CREDIT AGREEMENT
Dated as of May 23, 2000
This Credit Agreement is entered into by and FACTUAL DATA CORP., a
Colorado corporation (the "Borrower"), and XXXXX FARGO BANK, NATIONAL
ASSOCIATION, a national banking association (the "Bank").
ARTICLE I
Definitions
Section 1.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in the preamble hereto have the meanings
therein assigned to them;
(b) the terms defined in this Article have the meanings assigned
to them in this Article, and include the plural as well as
the singular;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP; and
(d) all accounting terms, unless otherwise specified, shall be
deemed to refer to Persons and their Subsidiaries on a
consolidated basis in accordance with GAAP.
"Advance" means a loan of funds by the Bank to the Borrower pursuant to
Article II hereof, including Revolving Advances and Term Advances.
"Affiliate" or "Affiliates" means any Person controlled by, controlling
or under common control with the Borrower, including (without limitation) any
Subsidiary of the Borrower. For purposes of this definition, "control," when
used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise.
"Affiliated Group" means FDC Acquisition, Inc., together with any Person
that, in the future, becomes a wholly owned subsidiary of the Borrower.
"Agreement" means this Credit Agreement and all exhibits, schedules,
amendments and supplements hereto.
"Bank" has the meaning specified in the preamble.
"Base Rate" means the rate of interest publicly announced from time to
time by the Bank as its "base rate" or "reference rate", or, if the Bank ceases
to announce a rate so designated, any similar successor rate designated by the
Bank.
"Borrower" has the meaning specified in the preamble.
"Borrowing" means a borrowing by the Borrower pursuant to Article II
hereof, consisting of Advances made to the Borrower by the Bank on the date
requested by the Borrower.
"Business Day" means any day other than a Saturday or Sunday on which
national banks are open for business in Minneapolis, Minnesota.
"Capital Adequacy Rule" has the meaning specified in Section
2.20(b)(ii).
"Capital Adequacy Rule Change" has the meaning specified in Section
2.20(b)(iii).
"Capital Expenditures" of any Person means the sum of:
(a) the aggregate amount of all expenditures of such Person for fixed or
capital assets made during such period which, in accordance with
GAAP would be classified as capital expenditures; and
(b) the aggregate amount of all Capitalized Lease Liabilities of such
Person incurred during such period.
"Capitalized Lease Liabilities" of any Person means, with respect to the
applicable Covenant Computation Period, all monetary obligations of such Person
under any leasing or similar arrangement which, in accordance with GAAP, would
be classified as capitalized leases, and, for purposes of this Agreement, the
amount of such obligations shall be the capitalized amount thereof, determined
in accordance with GAAP.
"Capitalized Lease Payments" of any Person means, with respect to the
applicable Covenant Computation Period, the total expenditures by such Person to
pay Capitalized Lease Liabilities during such period, as determined in
accordance with GAAP.
"Capitalized Lease Principal" of any Person means, with respect to the
applicable Covenant Computation Period, the total expenditures by such Person to
pay the principal portion of any Capitalized Lease Payments during such period.
"Cash Flow Available for Debt Service" of any Person means, with respect
to the applicable Covenant Computation Period, such Person's EBITDA less taxes
payable on account thereof and less Capital Expenditures not financed with
proceeds of additional Debt.
"Cash Flow Available for Interest" of any Person means, with respect to the
applicable Covenant Computation Period, such Person's Pre-Tax Net Income plus
Interest Expense payable in cash during such period.
"Closing Date" means the date of this Agreement.
"Collateral" means all personal property of the Borrower in which the
Bank has been granted a security interest pursuant to any Security Document,
together with all substitutions and replacements for and products of any of the
foregoing.
"Commitment" means the Bank's Revolving Commitment or Term Commitment,
as the context may require.
"Covenant Computation Date" means the last day of each fiscal quarter
(March 31, June 30, September 30, and December 31, as the case may be)
commencing June 30, 2000.
"Covenant Computation Period" means the twelve (12) consecutive calendar
months immediately preceding and ending on the Covenant Computation Date.
"Debt" of any Person means, without duplication (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) all obligations of
such Person to pay the deferred purchase price of property or services, except
trade accounts payable arising in the ordinary course of business, (d) all
Capitalized Lease Liabilities of such Person, (e) all debt of others secured by
a lien on any asset of such Person, whether or not such debt is assumed by such
Person, (f) all debt of others guaranteed by such other Person, (g) all
obligations of such Person to pay a specified purchase price for goods or
services, whether or not delivered or accepted (i.e., take-or-pay and similar
obligations), (h) all obligations of such Person under any interest rate swap
program or any similar agreement, arrangement or undertaking relating to
fluctuations in interest rates and (i) all obligations of such person to advance
funds to, or purchase assets, property or services from, any other Person in
order to maintain the financial condition of such Person.
"Debt Service Coverage Ratio" of any Person means, with respect to the
applicable Covenant Computation Period, the ratio of such Person's (a) Cash Flow
Available for Debt Service to (b) Debt Service Requirements.
"Debt Service Requirements" of any Person means, with respect to the
applicable Covenant Computation Period, the aggregate, without duplication, of
such Person's (a) Interest Expense (b) all scheduled installments of principal
on Funded Debt excluding voluntary prepayments of principal made, or to be made,
under the Term Note and any principal payments made under the Revolving Note
which are due on demand or during such period, and (c) all Capitalized Lease
Principal which is due on demand or during such period.
"Default" means an event that, with giving of notice or passage of time
or both, would constitute an Event of Default.
"Default Rate" shall have the meaning specified in Section 2.9(c).
"EBITDA" of any Person means, with respect to the applicable Covenant
Computation Period, the sum of such Person's (a) Pre-Tax Net Income, (b)
Interest Expense and (c) depreciation, depletion, and amortization of tangible
and intangible assets, before (i) special extraordinary gains, (ii) minority
interests, and (iii) extraordinary gains and losses, in each case for such
period, computed and calculated in accordance with GAAP.
"Environmental Laws" has the meaning specified in Section 4.12.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Eurodollar Advance" means any Advance subject to a Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to an Interest Period, the
rate per annum equal to the rate (rounded up to the nearest one-sixteenth of one
percent (1/16%)) determined by the Bank to be a rate at which U.S. dollar
deposits are offered to major banks in the London interbank eurodollar market
for funds to be made available on the first day of such Interest Period and
maturing at the end of such Interest Period, as determined by the Bank between
the opening of business and 12:00 Noon, Minneapolis, Minnesota time, on the
second Business Day prior to the beginning of such Interest Period.
"Eurodollar Rate" means, with respect to an Interest Period, the rate
obtained by adding (i) Eurodollar Spread to (ii) the rate obtained by dividing
(A) the applicable Eurodollar Base Rate by (B) a percentage equal to one (1.00)
minus the applicable percentage (expressed as a decimal) prescribed by the Board
of Governors of the Federal Reserve System (or any successor thereto) for
determining reserve requirements applicable to eurodollar fundings (currently
referred to as "Eurocurrency Liabilities" in Regulation D) or any other reserve
requirements applicable to a member bank of the Federal Reserve System with
respect to such eurodollar liabilities.
"Eurodollar Spread" means the amount as set forth below:
Term Facility Revolving Facility Status
------------- ------------------ --------------
2.50% 2.50% Xxxxx 0 Xxxxxx
0.00% 0.00% Xxxxx 0 Xxxxxx
3.00% n/a Level 3 Status
This spread shall be established for each fiscal quarter of the
Borrower, commencing on October 1, 2000, and shall be determined quarterly,
based on the Borrower's financial statements which are to be delivered pursuant
to Section 5.1(b) hereof. Any adjustment to this spread shall not become
effective until two (2) days after receipt of such financial statements by the
Bank. For the period from the Closing Date up to the point when this spread
shall be determined based upon the Borrower's financial statements for the
period ending September 30, 2000, this spread shall be at a Level 2 Status.
"Event of Default" has the meaning specified in Section 7.1.
"Facility" means the Revolving Facility or the Term Facility, as the
context may require.
"FDC Group" means the Borrower, any Subsidiaries and each member of the
Affiliated Group.
"Floating Rate" means an annual rate at all times equal to the Base Rate
plus the Floating Spread.
"Floating Rate Advance" means any Advance subject to the Floating Rate.
"Floating Spread" means the amount as set forth below:
Term Facility Revolving Facility Status
------------- ------------------ --------------
0.00% 0.00% Xxxxx 0 Xxxxxx
0.00% 0.00% Xxxxx 0 Xxxxxx
0.50% n/a Level 3 Status
This spread shall be established for each fiscal quarter of the
Borrower, commencing on October 1, 2000, and shall be determined quarterly,
based on the Borrower's financial statements which are to be delivered pursuant
to Section 5.1(b) hereof. Any adjustment to this spread shall not become
effective until two (2) days after receipt of such financial statements by the
Bank. For the period from the Closing Date up to the point when this spread
shall be determined based upon the Borrower's financial statements for the
period ending September 30, 2000, this spread shall be at a Level 2 Status.
"Funded Debt" of a Person means all interest-bearing Debt of such
Person, and shall include all interest-bearing Debt created, assumed or
guaranteed by such Person either directly or indirectly, including obligations
secured by liens upon property of such Person and upon which such Person
customarily pays the interest, and all Capitalized Lease Liabilities.
"GAAP" means generally accepted accounting principles.
"Guarantees" means the Guarantees of each of the Guarantors, pursuant to
which each Guarantor guarantees payment of all Obligations.
"Guarantor" means each member of the Affiliated Group.
"Guarantor Security Agreements" means each of the Security Agreements
executed by a Guarantor.
"Hazardous Substance" means any asbestos, urea-formaldehyde,
polychlorinated biphenyls ("PCBs"), nuclear fuel or material, chemical waste,
radioactive material, explosives, known carcinogens, petroleum products and
by-products and other dangerous, toxic or hazardous pollutants, contaminants,
chemicals, materials or substances listed or identified in, or regulated by, any
Environmental Laws.
"Installment Date" has the meaning specified in Section 2.11(b).
"Interest Coverage Ratio" of any Person means, with respect to the
applicable Covenant Computation Period, the ratio of such Person's (c) Cash Flow
Available for Interest to (b) Interest Expense.
"Interest Expense" of any Person means, for the applicable period, such
Person's total gross interest expense during such period (excluding interest
income), and shall in any event include, without limitation, (a) interest
expensed (whether or not paid) on all Debt, (b) the amortization of debt
discounts, (c) the amortization of all fees payable in connection with the
incurrence of Debt to the extent included in interest expense, and (d) the
portion of any Capitalized Lease Obligation allocable to interest expense.
"Interest Period" means, relative to any Eurodollar Advance, the period
beginning on (and including) the date on which such Eurodollar Advance is made
or continued as, or converted into, a Eurodollar Advance pursuant to Sections
2.4, 2.5 or 2.6 and shall end on (but exclude) the day which numerically
corresponds to such date one (1), two (2), three (3) or six (6) months
thereafter (or, if such month has no numerically corresponding day, on the last
Business Day of such month), as the Borrower may select in its relevant notice
pursuant to Sections 2.4, 2.5, or 2.6; provided, however, that:
(a) the Borrower shall not be permitted to select Interest Periods to be
in effect at any one time which have expiration dates occurring on
more than four (4) different dates;
(b) if an Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first
Business Day of a calendar month, in which case such Interest Period
shall end on the next preceding Business Day); and
(c) no Interest Period may end later than the later of the (i) Revolving
Commitment Termination Date, or (ii) the Term Commitment Termination
Date.
"Interest Rate Swap Agreements" has the meaning specified in Section
2.16.
"Level 1 Status" means that period of time during which the ratio of the
FDC Group's Funded Debt to EBITDA, on a trailing twelve-month basis, is less
than 1.00 to 1.00.
"Level 2 Status" means that period of time during which the ratio of the
FDC Group's Funded Debt to EBITDA, on a trailing twelve month basis, is equal to
or greater than 1.00 to 1.00 and, with respect to computation of the Term Spread
only, is less than or equal to 2.50 to 1.00.
"Level 3 Status" means that period of time during which the ratio of the
FDC Group's Funded Debt to EBITDA, on a trailing twelve-month basis, is greater
than 2.50 to 1.00.
"Loan Documents" means this Agreement, the Notes, the Guarantees, the
Subordination Agreements and the Security Documents.
"Maturity Date" means (a) with respect to the Revolving Facility,
April 30, 2001, and (b) with respect to the Term Facility, April 30, 2005.
"Note" or "Notes" means the Revolving Note or the Term Note, or all such
Notes, collectively, as the context may require.
"Obligations" means each and every debt, liability and obligation of
every type and description arising under or in connection with any of the Loan
Documents which the Borrower may now or at any time hereafter owe to the Bank
whether such debt, liability or obligation now exists or is hereafter created or
incurred, whether it is direct or indirect, due or to become due, absolute or
contingent, primary or secondary, liquidated or unliquidated, or sole, joint,
several or joint and several, and including specifically, but not limited to,
all costs, expenses, attorney's fees, indebtedness, liabilities and obligations
of the Borrower arising under or evidenced by the Notes or any Interest Rate
Swap Agreements.
"Origination Fee" has the meaning specified in Section 2.14(a).
"Permitted Business Acquisition" has the meaning specified in
Section 6.7.
"Permitted Liens" has the meaning specified in Section 6.1.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan" means an employee benefit plan or other plan maintained for
employees of the Borrower and covered by Title IV of ERISA.
"Pre-Tax Net Income" of any Person means, with respect to the applicable
Covenant Computation Period, such Person's pre-tax net income, as determined in
accordance with GAAP, before any extraordinary or non-recurring items.
"Pro Forma EBITDA" of any Person means, with respect to the applicable
Covenant Computation Period, the sum of such Person's (i) actual EBITDA for such
period, (ii) EBITDA relating to any Permitted Business Acquisitions of such
Person for such period, and (iii), subject to the review and prior approval of
the Bank, non-recurring charges specifically relating to any Permitted Business
Acquisitions of such Person, to the extent such charges are included in the
determination of such Person's EBITDA or the EBITDA relating to any such
Permitted Business Acquisition.
"Reportable Event" has the meaning assigned to that term in Title IV of
ERISA.
"Return" has the meaning specified in Section 2.20(b)(i).
"Revolving Advance" means a loan of funds by the Bank to the Borrower
under the Revolving Facility.
"Revolving Commitment" means the obligation of the Bank to make
Revolving Advances under Section 2.1 hereof in an amount not to exceed the
Revolving Commitment Amount.
"Revolving Commitment Amount" means Six Million Dollars ($6,000,000),
being the maximum amount of the Revolving Advances, in the aggregate, at any
time to be outstanding pursuant to Section 2.1 hereof, subject to reduction in
accordance with Section 2.17(a).
"Revolving Commitment Termination Date" means the earlier of (a) the
Maturity Date with respect to the Revolving Facility or (b) the date on which
the Revolving Commitment Amount is terminated in full pursuant to Section 7.2 or
reduced to zero pursuant to Section 2.17(a).
"Revolving Facility" means the revolving credit facility being made
available to the Borrower by the Bank pursuant to Section 2.1.
"Revolving Facility Outstanding Amount" means, as of the date of
determination, the aggregate principal amount of all outstanding Revolving
Advances.
"Revolving Note" means a promissory note of the Borrower payable to the
Bank in the amount of the Bank's Revolving Commitment, in substantially the form
of Exhibit A (as such promissory note may be amended, extended or otherwise
modified from time to time), evidencing the aggregate revolving indebtedness of
the Borrower to the Bank, and also means each promissory note accepted by the
Bank from time to time in substitution therefor or in renewal thereof in
substantially the form of Exhibit A.
"Security Agreement" means the Security Agreement of the Borrower dated
as of the date hereof, pursuant to which the Borrower grants the Bank a security
interest in all Collateral of the Borrower to secure payment of all Obligations.
"Security Documents" means the Security Agreement, the Guarantees, the
Guarantor Security Agreements and each and every additional agreement entered
into by the Borrower for the benefit of the Bank to secure payment of any
Obligation.
"Status" means the financial condition of the Borrower determined in
accordance with the definitions of "Level 1 Status," "Level 2 Status" and
"Level 3 Status."
"Stockholders' Equity" of any Person means the aggregate capital and
retained earnings of such Person, as determined in accordance with GAAP, as set
forth and described in such Person's financial statements prepared on a
consistent basis.
"Subordinated Debt" means all secured debt, evidenced by a promissory
note or other such instrument, made by Borrower and set forth in Schedule 3.1
hereto, as amended from time to time with the prior consent of the Bank.
"Subordinated Lender" means each Person who is now, or at any time in
the future may become, the holder of any Subordinated Debt.
"Subordination Agreement" means each Subordination Agreement between the
Bank and a Subordinated Lender subordinating payment of the Subordinated Debt
held by such Subordinated Lender to the first and prior payment of all
Obligations and subordinating any lien held by such Subordinated Lender as the
first and prior lien granted to the Bank pursuant to the Security Agreement.
"Subsidiary" of any Person means any corporation of which more than
fifty percent (50%) of the outstanding shares of capital stock having general
voting power under ordinary circumstances to elect a majority of the board of
directors of such corporation, (irrespective of whether or not at the time stock
of any other class or classes shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned by
such Person, by such Person and one or more Subsidiaries, or by one or more
other Subsidiaries.
"Taxes" has the meaning specified in Section 2.19.
"Term Advance" means the loan of funds by the Bank to the Borrower under
the Term Facility.
"Term Commitment" means the obligation of the Bank to make a Term
Advance to the Borrower under Section 2.2 hereof in an amount not to exceed the
Term Commitment Amount.
"Term Commitment Amount" means Four Million Dollars ($4,000,000), being
the maximum amount of the Term Commitment.
"Term Commitment Termination Date" means the earlier of (a) the Maturity
Date with respect to the Term Facility or (b) the date on which the Term
Commitment Amount is terminated in full pursuant to Section 7.2.
"Term Facility" means the term loan facility being made available to the
Borrower by the Bank pursuant to Section 2.2.
"Term Facility Outstanding Amount" means, as of the date of
determination, the unpaid principal amount of the Term Advance.
"Term Note" means a promissory note of the Borrower payable to the Bank
in the amount of the Bank's Term Commitment, in substantially the form of
Exhibit B (as such promissory note may be amended, extended or otherwise
modified from time to time), evidencing the aggregate term indebtedness of the
Borrower to the Bank, and also means each other promissory note accepted from
time to time in substitution therefor or in renewal thereof in substantially the
form of Exhibit B hereto.
"Type of Advance" has the meaning specified in Section 2.2.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the state designated in Section 8.7(a) hereof as the state whose laws shall
govern this Agreement, or in any other state whose laws are held to govern this
Agreement or any portion hereof.
ARTICLE II
CREDIT FACILITIES
Section 2.1 Commitment as to Revolving Facility. The Bank agrees, on the
terms and subject to the conditions herein set forth, to make Revolving Advances
to the Borrower from time to time during the period from the date hereof to and
including the Revolving Commitment Termination Date, or the earlier date of
termination in whole of the Revolving Commitment pursuant to Sections 2.17(a) or
7.2, in an aggregate amount at any time outstanding not to exceed the Revolving
Commitment Amount. Within the above limits, the Borrower may obtain Revolving
Advances, prepay Revolving Advances in accordance with the terms hereof and
reborrow Revolving Advances in accordance with the applicable terms and
conditions of this Article II.
Section 2.2 Commitment as to Term Facility. The Bank hereby agrees, on
the terms and subject to the conditions herein set forth, to make a single Term
Advance to the Borrower on the Closing Date in an amount equal to the Term
Commitment Amount. The Term Facility is not a revolving facility and, once the
Bank makes the initial Term Advance, the Bank shall have no further obligation
to make any additional Term Advances to the Borrower under the Term Facility,
whether or not any amounts are repaid thereunder.
Section 2.3 Various Types of Advances. The Term Advance and each
Revolving Advance hereunder shall be funded by the Bank as either a Floating
Rate Advance or a Eurodollar Advance (each being herein called a "Type of
Advance"), as the Borrower shall specify in the related notice of proposed
Borrowing or notice of conversion pursuant to Section 2.4 or 2.5. Floating Rate
Advances and Eurodollar Advances may be outstanding at the same time. It is
understood, however, that (i) in the case of Advances which are Floating Rate
Advances, the principal amount of each such Advance shall be in an amount equal
to or greater than $50,000 (ii) in the case of Advances which are Eurodollar
Advances, the principal amount of each such Advance shall be in an amount equal
to $100,000 or an integral multiple of $100,000.
Section 2.4 Procedures for Borrowing Under the Revolving Facility. Each
Borrowing under the Revolving Facility shall be funded by the Bank as a
Revolving Advance. The principal amount of each Revolving Advance shall be in an
amount equal to or greater than $50,000 or $100,000 depending on the Type of
Advance. The Borrower shall give notice to the Bank of each proposed Borrowing
not later than 12:00 Noon, Minneapolis, Minnesota time, on a Business Day which,
in the case of a Borrowing that is to bear interest initially at the Floating
Rate, is the proposed date of such Borrowing or, in the case of a Borrowing that
is to bear interest initially at a Eurodollar Rate, is at least two (2) Business
Days prior to the proposed date of such Borrowing. Each such notice shall be
effective upon receipt by the Bank, shall be in writing or by telephone or
telecopy transmission, to be confirmed in writing by the Borrower if so
requested by the Bank (in the form of Exhibit C), and shall specify whether the
Borrowing is to bear interest initially at the Floating Rate or a Eurodollar
Rate, and in the case of a Borrowing that is to bear interest initially at a
Eurodollar Rate, shall specify the Interest Period to be applicable thereto.
Subject to satisfaction of the conditions precedent set forth in Article III
with respect to such Borrowing, the Bank shall fund the requested Revolving
Advance to the Borrower prior to the close of business on the requested
Borrowing date.
Section 2.5 Converting Floating Rate Advances to Eurodollar Advances;
Procedures. So long as no Default or Event of Default shall exist, the Borrower
may convert all or any part of any outstanding Floating Rate Advance into a
Eurodollar Advance by giving notice to the Bank of such conversion not later
than 12:00 Noon, Minneapolis, Minnesota time, on a Business Day which is at
least two (2) Business Days prior to the date of the requested conversion. Each
such notice shall be effective upon receipt by the Bank, shall be in writing or
by telephone or telecopy transmission, to be confirmed in writing by the
Borrower if so requested by the Bank (in the form of Exhibit D), shall specify
the date and amount of such conversion, the total amount of Floating Rate
Advances to be so converted and the Interest Period therefor. Each conversion of
Floating Rate Advances shall be on a Business Day, and the aggregate amount of
each such conversion of Floating Rate Advances to a Eurodollar Advance shall be
in an amount equal to $100,000 or a higher integral multiple of $100,000.
Section 2.6 Procedures at End of an Interest Period. Unless the Borrower
requests a new Eurodollar Advance in accordance with the procedures set forth
below, or prepays the principal of an outstanding Eurodollar Advance at maturity
thereof, the Bank shall automatically and without request by the Borrower,
convert each Eurodollar Advance to a Floating Rate Advance on the last day of
the relevant Interest Period. So long as no Default or Event of Default shall
exist, the Borrower may cause all or any part of any outstanding Eurodollar
Advances to continue to bear interest at a Eurodollar Rate after the end of the
then applicable Interest Period by notifying the Bank not later than 12:00 Noon,
Minneapolis, Minnesota time, on a Business Day which is at least two (2)
Business Days prior to the first day of the new Interest Period. Each such
notice shall be in writing or by telephone or telecopy transmission, to be
confirmed in writing by the Borrower if so requested by the Bank (in the form of
Exhibit E), shall be effective when received by the Bank, and shall specify the
first day of the applicable Interest Period, the amount of the expiring
Eurodollar Advances to be continued and the Interest Period therefor. Each new
Interest Period shall begin on a Business Day and the aggregate amount of the
Revolving Advances bearing the new Eurodollar Rate shall be in an amount equal
to $100,000 or a higher multiple of $100,000.
Section 2.7 Setting and Notice of Rates. The applicable Eurodollar Rate
for each Interest Period shall be determined by the Bank and notice thereof
(which may be by telephone) shall be given by the Bank to the Borrower. Each
such determination of the applicable Eurodollar Rate shall be conclusive and
binding upon the parties hereto, in the absence of demonstrable error. The Bank,
upon written request of the Borrower, shall deliver to the Borrower a statement
showing the computations used by the Bank in determining the applicable
Eurodollar Rate hereunder.
Section 2.8 Right of Bank to Fund through Other Offices. The Bank, if
it so elects, may fulfill its Commitment as to any Eurodollar Advance by causing
a foreign branch or affiliate of such Bank to make such Eurodollar Advance;
provided, that in such event the obligation to the Borrower to repay such
Eurodollar Advance shall nevertheless be to the Bank and shall be deemed held by
the Bank, to the extent of such Eurodollar Advance, for the account of such
branch or affiliate.
Section 2.9 Interest on Advances. The Borrower hereby agrees to pay
interest on the unpaid principal amount of each Advance for the period
commencing on the date such Advance is made by the Bank until such Advance is
paid in full, in accordance with the following:
(a) Floating Rate Advances. Subject to subsection (c) below, while an
Advance is a Floating Rate Advance, the outstanding principal
balance thereof shall bear interest at an annual rate at all times
equal to the Floating Rate.
(b) Eurodollar Rate Advances. Subject to subsection (c) below, while an
Advance is a Eurodollar Advance, the outstanding principal balance
thereof shall bear interest for the applicable Interest Period at an
annual rate equal to the Eurodollar Rate established with respect
such Eurodollar Advance in accordance with Section 2.4, 2.5 or 2.6
hereof.
(c) Default Rate. From and after the occurrence of an Event of Default
and continuing thereafter until such Event of Default shall be
remedied to the written satisfaction of the Bank, the outstanding
principal balance of each Advance shall bear interest, until paid in
full, at a rate equal to the sum of (i) the interest rate otherwise
in effect with respect such Advance and (ii) two percent (2%) (the
"Default Rate").
Section 2.10 Obligation to Repay Advances; Representations. The Borrower
shall be obligated to repay all Advances under this Article II notwithstanding
the failure of the Bank to receive any written request therefor or written
confirmation thereof and notwithstanding the fact that the person requesting the
same was not in fact authorized to do so. Any request for a Borrowing under
Section 2.4, whether written, telephonic, telecopy or otherwise, shall be deemed
to be a representation by the Borrower that (a) the amount of the Borrowing,
when added to the Revolving Facility Outstanding Amount, would not exceed the
Revolving Commitment Amount and (b) the statements set forth in Section 3.2
hereof are correct as of the time of the request.
Section 2.11 Notes; Amortization.
(a) Revolving Facility. All Revolving Advances made by the Bank
hereunder shall be evidenced by and be repayable with interest in
accordance with the Revolving Note issued by the Borrower to the
Bank. The aggregate unpaid principal amount of the Revolving Note
shall be payable as provided therein and herein on the earlier of
the Revolving Commitment Termination Date or earlier in accordance
with Section 7.2.
(b) Term Facility. The Term Advance made by the Bank hereunder shall be
evidenced by and be repayable with interest in accordance with the
Term Note issued by the Borrower to the Bank. The Term Note shall
bear interest as provided therein and herein. The Term Facility
shall be payable in monthly principal installments of $66,666.67
each, commencing on June 30, 2000 and continuing on the last day of
each month thereafter (each herein an "Installment Date") until the
Maturity Date, when all unpaid principal thereof shall be finally
due and payable.
Section 2.12 Interest Due Dates. Accrued interest on each Eurodollar
Advance shall be payable on the last day of the Interest Period relating to such
Eurodollar Advance; provided, however, that if any Interest Period is longer
than three (3) months, interest shall be payable monthly in arrears on the last
day of each monthly period occurring after commencement of such Interest Period
and on the last day of the Interest Period. Accrued interest on each Floating
Rate Advance shall be payable in arrears on the last day of each month and at
maturity or conversion of such Floating Rate Loan to a Eurodollar Advance.
Section 2.13 Computation of Interest and Fees. Interest accruing on the
Notes and all other fees described in Section 2.14 shall be computed on the
basis of actual number of days elapsed in a year of three hundred sixty (360)
days.
Section 2.14 Fees. The Borrower hereby agrees to pay fees to the Bank,
commencing on the date hereof and continuing until all Obligations are paid in
full, in accordance with the following:
(a) Origination Fee. The Borrower agrees to pay the Bank an origination
fee (the "Origination Fee") of $49,800, payable upon execution of
this Agreement.
(b) Audit Fees. The Borrower agrees to pay to the Bank, on written
demand, reasonable fees charged by the Bank in connection with any
audits or inspections by the Bank of any Collateral or the
operations or businesses of the Borrower, together with actual
out-of-pocket costs and expenses incurred in conducting any such
audit or inspection; provided, however, that until the occurrence of
an Event of Default the Borrower shall not be obligated to reimburse
the Bank for more than one such audit or inspection conducted by the
Bank during each fiscal year of the Borrower.
Section 2.15 Use of Proceeds. The proceeds of the initial Borrowings
hereunder shall be used by the Borrower in accordance with Exhibit G and the
Lender is hereby authorized and directed to pay proceeds of such Borrowings as
therein provided.
Section 2.16 Hedging Agreements. In conjunction with this Facility, the
Borrower may, from time to time, execute certain documents for the purpose of
entering into interest rate contracts with the Bank ("Interest Rate Swap
Agreements"). Any Interest Rate Swap Agreements shall reference this Agreement,
and the obligations of the Borrower under any Interest Rate Swap Agreements
shall be included within the definition of Obligations hereunder and shall be
secured by the Security Documents.
Section 2.17 Voluntary Permanent Reduction or Termination of the
Commitment; Prepayments.
(a) Permanent Reduction or Termination of Commitment. The Borrower, from
time to time upon not less than three (3) Business Days' prior
written notice, may permanently reduce the Revolving Commitment
Amount; provided, however, that no such reduction shall reduce the
Revolving Commitment Amount to an amount less than the Revolving
Facility Outstanding Amount. Any such permanent reduction shall be
in an amount equal to $100,000 or a higher integral multiple of
$100,000. The Borrower at any time prior to the Revolving Commitment
Termination Date may terminate the Revolving Commitment by (i)
providing to the Bank not less than three (3) Business Days prior
written notice of its intention to so terminate the Revolving
Commitment and (ii) making payment in full of the Revolving Note and
all other Obligations.
(b) Prepayments. Subject to the following provisions of this subsection
(b), the Borrower from time to time may voluntarily prepay the
Notes in whole or in part. In the event of any prepayment hereunder,
(i) each prepayment of the Notes shall be made to the Bank not later
than 12:00 Noon, Minneapolis, Minnesota time, on a Business Day, and
funds received after that hour shall be deemed to have been received
by the Bank on the next following Business Day, (ii) any partial
prepayment of Revolving Advances which, at the time of such
prepayment, bear interest at a Eurodollar Rate shall be accompanied
by accrued interest on such partial prepayment through the date of
prepayment and additional compensation calculated in accordance with
Section 2.21, (iii) each partial prepayment of Revolving Advances
which, at the time of such prepayment, bear interest at a Eurodollar
Rate, shall be in an amount equal to $100,000 or a higher integral
multiple of $100,000 and (iv) each partial prepayment of Advances
which, at the time of such prepayment, bear interest at a Floating
Rate, shall be in an amount equal to or greater than $25,000, (v)
unless notified by the Borrower in writing to the contrary, the Bank
shall apply all partial prepayments to outstanding Revolving
Advances and, if no Revolving Advances are then outstanding, to
outstanding Term Advances and (iv) each voluntary partial prepayment
of the Term Note shall be applied to principal installments becoming
due under such Note in inverse order of their respective maturities.
Notwithstanding the foregoing, upon written notice of the Borrower
to the Bank, voluntary prepayments of the Term Note may be applied
to the principal installment due on the next occurring Installment
Date.
Section 2.18 Payments.
(a) Making of Payments. All payments of principal of and interest on the
Notes and all payments of fees and other Obligations due hereunder
shall be made to the Bank at its office in Minneapolis, Minnesota,
not later than 12:00 Noon, Minneapolis, Minnesota, time, on the date
due, in immediately available funds, and funds received after that
hour shall be deemed to have been received by the Bank on the next
following Business Day. The Borrower hereby authorizes the Bank
to charge the Borrower's demand deposit account maintained with the
Bank for the amount of any such payment on the due date therefor,
but the Bank's failure to so charge such account shall in no way
affect the obligation of the Borrower to make any such payment.
(b) Setoff. The Borrower agrees that the Bank shall have all rights of
setoff and bankers' lien provided by applicable law, and in addition
thereto, the Borrower agrees that at any time (i) any amount owing
by the Borrower under this Agreement is due to the Bank and (ii) if
any Event of Default exists, the Bank may apply to the payment of
any amount owing by the Borrower under this Agreement any and all
balances, credits, and deposits, accounts or moneys of the Borrower
then or thereafter in the possession of the Bank.
(c) Due Date Extension. If any payment of principal of or interest on
any Advance or any fees payable hereunder falls due on a day which
is not a Business Day, then such due date shall be extended to the
next following Business Day, and (in the case of principal)
additional interest shall accrue and be payable for the period of
such extension.
(d) Application of Certain Payments. Except as otherwise provided
herein, so long as no Default or Event of Default has occurred and
is continuing hereunder, each payment of principal shall be applied
to such Advances as the Borrower shall direct by notice, said notice
to be received by the Bank on or before the date of such payment, or
in the absence of such notice, as the Bank shall determine in its
discretion.
Section 2.19 Taxes. All payments made by the Borrower to the Bank under
or in connection with this Agreement or the Notes shall be made without any
setoff or other counterclaim, and free and clear of and without deduction for or
on account of any present or future taxes now or hereafter imposed by any
governmental or other authority, except to the extent that any such deduction or
withholding is compelled by law. As used herein, the term "Taxes" shall include
all income, excise and other taxes of whatever nature (other than taxes
generally assessed on the overall net income of the Bank by the government or
other authority of the country, state or political subdivision in which the Bank
is incorporated or in which the office through which the Bank is acting is
located) as well as all levies, imposts, duties, charges, or fees of whatever
nature. If the Borrower, or any Guarantor, is compelled by law to make any
deductions or withholdings on account of any Taxes (including any foreign
withholding) it will:
(a) pay to the relevant authorities the full amount required to be so
withheld or deducted;
(b) pay such additional amounts (including, without limitation, any
penalties, interest or expenses) as may be necessary in order that
the net amount received by the Bank after such deductions or
withholdings (including any required deduction or withholding on
such additional amounts) shall equal the amount the Bank would have
received had no such deductions or withholdings been made; and
(c) promptly forward to the Bank an official receipt or other
documentation satisfactory to the Bank evidencing such payment to
such authorities.
The amount that the Borrower shall be required to pay to the Bank
pursuant to the foregoing clause (b) shall be reduced, to the extent permitted
by applicable law, by the amount of any offsetting tax benefit which the Bank
receives as the result of Borrower's payment to the relevant authorities as
reasonably determined by the Bank; provided, however, that if the Bank shall
subsequently determine that it has lost the benefit of all or a portion of such
tax benefit, the Borrower shall promptly remit to the Bank the amount certified
by the Bank to be the amount necessary to restore the Bank to the position it
would have been in if no payment had been made pursuant to this sentence. If any
Taxes otherwise payable by the Borrower pursuant to the foregoing paragraph are
directly asserted against the Bank, the Bank may pay such taxes and the Borrower
promptly shall reimburse the Bank to the full extent otherwise required by such
paragraph. The obligations of the Borrower under this Section 2.19 shall survive
any termination of this Agreement.
Section 2.20 Increased Costs; Capital Adequacy; Funding Exceptions.
(a) Increased Costs on Eurodollar Advances. If Regulation D of the Board
of Governors of the Federal Reserve System or after the date of this
Agreement, the adoption of any applicable law, rule or regulation,
or any change in any existing law, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank
with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency,
shall:
(i) subject the Bank to or cause the withdrawal or termination
of any exemption previously granted any Bank with respect
to, any tax, duty or other charge with respect to its
Eurodollar Advances or its obligation to make Eurodollar
Advances, or shall change the basis of taxation of payments
to the Bank of the principal of or interest under this
Agreement in respect of its Eurodollar Advances or its
obligation to make Eurodollar Advances (except for changes
in the rate of tax on the overall net income of such Bank
imposed by the jurisdictions in which the Bank's principal
executive office is located); or
(ii) impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding any
reserve included in the determination of interest rates
pursuant to Section 2.9), special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, the Bank; or
(iii) impose on the Bank any other condition affecting its
making, maintaining or funding of its Eurodollar Advances
or its obligation to make Eurodollar Advances; and the
result of any of the foregoing is to increase the cost to
the Bank of making or maintaining any Eurodollar Advance,
or to reduce the amount of any sum received or receivable
by the Bank under this Agreement or under the Note with
respect to a Eurodollar Advance, then the Bank will notify
the Borrower within ninety (90) days after discovering
such increased cost and within fifteen (15) days after
demand by the Bank (which demand shall be accompanied by
a statement setting forth the basis of such demand), the
Borrower shall pay to the Bank such additional amount or
amounts as will compensate the Bank for such increased
cost or such reduction. The Bank will promptly notify
the Borrower of any event of which it has knowledge,
occurring after the date hereof, which will entitle the
Bank to compensation pursuant to this Section 2.20. If the
Borrower receives notice from the Bank of any event which
will entitle the Bank to compensation pursuant to this
Section 2.20, the Borrower may prepay any then outstanding
Eurodollar Advances or notify the Bank that any pending
request for a Eurodollar Advance shall be deemed to be a
request for a Floating Rate Advance, in each case subject
to the provisions of Section 2.21.
(b) Capital Adequacy. If the Bank determines at any time that the Bank's
Return has been reduced as a result of any Capital Adequacy Rule
Change, the Bank may require the Borrower to pay to the Bank the
amount necessary to restore the Bank's Return to what it would have
been had there been no Capital Adequacy Rule Change. For purposes
of this Section 2.20, the following definitions shall apply:
(i) "Return," for any calendar quarter or shorter period, means
the percentage determined by dividing (i) the sum of
interest and ongoing fees earned by the Bank under this
Agreement during such period by (ii) the average capital the
Bank is required to maintain during such period as a result
of its being a party to this Agreement, as determined by the
Bank based upon its total capital requirements and a
reasonable attribution formula that takes account of the
Capital Adequacy Rules then in effect. Return may be
calculated for the Bank for each calendar quarter and for
the shorter period between the end of a calendar quarter and
the date of termination in whole of this Agreement.
(ii) "Capital Adequacy Rule" means any law, rule, regulation or
guideline regarding capital adequacy that applies to the
Bank, or the interpretation thereof by any governmental or
regulatory authority. Capital Adequacy Rules include rules
requiring financial institutions to maintain total capital
in amounts based upon percentages of outstanding loans,
binding loan commitments and letters of credit.
(iii) "Capital Adequacy Rule Change" means any change in any
Capital Adequacy Rule occurring after the date of this
Agreement, but does not include any changes in applicable
requirements that at the date hereof are scheduled to take
place under the existing Capital Adequacy Rules or any
increases in the capital that the Bank is required to
maintain to the extent that the increases are required due
to a regulatory authority's assessment of the Bank's
financial condition.
The initial notice sent by the Bank shall be sent as promptly as
practicable after the Bank learns that its Return has been reduced, shall
include a demand for payment of the amount necessary to restore the Bank's
Return for the quarter in which the notice is sent, and shall state in
reasonable detail the cause for the reduction in the Bank's Return and the
Bank's calculation of the amount of such reduction. Thereafter, the Bank may
send a new notice during each calendar quarter setting forth the calculation of
the reduced Return for that quarter and including a demand for payment of the
amount necessary to restore the Bank's Return for that quarter. The Bank's
calculation in any such notice shall be conclusive and binding absent
demonstrable error.
(c) Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:
(i) the Bank determines that deposits in U.S. dollars (in the
applicable amounts), as the case may be, are not being
offered in the London interbank eurodollar market for such
Interest Period; or
(ii) the Bank otherwise determines (which determination shall be
binding and conclusive on all parties) that by reason of
circumstances affecting the London interbank eurodollar
market adequate and reasonable means do not exist for
ascertaining the applicable Eurodollar Rate; or
(iii) the Bank advises the Borrower that the Eurodollar Rate as
determined by the Bank will not adequately and fairly
reflect the cost to the Bank of maintaining or funding a
Eurodollar Advance for such Interest Period, or that
the making or funding of Eurodollar Advances has become
impracticable as a result of an event occurring after the
date of this Agreement which in the opinion of the Bank
materially affects such Eurodollar Advances;
then the Bank shall promptly notify the Borrower and the Borrower shall
enter into good faith negotiations with the Bank in order to determine an
alternate method to determine the Eurodollar Rate for the Bank, and during the
pendency of such negotiations with the Bank, the Bank shall be under no
obligation to make Eurodollar Advances.
(d) Illegality. In the event that any change in (including the adoption
of any new) applicable laws or regulations, or any change in the
interpretation of applicable laws or regulations by any governmental
authority, central bank, comparable agency or any other regulatory
body charged with the interpretation, implementation or
administration thereof, or compliance by the Bank with any
request or directive (whether or not having the force of law) of any
such authority, central bank, comparable agency or other regulatory
body, should make it (or, in the good faith judgment of the Bank,
shall raise a substantial question as to whether it is) unlawful for
the Bank to make, maintain or fund Eurodollar Advances, then (i) the
Bank shall promptly notify the Borrower, (ii) the obligation of the
Bank to make, maintain or convert into Eurodollar Advances shall,
upon the effectiveness of such event, be suspended for the duration
of such unlawfulness, and (iii) for the duration of such
unlawfulness, any notice by the Borrower pursuant to Section 2.4,
2.5 or 2.6 requesting the Bank to make or convert into Eurodollar
Advances shall be construed as a request to make or to continue
making Floating Rate Advances.
Section 2.21 Funding Losses. The Borrower hereby agrees that upon demand
by the Bank (which demand shall be accompanied by a statement setting forth the
basis for the calculations of the amount being claimed) the Borrower will
indemnify the Bank against any loss or expense which the Bank may have sustained
or incurred (including, without limitation, any net loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
the Bank to fund or maintain Eurodollar Advances) or which may be deemed to have
sustained or incurred, as reasonably determined by the Bank, (i) as a
consequence of any failure by the Borrower to make any payment when due of any
amount due hereunder in connection with any Eurodollar Advances, (ii) due to any
failure of the Borrower to borrow or convert any Eurodollar Advances on a date
specified therefor in a notice thereof or (iii) due to any payment or prepayment
of any Eurodollar Advance on a date other than the last day of the applicable
Interest Period for such Eurodollar Advance. For this purpose, all notices of
Borrowing pursuant to this Agreement shall be deemed to be irrevocable.
Section 2.22 Discretion of Bank as to Manner of Funding. Notwithstanding
any provision of this Agreement to the contrary, the Bank shall be entitled to
fund and maintain its funding of all or any part of its Eurodollar Advances in
any manner it deems fit, it being understood, however, that for the purposes of
this Agreement (specifically including, without limitation, Section 2.21 hereof)
all determinations hereunder shall be made as if the Bank had actually funded
and maintained each Eurodollar Advance during each Interest Period for such
Eurodollar Advance through the purchase of deposits having a maturity
corresponding to such Interest Period and bearing an interest rate equal to the
appropriate Eurodollar Rate for such Loan Period.
Section 2.23 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of the Bank pursuant to Section 2.19, 2.20, 2.21,
or 2.22 shall be conclusive absent demonstrable error. The Bank may use
reasonable averaging and attribution methods in determining compensation
pursuant to such Sections and the provisions of such Sections shall survive
termination of this Agreement.
ARTICLE III
CONDITIONS OF LENDING
Section 3.1 Conditions Precedent to the Initial Advances. The obligation
of the Bank to fund the initial Advance request of the Borrower is subject to
the condition precedent that the Bank shall have received the following, each in
form and substance satisfactory to the Bank:
(a) The Notes, properly executed on behalf of the Borrower.
(b) A certified copy of the resolutions of the Board of Directors of the
Borrower evidencing approval of all Loan Documents and the other
matters contemplated hereby.
(c) Copies of the Articles of Incorporation and Bylaws of the Borrower,
certified by the Secretary or Assistant Secretary of the Borrower
as being true and correct copies thereof.
(d) A certificate of good standing of the Borrower, dated not more than
sixty (60) days prior to the date hereof and evidence satisfactory
to the Bank that the Borrower is qualified to conduct its business
in each state where it presently conducts such business.
(e) A signed copy of a certificate of the Secretary or an Assistant
Secretary of the Borrower which shall certify the names of the
officers of the Borrower authorized to sign the Loan Documents and
the other documents or certificates to be delivered pursuant to this
Agreement by the Borrower or any of its officers, including requests
for Advances, together with the true signatures of such officers.
The Bank may conclusively rely on such certificate until it shall
receive a further certificate of the Secretary or Assistant
Secretary of the Borrower canceling or amending the prior
certificate and submitting the signatures of the officers named in
such further certificate.
(f) The Guarantees, properly executed by each of the Guarantors,
pursuant to which each such Guarantor unconditionally guarantees the
full and prompt payment of all Obligations.
(g) The Guarantor Security Agreements, properly executed by each of the
Guarantors, pursuant to which each Guarantor grants a security
interest in all of such Guarantor's personal property assets as
collateral for such Guarantor's obligations under such Guarantor's
Guaranty.
(h) A certified copy of the resolutions of the board of directors or
members, as the case may be, and shareholders, if necessary, of each
of the Guarantors evidencing approval of each Guarantor's Guaranty
and Guarantor Security Agreement.
(i) Copies of the articles of incorporation and bylaws, or articles of
organization and operating agreements, as the case may be, of each
Guarantor, as the case may be, certified by an officer of member, as
the case may be, of such Guarantor as being true and correct copies
thereof.
(j) A certificate of good standing of each Guarantor, dated not more
than sixty (60) days prior to the date hereof and evidence
satisfactory to the Bank that such Guarantor is qualified to conduct
its business in each state where it presently conducts such
business.
(k) A signed copy of a certificate of an officer or member, as the case
may be, of each Guarantor which shall certify the names of the
officers or members, as the case may be, of such Guarantor
authorized to sign such Guarantor's Guaranty and Guarantor Security
Agreement and the other documents or certificates to be delivered
pursuant to this Agreement by such Guarantor or any of its officers,
or members, as the case may be, together with the true signatures of
such officers or members, as the case may be. The Bank may
conclusively rely on such certificate until it shall receive a
further certificate of an officer or member, of such Guarantor
canceling or amending the prior certificate and submitting the
signatures of the officers named in such further certificate.
(l) Financing statements sufficient when filed to perfect the security
interests granted under the Security Documents, to the extent such
security interests are capable of being perfected by filing.
(m) Current searches of appropriate filing offices (including, without
limitation, secretaries of state and county recorders) showing that
no state or federal tax liens have been filed and remain in effect
against the Borrower or any of the Guarantors, and that no financing
statements or other notifications or filings have been filed and
remain in effect against the Borrower or any of the Guarantors,
other than those for which the Bank has received an appropriate
release, termination or satisfaction or those permitted in
accordance with Section 6.1.
(n) A certificate of insurance with respect to all equipment and
inventory of the Borrower and each of the Guarantors, naming the
Bank as lender's loss payee thereunder, together with an acceptable
lender's loss payable endorsement.
(o) A Subordination Agreement with each Subordinated Lender, in form and
content acceptable to the Bank, together with copies of all notes,
security agreements and other documentation evidencing any security
therefor or any Subordinated Debt identified in Schedule 3.1 hereto,
as amended from time to time.
(p) Collateral audit reports in all respects satisfactory to the Bank.
(q) Audited financial statements the FDC Group for the year ended
December 31, 1999.
(r) Payment of all fees and expenses then due and payable pursuant to
Sections 2.14 and 8.4 hereof.
(s) A signed copy of an opinion of counsel for the Borrower and each of
the Guarantors, addressed to the Bank, in form and content
acceptable to the Bank.
Section 3.2 Conditions Precedent to All Advances. The obligation of the
Bank to make each Advance shall be subject to the further conditions precedent
that on such date:
(a) the representations and warranties contained in Article IV hereof
are correct on and as of the date of such Advance as though made on
and as of such date; and
(b) no event has occurred and is continuing, or would result from such
Advance, which constitutes a Default or an Event of Default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank as follows:
Section 4.1 Corporate Existence and Power; Name; Chief Executive Office.
The Borrower is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Colorado, and is duly licensed or
qualified to transact business in all jurisdictions where the character of the
property owned or leased or the nature of the business transacted by it makes
such licensing or qualification necessary and where failure to obtain such
licensing or qualification would have a material adverse effect on the Borrower.
The Borrower has all requisite power and authority, corporate or otherwise, to
conduct its business, to own its properties and to execute and deliver, and to
perform all of its obligations under, the Loan Documents. Within the last twelve
(12) months, the Borrower has done business solely under the names set forth in
Schedule 4.l hereto. The chief executive office and principal place of business
of the Borrower is located at the address set forth in Schedule 4.1 hereto, and
all of the Borrower's records relating to its businesses are kept at that
location.
Section 4.2 Authorization for Borrowings; No Conflict as to Law or
Agreements. The execution, delivery and performance by the Borrower of the Loan
Documents and Advances from time to time obtained hereunder, have been duly
authorized by all necessary corporate action and do not and will not (a) require
any consent or approval which has not been obtained prior to the date hereof,
(b) require any authorization, consent or approval by, or registration,
declaration or filing (other than filing of financing statements as contemplated
hereunder) with, or notice to, any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any third party,
except such authorization, consent, approval, registration, declaration, filing
or notice as has been obtained, accomplished or given prior to the date hereof,
(c) violate any provision of any law, rule or regulation (including, without
limitation, Regulation X of the Board of Governors of the Federal Reserve
System) or of any order, writ, injunction or decree presently in effect having
applicability to the Borrower or of the articles of incorporation or bylaws of
the Borrower, (d) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other material agreement, lease or
instrument to which the Borrower is a party or by which it or its properties may
be bound or affected, or (e) result in, or require, the creation or imposition
of any mortgage, deed of trust, pledge, lien, security interest or other charge
or encumbrance of any nature upon or with respect to any of the properties now
owned or hereafter acquired by the Borrower (other than as required hereunder in
favor of the Bank).
Section 4.3 Legal Agreements. The Loan Documents, which relate to the
Borrower only, constitute the legal, valid and binding obligations and
agreements of the Borrower, enforceable against the Borrower in accordance with
their respective terms.
Section 4.4 Subsidiaries. Except as set forth in Schedule 4.1, the
Borrower has no Subsidiaries.
Section 4.5 Financial Condition; No Adverse Change. The Borrower has
heretofore furnished to the Bank audited financial statements for its fiscal
year ended December 31, 1999 and unaudited financial statements for the month
ended January 31, 2000 and those statements fairly present the financial
condition of the Borrower on the dates thereof and the results of its operations
and cash flows for the periods then ended and were prepared in accordance with
GAAP. Since the date of the financial statements described above, there has been
no material adverse change in the business, properties or condition (financial
or otherwise) of the Borrower.
Section 4.6 Litigation. On March 13, 2000, the Borrower was served with
a demand for arbitration by the holder of separate area development and
franchise agreements covering (1) the State of Ohio; Xxxxxx County Pennsylvania;
and Hinsdale and Lenawee County Michigan; and (2) the State of Florida (except
the counties of Broward, Dade, Monroe, Xxxxxxx, Xxx and Hendri). The arbitration
demand alleges breaches of the franchise agreements, violations of the Minnesota
Franchise Act, and various state-law tort claims. The arbitration demand seeks
unspecified damages and declaratory relief. The Borrower has filed its answer
and is in the process of evaluating the case. The Borrower intends vigorously to
contest the claims alleged in the proceeding and has asserted counterclaims
relating to unauthorized out-of territory sales, failure to develop franchise
areas, and for other amounts owed by the franchisee to the Borrower. Due to the
early stage of this litigation the Borrower cannot, nor can counsel, express a
judgement as to either the likelihood of success on the Borrower's counterclaims
or an unfavorable outcome, or the amount or range of a potential recovery or
loss. Other than the above case and other legal proceedings in the ordinary
course of its business the Borrower represents as immaterial, there are no
actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or the properties of the Borrower
before any court or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, which, if determined adversely to the
Borrower, could have a material adverse effect on the financial condition,
properties or operations of the Borrower.
Section 4.7 Regulation U. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Advance will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
Section 4.8 Taxes. The Borrower has paid or caused to be paid to the
proper authorities when due all federal, state and local taxes required to be
withheld by it. The Borrower has filed all federal, state and local tax returns
which to the knowledge of the officers of the Borrower, are required to be
filed, and the Borrower has paid or caused to be paid to the respective taxing
authorities all taxes as shown on said returns or on any assessment received by
it to the extent such taxes have become due.
Section 4.9 Titles and Liens. The Borrower has good and absolute title
to all properties and assets reflected in the latest balance sheet referred to
in Section 4.5, free and clear of all mortgages, security interests, liens and
encumbrances, except for (a) mortgages, security interests and liens permitted
by Section 6.1, and (b) covenants, restrictions, rights, easements and minor
irregularities in title which do not materially interfere with the business or
operations of the Borrower as presently conducted. In addition, no financing
statement naming the Borrower as debtor is on file in any office except to
perfect only security interests permitted by Section 6.1.
Section 4.10 Plans. Except as described in Schedule 4.10, the Borrower
does not maintain and has not in the past maintained any Plan. The Borrower has
not received any notice nor has any knowledge to the effect that it is not in
full compliance with any of the requirements of ERISA. No Reportable Event or
other fact or circumstance which may have an adverse effect on the Plan's tax
qualified status exists in connection with any Plan. The Borrower, does not
have:
(a) any accumulated funding deficiency within the meaning of ERISA; or
(b) any liability or knows of any fact or circumstances which could
result in any liability to the Pension Benefit Guaranty Corporation,
the Internal Revenue Service, the Department of Labor or any
participant in connection with any Plan (other than accrued benefits
which or which may become payable to participants or beneficiaries
of any such Plan).
Section 4.11 Default. The Borrower is in material compliance with all
provisions of all agreements, instruments, decrees and orders to which it is a
party or by which it or its property is bound or affected, the breach or default
of which could have a material adverse effect on the financial condition,
properties or operations of the Borrower.
Section 4.12 Environmental Compliance. The Borrower has obtained all
permits, licenses and other authorizations which are required under federal,
state and local laws and regulations relating to emissions, discharges, releases
of pollutants, contaminants, hazardous or toxic materials, or wastes into
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
materials or wastes ("Environmental Laws") at the Borrower's facilities or in
connection with the operation of its facilities. The Borrower and all activities
of the Borrower at its facilities comply with all Environmental Laws and with
all terms and conditions of any required permits, licenses and authorizations
applicable to the Borrower with respect thereto. The Borrower is also in
compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
Environmental Laws or contained in any plan, order, decree, judgment or notice
of which the Borrower is aware. The Borrower is not aware of, nor has the
Borrower received notice of, any events, conditions, circumstances, activities,
practices, incidents, actions or plans which may interfere with or prevent
continued compliance with, or which may give rise to any liability under, any
Environmental Laws.
Section 4.13 Submissions to Bank. All financial and other information
provided to the Bank by or on behalf of the Borrower in connection with the
Borrower's request for the credit facilities contemplated hereby is true and
correct in all material respects and, as to projections, valuations or proforma
financial statements, present a good faith opinion as to such projections,
valuations and proforma condition and results.
ARTICLE V
AFFIRMATIVE COVENANTS OF THE BORROWER
So long as either Note shall remain unpaid or outstanding or either
Commitment shall be outstanding, the Borrower will comply with the following
requirements, unless the Bank shall otherwise consent in writing:
Section 5.1 Reporting Requirements. The Borrower will deliver, or cause
to be delivered, to the Bank each of the following, which shall be in form and
detail acceptable to the Bank:
(a) as soon as available, and in any event within one hundred twenty
(120) days after the end of each fiscal year of the Borrower,
audited financial statements of the Borrower, on a combined basis to
include the Affiliated Group, with the unqualified opinion of
independent certified public accountants selected by the Borrower
and acceptable to the Bank, which annual financial statements shall
include the combined balance sheet of the Borrower (and each member
of Affiliated Group) as at the end of such fiscal year and the
related statements of income, retained earnings and cash flows, each
on a combined basis, of the Borrower (and each member of the
Affiliated Group) for the fiscal year then ended, prepared, if the
Bank so requests, on a consolidating and consolidated basis to
include any Subsidiaries, all in reasonable detail and prepared in
accordance with GAAP applied on a basis consistent with the
accounting practices applied in the financial statements referred to
in Section 4.5, together with a certificate of the chief financial
officer of the Borrower, substantially in the form of Exhibit F,
stating (i) that such financial statements have been prepared
in accordance with GAAP applied on a basis consistent with the
accounting practices reflected in the financial statements referred
to in Section 4.5, subject to year-end audit adjustments, (ii)
whether or not such officer has knowledge of the occurrence of any
Default or Event of Default hereunder not theretofore reported and
remedied and, if so, stating in reasonable detail the facts with
respect thereto, and (iii) all relevant facts in reasonable detail
to evidence, and the computations as to, whether or not the Borrower
is in compliance with the requirements set forth in Sections 5.8 -
5.13, 6.2(c), and 6.11;
(b) as soon as available and in any event within thirty (30) days after
the end of each month, a combined unaudited/internal balance sheet
and statements of income, cash flow, and retained earnings of the
Borrower and each member of the Affiliated Group, as at the end of
and for such month and for the year to date period then ended,
prepared, if the Bank so requests, on a consolidating and
consolidated basis to include any Subsidiaries, in reasonable detail
and stating in comparative form the figures for the corresponding
date and periods in the previous year, all prepared in accordance
with GAAP applied on a basis consistent with the accounting
practices reflected in the financial statements referred to in
Section 4.5 hereof, subject to year-end audit adjustments; and
accompanied by a certificate of the chief financial officer of the
Borrower, substantially in the form of Exhibit F, stating (i) that
such financial statements have been prepared in accordance with GAAP
applied on a basis consistent with the accounting practices
reflected in the financial statements referred to in Section 4.5,
subject to year-end audit adjustments, (ii) whether or not such
officer has knowledge of the occurrence of any Default or Event of
Default hereunder not theretofore reported and remedied and, if so,
stating in reasonable detail the facts with respect thereto, and
(iii) all relevant facts in reasonable detail to evidence, and the
computations as to, whether or not the Borrower is in compliance
with the requirements set forth in Sections 5.8 - 5.13, 6.2(c) and
6.11;
(c) not later than thirty (30) days after the commencement of each
fiscal year of the Borrower, the projected combined balance sheets,
income statements, and cash flow statements for each month of such
fiscal year for the Borrower and the members of the Affiliated
Group, prepared on a combined basis, in reasonable detail,
representing the good faith projections of the Borrower and
certified by the Borrower's chief financial officer as being the
most accurate projections available and identical to the projections
used by the Borrower (and each member of the Affiliated Group) for
internal planning purposes, together with such supporting schedules
and information as the Bank in its discretion may require;
(d) as promptly as practicable (but in no event later than five (5)
Business Days after the commencement thereof), notice in writing of
all litigation and of all proceedings before any governmental or
regulatory agency affecting the Borrower or any member of the
Affiliated Group, or any of its Subsidiaries, of the type described
in Section 4.6 or which seek a monetary recovery against the
Borrower or any member of the Affiliated Group, or any of its
Subsidiaries, in excess of $25,000;
(e) as promptly as practicable (but in any event not later than five (5)
Business Days) after an officer of the Borrower, or any member of
the Affiliated Group, obtains knowledge of the occurrence of a
Default or Event of Default hereunder, notice of such occurrence,
together with a detailed statement by a responsible officer of the
Borrower (or of any member of the Affiliated Group, as the case may
be) of the steps being taken by the Borrower (or such member if
the Affiliated Group) to cure the effect of such breach, default or
event;
(f) as soon as possible and in any event within ten (10) days after the
Borrower, or any member of the Affiliated Group, or any of its
Subsidiaries, knows or has reason to know that any Reportable Event
with respect to any Plan has occurred, the statement of the chief
financial officer of the Borrower (or any member of the Affiliated
Group, as the case may be), setting forth details as to such
Reportable Event and the action which the Borrower (or such member
of the Affiliated Group, as the case may be) proposes to take with
respect thereto, together with a copy of the notice of such
Reportable Event to the Pension Benefit Guaranty Corporation;
(g) as soon as possible, and in any event within ten (10) days after the
Borrower, or any member of the Affiliated Group, fails to make any
quarterly contribution required with respect to any Plan under
Section 4.12(m) of the Internal Revenue Code of 1986, as amended,
the statement of the chief financial officer of the Borrower (or
such member of the Affiliated Group) setting forth details as to
such failure and the action which the Borrower (or such member of
the Affiliated Group) proposes to take with respect thereto,
together with a copy of any notice of such failure required to be
provided to the Pension Benefit Guaranty Corporation;
(h) promptly upon their distribution, copies of all financial
statements, reports and proxy statements which the Borrower, or any
member of the Affiliated Group, shall have sent to its stockholders;
(i) promptly after the sending or filing thereof, copies of all regular
and periodic financial reports which the Borrower, or any member of
the Affiliated Group, shall file with the Securities and Exchange
Commission or any national securities exchange including without
limitation quarterly 10Q Statements and annual 10K Statements;
(j) promptly upon obtaining knowledge thereof, notice of the violation
by the Borrower, or any member of the Affiliated Group, of any law,
rule or regulation, the non-compliance with which could materially
and adversely affect its business or its financial condition; and
(k) such other information as reasonably requested by the Bank.
Section 5.2 Books and Records; Inspection and Examination. The Borrower
and its Subsidiaries will keep, and will cause each member of the Affiliated
Group to keep, accurate books of record and account for itself pertaining to its
business and financial condition and such other matters as the Bank may from
time to time request in which true and complete entries will be made in
accordance with GAAP consistently applied and, upon request of and reasonable
notice by the Bank, will permit any officer, employee, attorney or accountant
for the Bank, to audit, review, make extracts from or copy any and all corporate
and financial books and records of the Borrower, and each member of the
Affiliated Group, at all reasonable times during ordinary business hours, to
send account debtors and other obligors requests for verification of amounts
owed to the Borrower, or any member of the Affiliated Group, and to discuss the
affairs of the Borrower, or any member of the Affiliated Group, with any of its
directors, officers or agents. The Borrower and its Subsidiaries will permit,
and will cause each member of the Affiliated Group to permit, the Bank or its
employees, accountants, attorneys or agents, at the Bank's expense, to examine
and inspect any property of the Borrower and its Subsidiaries, and any member of
the Affiliated Group, at any time during ordinary business hours.
Section 5.3 Compliance with Laws. The Borrower and its Subsidiaries
will, and will cause each member of the Affiliated Group to, (a) comply with the
requirements of applicable laws and regulations, the non-compliance with which
would materially and adversely affect its business or its financial condition,
(b) comply with all applicable Environmental Laws and obtain any permits,
licenses or similar approvals required by any such Environmental Laws, and (c)
use and keep its assets, and will require that others use and keep its assets,
only for lawful purposes, without violation of any federal, state or local law,
statute or ordinance.
Section 5.4 Payment of Taxes and Other Claims. The Borrower and its
Subsidiaries will, and will cause each member of the Affiliated Group to, pay or
discharge, when due, (a) all taxes, assessments and governmental charges levied
or imposed upon it or upon its income or profits, upon any properties belonging
to it prior to the date on which penalties attach thereto, (b) all federal,
state and local taxes required to be withheld by it, and (c) all lawful claims
for labor, materials and supplies which, if unpaid, might by law become a lien
or charge upon any properties of the Borrower, or its Subsidiaries (or any
member of the Affiliated Group, as the case may be); provided, however, that the
Borrower, or its Subsidiaries (or such member of the Affiliated Group), shall
not be required to pay any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
Section 5.5 Maintenance of Properties. The Borrower and its Subsidiaries
will, and will cause each member of the Affiliated Group to, keep and maintain
all of its properties necessary or useful in its business in good condition,
repair and working order (normal wear and tear excepted); provided, however,
that nothing in this Section 5.5 shall prevent the Borrower, its Subsidiaries,
or any member of the Affiliated Group from discontinuing the operation and
maintenance of any of its properties if such discontinuance is, in the
reasonable judgment of the Borrower, its Subsidiaries, or such member of the
Affiliated Group, as the case may be, desirable in the conduct of its business
and not disadvantageous in any material respect to the Bank.
Section 5.6 Insurance. The Borrower and its Subsidiaries will, and will
cause each member of the Affiliated Group to, obtain and at all times maintain
insurance with insurers believed by the Borrower, its Subsidiaries, and each
member of the Affiliated Group to be responsible and reputable in such amounts
and against such risks as is usually carried by companies engaged in similar
business and owning similar properties in the same general areas in which the
Borrower, its Subsidiaries, and each member of the Affiliated Group, operate.
Section 5.7 Preservation of Corporate Existence. The Borrower and its
Subsidiaries will, and will cause each member of the Affiliated Group to,
preserve and maintain its corporate existence and all of its rights, privileges
and franchises necessary or desirable in the normal conduct of its business and
shall conduct its business in an orderly, efficient and regular manner.
Section 5.8 Senior Leverage Ratio. The FDC Group will maintain, on a
combined basis, as of each Covenant Computation Date, the ratio of its Funded
Debt, excluding Subordinated Debt, to its Pro Forma EBIDTA at not more than 2.00
to 1.00 for Covenant Computation Periods ending on June 30, 2000, September 30,
2000 and December 31, 2000, and at not more than 1.50 to 1.00 for Covenant
Computation Periods ending on March 31, 2001, and thereafter.
Section 5.9 Total Leverage Ratio. The FDC Group will maintain, on a
combined basis, as of each Covenant Computation Date, the ratio of its total
Funded Debt to its Pro Forma EBITDA at not more than 3.00 to 1.00
Section 5.10 Debt Service Coverage Ratio. The FDC Group will maintain,
on a combined basis, as of March 31, 2001 and each Covenant Computation Date
thereafter, its Debt Service Coverage Ratio at not less than 1.15 to 1.00.
Section 5.11 Minimum Stockholders' Equity. The FDC Group will maintain,
on a combined basis, as of each Covenant Computation Date, its Stockholders'
Equity at not less than the total of $25,000,000 plus, subsequent to
December 31, 2000, fifty percent (50%) of the after tax net income of the FDC
Group for the fiscal year ending December 31, 2000 (with any negative net income
counting as zero (0) for purposes of the foregoing).
Section 5.12 Minimum EBITDA. The FDC Group will achieve EBITDA, on a
combined basis, in amounts not less than the amounts set forth opposite the
applicable periods below (on a cumulative basis):
Period Minimum EBITDA
------ --------------
01/1/2000 - 06/30/2000 $2,000,000
01/1/2000 - 09/30/2000 $3,500,000
01/1/2000 - 12/31/2000 $6,000,000
Section 5.13 Interest Coverage Ratio. The FDC Group will maintain, on a
combined basis, as of December 31, 2000 and each Covenant Computation Date
thereafter, its Interest Coverage Ratio at not less than 3.00 to 1.00.
ARTICLE VI
NEGATIVE COVENANTS
So long as either Note remain unpaid or outstanding or either Commitment
shall be outstanding, the Borrower will comply with the following requirements,
unless the Bank shall otherwise consent in writing:
Section 6.1 Liens. The Borrower will not, nor will any of the Borrower's
Subsidiaries or any member of the Affiliated Group, create, incur or suffer to
exist any mortgage, deed of trust, pledge, lien, security interest, assignment
or transfer upon or of any of its assets, now owned or hereafter acquired, to
secure any indebtedness; excluding, however, from the operation of the foregoing
(herein "Permitted Liens"):
(a) mortgages, deeds of trust, pledges, liens, security interests and
assignments in existence on the date hereof and listed in
Schedule 6.1;
(b) liens for taxes or assessments or other governmental charges to the
extent not required to be paid by Section 5.4;
(c) materialmen's, merchants', carriers', worker's, repairer's, or other
like liens arising in the ordinary course of business to the extent
not required to be paid by Section 5.4;
(d) pledges or deposits to secure obligations under worker's
compensation laws, unemployment insurance and social security laws,
or to secure the performance of bids, tenders, contracts (other than
for the repayment of borrowed money) or leases or to secure
statutory obligations or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds in the ordinary course
of business;
(e) zoning restrictions, easements, licenses, restrictions on the use of
real property or minor irregularities in title thereto, which do not
materially impair the use of such property in the operation of the
business of the Borrower, or its Subsidiaries, or the value of such
property for the purpose of such business;
(f) liens and security interests granted to the Bank pursuant to any of
the Loan Documents; and
(g) purchase money mortgages, liens or security interests (including
conditional sale agreements or other title retention agreements and
leases in the nature of title retention agreements) upon or in
property acquired after the date hereof by the Borrower, or
mortgages, liens or security interests existing in such property at
the time of the acquisition thereof, provided that:
(i) no such mortgage, lien or security interest extends or shall
extend to or cover any property of the Borrower, its
Subsidiaries, or any member of the Affiliated Group, other
than the property then being acquired; and
(ii) the aggregate principal amount of the indebtedness secured
by any such mortgage, lien or security interest shall not
exceed the cost of such property so acquired by the
Borrower, its Subsidiaries, or any member of the Affiliated
Group, in connection therewith or the fair market value of
such property, whichever is less.
Section 6.2 Indebtedness. The Borrower will not, nor will it allow its
Subsidiaries or any member of the Affiliated Group to, incur, create, assume or
permit to exist any indebtedness or liability on account of deposits or advances
or any indebtedness for borrowed money, or any other indebtedness or liability
evidenced by notes, bonds, debentures or similar obligations, except:
(a) Obligations arising hereunder;
(b) indebtedness of the Borrower, its Subsidiaries, or any member of the
Affiliated Group, in existence on the date hereof and listed in
Schedule 6.2; and
(c) that the Borrower, its Subsidiaries and any member of the Affiliated
Group, may enter into: (i) new Capitalized Lease Liabilities;
(ii) indebtedness secured by security interests permitted by
Section 6.1(g); and (iii) other indebtedness in connection with and
specifically related to the purchase of property by the Borrower,
its Subsidiaries, or any member of the Affiliated Group, as the case
may be, in an aggregate amount not to exceed $2,000,000, at any
given time.
Section 6.3 Guaranties. The Borrower will not, nor will it allow its
Subsidiaries or any member of the Affiliated Group to, assume, guarantee,
endorse or otherwise become directly or contingently liable in connection with
any obligations of any other Person, except:
(a) the endorsement of negotiable instruments by the Borrower, its
Subsidiaries, or any member of the Affiliated Group, as the case
may be, for deposit or collection or similar transactions in the
ordinary course of business;
(b) guaranties, endorsements and other direct or contingent liabilities
in connection with the obligations of other Persons in existence on
the date hereof and listed in Schedule 6.3; and
(c) guaranties of the Guarantors to the Bank, issued in connection with
this credit facility.
Section 6.4 Investments. The Borrower will not, nor will it allow its
Subsidiaries or any member of the Affiliated Group to, purchase or hold
beneficially any stock or other securities or evidences of indebtedness of, make
or permit to exist any loans or advances to, or make any investment or acquire
any interest whatsoever in, any other Person, except:
(a) investments in direct obligations of the United States of America or
any agency or instrumentality thereof whose obligations constitute
full faith and credit obligations of the United States of America
having a maturity of one (1) year or less, commercial paper issued
by a U.S. corporation rated "A-1" or "A-2" by Standard & Poors
Corporation or "P-1" or "P-2" by Xxxxx'x Investors Service,
investments in money market mutual funds whose underlying assets
are investments which would otherwise be permitted investments under
this Section 6.4(a), or repurchase agreements, certificates of
deposit or bankers' acceptances having a maturity of one (1) year or
less issued by members of the Federal Reserve System having deposits
in excess of $100,000,000 (which certificates of deposit or bankers'
acceptances are fully insured by the Federal Deposit Insurance
Corporation); and
(b) advances in the form of progress payments, prepaid rent or security
deposits.
Section 6.5 Restricted Payments. The Borrower will not, nor will it
allow any Subsidiary or any member of the Affiliated Group to, declare or pay
any dividends on any shares of any class of stock of the Borrower, its
Subsidiaries or such member of the Affiliated Group, as the case may be, or
directly or indirectly apply any assets of the Borrower, its Subsidiaries or
such member of the Affiliated Group, as the case may be to the redemption,
retirement, purchase or other acquisition of any shares of any class of stock of
the Borrower, its Subsidiaries or such member of the Affiliated Group, as the
case may be, during any fiscal year of the Borrower, its Subsidiaries or such
member of the Affiliated Group, as the case may be.
Section 6.6 Sale or Transfer of Assets; Suspension of Business
Operations. The Borrower will not, nor will it allow any member of the
Affiliated Group to, sell, lease, assign, transfer or otherwise dispose of the
stock of any Subsidiary, all or a substantial part of its assets (whether in one
transaction or in a series of transactions) to any other Person other than the
sale of its inventory in the ordinary course of business and will not liquidate,
dissolve or suspend its business operations; provided, however, that the
Borrower, any of its Subsidiaries, or any member of the Affiliated Group, may
make such sales, transfers, assignments, leases or other dispositions of assets
in an aggregate amount not to exceed $2,000,000 in any year.
Section 6.7 Consolidation and Merger; Asset Acquisitions. The Borrower
will not, nor will it allow any member of the Affiliated Group to, consolidate
with or merge into any Person, or permit any other Person to merge into it, or
acquire (in a transaction analogous in purpose or effect to a consolidation or
merger) all or substantially all the assets of any other Person; provided,
however, that the Borrower (or any member of the Affiliated Group) may make
Permitted Business Acquisitions so long as the purchase price for any such
Permitted Business Acquisition does not exceed $2,000,000 per individual
transaction, and the purchase price for all such Permitted Business Acquisitions
within any fiscal year of the Borrower does not exceed $12,500,000 in the
aggregate. For purposes of the foregoing, "Permitted Business Acquisition" shall
mean a purchase by the Borrower (or any member of the Affiliated Group) of a
Person which (a) is in a similar line of business as the Borrower, (b) where the
Person being acquired has posted positive EBITDA (as such term would apply to
such Person) for the most recent twelve (12) month trailing period, and (c )
where the Borrower (or any member of the Affiliated Group) acquires at least
fifty-one percent (51%) of the outstanding stock of such Person being acquired.
Section 6.8 Restrictions on Nature of Business. The Borrower, its
Subsidiaries, and each member of the Affiliated Group, will not engage in any
line of business materially different from or unrelated to the business
presently engaged in by the Borrower, its Subsidiaries, and each member of the
Affiliated Group, as the case may be, and will not purchase, lease or otherwise
acquire assets not related to its business, other than the acquisition of assets
permitted under Section 6.4 hereof.
Section 6.9 Accounting. The Borrower, its Subsidiaries and each member
of the Affiliated Group will not adopt any material change in accounting
principles other than as required by, or acceptable under, GAAP. The Borrower
will not, nor will it allow its Subsidiaries or any member of the Affiliated
Group to, adopt, permit or consent to any change in its fiscal year.
Section 6.10 Hazardous Substances. The Borrower, its Subsidiaries and
each member of the Affiliated Group will not cause or permit any Hazardous
Substances to be disposed of, in any manner which might result in any material
liability to the Borrower, its Subsidiaries or any member of the Affiliated
Group, on, under or at any real property which is operated by the Borrower, its
Subsidiaries or any member of the Affiliated Group or in which the Borrower, its
Subsidiaries or any member of the Affiliated Group has any interest.
Section 6.11 . Capital Expenditures. The FDC Group will not incur or
contract to incur Capital Expenditures, on a combined basis, during any fiscal
year of more than $1,500,000 in the aggregate.
ARTICLE VII
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Section 7.1 Events of Default. "Event of Default", wherever used herein,
means any one of the following events:
(a) default in the payment of any interest on or principal of any Note
when it becomes due and payable and the continuation of such default
for more than three (3) Business Days; or
(b) default in the payment of any fees, costs or expenses required to be
paid by the Borrower under this Agreement or any other Loan Document
and the continuation of such default for more than ten (10) Business
days; or
(c) default in the performance, or breach, of any covenant or agreement
on the part of the Borrower contained in Sections 5.8 - 5.13, or
Article VI; or
(d) default in the performance, or breach, of any covenant or agreement
of the Borrower in this Agreement (other than a covenant or
agreement a default in whose performance or whose breach is
elsewhere in this Section 7.1 specifically dealt with) or in any
other Loan Document and the continuance of such default or
breach for a period of thirty (30) days after there has been given
a written notice specifying such default or breach and requiring it
to be remedied; or
(e) the Borrower, or any Guarantor, shall be or become insolvent (as
such term is defined in Section 101(32) of the United Sates
Bankruptcy Code and Section 2 of the Uniform Fraudulent Transfer
Act), or admit in writing its inability to pay its debts as they
mature, or make an assignment for the benefit of creditors; or the
Borrower, or any Guarantor, shall apply for or consent to the
appointment of any receiver, trustee, or similar officer for it or
for all or any substantial part of its property; or such receiver,
trustee or similar officer shall be appointed without the
application or consent of the Borrower, or any Guarantor, and such
appointment shall continue undischarged for a period of thirty (30)
days; or the Borrower, or any Guarantor, shall institute (by
petition, application, answer, consent or otherwise) any insolvency,
reorganization, arrangement, readjustment of debt, dissolution,
liquidation or similar proceeding relating to it under the laws of
any jurisdiction; or any such proceeding shall be instituted (by
petition, application or otherwise) against the Borrower, or any
Guarantor, or any judgment, writ, warrant of attachment or execution
or similar process shall be issued or levied against a substantial
part of the property of the Borrower, or any Guarantor, and such
judgment, writ, or similar process shall not be released, vacated or
fully bonded within thirty (30) days after its issue or levy; or
(f) a petition naming the Borrower, or any Guarantor, as debtor shall be
filed under the United States Bankruptcy Code; or
(g) any representation or warranty made by the Borrower in this
Agreement or by the Borrower (or any of its officers) in any request
for a Borrowing, or in any other certificate, instrument, or
statement contemplated by or made or delivered pursuant to or in
connection with this Agreement, shall prove to have been incorrect
in any material respect when made; or
(h) the rendering against the Borrower, or any Guarantor, of a final
judgment, decree or order for the payment of money in excess of
$50,000 (unless the payment of such judgment is fully insured) and
the continuance of such judgment, decree or order unsatisfied and in
effect for any period of thirty (30) consecutive days without a stay
of execution; or
(i) a default shall occur under any bond, debenture, note or other
obligation of the Borrower, or any Guarantor, evidencing
indebtedness in the amount of $50,000 or more, or under any
indenture or other instrument under which any such evidence of
indebtedness or other instrument under which any such evidence of
indebtedness has been issued or by which it is governed, and the
expiration of the applicable period of grace, if any, specified in
such evidence of indebtedness, indenture or other instrument; or
(j) any Reportable Event, which the Bank determines in good faith might
constitute grounds for the termination of any Plan or for the
appointment by the appropriate United States District Court of a
trustee to administer any Plan, shall have occurred and be
continuing thirty (30) days after written notice to such effect
shall have been given to the Borrower by the Bank; or any Plan shall
have been terminated, or a trustee shall have been appointed by an
appropriate United States District Court to administer any Plan, or
the Pension Benefit Guaranty Corporation shall have instituted
proceedings to terminate any Plan or to appoint a trustee to
administer any Plan; or
(k) the Borrower or any member of the Affiliated Group shall liquidate,
dissolve, terminate or suspend its business operations or otherwise
fail to operate its business in the ordinary course, or shall sell
all or substantially all of its assets, without the prior written
consent of the Bank; or
(l) the Borrower, or any Guarantor, shall fail to pay, withhold, collect
or remit any tax or tax deficiency when assessed or due (other than
any tax deficiency which is being contested in good faith and by
proper proceedings and for which it shall have set aside on its
books adequate reserves therefor) or notice of any state or federal
tax liens shall be filed or issued.
Section 7.2 Rights and Remedies. Upon the occurrence of an Event of
Default or at any time thereafter until such Event of Default is cured or waived
to the written satisfaction of the Bank, the Bank may exercise any or all of the
following rights and remedies:
(a) by notice to the Borrower, declare the Commitments to be terminated,
whereupon the same shall forthwith terminate;
(b) by notice to the Borrower, declare the entire unpaid principal
amount of the Notes, all interest accrued and unpaid thereon, and
all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Notes, all such accrued interest and all
such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower;
(c) without notice to the Borrower and without further action, apply any
and all money owing by the Bank to the Borrower to the payment of
the Notes, including interest accrued thereon, and of all other
Obligations then owing by the Borrower hereunder;
(d) exercise and enforce the rights and remedies available to the Bank
under any Loan Document or any guaranty given to the Bank by the
Guarantor; and
(e) exercise any other rights and remedies available to the Bank by law
or agreement.
Notwithstanding the foregoing, upon the occurrence of an Event of
Default described in Section 7.1(f) hereof, the entire unpaid principal amount
of the Notes, all interest accrued and unpaid thereon, and all other amounts
payable under this Agreement shall be immediately due and payable without
presentment, demand, protest or notice of any kind.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Waiver; Cumulative Remedies. No failure or delay on the
part of the Bank in exercising any right, power or remedy under the Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy under the
Loan Documents. The remedies provided in the Loan Documents are cumulative and
not exclusive of any remedies provided by law.
Section 8.2 Amendments, Requested Waivers, Etc. No amendment,
modification, termination or waiver of any provision of any Loan Document or
consent to any departure by the Borrower therefrom shall be effective unless the
same shall be in writing and signed by the Bank. Any waiver or consent given
hereunder shall be effective only in the specific instance and for the specific
purpose for which given. No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances.
Section 8.3 Addresses for Notices, Etc. Except as otherwise expressly
provided herein, all notices, requests, demands and other communications
provided for under the Loan Documents shall be in writing and mailed or
delivered to the applicable parties at their respective addresses set forth on
the execution pages hereto, or, as to each party, at such other address as shall
be designated by such party in a written notice to the other party complying as
to delivery with the terms of this Section 8.3. All such notices, requests,
demands and other communications shall be effective upon postmark, when mailed,
or upon delivery, when sent by nationally recognized overnight mail courier or
delivery service, addressed as aforesaid, except that notices or requests to the
Bank pursuant to any of the provisions of Article II shall not be effective
until received by the Bank.
Section 8.4 Costs and Expenses. The Borrower will reimburse the Bank for
any and all out of pocket costs and reasonable expenses (including without
limitation attorneys' fees) paid or incurred by the Bank in connection with (a)
the preparation of the Loan Documents and any other document or agreement
related hereto or thereto, and the transactions contemplated hereby, (b) the
negotiation of any amendments, modifications or extensions to or of any of the
foregoing documents, instruments or agreements and the preparation of any and
all documents necessary or desirable to effect such amendments, modifications or
extensions and (c) the enforcement by the Bank of any of the rights or remedies
of the Bank under any of the foregoing documents, instruments or agreements or
under applicable law, whether or not suit is filed with respect thereto.
Section 8.5 Participants. The Bank and its participants, if any, are not
partners or joint venturers, and the Bank shall not have any liability or
responsibility for any obligation, act or omission of any of its participants.
All rights and powers specifically conferred upon the Bank may be transferred or
delegated to any of the participants, successors or assigns of the Bank. If any
Person shall acquire a participation in any Advances under this Agreement, the
Borrower shall be obligated to the Lender to pay the full amount of all interest
calculated under Section 2.9 hereof, along with all other fees, charges and
other amounts due under this Agreement, regardless if such Person elects to
accept interest with respect to its participation at a lower rate than the rates
pursuant to this Agreement or otherwise elects to accept less than its prorata
share of such fees, charges and other amounts due under this Agreement.
Section 8.6 Execution in Counterparts. This Agreement and other Loan
Documents may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.
Section 8.7 Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) Governing Law. The Loan Documents shall be governed by, and
construed in accordance with, the laws of the State of Minnesota.
(b) Jurisdiction. The Borrower hereby irrevocably submits to the
jurisdiction of any Minnesota State or Federal court sitting in
Minneapolis or St. Xxxx, Minnesota, in any action or proceeding
arising out of or relating to this Agreement or any of the other
Loan Documents, and the Borrower hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and
determined in such Minnesota State court or in such Federal court.
The Borrower hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Borrower irrevocably
consents to the service of copies of the summons and complaint and
any other process which may be served in any such action or
proceeding by the mailing of copies of such process to the Borrower
at its addresses specified in Section 8.3 above. The Borrower agrees
that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this
Section 8.7(b) shall affect the right of the Bank to serve legal
process in any other manner permitted by law or affect the right of
the Bank to bring any action or proceeding against the Borrower or
their property in the courts of other jurisdictions.
(c) WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY IRREVOCABLY
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR ANY
INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.
Section 8.8 Severability of Provisions. Any provision of this Agreement
that is prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof.
Section 8.9 Headings. Article and Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
FACTUAL DATA CORP.
By/s/ X.X. Xxxxxx
--------------
X. X. Xxxxxx
Its President
Borrower's Address:
0000 Xxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
XXXXX FARGO BANK, NATIONAL
ASSOCIATION
By/s/ Xxxxxxx X. XxXxxxxxx
-----------------------
Xxxxxxx X. XxXxxxxxx
Its Vice President
Bank's Address:
Norwest Center
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
[Signature Page to Credit Agreement]
