guarantor (other than
a creditor having a purchase money security interest permitted by Section
6.8(ii) and then solely with respect to the related asset) shall obtain
possession of any of the Collateral by any means, including, without
limitation, levy, distraint, replevin or self-help, or any such creditor
shall establish or obtain any right in the Collateral which is equal to
or senior to the security interests of the Bank in such Collateral;
(xii) a Guaranty shall at any time and for any reason cease to be
in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by any Guarantor,
or any Guarantor shall deny that it has any further liability or
obligation under or shall fail to perform its obligations under a
Guaranty; or
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(xiii) (A) the expiration of 30 days after the Bank has given the
Borrower notice (which notice shall set forth in reasonable detail the
basis for the Bank's determination) of the Bank's good faith
determination that (x) the Bank deems itself insecure or (y) that a
material adverse change in the financial condition of the Borrower has
occurred since the date hereof or (z) that the Bank's prospect of payment
hereunder has been impaired, or (B) the reasonable suspicion by the Bank
that one or more Events of Default have occurred and the failure of the
Borrower, upon 30 days' notice thereof from the Bank, to provide
reasonably satisfactory evidence to the Bank that such Events of Default
have not in fact occurred;
then, and in every such event, the Bank, at its option, may by notice to the
Borrower terminate the Commitment and it shall thereupon terminate, and may, at
its option, by notice to the Borrower declare the Note (together with accrued
interest thereon) to be, and the Note shall thereupon become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; provided that in the case of any
of the Events of Default specified in paragraph (vii) or (viii) above with
respect to the Borrower, without any notice to the Borrower or any other act by
the Bank, the Commitment shall thereupon terminate and the Note (together with
accrued interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. NOTICES. All notices, requests and other communications to a
party hereunder shall be in writing and shall be given to such party at its
address set forth on the signature pages hereof or such other address as such
party may hereafter specify for the purpose by notice to the other. Each such
notice, request or other communication shall be effective when delivery to the
addressee, at the address specified in this Section is accepted or refused
provided that notices to the Bank under Section 2.2 and 2.6 shall not be
effective until received.
SECTION 9.2. NO WAIVERS. No failure or delay by the Bank in exercising
any right, power or privilege hereunder or under the Note shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 9.3. EXPENSES.
(a) The Borrower shall pay all out-of-pocket expenses of the Bank,
including: (i) $12,000 in fees, plus disbursements of counsel for the Bank in
connection with the preparation of this Agreement, the Collateral Documents and
the other documents contemplated hereby to be prepared by the Bank's counsel;
(ii) reasonable fees and disbursements of counsel for the Bank, in connection
with the enforcement of this Agreement, any waiver or consent hereunder or any
amendment hereof or any Default or alleged Default hereunder; and (iii) if an
Event of Default occurs, all out-of-pocket expenses incurred by the Bank,
including reasonable fees and disbursements of counsel, in connection with such
Event of Default and collection and other enforcement proceedings resulting
therefrom. The Borrower shall indemnify the Bank against any transfer taxes,
documentary taxes, assessments or charges made by any governmental authority by
reason of the execution and delivery of this Agreement or the Note.
(b) If the Bank shall determine that the adoption after the date hereof
of any law, rule, regulation or guidelines regarding capital adequacy, or any
change in any of the foregoing or in the interpretation or administration of any
of the foregoing by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Bank with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
Bank's capital or the capital of any Person controlling the Bank as a
consequence of the Bank's obligations hereunder to a level below that which the
Bank or such Person could have achieved but for such law, change or compliance
(taking into consideration the Bank's policies with respect to capital adequacy)
by an amount deemed by the Bank to be material, then from time to time within
ten days after demand by the Bank, the Borrower shall pay to the Bank such
additional amount or amounts (but without duplicating any amount paid as
additional commitment fee pursuant to Section 2.5) as will compensate the Bank
for such reduction. A certificate of the Bank claiming compensation
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under this Section 9.3(b) and setting forth the additional amount or amounts to
be paid to it hereunder shall be conclusive in the absence of manifest error. In
determining any such amount, the Bank may use any reasonable averaging and
attribution methods.
SECTION 9.4. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank to
or for the credit or the account of the Borrower against any and all of the
obligations now or hereafter existing under this Agreement, the Note or any
Collateral Document, irrespective of whether or not the Bank shall have made any
demand hereunder or under the Note and although such obligation may be
unmatured. The rights of the Bank under this Section 9.4 are in addition to
other rights and remedies (including, without limitation, other rights of
set-offs) which the Bank may have. The Borrower agrees, to the fullest extent it
may effectively do so under applicable law, that any holder of a participation
in any Note may exercise rights of set-off or counterclaim or other rights with
respect to such participation as fully as if such holder of a participation were
a direct creditor of the Borrower in the amount of such participation.
SECTION 9.5. AMENDMENTS AND WAIVERS. Any provision of this Agreement or
of the Note may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by the Borrower and the Bank.
SECTION 9.6. SUCCESSORS AND ASSIGNS. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement without the prior
written consent of the Bank.
(b) The Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in the Commitment or
in any or all of the Loans or the Note. In the event of any such grant by the
Bank of a participating interest to a Participant, whether or not upon notice to
the Borrower, the Bank shall remain responsible for the performance of its
obligations hereunder, and the Bank shall continue to deal solely and directly
with the Borrower in connection with the Bank's rights and obligations under
this Agreement. Any agreement pursuant to which the Bank may grant such a
participating interest shall provide that the Bank shall retain the sole right
and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement and the Collateral Documents;
provided that such participation agreement may provide that the Bank will not
agree to any modification, amendment or waiver of this Agreement or the
Collateral Documents which would have the effect of (i) increasing, decreasing
or extending the Commitment or subjecting the Bank to any additional obligation,
(ii) reducing the principal of or rate of interest on any Loan, (iii) postponing
the date fixed for any payment of principal of or interest on any Loan or fees
hereunder or under the Note, (iv) extending the Revolving Credit Period, (v)
releasing any substantial part of the Collateral or other direct or indirect
security for the Loans without the consent of the Participant. An assignment or
other transfer which is not permitted by subsection (c) or (d) below shall be
given effect for purposes of this Agreement only to the extent of a
participating interest granted in accordance with this subsection (b).
(c) The Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Note, and such Assignee
shall assume such rights and obligations, pursuant to an instrument executed by
such Assignee and the Bank, with (and subject to) the consent of the Borrower;
provided that if an Assignee is an affiliate of the Bank, no such consent shall
be required. Upon execution and delivery of such an instrument and payment by
such Assignee to the Bank of an amount equal to the purchase price agreed
between the Bank and such Assignee, such Assignee shall become a Bank party to
this Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the transferor
Bank and the Borrower shall make appropriate arrangements so that, if required,
a new Note or Notes is issued to the Assignee. If the Assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall, prior to the first date on which interest or fees are payable
hereunder for its account deliver to the Borrower certification as to exemption
from deduction or withholding of any United States federal income taxes.
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(d) The Bank may at any time assign all or any portion of its rights
under this Agreement and the Note to a Federal Reserve Bank. No such assignment
shall release the Bank from its obligations hereunder.
(e) The Bank may furnish any information concerning the Borrower in its
possession from time to time to Assignees and Participants (including
prospective Assignees and Participants) and may furnish such information in
response to credit inquiries consistent with general banking practice.
SECTION 9.7. VIRGINIA LAW. This Agreement and the Notes shall be governed
by and construed in accordance with the laws of the Commonwealth of Virginia
without reference to conflicts of laws principles.
SECTION 9.8. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when the Bank shall have received
counterparts hereof signed by both parties.
SECTION 9.9. WAIVER OF JURY TRIAL; SUBMISSION TO JURISDICTION. The
Borrower hereby irrevocably and unconditionally waives all right to trial by
jury in any action, proceeding, or counterclaim arising out of or related to
this Agreement, the Note, any Collateral Document or any of the transactions
contemplated hereby or thereby. Any legal action or proceeding with respect to
this Agreement, the Note, or any Collateral Document or any document related
hereto or thereto shall be brought in the courts of the Commonwealth of Virginia
in Fairfax County, Virginia or of the United States of America for the Eastern
District of Virginia and in no other courts, and by execution and delivery of
this Agreement the Borrower hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower hereby irrevocably and unconditionally waives any
objection, including without limitation, any objection to the laying of venue or
based on the grounds of the forum non conveniens which it now or hereafter may
have to the bringing of any action or proceeding in such respective
jurisdictions.
SECTION 9.10. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING
ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY
BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT
APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR
THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR ANY SUCCESSOR
THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF
ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY
ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO
THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING,
TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT
APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
(i) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF
THE BORROWER'S DOMICILE AT THE TIME OF THE EXECUTION OF THIS AGREEMENT AND
ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE
OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN
ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED
WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL
ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH
HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
(ii) RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL
BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT OR (II) BE A
WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE BANK (A) TO
EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO
FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN
FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE BANK
MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. NEITHER THIS EXERCISE
OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR
FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF
THE RIGHT OF ANY
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24
PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
SECTION 9.11. ENTIRE AGREEMENT. This Agreement, the Note, the Guaranties,
the Collateral Documents and other loan documents set forth the entire agreement
of the parties with respect to the subject matter hereof and thereof and
supersede all previous understandings. written or oral, in respect thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
PROXICOM, INC. [SEAL]
By /s/ XXXXXXXXXXX XXXXXXX
----------------------------
Name X. Xxxxxxx
Title VP
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
NATIONSBANK, N.A. [SEAL]
By /s/ XXXXX X. XXXXXXXX
----------------------------
Xxxxx X. Xxxxxxxx, Vice President
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
53093v7
The Exhibits and Schedules to this Secured Credit Agreement are not included
with this Registration Statement on Form S-1. The Registrant will provide these
Exhibits and Schedules upon the request of the Securities and Exchange
Commission.
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