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EXHIBIT 10.11
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of October 25, 1996, by
and between DATA PROCESSING RESOURCES CORPORATION, a California
corporation ("Borrower"), and XXXXX FARGO BANK, NATIONAL
ASSOCIATION ("Bank").
RECITAL
Borrower has requested from Bank the credit accommodations
described below (each, a "Credit" and collectively, the
"Credits"), and Bank has agreed to provide the Credits to
Borrower on the terms and conditions contained herein.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bank and Borrower
hereby agree as follows:
ARTICLE I
THE CREDITS
SECTION 1.1. LINE OF CREDIT.
(a) Line of Credit. Subject to the terms and conditions of
this Agreement, Bank hereby agrees to make advances to Borrower
from time to time up to and including October 30, 1998, not to
exceed at any time the aggregate principal amount of Ten Million
Dollars ($10,000,000.00) ("Line of Credit"), the proceeds of
which shall be used for short-term working capital requirements.
Borrower's obligation to repay advances under the Line of Credit
shall be evidenced by a promissory note substantially in the form
of Exhibit A attached hereto ("Line of Credit Note"), all terms
of which are incorporated herein by this reference.
(b) Borrowing and Repayment. Borrower may from time to
time during the term of the Line of Credit borrow, partially or
wholly repay its outstanding borrowings, and reborrow, subject to
all of the limitations, terms and conditions contained herein or
in the Line of Credit Note; provided however, that the total
outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as
set forth above. Notwithstanding the foregoing, Borrower shall
maintain a zero balance on advances under the Line of Credit for
a period of at least thirty (30) consecutive days during each 12-
month period commencing October 25, 1996.
SECTION 1.2. LOAN LIMIT.
(a) Loan Limit. Subject to the terms and conditions of
this Agreement, Bank hereby agrees to make advances to Borrower
from time to time up to and including October 30, 1998, not to
exceed the aggregate principal amount of Ten Million Dollars
($10,000,000.00) ("Loan Limit"), the proceeds of which shall be
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used to finance Acquisitions (as such term is defined below).
Borrower's obligation to repay each advance under the Loan Limit
shall be evidenced by a promissory note executed at the time such
advance is made, substantially in the form of Exhibit B attached
hereto (each, a "Loan Limit Note" and collectively, "Loan Limit
Notes"), all terms of which are incorporated herein by this
reference.
The term "Acquisition" means the purchase by Borrower, Newco
(as such term is defined below) or any other Subsidiary (as such
term is defined below) which is either owned directly by Borrower
or by a wholly-owned Subsidiary of Borrower, of the assets,
business, stock, partnership interests, or membership interests,
as the case may be, of any Target (as such term is defined
below), or the acquisition by Borrower, Newco, or any other
Subsidiary which is either directly owned by Borrower or by a
wholly-owned Subsidiary of Borrower, of any Target which is a
corporation, partnership, or limited liability company, through a
merger or consolidation in which the surviving entity is
Borrower, Newco or any other Subsidiary which is either directly
owned by Borrower or by a wholly-owned Subsidiary of Borrower, as
the case may be; provided, however, that the purpose of each
such Acquisition shall be to acquire a business which is in
substantially the same line of business as Borrower.
"Newco" means, if applicable, the Subsidiary to be formed by
Borrower to participate in an Acquisition, which Subsidiary shall
either be directly owned by Borrower or by a wholly-owned
Subsidiary of Borrower.
"Subsidiary" means any corporation, the majority of whose
shares having ordinary voting power for the selection of
directors (other than securities having such power only by reason
of the happening of a contingency) are at any applicable time
owned, directly or indirectly, by Borrower and/or by one or more
Subsidiaries, and shall include each Newco.
"Target" means the Person (as such term is defined below)
whose stock, assets or business shall be acquired by, merged into
or with, or consolidated with Borrower, Newco or any other
Subsidiary in an Acquisition.
"Person" means any natural person, corporation, limited
partnership, general partnership, joint venture, association,
company, trust, business or other organization, whether or not
legal entities.
(b)Limitation on Borrowings. Each advance under the Loan
Limit shall be subject to Bank's prior written approval of the
proposed Acquisition and source of repayment of the advance,
which approval shall not be unreasonably withheld. No approval by
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Bank of a proposed Acquisition shall be deemed to constitute a
waiver by Bank of its rights with respect to any default or event
of default hereunder arising from or otherwise relating to the
proposed Acquisition, regardless of whether Bank knows or should
know that such Acquisition would, or is likely to, give rise to
such default or event of default. Bank will not consider approval
of any advance under the Loan Limit unless and until Bank is
provided with all of the following (collectively, "Evaluation
Material"):
(i) A copy of the proposed acquisition agreement, and
available information as to the Target and its business,
including a summary of market conditions, debt to be assumed
by Borrower, Newco or any Subsidiary, and the total purchase
price for the acquisition;
(ii) A balance sheet, income statement and statement of
cash flows as of the end of each of the immediately three
preceding fiscal years of the Target or of the business to
be acquired, as appropriate;
(iii) A pro forma income statement and balance sheet
giving effect to the proposed Acquisition as of the date of
the most recent balance sheet required from Borrower under
Section 4.3 hereof;
(iv) Pro forma financial statement projections setting
forth, on a consolidated basis, (A) the estimated financial
position of Borrower as of the date of the Acquisition; (B)
the estimated financial position of Borrower as of (1) the
last day of each of the eight (8) full fiscal quarters
immediately following the date of the Acquisition, and (2)
the last day of each of the three full four-fiscal quarter
periods immediately following the aforementioned eight (8)
fiscal quarter period; and (C) the projected operating
results of Borrower subsequent to the Acquisition for the
same periods set forth in clause (B) above; and
(v)Such other documents and information as Bank may
reasonably require to enable Bank to evaluate the proposed
Acquisition and the effect such Acquisition may have on
Borrower's ability to meet its obligations hereunder.
Without limiting Bank's discretion to grant or deny approval
of any advance under the Loan Limit, Borrower acknowledges
that, as a condition to granting such approval, Bank may
require, among other things, amendments to the terms and
conditions of this Credit Agreement or any other Loan
Document (as such term is defined herein), an opinion of
counsel acceptable to Bank with respect to such matters as
Bank may require (including without limitation, an opinion
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that the Acquisition will comply with or be exempted from
any applicable bulk sales law and that the Acquisition does
not violate any federal or state laws or agreements which
may be applicable to Borrower or any Subsidiary),
subordination agreements, inter-creditor agreements, and
other agreements from Borrower and other parties to the
proposed Acquisition as Bank may deem necessary or
appropriate.
(c) Borrowing and Repayment. Borrower may from time
to time during the term of the Loan Limit borrow and partially or
wholly repay its outstanding borrowings, and reborrow, subject to
all the limitations, terms and conditions contained herein or in
the Loan Limit Note; provided however, that Borrower shall repay
each advance under the Loan Limit as required herein; and
provided further, that the total outstanding borrowings under the
Loan Limit shall not at any time exceed the maximum principal
amount available thereunder, as set forth above. The principal
amount of each advance under the Loan Limit shall be amortized
over a term of five (5) years and shall be repaid in equal
successive monthly installments, at the times and in the amounts
set forth in the Loan Limit Note executed by Borrower to evidence
such advance.
(d) Prepayment. Borrower may prepay principal on any
advance under the Loan Limit solely in accordance with the
provisions of the Loan Limit Note executed in connection
therewith.
SECTION 1.3. INTEREST/FEES.
(a) Interest. The outstanding principal balance of the
Line of Credit shall bear interest at the applicable rate of
interest set forth in the Line of Credit Note. The outstanding
principal balance of each advance under the Loan Limit shall bear
interest at the applicable rate of interest set forth in the
applicable Loan Limit Note.
(b) Computation and Payment. Interest shall be computed on
the basis of a 360-day year, actual days elapsed. Interest shall
be payable at the times and place set forth in the Line of Credit
Note and each Loan Limit Note (collectively, the "Notes").
(c) Unused Commitment Fee (Loan Limit). Borrower shall pay
to Bank a non-refundable fee equal to one-half of one percent
(0.50%) per annum (calculated on the basis of a 360-day year,
actual days elapsed) on the average daily unused amount of the
Loan Limit, which fee shall be calculated on a quarterly basis by
Bank and shall be due and payable by Borrower in arrears within
fifteen (15) days after each billing is sent by Bank; provided,
however, that such fee shall be reduced to one-quarter of one
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percent (0.25%) per annum with respect to any period for which
the Tier I Interest Rate (as such term is defined in the Line of
Credit Note) is applicable.
(d)Unused Commitment Fee (Line of Credit). Borrower shall
pay to Bank a non-refundable fee equal to one-half of one percent
(0.50%) per annum (computed on the basis of a 360-day year,
actual days elapsed) on the average daily unused amount of the
Line of Credit, which fee shall be calculated on a quarterly
basis by Bank and shall be due and payable by Borrower in arrears
within fifteen (15) days after each billing is sent by Bank;
provided, however, that such fee shall be reduced to fifteen one
hundredths of one percent (0.15%) per annum with respect to any
period for which the Tier I Interest Rate (as such term is
defined in the Line of Credit Note) is applicable.
SECTION 1.4. COLLECTION OF PAYMENTS. Borrower authorizes
Bank to collect all principal, interest and fees due under each
Credit by charging Borrower's demand deposit account number
___________ with Bank, or any other demand deposit account
maintained by Borrower with Bank, for the full amount thereof.
Should there be insufficient funds in any such demand deposit
account to pay all such sums when due, the full amount of such
deficiency shall be immediately due and payable by Borrower.
SECTION 1.5. COLLATERAL.
As security for all indebtedness of Borrower to Bank,
Borrower hereby grants to Bank security interests of first
priority in all Borrower's accounts receivable and equipment.
All of the foregoing shall be evidenced by and subject to the
terms of such security agreements, financing statements, and
other documents as Bank shall reasonably require, all in form and
substance satisfactory to Bank. Borrower shall reimburse Bank
immediately upon demand for all costs and expenses incurred by
Bank in connection with any of the foregoing security, including
without limitation, filing and recording fees and costs of
appraisals and audits.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties
to Bank, which representations and warranties (a) shall survive
the execution of this Agreement and shall continue in full force
and effect until the full and final payment, and satisfaction and
discharge, of all obligations of Borrower to Bank subject to this
Agreement, and (b) are qualified by the schedule of exceptions
set forth as Schedule II hereto, all terms of which are
incorporated herein by this reference. All representations and
warranties relating to Subsidiaries in this Article II shall be
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deemed to be made solely as of the date of each extension of
credit by Bank pursuant hereto and only with respect to any
Subsidiaries that may exist as of each such date.
SECTION 2.1. LEGAL STATUS. Borrower is a corporation,
duly organized and existing and in good standing under the laws
of the State of California, and is qualified or licensed to do
business (and is in good standing as a foreign corporation, if
applicable) in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to
be so licensed could have a material adverse effect on Borrower.
As of the date of this Agreement, Borrower has no Subsidiaries.
Each Subsidiary is a corporation duly organized and existing and
in good standing under the laws of the State of its
incorporation, and is qualified or licensed to do business (and
is in good standing as a foreign corporation, if applicable) in
all jurisdictions in which such qualification or licensing is
required or in which the failure to so qualify or to be so
licensed could have a material adverse effect on such Subsidiary.
SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement,
the Notes, and each other document, contract and instrument
required hereby or at any time hereafter delivered to Bank in
connection herewith (collectively, the "Loan Documents") have
been duly authorized, and upon their execution and delivery in
accordance with the provisions hereof will constitute legal,
valid and binding agreements and obligations of Borrower or the
party which executes the same, enforceable in accordance with
their respective terms.
SECTION 2.3. NO VIOLATION. The execution, delivery and
performance by Borrower of each of the Loan Documents do not
violate any provision of any law or regulation, or contravene any
provision of the Articles of Incorporation or By-Laws of
Borrower, or result in any breach of or default under any
contract, obligation, indenture or other instrument to which
Borrower is a party or by which Borrower may be bound.
SECTION 2.4. LITIGATION. There are no pending, or to the
best of Borrower's knowledge threatened, actions, claims,
investigations, suits or proceedings by or before any
governmental authority, arbitrator, court or administrative
agency which could have a material adverse effect on the
financial condition or operation of Borrower or any Subsidiary
other than those disclosed by Borrower to Bank in writing prior
to the date hereof.
SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENTS. The
financial statements of Borrower dated July 31, 1996, a true copy
of which has been delivered by Borrower to Bank prior to the date
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hereof, (a) are complete and correct and presents fairly the
financial condition of Borrower, (b) disclose all liabilities of
Borrower that are required to be reflected or reserved against
under generally accepted accounting principles, whether
liquidated or unliquidated, fixed or contingent, and (c) have
been prepared in accordance with generally accepted accounting
principles consistently applied. Since the date of such
financial statement there has been no material adverse change in
the financial condition of Borrower or any Subsidiary, nor has
Borrower or any Subsidiary mortgaged, pledged, granted a security
interest in or otherwise encumbered any of its assets or
properties except in favor of Bank or as otherwise permitted by
Bank in writing or disclosed in Schedule 5.7 hereto.
SECTION 2.6. INCOME TAX RETURNS. Borrower has no
knowledge of any pending assessments or adjustments of its or any
Subsidiary's income tax payable with respect to any year.
SECTION 2.7. NO SUBORDINATION. There is no agreement,
indenture, contract or instrument to which Borrower is a party or
by which Borrower may be bound that requires the subordination in
right of payment of any of Borrower's obligations subject to this
Agreement to any other obligation of Borrower.
SECTION 2.8. PERMITS, FRANCHISES. Borrower and each
Subsidiary possesses, and will hereafter possess, all material
permits, franchises and licenses required and rights to all
material trademarks, trade names, patents, and fictitious names,
if any, necessary to enable each of them to conduct the business
in which each is now engaged in compliance with applicable law.
SECTION 2.9. ERISA. Borrower and each Subsidiary is in
compliance in all material respects with all applicable
provisions of the Employee Retirement Income Security Act of
1974, as amended or recodified from time to time ("ERISA");
neither Borrower nor any Subsidiary has violated any provision of
any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower or any Subsidiary (each,
a "Plan"); no Reportable Event as defined in ERISA has occurred
and is continuing with respect to any Plan initiated by Borrower
or any Subsidiary; Borrower and each Subsidiary has met its
minimum funding requirements under ERISA with respect to each
Plan; and each Plan will be able to fulfill its benefit
obligations as they come due in accordance with the Plan
documents and under generally accepted accounting principles.
SECTION 2.10. OTHER OBLIGATIONS. Neither Borrower nor any
Subsidiary is in default on any obligation for borrowed money in
excess of Ten Thousand Dollars ($10,000.00), any purchase money
obligation in excess of Ten Thousand Dollars ($10,000.00), or any
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other material lease, commitment, contract, instrument or
obligation.
ARTICLE III
CONDITIONS
SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT.
The obligation of Bank to grant any of the Credits is subject to
the fulfillment to Bank's satisfaction of all of the following
conditions, in addition to those set forth elsewhere in this
Agreement:
(a) Approval of Bank Counsel. All legal matters incidental
to the granting of each of the Credits shall be satisfactory to
Bank's counsel.
(b) Documentation. Bank shall have received, in form and
substance satisfactory to Bank, each of the following, duly
executed:
(i) This Agreement and the Line of Credit Note
(ii) Corporate Borrowing Resolutions from Borrower.
(iii) Continuing Security Agreement-Rights to Payment and
Inventory.
(iv) Certificate of Incumbency from Borrower
(v) UCC-1 Financing Statement.
(vi) Such other documents as Bank may require under any
other Section of this Agreement.
(c) Financial Condition. There shall have been no material
adverse change, as determined by Bank, in the financial condition
or business of Borrower or any Subsidiary, nor any material
decline, as determined by Bank, in the market value of any
collateral required hereunder or a substantial or material
portion of the assets of Borrower or any Subsidiary.
(d) Insurance. Borrower shall have delivered to Bank
evidence of insurance coverage on all property of Borrower and
any Subsidiary, in form, substance, amounts, covering risks and
issued by companies satisfactory to Bank, and where required by
Bank, with loss payable endorsements in favor of Bank.
SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The
obligation of Bank to make each extension of credit requested by
Borrower hereunder shall be subject to the fulfillment to Bank's
satisfaction of each of the following conditions, in addition to
those set forth elsewhere in this Agreement:
(a) Compliance. The representations and warranties
contained herein and in each of the other Loan Documents shall be
true on and as of the date of the signing of this Agreement and
on the date of each extension of credit by Bank pursuant hereto,
with the same effect as though such representations and
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warranties had been made on and as of each such date, and on each
such date, no Event of Default as defined herein, and no
condition, event or act which with the giving of notice or the
passage of time or both would constitute such an Event of
Default, shall have occurred and be continuing or shall exist.
(b) Documentation. Bank shall have received all additional
documents which may be required in connection with such extension
of credit, including, without limitation, such other documents as
may be required under any other Section hereof.
ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants that so long as Bank remains committed to
extend credit to Borrower pursuant hereto, or any liabilities
(whether direct or contingent, liquidated or unliquidated) of
Borrower to Bank under any of the Loan Documents remain
outstanding, and until payment in full of all obligations of
Borrower subject hereto, Borrower shall, unless Bank otherwise
consents in writing:
SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all
principal, interest, fees or other liabilities due under any of
the Loan Documents at the times and place and in the manner
specified therein.
SECTION 4.2. ACCOUNTING RECORDS. Maintain, and cause each
Subsidiary to maintain, adequate books and records in accordance
with generally accepted accounting principles consistently
applied, and permit, and cause each Subsidiary to permit, any
representative of Bank, at any time during normal business hours,
to inspect, audit and examine such books and records, to make
copies of the same, and to inspect their properties.
SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of
the following, in form and detail satisfactory to Bank:
(a) not later than one hundred and twenty days (120) after
and as of the end of each fiscal year, (i) an audited
consolidated and consolidating financial statement of Borrower,
prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied and used consistently
with prior practices by an independent certified public
accountant reasonably acceptable to Bank, to include balance
sheet, income statement, statement of cash flows and notes to
financial statements, and (ii) Borrower's report for said fiscal
year on Securities and Exchange Commission ("SEC") Form 10-K;
(b) not later than forty-five (45) days after and as of the
end of each fiscal quarter including the last fiscal quarter of
the fiscal year, (i) a compiled, consolidated and consolidating
financial statement of Borrower, prepared in accordance with GAAP
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consistently applied and used consistently with prior practices
by Borrower or a certified public accountant reasonably
acceptable to Bank, to include balance sheet and income
statement, and (ii) Borrower's report for said quarter on SEC
Form 10-Q;
(c) contemporaneously with each annual and quarterly
financial statement of Borrower required hereby, a certificate of
the president or chief financial officer of Borrower that said
financial statements are accurate and that, to said person's best
knowledge after diligent investigation and inquiry, there exists
no Event of Default nor any condition, act or event which with
the giving of notice or the passage of time or both would
constitute an Event of Default; and
(d) from time to time such other information as Bank may
reasonably request.
SECTION 4.4. COMPLIANCE. Preserve and maintain, and
cause each Subsidiary to preserve and maintain, all material
licenses, permits, governmental approvals, rights, privileges and
franchises necessary for the conduct of their businesses; and
comply in all material respects, and cause each Subsidiary to
comply in all material respects, with the provisions of all
documents pursuant to which they are organized and/or which
govern their continued existence and with the requirements of all
laws, rules, regulations and orders of any governmental authority
applicable to them and/or their business.
SECTION 4.5. INSURANCE. Maintain and keep in force, and
cause each Subsidiary to maintain and keep in force, insurance of
the types and in amounts customarily carried in similar lines of
businesses, including but not limited to fire, extended coverage,
public liability, flood, property damage and workers'
compensation, with all such insurance carried with companies and
in amounts satisfactory to Bank, and deliver to Bank from time to
time at Bank's request schedules setting forth all insurance then
in effect.
SECTION 4.6. FACILITIES. Keep, and cause each Subsidiary
to keep, all properties useful or necessary to their business in
good repair and condition, and from time to time make, and cause
each Subsidiary to make, necessary repairs, renewals and
replacements thereto so that such properties shall be fully and
efficiently preserved and maintained.
SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and
discharge when due, and cause each Subsidiary to pay and
discharge when due, any and all indebtedness, obligations,
assessments and taxes, both real or personal, including without
limitation Federal and state income taxes and state and local
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property taxes and assessments, except such (a) as they may in
good faith contest or as to which a bona fide dispute may arise,
and (b) for which they have made provision, to Bank's
satisfaction, for eventual payment thereof in the event any of
them is obligated to make such payment.
SECTION 4.8. LITIGATION. Promptly give, and cause each
Subsidiary to give, notice in writing to Bank of any litigation
pending or threatened against Borrower or any Subsidiary with a
claim in excess of Two Hundred Fifty Thousand Dollars
($250,000.00).
SECTION 4.9. FINANCIAL CONDITION. Maintain, and cause
each Subsidiary to maintain, Borrower's financial condition as
follows on a combined basis, using GAAP consistently applied and
used consistently with prior practices (except to the extent
modified by the definitions herein), with compliance determined
commencing with Borrower's financial statements for the period
ended July 31, 1996:
(a)Tangible Net Worth not at any time less than Fourteen
Million Dollars ($14,000,000.00), with "Tangible Net Worth"
defined as the aggregate of total stockholders' equity plus
subordinated debt less any intangible assets.
(b)Total Liabilities divided by Tangible Net Worth not at
any time greater than 1.0 to 1.0, with "Total Liabilities"
defined as the aggregate of current liabilities and non-current
liabilities less subordinated debt, and with "Tangible Net Worth"
as defined above.
(c)Quick Ratio not at any time less than 1.50 to 1.0, with
"Quick Ratio" defined as the aggregate of unrestricted cash,
unrestricted marketable securities and receivables convertible
into cash divided by total current liabilities (for purposes of
this definition, the term "current liabilities" shall include,
without limitation, Borrower's obligations under the Line of
Credit and the Loan Limit).
(d)EBITDA Coverage Ratio not less than 2.50 to 1.0 as of
each fiscal year end, with "EBITDA" defined as net profit before
tax plus interest expense (net of capitalized interest expense),
depreciation expense and amortization expense, and with "EBITDA
Coverage Ratio" defined as EBITDA divided by the aggregate of
total interest expense plus the prior period current maturity of
long-term debt and the prior period current maturity of
subordinated debt.
(e) Liquidity not at any time less than Ten Million Dollars
($10,000,000.00), with "Liquidity" defined as Borrower's cash
plus Borrower's readily marketable securities.
(f)Net income after taxes not less than $1.00 on an annual
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basis, determined as of each fiscal year-end, and income before
provision for income taxes not less than $1.00 on a year-to-year
basis, determined as of each fiscal quarter end.
SECTION 4.10. NOTICE TO BANK. Promptly (but in no event
more than five (5) days after the occurrence of each such event
or matter) give, and cause each Subsidiary to give, written
notice to Bank in reasonable detail of: (a) the occurrence of
any Event of Default, or any condition, event or act which with
the giving of notice or the passage of time or both would
constitute an Event of Default; (b) any change in the name or the
organizational structure of Borrower or any Subsidiary; (c) the
occurrence and nature of any Reportable Event or Prohibited
Transaction, each as defined in ERISA, or any funding deficiency
with respect to any Plan; or (d) any termination or cancellation
of any insurance policy which Borrower or any Subsidiary is
required to maintain, or any uninsured or partially uninsured
loss through liability or property damage, or through fire, theft
or any other cause affecting the property of Borrower or any
Subsidiary in excess of an aggregate of Two Hundred Fifty
Thousand Dollars ($250,000.00).
ARTICLE V
NEGATIVE COVENANTS
Borrower further covenants that so long as Bank remains
committed to extend credit to Borrower pursuant hereto, or any
liabilities (whether direct or contingent, liquidated or
unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank's
prior written consent:
SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any
of the Credits except for the purposes stated in Article I
hereof.
SECTION 5.2. OTHER INDEBTEDNESS. Create, incur, assume or
permit to exist, or permit any Subsidiary to create, incur,
assume or permit to exist, any indebtedness or liabilities
resulting from borrowings, loans or advances, whether secured or
unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the liabilities of Borrower to Bank,
(b) liabilities of Borrower and/or any Subsidiary of Borrower
arising after the date hereof which do not exceed, in the
aggregate, $25,000.00, and which are fully subordinated to Bank's
rights hereunder pursuant to such documentation as Bank may
require, and (c) any other liabilities of Borrower existing as
of, and disclosed to Bank in writing prior to, the date hereof.
SECTION 5.3. MERGER, CONSOLIDATION, ACQUISITION OF ASSETS.
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Merge into or consolidate with, or permit any Subsidiary to merge
into or consolidate with, any other Person, nor acquire, or
permit any Subsidiary to acquire, all or substantially all of the
assets of any Person; provided however, that Borrower may
consummate an Acquisition which has been approved by Bank
pursuant to Section 1.2(b) hereof or which meets the following
conditions: (a) the aggregate consideration paid or to be paid
for the Target, the assets, or business to be acquired from the
Target or the stock, partnership interests of membership
interests of the Target (whether paid or to be paid in the form
of cash, stock, contingent or non-contingent liabilities assumed,
or other consideration) shall not exceed Three Million Dollars
($3,000,000.00), as determined by Bank in its sole and reasonable
discretion, (b) the Acquisition shall not constitute, result in,
create any condition that constitutes or with the passage of time
is likely to constitute an Event of Default; (c) in the case of
any Acquisition involving any merger or consolidation, Bank shall
have been provided with such information as it may require from
Borrower concerning the contingent and non-contingent liabilities
to be assumed by Borrower or any Subsidiary by operation of said
merger or consolidation and has approved the assumption of such
liabilities in writing, which approval may be withheld by Bank in
its sole discretion; (d) the Acquisition shall be conducted in
accordance with all applicable laws; and (e) in the case of any
Acquisition involving the purchase of assets, Bank shall have
received an opinion of counsel in form and substance reasonably
satisfactory to Bank that the Acquisition will comply with or be
exempted from any applicable bulk sales law.
SECTION 5.4. CHANGE IN NATURE OF BUSINESS, TRANSFER OF
ASSETS. Make, or permit any Subsidiary to make, any substantial
change in the nature of Borrower's or any Subsidiary's business
as conducted as of the date hereof; nor sell, lease, transfer or
otherwise dispose of, or permit any Subsidiary to sell, lease,
transfer or otherwise dispose of, all or a substantial or
material portion of Borrower's or any Subsidiary's assets except
in the ordinary course of its business.
SECTION 5.5. GUARANTIES. Guarantee, or permit any
Subsidiary to guarantee, or become liable, or permit any
Subsidiary to become liable, in any way as surety, endorser
(other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation
endorser or otherwise for, nor pledge or hypothecate, or permit
any Subsidiary to pledge or hypothecate, any assets of Borrower
or any Subsidiary as security for, any liabilities or obligations
of any other Person, except any of the foregoing in favor of
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Bank.
SECTION 5.6. LOANS, ADVANCES, INVESTMENTS. Make, or
permit any Subsidiary to make, any loans or advances to or
investments in any Person, except (1) any of the foregoing
existing as of, and disclosed to Bank in writing prior to, the
date hereof, (2) loans or advances made in the ordinary course of
business, (3) any Acquisition that has been approved by Bank
pursuant to Section 1.2(b) hereof or that is permitted under
Section 5.3 hereof, and (4) advances to management personnel
against awarded but unpaid bonuses, which advances shall not
exceed Fifty Thousand Dollars ($50,000.00) in the aggregate for
any fiscal quarter, determined on a non-cumulative basis.
SECTION 5.7. PLEDGE OF ASSETS. Mortgage, pledge, grant or
permit to exist, or permit any Subsidiary to mortgage, pledge,
grant or permit to exist, a security interest in, or lien upon,
all or any portion of Borrower's or any Subsidiary's assets now
owned or hereafter acquired, except any of the foregoing in favor
of Bank or which is existing as of, and disclosed to Bank, as set
forth in Schedule 5.7 attached hereto, which is incorporated
herein by this reference.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. The occurrence of any of the following shall
constitute an "Event of Default" under this Agreement:
(a) Borrower shall fail to pay when due any principal,
interest, fees or other amounts payable under any of the Loan
Documents.
(b) Any financial statement or certificate furnished to
Bank in connection with, or any representation or warranty made
by Borrower or any other party under this Agreement or any other
Loan Document shall prove to be incorrect, false or misleading in
any material respect when furnished or made.
(c) Any default in the performance of or compliance with
any obligation, agreement or other provision contained herein or
in any other Loan Document (other than those referred to in
subsections (a) and (b) above), and with respect to any such
default which by its nature can be cured, such default shall
continue for a period of twenty (20) days from its occurrence.
(d) Any default in the payment or performance of any
obligation, or any defined event of default, under the terms of
any contract or instrument (other than any of the Loan Documents)
pursuant to which Borrower or any Subsidiary has incurred any
debt or other liability to any Person, including Bank, provided
said default or defined event of default has or threatens to have
a material adverse effect on Borrower or Borrower and its
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Subsidiaries taken as a whole.
(e) The filing of a notice of judgment lien against
Borrower or any Subsidiary; or the recording of any abstract of
judgment against Borrower or any Subsidiary in any county in
which Borrower or any Subsidiary has an interest in real
property; or the service of a notice of levy and/or of a writ of
attachment or execution, or other like process, against the
assets of Borrower or any Subsidiary; or the entry of a judgment
against Borrower or any Subsidiary for the payment of money in
excess of $25,000.00 or any other judgment which has or threatens
to have a material adverse effect on Borrower or Borrower and its
Subsidiaries taken as a whole.
(f) Borrower or any Subsidiary shall become insolvent, or
shall suffer or consent to or apply for the appointment of a
receiver, trustee, custodian or liquidator of itself or any of
its property, or shall generally fail to pay its debts as they
become due, or shall make a general assignment for the benefit of
creditors; Borrower or any Subsidiary shall file a voluntary
petition in bankruptcy, or seeking reorganization, in order to
effect a plan or other arrangement with creditors or any other
relief under the Bankruptcy Reform Act, Title 11 of the United
States Code, as amended or recodified from time to time
("Bankruptcy Code"), or under any state or Federal law granting
relief to debtors, whether now or hereafter in effect; or any
involuntary petition or proceeding pursuant to the Bankruptcy
Code or any other applicable state or Federal law relating to
bankruptcy, reorganization or other relief for debtors is filed
or commenced against Borrower or any Subsidiary, or Borrower or
any Subsidiary shall file an answer admitting the jurisdiction of
the court and the material allegations of any involuntary
petition; or Borrower or any Subsidiary shall be adjudicated a
bankrupt, or an order for relief shall be entered against
Borrower or any Subsidiary by any court of competent jurisdiction
under the Bankruptcy Code or any other applicable state or
Federal law relating to bankruptcy, reorganization or other
relief for debtors.
(g) There shall exist or occur any event or condition which
Bank in good faith believes materially impairs, or is
substantially likely to impair materially, the prospect of
payment or performance by Borrower of its obligations under any
of the Loan Documents.
(h) The dissolution or liquidation of Borrower or any
Subsidiary; or Borrower, any Subsidiary, or any of their
respective directors or stockholders, shall take action seeking
to effect the dissolution or liquidation of Borrower or any
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Subsidiary.
SECTION 6.2. REMEDIES. Upon the occurrence of any Event
of Default: (a) all indebtedness of Borrower under each of the
Loan Documents, any term thereof to the contrary notwithstanding,
shall at Bank's option and upon Bank's notice to Borrower become
immediately due and payable without presentment, demand, protest
or notice of dishonor, all of which are hereby expressly waived
by Borrower; (b) the obligation, if any, of Bank to extend any
further credit under any of the Loan Documents shall immediately
cease and terminate; and (c) Bank shall have all rights, powers
and remedies available under each of the Loan Documents, or
accorded by law, including without limitation the right to resort
to any or all security for any of the Credits and to exercise any
or all of the rights of a beneficiary or secured party pursuant
to applicable law. All rights, powers and remedies of Bank may
be exercised at any time by Bank and from time to time after the
occurrence of an Event of Default, are cumulative and not
exclusive, and shall be in addition to any other rights, powers
or remedies provided by law or equity.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. NO WAIVER. No delay, failure or
discontinuance of Bank in exercising any right, power or remedy
under any of the Loan Documents shall affect or operate as a
waiver of such right, power or remedy; nor shall any single or
partial exercise of any such right, power or remedy preclude,
waive or otherwise affect any other or further exercise thereof
or the exercise of any other right, power or remedy. Any waiver,
permit, consent or approval of any kind by Bank of any breach of
or default under any of the Loan Documents must be in writing and
shall be effective only to the extent set forth in such writing.
SECTION 7.2. NOTICES. All notices, requests and demands
which any party is required or may desire to give to any other
party under any provision of this Agreement must be in writing
delivered to each party at the following address:
BORROWER: Data Processing Resources Corporation
0000 XxxXxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxxx, Chief Financial Officer
BANK: XXXXX FARGO BANK, NATIONAL ASSOCIATION
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
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or to such other address as any party may designate by written
notice to all other parties. Each such notice, request and
demand shall be deemed given or made as follows: (a) if sent by
hand delivery, upon delivery; (b) if sent by mail, upon the
earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent
by telecopy, upon receipt.
SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES.
Borrower shall pay to Bank immediately upon demand the full
amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include outside counsel
fees and all allocated costs of Bank's in-house counsel),
incurred by Bank in connection with (a) the negotiation and
preparation of this Agreement and the other Loan Documents, and
the review, negotiation and/or preparation of documents delivered
to or required by Bank in connection with each Acquisition,
Bank's continued administration hereof and thereof, and the
preparation of any amendments and waivers hereto and thereto,
(b) the enforcement of Bank's rights and/or the collection of any
amounts which become due to Bank under any of the Loan Documents,
and (c) the prosecution or defense of any action in any way
related to any of the Loan Documents, including without
limitation, any action for declaratory relief, and including any
of the foregoing incurred in connection with any bankruptcy
proceeding relating to Borrower. Notwithstanding anything herein
to the contrary, the aggregate of reimbursable attorneys' fees
incurred in connection with the negotiation and preparation of
this Agreement and the other Loan Documents and reimbursable
expenses for the audit recently performed at Bank's request shall
not exceed Seven Thousand Seven Hundred Fifty Dollars($7,750.00).
SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall
be binding upon and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of
the parties; provided however, that Borrower may not assign or
transfer its interest hereunder without Bank's prior written
consent. Bank reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any
interest in, Bank's rights and benefits under each of the Loan
Documents. In connection therewith, Bank may disclose all
documents and information which Bank now has or may hereafter
acquire relating to any of the Credits, Borrower or its business,
or any collateral required hereunder.
SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement
and the other Loan Documents constitute the entire agreement
between Borrower and Bank with respect to the Credits and
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supersede all prior negotiations, communications, discussions and
correspondence concerning the subject matter hereof. This
Agreement may be amended or modified only by a written instrument
executed by each party hereto.
SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement
is made and entered into for the sole protection and benefit of
the parties hereto and their respective permitted successors and
assigns, and no other Person shall be a third party beneficiary
of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any other of the Loan
Documents to which it is not a party.
SECTION 7.7. TIME. Time is of the essence of each and
every provision of this Agreement and each other of the Loan
Documents.
SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision
of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the
remainder of such provision or any remaining provisions of this
Agreement.
SECTION 7.9. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the
State of California, except to the extent Bank has greater rights
or remedies under Federal law, whether as a national bank or
otherwise, in which case such choice of California law shall not
be deemed to deprive Bank of any such rights and remedies as may
be available under Federal law.
SECTION 7.10. COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which when executed and
delivered shall be deemed to be an original, and all of which
when taken together shall constitute one and the same Agreement.
SECTION 7.11. ARBITRATION.
(a)Arbitration. Upon the demand of any party, any Dispute
shall be resolved by binding arbitration (except as set forth in
(e) below) in accordance with the terms of this Agreement. A
"Dispute" shall mean any action, dispute, claim or controversy of
any kind, whether in contract or tort, statutory or common law,
legal or equitable, now existing or hereafter arising under or in
connection with, or in any way pertaining to, any of the Loan
Documents, or any past, present or future extensions of credit
and other activities, transactions or obligations of any kind
related directly or indirectly to any of the Loan Documents,
including without limitation, any of the foregoing arising in
connection with the exercise of any self-help, ancillary or other
remedies pursuant to any of the Loan Documents. Any party may by
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summary proceedings bring an action in court to compel
arbitration of a Dispute. Any party who fails or refuses to
submit to arbitration following a lawful demand by any other
party shall bear all costs and expenses incurred by such other
party in compelling arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be
administered by the American Arbitration Association ("AAA") or
such other administrator as the parties shall mutually agree upon
in accordance with the AAA Commercial Arbitration Rules. All
Disputes submitted to arbitration shall be resolved in accordance
with the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in
any of the Loan Documents. The arbitration shall be conducted at
a location in California selected by the AAA or other
administrator. If there is any inconsistency between the terms
hereof and any such rules, the terms and procedures set forth
herein shall control. All statutes of limitation applicable to
any Dispute shall apply to any arbitration proceeding. All
discovery activities shall be expressly limited to matters
directly relevant to the Dispute being arbitrated. Judgment upon
any award rendered in an arbitration may be entered in any court
having jurisdiction; provided however, that nothing contained
herein shall be deemed to be a waiver by any party that is a bank
of the protections afforded to it under 12 U.S.C. Section 91 or
any similar applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and
Foreclosure. No provision hereof shall limit the right of any
party to exercise self-help remedies such as setoff, foreclosure
against or sale of any real or personal property collateral or
security, or to obtain provisional or ancillary remedies,
including without limitation injunctive relief, sequestration,
attachment, garnishment or the appointment of a receiver, from a
court of competent jurisdiction before, after or during the
pendency of any arbitration or other proceeding. The exercise of
any such remedy shall not waive the right of any party to compel
arbitration or reference hereunder.
(d) Arbitrator Qualifications and Powers; Awards.
Arbitrators must be active members of the California State Bar or
retired judges of the state or federal judiciary of California,
with expertise in the substantive laws applicable to the subject
matter of the Dispute. Arbitrators are empowered to resolve
Disputes by summary rulings in response to motions filed prior to
the final arbitration hearing. Arbitrators (i) shall resolve all
Disputes in accordance with the substantive law of the state of
California, (ii) may grant any remedy or relief that a court of
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the state of California could order or grant within the scope
hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award
recovery of all costs and fees, to impose sanctions and to take
such other actions as they deem necessary to the same extent a
judge could pursuant to the Federal Rules of Civil Procedure, the
California Rules of Civil Procedure or other applicable law. Any
Dispute in which the amount in controversy is $5,000,000 or less
shall be decided by a single arbitrator who shall not render an
award of greater than $5,000,000 (including damages, costs, fees
and expenses). By submission to a single arbitrator, each party
expressly waives any right or claim to recover more than
$5,000,000. Any Dispute in which the amount in controversy
exceeds $5,000,000 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three
arbitrators must actively participate in all hearings and
deliberations.
(e) Judicial Review. Notwithstanding anything herein to
the contrary, in any arbitration in which the amount in
controversy exceeds $25,000,000, the arbitrators shall be
required to make specific, written findings of fact and
conclusions of law. In such arbitrations (A) the arbitrators
shall not have the power to make any award which is not supported
by substantial evidence or which is based on legal error, (B) an
award shall not be binding upon the parties unless the findings
of fact are supported by substantial evidence and the conclusions
of law are not erroneous under the substantive law of the state
of California, and (C) the parties shall have in addition to the
grounds referred to in the Federal Arbitration Act for vacating,
modifying or correcting an award the right to judicial review of
(1) whether the findings of fact rendered by the arbitrators are
supported by substantial evidence, and (2) whether the
conclusions of law are erroneous under the substantive law of the
state of California. Judgment confirming an award in such a
proceeding may be entered only if a court determines the award is
supported by substantial evidence and not based on legal error
under the substantive law of the state of California.
(f)Real Property Collateral; Judicial Reference.
Notwithstanding anything herein to the contrary, no Dispute shall
be submitted to arbitration if the Dispute concerns indebtedness
secured directly or indirectly, in whole or in part, by any real
property unless (i) the holder of the mortgage, lien or security
interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any
rights or benefits that might accrue to them by virtue of the
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single action rule statute of California, thereby agreeing that
all indebtedness and obligations of the parties, and all
mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and
enforceable. If any such Dispute is not submitted to
arbitration, the Dispute shall be referred to a referee in
accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be
specifically enforceable in accordance with said Section 638. A
referee with the qualifications required herein for arbitrators
shall be selected pursuant to the AAA's selection procedures.
Judgment upon the decision rendered by a referee shall be entered
in the court in which such proceeding was commenced in accordance
with California Code of Civil Procedure Sections 644 and 645.
(g)Miscellaneous. To the maximum extent practicable, the
AAA, the arbitrators and the parties shall take all action
required to conclude any arbitration proceeding within 180 days
of the filing of the Dispute with the AAA. No arbitrator or
other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of
information by a party required in the ordinary course of its
business, by applicable law or regulation, or to the extent
necessary to exercise any judicial review rights set forth
herein. If more than one agreement for arbitration by or between
the parties potentially applies to a Dispute, the arbitration
provision most directly related to the Loan Documents or the
subject matter of the Dispute shall control. This arbitration
provision shall survive termination, amendment or expiration of
any of the Loan Documents or any relationship between the
parties.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first written
above.
XXXXX FARGO BANK,
DATA PROCESSING CORPORATION NATIONAL ASSOCIATION
a California corporation
By: __________________________ By: __________________________
Xxxxx X. Xxxxxxx
President
By: __________________________
Xxxxxxx X. Xxxxxxx
Chief Financial Officer
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