i
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
RCM Technologies, Inc. and All of Its Subsidiaries
with
Citizens Bank of Pennsylvania, as Administrative Agent and Arranger
and
Each of the Financial Institutions Now and Hereafter
Shown on the Signature Pages Hereof as Lenders
Dated as of May 31, 2002
vii
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS AND INTERPRETATION........................................................................2
1.1 Terms Defined...................................................................................2
1.2 Accounting Principles..........................................................................15
SECTION 2. CREDIT FACILITIES.....................................................................................15
2.1 Availability of Loans and Letters of Credit - Description:.....................................15
2.2 Advances, Conversions, Renewals and Payments:..................................................21
2.3 Interest.......................................................................................24
2.4 Additional Interest Provisions.................................................................26
2.5 Fees...........................................................................................27
2.6 Prepayments....................................................................................28
2.7 Use of Proceeds:...............................................................................29
2.8 Indemnity/Loss of Margin.......................................................................30
2.9 Capital Adequacy:..............................................................................30
SECTION 3. COLLATERAL............................................................................................31
3.1 Description:...................................................................................31
3.2 Lien Documents:................................................................................32
3.3 Other Actions: ................................................................................32
3.4 Searches:......................................................................................33
3.5 Landlord's Waivers:............................................................................33
3.6 Filing Security Agreement:.....................................................................33
3.7 Power of Attorney:.............................................................................33
3.8 Verifications:.................................................................................34
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES..........................................................34
4.1 Resolutions, Opinions, and Other Documents::...................................................34
4.2 Absence of Certain Events:.....................................................................35
4.3 Warranties and Representations at Closing:.....................................................35
4.4 Compliance with this Agreement:................................................................35
4.5 Officer's Certificate:.........................................................................35
4.6 Closing:.......................................................................................36
4.7 Non-Waiver of Rights:..........................................................................36
SECTION 5. REPRESENTATIONS AND WARRANTIES........................................................................36
5.1 Corporate Organization and Validity............................................................36
5.2 Places of Business:............................................................................37
5.3 Pending Litigation:............................................................................37
5.4 Title to Properties:...........................................................................37
5.5 Governmental Consent:..........................................................................37
5.6 Taxes:.........................................................................................37
5.7 Financial Statements:..........................................................................38
5.8 Full Disclosure:...............................................................................38
5.9 Subsidiaries:..................................................................................38
5.10 Guarantees, Contracts, etc:....................................................................38
5.11 Government Regulations, etc:...................................................................38
5.12 Business Interruptions:........................................................................39
5.13 Names:.........................................................................................40
5.14 Other Associations:............................................................................40
5.15 Environmental Matters:.........................................................................40
5.16 Regulation O:..................................................................................41
5.17 Capital Stock:.................................................................................41
5.18 Solvency:......................................................................................41
5.19 Patents, Trademarks, Etc:......................................................................41
5.20 Investment Company:............................................................................41
5.21 Location of Customer Lists:....................................................................42
5.22.....Offering, Syndication, Etc.....................................................................42
5.23.....Government Contracts.......................................................................... 42
5.24.....Canadian Operations........................................................................... 42
SECTION 6. AFFIRMATIVE COVENANTS.................................................................................42
6.1 Payment of Taxes and Claims:...................................................................42
6.2 Maintenance of Properties and Corporate Existence:.............................................42
6.3 Business Conducted:............................................................................44
6.4 Litigation:....................................................................................44
6.5 Taxes:.........................................................................................44
6.6 Bank Accounts:.................................................................................46
6.7 Employee Benefit Plans:........................................................................46
6.8 Warranties for Future Advances:................................................................47
6.9 Financial Covenants:...........................................................................47
6.10 Financial and Business Information:............................................................48
6.11 Officers' and Accountant's Certificates:.......................................................49
6.12 Inspection:....................................................................................50
6.13 Tax Returns and Reports........................................................................50
6.14 Acquisitions:..................................................................................50
6.15 Information to Participant:....................................................................51
6.16 Material Adverse Developments:.................................................................51
6.17 Name Changes, Places of Business:..............................................................51
6.18 Change in Control or Chief Executive Officer:..................................................51
6.19 Canadian Collateral............................................................................51
6.20 Dissolution of Management Systems, Integrators, Inc. and Solutions Through Data-Processing,
Inc............................................................................................52
SECTION 7. NEGATIVE COVENANTS....................................................................................52
7.1 Merger, Consolidation, Dissolution or Liquidation..............................................52
7.2 Acquisitions:..................................................................................52
7.3 Liens and Encumbrances:........................................................................52
7.4 Transactions With Affiliates or Subsidiaries...................................................53
7.5 Guarantees:....................................................................................53
7.6 Distributions, Redemptions and Other Indebtedness:.............................................54
7.7 Loans and Investments:.........................................................................54
7.8 Use of Lenders' or the Agent's Name:...........................................................54
7.9 Miscellaneous Covenants:.......................................................................54
7.10 Change of Ownership Interests:.................................................................54
SECTION 8. DEFAULT...............................................................................................54
8.1 Events of Default:.............................................................................54
8.2 Cure -.........................................................................................57
8.3 Rights and Remedies on Default:................................................................57
8.4 Nature of Remedies:............................................................................58
8.5 Set-Off:.......................................................................................58
SECTION 9. AGENT.................................................................................................58
9.1 Appointment and Authorization..................................................................58
9.2 General Immunity...............................................................................58
9.3 Consultation with Counsel......................................................................59
9.4 Documents......................................................................................59
9.5 Rights as a Lender.............................................................................59
9.6 Responsibility of Agent........................................................................59
9.7 Collections and Disbursements..................................................................60
9.8 Indemnification................................................................................61
9.9 Expenses.......................................................................................61
9.10 No Reliance....................................................................................61
9.11 Reporting......................................................................................62
9.12 Removal of Agent...............................................................................62
9.13 Action on Instructions of Lenders..............................................................62
9.14 Several Obligations............................................................................62
9.15 Consent of Lenders to Agent's Rights...........................................................62
9.16 Participations and Assignments:................................................................63
SECTION 10. MISCELLANEOUS........................................................................................64
10.1 GOVERNING LAW:.................................................................................64
10.2 Integrated Agreement:..........................................................................64
10.3 Waiver:........................................................................................64
10.4 Time:..........................................................................................65
10.5 Expenses of Agent and Lenders:.................................................................65
10.6 Brokerage:.....................................................................................65
10.7 Notices:.......................................................................................66
10.8 Joint and Several..............................................................................67
10.9 Headings.......................................................................................67
10.10 Survival:......................................................................................67
10.11 Successors and Assigns:........................................................................67
10.12 Duplicate Originals:...........................................................................67
10.13 Modification:..................................................................................67
10.14 Third Parties:...................................................................................67
10.15 Discharge of Taxes, The Borrowers' Obligations, Etc.:..........................................67
10.16 Withholding and Other Tax Liabilities:.........................................................68
10.17 CONSENT TO JURISDICTION:.......................................................................68
10.18 Waiver of Jury Trial:..........................................................................68
EXHIBIT LIST
Exhibit 1..................-- Form of Borrowing Authorization
Exhibit 2.1 -- Form of Revolving Credit Note
Exhibit 2.1(r) -- Form of Term Note
Exhibit 5.1 -- The Borrower's States of Qualifications
Exhibit 5.2 -- Places of Business
Exhibit 5.3 -- Judgments, Proceedings, Litigation and
Orders
Exhibit 5.4 -- Existing Liens and Claims
Exhibit 5.5 -- Required consents, approvals and filings
Exhibit 5.7 -- Tax Identification Number
Exhibit 5.9 -- Subsidiaries and Affiliates
Exhibit 5.10 -- Existing Guaranties, Investments and
Borrowings, Leases and Employment
Agreements
Exhibit 5.11 -- Employee Benefit Plans
Exhibit 5.12 -- Business Interruptions
Exhibit 5.13(a) -- Schedule of Names
Exhibit 5.13(b) -- Trademarks, Patents and Copyrights
Exhibit 5.14 -- Other Associations
Exhibit 5.15 -- Environmental Disclosure
Exhibit 5.17 -- Capital Stock
Exhibit 5.19 -- Required Licenses
Exhibit 6.10(a)(vii) -- Borrowing Base Certificate
Exhibit 6.11 -- Compliance Certificate
SCHEDULES
Schedule A -- Schedule of Lenders
Schedule B -- Address of Lenders
8
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement ("Agreement") is
dated as of the 31st day of May, 2002, by and among RCM TECHNOLOGIES, INC.,
("RCM") and ALL OF ITS SUBSIDIARIES (collectively, the "Borrower"), CITIZENS
BANK OF PENNSYLVANIA (formerly known as Mellon Bank, N.A.), a Pennsylvania state
chartered bank, in its capacity as administrative agent and arranger (the
"Agent"), and CITIZENS BANK OF PENNSYLVANIA (formerly known as Mellon Bank,
N.A.) ("Citizens"), and SUNTRUST BANK (formerly known as SUNTRUST BANK ATLANTA),
in its capacity as documentation agent and lender ("Suntrust") and FLEET
NATIONAL BANK in its capacity as syndication agent and lender ("Fleet",
collectively with Suntrust, the "Others") (Citizens and Others individually each
being a "Lender" and collectively referred to as "Lenders").
BACKGROUND
The Borrower, the Agent, Citizens, the Lenders, Wachovia Bank
("Wachovia"), and Bank of America, N.A. (formerly known as Bank of America
National Trust and Savings Association) ("Bank of America" together, with
Wachovia, the "Retiring Lenders") are presently parties to a certain Loan and
Security Agreement dated August 19, 1998 (as the same has been amended and
modified prior to the date hereof, the "Original Loan Agreement").
A. Pursuant to the terms and provisions of the Original Loan Agreement, the
Lenders and the Retiring Lenders made available to the Borrower a revolving line
of credit in the aggregate amount of $75,000,000.00 (the "Original Revolving
Credit Facility").
B. The Borrower has requested that the Lenders and the Retiring Lenders agree to
amend and restate the Original Loan Agreement in its entirety to, among other
things, (1) amend the Original Revolving Credit Facility to provide for a
revolving credit facility having a maximum limit of $40,000,000.00 (including a
sublimit of $5,000,000.00 under such revolving credit facility for the issuance
of trade and standby letters of credit), and a $7,500,000.00 term loan facility,
and (2) delete all references to the Retiring Lenders.
D. The Borrower and the Lenders are entering into this Agreement for
the purpose of amending and restating in its entirety the Original Loan
Agreement so that, following the date hereof, all of the loans heretofore
extended by the Lenders to the Borrower pursuant to the Original Loan Agreement
and/or hereafter extended by the Lenders to the Borrower shall be governed by
the terms and provisions of this Agreement and the other Loan Documents (as such
term is defined hereinafter).
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION
1.1 Terms Defined:
As used in this Agreement, the following terms have the following
respective meanings:
Account - Any right to payment for goods sold or leased or for
services rendered which is not evidenced by an instrument or chattel paper,
whether or not it has been earned by performance.
Account Debtor - Any Person obligated on any Account owing to
the Borrower.
Acquisition - Any acquisition by any Borrower of all or a
substantial portion of the Capital Stock, assets and/or properties of another
Person, or a business line of another Person, whether by purchase, merger or
otherwise.
Additional Net Restructuring Charge - A one-time deduction of
goodwill taken by RCM during its fiscal year ended December 31, 2001, up to an
amount not to exceed $35,000,000.00.
Adjusted Net Income - The sum of (i) Net Income, (ii) the net
loss (expressed as a positive number), if any, arising solely from Permitted
Asset or Stock Sales up to an amount, which when added to other net loses
previously recognized under this subparagraph (ii), does not exceed
$5,000,000.00 in the aggregate, and (iii) other extraordinary non-cash,
non-recurring charges approved by the Majority Lenders, which approval will not
be unreasonably withheld. (In no event shall any charge related to goodwill
taken by the Borrower after December 31, 2001 be considered as an adjustment to
Adjusted Net Income).
Advance(s) - Any monies advanced or credit extended
to the Borrower by any Lender under the Revolving Credit Facility.
Affiliate - Any entity which directly or indirectly through
one or more intermediaries controls or is controlled by or is under common
control with the Borrower, which control may be by ownership, contract, or
otherwise.
Agreement - This Amended and Restated Loan and Security
Agreement, as it may hereafter be amended, supplemented or replaced from time to
time.
Applicable LIBOR Rate Margin -The amount to be added to the
applicable LIBOR Rate to determine the applicable LIBOR Based Rate for all
amounts outstanding under the Loans which bear interest at the LIBOR Based Rate,
which amount shall be determined in accordance with the ratio of the Borrower's
Total Funded Debt to EBITDA as set forth in the following matrix:
Total Funded Applicable
Debt to EBITDA LIBOR Rate Margin
=> 2.25x 250 b.p.
=> 1.75x but < 2.25x 225 b.p.
=> 1.25x but < 1.75x 200 b.p.
< 1.25x 175 b.p.
The above pricing index shall be tested quarterly and shall be effective on the
first day of the calendar month following the earlier of (i) the date on which
the Agent receives, or (ii) is required to receive pursuant to the terms and
provisions of this Agreement, the Borrower's Compliance Certificate pursuant to
Section 6.11 hereof. In the event that financial statements and a Compliance
Certificate for the fiscal quarter most recently completed prior to such date of
determination either: (i) have not been delivered to the Agent in compliance
with the requirements of this Agreement, or (ii) if delivered, do not comply in
form with the requirements for quarterly financial statements and/or Compliance
Certificates set forth herein (as determined in the sole reasonable judgment of
the Agent), then the Agent may determine, in its reasonable judgment, the
Applicable LIBOR Rate Margin referred to above that will be in effect for the
period commencing on such date until delivery of documents which do comply.
Nothing contained in this definition shall be construed, in any fashion, as
altering or superseding the rights of the Agent and the Lenders, following the
occurrence of an Event of Default hereunder (including, without limitation, as a
result of a breach by the Borrower of any the applicable financial covenants set
forth herein) to charge interest on any Loan outstanding hereunder at the
Default Rate.
Applicable Prime Rate Margin -The amount to be added to the
applicable Prime Rate to determine the applicable Prime Based Rate for all
amounts outstanding under the Loans which bear interest at the Prime Based Rate,
which amount shall be determined in accordance with the ratio of the Borrower's
Total Funded Debt to EBITDA as set forth in the following matrix:
Total Funded Applicable
Debt to EBITDA Prime Rate Margin
=> 2.25x 25 b.p.
=> 1.75x but < 2.25x 0 b.p.
=> 1.25x but < 1.75x 0 b.p.
< 1.25x 0 b.p.
The above pricing index shall be tested quarterly and shall be effective on the
first day of the calendar month following the earlier of (i) the date on which
the Agent receives, or (ii) is required to receive pursuant to the terms and
provisions of this Agreement, the Borrower's Compliance Certificate pursuant to
Section 6.11 hereof. In the event that financial statements and a Compliance
Certificate for the fiscal quarter most recently completed prior to such date of
determination either: (i) have not been delivered to the Agent in compliance
with the requirements of this Agreement, or (ii) if delivered, do not comply in
form with the requirements for quarterly financial statements and/or Compliance
Certificates set forth herein (as determined in the sole reasonable judgment of
the Agent), then the Agent may determine, in its reasonable judgment, the
Applicable Prime Rate Margin referred to above that will be in effect for the
period commencing on such date until delivery of documents which do comply.
Nothing contained in this definition shall be construed, in any fashion, as
altering or superseding the rights of the Agent and the Lenders, following the
occurrence of an Event of Default hereunder (including, without limitation, as a
result of a breach by the Borrower of any the applicable financial covenants set
forth herein) to charge interest on any Loan outstanding hereunder at the
Default Rate.
Authorized Officer - Any officer or employee of the Borrower
authorized by the Borrower to request Advances or the issuance of Letters of
Credit as set forth in a Borrowing Authorization.
Borrowing Authorization - A document, in the form of Exhibit 1
attached hereto and made part hereof, signed and delivered to the Agent by an
Authorized Officer of the Borrower.
Borrowing Base - As of any date, an amount equal to eighty
percent (80%) of the aggregate amount of the Borrower's Eligible Accounts on
such date.
Business Day - Any day that is not a Saturday or Sunday or day
on which the Agent or any Lender is required or permitted to close, provided,
however, that solely with respect to LIBOR Rate Loans requested by the Borrower,
such day shall also be a day on which the Agent is able to determine the LIBOR
Rate for such requested LIBOR Rate Loan.
Capital Expenditures - Any expenditure that would be
classified as a capital expenditure on a statement of cash flow of the Borrower
prepared in accordance with GAAP, consistently applied but excluding any
expenditure incurred in connection with a Permitted Acquisition.
Capital Stock - as to any Person, all shares, interests,
partnership interests, limited liability company interests, participations,
rights in or other equivalents (however designated) of such Person's equity
(however designated) and any rights, warrants or options exchangeable for or
convertible into such shares, interests, participations, rights or other equity.
Citizens - Citizens Bank of Pennsylvania in its capacity as a
Lender.
Compliance Certificate - As defined in Section 6.11.
Closing - As defined in Section 4.6.
Closing Date - As defined in Section 4.6.
Collateral - As defined in Section 3.1.
Credit Facility - The lending arrangements, the Term Loan and
all Advances established and/or extended pursuant to this Agreement, and all
Letter of Credit Outstandings.
Default Rate - As defined in Section 2.4(c).
Distribution -
(1) Dividends or other distributions of any kind
on the Capital Stock of the Borrower; or
(2) The redemption, repurchase or acquisition of such Capital
Stock or of warrants, rights or other options to purchase such Capital Stock.
Drawing Date - As defined in Section 2.1(g).
EBITDA - The sum of (i) Net Income before interest, taxes,
depreciation and amortization, (ii) Additional Net Restructuring Charge, (iii)
any net loss if any (expressed as a positive number) arising solely from
Permitted Asset or Stock Sales up to an amount, which when added to other net
losses previously recognized under this subparagraph (iii), does not exceed
$5,000,000.00 in the aggregate, and (iv) other non-cash charges approved by the
Majority Lenders, which approval will not be unreasonably withheld. (In no event
shall any charge related to goodwill taken by the Borrower after December 31,
2001 be considered as an adjustment to EBITDA).
Eligible Accounts - shall mean Accounts which are and at all
times continue to meet the following conditions:
(a) The Account duly complies with all applicable laws,
whether Federal, state or local, including but not limited to usury laws, the
Federal Truth in Lending Act, the Federal Consumer Credit Protection Act, the
Fair Credit Billing Act, and Regulation Z of the Board of Governors of the
Federal Reserve System;
(b) The Account was not originated in or subject to the laws
of a jurisdiction whose laws would make the Account or the grant of the security
interest in the Account to the Agent and/or the Lenders unlawful, invalid or
unenforceable;
(c) The Account was originated by the Borrower in connection
with the sale of goods or the rendering of services by the Borrower in the
ordinary course of business under an enforceable contract, and such sale has
been consummated and such goods have been delivered or such services have been
rendered so that the performance of such contract has been completed by the
Borrower and by all parties other than the Account Debtor;
(d) The Account is evidenced by a written invoice or other
documentation, all of which are in form and substance satisfactory to the Agent
in its sole reasonable discretion (including any contract from which such
Account arises);
(e) The Account does not arise out of a contract with, or
order from, an Account Debtor that, by its terms, forbids or makes void or
unenforceable the grant of the security interest by the Borrower to the Agent
and/or the Lenders in and to the Account arising with respect thereto;
(f) The title of the Borrower to the Account and, except as to
the Account Debtor, to any related goods is absolute and is not subject to any
Lien, except Liens in favor of the Agent and/or the Lenders;
(g) The Account provides for payment in United States
or Canadian Dollars by the Account Debtor;
(h) The Account shall have amounts owing that are not
less than the amounts represented by the Borrower;
(i) The portion of the Account for which income has not yet
been earned or which constitutes unearned discount, service charges or deferred
interest shall be ineligible;
(j) The Account shall be eligible only to the
extent that it is not subject to any defense, claim of reduction,
counterclaim, set-off;
(k) The goods, the sale of which gave rise to the Account,
were shipped or delivered or provided to the Account Debtor on an absolute sale
basis and not on a xxxx and hold sale basis, a consignment sale basis, a
guaranteed sale basis, a sale or return basis, or on the basis of any other
similar terms making the Account Debtor's payment obligations conditional;
(l) The Account Debtor has not returned, rejected or refused
to retain, or otherwise notified the Borrower of any dispute concerning, or
claimed nonconformity of, any of the goods from the sale of which the Account
arose;
(m) All rights and remedies of the Borrower under the
Account are freely assignable by the Borrower;
(n) The Account has not been outstanding for more than ninety
(90) days past the invoice date (other than for a Permitted Delayed Account, in
which case has not been outstanding for more than one hundred twenty (120) days
past the invoice date) and is not subject to "dating" terms;
(o) The Account shall be ineligible if 50% or more of the
accounts of the related Account Debtor and its affiliates are more than ninety
(90) days past due from the date of original invoice therefor (other than a
Permitted Delayed Account, in which case has not been outstanding for more than
one hundred twenty (120) days past the invoice date);
(p) The Account shall be ineligible to the extent
that the aggregate amount of all the accounts of the Account
Debtor and its affiliates exceed 10% of all of the Borrower's Accounts;
(q) The Borrower have not received any note, trade acceptance,
draft, chattel paper or other instrument with respect to, or in payment of, the
Account, unless, if any such instrument has been received, the Borrower
immediately notifies the Agent and, at the Agent's request, endorse or assign
and deliver such instrument to the Agent, for the benefit of the Lenders
hereunder;
(r) The Borrower has not received any notice of (i) the death
of the Account Debtor, if an individual, or of a partner or member thereof if a
partnership or a limited liability company, (ii) the filing by or against the
Account Debtor of any proceeding in bankruptcy, receivership, insolvency,
reorganization, liquidation, conservatorship or any similar proceeding, or (iii)
any assignment by the Account Debtor for the benefit of creditors. Upon receipt
by the Borrower of any such notice, it will give the Agent prompt written notice
thereof;
(s) The Account Debtor is not an Affiliate;
(t) The Account shall be ineligible if the related Account
Debtor is domiciled in any country other than the United States of America or
the Province of Ontario, Canada, or a Province of Canada which has adopted and
has in effect legislation similar to the Personal Property Security Act
(Ontario), unless such Account is supported by a documentary letter of credit,
duly assigned to and in the possession of the Agent, from a financial
institution reasonably acceptable to the Agent and the terms and conditions of
which are reasonably acceptable to the Agent;
(u) If the Account Debtor is an Official Body and following a
request to Borrower by the Agent to do so (which such request may be made by the
Agent at any time in its sole discretion), the Account shall be ineligible until
the Borrower has taken all actions deemed necessary by the Agent in order to
further protect the Agent's and the Lenders' security interest therein,
including but not limited to any notices or filings required under the
Assignment of Claims Act of 1940, as amended, or any other applicable law; and
(v) The Agent has not reasonably deemed such Account
ineligible because of uncertainty about the creditworthiness of the Account
Debtor (including, without limitation, unsatisfactory past experiences of the
Borrower, the Agent or any Lender with the Account Debtor or unsatisfactory
reputation of the Account Debtor) or because the Agent otherwise makes a
reasonable determination that the collateral value of the Account to the Lenders
is impaired or that the Agent's and/or the Lenders' ability to realize such
value is insecure.
In the case of any dispute about whether an Account is or has ceased to be an
Eligible Account, the sole reasonable determination of the Agent shall be final
and binding.
ERISA - The Employee Retirement Income Security Act of 1974,
as the same may be amended, from time to time.
Event of Default - As defined in Section 8.1.
Existing Additional Deferred Consideration Payments - Deferred
and/or contingent cash consideration paid by the Borrower on or before December
31, 2003 (or payable on or before December 31, 2003 and paid within 120 days of
its due date), up to an amount not to exceed $12,000,000.00 in the aggregate, in
connection with any Acquisition closed prior to July 1, 2001, including without
limitation (i) fixed pre-set amounts paid as a result of the achievement of a
defined level of earnings by the acquired business following the closing of such
Acquisition, and (ii) additional amounts paid following closing which arise as a
result of earnings achieved by the acquired business in excess of defined
levels. (In no event shall payments made in consideration of consulting
services, agreements-not-to-compete or similar arrangements be considered
Existing Additional Deferred Consideration Payments).
Expenses - As defined in Section 10.5.
Extension Fee - As defined in Section 2.5(a).
Federal Funds Rate - For any day, the weighted average of the
rates on overnight federal funds transactions with member banks of the Federal
Reserve System arranged by federal funds brokers as published by the Federal
Reserve Bank of New York for such day, or if such day is not a Business Day, for
the next preceding Business Day (or, if such rate is not so published for any
such day, the average rate charged to the Agent on such day on such transactions
as reasonably determined by the Agent).
Frontage Fee - As defined in Section 2.5(d).
Fixed Charge Ratio - EBITDA divided by: the sum of interest
expense plus income taxes paid plus scheduled principal payments (excluding any
principal payments required under the Term Notes) plus Capital Expenditures plus
Distributions paid.
GAAP - Generally accepted accounting principles applied in a
manner consistent with the most recent audited financial statements of the
Borrower referred to in Section 5.7 herein.
Good Business Day - Any Business Day when banks in
Philadelphia, Pennsylvania, New York, New York and London, England are open for
business.
Governmental Acts - As defined in Section 2.1(o).
Income Tax Benefit - The net amount by which the Borrower's
Federal and State income tax obligations are reduced as a result of the Borrower
deducting all or a portion of the Additional Net Restructuring Charge on its
Federal and State income tax returns for its taxable year ended December 31,
2001, and by giving effect to the net tax effect of any adjustments increasing
or decreasing such deduction subsequent to its taxable year ended December 31,
2001.
Insolvency Proceeding - with respect to any Person, (a) any
case, action or proceeding with respect to such Person (and, if filed against
such Person, is not dismissed within 60 days) (i) before any court or any other
Official Body under any bankruptcy, insolvency, reorganization or other similar
law now or hereafter in effect, or (ii) for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar
official) of such Person or otherwise relating to liquidation, dissolution,
winding-up or relief of such Person, or (b) any general assignment for the
benefit of creditors, composition, marshaling of assets for creditors, or other,
similar arrangement in respect of such Person's creditors generally or any
substantial portion of its creditors; undertaken under any law.
Intercompany Notes - All notes, instruments,
entries or other evidence of any indebtedness between any of the
Borrowers.
Interest Coverage - EBITDA divided by interest expense.
Inventory - As defined in the UCC.
IRS - As defined in Section 6.7.
Letter of Credit - As defined in Section 2.1(e) hereof.
Letter of Credit Applicable Margin - The amount determined in
accordance with the ratio of the Borrower's Total Funded Debt to EBITDA as set
forth in the following matrix:
Total Funded Letter of Credit
Debt to EBITDA Applicable Margin
=> 2.25x 2.50% per annum
=> 1.75x but < 2.25x 2.25% per annum
=> 1.25x but < 1.75x 2.00% per annum
< 1.25x 1.75% per annum
The above pricing index shall be tested quarterly and shall be effective on the
first day of the calendar month following the earlier of (i) the date on which
the Agent receives, or (ii) is required to receive pursuant to the terms and
provisions of this Agreement, the Borrower's Compliance Certificate pursuant to
Section 6.11 hereof. In the event that financial statements and a Compliance
Certificate for the fiscal quarter most recently completed prior to such date of
determination either: (i) have not been delivered to the Agent in compliance
with the requirements of this Agreement, or (ii) if delivered, do not comply in
form with the requirements for quarterly financial statements and/or Compliance
Certificates set forth herein (as determined in the sole reasonable judgment of
the Agent), then the Agent may determine, in its reasonable judgment, the Letter
of Credit Applicable Margin referred to above that will be in effect for the
period commencing on such date.
Letter of Credit Borrowing - An extension of credit resulting
from a drawing under any Letter of Credit which shall not have been reimbursed
on the date when made and shall not have been converted into a Prime Based Rate
Loan under Section 2.1(g).
Letter of Credit Fee - As defined in Section 2.5(d) hereof.
Letter of Credit Outstandings - At any time the sum of (i) the
aggregate undrawn face amount of all then outstanding Letters of Credit, and
(ii) the aggregate amount of all unpaid and then outstanding Reimbursement
Obligations.
Liabilities - All liabilities of every kind as would be shown
on a balance sheet of the Borrower prepared in accordance with GAAP.
LIBOR Based Rate - The LIBOR Rate plus the Applicable LIBOR
Rate Margin.
LIBOR Based Rate Loan - That portion of the Loans on which
interest accrues at the LIBOR Based Rate.
LIBOR Interest Period - Section 2.3(b)(ii).
LIBOR Rate - An annual rate of interest determined by the
Agent as being the rate available to the Agent at approximately 11:00 a.m.
London time in the London Interbank Market, as referenced by Reuters Screen
"LIBO", in accordance with the usual practice in such market, for the LIBOR
Interest Period elected by the Borrower, in effect two Good Business Days prior
to the funding date for a requested LIBOR Based Rate Loan (including those
requested in connection with the conversion of a Prime Rate Loan to a LIBOR
Based Rate Loan in accordance with Section 2.3 hereof), or for a LIBOR Based
Rate Loan which the Borrower has elected to continue as a LIBOR Based Rate Loan
beyond the expiration of the then current LIBOR Interest Period with respect
thereto, for deposits of dollars in amounts equal (as nearly as may be
estimated) to the amount of the LIBOR Based Rate Loan which shall then be loaned
by the Lenders to the Borrower as of the time of such determination, as such
rate may be adjusted by the reserve percentage applicable during the LIBOR
Interest Period in effect (or if more than one such percentage shall be
applicable, the daily average of such percentages for those days in such LIBOR
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the applicable reserve
requirement (including without limitation, any emergency, supplemental or other
marginal reserve requirement) for the Agent with respect to liabilities or
assets consisting of or including "Eurocurrency Liabilities" as such term is
defined in Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time, having a term equal to such LIBOR Interest
Period ("Eurocurrency Reserve Requirement"), as reasonably applied to loans of
this type generally by the asset based loan department of the Agent. Such
adjustment shall be effectuated by calculating, and the LIBOR Rate shall be
equal to, the quotient of (i) the offered rate divided by (ii) one minus the
Eurocurrency Reserve Requirement.
LIBOR Rate Option - As defined in Section 2.3(b).
Lien - Any security interest or lien of any kind or nature in
property securing an obligation owed to, or a claim of any kind or nature in
Property by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute, regulation or contract, and
including, but not limited to, a security interest or lien arising from an
encumbrance, pledge, conditional sale or trust receipt, a capitalized lease,
consignment or bailment for security purposes, a trust, or an assignment, or as
a result of the issuance of any execution or distraint process against the
Borrower. The term "Lien" shall include without limitation, reservations,
exceptions, covenants, conditions, restrictions, leases and other encumbrances
affecting Property other than those which would not materially interfere with
the Borrower's use of the Property and would not materially detract from the
value of the Property. For the purposes of this Agreement, the Borrower shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
Line Reduction - As defined in Section 2.1(d).
Loans - Collectively, the unpaid balance of all Advances under
the Revolving Credit Facility, the unpaid balance of the Term Loan and all
Letter of Credit Outstandings.
Loan Documents - This Agreement, the Revolving Credit Notes,
the Term Notes, and all agreements, instruments and documents executed and/or
delivered from time to time pursuant to this Agreement or in connection
therewith, as amended or replaced from time to time.
Majority Lenders - At any time while no Loans are outstanding
hereunder, the Lenders holding at least one hundred percent (100%) of the
aggregate amount of the Revolving Credit Facility Pro Rata Shares at such time
and, at any time while Loans are outstanding hereunder, the Lenders holding at
least one hundred percent (100%) of the outstanding aggregate principal amount
of the Loans hereunder.
Material Adverse Effect - Any material adverse effect on the
Borrower's consolidated financial condition, assets, operating status or
projected financial condition or any fact or circumstance that, singly or in the
aggregate with any fact or circumstance, has a reasonable likelihood of
resulting in or leading to the inability of the Borrower to perform in any
material respect its obligations under this Agreement or under any Loan Document
or the inability of the Agent and/or the Lenders to enforce in any material
respect the rights purported to be granted to them under this Agreement or any
Loan Document or which might have a material adverse effect on the ability of
the Borrower to effectuate (including hindering or unduly delaying) the
transactions contemplated by this Agreement and the Loan Documents on the terms
contemplated hereby and thereby.
Minimum Tangible Net Worth - RCM's consolidated Tangible Net
Worth shall be (i) at least $4,000,000.00 as of June 30, 2001, plus (ii)
seventy-five percent (75%) of quarterly Net Income thereafter (determined
without taking the Additional Net Restructuring Charge into account and with no
credit for losses) (the "Net Income Component"), plus (iii) one hundred percent
(100%) of the Income Tax Benefit, less (iv) the sum of (A) the Existing
Additional Deferred Consideration Payments paid on or after July 1, 2001, plus
(B) the New Acquisition Consideration Payments (hereinafter defined) (if any)
paid on or after July 1, 2001, plus (C) any net losses (expressed as a positive
number), if any, arising solely from Permitted Asset or Stock Sales up to an
amount, which when added to other net losses recognized under this subparagraph
(C), does not exceed $5,000,000.00 in the aggregate, provided that the
reductions pursuant to clauses (A) and (B) of clause (iv) shall not in the
aggregate exceed the increase in Minimum Tangible Net Worth arising from the Net
Income Component.
Net Income - Consolidated net income of RCM after taxes as
such would appear on a statement of income prepared in accordance with GAAP.
New Acquisition Consideration Payments. Cash consideration
paid at closing and deferred and/or contingent consideration paid by the
Borrower up to an amount not to exceed $3,000,000.00 in the aggregate, in
connection with any Acquisition closed after July 1, 2001, including without
limitation (i) fixed pre-set amounts paid as a result of the achievement of a
defined level of earnings by the acquired business following the closing of such
Acquisition, and (ii) additional amounts paid following closing which arise as a
result of earnings achieved by the acquired business in excess of defined
levels. (In no event shall payments made in consideration of consulting services
be considered to be New Acquisition Consideration Payments).
Notes - Collectively, the Revolving Credit Notes and the Term Notes.
Obligations - All existing and future liabilities and
obligations of every kind or nature at any time owing by the Borrower to the
Lenders, and/or to the Agent in connection with the Loan Documents (including,
without limitation, this Agreement, the Term Notes and the Revolving Credit
Notes) and the transactions contemplated hereby and thereby or administration
thereof, whether joint or several, related or unrelated, primary or secondary,
matured or contingent, direct or indirect, due or to become due, and whether
principal, interest, Fees or Expenses, including, without limitation,
Obligations in respect of the Revolving Credit Facility, Letter of Credit
Outstandings, and/or the Term Loan, whether related to Advances or otherwise,
and any extensions, modifications, substitutions, increases and renewals
thereof, and the payment of all reasonable amounts advanced by the Agent (or any
Lender after the occurrence of an Event of Default), on behalf of the Lenders,
to preserve, protect and enforce rights hereunder and in the Collateral and all
Expenses incurred in connection therewith and herewith.
Official Body - any national, federal, state, local or other
government or political subdivision or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
Participation Advance - As defined in Section 2.1(i).
Permitted Acquisitions - An Acquisition which satisfies each
of the criteria set forth in Section 2.7 hereof.
Permitted Asset or Stock Sale - A sale of the assets or stock
pertaining to one or more business units operated by the Borrower, provided (A)
Borrower obtains the prior written consent of the Majority lenders, which such
consent can be withheld in the sole reasonable discretion of the Majority
Lenders, (B) such sale does not cause an Event of Default or an Unmatured Event
of Default, and (C) in the event any portion of the Term Loan is still
outstanding, the net after-tax proceeds from such sale (after payment of any
expenses of such sale and obligations secured by Permitted Liens on the assets
sold) shall be applied to reduce the outstanding principal of the Term Loan, in
the inverse order of maturity. In the event the Majority Lenders approve any
such sale, the Lenders agree that the Borrower will not be charged any fee in
consideration of receiving the Majority Lenders' consent hereunder.
Permitted Delayed Account - shall include certain major
customers of Borrower that have a demonstrated history of paying invoices beyond
90 days without any write-offs. Any such Permitted Delayed Accounts must be
approved by Majority Lenders in their sole reasonable discretion. Permitted
Delayed Accounts as of Closing include the New York City Board of Education,
Schering-Plough Corporation, United Technologies, Vermont Yankee and Ontario
Power Group, and may be updated by Borrowers from time to time as approved by
the Majority Lenders in their sole reasonable discretion.
Permitted Investments - (a) Investments in direct or indirect
obligations of, or obligations unconditionally guaranteed by, the United States
of America and maturing within twelve (12) months from the date of acquisition;
(b) investments in commercial paper of the Agent or commercial paper rated
"Prime-1" by Xxxxx'x Investors Services or "A-1" by Standard & Poor's
Corporation, or with an equivalent rating by another rating agency of nationally
recognized standing, maturing within twelve (12) months from the date of
acquisition; and (c) certificates of deposit maturing within twelve (12) months
from the date of acquisition and issued by the Agent.
PBGC - As defined in Section 6.7.
Permitted Liens - As defined in Section 7.3.
Person - An individual, partnership, corporation, trust,
unincorporated association or organization, joint venture, limited liability
company or partnership, or any other entity.
Prime Based Rate - The Prime Rate plus the Applicable Prime
Rate Margin as then in effect.
Prime Based Rate Loan - That portion of the Loans on which
interest accrues at the Prime Based Rate.
Prime Rate - That per annum rate designated or announced by
the Agent at its principal office from time to time as its prime rate of
interest, which may be greater or less than other interest rates charged by the
Agent to other borrowers and is not solely based or dependent upon the interest
rate which the Agent may charge any particular borrower or class of borrowers.
Prime Rate Option - As defined in Section 2.3(a).
Pro Rata Percentage - As defined in Section 2.1(a)(ii).
Property - Any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or
intangible.
Regulation D - Regulation D of the Board of Governors of the
Federal Reserve System, comprising Part 204 of Title 12, Code of Federal
Regulations, as amended, and any successor thereto.
Reimbursement Obligation - as defined in Section 2.1(g).
Revolving Credit Facility - As defined in Section 2.1(a)(i).
Revolving Credit Facility Pro Rata Share - Section 2.1(a)(ii).
Revolving Credit Limit - The lesser of (i) $40,000,000.00, or
(ii) the Borrowing Base as then in effect.
Revolving Credit Loans - As defined in Section 2.1(a)(i).
Revolving Credit Maturity Date - August 19, 2004.
Revolving Credit Notes - Those notes described in Section
2.1(b), as they may be amended, supplemented, replaced or restated from time to
time.
Revolving Credit Term - As defined in Section 2.1(c).
SEC - The Securities and Exchange Commission.
Sellers Notes - Any notes or other instruments evidencing any
indebtedness or other obligations of the Borrowers to a seller of an acquired or
merged Person.
Settlement Date - As defined in Section 2.2(b)(iii)(A).
Software - Collectively, all applications, operating and other
computer programs (including, without limitation, all object code and the source
code therefor), all documentation (including, without limitation, all
programmers', users' and technical manuals for all such programs), the visual
expressions, screen formats, report formats and other design features of all
such programs, all ideas, methods, algorithms, formulae and concepts used in
developing and/or incorporated into such programs or documentation, all future
modifications, revisions, updates, releases, refinements, improvements and
enhancements of such programs or documentation, all derivative works based upon
any of the foregoing, and all copies of the foregoing.
Standby Letter of Credit - A Letter of Credit issued to
support obligations of the Borrower, contingent or otherwise, for working
capital and business needs of the Borrower incurred in the ordinary course of
business.
Subsidiary - Any Person (other than an individual) more than
fifty percent (50%) of whose ownership interests or voting stock is legally and
beneficially owned directly or indirectly by the Borrower or owned by a Person
(other than an individual) more than fifty percent (50%) of whose ownership
interests or voting stock is legally and beneficially owned directly or
indirectly by the Borrower.
Tangible Net Worth - The amount by which the total assets of
the Borrower exceeds all Liabilities of the Borrower. (For purposes of this
calculation, the aggregate amount of any intangible assets of the Borrower
including without limitation, goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks and brand names, shall be
subtracted from the Borrower's total assets).
Termination Fee - As defined in Section 2.5(c).
Term Loan - As defined in Section 2.1(q).
Term Loan Maturity Date - 364 days from the Closing Date.
Term Notes - Those notes described in Section 2.1(r), as they
may be amended, supplemented, replaced or restated from time to time.
Total Funded Debt - The sum of all of the Borrower's bank debt
and capital lease obligations, as well as all other funded debt, including
without limitation all Sellers Notes.
UCC - The Uniform Commercial Code as adopted in the State of
New Jersey and in effect on the date hereof, as the same may be amended or
modified from time to time.
Unfunded Capital Expenditures - Capital Expenditures made with
(i) the use of any proceeds of any Loan hereunder or (ii) the Borrower's own
funds obtained other than (A) through equity contributed subsequent to the
Closing or (B) purchase money or other financing or lease transactions.
Unmatured Event of Default - An event which with the passage
of time, the giving of notice, or both would constitute an Event of Default.
Unused Line Fee - As defined in Section 2.5(b).
Working Capital - Current assets minus current liabilities as
defined in accordance with GAAP.
1.2 Accounting Principles: Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with GAAP, to the
extent applicable, except as otherwise expressly provided in this Agreement.
SECTION 2. CREDIT FACILITIES
2.1 Availability of Loans and Letters of Credit - Description:
(a) (i) Subject to the terms and conditions of this Agreement,
each Lender hereby establishes for the benefit of the Borrower a revolving
credit facility (collectively, the "Revolving Credit Facility") which shall
include all Advances extended by Lenders to or for the benefit of the Borrower
from time to time under the Revolving Credit Facility (collectively, the
"Revolving Credit Loans"). The aggregate principal amount of all Revolving
Credit Loans, together with all Letter of Credit Outstandings, shall not, at any
time, exceed the Revolving Credit Limit. Subject to such limitation, the
outstanding balance of Revolving Credit Loans may fluctuate from time to time,
to be reduced by repayments made by the Borrower, and to be increased by future
Revolving Credit Loans which may be made by the Lenders and, subject to any
earlier payment requirements set forth herein or in any other Loan Document,
shall be due and payable on the last day of the Revolving Credit Term. If the
aggregate principal amount of all Revolving Credit Loans, together with all
Letter of Credit Outstandings, at any time exceeds the Revolving Credit Limit,
the Borrower shall repay such excess in full upon within one (1) Business Day
after Borrower has knowledge of such excess.
(ii) Subject to Section 8.3(a) below and the
terms of this Agreement, each Lender agrees to lend to the
Borrower an amount equal to such Lender's respective percentage (as to each
Lender, the percentage of the Revolving Credit Facility set forth opposite its
name on that portion of Schedule "A" attached hereto and made a part hereof
entitled "Revolving Credit Facility" and referred to as its "Pro Rata
Percentage") of any Advance requested by the Borrower. The outstanding balance
of all Advances under the Revolving Credit Facility of each Lender, together
with such Lender's Pro Rata Percentage of all Letter of Credit Outstandings,
shall not exceed the respective amount (as such amount may change from time to
time in accordance with the terms hereof, the "Revolving Credit Facility Pro
Rata Share") set forth opposite its name on that portion of Schedule "A"
attached hereto and made a part hereof and entitled "Revolving Credit Facility".
(b) At the Closing, the Borrower shall execute and deliver its
amended and restated promissory note to each Lender for the total principal
amount of such Lender's Revolving Credit Facility Pro Rata Share (collectively,
as the same may be amended, modified or replaced from time to time, the
"Revolving Credit Notes"). Each Revolving Credit Note shall evidence the
Borrower's absolute and unconditional obligation to repay such Lender for all
outstanding Revolving Credit Loans and Letter of Credit Borrowings owed to such
Lender, with interest as herein and therein provided. Each and every Advance,
and all Letter of Credit Borrowings, under the Revolving Credit Facility shall
be deemed evidenced by the Revolving Credit Notes, which are deemed incorporated
herein by reference and made a part hereof. All Revolving Credit Notes shall be
substantially in the form set forth in Exhibit "2.1" attached hereto and made a
part hereof.
(c) The term of the Revolving Credit Facility ("Revolving
Credit Term") shall expire on the Revolving Credit Maturity Date, unless having
been sooner accelerated by the Agent on behalf of the Lenders in accordance with
the terms of this Agreement, or sooner terminated by the Borrower pursuant to
Section 2.1(d) hereof. On the last day of the Revolving Credit Term, all amounts
outstanding under the Revolving Credit Facility, all outstanding Letter of
Credit Borrowings, and any other Obligation then outstanding shall be due and
payable in full, and as of and after such date no further Advances or Letters of
Credit shall be available from the Lenders.
(d) The Borrower may, at its option from time to time,
permanently reduce the Revolving Credit Limit in $500,000.00 increments, or
terminate the Revolving Credit Facility entirely, by giving Agent at least five
(5) Business Days' prior written notice thereof.
(e) Under the Revolving Credit Facility, the Borrower may
request the issuance of a letter of credit (each a "Letter of Credit") by
delivering to the Agent a completed application and agreement for letter of
credit in such form as the Agent may specify from time to time by no later than
10:00 a.m., Philadelphia time, at least three (3) Business Days, or such shorter
period as may be agreed to by the Agent, in advance of the proposed date of
issuance. Each Letter of Credit shall be a trade letter of credit or a Standby
Letter of Credit. Subject to the terms and conditions hereof, in reliance on the
agreements of the other Lenders set forth in this Section 2.1, and provided the
Agent has not received written notice from a Lender that an Event of Default or
Unmatured Event of Default has occured, the Agent will issue a Letter of Credit
provided each Letter of Credit shall (i) have a maximum maturity of twelve (12)
months from the date of issuance, and (ii) in no event expire later than one
Business Day prior to the Revolving Credit Maturity Date and provided that in no
event shall (i) the Letter of Credit Outstandings exceed, at any one time,
$5,000,000.00 or (ii) the sum of the aggregate Letter of Credit Outstandings and
the Revolving Credit Loans then outstanding exceed, at any one time, the
aggregate Revolving Credit Facility Pro Rata Shares of the Lenders then in
effect.
(f) Immediately upon the issuance of each Letter of Credit,
each Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Agent a participation in such Letter of Credit and
each drawing thereunder in an amount equal to such Lender's Pro Rata Percentage
of the maximum amount available to be drawn under such Letter of Credit and the
amount of such drawing, respectively.
(g) In the event of any request for a drawing under a Letter
of Credit by the beneficiary or transferee thereof, the Agent will promptly
notify the Borrower. The Borrower shall reimburse (such obligation to reimburse
the Agent shall sometimes be referred to as a "Reimbursement Obligation") the
Agent prior to 11:00 a.m., Philadelphia time on each date that an amount is paid
by the Agent under any Letter of Credit (each such date, a "Drawing Date") in an
amount equal to the amount so paid by the Agent. In the event the Borrower fail
to reimburse the Agent for the full amount of any drawing under any Letter of
Credit by 11:00 a.m., Philadelphia time, on the Drawing Date, the Agent will
promptly notify each Lender thereof, and the Borrower shall be deemed to have
requested that a Prime Based Rate Loan be made by the Lenders pursuant to
Section 2.1(a) hereof in the full amount of the Reimbursement Obligation then
outstanding, to be disbursed on the Drawing Date under such Letter of Credit,
subject to the amount of the unutilized portion of the aggregate Revolving
Credit facility Pro Rata Shares of the Lenders then in effect and subject to the
conditions to Advances set forth herein other than any notice requirements. Any
notice given by the Agent pursuant to this Section 2.1(g) may be oral if
immediately confirmed in writing; provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.
(h) Each Lender shall upon any notice pursuant to Section
2.1(g) make available to the Agent an amount in immediately available funds
equal to its Pro Rata Percentage of the amount of the drawing, whereupon the
participating Lenders shall (subject to Section 2.1(i) each be deemed to have
made a Prime Based Rate Loan to the Borrower in that amount. If any Lender so
notified fails to make available to the Agent for the account of the Agent the
amount of such Lender's Pro Rata Percentage of such drawing by 2:00 p.m.,
Philadelphia time on the Drawing Date, then interest shall accrue on such
Lender's obligation to make such payment, from the Drawing Date to the date on
which such Lender makes such payment, at a rate per annum equal to the Federal
Funds Rate in effect from time to time during such period. The Agent will
promptly give notice of the occurrence of the Drawing Date, but failure of the
Agent to give any such notice on the Drawing Date or in sufficient time to
enable any Lender to effect such payment on such date shall not relieve such
Lender from its obligation under this Section 2.1(h) (other than interest during
the period it was not aware of such drawing).
(i) With respect to any Reimbursement Obligation that is not
converted into a Prime Based Rate Loan to the Borrower in whole or in part as
contemplated by Section 2.1(g) because of the Borrower's failure to satisfy any
of the applicable conditions to an Advance set forth herein (other than any
notice requirements) or for any other reason, the Borrower shall be deemed to
have incurred from the Agent a Letter of Credit Borrowing in the amount of such
drawing. Such Letter of Credit Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at the rate per annum
applicable to the Prime Based Rate Loans or, if applicable, the Default Rate.
Each Lender's payment to the Agent pursuant to Section 2.1(h) shall be deemed to
be a payment in respect of its participation in such Letter of Credit Borrowing
in satisfaction of its participation obligation under Section 2.1(h) (a
"Participation Advance").
(j) Upon (and only upon) receipt by the Agent for its account
of immediately available funds from the Borrower (i) in reimbursement of any
payment made by the Agent under the Letter of Credit with respect to which any
Lender has made a Participation Advance to the Agent, (ii) in payment of
interest on such a payment made by the Agent under such a Letter of Credit, or
(iii) in payment of a Letter of Credit Fee, the Agent will pay to each Lender,
in the same funds as those received by the Agent, the amount of such Lender's
ratable share of such funds, except the Agent shall retain the amount of the
ratable share of such funds of any Lender that did not make a Participation
Advance in respect of such payment by the Agent.
(k) If the Agent is required at any time to return to the
Borrower, or to a trustee, receiver, liquidator, custodian, or any official in
any Insolvency Proceeding, any portion of the payments made by the Borrower to
the Agent pursuant to Section 2.1(g) in reimbursement of a payment made under
the Letter of Credit or interest or fee thereon, each Lender shall, on demand of
the Agent, forthwith return to the Agent the amount of its ratable share of any
amounts so returned by the Agent plus interest thereon from the date such demand
is made to the date such amounts are returned by such Lender to the Agent, at a
rate per annum equal to the Federal Funds Rate in effect from time to time.
(l) The Borrower agrees to be bound by the terms of the
Agent's application and agreement for letters of credit and the Agent's written
regulations and customary practices relating to letters of credit, though such
interpretation may be different from the Borrower's own. In the event of a
conflict between such application or agreement and this Agreement, this
Agreement shall govern. It is understood and agreed that, except in the case of
gross negligence or willful misconduct, the Agent shall not be liable for any
error, negligence and/or mistakes, whether of omission or commission, in
following the Borrower's instructions or those contained in the Letters of
Credit or any modifications, amendments or supplements thereto.
(m) In determining whether to honor any request for drawing
under any Letter of Credit by the beneficiary thereof, the Agent shall be
responsible only to determine that the documents and certificates required to be
delivered under such Letter of Credit have been delivered and that they comply
on their face with the requirements of such Letter of Credit.
(n) Each Lender's obligation in accordance with this Agreement
to make the Prime Based Rate Loans or Participation Advances, as contemplated by
this Section 2.1, as a result of a drawing under a Letter of Credit, and the
Obligations of the Borrower to reimburse the Agent upon a draw under a Letter of
Credit, shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Section 2.1 under all
circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment,
defense or other right which such Lender may
have against the Agent, the Borrower or any
other Person for any reason whatsoever;
(ii) the failure of the Borrower or any other
Person to comply, in connection with a
Letter of Credit Borrowing, with the
conditions set forth in this Agreement for
the making of a Prime Based Rate Loan
hereunder, it being acknowledged that such
conditions are not required for the making
of a Letter of Credit Borrowing and the
obligation of the Lenders to make
Participation Advances under this Section
2.1;
(iii) any lack of validity or enforceability of
any Letter of Credit;
(iv) the existence of any claim, set-off, defense
or other right which the Borrower or any
Lender may have at any time against a
beneficiary or any transferee of any Letter
of Credit (or any Persons for whom any such
transferee may be acting), the Agent or any
Lender or any other Person or, whether in
connection with this Agreement, the
transactions contemplated herein or any
unrelated transaction (including any
underlying transaction between the Borrower
and the beneficiary for which any Letter of
Credit was procured);
(v) any draft, demand, certificate or other
document presented under any Letter of
Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or
any statement therein being untrue or
inaccurate in any respect even if the Agent
has been notified thereof,
(vi) payment by the Agent under any Letter of
Credit against presentation of a demand,
draft or certificate or other document which
does not comply with the terms of such
Letter of Credit;
(vii) any adverse change in the business,
operations, properties, assets,
condition (financial or
otherwise) or prospects of the Borrower;
(viii) any breach of this Agreement or any other
Loan Document by any party thereto;
(ix) the occurrence or continuance of an
Insolvency Proceeding with respect to
the Borrower;
(x) the fact that an Event of Default or a
Default shall have occurred and be
continuing;
(xi) the fact that the Revolving Credit Maturity
Date shall have passed or this Agreement or
the Revolving Credit Facility Pro Rata
Shares shall have been terminated; and
(xii) any other circumstance or happening
whatsoever, whether or not similar to any of
the foregoing; provided that each Lender's
obligation to make Prime Based Rate Loans
under this Section 2.1 is subject to the
conditions to Advances set forth in this
Agreement.
(o) In addition to amounts payable as provided in Section 9
hereof, the Borrower hereby agrees to protect, indemnify, pay and save harmless
the Agent and the Lenders from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which the Agent or the Lenders may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any Letter of Credit,
other than as a result of (A) the gross negligence or willful misconduct of the
Agent as determined by a final judgment of a court of competent jurisdiction or
(B) subject to the following clause (ii), the wrongful dishonor by the Agent of
a proper demand for payment made under any Letter of Credit (except upon the
request of the Borrower), or (ii) the failure of the Agent to honor a drawing
under any such Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions herein called "Governmental
Acts").
(p) (i) As between the Borrower and the Agent, the Borrower
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the Agent shall not be
responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for an issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged (even if the Agent shall have been notified thereof); (B)
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (C) the failure of the beneficiary of
any such Letter of Credit, or any other party to which such Letter of Credit may
be transferred, to comply fully with any conditions required in order to draw
upon such Letter of Credit or any other claim of the Borrower against any
beneficiary of such Letter of Credit, or any such transferee, or any dispute
between or among the Borrower and any beneficiary of any Letter of Credit or any
such transferee; (D) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (E) errors in interpretation of technical
terms; (F) any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any such Letter of Credit or of the
proceeds thereof; (G) the misapplication by the beneficiary of any such Letter
of Credit or the proceeds of any drawing under such Letter of Credit; or (H) any
consequences arising from causes beyond the control of the Agent, including any
Governmental Acts, and none of the above shall affect or impair, or prevent the
vesting of, any of the Agent's rights or powers hereunder.
(ii) In furtherance and extension and not in
limitation of the specific provisions set forth above, any
action taken or omitted by the Agent under or in connection with the Letters of
Credit issued by it or any documents and certificates delivered thereunder, if
taken or omitted in good faith, shall not put the Agent under any resulting
liability to the Borrower or any Lender.
(q) In reliance on the representations, warranties and
covenants contained in, and upon the terms and conditions of, this Agreement,
the Lenders agree to make a loan (the "Term Loan") to the Borrower, at a single
time on the Closing Date, in the aggregate amount of $7,500,000.00, with the
amount to be advanced by each Lender to fund the Term Loan hereunder being as
set forth opposite the Lender's name on that portion of Schedule "A" attached
hereto and made a part hereof entitled "Term Loan Facility" (the "Term Loan
Commitment"), which amount shall be remitted by the Lender to the Agent on the
Closing Date in immediately available funds by federal funds wire transfer. Any
amount repaid by the Borrower under the Term Loan may not be reborrowed.
(r) At the Closing, the Borrower shall execute and deliver its
promissory note to each Lender for the total principal amount of such Lender's
Term Loan Commitment (collectively, as the same may be amended, modified or
replaced from time to time, the "Term Notes"). Each Term Note shall evidence the
Borrower's absolute and unconditional obligation to repay such Lender for that
portion of the outstanding balance of the Term Loan owed to such Lender, with
interest as herein and therein provided. All Term Notes shall be substantially
in the form set forth in Exhibit "2.1(r)" attached hereto and made a part
hereof.
(s) The Term Loan shall mature on the Term Loan Maturity Date,
unless having been sooner accelerated by the Agent on behalf of the Lenders or
sooner prepaid by the Borrower in accordance with the terms and provisions of
this Agreement.
2.2 Advances, Conversions, Renewals and Payments:
(a) Except to the extent otherwise set forth in this
Agreement, all payments of principal and of interest on the Revolving Credit
Facility, the Term Loan, the Fees, the Expenses, and all other charges and any
other Obligations of the Borrower hereunder, shall be made to the Agent at its
main Philadelphia banking office, Citizens Bank, 0000 Xxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxx Meeting, Pennsylvania in United States dollars, in immediately
available funds. The Agent, on behalf of all of the Lenders, shall have the
unconditional right and discretion to make an Advance under the Revolving Credit
Facility to pay, and/or to charge RCM's or any other Borrower's operating
account with the Agent or any Lender for, all of the Borrower's Obligations as
they become due from time to time under this Agreement including without
limitation, interest, principal, Fees and reimbursement of Expenses. Any such
Advance shall not, in any event, cause the Revolving Credit Loans, together with
the aggregate amount of all Letter of Credit Outstandings, to exceed the
Revolving Credit Limit.
(b) (i) Any Loans which may be made by Lenders from time to
time under this Agreement shall be made available for the use and benefit of the
Borrower by crediting such proceeds to RCM's operating account with the Agent.
(ii) All Loans subject to the Prime Rate Option
requested by the Borrower hereunder must be requested
by 11:00 A.M., Philadelphia time, on the date such Loan is to be made, which
must be a Business Day. All Loans subject to the LIBOR Rate Option or
conversions from Loans subject to the Prime Rate Option to the LIBOR Rate
Option, requested by the Borrower must be requested by 11:00 A.M. Philadelphia
time, three Good Business Days prior to the date of such requested Loan or
conversion. If the Borrower does not have the required availability for such
requested Loan on the date any such LIBOR Based Rate Loan is to be made, then
the Lenders shall not be required to make such Loan. All remittances at any time
among the Lenders and the Agent under this Agreement shall be made in
immediately available funds by federal funds wire transfer. All requests for a
Loan may be made either by telephone or in writing, provided that all telephonic
requests are, upon the Agent's request, to be confirmed by the Borrower in
writing on the same day, and further provided that such written confirmation may
be sent by telecopy or facsimile transmission. No Lender shall be obligated, for
any reason whatsoever, to advance or reimburse Agent for the share of any other
Lender.
(iii) A. Between each Settlement Date,
the Agent, in its capacity as a Lender, shall have the
discretion (without any duty or obligation regardless of any prior practice or
procedures) to make all Advances for the account and on behalf of the Lenders in
accordance with each Lender's Pro Rata Percentage. Periodically but not less
frequently than once every week on the same day of each week, unless such day is
not a Business Day, in which event such determination shall be made the next
Business Day ("Settlement Date"), the Agent shall make a determination of the
appropriate dollar amount of each Lender's Revolving Credit Loans based upon
each such Lender's Pro Rata Percentage of all then outstanding Revolving Credit
Loans, which amounts shall be calculated as of the close of the Business Day
immediately preceding each respective Settlement Date. A Settlement Date shall
occur notwithstanding any intervening Event of Default or other occurrence,
event or circumstance, including without limitation the commencement of a
bankruptcy or reorganization case. Amounts of principal paid to the Agent by the
Borrower with respect to the Loans from time to time, between Settlement Dates,
shall be applied to the outstanding balance of the Loans made by the Agent, as a
Lender pursuant hereto, with the outstanding balance of the Loans made by each
other Lender to be adjusted on the next Settlement Date. Interest shall accrue
and each Lender shall be entitled to receive interest at the applicable rate
only on the actual outstanding dollar amount of its respective outstanding Loans
without regard to a prospective settlement. On each Settlement Date, Agent shall
then issue to each Lender a settlement schedule containing information with
respect to the status of the Loans and the relevant net positions of the Lenders
and the outstanding balances of their respective Loans as of the close of the
Business Day preceding such Settlement Date. Each settlement schedule shall show
the net amount then owing by each Lender to the Agent or by the Agent to each
such Lender based upon the aggregate Advances made and collections received
since the most recent Settlement Date and settlement among the Lenders and the
Agent shall be made in accordance with the direction of the Agent no later than
11:00 A.M. Philadelphia time, on each Settlement Date. To the extent the Agent
is not reimbursed by any Lender on a Settlement Date in accordance with the
Agent's direction, the Borrower shall immediately repay the Agent on demand the
amount of any reimbursement not so made by any Lender.
B. Each Lender is absolutely and
unconditionally obligated without setoff or deduction of
any kind, to remit to the Agent on the Settlement Date any amount owing to the
Agent by such Lender on the settlement schedule for such date. The Agent shall
also be entitled to recover any and all actual losses and damages (including
without limitation, reasonable attorneys' fees) from any party failing to remit
payment on the Settlement Date in accordance with this Agreement. The Agent may
set off the obligations of such party under this paragraph against any
distributions or payments of the Obligations which such party would otherwise be
entitled to hereunder at any time.
(iv) A. In lieu of the procedure set
forth in the preceding subparagraph (iii), the Agent shall
provide the Lenders with notice that the Borrower has requested an Advance, on
the same Business Day as such request, and request each Lender to provide the
Agent with such Lender's Pro Rata Percentage of such requested Advance prior to
the Agent's making such Advance. Upon receipt of such notice from the Agent
prior to 12:00 p.m., Philadelphia time, each Lender shall remit to the Agent its
respective Pro Rata Percentage of such requested Advance, prior to 1:00 P.M.
Philadelphia time, on the Business Day the Agent is scheduled to make such
Advance in accordance with Section 2.2(b)(ii) hereof. Neither the Agent nor any
other Lender shall be obligated, for any reason whatsoever, to remit or advance
the share of any other Lender. The Agent shall not be required to make the full
amount of the requested Advance unless and until it receives funds representing
each other Lender's Pro Rata Percentage of such requested Advance, but the Agent
shall advance to the Borrower that portion of the requested Advance equal to the
Pro Rata Percentages of such requested Advance which it has received from the
Lenders.
B. If the Agent does not receive
each other Lender's Pro Rata Percentage of such requested
Advance, and the Agent elects, in its sole discretion, to make the requested
Advance on behalf of the Lenders or any of them, the Agent shall be entitled to
recover each Lender's Pro Rata Percentage of each Advance together with interest
at a per annum rate equal to the Federal Funds Rate during the period commencing
on the date such Advance is made and ending on (but excluding) the date on which
the Agent recovers such amount. Each Lender is absolutely and unconditionally
obligated, without deduction or setoff of any kind, to forward to the Agent its
Pro Rata Percentage of each Advance made pursuant to the terms of this
Agreement. To the extent the Agent is not reimbursed by such Lender, he Borrower
shall repay the Agent immediately on demand, such amount. The Agent shall also
be entitled to recover any and all actual losses and damages (including, without
limitation, reasonable attorneys' fees) from any Lender failing to so advance
upon demand of the Agent. The Agent may set off the obligations of a Lender
under this paragraph against any distributions or payments of the Obligations
which the Agent would otherwise make available to such Lender at any time.
(v) To the extent and during the time
period in which any Lender fails to provide or delays providing
its respective payment to the Agent pursuant to clause (iii) or (iv) above (any
such Lender being referred to, during such period, as a "Defaulting Lender"),
such Lender's percentage of all payments of the Obligations (but not its Pro
Rata Percentage of future Advances required to be funded by such Lender) shall
decrease to reflect the actual percentage which its actual outstanding Loans
bears to the total outstanding Loans of all Lenders and said amount shall be
subordinate to the outstanding Loans of all Lenders.
In addition, notwithstanding any definition or other provision in this
Agreement to the contrary, during any period in which a Lender is a Defaulting
Lender and such default continues for three (3) Good Business Days, all
calculations for voting purposes among the Lenders shall be made as if the
Defaulting Lender were not a Lender and not a party to this Agreement.
2.3 Interest.
(a) Prime Based Rate Option. The unpaid principal balance of
the Loans, unless subject to the LIBOR Rate Option, shall bear interest, subject
to the terms hereof, at a per annum rate equal to the Prime Based Rate. Changes
in the Prime Based Rate shall become effective on the same day as the Agent
announces a change in its Prime Rate and upon any change in the Applicable Prime
Rate Margin occurring hereunder.
(b) LIBOR Rate Option.
(i) So long as no Event of Default has
occurred and is continuing, the Borrower shall have the option
to have the unpaid principal balance of the Loans bear interest at the LIBOR
Based Rate ("LIBOR Rate Option"), provided that LIBOR Based Rate Loans shall be
in a minimum amount of Five Hundred Thousand Dollars ($500,000.00). In no event,
however, may the Borrower have more than ten (10) LIBOR Rate Loans outstanding
at any one time.
(ii) LIBOR Based Rate Loans shall be
selected for a period of either one month, two months, three
months or six months duration, as the Borrower may elect, during which the LIBOR
Based Rate is applicable (the "LIBOR Interest Period"); provided, however, that
(a) if the LIBOR Interest Period would otherwise end on a day which shall not be
a Good Business Day, such LIBOR Interest Period shall be extended to the next
succeeding Good Business Day, unless such Good Business Day falls in another
calendar month, in which case such LIBOR Interest Period shall end on the next
preceding Good Business Day subject to clause (c) below; (b) interest shall
accrue from and including the first day of each LIBOR Interest Period to, but
excluding the day on which any LIBOR Interest Period expires; and (c) with
respect to any LIBOR Interest Period which begins on the last Good Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such LIBOR Interest Period), the LIBOR
Interest Period shall end on the last Good Business Day of a calendar month. No
LIBOR Interest Period for any Revolving Credit Loan may end after the Revolving
Credit Maturity Date. No LIBOR Interest Period for any Term Loan may end after
the Term Loan Maturity Date. Subject to all of the terms and conditions
contained herein applicable to a request that a new Advance be a LIBOR Based
Rate Loan, the Borrower may extend a LIBOR Based Rate Loan as of the last day of
the LIBOR Interest Period to a new LIBOR Based Rate Loan or, subject to clause
(i) above, may convert a portion of the Loans subject to the Prime Based Rate
Option to a LIBOR Based Rate Loan. If the Borrower fails to notify the Agent of
the LIBOR Interest Period for a subsequent LIBOR Based Rate Loan at least three
Good Business Days prior to the last day of the then current LIBOR Interest
Period of an outstanding LIBOR Based Rate Loan, then such outstanding LIBOR
Based Rate Loan shall become a loan subject to the Prime Based Rate Option at
the end of the current LIBOR Interest Period for such outstanding LIBOR Based
Rate Loan and shall accrue interest in accordance with Section 2.3(a) above.
(iii) The LIBOR Rate may be automatically
adjusted by the Agent on a prospective basis to take into
account the additional or increased cost of maintaining any necessary reserves
for Eurodollar deposits or increased costs due to changes after the date hereof
in applicable law or regulation or the interpretation thereof occurring
subsequent to the commencement of the then applicable LIBOR Interest Period,
including but not limited to changes after the date hereof in tax laws (except
changes of general applicability in corporate income tax laws as they affect
financial institutions) and changes in the reserve requirements imposed by the
Board of Governors of the Federal Reserve System (or any successor), excluding
any such changes that have resulted in a payment pursuant to Section 2.8 hereof,
that increase the cost to the Lenders of funding LIBOR Based Rate Loans. The
Agent shall promptly give the Borrower and each Lender notice of such a
determination and adjustment, which determination shall be conclusive as to the
correctness of the fact and the amount of such adjustment, absent manifest
error. The Borrower may, by written notice to the Agent, (A) request the Agent
to furnish to the Borrower a statement setting forth the basis for adjusting
such LIBOR Rate and the method for determining the amount of such adjustment;
and/or (B) prepay the LIBOR Based Rate Loan with respect to which such
adjustment is made, subject to the requirements of Section 2.5(c) and Section
2.8 below.
(iv) In the event that the Borrower
shall have requested the LIBOR Rate Option in accordance with
Section 2.3(b) and Agent shall have reasonably determined that Eurodollar
deposits equal to the amount of the principal of the requested LIBOR Based Rate
Loan and for the LIBOR Interest Period specified are unavailable, impractical or
unlawful, or that the rate based on the LIBOR Rate will not adequately and
fairly reflect the cost of funds of the LIBOR Based Rate applicable to the
specified LIBOR Interest Period, of making or maintaining the principal amount
of the requested LIBOR Based Rate Loan specified by the Borrower during the
LIBOR Interest Period specified, or that by reason of circumstances affecting
Eurodollar markets, adequate and reasonable means do not exist for ascertaining
the rate based on the LIBOR Rate applicable to the specified LIBOR Interest
Period, the Agent shall promptly give notice of such determination to the
Borrower that the rate based on the LIBOR Rate is not available. A determination
by the Agent hereunder shall be prima facie evidence of the correctness of the
fact and amount of such additional costs or unavailability. Upon such a
determination, (A) the right of the Borrower to select, convert to, or maintain
a LIBOR Based Rate Loan hereunder shall be suspended until the Agent shall have
notified the Borrower that such conditions shall have ceased to exist (which
notice the Agent shall give promptly after such cessation), and (B) the Loans
subject to the requested LIBOR Rate Option shall accrue interest in accordance
with Section 2.3(a) above.
(v) In the event that, as a result
of any changes in applicable law or regulation or the
interpretation thereof after the date hereof, it becomes unlawful for a Lender
to make or to continue to fund or maintain LIBOR Based Rate Loans or to maintain
Eurodollar liabilities sufficient to fund any LIBOR Based Rate Loan, then such
Lender shall immediately notify the Agent who shall immediately notify the other
Lenders and the Borrower thereof and such Lender's obligations to make, convert
to, or maintain a LIBOR Based Rate Loan shall be suspended until such time as
such Lender may again cause the LIBOR Based Rate to be applicable to its share
of any LIBOR Based Rate Loans and such Lender's share of the Loans subject to
the LIBOR Based Rate shall accrue interest in accordance with Section 2.3(a)
above. Promptly after becoming aware that it is no longer unlawful for such
Lender to maintain such Eurodollar liabilities, such Lender shall notify the
Agent who will notify the Borrower and the other Lenders thereof and such
suspension shall cease to exist.
(c) Payment Dates. Interest on amounts outstanding under the Term Loan
(including without limitation any LIBOR Based Rate Loan) shall be due and
payable in arrears on the first day of each calendar month, commencing on the
first day of the first full calendar month following the Closing Date. Interest
on amounts outstanding under any Revolving Credit Loan (including without
limitation any LIBOR Based Rate Loan with an Interest Period of greater than two
(2) months) shall be due and payable in arrears on the first day of each
calendar quarter, commencing on the first day of the first full calendar quarter
following the Closing Date. In addition to the foregoing, (i) for any LIBOR
Based Rate Loan, all accrued and unpaid interest thereon shall be due and
payable in full on the last day of the applicable LIBOR Interest Period for such
Loan, and (ii) in the case of any Loan, all accrued and unpaid interest thereon
shall be due an d payable in full upon the payment in full or any prepayment
thereof or the conversion thereof into a Loan of another type (but only on the
principal so paid, prepaid or converted).
2.4 Additional Interest Provisions.
(a) Calculation of Interest. Interest on the Loans, regardless
of the rate option, shall be based on a three hundred sixty (360) day year and
charged for the actual number of days elapsed.
(b) Limitation on LIBOR Based Rate Loans. Upon the occurrence
and continuance of an Event of Default described in Section 8 below, the Agent
may in its sole discretion eliminate the availability of LIBOR Based Rate Loans.
(c) Default Rate. After the occurrence and during the
continuance of an Event of Default hereunder, the Agent may, and shall at the
direction of the Majority Lenders, increase the per annum effective rate of
interest on all Loans outstanding hereunder, regardless of the rate option, to a
rate equal to two percentage points (2%) in excess of the then current
applicable interest rate (the "Default Rate"). The Borrower acknowledges that
the Default Rate is imposed as a direct result of the increased cost attendant
to the administration of the Loans because of said Event of Default.
(d) Continuation of Interest Charges. All contractual rates of
interest chargeable on outstanding Loans, regardless of the rate option, shall
continue to accrue and be paid even after default, maturity, acceleration,
judgment, bankruptcy, insolvency proceedings of any kind or the happening of any
event or occurrence similar or dissimilar to the foregoing.
(e) Applicable Interest Limitations: In no contingency or
event whatsoever shall the aggregate of all amounts deemed interest hereunder
and charged or collected pursuant to the terms of this Agreement exceed the
highest rate permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto. In the event that such
court determines that the Lenders have charged or received interest hereunder in
excess of the highest applicable rate, the Agent, on behalf of the Lenders,
shall in its sole reasonable discretion, apply and set off such excess interest
received by the Lenders against other Obligations due or to become due hereunder
and such rate shall automatically be reduced to the maximum rate permitted by
such law.
2.5 Fees.
(a) Extension Fee: At the Closing, the Borrower shall pay to
the Agent, for the ratable benefit of the Lenders, a non-refundable extension
fee (the "Extension Fee") in an amount equal to one-quarter of one percent
(0.25%) of the sum of (i) the aggregate Revolving Credit Facility Pro Rata
Shares, and (ii) the initial principal amount of the Term Loan.
(b) Unused Line Fee. So long as the Revolving Credit Facility
is outstanding and has not been terminated pursuant to the terms hereof, the
Borrower shall unconditionally pay to the Agent, for the benefit of the Lenders
in accordance with their Pro Rata Percentages, a non-refundable fee (the "Unused
Line Fee") based on the Borrower's financial condition, tested quarterly, as
follows:
Total Funded
Debt to EBITDA Unused Line Fee
> 2.25x 35.0 bp
> 1.75x and < 2.25x 30.0 bp > 1.25x and <
1.75x 25.0 bp < 1.25x 20.0 bp
The Unused Line Fee shall be charged on the average daily unused portion of the
Revolving Credit Facility calculated by subtracting the sum of the average daily
outstanding balance of all Revolving Credit Loans and Letter of Credit
Outstandings from $40,000,000. The Unused Line Fee shall be computed and paid on
a quarterly basis, in arrears, on the first day of each April, July, October and
January beginning on July 1, 2002, and on the earlier of (i) the Revolving
Credit Maturity Date or the date on which the Revolving Credit Facility is
terminated by the Borrower pursuant to Section 2.1(d) hereof, and, in the event
the Borrower requests a Line Reduction as provided in Section 2.1(d) hereof, on
the effective date of such reduction.
(c) Termination Amount. LIBOR Based Rate Loans may not be
repaid other than on the last day of the applicable LIBOR Interest Period. If
the Borrower prepays (for any reason whatsoever, including without limitation
any prepayment required in connection with an acceleration of any Loan
hereunder) a portion or all of the outstanding debt under a LIBOR Based Rate
Loan prior to the last day of the applicable LIBOR Interest Period, the Borrower
shall indemnify the Agent on behalf of the Lenders against any loss or expense
which the Agent on behalf of the Lenders has sustained or incurred as a
consequence of such prepayment in an amount equal to the, Termination Amount
(hereinafter defined). As used herein, the term "Termination Amount" means the
amount which the Borrower shall pay to the Agent, on behalf of the Lenders, as a
premium in connection with a repayment of a LIBOR Based Rate Loan other than on
the last day of the applicable LIBOR Interest Period therefor, which amount
shall be the amount determined by the Agent on behalf of the Lenders to be the
difference between (a) the present value of the interest payments that would
have been paid in the future to the Agent on behalf of the Lenders by the
Borrower on such repaid portion of the LIBOR Based Rate Loan but for such
repayment, and (b) the present value of the interest payments that would be paid
in the future to the Agent on behalf of the Lenders at the United States
Treasury Rate if on or about the date of repayment the Agent, on behalf of the
Lenders, made a hypothetical investment of the repaid portion of the LIBOR Based
Rate Loan in United States Treasury securities maturing on or about the date
that the repaid portion of the LIBOR Based Rate Loan would have matured but for
such repayment and bearing interest accruing from the date of repayment, payable
on each date on which the Borrower, but for such repayment, would have paid
interest on the repaid portion of principal. "United States Treasury Rate" means
a rate of interest per annum equal to (rounded downward to the nearest 1/100 of
one percent) the annual yield the Agent on behalf of the Lenders could obtain by
purchasing on the date of repayment United States Treasury Securities with
semi-annual interest payments, maturing on or about the date on which the repaid
portion of the LIBOR Based Rate Loan would have matured.
(d) Letter of Credit Fees. The Borrower shall pay: (i) to the
Agent, for the ratable benefit of the Lenders, a fee (the "Letter of Credit
Fee") in an amount equal to the Letter of Credit Applicable Margin, which fee
shall be computed on the daily average Letter of Credit Outstandings and shall
be payable quarterly in arrears on the first Business Day of each January,
April, July and October following the issuance of each Letter of Credit and on
the last day of the Revolving Credit Term; and (ii) to the Agent for its own
account a fronting fee ("Fronting Fee") at the time of the issuance of each
Letter of Credit in an amount equal to one-eighth of one percent (0.125%) of the
face amount of such Letter of Credit. The Borrower shall also pay to the Agent
for the Agent's sole account the Agent's then in effect customary fees and
administrative expenses payable with respect to letters of credit as the Agent
may generally charge or incur from time to time in connection with the issuance,
maintenance, modification (if any), assignment or transfer (if any), negotiation
and administration of the Letters of Credit.
(e) Calculation of Fees. All fees provided for in this Section
2.5 shall be based on a three hundred sixty (360) day year and charged for the
actual number of days elapsed.
(f) Defined Fee Terms. The Extension Fee, the
Unused Line Fees, the Termination Amount, the Frontage Fees, and
the Letter of Credit Fees are hereinafter sometimes referred to
individually as a "Fee" and, collectively, as the "Fees".
2.6 Prepayments.
(a) LIBOR Based Rate Loans. Apart from the provisions of
Section 2.5(c) above, if applicable, no portion of any LIBOR Based Rate Loan may
be prepaid at any time unless the Borrower first satisfies in full its
obligations under Section 2.8 below arising from such prepayment.
(b) Prime Based Rate Loans. Prime Based Rate Loans may be
prepaid at any time and from time to time in whole or in part without premium or
penalty, provided that any such prepayment under the Term Loan shall be in a
minimum amount of $500,000.00 and integral multiples thereof.
(c) Mandatory Prepayment of Term Loan. Pursuant to the terms
and provisions of this Agreement, as security for, among other things,
Borrower's performance of its obligations under the Loan Documents, Borrower has
heretofore pledged to, and granted a security interest in favor of, Agent, for
the benefit of the Lenders, in the Collateral. Included within the Collateral is
a certain federal income tax refund owed to RCM by the United States Government
in the approximate amount of $3,900,000.00 (the "Pledged Tax Refund").
Notwithstanding any other provision contained in this Agreement or the other
Loan Documents, Borrower shall also be required to make an additional payment(s)
of principal under the Term Loan in an amount equal to the amount of the
proceeds of the Pledged Tax Refund received by Borrower, which such payment(s)
shall be made on the date(s) on which Borrower actually receives any of said
proceeds. The principal payment(s) required to be made by Borrower under this
Section 2.6(c) shall be applied first to accrued but unpaid interest on the Term
Loan and then to the principal payments due under the Term Loan in the inverse
order of maturity. Prior to the occurrence of an Event of Default or Unmatured
Event of Default, Agent shall be permitted, at its sole option, to the extent
any principal payment is to be applied to the outstanding balance of a LIBOR
Based Rate Loan under this Section 2.6(c), to elect to hold such payment and not
apply it against the outstanding balance of said LIBOR Based Rate Loan, until
the earlier to occur of (a) an Unmatured Event of Default, (b) an Event of
Default, (c) the end of the applicable LIBOR Interest Period, or (d) the
thirtieth day following the Agent's receipt of such proceeds. If the application
of any payment made by Borrower pursuant to this Section 2.6(c) is delayed
pursuant to the immediately preceding sentence, interest shall continue to
accrue on the outstanding principal of the Term Loan until such payment is
actually applied by Agent to reduce the outstanding principal balance of the
Term Loan.
(d) Proceeds of Collateral. Except for sales or dispositions
in the ordinary course of The Borrower's business and with respect to equipment
which is replaced, the Borrower shall, upon the receipt of proceeds from the
sale or other disposition of any Collateral, hold such proceeds in trust for
Lenders and immediately remit in specie, all such proceeds to the Agent.
2.7 Use of Proceeds. The extensions of credit hereunder and the proceeds of the
Loans shall be used by the Borrower solely for (i) the financing of Acquisitions
(subject to the conditions set forth below), (ii) to refinance all existing
indebtedness owed by the Borrower pursuant to the Original Loan Agreement, and
(iii) for working capital and other general corporate purposes. The total cash
consideration paid or owed by the Borrower in connection with all Acquisitions
closed after December 31, 2001 and prior to the termination of this Agreement
shall not exceed $3,000,000.00, in the aggregate. (For purposes of this Section
2.7, cash consideration paid or owed for consulting services, agreements not to
compete or similar arrangements shall be considered paid or owed in connection
with an Acquisition).
2.8 Indemnity/Loss of Margin.
(a) The Borrower shall indemnify, defend and hold harmless the
Agent and the Lenders against any and all out of pocket loss, liability, cost or
expense which the Agent and any Lender or Lenders may sustain or incur as a
consequence of (i) any failure of the Borrower to obtain, convert or extend any
LIBOR Based Rate Loan after notice thereof has been given to the Agent; or (ii)
any payment, prepayment, termination or conversion of a LIBOR Based Rate Loan
made for any reason on a date other than the last day of the applicable LIBOR
Interest Period therefor. The Borrower shall pay the full amount thereof to the
Agent, for the ratable benefit of the Lenders, within fifteen (15) days of a
demand therefor by the Agent.
(b) In the event that any future law, rule, regulation, treaty
or official directive or the interpretation or application thereof by any
central bank, monetary authority or governmental authority, or the compliance
with any future guideline or request of any central bank, monetary authority or
governmental authority (whether or not having the force of law) imposes,
modifies or deems applicable any deposit insurance, reserve, special deposit, or
other similar requirement with respect to deposits in or for the account of, or
loans or advances or commitment to make loans or advances by a Lender and the
result of any of the foregoing is to increase the costs of a Lender, reduce the
income receivable by or return on equity of a Lender or impose any expense upon
a Lender with respect to any advances or extensions of credit or commitments to
make advances or extensions of credit under this Agreement, such Lender shall so
notify the Agent in writing. Upon notice from the Agent, the Borrower agrees to
pay such Lender the amount of such increase in cost, reduction in income,
reduced return on equity or capital, or additional expense after presentation by
such Lender of a statement in reasonable detail concerning such increase in
cost, reduction in income, reduced return on equity or capital, or additional
expense. Such statement shall be limited to ninety (90) days and shall set forth
a brief explanation of the amount and such Lender's calculation of the amount
(in determining such amount such Lender may use any reasonable averaging and
attribution methods), which statement shall be conclusively deemed correct
absent error. The terms of this Agreement and the Loan Documents shall be
amended to eliminate any such expenses and/or loss to the Lenders.
2.9 Capital Adequacy: If any future law, governmental rule, regulation, policy,
guideline, directive or similar requirement (whether or not having the force of
law) imposes, modifies, or deems applicable any capital adequacy, capital
maintenance or similar requirement which affects the manner in which any Lender
allocates capital resources to its commitments (including any commitments
hereunder), and as a result thereof, in the opinion of such Lender, the rate of
return on such Lender's capital with regard to the Loans and/or its obligations
hereunder is reduced to a level below that which such Lender could have achieved
but for such circumstances taking into account such Lender's policies regarding
capital adequacy, then in such case and upon notice from the Agent to the
Borrower, from time to time, the Borrower shall pay such Lender such additional
amount or amounts as shall compensate such Lender for such reduction in its rate
of return. Such notice shall contain the statement of such Lender in reasonable
detail with regard to any such amount or amounts which shall, in the absence of
error, be binding upon the Borrower. In determining such amount, such Lender may
use any reasonable method of averaging and attribution that it deems applicable.
In the event that a Lender, other than Citizens, exercises its rights under this
Section 2.9, the Borrower shall have the option to replace such Lender with
another financial institution (acceptable to the Agent) who will purchase all
(but not part) of such Lender's interest in the Loans then outstanding
hereunder. Such Lender shall be required to assign and transfer to the financial
institution obtained by the Borrower, pursuant to an agreement reasonably
satisfactory to such Lender and the Agent, and without representation, warranty
or recourse, its respective interest in the Loans then outstanding hereunder in
exchange for full payment of the outstanding balances thereof, with accrued
interest and all unpaid Fees.
SECTION 3. COLLATERAL
3.1 Description: As security for the payment of the Obligations,
and satisfaction by the Borrower of all covenants and
undertakings contained in this Agreement and the other Loan Documents:
(a) The Borrower has heretofore assigned and granted to the
Agent, on behalf of the Lenders, a continuing first lien on and security
interest in, upon and to all of its Property and business assets, including
without limitation the following described Property (the "Collateral"):
(i) Accounts, Contract Rights, Etc. -
All now owned and hereafter acquired, created, or arising
Accounts, accounts receivable, notes receivable, contract rights, chattel paper,
documents (including documents of title), instruments and letters of credit;
(ii) Inventory - All now owned or hereafter
acquired, created or arising Inventory of every nature and
kind, wherever located;
(iii) Equipment - Except as set forth in
Section 7.3(d), all now owned or hereafter acquired equipment,
including without limitation machinery, furniture and fixtures, wherever
located, and all replacements, parts, accessories, substitutions and additions
thereto;
(iv) General Intangibles - All now owned
and hereafter acquired, created or arising general intangibles
of every kind and description, including, but not limited, to all existing and
future customer lists, telephone lists and directories, choses in action, loans,
claims, books, records, patents and patent applications, copyrights, trademarks,
tradenames, tradestyles, trademark applications, blueprints, drawings, designs
and plans, trade secrets, formulae, tax and any other types of refunds, rights
to or in employee or other pension, retirement or similar plans and any assets
thereof, or any portion thereof, including without limitation refunds for
overpayments, distributions upon termination, reversion of any surplus assets or
otherwise, returned and unearned insurance premiums, rights and claims under
insurance policies relating to the Collateral, computer information, software,
records, data and, except where the terms of same prohibit the grant of a
security interest, contracts, contract rights, distributorship agreements,
licenses and license agreements.
(v) Deposit Accounts and Related Property -
All now existing and hereafter acquired or arising deposit
accounts, investment accounts, commercial paper, investment property, including
investment securities, and certificates of deposit, of every nature, wherever
located, and all documents and records associated therewith;
(vi) Property in Lender's Possession -
All Property, now or hereafter in the Agent's or any Lender's
possession;
(vii) Other Property - All other
personal Property of such entity not described above whether now
existing or hereafter acquired;
(viii) Intercompany Notes - All Intercompany Notes; and
(ix) Proceeds - The proceeds
(including, without limitation, insurance proceeds), whether cash or
non-cash, of all of the foregoing.
(b) The Borrower hereby covenants, confirms and agrees that, as security for the
repayment of the Obligations, the Agent, for the benefit of the Lenders has, or
is hereby granted, and shall therefore have and continue to have, a continuing
first priority lien on and security interest in all of the Collateral, all
whether now existing or hereafter acquired, created or arising, and all proceeds
thereof, including without limitation, a first priority lien on certain Property
granted to the Lenders under a Collateral Pledge Agreement dated August 19,
1998, and a certain Trademark Security Agreement dated August 19, 1998, except
to the extent otherwise expressly provided in Section 3.1(c) and Section 6.19 of
this Agreement. The Borrower acknowledges and agrees that nothing contained
herein or in any other Loan Document in any way impairs the Agent's existing
security interests, rights or priority in the Collateral.
(c) Notwithstanding any other provision in the Loan Documents to the contrary,
RCM shall not be required to pledge as security for the Obligations more than
sixty-five percent (65%) of the issued and outstanding stock in any of its
Subsidiaries incorporated under the laws of Canada (or any province thereof).
3.2 Lien Documents: At the Closing and thereafter as the Agent deems
necessary, the Borrower shall execute and deliver to the
Agent, or have executed and delivered (all in form and substance reasonably
satisfactory to the Agent):
(a) Financing Statements - Financing statements pursuant to
the UCC, which the Agent, on behalf of the Lenders, may file in any jurisdiction
where the Borrower is located, where any Collateral is or may be located and in
any other jurisdiction that the Agent deems appropriate; and
(b) Other Agreements - Any other agreements, documents, instruments and
writings, including, without limitation, patent and trademark security
agreements, reasonably required by the Agent to evidence, perfect or protect the
Lenders' Liens and security interests in the Collateral or as the Agent may
reasonably request from time to time.
3.3 Other Actions: In addition to the foregoing, the Borrower shall do anything
further that may be lawfully and reasonably required by the Agent to secure the
Lenders and effectuate the intentions and objects of this Agreement, including,
but not limited to, execution and delivery of continuation statements,
amendments to financing statements, security agreements, contracts and any other
documents required hereunder. At the Agent's request, the Borrower shall also
promptly deliver (with execution by the Borrower of all necessary documents or
forms to reflect the Agent's Lien thereon) to the Agent as bailee for Lenders,
all items for which the Lenders must receive possession to obtain a perfected
security interest, including without limitation, all notes, letters of credit,
documents of title, chattel paper, warehouse receipts, instruments, and any
other similar instruments constituting Collateral.
3.4 Searches: The Agent shall, prior to or at the Closing, and thereafter as the
Agent or the Majority Lenders acting through the Agent may reasonably determine
from time to time, at the Borrower's expense, obtain the following searches (the
results of which are to be consistent with the warranties made by the Borrower
in this Agreement):
(a) UCC Searches: UCC searches with the Secretary of
State and local filing office of each state or Canadian
province where the Borrower is located, maintains its executive office,
a place of business, or any assets;
(b) Judgments, Etc.: Judgment,
federal tax lien and corporate tax lien searches, in all applicable filing
offices of each state or province searched under subparagraph (a) above.
The Borrower shall, prior to or at Closing and at its expense,
obtain and deliver to the Agent good standing certificates showing the Borrower
to be in good standing in its state or province of incorporation and in each
other state or foreign country in which it is doing and presently intends to do
business, except any such jurisdiction for which such failure to be so qualified
will not have a Material Adverse Effect or adversely effect the Agent's and/or
the Lenders' rights hereunder.
3.5 Landlord's Waivers: The Borrower will use commercially reasonable efforts to
cause each landlord or warehouseman at its Parsippany, New Jersey location and
such other present and future locations of Borrower identified by the Agent from
time to time, to execute and deliver to Agent an instrument, in form and
substance reasonably satisfactory to Agent, under which such landlord or
warehouseman waives its/his/their right to distrain on or foreclose against the
Collateral.
3.6 Filing Security Agreement: A carbon, photographic or other
reproduction or other copy of this Agreement or of a financing
statement is sufficient as and may be filed in lieu of a financing statement.
3.7 Power of Attorney: By its signature hereon, the Borrower hereby irrevocably
authorizes the Agent to execute (on behalf of the Borrower) and file against the
Borrower one or more financing, continuation or amendment statements pursuant to
the UCC in form satisfactory to the Agent in its sole discretion, and the
Borrower will pay the cost of preparing and filing the same in all jurisdictions
in which such filing is deemed by the Agent to be necessary or desirable in
order to perfect, preserve and protect its security interests. Each of the
officers of the Agent is hereby irrevocably made, constituted and appointed the
true and lawful attorney for the Borrower (without requiring any of them to act
as such) with full power of substitution to do the following: (a) endorse the
name of the Borrower upon any and all checks, drafts, money orders and other
instruments for the payment of monies that are payable to the Borrower and
constitute collections on the Borrower's Accounts or proceeds of other
Collateral; (b) execute in the name of the Borrower any financing statements,
schedules, assignments, instruments, documents and statements that the Borrower
is obligated to give the Agent hereunder or is necessary to perfect the Agent's
security interest or lien in the Collateral; (c) to verify validity, amount or
any other matter relating to the Collateral by mail, telephone, telecopy or
otherwise in accordance with the customary procedures of the Agent's asset based
lending department; and (d) following an Event of Default and during the
continuance thereof, do such other and further acts and deeds in the name of any
such entity that the Agent may reasonably deem necessary or desirable to enforce
any Account or realize upon any other Collateral. This power of attorney is
coupled with an interest, and is irrevocable until the Obligations are
indefeasibly paid in full.
3.8 Verifications: The Agent, on behalf of the Lenders, shall be entitled to
verify the validity, amount, or any other matter relating to the Collateral by
mail, telephone, telecopy or otherwise in accordance with the customary
procedures of the Agent.
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES
Closing under this Agreement is subject to the following conditions
precedent (all documents to be in form and substance satisfactory to the Agent
and Lenders and their respective counsel):
4.1 Resolutions, Opinions, and Other Documents: Each of the Borrowers
shall have delivered to the Agent the following:
(a) this Agreement, the Term Notes and the Revolving
Credit Notes all properly executed;
(b) each document and agreement required
to be executed under any provision of this Agreement or any related
agreement;
(c) certified copies of (i) resolutions of the board of
directors of the Borrower authorizing the execution of this Agreement, the Term
Notes and the Revolving Credit Notes to be issued hereunder and each document
required to be delivered by any Section hereof and (ii) the Borrower's Articles
or Certificate of Incorporation and By-laws (or other constituent document);
(d) an incumbency certificate for the Borrower
identifying all Authorized Officers, with specimen signatures;
(e) a written opinion of the Borrower's independent legal
counsel addressed to the Agent for the benefit of all of the Lenders and
opinions of such other counsel as the Agent deems necessary;
(f) a certification by the Borrower signed on its behalf by
the chief financial officer of the Borrower that there has not occurred any
material adverse change in the operations and condition (financial or otherwise)
of the Borrower since December 31, 2001;
(g) payment by the Borrower of all Fees owing to the
Agent and/or the Lenders and all Expenses associated with
the Loans incurred on or prior to the Closing Date;
(h) agreements, in form and substance satisfactory to the
Agent in its sole discretion, subordinating all Intercompany Notes, including
but not limited to intercompany or acquisition related indebtedness and other
indebtedness which is not Permitted Indebtedness;
(i) Uniform Commercial Code, judgment, federal and state tax
lien searches against the Borrower, at the Borrower's expense, showing that the
Collateral is not subject to any Liens except for Permitted Liens, together with
Good Standing and Corporate Tax Lien Search Certificates showing no Liens on the
Borrower's Property (including without limitation the Collateral) and showing
the Borrower to be in good standing in each jurisdiction as required by Section
3.4 above;
(j) certificates evidencing each Borrower's
compliance in all material respects with all Federal, State and
local laws;
(k) all documents necessary to evidence and perfect the
Agent's, on behalf of the Lenders, security interests in all of the Borrower's
intellectual property including but not limited to trademark and copyright
assignments, registration with the U.S. Patent and Copyright offices and powers
of attorney;
(l) certified copies of or original hazard, liability, business interruption and
xxxxxxx'x compensation insurance policies, with coverage on terms and in amounts
acceptable to the Agent and confirming that the Agent has been named as
co-insured and loss payee, on behalf of the Lenders, on each such policy; and
(m) a Compliance Certificate evidencing the Borrower's compliance
with all of the financial covenants set forth in this
Agreement as of March 31, 2002;
4.2 Absence of Certain Events: At the Closing Date, no Event of Default
or Unmatured Event of Default hereunder shall have
occurred and be continuing.
4.3 Warranties and Representations at Closing: The warranties and
representations contained in Section 5 as well as any other Section of this
Agreement shall be true and correct in all material respects on the Closing Date
with the same effect as though made on and as of that date. The Borrower shall
not have taken any action or permitted any condition to exist which would have
been prohibited by any Section hereof.
4.4 Compliance with this Agreement: The Borrower shall have performed and
complied with all agreements, covenants and conditions contained herein
including, without limitation, the provisions of Sections 6 and 7 hereof, which
are required to be performed or complied with by the Borrower before or at the
Closing Date.
4.5 Officer's Certificate: The Agent shall have received a certificate dated the
Closing Date and signed on the Borrower's behalf by the chief financial officer
and President of each Borrower certifying that all of the conditions specified
in this Section have been fulfilled.
4.6 Closing: Subject to the conditions of this Section 4, the Revolving Credit
Facility shall be made available, and the proceeds of the Term Loan shall be
advanced by the Lenders to or on behalf of the Borrower, on the date ("Closing
Date") this Agreement is executed and all of the conditions contained in Section
4.1 hereof are completed or waived by the Agent (the "Closing").
4.7 Non-Waiver of Rights: By completing the Closing hereunder, or by making
Advances, extending the Term Loan and/or issuing a Letter of Credit hereunder,
the Agent and the Lenders do not thereby waive a breach of any warranty or
representation made by the Borrower hereunder or any agreement, document, or
instrument delivered to the Agent or any Lender, or otherwise referred to
herein, including without limitation, the Original Loan Agreement and all
documents executed or delivered in connection therewith, any claims and rights
of the Agent or any Lender resulting from any breach or misrepresentation by the
Borrower are specifically reserved by the Agent and the Lenders.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce Lenders to complete the Closing, make the proceeds of the
Term Loan available to or on behalf of the Borrower and make the initial
Advances under the Revolving Credit Facility to the Borrower, each Borrower,
jointly and severally, warrants and represents to the Agent and the Lenders
that:
5.1 Corporate Organization and Validity.
(a) Each Borrower is a corporation duly organized and validly
existing under the laws of its state of incorporation, is duly qualified, is
validly existing and in good standing and has lawful power and authority to
engage in the business it conducts in each state where the nature and extent of
its business requires qualification, except where the failure to so qualify will
not have a Material Adverse Effect. An accurate list and/or description of its
name and all states and other jurisdictions where each Borrower is incorporated
or is qualified to do business is attached hereto as Exhibit "5.1" and made a
part hereof.
(b) The making and performance of this Agreement and the other
Loan Documents will not violate or result in a default (immediately or with the
passage of time) under any law, government rule or regulation, or the charter,
minutes or bylaw provisions of any Borrower, or any material contract, agreement
or instrument to which the Borrower is a party, or by which it is bound which
violation would have a Material Adverse Affect. The Borrower is not in violation
of and has not knowingly caused any Person to violate any term of any material
agreement or instrument to which it or such Person is a party or by which it may
be bound or of its charter, minutes or its bylaws which violation would have a
Material Adverse Affect.
(c) Each Borrower has all requisite corporate power and
authority to enter into and perform this Agreement and to incur the obligations
herein provided for, and has taken all proper and necessary corporate action to
authorize the execution, delivery and performance of this Agreement, and the
documents and related agreements required hereby.
(d) This Agreement, the Term Notes and the Revolving Credit
Notes to be issued hereunder, and all related agreements and documents required
to be executed and delivered by the Borrower hereunder, when delivered, will be
valid and binding upon The Borrower, and enforceable in accordance with their
respective terms subject to bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally and general equitable principles.
5.2 Places of Business: The only places of business of the Borrower, and the
places where it keeps and intends to keep its Property and records concerning
its Property, are at the addresses listed in Exhibit "5.2" attached hereto and
made a part hereof.
5.3 Pending Litigation: There are no judgments or judicial or administrative
orders, proceedings, litigation or investigations (civil or criminal) pending,
or to the knowledge of the Borrower threatened, against the Borrower in any
court or before any governmental authority or arbitration board or tribunal
which is reasonably likely to have a Material Adverse Effect, except as shown in
Exhibit "5.3" attached hereto and made a part hereof. The Borrower is not in
default with respect to any order of any court, governmental authority,
regulatory agency or arbitration board or tribunal. Neither the Borrower nor any
executive officer of the Borrower has been indicted or convicted in connection
with or is engaging in any criminal conduct, or is currently subject to any
lawsuit or proceeding or, to the Borrower's knowledge, under investigation in
connection with any anti-racketeering or criminal conduct or activity.
5.4 Title to Properties: The Borrower has good and marketable title to all the
Property constituting Collateral, free from Liens, except those of the Agent
and/or the Lenders, except for Permitted Liens as set forth in Section 7.3 and
those Liens set forth on Exhibit "5.4", attached hereto and made a part hereof.
5.5 Governmental Consent: Except as set forth on Exhibit "5.5", neither the
nature of the Borrower or of its business or Property, nor any relationship
between the Borrower and any other Person, nor any circumstance affecting the
Borrower in connection with the issuance or delivery of this Agreement or the
other Loan Documents, is such as to require a consent, approval or authorization
of, or filing, registration or qualification with, any governmental authority on
the part of the Borrower in connection with the execution and delivery of this
Agreement or the issuance or delivery of the other Loan Documents.
5.6 Taxes: All tax returns required to be filed by the Borrower in any
jurisdiction have in fact been filed, and all taxes, assessments, fees and other
governmental charges upon the Borrower, or upon any of its respective Property,
income or franchises, which are shown to be due and payable on such returns have
been paid, except for those taxes being contested in good faith with due
diligence by appropriate proceedings for which appropriate reserves have been
maintained under GAAP. The Borrower is not aware of any proposed additional tax
assessment or tax to be assessed against or applicable to the Borrower that
would be reasonably likely to have a Material Adverse Effect.
5.7 Financial Statements: RCM's consolidated and consolidating annual audited
balance sheets as of December 31, 2001, and the related income statement and
statement of cash flow as of such date, accompanied, by the unqualified report
thereon, by the Borrower's independent certified public accountants, (complete
copies of which have been delivered to the Agent), have been prepared in
accordance with GAAP and present fairly, the financial position of the Borrower
as of such date and the results of its operations for such period. The
Borrower's fiscal year ends on December 31 of each calendar year. The Borrowers'
federal tax identification numbers are set forth on Exhibit "5.7" hereto.
5.8 Full Disclosure: Neither the financial statements referred to in Section
5.7, nor this Agreement nor any other Loan Document or any financial
projections, written reports or certificates regarding Accounts or Inventory, or
other financial statements or reports furnished by the Borrower to the Agent or
any Lender in connection with the negotiation of this Agreement or contained in
any financial statements or documents relating to the Borrower, as of the time
they were furnished, contained any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein not
misleading.
5.9 Subsidiaries: The Borrower has no Subsidiaries or Affiliates, except
as listed on Exhibit "5.9" attached hereto and made a
part hereof.
5.10 Guarantees, Contracts, etc:
(a) The Borrower does not own or hold equity or long term debt
investments in, have any outstanding advances to, or serve as guarantor, surety
or accommodation maker for the obligations of, or have any outstanding
borrowings from, any Person, or has entered into any leases for real or personal
property (whether as landlord or tenant), except as described in Exhibit "5.10",
attached hereto and a made part hereof.
(b) The Borrower is not a party to any contract or agreement,
or subject to any charter or other corporate restriction, which is reasonably
likely to have a Material Adverse Effect.
(c) Except as otherwise specifically provided in this
Agreement, the Borrower has not agreed or consented to cause or permit any of
its Property whether now owned or hereafter acquired to be subject in the future
(upon the happening of a contingency or otherwise) to a Lien not permitted by
this Agreement.
5.11 Government Regulations, etc:
(a) The use of the proceeds of and the Borrower's issuance of
the Revolving Credit Notes and the Term Notes will not directly or indirectly
violate or result in a violation of Section 7 of the Securities Exchange Act of
1934, as amended, Regulations U, T, G and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R., Chapter II. The Borrower neither owns nor
intends to carry or purchase any "margin stock" within the meaning of said
Regulation U.
(b) The Borrower has obtained all licenses, permits,
franchises or other governmental authorizations necessary for the ownership of
its Property and for the conduct of its business, except those which, if not
obtained, would have or could have a Material Adverse Effect.
(c) As of the date hereof, no employee benefit plan ("Pension
Plan"), as defined in Section 3(2) of ERISA, maintained by the Borrower or under
which the Borrower could have any liability under ERISA (i) has failed to meet
the minimum funding standards established in Section 302 of ERISA, except for
any such failure corrected in full prior to the date hereof, and described on
Exhibit "5.11", attached hereto and made a part hereof; (ii) has failed to
comply in all material respects with all applicable requirements of ERISA and of
the Internal Revenue Code, including all applicable rulings and regulations
thereunder, (iii) has engaged in or been involved in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Internal Revenue Code which
would subject the Borrower to any material liability, or (iv) has been
terminated if such termination would subject the Borrower to any material
unfunded liability. The Borrower has not assumed, or received notice of a claim
asserted against the Borrower for, withdrawal liability (as defined in Section
4207 of ERISA) with respect to any multi- employer pension plan and is not a
member of any Controlled Group (as defined in ERISA). The Borrower has timely
made all contributions when due with respect to any multi-employer pension plan
in which it participates and no event has occurred triggering a claim against
the Borrower for withdrawal liability with respect to any multi-employer pension
plan in which the Borrower participates. All Pension Plans and multi-employer
pension plans to which the Borrower participates are listed on Exhibit "5.11"
attached hereto and made a part hereof.
(d) The Borrower is not in violation of, or has knowingly
caused any Person to violate, any applicable statute, regulation or ordinance of
the United States of America, or of any state, city, town, municipality, county
or of any other jurisdiction, or of any agency, or department thereof (including
without limitation, environmental laws and regulations), which violation is
reasonably likely to have a Material Adverse Effect. The Borrower has not
received written notice that it is in violation of any applicable statute,
regulation or ordinance of the United States of America, or of any state, city,
town, municipality, county or of any other jurisdiction, or of any agency or
department thereof (including without limitation, environmental laws and
regulations), which violation is reasonably likely to have a Material Adverse
Effect.
5.12 Business Interruptions: Except as set forth in Exhibit "5.12" hereof,
within five (5) years prior to the date hereof, none of the business, Property
or operations of the Borrower have been materially and adversely affected in any
way by any casualty, strike, lockout, combination of workers, order of the
United States of America, or any state or local government, or any political
subdivision or agency thereof, directed against the Borrower. There are no
pending or threatened labor disputes, strikes, lockouts or similar occurrences
or grievances affecting the business being operated by the Borrower.
5.13
Names:
(a) Within the five (5) year period prior to the Closing Date,
the Borrower has not conducted business under or used any other name (whether
corporate or assumed) except for the names shown on Exhibit "5.13(a)", attached
hereto and made a part hereof. The Borrower is the sole owner of all names
listed on such Exhibit "5.13(a)" and any and all business done and all invoices
issued in such trade names are the Borrower's sales, business and invoices. Each
trade name of the Borrower represents a division or trading style of the
Borrower and not a separate corporate subsidiary or affiliate or independent
entity.
(b) All registered trademarks, patents or copyrights, or such
as to which applications for registration have been submitted, which the
Borrower uses, plans to use or has a right to use are listed on Exhibit
"5.13(b)" attached hereto and made a part hereof. The Borrower is the sole owner
of such Property except to the extent any other Person has claims or rights in
such Property, as such claims and rights are described on such Exhibit
"5.13(b)". To the best of the Borrower's knowledge, the Borrower is not in
violation of any rights of any other Person with respect to such Property.
5.14 Other Associations: The Borrower is not engaged or does not have an
interest in any joint venture or partnership with any other Person except as
described on Exhibit "5.14" attached hereto and made a part hereof.
5.15 Environmental Matters: The Borrower has no knowledge:
(a) of the presence of any Hazardous Substances that require
remediation under any applicable environmental statute, rule or regulation of
any governmental entity presently in effect on any of the real property on which
the Collateral is located including, without limitation, the properties listed
on Exhibit "5.15(a)", or
(b) of any on-site spills, releases, discharges, disposal or
storage of Hazardous Substances that have occurred or are presently occurring on
any of such real property in violation of any applicable environmental statute,
rule or regulation of any governmental entity presently in effect, or
(c) of any spills, releases, discharges or disposal of
Hazardous Substances that have occurred or are presently occurring at other real
properties as a result of the activities or omissions of the Borrower or for
which the Borrower is reasonably likely to be held responsible in violation of
any applicable environmental statute, rule or regulation of any governmental
entity presently in effect, or
(d) of any notice, summons, citation or other communication
sent to the Borrower from any state or federal agency concerning any intentional
or unintentional action or conduct, inaction or omission, past or present which
is or may be in violation of any state or federal environmental law, rule or
regulation.
As used herein, the term "Hazardous Substances" means any substances defined or
designated as hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance or similar term, by any environmental statute, rule or
regulation of any governmental entity presently in effect and applicable to such
real property.
5.16 Regulation O: No director, executive officer or principal shareholder of
the Borrower is a director, executive officer or principal shareholder of any
Lender. For the purposes hereof the terms "director" (when used with reference
to a Lender), "executive officer" and "principal shareholder" have the
respective meanings assigned thereto in Regulation O issued by the Board of
Governors of the Federal Reserve System.
5.17 Capital Stock: The authorized and outstanding Capital Stock of the Borrower
is as set forth on Exhibit "5.17" attached hereto and made a part hereof. All of
the outstanding Capital Stock of the Borrower has been duly and validly
authorized and issued and is fully paid and non-assessable and has been sold and
delivered to the holders thereof in compliance with, or under valid exemption
from, all Federal and state laws and the rules and regulations of all regulatory
bodies thereof governing the sale and delivery of securities. Except for the
rights and obligations set forth in Exhibit "5.17", there are no subscriptions,
warrants, options, calls, commitments, rights or agreements by which the
Borrower or any of its shareholders is bound relating to the issuance, transfer,
voting or redemption of shares of its capital stock or any preemptive rights
held by any Person with respect to the shares of the Borrower's Capital Stock.
Except as set forth in Exhibit "5.17", the Borrower has not issued any
securities convertible into or exchangeable for shares of its Capital Stock or
any options, warrants or other rights to acquire such shares or securities
convertible into or exchangeable for such shares.
5.18 Solvency: The Borrower is solvent, able to pay its debts as they become
due, and has capital sufficient to carry on its business and all businesses in
which it is about to engage, and now owns Property having a value both at fair
valuation and at present fair salable value greater than the amount required to
pay its debts. The Borrower will not be rendered insolvent by the execution and
delivery of this Agreement or any of the other documents executed in connection
with this Agreement or by the transactions contemplated hereunder or thereunder,
other than the potential insolvency of a Subsidiary of RCM (as a Borrower)
arising as a result of such Subsidiary being fully liable solely for the
Obligations due to the joint and several nature of the Obligations.
5.19 Patents, Trademarks, Etc: Except as set forth on Exhibit 5.19 attached
hereto and made a part hereof, (a) the Borrower does not require any patents,
trademarks or other intellectual property, or any license(s) to use any patents,
trademarks or other intellectual property in order to conduct business; and (b)
the Agent will not require any patents, trademarks or other intellectual
property or any licenses to use the same in order conduct business after the
occurrence of an Event of Default.
5.20 Investment Company: The Borrower is not an "investment company"
registered or required to be registered under the
Investment Company Act of 1940, as amended, nor is the Borrower controlled by
such a company.
5.21
Location of Customer Lists: The Borrower has a complete and accurate
list of all of RCM's and its Subsidiaries' customers names and addresses kept at
000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxxxx, 00000.
5.22 Offering, Syndication, Etc.: Since January 1, 2002, there has been no
additional offering, placement or arrangement of any
debt securities or bank financing by or on behalf of the Borrower or any
Affiliate.
5.23. Government Contracts. Each of the contracts or other agreements currently
between any Borrower and the (i) Comptroller of the Currency, (ii) Jet
Propulsion Laboratory, and (iii) the New York City Board of Education, does not
contain any provision which would prohibit such Borrower from taking such steps
as is determined necessary by the Agent to perfect the Agent's and the Lenders'
security interest in the Accounts arising from any such contract or agreement,
including but not limited to any notices or filings required under the
Assignment of Claims Act of 1940, as amended, or any other applicable law.
5.24. Canadian Operations. The only Borrower which owns any Accounts
arising out of operations in Canada is RCM Technologies
Canada Corp. and all payments on such Accounts are made solely to the
office of that Borrower located in Mississauga, Ontario.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower covenants that until all of the Obligations to the Lenders
are indefeasibly paid and satisfied in full and the Revolving Credit has been
terminated:
6.1 Payment of Taxes and Claims: The Borrower shall pay, before they
become delinquent,
(a) all taxes, assessments and governmental charges
or levies imposed upon it or its Property, and
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other Persons entitled to the benefit of statutory
or common law Liens, which, if unpaid, would result in the imposition of a Lien
upon its Property; provided, however, that the Borrower shall not be required to
pay any such tax, assessment, charge, levy, claim or demand if the amount,
applicability or validity thereof shall at the time be contested in good faith
and by appropriate proceedings by the Borrower, and if the Borrower shall have
set aside on its books adequate reserves in respect thereof, in accordance with
GAAP; which deferment of payment is permissible so long as no Lien other than a
Permitted Lien has been entered and the Borrower's title to, and its right to
use, its Property are not materially adversely affected thereby.
6.2 Maintenance of Properties and Corporate Existence:
(a) Property - The Borrower shall maintain its Property in
good condition and make all renewals, replacements, additions, betterments and
improvements thereto in the ordinary course of business, as the Borrower deems
reasonably necessary in good faith in the exercise of its business judgment, and
will pay and discharge when due the cost of repairs and maintenance to its
Property.
(b) Property Insurance - The Borrower shall maintain insurance
on all insurable tangible Property against fire, flood, casualty and such other
hazards (including, without limitation, extended coverage, workmen's
compensation, boiler and machinery) in such amounts, with such deductibles and
with such insurers as are customarily used by companies operating in the same
industry as the Borrower and reasonably acceptable to the Agent. At or prior to
Closing, the Borrower shall furnish the Agent with a schedule of all such
insurance prepared by its insurance broker, and certificates of insurance with
respect thereto (including the text of the Lender's Loss Payable Clause in favor
of the Agent required below), or such other evidence of insurance as the Agent
may require. The Borrower shall furnish the Agent with a copy of each such
policy at the Closing. In the event the Borrower fails to procure or cause to be
procured any such insurance or to timely pay or cause to be paid the premium(s)
on any such insurance, the Agent (on behalf of the Lenders) may do so for the
Borrower, but the Borrower shall continue to be liable for the same. The
policies of all casualty insurance shall contain standard Lender's Loss Payable
Clauses issued in favor of the Agent (on behalf of the Lenders) indicating that
the Agent is sole Lender Loss Payee, under which all losses thereunder shall be
paid to the Agent (on behalf of the Lenders) as the Agent's interest may appear
provided that the Agent will release insurance proceeds to the Borrower for
repair or replacement provided that the Borrower demonstrates to the
satisfaction of the Agent that (i) the business interruption resulting from the
casualty will not have a Material Adverse Effect; (ii) the Borrower has the
financial resources to effectuate repairs and/or restoration; and (iii) the
repairs and/or restoration can be completed within sixty (60) days. Such
policies shall expressly provide that the requisite insurance cannot be altered
or canceled without thirty (30) days prior written notice to the Agent and shall
insure Lenders notwithstanding the act or neglect of the Borrower. The Borrower
hereby appoints the Agent as its attorney-in-fact, exercisable at the Agent's
option (without any obligation to do so), to endorse any check which may be
payable to the Borrower, and to file proofs of loss with respect to any
insurance claims, in order to collect the proceeds of such insurance and any
amount or amounts collected by the Agent pursuant to the provisions of this
paragraph may be applied by the Agent to the Obligations. The Borrower further
covenants that all insurance premiums due and owing under their current casualty
policies have been paid. The Borrower also agrees to notify the Agent, promptly,
upon any receipt of a notice of termination, cancellation, or non-renewal from
its insurance company of any such policy.
(c) Public and Products Liability Insurance - The Borrower
shall maintain, and shall deliver to the Agent upon the Agent's request evidence
of, public liability and business interruption insurance in such amounts as are
reasonably acceptable to the Agent, but in any event not more than are customary
for companies in the same or similar businesses located in the same or similar
area.
(d) Financial Records - Consistent with the existing practice
of the Borrower, it shall keep current and accurate books of records and
accounts in which full and correct entries will be made of all of its business
transactions, and will reflect in its financial statements adequate accruals and
appropriations to reserves, all in accordance with GAAP. The Borrower shall not
change its fiscal year end date without providing the Agent with thirty (30)
days prior written notice thereof, provided that the Borrower may make such
change only once prior to the Revolving Credit Maturity Date.
(e) Corporate Existence and Rights - The Borrower shall do (or
cause to be done) all things necessary to preserve and keep in full force and
effect its existence, good standing in all jurisdictions where its failure to be
in good standing would likely result in a Material Adverse Effect, and all of
its rights, licenses and franchises, the absence of which might result in a
Material Adverse Effect.
(f) Compliance with Laws - The Borrower shall (i) be in
material compliance with any and all laws, ordinances, governmental rules and
regulations, and court or administrative orders or decrees to which it is
subject, whether federal, state or local, (including, without limitation,
environmental or environmental-related laws, statutes, ordinances, rules,
regulations and notices); (ii) shall obtain and maintain any and all licenses,
permits, franchises or other governmental authorizations necessary to the
ownership of its Property or to the conduct of its business, which violation or
failure to obtain or maintain causes or might cause a Material Adverse Effect.
The Borrower shall timely satisfy all assessments, fines, costs and penalties
imposed by any governmental body against the Borrower or any Property of the
Borrower subject to the provisions of Section 6.1 above.
6.3 Business Conducted:
(a) The Borrower shall continue in the business presently
operated by it using commercially reasonable efforts to maintain its customers
and goodwill. The Borrower shall not engage, directly or indirectly, in any
material respect in any line of business substantially different from the
business conducted by the Borrower immediately prior to the Closing Date, unless
such line of business is reasonably related to such business so conducted prior
to the Closing Date.
(b) The Borrower shall comply with all agreements to which it
is a party and by which it is bound and comply with all laws and regulations
applicable to it, to the extent that such non-compliance is reasonably likely to
have a Material Adverse Effect.
6.4 Litigation: The Borrower, upon having knowledge thereof, shall give prompt
notice to the Agent of (a) the commencement against the Borrower of any
litigation claiming from the Borrower more than $200,000.00 in excess of any
available insurance coverage the Borrower may have for such claim, and (b) any
other claims made against the Borrower, or investigations or proceedings
commenced against the Borrower the existence of which or adverse disposition of
which might have a Material Adverse Effect.
6.5 Taxes:
(a) Notwithstanding any other provision of this Agreement
(other than 6.5(f) and (g)), any and all payments by the Borrower hereunder
shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts or withholding taxes, and all liabilities with
respect thereto, excluding taxes imposed on the Agent's or any Lender's net
income or gross receipts and capital stock or franchise taxes or similar taxes
imposed on the Agent or any Lender (all such non-excluded taxes, levies,
imports, withholding taxes and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder to any Lender or the Agent (i) the sum
payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 6.5) such Lender or the Agent shall receive an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, and (iii) the Borrower shall pay the full
amount deducted to the relevant taxing authority or other governmental authority
in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other general intangible, excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Agent for
the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 6.5) paid by
such Lender or the Agent in respect of any and all payments made by the Borrower
hereunder, as the case may be, and any liability (including penalties, interest
and expenses other than those resulting from the failure of a Lender or the
Agent to pay any Taxes or Other Taxes for which it shall have received an
indemnity payment hereunder) arising therefrom or with respect thereto, whether
or not such Taxes or Other Taxes were correctly or legally asserted. Such
indemnification shall be made promptly after the date any Lender or the Agent,
as the case may be, makes written demand therefor showing in reasonable detail
the basis for such demands. If a Lender or the Agent shall become aware that it
is entitled to receive a refund of taxes or other taxes (including penalties and
interest) paid or indemnified by the Borrower under this Section, it shall
notify the Borrower and shall, promptly after receipt of a request by the
Borrower, apply for and pursue such a refund at the Borrower's expense. If any
Lender or the Agent receives a refund in respect of any Taxes or Other Taxes for
which such Lender or the Agent has received payment from the Borrower hereunder
it shall promptly upon receipt repay such refund to the Borrower without
interest, except to the extent interest shall have accompanied such refund,
provided that the Borrower, upon the request of such Lender or the Agent, agrees
to return such refund (plus penalties, interest or other charges) to such Lender
or the Agent in the event such Lender or the Agent is required to repay such
refund.
(d) Within 45 days after the date of any payment of Taxes or
Other Taxes withheld by the Borrower in respect of any payment to any Lender or
the Agent, the Borrower will furnish to the Agent, the original or a certified
copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 6.5
shall survive the payment in full of all Obligations hereunder.
(f) On or prior to the date it becomes a party to this
Agreement, each Lender that is organized outside of the United States shall
deliver to the Borrower such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto, including
Internal Revenue Service Form 4224, 1001 or W-8 and any other certificate or
statement or exemption required by Treasury Regulation Section 1.1441-4(a) or
Section 1.1441-6(c) or any subsequent version thereof, properly completed and
duly executed by such Lender establishing that such payment is (i) not subject
to withholding under the Code because such payment is effectively connected with
the conduct by such Lender of a trade or business in the United States or (ii)
totally exempt from United States Federal withholding tax under a provision of
an applicable tax treaty. In addition, each such Lender shall, if legally able
to do so, thereafter deliver such certificates, documents or other evidence from
time to time, including, without limitation, Internal Revenue Service Form W-8,
establishing that payments received hereunder are not subject to such
withholding upon receipt of a written request therefor from the Borrower or
Agent. Unless the Borrower and the Agent have timely received forms or other
documents satisfactory to them indicating that payments hereunder or under the
Revolving Credit Notes or the Term Notes are not subject to United States
Federal withholding tax under an applicable tax treaty, the Borrower or the
Agent shall withhold taxes from such payments at the applicable statutory rate.
(g) The Borrower shall not be required to pay any additional
amounts to any Lender in respect of United States Federal withholding tax
pursuant to this Section 6.5 if the obligation to pay such additional amounts
would not have arisen but for a failure by such Lender to deliver the
certificate, documents or other evidence specified in this Section 6.5 unless
such failure is attributable to (i) a change in applicable law, regulation or
official interpretation thereof or (ii) an amendment or modification to or a
revocation of any applicable tax treaty or a change in official position
regarding the application or interpretation thereof, in each case on or after
the date such Lender becomes a party to this Agreement, provided, however, that
such Lender shall promptly notify the Borrower of any such matter described in
clause (i) or (ii) above upon its learning of the same and shall thereafter take
all reasonable actions resulting from such matter including delivering
certificates, documents or other evidence as may be necessary to eliminate or
reduce the amount of tax required to be withheld.
(h) Any Lender claiming any additional amounts payable
pursuant to this Section 6.5 shall use reasonable efforts (consistent with legal
and regulatory restrictions) to file any certificate or document requested by
the Borrower or to change the jurisdiction of its applicable lending office if
the making of such filing or change would avoid the need for or reduce the
amount of any such additional amounts which may thereafter accrue and would not
result in the incurrence by such Lender of any cost for which the Borrower does
not provide such security or indemnity as may be reasonably required by the
Lender to indemnify it in full for such cost and would not in the judgment of
such Lender be otherwise disadvantageous to it. Each Lender agrees with
reasonable promptness to notify the Borrower of any determination which it shall
make to make any claim for additional amounts payable pursuant to this Section
6.5.
6.6 Bank Accounts: The Borrower shall maintain its principal depository
and disbursement account(s) with one or more of the
Lenders.
6.7 Employee Benefit Plans: The Borrower will (a) fund all its Pension Plan(s)
in a manner that will satisfy the minimum funding standards of Section 302 of
ERISA, or will promptly satisfy any accumulated funding deficiency that arises
under Section 302 of ERISA, (b) furnish Agent, promptly upon Agent's request of
the same, with copies of all reports or other statements filed with the United
States Department of Labor, the Pension Benefit Guaranty Corporation ("PBGC") or
the Internal Revenue Service ("IRS") with respect to all Pension Plan(s), or
which the Borrower, or any member of a Controlled Group, may receive from the
United States Department of Labor, the IRS or the PBGC, with respect to all such
Pension Plan(s), and (c) promptly advise the Agent of the occurrence of any
reportable event (as defined in Section 4043 of ERISA, other than a reportable
event for which the thirty (30) day notice requirement has been waived by the
PBGC) or prohibited transaction (under Section 406 of ERISA or Section 4975 of
the Internal Revenue Code) with respect to any such Pension Plan(s) and the
action which the Borrower proposes to take with respect thereto. The Borrower
will make all contributions when due with respect to any multi-employer pension
plan in which it participates and will promptly advise the Agent (i) upon its
receipt of notice of the assertion against it of a claim for withdrawal
liability, (ii) upon the occurrence of any event which, to the best of the
Borrower's knowledge, would trigger the assertion of a claim for withdrawal
liability against the Borrower, and (iii) upon the occurrence of any event
which, to the best of the Borrower's knowledge upon its learning of the same,
has placed the Borrower in a Controlled Group as a result of which any member
(including the Borrower) thereof may be subject to a claim for withdrawal
liability, whether liquidated or contingent.
6.8 Warranties for Future Advances: Each request by the Borrower for an Advance
or the issuance of a Letter of Credit under the Revolving Credit Facility in any
form following the Closing Date shall constitute an automatic representation and
warranty, the truth and accuracy of such representation and warranty of which
shall be a further condition to the funding of each Advance, by the Borrower to
the effect that (without waiving, impairing or limiting the rights of the Agent
and the Lenders under Section 8 below):
(a) There has not occurred any event or occurrence since the date of delivery of
the Borrower's most recent financial statements which has resulted in, or has
had, a Material Adverse Effect.
(b) No Event of Default or Unmatured Event of Default;
then exists;
(c) Each Advance is within and complies with the terms and
conditions of this Agreement including without limitation the notice provisions
contained in Section 2.2 hereof; and
(d) Each representation and warranty set forth in Section 5 of
this Agreement is then true and correct in all material respects; provided that
the Borrower may update all Exhibits and prepare additional Exhibits so that all
such Exhibits and the representations and warranties, taken together, accurately
reflect the state of the Borrower's affairs as of the date of a request for an
Advance or the issuance of a Letter of Credit by giving written notice thereof
to the Agent, and further provided that such updated and additional Exhibits do
not reflect events or conditions which constitute violations of Section 6 or 7
hereof or otherwise reflect material adverse developments.
6.9 Financial Covenants: RCM shall maintain and comply with the following
financial covenants (calculated on the basis of GAAP), to be tested quarterly on
a consolidated basis (The covenants set forth in Sections 6.9(a) and 6.9(c)
below will be based on a rolling two quarters times two basis, and trailing
unadjusted EBITDA of all Acquisitions will be included):
(a) Fixed Charge Ratio shall be maintained at a minimum
of 1.50x (contingent payments to acquirees are excluded
from this calculation);
(b) The Borrower shall not permit, in the aggregate, Capital Expenditures and/or
purchase money financing (excluding Acquisitions) to exceed, in the aggregate,
$3,000,000.00 in any rolling four quarter period.
(c) Interest Coverage shall be maintained at a minimum
of 3.75x; and
(d) RCM shall maintain, on a consolidated basis,
a Tangible Net Worth no less than the Minimum Tangible Net
Worth.
(e) The Borrower shall have an Adjusted Net Income in
any fiscal quarter of the Borrower of not less than $1.00.
6.10 Financial and Business Information: The Borrower shall deliver to
Agent the following:
(a) Financial Statements and Collateral Reports:
Such data, reports, statements and information, financial or
otherwise, as Agent may reasonably request, including, without limitation:
(i) within ninety (90) days after the end
of each fiscal year of RCM, financial statements of the
Borrower for such year on a consolidated (and unaudited consolidating) basis,
eliminating inter-company transactions, including the balance sheet as at the
end of such fiscal year and a statement of cash flows and income statement for
such fiscal year, setting forth in the consolidated statements in comparative
form, the corresponding figures as at the end of and for the previous fiscal
year, all in reasonable detail, including all supporting schedules, and audited
and certified on an unqualified basis by Xxxxx Xxxxxxxx, or another national
independent public accountants of recognized standing selected by the Borrower
and reasonably satisfactory to the Agent, to have been prepared in accordance
with GAAP, along with the Borrower's Form 10-K Report filed with the SEC and a
management letter;
(ii) within fifteen (15) days of the end of
each calendar month, such information as the Agent deems
reasonably necessary;
(iii) a Compliance Certificate to accompany all
quarterly and year-end financial statements delivered by
the Borrower hereunder;
(iv) no later than sixty (60) days after the end
of each fiscal year, annual projections and a budget
for the upcoming/current fiscal year of profit and loss, cash flows and balance
sheets prepared on a quarterly basis in a manner consistent with the prior
year's financial statements, all in form reasonably satisfactory to the Agent;
(v) no later than forty-five (45) days
after the end of each of the first three quarters of each
fiscal year of the Borrower, financial statements in the form filed with the
Borrower's report on Form 10-Q filed with the SEC for such quarter and a copy of
the Borrower's Form 10-Q filed with the SEC;
(vi) copies of all other periodic or episodic
SEC filings by the Borrower to be delivered promptly
after such filing, including without limitation all Forms 10-K and 8-K,
registration statements and prospectuses;
(vii) updated customer lists within thirty (30) days after the end of
each calendar quarter; and
(viii) within 15 days after the end of each
calendar month a borrowing base certificate for the Borrower,
signed on the Borrower's behalf by the Borrower's CFO, in the form of Exhibit
6.10(a)(vii) hereto and otherwise in form satisfactory to the Agent in its sole
reasonable discretion.
(b) Notice of Event of Default or Unmatured Event of Default -
Promptly upon becoming aware of the existence of any condition or event which
constitutes an Event of Default or an Unmatured Event of Default under this
Agreement, a written notice specifying the nature and period of existence
thereof and what action the Borrower is taking (and/or proposes to take) with
respect thereto.
(c) Notice of Claimed Default - Promptly upon receipt thereof
by the Borrower, a copy of any notice of default, oral or written, given to the
Borrower by any creditor for borrowed money in excess of $100,000.00.
(d) Securities and Other Reports - If the Borrower shall be
required to file reports with the SEC pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, promptly upon its becoming
available, one copy of each financial statement, report, notice or proxy
statement sent by the Borrower to stockholders generally, and, a copy of each
regular or periodic report, and any registration statement, or prospectus in
respect thereof, filed by the Borrower with any securities exchange or with
federal or state securities and exchange commissions or any successor agency.
6.11 Officers' and Accountant's Certificates: Along with the set of financial
statements and other reports delivered to the Agent and each Lender at the end
of each fiscal quarter and fiscal year, as applicable, pursuant to Section
6.10(a) hereof, the Borrower shall deliver to the Agent a certificate (in the
form of Exhibit "6.11" attached hereto and made a part hereof, with such changes
thereto determined necessary by the Agent in its sole reasonable discretion)
from the Borrower signed on its behalf by the chief financial officer of the
Borrower (the "Compliance Certificates") setting forth:
(a) Covenant Compliance - the information (including detailed
calculations) required in order to establish whether the Borrower is in
compliance with the requirements of Section 6.9 as of the end of the period
covered by the financial statements then being furnished (and any exhibits
appended thereto) under Section 6.10; and
(b) Event of Default - that the signer in his capacity as an
officer of the Borrower has reviewed the relevant terms of this Agreement, and
has made (or caused to be made under his supervision) a review of the
transactions and conditions of the Borrower from the beginning of the accounting
period covered by the financial statements being delivered therewith to the date
of the certificate, and that such review has not disclosed the existence during
such period of any condition or event which constitutes an Event of Default or
an Unmatured Event of Default or if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
the Borrower has taken or proposes to take with respect thereto.
6.12 Inspection: So long as this Agreement is in effect or any Obligation is
outstanding, the Borrower will permit any of the Agent's officers or other
representatives to visit and inspect any of the locations of the Borrower at any
time during normal business hours, provided that prior to the occurrence of any
Event of Default or an Unmatured Event of Default, the Agent shall give the
Borrower reasonable prior notice of each visit, to examine and audit all of the
Borrower's books of account, records, reports and other papers, to make copies
and extracts therefrom and to discuss its affairs, finances and accounts with
its officers, employees and independent certified public accountants. The
Borrower hereby irrevocably authorizes and directs all such accountants and
auditors to exhibit and deliver to the Agent copies of any and all of the
Borrower's financial statements or other accounting records of any sort in the
accountant's or auditor's possession. The Agent's reasonable out-of-pocket
expenses associated with said inspections shall be paid for by the Borrower.
Notwithstanding anything to the contrary contained in this Agreement, prior to
the occurrence of an Event of Default, the Borrower shall not be required to
reimburse the Agent for more than one such audit or more than four inspections
during any twelve month period.
6.13 Tax Returns and Reports: At the Agent's request from time to time, the
Borrower shall promptly furnish the Agent with copies of its annual federal and
state income tax returns. The Borrower further agrees that, if requested by the
Agent, it shall promptly furnish the Agent with copies of all reports filed by
it with any federal, state or local governmental authority or agency, board or
commission.
6.14 Acquisitions: All Acquisitions (regardless of whether such Acquisition is
funded with the proceeds of any Loan hereunder), other than Acquisitions of the
assets or stock of one Borrower (other than RCM), by another Borrower, must be
approved by the Majority Lenders if Total Funded Debt to EBITDA of the Borrower
(for the prior rolling two (2) quarters times two (2)) following such
Acquisition exceeds 1.5x on a pro forma basis. Any Acquisition (regardless of
whether such Acquisition is funded with the proceeds of any Loan hereunder) of
an entity exhibiting negative EBITDA in the preceding 12 months must be approved
by the Majority Lenders. All Acquisitions shall be in the Borrower's same line
or similar line of business and show historical and pro forma covenant
compliance based on an unadjusted historical financial basis. The results of due
diligence, including without limitation a review of the acquisition documents,
shall be to the satisfaction of the Majority Lenders in their sole discretion.
Notwithstanding anything herein to the contrary, any Acquisition shall have been
approved by the Board of Directors or like governing body of the acquiree.
6.15 Information to Participant: Each Lender may divulge to any participant,
co-lender or assignee or prospective participant, co-lender or assignee it is
permitted to obtain hereunder, all information, and furnish to such Person
copies of any reports, financial statements, certificates, and documents
obtained under any provision of this Agreement, or related agreements and
documents; provided, however that the Lender and any potential participant,
co-lender or assignee agrees to hold in confidence all confidential or
proprietary information not otherwise public (as indicated in writing to them by
the Borrower) provided to them by the Borrower, the Agent or such Lender except
(a) to the extent disclosure thereof is required under any statute, ordinance,
regulation, rule or order or any subpoena or any governmental inquiry or by
reason of any bank regulation in connection with any bank examination, and (b)
such potential participant, co-lender or assignee shall not be prohibited from
disclosing any such information to any of their agents, officers, employees,
attorneys, accountants or consultants who shall be informed of this provision.
6.16 Material Adverse Developments: The Borrower agrees that promptly after
becoming aware of any development or other information which would reasonably be
expected to have or cause a Material Adverse Effect, it shall give to the Agent
telephonic or telegraphic notice specifying the nature of such development or
information and such anticipated effect. In addition, such verbal communication
shall be confirmed by written notice thereof to the Agent on the next Business
Day after such verbal notice is given.
6.17 Name Changes, Places of Business: The Borrower shall give thirty (30) days
prior written notice to the Agent of any name change, any proposed change in the
state of its incorporation, or change in the location of any of its respective
places of business, of the places where records concerning its Accounts are
kept, or the establishment of any new, or the discontinuance of any existing
place of business which may require the filing of new financing statements or
other documents in connection with the perfection of the Agent's, for the
benefit of the Lenders, Liens on the Collateral.
6.18 Change in Control or Chief Executive Officer:
(a) In the event that Xxxx Xxxxx leaves his position as CEO of RCM Technologies,
Inc., the Borrower will obtain, within 180 days thereof, the written consent of
the Majority Lenders with respect to any proposed replacement, which consent
shall not be unreasonably withheld.
(b) In addition to the foregoing, the Borrower will not
make any material change in the executive management of
the Borrower.
6.19 Canadian Collateral: Upon the earlier to occur of (a) an Unmatured Event of
Default, (b) an Event of Default, or (c) the Borrower having furniture,
fixtures, inventory, equipment, intellectual property and leasehold improvements
located in Canada having an aggregate net book value in excess of $1,000,000.00
U.S. Dollars, as shown on the most recent financial statements delivered by the
Borrower to the Agent, the Agent may file such financing statements or financing
change statements as are necessary to perfect the security interest previously
granted by the Borrower in such of the Borrower's Property located in Canada
without further consent or action by or on behalf of the Borrower, and the
Borrower shall take whatever action is or may be requested by the Agent to
further grant to the Agent, on behalf of the Lenders, a first priority,
perfected security interest in all of such Borrower's Property located in
Canada. (The Lenders hereby acknowledge that unless the Agent has filed the
foregoing financing statements or financing change statements, the Lenders will
not have a first priority, perfected security interest in such of Borrower's
Property located in Canada).
6.20 Dissolution of Management Systems Integrators, Inc. and Solutions
Through Data-Processing, Inc. The Borrower hereby ratifies and confirms that RCM
is currently taking all steps necessary to promptly dissolve its wholly-owned
subsidiaries, Management Systems Integrators, Inc. and Solutions Through
Data-Processing, Inc. The Borrower further agrees to (i) continue to take all
such steps following Closing to promptly effectuate such dissolutions, and (ii)
promptly deliver to the Agent (when available) copies of all documentation
evidencing such dissolutions, including without limitation certificates of
dissolution evidencing their filing in the appropriate jurisdictions.
SECTION 7. NEGATIVE COVENANTS
The Borrower covenants that until all of the Obligations to the Lenders
are indefeasibly paid and satisfied in full and this Agreement has been
terminated, that:
7.1 Merger, Consolidation, Dissolution or Liquidation:
(a) The Borrower shall not sell, lease, license,
transfer or otherwise dispose of its Property, except for:
(i) Equipment in the ordinary course of the
Borrower's business; or
(ii) A Permitted Asset or Stock Sale.
(b) Except for Permitted Acquisitions, the Borrower shall not
merge or consolidate with any other Person, or commence a dissolution or
liquidation, except that any Subsidiary may merge into the Borrower or another
Subsidiary.
7.2 Acquisitions: Except for Permitted Acquisitions, the Borrower shall
not acquire all or a material portion of the Capital Stock or assets of any
Person in any transaction or in any series of related transactions or enter into
any sale and leaseback transaction.
7.3 Liens and Encumbrances: The Borrower shall not: (i) execute a
negative pledge agreement with any Person other than the Agent and/or the
Lenders covering any of its Property except with respect to property subject to
a permitted capitalized lease or purchase money financing, or (ii) cause or
permit or agree or consent to cause or permit in the future (upon the happening
of a contingency or otherwise), its Property (including, without limitation, the
Collateral), whether now owned or hereafter acquired, to be subject to a Lien or
be subject to any claim except for Permitted Liens. As used herein, "Permitted
Liens" means:
(a) 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 the payment thereof is
not at the time required by Section 6.1;
(b) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment, insurance,
social security and other like laws;
(c) Liens described in Exhibit 5.4 and replacements
thereof;
(d) Liens constituting purchase money security interests in
equipment, capitalized leases or finance leases previously or hereafter created
by the Borrower to Persons providing financing for Capital Expenditures
permitted under this Agreement so long as each obligation secured by a Lien
permitted by this subparagraph (d), (i) does not exceed 100% of the total cost
(including interest) to acquire and install such Property, (ii) such Lien
extends only to the Property actually acquired with such financing, and (iii)
the proceeds thereof and the aggregate total of all secured obligations
permitted under this subparagraph (d) plus Capital Expenditures do not exceed
the amount permitted in Section 6.9;
(e) Liens or capital leases on assets of any Person
acquired pursuant to a Permitted Acquisition; and
(f) Liens granted hereunder.
7.4 Transactions With Affiliates or Subsidiaries:
(a) The Borrower shall not enter into any transaction with any
Affiliate or Subsidiary including, without limitation, the purchase, sale, or
exchange of Property, or the loaning or giving of funds to any Affiliate or any
Subsidiary, unless (i) such Subsidiary or Affiliate is engaged in a business
substantially related to the business conducted by the Borrower, and the
transaction is in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's business and upon terms substantially the same
and no less favorable to the Borrower as it would obtain in a comparable
arm's-length transactions with any Person not an Affiliate or a Subsidiary, and
(ii) such transaction is not otherwise prohibited hereunder.
(b) The Borrower shall not create or acquire any Subsidiary, except as
a result of a Permitted Acquisition.
7.5 Guarantees: Excepting the endorsement in the ordinary course of
business of negotiable instruments for deposit or collection, the Borrower shall
not become or be liable, directly or indirectly, primary or secondary, matured
or contingent, in any manner, whether as guarantor, surety, accommodation maker,
or otherwise, for the existing or future indebtedness of any kind of any Person.
7.6 Distributions, Redemptions and Other Indebtedness: The Borrower
shall not: (a) declare or pay or make any forms of Distribution to its
shareholders, their successors or assigns; (b) make any prepayments on any
existing or future indebtedness for borrowed money to any Person without the
prior written consent of the Agent which consent will not be unreasonably
withheld; or (c) hereafter borrow money other than from Lenders hereunder except
in connection with borrowed money giving rise to a Permitted Lien under Section
7.3(d) and, in connection with Permitted Acquisitions, subordinated Sellers
Notes on terms and conditions reasonably acceptable to the Agent.
7.7 Loans and Investments: The Borrower shall not make or have
outstanding loans, advances, extensions of credit or capital contributions to,
or investments in, any Person other than advances made to employees for travel,
expenses and other business related activities, in the ordinary course of the
Borrower's business, in an aggregate amount not to exceed $500,000.00
outstanding at any one time.
7.8 Use of Lenders' or the Agent's Name: The Borrower shall not use the
Agent's or any Lender's name (or the name of any of the Agent's or any Lender's
affiliates) in connection with any of its business operations except to identify
the existence of the Loans and the names of the Lenders and the Agent in the
ordinary course of the Borrower's business. Nothing herein contained is intended
to permit or authorize the Borrower to make any commitment or contract on behalf
of any Lender or the Agent. The Agent and the Lenders may, however, publish the
existence of the credit facilities established hereunder and prepare
"tombstones" to memorialize the transactions.
7.9 Miscellaneous Covenants:
(a) The Borrower shall not become or be a party to any
contract or agreement which at the time of becoming a party to such contract or
agreement materially impairs the Borrower's ability to perform under this
Agreement, any other Loan Document, or under any other instrument, agreement or
document to which the Borrower is a party or by which it is or may be bound.
(b) The Borrower shall not carry or purchase any "margin
stock" within the meaning of Regulations U, G, T or X of the Board of Governors
of the Federal Reserve System, 12 C.F.R., Chapter II.
7.10 Change of Ownership Interests: The Borrower shall not
change its ownership or dispose of or transfer any ownership
interest in its wholly owned Subsidiaries.
SECTION 8. DEFAULT
8.1 Events of Default: Each of the following events shall constitute an event of
default ("Event of Default") and the Majority Lenders shall have the option to
cause the Agent, to declare the Obligations immediately due and payable, all
without demand, notice, presentment or protest or further action of any kind (it
also being understood that the occurrence of any of the events or conditions set
forth in subparagraphs (i), (j), (k) or (l) shall automatically cause an
acceleration of the Obligations):
(a) Payments - if the Borrower fails to make any payment of
principal or interest, or any fees, under this Agreement, the Term Notes, the
Revolving Credit Notes, or any other Loan Document on the due date of such
payment; or
(b) Other Charges - if the Borrower fails to pay any other
charges, Expenses or other monetary obligations owing to any Lender or the Agent
arising out of or incurred in connection with this Agreement or any other Loan
Document within five (5) days after notice that such payment was not made when
due or demanded, as applicable; or
(c) Covenant Defaults - the failure of the Borrower to duly
perform or observe any obligation, covenant, or agreement on its part contained
herein or in any other Loan Document or in any other existing or future
agreement (related or unrelated) between the Borrower and the Agent or any
Lender or all Lenders not otherwise specifically constituting an Event of
Default under this Section 8 and such failure continues unremedied for a period
of thirty (30) Business Days after the earlier of (i) notice from the Agent or
any Lender to the Borrower of the existence of such failure, or (ii) any officer
or principal of the Borrower knows or should have known of the existence of such
failure, provided that, in the event such failure is incapable of remedy as
determined by the Agent in its sole discretion or consists of a default on
account of the payment of any sum due hereunder or under the Loan Documents or
of any of the financial covenants in Section 6.9 or was willfully caused or
permitted by the Borrower, the Borrower shall not be entitled to any notice or
grace hereunder; or
(d) Financial Information - if any statement, report,
financial statement, or certificate made or delivered at any time by the
Borrower or any of its officers, employees or agents, to the Agent or any Lender
is not true and correct, in all material respects, when made; or
(e) Uninsured Loss - if there shall occur any uninsured damage
to or loss, theft, or destruction with respect to any portion of any Property of
the Borrower which is reasonably likely to result in a Material Adverse Effect;
or
(f) Warranties or Representations - if any warranty,
representation or other statement by or on behalf of the Borrower contained in
or pursuant to this Agreement, or in any document, agreement or instrument
furnished in compliance with, relating to, or in reference to this Agreement, is
false, erroneous, or misleading in any material respect when made or deemed
made; or
(g) Agreements with Others - if there shall be any default by
the Borrower beyond any grace period under any agreement with any other creditor
for borrowed money in excess of $200,000.00, and (i) such default consists of
the failure to pay any principal, premium or interest with respect to such
indebtedness, or (ii) such default consists of the failure to perform any
covenant or agreement with respect to such indebtedness, if the effect of such
default is to cause or to permit the relevant creditor to cause the Borrower's
obligations which are the subject thereof to become due prior to their maturity
date or prior to their regularly scheduled date of payment;
(h) Judgments - if any final judgment is entered against the
Borrower for the payment of money in excess of $200,000.00 which shall not be
satisfied, dismissed or bonded pending appeal within thirty (30) days after the
entry thereof; or
(i) Assignment for Benefit of Creditors, etc. - if the
Borrower makes or proposes an assignment for the benefit of creditors generally,
offers a composition or extension to creditors, or makes or sends notice of an
intended bulk sale of any business or assets now or hereafter owned or conducted
by the Borrower; or
(j) Bankruptcy, Dissolution, etc. - upon the commencement of
any action for the dissolution or liquidation of the Borrower, or the
commencement of any case or proceeding for reorganization or liquidation of the
Borrower's debts under the Bankruptcy Code or any other state or federal law,
now or hereafter enacted for the relief of debtors, whether instituted by or
against the Borrower; provided, however, that the Borrower shall have sixty (60)
days to obtain the dismissal or discharge of any involuntary proceeding filed
against it, it being understood that during such sixty (60) day period, no
Lender shall be obligated to make Advances or issue Letters of Credit hereunder
and the Agent may seek adequate protection in any bankruptcy proceeding
(provided, however, that the dissolution of any Borrower, other than RCM, with
the prior written consent of the Majority Lenders (which consent shall not be
unreasonably withheld), shall not constitute an Event of Default hereunder); or
(k) Receiver - upon the appointment of a receiver,
liquidator, custodian, trustee or similar official or
fiduciary for the Borrower or for a material portion of the Borrower's
Property; or
(l) Execution Process, Seizure, etc. - if any
Property of the Borrower, with an aggregate cost in excess of
$250,000.00 is seized by any governmental entity (federal, state or local),
landlord or other Person without the Borrower's consent;
or
(m) Termination of Business - if the Borrower
ceases any material portion of its business operations as
presently conducted; or
(n) Pension Benefits, etc. - if the Borrower fails to comply
with ERISA, so that grounds exist to permit the appointment of a trustee under
ERISA to administer the Borrower's employee plans or to allow the Pension
Benefit Guaranty Corporation to institute proceedings to appoint a trustee to
administer such plan(s), or to permit the entry of a Lien to secure any
deficiency or claim; or
(o) Criminal Conduct and Investigations - if the Borrower
commits or is indicted for committing any crime or if any proceeding or
investigation by any governmental body is pending an adverse disposition of
which would be reasonably likely to result in the forfeiture of any material
Property of the Borrower to any governmental entity, federal, state or local; or
(p) Chief Executive Officer - if Xxxx Xxxxx is no longer
active in his capacity as CEO of RCM, unless a replacement is hired within 180
days that is reasonably satisfactory to the Majority Lenders; or
(q) Material Adverse Effect - the happening of
any event or occurrence which results in or causes a Material
Adverse Effect.
8.2 Cure: Nothing contained in this Agreement or the Loan Documents shall be
deemed to compel the Agent and/or the Lenders to accept a cure of any Event of
Default hereunder.
8.3 Rights and Remedies on Default:
(a) In addition to all other rights, options and remedies
granted or available to the Agent or the Lenders under this Agreement or the
Loan Documents, or otherwise available at law or in equity, upon or at any time
after the occurrence and during the continuance of an Event of Default, or any
Unmatured Event of Default, the Majority Lenders shall have the option to
instruct the Agent to direct the Lenders, to, withhold or cease making Advances
and/or issuing Letters of Credit hereunder.
(b) In addition to all other rights, options and remedies
granted or available to the Agent under this Agreement or the Loan Documents
(each of which is also then exercisable by the Agent), the Agent may, at the
discretion of the Majority Lenders after the occurrence and during the
continuance of an Event of Default, terminate the Revolving Credit Facility and
the Term Loan.
[(c) INTENTIONALLY OMITTED]
(d) In addition to all other rights, options and remedies
granted or available to the Agent under this Agreement or the Loan Documents
(each of which is also then exercisable by the Agent), the Agent may, at the
discretion of the Majority Lenders, upon or at any time following the occurrence
of an Event of Default exercise all rights under the UCC and any other
applicable law or in equity, and under all Loan Documents permitted to be
exercised after the occurrence of an Event of Default, including the following
rights and remedies (which list is given by way of example and is not intended
to be an exhaustive list of all such rights and remedies):
(i) The right to take possession of,
send notices regarding and collect directly the Collateral, with
or without judicial process (including without limitation the right to notify
the United States postal authorities to redirect mail addressed to the Borrower
to an address designated by the Agent); or
(ii) By its own means or with judicial
assistance, enter the Borrower's premises and take possession of
the Collateral, or render it unusable, or dispose of the Collateral on such
premises in compliance with subsection (e) below, without any liability for
rent, storage, utilities or other sums, and the Borrower shall not resist or
interfere with such action; or
(iii) Require the Borrower at the Borrower's
expense to assemble all or any part of the Collateral and
make it available to the Agent at any place designated by the Agent;
(iv) The right to reduce the Revolving Credit
Limit or to modify the terms and conditions upon which
the Lenders may be willing to consider making Advances or issuing Letters of
Credit under the Revolving Credit Facility.
(e) The Borrower hereby agrees that a notice received by it at
least ten (10) days before the time of any intended public sale or of the time
after which any private sale or other disposition of the Collateral is to be
made, shall be deemed to be reasonable notice of such sale or other disposition.
If permitted by applicable law, any perishable inventory or Collateral which
threatens to speedily decline in value or which is sold on a recognized market
may be sold immediately by the Agent without prior notice to the Borrower. The
Borrower covenants and agrees not to interfere with or impose any obstacle to
the Agent's exercise of its rights and remedies with respect to the Collateral
after the occurrence of an Event of Default hereunder.
8.4 Nature of Remedies: All rights and remedies granted the Agent or the Lenders
hereunder and under the Loan Documents, or otherwise available at law or in
equity, shall be deemed concurrent and cumulative, and not alternative remedies,
and the Agent may proceed with any number of remedies at the same time until all
of the Obligations are satisfied in full. The exercise of any one right or
remedy shall not be deemed a waiver or release of any other right or remedy, and
the Agent, at the discretion of the Majority Lenders, upon or at any time after
the occurrence of an Event of Default, may proceed against the Borrower or any
of the Collateral, at any time, under any agreement, with any available remedy
and in any order.
8.5 Set-Off: If any bank account of the Borrower with the Agent, any Lender or
any participant is attached or otherwise liened or levied upon by any third
party, the Agent and/or such Lender (and such participant) as agent for the
Lenders shall have and be deemed to have, without notice to the Borrower, the
immediate right of set-off and shall apply the funds or amount thus set-off
against any of the Obligations hereunder.
SECTION 9. AGENT
9.1 Appointment and Authorization. Each Lender, and each subsequent holder of
any of the Notes by its acceptance thereof, hereby irrevocably appoints and
authorizes the Agent to take such action on its behalf and to exercise such
powers under this Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. Except as may be
otherwise expressly provided herein, the Borrower is hereby authorized by the
Lenders to deal solely with the Agent in all transactions which affect the
Lenders under this Agreement and the Loan Documents. The rights, privileges and
remedies accorded to the Agent hereunder shall be exercised by the Agent on
behalf of all of the Lenders.
9.2 General Immunity. Subject to the provisions of this Agreement, the Agent
will handle all transactions relating to the Loans and all other Obligations,
including, without limitation, all transactions with respect to this Agreement,
the Loan Documents and all related documents in accordance with its usual
banking practices. In performing its duties as Agent hereunder, the Agent will
take the same care as it takes in connection with loans in which it alone is
interested. However, neither the Agent nor any of its directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or them hereunder or in connection herewith except for its or their own
gross negligence or willful misconduct.
9.3 Consultation with Counsel. The Agent may consult with legal counsel and any
other professional advisors or consultants deemed necessary or appropriate and
selected by Agent and shall not be liable for any action taken or suffered in
good faith by it in accordance with the advice of such counsel.
9.4 Documents. The Agent shall not be under a duty to examine into or pass upon
the effectiveness, genuineness or validity of this Agreement or any of the
Revolving Credit Notes or the Term Notes or any other instrument or document
furnished pursuant hereto or in connection herewith, and the Agent shall be
entitled to assume that the same are valid, effective and genuine and what they
purport to be. In addition the Agent shall not be liable for failing to make any
inquiry concerning the accuracy, performance or observance of any of the terms,
provisions or conditions of such instrument or document.
9.5 Rights as a Lender. With respect to its applicable Pro Rata Percentage of
the Credit Facility, the Agent shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not the Agent,
and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. Subject to the
provisions of this Agreement, the Agent may accept deposits from, lend money to
and generally engage in any kind of banking or trust business with The Borrower
and its Affiliates as if it were not the Agent.
9.6 Responsibility of Agent. It is expressly understood and agreed that the
obligations of the Agent hereunder are only those expressly set forth in this
Agreement and that the Agent shall be entitled to assume that no Event of
Default, and no event which with the passage of time, or the giving of notice,
would constitute an Event of Default, has occurred and is continuing, unless the
Agent has actual knowledge of such fact. Except to the extent the Agent is
required by the Lenders pursuant to the express terms hereof to take, or refrain
from taking, a specific action, the Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising any rights
which may be vested in it by, or with respect to taking or refraining from
taking any action or actions that it may be able to take under or in respect of,
this Agreement and the Loan Documents. Except for gross negligence or willful
misconduct, the Agent shall incur no liability under or in respect of this
Agreement and the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties, or with respect to
anything that it may do or refrain from doing in the reasonable exercise of its
judgment, or that may seem to it to be necessary or desirable under the
circumstances. The relationship between the Agent and each Lender is and shall
be that of agent and principal only and nothing herein shall be construed to
constitute the Agent a joint venturer with any Lender, a trustee or fiduciary
for any of the Lenders or for the holder of a participation therein nor impose
on the Agent duties and obligations other than those set forth herein.
9.7 Collections and Disbursements.
(a) The Agent will have the right to collect and receive all
payments of the Obligations, together with all fees, charges or other amounts
due under this Agreement and the Loan Documents. On each Settlement Date, the
Agent shall make a determination of the actual outstanding dollar amount of each
Lender's Loans based upon its Pro Rata Percentage (or such lesser percentage if
such Lender has failed to remit a required payment to the Agent hereunder) of
the outstanding principal amount of all Loans.
(b) The Agent shall pay to each Lender, on each Settlement
Date, from the interest actually received by Agent from the Borrower, a sum
equal to the interest calculated for the actual number of days elapsed on the
basis of a year of 360 days, on each Lender's outstanding balance of its Loans
at the rate equal to the applicable rate of interest chosen by the Borrower with
respect to such Lender's Pro Rata Percentage of the Loans outstanding. If the
Agent should for any reason receive less than the full amount of the interest or
other compensation due under the Loan Documents, each Lender's share of such
interest or compensation shall decrease in proportion to each Lender's Pro Rata
Percentage.
(c) If any such payment received by the Agent is rescinded,
determined to be unenforceable or invalid or is otherwise required to be
returned for any reason at any time, whether before or after termination of this
Agreement and the Loan Documents, each Lender will, upon written notice from the
Agent, promptly pay over to the Agent its Pro Rata Percentage of the amount so
rescinded, held unenforceable or invalid or required to be returned, together
with interest and other fees thereon if also required to be rescinded or
returned.
(d) All payments by the Agent and the Lenders to each other
hereunder shall be in immediately available funds. The Agent will at all times
maintain proper books of account and records reflecting the interest of each
Lender in the Credit Facility and the Letters of Credit, in a manner customary
to the Agent's keeping of such records, which books and records shall be
available for inspection by each Lender at reasonable times during normal
business hours, at such Lender's sole expense. In the event that any Lender
shall receive any payments in reduction of the Obligations in an amount greater
than its applicable Pro Rata Percentage in respect of indebtedness to the
Lenders evidenced hereby (including, without limitation amounts obtained by
reason of setoffs), such Lender shall hold such excess in trust (to the extent
such Lender is lawfully able to do so) for the Agent (on behalf of all other
Lenders) and shall promptly remit to the Agent such excess amount so that the
amounts received by each Lender hereunder shall at all times be in accordance
with its applicable Pro Rata Percentage. To the extent necessary for each
Lender's actual percentage of all outstanding Loans to equal its applicable Pro
Rata Percentage, the Lender having a greater share of any payment(s) than its
applicable Pro Rata Percentage shall acquire a participation in the applicable
outstanding balances of the Loans of the other Lenders as determined by the
Agent.
(e) The proceeds from the sale or disposition of any
Collateral shall be applied first to Expenses incurred by the Agent, then to
accrued but unpaid interest, then to unpaid Fees owing to the Lenders and/or the
Agent, then on the next Settlement Date to the principal balance of the Loans in
accordance with the percentage which each Lender's respective outstanding Loans
bears to the aggregate outstanding Loans.
9.8 Indemnification. To the extent not promptly paid by the Borrower, the
Lenders hereby each indemnify the Agent ratably according to their respective
Pro Rata Percentages, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against the Agent in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted by the Agent
under or related to this Agreement or the other Loan Documents or the Loans,
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Agent's gross negligence or
willful misconduct. The Agent shall have the right to deduct, from any amounts
to be paid by the Agent to any Lender hereunder, any amounts owing to the Agent
by such Lender by virtue of this paragraph.
9.9 Expenses.
(a) All reasonable out-of-pocket costs and out-of-pocket expenses incurred by
the Agent in connection with the creation, amendment, administration,
termination and enforcement of the Loans (including, without limitation, audit
expenses, counsel fees and expenditures to protect, preserve and defend the
Agent's and each Lender's rights and interest under the Loan Documents) shall be
shared and paid on demand by the Lenders pro rata based on their applicable Pro
Rata Percentage.
(b) The Agent may deduct from payments or distributions to be
made to the Lenders such funds as may be necessary to pay or reimburse the Agent
for such costs or expenses.
(c) In connection with reimbursement of expenses set forth in
this Section 9.9 and indemnification obligations set forth in Section 9.8, the
Agent shall provide a written statement to the Lenders describing such expenses
or indemnification obligations.
9.10 No Reliance. By execution of or joining in this Agreement, each Lender
acknowledges that it has entered into this Agreement and the Loan Documents
solely upon its own independent investigation and is not relying upon any
information supplied by or any representations made by the Agent. Each Lender
shall continue to make its own analysis and evaluation of the Borrower. The
Agent makes no representation or warranty and assumes no responsibility with
respect to the financial condition or Property of the Borrower, any obligor or
any account debtor of The Borrower; the accuracy, sufficiency or currency of any
information concerning the financial condition, prospects or results of
operations of the Borrower; or for sufficiency, authenticity, legal effect,
validity or enforceability of the Loan Documents. The Agent assumes no
responsibility or liability with respect to the collectibility of the
Obligations or the performance by the Borrower of any obligation under the Loan
Documents.
9.11 Reporting. During the term of this Agreement, the Agent will promptly
furnish each Lender with such financial statements, reports and other materials
actually received by the Agent. The Agent will notify the Lenders promptly after
it receives actual knowledge of any Event of Default under the Loan Documents.
9.12 Removal of Agent. The Agent may resign at any time upon thirty (30) days
prior written notice thereof to the Lenders and the Borrower and upon receipt
from the Borrower of its written consent to such resignation, which consent
shall not be unreasonably withheld. The Agent may be removed as Agent hereunder
by the written direction of the Majority Lenders (exclusive of Citizens) upon
the following (i) willful misconduct in the performance of the Agent's duties or
responsibilities under this Agreement; or (ii) if a receiver, trustee or
conservator is appointed for the Agent or any state or federal regulatory
authority assumes management or control of the Agent or, if under applicable
law, the administrative discretionary duties and responsibilities of the Agent
hereunder become controlled by or subject to the approval of any state or
federal regulatory authority. Upon any such removal, the Majority Lenders shall
have the right to appoint a successor Agent. Upon the acceptance of the
appointment as a successor Agent hereunder by such successor Agent, such
successor Agent shall thereupon succeed to and become vested with all rights,
powers, obligations and duties of the retiring Agent and the retiring Agent
shall be discharged from its duties and obligations hereunder.
9.13 Action on Instructions of Lenders. With respect to any provision of this
Agreement, or any issue arising thereunder, concerning which the Agent is
authorized to act or withhold action by direction of the Lenders (or as the case
may be under this Agreement, the Majority Lenders), the Agent shall in all cases
be fully protected in so acting, or in so refraining from acting, hereunder in
accordance with written instructions signed by the Lenders. Such instructions
and any action taken or failure to act pursuant thereto shall be binding on all
of the Lenders and on all holders of the Notes.
9.14 Several Obligations. The obligation of each Lender is several, and
neither the Agent nor any other Lender shall be
responsible for any obligation or commitment hereunder of any other Lender.
9.15 Consent of Lenders to Agent's Rights.
(a) Subject to the provisions of this Section 9.15, the Agent
shall have the sole and exclusive right to service, administer and monitor the
Loans and the Loan Documents. The Agent shall, at the discretion of the Majority
Lenders, have the right to exercise all rights, remedies, privileges and options
under the Loan Documents, including without limitation the determination as to
whether Advances should be made or Letters of Credit issued under the Agreement
and the determination as to the basis on which and extent to which Advances may
be made or Letters of Credit issued.
(b) Notwithstanding anything to the contrary contained in
subparagraph (a) above, the Agent shall not, without the prior written consent
of all of the Lenders: (i) extend the Revolving Credit Term, any payment date
under the Credit Facility, the Term Loan Maturity Date or the Revolving Credit
Facility Maturity Date, (ii) decrease any interest rate or any fee or other
amount payable for the benefit of the Lenders hereunder, (iii) compromise or
settle all or any material portion of the Obligations, (iv) release any obligor
from the Obligations except in connection with a termination of the Revolving
Credit and the Term Loan and full payment and satisfaction of all Obligations,
(v) modify Sections 9.15(b) or 9.15(c) or any other provision of this Agreement
or any other Loan Document expressly providing for consent of all Lenders, or
the definition of Majority Lenders, (vi) release or subordinate the Agent's
interest (except with respect to Permitted Liens, to the extent applicable) in
any Collateral except in connection with (A) a sale in the ordinary course or
other permitted disposition, or (B) the enforcement of the Agent's rights and
interests in Collateral after the occurrence of an Event of Default; or (vii)
increase the Revolving Credit Limit or the Revolving Credit Pro Rata Share of
any Lender; and, except as expressly provided in this Section 9.15(b) the Agent
shall not, without the prior written consent of the Majority Lenders, modify,
amend or waive any provision of this Agreement or the other Loan Documents
unless expressly permitted herein.
(c) After an acceleration of the Obligations, the Agent shall
have the sole and exclusive right, with communication (to the extent reasonably
practicable under the circumstances) with all Lenders, to exercise or refrain
from exercising any and all right, remedies, privileges and options under the
Loan Documents and available at law or in equity to protect and enforce the
rights of the Lenders and collect the Obligations, including, without
limitation, instituting and pursuing all legal action against the Borrower or to
collect the Obligations, or defending any and all actions brought by the
Borrower or other Person; or incurring Expenses or otherwise making expenditures
to protect the Loans, the Collateral or the Lenders' rights or remedies.
(d) To the extent the Agent is required to obtain or otherwise
elects to seek the consent of the Lenders to an action the Agent desires to
take, if any Lender fails to notify the Agent, in writing, of its consent or
dissent to any request of the Agent hereunder within five (5) Business Days of
such Lender's receipt of such request, such Lender shall be deemed not to have
given its consent thereto.
(e) Any amendment to this Section 9 of this Agreement shall
not require the Borrower's consent, provided that any such amendment shall not
reduce the rights, or increase the obligations, of the Borrower under this
Agreement.
9.16 Participations and Assignments: (a) Subject to subparagraph (b) below, each
Lender may at any time: (i) grant participations of its Pro Rata Percentage of
Loans or in and to its interests under this Agreement (collectively,
"Participations") to any other lending office of such Lender or to any other
bank, lending institution or the Federal Reserve Bank ("Participants"); provided
however that: all amounts payable by the Borrower to such Lender hereunder and
voting rights of such Lender hereunder shall be determined as if such Lender had
not granted such Participation (a change in voting rights requiring written
consent of all Lenders); and any agreement pursuant to which such Lender may
grant a Participation (A) shall provide that such Lender is not delegating and
therefor shall retain the sole right and responsibility to exercise its rights
and privileges including, without limitation, the right to approve any
amendment, modification or waiver of any provisions of this Agreement, provided,
however that as between such Lender and its Participant such Lender may agree to
consult with and obtain the approval of its Participant regarding any amendment,
modification or waiver of any provision set forth in Section 9.15(b); and (B)
shall not release or discharge such Lender from its duties and obligations,
which shall remain absolute, to make Advances or issue Letters of Credit
hereunder; and (ii) assign all or any portion of its Pro Rata Percentage of
Loans and its right, title and interest therein or in and to this Agreement to a
Lender or any affiliate of a Lender, or to any other bank or financial
institution, with the prior written consent of the Agent and the Borrower
provided that the Borrower's consent shall not be required after the occurrence
and during the continuance of an Event of Default; and provided further that
each Lender's Revolving Credit Pro Rata Share shall be at least $5,000,000.00.
Notwithstanding anything to the contrary contained herein, each Lender may at
any time collaterally assign all or any portion of its rights under this
Agreement and its Revolving Credit Notes and its Term Notes to any Federal
Reserve Bank to secure overnight deposits, provided that no such assignment
shall release the assignor Lender from its obligations hereunder.
(b) Sales and/or assignments must be in minimum amounts of
$5,000,000.00 and Agent fees attendant thereto shall be in the minimum amount of
$3,500.00 per assignment. The Borrower will not be responsible for the payment
of any fees in connection with any said sale and/or assignment. Provided
further, transferability of voting rights in connection with transfers of
participation interests shall be limited to changes in principal, decreases in
rate, decreases in fees, changes in term, and release of collateral. Assignments
will require the written consent of the Agent and, absent an Event of Default,
the Borrower, except for assignments to an affiliate of the assigning Lender, to
another Lender or to the Federal Reserve Bank. Consents to assignments shall not
be unreasonably withheld.
SECTION 10. MISCELLANEOUS
10.1 GOVERNING LAW: THIS AGREEMENT, AND ALL RELATED AGREEMENTS AND DOCUMENTS,
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF
THE COMMONWEALTH OF PENNSYLVANIA. THE PROVISIONS OF THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND ALL OTHER AGREEMENTS AND DOCUMENTS REFERRED TO HEREIN ARE TO
BE DEEMED SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION
SHALL NOT AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL CONTINUE IN FULL
FORCE AND EFFECT.
10.2 Integrated Agreement: The Notes, the other Loan Documents, all related
agreements, and this Agreement shall be construed as integrated and
complementary of each other, and as augmenting and not restricting the Lenders'
and the Agent's rights and remedies. If, after applying the foregoing, an
inconsistency still exists, the provisions of this Agreement shall constitute an
amendment thereto and shall control.
10.3 Waiver:
(a) No omission or delay by the Agent or the Lenders in
exercising any right or power under this Agreement or any related agreements and
documents will impair such right or power or be construed to be a waiver of any
Unmatured Event of Default, or Event of Default or an acquiescence therein, and
any single or partial exercise of any such right or power will not preclude
other or further exercise thereof or the exercise of any other right, and as to
the Borrower no waiver will be valid unless in writing and signed by the Agent
and then only to the extent specified.
(b) The Borrower releases and shall indemnify, defend and hold
harmless the Agent and the Lenders, and their respective officers, employees and
agents, of and from any claims, demands, liabilities, obligations, judgments,
injuries, and out-of-pocket losses, damages and costs and expenses (including,
without limitation, reasonable legal fees) resulting from (i) acts or conduct of
the Borrower under, pursuant or related to this Agreement and the other Loan
Documents, (ii) the Borrower's breach or violation of any representation,
warranty, covenant or undertaking contained in this Agreement or the other Loan
Documents, and (iii) the Borrower's failure to comply with any or all laws,
statutes, ordinances, governmental rules, regulations or standards, whether
federal, state or local, or court or administrative orders or decrees,
(including without limitation environmental laws, etc.) and all costs, expenses,
fines, penalties or other damages resulting therefrom, unless resulting from
acts or conduct of the Agent or the Lenders constituting willful misconduct or
gross negligence. The obligations of the Borrower under this Section 10.3(b)
shall survive the occurrence of any and all events whatsoever, including without
limitation, payment of the Obligations or investigation by or knowledge of the
Agent or the Lenders.
10.4 Time: Whenever the Borrower shall be required to make any payment, or
perform any act, on a day which is not a Business Day, such payment may be made,
or such act may be performed, on the next succeeding Business Day except with
respect to the repayment of LIBOR Based Rate Loans as set forth in Section
2.3(b)(ii). Time is of the essence in the performance under all provisions of
this Agreement and all related agreements and documents.
10.5 Expenses of Agent and Lenders: At the Closing and from time to time
thereafter, the Borrower will pay all reasonable expenses of the Agent on demand
(including, without limitation, search costs, audit fees, appraisal fees,
environmental fees and the reasonable fees and expenses of legal counsel for the
Agent) relating to the closing of this Agreement, and all related agreements and
documents, including, without limitation, closing, enforcement of this Agreement
and the other Loan Documents, the enforcement, protection and defense of the
rights of the Agent and the Lenders in and to the Loans and the Collateral or
otherwise hereunder, and any expenses relating to extensions, amendments,
waivers or consents pursuant to the provisions hereof, or any related agreements
and documents or relating to agreements with other creditors, or termination of
this Agreement. The Borrower further agrees to pay, or reimburse the Lenders
for, all reasonable out-of-pocket costs and expenses, including without
limitation attorneys' fees (including the allocated costs of in-house counsel),
incurred in connection with the enforcement, protection and defense of their
rights in and to the Loans and the Collateral or otherwise hereunder, following
acceleration of the Obligations after the occurrence of an Event of Default
hereunder or following the failure to repay the Obligations in full upon
maturity. Collectively all of the foregoing are referred to as the "Expenses."
10.6 Brokerage: This transaction was brought about and entered into by the
Agent, the Lenders and the Borrower acting as principals and without any
brokers, agents or finders being the effective procuring cause hereof. The
Borrower represents that it has not committed the Agent or any Lender to the
payment of any brokerage fee, commission or charge in connection with this
transaction. If any such claim is made on the Agent or any Lender by any broker,
finder or agent or other person as a result of the Borrower's engaging thereof,
the Borrower hereby indemnifies, defends and saves such party harmless against
such claim and further will defend, with counsel satisfactory to the Agent, any
action or actions to recover on such claim, at the Borrower's own cost and
expense, including such party's reasonable counsel fees. The Borrower further
agrees that until any such claim or demand is adjudicated in such party's favor,
the amount demanded shall be deemed a liability of the Borrower under this
Agreement.
10.7 Notices:
(a) Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed given if delivered in person
or if sent by telecopy or by nationally recognized overnight courier, or via
first class, Certified or Registered mail, postage prepaid, as follows, unless
such address is changed by written notice hereunder:
If to Agent to: Citizens Bank of Pennsylvania
0000 Xxxxxxxx Xxxx
Xxxxx 000
Plymouth Meeting, Pennsylvania 19462
Attn.: Xxxxxxx X. Xxxxx, Vice President
Telecopy No.: 610/941-4136
With copies to: Xxxxxx & Xxxxxxx, P.C.
Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxx, Esquire
Telecopy No.: 856/795-0574
If to The Borrower to: RCM Technologies, Inc.
0000 XxXxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxx, Chairman, President & CEO
Telecopy No.: 856/488-8833
With copies to: Xxxxxx X. Xxxxxx, Esquire
Xxxxxxx & Bach, P.C.
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
If to Lenders: to the addresses set forth on Schedule "B"
(b) Any notice sent by the Agent, any Lender or the
Borrower by any of the above methods shall be deemed to be
given when so received.
(c) The Agent shall be fully entitled to rely upon any
facsimile transmission or other writing purported to be sent by any Authorized
Officer (whether requesting an Advance, the issuance of a Letter of Credit or
otherwise) as being genuine and authorized.
10.8 Joint and Several. If this Agreement is executed by more than one
Borrower, the obligations of such Persons or entities hereunder will be joint
and several.
10.9 Headings: The headings of any paragraph or Section of this
Agreement are for convenience only and shall not be used
to interpret any provision of this Agreement.
10.10 Survival: All warranties, representations, and covenants made by
the Borrower herein, or in any agreement referred to herein or on any
certificate, document or other instrument delivered by it or on its behalf under
this Agreement, shall be considered to have been relied upon by the Agent and
Lenders, and shall survive the delivery to Lenders of the Revolving Credit
Notes, regardless of any investigation made by the Lenders or on their behalf.
All statements in any such certificate or other instrument prepared and/or
delivered for the benefit of the Agent and any and all Lenders shall constitute
warranties and representations by the Borrower hereunder. Except as otherwise
expressly provided herein, all covenants made by the Borrower hereunder or under
any other agreement or instrument shall be deemed continuing until all
Obligations are satisfied in full.
10.11 Successors and Assigns: This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
subject to the provisions of Section 9.16. The Borrower may not transfer, assign
or delegate any of its duties or obligations hereunder.
10.12 Duplicate Originals: Two or more duplicate originals of this
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument. This
Agreement may be executed in counterparts, all of which counterparts taken
together shall constitute one completed fully executed document.
10.13 Modification: No modification hereof or any agreement referred to
herein shall be binding or enforceable unless in writing and signed by the
Borrower, the Agent and the Lenders, except as provided in Section 9 hereof. Any
modification in accordance with the terms hereof shall be binding on all parties
hereto, whether or not each is a signatory thereto.
10.14 Third Parties: No rights are intended to be created hereunder, or
under any related agreements or documents for the benefit of any third party
donee, creditor or incidental beneficiary of the Borrower. Nothing contained in
this Agreement shall be construed as a delegation to the Agent or any Lender of
the Borrower's duty of performance, including, without limitation, the
Borrower's duties under any Account or contract with any other Person.
10.15 Discharge of Taxes, The Borrowers' Obligations, Etc.: The Agent,
in its sole discretion, shall have the right at any time, and from time to time,
if the Borrower fails to timely perform, to: (a) pay for the performance of any
of the Borrower's Obligations hereunder, and (b) discharge taxes or Liens, at
any time levied or placed on any of the Borrower's Property in violation of this
Agreement unless such entity is in good faith with due diligence by appropriate
proceedings contesting such taxes or Liens and maintaining proper reserves
therefor in accordance with GAAP. Expenses and advances shall be added to the
Revolving Credit Loans, and bear interest at the same rate applied to the
Revolving Credit Loans, until reimbursed to the Agent. Such payments and
advances made by the Agent shall not be construed as a waiver by the Agent or
the Lenders of an Event of Default under this Agreement.
10.16 Withholding and Other Tax Liabilities: Each Lender shall have the
right to refuse to make any Advances or issue any Letter of Credit from time to
time unless the Borrower shall, at Agent's request, have given to the Agent
evidence, reasonably satisfactory to the Agent, that they have properly
deposited or paid, as required by law, all withholding taxes and all federal,
state, city, county or other taxes due up to and including the date of the
requested Advance or Letter of Credit issuance. Copies of deposit slips showing
payment shall likewise constitute satisfactory evidence for such purpose. In the
event that any lien, assessment or tax liability against the Borrower shall
arise in favor of any taxing authority, whether or not notice thereof shall be
filed or recorded as may be required by law, the Agent shall have the right (but
shall not be obligated, nor shall the Agent or any Lender hereby assume the
duty) to pay any such lien, assessment or tax liability by virtue of which such
charge shall have arisen; provided, however, that the Agent shall not pay any
such tax, assessment or lien if the amount, applicability or validity thereof is
being contested in good faith and by appropriate proceedings by such entity. In
order to pay any such lien, assessment or tax liability, the Agent shall not be
obliged to wait until said lien, assessment or tax liability is filed before
taking such action as hereinabove set forth. Any sum or sums which the Agent
(shared ratably by the Lenders) shall have paid for the discharge of any such
lien shall be added to the Credit Facility and shall be paid by the Borrower to
the Agent with interest thereon, upon demand, and the Agent shall be subrogated
to all rights of such taxing authority against the Borrower.
10.17 CONSENT TO JURISDICTION: THE BORROWER AND EACH LENDER HEREBY
IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF
PENNSYLVANIA OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
PENNSYLVANIA IN ANY AND ALL ACTIONS AND PROCEEDINGS WHETHER ARISING HEREUNDER OR
UNDER ANY OTHER AGREEMENT OR UNDERTAKING AND IRREVOCABLY AGREE TO SERVICE OF
PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO THE ADDRESS OF THE
APPROPRIATE PARTY SET FORTH HEREIN.
10.18 Waiver of Jury Trial: AS AN INDEPENDENT COVENANT, THE AGENT, EACH
LENDER AND THE BORROWER HEREBY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A JURY
TRIAL IN CONNECTION WITH ANY LITIGATION COMMENCED BY OR AGAINST ANY OF THEM WITH
RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO OR UNDER THE LOAN
DOCUMENTS WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
1052702v6
[INTENTIONALLY LEFT PARTIALLY BLANK]
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement the day and year first above written.
BORROWER: RCM TECHNOLOGIES, INC.
By:_________________________________________
Name:_______________________________________
Title:________________________________________
CATARACT, INC.
By:_________________________________________
Name:_______________________________________
Title:________________________________________
RCM TECHNOLOGIES (USA), INC.
By:_________________________________________
Name:_______________________________________
Title:________________________________________
PROGRAMMING ALTERNATIVES
OF MINNESOTA, INC.
By:_________________________________________
Name:_______________________________________
Title:________________________________________
SOFTWARE ANALYSIS AND MANAGEMENT, INC.
By:_________________________________________
Name:_______________________________________
Title:________________________________________
RCMT DELAWARE, INC.
By:_________________________________________
Name:_______________________________________
Title:________________________________________
RCM TECHNOLOGIES CANADA CORP.
By:_________________________________________
Name:_______________________________________
Title:________________________________________
BUSINESS SUPPORT GROUP OF MICHIGAN, INC.
By:_________________________________________
Name:_______________________________________
Title:________________________________________
PINNACLE CONSULTING, INC.
By:_________________________________________
Name:_______________________________________
Title:________________________________________
AGENT: CITIZENS BANK OF PENNSYLVANIA, as Administrative Agent and Arranger
By:_________________________________________
Name:_______________________________________
Title:________________________________________
LENDERS: CITIZENS BANK OF PENNSYLVANIA, as Lender
By:_________________________________________
Name:_______________________________________
Title:________________________________________
SUNTRUST BANK, as Documentation Agent and Lender
By:_________________________________________
Name:_______________________________________
Title:________________________________________
LEET NATIONAL BANK, as Syndication Agent and Lender
By:_________________________________________
Name:_______________________________________
Title:________________________________________
1052702 - v6
SCHEDULE A
Revolving Credit Facility
evolving Credit Revolving Credit
Lenders Pro Rata Share Pro Rata Percentage
Citizens Bank of Pennsylvania $ 16,842,500 42.1%
Fleet National Bank $ 14,740,000 36.8%
SunTrust Bank $ 8,417,500 21.1%
TOTAL COMMITMENT $ 40,000,000 100%
Term Loan Facility
Lenders Pro Rata Share
Citizens Bank of Pennsylvania $ 3,157,500
Fleet National Bank $ 1,582,500
TOTAL COMMITMENT $ 7,500,000
SCHEDULE B
CITIZENS BANK OF PENNSYLVANIA
0000 Xxxxxxxx Xxxx
Xxxxx 000
Plymouth Meeting, Pennsylvania 19462
Attn.: Xxxxxxx X. Xxxxx, Vice President
Telecopy No.: 610/941-4136
SUNTRUST BANK
000 Xxxxxxxxx Xxxxxx
XXX000 -0xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Director
Telecopy No.: 000-000-0000
FLEET NATIONAL BANK
000 Xxxxxxx Xxxxxx
XX DE/0007F
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx, Senior Vice President
Telecopy No.: 000-000-0000
