Exhibit 10.12
AMENDED AND RESTATED
FINANCING AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT (the
"Agreement") is made this 29th day of March 1999, by and among (i) FTI
CONSULTING, INC., a Maryland corporation, formerly known as Forensic
Technologies International Corporation (the "Company"), (ii) the Subsidiaries
signing this Agreement and any Subsidiaries now or hereafter parties to this
Agreement (the "Subsidiaries"; together with the Company, being called
collectively the "Borrowers" and individually, a "Borrower") and (iii)
NATIONSBANK, N.A., a national banking association, its successors and assigns,
as Agent (the "Agent") for itself and its participants (the Agent together with
such participants, each being called a "Lender" and collectively, the
"Lenders").
RECITALS
A. The Agent and the Lenders have provided a line of credit to the
Borrowers as evidenced by that certain Financing and Security Agreement dated as
of September 15, 1998 (the "Original Financing Agreement"). The Borrowers have
requested that the Agent and the Lenders revise certain terms of the Original
Financing Agreement and the Agent, the Lenders and the Borrowers have agreed to
amend and restate the Original Financing Agreement in its entirety pursuant to
this Agreement
B. Pursuant to this Agreement, the Agent and the Lenders have agreed to
provide the Borrowers with a revolving credit facility in the maximum principal
amount of Twenty Seven Million Dollars ($27,000,000) up to Five Million Dollars
($5,000,000) of which the Borrowers may use for working capital needs and for
general corporate purposes (the "Working Capital Advances"), and the balance may
be used to repay the costs of the Seller Notes issued by the Company in
connection with the Acquisitions made by the Company pursuant to the Original
Financing Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, each Subsidiary, the
Agent and the Lenders hereby agree to restate the Original Financing Agreement
in its entirety as follows:
I DEFINITIONS
SECTION 1.1 Certain Defined Terms. As used in this Agreement, the terms
defined in the Preamble and Recitals hereto shall have the respective meanings
specified therein, and the following terms shall have the following meanings:
"Account" individually and "Accounts" collectively mean all presently
existing or hereafter acquired or created accounts, accounts receivable,
contract rights, notes, drafts, instruments, acceptances, chattel paper, leases
and writings evidencing a monetary obligation or a security interest in or a
lease of goods, all rights to receive the payment of money or other
consideration under present or future contracts (including, without limitation,
all rights to receive payments under presently existing or hereafter acquired or
created letters of credit), or by virtue of merchandise sold or leased, services
rendered, loans and advances made or other considerations given, by or set forth
in or arising out of any present or future chattel paper, note, draft, lease,
acceptance, writing, bond, insurance policy, instrument, document or general
intangible, and all extensions and renewals of any thereof, all rights under or
arising out of present or future contracts, agreements or general interest in
merchandise which gave rise to any or all of the foregoing, including all goods,
all claims or causes of action now existing or hereafter arising in connection
with or under any agreement or document or by operation of law or otherwise, all
collateral security of any kind (including real property mortgages) given by any
person with respect to any of the foregoing and all proceeds (cash and non-cash)
of the foregoing.
"Account Debtor" means any Person who is obligated on an Account and
"Account Debtors" mean all Persons who are obligated on the Accounts.
"Additional LIBOR Rate Percentage" shall have the meaning set forth in
the Revolving Note.
"Additional Prime Rate Percentage" shall have the meaning set forth in
the Revolving Note.
"Affiliate" means, with respect to any Borrower, any Person, directly
or indirectly controlling, directly or indirectly controlled by, or under direct
or indirect common control with the Company or any Subsidiary, as the case may
be.
"Acquisitions" means the purchase by the Company of all of the
outstanding stock of each of the following companies: (i) S.E.A., Inc., ("SEA"),
(ii) Xxxx Consulting, Inc. ("XXXX") and KCI Management Corp. ("KCI").
"Agreement" means this Financing and Security Agreement and all
amendments, modifications and supplements hereto which may from time to time
become effective in
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accordance with the provisions of Section 12.10 hereof.
"Assets" means, at any time, all assets that should, in accordance
with GAAP consistently applied, be classified as assets on a consolidated
balance sheet of the Company and its Subsidiaries.
"Banking Day" shall mean any day that is not a Saturday, Sunday or
banking holiday in the State of Maryland
"Base LIBOR Rate" means with respect to any Interest Period pertaining
to a LIBOR Loan, the rate per annum equal to the London Interbank Offered Rate
for thirty (30), sixty (60) ninety (90) or one hundred eighty (180) day deposits
in United States Dollars in an amount approximately equal to the amount for
which said rate is to be set as 11:00 a.m. (London, time), as adjusted for
Federal Reserve Board reserve requirements and similar assessments, if any,
imposed upon the Agent.
"Chattel Paper" means a writing or writings which evidence both a
monetary obligation and a security interest in or lease of specific goods; any
returned, rejected or repossessed goods covered by any such writing or writings
and all proceeds (in any form including, without limitation, accounts, contract
rights, documents, chattel paper, instruments and general intangibles) of such
returned, rejected or repossessed goods; and all proceeds (cash and non-cash) of
the foregoing.
"Closing Date" shall mean the Banking Day, in any event not later than
March 31, 1999, on which the Agent shall be satisfied that the conditions
precedent set forth in Article VI have been fulfilled.
"Collateral" means all property of the Borrowers subject from time to
time to the Liens of this Agreement, the Security Documents and the other
Financing Documents, including but not limited to, all Accounts, Chattel Paper,
Documents, Equipment, General Intangibles, Instruments and Inventory (whether or
not designated with initial capital letters), as those terms are defined in the
Uniform Commercial Code as presently adopted and in effect in the State and
shall also cover, without limitation, (i) any and all property specifically
included in those respective terms in this Agreement or in the Financing
Documents and (ii) all proceeds (cash and non-cash, including, without
limitation, insurance proceeds) of the foregoing.
"Collection" means each check, draft, cash, money, instrument, item,
and other remittance in payment or on account of payment of the Accounts or
otherwise with respect to any Collateral, including, without limitation, cash
proceeds of any returned, rejected or repossessed goods, the sale or lease of
which gave rise to an Account, and other proceeds of Collateral; and
"Collections" means the collective reference to all of the foregoing.
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"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Company within the meaning
of Section 414(b) or (c) of the Internal Revenue Code.
"Current Assets" means at any date, the amount which, in conformity
with GAAP, would be set forth opposite the caption "total current assets" (or
any like caption) on a consolidated balance sheet of the Company and its
Subsidiaries.
"Current Liabilities" means at any date, the amount which, in
conformity with GAAP, would be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet of the
Company and its Subsidiaries, excluding all amounts outstanding under the
Revolving Loan.
"Current Ratio" means the ratio of (a) Current Assets to (b) Current
Liabilities.
"Daily LIBOR Rate" shall mean a fluctuating rate of interest equal to
the one (1) month rate of interest (rounded upwards, if necessary to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the one
(1) month London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) on the second preceding Banking Day, as adjusted from
time to time in the Lender's sole discretion for then-applicable reserve
requirements, deposit insurance assessment rates and other regulatory costs. If
for any reason such rate is not available, the term "Eurodollar Rate" shall mean
the fluctuating rate of interest equal the one (1) month rate of interest
(rounded upwards, if necessary to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the one (1) month London interbank offered rate for deposits
in dollars at approximately 11:00 a.m. (London time) on the second preceding
Banking Day, as adjusted from time to time in Lender's sole discretion for then
applicable reserve requirements, deposit insurance assessment rates and other
regulatory costs; provided, however, if more than one (1) rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates.
"Daily LIBOR Loan" means any Loan for which interest on all or a
portion of the outstanding principal thereof is to be computed with reference to
the Daily LIBOR Rate.
"Default" has the meaning described in Article IX.
"Default Rate" means the default rate of interest set forth in the
Revolving Note.
"Documents" means all documents and documents of title, whether nor
existing or hereafter acquired or created, and all proceeds (cash and non-cash
of the foregoing).
"Dollars" means dollars in lawful currency of the United States of
America.
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"EBITDA" means as to the Company and its Subsidiaries for any period
of determination thereof, the sum of (a) the net profit (or loss) determined in
accordance with GAAP consistently applied, plus (b) interest expense and tax
expense for such period, plus (c) depreciation and amortization of assets for
such period. EBITDA shall be calculated on a trailing twelve (12) month basis,
taking into account any Person acquired in an Acquisition during such twelve
(12) month period and adjusting for officer compensation which was eliminated
from the Person so acquired, provided the Lender has received evidence
satisfactory to Lender with respect to changes and compensation.
"EBITDAR" means as to the Company and its Subsidiaries for any period
of determination thereof, the sum of (a) EBITDA, plus (b) rent expense for such
period.
"Enforcement Costs" shall mean all expenses, charges, costs and fees
whatsoever (including, without limitation, reasonable outside attorney's fees
and expenses) of any nature whatsoever paid or incurred by or on behalf of the
Agent in connection with (a) the collection or enforcement of any or all of the
Obligations, (b) the preparation of or changes to this Agreement, the Note, the
Security Documents and/or any of the other Financing Documents, (c) the
creation, perfection, collection, maintenance, preservation, defense,
protection, realization upon, disposition, sale or enforcement of all or any
part of the Collateral, including, without limitation, those sums paid or
advanced, and costs and expenses, more specifically described in Section 10.3,
and (d) the monitoring, administration, processing, servicing of any or all of
the Obligations and/or the Collateral.
"Equipment" means all equipment, machinery, computers, chattels,
tools, parts, machine tools, furniture, furnishings, fixtures and supplies of
every nature, presently existing or hereafter acquired or created and wherever
located, whether or not the same shall be deemed to be affixed to real property,
together with all accessions, additions, fittings, accessories, special tools,
and improvements thereto and substitutions therefor and all parts and equipment
which may be attached to or which are necessary or beneficial for the operation,
use and/or disposition of such personal property, all licenses, warranties,
franchises and general intangibles related thereto or necessary or beneficial
for the operation, use and/or disposition of the same, together with all
Accounts, Chattel Paper, Instruments and other consideration received by the
Borrower on account of the sale, lease or other disposition of all or any part
of the foregoing, and together with all rights under or arising out of present
or future Documents and contracts relating to the foregoing and all proceeds
(cash and non-cash) of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Banking Day" means a Banking Day in which dealings in
Dollars are carried out on the London interbank eurodollar market.
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"Event of Default" means an event which, with the giving of notice or
lapse of time, or both, could or would constitute a Default under the provisions
of this Agreement.
"Fees" means the fees described in Sections 2.6 and 2.7 hereof.
"Financing Documents" means at any time collectively and include this
Agreement, the Notes, the Security Documents, the Warrant Documents and any
other instrument, agreement or document previously, simultaneously or hereafter
executed and delivered by any Borrower and/or any other Person, singly or
jointly with another Person or Persons, evidencing, securing, guarantying or in
connection with any of the Obligations and/or in connection with this Agreement,
any Note, any of the Security Documents, the Loans and/or any of the
Obligations.
"Fixed Charge Coverage Ratio" means the ratio of (i) EBITDAR, less
capital expenditures, to (ii) (a) the sum of interest expense, plus (b) required
principal on Indebtedness (other than prepayments on the Revolving Loan) and
capitalized leases scheduled and/or paid in the prior twelve (12) month period,
plus (c) any payments required to be made under any non-compete or earn out
agreements scheduled and/or paid in the prior twelve (12) month period, plus (d)
rent expense, plus (e) income tax expense for such period, less (f) up to Ten
Million Dollars ($10,000,000) scheduled to be paid to Xxxx Consulting, Inc. in
September of 1999.
"Funded Debt" means for any period of determination thereof an amount
equal to the sum of all Indebtedness for Borrowed Money (including, but not
limited to senior debt, stockholder debt, subordinated debt, the value of all
capitalized leases, all Seller Notes, all letters of credit issued on the
account of the Company other than letters of credit which secure Seller Notes,
and estimated liabilities under existing earn-out and/or non-compete agreements)
all as determined on a consolidated basis.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"General Intangibles" means all general intangibles of every nature,
whether presently existing or hereafter acquired or created, including without
limitation all books and records, claims (including without limitation all
claims for income tax and other refunds), choses in action, contract rights,
judgments, patents, patent licenses, trademarks, trademark licenses, licensing
agreements, rights in intellectual property, goodwill (including goodwill of the
Borrowers' business symbolized by and associated with any and all trademarks,
trademark licenses, copyrights and/or service marks), royalty payments,
licenses, contractual rights, rights as lessee under any lease of real or
personal property, literary rights, copyrights, service names, service marks,
logos, trade secrets, amounts received as an award in or settlement of a suit in
damages, deposit accounts, interests in joint ventures or general or limited
partnerships, rights in applications for any of the foregoing, books and records
in whatever media (paper, electronic or
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otherwise) recorded or stored, with respect to any or all of the foregoing and
all equipment and general intangibles necessary or beneficial desirable to
retain, access and/or process the information contained in those books and
records, and all proceeds (cash and non-cash) of the foregoing.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Hazardous Materials" means (a) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act of 1976, as amended from time to
time, and regulations promulgated thereunder; (b) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended from time to time, and regulations promulgated
thereunder; (c) any substance the presence of which on any property now or
hereafter owned or acquired by any Borrower is prohibited by any Law similar to
those set forth in this definition; and (d) any other substance which by Law
requires special handling in its collection, storage, treatment or disposal.
"Hazardous Materials Contamination" means the contamination (whether
presently existing or occurring after the date of this Agreement) by Hazardous
Materials of any property owned, operated or controlled by any Borrower or for
which any Borrower has responsibility, including, without limitation,
improvements, facilities, soil, ground water, air or other elements on, or of,
any property now or hereafter owned or acquired by any Borrower, and any other
contamination by Hazardous Materials for which any Borrower is, or is claimed to
be, responsible.
"Indebtedness for Borrowed Money" of a Person, at any time shall mean
the sum at such time of (a) indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services, (b) any obligations of
such Person in respect of letters of credit, banker's or other acceptances or
similar obligations issued or created for the account of such Person, (c) lease
obligations of such Person which have been or should be, in accordance with
GAAP, capitalized on the books of such Person, (d) all liabilities secured by
any Lien on any property owned by such Person, to the extent attached to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof, and (e) any obligation of such Person or
a commonly controlled entity to a multiemployer plan (as those terms are used
under applicable ERISA statutes and regulations), but excluding trade and other
accounts payable in the ordinary course of business in accordance with customary
trade terms and which are not overdue or which are being disputed in good faith
by such Person and for which adequate reserves are being provided on the books
of such Person in accordance with GAAP.
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"Instrument" means a negotiable instrument (as defined under Article 3
of the Uniform Commercial Code), a "certificated security" (as defined under
Article 8 of the Uniform Commercial Code), or any other writing which evidences
a right to payment of money and is not itself a security agreement or lease and
is of a type which is in the ordinary course of business transferred by delivery
with any necessary indorsement.
"Interest Period" means (a) as to any LIBOR Loan the period commencing
on and including the date of such Loan (or on the effective date of the election
pursuant to Section 2.4 (e) by which such Loan became a LIBOR Loan) and ending
on and including the day preceding the same day (or if there is no such same
day, the date preceding the last day) in the first, second, third or sixth
calendar month thereafter, as selected by the Borrowers in accordance with
Section 2.4(e), and thereafter such period commencing on and including the day
immediately following the last day of the then ending Interest Period for such
Loan and ending on and including the day preceding the day corresponding to the
first day of such Interest Period (or if there is no such corresponding day, the
day preceding the last day), in the first, second, third or sixth calendar month
thereafter, as so selected by the Borrowers; provided, however, that if any such
Interest Period would otherwise end on a day prior to a day that is not a
Eurodollar Banking Day, it shall be extended so as to end on the day prior to
the next succeeding Eurodollar Banking Day unless the same would fall in a
different calendar month, in which case such Interest Period shall end on the
day preceding the first Eurodollar Banking Day preceding such next succeeding
Eurodollar Banking Day; and (b) as to any Daily LIBOR Rate Loan or any Prime
Loan, the period commencing on and including the date of such Loan (or on the
effective date of the election pursuant to Section 2.4(e) by which such Loan
became a Daily LIBOR Rate Loan or a Prime Loan, as the case may be) and ending
on and including the day preceding the day 30, 60, 90, or 180 days thereafter,
as so selected by the Borrowers in accordance with Section 2.4 (e), and
thereafter each period commencing on and including the day immediately following
the last day of the then ending Interest Period for such Loan and ending on and
including the day preceding the day 30, 60, 90 or 180 days thereafter, as so
selected by the Borrowers; provided, however, that if any such Interest Period
would otherwise end on a day prior to a day that is not a Banking Day, it shall
be extended so as to end on the day prior to the next succeeding Banking Day.
"Interest Rates" mean the Prime Rate, plus the Additional Prime Rate
Percentage, the Daily LIBOR Rate, plus the Additional LIBOR Rate Percentage or
the LIBOR Rate, plus the Additional LIBOR Rate Percentage, as applicable.
"Inventory" means all inventory of the Borrowers and all right, title
and interest of the Borrowers in and to all of its now owned and hereafter
acquired goods, merchandise and other personal property furnished under any
contract of service or intended for sale or lease, including, without
limitation, all raw materials, work-in-progress, finished goods and materials
and supplies of any kind, nature or description which are used or consumed in
the Borrowers' business or are or might be used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise and other licenses, warranties,
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franchises, general intangibles, personal property and all documents of title or
documents relating to the same and all proceeds (cash and non-cash) of the
foregoing.
"Items of Payment" means each check, draft, cash, money, instrument,
item, and other remittance in payment or on account of payment of the Accounts
or otherwise with respect to any Collateral, including, without limitation, cash
proceeds of any returned, rejected or repossessed Goods, the sale or lease of
which gave rise to an Account, and other proceeds or products of Collateral; and
"Items of Payment" means the collective reference to all of the foregoing.
"Law" or "Laws" means all ordinances, statutes, rules, regulations,
orders, injunctions, writs, or decrees of any Governmental Authority or
political subdivision or agency thereof, or any court or similar entity
established by any thereof.
"Lease Assignments" means those certain Collateral Assignments of
Leases to be delivered by one or more of the Borrowers to the Agent pursuant to
Section 6.11 hereof of the Borrowers' leasehold interests in real property and
any improvements thereon at the following locations: (a) 0000 X Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000, (b) 0000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, (c)
000 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, (d) 0000
Xxxxxxxxxxx-Xxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, and (e) 000 X. Xxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000.
"Liabilities" means, at any time, all liabilities that should, in
accordance with GAAP consistently applied, be classified as liabilities on a
consolidated balance sheet of the Company and its Subsidiaries.
"LIBOR Loan" means any Loan for which interest on all or a portion of
the outstanding principal thereof is to be computed with reference to the LIBOR
Rate.
"LIBOR Rate" means, in respect to any LIBOR Loan, a rate per annum
equal to the sum of the Base LIBOR Rate for the Interest Period for which
interest is to be determined at the LIBOR Rate, plus the Additional LIBOR Rate
Percentage with respect to the Loans.
"Lien" means any mortgage, deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, lien or charge of
any kind, whether perfected or unperfected, avoidable or unavoidable, including,
without limitation, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction,
excluding the precautionary filing of any financing statement by any lessor in a
true lease transaction, by any xxxxxx in a true bailment transaction or by any
consignor in a true consignment transaction under the Uniform Commercial Code of
any jurisdiction or the
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agreement to give any financing statement by any lessee in a true lease
transaction, by any bailee in a true bailment transaction or by any consignee in
a true consignment transaction.
"Loan" means a Revolving Loan or a Swing Line Loan, and "Loans" mean
all Revolving Loans and Swing Line Loans, collectively.
"Loan Notice" has the meaning set forth in Section 2.4(e) hereof.
"Material Adverse Effect" means a material adverse change in (i) the
business operations or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole, (ii) the ability of the Company and its
Subsidiaries to repay the Obligations or otherwise perform their obligations
under any of the Financing Documents, or (iii) the value of, or the ability of
the Agent to realize upon, the Collateral.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Note" means the Revolving Promissory Note or the Swing Line Note, and
"Notes" mean collectively the Revolving Promissory Note the Swing Line Note, and
any other promissory notes which may from time to time evidence the Obligations.
"Obligations" means all present and future debts, obligations, and
liabilities, whether now existing or contemplated or hereafter arising, of any
of the Borrowers to the Agent or any of the Lenders under, arising pursuant to,
in connection with and/or on account of the provisions of this Agreement, the
Notes, each Security Document, and any of the other Financing Documents, any of
the Loans, including, without limitation, the principal of, and interest on, the
Notes, late charges, fees charged with respect to any guaranty of any letter of
credit, and also means all other present and future indebtedness, liabilities
and obligations, whether now existing or contemplated or hereafter arising, of
any of the Borrowers to the Agent or any of the Lenders of any nature whatsoever
regardless of whether such debts, obligations and liabilities be direct,
indirect, primary, secondary, joint, several, joint and several, fixed or
contingent; and any and all renewals, extensions and rearrangements of any such
debts, obligations and liabilities.
"Overdraft" means any excess of debit entries over collected funds on
deposit in any banking account of any Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means: (a) Liens for Taxes which are not delinquent
or which the Agent has determined in the exercise of its sole and absolute
discretion (i) are being diligently contested in good faith and by appropriate
proceedings, (ii) such Borrower has the financial ability to pay, with all
penalties and interest, at all times without materially and adversely
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affecting such Borrower, and (iii) are not, and will not be with appropriate
filing, the giving of notice and/or the passage of time, entitled to priority
over any Lien of the Agent; (b) deposits or pledges to secure obligations under
worker's compensation, social security or similar laws, or under unemployment
insurance in the ordinary course of business; (c) Liens in favor of the Agent;
(d) judgment Liens to the extent the entry of such judgment does not constitute
an Event of Default under the terms of this Agreement or result in the sale of,
or levy of execution on, any of the Collateral; (f) purchase money security
interest permitted under Section 8.01 hereof, (g) liens of carriers, warehouses,
mechanics and landlords incurred in the ordinary course of business, (h) Liens
currently securing the Subordinated Debt, and (i) such other Liens, if any, as
are set forth on EXHIBIT C attached hereto and made a part hereof.
"Person" shall mean and include an individual, a corporation, a
partnership, a joint venture, a trust, an unincorporated association, a
government or political subdivision or agency thereof or any other entity.
"Pledge Agreement" means those certain Amended and Restated Pledge and
Security Agreements of even date herewith, from the Company in favor of the
Agent for the benefit of the Lenders, as the same may be amended, replaced or
modified from time to time.
"Prime Loan" means any Loan for which interest on all or a portion of
the outstanding principal thereof is to be computed with reference to the Prime
Rate.
"Prime Rate" means the prime rate charged by the Agent as fixed by
management of the Agent for the guidance of its loan officers, whether or not
such rate is otherwise published or announced. The Prime Rate is not necessarily
the lowest rate of interest charged by the Agent to borrowers.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"Required Lenders" means at any time the Lenders holding at least
seventy-five percent (75.0%) of the then aggregate unpaid principal amount of
the Loans held by the Lenders, or, if no such principal amount is then
outstanding, the Lenders having at least seventy-five percent (75.0%) of the
Revolving Loan Committed Amount.
"Responsible Officer" means the chief executive officer of the Company
or the president of the Company or, with respect to financial matters, the chief
financial officer of the Company.
"Revolving Loan Committed Amount" means Twenty Seven Million Dollars,
and includes all amounts advanced under the Swing Line Loans.
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"Revolving Loan" and "Revolving Loans" have the meanings described in
Section 2.1(a).
"Revolving Promissory Note" has the meaning described in Section
2.1(c).
"Revolving Loan Account" has the meaning described in Section 2.4.
"Security Agreement" means that certain security agreement for
intellectual property dated the date hereof from the Company for the benefit of
the Agent and the Lenders, as the same may from time to time be amended,
restated, supplemented or otherwise modified.
"Security Documents" shall mean collectively any assignment, pledge
agreement, security agreement, mortgage, deed of trust, deed to secure debt,
financing statement and any similar instrument, document or agreement under or
pursuant to which a Lien is now or hereafter granted to, or for the benefit of,
the Agent on any collateral to secure the Obligations, as the same may from time
to time be amended, restated, supplemented or otherwise modified, including, but
not limited to the Pledge Agreements, the Security Agreement and the Lease
Assignments.
"Seller Notes" shall mean the promissory notes from the Company and
more fully described in Schedule A attached hereto.
"Senior Management" shall be deemed to refer to the following
executive positions: President, CEO, Chairman of the Board, Chief Operating
Officer and Chief Financial Officer.
"State" means the State of Maryland.
"Subsidiary" means the subsidiaries set forth on the signature page to
this Agreement, and any corporation the majority of the voting shares of which
at the time are owned directly by the Company and/or by one or more Subsidiaries
of the Company.
"Subordinated Debt" means that certain Indebtedness for Borrowed Money
of the Company in favor of Allied Capital Corporation and Allied Investment
Corporation, in an aggregate face principal amount of Thirteen Million Dollars
($13,000,000).
"Subordinated Debt Loan Documents" means any and all promissory notes,
agreements, documents or instruments now or at any time evidencing, securing,
guarantying or otherwise executed and delivered in connection with the
Subordinated Debt, as the same may from time to time be amended, restated,
supplemented or modified.
"Subordinated Indebtedness" means the Seller Notes, the Subordinated
Debt and all other Indebtedness incurred at any time by the Borrowers, the
repayment of which is
12
subordinated to the Obligations by a written agreement in form and substance
satisfactory to the Lender in its sole and absolute discretion.
"Subordination Agreement" means that certain Subordination Agreement
by and among Allied Capital Corporation and Allied Investment Corporation, the
Borrowers in favor of the Lender, as the same may be from time to time amended,
restated, supplemented or modified.
"Swing Line Loans" means loans made pursuant to Section 2.3 hereof.
"Swing Line Note" has the meaning described in Section 2.3(a) hereof.
"Taxes" mean all taxes and assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character
(including all penalties or interest thereon), which at any time may be
assessed, levied, confirmed or imposed by any Governmental Authority on any
Borrower or any of its properties or assets or any part thereof or in respect of
any of its franchises, businesses, income or profits.
"Uniform Commercial Code" means, unless otherwise provided in this
Agreement, the Uniform Commercial Code as adopted by and in effect from time to
time in the State.
"Warrant Documents" means that stock purchase warrant of even date
herewith from the Company in favor of the Agent, together with all exhibits and
instruments delivered therewith, as the same may be from time to time amended,
restated, supplemented or modified.
"Wholly Owned Subsidiary" means any domestic United States corporation
all the shares of stock of all classes of which (other than directors'
qualifying shares) at the time are owned directly or indirectly by the Company
and/or by one or more Wholly Owned Subsidiaries of the Company.
SECTION 1.2 Accounting Terms and Other Definitional Provisions. Unless
otherwise defined herein, as used in this Agreement and in any certificate,
report or other document made or delivered pursuant hereto, accounting terms not
otherwise defined herein, and accounting terms only partly defined herein, to
the extent not defined, shall have the respective meanings given to them under
GAAP. Unless otherwise defined herein, all terms used herein which are defined
by the Maryland Uniform Commercial Code shall have the same meanings as assigned
to them by the Maryland Uniform Commercial Code unless and to the extent varied
by this Agreement. The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are references to sections or
subsections of, or schedules or exhibits to, as the case may be, this Agreement
unless otherwise specified. As used herein, the singular number shall include
the
13
plural, the plural the singular and the use of the masculine, feminine or neuter
gender shall include all genders, as the context may require. Reference to any
one or more of the Financing Documents and any of the Financing Documents shall
mean the same as the foregoing may from time to time be amended, restated,
substituted, extended, renewed, supplemented or otherwise modified.
II BORROWING
SECTION 2.1 The Revolving Loan
(a) The Lenders agree to lend to the Borrowers and the Borrowers
jointly and severally agree to borrow on a revolving basis from time to time the
principal amount outstanding (the "Revolving Loan") not to exceed at any time
Twenty Seven Million Dollars ($27,000,000).
(b) The joint and several obligation of the Borrowers to repay the
advances under the Revolving Loan shall be evidenced by the Borrowers' Amended
and Restated Revolving Promissory Note of even date herewith (the "Revolving
Promissory Note") payable to the Agent in the form attached hereto as EXHIBIT A.
The Revolving Promissory Note shall bear interest and shall be repaid by the
Borrowers in the manner and at the times set forth in the Revolving Promissory
Note.
(c) The Borrowers may prepay the principal sum outstanding on the
Revolving Loan only in accordance with the terms of the Revolving Note. Sums
borrowed and repaid may be readvanced under the terms and conditions of this
Agreement.
(d) The proceeds of the Revolving Loan shall be used by the Borrowers
for the purposes set forth in Recital B above, and, unless prior written consent
of the Lenders is obtained, for no other purpose.
SECTION 2.2 Revolving Loan Procedure. The Borrowers hereby irrevocably
authorize the Agent and each of the Lenders to make advances under the Revolving
Loan at any time and from time to time, without further request from or notice
to the Borrowers, which the Agent, in its sole and absolute discretion, deems
necessary or appropriate to protect the Agent's interests under this Agreement
or otherwise, including, without limitation, advances made to cover Overdrafts,
principal of, and/or interest on, any Loans, fees, and/or Enforcement Costs,
prior to, on, or after the termination of this Agreement, regardless of whether
the aggregate amount of the advances which the Agent may make hereunder exceeds
the Revolving Credit Committed Amount. The Agent and each Lender shall have no
obligation whatsoever to make any advance under this subsection and the making
of one or more advances under this subsection shall not obligate the Agent or
any Lender to make other similar advance or advances. Any such advances will be
secured by the Collateral.
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SECTION 2.3 Swing Line Loans.
(a) Upon the terms and subject to the conditions hereof, and in
reliance upon the representations and warranties herein set forth, NationsBank,
N.A. ("NationsBank") agrees to make a loan or loans to the Borrowers (each a
"Swing Line Loan" and collectively, the "Swing Line Loans"), which Swing Line
Loans (i) shall accrue interest at the Prime Rate, plus the Additional Prime
Rate Percentage or the Daily LIBOR Rate, plus the Additional LIBOR Rate
Percentage, (ii) may be repaid and reborrowed in accordance with the provisions
hereof; (iii) shall not exceed in aggregate principal amount at any time
outstanding the amount of the Revolving Loan Committed Amount minus the
aggregate principal amount of all Revolving Loans then outstanding; (iv) shall
not exceed One Million Dollars ($1,000,000.00) in aggregate principal amount at
any time outstanding; and (v) shall not be made after NationsBank has received
written notice from any Lender that a Default or Event of Default has occurred
and is continuing. The Swing Line Loans shall be evidenced by a Note in the form
of Exhibit D attached hereto.
(b) On any Banking Day, NationsBank may, in its sole discretion, give
notice to the Agent and the Lenders (other than NationsBank) that its
outstanding Swing Line Loans shall be funded with a borrowing of Revolving Loans
(provided that each such notice shall be deemed to have been automatically given
upon the occurrence of an Event of Default), in which case a borrowing of
Revolving Loans constituting Revolving Loans at the Prime Rate, plus the
Additional Prime Rate Percentage or the Daily LIBOR Rate, plus the Additional
LIBOR Percentage, shall be made on the immediately succeeding Banking Day by all
of the Lenders ratably based upon each Lender's percentage of the Revolving
Loans, and the proceeds thereof shall be applied directly to repay NationsBank
for such outstanding Swing Line Loans. Each Lender hereby irrevocably agrees to
make Revolving Loans upon one (1) Banking Day's notice in the amount and in the
manner specified in the preceding sentence and on the date specified in writing
by the Agent notwithstanding (i) that the amount of such borrowing may not
comply with the minimum borrowing amounts otherwise required hereunder, (ii)
whether any conditions specified in Article VI are then satisfied, (iii) whether
a Default or Event of Default has occurred and is continuing, and (iv) any
reduction in the Revolving Loan Committed Amount after any such Swing Line Loans
were made. In the event that any borrowing pursuant to this Section 2.3 cannot
for any reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of any insolvency proceeding in
respect of any Borrower), each Lender (other than NationsBank) hereby agrees
that it shall forthwith purchase from NationsBank (without recourse or warranty)
such assignment of the outstanding Swing Line Loans as shall be necessary to
cause the Lenders to share in such Swing Line Loans ratably based upon their
respective percentages of the Revolving Loans, provided that all interest
payable on the Swing Line Loans shall be for the account of NationsBank until
the date the respective Revolving Loan is purchased and, to the extent
attributable to the purchased Revolving Loan,
15
shall be payable to the Lender purchasing such Revolving Loan from and after
such date of purchase.
(c) Whenever the Borrower desires to borrow a Swing Line Loan
hereunder, it shall deliver to NationsBank irrevocable notice thereof (which
notice may be in writing or by telecopy, telex or telegraph, or by telephone, if
immediately confirmed in writing, substantially in the form of a Loan Notice)
not later than 11:00 a.m., Eastern Time, on the proposed borrowing date. Such
notice shall specify (i) the date of such borrowing and (ii) the amount of the
Swing Line Loan.
SECTION 2.4 Interest.
(a) Interest Rates. Until the date on which the principal is due (at
stated maturity, on acceleration or otherwise), interest on all or any portion
of the outstanding principal balance of the Revolving Loans shall accrue for
each day at either the Prime Rate, plus the Additional Prime Rate Percentage for
such day, or for Working Capital Advances only if elected by the Borrowers, the
Daily LIBOR Rate, plus the Additional LIBOR Rate Percentage, or for any
advances, the LIBOR Rate, plus the Additional LIBOR Rate Percentage for the
Interest Period which includes such day, all as elected and specified (including
specification as to length of Interest Period, as permitted by the definition of
that term, with respect to any election of the LIBOR Rate) by the Borrowers in a
Loan Notice to the Agent in accordance with Subsection (e) hereof. Advances
accruing interest at the LIBOR Rate shall be in minimum amounts of $100,000 and
increments of $100,000.
After the date on which principal is due (at stated maturity, on
acceleration or otherwise), interest on the outstanding principal balance of any
Loan shall accrue at the Default Rate until such principal is paid in full and
shall be jointly and severally payable by the Borrowers upon demand by the
Agent.
(b) Determination of Interest Rates. Upon request of the Borrowers,
the Agent shall, as soon as practicable, notify the Borrowers and the Lenders of
each determination of a LIBOR Rate, provided that any failure to do so shall not
relieve the Borrowers of any liability hereunder. Each determination of an
Interest Rate by the Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrowers and the Lenders in the absence of
manifest error. The Agent shall, at the request of the Borrowers or any Lender,
deliver to the Borrowers or such Lender, as the case may be, a statement showing
the quotations used by the Agent in determining any Interest Rate pursuant
hereto.
(c) Inability to Determine LIBOR Rate. In the event that (i) the Agent
shall have determined (which determination shall be conclusive and binding upon
the Borrowers) that, by reason of circumstances affecting the London interbank
eurodollar market, adequate and reasonable means do not exist for ascertaining
the LIBOR Rate for any requested Interest Period with respect to a Loan that the
Borrowers have requested be made or converted as a LIBOR
16
Loan, or (ii) the Required Lenders shall determine and notify the Agent of such
determination (which determination shall be conclusive and binding upon the
Borrowers) that the rates quoted by the Agent for the purpose of computing the
LIBOR Rate for any requested Interest Period with respect to a Loan that the
Borrowers have requested be made or converted as a LIBOR Loan do not adequately
and fairly reflect the cost to such Lenders of funding or converting such Loan,
the Agent shall forthwith give notice of such determination to the Borrowers and
each Lender at least one day prior to the proposed date for funding or
converting such LIBOR Loan. If such notice is given, any requested LIBOR Loan
shall be made or converted as a Prime Loan having an Interest Period of thirty
(30) days. Until such notice has been withdrawn by the Agent, the Borrowers will
not request that any Loan be made or converted as a LIBOR Loan.
(d) Election of Interest Rates. By a proper and timely Loan Notice in
accordance with Subsection (e) hereof, the Borrowers shall select the initial
Interest Rate to be charged on Revolving Loans disbursed on the Closing Date and
from time to time thereafter the Borrowers may elect, by a proper and timely
Loan Notice to the Agent in accordance with the provisions of Subsection (e)
hereof, an initial Interest Rate for any Revolving Loan, or to convert the
Interest Rate on any Revolving Loan to any other Interest Rate (including, when
applicable, the selection of the Interest Period); provided that;
(i) the Borrowers shall not select any Interest Period that
extends beyond the maturity date of the Revolving Loan;
(ii) except as otherwise provided in Subsection (e) hereof no
such change from the LIBOR Rate to another Interest Rate shall become
effective on a day other than the day, which must be a Banking Day, and, if
such change involves a Loan upon which interest is, or will be, calculated
at the LIBOR Rate, also a Eurodollar Banking Day, next following the last
day of the Interest Period last in effect for such LIBOR Loan;
(iii) the Interest Rate on Loans may differ among the Lenders
only as provided in Subsections (c), (e) and Section 2.12 (Requirements of
Law);
(iv) any elections made by the Borrowers pursuant to this Section
shall be in the amount of $100,000, plus any additional increment of
$100,000;
(v) notwithstanding anything herein to the contrary, the
Borrowers may not under any circumstances make any election under this
Section that would result in Loans outstanding at more than five (5) LIBOR
Rates; and
(i) the first day of each Interest Period as to a LIBOR Loan
shall be a Eurodollar Banking Day.
Each election by the Borrowers as between the Prime Rate, the Daily
LIBOR Rate and the LIBOR Rate shall be made, as among the Lenders, pro rata in
accordance with their
17
respective proportionate shares, except as a variation from such prorationing
may be required by virtue of termination as to a particular Lender of its
Commitment to make LIBOR Loans, as contemplated by Subsection (d) hereof or by
Section 2.12 (Requirements of Law).
In the absence of an election by the Borrowers of the LIBOR Rate, or,
having made such election but the Borrowers fail or are not entitled under the
terms of this Agreement to elect to continue such Interest Rate and specify the
applicable Interest Period therefor, then upon the expiration of such then
current Interest Period, interest on the Revolving Loan shall accrue for each
day at the Prime Rate for such day, until the Borrowers, in accordance with this
Section, elect a different Interest Rate and specify the Interest Period for the
Revolving Loan.
(e) Loan Notice. The Lenders will not be obligated to make Revolving
Loans, convert the Interest Rate on Revolving Loans to another Interest Rate or
to act upon any election by the Borrowers pertaining to Interest Rates or
Interest Periods unless the Agent shall have received an irrevocable written
notice (a "Loan Notice") from the Borrowers at the times and specifying the
information as follows:
(i) the amount to be borrowed, prepaid or converted,
(ii) any election among the Prime Rate, the Daily LIBOR Rate or
the LIBOR Rate,
(iii) the requested date on which such election is to be
effective, and
(iv) the length of the Interest Period applicable to such
Revolving Loans;
Such Loan Notice (or telephone advice thereof promptly confirmed in
writing) shall be received by the Agent prior to 11:00 a.m. (Washington, D.C.)
time, at least;
(i) four (4) Eurodollar Banking Days prior to the requested
effective date of such election in the case of LIBOR Loans, and
(ii) two (2) Banking Days prior to the requested effective date
of such election in the case of Prime Loans or Working Capital
Advances accruing interest at the Daily LIBOR Rate.
Upon receipt of a Loan Notice, the Agent shall promptly notify each Lender
of the contents thereof. Each Lender will make the amount of its proportionate
share of any Revolving Loan to be made to the Borrowers.
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(f) Indemnity. The Borrowers jointly and severally agree to indemnify
and reimburse each Lender and to hold such Lender harmless from any loss, cost
(including administrative costs) or expense which such Lender may sustain or
incur as a consequence of (a) Default by the Borrowers in payment when due of
the principal amount of or interest on any LIBOR Loans of such Lender, (b)
failure of the Borrowers to make, or convert the Interest Rate of, a Revolving
Loan after the Borrowers have given (or are deemed to have given) a Loan Notice
in accordance with Subsection (d) hereof, or (c) the making by the Borrowers of
a prepayment of a LIBOR Loan on a day which is not the last day of the Interest
Period with respect thereto, including, without limitation, any such loss or
expense arising from the reemployment of funds obtained by such Lender to
maintain its LIBOR Loans hereunder or from fees payable to terminate the
deposits from which such funds were obtained; provided, that such Lender will
use its best efforts to redeploy such funds in a commercially reasonable manner.
This covenant shall survive termination of this Agreement and payment of the
Loans.
(g) Payment of Interest.
(i) Interest accruing on any LIBOR Loan during any Interest
Period shall be jointly and severally payable by the Borrowers on the last
Banking Day of such then current Interest Period; provided, however, that
with respect to LIBOR Loans for which the Interest Period selected by the
Borrowers pursuant to Subsection (c) hereof (Election of Interest Rates) is
greater than three (3) months, interest shall be payable quarterly on the
last Banking Day of such three month period with the first such three month
period commencing on the first day of the applicable Interest Period with
any remaining unpaid interest being due and payable on the last day of such
Interest Period; provided further that all accrued interest on any LIBOR
Loan converted or prepaid prior to the last Banking Day of the applicable
Interest Period shall be paid immediately upon such prepayment or
conversion.
(ii) Interest accruing on Prime Loans shall be paid quarterly in
arrears on the first day of each March, June, September and December,
commencing June 1, 1999, and on the date the principal of such Loans shall
be due (at stated maturity, on acceleration, or otherwise); provided, that
all accrued interest on any Prime Loan converted or prepaid shall be paid
immediately upon such prepayment or conversion.
SECTION 2.5 Revolving Loan Account. The Agent will establish and maintain a
loan account on its books (the "Revolving Loan Account") to which the Agent will
(a) debit (i) the principal amount of each Revolving Loan made by the Lenders
hereunder as of the date made, (ii) the amount of any interest accrued on the
Revolving Loans as and when due, and (ii) any other amounts due and payable by
the Borrowers to the Agent from time to time under the provisions of this
Agreement in connection with the Revolving Loans, including, without limitation,
Enforcement Costs, Fees, late charges, and service, collection and audit fees,
as and when due and payable, and (b) credit all payments made by the Borrowers
to the Agent on
19
account of the Revolving Loans as of the date made including, without
limitation, funds credited to the Collateral Account and collected and paid to
the Agent, the Agent reserving the right, exercised in its sole and absolute
discretion from time to time, to provide earlier credit or to disallow credit
for any Collection which is unsatisfactory to the Agent.
The Agent may debit the Revolving Loan Account for the amount of any
Collection which is returned to the Agent unpaid. All credit entries to the
Revolving Loan Account are conditional and shall be readjusted as of the date
made if final and indefeasible payment is not received by the Agent in cash or
solvent credits. The Borrowers hereby jointly and severally promises to pay to
the order of the Agent, on demand, an amount equal to the excess, if any, of all
debit entries over all credit entries recorded in the Revolving Loan Account
under the provisions of this Agreement.
SECTION 2.6 Collateral Account. After the occurrence of and during the
continuance of any Event of Default, the Borrowers will deposit or cause to be
deposited to a bank account designated by the Agent and from which the Agent
alone has power of access and withdrawal (the "Collateral Account") all Items of
Payment. After the occurrence of and during the continuance of any Event of
Default, the Borrowers shall deposit Items of Payment for credit to the
Collateral Account not later than the next Banking Day after the receipt
thereof, and in precisely the form received, except for the endorsements of the
Borrowers where necessary to permit the collection of any such Items of Payment,
which endorsement each of the Borrowers hereby agree to make. Pending such
deposit to the Collateral Account, endorsement and/or other delivery thereof to
the Agent, the Borrowers will not commingle any Items of Payment with any of its
other funds or property, but will hold them separate and apart therefrom in
trust and for the account of the Agent. The Agent is not, however, required to
credit the Collateral Account for the amount of any Collection which is
unsatisfactory to the Agent. In addition, the Borrowers shall, if so directed by
the Agent, after the occurrence of and during the continuance of any Event of
Default, establish a lock box to which Items of Payments may be sent and shall
direct each Borrower's customers and others as the Agent may require to forward
payments to that lock box. Items of Payment received in the lock box shall be
deposited in the Collateral Account or as otherwise directed by the Agent from
time to time.
SECTION 2.7 Commitment Fee. The Borrowers jointly and severally agree to
pay to the Agent for the ratable benefit of the Lenders on the first day of each
three month period commencing after the date of this Agreement a commitment fee
(computed on the basis of a year consisting of three hundred and sixty (360)
days for the actual number of days elapsed) of one quarter of one percent (.25%)
per annum on the daily average of the unused amount of the Revolving Loan.
SECTION 2.8 Origination Fee. The Borrowers jointly and severally agree to
pay the Agent an origination fee in the amount of Four Hundred Five Thousand Two
Hundred Fifty Dollars ($405,250), of which one-quarter has been paid, and the
balance of the fee ($303,750) is
20
payable on the date of this Agreement. This fee is considered earned when paid
and is not refundable
SECTION 2.9 Transactions under this Agreement Between the Borrowers and the
Agent. The Borrowers in the discretion of their respective management are to
agree among themselves as to the allocation of the benefits of the proceeds of
Loans and the purposes for which such benefits and proceeds will be used so long
as any such allocation or purpose does not violate the provisions of this
Agreement. The Borrowers hereby represent and warrant to the Agent and the
Lenders that each of them will derive benefits, directly and indirectly, from
each Loan, both in its separate capacity and as a member of the integrated group
to which each of the Borrowers belong, since the successful operation of the
integrated group is dependent upon the continued successful performance of the
functions of the integrated group as a whole. For administrative convenience,
the Company is hereby irrevocably appointed by each of the Borrowers as agent
for each of the Borrowers for the purpose of requesting Loans hereunder from the
Agent and the Lenders, receiving the benefits of such Loans and disbursing the
proceeds of such Loans between the Borrowers. By reason thereof, the Company is
hereby irrevocably appointed by each of the Borrowers as the attorney-in-fact of
each of the Borrowers with power and authority through its duly authorized
officer or officers to (a) endorse any check (if any) for the proceeds of any
Loan for and on behalf of each of the Borrowers and in the name of each of the
Borrowers, and (b) instruct the Agent to credit the proceeds of any Loan
directly to a banking account of any of the Borrowers which shall evidence the
making of such Loan and shall constitute the acknowledgment by each of the
Borrowers of the receipt of the proceeds of such Loan. The Agent and the Lenders
assume no responsibility or liability for any errors, mistakes, and/or
discrepancies in the oral, telephonic, written or other transmissions of any
instructions, orders, requests and confirmations between the Agent and the
Borrowers in connection with any Loan or any other transaction in connection
with the provisions of this Agreement.
SECTION 2.10 Account Statements. Any and all periodic or other statements
or reconciliations, and the information contained in those statements or
reconciliations, of the Revolving Loan Account shall be presumed conclusively to
be correct and shall constitute an account stated between the Agent, the Lenders
and the Borrowers unless the Agent receives specific written objection thereto
from the Company within thirty (30) Banking Days after such statement or
reconciliation shall have been sent by the Agent.
SECTION 2.11 Overdraft Advances. If, after the close of business on any
Banking Day, any banking account of the Borrowers with the Agent is determined
by the Agent to have an Overdraft, the Agent, in its sole discretion on each and
any such occasion may (and is hereby irrevocably authorized by the Borrowers
to), but is not obligated to, make an advance under the Revolving Loan to the
Borrowers in a principal amount equal to any such Overdraft as of the close of
business on such Banking Day. All Overdrafts shall be secured by the Collateral.
SECTION 2.12 Requirements of Law.
21
(a) In the event that any Laws, treaty, rule, regulation or
determination of an arbitrator or a court or other Governmental Authority of any
country or any change therein or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority:
(i) does or shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any LIBOR Loans made by it, or
change the basis of taxation of payments to such Lender of principal,
commitment fee, interest or any other amount payable hereunder (except for
changes in the rate of tax on the overall net income of such Lender);
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, or deposits or other liabilities in or for the account of, advances or
loans by, or other credit extended by, or any other acquisition of funds
by, any office of such Lender which are not otherwise included in the
determination of the LIBOR Rate hereunder;
(iii) does or shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing or maintaining advances or extensions of credit or to reduce
any amount receivable hereunder, in each case, in respect of its LIBOR Loans,
then, in any such case, the Borrowers jointly and severally shall promptly pay
such Lender, upon its demand, any additional amounts necessary to compensate
such Lender for such additional cost or reduced amount receivable which such
Lender deems to be material as reasonably determined by such Lender with respect
to such LIBOR Loans. If a Lender becomes entitled to claim any additional
amounts pursuant to this Section, it shall provide prompt notice thereof to the
Borrowers, through the Agent, certifying (x) that one on the events described in
this paragraph (a) has occurred and describing in reasonable detail the nature
of such event, (y) as to the increased cost or reduced amount resulting from
such event and (z) as to the additional amount demanded by such Lender and a
reasonably detailed explanation of the calculation thereof. Such a certificate
as to any additional amounts payable pursuant to this subsection submitted by
such Lender, through the Agent, to the Company shall be conclusive in the
absence of manifest error. This covenant shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) In the event that any Lender shall have determined that the
adoption of any Laws, rule or regulation regarding capital adequacy, or any
change therein or in the interpretation or application thereof or compliance by
any Lender or any corporation controlling such Lender with any request or
directive regarding capital adequacy (whether or not having the force of law)
22
from any central bank or Governmental Authority, does or shall have the effect
of reducing the rate of return on such Lender's or such corporation's capital as
a consequence of its obligations hereunder to a level below that which such
Lender or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, after submission by such Lender to the
Borrowers (with a copy to the Agent) of a written request therefor, the
Borrowers jointly and severally shall pay to such Lender such additional amount
or amounts as will compensate such Lender for such reduction; provided that the
Borrowers shall not be required to compensate a Lender pursuant to this
paragraph for any amounts incurred more than six months prior to the date that
such Lender notifies Borrowers of such Lender's intention to claim compensation
therefor; and provided further that, if the circumstances giving rise to such
claim have a retroactive effect, then such six-month period shall be extended to
include the period of such retroactive effect.
(c) Notwithstanding subsections (a) and (b) above, if any Lender
incurs the increased costs described in subsection (a) above or makes the
determination described in subsection (b) above and all Loans of such Lender
then outstanding and affected thereby shall be converted into Loans which are
not affected thereby (if not otherwise prohibited under the terms of this
Agreement).
(d) Illegality. Notwithstanding any other provisions herein, if any
Laws or any change therein or in the interpretation or application thereof shall
make it unlawful for any Lender to make or maintain LIBOR Loans as contemplated
by this Agreement, (i) the commitment of such Lender hereunder to make LIBOR
Loans shall forthwith be canceled, and (ii) such Lender's Loans then outstanding
as LIBOR Loans, if any, shall be repaid and made to Prime Loans (if not
otherwise prohibited under the terms of this Agreement) at the option of the
Borrowers in accordance with the election procedures set forth in Section
2.3(e); provided, however, that prior to the effective date of such election,
interest shall be calculated at the Prime Rate. Any remaining commitment of such
Lender hereunder to make LIBOR Loans (but not other Loans) shall terminate
forthwith and borrowings from such Lender at a time when borrowings from the
other banks are to be of LIBOR Loans shall be by way of Prime Loans as provided
herein. Upon the occurrence of any such change, such Lender, acting through the
Agent, shall promptly notify the Borrowers thereof, and shall furnish to the
Borrowers in writing evidence thereof certified by such Lender.
If any repayment to a Lender of any LIBOR Loan (including conversions
thereof) is made under this Section 2.11 (d) on a day other than a day otherwise
scheduled for a payment of principal of or interest on such Loan, the Borrowers
jointly and severally shall pay to such Lender upon its request such amount or
amounts as will compensate it for the amount by which the rate of interest on
such Loan immediately prior to such repayment exceeds the stated rate of
interest on relending or reinvesting the funds received in connection with such
prepayment, in each case for the period from the date of such prepayment to the
Banking Day next succeeding
23
the last day of such then current Interest Period, all as determined by such
Lender in its good faith discretion.
(e) Pro Rata Treatment and Payments.
(i) Each borrowing by the Borrowers under the Revolving Loans,
each conversion by the Borrowers of applicable Interest Rates, each
prepayment and (except as otherwise provided in Section 2.11 (d)
(Illegality) shall be made pro rata in accordance with each Lender's
applicable proportionate share. Unless otherwise specifically set forth
among the provisions of this Agreement, all payments to be made by the
Borrowers on account of the Obligations, including, without limitation,
principal, interest and Fees shall be made and/or applied pro rata in
accordance with the applicable proportionate share of each Lender.
(ii) Each Lender will make the amount of its proportionate share
of the Loans available to the Agent for the account of the Borrowers at the
office of the Agent set forth in Section 12.11 hereof by 11:00 a.m.
(Washington, D.C. time) in funds immediately available to the Agent on the
Closing Date in the case of Loans to be disbursed on the Closing Date and
in the case of Loans disbursed after the Closing Date, on the date
specified in the Loan Notice made in connection therewith. Unless the Agent
and the Borrowers shall have been notified in writing by any Lender prior
to the date due that such Lender will not make its proportionate share of
any borrowing on such date available to the Agent, the Agent may assume
that such Lender has made such amount available to the Agent on such date
and the Agent may, in reliance upon such assumption, make available to the
Borrowers a corresponding amount. If such amount is made available to the
Agent on a date after such date, such Lender shall pay to the Agent on
demand an amount equal to the product of (a) a fraction, the numerator of
which is the daily average federal funds rate during such period as quoted
by the Agent and the denominator of which is 360, times (b) the amount of
such Lender's proportionate share of such borrowing, times (c) the number
of days that elapse from and including such borrowing date to the date on
which such Lender's proportionate share of such borrowing shall have become
immediately available to the Agent. A certificate of the Agent submitted to
any Lender with respect to any amounts owing hereunder shall be conclusive,
absent manifest error. If such Lender's proportionate share of such
borrowing is not in fact made available to the Agent by such Lender within
three (3) Banking Days of such borrowing date, the Agent shall be entitled
to recover such amount with interest thereon at the rate per annum
applicable to Revolving Loans accruing interest at the Prime Rate
hereunder, on demand, from the Borrowers (without prejudice to the rights
of the Borrowers against such Lender). Nothing herein shall be deemed to
relieve any Lender from its obligation to fund its proportionate share of
any borrowings hereunder or to prejudice any rights which the Borrowers may
have against any Lender as a result of any default by such Lender
hereunder. No Lender shall be responsible for any default of the
24
other Lender in respect of the other Lender's obligation to make available
its proportionate share of borrowings hereunder nor shall any Commitment of
any Lender hereunder be increased as a result of such default of any other
Lender. Each Lender shall be obligated only to the extent provided herein
regardless of the failure of any other Lender to fulfill its obligations
hereunder.
(iii) All payments of the Obligations, including, without
limitation, principal, interest and Fees, shall be paid by the Borrowers
without setoff or counterclaim to the Agent on behalf of the Lender's at
the Agent's office specified in Section 12.1 hereof in Dollars in
immediately available funds not later than 12:00 noon (Washington, D.C.
time) on the due date of such payment. All payments received by the Agent
after such time shall be deemed to have been received by the Agent, for
purposes of computing interest and Fees, as of the next following Banking
Day. Promptly upon receipt thereof, the Agent shall distribute to each
Lender in like funds such Lender's proportionate share of such payments.
Unless the Agent shall have received notice from the Borrowers prior to the
date on which any payment of any of the Obligations is due to the Agent
that the Borrowers will not make such payment in full, the Agent may assume
that the Borrowers have made such payment in full to the Agent on such date
and the Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent the Borrowers shall not have so
made such payment in full to the Agent, each Lender shall repay to the
Agent forthwith on demand such amount distributed to such Lender together
with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to
the Agent, at the interest rate applicable at the time to the obligation in
respect of which payment is due. The Agent shall send the Borrowers
statements of all amounts due hereunder for interest, principal and Fees,
etc., which statements shall be considered correct and conclusively binding
on the Borrowers unless the Borrowers notify the Agent to the contrary
within thirty (30) days of their receipt of any statement that they deem to
be incorrect. Alternatively, at its sole discretion, each of the Banks may
charge any deposit account of either or both of the Borrowers with all or
any part of any amount due hereunder.
(iv) If any Lender makes a new Loan on a day on which the
Borrowers are to repay all or any part of any outstanding Loan from such
Bank, such Lender shall apply the proceeds of its new Loan to make such
repayment, and only an amount equal to the difference (if any) between the
amount being borrowed and the amount being repaid shall be made available
by such Lender to the Agent as provided above in this Section or remitted
by the Borrowers to the Agent as provided above in this Section.
III COLLATERAL
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As security for the payment of all of the Obligations, the Borrowers hereby
assign, grant and convey to the Agent for the ratable benefit of each Lender and
agrees that the Agent and each Lender shall have a perfected, continuing
security interest in all of the Collateral. The Borrowers further agree that the
Agent for the ratable benefit of each Lender shall have in respect the
Collateral all of the rights and remedies of a secured party under the Maryland
Uniform Commercial Code and under other applicable Laws and Security Documents,
as well as those provided in this Agreement. The Borrowers covenant and agree to
execute and deliver such financing statements and other instruments and filings
as are necessary in the opinion of the Agent to perfect such security interest.
Notwithstanding the fact that the proceeds of the Collateral constitute a part
of the Collateral, the Borrowers may not dispose of the Collateral, or any part
thereof, other than in the ordinary course of its business or as otherwise may
be permitted by this Agreement.
IV UNCONDITIONAL OBLIGATIONS
The joint and several payment and performance by the Borrowers of the
Obligations shall be absolute and unconditional, irrespective of any defense or
any rights of set-off, recoupment or counterclaim it might otherwise have
against the Agent or any Lender and the Borrowers shall pay absolutely net all
of the Obligations, free of any deductions and without abatement, diminution or
set-off; and until payment in full of all of the Obligations, the Borrowers: (a)
will not suspend or discontinue any payments provided for in the Notes; (b) will
perform and observe all of its other agreements contained in this Agreement,
including (without limitation) all payments required to be made to the Agent;
and (c) will not terminate or attempt to terminate this Agreement for any cause.
V. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to make the Loans, the Borrowers represent and
warrant to the Agent and each Lender and, unless the Agent is notified by the
Borrowers of a change or changes effecting such representations and warranties,
shall be deemed to represent and warrant to the Agent and the Lenders at the
time each request for an advance under the Loans is submitted and again at the
time any advance is made under the Loans that:
SECTION 5.1 Subsidiaries. The Company has no Subsidiaries, except as set
forth on the signature page of this Agreement.
SECTION 5.2 Good Standing. The Company and each of its Subsidiaries (a) is
a corporation duly organized, existing and in good standing under the laws of
the jurisdiction of its incorporation, (b) has the corporate power to own its
property and to carry on its business as now being conducted, and (c) is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of the properties owned by it therein or in which the
26
transaction of its business makes such qualification necessary, except where the
failure to be so qualified would not have a Material Adverse Effect.
SECTION 5.3 Power and Authority. The Company and each of its Subsidiaries
has full power and authority to execute and deliver this Agreement and each of
the other Financing Documents executed and delivered by it, to make the
borrowing hereunder, and to incur the Obligations, all of which have been duly
authorized by all proper and necessary corporate action. No consent or approval
of stockholders or of any public authority is required as a condition to the
validity or enforceability of this Agreement or any of the other Financing
Documents executed and delivered by the Company and each Subsidiary, except that
with respect to the sale of the Collateral which is pledged under the Pledge
Agreements, such sale may be subject to compliance with certain Laws.
SECTION 5.4 Binding Agreements. This Agreement and each of the other
Financing Documents executed and delivered by the Company and each Subsidiary
have been properly executed by the Company and each Subsidiary, constitute valid
and legally binding obligations of the Company and each Subsidiary, and are
fully enforceable against the Company and each Subsidiary in accordance with
their respective terms, subject to (a) bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally, (b) general
principles of equity (regardless of whether such principles of equity are
asserted in an action or proceeding at law or in equity) or the discretion of
the court before which any action or proceeding may be brought and (c) other
applicable laws which may limit the enforceability of certain of the remedial or
procedural provisions contained in the Financing Documents.
SECTION 5.5 Litigation. There are no proceedings pending or, so far as the
Company or any Subsidiary knows, threatened before any court or administrative
agency which will materially adversely affect the financial condition or
operations of the Company or any Subsidiary, or the authority of the Company or
Subsidiary to enter into this Agreement or any of the other Financing Documents
executed and delivered by the Company or any Subsidiary.
SECTION 5.6 No Conflicting Agreements. There is (a) no charter, by-law or
preference stock provision of the Company or any Subsidiary and no provision of
any existing mortgage, indenture, contract or agreement binding on the Company,
or any Subsidiary, or affecting their properties, and (b) to the knowledge of
the Company and each Subsidiary, no provision of law or order of court binding
upon the Company or any Subsidiary, which would conflict with or in any way
prevent the execution, delivery, or performance of the terms of this Agreement
or of any of the other Financing Documents executed and delivered by the Company
or any Subsidiary, or which would be violated as a result of such execution,
delivery or performance.
SECTION 5.7 Financial Condition. The unaudited consolidated financial
statements of the Company dated ______________, 1998 are complete and correct
and, in the
27
opinion of the Company, fairly present the current financial condition of the
Company on a consolidated basis as of the date and for the period referred to
and have been prepared in accordance with GAAP applied on a consistent basis
throughout the period involved. There are no material liabilities, direct or
indirect, fixed or contingent, of the Company, or any of its Subsidiaries as of
the date of such financial statements which are not reflected therein or in the
notes thereto. There has been no material adverse change in the financial
condition or operations of the Company on a consolidated basis since the date of
such financial statements (and to each Borrower's knowledge, no such material
adverse change is pending or threatened), and no Borrower has guaranteed the
obligations of, or made any investments in or advances to, any company,
individual or other entity, except as disclosed in such financial statements and
on Schedule 5.7 hereto.
SECTION 5.8 Taxes. The Company and each Subsidiary has filed or has caused
to have been filed all federal, state and local tax returns which, to the
knowledge of the Company and each Subsidiary, are required to be filed, and has
paid or caused to have been paid all taxes as shown on such returns or on any
assessment received by it, to the extent that such taxes have become due, unless
and to the extent only that such taxes, assessments and governmental charges are
currently contested in good faith and by appropriate proceedings by the Company
or such Subsidiary and adequate reserves therefor have been established as
required under GAAP.
SECTION 5.9 Compliance With Law. The Company and each Subsidiary is not in
violation of any applicable law, ordinance, governmental rule or regulation to
which it is subject and each Borrower has obtained any and all material
licenses, permits, franchises or other governmental authorizations necessary for
the ownership of its properties and the conduct of its business, except to the
extent such failure would not have a Material Adverse Effect.
SECTION 5.10 Places of Business and Location of Collateral. The Company and
each Subsidiary warrants that the address of the Company's and each Subsidiary's
chief executive office is as specified in EXHIBIT B attached hereto and made a
part hereof and that the address of each other place of business of the Company
and each Subsidiary, if any, is as disclosed to the Agent in EXHIBIT B. The
Collateral and all books and records pertaining to the Collateral are and will
be located at the address indicated on EXHIBIT B. The Company will promptly
advise the Agent in writing of the opening of any new place of business or the
closing of any Borrower's existing places of business, and of any change in the
location of the places where the Collateral, or any part thereof, or the books
and records concerning the Collateral, or any part thereof, are kept. The proper
and only places to file financing statements with respect to the Collateral
within the meaning of the Uniform Commercial Code are the State Department of
Assessments and Taxation and the locations listed on EXHIBIT E. A copy of a
fully executed financing statement shall be sufficient to satisfy for all
purposes the requirements of a financing statement as set forth in Article 9 of
the Maryland Uniform Commercial Code.
28
SECTION 5.11 Title to Properties. The Company and each Subsidiary has good
and marketable title to all of its properties, including the Collateral, and the
Collateral is free and clear of Liens other than the Permitted Liens.
SECTION 5.12 Margin Stock. None of the proceeds of the Loan will be used,
directly or indirectly, by the Company or any Subsidiary for the purpose of
purchasing or carrying, or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry, any "margin
security" within the meaning of Regulation G (12 CFR Part 207), or "margin
stock" within the meaning of Regulation U (12 CFR Part 221), of the Board of
Governors of the Federal Reserve System (herein called "margin security" and
"margin stock") or for any other purpose which might make the transactions
contemplated herein a "purpose credit" within the meaning of said Regulation G
or Regulation U, or cause this Agreement to violate any other regulation of the
Board of Governors of the Federal Reserve System or the Securities Exchange Act
of 1934 or the Small Business Investment Act of 1958, as amended, or any rules
or regulations promulgated under any of such statutes.
SECTION 5.13 ERISA. With respect to any "pension plan" as defined in
Section 3(2) of ERISA, which plan is now or previously has been maintained or
contributed to by the Company and/or by any Commonly Controlled Entity: (a) no
"accumulated funding deficiency" as defined in Code ss.412 or ERISA ss.302 has
occurred, whether or not that accumulated funding deficiency has been waived;
(b) no "reportable event" as defined in ERISA ss.4043 has occurred, other than
events for which reporting has been waived or which could not have a Material
Adverse Effect; (c) no termination of any plan subject to Title IV of ERISA has
occurred; (d) neither the Company nor any Commonly Controlled Entity has
incurred a "complete withdrawal" within the meaning of ERISA ss.4203 from any
multiemployer plan; that could have a Material Adverse Effect, (e) neither the
Company nor any Commonly Controlled Entity has incurred a "partial withdrawal"
within the meaning of ERISA ss.4205 with respect to any multiemployer plan; (f)
no multiemployer plan to which the Company or any Commonly Controlled Entity has
an obligation to contribute is in "reorganization" within the meaning of ERISA
ss.4241 nor has notice been received by the Company or any Commonly Controlled
Entity that such a multiemployer plan will be placed in "reorganization".
SECTION 5.14 Governmental Consent. Neither the nature of any Borrower or of
any Borrower's business or properties, nor any relationship between any Borrower
and any other entity or person, nor any circumstance in connection with the
making of the Loans, or the offer, issue, sale or delivery of the Notes is such
as to require a consent, approval or authorization of, or filing, registration
or qualification with, any governmental authority, on the part of any Borrower,
as a condition to the execution and delivery of this Agreement or any of the
other Financing Documents, the borrowing of the principal amounts of the Loans
or the offer, issue, sale or delivery of the Note.
29
SECTION 5.15 Subordinated Debt. None of the Subordinated Debt Loan
Documents has been amended, supplemented, restated or otherwise modified except
as otherwise disclosed to the Lender in writing on or before the date of this
Agreement. In addition, there does not exist any default or any event which upon
notice or lapse of time or both would constitute a default under the terms of
any of the Subordinated Debt Loan Documents.
SECTION 5.16 Full Disclosure. The financial statements referred to in this
Part V do not, nor does this Agreement, nor do any written statements furnished
by any Borrower to the Agent in connection with the making of the Loans, contain
any untrue statement of material fact or omit a material fact necessary to make
the statements contained therein or herein when taken in their entirety in light
of the circumstances under which they were made not misleading. There is no
material fact which the Borrowers have not disclosed to the Agent in writing
with respect to the transactions contemplated hereby which materially adversely
affects or, will or could prove to materially adversely affect the properties,
business, prospects, profits or condition (financial or otherwise) of the
Borrowers or the ability of any Borrower to perform its obligation under this
Agreement.
SECTION 5.17 Presence of Hazardous Materials or Hazardous Materials
Contamination. To the best of each Borrower's knowledge, (a) no Hazardous
Materials are located on any real property owned, controlled or operated by of
any Borrower or for which any Borrower is responsible, except for reasonable
quantities of necessary supplies for use by any Borrower in the ordinary course
of the its current line of business and stored, used and disposed in accordance
with applicable Laws; and (b) no property owned, controlled or operated by any
Borrower has ever been used as a manufacturing, storage, or dump site for
Hazardous Materials nor is affected by Hazardous Materials Contamination at any
other property.
SECTION 5.18 Intellectual Property. Each Borrower owns or possesses all of
the material patents, trademarks, service marks, trade names, copyrights and
licenses and all rights with respect thereto necessary for the present operation
of its business, to the best of each Borrower's knowledge without any conflict
with the rights of any other Person.
SECTION 5.19 Business Names and Addresses. Except a set forth in Schedule
5.19, in the twelve (12) years preceding the date hereof, no Borrower has
conducted business under any name other than its current name nor conducted its
business in any jurisdiction other than those disclosed on EXHIBIT B attached
hereto.
SECTION 5.20 Year 2000 Compliance. (a) The Borrowers have (i) begun
analyzing the operations of the Company and its Subsidiaries and affiliates that
could be adversely affected by failure to become Year 2000 compliant (that is,
that computer applications, imbedded microchips and other systems will be able
to perform date-sensitive functions prior to and after December 31, 1999) and;
(ii) developed a plan for becoming Year 2000 compliant in a timely manner, the
implementation of which is on schedule in all material respects. Each
30
Borrower reasonably believes that it will become Year 2000 compliant for its
operations and those of its subsidiaries and affiliates on a timely basis except
to the extent that a failure to do so could not reasonably be expected to have a
Material Adverse Effect.
(b) Each Borrower reasonably believes any suppliers and vendors that
are material to the operations of the Company or its Subsidiaries and affiliates
will be Year 2000 compliant for their own computer applications except to the
extent that a failure to do so could not reasonably be expected to have a
Material Adverse Effect.
(c) The Company will promptly notify the Agent in the event any
Borrower determines that any computer application which is material to the
operations of the Company, its Subsidiaries or any of its material vendors or
suppliers will not be fully Year 2000 compliant on a timely basis, except to the
extent that such failure could not reasonably be expected to have a Material
Adverse Effect.
SECTION 5.21 Perfection and Priority of Collateral. The Agent has, or upon
execution and recording of this Agreement and the Security Documents will have,
and will continue to have as security for the Obligations, a valid and perfected
Lien on and security interest in all Collateral, free of all other Liens, claims
and rights of third parties whatsoever except Permitted Liens.
SECTION 5.22 Equipment. To the best of the Borrowers' knowledge, all
Equipment is personalty and is not and will not be affixed to real estate in
such manner as to become a fixture or part of such real estate. No equipment is
held by any Borrower on a sale on approval basis.
SECTION 5.23 Inventory. The Inventory of each Borrower is (a) of good and
merchantable quality, free from defects, (b) not stored with a bailee,
warehouseman, carrier, or similar party, (c) not on consignment, sale on
approval, or sale or return, and (d) located at the places of business set forth
on Exhibit B hereto. No goods offered for sale by, or in the possession or
control of, any Borrower are consigned to or held on sale or return terms by any
Borrower.
SECTION 5.24 No Default. There is no Event of Default (as hereinafter
defined) and no event has occurred and no condition exists an is continuing
which with the giving of notice or the passage of time would constitute an Event
of Default. The Borrowers are not in default under the terms of any other
agreement or instrument to which it may be a party or by which the Collateral or
any of its properties may be bound or subject, except where such default could
not result in a Material Adverse Effect.
VI. CONDITIONS OF LENDING
31
The making of the Loan and any advance thereunder is subject to the
following conditions precedent:
SECTION 6.1 Opinion of Counsel for the Borrowers. On the date hereof, the
Agent shall receive the favorable written opinion of counsel for the Borrowers
satisfactory in all respects to the Agent.
SECTION 6.2 Approval of Counsel for the Agent. All legal matters incident
to the Loans and all documents necessary in the opinion of the Agent to make the
Loans shall be satisfactory in all material respects to counsel for the Agent.
SECTION 6.3 Supporting Documents. The Agent shall receive on the date
hereof: (a) a certificate of the Secretary of each Borrower, in a form
acceptable to the Agent in all respects, dated as of the date hereof and
certifying (i) that attached thereto is a true, complete and correct copy of
resolutions adopted by the Board of Directors of such Borrower authorizing the
execution and delivery of this Agreement, the Notes and the other Financing
Documents, and the Obligations, and (ii) as to the incumbency and specimen
signature of each officer of such Borrower executing this Agreement, the Notes
and the other Financing Documents, and a certification by the President or any
Vice President of such Borrower as to the incumbency and signature of the
Secretary of such Borrower; (b) such other documents as the Agent may reasonably
require each Borrower to execute, in form and substance acceptable to the Agent;
and (c) such additional information, instruments, opinions, documents,
certificates and reports as the Agent may reasonably deem necessary.
SECTION 6.4 Financing Documents. All of the Financing Documents required by
the Agent shall be executed, delivered and, if deemed necessary by the Agent,
recorded, all at the sole expense of the Borrowers.
SECTION 6.5 Insurance. The Borrowers shall have satisfied the Agent that
any and all insurance required by this Agreement is in effect as of the date of
this Agreement, and that, to the extent required by the Financing Documents, the
Agent has been named as an insured lienholder.
SECTION 6.6 Security Documents. In order to perfect the lien and security
interest created by this Agreement, the Borrowers shall have executed and
delivered to the Agent all financing statements and Security Documents (in form
and substance acceptable to the Agent in its sole discretion) deemed necessary
by the Agent, in a sufficient number of counterparts for recordation, and, at
the Borrowers' sole expense, shall record all such financing statements and
Security Documents, or cause them to be recorded, in all public offices deemed
necessary by the Agent.
32
SECTION 6.7 Termination Statements. The Agent shall have received from
creditors of each Borrowers all termination statements covering the Collateral
required by the Agent. The termination statements shall be fully and properly
executed, in recordable form and sufficient, in the opinion of counsel for the
Agent, to terminate the interests of other creditors of each Borrowers in the
Collateral.
SECTION 6.8 Subordinated Indebtedness. The Agent shall have received the
fully executed Subordination Agreement in form and content acceptable to the
Agent. The Agent shall have received and approved copies of the fully executed
Subordinated Debt Loan Documents, all of which must be in form and content
acceptable to the Agent.
SECTION 6.9 Subordinated Indebtedness . The Agent shall have received a
certificate signed by a Responsible Officer of the Company, certifying to the
Agent that the Company (a) has received the proceeds of the Subordinated Debt,
in accordance with, and pursuant to, the terms and conditions of the
Subordinated Debt Loan Documents, and have applied the same to such purposes as
has been previously disclosed to, and approved by, the Agent, and (b) the
Subordinated Debt Loan Documents which the Company has delivered to the Agent is
a true and correct photocopy of all Subordinated Debt Loan Documents.
SECTION 6.10 Compliance. At the time of the making of each advance
hereunder (a) the Company and each Subsidiary shall have complied and shall then
be in compliance with all the terms, covenants and conditions of this Agreement
which are binding upon it, (b) there shall exist no Event of Default and no
event which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default, and (c) the representations and warranties
contained in Part V shall be true with the same effect as though such
representations and warranties had been made at the time of the making of the
advance.
SECTION 6.11 Conditions Subsequent. Each Lender's obligation to made
advances under the Loans is expressly conditioned upon (i) the Agent's receipt
of the fully executed Lease Assignments promptly after the Closing Date, but not
more than fifteen (15) days) after the Closing Date, and (ii) each Borrower
using its best efforts in good faith to obtain, within forty-five (45) days of
Closing Date, lessor consents as may be reasonably required for the Lease
Assignments. The Lease Assignments and all lessor consents shall be in a form
satisfactory to the Agent.
VII. AFFIRMATIVE COVENANTS OF BORROWERS
Until payment in full and the performance of all of the Obligations
hereunder, the Company shall, and shall cause each of its Subsidiaries to:
33
SECTION 7.1 Financial Statements. Furnish to the Agent:
(a) Annual Statements and Certificates. As soon as available but in no
event more than ninety (90) days after the close of each of the Company's fiscal
years, a copy of the consolidated and consolidating audited financial statement
relating to the Company and its Subsidiaries in reasonable detail satisfactory
to the Agent, prepared in accordance with GAAP and certified by an independent
certified public accountant satisfactory to the Agent, which financial statement
shall include a balance sheet as at the end of such fiscal year, profit and loss
statement and a statement of changes in financial condition. The annual
statements shall be in such detail as Agent may reasonably require and will
provide, among other things, detail with regard to expenses, lease expense,
non-cash charges and interest expense and shall be accompanied by a certificate
in form and detail satisfactory to the Agent in all material respects (the
"Compliance Certificate") of that officer stating whether any event has occurred
which constitutes an Event of Default or which would constitute an Event of
Default with the giving of notice or the lapse of time or both, and, if so,
stating the facts with respect thereto. Each Compliance Certificate will clearly
set forth the methodology used in determining compliance and/or non-compliance
with all financial covenants and shall state the basis for determining the
Additional Prime Rate Percentage and the Additional LIBOR Rate Percentage under
the Note. In addition, the Company shall provide to the Agent within sixty (60)
days of the close of each of the Company's fiscal years an annual budget for the
Company and each Subsidiary for the following fiscal year
(b) Annual Opinion of Accountant. As soon as available but in no event
more than ninety (90) days after the close of each of the Company's fiscal
years, a letter or opinion of the independent certified public accountant who
examined the annual financial statement relating to the Company and its
Subsidiaries stating whether anything in such certified public accountant's
examination has revealed the occurrence of an event which constitutes an Event
of Default or which would constitute an Event of Default with the giving of
notice or the lapse of time or both, and, if so, stating the facts with respect
thereto.
(c) Quarterly Statements and Certificates. As soon as available but in
no event more than forty five (45) days after the close of each of the Company's
fiscal quarters, other than the fourth fiscal quarter, consolidated and
consolidating balance sheets of the Company and its Subsidiaries as at the close
of such period and consolidated and consolidating income and expense statements
for such period, and an aging of accounts receivable, all certified by the
principal financial officer of the Company. The quarterly statements shall be in
such detail as Agent may reasonably require and shall be accompanied by a
Compliance Certificate. Each Compliance Certificate will clearly set forth the
methodology used in determining compliance and/or non-compliance and shall set
forth the basis for determining the Additional Prime Rate Percentage and the
Additional LIBOR Rate Percentage under the Note.
34
(d) Reports to SEC and to Stockholders. The Company will furnish to
the Agent, promptly upon the filing or making thereof, but not later than
fifteen (15) days after the date of filing, at least one (l) copy of all
financial statements, reports, notices and proxy statements sent by any Borrower
to its stockholders, and of all regular and other reports filed by any Borrower
with any securities exchange or with the Securities and Exchange Commission.
(e) Additional Reports and Information. With reasonable promptness,
such additional information, reports or statements as the Agent may from time to
time reasonably request.
SECTION 7.2 Financial Covenants.
(a) Fixed Charge Coverage Ratio. Maintain for the trailing twelve (12)
months, a Fixed Charge Ratio of not less than the following amounts as of the
following dates:
Fixed Charge Coverage Ratio: Fiscal Quarter Ending:
Not less than 1.15 to 1.0 Closing Date through September 30, 2000;
Not less than 1.20 to 1.0 December 31, 2000 through March 31,
2001; and
Not less than 1.30 to 1.0 June 30, 2001 and at all times thereafter.
(b) Funded Debt to EBITDA. Maintain, a ratio of Funded Debt to EBITDA
not greater than the following amounts at the following times, tested as of the
last day of each of the Company's fiscal quarters for the four (4) quarter
period ending on that date:
Funded Debt To EBITDA: Fiscal Quarter Ending:
4.25 to 1.0 Closing Date through September 30, 1999;
4.00 to 1.0 December 31, 1999 through March 31,
2000; and
3.50 to 1.0 June 30, 2000 and at all times thereafter.
(c) Current Ratio. Maintain a Current Ratio of not less than 1.30 to
1.0, tested as of the last day of each of the Company's fiscal quarters.
(d) Minimum EBITDA. Maintain at all times a minimum EBITDA (the
"EBITDA Requirements") of not less than the following amounts at the following
times:
Minimum EBITDA: Fiscal Quarter Ending:
$11,000,000 Closing Date through June 30, 1999;
35
$12,500,000 September 30, 1999;
$13,000,000 December 31, 1999; and
$14,500,000 March 31, 2000 and at all times thereafter.
SECTION 7.3 Taxes and Claims. Pay and discharge and cause each of its
Subsidiaries to pay and discharge, all taxes, assessments and governmental
charges or levies imposed upon it or any of its income or properties prior to
the date on which penalties attach thereto, and all lawful claims which, if
unpaid, might become a Lien upon any of its properties; provided, however, the
Company and the Subsidiaries shall not be required to pay any such tax,
assessment, charge, levy or claim, the payment of which is being contested in
good faith and by proper proceedings.
SECTION 7.4 Corporate Existence. Maintain, and cause each of its
Subsidiaries to maintain, its corporate existence in good standing in the
jurisdiction in which it is incorporated and in each jurisdiction where it is
required to register or qualify to do business, except where such failure could
not have a Material Adverse Effect.
SECTION 7.5 Compliance with Laws. Comply, and cause each of its
Subsidiaries to comply, with all applicable federal, state and local laws, rules
and regulations to which it is subject and the violation of which could have a
Material Adverse Effect.
SECTION 7.6 Governmental Regulation. Promptly notify the Agent in the event
that the Company or any Subsidiary receives any notice, claim or demand from any
governmental agency which alleges that the Company or any Subsidiary is in
violation of any of the terms of, or has failed to comply with any applicable
order issued pursuant to any federal or state statute regulating its operation
and business, including, but not limited to, the Occupational Safety and Health
Act and the Environmental Protection Act.
SECTION 7.7 Litigation. Give prompt notice in writing, with a full
description to the Agent, of all litigation and of all proceedings before any
court or any governmental or regulatory agency affecting the Company or any
Subsidiary which, if adversely decided, could have a Material Adverse Effect.
SECTION 7.8 Use of Proceeds. Use the proceeds of the Loan for the purpose
or purposes set forth in Recital B above and, without the prior written consent
of the Agent, for no other purpose or purposes.
SECTION 7.9 Maintenance of Properties. Keep, and cause the Subsidiaries to
keep and maintain, its properties, whether owned in fee or otherwise, or leased,
in good operating condition (normal war and tear excepted); make and, cause the
Subsidiaries to make, all proper repairs, renewals, replacements, additions and
improvements thereto needed to maintain such
36
properties in good operating condition; comply, and cause the Subsidiaries to
comply, with the material provisions of all material leases to which it is party
or under which it occupies property so as to prevent any loss or forfeiture
thereof or thereunder; and comply, or cause the Subsidiaries to comply, with all
laws, rules, regulations and orders applicable to its properties or business or
any part thereof and the violation of which could have a Material Adverse
Effect.
SECTION 7.10 Other Liens, Security Interests, etc. Keep, and cause the
Subsidiaries to keep, its material properties and assets, including, without
limitation, the Collateral, free from all Liens, of every kind and nature, other
than the security interest granted to the Agent and the Lenders pursuant to this
Agreement and the Permitted Liens.
SECTION 7.11 Books and Records. (a) Keep and maintain and cause the
Subsidiaries to keep and maintain accurate books and records, (b) make and cause
the Subsidiaries to make entries on such books and records in form satisfactory
to the Agent disclosing the Agent's assignment of, and security interest in and
lien on, the Collateral and all collections received by the Company or any of
the Subsidiaries on its Accounts, (c) furnish and cause the Subsidiaries to
furnish to the Agent promptly upon request such information, reports, contracts,
invoices, lists of purchases of Inventory (showing names, addresses and amount
owing) and other data concerning Account Debtors and the Company's and the
Subsidiaries' Accounts and Inventory and all contracts and collection(s)
relating thereto as the Agent may from time to time specify, (d) unless the
Agent shall otherwise consent in writing, keep and maintain and cause the
Subsidiaries to keep and maintain all such books and records mentioned in (a)
above only at the addresses listed in EXHIBIT B, and (e) permit and cause the
Subsidiaries to permit any Person designated by the Agent to enter the premises
of the Company and each of the Subsidiaries and examine, audit and inspect the
books and records at any reasonable time and from time to time without notice.
SECTION 7.12 Business Names. Immediately notify, and cause each of the
Subsidiaries to notify, the Agent of any change in the name under which it
conducts its business.
SECTION 7.13 ERISA. Maintain at all times such bonding as is required by
ERISA. As soon as practicable and in any event within fifteen (15) days after it
knows or has reason to know that, with respect to any plan, a "reportable event"
has occurred, the Company will deliver to the Agent a certificate signed by its
chief financial officer setting forth the details of such "reportable event".
The Company shall agrees that with respect to any pension plan which the Company
and/or any Commonly Controlled Entity maintains or contributes to, either now or
in the future, that: (a) such bonding as is required under ERISA will be
maintained; (b) as soon as practicable and in any event within fifteen (15) days
after the Company or any Commonly Controlled Entity knows or has reason to know
that a "reportable event" has occurred or is likely to occur, the Company will
deliver to the Agent a certificate signed by its chief financial officer setting
forth the details of such "reportable event"; (c) within fifteen (15) days after
notice is received by the Company or any Commonly Controlled Entity that any
37
multiemployer plan has been or will be placed in "reorganization" within the
meaning of ERISA ss.4241, the Company will notify the Agent to that effect; and
(d) upon the Agent's request, the Company will deliver to the Agent a copy of
the most recent actuarial report, financial statements and annual report
completed with respect to any "defined benefit plan", as defined in ERISA
ss.3(35).
SECTION 7.14 Management. Promptly notify the Agent of any contemplated
changes in its Senior Management subsequent to the date hereof.
SECTION 7.15 Banking Relationship. Maintain the Agent as its principal
depository.
SECTION 7.16 Notification of Events of Default and Adverse Developments.
The Borrowers will promptly notify the Agent upon obtaining knowledge of the
occurrence of:
(a) any Event of Default;
(b) any Default;
(c) any event, development or circumstance whereby the financial
statements furnished hereunder fail in any material respect to
present fairly, in accordance with GAAP, the financial condition
and operational results of the Company or its Subsidiaries;
(d) any judicial, administrative or arbitral proceeding pending
against the Company or any of its Subsidiaries and any judicial
or administrative proceeding known by the Company to be
threatened against it or any of its Subsidiaries which, if
adversely decided, could have a Material Adverse Effect; and
(e) any other development in the business or affairs of the Company
and any of its Subsidiaries which could have a Material Adverse
Effect;
in each case describing in detail satisfactory to the Agent the nature thereof
and, in the case of notification under clauses (a) and (b), the action the
Company proposes to take with respect thereto.
SECTION 7.17 Insurance Generally. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible insurance companies on such
of its properties, in such amounts and against such risks as is customarily
maintained by similar businesses operating in the same vicinity; maintain
general public liability insurance against claims for personal injury, death or
property damage in such amounts as are satisfactory to the Agent in its
reasonable
38
discretion and workmen's compensation insurance in statutory amounts with such
companies as are licensed to do business in the state requiring the same; file,
and cause each of its Subsidiaries to file, with the Agent, upon its request, a
detailed list of the insurance then in effect and stating the names of the
insurance companies, the amounts and rates of the insurance, dates of the
expiration thereof and the properties and risks covered thereby; and, within
thirty (30) days after notice in writing from the Agent, obtain, and cause each
of its Subsidiaries to obtain, such additional insurance as the Agent may
reasonably request.
SECTION 7.18 Maintenance of the Collateral. Not permit anything to be done
to the Collateral which may materially impair the value thereof, other than
normal war and tear on tangible collateral and the sale of Inventory in the
ordinary course of business for fair consideration. The Agent, or an agent
designated by the Agent, shall be permitted to enter the premises of the
Company, and the Subsidiaries, and examine, audit and inspect the Collateral at
any reasonable time and from time to time without notice. The Agent agrees to
act in a commercially reasonable manner when inspecting, examining or auditing
the Collateral. The Agent shall not have any duty to, and the Borrowers hereby
release the Agent and each Lender from all claims of loss or damage caused by
the delay or failure to collect or enforce any of the Accounts or to, preserve
any rights against any other party with an interest in the Collateral.
SECTION 7.19 Defense of Title and Further Assurances. At its expense defend
the title to the Collateral (or any part thereof), and promptly upon request
execute, acknowledge and deliver any financing statement, renewal, affidavit,
deed, assignment, continuation statement, security agreement, certificate or
other document the Agent may reasonably require in order to perfect, preserve,
maintain, protect, continue and/or extend the lien or security interest granted
to the Agent and the Lenders under this Agreement and its priority. The
Borrowers shall pay to the Agent on demand all taxes, costs and reasonable
expenses incurred by the Agent in connection with the preparation, execution,
recording and filing of any such document or instrument.
SECTION 7.20 Subsequent Opinion of Counsel as to Recording Requirements.
Provide to the Agent a subsequent opinion of counsel as to the filing, recording
and other requirements with which the Company and the Subsidiaries have complied
to maintain the lien and security interest in favor of the Agent in the
Collateral in the event that the Company or any Subsidiary shall transfer its
principal place of business or the office where it keeps its records pertaining
to the Accounts.
SECTION 7.21 Assignments of Accounts. Promptly, upon request, execute and
deliver to the Agent written assignments, in form and content acceptable to the
Agent, of specific Accounts or groups of Accounts; provided, however, the lien
and/or security interest granted to the Agent and each of the Lenders under this
Agreement shall not be limited in any way to or by the inclusion or exclusion of
Accounts within such assignments. Such Accounts shall secure payment of the
Obligations and are not sold to the Agent whether or not any assignment thereof,
which is separate from this Agreement, is in form absolute.
39
SECTION 7.22 Notice of Returned Goods, etc. Promptly notify and cause the
Subsidiaries to promptly notify the Agent of the return, rejection or
repossession of any material amount of goods sold or delivered in respect of any
Accounts, and of any claims made in regard thereto. Whenever any Borrower
obtains possession (by return, rejection, repossession or otherwise) of any
material amount of goods, the sale or lease of which gave rise to an Account,
the Borrowers will (if requested by the Agent) physically segregate such goods
from the any Borrower's other property, and label and hold such goods as trustee
for the Agent for such disposition as the Agent may direct.
SECTION 7.23 Collections. Until such time as the Agent shall notify the
Company and each of the Subsidiaries of the revocation of such privilege, the
Company and each of the Subsidiaries (a) shall at its own expense have the
privilege for the account of and in trust for the Agent of collecting its
Accounts and receiving in respect thereto all items of payment and shall
otherwise completely service all of the Accounts including (i) the billing,
posting and maintaining of complete records applicable thereto, and (ii) the
taking of such action with respect to such Accounts as the Agent may request or
in the absence of such request, as the Company and each of the Subsidiaries may
deem advisable; and (b) may grant, in the ordinary course of business, to any
Account Debtor, any discount, rebate, refund or adjustment to which the Account
Debtor may be lawfully entitled, and may accept, in connection therewith, the
return of goods, the sale or lease of which shall have given rise to an Account.
The Agent may, at its option, at any time or from time to time after default
hereunder and continuation thereof, revoke the collection privilege given to the
Company and each of the Subsidiaries herein by either giving notice of its
assignment of, and lien on the Collateral to the Account Debtors or giving
notice of such revocation to the Company.
SECTION 7.24 Notice to Account Debtors and Escrow Account. In the event (a)
an Event of Default exists or (b) an event has occurred or condition exists and
is continuing which, with the giving of notice or the lapse of time will
constitute an Event of Default, the Company and the Subsidiaries shall promptly
upon the request of the Agent (a) in such form and at such times as specified by
the Agent, give notice of the Agent's lien on the Accounts to the Account
Debtors requiring the Account Debtors to make payments thereon directly to the
Agent, (b) promptly upon receipt deposit the Items of Payment into the
Collateral Account in the original form received by the Company and the
Subsidiaries (except for the endorsement of the Company and the Subsidiaries
where necessary, which endorsement each Borrower agrees to make, and the Agent,
by its duly authorized officers or nominee, is also hereby irrevocably
authorized to make such endorsement on each Borrower's behalf). Pending deposit
thereof to the Collateral Account, the Company and the Subsidiaries shall not
commingle any Items of Payment with any of its other funds or property, but will
hold them separate and apart therefrom in trust and for the account of the Agent
until deposit to the Collateral Account or other delivery thereof is made to the
Agent. The Agent will in its discretion apply the whole or any part of the
collected funds credited to the Collateral Account against the Obligations or
credit such collected
40
funds to the depository account of the Borrowers with the Agent, the order and
method of such application to be in the sole discretion of the Agent.
SECTION 7.25 Government Accounts. Immediately notify the Agent if any of
the Accounts arise out of contracts with the United States or with any state or
political subdivision thereof or any department, agency or instrumentality of
the United States, or any state or political subdivision thereof, and execute
any instruments and take any steps required by the Agent in order that all
moneys due and to become due under such contracts shall be assigned to the Agent
and notice thereof given to the government under the Federal Assignment of
Claims Act or any other applicable law.
SECTION 7.26 Hazardous Materials; Contamination. The Borrowers agree to (a)
give notice to the Agent promptly upon any Borrower's acquiring knowledge of the
presence of any Hazardous Materials on any property owned or controlled by any
Borrower or for which any Borrower is responsible or of any Hazardous Materials
Contamination with a full description thereof, except for reasonable quantities
of necessary supplies for use by such Borrower in the ordinary course of the its
current line of business and stored, used and disposed in accordance with
applicable Laws; (b) promptly comply with any Laws requiring the removal,
treatment or disposal of Hazardous Materials or Hazardous Materials
Contamination and provide the Agent with satisfactory evidence of such
compliance; (c) provide the Agent, within thirty (30) days after a demand by the
Agent, with a bond, letter of credit or similar financial assurance evidencing
to the Agent's satisfaction that the necessary funds are available to pay the
cost of removing, treating, and disposing of such Hazardous Materials or
Hazardous Materials Contamination and discharging any Lien which may be
established as a result thereof on any property owned or controlled by any
Borrower or for which any Borrower is responsible; and (d) defend, indemnify and
hold harmless the Agent and its agents, employees, trustees, successors and
assigns from any and all claims which may now or in the future (whether before
or after the termination of this Agreement) be asserted as a result of the
presence of any Hazardous Materials on any property owned or controlled by any
Borrower for which any Borrower is responsible for any Hazardous Materials
Contamination.
SECTION 7.27 Equipment. The Borrowers shall (a) maintain all Equipment as
personalty, (b) not affix any Equipment to any real estate in such manner as to
become a fixture or part of such real estate, and (c) shall hold no Equipment on
a sale on approval basis. The Borrowers hereby declare their intent that,
notwithstanding the means of attachment, no goods of the Borrowers hereafter
attached to any realty shall be deemed a fixture, which declaration shall be
irrevocable, without the Agent's consent, until all of the Obligations have been
paid in full and all of the commitments have been terminated.
41
VIII. NEGATIVE COVENANTS OF BORROWERS
Until payment in full and the performance of all of the Obligations,
without the prior written consent of the Agent, the Company will not and will
neither cause nor permit any of its Subsidiaries to, directly or indirectly:
SECTION 8.1 Borrowings. Create, incur, assume or suffer to exist any
Indebtedness for Borrowed Money in excess of One Million Dollars ($1,000,000) in
the aggregate at any one time, including capital leases, purchase money security
interests, except (a) borrowings in existence on the date hereof and reflected
on the financial statements which the Borrowers furnished to the Agent in
writing prior to the date hereof, (b) borrowings secured by Permitted Liens, and
(c) the Subordinated Debt.
SECTION 8.2 Mortgages and Pledges. Create, incur, assume or suffer to exist
any Lien on any of its property or assets, whether now owned or hereafter
acquired, except for Permitted Liens.
SECTION 8.3 Method of Accounting. Change the method of accounting employed
in the preparation of the financial statements furnished prior to the date of
this Agreement to the Agent pursuant to Part V of this Agreement, unless
required to conform to GAAP and on the condition that the Company's accountants
shall furnish such information as the Agent may request to reconcile the changes
with the Company's prior consolidated financial statements.
SECTION 8.4 Merger, Acquisition or Sale of Assets.
(a) The Company and each Subsidiary shall not alter or amend its
capital structure or authorize any additional class of equity, except that the
issuance or sale of additional securities of the Company, at fair market value
taking into account the restrictions on resale of such securities, as
applicable, and issuances under the Company's stock option and employee stock
purchase plans shall not be deemed an alteration or amendment to its capital
structure or authorization of additional class of equity, except as permitted
under subsection (b) hereof, or sell, lease or otherwise dispose of any of net
assets in excess of One Million Dollars ($1,000,000) in the aggregate, during
any twelve (12) month period.
(b) The Company may not acquire by merger, stock purchase or asset
purchase all or substantially all the assets of any Person or make investments
in any such during the existence of this Agreement.
SECTION 8.5 Advances and Loans. Lend money, give credit or make advances to
any Person which exceed $100,000 in the aggregate, including, without
limitation, officers,
42
directors, employees, Subsidiaries and Affiliates of the Company, other than
intercompany accounts and loans or advances to Subsidiaries, made in the
ordinary course of business.
SECTION 8.6 Dividends. No Borrowers will purchase, redeem or otherwise
acquire any shares of its capital stock or warrants now or hereafter
outstanding, declare or pay any dividends thereon (other than other than
dividends between the Company and the Subsidiaries or between Subsidiaries)
apply any of its property or assets to the purchase, redemption or other
retirement of, set apart any sum for the payment of any dividends on, or for the
purchase, redemption, or other retirement of, make any distribution by reduction
of capital or otherwise in respect of, any shares of any class of capital stock
of any Borrower, or any warrants, permit any Subsidiary to purchase or acquire
any shares of any class of capital stock of, or warrants issued by, any Company,
make any distribution to stockholders or set aside any funds for any such
purpose, and not prepay, purchase or redeem any Indebtedness for Borrowed Money
other than the Obligations, except upon the exercise of outstanding warrants in
accordance with their terms, and pursuant to the Company's employee stock
purchase and stock option plans.
SECTION 8.7 Contingent Liabilities. Assume, guarantee, endorse,
contingently agree to purchase or otherwise become liable upon the obligation of
any Person, except (a) by the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business and (b)
guaranties by any Borrower of contractual obligations (other than for the
payment of borrowed money) of any Wholly Owned Subsidiary of the Company..
SECTION 8.8 Investments. Purchase or acquire the obligations or stock of,
or any other or additional interest in, any Person, except (a) obligations of,
or obligations unconditionally guaranteed as to principal and interest by, the
United States of America, (b) bonds, debentures, participation certificates or
notes issued by any agency or corporation which is or may hereafter be created
by Act of the Congress of the United States as an agency or instrumentality
thereof, (c) Public Housing Bonds, Temporary Note or Preliminary Loan Notes,
fully secured by contracts with the United States, and (d) certificates of
deposit issued by the Agent.
SECTION 8.9 Subsidiaries. Except as permitted under Section 8.04 of this
Agreement, create or acquire any Subsidiaries other than the Subsidiaries
existing as of the date hereof.
SECTION 8.10 Additional Stock. Issue any additional stock of any class,
except stock of an existing class issued as a stock split or a stock dividend or
as permitted under Section 8.04, upon exercise of outstanding warrants, or in
the case of a Subsidiary, in connection with the merger or consolidation of a
Wholly Owned Subsidiary into the Company, where the Company is the sole
surviving corporation, or into another Wholly Owned Subsidiary, provided,
further, however, that any additional stock issued in connection with any of the
preceding shall be
43
delivered to the Agent together with a Pledge Agreement and such additional
documents and information as the Agent may require.
SECTION 8.11 ERISA Compliance. Neither the Company nor any Commonly
Controlled Entity will: (a) engage in or permit any "prohibited transaction" (as
defined in ERISA); (b) cause any "accumulated funding deficiency" as defined in
ERISA and/or the Internal Revenue Code; (c) terminate any pension plan in a
manner which could result in the imposition of a lien on the property of any
Borrower pursuant to ERISA; (d) terminate or consent to the termination of any
Multiemployer Plan; or (e) incur a complete or partial withdrawal with respect
to any Multiemployer Plan.
SECTION 8.12 Prohibition on Hazardous Materials. The Borrowers shall not
place, manufacture or store or permit to be placed, manufactured or stored any
Hazardous Materials on any property owned, controlled or operated by any
Borrower or for which any Borrower is responsible, except for reasonable
quantities of necessary supplies for use by such Borrower in the ordinary course
of business and stored, used and disposed in accordance with all applicable
Laws.
SECTION 8.13 Transfer of Collateral. Transfer, or permit the transfer, to
another location of any of the Collateral or the books and records related to
any of the Collateral; provided, however, that the Borrowers may transfer the
Collateral or the books and records related thereto to another location if (a)
the Company shall have provided to the Agent prior to such transfer an opinion
of counsel addressed to the Agent to the effect that the Agent's perfected
security interest shall not be affected by such move or if it shall be affected,
setting forth the steps necessary to continue the Agent's perfected security
interest together with the commencement of such steps by the Company at its
expense, and shall have taken such steps, or (b) such Collateral is immaterial
in value and constitutes items or goods used, consumed, leased or sold in the
ordinary course of business.
SECTION 8.14 Sale and Leaseback. Directly or indirectly enter into any
arrangement to sell or transfer all or any substantial part of its fixed assets
then owned by it and thereupon or within one year thereafter rent or lease the
assets so sold or transferred.
SECTION 8.15 Sale of Accounts. Sell, discount, transfer, assign or
otherwise dispose of any of its Accounts, notes receivable, installment or
conditional sales agreements or any other rights to receive income, revenues or
moneys, however evidenced.
SECTION 8.16 Line of Business. Enter into any lines or areas of business
which do not complement the Borrowers' current line of business.
SECTION 8.17 Liquidation, Termination, Dissolution, Change in Management,
etc. The Borrowers shall not liquidate, dissolve or terminate its existence or
suspend or
44
terminate a substantial portion of their business operations, change the conduct
of their businesses, including, but not limited to, acquiring a line of business
which does not complement any Borrower's current line of business, or changing
the composition of more than two (2) members of the Senior Management of the
Company without the prior written consent of the Agent.. For purposes hereof, a
change in ownership would include any Person indirectly or directly being a
beneficial owner of more than thirty percent (30%) of the total voting power of
the voting stock of any Borrower.
SECTION 8.18 Subordinated Indebtedness. The Borrowers will not, and will
not permit any Subsidiary to make:
(a) any payment of principal of, or interest on, any of the
Subordinated Indebtedness, including, without limitation, the Subordinated Debt,
if prohibited by the Subordination Agreement or if any Event of Default then
exists hereunder or would result from such payment;
(b) any payment of the principal or interest due on the Subordinated
Indebtedness as a result of acceleration thereunder or a mandatory prepayment
thereunder;
(c) any amendment or modification of or supplement to the documents
evidencing or securing the Subordinated Indebtedness; and
(d) payment of principal or interest on the Subordinated Indebtedness
other than when due (without giving effect to any acceleration of maturity or
mandatory prepayment).
IX. EVENTS OF DEFAULT
The occurrence of one or more of the following events shall be a "Default"
under this Agreement, and the term "Default" shall mean, whenever it is used in
this Agreement, any one or more of the following events:
SECTION 9.1 Failure to Pay. The Borrowers shall fail to (a) make any
payment of principal or interest on the Notes or (b) pay any of the Obligations,
when and as the same shall become due and payable, and such failure shall
continue for ten (10) days.
SECTION 9.2 Breach of Representations and Warranties. Any representation or
warranty made herein or in any report, certificate, opinion (including any
opinion of counsel for the Borrowers), financial statement or other instrument
furnished in connection with the Obligations or with the execution and delivery
of any of the Financing Documents, shall prove to have been false or misleading
when made in any material respect.
45
SECTION 9.3 Failure to Comply with Insurance Provisions. The Borrowers
shall fail to duly and promptly perform, comply with or observe the terms,
covenants, conditions and agreements set forth in SECTION 7.17.
SECTION 9.4 Failure to Comply with Covenants. Default shall be made by any
Borrower in the due observance and performance of any covenant, condition or
agreement contained in SECTIONS 7.02, 7.04 or 7.08 hereof or in Part VIII
hereof.
SECTION 9.5 Other Defaults. Default shall be made by any Borrower in the
due observance or performance of any other term, covenant or agreement herein
contained, which default shall remain unremedied for thirty (30) days after
written notice thereof to the Company by the Agent.
SECTION 9.6 Default Under Other Financing Documents. An event of default
shall occur under any of the other Financing Documents, and such event of
default is not cured within any applicable grace period provided therein.
SECTION 9.7 Receiver; Bankruptcy. The Company or any Subsidiary shall (a)
apply for or consent to the appointment of a receiver, trustee or liquidator of
itself or any of its property, (b) admit in writing its inability to pay its
debts as they mature, (c) make a general assignment for the benefit of
creditors, (d) be adjudicated a bankrupt or insolvent, (e) file a voluntary
petition in bankruptcy or a petition or an answer seeking reorganization or an
arrangement with creditors or to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation law
or statute, or an answer admitting the material allegations of a petition filed
against it in any proceeding under any such law or if corporate action shall be
taken by the Company or any Subsidiary for the purposes of effecting any of the
foregoing, or (f) by any act indicate its consent to, approval of or
acquiescence in any such proceeding or the appointment of any receiver of or
trustee for any of its property, or suffer any such receivership, trusteeship or
proceeding to continue undischarged for a period of sixty (60) days.
SECTION 9.8 Judgment. Unless adequately insured in the opinion of the
Agent, the entry of a final judgment for the payment of money involving more
than $500,000 against the Company or any Subsidiary and the failure by the
Company or such Subsidiary to discharge the same, or cause it to be discharged,
within thirty (30) days from the date of the order, decree or process under
which or pursuant to which such judgment was entered, or to secure a stay of
execution pending appeal of such judgment.
SECTION 9.9 Execution; Attachment. Any execution or attachment shall be
levied against the Collateral, or any part thereof, and such execution or
attachment shall not be set aside, discharged or stayed within thirty (30) days
after the same shall have been levied.
46
SECTION 9.10 Default Under Other Borrowings. Default shall be made with
respect to any evidence of indebtedness or liability for borrowed money (other
than the Loan), including, but not limited to any Subordinated Indebtedness if
the effect of such default is to accelerate the maturity of such evidence of
indebtedness or liability or to permit the holder or obligee thereof to cause
any indebtedness to become due prior to its stated maturity.
SECTION 9.11 Material Adverse Change. If the Agent in its sole discretion
determines in good faith that a material adverse change has occurred in the
financial condition of any Borrower from the financial condition set forth in
the financial statements dated _____ , 1998 or from the financial condition of
the Borrowers most recently disclosed to the Agent in any manner.
SECTION 9.12 Change in Management. Any change in the composition of more
than two (2) members of the Senior Management of the Company, unless a
replacement member of Senior Management satisfactory in all respects to the
Lender is hired within ninety (90) days of such change.
SECTION 9.13 Audit Results. If the results of any audits of the Company's
or any Subsidiary's books and records or the Collateral is unsatisfactory.
X. RIGHTS AND REMEDIES UPON DEFAULT
SECTION 10.1 Demand; Acceleration. The occurrence or non-occurrence of an
Event of Default under this Agreement shall in no way affect or condition the
right of the Agent to demand payment at any time of any of the Obligations which
are payable on demand regardless of whether or not an Event of Default has
occurred. Upon the occurrence of a Default, and in every such event and at any
time thereafter, the Agent may declare the Obligations due and payable, without
presentment, demand, protest, or any notice of any kind, all of which are hereby
expressly waived, anything contained herein or in any of the other Financing
Documents to the contrary notwithstanding.
SECTION 10.2 Specific Rights With Regard to Collateral. In addition to all
other rights and remedies provided hereunder or as shall exist at law or in
equity from time to time, the Agent may, after a Default without notice to the
Borrowers:
(a) request any Account Debtor obligated on any of the Accounts to
make payments thereon directly to the Agent, with the Agent taking control of
the cash and non-cash proceeds thereof;
(b) compromise, extend or renew any of the Collateral or deal with the
same as it may deem advisable;
47
(c) make exchanges, substitutions or surrenders of all or any part of
the Collateral;
(d) remove from any of the Company's or any Subsidiary's place of
business all books, records, ledger sheets, correspondence, invoices and
documents, relating to or evidencing any of the Collateral or without cost or
expense to the Agent, make such use of the Company's or any Subsidiary's
place(s) of business as may be reasonably necessary to administer, control and
collect the Collateral;
(e) repair, alter or supply goods if necessary to fulfill in whole or
in part the purchase order of any Account Debtor;
(f) demand, collect, receipt for and give renewals, extensions,
discharges and releases of any of the Collateral;
(g) institute and prosecute legal and equitable proceedings to enforce
collection of, or realize upon, any of the Collateral;
(h) settle, renew, extend, compromise, compound, exchange or adjust
claims in respect of any of the Collateral or any legal proceedings brought in
respect thereof;
(i) endorse the name of any Borrower upon any items of payment
relating to the Collateral or on any proof of claim in bankruptcy against an
Account Debtor; and
(j) notify the post office authorities to change the address for the
delivery of mail to each Borrower to such address or post office box as the
Agent may designate and receive and open all mail addressed to any Borrower.
SECTION 10.3 Performance by Agent. Upon the occurrence and continuation of
any Event of Default, the Agent without notice to or demand upon the Borrowers
and without waiving or releasing any of the Obligations or any Event of Default,
may (but shall be under no obligation to) at any time thereafter make such
payment or perform such act for the account and at the expense of the Borrowers,
and may enter upon the premises of each Borrower for that purpose and take all
such action thereon as the Agent may consider necessary or appropriate for such
purpose. All sums so paid or advanced by the Agent and all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred in connection therewith (the "Expense Payments") together with interest
thereon from the date of payment, advance or incurring until paid in full at the
rate of two percent (2.0%) per annum in excess of the highest fluctuating
interest rate payable under the Revolving Note from time to time shall be paid
by the Borrowers to the Agent on demand and shall constitute and become a part
of the Obligations.
48
SECTION 10.4 Uniform Commercial Code and Other Remedies. Upon the
occurrence of a Default (and in addition to all of its rights, powers and
remedies under this Agreement), the Agent shall have all of the rights and
remedies of a secured party under the Maryland Uniform Commercial Code and other
applicable laws, and the Agent is authorized to offset and apply to all or any
part of the Obligations all moneys, credits and other property of any nature
whatsoever of any Borrower now or at any time hereafter in the possession of, in
transit to or from, under the control or custody of, or on deposit with, the
Agent. Upon demand by the Agent, the Borrowers shall assemble the Collateral and
make it available to the Agent, at a place designated by the Agent. The Agent or
its agents may enter upon any of the Borrower's premises to take possession of
the Collateral, to remove it, to render it unusable, or to sell or otherwise
dispose of it.
Any written notice of the sale, disposition or other intended action by the
Agent with respect to the Collateral which is sent by regular mail, postage
prepaid, to the Borrowers at the address set forth in Article XII hereof, or
such other address of any Borrower which may from time to time be shown on the
Agent's records, at least ten (10) days prior to such sale, disposition or other
action, shall constitute reasonable notice to the Borrowers. The Borrowers shall
pay on demand all costs and expenses, including, without limitation, reasonable
attorney's fees and expenses, incurred by or on behalf of the Agent in preparing
for sale or other disposition, selling, managing, collecting or otherwise
disposing of, the Collateral. All of such costs and expenses (the "Liquidation
Costs") together with interest thereon from the date incurred until paid in full
at the Default Rate, shall be paid by the Borrowers to the Agent on demand and
shall constitute and become a part of the Obligations. Any proceeds of sale or
other disposition of the Collateral will be applied by the Agent to the payment
of the Liquidation Costs and Expense Payments, and any balance of such proceeds
will be applied by the Agent to the payment of the balance of the Obligations in
such order and manner of application as the Agent may from time to time in its
sole discretion determine. After such application of the proceeds, any balance
shall be paid to the Borrowers or to any other party entitled thereto.
XI. THE AGENT
SECTION 11.1 Appointment and Authority. Each Lender hereby irrevocably
designates and appoints NationsBank, N.A. as Agent of such Lender hereunder and
under the other Financing Documents, and hereby irrevocably authorizes
NationsBank, N.A. as Agent for such Lender, to take such actions on its behalf
under the provisions of this Agreement and the other Financing Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Agent or required of the Agent by the provisions of this Agreement and the other
Financing Documents, together with such powers as are reasonably incidental
thereto. The relationship between the Agent and each Lender is and shall be that
of agent and principal only and nothing herein shall be construed to constitute
Agent a trustee for any Lender or to establish a fiduciary relationship with any
Lender or impose on the Agent any duties, responsibilities, or obligations other
than those expressly set forth in the Financing Documents. No implied
49
covenants, functions, responsibilities, duties, obligations, or liabilities
shall be read into this Agreement and the other Financing Documents or otherwise
exist against the Agent.
SECTION 11.2 Performance and Delegation of Duties. In exercising its duties
and powers hereunder, the Agent shall exercise the same care which it would
exercise in dealing with loans for its own account. The Agent may execute any of
its duties under this Agreement and the other Financing Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care. In acting hereunder as the Agent
(including, without limitation, the taking out, holding, managing and disposing
of Collateral), NationsBank, N.A. shall be acting for its own account and for
the account of, and as agent for, the other Lenders to the extent of their
respective shares in the Loan.
SECTION 11.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(a) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or the other Financing
Documents (except for its or such Person's own gross negligence or willful
misconduct), (b) liable for any action lawfully taken or omitted to be taken by
it or such Person at the request or with the approval of the Required Lenders,
or, where expressly provided herein, all the Lenders, as the case may be, or (c)
responsible in any manner to any Lender for any recitals, representations or
warranties made by any other Lender or the Borrowers or any officer thereof
contained in the Financing Documents or in any certificate, report, statement or
other document referred to or provided for in, or received by it under or in
connection herewith or therewith or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Financing Documents or the
Collateral or perfection of Liens on the Collateral or the priority of Liens on
the Collateral or for any failure of any or all of the Borrowers or any other
Person who is a party to the Financing Documents to perform its obligations
under the Financing Documents. The Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of the
Financing Documents or to inspect the properties, books, or records of any
Borrower.
SECTION 11.4 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying upon, any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document, conversation, or
communication believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including, without limitation, counsel to the Borrowers,
independent accountants, and other experts selected by it), and shall not be
liable to any of the parties hereto or any future holder of either Note for the
consequences of such reliance. The Agent shall be fully justified in failing or
refusing to take any action under the Financing Documents unless it first
receives such advice or concurrence of the Required Lenders as it deems
appropriate or it is
50
first indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Furthermore, in connection with any action
taken or failure or refusal to act under the Financing Documents, the Agent may
request and each Lender shall provide specific indemnification, to the Agent's
satisfaction, ratably according to such Lender's share of the Loan, against any
and all liability and expense which may be incurred by the Agent by taking,
failing to take, or refusing to take, such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under the Financing
Documents in accordance with an instruction to it of the Required Lenders,
unless the consent of all the Lenders is expressly required hereunder, in which
case the Agent shall be so protected when acting in accordance with instructions
from all the Lenders. Such request and any action taken or failure to act
pursuant thereto shall be binding upon all Lenders and future holders of the
Note. In fulfilling any agreement in any of the Financing Documents relating to
the release of any item of Collateral, the Agent may rely upon any certification
of the Borrowers as to the fulfillment of any conditions to, or the compliance
with any covenants or agreements relating to, such release, including, without
limitation, any such condition as to the nonexistence of any Default or Event of
Default and any such covenant that any such item be sold or otherwise disposed
of in connection with such release.
SECTION 11.5 No Amendment to Agent's Duties Without Consent. The Agent
shall not be bound by any waiver, amendment, supplement, or modification of this
Agreement which affects its duties under this Agreement unless it shall have
given its prior written consent as Agent thereto.
SECTION 11.6 Non-Reliance of Lenders on Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to such Lender and that no act by the Agent
hereinafter taken, including any review of the affairs of the Borrowers, shall
be deemed to constitute any representation or warranty by it to such Lender.
Each Lender represents to the Agent and each other Lender that it has,
independently and without reliance upon the Agent or such other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial, and other condition and creditworthiness of the Borrowers and made
its own decision to make its Loan hereunder, authorize the issuance of Letters
of Credit and to enter into the Financing Documents. Each Lender also represents
that it will, independently and without reliance upon the Agent or any other
Lender, and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals,
and decisions in taking or not taking action required of or permitted to it
under the Financing Documents and the agreements contemplated thereby, and to
make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial, and other condition and
creditworthiness of the Borrowers. Except for any notices, reports, and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide the
Lenders with any credit or other
51
information concerning the business, operations, property, financial, and other
condition or creditworthiness of the Borrower which may come into its possession
or any of its officers, directors, employees, agents, attorneys-in-fact, or
Affiliates.
SECTION 11.7 Indemnification of Agent. Each Lender hereby agrees to
indemnify the Agent (in its capacity as such) to the extent not reimbursed by
the Borrowers and without limiting the obligation of the Borrowers to do so,
ratably according to its share of the Loans, from and against any and all
liabilities, Obligations, losses, claims, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including without limitation at any time following the payment
of the Notes and the other Obligations) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of the Financing
Documents or the transactions contemplated thereby or any action taken or
omitted by the Agent under or in connection with any of the foregoing; provided,
however, that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, claims, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
gross negligence or willful misconduct of Agent. The agreements in this Section
shall survive the payment of the Notes and all other Obligations.
SECTION 11.8 Reliance by Borrowers on Agent. The Borrowers shall not be
bound to ascertain the authority of the Agent to act on behalf of the Lenders in
connection with any of the matters governed or contemplated by this Agreement or
the other Financing Documents, or to inquire as to the satisfaction of any
conditions precedent to the exercise of such authority. The Borrowers shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document, conversation or communication believed by it to be genuine and correct
and to have been signed, sent or made by the Agent on behalf of the Lenders.
SECTION 11.9 Knowledge of Default. The Agent shall be entitled to assume
that no Default or Event of Default has occurred and is continuing, unless the
Agent has been notified in writing by a Lender or the Borrowers that such Lender
or Borrowers considers that a Default or an Event of Default has occurred and is
continuing and specifying the nature thereof.
SECTION 11.10 Action by the Agent. So long as the Agent shall be entitled,
pursuant to Section 11.09, to assume that no Default or Event of Default shall
have occurred and be continuing, the Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising any rights
which may be vested in it by this Agreement, or with respect to anything it may
do or refrain from doing which may seem to it to be necessary or desirable.
SECTION 11.11 Actions After Default, etc. In the event that the Agent,
pursuant to Section 11.09 shall have been notified of any Default or Event of
Default, the Agent:
52
(a) shall promptly notify the Lenders;
(b) shall take such action and assert such rights under this Agreement
as it is expressly required to do pursuant to the terms of this Agreement;
(c) may take such other actions and assert such other rights as it
deems advisable, in its sole discretion, for the protection of the interests of
the Lenders;
(d) shall, upon the written request of the Required Lenders, as
expeditiously and effectively as is reasonably practicable, enforce or attempt
to enforce the Security Documents or to otherwise realize upon the Collateral;
provided, however, (i) the Agent shall be guided by the Required Lenders as to
the action to be taken in enforcing or attempting to enforce the Security
Documents; and (ii) the Agent, notwithstanding indemnification, need not take
any action which it believes, upon advice of counsel, is prohibited by this
Agreement or applicable Law; and
(e) shall inform all the Lenders of the taking of action or assertion
of rights pursuant to this Section.
Each Lender agrees with the Agent and the other Lenders that the decisions and
determinations of the Required Lenders in enforcing the Note, the Security
Documents and the other Financing Documents and realizing (or attempting to
realize) upon the Collateral and in guiding the Agent in those matters shall be
binding upon all the Lenders, including, without limitation, authorizing the
Agent at the pro rata expense of all the Lenders (to the extent not reimbursed
by the Borrowers) to retain attorneys to seek judgment on the Notes and to
foreclose upon or exercise other rights under the Security Documents. Each
Lender similarly agrees with the other Lenders that it will not, without the
consent of the Required Lenders, seek to separately institute any legal action
on its Note or the other Financing Documents or to institute proceedings to
foreclose upon the Collateral. All rights of action under the Financing
Documents and all rights to the Collateral may be enforced by the Agent and any
suit or proceeding instituted by the Agent in furtherance of such enforcement
may be brought in its name as Agent without the necessity of joining as
plaintiffs or defendants any of the Lenders, and the recovery of any judgment
shall be for the benefit of the Lenders, subject to the expenses of the Agent.
SECTION 11.12 Distribution of Proceeds. All collections upon the
Obligations and all proceeds of the Collateral and all other sums and property
received by the Agent and/or any Lender or then held by the Agent and/or any
Lender or received by voluntary payment or through exercise of the right of
setoff, counterclaim, cross-action, or otherwise, shall be shared by the Lenders
pro rata in accordance with their respective shares of the Loans, in the
following order:
53
(a) First, to all Enforcement Costs and other expenses of the Agent
and/or the Lenders;
(b) Second, to all amounts due to the Agent (in its capacity as Agent
hereunder) from the Borrowers or the Lenders;
(c) Third, to the Lenders, in accordance with their respective shares
of the Loans, for past due interest on the Loans, and any of the other
Obligations;
(d) Fourth, to the Lenders, in accordance with their respective shares
of the Loans, for principal of the Loans;
(e) Fifth, to the Lenders, in accordance with their respective shares
of the Loans, for all other amounts owed the Lenders pursuant to the provisions
of this Agreement or the other Financing Documents; and
(f) Sixth, to the Lenders to the extent permitted by applicable Laws,
in accordance with their respective shares of the Loans, for all Obligations
arising other than under this Agreement or the other Financing Documents.
SECTION 11.13 Obligations of Lenders Several. The obligations,
representations, and warranties of the Lenders hereunder are several, and no
Lender hereunder shall be responsible for the obligations, representations and
warranties of any other Lender hereunder, and the failure of any Lender to
perform any of its obligations hereunder shall not relieve the other Lenders, or
any of them, from the performance of their or its respective obligations
hereunder.
SECTION 11.14 Participation for Own Account. Each Lender represents and
warrants to the other Lenders that it is participating herein for its own
account as a commercial transaction and not with a view to the distribution,
disposition, or participation of its interest herein, and it has no present
intention of making any such distribution, disposition, or participation.
SECTION 11.15 Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from, and generally engage in any
kind of business with the Borrowers as though the Agent were not the Agent
hereunder. With respect to any Loan made or renewed by it, and any Notes issued
to it, the Agent shall have the same duties, rights and powers under the
Financing Documents as any Lender and may exercise the same as though it were
not the Agent and the terms "Lender" and "Lenders" shall include the Agent in
its individual capacity.
54
SECTION 11.16 Removal of Agent. The Agent, or any successor Agent, may be
removed for "cause" (as hereinafter defined) upon at least thirty (30) days
prior written notice to such Agent and the Borrowers by the Lenders together
holding seventy-five percent (75.0%) or more of the aggregate shares of the Loan
of all Lenders, after deducting the share of the Loan of the Agent in its
individual Lender capacity. For purpose of this Section, the term "cause" shall
mean a material breach by the Agent, or any successor Agent, of its obligations
and duties to the Lenders hereunder. Any notice of removal shall set forth the
specific reasons constituting such removal. Such removal shall be effective upon
the appointment of a successor Agent and the acceptance of such appointment in
accordance with Section 11.17 hereof. All costs of removing an Agent and
appointing a successor shall be borne by the Lenders.
SECTION 11.17 Successor Agent. The Lenders shall appoint one of the Lenders
to succeed the Agent or any successor Agent removed pursuant to Section 11.16
hereof, and the successor Agent so appointed shall execute and deliver to its
predecessor, the Lenders, and the Borrowers an instrument in writing accepting
such appointment and assuming all of the obligations and liabilities of the
Agent for the Lenders under the Financing Documents, and thereupon such
successor Agent, without any further act, deed or conveyance, shall become fully
vested with all the properties, rights, duties and obligations of its
predecessor Agent. The predecessor Agent shall deliver to its successor Agent
forthwith all collateral security, documents, and moneys, if any, held by it as
Agent for the Lenders, whereupon such predecessor Agent shall be discharged from
its duties and obligations as Agent for the Lenders under this Agreement;
provided, however, that it shall not be relieved of any liabilities incurred or
arising prior to the effective date of such removal or arising out of its
agency.
SECTION 11.18 Action by Lenders. Wherever the mutual consent, approval or
agreement of the Required Lenders or all of the Lenders is required by the
provisions hereof, each of the Lenders agrees to use its best efforts to act
reasonably under the circumstances and, if reasonably possible under the
circumstances, to act in concert with the other.
SECTION 11.19 Benefits. None of the provisions contained in this Article
are intended to benefit the Borrowers or any Person other than the Lenders and
the Agent; provided, however, such provisions are binding upon the Borrowers.
Accordingly, neither the Borrowers nor any Person other than one of the Lenders
and the Agent shall be entitled to rely upon or to raise as a defense the
failure of the Agent or one of the Lenders to comply with the provisions of this
Article.
SECTION 11.20 Participations. Each of the Lenders shall have the right to
grant participations in the Obligations held by it to others at any time and
from time to time in minimum increments of One Million Dollars ($1,000,000), and
such Lender may divulge to any such participant or potential participant all
information, reports, financial statements and documents obtained in connection
with this Agreement, any Notes and any of the other Financing Documents or
otherwise.
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XII. MISCELLANEOUS
SECTION 12.1 Notices. All notices, certificates or other communications
hereunder shall be deemed given when delivered by hand or courier, or three (3)
days after the date when mailed by certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Agent
and the Lenders: NATIONSBANK, N.A.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, Senior Vice President
if to the Borrowers: c/o FTI CONSULTING, INC.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxx X. Xxxx, XX, Chairman
and Chief Financial Officer
SECTION 12.2 Consents and Approvals. If any consent, approval, or
authorization of any state, municipal or other governmental department, agency
or authority or of any person, or any person, corporation, partnership or other
entity having any interest therein, should be necessary to effectuate any sale
or other disposition of the Collateral, each Borrower agrees to execute all such
applications and other instruments, and to take all other action, as may be
required in connection with securing any such consent, approval or
authorization.
SECTION 12.3 Remedies, etc. Cumulative. Each right, power and remedy of the
Agent as provided for in this Agreement or in any of the other Financing
Documents or now or hereafter existing at law or in equity or by statute or
otherwise shall be cumulative and concurrent and shall be in addition to every
other right, power or remedy provided for in this Agreement or in any of the
other Financing Documents or now or hereafter existing at law or in equity, by
statute or otherwise, and the exercise or beginning of the exercise by the Agent
of any one or more of such rights, powers or remedies shall not preclude the
simultaneous or later exercise by the Agent of any or all such other rights,
powers or remedies. In order to entitle the Agent to exercise any remedy
reserved to it herein, it shall not be necessary to give any notice, other than
such notice as may be expressly required in this Agreement.
SECTION 12.4 No Waiver of Rights by the Agent. No failure or delay by the
Agent to insist upon the strict performance of any term, condition, covenant or
agreement of this Agreement or of any of the other Financing Documents, or to
exercise any right, power or remedy consequent upon a breach thereof, shall
constitute a waiver of any such term, condition, covenant or agreement or of any
such breach or preclude the Agent from exercising any such
56
right, power or remedy at any later time or times. By accepting payment after
the due date of any amount payable under this Agreement or under any of the
other Financing Documents, the Agent shall not be deemed to waive the right
either to require prompt payment when due of all other amounts payable under
this Agreement or under any of the other Financing Documents, or to declare a
default for failure to effect such prompt payment of any such other amount.
SECTION 12.5 Entire Agreement. The Financing Documents shall completely and
fully supersede all other agreements, both written and oral, including, but not
limited to the Original Financing Agreement, between the Agent, the Lenders and
the Borrowers relating to the Obligations. Neither the Agent, the Lenders nor
the Borrowers shall hereafter have any rights under such prior agreements but
shall look solely to the Financing Documents for definition and determination of
all of their respective rights, liabilities and responsibilities relating to the
Obligations.
SECTION 12.6 Survival of Agreement; Successors and Assigns. All covenants,
agreements, representations and warranties made by the Borrowers herein and in
any certificate, in the Financing Documents and in any other instruments or
documents delivered pursuant hereto shall survive the making by the Agent and
the Lenders of the Loans and the execution and delivery of the Note, and shall
continue in full force and effect so long as any of the Obligations are
outstanding and unpaid. Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and agreements by or on
behalf of any Borrower, which are contained in this Agreement shall inure to the
benefit of the successors and assigns of the Agent and each Lender, and all
covenants, promises and agreements by or on behalf of the Agent which are
contained in this Agreement shall inure to the benefit of the permitted
successors and permitted assigns of the Borrowers, but this Agreement may not be
assigned by the Borrowers without the prior written consent of the Agent.
SECTION 12.7 Expenses. The Borrowers jointly and severally agree to pay all
out-of-pocket expenses of the Agent (including the reasonable fees and expenses
of its legal counsel) in connection with the preparation of this Agreement, the
recordation of all financing statements and such other instruments as may be
required by the Agent at the time of, or subsequent to, the execution of this
Agreement to secure the Obligations (including any and all recordation tax and
other costs and taxes incident to recording), the enforcement of any provision
of this Agreement and the collection of the Obligations. The Borrowers jointly
and severally agree to indemnify and save harmless the Agent and each Lender for
any liability resulting from the failure to pay any required recordation tax,
transfer taxes, recording costs or any other expenses incurred by the Agent in
connection with the Obligations. The provisions of this Section shall survive
the execution and delivery of this Agreement and the repayment of the
Obligations. The Borrowers further jointly and severally agree to reimburse the
Agent and each Lender upon demand for all out-of-pocket expenses (including
reasonable attorneys' fees and legal expenses) incurred by the Agent and each
Lender in enforcing any of the Obligations or any
57
security therefor, which agreement shall survive the termination of this
Agreement and the repayment of the Obligations.
SECTION 12.8 Counterparts. This Agreement may be executed in any number of
counterparts all of which together shall constitute a single instrument.
SECTION 12.9 Governing Law. This Agreement and all of the other Financing
Documents shall be governed by, and construed in accordance with the laws of the
State of Maryland.
SECTION 12.10 Modifications. No modification or waiver of any provision of
this Agreement or of any of the other Financing Documents, nor consent to any
departure by any Borrower therefrom, shall in any event be effective unless the
same shall be in writing, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice to
or demand on any Borrower in any case shall entitle any Borrower to any other or
further notice or demand in the same, similar or other circumstance.
SECTION 12.11 Illegality. If fulfillment of any provision hereof or any
transaction related hereto or to any of the other Financing Documents, at the
time performance of such provision shall be due, shall involve transcending the
limit of validity prescribed by law, then ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity; and if any clause or
provisions herein contained other than the provisions hereof pertaining to
repayment of the Obligations operates or would prospectively operate to
invalidate this Agreement in whole or in part, then such clause or provision
only shall be void, as though not herein contained, and the remainder of this
Agreement shall remain operative and in full force and effect; and if such
provision pertains to repayment of the Obligations, then, at the option of the
Agent, all of the Obligations of the Borrowers to the Agent and each Lender
shall become immediately due and payable.
SECTION 12.12 Extension of Maturity. Should the principal of or interest on
the Notes become due and payable on other than a Banking Day, the maturity
thereof shall be extended to the next succeeding Banking Day and in the case of
principal, interest shall be payable thereon at the rate per annum specified in
the Notes during such extension.
SECTION 12.13 Gender, etc. Whenever used herein, the singular number shall
include the plural, the plural the singular and the use of the masculine,
feminine or neuter gender shall include all genders.
SECTION 12.14 Headings. The headings in this Agreement are for convenience
only and shall not limit or otherwise affect any of the terms hereof.
58
SECTION 12.15 Liability of the Agent. The Borrowers each hereby agree that
the Agent and each of the Lenders shall not be chargeable for any negligence,
mistake, act or omission of any accountant, examiner, agency or attorney
employed by the Agent or any Lender (except for the willful misconduct or gross
negligence of any Person employed by the Agent or any Lender) in making
examinations, investigations or collections, or otherwise in perfecting,
maintaining, protecting or realizing upon any lien or security interest or any
other interest in the Collateral or other security for the Obligations.
SECTION 12.16. Joint and Several Liability. Each of the Borrowers shall be
jointly and severally liable for the payment of the Obligations as and when due
and payable in accordance with the provisions of this Agreement, the Notes
and/or the other Financing Documents. The term "Borrowers" whenever used herein
shall include each Borrower, individually and jointly, and the Agent (with the
necessary approval of the Lenders as herein required) may (without notice to or
consent of any or all of the Borrowers and with or without consideration)
release, compromise, settle with, and proceed against any or all of the
Borrowers and any Collateral given by such Borrower without affecting,
impairing, lessening and releasing the obligations of the other Borrowers
hereunder.
[SIGNATURES ON FOLLOWING PAGE]
59
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Agreement on the day and year first above written.
Company:
WITNESS OR ATTEST: FTI CONSULTING, INC.
By: (Seal)
------------------------------- --------------------------------
Name:
Title:
Subsidiaries:
WITNESS OR ATTEST: TEKLICON, INC.
By: (Seal)
------------------------------- --------------------------------
Name:
Title:
WITNESS OR ATTEST: L.W.G., INC.
By: (Seal)
------------------------------- --------------------------------
Name:
Title:
WITNESS OR ATTEST: XXXXX, XXXX & XXXXX, INC.
By: (Seal)
------------------------------- --------------------------------
Name:
Title:
WITNESS OR ATTEST: S.E.A., INC.
By: (Seal)
------------------------------- --------------------------------
Name:
Title:
WITNESS OR ATTEST: XXXX CONSULTING, INC.
By: (Seal)
------------------------------- --------------------------------
Name:
Title:
WITNESS OR ATTEST: KCI MANAGEMENT CORP.
By: (Seal)
------------------------------- --------------------------------
Name:
Title:
WITNESS: NATIONSBANK, N.A. , as Agent and for
itself as a lender
By: (Seal)
------------------------------- --------------------------------
Xxxxxxx X. Xxxx
Senior Vice President
EXHIBITS
A. Note
B. Places of Business
C. Liens on Collateral
D. Swing Line Note
E. Places to Record Financing Statements
SCHEDULES
5.7 Changes in Financial Condition
5.19 Business Names
EXHIBIT B
PLACES OF BUSINESS
The Company's Chief Executive Office is:
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Subsidiaries' Chief Executive Offices are:
The Company and Subsidiaries have other places of business at the following
addresses:
The Collateral is located at the following addresses:
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
EXHIBIT C
LIENS ON COLLATERAL
SCHEDULE 5.7
SCHEDULE 5.19
