EXHIBIT 10.1
CREDIT AGREEMENT
BY AND AMONG
TECHNISOURCE, INC.,
A FLORIDA CORPORATION,
TECHNISOURCE OF FLORIDA, INC.,
A FLORIDA CORPORATION
AND
NATIONSBANK, N.A.,
A NATIONAL BANKING ASSOCIATION
DATED AS OF JANUARY 29, 1999
TABLE OF CONTENTS
PAGE
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ARTICLE I - DEFINITIONS......................................................1
1.1 Definitions........................................................1
1.2 Accounting Terms...................................................6
1.3 Other Definitional Provisions......................................7
ARTICLE II - REVOLVING CREDIT COMMITMENT.....................................7
2.1 Revolving Credit Commitment........................................7
2.2 Notice and Manner of Borrowing.....................................7
2.3 Note...............................................................8
2.4 Interest...........................................................8
2.5 Payments...........................................................9
2.6 Collateral.........................................................9
2.7 Fees...............................................................9
ARTICLE III - AVAILABILITY...................................................9
3.1 Acquisition Advance Availability. [TO BE INSERTED]................9
3.2 Working Capital Advance Availability..............................10
ARTICLE IV - GUARANTY.......................................................10
ARTICLE V - COLLATERAL......................................................10
5.1 Collateral........................................................10
5.2 Cross-Collateralization...........................................10
ARTICLE VI - CONDITIONS PRECEDENT TO BORROWING..............................10
6.1 Each Loan.........................................................11
6.2 Initial Loan......................................................11
ARTICLE VII - CONDITIONS PRECEDENT TO ACQUISITIONS..........................12
7.1 Acquisitions......................................................12
ARTICLE VIII - REPRESENTATIONS AND WARRANTIES...............................13
8.1 Corporate Existence and Power.....................................13
8.2 Corporate Authority...............................................14
8.3 Financial Condition...............................................14
8.4 Full Disclosure...................................................14
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8.5 Litigation........................................................15
8.6 Payment of Taxes..................................................15
8.7 No Adverse Restrictions or Defaults...............................15
8.8 Investment Company Act............................................15
8.9 Authorizations....................................................15
8.10 Subsidiaries and Affiliates......................................16
8.11 Title to Properties..............................................16
8.12 Use of Loans.....................................................16
8.13 ERISA............................................................17
ARTICLE IX - AFFIRMATIVE COVENANTS..........................................17
9.1 Loan Proceeds.....................................................17
9.2 Corporate Existence...............................................17
9.3 Maintenance of Business and Properties............................18
9.4 Insurance.........................................................18
9.5 Payment of Indebtedness, Taxes, Etc...............................18
9.6 Compliance with Laws..............................................18
9.7 Notice of Default.................................................19
9.8 Financial Statements, Reports, Etc................................19
9.9 Visitation Rights.................................................20
9.10 Notice of Litigation and Other Proceedings.......................20
9.11 ERISA............................................................21
9.12 Interest Coverage Ratio..........................................21
9.13 Leverage Ratio...................................................21
9.14 Ratio of Liabilities to Net Worth................................21
9.15 Books and Records................................................22
9.16 Operating Accounts...............................................22
9.17 Management.......................................................22
ARTICLE X - NEGATIVE COVENANTS..............................................22
10.1 Limitation on Liens..............................................23
10.2 Limitation on Indebtedness.......................................23
10.3 Third-Party Guaranties...........................................23
10.4 Dividends........................................................24
10.5 Mergers, Consolidations and Acquisition of Assets................24
10.6 Sale, Lease, Etc.................................................24
10.7 Investments......................................................24
10.8 Transactions with Affiliates.....................................24
10.9 Sale and Leaseback...............................................25
10.10 Purchase of Own Shares..........................................25
10.11 Transfer of Shares..............................................25
10.12 Business Operations.............................................25
10.13 Ownership of Assets.............................................25
10.14 Loans and Advances..............................................25
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10.15 Capital Expenditures............................................25
ARTICLE XI - ENVIRONMENTAL..................................................25
11.1 Hazardous and Toxic Materials Generally..........................25
ARTICLE XII - EVENTS OF DEFAULT.............................................26
12.1 Events of Default................................................26
ARTICLE XIII - MISCELLANEOUS................................................29
13.1 No Waiver, Remedies Cumulative...................................29
13.2 Survival of Representations......................................29
13.3 Expenses.........................................................29
13.4 Notices..........................................................30
13.5 Construction.....................................................30
13.6 Successors and Assigns...........................................30
13.7 Jurisdiction, Service of Process.................................30
13.8 Limit on Interest................................................31
13.9 Payment on other than Business Day...............................31
13.10 Net Payments....................................................31
13.11 Indemnification of Lender.......................................32
13.12 Counterparts....................................................32
13.13 Headings........................................................32
13.14 Severability....................................................32
13.15 Course of Dealing; Amendment; Supplemental Agreements...........33
13.16 Right of Setoff.................................................33
13.17 MANDITORY ARBITRATION...........................................33
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THIS CREDIT AGREEMENT, dated as of January 29, 1999 (the "Agreement"),
is made by and among TECHNISOURCE, INC., a Florida corporation, and TECHNISOURCE
OF FLORIDA, INC., a Florida corporation, a wholly-owned subsidiary of
Technisource, Inc. (collectively, the "Borrower"), and NATIONSBANK, N.A., a
national banking association (the "Lender").
R E C I T A L S
A. The Borrower has requested Lender to provide to the Borrower a
revolving credit facility as set forth herein.
B. The Lender is willing to provide a revolving credit facility to the
Borrower for the purposes, upon the terms, and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, and for other good and valuable consideration, it is agreed as
follows:
ARTICLE I - DEFINITIONS
1.1 DEFINITIONS.
In addition to terms defined elsewhere in this Agreement, the following
terms have the meanings indicated which meanings shall be equally applicable to
both the singular and the plural forms of such terms:
"ACCOUNTS OR ACCOUNTS RECEIVABLE" shall have the meaning ascribed to
Account in Section 679.106 of the Florida Statutes and shall include all present
and future accounts, General Intangibles, Chattel Paper, Instruments, notes,
acceptances, Documents or other rights to payment and all forms of obligations
owing at any time to the Borrower or any of its Subsidiaries arising out of the
sale or lease of Inventory or rendition of services, all rights of the Borrower
or any of its Subsidiaries earned or yet to be earned under contracts to sell or
lease Inventory or render services and all documents of any kind in respect of
any of the foregoing, and all the proceeds thereof, of every kind and nature and
in whatsoever form.
"ACQUISITION" shall mean the acquisition by Borrower of an informational
technology consulting company.
"ACQUISITION ADVANCE" shall mean a Borrowing for the purpose of financing
an Acquisition.
"ADJUSTED EBITDA" shall mean the actual earnings before Interest Expense,
taxes, depreciation and amortization of Borrower.
"ADJUSTED EBITL" shall mean the actual earnings before Interest Expense,
taxes, and Rentals of Borrower.
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"AFFILIATE" shall mean any Person which directly or indirectly through one
or more intermediaries controls, or is controlled by or is under common control
with, the Borrower. The term "control" means the possession, directly or
indirectly, of the power to cause the direction of the management and policies
of a Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGREEMENT" means this Credit Agreement, as the same may from time to time
be amended, modified, extended or renewed.
"BORROWER" has the meaning assigned to that term in the introduction to
this Agreement.
"BORROWING" shall mean the drawing down by the Borrower of a loan or loans
from the Lender on any given Borrowing Date.
"BORROWING DATE" shall mean the date as of which a Borrowing is
consummated.
"BUSINESS DAY" shall mean a day on which commercial banks are open for
business in Ft. Lauderdale, Florida.
"CAPITAL EXPENDITURES" shall mean any expenditure by a Person which is or
is required to be capitalized on its balance sheet for financial reporting
purposes in accordance with generally accepted accounting principles, including,
without limitation, the incurrence by such Person of any Capitalized Lease
Obligations, excluding any expenditures paid for with insurance proceeds.
"CAPITALIZED LEASE OBLIGATIONS" shall mean, as to any Person, the
obligations or such Person, as lessee or guarantor, to pay rent or other amounts
under a lease of (or other agreement conveying the right to use) real and/or
personal property, which obligations are required to be classified and accounted
for as a capital lease on a balance sheet of the Person under generally accepted
accounting principles.
"CHATTEL PAPER" shall have the meaning ascribed to said term in Section
679.105 of the Florida Statutes.
"CLOSING DATE" shall mean January ___, 1999.
"CODE" shall mean the Internal Revenue Code of 1986, as the same may be
from time to time hereafter modified or amended.
"COLLATERAL" has the meaning assigned to that term in Section 5.1 of this
Agreement.
"DEFAULT" shall mean any event which, with the lapse of time, the giving of
notice, or both, would become an Event of Default, provided such Default has not
been waived in writing by Lender.
"DEFAULT RATE" shall mean, for the period commencing on the date of the
occurrence of an Event of Default and terminating on the date the Event of
Default is cured, a rate equal to the maximum rate of interest permitted by law.
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"DOCUMENTS" shall have the meaning ascribed to said term in Section 679.105
of the Florida Statutes and shall include all bills of lading, airway bills,
dock warrants, dock receipts, warehouse receipts or orders for the delivery of
goods, and also any other document which in the regular course of business or
financing is treated as adequately evidencing that the person in possession of
it is entitled to receive, hold and dispose of the document and the goods it
covers.
"DOLLARS" or "$" shall mean dollars in lawful currency of the United States
of America.
"EQUIPMENT" shall have the meaning ascribed to said term in Section 679.109
of the Florida Statutes and shall include all of the Borrower's or any of its
Subsidiary's goods, machinery, equipment, fixed assets, rolling stock, fixtures,
furniture, office equipment, tools, parts and other items of personal property
of every kind and description, now owned or hereafter acquired by the Borrower
or any Subsidiary, wheresoever located, together with all additions,
attachments, accessions, parts, replacements and substitutions thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may from time to time be amended.
"EVENT OF DEFAULT" has the meaning assigned to that term in Section 12.1
hereof.
"FUNDED INDEBTEDNESS" Indebtedness on which interest is paid or payable in
accordance with the terms and conditions of such Indebtedness.
"GENERAL INTANGIBLES" shall have the meaning ascribed to said term in
Section 679.106 of the Florida Statutes and shall include, without limitation,
any personal property other than goods, Accounts, Inventory, Equipment, Chattel
Paper and Instruments, including, all franchises, licenses, leases and subleases
whereby Borrower or any Subsidiary leases to another any of Borrower's or any
Subsidiary's Inventory or Equipment, contracts, permits and authorizations of
governmental agencies and others, tradenames, trademarks, service marks,
patents, copyrights, intellectual property and all other intangible property of
the Borrower or any Subsidiary.
"INDEBTEDNESS" of any Person shall mean (a) all indebtedness for borrowed
money or for the deferred purchase price of any property or services (other than
accounts payable and accruals in the ordinary course of business) for which the
Person is liable as principal, (b) all indebtedness (excluding unaccrued finance
charges) secured by a Lien on property owned or being purchased by the Person,
whether or not such indebtedness shall have been assumed by the Person, (c) all
Capitalized Lease Obligations (excluding unaccrued finance charges) of the
Person, (d) any arrangement (commonly described as a sale-and-leaseback
transaction) with any financial institution or other lender or investor
providing for the leasing to the Person of property which at the time has been
or is to be sold or transferred by the Person to the lender or investor, or
which has been or is being acquired from another Person by the lender or
investor for the purpose of leasing the property to the Person, (e) any
contingent obligation or liability including those under Third-Party Guaranties
and letters of credit for borrowed money, and (f) all obligations of
partnerships or joint ventures in respect of which the Person is primarily or
secondarily liable as a partner or joint venturer or otherwise (provided that in
any event for purposes of determining the amount of the Indebtedness, the full
amount of such obligations, without giving effect to the
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contingent liability or contributions of other participants in the partnership
or joint venture, shall be included to the extent such Person is liable
therefor).
"INTERCOMPANY INDEBTEDNESS" shall mean Indebtedness by and between Borrower
and its Subsidiaries.
"INTEREST COVERAGE RATIO" shall mean (i) Borrower's adjusted EDITL; divided
by (ii) the sum of Interest Expense and Rentals for the Borrower.
"INTEREST EXPENSE" for any period shall mean the aggregate amount of
interest charges on all Indebtedness of the Borrower or any Subsidiary, as the
case may be (said amount not to include the netting or inclusion of Interest
Income).
"INTEREST INCOME" for any period shall mean the aggregate amount of
interest earned by Borrower or any Subsidiary, as the case may be (said amount
not to include the netting or inclusion of Interest Expense).
"INSTRUMENTS" shall have the meaning ascribed to said term in Section
679.105 of the Florida Statutes.
"INVENTORY" shall mean all goods, merchandise and other personal property
now owned or hereafter acquired by Borrower or any Subsidiary, wheresoever
located, which are held for sale or lease or are furnished under a contract of
service or are raw materials, work in process or materials used or consumed or
to be used or consumed in Borrower's or any Subsidiary's business, in all of its
forms, together with all Inventory in transit, repossessed or returned Inventory
and all Documents of title representing the Inventory, and all accessions
thereto and products thereof.
"INVESTMENTS" shall mean, with respect to any Person, all advances, loans
or extensions of credit to any other Person, all purchases or commitments to
purchase any stock, bonds, notes, debentures or other securities of any other
Person, and any investment in other Persons, including partnerships or joint
ventures.
"LENDER" has the meaning assigned to that term in the introduction to this
Agreement.
"LEVERAGE RATIO" shall mean the ratio derived by comparing Borrower's: (i)
aggregate outstanding of all Funded Indebtedness; to (ii) Adjusted EBITDA.
"LIABILITIES" shall mean, at the time any determination thereof is to be
made, the aggregate amount of all liabilities of the Borrower or any Subsidiary
determined in accordance with generally accepted accounting principles,
including, without limitation, the contingent obligation of the Borrower or any
Subsidiary to reimburse amounts outstanding under any letters of credit or under
other similar facilities.
"LIEN" shall mean a mortgage, pledge, lien, security interest, or other
charge or encumbrance or any segregation of assets or revenues or other
preferential arrangement (whether
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or not constituting a security interest) with respect to any present or future
assets, including fixtures, revenues, or rights to the receipt of income of the
Person referred to in the context in which the term is used.
"LIBOR RATE" shall mean the thirty (30) day rate of interest per annum at
which United States Dollar deposits are offered in the London Interbank Market,
fully adjusted for any reserve requirements or assessment rates established from
time to time by the Board of Governors of the Federal Reserve System and the
Federal Deposit Insurance Corporation.
"MATERIAL ADVERSE CHANGE" shall mean any material adverse change in or
material adverse effect upon the business, assets, liabilities (actual or
contingent), condition (financial or otherwise), operations, properties of
Borrower and its Subsidiaries taken as a whole.
"NET WORTH" shall mean, at the time any determination thereof is to be
made, (i) the aggregate amount of all assets of a Person, as may be properly
classified as such, under generally accepted accounting principles, less (ii)
the aggregate amount of all Liabilities of such Person, all as determined in
accordance with generally accepted accounting principles applied on a consistent
basis.
"NOTE" has the meaning assigned to that term in Section 2.3 of this
Agreement.
"PERMITTED LIENS" shall mean a mortgage, pledge, lien, security interest or
other charge or encumbrance or any segregation of assets or revenues or other
preferential arrangement (whether or not constituting a security interest and
including, without limitation, any conditional sale or other title retention
agreement, and the filing of, or agreement to give, any financing statement
under the Uniform Commercial Code or comparable law of any jurisdiction) with
respect to any present or future assets, including fixtures, revenues or rights
to the receipt of income of the Person referred to in the context in which the
term is used which are permitted to exist under this Agreement pursuant to
Section 10.1 of this Agreement.
"PERSON" shall mean any natural person, corporation, unincorporated
organization, trust, joint-stock company, joint venture, association, company,
partnership or government, or any agency or political subdivision of any
government.
"PLAN" shall mean any employee benefit plan which is subject to the
provisions of Title IV of ERISA and which is maintained in whole or in part for
employees of the Borrower or any of its Subsidiaries.
"RELATED DOCUMENTS" shall mean the Note, the Security Agreement, the
UCC-1's and any and all other documents statements, and opinions described in
the Closing Documents Index attached hereto as "Exhibit D".
"RENTALS" of any Person shall mean, as of any date, the aggregate amount of
the obligations and liabilities of such Person to make payments under all
leases, subleases and similar arrangements for the use of real, personal or
mixed property, other than Capitalized Lease Obligations.
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"REVOLVING CREDIT COMMITMENT" shall mean the obligation of the Lender to
make a Revolving Credit Loan or Revolving Credit Loans to the Borrower in an
aggregate principal amount not to exceed Twenty-five Million Dollars
($25,000,000.00) pursuant and subject to Section 2.1(a) hereof.
"REVOLVING CREDIT LOAN" OR "REVOLVING CREDIT LOANS" shall mean the
principal amount and the aggregate principal amount, respectively, advanced by
the Lender as a loan or loans to the Borrower under Article II, or, where the
context so requires, the amount thereof then outstanding or any portion thereof.
"REVOLVING CREDIT MATURITY DATE" shall mean the date the Revolving Credit
Commitment will mature, which for the purposes of this Agreement is April 30,
2000.
"SUBSIDIARY" shall mean any Person in which the Borrower may own, directly
or indirectly, an equity interest of more than fifty percent (50%), or which may
effectively be controlled by the Borrower, during the term of this Agreement, as
well as all Subsidiaries and other Persons from time to time included in the
consolidated financial statements of the Borrower.
"TERMINATION EVENT" shall mean a "reportable event" as defined in Section
4043(b) of ERISA or the filing of a notice of intent to terminate under Section
4041 of ERISA.
"THIRD PARTY GUARANTY" shall mean, as to any Person, all liabilities or
obligations of such Person in respect of any Indebtedness or other obligations
of others guaranteed, directly or indirectly, in any manner by such Person, or
in effect guaranteed, directly or indirectly, by such Person through an
agreement, contingent or otherwise, to purchase such Indebtedness or obligation,
or to purchase or sell property, or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of the Indebtedness or
obligation or to assure the owner of such Indebtedness or obligation against
loss, or to supply funds to or in any manner invest in the debtor, or otherwise.
"WORKING CAPITAL ADVANCES" shall mean a Borrowing for the purpose of
financing Borrower's purchases of equipment, leasehold improvements and working
capital requirements.
1.2 ACCOUNTING TERMS.
Accounting terms not specifically defined in this Agreement shall have
the meaning given to them under accounting principles and practices generally
accepted in the United States, applied on a consistent basis with the financial
statements referred to in Section 9.8 hereof, and shall be determined both as to
classification of items and amounts in accordance therewith. All Subsidiaries
shall be consolidated to the fullest extent permitted by such principles and
practices, and any accounting terms, financial covenants, and financial
statements referred to herein shall be determined and prepared on the basis of
such consolidation.
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1.3 OTHER DEFINITIONAL PROVISIONS.
The words "hereof," "herein," and "hereunder" and words of similar
import when used in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement, and section, subsection, and exhibit
references refer to this Agreement unless otherwise specified.
ARTICLE II - REVOLVING CREDIT COMMITMENT
2.1 REVOLVING CREDIT COMMITMENT.
(a) The Lender agrees, subject to the terms and conditions of this
Agreement, to make Revolving Credit Loans in United States Dollars to the
Borrower for a period terminating on the earlier of the Revolving Credit
Maturity Date or the termination in full of the Revolving Credit Commitment of
the Lender pursuant to Article XII hereof, at such times and in such amounts as
the Borrower shall request in accordance with the provisions of this Agreement,
provided that the aggregate principal amount of the Revolving Credit Loans
outstanding at any one time shall not exceed the Revolving Credit Commitment.
Within the limits of the Revolving Credit Commitment, and subject to the
provisions of this Agreement, the Borrower may borrow, repay, and reborrow from
time to time for a period from the date hereof to and including the earlier of
the Revolving Credit Maturity Date or the termination in full of the Revolving
Credit Commitment of the Lender pursuant to Article XII hereof. The Revolving
Credit Commitment shall have a sublimit in the amount of Fifteen Million Dollars
($15,000,000.00) to finance working capital needs of the Borrower (the "Working
Capital Sublimit"), and a sublimit in the amount of Ten Million Dollars
($10,000,000.00) for Acquisition purposes (the "Acquisition Sublimit").
(b) Any Revolving Credit Loan made under this Article II and, to the
extent permitted by law, interest thereon which is not paid when due (whether at
stated maturity, by acceleration, or otherwise), after giving effect to any
applicable cure period, shall bear interest at the Default Rate (computed on the
actual number of days elapsed over a 360-day year). In addition, any judgment
obtained by Lender in connection with any amounts due under this Agreement or
the Note shall also bear interest at the Default Rate.
(c) Borrower shall arrange its borrowings under the Revolving Credit
Loan such that the aggregate outstanding principal balance of the Revolving
Credit Loans shall not exceed One Thousand Dollars ($1,000.00) for thirty (30)
consecutive days during the term of the Revolving Credit Loan.
2.2 NOTICE AND MANNER OF BORROWING.
(a) Borrower shall give written notice (or telephonic notice, promptly
confirmed in writing) to the Lender in substantially the form attached hereto as
Exhibit "E," prior to 2:00 p.m., Ft. Lauderdale time, on each proposed Borrowing
Date.
(b) Each Borrowing under this Article II shall be made at the office of
the Lender, at its address as set forth opposite its signature at the end of
this Agreement, by crediting
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the Borrower's general deposit account with the Lender in the amount thereof. No
advances of any Borrowing will be made to any party other than the Borrower.
2.3 NOTE.
(a) The Revolving Credit Loans made by the Lender under this Article II
shall be evidenced by, and repaid with interest in accordance with, a single
Master Revolving Promissory Note executed by the Borrower in favor of the Lender
in substantially the form of Exhibit "A" attached hereto and made a part hereof,
with appropriate insertions, in the amount of the Revolving Credit Commitment,
dated the initial Borrowing Date and payable to the order of the Lender ( as
amended, extended, renewed and or restated from time to time, the "Note").
(b) Each Revolving Credit Loan evidenced by the Note and all prepayments
of the principal thereof shall be evidenced by the records of the Lender.
(c) Although the stated amount of the Note shall be equal to the
Revolving Credit Commitment, the Note shall be enforceable, with respect to the
Borrower's obligation to pay the principal amount thereof, only to the extent of
the unpaid principal amount of the Revolving Credit Commitment at the time
evidenced thereby. Interest on the Note shall be payable on, and only for the
period during which, the principal amount of the Loan evidenced thereby is
outstanding.
2.4 INTEREST.
(a) The principal balance outstanding from time to time under the Note
shall bear interest at a fluctuating rate per annum equal to one hundred forty
(140) basis points in excess of the LIBOR Rate. The interest rate under the Note
shall change on the fifth (5th) day of each month (each an "Interest Rate Change
Date"), based upon the LIBOR Rate in effect on each Interest Rate Change Date,
and shall be the rate in effect until the next Interest Rate Change Date. The
Note shall initially bear interest from the Closing Date until the first
Interest Rate Change Date, at a rate equal to one hundred forty (140) basis
points in excess of the LIBOR Rate in effect on the Closing Date.
(b) Interest on the principal balance from time to time outstanding
under the Note shall be due and payable monthly on the fifth (5th) day of each
month commencing the fifth (5th) day of the first (1st) month following the
Borrowing of a Revolving Credit Loan. If such payment day is not a Business Day,
the Business Day immediately preceding such date shall be the date on which
interest shall be due and payable. Interest under the Note shall be charged only
on the Revolving Credit Loans advanced and shall be computed from the date of
such advance to the date of repayment.
(c) All interest under the Note shall be computed on a daily basis,
based on a 360-day year. In no event shall interest be due at a rate in excess
of the highest lawful rate in effect from time to time. It is not the intention
of the parties hereto to make any agreement which shall be violative of the laws
of the State of Florida or the United States of America relating to usury. In no
event shall Borrower pay or Lender accept or charge any interest which,
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together with any other charges upon the principal or any portion thereof,
howsoever computed, after taking into account any requirement for commitment and
facility fees, shall exceed the maximum lawful rate of interest allowable under
the laws of the State of Florida or the United States of America from time to
time. Should any provision of this Agreement or any existing or future notes,
loan agreements or any other agreements between the parties be construed to
require the payment of interest which,together with any other charges upon the
principal or any portion thereof, after taking into account any requirement for
commitment and facility fees, shall exceed such maximum lawful rate of interest,
then any such excess shall be applied against the remaining principal balance.
(d) Any principal and, to the extent permitted by law, interest which is
not paid when due under the Note (whether at stated maturity, by acceleration or
otherwise) and which constitutes an Event of Default shall bear interest at a
rate per annum (computed as aforesaid) equal to the Default Rate.
2.5 PAYMENTS.
All payments of principal and interest under the Note shall be to the
Lender at its address as set forth opposite its signature at the end of this
Agreement or as otherwise directed by Lender, in immediately available funds.
2.6 COLLATERAL.
All obligations of the Borrower under the Revolving Credit Commitment
shall be secured by the Collateral set forth in Article V of this Agreement.
2.7 FEES.
In connection with the Revolving Credit Commitment Borrower shall pay to
Lender the following fees:
(a) COMMITMENT FEE: A commitment fee equal to Sixty-two Thousand Five
Hundred Dollars ($62,500.00) due and payable on or before the Closing Date.
(b) UNUSED LINE FEE: An unused line fee computed at a rate equal to
fifteen (15) basis points multiplied by the average daily unused portion of the
Revolving Credit Commitment for the immediately preceding calendar quarter,
payable in arrears within fifteen (15) days of the end of each calendar quarter,
commencing on the first (1st) of such date to occur after the Closing Date.
ARTICLE III - AVAILABILITY
3.1 ACQUISITION ADVANCE AVAILABILITY.
Acquisition Advances under the Revolving Credit Commitment shall be
limited to, in the aggregate outstanding at any time, an amount equal to the
Acquisition Sublimit, and all
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Acquisition Advances shall be subject to the conditions precedent set forth in
Section 7.1 of this Agreement.
3.2 WORKING CAPITAL ADVANCE AVAILABILITY.
Working Capital Advances under the Revolving Credit Commitment shall be
limited to, in the aggregate outstanding at any time, an amount equal to the
Working Capital Sublimit.
ARTICLE IV - GUARANTY
None.
ARTICLE V - COLLATERAL
5.1 COLLATERAL.
In order to secure the full and timely payment of the Revolving Credit
Loans outstanding under the Revolving Credit Commitment, as well as any
renewals, extensions or modifications thereof, and to secure performance of all
obligations of Borrower to Lender, however and whenever created, Borrower agrees
that it will execute or cause to be executed and delivered to Lender a security
agreement in favor of Lender (the "Security Agreement") and a UCC-1 financing
statement in favor of Lender (the "UCC-1"), in form and substance acceptable to
Lender, granting to Lender a first priority perfected security interest subject
to no other liens or encumbrances except for Permitted Liens or as may be
otherwise set forth in the Security Agreement or this Agreement, in the
following, together with the proceeds and products thereof: (1) all Borrower's
and each Subsidiary's presently existing and hereafter created Accounts or
Accounts Receivable; (2) all Borrower's and each Subsidiary's presently owned
and hereafter acquired Inventory; (3) all Borrower's and each Subsidiary's
presently owned and hereafter acquired Equipment; and (4) all Borrower's and
each Subsidiary's presently owned and hereafter acquired Chattel Paper,
Documents, Instruments and General Intangibles.
All of the above-described collateral is hereafter referred to as "Collateral".
5.2 CROSS-COLLATERALIZATION.
The Collateral shall secure all Indebtedness, howsoever or whenever
incurred, whether direct or indirect, contingent or absolute, of Borrower or any
Subsidiary to Lender.
ARTICLE VI - CONDITIONS PRECEDENT TO BORROWING
The Lender shall not be obligated to make any Revolving Credit Loan to
the Borrower hereunder unless, except as specifically provided for herein, the
following conditions precedent shall have been satisfied in the sole opinion of
the Lender:
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6.1 EACH LOAN.
The obligation of the Lender to make each Revolving Credit Loan
pursuant to Article II herein is subject to the condition precedent that: (i)
the Borrower shall have delivered to the Lender the notice of Borrowing provided
for in Section 2.2 hereof; and (ii) all representations and warranties set forth
in Article XIII herein shall be true and correct in all material respects as of
the date thereof.
6.2 INITIAL LOAN.
The obligation of the Lender to enter into this Agreement and make the
initial Revolving Credit Loans pursuant to Article II herein is subject to the
following additional conditions precedent, each of which shall have been met,
performed or delivered to Lender by the initial Borrowing Date:
(a) NOTE. The Note, duly executed and completed in the form of Exhibit
"A " attached hereto and made a part hereof.
(b) OPINION OF COUNSEL. A legal opinion reasonably acceptable to the
Lender and its counsel.
(c) INSURANCE. Evidence that all of the Borrower's insurable
properties, are insured as required by Section 9.4 of this Agreement. All
insurance policies covering the Collateral shall name the Lender as "Loss Payee"
and shall grant the Lender at least thirty (30) days prior written notice of
intended policy cancellation, non-renewal or material modification.
(d) CORPORATE DOCUMENTS. Certified copies of the Articles of
Incorporation and Bylaws of each Borrower and all amendments thereto, together
with a Certificate of Good Standing of each Borrower and proof of qualification
of each to do business in each jurisdiction in which its business is conducted.
(e) CERTIFICATION OF NO ADVERSE CHANGE. Evidence or certification from
Borrower that, from the date of the latest financial information furnished to
Lender by Borrower there has been no Material Adverse Change.
(f) SUPPORTING DOCUMENTS. This Agreement, each of the Related
Documents and each of the certificates and any and all other documents described
in the Closing Documents Index attached hereto as Exhibit "D" and made a part
hereof.
(g) LIEN SEARCH. Completion and satisfaction of a lien search
conducted in each jurisdiction where each Borrower or its assets are located.
(h) DUE DILIGENCE. Completion and satisfaction of due diligence
analysis and review with respect to the assets, liabilities, businesses,
operations, conditions, and prospects of each Borrower, as applicable,
including, but not limited to: (i) a NationsBank Business Credit Audit; and (ii)
a review of Borrower's fiscal year 1999 financial projections.
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(i) GOVERNMENT REGULATIONS. The proceeds of advances under the
Revolving Credit Commitment will be expended in compliance with all applicable
governmental and regulatory laws, rules and regulations (including without
limitation Federal Reserve Regulation U).
(j) FEES. Lender shall have been paid all fees and expenses payable on
or prior to the due date thereof in accordance with the terms hereof.
(k) SOLVENCY. A certificate of Borrower's chief executive officer or
chief financial officer confirming the solvency of Borrower (after consummation
of the transactions contemplated hereby) and satisfaction of all other
conditions precedent to the initial borrowing.
(l) CONSENTS. All requisite third parties shall have approved or
consented to the transactions contemplated hereby to the extent required, and
there shall be no governmental or judicial action, actual or threatened, that
has or would have a reasonable likelihood of restraining, preventing or imposing
burdensome conditions on the transactions contemplated hereby.
(m) OTHER. All other documents, agreements or instruments required in
connection with this Agreement.
ARTICLE VII - CONDITIONS PRECEDENT TO ACQUISITIONS
7.1 ACQUISITIONS FUNDED WITH ACQUISITION ADVANCES.
Borrower acknowledges and agrees that Lender's approval shall be
required for all Acquisitions. Lender's approval of Acquisitions to be funded in
whole or in part with Acquisition Advances shall be based upon the following
conditions having been satisfied:
(a) Satisfactory review and approval by Lender of the purchase
documentation related to each proposed Acquisition, which documentation shall
include but not be limited to subordination of any seller's notes or
Indebtedness to any seller entered into with respect to such Acquisition.
(b) Delivery and satisfactory review and approval by Lender of a
minimum of two (2) years of compiled historical financial statements prepared on
an accrual basis of the proposed Acquisition to the extent such Acquisition was
in operation for two (2) fiscal years.
(c) Satisfactory review of Borrower's pro forma consolidated balance
sheet giving effect to the proposed Acquisition.
(d) Satisfactory review of Borrower's consolidated and consolidating
financial projections on a pro forma basis giving effect to the proposed
Acquisition.
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(e) Evidence satisfactory to Lender that the proposed Acquisition will
not cause a default under this Agreement including, without limitation, all
representations and warranties, covenants and Events of Default.
(f) Any other information, financial or otherwise, that may be
reasonably requested by Lender.
(g) Borrower shall have obtained all required third party consents and
approvals.
(h) Execution of definitive collateral documentation.
(i) Copy of Borrower's "due diligence" package with respect to each
proposed Acquisition provided to management and board of directors of Borrower.
(j) A litigation search of each proposed Acquisition acceptable to
Lender in its reasonable discretion.
In no event will Lender approve an Acquisition: (i) which is opposed by the
selling entity's board of directors or controlling shareholders; or (ii) which
is not in the business of informational technology consulting.
7.2 ACQUISITIONS WHICH ARE NOT FUNDED WITH ACQUISITION ADVANCES.
Borrower acknowledges and agrees that Lender's prior written approval
shall be required for all Acquisitions that are not funded with Acquisition
Advances. Lender's approval of such Acquisitions shall not be unreasonably
withheld; provided, however, that Lender shall not be required to approve any
such Acquisition: (i) which is opposed by the selling entity's board of
directors or controlling shareholders; (ii) which is not in the business of
informational technology consulting; (iii) for which the Borrower does not
deliver to the Lender pro forma financial statements which evidence that the
Borrower and its subsidiaries (including the company being acquired pursuant to
the Acquisition) will be in compliance with all financial covenants set forth in
Sections 9.12, 9.13 and 9.14 of this Agreement after giving effect to such
Acquisition; or (iv) when an Event of Default has occurred and is continuing
under this Agreement.
ARTICLE VIII - REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make
the Revolving Credit Loans provided for herein, the Borrower and each
Subsidiary, as applicable, make the following representations and warranties to
the Lender, all of which shall survive the execution and delivery of this
Agreement and the Note:
8.1 CORPORATE EXISTENCE AND POWER.
Each Borrower and each Subsidiary is a corporation duly incorporated,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation and is duly
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qualified or licensed to transact business in all places where such
qualification or license is necessary. Each Borrower has the corporate power to
make and perform this Agreement, the Note and the applicable Related Documents,
and this Agreement, the Note and the applicable Related Documents, when duly
executed and delivered, will constitute the legal, valid, and binding
obligations of each Borrower, enforceable substantially in accordance with their
respective terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, or other laws affecting creditors' rights generally.
8.2 CORPORATE AUTHORITY.
The making and performance by each Borrower of this Agreement, the Note
and the applicable Related Documents, and any additional documents contemplated
to be executed in connection herewith have been duly authorized by all necessary
corporate action of each Borrower, and do not and will not violate any provision
of law or regulation, or any writ, order, or decree of any court, governmental
commission, bureau, or other administrative agency or public regulatory body or
regulatory authority or agency or any provision of the articles or certificate
of incorporation or Bylaws of either Borrower, and do not and will not, with the
passage of time or the giving of notice, result in a breach of, or constitute a
default or require any consent under, or result in the creation of any Lien,
charge or encumbrance upon any property or assets of the Borrower, pursuant to
any instrument or agreement to which either Borrower is a party or by which
either Borrower or any of its respective properties may be bound or affected.
8.3 FINANCIAL CONDITION.
The consolidated balance sheet of the Borrower as of September 30,
1998, and statement of shareholder's equity of the Borrower for the nine (9)
month period ending on that date were prepared in accordance with generally
accepted accounting principles consistently applied on a generally recognized
consistent basis of accounting, as applicable, are complete, correct and fairly
present the financial condition on a consolidated basis of the Borrower and each
of its Subsidiaries as of those dates and the results of Borrower's and each
Subsidiary's operations on a consolidated basis for the periods ending on those
dates. Other than as disclosed by those financial statements or as listed on
Schedule II hereto, the Borrower and each of its Subsidiaries did not have any
direct or contingent obligations or liabilities which would result in a Material
Adverse Change. Since September 30, 1998, there has been no Material Adverse
Change.
8.4 FULL DISCLOSURE.
The financial statements referred to in Section 8.3 do not, nor does
this Agreement, or any written statement furnished by the Borrower or any of its
Subsidiaries to the Lender in connection with the negotiation of this Agreement
and the Revolving Credit Loans, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading.
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8.5 LITIGATION.
There are no suits or proceedings pending, or to the knowledge of the
Borrower, threatened before any court or by or before any governmental or
regulatory authority, commission, bureau, or agency or public regulatory body
against or affecting the Borrower or any of its Subsidiaries which, if adversely
determined, would result in a Material Adverse Change.
8.6 PAYMENT OF TAXES.
The Borrower has filed or caused to be filed, or has obtained
extensions to file, all federal, state, and local tax returns which are required
to be filed, and has paid or caused to be paid, or, with respect to the Borrower
and each of its Subsidiaries, have reserved on its books amounts sufficient for
the payment of, all taxes as shown on said returns or on any assessment received
by it, to the extent that the taxes have become due, except as otherwise
permitted by the provisions hereof. No tax liens have been filed and the
Borrower and each of the Subsidiaries have not been notified of, or otherwise
has knowledge of, any claim being asserted with respect to any such taxes, fees,
or other charges which are reasonably likely to result in a Material Adverse
Change.
8.7 NO ADVERSE RESTRICTIONS OR DEFAULTS.
Neither the Borrower nor any Subsidiary is a party to any agreement or
instrument or subject to any court order or judgment, governmental decree,
charter, or other corporate or other restriction which is materially adverse to
its ability to conduct its business as currently conducted. Neither the Borrower
nor any Subsidiary is in default in the performance, observance, or fulfillment
of any of the obligations, covenants, or conditions contained in any agreement
or instrument to which it is a party or by which the Borrower or any of its
Subsidiaries or their respective properties may be bound or affected, or under
any law, regulation, decree, order, or the like, which is materially adverse to
their respective ability to conduct their business(es) as currently conducted.
8.8 INVESTMENT COMPANY ACT.
The Borrower is not an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
8.9 AUTHORIZATIONS.
All authorizations, consents, approvals, and licenses required under
applicable law or regulation for the ownership or operation of the property
owned or operated by the Borrower or any of its Subsidiaries for the conduct of
business in which the Borrower nor any of its Subsidiaries is engaged, have been
duly issued and are in full force and effect, and neither the Borrower nor any
of its Subsidiaries is in default under any order, decree, ruling, regulation,
closing agreement, or other decision or instrument of any governmental
commission, bureau, or other administrative agency or public regulatory body
having jurisdiction over the Borrower or
15
any of its Subsidiaries, which default would result in a Material Adverse
Change. No approval, consent, or authorization of or filing or registration with
any governmental commission, bureau, or other regulatory authority or agency is
required with respect to the execution, delivery, or performance of this
Agreement, the Note or the Related Documents.
8.10 SUBSIDIARIES AND AFFILIATES.
As of the date of execution of this Agreement, the Borrower has no
Subsidiaries and no Affiliates other than as disclosed in Schedule I hereto. All
the capital stock and evidence of the equity rights held by the Borrower or a
Subsidiary in each Subsidiary hereafter created or acquired will be owned by the
Borrower and/or another Subsidiary, beneficially and of record, free and clear
of all Liens.
8.11 TITLE TO PROPERTIES.
The Borrower and each of its Subsidiaries, as applicable, have good and
marketable fee title to all real property, and good title to all other property
and assets, reflected in the latest balance sheet of the Borrower referred to in
Section 8.3 or purported to have been acquired by the Borrower or any of its
Subsidiaries subsequent to such date, except property and assets sold or
otherwise disposed of subsequent to such date in the ordinary course of
business. All property and assets of any kind of the Borrower or any of its
Subsidiaries are free from any Liens except for Permitted Liens. The Borrower
and each of its Subsidiaries enjoys peaceful and undisturbed possession under
all of the leases under which it is operating, none of which contains any
unusual provisions that would result in a Material Adverse Change. All leases
pertaining to real property are valid, subsisting, and in full force and effect
and the Borrower and its Subsidiaries, as applicable, have not received notice
of default thereunder, and the Borrower and its Subsidiaries have no leases for
personal property except as disclosed to Lender on the Borrower's financial
statements. The Borrower and each of its Subsidiaries possess all patents,
patent rights or licenses, trademarks, trademark rights, trade names, trade name
rights, and copyrights which are required to conduct its business as now
conducted without known conflict with the rights of others.
8.12 USE OF LOANS.
The proceeds of the Revolving Line of Credit Commitment shall be used
by the Borrower exclusively for: (i) Acquisition Advances; and (ii) Working
Capital Advances. The Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of the Revolving Credit Loans hereunder will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock. If requested by the Lender the Borrower will furnish
to the Lender in connection with the Revolving Credit Loans hereunder a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in said Regulation.
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8.13 ERISA.
(a) None of the Plans or the trusts created thereunder has engaged in a
prohibited transaction which could subject any such Plan or trust to a material
tax or penalty on prohibited transactions imposed under Code Section 4975 or
ERISA.
(b) None of the Plans or the trusts created thereunder has been
terminated; nor has any such Plan incurred any liability to the Pension Benefit
Guaranty Corporation, other than for required insurance premiums which have been
paid when due, or incurred any accumulated funding deficiency; nor has there
been any reportable event, or other event or condition, which presents a risk of
termination of any such Plan by the Pension Benefit Guaranty Corporation.
(c) The present value of all accrued benefits under the Plans did not,
as of the most recent valuation date, exceed the then current value of the
assets of Plans allocable to such accrued benefits.
(d) Neither the Borrower nor any Subsidiary has been a party to or has
any employees who are covered by any multi-employer pension or benefit plan.
(e) As used in this Section 8.13, the terms "accumulated funding
deficiency," "reportable event" and accrued benefits" shall have the respective
meanings assigned to them in ERISA, and the term "prohibited transaction" shall
have the meaning assigned to it in Code Section 4975 and ERISA.
ARTICLE IX - AFFIRMATIVE COVENANTS
The Borrower and each Subsidiary, as applicable, covenants and agrees
that from the Closing Date and until payment in full of the principal of and
interest on the Note and the termination in full of the Revolving Credit
Commitment unless the Lender shall otherwise consent in writing, the Borrower
will and, to the extent that Borrower may from time to time have any
Subsidiaries, will cause each of its Subsidiaries to:
9.1 LOAN PROCEEDS.
Use the proceeds of the Revolving Credit Loans only for the purposes
set forth in Section 8.12 and furnish the Lender with all evidence that it may
reasonably require with respect to such use.
9.2 CORPORATE EXISTENCE.
Do or cause to be done all things necessary to maintain, preserve, and
keep in full force and effect its existence in the jurisdiction of its
incorporation, and qualify and remain qualified in each jurisdiction where
qualification is necessary in view of its business operations or the ownership
of its properties except for the discontinuation or cessation of any Subsidiary
in the ordinary course of business and which does not result in a Material
Adverse Change.
17
9.3 MAINTENANCE OF BUSINESS AND PROPERTIES.
At all times maintain, preserve, and protect all rights, privileges,
patents, franchises, and trade names necessary in the conduct of its business
and preserve all the remainder of its property used or useful in the conduct of
its business and keep the same in good repair, working order, and condition, and
from time to time make, or cause to be made, all needful and proper repairs,
replacements, betterments, and improvements thereto so that the business carried
on in connection therewith may be conducted properly at all times.
9.4 INSURANCE.
Insure and keep insured with reputable insurance companies and in
amounts consistent with the coverages customarily maintained by other companies
in the same or similar business and location, all insurable property owned by it
against loss or damage from such hazards or risks, including fire; insure and
keep insured employers' and public liability risks in good and responsible
insurance companies of the types and in amounts consistent with the coverages
customarily maintained by other companies in the same or similar business and
location; and upon request of the Lender furnish a certificate setting forth in
summary form the nature and extent of the insurance maintained by the Borrower
pursuant to this Section 9.4. Each insurance policy maintained by the Borrower
pursuant to this Section 9.4 shall include a provision that the insurer will
provide the Lender with thirty (30) days notice prior to the termination or
expiration of such policy. With respect to all insurance policies maintained by
Borrower covering the Collateral, said policies shall name the Lender as "Loss
Payee" and shall grant Lender at least thirty (30) days notice of intended
policy cancellation, non-renewal or material modification.
9.5 PAYMENT OF INDEBTEDNESS, TAXES, ETC.
Pay all of its Indebtedness and obligations before the same shall
become in default and comply in all material respects with all other agreements,
indentures, mortgages, or documents binding on it; and pay and discharge or
cause to be paid and discharged promptly all taxes, assessments, and
governmental charges or levies imposed upon it or upon its property or upon any
part thereof, before the same shall become in default, as well as all lawful
claims for labor, materials, and supplies or otherwise which, if unpaid, might
become a Lien upon such properties or any part thereof; provided, however, that
neither the Borrower nor any of its Subsidiaries shall be required to pay and
discharge or to cause to be paid and discharged any tax, assessment, charge,
levy, or claim so long as the validity thereof shall be contested in good faith
by appropriate proceedings and the Borrower or Subsidiary , as the case may be,
shall have set aside on its books adequate reserves with respect to any tax,
assessment, charge, levy, or claim, so contested.
9.6 COMPLIANCE WITH LAWS.
Duly observe, conform and comply with all laws, decisions, judgments,
rules, regulations, and orders of all governmental authorities relative to the
conduct of Borrower's business, and to its properties and assets, except those
being contested in good faith by
18
appropriate proceedings diligently pursued; and obtain, maintain, and keep in
full force and effect, all governmental licenses, authorizations, consents, and
permits necessary to the proper conduct of the business of the Borrower.
9.7 NOTICE OF DEFAULT.
Upon the occurrence of any Default or Event of Default which management
of the Borrower or any Subsidiary has knowledge of, promptly furnish written
notice thereof to the Lender specifying the nature and period of existence
thereof and the action which the Borrower is taking or proposes to take with
respect thereto.
9.8 FINANCIAL STATEMENTS, REPORTS, ETC.
In the case of the Borrower, furnish to the Lender:
(a) within ninety (90) days after the end of each fiscal year of the
Borrower (being December 31), audited consolidated and consolidating balance
sheet and statement of operations cash flows, and statement of shareholders
equity together with supporting schedules of the Borrower, all in reasonable
detail, setting forth in each case the corresponding figures for the preceding
fiscal year, prepared in accordance with generally accepted accounting
principles, consistently applied, by a firm of independent certified public
accountants of recognized standing selected by the Borrower and acceptable to
the Lender, showing the financial condition of the Borrower and its Subsidiaries
at the close of such year and the results of operations of the Borrower and its
Subsidiaries during such year ;
(b) within forty-five (45) days after the end of each of the first
three quarters of each fiscal year of the Borrower, similar financial statements
to those referred to in subparagraph (a) above, internally prepared by the
Borrower, said financial statements to be unaudited and without footnotes
thereto, and certified by the President or Chief Financial Officer of the
Borrower, such consolidated balance sheet to be as of the end of each quarter
and the statement of operations and statement of cash flows to be for the period
from the beginning of the fiscal year to the end of such quarter;
(c) within forty-five (45) days after the end of each quarter of each
fiscal year of the Borrower, an accounts receivable aging report, certified by
the President or Chief Financial Officer of the Borrower;
(d) concurrently with the delivery of the financial statements required
in Subsection (a) and each quarterly financial statement submitted in Subsection
(b) hereinabove, a Borrower's Certificate (substantially in the form attached
hereto as Exhibit "B") signed by the President or the Chief Financial Officer of
the Borrower stating that they have no knowledge of any event which constitutes
a Default or Event of Default, accompanied by a report setting forth
computations showing, in detail satisfactory to the Lender, whether the Borrower
was in compliance with its obligations under Sections 9.12, 9.13, and 9.14;
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(e) prior to any request for an Acquisition Advance, an Acquisition
Advance Certificate (substantially in the form attached hereto as Exhibit "C");
(f) as soon as available, but in no event later than ten (10) days
after the filing thereof with any securities exchange or regulatory agency,
including, without limitation, the Securities and Exchange Commission, copies of
all regular, periodic and special reports, and all registration statements which
Borrower files with said exchange or agency, and all other material reports and
other statements (other than routine reports and other statements prepared in
the ordinary course of business that would not result in a Material Adverse
Change) that the Borrower or any Subsidiary may render to or file with any
governmental authority;
(g) any management letter received by Borrower from its independent
certified public accountants; and
(h) promptly, from time to time, such other information regarding the
assets, operations, business, affairs, and financial condition of the Borrower
and any of its Subsidiaries as the Lender may reasonably request.
All financial statements required to be furnished to the Lender under
this Section 9.8 shall be prepared in accordance with generally accepted
accounting principles applied on a basis consistent with the accounting
practices of the Borrower reflected in its financial statements referred to in
Section 8.3 hereof, or to the extent such treatment has changed, with a
reconciliation thereof.
9.9 VISITATION RIGHTS.
Permit any authorized representative of the Lender from time to time,
upon reasonable notice to the Borrower and during normal business hours, to
examine and copy the records, books, papers and financial reports of, and visit
and inspect the properties of, the Borrower or any of its Subsidiaries, and to
discuss the affairs and finances of the Borrower or any of its Subsidiaries,
with any of their respective officers, directors, and independent public
accountants, and in each case at the expense of the Borrower; provided, however,
that the cost for such audits and examinations by Lender shall not exceed Five
Thousand Dollars ($5,000.00) in the aggregate in any fiscal year of Borrower
unless an Event of Default has occurred under this Agreement.
9.10 NOTICE OF LITIGATION AND OTHER PROCEEDINGS.
Give prompt notice in writing to the Lender of the commencement of (a)
all litigation which, if adversely determined, is reasonably likely to result in
a Material Adverse Change; (b) all other litigation involving a claim against
the Borrower or any of its Subsidiaries for Twenty-Five Thousand Dollars
($25,000.00), or more per occurrence or One Hundred Thousand Dollars
($100,000.00) or more in the aggregate, in excess of applicable insurance
coverage; and (c) any citation, order, decree, ruling, or decision issued by, or
any denial of any application or petition to, or any proceedings before any
governmental commission, bureau, or other administrative agency or public
regulatory body against or affecting the Borrower or any of
20
its Subsidiaries or any property of the Borrower or any Subsidiary, which is
reasonably likely to result in a Material Adverse Change.
9.11 ERISA.
Furnish to the Lender:
(a) As soon as available and in any event within fifteen (15) days
after Borrower or any of its Subsidiaries knows or has reason to know that any
Termination Event has occurred, a statement of a senior officer of the Borrower
describing the Termination Event and the action which the Borrower or any of its
Subsidiaries proposes to take so that the Termination Event shall not be
continuing;
(b) Promptly after receipt of request therefor by the Lender, copies
of each annual report filed by the Borrower or any of its Subsidiaries pursuant
to Section 104 of ERISA with respect to each Plan (including, to the extent
required by Section 103 of ERISA, the related financial and actuarial statements
and opinions and other supporting statements, certifications, schedules and
information referred to in said Section 103) and each annual report, if any,
required to be filed with respect to each Plan under Section 4065 of ERISA;
(c) Promptly after receipt thereof by the Borrower or any of its
Subsidiaries from the Pension Benefit Guaranty Corporation, copies of each
notice received by such party of the Pension Benefit Guaranty Corporation's
intention to terminate any Plan or to have a Trustee appointed to administer any
Plan; and
(d) Promptly after such request, any other documents and information
relating to any Plan that the Lender may reasonably request from time to time.
9.12 INTEREST COVERAGE RATIO.
At all times, Borrower shall maintain an Interest Coverage Ratio equal
to or exceeding 2.0 to 1.0.
9.13 LEVERAGE RATIO.
At all times, Borrower shall maintain a Leverage Ratio not to exceed
3.0 to 1.0.
9.14 RATIO OF LIABILITIES TO NET WORTH.
At all times, Borrower shall maintain a ratio of total liabilities to
Tangible Net Worth not to exceed 1.5 to 1.0. For purposes of this Agreement,
"Tangible Net Worth" shall mean Net Worth less capitalized organization and
development costs, capitalized interest, debt discount and expense, goodwill,
patents, trademarks, copyrights, franchises, licenses and such other assets as
are properly classified as "intangible assets" under generally accepted
accounting principles.
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Each of the covenants set forth in Section 9.12 and 9.13 are to be
calculated on a rolling four quarter basis, utilizing the consolidated financial
statements of the Borrower and its Subsidiaries for the immediately preceding
four (4) fiscal quarters. The rolling four quarter calculation will include the
previous four quarters of financial performance for any acquired entity or
assets on an accrual basis. In no instance shall the Borrower be subject to
financial covenants in its other financing and leasing arrangements that are
more restrictive than those set forth above. The covenant contained in Section
9.14 shall be calculated and tested quarterly.
9.15 BOOKS AND RECORDS.
With respect to Borrower, keep and maintain full and accurate accounts
and records of its operations according to generally accepted accounting
principles consistently applied, and will permit Lender or any of their
designated officers, employees, agents and representatives, at Lender's expense
and upon reasonable notice, to have access thereto, and to make audits, and to
inspect and otherwise check its properties, real, personal and mixed, and to
arrange for verification of Accounts Receivable under reasonable procedures,
directly with accounts debtors or by other methods.
9.16 OPERATING ACCOUNTS.
With respect to Borrower, maintain its primary depository bank accounts
with Lender.
9.17 MANAGEMENT.
With respect to Borrower, maintain Xxxxxx X. Xxxxxxx and Xxxxx X.
Xxxxxxxxx as active members of the day-to-day management team of Borrower.
9.18 YEAR 2000 COMPLIANCE.
Borrower and its Subsidiaries shall take all necessary and appropriate
steps to ascertain the extent of, and to quantify and successfully address,
business and financial risks facing the Borrower and its Subsidiaries as a
result of failure to become Year 2000 compliant (that is, that computer
applications, imbedded microchips and other systems will be able to perform
date-sensitive functions prior to and after December 31, 1999) including risks
resulting from the failure of key vendors and suppliers of the Borrower and its
Subsidiaries to become Year 2000 compliant, and Borrower's and its subsidiaries'
material computer applications and those of its key vendors and suppliers shall,
on a timely basis, adequately address the Year 2000 problem in all material
respects.
ARTICLE X - NEGATIVE COVENANTS
The Borrower and each Subsidiary covenants and agrees that from the
Closing Date and until payment in full of the principal of and interest on the
Note and the termination in full of the Revolving Credit Commitment, unless the
Lender shall otherwise consent in writing,
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the Borrower will not, nor will it, to the extent that it may from time to time
have any Subsidiaries, permit any Subsidiary to:
10.1 LIMITATION ON LIENS.
Create or suffer to exist any Lien upon, or transfer or assignment of,
any of its property or revenues or assets now owned or hereafter acquired to
secure any Indebtedness or obligations, or enter into any arrangement for the
acquisition of any property subject to conditional sale agreements or leases or
other title retention agreements; excluding, however, from the operation of this
covenant: (a) deposits or pledges to secure payment of workers' compensation,
unemployment insurance, old age pensions, or other social security; (b) deposits
or pledges to secure performance of bids, tenders, contracts (other than
contracts for the payment of money) or leases, public or statutory obligations,
surety or appeal bonds, or other deposits or pledges for purposes of like
general nature in the ordinary course of business; (c) Liens for property taxes
not delinquent and Liens for taxes which in good faith are being contested or
litigated; (d) mechanic's, carrier's, workmen's, repairmen's, landlord's or
other like liens arising in the ordinary course of business securing obligations
which are not overdue for a period of thirty (30) days or more or which are in
good faith being contested or litigated; and (e) existing Liens reflected in the
financial statements referred to in Section 8.3 hereof, including any notes
thereto, or additional existing Liens listed in Schedule II attached hereto and
made a part hereof.
10.2 LIMITATION ON INDEBTEDNESS.
Incur, create, assume, or permit to exist any Indebtedness, except:
(a) the Note and any other Indebtedness of the Borrower or any of its
Subsidiaries to the Lender;
(b) Existing Indebtedness reflected in the financial statements
referred to in Section 8.3 hereof , including any notes thereto, or additional
existing Indebtedness listed in Schedule II attached hereto and made a part
hereof; and
(c) Indebtedness in favor of parties other than Lender incurred in
connection with Acquisitions, but only if the holders and obligees of such
Indebtedness subordinate such Indebtedness to the Indebtedness of Borrower to
Lender, pursuant to subordination agreements in form and content acceptable to
Lender and its counsel.
10.3 THIRD-PARTY GUARANTIES.
Be or become liable in respect of any Third-Party Guaranty, except for:
(a) the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; (b) Third-Party
Guaranties by the Borrower of Indebtedness of its Subsidiaries in favor of the
Lender or otherwise permitted to the extent the Indebtedness is permitted in
Section 10.2 hereof; (c) performance bonds entered into by the Borrower or its
Subsidiaries to secure the obligations of itself or its Subsidiaries; and (d)
Third-Party Guaranties
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of the Borrower and its Subsidiaries existing as of the date of execution
hereof, as shown on Schedule II hereto.
10.4 DIVIDENDS.
Declare or pay any cash dividend or authorize or make any other cash
distribution on any stock of the Borrower, whether now or hereafter outstanding,
or make, or permit any Subsidiary to make, any payment on account of the
purchase, acquisition, redemption or other retirement of any shares of such
stock.
10.5 MERGERS, CONSOLIDATIONS AND ACQUISITION OF ASSETS.
Liquidate, dissolve, whether voluntary or involuntarily, merge or
consolidate with or acquire any corporation or all or substantially all of the
assets of any Person (except for Acquisitions as permitted herein), or dispose
of all or substantially all of the assets of any Person.
10.6 SALE, LEASE, ETC.
Sell, lease, assign, transfer or otherwise dispose of any of its assets
or revenues (other than obsolete or worn-out personal property, or personal
property or real estate not used or useful in its business) whether now owned or
hereafter acquired, other than in the ordinary course of business, including,
without limitation, the stock of any Subsidiary, or sell, assign or discount any
of its accounts receivable or any promissory note held by it, with or without
recourse, other than the discount of such notes or accounts receivable in the
ordinary course of business for collection.
10.7 INVESTMENTS.
Make or suffer to exist any Investments, except that this prohibition
shall not apply to (i) the purchase of direct obligations of the government of
the United States of America, or any agency thereof, or obligations
unconditionally guaranteed by the United States of America; (ii) certificates of
deposit of any bank organized or licensed to conduct a banking business under
the laws of the United States or any State thereof; (iii) Investments in
commercial paper which, at the time of acquisition by the Borrower or any
Subsidiary, is accorded the highest rating category by a nationally recognized
credit rating agency; and (iv) other Investments of the Borrower existing as of
the date of execution hereof as shown on Schedule II hereof.
10.8 TRANSACTIONS WITH AFFILIATES.
Enter into or be a party to, any transaction or arrangement with any
Affiliate (including, without limitation, the purchase from, sale to or exchange
of property with, or the rendering of any service by or for, any Affiliate),
except in the ordinary course of, and pursuant to the reasonable requirements of
the Borrower's or any Subsidiary's business, and in connection with Acquisitions
and upon fair and reasonable terms no less favorable to the Borrower or any
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Subsidiary than would be obtained in a comparable arm's length transaction with
a Person other than an Affiliate.
10.9 SALE AND LEASEBACK.
After the sale of any property or assets owned by the Borrower or any
Subsidiary, lease such property or substantially identical property.
10.10 PURCHASE OF OWN SHARES.
Other than redemptions in connection with indemnification claims
pursuant to any Acquisition, purchase, retire or redeem any shares of its own
stock. Notwithstanding the foregoing, provided that (i) no Event of Default has
occurred under this Agreement, and (ii) no default will occur under Sections
9.12, 9.13 or 9.14 of this Agreement as a result thereof, Borrower shall be
entitled to purchase, retire or redeem shares of its own stock in an aggregate
amount not to exceed One Million Dollars ($1,000,000.00).
10.11 TRANSFER OF SHARES.
Transfer or allow the transfer of any Subsidiary's shares of capital
stock.
10.12 BUSINESS OPERATIONS.
Change the nature of its business.
10.13 OWNERSHIP OF ASSETS.
With respect to Borrower, own any assets or conduct any business other
than: (i) existing lines of business; (ii) Acquisitions permitted herein; or
(iii) the ownership of Subsidiaries.
10.14 LOANS AND ADVANCES.
Make loans or advances to any insiders, or Affiliates (excluding
intercompany Indebtedness which nets to zero on Borrower's consolidated
financial statements).
10.15 CAPITAL EXPENDITURES.
Permit capital expenditures to exceed Four Million Dollars
($4,000,000.00) in the aggregate each fiscal year.
ARTICLE XI - ENVIRONMENTAL
11.1 HAZARDOUS AND TOXIC MATERIALS GENERALLY.
(a) The Borrower expressly represents to the Lender that to the best
of its knowledge, there has been no complaint, order, citation, or notice with
regard to air emissions,
25
Hazardous Discharges (as hereinafter defined), or other environmental, health,
or safety matters affecting any of the premises owned or operated by the
Borrower or any of its Subsidiaries (the "Premises") or the businesses therein
conducted which have not been fully satisfied and discharged, and there has been
no spill, discharge, release, or cleanup of any hazardous or toxic waste or
substance or any petroleum product or pesticide ("Hazardous Substances") at any
of the Premises, including, without limitation, into or upon any of their
respective soils, surface water, ground water, or the improvements located
thereon (a "Hazardous Discharge"), and, accordingly, such properties are clean
of all such wastes and substances. The Borrower expressly covenants and agrees
that to the extent the Premises are used for the handling, storage,
transportation, or disposal of any Hazardous Substance, it shall (i) implement
and maintain a program or system to minimize the likelihood and effect of any
Hazardous Discharge, (ii) use its best efforts to ensure that such use will be
in accordance with all federal, state, and local environmental laws, rules, and
regulations which apply to the handling, storage, transportation, or disposal of
any Hazardous Substance and (iii) obtain any and all necessary permits,
licenses, and approvals with respect to such use.
(b) The Borrower agrees to indemnify and hold the Lender harmless from
and against any claims, losses, damages, liabilities (including, without
limitation, all foreseeable and unforeseeable consequential damages), penalties,
fines, charges, interest, judgments, administrative and judicial proceedings,
voluntary or involuntary, remedial actions of any kind, public or private,
incurred by the Lender as a result of any past, present, or future use,
handling, storage, transportation or disposal of any Hazardous Substance by the
Borrower or any of its Subsidiaries or any other user or operator of any of the
Premises; including, without limitation, all costs and expenses incurred in
connection therewith (including, without limitation, reasonable attorneys' fees
and expenses (including those for appellate proceedings and court costs). The
foregoing indemnity shall survive the repayment of the Revolving Credit Loans
and the termination of this Agreement; provided that the Borrower shall not be
liable to the Lender for its own gross negligence or willful misconduct nor
shall the Borrower be liable for any claims which are barred by any applicable
statute of limitations.
(c) Subject to the provisions of this Article XI, the Borrower and its
Subsidiaries shall comply with any and all federal, state, or local
environmental laws, rules, or regulations which apply to the Premises or to any
users or operators of any establishments at the Premises.
ARTICLE XII - EVENTS OF DEFAULT
12.1 EVENTS OF DEFAULT.
If any one of the following "EVENTS OF DEFAULT" shall occur and shall
not have been remedied:
(a) Any representation or warranty made by the Borrower in connection
with this Agreement, or any Revolving Credit Loan hereunder, or in any
certificate or report furnished by the Borrower hereunder shall prove to have
been incorrect in any material respect; or
26
(b) The Borrower shall fail to pay, when due, any principal of or
interest on the Note, or to pay when due any other sum payable under this
Agreement; or
(c) The Borrower shall default in the performance of any agreement,
covenant or obligation contained herein; or
(d) Final judgment for the payment of money in an amount in excess of
applicable insurance coverage shall be rendered against the Borrower or any of
its Subsidiaries, and the same shall remain undischarged for a period of thirty
(30) days, during which period execution shall not effectively be stayed; or
(e) The Borrower shall voluntarily terminate operations or the Borrower
or any Subsidiary shall (1) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of the
Borrower or Subsidiary, as the case may be, or of all or of a substantial part
of the assets of the Borrower or Subsidiary, as the case may be, (2) admit in
writing its inability, or be generally unable, to pay its debts as the debts
become due, (3) make a general assignment for the benefit of its creditors, (4)
commence a voluntary case under the United States Bankruptcy Code (as now or
hereafter in effect), (5) file a petition seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, (6) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Bankruptcy Code, or (7) take any corporate action
for the purpose of effecting any of the foregoing; or
(f) The Borrower shall fail to furnish to the Lender notice of default
in accordance with Section 9.7 hereof, within ten (10) days after any such
Default or Event of Default becomes known to the President or Chief Financial
Officer of the Borrower, whether or not notification to the Borrower is
furnished by the Lender, unless such Default or Event of Default shall be cured
prior to the expiration of such ten (10) day period; or
(g) Without its application, approval or consent, a proceeding shall be
commenced, in any court of competent jurisdiction, seeking in respect of the
Borrower or any Subsidiary, the liquidation, reorganization, dissolution,
winding-up, or composition or readjustment of debt, the appointment of a
trustee, receiver, liquidator or the like of the Borrower or Subsidiary, as the
case may be, or of all or any substantial part of the assets of the Borrower or
Subsidiary, as the case may be, or other like relief in respect of the Borrower
or Subsidiary, as the case may be, under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of debts
unless such proceeding is contested in good faith by the Borrower or Subsidiary;
and, if the proceeding is being contested in good faith by the Borrower or
Subsidiary, as the case may be, the same shall continue undismissed, or unstayed
and in effect, for any period of sixty (60) consecutive days, or an order for
relief against the Borrower or any Subsidiary shall be entered in any
involuntary case under the Bankruptcy Code; or
(h) The Borrower or any of its Subsidiaries shall (1) default in the
payment of principal or interest, on any Indebtedness to Lender (other than the
Notes) beyond the period of
27
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; (2) default in the payment of principal or interest on
any Indebtedness to any other lender beyond the applicable period of grace
pertaining thereto, if any, provided in the instrument or agreement under which
such Indebtedness was created; or (3) default in the observance or performance
of any other agreement contained in any Indebtedness referred to in (1) or (2)
above or in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur, the effect of which default or other
event is to cause, or permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause, such
Indebtedness to become due prior to its stated maturity; provided, however, that
no Event of Default shall occur under this Article XII so long as the Borrower
or any of its Subsidiaries shall contest in good faith its obligations under the
Indebtedness described in this Article XII by appropriate proceedings and the
Borrower or Subsidiary, as the case may be, shall have set aside on its books
adequate reserves with respect to any amount so contested; or
(i) A Termination Event has occurred; or a trustee shall be appointed to
administer any Plan or Plans under Section 4042 of ERISA; or the Pension Benefit
Guaranty Corporation shall institute proceedings to terminate, or to have a
trustee appointed to administer, any Plan or Plans, and the proceeding shall not
be dismissed within thirty (30) days; or a voluntary notice of intent to
terminate is filed under Section 4041 of ERISA which would, in the opinion of
the Lender, result in a Material Adverse Change; or, with respect to any Plan as
to which the Borrower or any Subsidiary may have any liability, there shall
exist a deficiency in the Plan assets available to satisfy the benefits
guaranteeable under ERISA with respect to the Plan which is material to the
financial condition of the Borrower and such Subsidiary taken as a whole, and
(1) steps are undertaken to terminate the Plan or (2) the Plan is terminated or
(3) any Reportable Event which presents a material risk of termination with
respect to the Plan shall occur; or
(j) Failure by Borrower or any of its Subsidiaries to conduct its
business in the ordinary course consistent with past practices and in accordance
with all local, state and Federal laws and regulations governing the conduct of
Borrower's or any of Subsidiary's businesses, which failure is reasonably likely
to result in a Material Adverse Change; or
(k) Dissolution of Borrower or failure of the Borrower to maintain its
corporate existence except for the discontinuation or cessation of any
Subsidiary's existence in the ordinary course of business and which does not
result in a Material Adverse Change; or
(l) Any Material Adverse Change shall occur; or
(m) This Agreement, the Note, the Related Documents or any other
security document in favor of Lender, or any provisions thereof, shall be
invalidated or deemed unenforceable in any material respect; or
(n) Any default shall occur under the Note, this Agreement or any of the
Related Documents which default continues beyond any applicable grace or cure
period contained therein;
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THEREUPON, in the case of any such event the Lender may at its option: (i)
immediately terminate the Revolving Credit Commitment of the Lender hereunder,
and/or (ii) immediately declare the principal of, and interest accrued on, the
Note forthwith due and payable, whereupon the same shall become forthwith due
and payable; and the principal of, and interest accrued on, the Note shall
become immediately due and payable, both as to principal and interest, without
presentment, demand, protest, or other notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the Note to the
contrary notwithstanding; and (iii) exercise any and all rights and remedies
available to Lender under this Agreement, the Note, the Related Documents, the
Uniform Commercial Code in effect in the State of Florida, or any other
document, instrument or agreement executed and delivered in connection with this
Agreement, and all rights and remedies available to Lender under any other
applicable law.
ARTICLE XIII - MISCELLANEOUS
13.1 NO WAIVER, REMEDIES CUMULATIVE.
No failure on the part of the Lender to exercise and no delay in
exercising any right granted hereunder or in the Notes shall operate as a waiver
thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and are not exclusive of any
remedies provided by law.
13.2 SURVIVAL OF REPRESENTATIONS.
All representations and warranties made herein shall survive the making
of the Revolving Credit Loans hereunder and the delivery of the Notes.
13.3 EXPENSES.
Whether or not any of the Revolving Credit Loans herein provided for
shall be made, the Borrower agrees to pay on demand all reasonable costs and
expenses of the Lender (as more fully set forth on the Expense and Disbursement
Statement of even date herewith executed by Borrower and Lender) in connection
with the preparation, printing, execution, and delivery of this Agreement, the
Related Documents, the Note, and the other instruments and documents to be
delivered hereunder and thereunder, including the reasonable fees and
out-of-pocket expenses of legal counsel for the Lender, with respect thereto,
and the reasonable fees of independent public accountants, and other outside
experts retained by the Lender in connection with the enforcement of this
Agreement, the Related Documents, the Note, and the other instruments and
documents to be delivered hereunder and thereunder. In addition, the Borrower
shall pay any and all stamp and other taxes payable or determined to be payable
in connection with the execution and delivery of this Agreement, the Notes and
the instruments and documents to be delivered hereunder and thereunder, and
agrees to save the Lender harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omitting to pay such taxes.
All obligations provided for in this Section 13.3 shall survive any termination
of this Agreement.
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13.4 NOTICES.
Except as otherwise provided for in this Agreement, any notice or other
communication hereunder to any party hereto shall be delivered by hand,
registered or certified mail, postage prepaid return receipt requested, in the
United States mail or overnight delivery by a nationally recognized overnight
courier service ("Overnight Courier") and shall be deemed to have been given or
made on the third (3rd) Business Day after the deposit thereof in the mail, or
shall be deemed to have been given or made on the second (2nd) Business Day
after deposit thereof with an Overnight Courier, or when received if delivered
by hand, addressed to the party at its address specified next to its signature
hereto (or at any other address that the party may hereafter specify to the
other parties in writing), except that notices by the Borrower under Section 2.2
hereof shall not be effective until received.
13.5 CONSTRUCTION.
This Agreement, the Related Documents, and the Note shall be deemed
contracts made under the law of the State of Florida and shall be governed by
and construed in accordance with the law of said state.
13.6 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the benefit of
the Borrower and the Lender, and their respective successors and assigns;
provided, that the Borrower may not assign any of its rights hereunder without
the prior written consent of the Lender. The Lender may, without the consent of
the Borrower, or any other Person, assign, negotiate, hypothecate, or grant
participations in this Agreement or in any of its rights and security under this
Agreement and each of the other documents contemplated to be executed in
conjunction herewith; provided, however, the Lender agrees that in the event of
all such assignments, negotiations, hypothecations, or participations the Lender
shall remain as the holder of the majority amount of the Revolving Credit Loans
and as administrative agent hereunder and shall not assign its obligations to
administer the Revolving Credit Loans. The Borrower shall accord full
recognition to any such assignment, and all rights and remedies of the Lender in
connection with the interest so assigned shall be as fully enforceable by such
assignee as they were by the Lender before such assignment. In connection with
any proposed assignment, the Lender may disclose to the proposed assignee any
information that the Borrower is required to deliver to the Lender pursuant to
this Agreement.
13.7 JURISDICTION, SERVICE OF PROCESS.
(a) Any suit, action, or proceeding against the Borrower or any
Subsidiary with respect to this Agreement, the Note, the Related Documents or
any judgment entered by any court in respect of any thereof may be brought in
the courts of the State of Florida or in the U.S. District Court for the
Southern District of Florida as the Lender (in its sole discretion) may elect,
and the Borrower and each Subsidiary hereby accepts the nonexclusive
jurisdiction of those courts for the purpose of any suit, action, or proceeding.
30
(b) In addition, the Borrower and each Subsidiary hereby irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any suit, action, or proceeding
arising out of or relating to this Agreement, the Note, the Related Documents or
any judgment entered by any court in respect of any thereof brought in Broward
or Miami-Dade County, Florida, and hereby further irrevocably waives any claim
that any suit, action, or proceeding brought in Broward or Miami-Dade County,
Florida has been brought in an inconvenient forum. The Borrower and each
Subsidiary further agrees that if any such suit, action, or proceeding is
pending in more than one jurisdiction that the Lender's selection of the forum
shall be binding on the Borrower and each Subsidiary.
13.8 LIMIT ON INTEREST.
Anything herein, in the Related Documents, or in the Notes to the
contrary notwithstanding, the obligations of the Borrower under this Agreement,
the Related Documents, and the Note to the Lender shall be subject to the
limitation that payments of interest to the Lender shall not be required to the
extent that receipt of any such payment by the Lender would be contrary to
provisions of law applicable to the Lender (if any) which limit the maximum rate
of interest which may be charged or collected by the Lender; provided, however,
that nothing herein shall be construed to limit the Lender to presently existing
maximum rates of interest, if an increased interest rate is hereafter permitted
by reason of applicable federal or state legislation. If by the terms of this
Agreement, the Related Documents, or the Note, the Borrower is at any time
required or obligated to pay interest in excess of such maximum rate, the rate
of interest payable hereunder and thereunder shall be computed at such maximum
rate and the portion of all prior interest payments in excess of such maximum
rate shall be applied to and shall be deemed to have been payments in reduction
of the principal balance of this Agreement and the Note.
13.9 PAYMENT ON OTHER THAN BUSINESS DAY.
Except as otherwise provided for in this Agreement, should any payment
required by this Agreement become due and payable other than on a Business Day,
the maturity thereof shall be the immediately preceding Business Day.
13.10 NET PAYMENTS.
All payments by the Borrower under this Agreement and the Note shall be
made without setoff or counterclaim and in such amounts as may be necessary in
order that all payments, after deduction or withholding for or on account of any
present or future taxes, levies, imposts, duties, or other charges of whatsoever
nature imposed by any government or any political subdivision or taxing
authority thereof (collectively, the "Taxes"), shall not be less than the
amounts otherwise specified to be paid under this Agreement and the Note.
Notwithstanding anything to the contrary contained in this Section 13.10, the
Borrower shall not be liable for the payment of any tax on or measured by net
income imposed on the Lender pursuant to the income tax laws of the United
States or any of the United States or any political subdivision thereof. The
Borrower shall pay all Taxes when due (and indemnify the Lender against any
liability therefor) and shall promptly (and in any event not later than 30 days
thereafter) furnish to the Lender any
31
certificates, receipts, and other documents which may be required (in the
judgment of the Lender) to establish any tax credit to which the Lender may be
entitled. The obligations of the Borrower under this Section 13.10 shall survive
the termination of this Agreement and the repayment of the Revolving Credit
Loans, but such obligations shall terminate as to any claim or liability for
Taxes for which the Borrower is responsible pursuant to this Section 13.10 on
the same date that any such claim or liability for Taxes is barred by any
applicable statute of limitations.
13.11 INDEMNIFICATION OF LENDER.
Borrower and each Subsidiary hereby jointly and severally indemnify and
hold harmless, release and forever discharge Lender, its agents, servants,
employees, officers, directors, affiliates, attorneys, successors and assigns
from all damages, losses, claims, demands, liabilities, obligations, actions and
causes of action whatsoever which may exist as of the date hereof or arise
hereafter or which may be presently known or unknown and which may be of any
nature and extent whatsoever which may be brought by third parties on account of
or in any way directly or indirectly related to, concerning, arising out of, or
founded upon this Agreement, the Related Documents and any agreement, document
or instrument executed or to be executed in conjunction therewith or in
connection with any and all transactions contemplated thereby. This indemnity
and release on the part of the Borrower and the Subsidiary is contractual and
not merely a recital. The foregoing indemnity shall survive the repayment of the
Revolving Credit Loans and the termination of this Agreement; provided that
neither the Borrower nor any Subsidiary shall indemnify or be liable to the
Lender for its own gross negligence or willful misconduct nor shall the Borrower
or any Subsidiary be liable for any claims which are barred by any applicable
statute of limitations.
13.12 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original and all of which when taken
together shall constitute but one and the same instrument.
13.13 HEADINGS.
The headings and the Table of Contents of this Agreement are for
convenience only and are not to affect the construction of or to be taken into
account in interpreting the substance of this Agreement.
13.14 SEVERABILITY.
In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision had never been
contained herein.
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13.15 COURSE OF DEALING; AMENDMENT; SUPPLEMENTAL AGREEMENTS.
No course of dealing between the Lender and the Borrower shall be
effective to amend, modify, or change any provision of this Agreement. This
Agreement may not be amended, modified, or changed in any respect except by an
agreement in writing signed by the Lender and the Borrower. The Lender and the
Borrower may, subject to the provisions of this Section 13.15, from time to
time, enter into written agreements supplemental hereto for the purpose of
adding any provisions to this Agreement or changing in any manner the rights and
obligations of the Lender and the Borrower hereunder. Any such supplemental
agreement in writing shall be binding upon the Lender and the Borrower.
13.16 RIGHT OF SETOFF.
Upon the occurrence and during the continuance of any Event of Default,
the Lender is hereby authorized at any time and from time to time, without
notice to the Borrower (any such notice being expressly waived by the Borrower),
to set off and apply any and all deposits (general or special, time or demand,
professional or final) at any time held and any other indebtedness owing by the
Lender to or for the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this agreement or
the note, or any other instrument executed in connection with this agreement or
the notes or constituting security therefor, irrespective of whether or not the
Lender shall have made demand under this agreement or the note and although such
obligations may be unmatured. The Lender agrees promptly to notify the Borrower
after any such setoff and application, provided that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
of the Lender under this Section 13.16 are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which the
Lender may have.
13.17 CONFIDENTIALITY.
Lender agrees to keep any information delivered or made available by
Borrower to Lender confidential from anyone other than persons employed or
retained by Lender who are expected to become engaged in documenting,
negotiating, auditing, evaluating, approving, structuring or administering the
Revolving Credit Loan; provided, that nothing herein shall prevent the Lender
from disclosing such information (i) upon the order of, or to, any court or
administrative or regulatory agency or entity, (ii) which has been publicly
disclosed other than as a result of a disclosure by Lender, (iii) in connection
with any litigation to which the Lender or Borrower is a party, (iv) to the
extent required in connection with the exercise of any right or remedy
hereunder, (v) to Lender's legal counsel, accountants and independent auditors,
(vi) to Lender's affiliates, or (vii) to any participant in the Revolving Credit
Loan or any assignee of all or part of Lender's rights hereunder.
13.18 MANDITORY ARBITRATION.
ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING
BUT NOT LIMITED TO THOSE ARISING OUT OF
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OR RELATING TO THIS AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS,
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 BORROWER'S DOMICILE AT TIME OF THIS AGREEMENT'S EXECUTION AND ADMINISTERED
BY ENDISPUTE, INC. D/B/A J.A.M.S./ENDISPUTE WHO WILL APPOINT AN ARBITRATOR; IF
J.A.M.S./ENDISPUTE IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN NINETY (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
SIXTY (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 LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF LENDER (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 (C) TO OBTAIN
FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
INJUNCTIVE RELIEF OR THE APPOINTMENT OF A RECEIVER. 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 THIS 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
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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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year first above written.
[BORROWER]:
TECHNISOURCE, INC.,
a Florida corporation
By: /s/ XXXXXX X. XXXXXXX
----------------------------
Xxxxxx X. Xxxxxxx, President
0000 X. Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X.Xxxxxxx, President
TECHNISOURCE OF FLORIDA, INC.,
a Florida corporation
By: /s/ XXXXXX X. XXXXXXX
----------------------------
Xxxxxx X. Xxxxxxx, President
0000 X. Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, President
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[LENDER]:
NATIONSBANK, N.A., A NATIONAL
BANKING ASSOCIATION
By: /s/ XXXXXXX X. XXXXXXX
--------------------------
Xxxxxxx X. Xxxxxxx,
Senior Vice President
Xxx Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx,
Senior Vice President
[ACKNOWLEDGMENTS APPEAR ON NEXT PAGE]
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