EXHIBIT 10
Execution Copy
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 29, 1997
BY AND BETWEEN
DOCUCORP, INC.
AND
NATIONSBANK, N.A.
TABLE OF CONTENTS
1. Definitions and Accounting Matters.................................1
1.1. Certain Defined Terms......................................1
1.2. Accounting Terms and Determinations........................17
2. Loans..............................................................18
2.1. Amount of Loans............................................18
2.2. Borrowings.................................................18
2.3. Repayment of Loans.........................................19
2.4. Interest...................................................19
2.5. Voluntary Reductions of Commitment.........................21
2.6. Continuation and Conversion of Loans.......................21
2.7. Minimum Amounts............................................22
2.8. Fees.......................................................22
2.9. Notes......................................................22
2.10. Optional Prepayments.......................................23
2.11. Mandatory Prepayments of Loans.............................23
2.12. Conversion to Term Loan....................................24
2.13. Use of Proceeds............................................25
2.14. Release of Investor Guaranty...............................25
3. Payments; Computations; Taxes; Etc.................................25
3.1. Payments...................................................25
3.2. Computations...............................................26
3.3. Certain Notices............................................26
3.4. Taxes......................................................27
3.5. Additional Costs...........................................27
3.6. Limitation on Types of Loans...............................29
3.7. Illegality.................................................29
3.8. Treatment of Affected Loans................................29
3.9. Compensation...............................................30
4. Conditions Precedent...............................................31
4.1. Initial Loans..............................................31
4.2. Initial and Subsequent Extensions of Credit................33
4.3. Conditions to Acquisitions.................................34
4.4. Closing Documents for Non-Significant Acquisitions.........36
5. Representations and Warranties.....................................38
5.1. Corporate Existence........................................38
5.2. Authorization; No Conflict.................................38
5.3. Enforceability.............................................38
5.4. Approvals..................................................39
5.5. Financial Condition........................................39
5.6. Litigation.................................................39
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5.7. Federal Reserve Regulations................................39
5.8. ERISA......................................................40
5.9. Taxes......................................................40
5.10. Investment Company Act.....................................41
5.11. Public Utility Holding Company Act.........................41
5.12. Material Agreements........................................41
5.13. Environmental and Safety Matters...........................41
5.14. Subsidiaries...............................................42
5.15. Compliance with Law........................................42
5.16. Capitalization.............................................42
5.17. Title to Properties........................................42
5.18. Solvency...................................................42
5.19. Conduct of Business........................................43
5.20. Representations and Warranties in Acquisition Documents....43
5.21. Performance of Contracts, Etc..............................43
5.22. Disclosure.................................................43
5.23. Representations Regarding Acquisitions.....................43
6. Affirmative Covenants..............................................43
6.1. Financial Statements and Other Information.................44
6.2. Litigation.................................................47
6.3. Corporate Existence, Etc...................................47
6.4. Insurance..................................................47
6.5. Obligations and Taxes......................................48
6.6. Maintaining Records; Access to Properties and Inspections..48
6.7. Environmental and Safety Matters...........................48
6.8. Additional Security........................................49
6.9. Deposit Accounts/Cash Management Services..................49
6.10. Change in Management Group.................................49
6.11. Enforcement of Remedies under Acquisition Documents........49
6.12. Lien on Intellectual Property..............................49
7. Negative Covenants.................................................50
7.1. Prohibition of Fundamental Changes.........................50
7.2. Limitation on Liens........................................51
7.3. Indebtedness and Guarantees................................51
7.4. Investments................................................51
7.5. Restricted Payments........................................51
7.6. Accounting.................................................51
7.7. Amendment of Certain Documents.............................52
8. Financial Covenants................................................52
8.1. Quick Ratio................................................52
8.2. Ratio of Funded Debt to Adjusted EBITDA....................52
8.3. Ratio of Adjusted EBITDA to Debt Service...................52
8.4. Minimum Net Worth..........................................52
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9. Events of Default..................................................52
9.1. Payments under Credit Documents............................53
9.2. Other Indebtedness.........................................53
9.3. Representations and Warranties.............................53
9.4. Other Obligations..........................................53
9.5. Ability to Pay Debts.......................................53
9.6. Voluntary Proceedings......................................54
9.7. Involuntary Proceedings....................................54
9.8. Judgments..................................................54
9.9. ERISA Event................................................54
9.10. Change in Control..........................................55
10. Miscellaneous......................................................56
10.1. Waiver.....................................................56
10.2. Notices....................................................56
10.3. Expenses, Etc..............................................57
10.4. Amendments, Etc............................................58
10.5. Successors and Assigns.....................................58
10.6. Assignments and Participations.............................58
10.7. Survival...................................................58
10.8. Table of Contents: Descriptive Headings....................58
10.9. Counterparts...............................................58
10.10. Governing Law..............................................58
10.11. COMPLETE AGREEMENT.........................................59
10.12. Arbitration................................................59
10.13. Acknowledgments............................................60
10.14. Confidentiality............................................60
10.15. Obligations with Respect to Loan Parties...................60
EXHIBITS:
Exhibit A Form of First Amendment to Guaranty
Exhibit B Form of Subsidiary Guaranty
Exhibit C Form of Pledge Agreement
Exhibit D Form of Security Agreement
Exhibit E Form of Notice of Borrowing
Exhibit F Form of Notice of Continuation
Exhibit G Form of Notice of Conversion
Exhibit H Form of Facility A Note
Exhibit I Form of Facility B Note
Exhibit J Form of Opinion of Counsel to Company
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SCHEDULES:
Schedule 5.1. Corporate Existence
Schedule 5.6. Litigation
Schedule 5.8. ERISA
Schedule 5.9. Taxes
Schedule 5.12. Material Agreements
Schedule 5.16. Capitalization
Schedule 5.17. Title to Properties
Schedule 7.3. Indebtedness
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CREDIT AGREEMENT (this "Agreement") dated as of September 29, 1997 by and
between DOCUCORP., INC., a Delaware corporation (the "Company") and
NATIONSBANK, N.A., formerly known as NationsBank, N.A. (South) and prior to
that NationsBank of Georgia, National Association (the "Lender").
The Company has requested that the Lender make certain loans to the
Company in an aggregate principal amount up to but not exceeding $10,000,000 at
any one time outstanding, and the Lender is willing to make such loans upon the
terms hereof and subject to the conditions contained herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree as follows:
1. DEFINITIONS AND ACCOUNTING MATTERS
1.1. CERTAIN DEFINED TERMS
As used herein, the following terms shall have the following meanings (all
terms defined in this Section or in other provisions of this Agreement in the
singular to have the same meanings when used in the plural and vice versa):
"ACCOUNT DEBTOR" shall mean a Person who is obligated on a Receivable.
"ACQUISITION" shall mean, with respect to a Seller, the acquisition by the
Company directly, or indirectly through any of its Subsidiaries, of
substantially all of the assets of, assets constituting a distinct operating
division of, or the outstanding capital stock of, such Seller as contemplated
by the applicable Acquisition Documents.
"ACQUISITION DOCUMENTS" shall mean, with respect to an Acquisition,
collectively, the Purchase Agreement for such Seller and all related agreements
and conveyance instruments executed in connection therewith or pursuant thereto.
"ADJUSTED EBITDA" shall mean, for any fiscal period, Net Income of a
Person for such period PLUS the sum of the following amounts (but only to the
extent included in determining such Net Income for such period): (a) income tax
expense of such Person in respect of such period MINUS (b) cash payments
actually made during such period in respect of taxes on income of such Person
PLUS (c) interest expense of such Person for such period PLUS (d) depreciation
and amortization expense and other non-cash charges of such Person for such
period PLUS (e) extraordinary non-cash losses of such Person for such period
PLUS (f) in the case of the Company, the extraordinary and unusual charges
incurred by the Company in an amount not to exceed $21,500,000 in connection
with the transactions contemplated by that certain Agreement and Plan of merger
dated as of January 15, 1997, by and among the Company, Image Sciences, Inc.,
ISI Merger Corp., FormMaker Software, Inc. and FormMaker Acquisition Corp. (the
"Merger Transactions") and MINUS (g) capitalized software expenses incurred
during such period, as determined in accordance with GAAP; PROVIDED, HOWEVER,
as of the effective date of any Acquisition, Adjusted EBITDA shall be computed
giving pro forma effect to such Acquisition for
each four fiscal quarter period then and thereafter occurring until such
Acquisition has been effective for four complete fiscal quarters; FURTHER
PROVIDED, HOWEVER, Adjusted EBITDA shall be computed giving pro forma effect to
the Merger Transactions for each four fiscal quarter period ending after the
effective date of the Merger Transactions until the Merger Transactions have
been effective for four complete fiscal quarters.
"ADJUSTED LIBO RATE" shall mean, with respect to each Interest Period for
any LIBOR Loan, the rate obtained by dividing (a) LIBOR for such Interest
Period by (b) a percentage equal to 1 MINUS the stated maximum rate (stated as
a decimal) of all reserves, if any, required to be maintained against
"Eurocurrency liabilities" as specified in Regulation D of the Board of
Governors of the Federal Reserve System (or against any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Loans is determined or any category of extensions of credit or other
assets which includes loans by an office of the Lender outside of the United
States of America to residents of the United States of America).
"AFFILIATE" shall mean, as to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled by,
such Person and, if such Person is an individual, any member of the immediate
family (including parents, spouse and children) of such individual, any trust
whose principal beneficiary is such individual or one or more members of such
individual's immediate family and any Person who is controlled by any such
member or trust. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of management or policies of the subject Person (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise); PROVIDED that, in any event, any Person which owns
directly or indirectly 5% or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
5% or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed an
Affiliate of such corporation or other Person. The term "Affiliate" shall
include Policy Management Systems Corp. only if it is such by virtue of the
immediately preceding proviso.
"APPLICABLE LAW" shall mean all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and all
orders, rulings and decrees of all courts and arbitrators.
"APPLICABLE LENDING OFFICE" shall mean, for the Lender, 000 Xxxxxxxxx
Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxx 00000 or such other office of the Lender
(or of an affiliate of the Lender) in the United States of America as the
Lender may from time to time specify in writing to the Company as the office by
which the Loans are to be made and maintained.
"ASSIGNMENT OF ACQUISITION DOCUMENTS" shall mean each assignment of rights
under Acquisition Documents executed by any Loan Party in favor of the Lender
after the Closing Date pursuant to Section 4.3., each such assignment to be in
form and substance satisfactory to the Lender.
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"BANKRUPTCY CODE" means the United States Bankruptcy Code of 1978, as
amended from time to time, or any successor federal statute.
"BASE RATE" shall mean, for any day, the higher of (a) the Federal Funds
Rate for such day plus 1/2 of 1% per annum and (b) the Prime Rate for such day.
Each change in any interest rate provided for herein resulting from a change in
the Base Rate shall take effect at the time of such change in the Base Rate. If
for any reason the Lender shall have determined that it is unable to ascertain
the Federal Funds Rate for such day, including, without limitation, the
inability or failure of the Lender to obtain sufficient bids or publications as
contemplated by the definition of the Federal Funds Rate, the Base Rate for
such day shall be the Prime Rate.
"BASE RATE LOAN" shall mean a Loan which bears interest at a rate based on
the Base Rate.
"BORROWING BASE" shall mean at any time an amount equal to 75% of the face
value of Eligible Receivables of the Company and its Subsidiaries due and owing
at such time; PROVIDED, HOWEVER, that all Receivables subject to clause (g) of
the definition of Eligible Receivables and which are Eligible Receivables as a
result of the application of such clause (g) shall not, in the aggregate,
constitute more than 15% of the Borrowing Base at any time; PROVIDED FURTHER,
HOWEVER, that all Eligible Receivables due from an Account Debtor incorporated
under the laws of Canada or any province thereof or whose principal place of
business or a substantial portion of whose assets is located in Canada shall
not, in the aggregate, constitute more than 10% of the Borrowing Base at any
time.
"BORROWING BASE CERTIFICATE" shall mean a certificate of the chief
financial officer of the Company setting forth the calculation of the Borrowing
Base, such certificate to be in form reasonably acceptable to the Lender.
"BUSINESS DAY" shall mean (a) any day other than a Saturday, Sunday or
other day on which commercial banks are authorized or required to close in
Atlanta, Georgia and (b) with reference to a LIBOR Loan, any such day that is
also a day on which dealings in Dollar deposits are carried out in the London
interbank market.
"CAPITALIZED LEASE OBLIGATION" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with such principles.
"CLOSING DATE" shall mean the date upon which the conditions precedent to
the initial extension of credit hereunder set forth in Article 4. have been
satisfied and the initial extension of credit hereunder is made.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute.
"COLLATERAL" means any collateral security hereafter pledged by any Loan
Party to secure the Obligations or any portion thereof.
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"COMMITMENT" means the Lender's obligation, subject to the terms hereof,
to make Revolving Loans pursuant to Section 2.1. in an aggregate principal
amount at any one time outstanding equal to the sum of the Facility A
Commitment and the Facility B Commitment, as the same may be reduced from time
to time pursuant to the terms hereof.
"CONSOLIDATED SUBSIDIARY" shall mean, as to any Person, each Subsidiary of
such Person (whether now existing or hereafter created or acquired) the
financial statements of which are required to be consolidated with the
financial statements of such Person in accordance with GAAP.
"CONTINUE", "CONTINUATION" and "CONTINUED" each refers to the continuation
of a LIBOR Loan from one Interest Period to the next Interest Period pursuant
to Section 2.6.(a).
"CONTROL GROUP" shall mean Safeguard Scientifics, Inc., Technology Leaders
II L.P., Technology Leaders II Offshore C.V., Xerox Corporation and Xxxxxxx X.
Xxxxxxxx.
"CONVERT", "CONVERSION" and "CONVERTED" each refers to the conversion of a
Loan of one Type into a Loan of another Type pursuant to Section 2.6.(b).
"CREDIT DOCUMENTS" shall mean, collectively, this Agreement, the Notes,
the Guaranties, the Security Documents, and any other documents and instruments
executed and delivered by any Loan Party or the Investor Guarantor in
connection with this Agreement or any of the foregoing documents.
"CREDIT FACILITY" shall mean the credit facility for Loans extended by the
Lender to the Company under this Agreement.
"CURRENT MATURITIES" shall mean, with respect to any Person and for any
period, the sum of (a) regularly scheduled principal payments on Indebtedness
of such Person during such period, other than any balloon, bullet or similar
principal payment payable on any Indebtedness of such Person which repays such
Indebtedness in full PLUS (b) to the extent not already included in the
preceding clause (a), payments on Capitalized Lease Obligations of such Person
during such period.
"DEFAULT" shall mean an Event of Default or an event which with notice or
lapse of time or both would become an Event of Default.
"DOLLARS" and "$" shall mean lawful money of the United States of America.
"ELIGIBLE RECEIVABLE" shall mean, as of any date of determination thereof,
the aggregate of all Receivables of the Company and its Subsidiaries at such
date other than the following (determined without duplication):
(a) any Receivable which does not represent a complete bona fide
transaction requiring no further action on the part of the Company or any
Subsidiary, as applicable, to make such Receivable payable by the Account
Debtor other than Receivables representing maintenance fees relating to
maintenance services to be provided by the Company to certain customers under
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annual or monthly maintenance contracts for which the Company has delivered an
invoice to any such customer within a 90 day period prior to the renewal of
such customer's maintenance contract;
(b) any Receivable not payable in Dollars;
(c) any Receivable which, at the date of issuance of the invoice
therefor, was by its terms payable more than 90 days after provision of the
related goods or services;
(d) any Receivable due from (i) any Subsidiary or Affiliate of any Loan
Party or (ii) any employee, agent or representative of any Loan Party or any
Subsidiary or Affiliate of any Loan Party;
(e) any Receivable with respect to all or part of which a check,
promissory note, draft, trade acceptance or other instrument for the payment of
money has been presented for payment and returned uncollected for any reason;
(f) any Receivable as to which any one or more of the following events
has occurred with respect to the applicable Account Debtor: death or judicial
declaration of incompetency; the filing by or against such Account Debtor of a
request or petition for liquidation, reorganization, arrangement, adjustment of
debts, adjudication as a bankrupt, or other relief under the bankruptcy,
insolvency, or similar laws of the United States, any state or territory
thereof, or any foreign jurisdiction, now or hereafter in effect; the making of
any general assignment by such Account Debtor for the benefit of creditors; the
appointment of a receiver or trustee for such Account Debtor or for any of the
assets of such Account Debtor, including, without limitation, the appointment
of or taking possession by a "custodian," as defined in the Bankruptcy Code;
the institution by or against such Account Debtor of any other type of
insolvency proceeding (under the bankruptcy laws of the United States or
elsewhere) or of any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs of, such
Account Debtor; the sale, assignment, or transfer of all or substantially all
of the assets of such Account Debtor; the inability to pay or the nonpayment by
such Account Debtor of its debts generally as they become due; the cessation of
the business of such Account Debtor as a going concern;
(g) any Receivable due from an Account Debtor incorporated under the laws
of any jurisdiction other than the United States of America or any state
thereof or Canada or any province thereof or whose principal place of business
or a substantial portion of whose assets is located outside of the United
States of America and Canada unless the payment of such Receivable is supported
by a letter of credit issued or confirmed by a financial institution located in
the United States of America and naming the Company or any Subsidiary as
beneficiary;
(h) any Receivable which remains unpaid for more than 90 days after the
original invoice date;
(i) all Receivables from any Account Debtor if more than 25% of the
aggregate amount of the Receivables of such Account Debtor are ineligible
pursuant to clause (h) above;
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(j) any Receivable with respect to which there is any unresolved dispute,
defense, offset or counterclaim with or by the respective Account Debtor, but
only to the extent of the amount shown to be due on the invoice(s) with respect
to which there is any dispute;
(k) any Receivable as to which either (i) the perfection, enforceability
or validity of the Lender's security interest in such Receivable, or (ii) the
Lender's right or ability to obtain direct payment of the proceeds of such
Receivable, is governed by any federal or state statutory requirements other
than those of the UCC (including, without limitation, the Federal Assignment of
Claims Act unless the Company or such Subsidiary, as applicable, complies with
the provisions of the Federal Assignment of Claims Act to the satisfaction of
the Lender);
(l) any Receivable (i) as to which the Lender does not have a valid and
enforceable first priority security interest, subject to no other Liens other
than Permitted Liens or (ii) as to which the Lender does not have a right of
direct payment upon an Event of Default;
(m) any Receivable that has not been created in the ordinary course of
business;
(n) the portion of the Receivables of the Company owing by any Account
Debtor or group of affiliated Account Debtors representing in excess of 25% of
the aggregate amount of all Eligible Receivables of the Company; provided,
however, that this subparagraph (m) shall not apply to Receivables owing by
Policy Management Systems Corp.; and
(o) any Receivable arising from a sale on a xxxx-and-hold, guaranteed
sale, sale-and-return, sale on approval or consignment basis or made pursuant
to any other written agreement providing for repurchase or return.
"EMPLOYEE BENEFIT PLAN" shall mean any employee benefit plan within the
meaning of Section 3(3) of ERISA maintained or contributed to by any Loan Party
or any of its ERISA Affiliates, other than a Multiemployer Plan.
"ENVIRONMENTAL CLAIM" shall mean, with respect to any Person, any notice,
claim, demand or other communication (whether written or oral) alleging or
asserting such Person's liability for investigatory costs, cleanup costs,
governmental response costs, damages to natural resources or other property,
personal injuries, fines or penalties arising out of, based on or resulting
from (a) the presence, handling, generation, treatment, storage, disposal,
Release or threatened Release into the environment of any Hazardous Material at
any location, whether or not owned by such Person, or (b) circumstances forming
the basis of any violation, or alleged violation, of any Environmental Law.
"ENVIRONMENTAL LAWS" shall mean any and all federal, state, local and
foreign statutes, laws, regulations, ordinances and similar provisions having
the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and common law concerning public
health or safety, worker health or safety or pollution or protection of the
environment, including without limitation those relating to any emissions,
discharges or Releases of Hazardous Materials to ambient air, surface water,
ground water or land, or otherwise relating
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to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, control, clean-up or handling of Hazardous Materials.
"EQUITY ISSUANCE" means any issuance or sale by the Company of its capital
stock or any warrants, options or similar rights to acquire, or securities
convertible into or exchangeable for, such capital stock.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor statute.
"ERISA AFFILIATE" of any Person shall mean any corporation or trade or
business which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as such Person or which is under
common control (within the meaning of Section 414(c) of the Code) with such
Person.
"ERISA EVENT" with respect to any Person shall mean (a) the occurrence of
a reportable event, within the meaning of Section 4043 of ERISA, with respect
to any Plan of such Person or any of its ERISA Affiliates, unless the 30-day
notice requirement with respect to such event has been waived by the PBGC; (b)
the provision by the administrator of any Plan of such Person or any of its
ERISA Affiliates of a notice of intent to terminate such Plan pursuant to
Section 4041(a)(2) of ERISA (including any such notice with respect to a plan
amendment referred to in Section 4041(a)(2) of ERISA); (c) the cessation of
operations at a facility of such Person or any of its ERISA Affiliates in the
circumstances described in Section 4062(e) of ERISA with respect to a Plan; (d)
the withdrawal by such Person or any of its ERISA Affiliates from a Plan during
a plan year for which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA; (e) the failure by such Person or any of its ERISA
Affiliates to make a payment to a Plan required under Section 302(f)(1) of
ERISA; (f) the adoption of an amendment to a Plan of such Person or any of its
ERISA Affiliates requiring the provision of security to such Plan pursuant to
Section 307 of ERISA; or (g) the institution by the PBGC of proceedings to
terminate a Plan of such Person or any of its ERISA Affiliates pursuant to
Section 4042 of ERISA, or the occurrence of any event or condition described in
Section 4042 of ERISA that could constitute grounds for the termination of, or
the appointment of a trustee to administer, such Plan.
"FACILITY A COMMITMENT" shall mean the obligation of the Lender to make
Facility A Loans to the Company in an aggregate principal amount at any one
time outstanding up to but not exceeding $6,500,000.
"FACILITY B COMMITMENT" shall mean the obligation of the Lender to make
Facility B Loans to the Company in an aggregate principal amount at any one
time outstanding up to but not exceeding $3,500,000.
"FACILITY A TERMINATION DATE" shall mean September 29, 1998.
"FACILITY B TERMINATION DATE" shall mean March 29, 1999.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) equal to the weighted average
of the rates on overnight
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federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers on such day, as published by the Federal Reserve Bank
of New York on the Business Day next succeeding such day, provided that (i) if
the day for which such rate is to be determined is not a Business Day, the
Federal Funds Rate for such day shall be the Federal Funds Rate for the
immediately preceding Business Day, and (ii) if such rate is not so published
for any Business Day, the Federal Funds Rate for such day shall be the average
rate charged by three federal funds brokers of recognized standing selected by
the Lender on such day for such transactions as determined by the Lender.
"FUNDED DEBT" shall mean, with respect to any Person, the outstanding
Indebtedness of such Person having an initial maturity or term in excess of one
year including Capitalized Lease Obligations and including Indebtedness
outstanding under a revolving credit or similar agreement which obligates the
lender or lenders to extend credit over a period of one year or more. Funded
Debt shall not include, as at any date of determination, Subordinated Debt.
"GAAP" shall mean generally accepted accounting principles applied in the
United States of America and practices which are recognized as such by the
American Institute of Certified Public Accountants, applied on a basis
consistent with those which, in accordance with Section 1.2.(a), are to be used
in making the calculations for purposes of determining compliance with the
terms of this Agreement.
"GOVERNMENTAL APPROVALS" shall mean all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all Governmental Authorities.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"GUARANTEE" shall mean a guarantee, an endorsement, a contingent agreement
to purchase or to furnish funds for the payment or maintenance of, or otherwise
to be or become contingently liable under or with respect to, any Indebtedness
or other obligations, net worth, working capital or earnings of any Person, or
a guarantee of the payment of dividends or other distributions upon the stock
or equity interests of any Person, or an agreement to purchase, sell or lease
(as lessee or lessor) property, products, materials, supplies or services
primarily for the purpose of enabling a debtor to make payment of its
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank to issue a letter of credit for the benefit
of another Person, but excluding endorsements for collection or deposit in the
ordinary course of business. Usage of the term "Guarantee" as a verb shall
have a corresponding meaning.
"GUARANTOR CREDIT AGREEMENT" shall mean that certain Credit Agreement
dated as of September 13, 1996, as amended by that certain First Amendment to
Credit Agreement dated as of June 19, 1997, by and among the Safeguard
Scientifics, Inc., Safeguard Scientifics (Delaware), Inc. and PNC Bank, N.A.
"GUARANTY" shall mean the Investor Guaranty, each Subsidiary Guaranty and
any guaranty executed by a Loan Party in favor of the Lender after the Closing
Date pursuant to Section 4.3.
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by which such Loan Party Guarantees payment and performance of all of the
Obligations, such guaranty to be in form and substance satisfactory to the
Lender.
"HAZARDOUS MATERIALS" shall mean all or any of the following: (a)
substances that are defined or listed in, or otherwise classified pursuant to,
any applicable Environmental Laws as "hazardous substances" "hazardous
materials", "hazardous wastes", "toxic substances" or any other formulation
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
reproductive toxicity or "TLCP" toxicity, "EP toxicity"; (b) oil, petroleum or
petroleum derived substances, natural gas, natural gas liquids or synthetic gas
and drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (c) any flammable substances or explosives or any radioactive
materials; and (d) asbestos in any form or (e) electrical equipment which
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million.
"INDEBTEDNESS" shall mean, without duplication, as to any Person (a)
indebtedness created, issued or incurred by such Person for borrowed money
(whether by loan or the issuance or sale of debt securities) whether or not
recourse is limited to specific assets of such Person; (b) obligations of such
Person to pay the deferred purchase or acquisition price of property or
services, other than trade accounts payable arising in the ordinary course of
business so long as such trade accounts payable are not for borrowed money; (c)
Indebtedness of others secured by a Lien on the property of such Person,
whether or not the Indebtedness so secured has been assumed by such Person; (d)
reimbursement obligations of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial
institutions for the account of such Person; (e) Capitalized Lease Obligations
of such Person; and (f) Indebtedness of others Guaranteed by such Person.
"INSUFFICIENCY" shall mean, with respect to any Plan, the amount, if any,
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"INTELLECTUAL PROPERTY" shall mean patents, patent rights and licenses,
patent applications, trademarks, trademark rights, trade names, trade name
rights, copyrights and rights with respect to the foregoing.
"INTEREST EXPENSE" shall mean for any period of computation thereof, cash
interest expense attributable to Indebtedness for money borrowed (including
without limitation, Capitalized Lease Obligations) of the Company and its
Consolidated Subsidiaries actually paid during such period.
"INTEREST PERIOD" shall mean with respect to any LIBOR Loan, the period
commencing on the date of the borrowing, Conversion or Continuation of such
Loan and ending on the last day of the period selected by the Company pursuant
to the provisions below. The duration of each Interest Period shall be one,
two, three or six months, in each case as the Company may, in an appropriate
Notice of Borrowing, Notice of Continuation or Notice of Conversion, select. In
no event shall an Interest Period of a Loan extend beyond the Termination Date.
Whenever the last day of any Interest Period would otherwise occur on a day
other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day; PROVIDED,
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HOWEVER, that if such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day.
"INVENTORY" shall mean (a) all inventory of the Company and all goods
intended for sale or lease by the Company, (b) all work-in-process, (c) all raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, packing, shipping,
selling or furnishing of such goods or otherwise used or consumed in the
business of the Company, and (d) all documents relating to any of the foregoing.
"INVESTMENT" in any Person shall mean (a) the acquisition (whether for
cash, property, services or securities or otherwise) of capital stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of, or any contribution to the capital of, such Person; (b) any deposit with,
or advance, loan or other extension of credit to, such Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person (other than any such deposit, advance, loan, extension of credit or
commitment representing (i) the purchase price of inventory or supplies sold in
the ordinary course of business or (ii) a deposit for, or prepayment of, rents
or utilities made in the ordinary course of business or (iii) a deposit to
secure the performance of the obligations described in subparagraphs (d) and
(e) of the definition of "Permitted Liens" set forth herein made in the
ordinary course of business); or (c) any Guarantee of, or other contingent
obligation with respect to, Indebtedness or other liability of such Person.
"INVESTOR GUARANTOR" shall mean Safeguard Scientifics (Delaware), Inc., a
Delaware corporation.
"INVESTOR GUARANTY" shall mean that certain Guaranty dated as of December
20, 1995, executed by the Investor Guarantor in favor of the Lender, as such
guaranty is amended by that certain First Amendment to Guaranty substantially
in the form of Exhibit A executed by the Investor Guarantor in favor of the
Lender.
"LIBOR" shall mean, with respect to any Interest Period and a LIBOR Loan,
the offered rate per annum in the London interbank market for deposits in
Dollars of amounts equal or comparable to the principal amount of such LIBOR
Loan offered for a term comparable to such Interest Period, as currently shown
on the Reuters Screen LIBOR page as of 11:00 a.m., Greenwich Mean Time, two
Business Days prior to the first day of such Interest Period; PROVIDED,
HOWEVER, that (a) if more than one offered rate as described above appears on
the Reuters Screen LIBOR page, the rate used to determine LIBOR will be the
arithmetic average (rounded upward, if necessary, to the next higher 1/16 of
1%) of such offered rates, or (b) if no such offered rates appear, the rate
used for such Interest Period will be the arithmetic average (rounded upward,
if necessary, to the next higher 1/16 of 1%) of rates quoted by the Lender at
approximately 10:00 a.m., New York time, two Business Days prior to the first
day of such Interest Period for deposits in Dollars offered to leading European
banks for a period comparable to such Interest Period in an amount comparable
to the principal amount of such LIBOR Loan. If the Lender ceases to use the
Reuters Screen LIBOR page for determining interest rates based on eurodollar
deposit rates, a comparable internationally recognized interest rate reporting
service shall be used to determine such offered rates.
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"LIBOR LOAN" shall mean a Loan bearing interest at a rate based on LIBOR.
"LIEN" shall mean, as applied to the property of any Person: (a) any
security interest, encumbrance, mortgage, deed to secure debt, deed of trust,
pledge, lien, charge or lease constituting a Capitalized Lease Obligation,
conditional sale or other title retention agreement, or other security title or
encumbrance of any kind in respect of any property of such Person, or upon the
income or profits therefrom; (b) any arrangement, express or implied, under
which any property of such Person is transferred, sequestered or otherwise
identified for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to the payment
of the general, unsecured creditors of such Person; and (c) the filing of, or
any agreement to give, any financing statement under the Uniform Commercial
Code or its equivalent in any jurisdiction other than the filing of a financing
statement for notice purposes which financing statement does not evidence or
relate to a Lien described in clauses (a) or (b) above.
"LOAN PARTY" means each of the Company, its Subsidiaries and each Person,
who Guarantees all or a portion of the Obligations and/or who grants a Lien in
any of the Collateral to secure all or a portion of the Obligations. The term
"Loan Party" shall not include the Investor Guarantor.
"LOANS" shall mean, collectively, the Facility A Loans, the Facility A
Term Loan and the Facility B Loans.
"MANAGEMENT GROUP" shall mean Hsi-Xxxx Xxx and Xxxxxxx X. Xxxxxxxx.
"MATERIAL ADVERSE EFFECT" shall mean any event, circumstance or condition
that, individually or when aggregated with all other similar events,
circumstances or conditions, could reasonably be expected to have a material
adverse effect on (a) the business, property, assets, liabilities, condition
(financial or otherwise), operations, results of operations or prospects of (i)
the Company and its Subsidiaries taken as a whole or (ii) the Investor
Guarantor; (b) the ability of the Company, any other Loan Party or the Investor
Guarantor to perform its obligations under any of the Credit Documents to which
it is a party; (c) the validity or enforceability of any of the Credit
Documents; or (d) the rights and remedies of the Lender under any of the Credit
Documents.
"MATERIAL CONTRACT" shall mean, with respect to the Company and the other
Loan Parties, any contract, agreement or binding understanding or arrangement
(whether or not in written form) the termination or loss of which could
reasonably be expected to have a Material Adverse Effect.
"MULTIEMPLOYER PLAN" of any Person shall mean a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions have been made by such
Person or any ERISA Affiliate of such Person and which is covered by Title IV
of ERISA.
"NET INCOME" shall mean, for any period of computation thereof, the net
income of a Person; PROVIDED, HOWEVER, that the following shall be excluded
when determining Net Income:
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(i) net gains on the acquisition, retirement, sale or other disposition of
capital stock and other securities of such Person; (ii) net gains on the
collection of proceeds of life insurance policies; (iii) any write-up of any
asset; and (iv) any other net gain or credit of an extraordinary nature.
"NET PROCEEDS" shall mean, with respect to an Equity Issuance, the
aggregate amount of all cash received by a Person in respect of such Equity
Issuance net of investment banking fees, legal fees, accountants fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred by such Person in connection with such Equity Issuance.
"NET WORTH" shall mean, with respect to any Person and at any given time,
the sum of such Person's total shareholder's equity (including capital stock,
additional paid-in capital and retained earnings, after deducting treasury
stock) which would appear as such on a balance sheet of such Person prepared in
accordance with GAAP. In addition, to the extent not already included in Net
Worth, the carrying value of the Company's Class B Common Stock shall be
included when determining Net Worth.
"NEW SUBSIDIARY" means, with respect to an Acquisition, any Subsidiary of
the Company formed in connection with, and for the purpose of effecting, such
Acquisition. If all of the outstanding capital stock of a Seller is being
acquired by the Company or any of its Subsidiaries in connection with an
Acquisition, then such Seller shall also constitute a New Subsidiary.
"NOTES" shall mean, collectively, the Facility A Note and the Facility B
Note.
"OPERATING ACCOUNT" shall mean the account established by the Company with
the Lender or which the Company and the Lender may designate from time to time
as the "Operating Account."
"OBLIGATIONS" shall mean, individually and collectively:
(a) the Loans;
(b) all other obligations and indebtedness of the Company owing to the
Lender of every kind, nature and description, under or with respect to this
Agreement, the Notes or any of the other Credit Documents, whether direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by any note;
(c) all other obligations and indebtedness owing by the Company to the
Lender and all future advances made to the Company by the Lender, however and
whenever created, arising or evidenced, whether direct or indirect, through
assignment from third parties, whether absolute or contingent, or otherwise,
now or hereafter existing, or due or to become due, including, without
limitation, obligations under all guaranties, letters of credit and overdrafts;
and
(d) any and all renewals, modifications, extensions and supplements to
any of the foregoing.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
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"PERMITTED INVESTMENTS" of any Person shall mean: (a) direct obligations
of the United States of America or of any agency thereof, or obligations
guaranteed as to principal and interest by the United States of America or of
any agency thereof, in either case maturing not more than 90 days from the date
of acquisition thereof by such Person; (b) time deposits or certificates of
deposit issued by any bank or trust company organized under the laws of the
United States of America or any state thereof and having capital, surplus and
undivided profits of at least $200,000,000, maturing not more than 90 days from
the date of acquisition thereof by such Person; and (c) commercial paper having
the highest rating from Standard & Poor's Rating Group, a division of
XxXxxx-Xxxx, Inc. or Xxxxx'x Investors Services, Inc. maturing not more than 90
days from the date of acquisition thereof by such Person.
"PERMITTED LIENS" shall mean:
(a) Liens created pursuant to the Security Documents;
(b) Liens imposed by any Governmental Authority for taxes, assessments or
charges not yet due or which are being contested in accordance with Section
6.5.;
(c) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business not yet delinquent
or which are being contested in accordance with Section 6.5.;
(d) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(e) deposits to secure the performance of bids, trade contracts (other
than a trade contract which constitutes Indebtedness), leases (other than
Capitalized Lease Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(f) easements, rights-of-way, zoning restrictions and other similar
encumbrances of record on real property incurred in the ordinary course of
business which, in the aggregate, are not material in dollar amount, and which
do not in any case materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of the Company
or any of the other Loan Parties;
(g) Liens existing on the date hereof and disclosed on Schedule 5.17.
hereto; and
(h) Purchase Money Liens securing Indebtedness of the Company permitted
under Section 7.3.(c).
"PERSON" shall mean an individual, corporation, partnership, limited
liability company, association, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
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"PLAN" of the Company or any of the other Loan Parties shall mean an
employee benefit or other plan established or maintained by such Person or any
ERISA Affiliate of such Person and which is covered by Title IV of ERISA, other
than a Multiemployer Plan of such Person.
"PLEDGE AGREEMENT" shall mean (a) the Pledge Agreement dated as of the
date hereof executed by the Borrower in favor of the Lender and (b) each
additional pledge agreement entered into between a Loan Party and the Lender
after the Closing Date pursuant to Section 4.3. by which such Loan Party grants
to the Lender a Lien in all capital stock of each Subsidiary directly owned by
such Loan Party, in each case, substantially in the form of Exhibit C.
"PRIME RATE" shall mean the rate of interest from time to time announced
by the Lender in Atlanta, Georgia as its prime commercial lending rate. The
Prime Rate is not necessarily intended to be the lowest rate of interest
determined by the Lender in connection with extensions of credit.
"PURCHASE AGREEMENT" shall mean, with respect to an Acquisition, the asset
purchase agreement, stock purchase agreement or other primary agreement to
which the Company and/or one or more of its Subsidiaries is a party and
pursuant to which the Company or such Subsidiary or Subsidiaries is acquiring
substantially all of the assets, assets constituting a distinct operating
division, or the outstanding capital stock, of the Seller that is the target of
such Acquisition.
"PURCHASE MONEY LIEN" shall mean a Lien on any fixed asset or equipment
(and any intangible assets associated therewith) acquired after the date
hereof; PROVIDED, HOWEVER, that: (a) such Lien attaches only to the property
being acquired; (b) the Indebtedness incurred in connection with such
acquisition shall not exceed the purchase price of such property and (c) such
Lien shall secure only such Indebtedness.
"RECEIVABLE" shall mean all accounts and any and all rights to the payment
of money or other forms of consideration of any kind (whether classified under
the UCC as accounts, chattel paper, general intangibles, or otherwise) for
goods sold or leased of for services rendered including, but not limited to,
accounts receivable, proceeds of any letter of credit naming the Company or any
Subsidiary as beneficiary, chattel paper, tax refunds, insurance proceeds,
contract rights, notes drafts, instruments, documents acceptances, and all
other debts, obligations and liabilities in whatever form from any person.
"REGULATIONS D, G, T, U AND X" shall mean, respectively, Regulations D, G,
T, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be amended or supplemented from time to time.
"REGULATORY CHANGE" shall mean, with respect to the Lender, any change
enacted or adopted after the date of this Agreement in United States Federal,
state or foreign law or regulations (including, without limitation, Regulation
D) or the adoption or publication after the date of this Agreement of any
interpretations, directives or requests (whether or not having the force of
law) applying to a class of banks including the Lender of or under any United
States Federal, state or foreign law or regulations by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
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"RELEASE" shall mean any "release" as such term is defined in 42 U.S.C.
Section 9601(22), or any successor federal statute or analogous state law.
"RESTRICTED PAYMENT" shall mean (a) dividends by or on behalf of a Loan
Party on, or other payments or distributions on account of or with respect to,
or the setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of capital stock of such Loan Party, or (b) any prepayment by a Loan
Party of principal, optional redemption, purchase, retirement prior to stated
maturity, defeasance, or similar optional prepayment with respect to any
Indebtedness for borrowed money other than the Loans.
"REVOLVING LOANS" shall mean the Facility A Loans and the Facility B Loans.
"SECURITY AGREEMENTS" shall mean (a) the Security Agreements dated as of
the date hereof and executed by the Company and each Subsidiary Guarantor and
the Lender and (b) each security agreement entered into between a Loan Party
and the Lender after the Closing Date pursuant to Section 4.3., in each case,
substantially in the form of Exhibit D.
"SECURITY DOCUMENTS" shall mean, collectively, the Security Agreements,
the Pledge Agreements, the Assignments of Acquisition Documents, each of the
UCC financing statements naming a Loan Party as debtor and the Lender as
secured party and covering the Collateral, and any other security documents
executed and delivered to the Lender by a Loan Party.
"SELLER" shall mean the Person being acquired in an Acquisition.
"SIGNIFICANT ACQUISITION" shall mean any Acquisition in which the
aggregate amount of consideration payable by the Company and its Subsidiaries
in connection therewith equals or exceeds $3,000,000. For purposes of this
definition, such consideration shall include (without duplication), but shall
not be limited to, the following: (a) the amount of cash paid, together with
the fair market value of all other assets (excluding assets of the type
described in the following clause (b)) conveyed, by the Company and its
Subsidiaries in consideration for such Acquisition; (b) the fair market value
of all capital stock, warrants and options to acquire capital stock, of the
Company conveyed by the Company in consideration for such Acquisition; (c) the
aggregate amount of Indebtedness acquired, incurred or assumed by the Company
and its Subsidiaries in connection with such Acquisition; (d) all amounts paid
or to be paid by the Company and its Subsidiaries in respect of any covenant
not to compete granted in connection with such Acquisition and accruing to the
benefit of any New Subsidiary or other Loan Party; (e) the aggregate
capitalized amount of consulting or other similar fees or payments to be paid
by such New Subsidiary or other Loan Party to a Seller or any Affiliate of such
Seller in connection with, or as a result of, such Acquisition; (f) the
aggregate amount of earn-out payments, similar payments or other contingent
obligations required to be made by the Company and its Subsidiaries in
connection with such Acquisition and which payments or other obligations are to
be capitalized by the Company and its Subsidiaries and (g) the amount of all
transaction fees and expenses (including, without limitation, legal, accounting
and brokers' fees and expenses) incurred by the Company and its Subsidiaries in
connection with such Acquisition.
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"SMALL ACQUISITION" shall mean any Acquisition that is not a Significant
Acquisition.
"SOLVENT" shall mean, when used with respect to any Person, that (a) the
fair value and the fair salable value of its assets (excluding any Indebtedness
due from any Affiliate of such Person) are each in excess of the fair valuation
of its total liabilities (including all contingent liabilities); and (b) such
Person is able to pay its debts or other obligations in the ordinary course as
they mature and (c) the Person has capital not unreasonably small to carry on
its business and all business in which it proposes to be engaged.
"SUBORDINATED DEBT" means, at any time, the Indebtedness of the Company or
any of its Subsidiaries that is subordinated in right of payment to the Loans
and the other Obligations in a manner satisfactory to the Lender and otherwise
permitted by the Lender.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
partnership, association or other business entity of which more than 50% of the
total voting power of shares of stock (or equivalent ownership or controlling
interest) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person or any combination thereof.
"SUBSIDIARY GUARANTOR" shall mean each of (i) FormMaker Software, Inc., a
Georgia corporation, (ii) Image Sciences, Inc., a Texas corporation and (iii)
Micro Dynamics, Ltd., a Delaware corporation.
"SUBSIDIARY GUARANTY" shall mean the Subsidiary Guaranty substantially in
the form of Exhibit B executed by each Subsidiary Guarantor in favor of the
Lender.
"TERMINATION DATE" shall mean September 29, 2000.
"TRANSACTIONS" shall mean (a) the making of the Loans hereunder, (b) any
Acquisition, (c) the execution and delivery of each of the Credit Documents and
the Acquisition Documents and (d) the consummation of all of the other
transactions contemplated by the Credit Documents and the Acquisition Documents.
"TYPE" with respect to a Loan, refers to whether such Loan is a LIBOR
Loan or a Base Rate Loan.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of Texas.
"WHOLLY-OWNED SUBSIDIARY" of a Person shall mean any corporation,
association or other business entity of which 100% of the outstanding shares of
all classes of capital stock or other ownership interests is at the time owned
directly or indirectly by, such Person or one or more of the other Wholly-Owned
Subsidiaries of such Person or a combination thereof.
In addition to the above definitions, the following terms are defined in
this Agreement on the indicated pages:
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Acquisition Date...................................34
Acquisition Historical Financial Statements........34
Acquisition Projected Financial Statements.........34
Additional Costs...................................28
Change in Control..................................55
Default Rate.......................................20
Event of Default...................................52
Facility A Loans...................................18
Facility A Note....................................22
Facility A Term Loan...............................24
Facility B Loans...................................18
Facility B Note....................................22
Historical Financial Statements....................32
Liquidity Agreement................................33
Margin Stock.......................................40
Notice of Borrowing................................18
Notice of Continuation.............................21
Notice of Conversion...............................21
Other Taxes........................................27
Pro Forma Opening Balance Sheet....................45
Projected Financial Statements.....................32
Taxes..............................................27
1.2. ACCOUNTING TERMS AND DETERMINATIONS
(a) Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, all calculations for purposes of determining
compliance with the terms of this Agreement shall be made, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Lender hereunder shall be prepared in accordance with GAAP
applied for all periods to the extent practicable on a basis consistent with
that used in the preparation of the Historical Financial Statements, so as to
present fairly the financial condition and the results of operations of the
applicable Person. In the event of a change in GAAP that is applicable to the
Company, compliance with the financial covenants contained herein shall
continue to be determined in accordance with GAAP as in effect prior to such
change; provided, however, that the Company and the Lender will thereafter
negotiate in good faith to revise such covenants to the extent necessary to
conform such covenants to GAAP as then in effect.
(b) To enable the ready and consistent determination of compliance with
the covenants set forth in Article 7. and Article 8., the Company will not,
without the prior written consent of the Lender, change the last day of its
fiscal year from July 31 of each year or the last days of the first three
fiscal quarters in each of its fiscal years from the last day in October,
January and April of each year, respectively.
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(c) All terms defined in the UCC and not otherwise defined herein are
used herein as defined in the UCC. References in this Agreement to "Sections",
"Articles", "Exhibits" and "Schedules" are to sections, articles, exhibits and
schedules herein and hereto unless otherwise indicated. References in this
Agreement to any document, instrument or agreement (i) shall include all
exhibits, schedules and other attachments thereto, (ii) shall include all
documents, instruments or agreements issued or executed in replacement thereof,
and (iii) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, modified or supplemented from time to time and
in effect at any given time.
2. LOANS
2.1. AMOUNT OF LOANS
(a) FACILITY A LOANS. The Lender agrees, on the terms and subject to the
conditions contained herein, to make loans to the Company during the period
from and including the Closing Date to but excluding the Facility A Termination
Date in an aggregate principal amount at any one time outstanding of up to but
not exceeding the Facility A Commitment (such Loans being herein called
"Facility A Loans"). During the period from and including the Closing Date to
but excluding the Facility A Termination Date and subject to the terms
contained herein, the Company may borrow, repay and reborrow the Facility A
Loans.
(b) FACILITY B LOANS. The Lender agrees, on the terms and subject to the
conditions contained herein, to make loans to the Company during the period
from and including the Closing Date to but excluding the Facility B Termination
Date in an aggregate principal amount at any one time outstanding of up to but
not exceeding the Facility B Commitment (such Loans being herein called
"Facility B Loans"); provided however, at all times after the Investor Guaranty
has been released pursuant to Section 2.14. the aggregate principal amount of
the Facility B Loans at any one time outstanding shall not exceed the lesser of
(a) the Borrowing Base and (b) the amount of the Facility B Commitment. During
the period from and including the Closing Date to but excluding the Facility B
Termination Date and subject to the terms contained herein, the Company may
borrow, repay and reborrow the Facility B Loans.
2.2. BORROWINGS
(a) The Company shall give the Lender notice of each borrowing of a Loan
hereunder as provided in Section 3.3., which notice when given shall be
irrevocable. Each notice of borrowing (which shall be in the form of Exhibit
E, each a "Notice of Borrowing") shall specify: (a) whether such Loan is a
Facility A Loan or a Facility B Loan; (b) the requested amount of such Loan;
(c) the proposed use of the proceeds of such Loan; (d) the date such Loan is to
be made; and (e) in the case of a Loan which is initially to be a LIBOR Loan,
the initial Interest Period therefor. Not later than 2:00 p.m. (Atlanta,
Georgia time) on the date specified for each borrowing hereunder, the Lender
shall make the amount of the Loan available to the Company by depositing the
same, in immediately available funds, in an account of the Company maintained
at the Applicable Lending Office.
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(b) At 5:00 p.m. on each Business Day the Company shall be deemed to have
requested that the Lender make to the Company a Facility B Loan in an amount
equal to the amount by which drafts against the Operating Account exceed the
available balance contained therein at such time. The Lender shall make the
proceeds of each such Facility B Loan available to the Company by depositing
such proceeds into the Operating Account. Facility B Loans advance to the
Company under this subsection may initially be only Base Rate Loans. The
provisions of this subsection shall not become effective until the Company has
executed and delivered the Lender's customary documentation relating to its
"Auto Borrow" and "Auto Sweep" programs.
2.3. REPAYMENT OF LOANS
(a) FACILITY A LOANS. On the Facility A Termination Date, the aggregate
principal amount of all Facility A Loans then outstanding and that has not been
converted into the Facility A Term Loan pursuant to Section 2.12. shall be due
and payable in full.
(b) FACILITY A TERM LOAN. The principal balance of the Facility A Term
Loan shall be repaid in 24 consecutive monthly installments due and payable on
the last day of each calendar month commencing with the first such day
following the Facility A Termination Date. The first 23 such installments
shall each be in an amount equal to 1/24th of the initial principal balance of
the Facility A Term Loan and the final installment shall be equal to the
remaining principal balance of the Facility A Term Loan. Notwithstanding the
foregoing, on the Termination Date, the principal amount of the Facility A Term
Loan then outstanding shall be due and payable in full.
(c) FACILITY B LOANS. On the Facility B Termination Date, the aggregate
principal amount of all Facility B Loans then outstanding shall be due and
payable in full.
2.4. INTEREST
(a) FACILITY A LOANS. The Company agrees to pay to the Lender in
accordance with Section 3.2. interest on the unpaid principal amount of each
Facility A Loan for the period from and including the date of such Facility A
Loan to but excluding the date such Facility A Loan shall be paid in full, at
the following per annum rates:
(i) during the periods that such Facility A Loan is a Base Rate
Loan, at the Base Rate (as in effect from time to time); and
(ii) during the periods that such Facility A Loan is a LIBOR Loan,
for each Interest Period relating thereto, at the Adjusted LIBO Rate for
such Facility A Loan for such Interest Period plus two
and one-half of one percent (2.5%).
(b) FACILITY B LOANS. The Company agrees to pay to the Lender in
accordance with Section 3.2. interest on the unpaid principal amount of each
Facility B Loan for the period from and including the date of such Facility B
Loan to but excluding the date such Facility B Loan shall be paid in full, at
the following per annum rates:
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(i) during the periods that such Facility B Loan is a Base Rate
Loan, at the Base Rate (as in effect from time to time) minus one-quarter
of one percent (0.25%); provided, however, if the Investor Guaranty has
been released pursuant to Section 2.14., then such Loan shall bear
interest at the Base Rate (as in effect from time to time); and
(ii) during the periods that such Facility B Loan is a LIBOR Loan,
for each Interest Period relating thereto, at the Adjusted LIBO Rate for
such Facility B Loan for such Interest Period plus two percent (2.0%);
provided, however, if the Investor Guaranty has been released pursuant to
Section 2.14., then such Loan shall bear interest at Adjusted LIBO Rate
plus two and one-quarter of one percent (2.25%).
(c) PAYMENT OF ACCRUED INTEREST. Accrued interest on each Loan shall be
payable (i) in the case of a Base Rate Loan, monthly in arrears on the last
Business Day of each calendar month; (ii) in the case of a LIBOR Loan, on the
last day of each Interest Period thereof (and, if such Interest Period is
longer than three months, at three-month intervals following the first day of
such Interest Period); (iii) in the case of each Loan, upon the payment or
prepayment thereof or the Conversion of such Loan to a Loan of another Type
(but only on the principal amount so paid, prepaid or Converted); (iv) in the
case of each Facility A Loan, on the Facility A Termination Date; (v) in the
case of each Facility B Loan, on the Facility B Termination Date; and (vi) in
the case of the Facility A Term Loan on the Termination Date.
(d) If an Event of Default shall have occurred and be continuing, the
Company agrees to pay to the Lender interest, for the period such Event of
Default is continuing, on the unpaid principal amount of each Loan (and, to the
extent permitted by law, on the unpaid amount of all interest, fees and other
amounts payable hereunder or under the Credit Documents that is not paid when
due) at a rate per annum (the "Default Rate") equal at all times to 3% per
annum above the rate per annum required to be paid on such Loans pursuant to
Section 2.4.(a) or (b), as applicable.
(e) In no event shall the amount of interest due or payable on the Loans
exceed the maximum rate of interest allowed by Applicable Law and, in the event
any such payment is paid by the Company or received by the Lender, then such
excess sum shall be credited as a payment of principal, unless the Company
shall notify the Lender in writing that the Company elects to have such excess
sum returned to it forthwith. It is the express intent of the parties hereto
that the Company not pay and the Lender not receive, directly or indirectly, in
any manner whatsoever, interest in excess of that which may be lawfully paid by
the Company under Applicable Law.
(f) THE PARTIES HERETO HEREBY AGREE AND STIPULATE THAT THE ONLY CHARGE
IMPOSED UPON THE COMPANY FOR THE USE OF MONEY IN CONNECTION WITH THIS AGREEMENT
IS AND SHALL BE THE INTEREST DESCRIBED IN SUBSECTIONS (a) AND (b) OF SECTION
2.4. THE PARTIES HERETO FURTHER AGREE AND STIPULATE THAT ALL OTHER CHARGES
IMPOSED BY THE LENDER ON THE COMPANY IN CONNECTION WITH THIS AGREEMENT,
INCLUDING ALL COMMITMENT FEES, FACILITY FEES, UNDERWRITING FEES, DEFAULT
CHARGES, LATE CHARGES, ATTORNEYS' FEES AND REIMBURSEMENT FOR COSTS AND EXPENSES
PAID BY THE LENDER TO THIRD PARTIES OR FOR DAMAGES
-20-
INCURRED BY THE LENDER, ARE CHARGES MADE TO COMPENSATE THE LENDER FOR
UNDERWRITING OR ADMINISTRATIVE SERVICES AND COSTS OR LOSSES PERFORMED OR
INCURRED, AND TO BE PERFORMED OR INCURRED, BY THE LENDER IN CONNECTION WITH
THIS AGREEMENT AND SHALL UNDER NO CIRCUMSTANCES BE DEEMED TO BE CHARGES FOR THE
USE OF MONEY ALL CHARGES OTHER THAN CHARGES FOR THE USE OF MONEY SHALL BE FULLY
EARNED AND NONREFUNDABLE WHEN DUE.
2.5. VOLUNTARY REDUCTIONS OF COMMITMENT
The Company shall have the right to terminate or reduce the amount of
either the Facility A Commitment or the Facility B Commitment at any time or
from time to time; provided that: (i) the Company shall give notice of each
such termination or reduction as provided in Section 3.3., which notice when
given shall be irrevocable and (ii) each partial reduction shall be in an
aggregate amount at least equal to $100,000 or an integral multiple of $100,000
in excess thereof. The Facility A Commitment and the Facility B Commitment,
once terminated or reduced, may not be reinstated or increased.
2.6. CONTINUATION AND CONVERSION OF LOANS
(a) So long as no Default or Event of Default shall have occurred and be
continuing, the Company may on any Business Day, with respect to any LIBOR
Loan, elect to maintain such LIBOR Loan or any portion thereof as a LIBOR Loan
by selecting a new Interest Period for such LIBOR Loan or portion. Each new
Interest Period selected under this Section shall commence on the last day of
the immediately preceding Interest Period. Each selection of a new Interest
Period shall be made by the Company's giving of a notice in the form of Exhibit
F (a "Notice of Continuation") within the time prescribed by Section 3.3. Such
notice by the Company of a Continuation shall specify (a) the effective date of
such Continuation, (b) the LIBOR Loan and portion thereof subject to such
Continuation and (c) the duration of the selected Interest Period, all of which
shall be specified in such manner as is necessary to comply with all
limitations on Loans outstanding hereunder. If the Company shall fail to
select in a timely manner a new Interest Period for any LIBOR Loan in
accordance with this Section, such Loan will automatically, on the last day of
the current Interest Period therefor, Convert into a Base Rate Loan
notwithstanding failure of the Company to comply with the immediately following
subsection (b).
(b) So long as no Default or Event of Default shall have occurred and be
continuing, the Company may on any Business Day, upon the Company's giving of a
notice in the form of Exhibit G (a "Notice of Conversion"), Convert all or a
portion of a Loan of one Type into a Loan of another Type. In connection with
any Conversion of a LIBOR Loan into a Base Rate Loan on a day other than the
last day of an Interest Period for such LIBOR Loan the Company as a condition
to such Conversion shall pay all amounts contemplated by Section 3.9. Each
such Notice of Conversion shall be given within the time prescribed by Section
3.3. Subject to the restrictions specified above, each Notice of Conversion
shall specify (a) the requested date of such Conversion, (b) the Type of Loan
to be Converted, (c) the portion of such Type of Loan to be
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Converted, (d) the Type of Loan such Loan is to be Converted into and (e) if
such Conversion is into a LIBOR Loan, the requested duration of the initial
Interest Period of such Loan.
(c) No more than six separate Interest Periods in respect of LIBOR Loans
may be outstanding at any one time.
2.7. MINIMUM AMOUNTS
Except for Conversions or prepayments made pursuant to Section 3.8., (a)
each borrowing of LIBOR Loans (including a Continuation of, or Conversion into,
LIBOR Loans) shall be in an amount at least equal to $1,000,000 and integral
multiples of $500,000 in excess thereof, (b) each borrowing of Base Rate Loans
(including a Continuation of, or Conversion into, Base Rate Loans) shall be in
an amount at least equal to $250,000 and integral multiples of $5,000 in excess
thereof, and (c) each voluntary prepayment of Loans shall be in an amount at
least equal to $100,000 and integral multiples thereof (borrowings, prepayments
or Conversions of Loans into Loans of different Types or, in the case of LIBOR
Loans, having different Interest Periods, shall be deemed to be separate
borrowings, prepayments or Conversions for purposes of the foregoing, one for
each Type or Interest Period). The provisions of this Section shall not apply
to borrowings under Section 2.2.(b).
2.8. FEES
(a) The Company shall pay to the Lender on the Closing Date a closing fee
in the amount of $5,000.
(b) If during any calendar month the daily average unused amount of the
Facility B Commitment for such month shall be greater than an amount equal to
65% of the Facility B Commitment, then the Company shall pay to the Lender,
during the period beginning on the first day of the following month through the
last day of the month in which the daily average unused amount of the Facility
B Commitment for such month shall first be less than such amount, a fee on the
daily average unused amount of the Facility B Commitment at a per annum rate,
computed in accordance with Section 3.2., equal to one-quarter of one percent
(0.25%). Accrued unused commitment fees shall be payable monthly in arrears on
the last Business Day of each month.
(c) All fees shall be fully earned and non-refundable upon receipt.
2.9. NOTES
(a) (i) The Facility A Loans and the Facility A Term Loan shall be
evidenced by a single promissory note (the "FACILITY A NOTE") to be executed by
the Company in substantially the form of Exhibit H, dated the date hereof,
payable to the Lender in a principal amount equal to the amount of the Facility
A Commitment as originally in effect and otherwise duly completed.
(ii) The Facility B Loans shall be evidenced by a promissory note
(the "FACILITY B NOTE") to be executed by the Company in substantially the form
of Exhibit I, dated the date hereof, payable to the Lender in a principal
amount equal to the amount of the Facility B Commitment as originally in effect
and otherwise duly completed.
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(b) The date and amount of each Loan made by the Lender to the Company,
and each payment made on account of the principal thereof, shall be recorded by
the Lender on its books and, prior to any transfer of the applicable Note
evidencing such Loans held by it, endorsed by the Lender on the schedule
attached to such Note or any continuation thereof; provided that the failure of
the Lender to make any such recordation or endorsement shall not affect the
obligations of the Company to make a payment when due of any amount owing under
such Note. Any such recordations or endorsements made by the Lender on its
books or such Note shall be conclusive and binding on the Company absent
manifest error.
2.10. OPTIONAL PREPAYMENTS
The Company shall have the right to prepay Loans in whole or in part at
any time or from time to time, without premium or penalty, except that in
connection with any prepayment of LIBOR Loans on a day other than the last day
of the Interest Period applicable thereto, the Company as a condition to such
prepayment shall pay all amounts contemplated by Section 3.9. in connection
with such prepayment. Optional prepayments of the Facility A Term Loan shall
be applied to reduce scheduled repayments of such Loan in inverse order of
maturity.
2.11. MANDATORY PREPAYMENTS OF LOANS
(a) LOANS IN EXCESS OF COMMITMENT. If at any time (a) the aggregate
amount of either the Facility A Loans or the Facility B Loans outstanding shall
exceed the amount of the Facility A Commitment or Facility B Commitment,
respectively, in effect at such time, or (b) after the Investor Guaranty has
been released pursuant to Section 2.14., the aggregate amount of the Facility B
Loans shall exceed the Lesser of (i) the Facility B Commitment or (ii) the
Borrowing Base, then, in each such case the Company shall, within one Business
Day, prepay such Loans in such amounts as shall be necessary to eliminate such
excess.
(b) SWEEP OF OPERATING ACCOUNT. At 5:00 p.m. of each Business Day, the
Company shall repay a principal amount of Facility B Loans by an amount equal
to the positive balance, if any, of available funds on deposit in the Operating
Account as determined by the Lender at such time. The Company hereby
authorizes the Lender to deduct such amount from the Operating Account without
notice to the Company, and to apply such amount in repayment of the then
outstanding principal balance of Facility B Loans. The provisions of this
subsection shall not become effective until the Company has executed and
delivered the Lender's customary documentation relating to its "Auto Borrow"
and "Auto Sweep" programs.
(c) CERTAIN ACTIONS BY INVESTOR GUARANTOR AND AFFILIATES. If, at any
time prior to the release of the Investor Guaranty in accordance with Section
2.14. hereof, any of the following shall occur:
(i) the Investor Guarantor (x) merges or consolidates with any Person
(other than a merger or consolidation with a Subsidiary of Safeguard
Scientifics, Inc. pursuant to which the Investor Guarantor is the
surviving entity); (y) dissolves, liquidates or ceases to exist, or takes
any action authorizing any of the foregoing or (z) sells, leases,
transfers or
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otherwise disposes of, in one transaction or a series of transactions, all
or substantially all of its assets; or
(ii) at any time both: (x) the amount of Revolving Loans (as defined
in the Guarantor Credit Agreement) which the Investor Guarantor could then
borrow under the Guarantor Credit Agreement shall be less than $3,500,000
and (y) the value of all Qualifying Securities (as defined below) PLUS all
cash and cash equivalents then held by the Investor Guarantor MINUS twice
the amount of Indebtedness then owing under the Guarantor Credit Agreement
shall be less than $7,000,000. For purposes of this subsection (iii), the
term "Qualifying Security" means any common stock owned by the Investor
Guarantor in a Subsidiary whose common stock (A) is listed on the New York
Stock Exchange, the American Stock Exchange or some other principal
national securities exchange or has price quotations in the
over-the-counter market reported by the National Association of Securities
Dealers Automated Quotation System; (B) is not subject to any instrument,
document or agreement which in any way prohibits the sale of such common
stock by the Investor Guarantor for any specified period of time or
otherwise; and (C) the offer and sale of which by the Investor Guarantor
would not then be subject to any registration requirements or other
restrictions under the Securities Act of 1933, as amended (the "Securities
Act"), or other Applicable Law, including without limitation, volume
limitations imposed under Rule 144 of the Securities Act; or
(iii) any event or condition of the types described in Sections 9.5.,
9.6., or 9.7. occurs or exists with respect to the Investor Guarantor; or
(iv) any representation, warranty or certification made or deemed to
be made in any Credit Document by the Investor Guarantor or any
certificate, financial statement or other information furnished in writing
to the Lender by or on behalf of the Investor Guarantor pursuant to the
provisions hereof or thereof, shall prove to have been false or misleading
in any material respect as of the time made or deemed to be made; or
(v) the Investor Guarantor fails to comply with any of its
obligations under its Guaranty and such failure continues for five days
after notice is made by the Lender to the Company of such failure.
then, (a) the Company shall, within one Business Day of the Lender's demand,
repay the entire outstanding principal amount of, and all accrued and unpaid
interest on, the Facility B Loans and all other Obligations payable by the
Company hereunder relating to the Facility B Commitment and (b) the Lender may
upon written notice to the Company terminate the Facility B Commitment.
2.12. CONVERSION TO TERM LOAN
Subject to the terms and conditions of this Agreement, the Company may
elect to convert the aggregate principal amount of Facility A Loans outstanding
on the Facility A Termination Date into a single term loan (the "Facility A
Term Loan") provided (a) the Company has given the
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Lender thirty-days' prior notice of the Company's intention to so convert the
Facility A Loans and (b) the conditions set forth in Section 4.2. have been
satisfied as of the date such conversion.
2.13. USE OF PROCEEDS
The Company may use the proceeds of Loans to finance Acquisitions, for
working capital purposes and for other general corporate purposes.
2.14. RELEASE OF INVESTOR GUARANTY
The Lender agrees, upon at least 30 days but not more than 60 days prior
written request of the Company, to release the Investor Guarantor from its
obligations under and pursuant to the Investor Guaranty (other than those
obligations which survive the termination thereof), subject to the satisfaction
of the following conditions:
(a) the Lender shall receive evidence satisfactory to the Lender of the
Company's receipt of at least $10,000,000 in Net Proceeds from an Equity
Issuance completed on or after the date hereof; and
(b) no Default or Event of Default have occurred and be continuing as of
the proposed date of such release of the Investor Guarantor; and
(c) no Default or Event of Default shall have ever occurred hereunder;
PROVIDED, HOWEVER, that the Lender may, in its sole discretion, waive the
condition set forth in this clause (c).
3. PAYMENTS; COMPUTATIONS; TAXES; ETC.
3.1. PAYMENTS
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Company under this
Agreement and the Notes and, except to the extent otherwise provided therein,
all payments to be made by the Company under any other Credit Document, shall
be made in Dollars, in immediately available funds, without deduction, set-off
or counterclaim, to the Lender at its Applicable Lending Office, not later than
12:00 noon Atlanta time on the date on which such payment shall become due
(each such payment made after such time on such due date to be deemed to have
been made on the next succeeding Business Day).
(b) The Company shall, at the time of making each payment under this
Agreement or either Note, specify to the Lender the Loans or other Obligations
to which such payment is to be applied (and in the event that it fails to so
specify, or if an Event of Default has occurred and is continuing, the Lender
may apply such payment to the Loans in such manner as it may determine to be
appropriate).
(c) If the due date of any payment under this Agreement or the Notes
would otherwise fall on a day which is not a Business Day, such date shall be
extended to the next succeeding
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Business Day and interest shall be payable for any principal so extended for
the period of such extension.
3.2. COMPUTATIONS
Interest on Loans and commitment fees shall be computed on the basis of a
year of 360 days comprised of twelve thirty-day months for the actual days
elapsed (including the first day but excluding the last day) occurring in the
period for which such amounts are payable.
3.3. CERTAIN NOTICES
Notwithstanding anything contained in Section 10.2. to the contrary,
Notices of Borrowings, notices of optional terminations or reductions of the
Facility A Commitment, notices of optional terminations or reductions of the
Facility B Commitment, notices of optional prepayments of Loans, Notices of
Conversion and Notices of Continuations shall be irrevocable and shall be
effective only if received by the Lender in writing not later than 12:00 noon
Atlanta, Georgia time on the number of Business Days prior to the date of the
relevant optional termination, reduction, borrowing, Continuation, Conversion
or prepayment specified below:
NUMBER OF
BUSINESS
NOTICE DAYS PRIOR
------ ----------
Initial Borrowing on Closing Date 1
Subsequent Borrowing of Base Rate Loans Same Day
Subsequent Borrowing of LIBOR Loans 3
Notice of Conversion to a LIBOR Loan 3
Notice of Conversion to a Base Rate Loan 1
Notice of Continuation 3
Termination or reduction of Facility A Commitment 2
Termination or reduction of Facility B Commitment 2
Prepayment of Loans 1
Subject to Section 2.5., each such notice of optional termination or
reduction of Facility A Commitment or Facility B Commitment shall specify the
amount of the Facility A Commitment or the Facility B Commitment, as
applicable, to be terminated or reduced. Each notice of borrowing, Conversion
or optional prepayment shall specify the Type of Loans to be borrowed,
Converted or prepaid and the amount of each Loan to be borrowed, Converted or
prepaid and the date thereof (which shall be a Business Day). The provisions
of this Section shall not apply to borrowings under Section 2.2.(b) or
repayments pursuant to Section 2.11.(b).
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3.4. TAXES
(a) Any and all payments by the Company hereunder shall be paid (except
to the extent required by law) free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding franchise
taxes and taxes based on net income imposed on the Lender by the United States
(or any political subdivision thereof) in which the Lender has its Applicable
Lending Office (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Company shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder to the Lender (i) the sum payable by
the Company shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 3.4.) the Lender shall receive an amount equal to the sum it
would have received had no such deductions been made, (ii) the Company shall
make such deductions, and (iii) the Company shall pay the full amount deducted
to the relevant taxing authority or other Governmental Authority in accordance
with Applicable Law.
(b) In addition, the Company agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or
any other Credit Document (hereinafter referred to as "Other Taxes").
(c) The Company will indemnify the Lender for the full amount of Taxes
and Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction
on amounts payable under this Section 3.4.) paid by the Lender and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. Such indemnification shall be made within five Business
Days after the date of receipt of a written demand therefor from the Lender.
(d) Within 30 days after the date of any payment of Taxes or Other Taxes
withheld by the Company in respect of any payment to the Lender, the Company
will furnish to the Lender, at its address referred to in Section 10.2., the
original or a certified copy of a receipt evidencing payment thereof.
(e) If the Lender claims any additional amounts payable pursuant to this
Section, the Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document reasonably
requested by the Company if the making of such a filing would avoid the need
for or reduce the amount of any such additional amounts which may thereafter
accrue and would not, in the sole determination of the Lender, be otherwise
disadvantageous to the Lender.
3.5. ADDITIONAL COSTS
(a) EVENTS ENTITLING THE LENDER TO RECEIVE COMPENSATION. The Company
shall pay directly to the Lender from time to time such amounts as the Lender
may determine in good faith
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to be necessary to compensate it for any costs which it determines are
attributable to its making or maintaining any Loans or its obligation to make
any Loans hereunder, or any reduction in any amount receivable by the Lender
hereunder in respect of any of such Loans or such obligation (such increases in
costs and reductions in amounts receivable being herein called "Additional
Costs") resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to the
Lender under this Agreement or either of the Notes in respect of any of
such Loans (other than taxes imposed on or measured by the overall net
income of the Lender or of its Applicable Lending Office for any of such
Loans by the jurisdiction in which the Lender has its Applicable Lending
Office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of, the Lender (including any of
such Loans or any deposits referred to in the definition of "LIBOR" in
Section 1.1.), or any commitment of the Lender (including the
Commitment) hereunder.
(b) DETERMINATION OF AMOUNT OF COMPENSATION. Without limiting the effect
of the foregoing provisions of this Section 3.5. (but without duplication), the
Company shall pay directly to the Lender from time to time on request such
amounts as the Lender may determine to be necessary to compensate the Lender
(or, without duplication, the bank holding company of which the Lender is a
subsidiary) for any increased costs which it determines in good faith are
attributable to the maintenance by the Lender (or any Applicable Lending Office
or such bank holding company) of capital in respect of the Commitment or Loans
pursuant to any law or regulation or any interpretation, directive or request
(whether or not having the force of law) of any court or governmental or
monetary authority (i) following any Regulatory Change or (ii) implementing any
risk-based capital guideline or requirement (whether or not having the force of
law and whether or not the failure to comply therewith would be unlawful)
hereafter issued by any government or governmental or supervisory authority
implementing at the national level the Basle Accord (including, without
limitation, the Final Risk-Based Capital Guidelines of the Board of Governors
of the Federal Reserve System (12 CFR Part 208, Appendix A; 00 XXX Xxxx 000,
Xxxxxxxx X) and the Final Risk-Based Capital Guidelines of the Office of the
Comptroller of the Currency (12 CFR Part 3, Appendix A)), such compensation to
include, without limitation, an amount equal to any reduction of the rate of
return on assets or equity of the Lender (or any Applicable Lending Office or
such bank holding company) to a level below that which the Lender (or any
Applicable Lending Office or such bank holding company) could have achieved but
for such law, regulation, interpretation, directive or request. For purposes
of this Section 3.5.(b), "Basle Accord" shall mean the proposals for risk-based
capital framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended,
modified and supplemented and in effect from time to time or any replacement
thereof.
(c) NOTICE OF THE OCCURRENCE OF AN EVENT ENTITLING LENDER TO
COMPENSATION. The Lender shall notify the Company of any event occurring after
the date of this Agreement that will entitle the Lender to compensation under
Section 3.5.(a) or (b) as promptly as practicable and
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shall furnish to the Company a certificate setting forth the basis and amount
of each request by the Lender for compensation, together with calculations in
reasonable detail of such amount. Determinations and allocations by the Lender
for purposes of this Section 3.5. of the effect of any Regulatory Change
pursuant to Section 3.5.(a), of the effect of capital maintained pursuant to
Section 3.5.(b) on its costs or rate of return of maintaining Loans or its
obligation to make Loans or on amounts receivable by it in respect of Loans,
and of the amounts required to compensate the Lender under this Section, shall
be made in a manner consistent with that applied by the Lender in similar
contexts and shall be conclusive in the absence of manifest error.
3.6. LIMITATION ON TYPES OF LOANS
Anything herein to the contrary notwithstanding, if on or prior to the
determination of LIBOR for any Interest Period the Lender determines (which
determination shall be conclusive) that:
(a) quotations of interest rates for the relevant deposits referred
to in the definition of "LIBOR" are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining rates
of interest for LIBOR Loans as provided herein; or
(b) the relevant rates of interest referred to in the definition of
LIBOR in this Agreement upon the basis of which the rate of interest for
LIBOR Loans for such Interest Period is to be determined are not likely
to adequately cover the cost to the Lender of making or maintaining
LIBOR Loans for such Interest Period;
then the Lender shall give the Company notice thereof, and so long as such
condition remains in effect, the Lender shall be under no obligation to make
additional LIBOR Loans, to Continue LIBOR Loans or to Convert Base Rate Loans
into LIBOR Loans, and the Company shall, on the last day(s) of the then-current
Interest Period(s) for the outstanding LIBOR Loans, either prepay such Loans or
Convert such Loans into Base Rate Loans in accordance with Section 2.6.
3.7. ILLEGALITY
Notwithstanding any other provision of this Agreement, if it becomes
unlawful for the Lender to honor its obligation to make or maintain LIBOR
Loans hereunder, then the Lender shall promptly notify the Company thereof
and the Lender's obligation to make or Continue, or to Convert Base Rate
Loans into, LIBOR Loans shall be suspended until such time as the Lender may
again make and maintain LIBOR Loans.
3.8. TREATMENT OF AFFECTED LOANS
If the obligation of the Lender to make, Continue or Convert Base Rate
Loans into LIBOR Loans shall be suspended pursuant to either of the immediately
preceding Sections, all outstanding LIBOR Loans shall be automatically
Converted into Base Rate Loans on the last day(s) of the current Interest
Period(s) for such LIBOR Loans (or, in the case of a Conversion required by
Sections 3.6. or 3.7., on such earlier date as the Lender may specify to the
Company)
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and, unless and until the Lender gives notice as provided below that the
circumstances specified in Sections 3.6. or 3.7. which gave rise to such
Conversion no longer exist:
(a) to the extent that any LIBOR Loans have been so Converted, all
payments and prepayments of principal which would otherwise be
applied to such LIBOR Loans shall be applied instead to the Base
Rate Loans; and
(b) all Loans which would otherwise be made or Continued as LIBOR
Loans shall be made or Continued instead as Base Rate Loans and all Base
Rate Loans which would otherwise be Converted into LIBOR Loans shall
remain as Base Rate Loans.
If the Lender gives notice to the Company that the circumstances specified
in Sections 3.6. or 3.7. which gave rise to the Conversion of LIBOR Loans
pursuant to this Section no longer exist at a time when LIBOR Loans are
outstanding, the Lender's Base Rate Loans shall be automatically Converted, at
the option of the Company.
3.9. COMPENSATION
The Company shall pay the Lender such amount or amounts as shall be
sufficient to compensate the Lender for any loss, cost, or expense which the
Lender determines in good faith is attributable to: (a) any payment, prepayment
or Conversion of a LIBOR Loan for any reason (including, without limitation,
the acceleration of the Loans pursuant to Article 9.) on a date other than the
last day of the Interest Period for such Loan; (b) any prepayment of the
Facility A Term Loan while it bears interest at a fixed rate as provided in
Section 2.4.(a)(iii) for any reason (including, without limitation, the
acceleration of the Loans pursuant to Article 9.) on a date other than the
Termination Date; or (c) any failure by the Company for any reason, including
without limitation, the failure of any of the conditions precedent specified in
Article 4. to be satisfied, to (i) borrow a LIBOR Loan from the Lender on the
date for such borrowing specified in the relevant Notice of Borrowing given
pursuant to Section 2.2.(a) or (ii) to convert the Facility A Loans into the
Facility A Term Loan pursuant to Section 2.12. after giving the Lender notice
of such conversion. Without limiting the effect of the preceding sentence,
such compensation shall include with respect to a LIBOR Loan an amount equal to
the excess, if any, of (i) the amount of interest which otherwise would have
accrued on the principal amount so paid, prepaid or Converted or not borrowed
for the period from the date of such payment, prepayment, Conversion or failure
to borrow to the last day of the then-current Interest Period for such Loan
(or, in the case of a failure to borrow, the Interest Period for such Loan
which would have commenced on the date specified for such borrowing) at the
applicable rate of interest for such Loan provided for herein over (ii) the
amount of interest which would otherwise have accrued on such principal amount
at a rate per annum equal to the sum of (x) the Adjusted LIBO Rate which would
apply to a LIBOR Loan having a principal amount equal to or comparable to such
principal amount and with maturities comparable to such period (as determined
in good faith by the Lender) plus (y) the percentage above the applicable
Adjusted LIBO Rate at which such Loan bears interest under Section 2.4(a) or
(b), as applicable.
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4. CONDITIONS PRECEDENT
4.1. INITIAL LOANS
The obligation of the Lender to make the initial Loans hereunder on the
Closing Date is subject to the following conditions:
(a) CORPORATE DOCUMENTS. The Lender shall have received the following
documents, each certified as indicated below:
(i) a copy of the charter, as amended, of each Loan Party,
certified as of a recent date by the Secretary of State of the
jurisdiction of its formation, and a certificate as of a recent date
from such Secretary of State as to the good standing of such Loan Party;
(ii) a certificate as of a recent date from the Secretary of State
of each state in which each Loan Party is required to qualify to do
business as a foreign corporation to the effect that such Loan Party is
so qualified;
(iii) a certificate of the secretary of each Loan Party, dated the
Closing Date and certifying (A) that attached thereto is a true and
complete copy of such Loan Party's by-laws as in effect on the date of
such certificate, (B) that attached thereto is a true and complete copy
of resolutions duly adopted by such Loan Party's board of directors
authorizing the execution, delivery and performance of each of the
Credit Documents to which such Loan Party is a party, and that such
resolutions have not been modified, rescinded or amended and are in full
force and effect, (C) that such Loan Party's charter has not been
amended since the date of the certification thereto furnished pursuant
to subsection (i) above, and (D) as to the incumbency and specimen
signature of each of such Loan Party's officers executing each of the
Credit Documents to which such Loan Party is a party (and the Lender may
conclusively rely on such certificate until the Lender receives notice
in writing from such Loan Party, to the contrary);
(iv) a certificate of another officer of such Loan Party as to the
incumbency and specimen signature of the secretary of such Loan
Party;
(v) a certificate of the secretary of the Investor Guarantor dated
the Closing Date and certifying (A) that Investor Guarantor's
certificate of incorporation has not been amended since December 20,
1995, or if it has been amended, that attached thereto is a true and
complete copy of such amendment, (B) that the Investor Guarantor's
by-laws have not been amended since December 20, 1995, or if they have
been amended, that attached thereto is a true and complete copy of such
amendment, and (C) that attached thereto is a true and complete copy of
resolutions duly adopted by the Investor Guarantor's board of directors
authorizing the execution, delivery and performance of each of the
Credit Documents to which the Investor Guarantor is a party, and that
such resolutions have not been modified, rescinded or amended and are in
full force and effect;
(vi) a certificate of another officer of the Investor Guarantor as
to the incumbency and specimen signature of the secretary of the
Investor Guarantor;
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(b) NOTES. The Lender shall have received each of the Notes, duly
completed and executed by the Company.
(c) OPINIONS OF COUNSEL. The Lender shall have received the opinion of
(i) Gardere & Xxxxx, L.L.P., counsel to the Company and the Subsidiary
Guarantors, substantially in the form of Exhibit J and (ii) Gardere & Xxxxx,
L.L.P., counsel to the Investor Guarantor, in form and substance satisfactory
to the Lender and its counsel.
(d) INSURANCE. The Lender shall have received certificates of insurance
evidencing the existence of all insurance required to be maintained by each
Loan Party pursuant to the Credit Documents to which it is a party and Section
6.4. hereof, together with loss payable clauses as required by such Credit
Documents. In addition, the Company shall have delivered a certificate of the
chief financial officer of the Company stating that such insurance is in full
force and effect and that all premiums then due and payable thereon have been
paid.
(e) HISTORICAL FINANCIAL STATEMENTS. The Lender shall have received the
following in form and substance satisfactory to the Lender: (i) the unaudited
combined pro forma balance sheets and statements of operations of the Company
for the fiscal year ended July 31, 1996, and (ii) the respective unaudited
combined pro forma balance sheets and statements of operations of the Company
for the six (6) month period ending January 31, 1997 (collectively, the
"Historical Financial Statements").
(f) PROJECTED FINANCIAL STATEMENTS. The Lender shall have received pro
forma projected financial statements reflecting the forecasted financial
condition and results of operations of the Company on a quarterly basis for the
period from August 1, 1997 through July 31, 1998 in form and substance
satisfactory to Lender (the "Projected Financial Statements");
(g) FEES, EXPENSES AND OTHER CONSIDERATION. The Lender shall have
received all amounts payable by the Company in respect of fees and expenses,
including the fees required by Section 2.8.(a) and attorney's fees, to the
extent due and payable on or prior to the making of the initial Loans
hereunder.
(h) LIEN SEARCHES. The Lender shall have received favorable UCC, tax,
judgment and lien search reports (including without limitation, searches of the
records of the United States Patent and Trademark Office) with respect to each
Loan Party in all necessary or appropriate jurisdictions and under all legal
and appropriate trade names indicating that there are no prior liens on any of
the Collateral other than Permitted Liens.
(i) REPAYMENT OF EXISTING INDEBTEDNESS. The Lender shall have received
evidence that all Indebtedness of the Company and its Subsidiaries (other than
Indebtedness to be incurred hereunder and the Indebtedness permitted under
Section 7.3.) in existence on the Closing Date shall have been repaid in full
as of the Closing Date and that any Liens on the assets of the Company and its
Subsidiaries (other than Permitted Liens) shall have been released; and the
Lender shall have received such UCC termination statements and other
instruments, in each case in proper form for recording, as the Lender shall
have requested to release and terminate of
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record all Liens on any such assets (or arrangements for such release and
termination satisfactory to the Lender shall have been made).
(j) GUARANTIES. The Lender shall have received a First Amendment to the
Investor Guaranty substantially in the form of Exhibit A duly executed and
delivered by the Investor Guarantor and each Subsidiary Guaranty, duly executed
and delivered by each Subsidiary Guarantor.
(k) SECURITY AGREEMENT AND FINANCING STATEMENTS. The Lender shall have
received each Security Agreement to be executed by each Loan Party, duly
executed and delivered by such Loan Party. In addition, each Loan Party shall
have delivered to the Lender appropriately completed and duly executed copies
of UCC financing statements as the Lender may request in order to perfect the
security interests created pursuant to each such Security Agreement.
(l) PLEDGE AGREEMENT. The Lender shall have received the Pledge
Agreements to be executed by the Company and FormMaker Software, Inc.
("FormMaker"), duly executed and delivered by the Company and FormMaker. In
addition, the Lender shall have received each of the following: (i) all
certificates, if any, representing all of the issued and outstanding capital
stock, membership interest and other equity interest of each Subsidiary of the
Company and FormMaker, as applicable and (ii) stock powers duly endorsed in
blank relating to all such certificates.
(m) LIQUIDITY AGREEMENT. The Lender shall have received a copy of that
certain Liquidity Agreement dated as of January 15, 1997 (the "Liquidity
Agreement"), by and among the Company, the Investor Guarantor, Technology
Leaders II L.P. and Technology Leaders II Offshore C.V. certified as true and
correct by an officer of the Company.
(n) OTHER DOCUMENTS. The Lender shall have received such other
documents, instruments, agreements and certifications as the Lender or counsel
to the Lender may reasonably request in connection with this Agreement.
4.2. INITIAL AND SUBSEQUENT EXTENSIONS OF CREDIT
The obligation of the Lender to make any Loan hereunder (including the
initial Loans), and the Company's right to convert Facility A Loans into the
Facility A Term Loan pursuant to Section 2.12., are each subject to the further
condition precedent that, both immediately prior to the making of such Loan, or
the conversion of such Loans, and also after giving effect thereto:
(a) no Default or Event of Default shall have occurred and be continuing;
(b) the representations and warranties made or deemed made by the Company
in Article 5. and by the Company and the other Loan Parties in each of the
other Credit Documents shall be true, complete and correct in all material
respects on and as of the date of the making of such extension of credit with
the same force and effect as if made on and as of such date (or, in the case of
any such representation and warranty made only as of a particular date, as of
such particular date); and
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(c) the Lender shall have timely received (i) in the case of a borrowing
of a Loan, a duly executed Notice of Borrowing and (ii) in the case of the
conversion of Facility A Loans under Section 2.12., the applicable notice
required under such Section.
Each Notice of Borrowing hereunder, and any notice given under Section
2.12., shall constitute a certification by the Company to the effect set forth
in subsections (a) through (c) above (both as of the date of such notice and as
of the date of such extension of credit).
4.3. CONDITIONS TO ACQUISITIONS
The ability of the Company to consummate an Acquisition of a Seller
without violating Section 7.1., and the obligation of the Lender to make any
Loan hereunder, the proceeds of which will be used to finance such Acquisition,
are subject to the condition precedent that on or prior to the date (the
"Acquisition Date") such Loan is to be made or such Acquisition is to be
consummated (or such earlier date as may be provided below):
(a) DESCRIPTION OF TRANSACTION. The Lender shall have received not less
than 30 days prior to the Acquisition Date (or in the case of a Small
Acquisition, on or prior to the Acquisition Date), (x) a written description of
the Acquisition in detail reasonably satisfactory to the Lender, such
description to include a description of (i) the purchase price of such
Acquisition, (ii) the method and structure of payment thereof and (iii) the
Seller and (y) in the case of a Significant Acquisition, the current draft of
the Purchase Agreement.
(b) HISTORICAL FINANCIAL STATEMENTS. If such Acquisition is a
Significant Acquisition, the Lender shall have received not less than 15 days
prior to the Acquisition Date, the following: (i) an audited (or unaudited if
audited statements are not available) balance sheet, statement of operations
and statement of cash flows for such Seller for the two fiscal years most
recently ended and (ii) if then available, an unaudited balance sheet,
statement of operations and statement of cash flows for such Seller for the
fiscal quarter most recently ending prior to the Acquisition Date
(collectively, the "Acquisition Historical Financial Statements").
(c) PRO FORMA FINANCIAL STATEMENTS. If such Acquisition is a Significant
Acquisition, the Lender shall have received not less than 15 days prior to the
Acquisition Date, pro forma projected financial statements in form reasonably
satisfactory to the Lender reflecting the forecast financial condition and
results of operations of such Seller, the Company and its Consolidated
Subsidiaries on a monthly basis for the next fiscal year (the "Acquisition
Projected Financial Statements").
(d) CORPORATE DOCUMENTS. If such Acquisition is a Significant
Acquisition and involves any New Subsidiaries, the Lender shall have received
the following documents, each certified as indicated below:
(i) a copy of the charter of each such New Subsidiary, certified
as of a recent date by the Secretary of State of the jurisdiction of its
formation, and a certificate as of a recent date from such Secretary of
State as to the good standing of such New Subsidiary;
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(ii) a certificate as of a recent date from the Secretary of State
of each state in which each such New Subsidiary is required to qualify
to do business as a foreign corporation to the effect that such New
Subsidiary is so qualified, or, if unavailable, evidence satisfactory to
the Lender that each such New Subsidiary has taken appropriate steps to
so qualify;
(iii) a certificate of the secretary of each such New Subsidiary,
dated the Acquisition Date and certifying (A) that attached thereto is a
true and complete copy of such New Subsidiary's by-laws as in effect on
the date of such certificate, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by such New Subsidiary's board
of directors authorizing the execution, delivery and performance of each
of the Credit Documents to which such New Subsidiary is or is to be a
party, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect, (C) that such New Subsidiary's
charter has not been amended since the date of the certification thereto
furnished pursuant to subsection (i) above, and (D) as to the incumbency
and specimen signature of each of such New Subsidiary's officers
executing each of such Credit Documents (and the Lender may conclusively
rely on such certificate until the Lender receives notice in writing
from such New Subsidiary, to the contrary); and
(iv) a certificate of another officer of such New Subsidiary as to
the incumbency and specimen signature of the secretary of such New
Subsidiary.
(e) ACQUISITION DOCUMENTS. In the case of a Significant Acquisition, on
the Acquisition Date: (i) the Lender shall have received fully executed copies
of all of the Acquisition Documents and any amendments thereto; (ii) the
applicable Purchase Agreement shall be in full force and effect and (iii) the
Lender shall have received a certificate from the Company's chief executive or
chief financial officer to the effect set forth in the immediately preceding
clauses (i) and (ii).
(f) ASSIGNMENT OF ACQUISITION DOCUMENTS. In the case of a Significant
Acquisition, the Lender shall have received an Assignment of Acquisition
Documents duly executed by any New Subsidiary or any other existing Loan Party
having rights under such Purchase Agreement or any of the other Acquisition
Documents being executed in connection with such Purchase Agreement. In
addition, the Lender shall have received the acknowledgment respect to the
Assignment of Acquisition Documents, in the form attached thereto.
(g) LIEN SEARCHES. In the case of a Significant Acquisition, the Lender
shall have received UCC, tax, judgment and lien search reports in form and
substance satisfactory to the Lender with respect to the Seller and each New
Subsidiary in all necessary or appropriate jurisdictions and under all legal
and appropriate trade names indicating that there are no prior liens on any of
the Collateral other than Permitted Liens or Liens to be released prior to or
at the time of the consummation of such Significant Acquisition.
(h) SECURITY AGREEMENTS. In the case of a Significant Acquisition, the
Lender shall have received a Security Agreement from each such New Subsidiary.
In addition, each such New Subsidiary shall have filed appropriately completed
and duly executed copies of UCC financing
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statements, and taken such other action, as the Lender shall have reasonably
requested in order to perfect the security interests created pursuant to such
Security Agreement.
(i) PLEDGE AGREEMENTS. In the case of a Significant Acquisition, the
Lender shall have received from each Loan Party owning any issued and
outstanding capital stock of each such New Subsidiary, (i) if such Loan Party
has previously executed and delivered a Pledge Agreement, an amendment (in form
and substance satisfactory to the Lender) to such Pledge Agreement subjecting
to the Lien thereof such capital stock or (ii) if such Loan Party not has
previously executed and delivered a Pledge Agreement, a Pledge Agreement
granting to the Lender a Lien in such capital stock. In addition, the Lender
shall have received each of the following: (x) all stock certificates
representing all of such capital stock, and (y) stock powers duly endorsed in
blank by the applicable Loan Parties relating to all such stock certificates.
(j) GUARANTIES. In the case of a Significant Acquisition, the Lender
shall have received a Guaranty from each such New Subsidiary
(k) OPINIONS OF COUNSEL. In the case of a Significant Acquisition, the
Lender shall have received an opinion counsel to the Loan Parties regarding (i)
the due organization of each such New Subsidiary; (ii) the corporate authority
of any New Subsidiary or other Loan Party delivering a Credit Document pursuant
to this Section; (iii) the execution, delivery and enforceability of such
Credit Documents; (iv) noncontravention of Applicable Law by such Acquisition
or by the execution, delivery and performance by such New Subsidiary and such
Loan Parties of such Credit Documents; (v) validity and perfection of any
security interests granted under any Security Document delivered under this
Section and (vi) such other matters as the Lender or its counsel may reasonably
request.
(l) OTHER DOCUMENTS. The Lender shall have received such other
documents, instruments, agreements and certifications as the Lender or its
counsel may reasonably request.
4.4. CLOSING DOCUMENTS FOR NON-SIGNIFICANT ACQUISITIONS
Within 15 days after the date of consummation of an Acquisition that is
not a Significant Acquisition, the Company shall deliver to the Lender, each of
the following in form and substance satisfactory to the Lender:
(a) CORPORATE DOCUMENTS. If such Acquisition involved any New
Subsidiaries, the following documents, each certified as indicated below:
(i) a copy of the charter of each such New Subsidiary, certified as
of a recent date by the Secretary of State of the jurisdiction of its
formation, and a certificate as of a recent date from such Secretary of
State as to the good standing of such New Subsidiary;
(ii) a certificate as of a recent date from the Secretary of State of
each state in which each such New Subsidiary is required to qualify to
do business as a foreign corporation to the effect that such New
Subsidiary is so qualified;
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(iii) a certificate of the secretary of each such New Subsidiary,
dated the Acquisition Date and certifying (A) that attached thereto is a
true and complete copy of such New Subsidiary's by-laws as in effect on
the date of such certificate, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by such New Subsidiary's board
of directors authorizing the execution, delivery and performance of each
of the Credit Documents to which such New Subsidiary is or is to be a
party, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect, (C) that such New Subsidiary's
charter has not been amended since the date of the certification thereto
furnished pursuant to subsection (i) above, and (D) as to the incumbency
and specimen signature of each of such New Subsidiary's officers
executing each of such Credit Documents (and the Lender may conclusively
rely on such certificate until the Lender receives notice in writing
from such New Subsidiary, to the contrary); and
(iv) a certificate of another officer of such New Subsidiary as to
the incumbency and specimen signature of the secretary of such New
Subsidiary.
(b) ACQUISITION DOCUMENTS. (i) the Lender shall have received fully
executed copies of all of the Acquisition Documents and any amendments thereto
and (ii) the Lender shall have received a certificate from the Company's chief
executive or chief financial officer to the effect set forth in the immediately
preceding clause (i) and also stating that the applicable Purchase Agreement is
in full force and effect.
(c) LIEN SEARCHES. The Lender shall have received UCC, tax, judgment and
lien search reports in form and substance satisfactory to the Lender with
respect to the Seller and each New Subsidiary in all necessary or appropriate
jurisdictions and under all legal and appropriate trade names indicating that
there are no prior liens on any of the Collateral other than Permitted Liens or
Liens that were released prior to or in connection with such Significant
Acquisition (together with evidence of such release).
(d) SECURITY AGREEMENTS. The Lender shall have received a Security
Agreement from each such New Subsidiary. In addition, each such New Subsidiary
shall have filed appropriately completed and duly executed copies of UCC
financing statements, and taken such other action, as the Lender shall have
reasonably requested in order to perfect the security interests created
pursuant to such Security Agreement.
(e) PLEDGE AGREEMENTS. The Lender shall have received from each Loan
Party owning any issued and outstanding capital stock of each such New
Subsidiary, (i) if such Loan Party has previously executed and delivered a
Pledge Agreement, an amendment (in form and substance satisfactory to the
Lender) to such Pledge Agreement subjecting to the Lien thereof such capital
stock or (ii) if such Loan Party not has previously executed and delivered a
Pledge Agreement, a Pledge Agreement granting to the Lender a Lien in such
capital stock. In addition, the Lender shall have received each of the
following: (x) all stock certificates representing all of such capital stock,
and (y) stock powers duly endorsed in blank by the applicable Loan Parties
relating to all such stock certificates.
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(f) GUARANTIES. The Lender shall have received a Guaranty from each such
New Subsidiary.
(g) OTHER DOCUMENTS. The Lender shall have received such other
documents, instruments, agreements and certifications as the Lender or its
counsel may reasonably request.
5. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Lender that the following
statements are, and after giving effect to the Transactions, will be, true and
correct:
5.1. CORPORATE EXISTENCE
Each of the Company and the other Loan Parties (a) is a corporation duly
organized and validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite corporate power, and
has all Governmental Approvals, necessary to own its assets and carry on its
business as now being or as proposed to be conducted and to consummate the
Transactions; and (c) is qualified to do business in all jurisdictions in which
the nature of the business conducted by it makes such qualification necessary,
except where failure so to qualify would not have a Material Adverse Effect,
all of which such jurisdictions are set forth on Schedule 5.1.
5.2. AUTHORIZATION; NO CONFLICT
The execution, delivery and performance by the Company and the other Loan
Parties of each of the Credit Documents and the Acquisition Documents to which
any is a party and the consummation of the Transactions (a) have been duly
authorized by all requisite corporate and, if required, stockholder action on
the part of the Company and each such Loan Party and (b) will not (i) violate
any provision of Applicable Law, or any order of any Governmental Authority or
any provision of the charter or by-laws of the Company or any other Loan Party,
(ii) violate, conflict with, result in a breach of or constitute (alone or with
notice or lapse of time or both) a default or an event of default under any
Material Contract to which the Company or any other Loan Party is a party or by
which the Company or any other Loan Party or any of its property is or may be
bound, or (iii) result in the creation or imposition of any Lien upon any
property or assets of the Company or any other Loan Party (except pursuant to
the Security Documents).
5.3. ENFORCEABILITY
This Agreement and each other Credit Document have been duly executed and
delivered by the Company and each of the other Loan Parties (to the extent it
is a party thereto) and constitute the legal, valid and binding obligations of
the Company and the other Loan Parties enforceable against the Company and the
other Loan Parties in accordance with their respective terms, except as the
same may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other laws affecting generally the enforcement of
creditors' rights and by general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
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5.4. APPROVALS
No Governmental Approvals are necessary for the execution, delivery or
performance by the Company and the other Loan Parties of the Credit Documents
or the Acquisition Documents to which any of them is a party or for the
validity or enforceability thereof, except for filings and recordings in
respect of the Liens created pursuant to the Security Documents.
5.5. FINANCIAL CONDITION
(a) The Historical Financial Statements of the Company are complete and
correct in all material respects and fairly present the financial condition and
results of operations of the Company as of and for the periods covered thereby.
During the period from July 31, 1996 through and including the Closing Date,
there has been no material adverse change in the business, property, assets,
liabilities, condition (financial or otherwise), operations, results of
operations or prospects of the Company.
(b) The Pro Forma Opening Balance Sheet fairly presents the pro forma
financial condition of the Company as of the Closing Date. The Projected
Financial Statements are based on the assumptions set forth therein and, as of
the date hereof, constitute, in the good faith judgment of the Company,
reasonable estimations of future performance of the Company.
(c) With respect to a given Significant Acquisition, to the Company's
actual knowledge (i) the Acquisition Historical Financial Statements of the
Seller fairly present the financial condition and results of operations of the
Seller as of and for the periods covered thereby; and (ii) the Acquisition
Projected Financial Statements are based on the assumptions set forth therein
and constitute, in the good faith judgment of the Company, reasonable
estimations of future performance of the Company, its Consolidated Subsidiaries
and the applicable Seller.
5.6. LITIGATION
Except as set forth on Schedule 5.6., there are no actions, suits or
proceedings at law or in equity by or before any Governmental Authority now
pending or, to the Company's knowledge, threatened against the Company or any
other Loan Party or their respective business, property or rights (i) which
involve any Credit Document or any Acquisition Document or any Transaction or
(ii) which, if adversely determined could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. There exists no
judgment, order, injunction or other restraint issued or filed which is
material to the Company or any other Loan Party, or any of their respective
businesses, properties or rights, or which prohibits or adversely affects any
of the Transactions.
5.7. FEDERAL RESERVE REGULATIONS
Neither the Company nor any of the other Loan Parties is engaged in the
business of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying Margin Stock. No part of the proceeds of any
extension of credit hereunder, whether directly or indirectly, and whether
immediately, incidentally or ultimately, will be used (i) to purchase or carry
Margin Stock or to extend credit to others for the purpose of purchasing or
carrying Margin
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Stock or to refund indebtedness originally incurred for such purpose, or (ii)
for any purpose which entails a violation of, or which is inconsistent with,
the provisions of the Regulations of the Board of Governors of the Federal
Reserve System, including Regulations G, T, U or X. As used herein, the term
"Margin Stock" shall mean margin stock within the meaning of Regulations G, T,
U and X.
5.8. ERISA
(a) Neither the Company nor any other Loan Party maintains or contributes
to any Employee Benefit Plan or Multiemployer Plan other than those identified
on Schedule 5.8.
(b) The Company and each other Loan Party are in compliance in all
material respects with all applicable provisions of ERISA and the Code with
respect to all Employee Benefit Plans. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified, and each trust related to
such Plan has been determined to be exempt from federal income tax under
Section 501(a) of the Code. The actuarial present value of all accumulated
benefit obligations under each Plan, as disclosed in the most recent actuarial
report with respect to such Plan, does not exceed the fair market value of the
assets of such Plan. No material liability has been incurred by the Company or
any other Loan Party or any of their ERISA Affiliates which remains unsatisfied
for any taxes, penalties or other amount (other than contributions in the
ordinary course) with respect to any Employee Benefit Plan or any Multiemployer
Plan, and to the Company's actual knowledge no such material liability is
expected to be incurred.
(c) Neither the Company nor any other Loan Party has: (i) engaged in a
nonexempt prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code; (ii) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are no premium
payments which are due and unpaid; (iii) failed to make a required contribution
or payment to a Multiemployer Plan; or (iv) failed to make a required
installment or other required payment under Section 412 of the Code.
(d) No ERISA Event has occurred or is reasonably expected to occur with
respect to any Plan or Multiemployer Plan maintained or contributed to by the
Company or any other Loan Party which could have a Material Adverse Effect.
(e) No proceeding, claim (other than routine claims for benefits),
lawsuit and/or investigation is existing or, to the Company's actual knowledge,
threatened concerning or involving any Employee Benefit Plan or Multiemployer
Plan maintained or contributed to by the Company or any other Loan Party.
5.9. TAXES
Except as set forth on Schedule 5.9., each of the Company and the other
Loan Parties has filed all federal income tax returns and all other tax returns
and reports, domestic and foreign, required to be filed by it and has paid all
taxes, assessments, fees and other governmental charges shown to be due and
payable by it on such returns or reports. All such returns are true and
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correct in all material respects. Except as set forth on such Schedule, each
of the Company and the other Loan Parties has paid or, in the case of taxes
which are not yet due and payable or are being contested in good faith, has
provided adequate reserves for the payment of, all federal, state and foreign
taxes applicable for all prior fiscal years and for the current fiscal year to
the date hereof. To the Company's actual knowledge, there is no proposed tax
assessment against the Company or any other Loan Party.
5.10. INVESTMENT COMPANY ACT
Neither the Company nor any other Loan Party is an "investment company"
nor a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
5.11. PUBLIC UTILITY HOLDING COMPANY ACT
Neither the Company nor any other Loan Party is a "holding company" nor an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
5.12. MATERIAL AGREEMENTS
Other than this Agreement, the other Credit Documents, the Acquisition
Documents and except as set forth on Schedule 5.12., neither the Company nor
any other Loan Party is a party to or otherwise bound or affected by (a) except
as otherwise permitted by Sections 7.3. and 7.4., any credit agreement, loan
agreement, indenture, guarantee or other arrangement providing for or otherwise
relating to any Indebtedness or any extension of credit (or commitment for any
extension of credit) to, or Guarantee by, the Company or any other Loan Party,
or (b) any collective bargaining agreement, management agreement, employment
agreement or consulting agreement. Neither the Company nor any other Loan
Party is a party to any agreement or instrument or subject to any corporate
restriction that has resulted or could reasonably be expected to result in a
Material Adverse Effect. The representations and warranties in subsection (b)
of the first sentence of this Section are made as of the Closing Date only.
5.13. ENVIRONMENTAL AND SAFETY MATTERS
The Company and each of the other Loan Parties has obtained all
Governmental Approvals which are required under Environmental Laws and is in
compliance with all terms and conditions of such Governmental Approvals the
failure with which to be in compliance would have a Materially Adverse Effect.
Each of the Company and each other Loan Party is also in material compliance
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables contained in the
Environmental Laws. The Company is not aware of, and has not received notice
of, any past, present, or future events, conditions, circumstances, activities,
practices, incidents, actions, or plans which, with respect to the Company or
any of the other Loan Parties, may interfere with or prevent compliance or
continued compliance with Environmental Laws, or may give rise to any
common-law or legal liability, or otherwise form the basis of any claim,
action, demand, suit, proceeding, hearing,
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study, or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling or the
emission, discharge, release or threatened release into the environment, of any
pollutant, contaminant, chemical, or industrial, toxic, or other Hazardous
Material; and there is no civil, criminal, or administrative action, suit,
demand, claim, hearing, notice, or demand letter, notice or violation,
investigation, or proceeding pending or, to the Company's knowledge,
threatened, against the Company or any of the other Loan Parties relating in
any way to Environmental Laws.
5.14. SUBSIDIARIES
Except as set forth on Schedule 5.16., the Company has no Subsidiaries,
and except as set forth on such Schedule, all such Subsidiaries are
Wholly-Owned Subsidiaries of the Company.
5.15. COMPLIANCE WITH LAW
The Company and each of the other Loan Parties are in compliance with all
Applicable Laws of, and all applicable restrictions imposed by, all
Governmental Authorities in respect of the conduct of their respective business
and the ownership of their respective property, except such noncompliance as
could not reasonably be expected to individually or in the aggregate, have a
Material Adverse Effect.
5.16. CAPITALIZATION
All of the outstanding capital stock of the Company is validly issued,
fully paid and non-assessable. Schedule 5.16. correctly sets forth the
corporate structure and ownership interests of each of the Company's
Subsidiaries, including the correct legal name of each such Loan Party, and the
shareholders or other Persons holding equity interests in each such Loan Party
and their percentage equity or voting interest. Except as set forth on
Schedule 5.16., there are no outstanding securities convertible into or
exchangeable for any capital stock (collectively, "capital stock equivalents")
of the Company or any other Loan Party or any outstanding subscriptions,
options, warrants, calls, rights (including without limitation, preemptive
rights) or other agreements or commitments of any nature relating to or
exercisable for capital stock or capital stock equivalents of the Company or
any other Loan Party.
5.17. TITLE TO PROPERTIES
Except as set forth on Schedule 5.17., each of the Company and the other
Loan Parties have good, indefeasible and insurable title to, or valid leasehold
interests in, all its real properties and good title to its other assets, free
and clear of all Liens other than Permitted Liens.
5.18. SOLVENCY
After fiving effect to the Transactions, the Company and each other Loan
Party will be Solvent.
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5.19. CONDUCT OF BUSINESS
The Company and its Subsidiaries are engaged in the business of developing
and marketing document automation software and providing both related and
complementary services.
5.20. REPRESENTATIONS AND WARRANTIES IN ACQUISITION DOCUMENTS
Each representation and warranty made or deemed made by the Company or any
other Loan Party in any of the other Credit Documents and the Acquisition
Documents is hereby deemed made to and for the benefit of the Lender as if the
same were set forth herein in full.
5.21. PERFORMANCE OF CONTRACTS, ETC.
Neither the Company nor any of the other Loan Parties is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any contract, agreement, indenture, mortgage, lease or
other binding understanding or arrangement of any such Person, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, in each case, that could have a Material Adverse
Effect.
5.22. DISCLOSURE
No representation or warranty of the Company or any other Loan Party made
or deemed made in this Agreement, any other Credit Document, any Acquisition
Document, the financial statements referred to in Section 4.1.(e) through (g),
or any other document, certificate or written statement furnished to the Lender
by or on behalf of any such Person for use in connection with any of the
Transactions, contained, as of the date made or deemed made or as of the date
thereof, any untrue statement of a material fact or omitted, omits or will omit
to state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances in which the
same were made. There is no material fact known to the Company that has had or
will have a Material Adverse Effect and that has not been disclosed herein or
in such other documents, certificates and statements furnished to the Lender
for use in connection with the transactions contemplated hereby.
5.23. REPRESENTATIONS REGARDING ACQUISITIONS
To the extent any representation or warranty contained in this Article 5.
relates to an Acquisition and the Transactions relating thereto, such
representation or warranty shall be deemed made only on and as of the (a) the
date such Acquisition has been consummated and (b) the date of the making of
the Loan any of the proceeds of which are used in whole or in part to finance
such Acquisition.
6. AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as the Credit Facility is
in effect or the principal or interest on any Loan or any Obligation shall
remain unpaid, the Company will, and (as applicable) will cause each of the
other Loan Parties to:
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6.1. FINANCIAL STATEMENTS AND OTHER INFORMATION
Deliver to the Lender:
(a) as soon as available and in any event within 120 days after the end
of each fiscal year of the Company, audited consolidated statements of income,
retained earnings and cash flow of the Company and its Consolidated
Subsidiaries for such fiscal year and the related audited consolidated balance
sheet as of the end of such fiscal year, accompanied by an unqualified report
of the Company's independent auditors (who shall be of nationally recognized
standing), stating that such financial statements fairly present the
consolidated financial condition and results of operations of the Company and
its Consolidated Subsidiaries in accordance with GAAP;
(b) as soon as available and in any event within 45 days after the end of
each fiscal quarter of each fiscal year of the Company, a consolidated
statements of income, retained earnings and cash flow of the Company and its
Consolidated Subsidiaries for such fiscal quarter and for the period from the
beginning of the current fiscal year to the end of such fiscal quarter, and the
related consolidated balance sheet as of the end of such period, accompanied by
a certificate of the chief financial officer of the Company, which certificate
shall state that such consolidated financial statements fairly present the
consolidated financial condition and results of operations of the Company and
its Consolidated Subsidiaries in accordance with GAAP (subject to normal
year-end adjustments and absence of full footnote disclosures);
(c) simultaneously with the delivery of the annual financial statements
referred to in Section 6.1.(a), a report addressed to the Company by the
independent auditors who audited such statements (i) stating that, in
connection with their audit of such statements (and without conducting any
procedures other than those customarily conducted in a year-end audit), such
auditors have obtained no knowledge of any condition or event which constitutes
a Default or Event of Default as at the end of such fiscal year of the Company,
or if such auditors shall have obtained knowledge of any such condition or
event, specifying in such report each such condition or event of which they
have knowledge and the nature and status thereof and (ii) setting forth in
reasonable detail the computations necessary to determine whether the Company
is in compliance with the covenants contained in Sections 7.3. and 7.4. and
Article 8.;
(d) simultaneously with the delivery of the quarterly financial
statements pursuant to Section 6.1.(b), a certificate of the chief financial
officer of the Company (i) to the effect that no Default or Event of Default
has occurred and is continuing (or, if any Default or Event of Default has
occurred and is continuing, describing the same in reasonable detail and
describing the action that the Company (or such other Person, as appropriate)
has taken and proposes to take with respect thereto) and (ii) setting forth in
reasonable detail the computations necessary to determine whether the Company
is in compliance with the covenants contained in Sections 7.3. and 7.4. and
Article 8., in each case as of the end of the period for which such financial
statements are delivered;
(e) if the Investor Guaranty has been released pursuant to Section 2.14.,
within 30 days of the end of each calendar month, a Borrowing Base Certificate
as of the last Business Day of such month, together with a schedule of
receivables as of the date of such Borrowing Base
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Certificate setting forth an aged trial balance in summary form of the
Company's then existing Receivables, and also specifying the name of and the
balance due from (and any rebate due to) each Account Debtor obligated on an
aggregate amount of Receivables which constitutes 5% or more of the Company's
Eligible Receivables;
(f) within 30 days of the Closing Date, a pro forma balance sheet of the
Company, dated as of the Closing Date and giving effect to the consummation of
the transaction contemplated hereby, in form and substance satisfactory to the
Lender (the "Pro Forma Opening Balance Sheet");
(g) promptly upon the receipt thereof, copies of all "management letters"
received by the Company or any other Loan Party from its independent
accountants;
(h) as soon as possible, and in any event within thirty days after the
Company or any other Loan Party knows or has reason to know that any of the
events or conditions specified below have occurred or exist, a statement signed
by the chief financial officer of the Company setting forth details respecting
such event or condition and the action, if any, which the Company, any other
Loan Party or its ERISA Affiliates proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to the PBGC by
the Company or any other Loan Party or any of its ERISA Affiliates as of such
date with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA and
the regulations issued thereunder, with respect to a Plan of the Company
or any other Loan Party or any of its ERISA Affiliates, as to which the
PBGC has not by regulation waived the requirement of Section 4043 (a) of
ERISA that it be notified within 30 days of the occurrence of such event
(provided that a failure to meet the minimum funding standard of
Section 412 of the Code or Section 302 of ERISA shall be a reportable
event regardless of the issuance of any waivers in accordance with
Section 412(d) of the Code);
(ii) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan of the Company or any other Loan Party or any of its
ERISA Affiliates or the termination of any such Plan;
(iii) the institution by the PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan of the Company or any other Loan Party or
any of its ERISA Affiliates, or the receipt by the Company or any other
Loan Party or any of its ERISA Affiliates of a notice from a Multiemployer
Plan of the Company or any other Loan Party or any of its ERISA Affiliates
that such action has been taken by the PBGC with respect to such
Multiemployer Plan;
(iv) the complete or partial withdrawal by the Company or any other
Loan Party or any of its ERISA Affiliates under Section 4201 or 4204 of
ERISA from a Multiemployer Plan, or the receipt by the Company or any
other Loan Party or any such ERISA Affiliate of notice from such a
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or
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has terminated under Section 4041A of ERISA, which in any such case could
reasonably be expected to result in the imposition of withdrawal liability
upon the Company or any other Loan Party or any of its ERISA Affiliates;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Company or any other Loan Party or any of
its ERISA Affiliates to enforce Section 515 of ERISA, which proceeding is
not dismissed within 30 days; and
(vi) the fair market value of the assets of any Plan does not equal
or exceed the accumulated benefit obligations with respect to such Plan,
as disclosed on the most recent actuarial report with respect to such
Plan.
(i) promptly after the Company obtains knowledge of the occurrence of any
Default or Event of Default, a notice of such Default or Event of Default
describing the same in reasonable detail together with a description of the
action that the Company (or such other appropriate party, as the case may be)
has taken and proposes to take with respect thereto;
(j) promptly after receipt of written request from the Lender, such other
information regarding the business, affairs or financial condition of the
Company or any other Loan Party as the Lender may reasonably request;
(k) as soon as possible, and in any event within ten Business Days after
the Company receives notice or otherwise has knowledge that any of the
following events have occurred or exist, a statement signed by the chief
financial officer of the Company setting forth details regarding such event or
condition and the action, if any, which the Company proposes to take with
respect thereto (along with all relevant documentation): (A) any violation by
the Company or any other Loan Party of any Environmental Laws which could
reasonably be expected to have a Material Adverse Effect; (B) any request for
information or notice of potential responsibility under Environmental Laws with
respect to cleanup of any property or facility of the Company or any other Loan
Party or any offsite location; (C) the imposition of any Lien on any assets of
the Company or any other Loan Party under Environmental Laws; (D) the
commencement of any litigation, enforcement action or investigation with
respect to the Company or any other Loan Party under Environmental Laws; or (E)
any Release or threatened Release of any Hazardous Material at or from any
property or facility of the Company or any other Loan Party;
(l) promptly upon their becoming available, copies of any statements,
reports and other communications, if any, which the Company or any other Loan
Party shall have provided to its stockholders or filed with the Securities and
Exchange Commission (or any governmental agency substituted therefor), any
national securities exchange or the National Association of Securities Dealers,
Inc.;
(m) simultaneously with the delivery of the annual financial statements
referred to in Section 6.1(a), pro forma projected financial statements
reflecting the forecasted financial condition and results of operations of the
Company on a quarterly basis for the next succeeding fiscal year;
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(n) promptly upon receipt thereof, copies of any notification or other
communication regarding any claim or potential claim for indemnification under
any Acquisition Documents relating to any Significant Acquisition;
(o) prompt notice of the terms of any proposed amendment to, or
modification or waiver of any of the material terms of any of the Acquisition
Documents relating to any Significant Acquisition; and
(p) simultaneously with the delivery of the annual financial statements
referred to in Section 6.1.(a), capital and operating expense budgets,
projections of sources and applications of funds and profit and loss
projections for the Company (and each of its Consolidated Subsidiaries) on a
consolidated basis for each month of the next succeeding fiscal year, all
itemized in reasonable detail and prepared by the Company. Any material
revisions made in such budgets or projects shall be furnished promptly to the
Lender.
6.2. LITIGATION
Promptly (and in any event within three Business Days of receipt) give to
the Lender notice of the filing or commencement of, or any written notice of
intention of any Person to file or commence, any action, suit or proceeding
affecting the Company or any of the other Loan Parties, whether at law or in
equity by or before any Governmental Authority which if adversely determined
could reasonably be expected to result in liability to the Company or any of
the other Loan Parties in an amount equal to or exceeding $250,000 (including
the amount of any deductible paid or required to be paid by the Company or any
other Loan Party under the terms of its insurance policies, but NET of any
amounts acknowledged in writing by the applicable insurer(s) to be fully
covered by insurance) or would otherwise have a Material Adverse Effect, and of
any adverse development in respect of such legal or other proceedings.
6.3. CORPORATE EXISTENCE, ETC.
Except as expressly permitted by this Agreement: preserve and maintain its
corporate existence, and all of its material rights, privileges and franchises;
comply in all material respects with the requirements of all Applicable Laws,
rules, regulations and orders of all Governmental Authorities; maintain all of
its material properties used in its business in sufficient working order and
condition so as to permit such Loan Party to conduct its business; and preserve
and enforce its rights (including rights to indemnification) under any Material
Contracts, except where the failure to do so would not have a Material Adverse
Effect in the reasonable judgment of the Lender.
6.4. INSURANCE
Keep insured by financially sound and reputable insurers all property of a
character usually insured by entities engaged in the same or similar business
similarly situated against loss or damage of the kinds and in the amounts
customarily insured against by such businesses and carry such other insurance
as is usually carried by such businesses. Without limiting the obligations of
the Company and the other Loan Parties under the foregoing provisions of this
Section, in the
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event the Company or any of the other Loan Parties shall fail to maintain in
full force and effect insurance as required by the foregoing provisions of this
Section or any of the other Credit Documents, then the Lender may upon notice
to the Company or such other Loan Party, but shall have no obligation to,
procure insurance covering the interests of the Lender in such amounts and
against such risks as the Lender shall deem appropriate, and the Company shall
reimburse the Lender in respect of any premiums paid by the Lender as provided
in Section 10.3.(c).
6.5. OBLIGATIONS AND TAXES
Pay its Indebtedness and other obligations in accordance with their terms
and pay and discharge promptly all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits or in respect of its
property, and in any event before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might give rise to a Lien upon such properties or
any part thereof; PROVIDED, HOWEVER, that such payment and discharge shall not
be required so long as the validity or amount thereof shall be contested in
good faith by appropriate proceedings which effectively stay the execution of
any such Lien and the Company shall (or shall cause the applicable Loan Party
to) set aside on its books adequate reserves in accordance with GAAP with
respect thereto.
6.6. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS
Maintain all financial records in accordance with GAAP and permit any
representatives designated by the Lender upon reasonable notice to visit and
inspect the properties of the Company or any of the other Loan Parties and to
inspect their financial and business records and make extracts therefrom and
copies thereof, all at reasonable times during normal business hours and in a
manner so as not to unreasonably disrupt the operations of the Company or the
other Loan Parties and as often as reasonably requested, and permit the Lender
or any representatives designated by the Lender upon reasonable notice to
discuss the affairs, finances and condition of the Company or any of the other
Loan Parties with the officers thereof and, after prior notice to the Company
(so long as no Event of Default has occurred and is continuing), independent
accountants therefor.
6.7. ENVIRONMENTAL AND SAFETY MATTERS
For the purposes of protecting the Lender's security interest in the
Collateral and preserving the Company's ability to satisfy its Obligations:
(a) Comply with all Environmental Laws applicable to it or any of its
property or facilities in all material respects.
(b) Keep its properties and facilities free from any Liens which could
reasonably be expected to have a Material Adverse Effect arising under any
Environmental Laws.
(c) Respond promptly to any Release or threatened Release of any
Hazardous Materials in a manner which complies in all material respects with
all Environmental Laws and mitigates any associated risk to human health or the
environment to the maximum extent commercially practicable.
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(d) If the Lender at any time has reason to believe that any property or
facility owned or operated by the Company or any other Loan Party has been or
may be either (i) operated in violation of any Environmental Laws; (ii)
contaminated with any Hazardous Materials; or (iii) subject to any
government-imposed obligation to conduct any environmental investigation or
clean-up, any of which, in the good faith judgment of the Lender may impair in
any material respect the value of the Collateral or the ability of the Company
or any of the other Loan Parties to satisfy any of their respective
Obligations, the Company shall, upon the written request of the Lender, at the
Company's sole cost and expense, conduct such investigation or study, through
retention of a consulting firm reasonably satisfactory to the Lender, as is
necessary in the good faith judgment of the Lender to demonstrate that no such
impairment could reasonably be expected to have a Material Adverse Effect.
6.8. ADDITIONAL SECURITY
If and to the extent requested by the Lender from time to time, execute
and deliver such additional documents and take such other action as may be
necessary or desirable in the reasonable opinion of the Lender in order to
assure and confirm that all Obligations are secured in a manner acceptable to
the Lender by a first priority Lien on substantially all present and future
assets of the Company and the other Loan Parties (other than Intellectual
Property, unless a security interest in Intellectual Property in granted to the
Lender pursuant to Section 6.12. hereof) subject only to Permitted Liens.
6.9. DEPOSIT ACCOUNTS/CASH MANAGEMENT SERVICES
For the purpose of protecting the Lender's security interest in the
Collateral and enabling the Lender to monitor the proceeds of Collateral and
the uses of cash by the Company and the other Loan Parties, maintain all of its
primary operating accounts and cash management service relationships with the
Lender or its Texas Affiliate.
6.10. CHANGE IN MANAGEMENT GROUP
Immediately notify the Lender if any member of the Management Group shall
terminate their employment with the Company or otherwise cease to be employed
by the Company in a senior management position.
6.11. ENFORCEMENT OF REMEDIES UNDER ACQUISITION DOCUMENTS
If the Company becomes aware of or otherwise has knowledge of any facts
that could give rise to any material claim for indemnification from any party
under any Acquisition Document, assert or cause the assertion of such claim
against such party before the date on which such claim may no longer be made
under such Acquisition Document, and in asserting any such claim shall comply
with all requirements for asserting such claims under the Acquisition Documents.
6.12. LIEN ON INTELLECTUAL PROPERTY.
If either of the following occurs:
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(a) the ratio of (i) Funded Debt of the Company and its Consolidated
Subsidiaries TO (ii) Adjusted EBITDA of the Company and its Consolidated
Subsidiaries for the four fiscal quarter period most recently ending exceeds
2.25 to 1.0 at any time; or
(b) the ratio of (i) Adjusted EBITDA of the Company and its Consolidated
Subsidiaries for the four fiscal quarter period most recently ended (the "Prior
Period") TO (ii) the sum of (x) Interest Expense of the Company and its
Consolidated Subsidiaries for such four fiscal quarter period PLUS (y) Current
Maturities of the Company and its Consolidated Subsidiaries for the four fiscal
quarter period immediately following the Prior Period is less than 1.75 to 1.0
at any time;
then, within 30 days of the Lender's request therefor, the Company shall, at
its sole cost and expense, take any and all actions requested by the Lender to
grant to the Lender a security interest in and first priority lien on all
Intellectual Property owned by the Company and each Subsidiary Guarantor
including, without limitation, the execution and delivery of security
agreements, financing statements, and filings with the United States Patent and
Trademark Office.
7. NEGATIVE COVENANTS
The Company covenants and agrees that, so long as the Credit Facility is
in effect or the principal or interest on any Loan or any Obligation shall
remain unpaid, the Company will not, nor will it permit any of the Loan Parties
to:
7.1. PROHIBITION OF FUNDAMENTAL CHANGES
Effect any of the following: (i) any transaction of merger, consolidation,
recapitalization, reorganization, liquidation or dissolution (other than the
merger of a Subsidiary of the Company with and into (x) the Company pursuant to
which the Company is the surviving corporation, (y) any Wholly-Owned Subsidiary
of the Company pursuant to which such Wholly-Owned Subsidiary is the surviving
corporation or (z) another Person which Person becomes a Wholly-Owned
Subsidiary after giving effect to such merger); or (ii) the sale, transfer,
lease, contribution or other conveyance, or the granting of options, warrants
or other rights (excluding options, warrants or other rights with respect to
the Company's stock) with respect to, any of its assets to any Person other
than sales of assets in the ordinary course of business; or (iii) engage in any
line of business other than those engaged in or similar to those engaged in by
the Company or such other Loan Party, as applicable, on the Closing Date; or
(iv) any Acquisition or any other transaction of acquisition of another Person,
or of substantially all of the assets of another Person, or of a distinct
operating division of another Person, unless (A) at the time of such
transaction, such other Person is engaged in, or such assets are to be used in,
the same or similar line(s) of business as those described in Section 5.19.,
(B) no Default or Event of Default has occurred and is continuing or would
occur after giving effect to such transaction, and (C) the applicable
conditions precedent contained in Section 4.3. have been satisfied.
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7.2. LIMITATION ON LIENS
Without the Lender's prior written consent, (i) create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired, except Permitted Liens or (ii) enter into or
assume any agreement (other than the Credit Documents) prohibiting the creation
or assumption of any Lien upon any of Intellectual Property, whether now owned
or hereafter acquired.
7.3. INDEBTEDNESS AND GUARANTEES
Without the Lender's prior written consent (which will not be unreasonably
withheld), create, incur or suffer to exist any Indebtedness or Guarantees
except (a) Indebtedness to the Lender created hereunder and under any of the
Credit Documents; (b) Indebtedness existing on the Closing Date and described
on attached Schedule 7.3.; (c) Indebtedness in an aggregate amount not to
exceed $500,000.00 during any fiscal year of the Company; (d) Indebtedness
otherwise permitted by Section 7.4. and (e) loans and advances to employees of
the Company for moving, entertainment, travel and other similar expenses in the
ordinary course of business consistent with past practices.
7.4. INVESTMENTS
Make or permit to remain outstanding any Investments except (i) Permitted
Investments, (ii) the ownership of the capital stock of Subsidiaries by the
Company or its Subsidiaries, the acquisition of which is permitted by
Section 7.1.(iv), (iii) loans or advances to the Company by one or more of its
Subsidiaries, provided that such Subsidiary is a Subsidiary Guarantor and (iv)
loans or advances to any Subsidiary by the Company or another Subsidiary,
provided that each such Subsidiary borrower is a Subsidiary Guarantor.
7.5. RESTRICTED PAYMENTS
Make any Restricted Payment; PROVIDED, HOWEVER, that (i) Subsidiaries of
the Company may make dividends, payments or other distributions to the Company
or to any Wholly-Owned Subsidiary of the Company, (ii) so long as no Default or
Event of Default shall have occurred and be continuing or would result
therefrom, the Company may make payments in an aggregate amount not to exceed
$250,000 per year to redeem shares of its common stock issued to any employee
in accordance with an employee stock ownership plan and (iii) so long as no
Default or Event of Default shall have occurred and be continuing or would
result therefrom, the Company may redeem shares of its Class B Common Stock as
required by, and pursuant to the terms of, Part THIRD, Section A(5) of its
certificate of incorporation in exchange for or out of proceeds from the
substantially concurrent sale of shares of its Class A Common Stock to the
Investor Guarantor pursuant to the Liquidity Agreement.
7.6. ACCOUNTING
Change its accounting methods or practices (except as required to conform
to changes in GAAP or permitted by GAAP) or, without the prior written consent
of the Lender, which consent shall not be unreasonably withheld, change its
fiscal year end from July 31.
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7.7. AMENDMENT OF CERTAIN DOCUMENTS
Enter into any amendment, modification or waiver of any of the terms of
any of the Acquisition Documents which amendment, modification or waiver would
have a Material Adverse Effect in the reasonable judgment of the Lender.
8. FINANCIAL COVENANTS
So long as the Credit facility remains in effect or the principal or
interest on any Loan or Obligations shall remain unpaid:
8.1. QUICK RATIO
The Company shall not permit the ratio of the sum of cash, cash
equivalents and Receivables TO current liabilities of the Company and its
Consolidated Subsidiaries, each as calculated in accordance with GAAP, to be
less than .55 to 1.0 at any time.
8.2. RATIO OF FUNDED DEBT TO ADJUSTED EBITDA
The Company shall not permit the ratio of (a) Funded Debt of the Company
and its Consolidated Subsidiaries TO (b) Adjusted EBITDA of the Company and its
Consolidated Subsidiaries for the four fiscal quarter period most recently
ending to exceed 2.5 to 1.0 at any time.
8.3. RATIO OF ADJUSTED EBITDA TO DEBT SERVICE
The Company shall not permit the ratio of (a) Adjusted EBITDA of the
Company and its Consolidated Subsidiaries for the four fiscal quarter period
most recently ended (the "Prior Period") TO (b) the sum of (i) Interest Expense
of the Company and its Consolidated Subsidiaries for such four fiscal quarter
period PLUS Current Maturities of the Company and its Consolidated Subsidiaries
for the four fiscal quarter period immediately following the Prior Period to be
less than 1.5 to 1.0 at any time.
8.4. MINIMUM NET WORTH
The Company shall not permit at any time its Net Worth determined on a
consolidated basis with its Consolidated Subsidiaries to be less than
(a) $11,500,000 PLUS (b) an amount equal to 80% of positive Net Income of the
Company and its Consolidated Subsidiaries (or MINUS 100% of any negative Net
Income of the Company and its Consolidated Subsidiaries) for each fiscal
quarter ending after July 31, 1997 PLUS (c) 100% of the Net Proceeds of each
Equity Issuance effected after the date hereof.
9. EVENTS OF DEFAULT
If one or more of the following events (herein collectively called "Events
of Default" and singularly called an "Event of Default") shall occur and be
continuing:
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9.1. PAYMENTS UNDER CREDIT DOCUMENTS
The Company or any other Loan Party shall default in the payment when due
of any principal of any Loan. The Company shall default in the payment when
due of any interest on any Loan or any fee or any other Obligations payable by
it hereunder or under any other Credit Document, or any other Loan Party shall
default in the payment when due of any other amount payable by it under any
Credit Document to which such Loan Party is a party and such default shall
continue unremedied for a period of five days after the Company or such other
Loan Party receives notice of such default.
9.2. OTHER INDEBTEDNESS
The Company or any other Loan Party shall default in the payment when due
of any principal of or interest on any Indebtedness, having a principal amount
outstanding, individually or in the aggregate, equal to or exceeding
$250,000.00 (other than the Obligations) and such default shall continue
unremedied beyond any applicable grace or cure periods; or any event specified
in any note, agreement, indenture or other document evidencing or relating to
any Indebtedness of the Company or any other Loan Party shall occur if the
effect of such event is to cause, or to permit the holder thereof to cause
(with the giving of notice or lapse of time or both), such Indebtedness to
become due or to be required to be prepaid (whether by redemption, purchase or
otherwise) prior to its stated maturity, and such event shall remain unremedied
beyond any applicable grace or cure periods.
9.3. REPRESENTATIONS AND WARRANTIES
Any representation, warranty or certification made or deemed to be made in
any Credit Document by the Company or any other Loan Party or any certificate,
financial statement or other information furnished in writing to the Lender
pursuant to the provisions hereof or thereof, shall prove to have been false or
misleading in any material respect as of the time made or deemed to be made.
9.4. OTHER OBLIGATIONS
(i) The Company shall default in the performance of any of its obligations
under Section 2.13., Section 6.1. (which default shall continue for ten
Business Days), Article 7. or Article 8.; (ii) the Company shall default in the
performance of any of its other obligations in this Agreement and such default
shall continue unremedied for a period of 30 days after the Company receives
notice or otherwise has actual knowledge thereof; (iii) an "Event of Default"
as defined in any other Credit Document shall have occurred and be continuing;
or (iv) an "Event of Default" under and as defined in the Guarantor Credit
Agreement shall have occurred and be continuing.
9.5. ABILITY TO PAY DEBTS
The Company or any other Loan Party shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts become due.
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9.6. VOLUNTARY PROCEEDINGS
The Company or any other Loan Party shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of its creditors, (iii) commence
a voluntary case under the Bankruptcy Code, (iv) file a petition seeking to
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts,
(v) acquiesce in writing to, any petition filed against it in an involuntary
case under the Bankruptcy Code, or (vi) take any corporate action for the
purpose of effecting any of the foregoing.
9.7. INVOLUNTARY PROCEEDINGS
A proceeding or case shall be commenced against the Company or any other
Loan Party, without its application or consent, in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of all or
any substantial part of its assets, or (iii) similar relief under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, and such proceeding or case shall continue undismissed,
or an order, judgment or decree approving or ordering any of the foregoing
shall be entered and continue unstayed and in effect, for a period of 60 or
more days; or an order for relief against the Company or any other Loan Party
shall be entered in an involuntary case under the Bankruptcy Code.
9.8. JUDGMENTS
A judgment or judgments for the payment of money in excess of $250,000.00
in the aggregate (exclusive of judgment amounts to the extent covered by
insurance where the Company has submitted a claim and the insurer has not
contested liability in respect of such judgment) shall be rendered by a court
or courts against the Company or any other Loan Party and the same shall not be
vacated, bonded or discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within 60
days from the date of entry thereof.
9.9. ERISA EVENT
(a) Any ERISA Event shall have occurred with respect to the Company or any
other Loan Party and the sum of the Insufficiency of such Plan (determined as
of the date of occurrence of such ERISA Event) and the Insufficiency of any and
all other Plans (determined as of the date of occurrence of such ERISA Event)
of the Company or any other Loan Party with respect to which an ERISA Event
shall have occurred (or the liability of the Company or any other Loan Party or
its ERISA Affiliates related to such ERISA Event) exceeds $250,000; or (b) the
Company or any other Loan Party or any of its ERISA Affiliates shall have been
notified by a Multiemployer Plan that it has incurred withdrawal liability to
such Multiemployer Plan and the imposition of such liability is reasonably
likely to be incurred in an amount that, when aggregated with all other amounts
required to be paid to Multiemployer Plans by the Company or any other Loan
Party and its ERISA Affiliates as withdrawal liability (determined as of the
date of such notification
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indemnification), requires payments exceeding $250,000 per annum or $250,000 in
the aggregate; or (c) the Company or any other Loan Party or any of its ERISA
Affiliates shall have been notified by a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated within the
meaning of Title IV of ERISA, and as a result of such reorganization or
termination the aggregate annual contributions of such Person and its ERISA
Affiliates to all Multiemployer Plans that are then in reorganization or being
terminated have been or will be increased over the amounts contributed to such
Multiemployer Plans for the plan years of such Multiemployer Plans immediately
preceding the plan year in which such reorganization or termination occurs by
an amount exceeding $250,000.
9.10. CHANGE IN CONTROL
A Change in Control shall have occurred without the prior written consent
of the Lender. As used in this Section the term "Change in Control" shall mean
any of the following: (i) the Control Group at any time fails to own, on a
fully diluted basis, at least 51% of the capital stock of the Company prior to
a registered public offering of any capital stock of the Company or (ii) if
after any such offering any Person or two or more Persons (other than the
Control Group) acting in concert, shall acquire "beneficial ownership" within
the meaning of Rule 13d-3 of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), directly or indirectly, of capital stock or
securities of the Company representing 30% or more of the aggregate voting
power of all classes of capital stock and securities of the Company; or (iii)
during any twelve-month period (commencing both before and after the Agreement
Date), a majority of the Board of Directors of the Borrower shall no longer be
composed of individuals (x) who were members of such Board of Directors on the
first date of such period, (y) whose election or nomination to such Board of
Directors was approved by individuals referred to in clause (x) above
constituting at the time of such election or nomination at least a majority of
such Board of Directors or (z) whose election or nomination to such Board of
Directors was approved by individuals referred to in clauses (x) and (y) above
constituting at the time of such election or nomination at least a majority of
such Board of Directors..
THEREUPON: (1) In the case of an Event of Default, other than an Event of
Default referred to in Section 9.6. or Section 9.7., the Lender may, by notice
to the Company, terminate the Commitment, cancel the Credit Facility and/or
declare the then-outstanding principal amount of, and the accrued interest on,
the Loans and all other Obligations payable by the Company hereunder and under
the Notes (including, without limitation, any amounts payable under
Section 10.3.), whereupon such amounts shall be immediately due and payable
without presentment, demand, protest or other formalities of any kind, all of
which are hereby expressly waived by the Company; (2) in the case of the
occurrence of an Event of Default referred to in Section 9.6. or Section 9.7.
above, the Commitment and the Credit Facility shall automatically be canceled
and the then-outstanding principal amount of, and the accrued interest on, the
Loans and all other Obligations payable by the Company hereunder and under the
Notes (including, without limitation, any amounts payable under Section 10.3.)
shall automatically become immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Company; and (3) in the case of any Event of Default,
may exercise any and all remedies available under the Security Documents or
under Applicable Law.
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10. MISCELLANEOUS
10.1. WAIVER
No failure on the part of the Lender to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege under this Agreement or the Note or other Credit Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement or any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
10.2. NOTICES
All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and
delivered personally, mailed by certified or registered mail, return receipt
requested and postage prepaid, sent via a nationally recognized overnight
courier, or sent via facsimile. Such notices, demands and other communications
will be sent to the address indicated below:
To the Company:
DocuCorp., Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxx, Vice President- Finance and Administration
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
To the Lender:
NationsBank, N.A.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party;
provided, however, that the failure to deliver copies of notices as indicated
above shall not affect the validity of any notice. Any such communication
shall be deemed to have been received (i) when delivered, if personally
delivered, or sent by nationally-recognized overnight courier or sent via
facsimile or (ii) on the third Business Day following the date on which the
piece of mail containing such communication is posted if sent by certified or
registered mail.
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10.3. EXPENSES, ETC.
(a) AGREEMENT TO PAY AND REIMBURSE. The Company agrees to pay or
reimburse the Lender for the following as incurred by Lender: (i) all out-of
pocket costs and expenses (including, without limitation, the reasonable fees
and expenses of Xxxxxx & Bird LLP, counsel to the Lender) in connection with
(A) the negotiation, preparation, execution and delivery of this Agreement and
the other Credit Documents and the extension of credit hereunder and (B) any
amendment, modification or waiver of any of the terms of this Agreement or any
of the other Credit Documents; (ii) all costs and expenses of the Lender
(including reasonable counsel's fees and expenses) in connection with (A) any
Default and any enforcement or collection proceedings resulting therefrom and
(B) the enforcement of this Section; and (iii) all transfer, stamp, documentary
or other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any of the other Credit
Documents or any other document referred to herein or therein and all costs,
expenses, taxes, assessments and other charges incurred in connection with any
filing, registration, recording or perfection of any security interest
contemplated by this Agreement or any other Credit Document or any other
document referred to herein or therein.
(b) INDEMNITY. The Company agrees to indemnify the Lender and its
directors, officers, employees and agents for, and hold each of them harmless
against, any and all losses, liabilities, claims (including Environmental
Claims), damages or expenses incurred by any of them arising out of or by
reason of any investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings) relating to the
extensions of credit hereunder or any actual or proposed use by the Company or
any Loan Party of the proceeds of any of the extensions of credit hereunder or
the past, present or future business activities of the Company or any Loan
Party including, without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims, damages
or expenses that are determined pursuant to a final, non-appealable order of a
court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of the Person to be indemnified).
(c) EXPENSES PAID ON BEHALF OF THE COMPANY. If the Company fails to pay
when due any costs, expenses or other amounts payable by it under any Credit
Document, including, without limitation, fees and expenses of counsel,
indemnities and insurance premiums, such amount may be paid on behalf of the
Company by the Lender, in its sole discretion. Any such payment by the Lender
shall constitute for all purposes of this Agreement the making by the Lender of
a Loan, which shall bear interest at the Base Rate, in the amount of such
payment (but without any requirement for compliance with the conditions set
forth in Article 4.). In the event that such payment is not reimbursed by the
Company by 12:00 noon Atlanta time on the first Business Day after such
payment, the Lender shall be deemed to have made a Loan to the Company in such
amount, which Loan shall be deemed to bear interest at the Default Rate with
respect to Base Rate Loans from the date such Loan is made until the same is
repaid.
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10.4. AMENDMENTS, ETC.
Any term, covenant, agreement or condition of this Agreement or any of the
other Credit Documents may be amended or waived and any departure therefrom may
be consented to if, but only if, such amendment, waiver or consent is in
writing signed by the Lender and, in the case of an amendment, by the Company.
Unless otherwise specified in such waiver or consent, a waiver or consent given
hereunder shall be effective only in the specific instance and for the specific
purpose for which given.
10.5. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
10.6. ASSIGNMENTS AND PARTICIPATIONS
The Company may not assign its rights or obligations hereunder or under
the other Credit Documents without the prior consent of the Lender. The Lender
may assign to one or more Persons, or sell participations to one or more
Persons in, all or a portion of its rights and obligations hereunder, under the
Note and the other Credit Documents. The Lender may, in connection with any
assignment or proposed assignment or sale or proposed sale of a participation,
disclose to the assignee or proposed assignee or participant or proposed
participant any information relating to the Company furnished to the Lender by
or on behalf of the Company.
10.7. SURVIVAL
The obligations of the Company and its Subsidiaries under Sections 3.4.
and 10.3. shall survive the repayment of the Loans and the termination of the
Credit Facility.
10.8. TABLE OF CONTENTS: DESCRIPTIVE HEADINGS
The table of contents and captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
10.9. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which need not contain the signature of more than one party and all of which
taken together shall constitute one and the same original instrument.
10.10. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR
CONFLICT OF LAW PROVISION OR RULE.
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10.11. COMPLETE AGREEMENT.
THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS COLLECTIVELY REPRESENT THE
FINAL AGREEMENT BY AND AMONG THE LENDER AND THE LOAN PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE LENDER OR THE LOAN PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE LENDER AND THE LOAN PARTIES.
10.12. ARBITRATION
ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT
NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY CREDIT
DOCUMENT, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION
AND MEDIATION SERVICES, INC. (J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH
BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL.
JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER
SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF THE
COMPANY'S DOMICILE AT THE TIME OF THIS AGREEMENT'S EXECUTION AND ADMINISTERED
BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY
PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90
DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A
SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR
UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO
(I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION
OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER BY
THE LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDER
HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF,
OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR
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(C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT
LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A
RECEIVER. THE LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
AGREEMENT. NEITHER THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES
SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN
ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
OCCASIONING RESORT TO SUCH REMEDIES.
10.13. ACKNOWLEDGMENTS
The Company hereby acknowledges that: (a) it has been advised by counsel
in the negotiation, execution and delivery of this Agreement and the other
Credit Documents to which it is a party; (b) the Lender has no fiduciary
relationship with or fiduciary duty to the Company or any of the other Loan
Parties, and the relationship between the Lender on one hand, and the Company
on the other hand, is solely that of debtor and creditor; and (c) no joint
venture exists between the Lender on one hand, and the Company on the other
hand.
10.14. CONFIDENTIALITY
Except as otherwise provided by Applicable Law, the Lender shall utilize
all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as confidential or proprietary by the
Company in accordance with the Lender's customary procedure for handling
confidential information of this nature and in accordance with safe and sound
banking practices but in any event may make disclosure: (a) to any of its
Affiliates (provided they shall agree to keep such information confidential in
accordance with the terms of this Section); (b) as reasonably required by any
BONA FIDE transferee or participant in connection with the contemplated
transfer of any of the Loans or the Lender's commitments hereunder, or
participations therein, as permitted hereunder; (c) as required by any
Governmental Authority or representative thereof or pursuant to legal process;
(d) to the Lender's independent auditors and other professional advisors
(provided they shall be notified of the confidential nature of the
information); and (e) after the happening and during the continuance of an
Event of Default, to any other Person, in connection with the exercise of the
Lender's rights hereunder or under any of the other Credit Documents.
10.15. OBLIGATIONS WITH RESPECT TO LOAN PARTIES.
The obligations of the Company to direct or prohibit the taking of certain
actions by the other Loan Parties as specified herein and in the other Credit
Documents shall be absolute and not subject to any defense the Company may have
that the Company does not control such Loan Parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement
to be duly executed as of the day and year first above written.
DOCUCORP, INC.
By:_________________________
Name:____________________
Title:___________________
NATIONSBANK, N.A.
By:_________________________
Name:____________________
Title:___________________
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