EXHIBIT 10.43
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LOAN AND SECURITY AGREEMENT
BY AND AMONG
SPSS INC.
AND
EACH OF ITS SUBSIDIARIES THAT BECOME ADDITIONAL BORROWERS
AS BORROWERS,
AND
FOOTHILL CAPITAL CORPORATION
AS LENDER
DATED AS OF MARCH 31, 2003
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION.............................................................................1
1.1 Definitions.....................................................................................1
1.2 Accounting Terms...............................................................................26
1.3 Code...........................................................................................26
1.4 Construction...................................................................................26
1.5 Schedules and Exhibits.........................................................................26
2. LOAN AND TERMS OF PAYMENT...............................................................................26
2.1 Revolver Advances..............................................................................26
2.2 Term Loan......................................................................................28
2.3 Borrowing Procedures and Settlements...........................................................28
2.4 Payments.......................................................................................29
2.5 Overadvances...................................................................................31
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations....................31
2.7 Cash Management................................................................................33
2.8 Crediting Payments.............................................................................34
2.9 Designated Account.............................................................................34
2.10 Maintenance of Loan Account; Statements of Obligations.........................................34
2.11 Fees...........................................................................................35
2.12 Letters of Credit..............................................................................36
2.13 LIBOR..........................................................................................38
2.14 Capital Requirements...........................................................................41
2.15 Joint and Several Liability of Borrowers.......................................................41
3. CONDITIONS; TERM OF AGREEMENT...........................................................................44
3.1 Conditions Precedent to the Initial Extension of Credit........................................44
3.2 Conditions Subsequent to the Initial Extension of Credit.......................................48
3.3 Conditions Precedent to all Extensions of Credit...............................................48
3.4 Term...........................................................................................49
3.5 Effect of Termination..........................................................................49
3.6 Early Termination by Borrowers.................................................................49
3.7 Conditions Precedent to Certain A Advances.....................................................50
3.8 Conditions To Becoming an Additional Borrower..................................................50
4. CREATION OF SECURITY INTEREST...........................................................................53
4.1 Grant of Security Interest.....................................................................53
4.2 Negotiable Collateral..........................................................................53
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral.........................53
4.4 Delivery of Additional Documentation Required..................................................53
4.5 Power of Attorney..............................................................................54
4.6 Right to Inspect...............................................................................54
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4.7 Control Agreements.............................................................................54
4.8 Commercial Tort Claims.........................................................................55
5. REPRESENTATIONS AND WARRANTIES..........................................................................55
5.1 No Encumbrances................................................................................55
5.2 Eligible Accounts..............................................................................55
5.3 [Intentionally Omitted]........................................................................55
5.4 Equipment......................................................................................55
5.5 Location of Inventory and Equipment............................................................55
5.6 Inventory Records..............................................................................56
5.7 Location of Chief Executive Office; FEIN.......................................................56
5.8 Due Organization and Qualification; Subsidiaries...............................................56
5.9 Due Authorization; No Conflict.................................................................56
5.10 Litigation.....................................................................................58
5.11 No Material Adverse Change.....................................................................58
5.12 Fraudulent Transfer............................................................................58
5.13 Employee Benefits..............................................................................59
5.14 Environmental Condition........................................................................59
5.15 Brokerage Fees.................................................................................59
5.16 Intellectual Property..........................................................................59
5.17 Leases.........................................................................................60
5.18 DDAs...........................................................................................60
5.19 Complete Disclosure............................................................................60
5.20 Indebtedness...................................................................................61
5.21 Taxes and Payments.............................................................................61
5.22 Inactive Subsidiaries..........................................................................61
6. AFFIRMATIVE COVENANTS...................................................................................61
6.1 Accounting System..............................................................................62
6.2 Collateral Reporting...........................................................................62
6.3 Financial Statements, Reports, Certificates....................................................63
6.4 Guarantor Reports..............................................................................65
6.5 [Intentionally Omitted]........................................................................65
6.6 Maintenance of Properties......................................................................65
6.7 Taxes..........................................................................................66
6.8 Insurance......................................................................................66
6.9 Location of Inventory and Equipment............................................................67
6.10 Compliance with Laws...........................................................................67
6.11 Leases.........................................................................................67
6.12 Brokerage Commissions..........................................................................67
6.13 Existence......................................................................................67
6.14 Environmental..................................................................................67
6.15 Disclosure Updates.............................................................................68
6.16 Intellectual Property Rights...................................................................68
6.17 Cleanup of Certain Intellectual Property.......................................................70
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6.18 Registration of Certain Intellectual Property..................................................70
6.19 Proceeds from Permitted Dispositions...........................................................71
7. NEGATIVE COVENANTS......................................................................................71
7.1 Indebtedness...................................................................................71
7.2 Liens..........................................................................................71
7.3 Restrictions on Fundamental Changes............................................................72
7.4 Disposal of Assets.............................................................................72
7.5 Change Name....................................................................................72
7.6 Guarantee......................................................................................72
7.7 Nature of Business.............................................................................72
7.8 Prepayments and Amendments.....................................................................72
7.9 [Intentionally Omitted]........................................................................73
7.10 Consignments...................................................................................73
7.11 Distributions..................................................................................73
7.12 Accounting Methods.............................................................................73
7.13 Investments....................................................................................73
7.14 Transactions with Affiliates...................................................................73
7.15 Suspension.....................................................................................73
7.16 [Intentionally Omitted]........................................................................73
7.17 Use of Proceeds................................................................................73
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees.............74
7.19 Securities Accounts............................................................................74
7.20 Financial Covenants............................................................................74
7.21 Billing Practices..............................................................................75
7.22 AOL Agreement..................................................................................75
7.23 Inactive Subsidiaries..........................................................................75
8. EVENTS OF DEFAULT.......................................................................................75
9. THE LENDER'S RIGHTS AND REMEDIES........................................................................78
9.1 Rights and Remedies............................................................................78
9.2 Remedies Cumulative............................................................................80
10. TAXES AND EXPENSES......................................................................................80
11. WAIVERS; INDEMNIFICATION................................................................................81
11.1 Demand; Protest................................................................................81
11.2 Lender's Liability for Collateral..............................................................81
11.3 Indemnification................................................................................81
12. NOTICES.................................................................................................81
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..............................................................83
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14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS..............................................................84
14.1 Assignments and Participations.................................................................84
14.2 Successors.....................................................................................85
15. AMENDMENTS; WAIVERS.....................................................................................85
15.1 Amendments and Waivers.........................................................................85
15.2 No Waivers; Cumulative Remedies................................................................86
16. GENERAL PROVISIONS......................................................................................86
16.1 Effectiveness..................................................................................86
16.2 Section Headings...............................................................................86
16.3 Interpretation.................................................................................86
16.4 Severability of Provisions.....................................................................86
16.5 Withholding Taxes..............................................................................86
16.6 Amendments in Writing..........................................................................87
16.7 Counterparts; Telefacsimile Execution..........................................................87
16.8 Revival and Reinstatement of Obligations.......................................................87
16.9 Integration....................................................................................87
16.10 Parent as Agent for Borrowers..................................................................87
16.11 Determinations; Judgment Currency..............................................................88
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LOAN AND SECURITY AGREEMENT
THIS
LOAN AND SECURITY AGREEMENT (this "Agreement"), is
entered into as of March 31, 2003, by and among FOOTHILL CAPITAL CORPORATION, a
California corporation ("Lender"),
SPSS INC., a Delaware corporation ("Parent"),
and each of Parent's Subsidiaries that become Additional Borrowers in accordance
with Section 3.8 of this Agreement (such Subsidiaries, together with Parent, are
referred to hereinafter each individually as a "Borrower", and individually and
collectively, jointly and severally, as the "Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following definitions:
"A Advances" has the meaning set forth in Section 2.1(a).
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"Accounts" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), including all books and other debts, and any and all
supporting obligations in respect thereof.
"ACH Transactions" means any cash management or related
services (including the Automated Clearing House processing of electronic funds
transfers through the direct Federal Reserve Fedline system) provided by Xxxxx
Fargo or its Affiliates for the account of Administrative Borrower or its
Subsidiaries.
"Additional Borrower" has the meaning set forth in Section
3.8.
"Additional Borrower Effective Date" has the meaning set forth
in Section 3.8.
"Additional Documents" has the meaning set forth in Section
4.4.
"Additional Permitted Dispositions" means sales or other
dispositions by Borrowers or Restricted Subsidiaries of their respective assets
having a fair market value not to exceed $2,000,000 in the aggregate during the
term of this Agreement.
"Administrative Borrower" has the meaning set forth in Section
16.10.
"Advances" has the meaning set forth in Section 2.1(b).
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"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for purposes of the definition of Eligible
Accounts and Section 7.14 hereof: (a) any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed to control such Person; (b)
each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person; and (c) each partnership or joint venture in which a
Person is a partner or joint venturer shall be deemed to be an Affiliate of such
Person.
"Agreement" has the meaning set forth in the preamble hereto.
"AOL Agreement" means the agreement entered into as of October
21, 2001, between Parent and AOL, as amended, modified or supplemented and as
may be further amended, modified or supplemented from time to time.
"AOL" means America Online, Inc., a Delaware corporation.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period of time from and after
the date of the execution and delivery of this Agreement up to the date that is
the first anniversary of the Closing Date, 4.0% times the Maximum Revolver
Amount, (b) during the period of time from and including the date that is the
first anniversary of the Closing Date up to the date that is the second
anniversary of the Closing Date, 3.0% times the Maximum Revolver Amount, (c)
during the period of time from and including the date that is the second
anniversary of the Closing Date up to the date that is the third anniversary of
the Closing Date, 2.0% times the Maximum Revolver Amount, and (d) during the
period of time from and including the date that is the third anniversary of the
Closing Date up to the Maturity Date, 1.0% times the Maximum Revolver Amount;
provided, however, that if this Agreement is terminated prior to the Maturity
Date from the proceeds of (x) a private or public placement of equity or
subordinated debt by Borrowers or (y) the sale of all or substantially all of
the stock or assets of Borrowers, then the Applicable Prepayment Premium shall
be 50% of the amount that otherwise would have been due.
"Assignee" has the meaning set forth in Section 14.1(a).
"Authorized Person" means any officer or other employee of
Administrative Borrower.
"Availability" means, as of any date of determination, if such
date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Borrowers are entitled to borrow as Advances under
Section 2.1 (a) and (b) (after giving
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effect to all then outstanding Obligations (other than Bank Products
Obligations) and all sublimits and reserves applicable hereunder).
"B Advances" has the meaning set forth in Section 2.1(b).
"Bank Product Agreements" means those certain agreements
entered into from time to time by Parent or its Subsidiaries in connection with
any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Parent or its
Subsidiaries to Xxxxx Fargo or its Affiliates pursuant to or evidenced by the
Bank Product Agreements and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all such amounts that Borrowers are
obligated to reimburse to Lender as a result of Lender purchasing participations
or executing indemnities or reimbursement obligations with respect to the Bank
Products provided to Parent or its Subsidiaries pursuant to the Bank Product
Agreements.
"Bank Products" means any service or facility extended to
Parent or any of its Subsidiaries at the request of Parent or any such
Subsidiary (or as required by Section 2.7 of this Agreement) by Xxxxx Fargo or
any Affiliate of Xxxxx Fargo including: (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions,
(f) cash management, including controlled disbursement, accounts or services, or
(g) Hedge Agreements.
"Bank Product Reserves" means, as of any date of
determination, the amount of reserves that Lender has established (based upon
Xxxxx Fargo's or its Affiliate's reasonable determination of the credit exposure
in respect of then extant Bank Products) for Bank Products then provided or
outstanding.
"Bankruptcy Code" means the United States Bankruptcy Code and
the Insolvency Xxx 0000 of the United Kingdom, each as in effect from time to
time.
"Base LIBOR Rate" means the rate per annum, determined by
Lender in accordance with its customary procedures, and utilizing such
electronic or other quotation sources as it considers appropriate (rounded
upwards, if necessary, to the next 1/16%), on the basis of the rates at which
Dollar deposits are offered to major banks in the London interbank market on or
about 11:00 a.m. (California time) two (2) Business Days prior to the
commencement of the applicable Interest Period, for a term and in amounts
comparable to the Interest Period and amount of the LIBOR Rate Loan requested by
Administrative Borrower in accordance with this Agreement, which determination
shall be conclusive in the absence of manifest error.
"Base Rate" means, the rate of interest announced within Xxxxx
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Xxxxx Fargo's base rates (not
necessarily the lowest of such rates) and serves
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as the basis upon which effective rates of interest are calculated for those
loans making reference thereto and is evidenced by the recording thereof after
its announcement in such internal publication or publications as Xxxxx Fargo may
designate.
"Base Rate Loan" means each portion of an Advance or the Term
Loan that bears interest at a rate determined by reference to the Base Rate.
"Base Rate Revolver A Margin" means 0.25 percentage points.
"Base Rate Revolver B Margin" means 3.00 percentage points.
"Base Rate Term Loan Margin" means 2.50 percentage points;
provided, however, that if, as of any fiscal year-end of Parent commencing on or
after Lender's receipt of audited, unqualified financial statements of Parent
for the fiscal year ended December 31, 2003, EBITDA for the immediately
preceding 12-month period equals or exceeds the amounts set forth in the
following table, "Base Rate Term Loan Margin" shall have the meaning as set
forth in the following table. The determination of EBITDA for purposes of this
definition shall be based upon the fiscal year end audited financial statements
delivered to Lender pursuant to Section 6.3(b). Notwithstanding the foregoing,
if Parent fails to deliver to Lender the financial statements required pursuant
to Section 6.3, then upon the occurrence, and during the continuance, of such
failure, the "Base Rate Term Loan Margin" shall mean 2.50 percentage points.
If EBITDA is: Base Rate Term Loan Margin means:
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greater than 85% of the EBITDA Target but less than 95% of the 2.25 percentage points
EBITDA Target
95% of the EBITDA Target or greater 2.00 percentage points
For purposes of this definition, the "EBITDA Target" shall mean an amount
determined by Lender based on the Operating Budget delivered pursuant to Section
6.3(c) satisfactory to Lender; provided that if Lender does not receive such
Operating Budget or Borrowers and Lender cannot agree (for any reason) on an
EBITDA Target acceptable to Borrowers and Lender, then the EBITDA Target shall
be $29,273,000.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA
Affiliate of any Borrower has been an "employer" (as defined in Section 3(5) of
ERISA) within the past six (6) years.
"Board of Directors" means the board of directors of Parent or
any committee thereof duly authorized to act on behalf thereof.
"Books" means all of each Borrower's and the Restricted
Subsidiaries' now owned or hereafter existing books and records (including all
of its Records indicating,
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summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of each Borrower's or the Restricted Subsidiaries' Records relating to its
or their business operations or financial condition, and all of its or their
goods or General Intangibles related to such information).
"Borrower" and "Borrowers" have the respective meanings set
forth in the preamble to this Agreement, and, subject to satisfaction of all of
the conditions precedent set forth in Section 3.8, shall also include any
Additional Borrower from and after the applicable Additional Borrower Effective
Date.
"Borrower Intellectual Property Right" means any Intellectual
Property Right owned, held, licensed, used or held for use by any Borrower.
"Borrowing" means a borrowing hereunder of an Advance.
"Borrowing Base" has the meaning set forth in Section 2.1(a).
"Borrowing Base Certificate" means a certificate in the form
of Exhibit B-1.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which national banks are authorized or required to close, except
that, if a determination of a Business Day shall relate to a LIBOR Rate Loan,
the term "Business Day" also shall exclude any day on which banks are closed for
dealings in Dollar deposits in the London interbank market.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness
represented by obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year from the date of measurement, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within one (1) year from the date of measurement and, at the time of
acquisition, having the highest rating obtainable from either S&P or Xxxxx'x,
(c) commercial paper maturing no more than 270 days from the date of measurement
and, at the time of acquisition, having a rating of A-1 or P-1, or better, from
S&P or Xxxxx'x, and (d) certificates of deposit or bankers' acceptances maturing
within one (1) year from the date of measurement that are either (i) issued by
any bank organized under the laws of the United States or any state thereof
which bank has a rating of A or A2, or better, from S&P or Xxxxx'x, or (ii) in
an amount less than or equal to $100,000 in the aggregate issued by any other
bank insured by the Federal Deposit Insurance Corporation.
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"Cash Management Bank" has the meaning set forth in Section
2.7(a).
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash
management service agreements, in form and substance satisfactory to Lender,
each of which is among Administrative Borrower, Lender, and one of the Cash
Management Banks.
"Cash Sweep Instruction" has the meaning set forth in Section
2.7(b).
"Change of Control" means (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 10%, or more, of the Stock of Parent having the right to vote for
the election of members of the Board of Directors, or (b) a majority of the
members of the Board of Directors do not constitute Continuing Directors, or (c)
any Borrower ceases to own and control, directly or indirectly, 100% of the
outstanding capital Stock of each of its Subsidiaries that are Restricted
Subsidiaries extant as of the Closing Date.
"Closing Date" means the date of the making of the initial
Advance (or other extension of credit) hereunder or the date on which Lender
sends Administrative Borrower a written notice that each of the conditions
precedent set forth in Section 3.1 either have been satisfied or have been
waived.
"Closing Date Business Plan" means the Operating Budget of
Parent and its Subsidiaries for the fiscal year ended December 31, 2003, on a
month by month basis, in form and substance (including as to scope and
underlying assumptions) satisfactory to Lender.
"Code" means the
New York Uniform Commercial Code, as in
effect from time to time.
"Collateral" means all of each Borrower's now owned or
hereafter acquired right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
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(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) any "commercial tort claims" as that term is
defined in the Code, as set forth on Schedule C-1 hereto,
(j) money or other assets of each such Borrower that
now or hereafter come into the possession, custody, or control of Lender, and
(k) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, "commercial tort claims," money, deposit accounts, or other tangible
or intangible property resulting from the sale, exchange, collection, or other
disposition of any of the foregoing, or any portion thereof or interest therein,
and the proceeds thereof.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance satisfactory to Lender.
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrowers.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C-1 delivered by the chief financial officer of Parent to
Lender.
"Continuing Director" means (a) any member of the Board of
Directors who was a director of Parent on the Closing Date, and (b) any
individual who becomes a member of the Board of Directors after the Closing Date
if such individual was appointed or nominated for election to the Board of
Directors by a majority of the Continuing Directors or by a majority of the
members of a nominating or other committee of the Board of Directors to which
the Board of Directors has delegated such authority, but excluding any such
individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors of Parent (as such terms are
used in Rule 14a-11 under the Exchange Act) and whose initial assumption of
office resulted from such contest or the settlement thereof.
"Control Agreement" means a control agreement, in form and
substance satisfactory to Lender, executed and delivered by the applicable
Borrower, Lender, and the applicable securities intermediary with respect to a
Securities Account or the applicable bank with respect to a DDA.
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"Copyright Security Agreement" means a copyright security
agreement executed and delivered by each Borrower and Lender, the form and
substance of which is satisfactory to Lender.
"Copyrights" means all unregistered and registered copyrights
owned or licensed by Borrowers in any and all schematics, technology, know-how,
computer software programs or applications (in both source code and object code
format), documents, items, materials and all other works that are protectable
under copyright law, and all registrations, applications for registrations,
renewals and extensions thereof, whether now existing or acquired in the future.
"Daily Balance" means, with respect to each day during the
term of this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account
maintained by any Borrower.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Designated Account" means that certain DDA of Administrative
Borrower identified on Schedule D-1.
"Designated Account Bank" means Bank One, N.A., Chicago, whose
office is located at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000, and
whose ABA number is 000000000, or any substitute bank as permitted pursuant to
the terms and conditions of this Agreement.
"Dilution" means, as of any date of determination, a
percentage, based upon the experience of the immediately prior three (3) months,
that is the result of dividing (a) the Dollar amount of bad debt write-downs,
discounts, advertising allowances, credits, or other dilutive items with respect
to the Accounts during such period, by (b) the Dollar amount of Borrowers'
xxxxxxxx with respect to Accounts during such period.
"Dilution Reserve" means, as of any date of determination, an
amount sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.
"Disbursement Letter" means an instructional letter executed
and delivered by Administrative Borrower to Lender regarding the extensions of
credit to be made on the Closing Date, the form and substance of which is
satisfactory to Lender.
"Dollars" or "$" means United States dollars.
"Due Diligence Letter" means the due diligence letter sent by
Lender's counsel to Administrative Borrower, together with Administrative
Borrower's completed
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responses to the inquiries set forth therein, the form and substance of such
responses to be satisfactory to Lender.
"EBITDA" means, with respect to any fiscal period, Parent's
and its Subsidiaries' consolidated net earnings (or loss), minus extraordinary
non-cash gains and capitalized software development costs, plus extraordinary
non-cash losses, interest expense, income taxes, and depreciation and
amortization for such period, as determined in accordance with GAAP.
"Eligible Accounts" means those Accounts created by one of
Borrowers in the ordinary course of its business, that arise out of its sale of
goods or rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made by Borrowers under the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the criteria set forth below; provided, however, that such criteria may be fixed
and revised from time to time by Lender in Lender's Permitted Discretion to
address the results of any audit performed by Lender from time to time after the
Closing Date. In determining the amount to be included, Eligible Accounts shall
be calculated net of customer deposits and unapplied cash remitted to Borrowers.
Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to
pay within 60 days from the due date or Accounts with selling terms of more than
60 days,
(b) Accounts owed by an Account Debtor (or its
Affiliates) where 50% or more of all Accounts owed by that Account Debtor (or
its Affiliates) are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor
is an employee, Affiliate, or Lender of any Borrower,
(d) Accounts arising in a transaction wherein goods
are placed on consignment or are sold pursuant to a guaranteed sale, a sale or
return, a sale on approval, a xxxx and hold, or any other terms (other than
standard warranty terms offered by any Borrower in the ordinary course of
business and consistent with such Borrower's past practices) by reason of which
the payment by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor
is a non-governmental Person unless: (i) the Account Debtor either (A) maintains
its chief executive office in the United States of America, (B) is organized
under the laws of the United States of America or any state, territory or
subdivision thereof, or (C) maintains a substantial presence in the United
States of America or any state, territory or subdivision thereof satisfactory to
Lender in its Permitted Discretion; or (ii) (A) the Account is supported by an
irrevocable letter of credit satisfactory to Lender in its Permitted Discretion
(as to form, substance, and issuer or domestic confirming bank) that has been
delivered to Lender and is
-9-
directly drawable by Lender, or (B) the Account is covered by credit insurance
in form, substance, and amount, and by an insurer, satisfactory to Lender in its
Permitted Discretion,
(g) Except for Eligible Governmental Accounts,
Accounts with respect to which the Account Debtor is the government of any
foreign country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, unless (y) the Account is
supported by an irrevocable letter of credit satisfactory to Lender in its
Permitted Discretion (as to form, substance, and issuer or domestic confirming
bank) that has been delivered to Lender and is directly drawable by Lender, or
(z) the Account is covered by credit insurance in form, substance, and amount,
and by an insurer, satisfactory to Lender in its Permitted Discretion,
(h) Except for Eligible Governmental Accounts,
Accounts with respect to which the Account Debtor is either (i) the United
States of America or any department, agency, or instrumentality of the United
States of America (exclusive, however, of Accounts with respect to which the
applicable Borrower has complied, to the reasonable satisfaction of Lender, with
the Assignment of Claims Act, 31 USC Section 3727), or (ii) any state of the
United States of America (exclusive, however, of (y) Accounts owed by any state
that does not have a statutory counterpart to the Assignment of Claims Act or
(z) Accounts owed by any state that does have a statutory counterpart to the
Assignment of Claims Act as to which the applicable Borrower has complied to
Lender's satisfaction),
(i) Accounts with respect to which the Account Debtor
is a creditor of any Borrower, has or has asserted a right of setoff, has
disputed its liability, or has made any claim with respect to its obligation to
pay the Account, to the extent of such claim, right of setoff, or dispute,
(j) Accounts with respect to an Account Debtor whose
total obligations owing to Borrowers exceed 10% (such percentage as applied to a
particular Account Debtor being subject to reduction by Lender in its Permitted
Discretion if the creditworthiness of such Account Debtor deteriorates) of all
Eligible Accounts, to the extent of the obligations owing by such Account Debtor
in excess of such percentage,
(k) Accounts with respect to which the Account Debtor
is subject to an Insolvency Proceeding, is not Solvent, has gone out of
business, or as to which a Borrower has received notice of an imminent
Insolvency Proceeding or a material impairment of the financial condition of
such Account Debtor,
(l) Accounts with respect to which the Account Debtor
is located in the states of New Jersey, Minnesota, or West Virginia (or any
other state that requires a creditor to file a business activity report or
similar document in order to bring suit or otherwise enforce its remedies
against such Account Debtor in the courts or through any judicial process of
such state), unless the applicable Borrower has qualified to do business in New
Jersey, Minnesota, West Virginia, or such other states, or has filed a business
activities report with the applicable division of taxation, the department of
revenue, or with such other
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state offices, as appropriate, for the then-current year, or is exempt from such
filing requirement,
(m) Accounts, the collection of which, Lender, in its
Permitted Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition,
(n) Accounts that are not subject to a valid and
perfected first priority Lender's Lien,
(o) Accounts with respect to which (i) the goods
giving rise to such Account have not been shipped and billed to the Account
Debtor, or (ii) the services giving rise to such Account have not been performed
and billed to the Account Debtor,
(p) Accounts that represent the right to receive
progress payments or other advance xxxxxxxx that are due prior to the completion
of performance by the applicable Borrower of the subject contract for goods or
services, or
(q) Accounts that represent or relate in any way to
Borrowers' Recurring Maintenance Revenues.
"Eligible Governmental Accounts" means Accounts (a) that would
be Eligible Accounts but for the application of clause (g) or (h) of the
definition of Eligible Accounts and (b) with respect to which the Account Debtor
is the government of the United States of America, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof.
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by any Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Borrowers, relating to the environment, employee health and safety, or Hazardous
Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33
USC Section 1251 et seq; the Toxic Substances Control Act, 15 USC Section 2601
et seq; the Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water
Act, 42 USC Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC Section
2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of
1986, 42 USC Section 11001 et seq.; the Hazardous Material Transportation Act,
49 USC Section 1801 et seq.; and the Occupational Safety and Health Act, 29 USC
Section 651 et seq. (to the extent it regulates occupational exposure to
Hazardous
-11-
Materials); any state and local or foreign counterparts or equivalents, in each
case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles), tools, parts, goods (other than consumer goods, farm products,
or Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
a Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with a Borrower and whose employees are aggregated with the employees of a
Borrower under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Borrowers aged in excess of their
historical levels with respect thereto and all book overdrafts in excess of
their historical practices with respect thereto, in each case as determined by
Lender in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as
in effect from time to time.
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"Existing Lender" means Bank One, N.A.
"Fee Letter" means that certain fee letter, dated as of even
date herewith, among Borrowers and Lender, in form and substance satisfactory to
Lender.
"FEIN" means Federal Employer Identification Number.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section
2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America, consistently applied.
"General Intangibles" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, Copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body, including in each
case those of the United Kingdom.
"Guarantor Security Agreement" means a security agreement
executed and delivered by the Guarantors, the form and substance of which is
satisfactory to Lender.
"Guarantors" means, collectively, ShowCase Corporation, a
Minnesota corporation, and NetGenesis Corp., a Delaware corporation.
"Guaranty" means that certain general continuing guaranty
executed and delivered by Guarantors in favor of Lender, in form and substance
satisfactory to Lender.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or that are otherwise regulated under any
applicable laws or regulations relating to the protection of
-13-
human health, safety or the environment, (b) oil, petroleum, or petroleum
derived substances, natural gas, natural gas liquids, synthetic gas, drilling
fluids, produced waters, and other wastes associated with the exploration,
development, or production of crude oil, natural gas, or geothermal resources,
(c) any flammable substances or explosives or any radioactive materials, and (d)
asbestos in any form or electrical equipment that contains any oil or dielectric
fluid containing levels of polychlorinated biphenyls in excess of 50 parts per
million.
"Hedge Agreement" means any and all transactions, agreements,
or documents now existing or hereafter entered into between Parent or its
Subsidiaries and Xxxxx Fargo or its Affiliates, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging Administrative Borrower's or its Subsidiaries'
exposure to fluctuations in interest or exchange rates, loan, credit exchange,
security or currency valuations or commodity prices.
"Inactive Subsidiaries" means, collectively, Jandel Corp., a
California corporation, and Vento Software, Inc., a Florida corporation.
"Indebtedness" means (a) all obligations for borrowed money,
(b) all obligations evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations under Capital Leases, (d) all obligations or liabilities of
others secured by a Lien on any asset of Parent or its Restricted Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations for the deferred purchase price of assets (other than trade debt
incurred in the ordinary course of business and repayable in accordance with
customary trade practices), and (f) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section
11.3.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief and including the appointment of a trustee, receiver, administrative
receiver, administrator or similar officer.
"Intangible Assets" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
-14-
"Intellectual Property Right" means any trademark, Copyright,
service xxxx, trade name, patent (including any registrations or applications
for registration of any of the foregoing), license, or trade secret, including
any such legal rights included in any schematics, technology, know-how, computer
software programs or applications (in both source code and object code format)
or in other tangible or intangible information or material.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Borrowers and Lender, the form and substance
of which is satisfactory to Lender.
"Interest Period" means, with respect to each LIBOR Rate Loan,
a period commencing on the date of the making of such LIBOR Rate Loan and ending
1, 2, or 3 months thereafter; provided, however, that (a) if any Interest Period
would end on a day that is not a Business Day, such Interest Period shall be
extended (subject to clauses (c)-(e) below) to the next succeeding Business Day,
(b) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (c) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with
respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, or 3 months
after the date on which the Interest Period began, as applicable, and (e)
Borrowers (or Administrative Borrower on behalf thereof) may not elect an
Interest Period which will end after the Maturity Date.
"Inventory" means all Borrowers' now owned or hereafter
acquired right, title, and interest with respect to inventory, including goods
held for sale or lease or to be furnished under a contract of service, goods
that are leased by a Borrower as lessor, goods that are furnished by a Borrower
under a contract of service, and raw materials, work in process, or materials
used or consumed in a Borrower's business.
"Investment" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Investment Property" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.
-15-
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
"Judgment Conversion Date" has the meaning set forth in
Section 16.11(a).
"Judgment Currency" has the meaning set forth in Section
16.11(a).
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by Lender pursuant to
a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section
2.12(a).
"Lender" has the meaning set forth in the preamble to this
Agreement.
"Lender Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by a Borrower under any of
the Loan Documents that are paid or incurred by Lender, (b) fees or charges paid
or incurred by Lender in connection with Lender's transactions with Borrowers,
including, fees or charges for photocopying, notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
litigation, and Uniform Commercial Code searches and including searches with the
patent and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisals (including periodic
appraisals of Collateral or Recurring Maintenance Revenues or business
valuations to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement), real estate surveys, real estate title
policies and endorsements, and environmental audits, (c) costs and expenses
incurred by Lender in the disbursement of funds to or for the account of
Borrowers (by wire transfer or otherwise), (d) charges paid or incurred by
Lender resulting from the dishonor of checks, (e) reasonable costs and expenses
paid or incurred by Lender to correct any default or enforce any provision of
the Loan Documents, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or advertising to
sell the Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) subject to the limitations set forth in this Agreement, audit
fees and expenses of Lender related to audit examinations of the Books to the
extent of the fees and charges (and up to the amount of any limitation)
contained in this Agreement, (g) reasonable costs and expenses of third party
claims or any other suit paid or incurred by Lender in enforcing or defending
the Loan Documents or in connection with the transactions contemplated by the
Loan Documents or Lender's relationship with any Borrower or any guarantor of
the Obligations, (h) Lender's reasonable fees and expenses (including attorneys
fees) incurred in advising, structuring, drafting, reviewing, administering, or
amending the Loan Documents, and (i) Lender's reasonable fees and expenses
(including attorneys fees) incurred in terminating, enforcing (including
attorneys fees and expenses incurred in connection with a "workout," a
"restructuring," or an Insolvency Proceeding concerning any Borrower or in
exercising rights or remedies under
-16-
the Loan Documents), or defending the Loan Documents, irrespective of whether
suit is brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means Lender, Lender's Affiliates, and
the officers, directors, employees, and agents of Lender.
"Lender's Account" means the account identified on Schedule
L-1.
"Lender's Liens" means the Liens granted by Borrowers to
Lender under this Agreement or the other Loan Documents.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of
determination, the aggregate undrawn amount of all outstanding Letters of
Credit.
"LIBOR Deadline" has the meaning set forth in Section
2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit
L-1.
"LIBOR Rate" means, for each Interest Period for each LIBOR
Rate Loan, the rate per annum determined by Lender (rounded upwards, if
necessary, to the next 1/16%) by dividing (a) the Base LIBOR Rate for such
Interest Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.
"LIBOR Rate Loan" means each portion of an A Advance that
bears interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means 2.50 percentage points.
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, fixed or floating charge, deposit arrangement,
security agreement, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting Real
Property.
"Loan Account" has the meaning set forth in Section 2.10.
-17-
"Loan Documents" means this Agreement, the Bank Product
Agreements, the Cash Management Agreements, the Control Agreements, the
Copyright Security Agreement, the Disbursement Letter, the Due Diligence Letter,
the Fee Letter, the Guarantor Security Agreement, the Guaranty, the Intercompany
Subordination Agreement, the Letters of Credit, the Officers' Certificate, the
Patent Security Agreement, the Securities Pledge Agreement, the Trademark
Security Agreement, any note or notes executed by a Borrower in connection with
this Agreement and payable to Lender, and any other agreement entered into, now
or in the future, by any Borrower and Lender in connection with this Agreement.
"Material Adverse Change" means (a) a material adverse change
in the business, prospects (as such prospects affect Borrowers' EBITDA or
Borrowers' EBITDA projections set forth in any Operating Budget) , operations,
results of operations, assets, liabilities or condition (financial or otherwise)
of Borrowers taken as a whole, (b) a material impairment of a Borrower's ability
to perform its obligations under the Loan Documents to which it is a party or of
Lender's ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of the Lender's
Liens with respect to the Collateral as a result of an action or failure to act
on the part of a Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $25,000,000.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a
Borrower in favor of Lender, in form and substance satisfactory to Lender, that
encumber the Real Property Collateral and the related improvements thereto.
"Negotiable Collateral" means all of Borrowers' now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Obligations" means (a) all loans (including the Term Loan),
Advances, debts, principal, interest (including any interest that, but for the
provisions of the Bankruptcy Code, would have accrued), contingent reimbursement
obligations with respect to outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to Borrowers' Loan Account pursuant hereto),
obligations, fees (including the fees provided for in the Fee Letter), charges,
costs, Lender Expenses (including any fees or expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties of any kind and description owing by Borrowers
to Lender pursuant to or evidenced by the Loan Documents and irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all Lender Expenses that Borrowers
are required to pay or reimburse by the Loan Documents, by law, or otherwise,
-18-
and (b) all Bank Product Obligations. Any reference in this Agreement or in the
other Loan Documents to the Obligations shall include all amendments, changes,
extensions, modifications, renewals, replacements, substitutions, and
supplements, thereto and thereof, as applicable, both prior and subsequent to
any Insolvency Proceeding.
"Officers' Certificate" means a written instrument containing
representations and warranties of the Borrowers executed by an officer of the
Administrative Borrower and in the form submitted by Lender to Administrative
Borrower, together with Borrowers' completed responses to the inquiries set
forth therein, the form and substance of such responses to be satisfactory to
Lender.
"Operating Budget" means, on a consolidated basis, Parent's
and its Subsidiaries' forecasted (a) balance sheets, (b) profit and loss
statements, and (c) cash flow statements, all prepared on a consistent basis
with Parent's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.
"Originating Lender" has the meaning set forth in Section
14.1(d).
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(d).
"Patent Security Agreement" means a patent security agreement
executed and delivered by Borrowers and Lender, the form and substance of which
is satisfactory to Lender.
"Pay-Off Letter" means a letter, in form and substance
satisfactory to Lender, from Existing Lender to Lender respecting the amount
necessary to repay in full all of the obligations of Borrowers owing to Existing
Lender and obtain a release of all of the Liens existing in favor of Existing
Lender in and to the assets of Borrowers.
"Permitted Acquisition" means either (a) an acquisition by a
Borrower of all or substantially all of the assets or Stock of any Person which
either (i) is consented to (in advance of the consummation of the proposed
acquisition) in writing by Lender; provided that Borrowers update the schedules
hereto and to each of the other Loan Documents, as applicable; and provided,
further, that in no event may any schedule be updated in a manner that would
reflect or evidence a Default or Event of Default, or (ii) satisfies each of the
following conditions:
(1) any Indebtedness or Liens assumed or issued in
connection with such acquisition are otherwise permitted under Section 7.1 or
7.2, as the case may be;
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(2) at the time of such acquisition, no Default and no
Event of Default exists, or would exist upon the consummation thereof, both on
an actual and a pro forma basis;
(3) Borrowers have delivered to Lender not less than 30
days prior to the consummation of the acquisition an acquisition summary
providing a reasonably detailed description of the Person whose Stock or assets
are proposed to be acquired and the terms and conditions of the proposed
purchase, along with such due diligence information (including, without
limitation, due diligence information regarding any environmental matters)
reasonably requested by, and in form and content reasonably acceptable to,
Lender; provided that Lender shall review such summary and diligence information
reasonably promptly after delivery thereof;
(4) Borrowers have delivered to Lender all legal
documentation pertaining to such acquisition; provided that Lender shall review
such documentation reasonably promptly after delivery thereof;
(5) Borrowers have delivered to Lender evidence in form
and substance reasonably acceptable to Lender that Borrowers are in compliance
with the financial covenants set forth in Section 7.20 hereof for the most
recent fiscal period measured hereunder, recalculated as if the acquisition were
consummated on the last day of such fiscal period;
(6) such acquisition shall be consensual and shall have
been approved by the board of directors of the Person whose Stock or assets are
proposed to be acquired;
(7) concurrently with the delivery of the acquisition
summary referred to in clause (c) above, Borrowers shall have delivered to
Lender, in form and substance reasonably satisfactory to Lender, a pro forma
consolidated balance sheet, income statement and cash flow statement of Parent
and its Subsidiaries, based on recent financial statements, which shall be
complete and shall fairly present in all material respects the assets,
liabilities, financial condition and results of operations of Parent and its
Subsidiaries in accordance with GAAP consistently applied, but taking into
account such proposed acquisition and the funding of all Indebtedness in
connection therewith;
(8) Borrowers have updated the schedules hereto and to
each of the other Loan Documents, as applicable; provided, that in no event may
any schedule be updated in a manner that would reflect or evidence a Default or
Event of Default;
(9) Borrowers have delivered (i) projections for the
Person whose Stock or assets are proposed to be acquired and (ii) an updated pro
forma Operating Budget for Parent and its Subsidiaries, in each case in form and
content reasonably acceptable to Lender;
-20-
(10) the Person whose Stock or assets are proposed to be
acquired would not qualify as a "significant subsidiary" pursuant to Rule
1-02(w) of Regulation S-X under the Exchange Act; and
(11) Lender shall be satisfied that all acts necessary
to perfect the Lender's Liens in the assets being purchased in connection with
such acquisition has been taken.
or (b) up to three (3) acquisitions by a Borrower of all or substantially all of
the assets (but not Stock) of any Person; provided that, with respect to
Permitted Acquisitions made pursuant to this clause (b): (i) the aggregate
purchase price of all such Permitted Acquisitions shall not exceed $5,000,000
during the term of this Agreement, (ii) the aggregate amount of liabilities,
including contingent liabilities, being assumed in connection with all such
Permitted Acquisitions shall not exceed $2,500,000 in the aggregate during the
term of this Agreement, (iii) Advances used to fund all such Permitted
Acquisitions shall not exceed $2,500,000 in the aggregate, (iv) Lender shall be
satisfied that all acts necessary to perfect the Lender's Liens in the assets
being purchased in connection with such Permitted Acquisitions have been taken,
(v) Borrowers shall have Excess Availability of at least $2,500,000, both before
and immediately after giving effect to any such Permitted Acquisition, (vi) a
majority of the assets being acquired are located in the United States, and
(vii) no Default or Event of Default has occurred and is continuing, or would
result therefrom.
"Permitted Discretion" means a determination made in good
faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions
by Borrowers or Restricted Subsidiaries of Equipment that is substantially worn,
damaged, or obsolete in the ordinary course of business, (b) sales or other
dispositions by Borrowers or Restricted Subsidiaries of Inventory to buyers in
the ordinary course of business, (c) the use or transfer of money or Cash
Equivalents by Borrowers or Restricted Subsidiaries in a manner that is not
prohibited by the terms of this Agreement or the other Loan Documents, (d) the
licensing by Borrowers or Restricted Subsidiaries, on a non-exclusive basis, of
patents, trademarks, Copyrights, and other intellectual property rights in the
ordinary course of business, and (e) subject to Sections 2.4(b) and 6.19,
Additional Permitted Dispositions.
"Permitted Investments" means (a) investments in Cash
Equivalents, (b) investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) investments by any Borrower or any Restricted Subsidiary
in any other Borrower or Restricted Subsidiary, (e) Permitted Acquisitions, and
(f) investments made by any Borrower or Restricted Subsidiary to or for the
benefit of any Unrestricted Subsidiary; provided that (i) the aggregate amount
of all investments made pursuant to this clause (f) shall not exceed (X)
$1,000,000 during any month or (Y) $2,500,000 at any one time outstanding and
(ii) any and all investments made
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pursuant to this clause (f) shall be subject to (I) the absence of a Default or
Event of Default, (II) the Borrowers having Excess Availability of at least
$3,000,000 and (III) the Person making such Investment being Solvent, in each of
cases (I), (II) and (III), both before and immediately after giving effect to
any such investment; provided that if any such investment pursuant to clauses
(a) through (f) above is in the form of Indebtedness owed by a Borrower or a
Restricted Subsidiary to another Borrower or Restricted Subsidiary, such
Indebtedness investment shall be subject to the terms and conditions of the
Intercompany Subordination Agreement.
"Permitted Liens" means (a) Liens held by Lender, (b) Liens
for unpaid taxes that either (i) are not yet delinquent, or (ii) do not
constitute an Event of Default hereunder and are the subject of Permitted
Protests, (c) Liens set forth on Schedule P-1, (d) the interests of lessors
under operating leases, (e) purchase money Liens or the interests of lessors
under Capital Leases to the extent that such Liens or interests secure Permitted
Purchase Money Indebtedness and so long as such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, (f) Liens arising by operation
of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of Borrowers' business
and not in connection with the borrowing of money, and which Liens either (i)
are for sums not yet delinquent, or (ii) are the subject of Permitted Protests,
(g) Liens arising from deposits made in connection with obtaining worker's
compensation or other unemployment insurance, (h) Liens or deposits to secure
performance of bids, tenders, or leases incurred in the ordinary course business
and not in connection with the borrowing of money, (i) Liens granted as security
for surety or appeal bonds in connection with obtaining such bonds in the
ordinary course of business, (j) Liens resulting from any judgment or award that
is not an Event of Default hereunder, (k) Liens with respect to the Real
Property Collateral that are exceptions to the commitments for title insurance
issued in connection with the Mortgages, as accepted by Lender, and (l) with
respect to any Real Property that is not part of the Real Property Collateral,
easements, rights-of-way, and zoning restrictions that do not materially
interfere with or impair the use or operation thereof by Borrowers.
"Permitted Protest" means the right of Parent, any Borrower or
any Restricted Subsidiary, as applicable, to protest any Lien (other than any
such Lien that secures the Obligations), taxes (other than payroll taxes or
taxes that are the subject of a United States federal tax lien), or rental
payment, provided that (a) a reserve with respect to such obligation is
established on the Books in such amount as is required under GAAP, (b) any such
protest is instituted promptly and prosecuted diligently by Parent, such
Borrower or such Restricted Subsidiary, as applicable, in good faith, and (c)
Lender is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Lender's
Liens.
"Permitted Purchase Money Indebtedness" means, as of any date
of determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate amount outstanding at any one time not in excess of $2,500,000.
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"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than
Real Property.
"Pledged Notes" means the promissory notes pledged to the
Lender pursuant to the Securities Pledge Agreement.
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations) incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"Real Property" means any estates or interests in real
property now owned or hereafter acquired by any Borrower and the improvements
thereto.
"Real Property Collateral" means the parcel or parcels of Real
Property identified on Schedule R-1 and any Real Property hereafter acquired by
a Borrower.
"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Recurring Maintenance Revenues" means, with respect to any
period, the total revenues of Borrowers for such period that are derived from
customer service and support of licensed products, as reflected on Borrowers'
financial statements in accordance with their historical practices (it being
understood and agreed that such Recurring Maintenance Revenues generally have
been paid on an annual basis in advance and recognized ratably over the term of
the applicable contracts).
"Recurring Maintenance Revenues Net Orderly Liquidation Value"
means the appraised value of Borrowers' Recurring Maintenance Revenues that is
estimated to be recoverable in an orderly liquidation of such Recurring
Maintenance Revenues, such value to be as determined from time to time (using a
valuation method reasonably consistent with the method used in the valuation
prepared by Empire Valuation Consultants, Inc., dated February 5, 2003) by a
qualified appraisal company selected by Lender, net of all related costs and
expenses.
"Relevant Jurisdiction" means (a) as of the Closing Date, the
United States of America and (b) from and after any Additional Borrower
Effective Date, shall also include the jurisdiction under which any Additional
Borrower is organized.
"Remedial Action" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of
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Hazardous Materials so they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, (c) perform any
pre-remedial studies, investigations, or post-remedial operation and maintenance
activities, or (d) conduct any other actions authorized by 42 USC Section 9601.
"Rent Reserve" means a reserve in the amount of $250,000,
which amount may be increased to $500,000 by Lender in the event of a Default.
"Required Availability" means Excess Availability and
unrestricted cash and Cash Equivalents held in U.S. bank accounts in an amount
of not less than $5,000,000.
"Required Library" means, as of any date of determination,
those Copyrights of Borrowers that generated not less than 95% of the aggregate
amount of current revenues generated by and/or arising from the licensing,
sublicensing, use, transfer or other exploitation and/or disposition of or
access to Borrowers' technology and computer software programs or applications
for the immediately preceding fiscal quarter (such determination to be made
concurrent with the delivery of each Compliance Certificate delivered to Lender
pursuant to Section 6.3(a)(iii).
"Reserve Percentage" means, on any day, for Lender, the
maximum percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Restricted Subsidiary" means (a) any Subsidiary of Parent
other than (i) the Unrestricted Subsidiaries and (ii) any other Borrower and (b)
from and after any Additional Borrower Effective Date, shall also include any
other non-Borrower Subsidiary of Parent if such Subsidiary is organized under
the laws of a Relevant Jurisdiction or any state, territory or subdivision
thereof.
"Revolver B Amount" has the meaning set forth in Section
2.1(b).
"Revolver Usage" means, as of any date of determination, the
sum of (a) the then extant amount of outstanding Advances, plus (b) the then
extant amount of the Letter of Credit Usage.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"Securities Account" means a "securities account" as that term
is defined in the Code.
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"Securities Pledge Agreement" means a securities pledge
agreement, in form and substance satisfactory to Lender, executed and delivered
by Parent and each Person that owns stock of a Borrower or Restricted
Subsidiary.
"Solvent" means, with respect to any Person on a particular
date, that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act) or, in the case of any Person in the United Kingdom,
within the meaning of Section 123 of the Insolvency Xxx 0000 of the United
Kingdom.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
"Taxes" has the meaning set forth in Section 16.5.
"Term Loan" has the meaning set forth in Section 2.2.
"Term Loan Amount" means $10,000,000.
"Trademark Security Agreement" means a trademark security
agreement executed and delivered by each Borrower and Lender, the form and
substance of which is satisfactory to Lender.
"Underlying Issuer" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that
has been issued by an Underlying Issuer.
"Unrestricted Subsidiary" means (a) any Subsidiary of Parent
that is organized under the laws of a jurisdiction other than the United States
of America or any state, territory or subdivision thereof (other than as set
forth in clause (b) of the definition of Restricted Subsidiary), (b) so long as
Sections 5.22 and 7.23 remain true and correct as to the respective Inactive
Subsidiary, such Inactive Subsidiary, and (c) SPSS U.S. Inc., but only so long
as England and Wales are not Relevant Jurisdictions.
"Voidable Transfer" has the meaning set forth in Section 16.8.
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"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a
national banking association.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall, unless such reference specifically
indicates a contrary intent, include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein to any Person shall be construed to include such Person's
successors and assigns. Any requirement of a writing contained herein or in the
other Loan Documents shall be satisfied by the transmission of a Record and any
Record transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) REVOLVER A ADVANCES. Subject to Section 3.7 and
the other terms and conditions of this Agreement, and during the term of this
Agreement, Lender agrees to make advances ("A Advances") to Borrowers in an
amount at any one time outstanding not to exceed an amount equal to the lesser
of (i) the Maximum Revolver Amount less the Revolver B Amount less the aggregate
outstanding principal amount of the Term Loan less the Letter of Credit Usage,
or (ii) the Borrowing Base less the Letter of Credit Usage. For
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purposes of this Agreement, "Borrowing Base," as of any date of determination,
shall mean the result of:
(x) the lesser of
(i) 85% of the amount of
Eligible Accounts (provided,
however, that for purposes of this
clause (i), the amount of the
Borrowing Base that is attributable
to Eligible Governmental Accounts
shall not exceed $500,000 at any one
time outstanding), less the amount,
if any, of the Dilution Reserve, and
(ii) an amount equal to (A)
Borrowers' Collections with respect
to Accounts for the immediately
preceding 120-day period less (B)
the aggregate outstanding amount of
the Term Loan, minus
(y) the sum of (i) the Bank Products
Reserve, (ii) the Rent Reserve, and (iii)
the aggregate amount of reserves, if any,
established by Lender under Section 2.1(c).
(b) REVOLVER B ADVANCES. Subject to the terms and
conditions of this Agreement, and during the term of this Agreement, provided
that no Event of Default exists, Lender agrees to make advances ("B Advances,"
and, collectively with A Advances, "Advances") to Borrowers in an amount at any
one time outstanding not to exceed $3,500,000 (the "Revolver B Amount"), so long
as the results set forth in Borrower's unaudited financial statements for the
six-month period ended June 30, 2003 and in Borrower's audited, unqualified
financial statements for the 12-month period ended December 31, 2002 (in each
case based upon the financial statements delivered to Lender pursuant to Section
6.3) are substantially consistent with the Operating Budget.
(c) Anything to the contrary in this Section 2.1
notwithstanding, Lender shall have the right to establish reserves in such
amounts, and with respect to such matters, as Lender in its Permitted Discretion
shall deem necessary or appropriate, against the Borrowing Base, including
reserves with respect to (i) sums that Borrowers are required to pay (such as
taxes, assessments, insurance premiums, or, in the case of leased assets, rents
or other amounts payable under such leases) and have failed to pay under any
Section of this Agreement or any other Loan Document, and (ii) amounts owing by
Borrowers to any Person to the extent secured by a Lien on, or trust over, any
of the Collateral (other than any existing Permitted Lien set forth on Schedule
P-1 which is specifically identified thereon as entitled to have priority over
the Lender's Liens), which Lien or trust, in the Permitted Discretion of Lender
likely would have a priority superior to the Lender's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral.
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(d) Lender shall have no obligation to make
additional Advances hereunder to the extent such additional Advances would cause
the Revolver Usage to exceed the Maximum Revolver Amount.
(e) Amounts borrowed pursuant to this Section may be
repaid and, subject to the terms and conditions of this Agreement, reborrowed at
any time during the term of this Agreement; provided, however, that the Revolver
B Amount shall be reduced, dollar for dollar, to the extent that B Advances are
prepaid pursuant to Section 2.2(b).
2.2 TERM LOAN.
(a) Subject to the terms and conditions of this
Agreement, on the Closing Date Lender agrees to make a term loan (the "Term
Loan") to Borrowers in an amount equal to the Term Loan Amount. The Term Loan
shall be repaid in monthly installments, each in an amount equal to
one-forty-eighth (1/48th) of the Term Loan Amount, such installments to be due
and payable on the first day of each month commencing on May 1, 2003 and
continuing until and including the Maturity Date, with the outstanding unpaid
principal balance and all accrued and unpaid interest under the Term Loan due
and payable on the date of termination of this Agreement, whether by its terms,
by prepayment, or by acceleration. All amounts outstanding under the Term Loan
shall constitute Obligations. The Term Loan may be prepaid in full or in part at
any time without any prepayment penalty.
(b) If Lender determines, based on an updated
appraisal of Borrowers' Recurring Maintenance Revenues, that the sum of (i) the
principal amount of the outstanding Term Loan plus (ii) all outstanding B
Advances exceeds the lesser of (x) 60% of the Recurring Maintenance Revenues Net
Orderly Liquidation Value of revenues derived in the United States of America,
determined on a quarterly basis, and (y) 30% of the Recurring Maintenance
Revenues Net Orderly Liquidation Value of revenues derived worldwide, determined
on a quarterly basis, then Borrowers shall immediately pay to Lender, in cash,
an amount equal to 100% of such excess, plus all accrued and unpaid interest on
such amount, applied first to the Term Loan and then to the outstanding B
Advances.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be
made by a written request by an Authorized Person delivered to Lender (which
notice must be received by Lender no later than 10:00 a.m. (California time) on
the Business Day that is the requested Funding Date specifying (i) the amount of
such Borrowing, and (ii) the requested Funding Date, which shall be a Business
Day. At Lender's election, in lieu of delivering the above-described request in
writing, any Authorized Person may give Lender telephonic notice of such request
by the required time, with such telephonic notice to be confirmed in writing
within 24 hours of the giving of such notice.
(b) MAKING OF ADVANCES. If Lender has received a
timely request for a Borrowing in accordance with the provisions hereof, and
subject to the satisfaction of the applicable terms and conditions set forth
herein, Lender shall make the proceeds of such
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Advance available to Borrowers on the applicable Funding Date by transferring
available funds equal to such proceeds to Administrative Borrower's Designated
Account.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWERS. (i) Except as otherwise
expressly provided herein, all payments by Borrowers shall be
made to Lender's Account and shall be made in immediately
available funds, no later than 11:00 a.m. (California time) on
the date specified herein. Any payment received by Lender
later than 11:00 a.m. (California time), shall be deemed to
have been received on the following Business Day and any
applicable interest or fee shall continue to accrue until such
following Business Day.
(b) APPLICATION, AND REVERSAL OF PAYMENTS.
(i) All payments shall be remitted to Lender and all
such payments (other than payments received while no Default
or Event of Default has occurred and is continuing and which
relate to the payment of principal or interest of specific
Obligations or which relate to the payment of specific fees),
and all proceeds of Additional Permitted Dispositions (other
than proceeds applied in accordance with Section 2.4(b)(v)(A))
and during any time that a Cash Sweep Instruction is in
effect, all proceeds of Accounts or other Collateral received
by Lender, shall be applied as follows:
A. first, to pay any Lender Expenses then
due to Lender under the Loan Documents, until paid in
full,
B. second, to pay any fees then due to
Lender under the Loan Documents until paid in full,
C. third, ratably to pay interest due in
respect of Advances and the Term Loan until paid in
full,
D. fourth, ratably to pay all principal
amounts then due and payable (other than as a result
of an acceleration thereof) with respect to the Term
Loan until paid in full,
E. fifth, so long as no Event of Default has
occurred and is continuing, and at Lender's election,
to pay amounts then due and owing by Parent or its
Subsidiaries in respect of Bank Products, until paid
in full,
F. sixth, so long as no Event of Default has
occurred and is continuing, to pay the principal of
all Advances until paid in full,
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G. seventh, if an Event of Default has
occurred and is continuing, ratably (i) to pay the
principal of all Advances until paid in full, and
(ii) to Lender, to be held by Lender, for the benefit
of Xxxxx Fargo or its Affiliates, as applicable, as
cash collateral in an amount up to the amount of the
Bank Products Reserve established prior to the
occurrence of, and not in contemplation of, the
subject Event of Default until Parent's and its
Subsidiaries' obligations in respect of the then
extant Bank Products have been paid in full or the
cash collateral amount has been exhausted,
H. eighth, if an Event of Default has
occurred and is continuing, to pay the outstanding
principal balance of the Term Loan (in the inverse
order of the maturity of the installments due
thereunder) until the Term Loan is paid in full,
I. ninth, if an Event of Default has
occurred and is continuing, to be held by Lender as
cash collateral in an amount up to 105% of the then
extant Letter of Credit Usage until paid in full,
J. tenth, to pay any other Obligations until
paid in full, and
K. eleventh, to Borrowers (to be wired to
the Designated Account) or such other Person entitled
thereto under applicable law.
(ii) In each instance, so long as no Default or Event
of Default has occurred and is continuing, Section 2.4(b)
shall not be deemed to apply to any payment by Borrowers
specified by Borrowers to be for the payment of specific
Obligations then due and payable (or prepayable) under any
provision of this Agreement.
(iii) For purposes of the foregoing, "paid in full"
means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service
fees, professional fees, interest (and specifically including
interest accrued after the commencement of any Insolvency
Proceeding), default interest, interest on interest, and
expense reimbursements, whether or not the same would be or is
allowed or disallowed in whole or in part in any Insolvency
Proceeding.
(iv) In the event of a direct conflict between the
priority provisions of this Section 2.4 and other provisions
contained in any other Loan Document, it is the intention of
the parties hereto that such priority provisions in such
documents shall be read together and construed, to the fullest
extent possible, to be in concert with each other. In the
event of any actual, irreconcilable conflict that cannot be
resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.
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(v) Notwithstanding anything to the contrary
contained in this Agreement or any other Loan Document, all
proceeds received by Lender, directly or indirectly, in
connection with an Additional Permitted Disposition consisting
of a sale or other disposition by a Borrower or Restricted
Subsidiary of Accounts or contracts that represent Recurring
Maintenance Revenues shall be applied as follows: (A) 75% of
the amount of any such proceeds to prepay the outstanding
principal balance of the Term Loan (in the inverse order of
the maturity of the installments due thereunder), until the
Term Loan is paid in full (provided that the Term Loan Amount
shall be reduced, dollar for dollar, to the extent that the
Term Loan is prepaid pursuant to this Section 2.4(b)(v)), and
(B) the remainder to be applied in accordance with Section
2.4(b)(i).
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to Lender
pursuant to Sections 2.1 and 2.12 is greater than either the Dollar or
percentage limitations set forth in Section 2.1 or 2.12 (an "Overadvance"),
Borrowers immediately shall pay to Lender, in cash, the amount of such excess,
which amount shall be used by Lender to reduce the Obligations in accordance
with the priorities set forth in Section 2.4(b). In addition, Borrowers hereby
promise to pay the Obligations (including principal, interest, fees, costs, and
expenses) in Dollars in full to Lender as and when due and payable under the
terms of this Agreement and the other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c)
below, all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest on the Daily Balance thereof as follows: (i) if
the relevant Obligation is an A Advance that is a LIBOR Rate Loan, at a per
annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, (ii) if the
relevant Obligation is an A Advance that is a Base Rate Loan, at a per annum
rate equal to the Base Rate plus the Base Rate Revolver A Margin, (iii) if the
relevant Obligation is a B Advance, at a per annum rate equal to the Base Rate
plus the Base Rate Revolver B Margin, (iv) if the relevant Obligation is the
Term Loan, at a per annum rate equal to the Base Rate plus the Base Rate Term
Loan Margin, and (v) otherwise, at a per annum rate equal to the Base Rate plus
the Base Rate Revolver A Margin.
(b) LETTER OF CREDIT FEE. Borrowers shall pay Lender
a Letter of Credit fee (in addition to the charges, commissions, fees, and costs
set forth in Section 2.12(e)) which shall accrue at a rate equal to 2.00% per
annum times the Daily Balance of the undrawn amount of all outstanding Letters
of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default,
(i) all Obligations (except for undrawn
Letters of Credit and except for Bank Product
Obligations) that have been charged to the
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Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof at a per annum
rate equal to 2.50 percentage points above the per
annum rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for
above shall be increased to 2.50 percentage points
above the per annum rate otherwise applicable
hereunder.
(d) PAYMENT. Except as provided in Section 2.13(a),
interest, Letter of Credit fees, and all other fees payable hereunder shall be
due and payable, in arrears, on the first day of each month at any time that
Obligations or obligations to extend credit hereunder are outstanding. Borrowers
hereby authorize Lender, from time to time, without prior notice to Borrowers,
to charge such interest and fees, all Lender Expenses (as and when incurred),
the charges, commissions, fees, and costs provided for in Section 2.12(e) (as
and when accrued or incurred), the fees and costs provided for in Section 2.11
(as and when accrued or incurred), and all other payments as and when due and
payable under any Loan Document (including the installments due and payable with
respect to the Term Loan and including any amounts due and payable to Xxxxx
Fargo or its Affiliates in respect of Bank Products up to the amount of the then
extant Bank Products Reserve) to Borrowers' Loan Account, which amounts
thereafter shall constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not paid when due shall
be compounded by being charged to Borrowers' Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable
under the Loan Documents shall be computed on the basis of a 360-day year for
the actual number of days elapsed. In the event the Base Rate is changed from
time to time hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE.
In no event shall the interest rate or rates payable under this Agreement, plus
any other amounts paid in connection herewith, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable. Borrowers and Lender, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall
be liable only for the payment of such maximum as allowed by law, and payment
received from Borrowers in excess of such legal maximum, whenever received,
shall be applied to reduce the principal balance of the Obligations to the
extent of such excess.
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2.7 CASH MANAGEMENT.
(a) Borrowers shall (i) establish and maintain cash
management services of a type and on terms satisfactory to Lender at one or more
of the banks set forth on Schedule 2.7(a) (each, a "Cash Management Bank"), and
shall request in writing and otherwise take such reasonable steps to ensure that
all of their Account Debtors forward payment of the amounts owed by them
directly to such Cash Management Bank, and (ii) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all Collections (including those sent directly by Account
Debtors to a Cash Management Bank) into a bank account in Lender's name (a "Cash
Management Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and
maintain Cash Management Agreements with Lender and Borrowers, in form and
substance acceptable to Lender. Each such Cash Management Agreement shall
provide, among other things, that (i) all items of payment deposited in such
Cash Management Account and proceeds thereof are held by such Cash Management
Bank as Lender or bailee-in-possession for Lender, (ii) the Cash Management Bank
has no rights of setoff or recoupment or any other claim against the applicable
Cash Management Account, other than for payment of its service fees and other
charges directly related to the administration of such Cash Management Account
and for returned checks or other items of payment, and (iii) at any time after
which Lender so instructs such Cash Management Bank (a "Cash Sweep
Instruction"), it immediately will forward by daily sweep all amounts in the
applicable Cash Management Account to the Lender's Account until such time (if
any) as Lender, in its sole discretion, notifies it that the Cash Sweep
Instruction is terminated; and (iv) if clause (iii) is not applicable, then the
Administrative Borrower may direct the Cash Management Bank to immediately
transfer all such amounts to any DDA designated by the Administrative Borrower
for use by Borrowers in accordance with this Agreement. Lender may issue a Cash
Sweep Instruction only if: (w) a Default or Event of Default shall have
occurred; (x) Borrowers shall have failed to pay (by wire transfer of
immediately available funds to Lender's Account) any interest, principal, fees
or other amounts for which Borrowers are responsible under this Agreement within
five (5) Business Days after the Administrative Borrower receives notice
(whether oral or written) that such amounts have been charged to the Loan
Account; (y) Advances in an aggregate amount in excess of $1,000,000 are
outstanding; or (z) Excess Availability is less than $2,000,000.
(c) So long as no Default or Event of Default has
occurred and is continuing, Administrative Borrower may amend Schedule 2.7(a) to
add or replace a Cash Management Account Bank or Cash Management Account;
provided, however, that (i) such prospective Cash Management Bank shall be
satisfactory to Lender and Lender shall have consented in writing in advance to
the opening of such Cash Management Account with the prospective Cash Management
Bank, and (ii) prior to the time of the opening of such Cash Management Account,
Borrowers and such prospective Cash Management Bank shall have executed and
delivered to Lender a Cash Management Agreement. Borrowers shall close any of
their Cash Management Accounts (and establish replacement cash management
accounts in accordance with the foregoing sentence) promptly and in any event
within 30 days of notice from Lender that the creditworthiness of any Cash
Management Bank is no
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longer acceptable in Lender's reasonable judgment, or as promptly as practicable
and in any event within 60 days of notice from Lender that the operating
performance, funds transfer, or availability procedures or performance of the
Cash Management Bank with respect to Cash Management Accounts or Lender's
liability under any Cash Management Agreement with such Cash Management Bank is
no longer acceptable in Lender's reasonable judgment.
(d) The Cash Management Accounts shall be cash
collateral accounts, with all cash, checks and similar items of payment in such
accounts securing payment of the Obligations, and in which Borrowers are hereby
deemed to have granted a Lien to Lender.
2.8 CREDITING PAYMENTS. The receipt of any payment item by Lender
(whether from transfers to Lender by the Cash Management Banks pursuant to the
Cash Management Agreements or otherwise) shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to the Lender's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Lender only if it is received into the Lender's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Lender's Account on a non-Business Day or after 11:00 a.m. (California time) on
a Business Day, it shall be deemed to have been received by Lender as of the
opening of business on the immediately following Business Day.
2.9 DESIGNATED ACCOUNT. Lender is authorized to make the Advances and
the Term Loan, and Lender is authorized to issue the Letters of Credit, under
this Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
Section 2.6(d). Administrative Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrowers and made by Lender
hereunder. So long as no Default or Event of Default has occurred and is
continuing, Administrative Borrower may add or replace, the Designated Account
Bank or the Designated Account on 30 days prior written notice to Lender;
provided, however, that (i) such prospective Designated Account Bank shall be
satisfactory to Lender and Lender shall have consented in writing in advance to
the opening of such Designated Account with the prospective Designated Account
Bank, and (ii) prior to the time of the opening of such Designated Account,
Borrowers and such prospective Designated Account Bank shall have executed and
delivered to Lender a Control Agreement. Unless otherwise agreed by Lender and
Administrative Borrower, any Advance requested by Borrowers and made by Lender
hereunder shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Lender
shall maintain an account on its books in the name of Borrowers (the "Loan
Account") on which Borrowers will be charged with the Term Loan, all Advances
made by Lender to Borrowers or for Borrowers' account, the Letters of Credit
issued by Lender for Borrowers' account,
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and with all other payment Obligations hereunder or under the other Loan
Documents (except for Bank Product Obligations), including, accrued interest,
fees and expenses, and Lender Expenses. In accordance with Section 2.8, the Loan
Account will be credited with all payments received by Lender from Borrowers or
for Borrowers' account, including all amounts received in the Lender's Account
from any Cash Management Bank. Lender shall render statements regarding the Loan
Account to Administrative Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Lender
Expenses owing, and such statements shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrowers and Lender
unless, within 30 days after receipt thereof by Administrative Borrower,
Administrative Borrower shall deliver to Lender written objection thereto
describing the error or errors contained in any such statements.
2.11 FEES. Borrowers shall pay to Lender the following fees and
charges, which fees and charges shall be non-refundable when paid (irrespective
of whether this Agreement is terminated thereafter):
(a) UNUSED LINE FEE. On the first day of each month
during the term of this Agreement, an unused line fee in the amount equal to
0.25% per annum times the result of (a) the Maximum Revolver Amount, less (b)
the sum of (i) the average Daily Balance of Advances that were outstanding
during the immediately preceding month, plus (ii) the average Daily Balance of
the Letter of Credit Usage during the immediately preceding month, plus (iii)
the average Daily Balance of the Term Loan that was outstanding during the
immediately preceding month, plus (iv) so long as the conditions set forth in
Section 3.7 remain unsatisfied, an amount, if any, equal to the excess of (A)
the amount of Availability pursuant to Section 2.1(a) (assuming Section 3.7 did
not apply) over (B) $2,500,000, plus (v) so long as the conditions set forth in
Section 2.1(b) remain unsatisfied and Borrowers are not able to request any B
Advances pursuant to Section 2.1(b), $3,500,000,
(b) FEE LETTER FEES. As and when due and payable
under the terms of the Fee Letter, Borrowers shall pay to Lender the fees set
forth in the Fee Letter,
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. Audit,
appraisal, and valuation fees and charges as follows: (i) a fee of $850 per day,
per auditor, plus out-of-pocket expenses for each financial audit of a Borrower
performed by personnel employed by Lender and for the establishment of
electronic collateral reporting systems, (ii) a fee of $1,500 per day per
appraiser, plus out-of-pocket expenses, for each appraisal of the Collateral
performed by personnel employed by Lender, and (iii) the actual charges paid or
incurred by Lender if it elects to employ the services of one or more third
Persons to perform financial audits of Borrowers, to appraise the Collateral or
Recurring Maintenance Revenues, or any portion thereof, or to assess a
Borrower's business valuation; provided, however, that, notwithstanding the
foregoing, so long as no Event of Default shall have occurred, Borrowers shall
not be responsible for the charges incurred in connection with audits to the
extent that such audits are done more frequently than (x) three (3) times during
the period of
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time from and after the Closing Date up to the date that is the first
anniversary of the Closing Date, and (y) two (2) times during each 12 month
period thereafter (it being understood and agreed that the foregoing shall not
prohibit in any way Lender from performing, or causing the performance of, such
audits more frequently), and
(d) FLOAT CHARGE. From and after the Closing Date,
Lender shall be entitled to charge Borrowers for one (1) Business Day of
'clearance' or 'float' at the rate applicable to A Advances that bear interest
at a rate determined by reference to the Base Rate under Section 2.6 on all
Collections that are received by Borrowers (regardless of whether forwarded by
the Cash Management Banks to Lender). This across-the-board one (1) Business Day
clearance or float charge on all Collections is acknowledged by the parties to
constitute an integral aspect of the pricing of the financing of Borrowers and
shall apply irrespective of whether or not there are any outstanding monetary
Obligations; the effect of such clearance or float charge being the equivalent
of charging one (1) Business Day of interest on such Collections.
2.12 LETTERS OF CREDIT
(a) Subject to the terms and conditions of this
Agreement, Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Xxxxx Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Administrative Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by
Lender) to Lender (reasonably in advance of the requested date of issuance,
amendment, renewal, or extension) a notice requesting the issuance of an L/C or
L/C Undertaking, or identifying the L/C or L/C Undertaking to be amended,
renewed, or extended, the date of issuance, amendment, renewal, or extension,
the date on which such L/C or L/C Undertaking is to expire, the amount of such
L/C or L/C Undertaking, the name and address of the beneficiary thereof (or of
the Underlying Letter of Credit, as applicable), and such other information as
shall be necessary to prepare, amend, renew, or extend such L/C or L/C
Undertaking. If requested by Lender, Borrowers also shall be an applicant under
the application with respect to any Underlying Letter of Credit that is to be
the subject of an L/C Undertaking. Lender shall have no obligation to issue a
Letter of Credit if any of the following would result after giving effect to the
requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the
Borrowing Base less the then extant amount of outstanding
Advances, or
(ii) the Letter of Credit Usage would exceed
$3,000,000, or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount less the then extant amount of
outstanding Advances.
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(b) Borrowers and Lender acknowledge and agree that
certain Underlying Letters of Credit may be issued to support letters of credit
that already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to Lender (in the exercise of its Permitted Discretion), including
the requirement that the amounts payable thereunder must be payable in Dollars.
If Lender is obligated to advance funds under a Letter of Credit, Borrowers
immediately shall reimburse such L/C Disbursement to Lender by paying to Lender
an amount equal to such L/C Disbursement (i) not later than 11:00 a.m.,
California time, on the date that such L/C Disbursement is made, if
Administrative Borrower shall have received written or telephonic notice of such
L/C Disbursement prior to 10:00 a.m., California time, on such date, or, (ii) if
such notice has not been received by Administrative Borrower prior to such time
on such date, then not later than 11:00 a.m., California time, on the Business
Day that Administrative Borrower receives such notice, if such notice is
received prior to 10:00 a.m., California time, on the date of receipt, and, in
the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance
hereunder, Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance.
(c) Each Borrower hereby agrees to indemnify, save,
defend, and hold Lender harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by Lender arising out of or in connection
with any Letter of Credit; provided, however, that no Borrower shall be
obligated hereunder to indemnify for any loss, cost, expense, or liability that
is caused by the gross negligence or willful misconduct of Lender. Each Borrower
agrees to be bound by the Underlying Issuer's regulations and interpretations of
any Underlying Letter of Credit or by Lender's interpretations of any L/C issued
by Lender to or for such Borrower's account, even though this interpretation may
be different from such Borrower's own, and each Borrower understands and agrees
that Lender shall not be liable for any error, negligence, or mistake, whether
of omission or commission, in following Borrowers' instructions or those
contained in the Letter of Credit or any modifications, amendments, or
supplements thereto. Each Borrower understands that the L/C Undertakings may
require Lender to indemnify the Underlying Issuer for certain costs or
liabilities arising out of claims by Borrowers against such Underlying Issuer.
Each Borrower hereby agrees to indemnify, save, defend, and hold Lender harmless
with respect to any loss, cost, expense (including reasonable attorneys fees),
or liability incurred by Lender under any L/C Undertaking as a result of
Lender's indemnification of any Underlying Issuer; provided, however, that no
Borrower shall be obligated hereunder to indemnify for any loss, cost, expense,
or liability that is caused by the gross negligence or willful misconduct of
Lender.
(d) Each Borrower hereby authorizes and directs any
Underlying Issuer to deliver to Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon Lender's instructions
with respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
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(e) Any and all charges, commissions, fees, and costs
incurred by Lender relating to Underlying Letters of Credit shall be Lender
Expenses for purposes of this Agreement and immediately shall be reimbursable by
Borrowers to Lender for the account of Lender; it being acknowledged and agreed
by each Borrower that, as of the Closing Date, the usage charge imposed by the
prospective Underlying Issuer is 0.825% per annum times the face amount of each
Underlying Letter of Credit, that such usage charge may be changed from time to
time, and that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change in any applicable
law, treaty, rule, or regulation or any change in the interpretation or
application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or Lender with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority, including Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is
or shall be imposed or modified in respect of any Letter of
Credit issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer
or Lender any other condition regarding any Underlying Letter
of Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to Lender of issuing, making, guaranteeing, or maintaining any Letter of Credit
or to reduce the amount receivable in respect thereof by Lender, then, and in
any such case, Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify
Administrative Borrower, and Borrowers shall pay on demand such amounts as
Lender may specify to be necessary to compensate Lender for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Base Rate
Loans hereunder. The determination by Lender of any amount due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
2.13 LIBOR.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of
having interest charged at the rate based upon the Base Rate, Borrowers shall
have the option (the "LIBOR Option") to have interest on all or a portion of the
A Advances be charged at a rate of interest based upon the LIBOR Rate. Interest
on LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the
Interest Period applicable thereto, (ii) the occurrence of an Event of Default
in consequence of which Lender has elected to accelerate the maturity of all or
any portion of the Obligations, or (iii) termination of this Agreement pursuant
to the terms hereof. On the last day of each applicable Interest Period, unless
Administrative Borrower
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properly has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrowers no
longer shall have the option to request that A Advances bear interest at the
LIBOR Rate and Lender shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder.
(b) LIBOR ELECTION.
(i) Administrative Borrower may, at any time and from
time to time, so long as no Event of Default has occurred and
is continuing, elect to exercise the LIBOR Option by notifying
Lender prior to 11:00 a.m. (California time) at least three
(3) Business Days prior to the commencement of the proposed
Interest Period (the "LIBOR Deadline"). Notice of
Administrative Borrower's election of the LIBOR Option for a
permitted portion of the A Advances and an Interest Period
pursuant to this Section shall be made by delivery to Lender
of a LIBOR Notice received by Lender before the LIBOR
Deadline, or by telephonic notice received by Lender before
the LIBOR Deadline (to be confirmed by delivery to Lender of a
LIBOR Notice received by Lender prior to 5:00 p.m. (California
time) on the same day).
(ii) Each LIBOR Notice shall be irrevocable and
binding on Borrowers. In connection with each LIBOR Rate Loan,
each Borrower shall indemnify, defend, and hold Lender
harmless against any loss, cost, or expense incurred by Lender
as a result of (a) the payment of any principal of any LIBOR
Rate Loan other than on the last day of an Interest Period
applicable thereto (including as a result of an Event of
Default), (b) the conversion of any LIBOR Rate Loan other than
on the last day of the Interest Period applicable thereto, or
(c) the failure to borrow, convert, continue or prepay any
LIBOR Rate Loan on the date specified in any LIBOR Notice
delivered pursuant hereto (such losses, costs, and expenses,
collectively, "Funding Losses"). Funding Losses shall, with
respect to Lender, be deemed to equal the amount determined by
Lender to be the excess, if any, of (i) the amount of interest
that would have accrued on the principal amount of such LIBOR
Rate Loan had such event not occurred, at the LIBOR Rate that
would have been applicable thereto, for the period from the
date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to
borrow, convert or continue, for the period that would have
been the Interest Period therefor), minus (ii) the amount of
interest that would accrue on such principal amount for such
period at the interest rate which Lender would be offered were
it to be offered, at the commencement of such period, Dollar
deposits of a comparable amount and period in the London
interbank market. A certificate of Lender delivered to
Administrative Borrower setting forth any
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amount or amounts that Lender is entitled to receive pursuant
to this Section shall be conclusive absent manifest error.
(iii) Borrowers shall have not more than five (5)
LIBOR Rate Loans in effect at any given time. Borrowers only
may exercise the LIBOR Option for LIBOR Rate Loans of at least
$1,000,000 and integral multiples of $500,000 in excess
thereof.
(c) PREPAYMENTS. Borrowers may prepay LIBOR Rate
Loans at any time; provided, however, that in the event that LIBOR Rate Loans
are prepaid on any date that is not the last day of the Interest Period
applicable thereto, including as a result of any automatic prepayment through
the required application by Lender of proceeds of Collections in accordance with
Section 2.4(b) or for any other reason, including early termination of the term
of this Agreement or acceleration of all or any portion of the Obligations
pursuant to the terms hereof, Each Borrower shall indemnify, defend, and hold
Lender and their Participants harmless against any and all Funding Losses in
accordance with clause (b) above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Lender on a
prospective basis to take into account any additional or
increased costs to Lender of maintaining or obtaining any
eurodollar deposits or increased costs due to changes in
applicable law occurring subsequent to the commencement of the
then applicable Interest Period, including changes in tax laws
(except changes of general applicability in corporate income
tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any
successor), excluding the Reserve Percentage, which additional
or increased costs would increase the cost of funding loans
bearing interest at the LIBOR Rate. In any such event, Lender
shall give Administrative Borrower notice of such a
determination and adjustment and, upon its receipt of the
notice from Lender, Administrative Borrower may, by notice to
Lender (y) require Lender to furnish to Administrative
Borrower a statement setting forth the basis for adjusting
such LIBOR Rate and the method for determining the amount of
such adjustment, or (z) repay the LIBOR Rate Loans with
respect to which such adjustment is made (together with any
amounts due under clause (b)(ii) above).
(ii) In the event that any change in market
conditions or any law, regulation, treaty, or directive, or
any change therein or in the interpretation of application
thereof, shall at any time after the date hereof, in the
reasonable opinion of Lender, make it unlawful or impractical
for Lender to fund or maintain LIBOR Advances or to continue
such funding or maintaining, or to determine or charge
interest rates at the LIBOR Rate, Lender shall give notice of
such changed circumstances to Administrative Borrower and (y)
in the case of any LIBOR Rate Loans that are outstanding, the
date specified in Lender's
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notice shall be deemed to be the last day of the Interest
Period of such LIBOR Rate Loans, and interest upon the LIBOR
Rate Loans of Lender thereafter shall accrue interest at the
rate then applicable to Base Rate Loans, and (z) Borrowers
shall not be entitled to elect the LIBOR Option until Lender
determines that it would no longer be unlawful or impractical
to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to
the contrary contained herein notwithstanding, neither Lender, nor any of its
Participants, is required actually to acquire eurodollar deposits to fund or
otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, Lender determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by Lender
or its parent bank holding company with any guideline, request or directive of
any such entity regarding capital adequacy (whether or not having the force of
law), will have the effect of reducing the return on Lender's or such holding
company's capital as a consequence of Lender's obligations hereunder to a level
below that which Lender or such holding company could have achieved but for such
adoption, change, or compliance (taking into consideration Lender's or such
holding company's then existing policies with respect to capital adequacy and
assuming the full utilization of such entity's capital) by any amount deemed by
Lender to be material, then Lender may notify Administrative Borrower thereof.
Following receipt of such notice, Borrowers agree to pay Lender on demand an
amount equal to the amount by which Lender's return on capital was reduced as
and when such reduction is determined, payable within 90 days after presentation
by Lender of a statement in the amount and setting forth in reasonable detail
Lender's calculation thereof and the assumptions upon which such calculation was
based (which statement shall be deemed true and correct absent manifest error).
In determining such amount, Lender may use any reasonable averaging and
attribution methods.
2.15 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each Borrower is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by Lender under this Agreement, for the mutual
benefit, directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations.
(b) Each Borrower, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Borrowers, with respect to the
payment and performance of all of the
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Obligations (including any Obligations arising under this Section 2.15), it
being the intention of the parties hereto that all the Obligations shall be the
joint and several obligations of each Borrower without preferences or
distinction among them.
(c) If and to the extent that any Borrower shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each such
event the other Borrowers will make such payment with respect to, or perform,
such Obligation.
(d) The Obligations of each Borrower under the provisions of
this Section 2.15 constitute the absolute and unconditional, full recourse
Obligations of each Borrower enforceable against each such Borrower to the full
extent of its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement,
each Borrower hereby waives notice of acceptance of its joint and several
liability, notice of any Advances or Letters of Credit issued under or pursuant
to this Agreement, notice of the occurrence of any Default, Event of Default, or
of any demand for any payment under this Agreement, notice of any action at any
time taken or omitted by Lender under or in respect of any of the Obligations,
any requirement of diligence or to mitigate damages and, generally, to the
extent permitted by applicable law, all demands, notices and other formalities
of every kind in connection with this Agreement (except as otherwise provided in
this Agreement). Each Borrower hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any of the Obligations,
the acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
Lender at any time or times in respect of any default by any Borrower in the
performance or satisfaction of any term, covenant, condition or provision of
this Agreement, any and all other indulgences whatsoever by Lender in respect of
any of the Obligations, and the taking, addition, substitution or release, in
whole or in part, at any time or times, of any security for any of the
Obligations or the addition, substitution or release, in whole or in part, of
any Borrower. Without limiting the generality of the foregoing, each Borrower
assents to any other action or delay in acting or failure to act on the part of
Lender with respect to the failure by any Borrower to comply with any of its
respective Obligations, including any failure strictly or diligently to assert
any right or to pursue any remedy or to comply fully with applicable laws or
regulations thereunder, which might, but for the provisions of this Section 2.15
afford grounds for terminating, discharging or relieving any Borrower, in whole
or in part, from any of its Obligations under this Section 2.15, it being the
intention of each Borrower that, so long as any of the Obligations hereunder
remain unsatisfied, the Obligations of such Borrower under this Section 2.15
shall not be discharged except by performance and then only to the extent of
such performance. The Obligations of each Borrower under this Section 2.15 shall
not be diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Borrower or Lender. The joint and several liability of the Borrowers
hereunder shall continue in full force and
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effect notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, constitution or place of formation of any of the
Borrowers or Lender.
(f) Each Borrower represents and warrants to Lender that such
Borrower is currently informed of the financial condition of Borrowers and of
all other circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations. Each Borrower further represents
and warrants to Lender that such Borrower has read and understands the terms and
conditions of the Loan Documents. Each Borrower hereby covenants that such
Borrower will continue to keep informed of Borrowers' financial condition, the
financial condition of other guarantors, if any, and of all other circumstances
which bear upon the risk of nonpayment or nonperformance of the Obligations.
(g) Each of the Borrowers waives all rights and defenses
arising out of an election of remedies by Lender, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed Lender's rights of subrogation and
reimbursement against such Borrower by the operation of Section 580(d) of the
California Code of Civil Procedure or otherwise.
(h) Each of the Borrowers waives all rights and defenses that
such Borrower may have because the Obligations now or hereafter may be secured
by Real Property. This means, among other things:
(i) Lender may collect from such Borrower without
first foreclosing on any Real Property Collateral or Personal
Property Collateral pledged by Borrowers.
(ii) If Lender forecloses on any Real Property
Collateral pledged by Borrowers:
A. The amount of the Obligations may be
reduced only by the price for which that collateral
is sold at the foreclosure sale, even if the
collateral is worth more than the sale price.
B. Lender may collect from such Borrower
even if Lender, by foreclosing on the Real Property
Collateral, has destroyed any right such Borrower may
have to collect from the other Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.
(i) The provisions of this Section 2.15 are made for the
benefit of Lender and its respective successors and assigns, and may be enforced
by it or them from time to time against any or all of the Borrowers as often as
occasion therefor may arise and without
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requirement on the part of Lender, successor, or assign first to marshal any of
its or their claims or to exercise any of its or their rights against any of the
other Borrowers or to exhaust any remedies available to it or them against any
of the other Borrowers or to resort to any other source or means of obtaining
payment of any of the Obligations hereunder or to elect any other remedy. The
provisions of this Section 2.15 shall remain in effect until all of the
Obligations shall have been paid in full or otherwise fully satisfied. If at any
time, any payment, or any part thereof, made in respect of any of the
Obligations, is rescinded or must otherwise be restored or returned by Lender
upon the insolvency, bankruptcy or reorganization of any of the Borrowers, or
otherwise, the provisions of this Section 2.15 will forthwith be reinstated in
effect, as though such payment had not been made.
(j) Each of the Borrowers hereby agrees that it will not
enforce any of its rights of contribution or subrogation against the other
Borrowers with respect to any liability incurred by it hereunder or under any of
the other Loan Documents, any payments made by it to Lender with respect to any
of the Obligations or any collateral security therefor until such time as all of
the Obligations have been paid in full in cash. Any claim which any Borrower may
have against any other Borrower with respect to any payments to Lender hereunder
or under any other Loan Documents are hereby expressly made subordinate and
junior in right of payment, without limitation as to any increases in the
Obligations arising hereunder or thereunder, to the prior payment in full in
cash of the Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the
laws of any jurisdiction relating to any Borrower, its debts or its assets,
whether voluntary or involuntary, all such Obligations shall be paid in full in
cash before any payment or distribution of any character, whether in cash,
securities or other property, shall be made to any other Borrower therefor.
(k) Each of the Borrowers hereby agrees that, after the
occurrence and during the continuance of any Default or Event of Default, the
payment of any amounts due with respect to the indebtedness owing by any
Borrower to any other Borrower is hereby subordinated to the prior payment in
full in cash of the Obligations. Each Borrower hereby agrees that after the
occurrence and during the continuance of any Default or Event of Default, such
Borrower will not demand, xxx for or otherwise attempt to collect any
indebtedness of any other Borrower owing to such Borrower until the Obligations
shall have been paid in full in cash. If, notwithstanding the foregoing
sentence, such Borrower shall collect, enforce or receive any amounts in respect
of such indebtedness, such amounts shall be collected, enforced and received by
such Borrower as trustee for the Lender, and such Borrower shall deliver any
such amounts to Lender for application to the Obligations in accordance with
Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of Lender to make the initial Advance (or otherwise to extend any
credit provided for hereunder), is subject to the fulfillment, to the
satisfaction of Lender, of each of the conditions precedent set forth below:
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(a) the Closing Date shall occur on or before March 31, 2003;
(b) Lender shall have received all financing statements
required by Lender, duly authorized by the applicable Borrowers, and Lender
shall have received searches reflecting the filing of all such financing
statements;
(c) Lender shall have received each of the following
documents, in form and substance satisfactory to Lender, duly executed, and each
such document shall be in full force and effect:
(i) the Cash Management Agreements,
(ii) the Copyright Security Agreement,
(iii) the Disbursement Letter,
(iv) the Due Diligence Letter,
(v) the Fee Letter,
(vi) the Guarantor Security Agreement,
(vii) the Guaranty,
(viii) the Intercompany Subordination Agreement,
(ix) the Officers' Certificate,
(x) the Patent Security Agreement,
(xi) the Pay-Off Letter, together with Uniform Commercial Code
termination statements and other documentation evidencing the
termination by Existing Lender of its Liens in and to the properties
and assets of Borrowers,
(xii) the Securities Pledge Agreement, together with all
Pledged Notes and certificates representing the shares of Stock pledged
thereunder, as well as Stock powers with respect thereto endorsed in
blank, and
(xiii) the Trademark Security Agreement;
(d) Lender shall have received a certificate from the
Secretary of each Borrower (i) attesting to the resolutions of such Borrower's
board of directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which such Borrower is a party and
authorizing specific officers of such Borrower to execute the same and (ii)
certifying the names and true signatures of the officers of such Borrower
authorized to sign each such Loan Document;
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(e) Lender shall have received copies of each Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower;
(f) Lender shall have received a certificate of status with
respect to each Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;
(g) Lender shall have received certificates of status with
respect to each Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower) in which its failure to
be duly qualified or licensed (or, as the case may be, duly incorporated and
existing) would constitute a Material Adverse Change, which certificates shall
indicate that such Borrower is in good standing in such jurisdictions;
(h) Lender shall have received a certificate from the
Secretary of each Guarantor (i) attesting to the resolutions of such Guarantor's
Board of Directors authorizing its execution, delivery, and performance of the
Loan Documents to which such Guarantor is a party and authorizing specific
officers of such Guarantor to execute the same and (ii) certifying the names and
true signatures of the officers of such Guarantor authorized to sign each such
Loan Document;
(i) Lender shall have received copies of each Guarantor's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Guarantor;
(j) Lender shall have received a certificate of status with
respect to each Guarantor, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Guarantor, which certificate shall indicate that such
Guarantor is in good standing in such jurisdiction;
(k) Lender shall have received certificates of status with
respect to each Guarantor, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Guarantor) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
(l) Lender shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8, the form
and substance of which shall be satisfactory to Lender;
(m) Lender shall have received Collateral Access Agreements
from the master landlord and the two (2) sublandlords with respect to the
following location: 000 Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxx, XX 00000;
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(n) Lender shall have received opinions of Borrowers' counsel
in form and substance satisfactory to Lender;
(o) Lender shall have received satisfactory evidence
(including a certificate of the chief financial officer of Parent) that all tax
returns required to be filed by Borrowers have been timely filed and all taxes
upon Borrowers or their properties, assets, income, and franchises (including
Real Property taxes and payroll taxes) have been paid prior to delinquency,
except such taxes that are the subject of Permitted Protests;
(p) Borrowers shall have the Required Availability after
giving effect to the initial extensions of credit hereunder and provided that
Borrowers' trade payables are at a level and are aged consistently with
Borrowers' historical practices;
(q) Lender and its counsel shall have completed its business,
legal, and collateral due diligence, including (i) a collateral audit and review
of Borrowers' books and records and verification of Borrowers' representations
and warranties to Lender, the results of which shall be reasonably satisfactory
to Lender and (ii) a review of all material contracts of Borrowers, including
the AOL Agreement, the results of which shall be reasonably satisfactory to
Lender and its counsel;
(r) Lender shall have received completed reference checks with
respect to Borrowers' senior management, the results of which are reasonably
satisfactory to Lender in its sole discretion;
(s) Lender shall have received a final appraisal of Borrowers'
Recurring Maintenance Revenues, the results of which shall be consistent with
the preliminary appraisal report delivered to Lender;
(t) Borrowers shall have remitted by wire transfer to Lender
all cash (and delivered all Cash Equivalents in such manner as directed by
Lender) of Borrowers utilized to calculate the Required Availability;
(u) No Material Adverse Change shall have occurred in
Borrowers' financial condition or prospects or the value of the Collateral;
(v) Lender shall have received Borrowers' unaudited financial
statements for the quarter and the fiscal year ended December 31, 2002.
(w) Borrowers shall have paid all Lender Expenses incurred on
or before the Closing Date in connection with the transactions evidenced by this
Agreement;
(x) Lender shall have conducted Uniform Commercial Code, tax
lien and litigation searches, the results of which shall be satisfactory to
Lender;
(y) Lender shall have received evidence that all Liens created
by Borrowers and Restricted Subsidiaries, other than Permitted Liens, have been
discharged and
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shall have received an acknowledgement copy of the filings of such discharge, in
each case satisfactory to Lender;
(z) Lender shall be satisfied with the takeover audit, which
shall include expanded reviews of deferred revenues, accrued liabilities and
unapplied cash;
(aa) Lender shall have received satisfactory evidence that not
less than the Required Library of all existing Copyrights of Borrowers have been
registered with the United States Copyright Office (or any similar office of any
other jurisdiction in which Copyrights are used), and that all such Copyrights
and any proceeds thereof are specifically encumbered by the Copyright Security
Agreement;
(bb) Borrowers shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by Borrowers of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby; and
(cc) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Lender.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of Lender to continue to make Advances (or otherwise extend credit
hereunder) is subject to the fulfillment, on or before the date applicable
thereto, of each of the conditions subsequent set forth below (the failure by
Borrowers to so perform or cause to be performed constituting an Event of
Default):
(a) within 30 days after the Closing Date, deliver to Lender
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by Section 6.8, the form and substance of which shall
be satisfactory to Lender and its counsel; and
(b) within 90 days after the Closing Date, Borrowers shall
have closed their bank accounts with Silicon Valley Bank (account numbers
3300090566; 8800036858; 3300020410) and Xxxxx Fargo Bank (account number
000-0000000) and shall have transferred any and all remaining funds therein to a
Cash Management Account at a Cash Management Bank.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
Lender to make any Advances (or to extend any other credit hereunder) shall be
subject to the following conditions precedent (and shall be subject to Section
3.7, if applicable):
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
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(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
any Borrower, Lender, or any of their Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.4 TERM. This Agreement shall become effective in accordance with
Section 16.1 and shall continue in full force and effect for a term ending on
the fourth anniversary of the Closing Date (the "Maturity Date"). The foregoing
notwithstanding, Lender shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrowers with respect to any outstanding Letters of Credit and including all
Bank Products Obligations) immediately shall become due and payable without
notice or demand (including (a) either (i) providing cash collateral to be held
by Lender in an amount equal to 105% of the then extant Letter of Credit Usage,
or (ii) causing the original Letters of Credit to be returned to Lender, and (b)
providing cash collateral to be held by Lender for the benefit of Xxxxx Fargo or
its Affiliates with respect to the then extant Bank Products Obligations). No
termination of this Agreement, however, shall relieve or discharge Borrowers of
their duties, Obligations, or covenants hereunder and the Lender's Liens in the
Collateral shall remain in effect until all Obligations have been fully and
finally discharged and Lender's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all
of the Obligations have been fully and finally discharged and Lender's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Lender will, at Borrowers' sole expense, execute and
deliver any Uniform Commercial Code termination statements, lien releases,
mortgage releases, re-assignments of trademarks, discharges of security
interests, and other similar discharge or release documents (and, if applicable,
in recordable form) as are reasonably necessary to release, as of record, the
Lender's Liens and all notices of security interests and liens previously filed
by Lender with respect to the Obligations.
3.6 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at any
time upon 30 days prior written notice by Administrative Borrower to Lender, to
terminate this Agreement by paying to Lender, in cash, the Obligations
(including (a) either (i) providing cash collateral to be held by Lender in an
amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to Lender, and (b) providing cash
collateral to be held by Lender for the benefit of Xxxxx Fargo or its Affiliates
with respect to the then extant Bank Products Obligations), in full, together
with the
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Applicable Prepayment Premium. If Administrative Borrower has sent a notice of
termination pursuant to the provisions of this Section, then Lender's
obligations to extend credit hereunder shall terminate and Borrowers shall be
obligated to repay the Obligations (including (a) either (i) providing cash
collateral to be held by Lender in an amount equal to 105% of the then extant
Letter of Credit Usage, or (ii) causing the original Letters of Credit to be
returned to Lender, and (b) providing cash collateral to be held by Lender for
the benefit of Xxxxx Fargo or its Affiliates with respect to the then extant
Bank Products Obligations), in full, together with the Applicable Prepayment
Premium, on the date set forth as the date of termination of this Agreement in
such notice. In the event of the termination of this Agreement and repayment of
the Obligations at any time prior to the Maturity Date, for any other reason,
including (a) termination upon the election of Lender to terminate after the
occurrence of an Event of Default, (b) foreclosure and sale of Collateral, (c)
sale of the Collateral in any Insolvency Proceeding, or (iv) restructure,
reorganization or compromise of the Obligations by the confirmation of a plan of
reorganization, or any other plan of compromise, restructure, or arrangement in
any Insolvency Proceeding, then, in view of the impracticability and extreme
difficulty of ascertaining the actual amount of damages to Lender or profits
lost by Lender as a result of such early termination, and by mutual agreement of
the parties as to a reasonable estimation and calculation of the lost profits or
damages of Lender, Borrowers shall pay the Applicable Prepayment Premium to
Lender, measured as of the date of such termination.
3.7 CONDITIONS PRECEDENT TO CERTAIN A ADVANCES. Notwithstanding
anything to the contrary in this Agreement, Lender shall have no obligation to
make A Advances in excess of $2,500,000 at any one time outstanding, until
Borrowers have fulfilled the following conditions precedent to the satisfaction
of Lender:
(a) Borrowers shall have provided weekly accounts receivable
activity reports to Lender, in a manner reasonably satisfactory to Lender;
(b) Borrowers shall have provided Lender with Recurring
Maintenance Revenue reporting, in accordance with GAAP, in its consolidated
financial statements;
(c) Parent's and its Subsidiaries' unaudited financial
statements for the fiscal quarter ended March 31, 2003 and Parent's and its
Subsidiaries' audited, unqualified financial statements for the 12 months ended
December 31, 2002 (in each case based upon the financial statements delivered to
Lender pursuant to Section 6.3) shall be substantially consistent with the
Closing Date Business Plan; and
(d) Borrowers shall have implemented an electronic collateral
reporting system that utilizes the data in Borrowers' current reporting systems
that is reasonably satisfactory to Lender.
3.8 CONDITIONS TO BECOMING AN ADDITIONAL BORROWER. As a condition to
any Subsidiary of Parent that is not a Borrower as of the Closing Date becoming
a "Borrower"
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for purposes of the Loan Documents after the Closing Date (any such additional
Borrower, an "Additional Borrower"),
(a) Lender shall have received each of the following
documents, in form and substance satisfactory to Lender, duly executed and each
such document shall be in full force and effect:
(i) this Agreement, including a duly executed counterpart
thereof by such Additional Borrower;
(ii) the Cash Management Agreements pertaining to such
Additional Borrower;
(iii) the Copyright Security Agreement, including a duly
executed counterpart thereof by such Additional Borrower;
(iv) the Intercompany Subordination Agreement, including a
duly executed counterpart thereof by such Additional Borrower;
(v) the Patent Security Agreement, including a duly executed
counterpart thereof by such Additional Borrower;
(vi) the Securities Pledge Agreement, including a duly
executed counterpart thereof by such Additional Borrower;
(vii) the Trademark Security Agreement, including a duly
executed counterpart thereof by such Additional Borrower;
(viii) a debenture, or other security document required by
Lender based on the Additional Borrower's place of incorporation,
operations or assets;
(ix) a certificate from the Secretary of such Additional
Borrower (A) attesting to the resolutions of such Additional Borrower's
Board of Directors authorizing its execution, delivery, and performance
of this Agreement and the other Loan Documents to which such Additional
Borrower will be a party and authorizing specific officers of such
Additional Borrower to execute the same and (B) certifying the names
and true signatures of the officers of such Additional Borrower
authorized to sign each such Loan Document;
(x) copies of such Additional Borrower's Governing Documents,
as amended, modified, or supplemented to the date of their delivery,
certified by the Secretary of such Additional Borrower;
(xi) a certificate of status with respect to such Additional
Borrower, dated as of a date acceptable to Lender, such certificate to
be issued by the appropriate officer of the jurisdiction of
organization of such Additional
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Borrower, which certificate shall indicate that such Additional
Borrower is in good standing in such jurisdiction;
(xii) certificates of status with respect to each Additional
Borrower, each dated as of a date acceptable to Lender, such
certificates to be issued by the appropriate officer of the
jurisdictions (other than the jurisdiction of organization of such
Additional Borrower) in which its failure to be duly qualified or
licensed would constitute a Material Adverse Change, which certificates
shall indicate that such Additional Borrower is in good standing in
such jurisdictions; and
(xiii) an opinion of such Additional Borrower's counsel in
form and substance satisfactory to Lender;
(b) Lender shall be satisfied that all acts necessary to
perfect the Lender's Liens in the collateral of such Additional Borrower have
been taken;
(c) Lender shall have received satisfactory evidence
(including a certificate of the chief financial officer or chief executive
officer of Parent or such Additional Borrower) that all tax returns required to
be filed by such Additional Borrower have been timely filed and all taxes upon
such Additional Borrower or its properties, assets, income, and franchises
(including any Real Property taxes and payroll taxes) have been paid prior to
delinquency, except such taxes that are the subject of a Permitted Protest;
(d) Such Additional Borrower shall have received all licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with its execution and delivery of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby;
(e) Lender shall be reasonably satisfied with its business and
legal due diligence with respect to such Additional Borrower; and
(f) All other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Lender.
If Lender is satisfied that all of the above conditions precedent have
been satisfied, then Lender shall notify the Administrative Borrower of such,
and such notice shall include the date on which such Subsidiary of Parent shall
become an Additional Borrower (such date, with respect to any Additional
Borrower, the "Additional Borrower Effective Date"); provided, that even if all
of the above conditions precedent are satisfied, no Subsidiary shall become an
Additional Borrower if Lender reasonably objects to any such Subsidiary becoming
an Additional Borrower. In addition, Lender, in its sole discretion, may require
that any Subsidiary of an Additional Borrower that would become a Restricted
Subsidiary by virtue of clause (b) of the definition of Restricted Subsidiary
enter into a
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general continuing guaranty agreement and a security agreement, in each case in
favor of the Lender and in form and substance satisfactory to Lender.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Each Borrower hereby grants to Lender a
continuing security interest in all of its right, title, and interest in all
currently existing and hereafter acquired or arising Personal Property
Collateral in order to secure prompt repayment of any and all of the Obligations
in accordance with the terms and conditions of the Loan Documents and in order
to secure prompt performance by such Borrowers of each of their covenants and
duties under the Loan Documents. The Lender's Liens in and to the Personal
Property Collateral shall attach to all Personal Property Collateral without
further act on the part of Lender or such Borrowers. Anything contained in this
Agreement or any other Loan Document to the contrary notwithstanding, except for
Permitted Dispositions, such Borrowers have no authority, express or implied, to
dispose of any item or portion of the Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection of priority of Lender's security interest is
dependent on or enhanced by possession, the applicable Borrower, immediately
upon the request of Lender, shall endorse and deliver physical possession of
such Negotiable Collateral to Lender.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Lender or Lender's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Lender or that Lender has a security interest therein, or (b)
collect the Accounts, chattel paper, or General Intangibles directly and charge
the collection costs and expenses to the Loan Account. Each Borrower agrees that
it will hold in trust for Lender, as Lender's trustee, any Collections that it
receives and immediately will deliver said Collections to Lender or a Cash
Management Bank in their original form as received by the applicable Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time upon the
request of Lender, Borrowers shall execute and deliver to Lender, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, mortgages, surveys,
assignments, endorsements of certificates of title, and all other documents (the
"Additional Documents") that Lender may request in its Permitted Discretion, in
form and substance reasonably satisfactory to Lender, to perfect and continue
perfected or better perfect the Lender's Liens in the Collateral (whether now
owned or hereafter arising or acquired), to create and perfect Liens in favor of
Lender in any Real Property acquired by any Borrower after the Closing Date, and
in order to fully consummate all of the transactions contemplated hereby and
under the other Loan Documents. To the maximum extent permitted by applicable
law, each Borrower authorizes Lender to execute any such Additional Documents in
the applicable Borrower's name and authorize Lender to
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file such executed Additional Documents in any appropriate filing office. In
addition, on such periodic basis as Lender shall require, Borrowers shall (a) to
the extent required pursuant to Section 6.16, provide Lender with a report of
all new patentable, copyrightable, or trademarkable materials acquired or
generated by Borrowers during the prior period, (b) to the extent required
pursuant to Section 6.16, cause all patents, Copyrights, and trademarks acquired
or generated by Borrowers that are not already the subject of a registration
with the appropriate filing office (or an application therefor diligently
prosecuted) to be registered with such appropriate filing office in a manner
sufficient to impart constructive notice of Borrowers' ownership thereof, and
(c) cause to be prepared, executed, and delivered to Lender supplemental
schedules to the applicable Loan Documents to identify such patents, Copyrights,
and trademarks as being subject to the security interests created thereunder.
4.5 POWER OF ATTORNEY. Each Borrower hereby irrevocably makes,
constitutes, and appoints Lender (and any of Lender's officers, employees, or
Lenders designated by Lender) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or xxxx of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) send requests for verification of Accounts, (d)
at any time that a Cash Sweep Instruction is in effect, endorse such Borrower's
name on any Collection item that may come into Lender's possession, (e) at any
time that an Event of Default has occurred and is continuing, make, settle, and
adjust all claims under such Borrower's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, and (f)
at any time that an Event of Default has occurred and is continuing, settle and
adjust disputes and claims respecting the Accounts, chattel paper, or General
Intangibles directly with Account Debtors, for amounts and upon terms that
Lender determines to be reasonable, and Lender may cause to be executed and
delivered any documents and releases that Lender determines to be necessary. The
appointment of Lender as each Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and Lender's
obligations to extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Subject to Section 2.11(c), Lender (through any
of its respective officers, employees, or agents) shall have the right, from
time to time hereafter to inspect the Books and to check, test, and appraise the
Collateral in order to verify Borrowers' financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral
(including the right to appraise the Collateral and Recurring Maintenance
Revenues on at least a quarterly basis).
4.7 CONTROL AGREEMENTS. Each Borrower agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
and, if to another securities intermediary, unless each of the applicable
Borrower, Lender, and the substitute securities intermediary have entered into a
Control Agreement. No arrangement contemplated hereby or by any Control
Agreement in respect of any Securities Accounts or
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other Investment Property shall be modified by Borrowers without the prior
written consent of Lender. Upon the occurrence and during the continuance of a
Default or Event of Default, Lender may notify any securities intermediary to
liquidate the applicable Securities Account or any related Investment Property
maintained or held thereby and remit the proceeds thereof to the Lender's
Account.
4.8 COMMERCIAL TORT CLAIMS. Borrowers shall promptly notify Lender in
writing upon incurring or otherwise obtaining a commercial tort claim (as that
term is defined in the Code) after the date hereof against any third party and,
upon request of Lender, promptly supplement Schedule C-1 to this Agreement,
authorize the filing of additional financing statements or amendments to
existing financing statements and do such other acts or things deemed necessary
or desirable by Lender to give Lender a security interest in any such commercial
tort claim.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement, each
Borrower makes the following representations and warranties to Lender which
shall be true, correct, and complete, in all material respects, as of the date
hereof, and shall be true, correct, and complete, in all material respects, as
of the Closing Date, and at and as of the date of the making of each Advance (or
other extension of credit) made thereafter, as though made on and as of the date
of such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 NO ENCUMBRANCES. Each Borrower has good and indefeasible title to
its Collateral and its Real Property, free and clear of Liens except for
Permitted Liens.
5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide existing
payment obligations of Account Debtors created by the sale and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of Borrowers' business, owed to Borrowers without defenses, disputes,
offsets, counterclaims, or rights of return or cancellation. As to each Account
that is identified by Administrative Borrower as an Eligible Account in a
borrowing base report submitted to Lender, such Account is not excluded as
ineligible by virtue of one or more of the excluding criteria set forth in the
definition of Eligible Accounts.
5.3 [INTENTIONALLY OMITTED].
5.4 EQUIPMENT. All of the Equipment is used or held for use in
Borrowers' business and is fit for such purposes.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and Equipment
are not stored with a bailee, warehouseman, or similar party and are located
only at the locations identified on Schedule 5.5.
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5.6 INVENTORY RECORDS. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive
office of each Borrower is located at the address indicated in Schedule 5.7, and
each Borrower's FEIN is identified in Schedule 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
(a) Each Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b) is a complete and accurate
description of the authorized capital Stock of each Borrower (other than
Parent), by class, and, as of the Closing Date, a description of the number of
shares of each such class that are issued and outstanding. Other than as
described on Schedule 5.8(b), there are no subscriptions, options, warrants, or
calls relating to any shares of capital Stock of any Borrower (other than
Parent), including any right of conversion or exchange under any outstanding
security or other instrument. No Borrower is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital Stock or any security convertible into or exchangeable for
any of its capital Stock.
(c) Set forth on Schedule 5.8(c) is a complete and accurate
list of each Restricted Subsidiary, showing: (i) the jurisdiction of their
organization; (ii) the number of shares of each class of common and preferred
Stock authorized for each of such Restricted Subsidiary; and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by the applicable Person. All of the outstanding capital Stock of
each such Restricted Subsidiary has been validly issued and is fully paid and
non-assessable.
(d) There are no subscriptions, options, warrants, or calls
relating to any shares of any Restricted Subsidiary's capital Stock, including
any right of conversion or exchange under any outstanding security or other
instrument. No Borrower nor any Restricted Subsidiary is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of any Restricted Subsidiary's capital Stock or any security
convertible into or exchangeable for any such capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party have been duly authorized by all necessary action on the part of
such Borrower.
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(b) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party do not and will not (i) violate any provision of federal, state,
or local law or regulation applicable to any Borrower, the Governing Documents
of any Borrower, or any order, judgment, or decree of any court or other
Governmental Authority binding on any Borrower, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation of any Borrower, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of Borrower, other than Permitted Liens, or (iv) require
any approval of any Borrower's interestholders or any approval or consent of any
Person under any material contractual obligation of any Borrower.
(c) Other than (i) the filing of financing statements, fixture
filings, filings with the UK Companies Registry (if applicable), filings with
the U.S. Patent and Trademark Office, the U.S. Copyright Office and their
counterparts in the United Kingdom and the European Community (if applicable),
and filing of Mortgages and (ii) the execution by the Cash Management Banks of
the Cash Management Agreements and the execution by the securities
intermediaries of the Control Agreements, the execution, delivery, and
performance by each Borrower of this Agreement and the Loan Documents to which
such Borrower is a party do not and will not require any registration with,
consent, or approval of, or notice to, or other action with or by, any
Governmental Authority or other Person.
(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Lender's Liens are validly created and, assuming the
proper filing of all necessary documents with the proper office for filing
thereof by Lender, are perfected, first priority Liens, subject only to
Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Guarantor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
such Guarantor, (iii) result in or require the creation or imposition of any
Lien of any
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nature whatsoever upon any properties or assets of such Guarantor, other than
Permitted Liens, or (iv) require any approval of such Guarantor's
interestholders or any approval or consent of any Person under any material
contractual obligation of such Guarantor.
(h) Other than the filing of financing statements, fixture
filings, filings with the UK Companies Registry (if applicable), filings with
the U.S. Patent and Trademark Office, the U.S. Copyright Office and their
counterparts in the United Kingdom and the European Community (if applicable),
and filing of Mortgages, the execution, delivery, and performance by each
Guarantor of the Loan Documents to which such Guarantor is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority or other Person.
(i) The Loan Documents to which each Guarantor is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Guarantor will be legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers, threatened against Borrowers, or any of their Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrowers, or any Restricted Subsidiaries, as
applicable, reasonably could not be expected to result in a Material Adverse
Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrowers or Guarantors that have been delivered by Borrowers to Lender have
been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material respects, Borrowers' (or
Guarantors', as applicable) financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material
Adverse Change with respect to Borrowers (or Guarantors, as applicable) since
the date of the latest financial statements submitted to Lender on or before the
Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) Each Borrower is Solvent.
(b) No transfer of property is being made by any Borrower and
no obligation is being incurred by any Borrower in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of
Borrowers.
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5.13 EMPLOYEE BENEFITS. None of Borrowers or Restricted Subsidiaries,
or any of their ERISA Affiliates, has maintained or contributed, or currently
maintains or contributes, to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14, (a)
to Borrowers' knowledge, none of Borrowers' properties or assets has ever been
used by Borrowers or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such production, storage, handling, treatment, release or transport was in
violation, in any material respect, of applicable Environmental Law, (b) to
Borrowers' knowledge, none of Borrowers' properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) none of Borrowers have
received notice that a Lien arising under any Environmental Law has attached to
any revenues or to any Real Property owned or operated by Borrowers, and (d)
none of Borrowers have received a summons, citation, notice, or directive from
the Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by any Borrower resulting in the
releasing or disposing of Hazardous Materials into the environment.
5.15 BROKERAGE FEES. Borrowers have not utilized the services of any
broker or finder in connection with Borrowers' obtaining financing from Lender
under this Agreement and no brokerage commission or finders fee is payable by
Borrowers in connection herewith.
5.16 INTELLECTUAL PROPERTY.
(a) Each Borrower owns, or holds licenses in, all Intellectual
Property Rights that are necessary to the conduct of its business as currently
conducted. Attached hereto as Schedule 5.16(a) (which Borrowers may amend from
time to time provided that notice and copies thereof are promptly provided to
Lender) is a true, correct, and complete listing of all material patents, patent
applications, trademarks, trademark applications and Copyrights (including
Copyright registrations and applications) as to which each Borrower is the owner
or is an exclusive licensee.
(b) Each Borrower represents and warrants that it has taken
all commercially reasonable actions necessary to protect Intellectual Property
Rights, including (i) protecting the secrecy and confidentiality of such
Borrower's confidential information and trade secrets by having and enforcing a
policy requiring all current and former employees, consultants, licensees,
vendors and contractors to execute appropriate confidentiality and invention
assignment agreements; (ii) taking all commercially reasonable actions necessary
to ensure that no trade secret of such Borrower having a material value to such
Borrower falls or has fallen into the public domain; and (iii) protecting the
secrecy and confidentiality of the source code of all computer software programs
and applications of which such Borrower is the owner or licensee by requiring
any Persons to whom such Borrower licenses software products to enter into
license agreements with appropriate use and non-disclosure
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restrictions. Each Borrower has only entered into such source code licenses as
set forth in Schedule 5.16(b).
(c) No past or present employee or contractor of any Borrower
has any ownership interest, license, permission or other Intellectual Property
Right in or to any material Intellectual Property Rights.
(d) Each Borrower has made all necessary payments, filings and
recordations to protect and maintain its interest in material Intellectual
Property Rights in the United States or any other jurisdiction, including (i)
making all necessary registration, maintenance, and renewal fee payments; and
(ii) filing all necessary documents, including all applications for registration
of Copyrights (at least with respect to the Required Library), trademarks, and
patents.
(e) No claim has been made and is continuing or threatened
that the use by any Borrower of any item of the Intellectual Property Rights is
invalid or unenforceable or that the use by such Borrower of any item of the
Intellectual Property Rights does or may violate the rights of any Person, other
than any such claim which would not cause a Material Adverse Change. To the best
of each Borrower's knowledge, there is currently no infringement or unauthorized
use of any item of Intellectual Property Rights contained on Schedule 5.16(a).
(f) Each Borrower has filed applications and taken any and all
other actions reasonably necessary to register all Copyrights constituting the
Required Library, in good faith in accordance with the procedures and
regulations of the U.S. Copyright Office (or any similar office of any other
jurisdiction in which Copyrights are used) in a manner sufficient to impart
constructive notice of such Borrower's ownership thereof.
5.17 LEASES. Borrowers enjoy peaceful and undisturbed possession under
all leases material to the business of Borrowers and to which Borrowers are a
party or under which Borrowers are operating. All of such leases are valid and
subsisting and no material default by Borrowers exists under any of them.
5.18 DDAS. Set forth on Schedule 5.18 are all of the DDAs of each
Borrower, including, with respect to each depository (i) the name and address of
such depository, and (ii) the account numbers of the accounts maintained with
such depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Borrowers in writing to Lender (including all
information contained in the Schedules hereto or in the other Loan Documents)
for purposes of or in connection with this Agreement, the other Loan Documents
or any transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Borrowers
in writing to the Lender will be, true and accurate, in all material respects,
on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was
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provided. On the Closing Date, the Closing Date Business Plan represents, and as
of the date on which any other Operating Budget is delivered to Lender, such
additional Operating Budget will represent Borrowers' good faith reasonable
estimate of its future performance for the periods covered thereby, but is not a
guarantee of performance and will not be deemed to be factual information for
purposes of the foregoing.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of each Borrower outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
5.21 TAXES AND PAYMENTS. Except as set forth on Schedule 5.21, each of
the Borrowers and the Restricted Subsidiaries have filed all federal and state
income tax returns and all other material tax returns, domestic and foreign,
required to be filed by them and have paid all taxes and assessments payable by
them which have become due, except for those contested in good faith and
adequately disclosed and fully provided for on the financial statements of
Borrowers and the Restricted Subsidiaries, in accordance with GAAP and for which
Borrowers and the Restricted Subsidiaries, as applicable, have provided adequate
reserves (in the good faith judgment of the management of Borrowers and the
Restricted Subsidiaries). Borrowers and the Restricted Subsidiaries have
provided adequate reserves (in the good faith judgment of the management of
Borrowers and the Restricted Subsidiaries) for the payment of all federal,
state, local and foreign income taxes applicable for the current fiscal year to
date. Except as set forth on Schedule 5.21, there is no action, suit,
proceeding, investigation, audit, or claim now pending or, to the knowledge of
Borrowers and the Restricted Subsidiaries threatened, by any authority regarding
any taxes relating to any of Borrowers and the Restricted Subsidiaries that
could reasonably be expected to result in a Material Adverse Change to any of
the Borrowers or the Restricted Subsidiaries. Except as set forth on Schedule
5.21, as of the Closing Date, none of the Borrowers or the Restricted
Subsidiaries have entered into an agreement or waiver or been requested to enter
into an agreement or waiver extending any statute of limitations relating to the
payment or collection of taxes of any of the Borrowers or the Restricted
Subsidiaries, or is aware of any circumstances that would cause the taxable
years or other taxable periods of any of the Borrowers or the Restricted
Subsidiaries not to be subject to the normally applicable statute of
limitations.
5.22 INACTIVE SUBSIDIARIES.. Each Inactive Subsidiary has no
Indebtedness or other material liabilities, conducts no material operations or
business and owns no material assets or properties.
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrowers shall and shall cause each of the Restricted Subsidiaries
(and with respect to the covenants contained
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in Section 6.14, Borrowers shall cause each of their respective Subsidiaries) to
do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Lender.
6.2 COLLATERAL REPORTING.
(a) Provide Lender with the following documents at the
following times in form reasonably satisfactory to Lender:
Weekly (i) Domestic cash position
Monthly (not later than (ii) a detailed calculation of the Borrowing Base
the 15th day of each (including detail regarding those Accounts that are
month) not Eligible Accounts),
(iii) a detailed aging, by total, of the Accounts,
together with a reconciliation to the detailed
calculation of the Borrowing Base previously provided
to Lender,
(iv) a summary aging, by vendor, of Borrowers'
accounts payable and any book overdraft,
(v) a calculation of Dilution for the prior month,
(vi) a report detailing Recurring Maintenance
Revenues, and
(vii) copies of all bank statements,
Quarterly (viii) upon request by Lender, a list of each
Borrower's customers that made purchases during the
applicable quarter, provided that Lender shall use
such information solely for collateral monitoring
purposes,
(ix) a report regarding each Borrower's accrued, but
unpaid, ad valorem taxes,
Upon request by Lender (x) copies of invoices in connection with the
Accounts, credit memos, remittance advices, deposit
slips, shipping and delivery documents in connection
with the Accounts and, for Inventory and Equipment
acquired by Borrowers, purchase orders and invoices,
and
(xi) such other reports as to the Collateral, or the
financial condition of Borrowers as Lender may
reasonably request.
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In addition, each Borrower agrees to cooperate fully with
Lender to facilitate and implement a system of electronic collateral reporting
in order to provide electronic reporting of each of the items set forth above.
(b) In addition to the documents to be provided
pursuant to Section 6.2(a), once Borrowers shall have fulfilled, to Lender's
satisfaction, the conditions set forth in Section 3.7, provide Lender with the
following documents at the following times in form satisfactory to Lender:
Weekly (i) a sales journal, collection journal, and credit
register since the last such schedule and a
calculation of the Borrowing Base as of such date,
and
(ii) notice of all returns, disputes, or claims.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Lender:
(a) as soon as available, but in any event within 45
days after the end of each fiscal quarter (other than the last fiscal quarter of
each fiscal year) during each of Parent's fiscal years (provided, that if and
when Parent's systems are able to generate monthly financials, Parent shall
deliver such monthly financials within 30 days (45 days in the case of a month
that is the end of one of the first three (3) fiscal quarters in a fiscal year)
after the end of each month during each of Parent's fiscal years),
(i) a company prepared consolidated balance sheet,
income statement, and statement of cash flow covering Parent's
and its Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial
officer of Parent to the effect that:
A. the financial statements delivered
hereunder have been prepared in accordance with GAAP
(except for the lack of footnotes and being subject
to year-end audit adjustments) and fairly present in
all material respects the financial condition of
Parent and its Subsidiaries,
B. the representations and warranties of
Borrowers contained in this Agreement and the other
Loan Documents are true and correct in all material
respects on and as of the date of such certificate,
as though made on and as of such date (except to the
extent that such representations and warranties
relate solely to an earlier date), and
C. there does not exist any condition or
event that constitutes a Default or Event of Default
(or, to the extent of any non-compliance, describing
such non-compliance as to which he or she may have
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knowledge and what action Borrowers have taken, are
taking, or propose to take with respect thereto), and
(iii) for each month that is the end of a fiscal
quarter on which a financial covenant in Section 7.20 is to be
tested, a Compliance Certificate demonstrating, in reasonable
detail, compliance at the end of such period with the
applicable financial covenants contained in Section 7.20,
(b) as soon as available, but in any event within 90
days after the end of each of Parent's fiscal years,
(i) financial statements of Parent and its
Subsidiaries for each such fiscal year, audited by independent
certified public accountants reasonably acceptable to Lender
and certified, without any qualifications, by such accountants
to have been prepared in accordance with GAAP (such audited
financial statements to include a balance sheet, income
statement, and statement of cash flow and, if prepared, such
accountants' letter to management),
(ii) a certificate of such accountants addressed to
Lender stating that such accountants do not have knowledge of
the existence of any Default or Event of Default under Section
7.20,
(c) as soon as available, but in any event within 30
days prior to the start of each of Parent's fiscal years,
(i) copies of Borrowers' Operating Budget, in form
and substance (including as to scope and underlying
assumptions) reasonably satisfactory to Lender, in its
Permitted Discretion, for the forthcoming three (3) years,
year by year, and for the forthcoming fiscal year, month by
month, certified by the chief financial officer of Parent as
being such officer's good faith best estimate of the financial
performance of Parent and its Subsidiaries during the period
covered thereby,
(d) if and when filed by any Borrower,
(i) 10-Q quarterly reports, Form 10-K annual reports,
and Form 8-K current reports,
(ii) any other filings made by any Borrower with the
SEC,
(iii) copies of Borrowers' federal income tax
returns, and any amendments thereto, filed with the Internal
Revenue Service (or, if applicable, Borrowers' tax returns
filed with the United Kingdom tax authorities), and
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(e) if and when provided, any other information that
is provided by Parent to its shareholders generally,
(f) if and when filed by any Borrower and as
requested by Lender, satisfactory evidence of payment of applicable excise taxes
in each jurisdictions in which (i) any Borrower conducts business or is required
to pay any such excise tax, (ii) where any Borrower's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of any
Borrower, or (iii) where any Borrower's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(g) as soon as a Borrower has knowledge of any event
or condition that constitutes a Default or an Event of Default, notice thereof
and a statement of the curative action that Borrowers propose to take with
respect thereto,
(h) as soon as available, but in any event within 15
days after the end of each month during each of Parent's fiscal years, a monthly
flash report detailing Parent's revenues for each such month, and
(i) upon the request of Lender, any other report
reasonably requested relating to the financial condition of Borrowers.
In addition to the financial statements referred to above,
Borrowers agree to deliver financial statements prepared on both a consolidated
and consolidating basis and that no Borrower, or any Subsidiary of a Borrower,
will have a fiscal year different from that of Parent. Borrowers agree that
their independent certified public accountants are authorized to communicate
with Lender and to release to Lender whatever financial information concerning
Borrowers that Lender reasonably may request. Each Borrower waives the right to
assert a confidential relationship, if any, it may have with any accounting firm
or service bureau in connection with any information requested by Lender
pursuant to or in accordance with this Agreement, and agree that Lender may
contact directly any such accounting firm or service bureau in order to obtain
such information.
6.4 GUARANTOR REPORTS. Cause each Guarantor to deliver its annual
financial statements at the time when Parent provides its audited financial
statements to Lender and copies of all federal income tax returns and, if
applicable, United Kingdom tax returns as soon as the same are available and in
any event no later than 30 days after the same are required to be filed by law.
6.5 [INTENTIONALLY OMITTED].
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of their
properties which are necessary to or useful in the proper conduct of their
business in good working order and condition, ordinary wear and tear excepted,
and materially comply at all times with the provisions of all leases to which it
is a party as lessee, so as to prevent any loss or forfeiture thereof or
thereunder.
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6.7 TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers
or any of their assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrowers
will make timely payment or deposit of all tax payments and withholding taxes
required of it by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes (and, if
applicable, United Kingdom taxes, national insurance and other contributions),
and will, upon request, furnish Lender with proof satisfactory to Lender
indicating that the applicable Borrower has made such payments or deposits.
Borrowers shall deliver satisfactory evidence of payment of applicable excise
taxes in each jurisdiction in which any Borrower is required to pay any such
excise tax.
6.8 INSURANCE.
(a) At Borrowers' expense, maintain insurance
respecting their property and assets wherever located, covering loss or damage
by fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses.
Borrowers also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Lender. Borrowers shall deliver copies of all such policies to Lender with a
satisfactory lender's loss payable endorsement naming Lender as sole loss payee
or additional insured, as appropriate. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 30 days prior
written notice to Lender in the event of cancellation of the policy for any
reason whatsoever.
(b) Administrative Borrower shall give Lender prompt
notice of any loss covered by such insurance. Lender shall have the exclusive
right to adjust any losses payable under any such insurance policies in excess
of $100,000, without any liability to Borrowers whatsoever in respect of such
adjustments. Any monies received as payment for any loss under any insurance
policy mentioned above (other than liability insurance policies) or as payment
of any award or compensation for condemnation or taking by eminent domain, shall
be paid over to Lender to be applied at the option of Lender either to the
prepayment of the Obligations or shall be disbursed to Administrative Borrower
under staged payment terms reasonably satisfactory to Lender for application to
the cost of repairs, replacements, or restorations. Any such repairs,
replacements, or restorations shall be effected with reasonable promptness and
shall be of a value at least equal to the value of the items or property
destroyed prior to such damage or destruction.
(c) Borrowers shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under this Section 6.8, unless Lender is included thereon as named
insured with the loss payable to Lender under a lender's loss payable
endorsement or its equivalent. Administrative Borrower immediately
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shall notify Lender whenever such separate insurance is taken out, specifying
the insurer thereunder and full particulars as to the policies evidencing the
same, and copies of such policies promptly shall be provided to Lender.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory and
Equipment only at the locations identified on Schedule 5.5; provided, however,
that Administrative Borrower may amend Schedule 5.5 so long as such amendment
occurs by written notice to Lender not less than 30 days prior to the date on
which the Inventory or Equipment is moved to such new location, so long as such
new location is within the continental United States of America, and so long as,
at the time of such written notification, the applicable Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Lender's Liens on such assets and also provides to Lender a
Collateral Access Agreement.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act
(and, if applicable, relevant United Kingdom employment legislation), other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.
6.11 LEASES. Pay when due all rents and other amounts payable under any
leases to which any Borrower is a party or by which any Borrower's properties
and assets are bound, unless such payments are the subject of a Permitted
Protest.
6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrowers' obtaining
financing from Lender under this Agreement. Borrowers agree and acknowledge that
payment of all such brokerage commissions or finders fees shall be the sole
responsibility of Borrowers, and each Borrower agrees to indemnify, defend, and
hold Lender harmless from and against any claim of any broker or finder arising
out of Borrowers' obtaining financing from Lender under this Agreement.
6.13 EXISTENCE. At all times preserve and keep in full force and effect
each Borrower's valid existence and, except for any failure which could not
reasonably be expected to result in a Material Adverse Change, good standing
(where applicable) and any rights and franchises material to Borrowers'
businesses.
6.14 ENVIRONMENTAL.
(a) Keep any property either owned or operated by any
Borrower free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Lender documentation of such compliance which Lender
reasonably requests, (c) promptly notify Lender of any release of a Hazardous
Material of any reportable quantity from or onto property owned or operated by
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any Borrower and take any Remedial Actions required to xxxxx said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly provide Lender with written notice within 10 days of the receipt of any
of the following: (i) notice that an Environmental Lien has been filed against
any of the real or personal property of any Borrower, (ii) commencement of any
Environmental Action filed against any Borrower or notice that an Environmental
Action will be filed against any Borrower, and (iii) notice of a violation,
citation, or other administrative order which reasonably could be expected to
result in a Material Adverse Change.
6.15 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Lender if any written
information, exhibit, or report furnished to Lender contained any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.16 INTELLECTUAL PROPERTY RIGHTS.
(a) Each Borrower agrees that, should it obtain an
ownership interest in any Intellectual Property Right which is not now a part of
the Collateral, (i) any such Intellectual Property Right shall automatically
become Collateral and (ii) with respect to any ownership interest in any
material Intellectual Property Right that Borrower should obtain, it shall give
prompt written notice thereof to Lender in accordance with Section 12 hereof.
Each Borrower authorizes Lender to modify this Agreement by amending Schedule
5.16(a) (and will cooperate reasonably with Lender in effecting any such
amendment) to include any Intellectual Property Right which becomes part of the
Collateral under this Section.
(b) With respect to material Borrower Intellectual
Property Rights, each Borrower agrees, subject to the last sentence of this
subsection, to take all necessary steps, including, without limitation, making
all necessary payments and filings in connection with registration, maintenance,
and renewal of Copyrights (at least with respect to the Required Library),
trademarks, and patents in the U.S. Copyright Office, the U.S. Patent and
Trademark Office, the United Kingdom Patent Office, any other appropriate
government agencies in foreign jurisdictions or in any court, to maintain each
such Borrower Intellectual Property Right. Each Borrower agrees to take
corresponding steps with respect to each new or acquired material Intellectual
Property Right to which it is now or later becomes entitled. Any expenses
incurred in connection with such activities shall be borne solely by Borrowers.
Each Borrower shall not discontinue use of or otherwise abandon any Intellectual
Property Right without the written consent of Lender, unless such Borrower shall
have previously determined that such use or the pursuit or maintenance of such
registration is no longer desirable in the conduct of Borrower's business and
that the loss thereof will not cause a Material Adverse Change, in which case,
such Borrower will give notice of any such abandonment to Lender pursuant to the
terms of Section 12 hereof.
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(c) Each Borrower will continue to take all actions
reasonably necessary to protect such Borrower's material Intellectual Property
Rights (other than Copyrights, (which are covered by subsection (f) below),
including such steps as are set forth in Sections 5.16(a) and (b) above. Except
with respect to consulting arrangements where a Borrower develops software for a
consulting client and retains the license to use the same, each Borrower further
agrees to give Lender prompt written notice in accordance with Section 12 hereof
if such Borrower enters into any agreements after the Closing Date pursuant to
which it grants any right to a third party to use or access the source code of
any material computer software programs or applications of which such Borrower
is the owner or licensee. Each Borrower authorizes Lender to modify this
Agreement by amending Schedule 5.16(b) (and will cooperate reasonably with
Lender in effecting any such amendment) to include any such additional license
grant(s).
(d) Each Borrower agrees to notify Lender promptly
and in writing if it learns (i) that any item of the Intellectual Property
Rights contained on Schedule 5.16(a) may be determined to have become abandoned
or dedicated or (ii) of any adverse determination or the institution of any
proceeding (including the institution of any proceeding in the U.S. Copyright
Office, U.S. Patent and Trademark Office, the United Kingdom Patent Office and
any other appropriate government agencies in foreign jurisdictions, or any
court) regarding any item of the Intellectual Property Rights that would cause a
Material Adverse Change.
(e) In the event that any Borrower becomes aware that
any item of the Intellectual Property Rights is infringed or misappropriated by
a third party, such Borrower shall promptly notify Lender and shall take such
actions as Borrowers and Lender deem appropriate under the circumstances to
protect such Intellectual Property Rights, including suing for infringement or
misappropriation and for an injunction against such infringement or
misappropriation, unless any such infringement or misappropriation would not
cause a Material Adverse Change. Any expense incurred in connection with such
activities shall be borne solely by Borrowers.
(f) On the 15th day of each month, each Borrower
shall deliver to Lender documentation reasonably satisfactory to Lender
identifying the Copyrights, whether created or acquired before or after the
Closing Date, comprising the Required Library (including any supporting
documentation relating to the composition of the Required Library), and the
percentage of the aggregate amount of revenues generated for the preceding month
by and/or arising from each such Copyright. No more than ten (10) days following
each such date of determination, each Borrower shall (a) file applications and
take any and all other actions necessary to register or record a transfer of
ownership, as applicable, to Borrower on an expedited basis (if expedited
processing is available in accordance with the applicable regulations and
procedures of the U.S. Copyright Office and any similar office of any other
jurisdiction in which Copyrights are used) each such Copyright comprising the
Required Library which on the applicable date of determination is not already
the subject of a valid registration or an application therefor diligently
prosecuted with the U.S. Copyright Office (or any similar office of any other
jurisdiction in which Copyrights are used) identifying such Borrower as the sole
claimant thereof in a manner sufficient to impart constructive notice of such
Borrower's
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ownership thereof, and (b) cause to be prepared, executed, and delivered to
Lender, with sufficient time to permit Lender to record no later than the last
Business Day within (ten) 10 days following the date of registration of or
recordation of transfer of ownership, as applicable, to the applicable Borrower
of such Copyrights, a Copyright Security Agreement or supplemental schedules to
the Copyright Security Agreement reflecting the security interest of Lender in
such Copyrights, which supplemental schedules shall be in form and content
suitable for registration with the U.S. Copyright Office (or any similar office
of any other jurisdiction in which Copyrights are used) so as to give
constructive notice, when so registered, of the transfer by such Borrower to
Lender of a security interest in such Copyrights.
(g) Each Borrower shall maintain copies of all source
and object code for all software utilized in its business operations at safe and
secure offsite locations reasonably acceptable to Lender, and shall, at the
request of Lender, advise the operators of such locations of Lender's security
interest in such software, shall keep Lender fully informed of each such
location, and shall maintain the currency of all such software stored offsite.
6.17 CLEANUP OF CERTAIN INTELLECTUAL PROPERTY. On or prior to the date
that is thirty (30) days after the Closing Date, Borrowers shall prepare and
deliver, or cause to be delivered, to the U.S. Patent and Trademark Office or
the U.S. Copyright Office, as applicable, in good faith in accordance with the
procedures and regulations of such office all documents, instruments or other
information necessary for accurate and proper recordation of: (a) the assignment
by Illumitek, Inc. to SPSS, Inc. of U.S. Patent No. 6,492,989; (b) the
assignment by Illumitek, Inc. to SPSS, Inc. of any right, title and interest in
or to the term "nVIZn," and (c) the release of a security interest in the
Copyrights granted Continental Bank N.A. (Chicago). Following such delivery,
Borrowers shall promptly provide to Lender reasonable documentation of such
delivery, including verification of receipt by the applicable entity.
6.18 REGISTRATION OF CERTAIN INTELLECTUAL PROPERTY.
(a) On or prior to the date that is ten (10) Business
Days after the Closing Date, Borrowers shall prepare and deliver, or cause to be
delivered, to the U.S. Patent and Trademark Office in good faith in accordance
with the procedures and regulations, all necessary filings and payments of the
U.S. Patent and Trademark Office: (i) to register on the Principal Register that
certain trademark "SPSS," and (ii) to file an Intent-to-Use application for the
term "nVizn."
(b) On or prior to the date that is ten (10) Business
Days after the Closing Date, Borrowers shall prepare and deliver, or cause to be
delivered, to the Office of Harmonization in the Internal Market, or other
applicable counterpart entity to the U.S. Patent and Trademark Office in the
European Community, in good faith in accordance with the procedures and
regulations of such office, all necessary payments and filings to register that
certain trademark "AnswerTree."
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6.19 PROCEEDS FROM PERMITTED DISPOSITIONS. Notwithstanding anything to
the contrary contained in this Agreement, each Borrower shall remit any proceeds
that such Borrower receives from any Permitted Dispositions to Lender to be
applied by Lender in accordance with Section 2.4(b).
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrowers will not and will not permit any of the Restricted
Subsidiaries to do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the
other Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20;
(c) Permitted Purchase Money Indebtedness;
(d) refinancings, renewals, or extensions of
Indebtedness permitted under clauses (b) and (c) of this Section 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings, renewals, or extensions do
not, in Lender's reasonable judgment, materially impair the prospects of
repayment of the Obligations by Borrowers or materially impair Borrowers'
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of the Indebtedness so refinanced,
renewed, or extended or add one or more of the Borrowers as liable with respect
thereto if such additional Borrowers were not liable with respect to the
original Indebtedness, (iii) such refinancings, renewals, or extensions do not
result in a shortening of the average weighted maturity of the Indebtedness so
refinanced, renewed, or extended, nor are they on terms or conditions, that,
taken as a whole, are materially more burdensome or restrictive to the
applicable Borrower, and (iv) if the Indebtedness that is refinanced, renewed,
or extended was subordinated in right of payment to the Obligations, then the
terms and conditions of the refinancing, renewal, or extension Indebtedness must
include subordination terms and conditions that are at least as favorable to
Lender as those that were applicable to the refinanced, renewed, or extended
Indebtedness;
(e) Indebtedness comprising Permitted Investments.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced,
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renewed, or extended under Section 7.1(d) and so long as the replacement Liens
only encumber those assets that secured the refinanced, renewed, or extended
Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Except for Permitted Acquisitions, enter into any
merger, consolidation, reorganization, recapitalization, or reclassify its
Stock, or purchase all or substantially all of the assets of any other Person;
provided, that any Borrower or Restricted Subsidiary may merge or consolidate
with any other Borrower or Restricted Subsidiary so long as (i) a Borrower or
Restricted Subsidiary is the surviving or continuing corporation and (ii) no
Default or Event of Default exists or would result therefrom.
(b) Liquidate, wind up, or dissolve itself (or suffer
any liquidation or dissolution).
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of the
assets of any Borrower without Lender's prior written consent (it being
understood and agreed that Lender and Borrowers shall consult in good faith with
respect to any request for such consent).
7.5 CHANGE NAME. Change any Borrower's name, FEIN, corporate structure
or identity, or add any new fictitious name; provided, however, that a Borrower
may change its name upon at least 30 days' prior written notice by
Administrative Borrower to Lender of such change and so long as, at the time of
such written notification, such Borrower provides any financing statements or
fixture filings necessary to perfect and continue perfected Lender's Liens.
7.6 GUARANTEE. Unless otherwise permitted under clause (d) or (f) of
the definition of Permitted Investments, guarantee or otherwise become in any
way liable with respect to the obligations of any third Person except by
endorsement of instruments or items of payment for deposit to the account of
Borrowers or which are transmitted or turned over to Lender.
7.7 NATURE OF BUSINESS. Make any change in the principal nature of
Borrowers' business.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing permitted
by Section 7.1(d), prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Borrower, other than the Obligations in accordance with this
Agreement, and
(b) Except in connection with a refinancing permitted
by Section 7.1(d), directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under Sections 7.1(b) or (c).
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7.9 [INTENTIONALLY OMITTED].
7.10 CONSIGNMENTS. Consign any Inventory or sell any Inventory on xxxx
and hold, sale or return, sale on approval, or other conditional terms of sale.
7.11 DISTRIBUTIONS. Other than distributions or declaration and payment
of dividends by a Borrower or Restricted Subsidiary to another Borrower or
Restricted Subsidiary, make any distribution or declare or pay any dividends (in
cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of any Borrower's Stock, of any class, whether now or
hereafter outstanding;
7.12 ACCOUNTING METHODS. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrowers' accounting records without said accounting firm or
service bureau agreeing to provide Lender information regarding the Collateral
or Borrowers' financial condition.
7.13 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment, or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that the Borrowers and the Restricted Subsidiaries shall not have
Permitted Investments (other than in the Cash Management Accounts) in deposit
accounts or Securities Accounts in excess of $200,000 outstanding at any one
time unless such Borrower or Restricted Subsidiary, as applicable, and the
applicable securities intermediary or bank have entered into Control Agreements
or similar arrangements governing such Permitted Investments, as Lender shall
determine in its Permitted Discretion, to perfect (and further establish) the
Lender's Liens in such Permitted Investments.
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of any Borrower or Restricted
Subsidiary except for transactions that are in the ordinary course of Borrowers'
or Restricted Subsidiary's business, upon fair and reasonable terms, that are
fully disclosed to Lender, and that are no less favorable to Borrowers or
Restricted Subsidiaries than would be obtained in an arm's length transaction
with a non-Affiliate.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.16 [INTENTIONALLY OMITTED]
7.17 USE OF PROCEEDS. Use the proceeds of the Advances and the Term
Loan for any purpose other than (a) on the Closing Date, (i) to repay in full
the outstanding principal, accrued interest, and accrued fees and expenses owing
to Existing Lender, and (ii) to pay transactional fees, costs, and expenses
incurred in connection with this Agreement, the other Loan Documents, and the
transactions contemplated hereby and thereby, and (b) thereafter, consistent
with the terms and conditions hereof, for its lawful and permitted purposes.
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7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without Administrative Borrower providing 30 days prior written notification
thereof to Lender and so long as, at the time of such written notification, the
applicable Borrower or Restricted Subsidiary provides any financing statements
or fixture filings necessary to perfect and continue perfected the Lender's
Liens and also provides to Lender a Collateral Access Agreement with respect to
such new location. The Inventory and Equipment shall not at any time now or
hereafter be stored with a bailee, warehouseman, or similar party without
Lender's prior written consent.
7.19 SECURITIES ACCOUNTS. Establish or maintain any Securities Account
unless Lender shall have received a Control Agreement in respect of such
Securities Account. Borrowers agree to not transfer assets out of any Securities
Account; provided, however, that, so long as no Event of Default has occurred
and is continuing or would result therefrom, Borrowers may use such assets (and
the proceeds thereof) to the extent not prohibited by this Agreement.
7.20 FINANCIAL COVENANTS.
(a) Fail to maintain:
(i) MINIMUM EBITDA. EBITDA, measured on a fiscal
quarter-end basis, of not less than the required amount set
forth in the following table for the applicable period set
forth opposite thereto;
Applicable Amount Applicable Period
----------------- -----------------
$ 2,580,000 For the 3 month period
ending March 31, 2003
$ 7,540,000 For the 6 month period
ending June 30, 2003
$14,340,000 For the 9 month period
ending September 30, 2003
$22,380,000 For the 12 month period
ending December 31, 2003
An amount determined by Lender based For each 12 month period
on the Operating Budget delivered ending each fiscal quarter thereafter
pursuant to Section 6.3(c)
satisfactory to Lender; provided that
if Lender does not receive such
Operating Budget or Borrowers and
Lender cannot agree (for any reason)
on covenants acceptable to Borrowers
and Lender, then the applicable
amount shall be $22,380,000.
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(ii) MINIMUM RECURRING MAINTENANCE REVENUES. For each
12 month period, measured on a quarterly basis, a minimum of
(a) $27,500,000 in United States Recurring Maintenance
Revenues and (b) $60,000,000 in worldwide Recurring
Maintenance Revenues.
(b) Make:
(i) CAPITAL EXPENDITURES. Capital expenditures in
excess of $10,800,000 during fiscal year 2003. The covenants
for fiscal years 2004, 2005 and 2006 will be determined by
Lender based on the Operating Budget delivered pursuant to
Section 6.3(c) satisfactory to Lender; provided that if Lender
does not receive such Operating Budget or Borrowers and Lender
cannot agree (for any reason) on covenants acceptable to
Borrowers and Lender, then the applicable amount shall be
$10,800,000.
7.21 BILLING PRACTICES. Make any change to their billing practices
which could have a material adverse effect upon the value of the Recurring
Maintenance Revenues or which could otherwise result in a Material Adverse
Change.
7.22 AOL AGREEMENT. Make any payments to AOL with respect to the AOL
Agreement unless (a) no Default or Event of Default shall have occurred and be
continuing and (b) the sum of Excess Availability plus Borrowers' unrestricted
cash held in accounts in the United States of America exceeds (i) $2,000,000 (if
the conditions set forth in Section 3.7 have not been fulfilled to Lender's
satisfaction) or (B) $4,000,000 (if the conditions set forth in Section 3.7 have
been fulfilled to Lender's satisfaction), in each of cases (a) and (b), both
before and immediately after giving effect to any such payment.
7.23 INACTIVE SUBSIDIARIES. Each Inactive Subsidiary will not incur any
Indebtedness or other material liabilities, conduct any material operations or
business or own or acquire any material assets or properties.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
8.1 If Borrowers fail to pay when due and payable or when declared due
and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest
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which, but for the provisions of the Bankruptcy Code, would have accrued on such
amounts), fees and charges due Lender, reimbursement of Lender Expenses, or
other amounts constituting Obligations);
8.2 If (a) Borrowers fail to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in Sections 6.2 or 6.3
and such failure or neglect continues for a period of five (5) days after the
date on which such failure or neglect first occurs, or (b) Borrowers fail to
perform, keep, or observe any term, provision, condition, covenant, or agreement
contained in any other section of this Agreement or in any of the other Loan
Documents; provided, however, that if, during any applicable period, such
failure is a failure to maintain the minimum EBITDA level specified in Section
7.20(a)(i) for such applicable period (an "EBITDA Default"), then such failure
will not constitute an Event of Default, so long as (i) Borrowers prepay to
Lender the outstanding Obligations hereunder (applied first to the outstanding
principal balance of the Term Loan (in the inverse order of the maturity of
installments due thereunder), second, to any outstanding B Advances (in the
inverse order of maturity), and third to outstanding A Advances (in the inverse
order of maturity), within three (3) Business Days of the occurrence of such
EBITDA Default, in an amount equal to the lesser of (A) $5,000,000 and (B) the
aggregate Obligations outstanding hereunder (provided that Term Loan Amount
shall be reduced, dollar for dollar, to the extent that the Term Loan is prepaid
pursuant to this Section 8.2 (it being understood and agreed that, in accordance
with and pursuant to Section 2.1(e), A Advances and B Advances paid hereunder
may be reborrowed)), (ii) the level of EBITDA maintained is at least 85% of the
minimum level specified in Section 7.20(a)(i) for such applicable period, and
(iii) no prior EBITDA Default has occurred during such fiscal year (it being
understood that this proviso shall only apply to the relevant applicable period
in which such EBITDA Default occurred); provided, further, that, during any
period of time that any such failure or neglect of Borrowers referred to in this
Section 8.2 exists, even if such failure or neglect is not yet an Event of
Default by virtue of the existence of a grace period or the pre-condition of the
giving of a notice, the Lender shall be relieved of its obligation to extend any
credit under this Agreement;
8.3 If any material portion of any Borrower's or any Restricted
Subsidiary's assets is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by any Borrower or any
Restricted Subsidiary;
8.5 If an Insolvency Proceeding is commenced against any Borrower, or
any Restricted Subsidiary, and any of the following events occur: (a) the
applicable Borrower or Restricted Subsidiary consents to the institution of the
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
Lender shall be relieved of its obligation to extend credit hereunder, (d) an
interim trustee (or, if applicable, a trustee, an administrator, administrative
or other receiver or similar
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officer) is appointed to take possession of all or any substantial portion of
the properties or assets of, or to operate all or any substantial portion of the
business of, any Borrower or Restricted Subsidiaries, or (e) an order for relief
shall have been entered therein;
8.6 If any Borrower or any Restricted Subsidiary is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any Borrower's or any Restricted Subsidiary's assets, where the
obligation giving rise to the Lien, levy or assessment is in excess of $50,000,
by the United States of America or, if applicable, the United Kingdom, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien, whether xxxxxx or
otherwise, upon any Borrower's or any Restricted Subsidiary's assets and the
same is not paid before such payment is delinquent;
8.8 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of any Borrower's or any Restricted Subsidiary's assets;
8.9 If there is a default in any material agreement involving an amount
in excess of $50,000 to which any Borrower or any Restricted Subsidiary is a
party and such default (a) occurs at the final maturity of the obligations
thereunder, or (b) results in a right by the other party thereto, irrespective
of whether exercised, to accelerate the maturity of the applicable Borrower's or
Restricted Subsidiary's obligations thereunder, to terminate such agreement, or
to refuse to renew such agreement pursuant to an automatic renewal right
therein;
8.10 If any Borrower or any Restricted Subsidiary makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to Lender
by any Borrower or Restricted Subsidiary, or any officer, employee, agent, or
director of any Borrower or Restricted Subsidiary;
8.12 If the obligation of any Guarantor under its Guaranty is limited
or terminated by operation of law or by such Guarantor thereunder;
8.13 If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby; or
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8.14 Any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Borrower, or a proceeding shall be commenced
by any Borrower, or by any Governmental Authority having jurisdiction over any
Borrower, seeking to establish the invalidity or unenforceability thereof, or
any Borrower shall deny that any Borrower has any liability or obligation
purported to be created under any Loan Document.
8.15 If any Change of Control shall occur.
9. THE LENDER'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, Lender (at its election but without notice
of its election and without demand) may do any one or more of the following, all
of which are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) Cease advancing money or extending credit to or
for the benefit of Borrowers under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrowers and Lender;
(c) Terminate this Agreement and any of the other
Loan Documents as to any future liability or obligation of Lender, but without
affecting any of the Lender's Liens in the Collateral and without affecting the
Obligations;
(d) Settle or adjust disputes and claims directly
with Account Debtors for amounts and upon terms which Lender considers
advisable, and in such cases, Lender will credit the Loan Account with only the
net amounts received by Lender in payment of such disputed Accounts after
deducting all Lender Expenses incurred or expended in connection therewith;
(e) Cause Borrowers to hold all returned Inventory in
trust for Lender, segregate all returned Inventory from all other assets of
Borrowers or in Borrowers' possession and conspicuously label said returned
Inventory as the property of Lender;
(f) Without notice to or demand upon any Borrower or
Guarantor, make such payments and do such acts as Lender considers necessary or
reasonable to protect its security interests in the Collateral. Each Borrower
agrees to assemble the Personal Property Collateral if Lender so requires, and
to make the Personal Property Collateral available to Lender at a place that
Lender may designate which is reasonably convenient to both parties. Each
Borrower authorizes Lender to enter the premises where the Personal Property
Collateral is located, to take and maintain possession of the Personal Property
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
Lien that in Lender's determination appears to conflict with the Lender's Liens
and to pay all expenses incurred in connection therewith and to charge
Borrowers' Loan Account therefor. With
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respect to any of Borrowers' owned or leased premises, each Borrower hereby
grants Lender a license to enter into possession of such premises and to occupy
the same, without charge, in order to exercise any of Lender's rights or
remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to any Borrower (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of any Borrower
held by Lender (including any amounts received in the Cash Management Accounts),
or (ii) Indebtedness at any time owing to or for the credit or the account of
any Borrower held by Lender;
(h) Hold, as cash collateral, any and all balances
and deposits of any Borrower held by Lender, and any amounts received in the
Cash Management Accounts, to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Personal Property Collateral. Each Borrower hereby grants to
Lender a license or other right to use, without charge, such Borrower's labels,
patents, Copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Personal Property Collateral, in completing production of, advertising for sale,
and selling any Personal Property Collateral and such Borrower's rights under
all licenses and all franchise agreements shall inure to Lender's benefit;
(j) Sell the Personal Property Collateral at either a
public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
Borrowers' premises) as Lender determines is commercially reasonable. It is not
necessary that the Personal Property Collateral be present at any such sale;
(k) Lender shall give notice of the disposition of
the Personal Property Collateral as follows:
(i) Lender shall give Administrative Borrower (for
the benefit of the applicable Borrower) a notice in writing of
the time and place of public sale, or, if the sale is a
private sale or some other disposition other than a public
sale is to be made of the Personal Property Collateral, then
the time on or after which the private sale or other
disposition is to be made; and
(ii) The notice shall be personally delivered or
mailed, postage prepaid, to Administrative Borrower as
provided in Section 12, at least 10 days before the earliest
time of disposition set forth in the notice; no notice needs
to be given prior to the disposition of any portion of the
Personal Property Collateral that is perishable or threatens
to decline speedily in value or that is of a type customarily
sold on a recognized market;
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(l) Lender may credit bid and purchase at any public
sale;
(m) Lender may seek the appointment of a receiver,
administrator or administrative receiver or keeper to take possession of all or
any portion of the Collateral or to operate same and, to the maximum extent
permitted by law, may seek the appointment of such a receiver, administrator or
administrative receiver without the requirement of prior notice or a hearing;
(n) Lender shall have all other rights and remedies
available to it at law or in equity pursuant to any other Loan Documents; and
(o) Any deficiency that exists after disposition of
the Personal Property Collateral as provided above will be paid immediately by
Borrowers. Any excess will be returned, without interest and subject to the
rights of third Persons, by Lender to Administrative Borrower (for the benefit
of the applicable Borrower).
9.2 REMEDIES CUMULATIVE. The rights and remedies of Lender under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default shall be deemed a continuing waiver. No delay by Lender
shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Lender, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
Borrowers' Loan Account as Lender deems necessary to protect Lender from the
exposure created by such failure, or (c) in the case of the failure to comply
with Section 6.8 hereof, obtain and maintain insurance policies of the type
described in Section 6.8 and take any action with respect to such policies as
Lender deems prudent. Any such amounts paid by Lender shall constitute Lender
Expenses and any such payments shall not constitute an agreement by Lender to
make similar payments in the future or a waiver by Lender of any Event of
Default under this Agreement. Lender need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel
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paper, and guarantees at any time held by Lender on which any such Borrower may
in any way be liable.
11.2 LENDER'S LIABILITY FOR COLLATERAL. Each Borrower hereby agrees
that: (a) so long as Lender complies with its obligations, if any, under the
Code, Lender shall not in any way or manner be liable or responsible for: (i)
the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or
arising in any manner or fashion from any cause, (iii) any diminution in the
value thereof, or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person, and (b) all risk of loss, damage, or
destruction of the Collateral shall be borne by Borrowers.
11.3 INDEMNIFICATION. Each Borrower shall pay, indemnify, defend, and
hold the Lender-Related Persons, each Participant, and each of their respective
officers, directors, employees, agents, and attorneys-in-fact (each, an
"Indemnified Person") harmless (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution, delivery, enforcement,
performance, or administration of this Agreement, any of the other Loan
Documents, or the transactions contemplated hereby or thereby, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, Borrowers shall have no obligation to
any Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any payment to any
other Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Borrowers or Lender to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents
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which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail (postage prepaid, return
receipt requested), overnight courier, electronic mail (at such email addresses
as the Administrative Borrower or Lender, as applicable, may designate to each
other in accordance herewith), or telefacsimile to Borrowers in care of
Administrative Borrower or to Lender, as the case may be, at its address set
forth below:
If to Administrative
Borrower:
SPSS INC.
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx Parenti and Xxxxxxx Xxxx
Fax No. 000-000-0000
with copies to: XXXX & XXXXXXX
Suite 2500, 000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx, Esq.
Fax No. 000-000-0000
If to Lender: FOOTHILL CAPITAL CORPORATION
Xxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Business Finance Division Manager
Fax No.: 000-000-0000
XXXXXXXX & XXXXXXXX LLP
1290 Avenue of the Americas, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
Fax No: 000-000-0000
Lender and Borrowers may change the address at which they are
to receive notices hereunder, by notice in writing in the foregoing manner given
to the other party. All notices or demands sent in accordance with this Section
12, other than notices by Lender in connection with enforcement rights against
the Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or three (3) Business Days after the
deposit thereof in the mail. Each Borrower acknowledges and agrees that notices
sent by Lender in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
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13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF
NEW YORK (INCLUDING GIVING EFFECT TO SECTION 5-1401 OF
THE
NEW YORK GENERAL OBLIGATIONS LAW).
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
NEW
YORK, STATE OF
NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND LENDER WAIVE, TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
BORROWERS AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
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14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Lender may assign and delegate to one or more
assignees (each an "Assignee") all, or any ratable part of all, of the
Obligations and the other rights and obligations of Lender hereunder and under
the other Loan Documents; provided, however, that Borrowers may continue to deal
solely and directly with Lender in connection with the interest so assigned to
an Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee,
have been given to Administrative Borrower by Lender and the Assignee an
appropriate assignment and acceptance agreement.
(b) From and after the date that Lender provides
Administrative Borrower with such written notice and executed assignment and
acceptance agreement, (i) the Assignee thereunder shall be a party hereto and,
to the extent that rights and obligations hereunder have been assigned to it
pursuant to such assignment and acceptance agreement, shall have the assigned
and delegated rights and obligations of Lender under the Loan Documents, and
(ii) Lender shall, to the extent that rights and obligations hereunder and under
the other Loan Documents have been assigned and delegated by it pursuant to such
assignment and acceptance agreement, relinquish its rights (except with respect
to Section 11.3 hereof) and be released from its obligations under this
Agreement (and in the case of an assignment and acceptance agreement covering
all or the remaining portion of Lender's rights and obligations under this
Agreement and the other Loan Documents, Lender shall cease to be a party hereto
and thereto), and such assignment shall affect a novation between Borrowers and
the Assignee.
(c) Immediately upon Borrower's receipt of such fully
executed assignment and acceptance agreement, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the rights and duties
of Lender arising therefrom.
(d) Lender may at any time sell to one or more
commercial banks, financial institutions, or other Persons not Affiliates of
Lender (a "Participant") participating interests in Obligations and the other
rights and interests of Lender hereunder and under the other Loan Documents;
provided, however, that (i) Lender shall remain the "Lender" for all purposes of
this Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations and the other rights and interests of
Lender hereunder shall not constitute a "Lender" hereunder or under the other
Loan Documents and Lender's obligations under this Agreement shall remain
unchanged, (ii) Lender shall remain solely responsible for the performance of
such obligations, (iii) Borrowers and Lender shall continue to deal solely and
directly with each other in connection with Lender's rights and obligations
under this Agreement and the other Loan Documents, (iv) Lender shall not
transfer or grant any participating interest under which the Participant has the
right to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, except to the extent such amendment
to, or consent or waiver with respect to this Agreement or of any other Loan
Document would (A) extend the final maturity date of the Obligations hereunder
in which such Participant is participating, (B) reduce the interest rate
applicable to the Obligations hereunder in which such Participant is
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participating, (C) release all or a material portion of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through Lender, or (E) change the
amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Borrowers hereunder shall be determined
as if Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through Lender and no Participant shall have any rights under this
Agreement or the other Loan Documents or any direct rights as to Borrowers, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by Lender.
(e) In connection with any such assignment or
participation or proposed assignment or participation, a Lender may disclose all
documents and information which it now or hereafter may have relating to
Borrowers or Borrowers' business.
(f) Any other provision in this Agreement
notwithstanding, Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Bank or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without Lender's prior written consent and any prohibited assignment shall be
absolutely void ab initio. No consent to assignment by Lender shall release any
Borrower from its Obligations. Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder and thereunder pursuant to
Section 14.1 hereof and, except as expressly required pursuant to Section 14.1
hereof, no consent or approval by any Borrower is required in connection with
any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by Lender and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver
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or consent shall be effective only in the specific instance and for the specific
purpose for which was given.
15.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Lender to exercise
any right, remedy, or option under this Agreement or, any other Loan Document,
or delay by Lender in exercising the same, will operate as a waiver thereof. No
waiver by Lender will be effective unless it is in writing, and then only to the
extent specifically stated. No waiver by Lender on any occasion shall affect or
diminish Lender's rights thereafter to require strict performance by Borrowers
of any provision of this Agreement. Lender's rights under this Agreement and the
other Loan Documents will be cumulative and not exclusive of any other right or
remedy that Lender may have.
16. GENERAL PROVISIONS.
16.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrowers and Lender.
16.2 SECTION HEADINGS. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
16.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against Lender or Borrowers, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.
16.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
16.5 WITHHOLDING TAXES. All payments made by Borrowers hereunder or
under any note will be made without setoff, counterclaim, or other defense,
except as required by applicable law other than for Taxes (as defined below).
All such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of Lender, or (ii) to the extent
that such tax results from a change in the circumstances of Lender, including a
change in the residence, place of organization, or principal place of business
of Lender, or a change in the branch or lending office of Lender participating
in the transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed,
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each Borrower agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement or under any note, including any amount paid pursuant to this Section
16.5 after withholding or deduction for or on account of any Taxes, will not be
less than the amount provided for herein; provided, however, that Borrowers
shall not be required to increase any such amounts payable to Lender if the
increase in such amount payable results from Lender's own willful misconduct or
gross negligence. Borrowers will furnish to Lender as promptly as possible after
the date the payment of any Taxes is due pursuant to applicable law certified
copies of tax receipts evidencing such payment by Borrowers.
16.6 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing signed by Lender and each of Borrowers.
16.7 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
16.8 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Borrower or Guarantor or the transfer to
Lender of any property should for any reason subsequently be declared to be void
or voidable under any state or federal law relating to creditors' rights,
including provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if Lender is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Lender is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of Lender
related thereto, the liability of Borrowers or Guarantor automatically shall be
revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.
16.9 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
16.10 PARENT AS AGENT FOR BORROWERS. Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force and
effect unless and until Lender
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shall have received prior written notice signed by each Borrower that such
appointment has been revoked and that another Borrower has been appointed
Administrative Borrower. Each Borrower hereby irrevocably appoints and
authorizes the Administrative Borrower (i) to provide Lender with all notices
with respect to Advances and Letters of Credit obtained for the benefit of any
Borrower and all other notices and instructions under this Agreement and (ii) to
take such action as the Administrative Borrower deems appropriate on its behalf
to obtain Advances and Letters of Credit and to exercise such other powers as
are reasonably incidental thereto to carry out the purposes of this Agreement.
It is understood that the handling of the Loan Account and Collateral of
Borrowers in a combined fashion, as more fully set forth herein, is done solely
as an accommodation to Borrowers in order to utilize the collective borrowing
powers of Borrowers in the most efficient and economical manner and at their
request, and that Lender shall not incur liability to any Borrower as a result
hereof. Each Borrower expects to derive benefit, directly or indirectly, from
the handling of the Loan Account and the Collateral in a combined fashion since
the successful operation of each Borrower is dependent on the continued
successful performance of the integrated group. To induce Lender to do so, and
in consideration thereof, each Borrower hereby jointly and severally agrees to
indemnify Lender harmless against any and all liability, expense, loss or claim
of damage or injury, made against Lender by any Borrower or by any third party
whosoever, arising from or incurred by reason of (a) the handling of the Loan
Account and Collateral of Borrowers as herein provided, (b) Lender's relying on
any instructions of the Administrative Borrower, or (c) any other action taken
by Lender hereunder or under the other Loan Documents, except that Borrowers
will have no liability to any Lender-Related Person under this Section 16.10
with respect to any liability that has been finally determined by a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of such Lender-Related Person.
16.11 DETERMINATIONS; JUDGMENT CURRENCY.
(a) This is an international financial transaction in
which the specification of a currency and payment in
New York City is of the
essence. Dollars shall be the currency of account in the case of all payments
pursuant to or arising under this Agreement or under any other Loan Document,
and all such payments shall be made to the Lender's Account in immediately
available funds. To the fullest extent permitted by applicable law, the
Obligations of each Borrower to Lender under this Agreement and under the other
Loan Documents shall not be discharged by any amount paid in any other currency
or in any other manner than to the Lender's Account to the extent that the
amount so paid after conversion under this Agreement and transfer to the
Lender's Account does not yield the amount of Dollars in
New York City due under
this Agreement and under the other Loan Documents. If, for the purposes of
obtaining or enforcing judgment against Borrowers in any court in any
jurisdiction in connection with this Agreement or any Loan Document, it becomes
necessary to convert into any other currency (such other currency being referred
to as the "Judgment Currency") an amount due under this Agreement or any Loan
Document in Dollars other than Judgment Currency, the conversion shall be made
at the rate of exchange prevailing on the Business Day immediately preceding (a)
the date of actual payment of the amount due, in the case of any proceeding in
the courts of any jurisdiction that would give
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effect to such conversion being made on such date, or (b) the date on which the
judgment is given, in the case of any proceeding in the courts of any other
jurisdiction (the applicable date as of which such conversion is made pursuant
to this Section 16.11 being hereinafter referred to as the "Judgment Conversion
Date").
(b) If, in the case of any proceeding in the court of
any jurisdiction referred to in subsection (a) above, there is a change in the
rate of exchange prevailing between the Judgment Conversion Date and the date of
actual receipt for value of the amount due, Borrowers shall pay such additional
amount (if any and in any event not a lesser amount) as may be necessary to
ensure that the amount actually received in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of Dollars which could have been purchased with the amount of
the Judgment Currency stipulated in the judgment or judicial order at the rate
of exchange prevailing on the Judgment Conversion Date. The term "rate of
exchange" in this Section means the spot rate of exchange at which Lender would,
on the relevant date at or about 12:00 noon (California time), be prepared to
sell Dollars against the Judgment Currency.
(c) Any amount due from Borrowers under this Section
16.11 shall not be affected by judgment being obtained for any other amounts due
under or in respect of this Agreement or any Loan Document.
(d) Where any amount is denominated in Dollars under
this Agreement but requires for its determination an amount which is determined
in another currency, Lender shall determine the applicable exchange rate in its
sole discretion.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
SPSS INC.,
a Delaware corporation, as Borrower
By: /s/ Xxxx Xxxxxx
Title: President and Chief Executive Officer
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Lender
By: /s/ Xxxxx Xxxxxx
Title: Senior Vice President
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