EXHIBIT 99.2
SECOND AMENDED AND RESTATED
CREDIT AND SECURITY AGREEMENT
EMERGENT INFORMATION TECHNOLOGIES, INC.,
formerly known as
SM&A Corporation
Each of the Financial Institutions Initially A Signatory
Hereto, Together with Those Assignees
Pursuant to Section 10.6
Hereof, as Lenders,
and
MELLON BANK, N.A., as Agent
and
XXXXX FARGO BANK, N.A., as Co-Agent
December 29, 2000
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS...................................................... 2
SECTION 1.1 Defined Terms................................................ 2
SECTION 1.2 Other Definitional Provisions................................ 15
ARTICLE II THE CREDIT...................................................... 15
SECTION 2.1 The Revolving Loans.......................................... 15
SECTION 2.2 Making the Revolving Loans................................... 16
SECTION 2.3 [Intentionally Omitted]...................................... 19
SECTION 2.4 [Intentionally Omitted]...................................... 19
SECTION 2.5 Repayment.................................................... 19
SECTION 2.6 Interest Rate and Payment Dates.............................. 20
SECTION 2.7 Letters of Credit............................................ 21
SECTION 2.8 Fees......................................................... 24
ARTICLE III GENERAL PROVISIONS CONCERNING THE LOANS........................ 25
SECTION 3.1 Use of Proceeds.............................................. 25
SECTION 3.2 Computation of Interest and Fees............................. 25
SECTION 3.3 Payments..................................................... 25
SECTION 3.4 Apportionment, Application, and Reversal of Payments......... 26
SECTION 3.5 Reduced Return............................................... 27
SECTION 3.6 Indemnities.................................................. 27
SECTION 3.7 Requirements of Law.......................................... 28
ARTICLE IV CONDITIONS OF LENDING........................................... 29
i.
SECTION 4.1 Conditions Precedent to Initial Loans........................ 29
SECTION 4.2 Conditions Precedent to Each Borrowing....................... 31
ARTICLE V REPRESENTATIONS AND WARRANTIES................................... 32
SECTION 5.1 Representations and Warranties............................... 32
ARTICLE VI COVENANTS....................................................... 35
SECTION 6.1 Affirmative Covenants........................................ 35
SECTION 6.2 Negative Covenants........................................... 39
ARTICLE VII EVENTS OF DEFAULT.............................................. 44
SECTION 7.1 Events of Default............................................ 44
SECTION 7.2 Remedies..................................................... 46
SECTION 7.3 Remedies Cumulative.......................................... 48
ARTICLE VIII CREATION OF SECURITY INTEREST................................. 48
SECTION 8.1 Grant of Security Interest................................... 48
SECTION 8.2 Negotiable Collateral........................................ 48
SECTION 8.3 Collection of Accounts, General Intangibles, and
Negotiable Collateral....................................... 49
SECTION 8.4 Delivery of Additional Documentation Required................ 49
SECTION 8.5 Power of Attorney............................................ 49
SECTION 8.6 Right to Inspect............................................. 50
SECTION 8.7 Liability for Collateral..................................... 50
ARTICLE IX THE AGENT; THE LENDER GROUP..................................... 50
SECTION 9.1 Appointment and Authorization of Agent....................... 50
SECTION 9.2 Delegation of Duties......................................... 51
SECTION 9.3 Liability of Agent........................................... 51
ii.
SECTION 9.4 Reliance by Agent............................................ 52
SECTION 9.5 Notice of Default or Event of Default........................ 52
SECTION 9.6 Credit Decision.............................................. 52
SECTION 9.7 Costs and Expenses; Indemnification.......................... 53
SECTION 9.8 Agent in Individual Capacity................................. 54
SECTION 9.9 Successor Agent.............................................. 54
SECTION 9.10 Withholding Tax.............................................. 54
SECTION 9.11 Collateral Matters........................................... 56
SECTION 9.12 Restrictions on Actions by Lenders; Sharing of Payments...... 57
SECTION 9.13 Agency for Perfection........................................ 57
SECTION 9.14 Payments by Agent to the Lenders............................. 58
SECTION 9.15 Concerning the Collateral and Related Loan Documents......... 58
SECTION 9.16 Several Obligations; No Liability............................ 58
SECTION 9.17 Holders of Notes............................................. 58
SECTION 9.18 Calculations................................................. 59
SECTION 9.19 Co-Agent..................................................... 59
ARTICLE X MISCELLANEOUS.................................................... 59
SECTION 10.1 Amendments, Etc.............................................. 59
SECTION 10.2 Notices, Etc................................................. 60
SECTION 10.3 Right of Setoff.............................................. 60
SECTION 10.4 No Waiver; Remedies.......................................... 61
SECTION 10.5 Costs and Expenses........................................... 61
SECTION 10.6 Assignments and Participations............................... 61
SECTION 10.7 Effectiveness; Binding Effect................................ 64
iii.
SECTION 10.8 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver........................................... 64
SECTION 10.9 Waiver of Notices............................................ 65
SECTION 10.10 Destruction of Borrower's Documents.......................... 65
SECTION 10.11 Entire Agreement............................................. 65
SECTION 10.12 Severability of Provisions................................... 65
SECTION 10.13 Execution in Counterparts.................................... 66
SECTION 10.14.Confidentiality.............................................. 66
iv.
SECOND AMENDED AND RESTATED
CREDIT AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT dated
as of December 29, 2000, is entered into among EMERGENT INFORMATION
TECHNOLOGIES, INC., a California corporation, formerly known as SM&A Corporation
(the "Borrower"), the financial institutions listed on the signature pages
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hereof (such financial institutions, together with their respective successors
and assigns, are referred to herein each individually as a "Lender" and
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collectively as the "Lenders"), MELLON BANK, N.A., as agent for the Lenders (in
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such capacity, the "Agent"), and XXXXX FARGO BANK, N.A., as co-agent for the
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Lenders (in such capacity, together with its successors, if any, in such
capacity, the "Co-Agent").
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WHEREAS, Borrower is party to that certain Amended and Restated Credit
Agreement dated as of June 7, 1999 with the Lenders, Agent and Co-Agent (as
amended to the date hereof, the "Existing Credit Agreement"), under which the
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Lenders have made Revolving Loans (as defined in the Existing Credit Agreement,
hereinafter the "Existing Revolving Loans") evidenced by Revolving Notes (as
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defined in the Existing Credit Agreement, hereinafter the "Existing Revolving
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Notes");
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WHEREAS, the Obligations (as defined in the Existing Credit Agreement,
hereinafter the "Existing Obligations") of Borrower under the Existing Revolving
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Notes and the other Loan Documents (as defined in the Existing Credit Agreement,
hereinafter the "Existing Loan Documents") as secured by the Collateral (as
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defined in the Existing Credit Agreement, hereinafter the "Existing Collateral")
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and as guaranteed or supported or otherwise benefited by the Existing Loan
Documents;
WHEREAS, Borrower has requested that the Lenders amend and restate the
Existing Credit Agreement to extend the maturity date, reset financial
covenants, reduce Lender commitments to provide revolving loans, permit
additional subordinated indebtedness, and make certain other changes to the
Existing Credit Agreement;
WHEREAS, the Lenders are willing to make loans and other financial
accommodations available to the Borrower, and the Agent and the Co-Agent are
willing to act as Agent and Co-Agent, respectively, in connection therewith, in
each case on the terms and conditions set forth herein; and
WHEREAS, the parties hereto intend that (a) the Existing Obligations
shall continue to exist under, and to be evidenced by, this Agreement and the
Notes (as hereinafter defined) issued hereunder, (b) the Existing Revolving
Loans shall be Revolving Loans under and as defined in this Agreement and the
Notes and (c) the Existing Collateral shall continue to secure the Existing
Obligations as well as the other Obligations of the Borrower under this
Agreement and the Notes and the other Loan Documents hereunder.
1.
NOW, THEREFORE, the Borrower, the Lenders, the Agent, and the Co-Agent
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms.
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As used in this Agreement, the following terms have the following meanings:
"Account Debtor": Any Person who is or who may become obligated under,
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with respect to, or on account of, an Account, General Intangible, or Negotiable
Collateral.
"Accounts": All currently existing and hereafter arising accounts,
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contract rights, and all other forms of obligations owing to the Borrower
arising out of the sale, license, or lease of goods or General Intangibles or
the rendition of services by the Borrower, irrespective of whether earned by
performance, and any and all credit insurance, guaranties, or security therefor.
"Acquisition": Any transaction or series of transactions by which the
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Borrower acquires, either directly or through an Affiliate or Subsidiary or
otherwise, (a) any or all of the stock or other securities of any class of any
Person or (b) a substantial portion of the assets, or a division or line of
business or any Person.
"Affiliate": As applied to any Person, any other Person who, directly or
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indirectly, controls, is controlled by, is under common control with, or is a
director or officer of such Person.
"Agent": As set forth in the introductory paragraph of this Agreement.
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"Agent's Liens": The Liens on the Collateral granted by the Borrower to
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the Agent for the benefit of the Lender Group under this Agreement pursuant to
Section 8.1 and the other Loan Documents.
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"Agent-Related Persons": The Agent and any successor agent together with
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their respective Affiliates, and the officers, directors, employees, counsel,
agents, and attorneys-in-fact of such Persons and their Affiliates.
"Agreement": This Credit Agreement, as amended, supplemented or modified
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from time to time.
"Amendment Number Four": That certain Amendment Number Four to Amended and
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Restated Credit and Security Agreement dated as of August 9, 2000, among
Borrower, Lenders, Co-Agent and Agent, including any attachments thereto.
2.
"Amendment Number One": That certain Amendment Number One to Amended and
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Restated Credit and Security Agreement dated as of August 20, 1999, between the
Borrower, the Lenders and the Agent, including any attachments thereto.
"Amendment Number Three": That certain Amendment Number Three to Amended
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and Restated Credit and Security Agreement dated as of May 4, 2000, between
Borrower, Agent, and Co-Agent, including any attachments thereto.
"Amendment Number Two": That certain Amendment Number One (sic) to Amended
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and Restated Credit and Security Agreement dated as of April 10, 2000, between
Borrower, Agent, and Co-Agent, including any attachments thereto.
"Annualized": Regarding any amount with respect to the Borrower: (a) for
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the fiscal quarter ending March 31, 2001, such amount for such fiscal quarter
multiplied by four (4), (b) for the fiscal quarter ending June 30, 2001, such
amount for such fiscal quarter together with the immediately preceding fiscal
quarter multiplied by two (2), (c) for the fiscal quarter ending September 30,
2001, such amount for such fiscal quarter, together with the immediately
preceding two (2) fiscal quarters multiplied by four-thirds (4/3), and (d) for
the fiscal quarter ending December 31, 2001 and for each subsequently occurring
Fiscal Quarter, such amount for such fiscal quarter, together with the three (3)
immediately preceding fiscal quarters on a rolling four (4) fiscal quarter
basis.
"Applicable Reduction Amount": means:
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(i) as of March 31, 2001, the positive difference of the result of (a)
the then applicable Revolver Commitment after giving effect to Section 2.1(b)(B)
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hereof, minus (b) $21,700,000,
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(ii) as of June 30, 2001, the positive difference of the result of (a)
the then applicable Revolver Commitment after giving effect to Section 2.1(b)(B)
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hereof, minus (b) $20,700,000,
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(iii) as of September 30, 2001, the positive difference of the result of
(a) the then applicable Revolver Commitment after giving effect to Section
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2.1(b)(B) hereof, minus (b) $19,700,000, and
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(iv) as of December 31, 2001, the positive difference of the result of
(a) the then applicable Revolver Commitment after giving effect to Section
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2.1(b)(B) hereof, minus (b) $18,700,000.
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"Asset Sale": The disposition whether by sale, lease, transfer, loss,
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damage, destruction, casualty, condemnation or otherwise of any of the
following: (a) any of the Stock or other equity or ownership interest of any of
the Borrower's Subsidiaries, or (b) any or all of the assets of the Borrower or
any of its Subsidiaries, other than sales of Inventory in the ordinary course of
business.
3.
"Assignee": Has the meaning set forth in Section 10.6.
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"Assignment and Acceptance": An Assignment and Acceptance in the form of
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Exhibit A-1 attached hereto.
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"Average Unused Commitment": With respect to any Lender, (a) such Lender's
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Commitment, minus (b) the sum of (i) the average daily balance of such Lender's
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Pro Rata Share of the Revolving Facility Usage for the immediately preceding
three-month period plus (ii) the average daily balance of such Lender's Pro Rata
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Share of the L/C Usage for the immediately preceding three-month period.
"Average Unused Commitments" means, collectively, the aggregate amount of the
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Average Unused Commitments of all of the Lenders.
"Bankruptcy Code": The United States Bankruptcy Code (11 U.S.C. (S) 101 et
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seq.), as amended, and any successor statute.
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"Borrower": As set forth in the introductory paragraph of this Agreement.
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"Borrower's Books": All of the Borrower's books and records including:
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ledgers; records indicating, summarizing, or evidencing the Borrower's
properties or assets (including the Collateral) or liabilities; all information
relating to the Borrower's business operations or financial condition; and all
computer programs, disk or tape files, printouts, runs, or other computer
prepared information.
"Borrowing": A borrowing hereunder consisting of Revolving Loans made on
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the same day by the Lenders to the Borrower.
"Business": The business of the Borrower and its Subsidiaries as currently
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conducted or currently proposed to be conducted excluding the business of the
Discontinued Operations.
"Business Day": Any day on which the Agent is open for business at the
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location where the Notes are payable unless otherwise stated.
"Capital Expenditures": As applied to any Person, all expenditures made
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and liabilities incurred for the acquisition of any fixed asset or improvement,
replacement, substitution or addition thereto which has a useful life of more
than one year and including, without limitation, those arising in connection
with Capital Leases.
"Capital Leases": As applied to any Person, any lease of any property
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(whether real, personal or mixed) by that Person as lessee which would, in
accordance with GAAP, be required to be accounted for as a capital lease on the
balance sheet of that Person.
4.
"Change of Control": Shall be deemed to have occurred at such times as:
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(a) with the exception of Xxxxxx X. Xxxxx or an Affiliate of Xxxxxx X. Xxxxx, a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
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Securities Exchange Act of 1934), becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of more than forty percent (40%) of the total voting power of all classes of
stock then outstanding of Borrower normally entitled to vote in the election of
directors; or (b) the Borrower shall fail to own directly or indirectly one
hundred percent (100%) or more of the issued and outstanding common stock of any
Guarantor or shall lose voting control of the issued and outstanding common
stock of any Guarantor; or (c) a sale, lease, license, transfer, conveyance or
other disposition, in one or a series of related transactions, of all or
substantially all of the assets of the Borrower or its Subsidiaries, taken as a
whole, to any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act), excluding for the sake of clarity, sales of assets of
Discontinued Operations, or (d) the adoption of a plan for the liquidation or
dissolution of the Borrower, or (e) a period of 89 consecutive days shall have
elapsed during which Xxxxxx X. Xxxxx shall have resigned from his executive
office with the Borrower, unless he has been replaced by another individual or
individuals reasonably satisfactory to the Required Lenders; or (f) the failure
of the Borrower to remain a reporting company under the Exchange Act.
"Co-Agent": As set forth in the introductory paragraph of this Agreement.
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"Code": The California Uniform Commercial Code, as in effect from time to
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time.
"Collateral": All of Borrower's right, title, and interest in and to each
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of the following:
(b) the Accounts,
(c) Borrower's Books,
(d) the Equipment,
(e) the General Intangibles,
(f) the Inventory,
(g) the Negotiable Collateral,
(h) Investment Property,
(i) any money, or other assets of the Borrower that now or hereafter
come into the possession, custody, or control of any member of the Lender Group,
and
(j) the proceeds and products, whether tangible or intangible, of any of
the foregoing, including proceeds of insurance covering any or all of the
Collateral, and any and all Accounts, Borrower's Books, Equipment, General
Intangibles, Inventory, Negotiable
5.
Collateral, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
"Collections": All cash, checks, notes, instruments, and other items of
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payment (including, insurance proceeds, proceeds of cash sales, rental proceeds,
and tax refunds).
"Commitment": At any time with respect to a Lender, the principal amount
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set forth beside such Lender's name under the heading "Commitment" on Schedule
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C-1 attached hereto or on the signature page of the Assignment and Acceptance
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pursuant to which such Lender became a Lender hereunder in accordance with the
provisions of Section 10.6, and "Commitments" means, collectively, the aggregate
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amount of the commitments of all of the Lenders.
"Daily Balance": The amount of Loans owed at the end of a given day.
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"Debt Service Coverage Ratio": As of any date of determination, (x) EBITDA
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for the rolling 4 quarter period, less non-financed Capital Expenditures for
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that same period, divided by (y) the sum of Annualized Interest Expense, plus
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Annualized principal payments required to be made on all interest bearing
Indebtedness during the period under review, but not including any principal
payments made in permanent reduction of the Revolver Commitment required by
Section 2.1(b), plus Annualized payments required to be made on Capital Lease
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liabilities during the period under review. For the purposes of this ratio,
Interest Expense will exclude fees, expenses, original issue discount, and
interest which are required to be capitalized under GAAP.
"Discontinued Operation": The assets and liabilities associated with the
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Borrower's division commonly known as "Emergent Central," which assets and
liabilities are treated as a discontinued operation on the Borrower's
consolidated balance sheet.
"Dollars" and "$": Dollars in lawful currency of the United States of
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America.
"EBITDA": With reference to the Borrower and its Subsidiaries on a
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consolidated basis but excluding Discontinued Operations, for any fiscal period
under review, the sum of (i) Net Income for that period, minus (ii) any
extraordinary gain reflected in such Net Income, plus (iii) Interest Expense
(expensed and capitalized) for that period, plus (iv) provision for income
taxes, for that period (whether or not payable during that period), plus (v)
depreciation and amortization for that period, plus (vi) at the Required
Lenders' reasonable discretion, extraordinary non-cash charges, in each case
determined in accordance with GAAP and, in the case of items (iii), (iv), (v)
and (vi), only to the extent deducted in the determination of Net Income for
that period.
"Equipment": All of the Borrower's present and hereafter acquired
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machinery, machine tools, motors, equipment, furniture, furnishings, fixtures,
vehicles (including motor vehicles and trailers), tools, parts, goods (other
than consumer goods, farm products, or
6.
Inventory), wherever located, including, (a) any interest of the Borrower in any
of the foregoing, and (b) all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended
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to the date hereof and from time to time hereafter and any successor statute.
"ERISA Affiliate": As applied to any Person, any trade or business
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(whether or not incorporated) which is a member of a group of which that Person
is a member and which is under common control within the meaning of Section
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414(b) and (c) of the Internal Revenue Code.
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"Events of Default": Has the meaning set forth in Section 7.1.
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"Exchange Act": The Securities Exchange Act of 1934, as in effect from
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time to time.
"Existing Credit Agreement": As set forth in the recitals to this
-------------------------
Agreement.
"Existing Loan Documents": As set forth in the recitals to this Agreement.
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"Existing Obligations": As set forth in the recitals to this Agreement.
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"Expected Federal Tax Refund": The refund of federal income taxes paid by
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Borrower with respect to Borrower's fiscal year ended December 31, 2000, in the
amount of approximately $3,000,000, which Borrower advised Agent and Co-Agent
Borrower reasonably expects to receive.
"Expected State Tax Refund": The refund of state income taxes paid by
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Borrower with respect to Borrower's fiscal year ended December 31, 1999, in the
amount of approximately $800,000.
"Federal Funds Rate": For any day, the rate set forth in the weekly
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statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Business Day, the rate for such day will be the arithmetic mean
as determined by the Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by
each of three leading brokers of Federal funds transactions in New York City
selected by the Agent.
"Fee Letters": means, collectively, the letter dated June 7, 1999, between
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the Borrower and Agent, and the letter dated June 7, 1999, between the Borrower
and Co-Agent, providing, in each case, for the payment of certain fees in
connection with this Agreement.
"Funding Date": The date on which a Borrowing occurs.
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7.
"GAAP": Generally accepted accounting principles set forth in the opinions
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and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession
or any public commission having regulatory responsibility over the Borrower or
any Subsidiary.
"General Intangibles": means all of the Borrower's present and future
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general intangibles and other personal property (including contract rights,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, service marks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, literature, reports, catalogs,
deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than goods, Accounts, and Negotiable Collateral.
"Guarantors": Any Material Subsidiary of the Borrower, as determined by
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the Agent, organized under the laws of the United States of America or any
political subdivision thereof.
"Hedging Transaction": Any interest rate swap transaction, basis swap
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transaction, forward rate transaction, commodity swap transaction, equity
transaction, equity index transaction, foreign exchange transaction, cap
transaction, floor transaction (including any option with respect to any of the
foregoing transactions and any combination of the foregoing) entered into by
Borrower from time to time; provided that such transaction is entered into for
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risk management purposes and not for speculative purposes.
"Indebtedness": With respect to the Borrower and its consolidated
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Subsidiaries, without duplication, in accordance with GAAP: (a) all obligations
for borrowed money, (b) all obligations evidenced by bonds, debentures, notes,
or other similar instruments and all reimbursement or other obligations in
respect of letters of credit, bankers acceptances, interest rate swaps
(excluding any deemed principal amount thereof not required to be shown on such
Person's balance sheet in accordance with GAAP), or other financial products,
(c) all obligations under capital leases or with respect to the deferred
purchase price for goods and services (other than accounts payable arising in
the ordinary course of business on terms customary in the trade), (d) all
obligations or liabilities of others secured by a Lien on any property or asset
of the Borrower, irrespective of whether such obligation or liability is
assumed, and (e) any obligation of the Borrower guaranteeing or intended to
guarantee (whether guaranteed, endorsed, co-made, discounted, or sold with
recourse to the Borrower) any indebtedness, lease, dividend, letter of credit,
or other obligation of any other Person.
"Indemnified Liabilities": Has the meaning set forth in Section 3.6.
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"Indemnified Person": Has the meaning set forth in Section 3.6.
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8.
"Intercreditor Agreement": Has the meaning set forth in the definition of
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"Subordinated Debt Documents."
"Interest Expense": For any period of determination, the aggregate
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consolidated amount, without duplication, of interest and original issue
discount paid, accrued or scheduled to be paid in respect of any Indebtedness of
the Borrower and its consolidated Subsidiaries, including (a) all but the
principal component of payments in respect of conditional sale contracts,
Capital Leases and other title retention agreements, (b) commissions, discounts
and other fees and charges with respect to letters of credit and bankers'
acceptance financing and (c) net costs under interest rate protection
agreements, in each case determined in accordance with GAAP.
"Internal Revenue Code": The Internal Revenue Code of 1986, as amended to
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the date hereof and from time to time hereafter and any successor statute.
"Inventory": All present and future inventory in which the Borrower has
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any interest, including goods held for sale or lease or to be furnished under a
contract of service, wherever located.
"Investment Property": "investment property" as that term is defined in
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Section 9115 of the Code.
"Issuing Bank": Mellon Bank, N.A., or any Lender, Affiliate of any Lender
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or, if none of the foregoing are capable of issuing L/Cs, such other financial
institution acceptable to the Agent and the Borrower which may at any time issue
or be requested to issue an L/C for the account of the Borrower under this
Agreement. If there is more than one Issuing Bank, all references to "the
Issuing Bank" shall be deemed to refer to each Issuing Bank or to all Issuing
Banks, as the context requires.
"Kapos": means Kapos Associates, Inc., a Virginia corporation.
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"Key-Man Life Insurance Proceeds": The proceeds of one or more life
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insurance policies with aggregate face amounts of up to $6,000,000 insuring the
life of Xxxxxx Xxxxx (or such other person as may be selected by the holders of
the Subordinated Debt Obligations pursuant to the Subordinated Debt Documents),
which life insurance policies shall name the holders of the Subordinated Debt
Obligations as the sole beneficiaries.
"L/C": Has the meaning set forth in Section 2.7.
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"L/C Usage": As of the date of determination, the sum of (i) the undrawn
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amount of outstanding L/Cs, plus (ii) the amount of unreimbursed drawings under
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L/Cs.
"Lender" and "Lenders": As set forth in the introductory paragraph of this
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Agreement.
9.
"Lender Group": Individually and collectively, each of the Lenders and the
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Agent.
"Lender Group Expenses": Has the meaning set forth in Section 10.5.
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"Lender Hedging Agreement": Any agreement entered into between the
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Borrower and any Lender or any Affiliate of a Lender in connection with any
Hedging Transaction between Borrower and such Lender or such Affiliate.
"Letter of Credit Request": Has the meaning set forth in Section 2.7.
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"Lien": Any lien, mortgage, deed of trust, pledge, security interest,
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charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).
"Loan Account": An account maintained by the Agent on its books in the
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name of Borrower on which Borrower will be charged with all Loans and other
advances made by Agent or the Lenders to Borrower or for Borrower's account,
including, accrued interest, Lender Group Expenses, and any other payment
Obligations of Borrower.
"Loans": Revolving Loans.
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"Loan Documents": This Agreement, the Note(s), each security agreement and
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each guarantee, including, but not limited to, the guaranties and the security
agreements of each of the Guarantors, the Fee Letters, any Lender Hedging
Agreement, the Stock Pledge Agreement, the Reaffirmation Agreement, the Existing
Loan Documents, and other documents required by the Lender Group in connection
with this Agreement and/or the credit extended hereunder.
"Material Subsidiary": (a) Emergent Information Technologies-East, a
-------------------
California corporation, formerly known as SM&A Corporation (East), (b) Emergent
Information Technologies-Central, a California corporation, formerly known as
Systems Integration Software, (c) Xxxxxx Xxxxx & Associates, Inc., a California
corporation, (d) each New Guarantor, and (e) any other Subsidiary of the
Borrower (i) which has an individual net worth which equals or exceeds, at the
relevant time period, ten percent (10%) of the net worth of Borrower and all of
its Subsidiaries on a consolidated basis (including such Subsidiary), (ii) which
has a pre-tax income which equals or exceeds, as of the relevant time period,
ten percent (10%) of the pre-tax income of Borrower and all of its Subsidiaries
on a consolidated basis (including such Subsidiary) or (iii) the divestiture of
which by Borrower otherwise could reasonably be expected to have a material
adverse effect on the business, operations, assets or financial condition of the
Borrower or of the Borrower and its Subsidiaries taken as a whole (regardless of
its relative net worth).
"Maturity Date": January 31, 2002.
-------------
"Mellon": Mellon Bank, N.A., a national banking association.
------
10.
"Negotiable Collateral": All of a Person's present and future letters of
---------------------
credit, notes, drafts, instruments, Investment Property, documents, personal
property leases (wherein such Person is the lessor), chattel paper, and books or
records relating to any of the foregoing.
"Net Cash Proceeds":
-----------------
(i) with respect to any Asset Sale the aggregate amount of cash
consideration received by the Borrower or any of its Subsidiaries in connection
with such Asset Sale (including insurance proceeds, awards of condemnation, and
payments under notes or other debt securities received in connection with any
Asset Sale less any reserves reasonably established pursuant to such Asset Sale
for future liabilities related thereto) which the Borrower or any of its
Subsidiaries does not reinvest, within ninety (90) days, in other productive
fixed assets of a kind then used or usable in the Business of Borrower after
deduction of all reasonable and customary fees, costs and expenses directly
incurred by the Borrower or such Subsidiary in connection therewith (including
taxes paid or payable and attributable to such sale, lease or transfer); and
(ii) with respect to the public or private issuance of equity or
permitted debt, the aggregate amount of cash consideration received by the
Borrower or any of its Subsidiaries in connection with such public or private
issuance of equity or permitted debt after deduction of all reasonable and
customary fees, taxes, costs and expenses directly incurred by the Borrower or
such Subsidiary in connection therewith.
"Net Income": With respect to any Person for any fiscal period, the net
----------
income of such Person during such fiscal period determined in accordance with
GAAP, consistently applied.
"New Guarantors": means, collectively, Emergent Information Technologies-
--------------
West, a California corporation, Emergent Information Technologies-International,
a Delaware corporation, Kapos, and SNI, and "New Guarantor" means any one of
-------------
them.
"Note Purchase Agreement": Has the meaning set forth in the definition of
-----------------------
"Subordinated Debt Documents."
"Notes": The Revolving Notes.
------
"Obligations": All loans, Revolving Loans, debts, principal, interest
-----------
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), premiums, liabilities (including all amounts charged to the
Borrower's Loan Account pursuant hereto), obligations, fees, charges, costs, or
Lender Group Expenses (including any fees or expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties owing by the Borrower to the Lender Group or
the Issuing Bank of any kind and description (whether pursuant to or evidenced
by the Loan Documents or pursuant to any other agreement between the Lender
Group or the Issuing Bank and the Borrower, and irrespective of whether for the
payment of money), whether direct or indirect,
11.
absolute or contingent, due or to become due, now existing or hereafter arising,
and including any debt, liability, or obligation owing from the Borrower to
others that the Lender Group or the Issuing Bank may have obtained by assignment
or otherwise, and further including all interest not paid when due and all
Lender Group Expenses that the Borrower is required to pay or reimburse by the
Loan Documents, by law, or otherwise, and further including payment obligations,
if any, under Hedging Transactions evidenced by the Lender Hedging Agreements
and the Existing Obligations.
"Participant": As defined in Section 10.6(e).
----------- ---------------
"PBGC": The Pension Benefit Guaranty Corporation established pursuant to
-----
Subtitle A of Title IV of ERISA.
"Permitted Acquisition": Any Acquisition that is approved by the Required
---------------------
Lenders.
"Person": An individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever nature.
"Plan": Any employee pension benefit plan maintained or contributed to by
----
the Borrower or any ERISA Affiliate of the Borrower and insured by the Pension
Benefit Guaranty Corporation under Title IV of ERISA.
"Potential Event of Default": A condition or event which, after notice or
--------------------------
lapse of time or both, would constitute an Event of Default if that condition or
event were not cured or removed within any applicable grace or cure period.
"Prime Rate": The interest rate per annum announced from time to time by
----------
the Agent as its Prime Rate. The Prime Rate may be greater or less than other
interest rates charged by the Agent to other borrowers and is not solely based
or dependent upon the interest rate which the Agent may charge any particular
borrower or class of borrowers. Information concerning the Prime Rate may be
obtained from the Agent.
"Projections": Borrower's forecasted (a) balance sheets, (b) profit and
-----------
loss statements, and (c) cash flow statements, all prepared on a basis
consistent with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share": With respect to any Lender: (a) the percentage obtained
--------------
by dividing (i) such Lender's Commitment to make Revolving Loans, by (ii) the
aggregate Commitments of all Lenders to make Revolving Loans; (b) with respect
to the Average Unused Commitments, the percentage obtained by dividing (i) such
Lender's Average Unused Commitment, by (ii) the aggregate Average Unused
Commitment of all Lenders, and (c) with respect to all other matters, the
percentage obtained by dividing (i) such Lender's
12.
Commitment to make Revolving Loans, by (ii) the aggregate Commitments of all
Lenders to make Revolving Loans.
"Purchaser": Has the meaning set forth in the definition of "Subordinated
---------
Debt Documents".
"Reaffirmation Agreement": that certain Reaffirmation Agreement, dated as
-----------------------
of the Closing Date, by each of the Guarantors and Borrower in favor of the
Lender Group pursuant to which each Guarantor and Borrower reaffirms its
obligations under the Loan Documents to which it is a party (including the
grants of security interests in favor of Agent) notwithstanding the amendment
and restatement of the Existing Credit Agreement effected by this Agreement.
"Real Property": means any estates or interests in real property now owned
-------------
or hereafter acquired by Borrower.
"Regulation T, U and X": Regulations T, U and X, respectively, promulgated
---------------------
by the Board of Governors of the Federal Reserve System, as amended from time to
time, and any successors thereto.
"Required Lenders": At any time, Lenders whose Pro Rata Shares aggregate
----------------
66.7% of the Commitment, or if the Commitments have been terminated irrevocably,
66.7% of the Obligations then outstanding.
"Revolving Commitment": The amount of $22,700,000, as such amount shall be
--------------------
reduced pursuant to Section 2.1(b).
--------------
"Revolving Facility Usage": As of any date of determination, the aggregate
------------------------
amount of Revolving Loans outstanding.
"Revolving Loans": As defined in Section 2.1(a).
--------------- --------------
"Revolving Note": As defined in Section 2.1(d).
-------------- --------------
"S.E.C.": The United States Securities and Exchange Commission and any
-----
successor institution or body which performs the functions or substantially all
of the functions thereof.
"Settlement Date": Has the meaning set forth in Section 2.2(d)(ii).
--------------- ------------------
"SNI": means StamiNet, Inc., a California corporation.
---
"Solvent": When used with respect to any Person, that as of the date as to
-------
which the Person's solvency is to be measured:
13.
(i) the fair saleable value of its assets is in excess of the total
amount of its liabilities (including contingent liabilities) as
they become absolute and matured;
(ii) it has sufficient capital to conduct its business; and
(iii) it is able to meet its debts as they mature.
"Standard Notice": An irrevocable notice provided by the Borrower to the
---------------
Agent on a Business Day which is at least one Business Day in advance of the
requested Funding Date. Standard Notice must be provided no later than 12:00
p.m., Los Angeles time, on the last day permitted for such notice.
"Stock": All shares, options, warrants, interests, participations, or
-----
other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including ordinary shares, preference shares, common stock,
preferred stock, or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the S.E.C. under the
Exchange Act).
"Stock Pledge Agreement": that certain Stock Pledge Agreement, dated as of
----------------------
the date of Amendment Number One, among Borrower, Agent, and Co-Agent.
"Subordinated Debt Documents": Collectively, (a) that certain Note
---------------------------
Purchase Agreement, dated as of the Closing Date, among the Borrower,
Guarantors, and each of the Persons identified therein as a "Purchaser"(the
"Note Purchase Agreement"), and (b) that certain Intercreditor and Subordination
------------------------
Agreement, dated as of the Closing Date, among the Purchasers and Agent (the
"Intercreditor Agreement"), and all other documents and instruments to be
------------------------
executed and delivered in connection therewith.
"Subordinated Debt Obligations": Indebtedness of Borrower and the
-----------------------------
Guarantors incurred pursuant to the Subordinated Debt Documents in favor of the
Persons identified therein as "Purchasers".
"Subsidiary": A corporation, partnership, limited liability company or
----------
other entity of which shares of stock, or any other "equity security", having
ordinary voting power (other than stock having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such entity are at the time owned, directly, or indirectly
through one or more intermediaries, or both, by the Borrower.
"Total Leverage Ratio": As of any date of determination with reference to
--------------------
the Borrower and its Subsidiaries on a consolidated basis, the ratio of
Indebtedness to EBITDA for the preceding four (4) fiscal quarters.
"Unused Line Fee": As defined in Section 2.8(c).
--------------- --------------
14.
SECTION 1.2 Other Definitional Provisions.
------------------------------
(a) All terms defined in this Agreement shall have the defined meanings
when used in the Notes or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in the Notes, and any certificate or other document
made or delivered pursuant hereto, accounting terms not defined in subsection
----------
1.1, and accounting terms partly defined in subsection 1.1 to the extent not
--- --------------
defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified.
ARTICLE II
THE CREDIT
SECTION 2.1 The Revolving Loans.
--------------------
(a) The Revolving Commitment. Each Lender agrees, severally and not
------------------------
jointly, on the terms and conditions hereinafter set forth, to make loans
("Revolving Loans") to the Borrower from time to time during the period from the
------------------
date hereof to and including the Maturity Date in an aggregate amount not to
exceed such Lender's Pro Rata Share of the Revolving Commitment (as such amount
may be reduced pursuant to Section 2.1(b)) less the undrawn and unreimbursed
--------------
amount of L/Cs, in each case, as of the date of the making of any such loan.
Within the limits of the Revolving Commitment and prior to the Maturity Date,
the Borrower may borrow, repay pursuant to Section 2.5(b) and reborrow under
--------------
this section.
(b) Reduction of the Revolving Commitment.
(A) The Revolving Commitment shall be permanently reduced on each
date set forth below by the 'Reduction Amount' corresponding thereto:
----------------------------------------------------------------------
Date Reduction Amount
-----------------------------------------------------------------------
March 31, 2001 the lesser of $1,000,000 and the
Applicable Reduction Amount
-----------------------------------------------------------------------
June 30, 2001 the lesser of $1,000,000 and the
Applicable Reduction Amount
-----------------------------------------------------------------------
September 30, the lesser of $1,000,000 and the
-----------------------------------------------------------------------
15.
-----------------------------------------------------------------------
2001 Applicable Reduction Amount
-----------------------------------------------------------------------
December 31, 2001 the lesser of $1,000,000 and the
Applicable Reduction Amount
-----------------------------------------------------------------------
(B) The Revolving Commitment shall be permanently reduced by an amount
equal to the Net Cash Proceeds received by Agent from Borrower pursuant to
Section 2.5(a)(ii) hereof; provided, however, that the Revolving Commitment
------------------ -------- -------
shall not be reduced pursuant to this Section 2.1(b)(B) by an amount in
-----------------
excess of $4,000,000.
Upon the effectiveness of each such reduction in the Revolving Commitment, (A)
to the extent that the aggregate outstanding Obligations exceeds the Revolving
Commitment, the amount of such excess shall be immediately due and payable,
without notice, in accordance with Section 2.5(a), and (B) each Lender's
--------------
Commitment shall be reduced ratably.
(c) Revolving Notes. The Loans made by the Lender Group pursuant hereto
---------------
shall be evidenced by one or more promissory notes of the Borrower,
substantially in the form of Exhibit RN-1 (the "Revolving Notes"), with any
------------ ---------------
appropriate insertions, payable to the order of each Lender and representing the
obligation of the Borrower to pay the aggregate unpaid principal amount of all
Revolving Loans made by such Lender, with interest thereon as prescribed in
Section 2.6. Each Lender is hereby authorized to record in its books and records
-----------
and on any schedule annexed to the Revolving Notes, the date and amount of each
Revolving Loan made by such Lender and the date and amount of each payment of
principal thereof, and any such recordation shall constitute prima facie
----- -----
evidence of the accuracy of the information so recorded; provided that failure
by such Lender to effect such recordation shall not affect the Borrower's
obligations hereunder.
(d) Limitation on Revolving Loans. The Lenders shall have no obligation
-----------------------------
to make Revolving Loans hereunder to the extent they would cause the Revolving
Facility Usage plus the L/C Usage to exceed the Revolving Commitment.
----
SECTION 2.2 Making the Revolving Loans.
--------------------------
(a) Notice to Agent. The Borrower may borrow under the Revolving
---------------
Commitment on any Business Day, provided that the Borrower shall give the Agent
Standard Notice specifying (i) the amount of the proposed Borrowing and (ii) the
requested date of the Borrowing. The Standard Notice may be given in writing
(including facsimile transmission) signed by one (1) authorized officer of the
Borrower no later than 12:00 noon, Los Angeles time, or orally, but if the
Standard Notice is provided orally, the Standard Notice shall be given by 11:00
a.m. and the Borrower shall confirm the oral Standard Notice on the same day in
writing (including facsimile transmission) no later than 12:00 noon, Los Angeles
time,
16.
and any conflict regarding a written or oral notice and the Agent's books and
records applicable to the same Borrowing shall be conclusively determined by the
Agent's books and records. Neither the Agent nor the Lenders shall incur any
liability to the Borrower in acting upon any oral or written notice of Borrowing
which the Agent believes in good faith to have been given by a Person duly
authorized to borrow on behalf of the Borrower. Each Borrowing shall be in a
minimum amount of $1.00.
(b) Disbursement of Funds. The Agent may, on behalf of the Lenders,
---------------------
disburse funds to the Borrower for Loans requested. Each Lender shall reimburse
the Agent on demand for all funds disbursed on its behalf by the Agent, or if
the Agent so requests, each Lender will remit to the Agent its Pro Rata Share of
any Loan before the Agent disburses same to Borrower. If the Agent elects to
require that each Lender make funds available to the Agent, prior to a
disbursement by the Agent to Borrower, the Agent shall advise each Lender by
telephone or telecopy of the amount of such Lender's Pro Rata Share of the Loan
requested by Borrower no later than 1:00 p.m. (Los Angeles time) on the Business
Day immediately preceding the requested Funding Date applicable thereto, and
each such Lender shall pay the Agent such Lender's Pro Rata Share of such
requested Loan, in same day funds, by wire transfer to the Agent's account on
such Funding Date. If any Lender fails to pay the amount of its Pro Rata Share
within 1 Business Day after the Agent's demand, the Agent shall promptly notify
the Borrower, and the Borrower shall immediately repay such amount to the Agent.
Any repayment required pursuant to this Section 2.2(b) shall be without premium
--------------
or penalty. Nothing in this Section 2.2(b) or elsewhere in this Agreement or
--------------
the other Loan Documents, including the provisions of Section 2.2(d), shall be
--------------
deemed to require the Agent to advance funds on behalf of any Lender or to
relieve any Lender from its obligation to fulfill its Commitments hereunder or
to prejudice any rights that the Agent or the Borrower may have against any
Lender as a result of any default by such Lender hereunder.
(c) [Intentionally Omitted].
(d) Settlements.
-----------
(i) The Revolving Facility Usage may fluctuate from day to day
through the Agent's disbursement of funds to, and receipt of funds from, the
Borrower. In order to minimize the frequency of transfers of funds between the
Agent and each Lender notwithstanding terms to the contrary set forth herein,
Revolving Loans and payments will be settled among the Agent and the Lenders
according to the procedures described in this Section 2.2(d). These procedures
--------------
notwithstanding, each Lender's obligation to fund its portion of any Revolving
Loans made by the Agent to the Borrower will commence on the date such Revolving
Loans are made by the Agent. Such payments will be made by such Lender without
set-off, counterclaim or reduction of any kind.
(ii) On the first Business Day of each week, or more frequently
(including daily), either at the discretion of Agent or in the event that funds
disbursed by the
17.
Agent to the Borrower for Loans, in the aggregate, equals or exceeds $100,000
(each such day being a "Settlement Date"), the Agent will advise each Lender by
---------------
telephone or telecopy of the amount of each such Lender's Pro Rata Share of the
Revolving Facility Usage as of the close of business of the second Business Day
immediately preceding the Settlement Date. In the event that payments are
necessary to adjust such Lender's actual Pro Rata Share of the Revolving
Facility Usage as of any Settlement Date to equal the amount of such Lender's
required Pro Rata Share of the Revolving Facility Usage, the party from which
such payment is due will pay the other, in same day funds, by wire transfer to
the other's account not later than 12:00 noon (Los Angeles time) on the Business
Day immediately following the Settlement Date.
(e) Availability of Lender's Pro Rata Share.
---------------------------------------
(i) Unless the Agent shall have received notice from a Lender prior
to a Funding Date that such Lender will not make available its Pro Rata Share of
a Loan requested by the Borrower, the Agent may assume that such Lender will
make such amount available to the Agent on the Business Day following the next
Settlement Date. If a Lender does not in fact made its Pro Rata Share available
to the Agent on such date, then such Lender and the Borrower severally agree to
pay to the Agent forthwith on demand such amount without set-off, counterclaim
or deduction of any kind, together with interest thereon, for each day from and
including the date such amount was to have been made available to the Agent by
such Lender to, but excluding, the date of payment to the Agent, at (a) in the
case of such Lender, the Federal Funds Rate, or (b) in the case of the Borrower,
the interest rate applicable under this Agreement with respect to such Loan.
Until any such amount is paid to the Agent, the Agent shall not be obligated to
submit to such Lender any payment made by the Borrower to the Agent with respect
to any Loan or any fees or other payments with respect thereto.
(ii) Nothing contained in this Section 2.2(e) will be deemed to
--------------
relieve a Lender of its obligation to fulfill its Commitments or to prejudice
any rights the Agent or the Borrower may have against such Lender as a result of
any such default by such Lender under this Agreement.
(f) Return of Payments.
------------------
(i) If the Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
the Agent from the Borrower and such related payment is not received by the
Agent, then the Agent will be entitled to recover such amount from such Lender
without set-off, counterclaim or deduction of any kind together with interest
thereon, for each day from and including the date such amount is made available
by the Agent to such Lender to, but excluding, the date of repayment to the
Agent, at the Federal Funds Rate, and such payment to such Lender shall be
deemed to not have been made.
18.
(ii) If the Agent determines at any time that any amount received
by the Agent under this Agreement must be returned to the Borrower or paid to
any other person pursuant to any requirement at law, court order or otherwise,
then, notwithstanding any other term or condition of this Agreement, the Agent
will not be required to distribute any portion thereof to any Lender. In
addition, each Lender will repay to the Agent on demand any portion of such
amount that the Agent has distributed to such Lender, together with interest at
such rate, if any, as the Agent is required to pay to the Borrower or such other
Person, without set-off, counterclaim or deduction of any kind.
(g) Lenders' Failure to Perform. It is understood that (i) no Lender
---------------------------
shall be responsible for any failure by any other Lender to perform its
obligation to make any Loans hereunder, nor shall any Commitment of any Lender
be increased or decreased as a result of any failure by any other Lender to
perform its obligation to make any Loans hereunder, and (ii) no failure by any
Lender to perform its obligation to make any Loans hereunder shall excuse any
other Lender from its obligation to make any Loans hereunder.
(h) Effect of Bankruptcy. If a case is commenced by or against the
--------------------
Borrower under the Bankruptcy Code, or other statute providing for debtor
relief, then, unless otherwise agreed by all the Lenders, the Lender Group shall
not make additional loans or provide additional financial accommodations under
the Loan Documents to the Borrower as debtor or debtor-in-possession, or to any
trustee for the Borrower, nor consent to the use of cash collateral (provided
that the Loan Account shall continue to be charged, to the fullest extent
permitted by law, for accruing interest, fees, and Lender Group Expenses).
SECTION 2.3 [Intentionally Omitted]
SECTION 2.4 [Intentionally Omitted]
SECTION 2.5 Repayment.
---------
(a) Mandatory Repayments.
--------------------
(i) If, at any time and from time to time (in any such case in
accordance with the terms and conditions contained herein), Borrower shall issue
and sell any Stock of Borrower, but excluding the issuance by Borrower of
approximately 2,250,000 shares of its common stock to the Purchasers, then
Borrower shall make a mandatory repayment of the Obligations, in any such case,
in an amount equal to the amount of proceeds (net of any reasonable and
customary fees, commissions, expenses, and other costs paid by Borrower in
connection therewith, other than those payable to any Affiliate of Borrower)
received by Borrower from such issuance and sale of Stock.
(ii) If, at any time and from time to time (in any such case in
accordance with the terms and conditions contained herein), (A) Borrower shall
sell or otherwise dispose of any of its assets other than (1) the sale of
Inventory in the ordinary course of business, or (2) Asset Sales if all of the
following conditions are met: (w) the
19.
market value of assets sold or otherwise disposed of in any single transaction
or series of related transactions does not exceed $250,000 and the aggregate
market value of assets sold or otherwise disposed of in any fiscal year of
Borrower does not exceed $500,000; (x) the Net Cash Proceeds of such Asset Sales
are applied as required by Sections 2.06 and 6.11 of the Note Purchase
Agreement; (y) after giving effect to the Asset Sale and the repayment of
Indebtedness with the proceeds thereof, Borrower is in compliance on a pro forma
basis with the covenants set forth in Sections 6.16, 6.17 and 6.18 of the Note
Purchase Agreement recomputed for the most recently ended quarter for which
information is available and is in compliance with all other terms and
conditions of the Note Purchase Agreement and this Agreement; and (z) no Default
or Event of Default then exists or would result from such Asset Sale; provided,
--------
however, that clause (w) subsection (2) hereof shall not apply to an Asset Sale
-------
with respect to Discontinued Operations, or (B) Borrower receives a tax refund
from any taxing authority (including, without limitation, the Expected Federal
Tax Refund, but excluding the Expected State Tax Refund), then Borrower shall
make a mandatory repayment of the Obligations, in any such case, in an amount
equal to the amount of proceeds received by Borrower from such taxing authority
or the Net Cash Proceeds from such Asset Sale.
(iii) If at any time the aggregate outstanding Obligations exceed the
Revolving Commitment then in effect, including, but not limited to, as a result
of a permanent reduction in the Revolving Commitment required under Section
-------
2.1(b) hereof, the Borrower shall immediately repay the excess to the Agent for
------
the ratable benefit of the Lender Group.
(iv) The aggregate principal amount of the Revolving Loans
outstanding on the Maturity Date, together with accrued interest thereon, shall
be due and payable in full on the Maturity Date.
(b) Optional Payment. The Borrower shall have the right at its option
----------------
from time to time to prepay the Revolving Loans in whole or in part without
premium or penalty. Prepayments shall be made by giving the Agent Standard
Notice thereof (which shall be irrevocable), specifying the date, and amount and
type of prepayment, and upon such date the amount so specified and accrued
interest thereon shall be due and payable.
(c) [Intentionally Omitted].
SECTION 2.6 Interest Rate and Payment Dates.
--------------------------------
(a) Payment. The principal balance of the Notes shall be paid in
-------
accordance with the terms set forth in the Notes. Accrued interest on the Loans
shall be due and payable on December 29, 2000, and on the last Business Day of
each calendar month thereafter. After maturity of any part of a Note (by
acceleration or otherwise), interest on such part of such Note shall be due and
payable ON DEMAND.
20.
(b) Interest Rate. The unpaid principal amount of the Notes shall
-------------
bear interest for each day until due at a per annum rate equal to the Prime Rate
for such day plus 1.00%.
----
(c) [Intentionally Omitted]
(d) Default Rate of Interest. All Loans hereunder with accrued
------------------------
interest thereon and all other amounts owing under the Loan Documents shall bear
interest at a rate equal to 2% above the per annum rate otherwise applicable
hereunder from and after the occurrence and during the continuance of an Event
of Default.
(e) [Intentionally Omitted]
(f) [Intentionally Omitted].
SECTION 2.7 Letters of Credit.
-----------------
(a) Issuance of Letters of Credit. Subject to the terms and
-----------------------------
conditions set forth in this Agreement, the Agent may from time to time cause
the Issuing Bank to issue Letters of Credit (each, an "L/C") hereunder at the
request of the Borrower and for the Borrower's account, as more specifically
described below. The L/C's issued under this Section 2.7 shall be used by the
-----------
Borrower consistent with this Agreement, for its general working capital
purposes or other ordinary course business purposes. The Agent shall not be
obligated to cause the Issuing Bank to issue any L/C for the account of any
Borrower if:
(i) Issuance of the requested L/C (i) would cause the L/C
Usage to exceed $5,000,000 or (ii) would cause the sum of the Revolving Facility
Usage plus the L/C Usage to exceed the Revolving Commitment then in effect; or
----
(ii) Issuance of the L/C is enjoined, restrained or prohibited
by any governmental authority, requirement of any applicable law, rule or
regulation or any request or directive of any governmental authority (whether or
not having the force of law) or would impose upon the Agent or the Issuing Bank
any material restriction, reserve, capital requirement, loss, cost or expense
(for which the Agent or the Issuing Bank is not otherwise compensated); or
(iii) A default of any Lender's obligations to fund under
subsection 2.7(f) exists, unless the Agent and the Issuing Bank have entered
----------------
into satisfactory arrangements with the Borrower to eliminate the Issuing Bank's
risk with respect to such Lender, including cash collateralization of such
Lender's Pro Rata Share of the L/C Usage.
(b) Terms of Letters of Credit. The proposed amount, terms and
--------------------------
conditions, and form of each L/C (and of any drafts or acceptances thereunder)
shall be subject to approval by the Agent and the Issuing Bank. The term of each
standby L/C shall not exceed 360 days, but may be subject to annual renewal. No
L/C shall have an expiry date later than the Maturity Date.
21.
(c) Request for Issuance. A request for issuance of an L/C in the
--------------------
form of Exhibit LCR (a "Letter of Credit Request") may be given in writing or
------------------------
electronically and, if requested by the Agent, promptly confirmed in writing. A
Letter of Credit Request must be received by the Agent no later than 9:00 A.M.
Los Angeles time at least three (3) Business Days (or such shorter period as may
be agreed to by the Issuing Bank) in advance of the proposed date of issuance.
(d) Lender's Participation. Immediately upon issuance or amendment
----------------------
of any L/C, each Lender shall be deemed to have irrevocably and unconditionally
purchased and received from the Issuing Bank, without recourse or warranty, an
undivided interest and participation in all rights and obligations under such
L/C (other than fees and other amounts owing to the Issuing Bank) and under this
Agreement and any reimbursement agreement executed by the Borrower therefor, in
accordance with such Lender's Pro Rata Share.
(e) Payment of Amounts Drawn Under L/Cs. Upon notice from the
-----------------------------------
Issuing Bank of any drawing under any L/C, the Agent shall notify the Borrower
of such drawing not later than 12:00 P.M. Los Angeles time on the Business Day
immediately prior to the date on which the Issuing Bank intends to honor such
drawing. The Borrower will be deemed to have concurrently given a Standard
Notice to the Agent for Revolving Loans to be made as Prime Rate Loans in the
amount of and at the time of such drawing. The proceeds of such Revolving Loans
shall be applied directly by the Agent to reimburse the Issuing Bank for the
amount of such drawing.
(f) Payment by Lenders. If Revolving Loans are not made in an amount
------------------
sufficient to reimburse the Issuing Bank in full for the amount of any draw, the
Agent shall promptly notify each Lender of the unreimbursed amount of such
drawing and of such Lender's respective participation therein. Each Lender shall
make available to the Agent, for the account of the Issuing Bank, the amount of
its participation in immediately available funds not later than 12:00 P.M. Los
Angeles time on the next Business Day. If any Lender fails to make available to
the Agent the amount of such Lender's participation, the Issuing Bank shall be
entitled to recover such amount on demand from such Lender together with
interest at the Federal Funds Rate for the first three Business Days and
thereafter at the Prime Rate. For each L/C, the Agent shall promptly distribute
to each Lender which has funded the amount of its participation its Pro Rata
Share of all payments subsequently received by the Agent from the Borrower in
reimbursement of honored drawings thereunder.
(g) Nature of Issuing Bank's Duties. In determining whether to pay
-------------------------------
under any L/C, the Issuing Bank shall be responsible only to determine that the
documents and certificates required to be delivered under that L/C have been
delivered and that they comply on their face with the requirements of that L/C.
As among the Borrower, the Issuing Bank and each other Lender, the Borrower
assumes all risks of the acts and omissions of the Issuing Bank, or misuse of
the L/C by the respective beneficiaries of such L/C. Any action taken or omitted
to be taken by the Issuing Bank under or in connection with any L/C, if
22.
taken or omitted in the absence of gross negligence or willful misconduct, shall
not create for the Issuing Bank any liability to any Borrower, the Agent or any
Lender.
(h) Obligations Absolute. The obligations of the Borrower to
--------------------
reimburse the Issuing Bank for drawings honored under the L/Cs issued for the
account of the Borrower and the obligations of the Lenders under subsection
----------
2.7(f) shall be unconditional and irrevocable and shall be paid strictly in
------
accordance with the terms of this Agreement under all circumstances including,
without limitation, the fact that an Event of Default shall have occurred and be
continuing.
(i) Agent's Execution of Applications and Other Issuing Bank
--------------------------------------------------------
Documentation; Reliance on Agreement by Issuing Bank. The Agent shall be
----------------------------------------------------
authorized to execute, deliver and perform on behalf of the Lenders such letter
of credit applications, shipping indemnities, letter of credit modifications and
consents and other undertakings for the benefit of the Issuing Bank as may be
reasonably necessary or appropriate in connection with the issuance or
modification of L/Cs requested by the Borrower hereunder. The Lenders, the Agent
and the Borrower all expressly agree that the terms of this Section 2.7 and
-----------
various other provisions of this Agreement identifying the Issuing Bank are
intended to benefit the Issuing Bank and the Issuing Bank shall be entitled to
enforce the provisions hereof which are for its benefit.
(j) Additional Payments. If by reason of (a) any change in any legal
-------------------
requirement or any change in the interpretation or application by any
governmental authority of any legal requirement or (b) compliance by the Issuing
Bank or any Lender with any direction, request or requirement (whether or not
having the force of law) of any governmental authority or monetary authority
including, without limitation, Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect (and any successor
thereto):
(i) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any L/Cs issued by the Issuing
Bank or participations therein purchased by any Lender; or
(ii) there shall be imposed on the Issuing Bank or any Lender
any other condition regarding this subsection 2.7(j), any L/C or any
-----------------
participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to the Issuing Bank or any Lender of issuing, making or maintaining any L/C or
of purchasing or maintaining any participation therein, or to reduce the amount
receivable in respect thereof by such Issuing Bank or any Lender, then, and in
any such case, the Issuing Bank or such Lender may, at any time within a
reasonable period after the additional cost is incurred or the amount received
is reduced, notify the Borrower, and the Borrower shall pay on demand such
amounts as the Issuing Bank or such Lender may specify to be necessary to
compensate the Issuing Bank or such Lender for such additional cost or reduced
receipt, together with interest on such amount from the date of such demand
until payment in full thereof at a rate
23.
equal at all times to the Prime Rate per annum. The determination by the Issuing
Bank or any Lender, as the case may be, of any amount due pursuant to this
subsection, as set forth in a certificate setting forth the calculation thereof
in reasonable detail, shall, in the absence of manifest or demonstrable error,
be final and conclusive and binding on all of the parties hereto.
(k) Immediately upon the termination of this Agreement, Borrower
agrees to either: (i) provide cash collateral, if requested by the Agent, to be
held by Agent in an amount equal to one hundred percent (100%) of the maximum
amount of the Lender Group's obligations under outstanding L/Cs, or (ii) cause
to be delivered to the Agent releases of all of the Lender Group's obligations
under outstanding L/Cs. At the Agent's discretion, any proceeds of collateral
received by any Lender or the Issuing Bank after the occurrence and during the
continuation of an Event of Default may be held as the cash collateral required
by this Section 2.7(k). Any cash collateral received by any Lender or the
--------------
Issuing Bank pursuant to this Section 2.7(k) shall be held by such Lender or the
--------------
Issuing Bank in an interest bearing account selected by the Agent in its
reasonable credit judgment, and interest earned on deposits in such account, if
any, shall be for the account of the Borrower subject to the provisions of this
Agreement. The provisions of this Section 2.7 shall survive the termination of
-----------
this Agreement with respect to any L/Cs then outstanding.
SECTION 2.8 Fees. Borrower shall pay to Agent for the ratable
----
benefit of the Lender Group (except as otherwise indicated) the following:
(a) [Intentionally Omitted];
(b) [Intentionally Omitted];
(c) Unused Line Fee. The Borrower shall pay to the Agent for the
---------------
benefit of the Lender Group according to each Lender's Pro Rata Share of the
Average Unused Commitments, a fee (the "Unused Line Fee") in an amount equal to
0.40% per annum times the Average Unused Commitments. The Unused Line Fee shall
-----
be payable in arrears, commencing on the first Business Day of January, 2001,
and thereafter (i) on the first Business Day of each three-month period during
the term of this Agreement, (ii) on the date of any reduction of the Revolving
Commitment (to the extent accrued and unpaid on the amount of such reduction),
and (iii) on the Maturity Date; and
(d) Annual Administration Fee. As set forth in the Fee Letters.
-------------------------
(e) Letter of Credit Fees.
---------------------
(i) Borrower shall pay to the Agent for the ratable benefit of
the Lenders on the first Business Day of each month a fee (the "Letter of Credit
----------------
Fees"), in an amount equal to (i) the rate per annum equal to 3.5% of the daily
----
weighted average amount of undrawn and unreimbursed standby L/Cs outstanding for
the account of the Borrower during the immediately preceding month, with a
minimum charge of $500 per standby L/C,
24.
subject to change in the future in accordance with Issuing Bank's standard fee
schedule, (ii) the Issuing Bank's customary opening fee for each documentary L/C
issued for the account of the Borrower during the immediately preceding month,
(iii) the Issuing Bank's customary negotiation fee for amounts drawn under each
documentary L/C issued for the account of the Borrower during the immediately
preceding month, and (iv) the Issuing Bank's customary guaranty fee on the
maximum amount available to be drawn under each documentary L/C guaranteed for
the account of the Borrower hereunder and outstanding during the immediately
preceding month. Notwithstanding the foregoing, Letter of Credit Fees on undrawn
and unencumbered L/Cs outstanding after the occurrence and during the
continuance of an Event of Default shall be payable on demand at a rate equal to
the rate at which the Letter of Credit Fees are charged pursuant to the first
sentence of this subsection 2.8(e)(i), plus 2% per annum.
--------------------
(ii) The Borrower shall also pay the customary charges, fees and
expenses of the Issuing Bank for the issuance, administration and negotiation of
each L/C for the account of the Borrower and the Agent shall be entitled to
charge to the Loan Account such fees, charges and expenses of the Issuing Bank
(in each case, the "Issuing Bank Fees"). As between Agent and Borrower, each
-----------------
determination by the Agent of Letter of Credit Fees, Issuing Bank Fees and other
fees, charges and expenses under this Section shall be conclusive and binding
for all purposes, absent manifest or demonstrable error.
ARTICLE III
GENERAL PROVISIONS CONCERNING THE LOANS
SECTION 3.1 Use of Proceeds. The proceeds of the Loans hereunder
---------------
shall be used by the Borrower for general corporate purposes, working capital,
Permitted Acquisitions, to repay existing indebtedness, and for the repurchase
of Borrower's equity securities as permitted under Section 6.2(j).
--------------
SECTION 3.2 Computation of Interest and Fees.
---------------------------------
(a) Calculations. Interest in respect of all Loans shall be
------------
calculated the basis of a 360 day year for the actual days elapsed. Any change
in the interest rate on the Loans resulting from a change in the Prime Rate
shall become effective as of the opening of business on the day on which such
change in the Prime Rate shall become effective.
(b) Determination by Agent. Each determination of an interest rate or
----------------------
fee by the Agent pursuant to any provision of this Agreement shall be conclusive
and binding on the Borrower in the absence of manifest error.
SECTION 3.3 Payments.
--------
(a) The Borrower shall make each payment of principal, interest and
fees hereunder and under the Notes, without setoff or counterclaim, not later
than 12:00 p.m. (Los
25.
Angeles time) on the day when due in lawful money of the United States of
America to the Agent for the account of the Lenders at the office of the Agent
designated in writing in immediately available funds. Any interest not paid when
due shall be compounded and shall thereafter accrue interest at the rate then
applicable to Borrowings hereunder.
(b) Whenever any payment to be made hereunder or under the Notes
shall be stated to be due on a day which is not a Business Day, such payment may
be made on the next succeeding Business Day, and with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension.
(c) Unless the Agent receives notice from the Borrower prior to the
date on which any payment is due to the Lenders that the Borrower will not make
such payment in full as and when required, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Lender on such due date an amount equal
to the amount then due such Lender. If and to the extent the Borrower has not
made such payment in full to the Agent, each Lender shall repay to the Agent on
demand such amount distributed to such Lender, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Lender until the date repaid.
SECTION 3.4 Apportionment, Application, and Reversal of Payments.
----------------------------------------------------
Except as otherwise provided with respect to defaulting Lenders, aggregate
principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Revolving Loans to which such
payments relate held by each Lender) and payments of the fees (other than fees
designated for the Agent's sole and separate account) shall, as applicable, be
apportioned ratably among the Lenders. All payments shall be remitted to the
Agent and all such payments not relating to principal or interest of specific
Revolving Loans, or not constituting payment of specific fees, and all proceeds
of Accounts or other Collateral received by the Agent, shall be applied as in
the following order:
(i) to pay any fees, or expense reimbursements then due to the
Agent from the Borrower;
(ii) to pay any fees or expense reimbursements then due to the
Lenders from the Borrower;
(iii) ratably to pay interest due in respect of all outstanding
Revolving Loans;
(iv) ratably to pay principal of all outstanding Revolving
Loans;
(v) ratably to pay any Obligations due to any Lender by
Borrower under any Hedging Agreement.
26.
(vi) ratably to pay any other Obligations due to the Agent or
any Lender by the Borrower.
SECTION 3.5 Reduced Return. If the Agent shall have determined that
--------------
any applicable law, regulation, rule or regulatory requirement generally
applicable to banks located in California, Pennsylvania, or such other state as
any Lender shall be located (collectively in this Section 3.5, "Requirement")
----------- -----------
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any United States federal or state
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's capital as a
consequence of its Commitments and obligations hereunder to a level below that
which would have been achieved but for such Requirement, change or compliance
(taking into consideration such Lender's policies with respect to capital
adequacy) by an amount deemed by such Lender to be material (which amount shall
be determined by such Lender's reasonable allocation of the aggregate of such
reductions resulting from such events), then from time to time, within five (5)
Business Days after demand by the Agent on behalf of such Lender, the Borrower
shall pay to the Agent for the benefit of such Lender such additional amount or
amounts as will compensate such Lender for such reduction. Neither the Agent nor
any Lender presently has knowledge of any new Requirement or any pending change
in any existing Requirement which would result in such additional amounts being
owed. Notwithstanding any other provision of this Section 3.5, no Lender shall
-----------
demand compensation for any increased cost or reduction referred to in this
Section 3.5 if it shall not at the time be the general policy of such Lender to
-----------
demand such compensation in similar circumstances under comparable provisions of
other credit agreements, and such Lender shall in good faith endeavor to
allocate increased costs or reductions fairly among all of its affected
commitments and credit extensions (whether or not it seeks compensation from all
affected borrowers).
SECTION 3.6 Indemnities. Whether or not the transactions
-----------
contemplated hereby shall be consummated, the Borrower agrees to indemnify, pay
and hold the Lender Group and the Issuing Bank, and the shareholders, officers,
directors, employees and agents of the Lender Group and the Issuing Bank (each,
an "Indemnified Person"), harmless from and against any and all claims,
------------------
liabilities, losses, damages, costs and expenses (whether or not any of the
foregoing Indemnified Persons is a party to any litigation), including, without
limitation, reasonable attorneys' fees and costs (including, without limitation,
the reasonable estimate of the allocated cost of in-house legal counsel and
staff) and costs of investigation, document production, attendance at a
deposition, or other discovery, prior to the assumption of defense by the
Borrower, with respect to or arising out of any proposed acquisition by the
Borrower or any of its Subsidiaries of any Person or any securities (including a
self-tender), this Agreement or any use of proceeds hereunder, or any claim,
demand, action or cause of action being asserted against the Borrower or any of
its Subsidiaries (collectively, the "Indemnified Liabilities"), provided that
-----------------------
the Borrower shall
27.
have no obligation hereunder with respect to Indemnified Liabilities arising
from the gross negligence or willful misconduct of any such Indemnified Persons.
If any claim is made, or any action, suit or proceeding is brought, against any
Indemnified Person pursuant to this Section, such Indemnified Person shall
notify the Borrower within thirty (30) days of such Indemnified Person's being
notified in writing of the commencement of such action, suit or proceeding, and
the Borrower will assume the defense of such action, suit or proceeding,
employing counsel selected by the Borrower and reasonably satisfactory to such
Indemnified Person, and pay the fees and expenses of such counsel. This covenant
shall survive termination of this Agreement and payment of the outstanding Notes
for a period of six (6) years.
SECTION 3.7 Requirements of Law. In the event that any law,
-------------------
regulation or directive generally applicable to financial institutions located
in California, Pennsylvania, or such other state as a Lender shall be located or
any change therein or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any United States federal or state central bank or other governmental
authority, agency or instrumentality:
(a) does or shall impose, modify or hold applicable any reserve,
assessment rate, special deposit, compulsory loan or other requirement
(collectively in this Section 3.7 "Requirements") against assets held by, or
----------- ------------
deposits or other liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of a
Lender at the last Borrowing date of a Loan;
(b) does or shall impose, modify or hold applicable any of the
Requirements against Commitments to extend credit;
(c) does or shall impose on any Lender any other condition;
and the result of any of the foregoing is to increase the cost to any Lender of
making, renewing or maintaining its Revolving Commitment or to reduce any amount
receivable thereunder (which increase or reduction shall be determined by such
Lender's reasonable allocation of the aggregate of such cost increases or
reduced amounts receivable resulting from such events), then, in any such case,
the Borrower shall pay to the Agent for the benefit of such Lender, within five
(5) Business Days of the Agent's demand on behalf of such Lender, any additional
amounts necessary to compensate such Lender for such additional cost or reduced
amount receivable as determined by such Lender with respect to Sections 3.5 and
-------------
3.7 of this Agreement. If any Lender becomes entitled to claim any additional
----
amounts pursuant to this subsection, the Agent on behalf of such Lender shall
notify the Borrower of the event by reason of which it has become so entitled.
Such notice shall contain a statement incorporating the calculation as to any
additional amounts payable pursuant to the foregoing sentence, and such
statement submitted by the Agent to the Borrower shall be conclusive in the
absence of manifest error. Neither the Agent nor any Lender presently has
knowledge of any new Requirement or any pending change in any existing
Requirement which would
28.
result in such additional amounts being owed. Notwithstanding any other
provision of this Section 3.7, no Lender shall demand compensation for any
-----------
increased cost or reduction referred to in this Section 3.7 if it shall not at
-----------
the time be the general policy of such Lender to demand such compensation in
similar circumstances under comparable provisions of other credit agreements,
and such Lender shall in good faith endeavor to allocate increased costs or
reductions fairly among all of its affected commitments and credit extensions
(whether or not it seeks compensation from all affected borrowers).
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.1 Conditions Precedent to Initial Loans. The obligation
-------------------------------------
of the Lender Group (or any member thereof) to make the initial Loan is subject
to the conditions precedent that:
(a) The Agent shall have received on or before the day of the initial
Borrowing the following, each dated prior to or as of such day, in form and
substance satisfactory to the Agent:
(i) The Notes issued by the Borrower to the order of each
Lender;
(ii) Copies of the Articles of Incorporation, partnership
agreement or other organizational document of the Borrower, certified as of a
recent date by the Secretary of State of its state of formation or
incorporation;
(iii) Copies of the Bylaws, if any, of the Borrower, certified
by the Secretary or an Assistant Secretary of the Borrower;
(iv) Copies of resolutions of the Board of Directors or other
authorizing documents of the Borrower, in form and substance satisfactory to the
Agent, approving the Loan Documents and the Borrowings hereunder;
(v) An incumbency certificate executed by the Secretary or an
Assistant Secretary of the Borrower, or equivalent document, certifying the
names and signatures of the officers of the Borrower or other Persons authorized
to sign the Loan Documents and the other documents to be delivered hereunder;
(vi) Copies of the Articles of Incorporation, partnership
agreement or other organizational document of each of the New Guarantors,
certified as of a recent date by the Secretary of State of its state of
formation or incorporation;
(vii) Copies of the Bylaws, if any, of each of the New
Guarantors, certified by the Secretary or an Assistant Secretary of the
applicable New Guarantor;
29.
(viii) Copies of resolutions of the Board of Directors or other
authorizing documents of each New Guarantor, in form and substance satisfactory
to the Agent , approving the Loan Documents to which it is a party;
(ix) An executed original of the Reaffirmation Agreement;
(x) An executed original of a guaranty and security agreement,
executed by each New Guarantor, in each case, in form and substance satisfactory
to Agent; and
(xi) Such amendments or restatements of the existing Loan
Documents as Agent shall require, in each case, in form and substance
satisfactory to Agent.
(b) Borrower and the Guarantors shall have executed and delivered the
Subordinated Debt Documents, which shall be in form and substance satisfactory
to Agent. Agent shall have received a certificate from the Secretary of the
Borrower, dated as of the Closing Date, certifying to a true, correct, and
complete copy of each of the material Subordinated Debt Documents. The
Subordinated Debt Documents shall be in full force and effect and no material
term or condition thereof shall have been amended, modified, or waived except
with the prior written consent of Agent. Agent shall have received all net cash
proceeds in an aggregate amount not less than $25,000,000 from the issuance and
sale by the Borrower of the notes evidencing the Subordinated Debt Obligations
in repayment of the Existing Obligations.
(c) All fees (including any investment banking fees incurred in
connection with the transactions contemplated herein) required to be paid at
closing shall have been paid;
(d) The Agent shall have received an opinion of counsel to the
Borrower and the Guarantors in form and substance acceptable to the Agent and
its counsel;
(e) No material adverse change shall have occurred since September
30, 2000 in the business, assets, operations, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries, taken as a whole, or in the
facts and information regarding such entities represented by the Borrower to the
Agent as of such date;
(f) No action, suit, investigation or proceeding shall have been
pending or threatened in any court or before any arbitration or governmental
authority that purports to affect the Borrower, any of its Subsidiaries or the
Loans contemplated hereby, and that could have a material adverse effect on the
Borrower or any of its Subsidiaries or the Loans contemplated hereby, or on the
ability of the Borrower and its Subsidiaries to perform their obligations under
the Loan Documents;
(g) The Borrower and its Subsidiaries shall have been in compliance
with all of their existing material financial obligations, except for such
defaults under the Existing
30.
Credit Agreement as have been waived by the lenders thereunder or as to which
the lenders have agreed to forebear from taking any action in response to such
defaults;
(h) All information previously furnished by the Borrower to the
Lender Group shall be true and correct in all material respects; and
(i) All corporate and legal proceedings and all instruments and
documents in connection with the transactions contemplated by this Agreement
shall be reasonably satisfactory in content, form and substance to the Agent and
its counsel, and the Agent and such counsel shall have received any and all
further information and documents which the Agent or such counsel may reasonably
have requested in connection therewith, such documents where appropriate to be
certified by proper corporate or governmental authorities.
SECTION 4.2 Conditions Precedent to Each Borrowing. The obligation of
---------------------------------------
the Lender Group (or any member thereof) to make a Loan on the occasion of each
Borrowing (including the initial Borrowing) or of the Agent to cause the Issuing
Bank to issue any requested L/C shall be subject to the further conditions
precedent that on the date of such Borrowing, or Letter of Credit Request:
(a) the following statements shall be true and the Agent shall have
received the notice required by Section 2.2(a), which notice shall be deemed to
--------------
be a certification by the Borrower that:
(i) The representations and warranties contained in Section 5.1
-----------
are correct on and as of the date of such Borrowing or the issuance of such
requested L/C as though made on and as of such date;
(ii) No event has occurred and is continuing, or would result
from such Borrowing, or the issuance of the requested L/C, which constitutes an
Event of Default or Potential Event of Default;
(iii) Nothing shall have occurred and the Agent shall not have
become aware of any fact or condition not previously known, which the Agent
shall determine has, or could reasonably be expected to have, a material adverse
effect on the rights or remedies of the Lender Group, or on the ability of the
Borrower to perform its obligations to the Lender Group or which has, or could
reasonably be expected to have, a materially adverse effect on the performance,
business, property, assets, condition (financial or otherwise) or prospects of
the Borrower and its Subsidiaries taken as a whole; and
(iv) The security interests and liens in favor of the Lender
Group are valid, enforceable, and prior to all others' rights and interests,
except those the Agent consents to in writing; and
(v) All Loan Documents are in full force and effect; and
31.
(b) the Agent shall have received such other approvals, opinions or
documents as the Agent may reasonably request.
The foregoing conditions precedent are not conditions to each Lender
participating in or reimbursing Agent for such Lender's Pro Rata Share of any
drawings under L/Cs or Revolving Loans made by Agent, in each case, as provided
herein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 Representations and Warranties. The Borrower represents
-------------------------------
and warrants as follows:
(a) Organization. The Borrower and each of its Material Subsidiaries
------------
is duly organized, validly existing and in good standing under the laws of the
state of its incorporation. The Borrower and each of its Material Subsidiaries
is also duly authorized, qualified and licensed in all applicable jurisdictions,
and under all applicable laws, regulations, ordinances or orders of public
authorities, to carry on its business in the locations and in the manner
presently conducted in which the failure to be so authorized, qualified or
licensed would have a material adverse effect on the Borrower and its Material
Subsidiaries taken as a whole.
(b) Authorization. The execution, delivery and performance by the
-------------
Borrower of the Loan Documents, and the making of Borrowings hereunder, are
within the Borrower's corporate powers, have been duly authorized by all
necessary corporate action, do not contravene (i) the Borrower's charter, by-
laws or other organizational document or (ii) any law or regulation (including
Regulations T, U and X) binding on or affecting the Borrower or its properties,
and will not constitute an event of default under any material agreement to
which the Borrower is a party or by which its assets or properties may be bound.
(c) Governmental Consents. No authorization or approval or other
---------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body (except routine reports required pursuant to the Securities
Exchange Act of 1934, as amended (if such act is applicable to the Borrower),
which reports will be made in the ordinary course of business) is required for
the due execution, delivery and performance by the Borrower of the Loan
Documents.
(d) Validity. The Loan Documents are the binding obligations of the
--------
Borrower or other executing Person, if any, enforceable in accordance with their
respective terms.
(e) Financial Condition. The balance sheets of the Borrower and its
-------------------
consolidated Subsidiaries as of September 30, 2000, and the related statements
of income and retained earnings of the Borrower and its consolidated
Subsidiaries for the fiscal quarter
32.
then ended, copies of which have been furnished to the Agent, fairly present in
all material respects the financial condition of the Borrower and its
consolidated Subsidiaries as at such date and the results of the operations of
the Borrower and its consolidated Subsidiaries for the periods ended on such
date, all in accordance with GAAP, consistently applied, and since September 30,
2000, there has been no material adverse change in the business, operations,
properties, assets or condition (financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole.
(f) Litigation. Except as set forth on Schedule 5.1(f) hereto, there
---------- ---------------
is no known pending or threatened action or proceeding affecting the Borrower or
any of its Subsidiaries before any court, governmental agency or arbitrator,
which may materially and adversely affect the consolidated financial condition
or operations of the Borrower or which may have a material adverse effect on the
Borrower's ability to perform its obligations under the Loan Documents, having
regard for its other financial obligations.
(g) Employee Benefit Plans. The Borrower and each of its ERISA
----------------------
Affiliates has fulfilled its obligations, if any, under the minimum funding
standards of ERISA and the Internal Revenue Code with respect to each Plan and
is in compliance in all material respects with the applicable provisions of
ERISA and the Internal Revenue Code, and has not incurred any liability with
respect to any Plan under Title IV of ERISA. No reportable event has occurred
under Section 4043(b) of ERISA for which the PBGC requires 30 day notice. No
action by the Borrower or of any ERISA Affiliate of the Borrower to terminate or
withdraw from any Plan has been taken and no notice of intent to terminate a
Plan has been filed under Section 4041 of ERISA. No proceeding has been
commenced with respect to a Plan under Section 4042 of ERISA, and no event has
occurred or condition exists which might constitute grounds for the commencement
of such a proceeding.
(h) Disclosure. No representation or warranty of the Borrower
----------
contained in this Agreement or any other document, certificate or written
statement furnished to the Agent or any Lender by or on behalf of the Borrower
for use in connection with the transactions contemplated by this Agreement
contains any known untrue statement of a material fact or omits to state a known
material fact (known to the Borrower in the case of any document not furnished
by it) necessary in order to make the statements contained herein or therein not
misleading. There is no fact known to the Borrower which materially and
adversely affects the business, operations, property, assets or condition
(financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole,
which has not been disclosed herein or in such other documents, certificates and
statements furnished to the Agent for use in connection with the transactions
contemplated hereby.
(i) Environmental Matters. Except as set forth in Schedule 5.1(i)
--------------------- ---------------
hereto, neither the Borrower nor any Subsidiary, nor any of their respective
officers, employees, representatives or agents, nor, to the best of their
knowledge, any other person, has treated, stored, processed, discharged,
spilled, or otherwise disposed of any substance defined as hazardous or toxic by
any applicable federal, state or local law, rule, regulation, order or
33.
directive, or any waste or by-product thereof, at any real property or any other
facility owned, leased or used by the Borrower or any Subsidiary, in violation
of any applicable statutes, regulations, ordinances or directives of any
governmental authority or court, which violations may result in liability to the
Borrower or any Subsidiary or any of their respective officers, employees,
representatives, agents or shareholders in an amount exceeding $100,000 for all
such violations; and the unresolved violations set forth in said Schedule 5.1(i)
---------------
will not result in liability to the Borrower or any Subsidiary or any of their
respective officers, employees, representatives, agents or shareholders in an
amount exceeding $100,000 for all such unresolved violations. Except as set
forth in said Schedule 5.1(i), no employee or other person has made a claim or
---------------
demand against the Borrower or any Subsidiary based on alleged damage to health
caused by any such hazardous or toxic substance or by any waste or by-product
thereof; and the unsatisfied claims or demands against the Borrower or any
Subsidiary set forth in said Schedule 5.1(i) will not result in uninsured
---------------
liability to the Borrower or any Subsidiary or any of their respective officers,
employees, representatives, agents or shareholders in an amount exceeding
$100,000 in excess of reserves on the books of the Borrower for all such
unsatisfied claims or demands. Except as set forth in said Schedule 5.1(i),
---------------
neither the Borrower nor any Subsidiary has been charged by any governmental
authority with improperly using, handling, storing, discharging or disposing of
any such hazardous or toxic substance or waste or by-product thereof or with
causing or permitting any pollution of any body of water; and the outstanding
related charges set forth in said Schedule 5.1(i) will not result in liability
---------------
to the Borrower or any Subsidiary or any of their respective officers,
employees, representatives, agents or shareholders in an amount exceeding
$100,000 for all such outstanding charges.
(j) Employee Matters. There is no known strike or work stoppage in
----------------
existence or threatened involving the Borrower or its Subsidiaries that may
materially and adversely affect the consolidated financial condition or
operations of the Borrower or that may have a material adverse effect on the
Borrower's ability to perform its obligations under the Loan Documents, having
regard for its other financial obligations.
(k) Solvency. The Borrower and each of its Subsidiaries is Solvent.
--------
(l) Title to Properties. The Borrower and each of its Subsidiaries
-------------------
has good and marketable title to all of its properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind except those permitted under Section 6.2(f) hereof.
---------------
(m) Tax Returns. The Borrower and each of its Subsidiaries has
-----------
filed, or caused to be filed, in a timely manner all tax returns, reports and
declarations which are required to be filed by it (without requests for
extension except as previously disclosed in writing to the Agent) including all
documents or other documents necessary to enable Borrower to receive the
Expected State Tax Refund. All information in such tax returns, reports and
declarations is complete and accurate in all material respects. The Borrower and
each of its Subsidiaries has paid or caused to be paid all taxes due and payable
or claimed
34.
due and payable in any assessment received by it, except taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to the Borrower or its Subsidiary and with respect to
which adequate reserves have been set aside on its books. Adequate provision has
been made for the payment of all accrued and unpaid Federal, State, county,
local, foreign and other taxes whether or not yet due and payable and whether or
not disputed.
(n) Compliance with Other Agreements and Applicable Laws. Neither
----------------------------------------------------
Borrower nor any of its Subsidiaries is in default in any material respect
under, or in violation in any material respect of any of the terms of, any
material agreement, contract, instrument, lease or other commitment to which it
is a party or by which it or any of its assets are bound and Borrower and each
of its Subsidiaries is in compliance in all material respects with all
applicable provisions of material laws, rules, regulations, licenses, permits,
approvals and orders of any foreign, Federal, state or local governmental
authority.
ARTICLE VI
COVENANTS
SECTION 6.1 Affirmative Covenants. So long as any Note shall remain
----------------------
unpaid or the Lender Group shall have any Commitment hereunder, the Borrower
will, unless the Agent shall otherwise consent in writing:
(a) Financial Information. Furnish to the Agent:
---------------------
(i) as soon as available, but in any event within 90 days after
the end of each fiscal year of the Borrower, (A) a copy of the Borrower's
audited consolidated balance sheet of itself and its consolidated Subsidiaries
as at the end of each fiscal year and the related audited consolidated
statements of income and retained earnings (or comparable statement) employed in
the business and changes in financial position and cash flow for such year,
setting forth in each case in comparative form the figures for the previous
year, accompanied by an unqualified report and opinion thereon of independent
certified public accountants acceptable to the Agent, and, if prepared, such
accountants' letter to management, and (B) a copy of the Borrower-prepared
consolidating balance sheet and income statements prepared in connection with
the statement provided in subpart (A) above;
(ii) as soon as available, but in any event within 45 days after
the end of each fiscal quarter, the Borrower's unaudited consolidated and
consolidating balance sheet of itself and its consolidated Subsidiaries as at
the end of such period and the related unaudited consolidated and consolidating
statement of income and retained earnings (or comparable statement) and changes
in financial position and cash flow for such period and year to date, setting
forth in each case in comparative form, if available, the figures as at the end
of the previous fiscal year as to the balance sheet and the figures for the
previous corresponding period as to the other statements, certified by the Chief
Financial Officer of the Borrower as being fairly stated in all material
respects subject to year end adjustments; all such financial
35.
statements to be complete and correct in all material respects and to be
prepared in reasonable detail acceptable to the Agent and in accordance with
GAAP applied consistently throughout the periods reflected therein (except as
approved by such accountants and disclosed therein);
(iii) as soon as available, but in any event within 30 days after
the end of each month, the Borrower's unaudited consolidated and consolidating
balance sheet of itself and its consolidated Subsidiaries as at the end of such
period and the related unaudited consolidated and consolidating statement of
income and retained earnings (or comparable statement) and the Borrower's
regularly prepared cash projections for such period and year to date, setting
forth in each case in comparative form, if available, the figures as at the end
of the previous fiscal year as to the balance sheet and the figures for the
previous corresponding period as to the other statements; all such financial
statements to be complete and correct in all material respects and to be
prepared in reasonable detail acceptable to the Agent and in accordance with
GAAP applied consistently throughout the periods reflected therein (except as
approved by such accountants and disclosed therein);
(iv) (a) together with each delivery of financial statements of
Borrower and its Subsidiaries pursuant to subdivision (i), (ii), and (iii)
above, a certificate, executed by the Chief Financial Officer of the Borrower
stating that such officer has reviewed the terms of this Agreement and has made,
or caused to be made under his supervision, a review in reasonable detail of the
transactions and condition of the Borrower and its Subsidiaries during the
accounting period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such accounting period, and
that such officer does not have knowledge of the existence as at the date of
such certificate, of any condition or event that constitutes an Event of Default
or Potential Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
the Borrower has taken, is taking and proposes to take with respect thereto; and
(b) together with each delivery of financial statements of the Borrower and its
Subsidiaries pursuant to subdivision (i) and (ii) above, a certificate
demonstrating in reasonable detail compliance during and at the end of the
applicable accounting periods with the restrictions contained in Section 6.2
-----------
hereof;
(v) as soon as available, but in any event within 30 days after
the end of each quarter through and including the quarter ended December 31,
2001, Projections for the period from the date of such Projections through
December 31, 2001; and
(vi) any other report as Agent may reasonably request from time
to time.
(b) Notices and Information. Deliver to the Agent:
-----------------------
(i) promptly upon any officer of the Borrower obtaining
knowledge (a) of any condition or event which constitutes an Event of Default or
Potential Event of Default, (b) that any Person has given any notice to the
Borrower or any Subsidiary of the
36.
Borrower or taken any other action with respect to a claimed default or event or
condition of the type referred to in Section 7.1(e), (c) of the institution of
--------------
any litigation involving an alleged liability (including possible forfeiture of
property) of the Borrower or any of its Subsidiaries equal to or greater than
$1,000,000 or any adverse determination in any litigation involving a potential
liability of the Borrower or any of its Subsidiaries equal to or greater than
$1,000,000, or (d) of a material adverse change in the business, operations,
properties, assets or condition (financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole, an officer's certificate specifying the nature
and period of existence of any such condition or event, or specifying the notice
given or action taken by such holder or Person and the nature of such claimed
default, Event of Default, Potential Event of Default, event or condition, and
what action the Borrower has taken, is taking and proposes to take with respect
thereto;
(ii) promptly upon becoming aware of the occurrence of or
forthcoming occurrence of (a) any reportable event under Section 4043(b) of
ERISA for which the PBGC requires 30 day notice, (b) any action by the Borrower
or any ERISA Affiliate of the Borrower to terminate or withdraw from a Plan or
the filing of any notice of intent to terminate under Section 4041 of ERISA, (c)
any notice of noncompliance made with respect to a Plan under Section 4041(b) of
ERISA, and (d) the commencement of any proceeding with respect to a Plan under
Section 4042 of ERISA, an officer's certificate specifying the nature of such
occurrence or forthcoming occurrence;
(iii) promptly, and in any event within 30 days after receipt
thereof, a copy of any notice, summons, citation, directive, letter or other
form of communication from any governmental authority or court in any way
concerning any action or omission on the part of the Borrower or any of its
Subsidiaries in connection with any substance defined as toxic or hazardous by
any applicable federal, state or local law, rule, regulation, order or directive
or any waste or byproduct thereof, or concerning the filing of a lien upon,
against or in connection with the Borrower, its Subsidiaries, or any of their
leased or owned real or personal property, in connection with a Hazardous
Substance Superfund or a Post-Closure Liability Fund as maintained pursuant to
(S) 9507 of the Internal Revenue Code;
(iv) promptly upon becoming aware of the occurrence of or
forthcoming occurrence of a Change of Control, an officer's certificate
describing, in reasonable detail, the specifics of the Change of Control; and
(v) promptly upon the Agent's request, such other statements,
lists of property and accounts, budgets, forecasts or reports as to the Borrower
and its Subsidiaries as the Agent may reasonably request.
(c) Corporate Existence, Etc. At all times preserve and keep in full
------------------------
force and effect its and its Material Subsidiaries' corporate existence and
rights and franchises material to its business as a whole and those of each of
its Material Subsidiaries.
37.
(d) Payment of Taxes and Claims. Pay, and cause each of its
---------------------------
Subsidiaries to pay, all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or in respect of any of its
franchises, business, income or property before any penalty or interest accrues
thereon, and all claims (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due and payable and
which by law have or may become a lien upon any of its properties or assets,
prior to the time when any penalty or fine shall be incurred with respect
thereto; provided that no such charge or claim need be paid if being contested
in good faith by appropriate proceedings promptly instituted and diligently
conducted and if such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made therefor.
(e) Maintenance of Properties; Insurance. Maintain or cause to be
------------------------------------
maintained in good repair, working order and condition (ordinary wear and tear
excepted) all material properties used or useful in the business of the Borrower
and its Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof. The Borrower will
maintain or cause to be maintained, with financially sound and reputable
insurers, insurance with respect to its properties and business and the
properties and business of its Subsidiaries against loss or damage of the kinds
customarily insured against by corporations of established reputation engaged in
the same or similar businesses and similarly situated, of such types and in such
amounts as are customarily carried under similar circumstances by such other
corporations. All hazard insurance and such other insurance as Agent shall
specify, shall contain a Form 438BFU (NS) mortgagee endorsement, or an
equivalent endorsement satisfactory to Agent, showing Agent on behalf of the
Lenders as the loss payee thereof, as its interests may appear, and shall
contain a waiver of warranties. Every policy of insurance referred to in this
Section 6.1(e) shall contain an agreement by the insurer that it will not cancel
--------------
such policy except after 30 days prior written notice to Agent and that any loss
payable thereunder shall be payable notwithstanding any act or negligence of the
Borrower which might, absent such agreement, result in a forfeiture of all or a
part of such insurance payment. The Borrower will, upon the request of the
Agent, deliver to the Agent a copy of each insurance policy, or, if permitted by
the Agent, a certificate of insurance listing all insurance in force.
(f) Inspection. Permit any authorized representatives designated by
----------
the Agent to visit and inspect any of the properties of the Borrower or any of
its Subsidiaries, including its and their financial and accounting records, and
to make copies and take extracts therefrom, and to discuss its and their
affairs, finances and accounts with its and their officers and independent
public accountants, all at such reasonable times during normal business hours
and as often as may be reasonably requested. Agent's access to Borrower's Books
shall not include access to matters which are classified or deemed secret or any
level of secret or similar classification pursuant to appropriate governmental
authority unless such access is permitted by applicable governmental
regulations.
38.
(g) Compliance with Laws Etc. Exercise, and cause each of its
------------------------
Subsidiaries to exercise, all due diligence in order to comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, including, without limitation, all rules and regulations
of public utility commissions or similar regulatory authorities, and all
environmental laws, rules, regulations and orders, noncompliance with which
would materially and adversely affect the business, properties, assets,
operations or condition (financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole.
(h) Hazardous Waste Studies. Promptly, and in any event within
-----------------------
thirty (30) days after submission, provide the Agent with copies of all such
investigations, studies, samplings and testings as may be requested by any
governmental or regulatory authority relative to any substance defined as
hazardous or toxic by any applicable federal, state or local law, rule,
regulation, order or directive, or any waste or by-product thereof, at or
affecting any real property or any facility owned, leased or used by the
Borrower or any Subsidiary.
(i) Accounting System. Maintain a standard and modern system of
-----------------
accounting that enables Borrower to produce financial statements in accordance
with GAAP, and maintain records pertaining to the Collateral that contain
information as from time to time may be requested by the Lender Group.
(j) Location of Inventory and Equipment. Keep its Inventory and
-----------------------------------
Equipment only at the locations identified on Schedule 6.1(j); provided,
however, that Borrower may amend Schedule 6.1(j) so long as such amendment
occurs by written notice to Agent not less than 30 days prior to the date on
which the Inventory or Equipment is moved to such new location, so long as such
new location is within the continental United States, and so long as, at the
time of such written notification, Borrower provides any financing statements or
fixture filings necessary or advisable to perfect and continue perfected Agent's
Liens and also provide to Agent a collateral access agreement in form and
substance satisfactory to Agent.
(k) Tax Returns. The Borrower and each of its Subsidiaries will
-----------
file, or cause to be filed, in a timely manner all tax returns, reports and
declarations which are required to be filed by it (without requests for
extension except as previously disclosed in writing to the Agent) to enable
Borrower to timely receive the Expected Federal Tax Refund.
SECTION 6.2 Negative Covenants. So long as any Note shall remain
-------------------
unpaid or the Lender Group shall have any Commitment hereunder, the Borrower
will not, without the written consent of the Agent:
(a) Total Leverage Ratio. Commencing as of the last day of the
--------------------
fiscal quarter ending December 31, 2000 and continuing as of the last
day of each fiscal quarter ending thereafter, permit the Total
Leverage Ratio to be greater than the ratios described below
calculated as of the end of each fiscal quarter in accordance with the
following schedule:
39.
--------------------------------------------------------------------------------
Fiscal Quarter Ending Maximum Total Leverage Ratio
--------------------------------------------------------------------------------
December 31, 2000 through the fiscal
quarter ending March 31, 2001 2.75 to 1.00
--------------------------------------------------------------------------------
June 30, 2001 2.50 to 1.00
--------------------------------------------------------------------------------
September 30, 2001 2.25 to 1.00
--------------------------------------------------------------------------------
December 31, 2001, and as of the last
day of each fiscal quarter thereafter 2.00 to 1.00
--------------------------------------------------------------------------------
(b) Minimum Debt Service Coverage Ratio. Commencing as of the last day of
-----------------------------------
the fiscal quarter ending March 31, 2001 and continuing as of last day
of each fiscal quarter ending thereafter, permit the minimum Debt
Service Coverage Ratio to be less than the ratios described below
calculated as of the end of each fiscal quarter in accordance with the
following schedule:
--------------------------------------------------------------------------------
Fiscal Quarter Ending Minimum Debt Service Coverage
Ratio
--------------------------------------------------------------------------------
March 31, 2001 and June 30, 2001 2.50 to 1.00
--------------------------------------------------------------------------------
September 30, 2001 2.75 to 1.00
--------------------------------------------------------------------------------
December 31, 2001, and as of the last
day of each fiscal quarter thereafter 3.00 to 1.00
--------------------------------------------------------------------------------
(c) [Intentionally Omitted]
(d) Liens Etc. Create or suffer to exist, or permit any of its
---------
Subsidiaries to create or suffer to exist, any Lien upon or with respect to any
of its properties, whether now owned or hereafter acquired, or assign, or permit
any of its Subsidiaries to assign, any right to receive income, in each case to
secure any indebtedness of any Person other than (i) Liens reflected on Schedule
--------
6.2(d) hereto; (ii) purchase money Liens upon or in any property acquired or
------
held by the Borrower or any Subsidiary in the ordinary course of business to
secure the purchase price of such property or to secure indebtedness incurred
solely for the purpose of financing the acquisition of such property as
permitted by Section 6.2(h)(v) hereof; (iii) Liens for taxes not yet due; (iv)
-----------------
Liens associated with any operating leases; (v)
40.
Liens securing the Obligations; and (vi) Liens in Key-Man Life Insurance
Proceeds securing the Subordinated Debt Obligations.
(e) Debt.Create, incur, assume or permit to exist, or permit any
----
Subsidiary, to create, incur, assume or permit to exist, any direct or
contingent Indebtedness, liabilities or lease obligations (other than those to
the Lender Group or the Issuing Bank under any Loan Document, including any
Hedging Agreement), or become liable for the debts of others without the Agent's
written consent, except for (i) acquiring goods, supplies or merchandise on
normal trade credit; (ii) endorsing negotiable instruments received in the usual
course of business; (iii) obtaining surety bonds in the usual course of
business, (iv) the Indebtedness of the Borrower and its Subsidiaries existing as
of, and disclosed to the Agent prior to the date of this Agreement; (v) secured
Indebtedness, in the aggregate, for purchase money financing of equipment which
is permitted under Section 6.2(d)(ii) hereof and obligations under Capital
------------------
Leases, not to exceed $1,500,000 outstanding at any time; (vi) operating leases;
(vii) the Subordinated Debt Obligations; and (viii) those contingent obligations
of the Borrower set forth on Schedule 6.2(e) hereto. Neither the Borrower nor
---------------
any of its Subsidiaries shall prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of the Borrower or of any of its Subsidiaries other
than (i) the Obligations in accordance with this Agreement, and (ii) the
Subordinated Debt Obligations in accordance with and as permitted by the
Intercreditor Agreement.
(f) Consolidation, Merger or Dissolution. Except for Permitted
------------------------------------
Acquisitions or in connection with the sale of Discontinued Operations,
consolidate with or merge into, or permit any Subsidiary to consolidate with or
merge into, any other corporation or entity; provided, however, any Solvent
-------- -------
Subsidiary may be merged with or liquidated into the Borrower or any wholly-
owned Subsidiary (if the Borrower or such wholly-owned Subsidiary is the
surviving corporation).
(g) Loans, Investments, Secondary Liabilities. With the exception of
-----------------------------------------
Permitted Acquisitions, make or permit to remain outstanding, or permit any
Subsidiary to make or permit to remain outstanding, any loan or advance to, or
guarantee, induce or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stock or dividends of, or own,
purchase or acquire any stock, obligations or securities of or any other
interest in, or make any capital contribution to, any other Person, in an
aggregate amount at any time, collectively among the Borrower and its
Subsidiaries, in excess of $1,000,000 except that the Borrower and its
Subsidiaries may, without limitation as to the dollar amount of any such
transactions (except as expressly provided below):
(i) own, purchase or acquire certificates of deposit issued by
the Agent or any Lender, commercial paper rated Moody's P-1, municipal bonds
rated Xxxxx'x XX or better, direct obligations of the United States of America
or its agencies, and obligations guaranteed by the United States of America;
41
(ii) continue to own the existing capital stock of the
Borrower's Subsidiaries and a 45% member interest in SMD Software L.L.C., a
Washington limited liability company;
(iii) endorse negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business;
(iv) allow the Borrower's Subsidiaries to make or permit to
remain outstanding advances from the Borrower's Subsidiaries to the Borrower;
(v) make or permit to remain outstanding loans or advances to
any of Borrower's Subsidiaries not guaranteeing the repayment of the Loans or
the performance of Borrower hereunder (a "Non-guaranteeing Subsidiary") or enter
---------------------------
into or permit to remain outstanding guarantees in connection with the
obligations of the Borrower's Non-guaranteeing Subsidiaries, provided that such
loans and advances shall be limited to those arising in the ordinary course of
Borrower's business and the aggregate amount of such loans or guarantees by the
Borrower outstanding at any time shall not exceed $500,000;
(vi) make or permit to remain outstanding loans and advances to
any of its officers, directors and shareholders or enter into or permit to
remain outstanding guarantees in connection with the obligations of any of its
officers, directors and shareholders, in an aggregate amount for all such loans,
advances and guarantees not exceeding $500,000 outstanding at any one time; and
(vii) enter into Hedging Transactions with any Lender pursuant
to any Hedging Agreement.
(h) Asset Sales. Convey, sell, lease, transfer or otherwise dispose
-----------
of, or permit any Subsidiary to convey, sell, lease, transfer or otherwise
dispose of, during any fiscal year of the Borrower, in one transaction or a
series of transactions, outside the ordinary course of business, assets of the
Borrower or of any of its Subsidiaries, whether now owned or hereafter acquired,
having an aggregate value in excess of $500,000; provided, however, that this
-------- -------
Section 6.2(h) shall not apply to an asset sale with respect to Discontinued
--------------
Operations.
(i) Dividends. Authorize, declare or pay any dividends or other
---------
distributions on its capital stock or redeem, repurchase or acquire any shares
of its capital stock.
(j) Limitation on Granting of Liens and on Restrictions on Subsidiary
-----------------------------------------------------------------
Dividends and Other Transfers. Borrower will not, and it will not permit
-----------------------------
any of its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of (i) any Subsidiary to (A) pay dividends or make any other
distribution on its capital stock or any other equity interest or participation
in its profits owned by Borrower or any Subsidiary, or pay or repay any
indebtedness owed to Borrower or a Subsidiary, (B) make loans or advances to
Borrower or
42
(C) transfer any of its properties or assets to the Borrower or any
Subsidiary or (ii) Borrower or any Subsidiary to grant Liens or security
interests on the assets of such Person in favor of the Lender Group, except for
such encumbrances or restrictions existing under or by reason of (A) applicable
law, (B) this Agreement, (C) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of Borrower or any
Subsidiary, and (D) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of Borrower or any Subsidiary.
(k) Transactions with Affiliates. Neither the Borrower nor any of its
----------------------------
Subsidiaries shall enter into any transaction for the purchase, sale or exchange
of property or the rendering of any service to or by any affiliate, except in
the ordinary course of and pursuant to the reasonable requirements of the
Borrower's or its Subsidiary's business and upon fair and reasonable terms no
less favorable to the Borrower or its Subsidiary than the Borrower or its
Subsidiary would obtain in a comparable arm's length transaction with an
unaffiliated person.
(l) Books and Records. The Borrower will, and will cause each of the
-----------------
Guarantors to, keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of applicable law
shall be made of all dealings and transactions in relation to their businesses
and activities.
(m) Restructure. Make any material change in the Borrower's financial
-----------
structure, the principal nature of the Borrower's business operations (taken as
a whole), or the date of its fiscal year.
(n) Change in Location of Chief Executive Office; Inventory and Equipment
---------------------------------------------------------------------
with Bailees. The Borrower shall not relocate its chief executive office to a
------------
new location without providing 30 days prior written notification thereof to
Agent and so long as, at the time of such written notification, the Borrower
provides any financing statements or fixture filings necessary or advisable to
perfect and continue perfected Agent's Liens.
(o) Securities Accounts. The Borrower shall not establish or maintain any
-------------------
Securities Account (as defined in Section 8501 of the Code) unless Agent shall
have received a control agreement in form and substance satisfactory to Agent,
duly executed and in full force and effect, in respect of such Securities
Account. The Borrower agrees that it will not transfer assets out of any
Securities Accounts; provided, however, that, so long as no Event of Default has
occurred and is continuing or would result therefrom, the Borrower may use such
assets to the extent permitted by this Agreement.
(p) Capital Expenditures. Make or incur any Capital Expenditure if, after
--------------------
giving effect thereto, the aggregate amount of all Capital Expenditures by the
Borrower and its Subsidiaries, collectively, during any fiscal year would exceed
$2,000,000.
43
(q) Amendments to Certain Documents. Enter into any amendment, supplement,
-------------------------------
or modification of any Subordinated Debt Document, except as otherwise permitted
by the Intercreditor Agreement.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 Events of Default.
-----------------
Any one or more of the following events shall constitute an event of default
(each, an "Event of Default") under this Agreement:
----------------
(a) The Borrower shall fail to pay any installment of principal or interest
or any other amount payable hereunder within five (5) days of the due date
thereof; or
(b) Any representation or warranty made by the Borrower herein or by the
Borrower (or any of its officers) in connection with the Loan Documents shall
prove to have been incorrect in any material respect when made; or
(c) The Borrower shall fail to perform or observe any term, covenant or
agreement contained in this Agreement on its part to be performed or observed
other than as described in Section 7.1(a) above and such failure shall continue
--------------
for five (5) consecutive days after the Borrower becomes aware of such failure
to perform or observe any such term, covenant or agreement; provided, that such
-------- ----
five (5) day period shall not apply in the case of: (i) any failure to observe
any such term, covenant, condition or provision which is not capable of being
cured at all or within such five (5) day period or which has been the subject of
a prior failure within a six (6) month period, or (ii) an intentional breach by
Borrower of any such term, covenant, condition or provision; or
(d) The Borrower or any of its Subsidiaries shall default in the
performance of or compliance with any term contained in any Loan Document other
than this Agreement and such default shall not have been remedied or waived
within any applicable grace period; or
(e) The Borrower or any of its Subsidiaries shall (i) fail to pay any
principal of, or premium or interest on, any indebtedness (including, without
limitation, with respect to the Subordinated Debt Obligations) when due (whether
by scheduled maturity, required prepayment, acceleration, demand or otherwise)
and such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such indebtedness, and not
otherwise have been waived or extended, or (ii) fail to perform or observe any
term, covenant or condition on its part to be performed or observed under any
agreement or instrument relating to any such indebtedness (including, without
limitation, any of the Subordinated Debt Documents) or material to the
performance, business, property, assets, condition (financing or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole, when required
to be performed or observed, and such failure shall continue
44
after the applicable grace period, if any, specified in such agreement or
instrument and such failure shall not have been waived; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or the Borrower or any
of its Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unhanded for a period of sixty (60) days; or (iii) there shall be commenced
against the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, restraint or
similar process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within thirty (30) days from the
entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) and (iii)
above; or (v) the Borrower or any of its Subsidiaries shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(g) One or more judgments or decrees shall be entered against the Borrower
or any of its Subsidiaries involving in the aggregate a liability (not paid or
fully covered by insurance or reserves) equal to or greater than $250,000 and
all such judgments or decrees shall not have been vacated, discharged, or stayed
or bonded pending appeal within thirty (30) days from the entry thereof; or
(h) Any guaranty of the Loans for any reason other than satisfaction in
full of all obligations of the Borrower under the Loan Documents, ceases to be
in full force and effect or is declared null and void, or any Guarantor denies
that it has any further liability under such guaranty or gives notice to such
effect and any such cessation, declaration or denial shall not have been
rescinded, and such guarantee reaffirmed, to the satisfaction of the Agent
within thirty (30) days after the Borrower knows of such development; or
(i) The occurrence of any one or more of the following events with respect
to the Borrower or any ERISA Affiliate of the Borrower provided such event or
events could reasonably be expected, in the judgment of the Agent, to subject
the Borrower or any ERISA Affiliate of the Borrower to any tax, penalty or
liability (or any combination of the foregoing) which, in the aggregate, could
have a material adverse effect on the financial
45
condition of the Borrower or any ERISA Affiliate of the Borrower with respect to
a Plan: (A) a reportable event shall occur with respect to a Plan which is, in
the reasonable judgment of the Agent, likely to result in the termination of
such Plan for purposes of Title IV of ERISA, or (B) any Plan termination (or
commencement of proceedings to terminate a Plan) or the full or partial
withdrawal from a Plan by the Borrower or any ERISA Affiliate of the Borrower;
or
(j) There shall be instituted against the Borrower or any Material
Subsidiary, or against any Guarantor, any proceeding for which forfeiture of any
property is a potential penalty and such proceeding remains undismissed,
undischarged or unbonded for a period of thirty (30) days from the date the
Borrower knows of such proceeding;
(k) The giving of notice by the Subordinated Creditors (as defined in the
Intercreditor Agreement) under section 3(viii) of the Intercreditor Agreement or
(l) A Change of Control shall have occurred.
SECTION 7.2 Remedies. Upon the occurrence, and during the continuation, of
an Event of Default, the Required Lenders (at their election but without notice
of its election and without demand) may, except to the extent otherwise
expressly provided or required below, authorize and instruct Agent to do any one
or more of the following on behalf of the Lender Group (and Agent, acting upon
the instructions of the Required Lenders, shall do the same on behalf of the
Lender Group), all of which are authorized by the Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by any of
the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, under any of the Loan Documents;
(c) Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of the Lender Group, but without affecting
Agent's rights and security interests, for the benefit of the Lender Group, in
the Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account Debtors for
amounts and upon terms which Agent considers advisable, and in such cases, Agent
will credit Borrower's Loan Account with only the net amounts received by Agent
in payment of such disputed Accounts after deducting all Lender Group Expenses
incurred or expended in connection therewith;
(e) Without notice to or demand upon the Borrower, make such payments and
do such acts as Agent considers necessary or reasonable to protect its security
interests for the benefit of the Lender Group in the Collateral. Borrower
agrees to assemble the Collateral
46
if Agent so requires, and to make the Collateral available to Agent as Agent may
designate. The Borrower authorizes Agent to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or Lien that in Agent's determination appears to conflict with Agent's
Liens and to pay all expenses incurred in connection therewith. With respect to
any owned or leased premises of the Borrower, the Borrower hereby grants Agent a
license to enter into possession of such premises and to occupy the same,
without charge, for up to 120 days in order to exercise any of the Lender
Group's rights or remedies provided herein, at law, in equity, or otherwise;
(f) Without notice to the Borrower (such notice being expressly waived),
and without constituting a retention of any Collateral in satisfaction of an
obligation (within the meaning of Section 9505 of the Code), set off and apply
to the Obligations any and all (i) balances and deposits of the Borrower held by
the Lender Group, or (ii) indebtedness at any time owing to or for the credit or
the account of the Borrower held by the Lender Group;
(g) Hold, as cash collateral, any and all balances and deposits of the
Borrower held by the Lender Group, to secure the full and final repayment of all
of the Obligations;
(h) Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell (in the manner provided for herein) the
Collateral. The Borrower hereby grants to Agent a license or other right to
use, without charge, the Borrower's labels, patents, copyrights, rights of use
of any name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in completing production of, advertising for sale, and selling any
Collateral and Borrower's rights under all licenses and all franchise agreements
shall inure to the Lender Group's benefit;
(i) Sell the Collateral at either a public or private sale, or both, by way
of one or more contracts or transactions, for cash or on terms, in such manner
and at such places (including any of the Borrower's premises) as Agent
determines is commercially reasonable. It is not necessary that the Collateral
be present at any such sale;
(j) Agent shall give notice of the disposition of the Collateral as
follows:
(1) to the Borrower and each holder of a security interest in the
Collateral who has filed with Agent a written request for notice, a notice in
writing of the time and place of public sale, or, if the sale is a private sale
or some other disposition other than a public sale is to be made of the
Collateral, then the time on or after which the private sale or other
disposition is to be made;
(2) The notice shall be personally delivered or mailed, postage
prepaid, to the Borrower as provided in Section 10.2 and at least 10 days before
------------
the date fixed for the sale, or at least 10 days before the date on or after
which the private sale or other disposition is to be made; no notice needs to be
given prior to the disposition of any
47
portion of the Collateral that is perishable or threatens to decline speedily in
value or that is of a type customarily sold on a recognized market. Notice to
Persons other than Borrower claiming an interest in the Collateral shall be sent
to such addresses as they have furnished to Agent;
(3) If the sale is to be a public sale, Agent also shall give notice
of the time and place by publishing a notice one time at least 5 days before the
date of the sale in a newspaper of general circulation in the county in which
the sale is to be held;
(k) Any one or more members of the Lender Group may credit bid and purchase
at any public sale;
(l) The Lender Group shall have all other rights and remedies available to
it at law or in equity pursuant to any other Loan Documents; and
(m) Any deficiency that exists after disposition of the Collateral as
provided above will be paid immediately by the Borrower. Any excess will be
returned, without interest and subject to the rights of third Persons, by Agent
to the Borrower.
SECTION 7.3 Remedies Cumulative. The rights and remedies of the Lender
-------------------
Group under this Agreement, the other Loan Documents, and all other agreements
shall be cumulative. The Lender Group shall have all other rights and remedies
not inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
ARTICLE VIII
CREATION OF SECURITY INTEREST.
SECTION 8.1 Grant of Security Interest. The Borrower hereby grants to
--------------------------
the Agent, for the benefit of the Lender Group a continuing security interest in
all currently existing and hereafter acquired or arising Collateral in order to
secure prompt repayment of any and all Obligations and in order to secure prompt
performance by Borrower of each of its covenants and duties under the Loan
Documents ("Agent's Liens"). The Agent's Liens in and to the Collateral shall
attach to all Collateral without further act on the part of the Lender Group or
the Borrower. Anything contained in this Agreement or any other Loan Document to
the contrary notwithstanding, except for the sale of Inventory to buyers in the
ordinary course of business, the Borrower has no authority, express or implied,
to dispose of any item or portion of the Collateral.
SECTION 8.2 Negotiable Collateral. In the event that any Collateral,
---------------------
including proceeds, is evidenced by or consists of Negotiable Collateral, the
Borrower,
48
immediately upon the request of the Agent, shall endorse and deliver physical
possession of such Negotiable Collateral to the Agent.
SECTION 8.3 Collection of Accounts, General Intangibles, and Negotiable
-----------------------------------------------------------
Collateral. At any time, the Agent or the Agent's designee may, after the
----------
occurrence and during the continuance of an Event of Default, (a) notify
customers or Account Debtors of the Borrower that the Accounts, General
Intangibles, or Negotiable Collateral have been assigned to the Agent for the
benefit of the Lender Group or that the Agent for the benefit of the Lender
Group has a security interest therein, and (b) collect the Accounts, General
Intangibles, and Negotiable Collateral directly and charge the collection costs
and expenses to the Loan Account. The Borrower agrees that it will hold in trust
for the Lender Group, as the Lender Group's trustee, any Collections that it
receives and immediately will deliver said Collections to the Agent in their
original form as received by the Borrower.
------------------------------------------
SECTION 8.4 Delivery of Additional Documentation Required. At any time
upon the request of the Agent, the Borrower shall execute and deliver to the
Agent, all financing statements, continuation financing statements, fixture
filings, security agreements, pledges, assignments, endorsements of certificates
of title, applications for title, affidavits, reports, notices, schedules of
accounts, letters of authority, and all other documents that the Agent
reasonably may request, in form satisfactory to the Agent, to perfect and
continue perfected the Agent's Liens on the Collateral (whether now owned or
hereafter arising or acquired), and in order to fully consummate all of the
transactions contemplated hereby and under the other the Loan Documents.
SECTION 8.5 Power of Attorney.
-----------------
The Borrower hereby irrevocably makes, constitutes, and appoints the
Agent (and any of the Agent's officers, employees, or agents designated by the
Agent) as the Borrower's true and lawful attorney, with power to (a) if the
Borrower refuses to, or fails timely to execute and deliver any of the documents
described in Section 8.4, sign the name of the Borrower on any of the documents
-----------
described in Section 8.4, (b) at any time that an Event of Default has occurred
-----------
and is continuing or the Agent deems itself insecure, sign the Borrower's name
on any invoice or xxxx of lading relating to any Account, drafts against Account
Debtors, schedules and assignments of Accounts, verifications of Accounts, and
notices to Account Debtors, (c) send requests for verification of Accounts, (d)
endorse the Borrower's name on any Collection item that may come into the Lender
Group's possession, (e) at any time that an Event of Default has occurred and is
continuing or the Agent deems itself insecure, notify the post office
authorities to change the address for delivery of the Borrower's mail to an
address designated by the Agent, to receive and open all mail addressed to the
Borrower, and to retain all mail relating to the Collateral and forward all
other mail to Borrower, (f) at any time that an Event of Default has occurred
and is continuing or the Agent deems itself insecure, make, settle, and adjust
all claims under the Borrower's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, and (g)
at any time that an Event of Default has occurred and is continuing or the Agent
deems itself insecure, settle and adjust
49
disputes and claims respecting the Accounts directly with Account Debtors, for
amounts and upon terms that the Agent determines to be reasonable, and the Agent
may cause to be executed and delivered any documents and releases that the Agent
determines to be necessary. The appointment of the Agent as the Borrower's
attorney, and each and every one of Agent's rights and powers, being coupled
with an interest, is irrevocable until all of the Obligations have been fully
and finally repaid and performed and the Lender Group's obligations to extend
credit hereunder are terminated.
SECTION 8.6 Right to Inspect. The Agent and each Lender (through any of
----------------
their respective officers, employees, or agents) shall have the right, from time
to time hereafter, upon reasonable notice to Borrower and during normal business
hours, to inspect the Borrower's Books and to check, test, and appraise the
Collateral in order to verify the Borrower's financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.
SECTION 8.7 Liability for Collateral. The Borrower hereby agrees that:
------------------------
(a) so long as the Lender Group complies with its obligations, if any, under
Section 9207 of the Code, the Lender Group shall not in any way or manner be
liable or responsible for: (i) the safekeeping of the Collateral; (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause;
(iii) any diminution in the value thereof; or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person; and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by the
Borrower.
ARTICLE IX
THE AGENT; THE LENDER GROUP.
SECTION 9.1 Appointment and Authorization of Agent. Each Lender hereby
--------------------------------------
designates and appoints Mellon Bank, N.A. as its agent under this Agreement and
the other Loan Documents and each Lender and the Issuing Bank (by its acceptance
of the benefits hereof) hereby irrevocably authorizes the Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. The Agent agrees
to act as such on the express conditions contained in this Article IX. The
----------
provisions of this Article IX are solely for the benefit of the Agent, the
----------
Agent-Related Persons, the Lenders and the Issuing Bank; the Borrower shall have
no rights as a third party beneficiary of any of the provisions contained
herein; provided, however, that certain of the provisions of Section 9.10 hereof
------------
also shall be for the benefit of the Borrower. Any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document
notwithstanding, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties,
50
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that the Agent.
is merely the representative of the Lenders, and has only the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement, the
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions which the Agent is expressly entitled to take or assert under
or pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to the Agent, the Lenders agree that the Agent
shall have the right to exercise the following powers as long as this Agreement
remains in effect: (a) maintain, in accordance with its customary business
practices, ledgers and records reflecting the status of the Revolving Loans, the
Collateral, the Collections, and related matters; (b) execute or file any and
all financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and other written
agreements with respect to the Loan Documents; (c) make Revolving Loans, for
itself or on behalf of the Lenders as provided in the Loan Documents; (d)
exclusively receive, apply, and distribute the Collections as provided in the
Loan Documents; (e) open and maintain such bank accounts and lock boxes as the
Agent deems necessary and appropriate in accordance with the Loan Documents for
the foregoing purposes with respect to the Collateral and the Collections; (f)
perform, exercise, and enforce any and all other rights and remedies of the
Lender Group with respect to the Borrower, the Revolving Loans, the Collateral,
the Collections, or otherwise related to any of same as provided in the Loan
Documents; and (g) incur and pay such Lender Group Expenses as the Agent may
deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.
SECTION 9.2 Delegation of Duties. Except as otherwise provided in
--------------------
this section, the Agent may execute any of its duties under this Agreement or
any other Loan Document by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or misconduct of
any agent or attorney-in-fact that it selects as long as such selection was made
in compliance with this section and without gross negligence or willful
misconduct.
SECTION 9.3 Liability of Agent. None of the Agent-Related Persons
------------------
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by the Borrower or any
Subsidiary or Affiliate of the Borrower, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any
51.
other Loan Document, or for any failure of the Borrower or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No Agent-
Related Person shall be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of the Borrower or any of the Borrower's
Subsidiaries or Affiliates.
SECTION 9.4 Reliance by Agent. The Agent shall be entitled to rely,
-----------------
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent, or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Borrower or counsel to any Lender), independent accountants and other
experts selected by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Lenders as it
deems appropriate and until such instructions are received, the Agent shall act,
or refrain from acting, as it deems advisable. If the Agent so requests, it
shall first be indemnified to its reasonable satisfaction by the Lenders against
any and all liability and expense that may be incurred by it by reason of taking
or continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Required
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
SECTION 9.5 Notice of Default or Event of Default. The Agent shall
-------------------------------------
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default unless the Agent shall have received written notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default, and stating that such notice is a "notice of default." The
Agent promptly will notify the Lenders of its receipt of any such notice or of
any Event of Default of which the Agent has actual knowledge. If any Lender
obtains actual knowledge of any Event of Default, such Lender promptly shall
notify the other Lenders and the Agent of such Event of Default. Each Lender
shall be solely responsible for giving any notices to its Participants, if any.
Subject to Section 9.4, the Agent shall take such action with respect to such
-----------
Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 7.2; provided, however, that unless and until the Agent
----------- -------- -------
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
SECTION 9.6 Credit Decision. Each Lender acknowledges that none of
---------------
the Agent-Related Persons has made any representation or warranty to it, and
that no act by the Agent hereinafter taken, including any review of the affairs
of the Borrower and its Subsidiaries or Affiliates, shall be deemed to
constitute any representation or warranty by
52.
any Agent-Related Person to any Lender. Each Lender represents to the Agent that
it has, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower and
any other Person (other than the Lender Group) party to a Loan Document, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrower. Each Lender also represents that it will, independently
and without reliance upon any Agent-Related Person and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and any other Person (other than the Lender
Group) party to a Loan Document. Except for notices, reports and other documents
expressly herein required to be furnished to the Lenders by the Agent, the Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Borrower and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
SECTION 9.7 Costs and Expenses; Indemnification. The Agent may incur
-----------------------------------
and pay Lender Group Expenses to the extent the Agent deems reasonably necessary
or appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including without limiting the
generality of the foregoing, court costs, reasonable attorneys fees and
expenses, costs of collection by outside collection agencies and auctioneer fees
and costs of security guards or insurance premiums paid to maintain the
Collateral, whether or not the Borrower is obligated to reimburse the Agent or
the Lenders for such expenses pursuant to the Loan Agreement or otherwise. The
Agent is authorized and directed to deduct and retain sufficient amounts from
Collections to reimburse the Agent for such out-of-pocket costs and expenses
prior to the distribution of any amounts to the Lenders. In the event the Agent
is not reimbursed for such costs and expenses from Collections, each Lender
hereby agrees that it is and shall be obligated to pay to or reimburse the Agent
for the amount of such Lender's Pro Rata Share thereof. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of the Borrower and without limiting the obligation of the Borrower to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to the Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender shall reimburse the
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including attorneys fees and expenses) incurred by the Agent in connection with
the preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through
53.
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the Agent
is not reimbursed for such expenses by or on behalf of the Borrower. The
undertaking in this section shall survive the payment of all obligations
hereunder and the resignation or replacement of the Agent.
SECTION 9.8 Agent in Individual Capacity. Mellon and its Affiliates
----------------------------
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Borrower and
its Subsidiaries and Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents as though Mellon were not Agent hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, Mellon or its Affiliates may receive information
regarding the Borrower or its Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of the Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations), the Agent shall be under no obligation to provide such information
to them. With respect to Loans made by Mellon, Mellon shall have the same rights
and powers under this Agreement as any other Lender and may exercise the same as
though it were not Agent, and the terms "Lender" and "Lenders" include Mellon in
its individual capacity.
SECTION 9.9 Successor Agent. The Agent may resign as Agent upon 45
---------------
days notice to the Lenders. If the Agent resigns under this Agreement, the
Required Lenders shall appoint a successor Agent for the Lenders. If no
successor Agent is appointed prior to the effective date of the resignation of
the Agent, the Agent may appoint, after consulting with the Lenders, a successor
Agent. If the Agent has materially breached or failed to perform any material
provision of this Agreement or of applicable law, the Required Lenders may agree
in writing to remove and replace the Agent with a successor Agent from among the
Lenders. In any such event, upon the acceptance of its appointment as successor
Agent hereunder, such successor Agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall mean such successor
Agent. After any retiring Agent's resignation or replacement hereunder as Agent,
the provisions of this Article IX shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement and
the retiring Agent's appointment, powers and duties as Agent shall be
terminated. If no successor Agent has accepted appointment as Agent by the date
which is 45 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of Agent hereunder until such time,
if any, as the Lenders appoint a successor Agent as provided for above.
SECTION 9.10 Withholding Tax. (a) If any Lender is a "foreign
---------------
corporation, partnership or trust" within the meaning of the IRC and such Lender
claims
54.
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the IRC, such Lender agrees with and in favor of the Agent and the
Borrower, to deliver to Agent and Borrower:
(i) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS Forms
1001 and W-8 before the payment of any interest in the first calendar year and
before the payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Lender and in each succeeding
taxable year of such Lender during which interest may be paid under this
Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the IRC
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees promptly to notify the Agent and the Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of
the obligations of the Borrower to such Lender, such Lender agrees to notify the
Agent of the percentage amount in which it is no longer the beneficial owner of
obligations of the Borrower to such Lender. To the extent of such percentage
amount, the Agent will treat such Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the obligations of the
Borrower to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the IRC.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
55.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify the Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all obligations of the Borrower and
the resignation or replacement of the Agent.
SECTION 9.11 Collateral Matters.
------------------
(a) The Lenders hereby irrevocably authorize the Agent, at its option
and in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrower
of all obligations; (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if the Borrower
certifies to the Agent that the sale or disposition is permitted under this
Agreement or the other Loan Documents (and the Agent may rely conclusively on
any such certificate, without further inquiry); (iii) constituting property in
which the Borrower owned no interest at the time the security interest was
granted or at any time thereafter; or (iv) constituting property leased to the
Borrower under a lease that has expired or is terminated in a transaction
permitted under this Agreement. Except as provided above, the Agent will not
execute and deliver a release of any Lien on any Collateral without the prior
written authorization of (y) if the release is of all or substantially all of
the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon
request by the Agent or the Borrower at any time, the Lenders will confirm in
writing the Agent's authority to release any such Liens on particular types or
items of Collateral pursuant to this Section; provided, however, that (1) the
Agent shall not be required to execute any document necessary to evidence such
release on terms that, in the Agent's opinion, would expose the Agent to
liability or create any obligation or entail any consequence other than the
release of such Lien without recourse, representation, or warranty, and (2) such
release shall not in any manner discharge, affect, or impair the obligations of
the Borrower or any Liens (other than those expressly being released) upon (or
obligations of the Borrower in respect of) all interests retained by the
Borrower, including, the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
(b) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by the Borrower or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or
56.
available to the Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, subject to the terms and conditions contained herein, the
Agent may act in any manner it may deem appropriate, in its sole discretion
given the Agent's own interest in the Collateral in its capacity as one of the
Lenders and that the Agent shall have no other duty or liability whatsoever to
any Lender as to any of the foregoing, except as otherwise provided herein.
SECTION 9.12 Restrictions on Actions by Lenders; Sharing of Payments.
-------------------------------------------------------
(a) Each of the Lenders agrees that it shall not, without the express
consent of the Required Lenders, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of the Required Lenders, set off against the
obligations of the Borrower, any amounts owing by such Lender to the Borrower or
any accounts of the Borrower now or hereafter maintained with such Lender. Each
of the Lenders further agrees that it shall not, unless specifically requested
to do so by the Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral the purpose of
which is, or could be, to give such Lender any preference or priority against
the other Lenders with respect to the Collateral.
(b) Subject to Section 9.8, if, at any time or times any Lender shall
receive (i) by payment, foreclosure, setoff or otherwise, any proceeds of
Collateral or any payments with respect to the obligations of the Borrower
arising under, or relating to, this Agreement or the other Loan Documents,
except for any such proceeds or payments received by such Lender from the Agent
pursuant to the terms of this Agreement, or (ii) payments from the Agent in
excess of such Lender's ratable portion of all such distributions by the Agent,
such Lender promptly shall (1) turn the same over to the Agent, in kind, and
with such endorsements as may be required to negotiate the same to the Agent, or
in same day funds, as applicable, for the account of all of the Lenders and for
application to the obligations of the Borrower in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or warranty, an
undivided interest and participation in the obligations of the Borrower owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
SECTION 9.13 Agency for Perfection. The Agent and each Lender hereby
---------------------
appoints each other Lender as agent for the purpose of perfecting the Agent's
Liens in assets which, in accordance with Article 9 of the UCC can be perfected
only by possession. Should any Lender obtain possession of any such Collateral,
such Lender shall notify Agent
57.
thereof, and, promptly upon the Agent's request therefor shall deliver such
Collateral to the Agent or in accordance with the Agent's instructions.
SECTION 9.14 Payments by Agent to the Lenders. All payments to be
--------------------------------
made by the Agent to the Lenders shall be made by bank wire transfer or internal
transfer of immediately available funds pursuant to such wire transfer
instructions as each party may designate for itself by written notice to the
Agent.
SECTION 9.15 Concerning the Collateral and Related Loan Documents.
----------------------------------------------------
Each member of the Lender Group authorizes and directs the Agent to enter into
this Agreement and the other Loan Documents relating to the Collateral, for the
benefit of the Lender Group. Each member of the Lender Group agrees that any
action taken by the Agent or all Lenders, as applicable, in accordance with the
terms of this Agreement or the other Loan Documents relating to the Collateral
and the exercise by the Agent or all Lenders, as applicable, of their respective
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
SECTION 9.16 Several Obligations; No Liability. Notwithstanding that
---------------------------------
certain of the Loan Documents now or hereafter may have been or will be executed
only by or in favor of the Agent in its capacity as such, and not by or in favor
of the Lenders, any and all obligations on the part of the Agent (if any) to
make any credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 9.7, no member of the Lender Group shall
-----------
have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to the Borrower or any other Person for any failure
by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
SECTION 9.17 Holders of Notes. The Agent may deem and treat the
----------------
Lender which is payee of a Note as the owner and holder of such Note for all
purposes hereof unless and until an Assignment and Acceptance with respect to
the assignment or transfer thereof shall have been filed with the Agent in
accordance with Section 10.6. Any authority, direction or consent of any Person
------------
who at the time of giving such authority, direction or consent is shown in the
records of the Agent as being a Lender shall be conclusive and binding on each
present and subsequent holder, transferee or assignee of any Note or Notes
payable to such Lender or of any Note or Notes issued in exchange therefor.
58.
SECTION 9.18 Calculations. The Agent shall not be liable for any
------------
calculation, apportionment or distribution of payments made by it in good faith.
If such calculation, apportionment or distribution is subsequently determined to
have been made in error, the sole recourse of any Lender to whom payment was due
but not made shall be to recover from the other Lenders any payment in excess of
the amount to which they are determined to be entitled or, if the amount due was
not paid by the Borrower, to recover such amount from the Borrower.
SECTION 9.19 Co-Agent. Notwithstanding the provisions of this
--------
Agreement or any of the other Loan Documents, the Co-Agent (in its capacity as
Co-Agent as opposed to its capacity as a Lender) shall have no powers, rights,
duties, responsibilities, or liabilities with respect to this Agreement and the
other Loan Documents nor shall Co-Agent have or be deemed to have any fiduciary
relationship with any Lender.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments, Etc. No amendment or waiver of any provision
---------------
of the Loan Documents nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Lenders (or by the Agent at the written request of the Required
Lenders), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
--------
however, that no such waiver, amendment, or consent shall, unless in writing and
-------
signed by all the Lenders and the Borrower and acknowledged by the Agent, do any
of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Lenders (or any of them) hereunder or under any other Loan Document;
(c) reduce the outstanding principal of, or the rate of interest
specified herein on the Revolving Loans (except for pricing adjustments
resulting from the application of the appropriate Prime Rate), or any fees or
other amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments that is required for the
Lenders or any of them to take any action hereunder;
(e) amend this Section or any provision of the Agreement providing
for consent or other action by all the Lenders;
(f) release Collateral other than as permitted by Section 9.11;
------------
59.
(g) change the definition of "Required Lenders";
(h) release the Borrower from any obligation for the payment of
money;
(i) release any Guarantor from its guaranty of the Loans or any of
its obligations thereunder; or
(j) amend any of the provisions of Article IX.
----------
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by the Agent or the Issuing Bank, as the case may
be, affect the rights or duties of the Agent or the Issuing Bank under this
Agreement or any other Loan Document. The foregoing notwithstanding, any
amendment, modification, waiver, consent, termination, or release of or with
respect to any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of the Borrower, shall not require
consent by or the agreement of the Borrower.
SECTION 10.2 Notices, Etc. Except as otherwise set forth in this
------------
Agreement, all notices and other communications provided for hereunder shall be
in writing (including facsimile communication) and mailed or sent by facsimile
or delivered, if to the Borrower, at its address set forth on the signature page
hereof; if to the Agent, at its address set forth on the signature page hereof;
if to any Lender, at such Lender's address set forth on the signature page
hereof or on such Assignment and Acceptance by which such Lender became a party
hereto, or, as to each party, at such other address as shall be designated by
such party in a written notice to the other party. All such notices and
communications shall be effective when sent by facsimile, the next day if sent
by reputable overnight courier, or three days after such notice or communication
is deposited in the mails, except that notices and communications to the Agent
pursuant to Article II or VII shall not be effective until received by the
---------- ---
Agent.
SECTION 10.3 Right of Setoff. Upon and only after the occurrence of
---------------
any uncured Event of Default, the Agent, each Lender and the Issuing Bank is
hereby authorized by the Borrower, at any time and from time to time, without
notice, (a) to set off against, and to appropriate and apply to the payment of,
the obligations and liabilities of the Borrower under the Loan Documents
(whether matured or unmatured, fixed or contingent or liquidated or
unliquidated) any and all amounts owing by any member of the Lender Group to the
Borrower (whether payable in Dollars or any other currency, whether matured or
unmatured, and, in the case of deposits, whether general or special, time or
demand and however evidenced) and (b) pending any such action, to the extent
necessary, to hold such amounts as collateral to secure such obligations and
liabilities and to return as unpaid for insufficient funds any and all checks
and other items drawn against any deposits so held as the Agent, any Lender or
the Issuing Bank in its sole discretion may elect. Each member of the Lender
Group and the Issuing Bank is authorized to debit any account maintained with it
60.
by the Borrower for any amount of principal, interest or fees which are then due
and owing to the Lender Group.
SECTION 10.4 No Waiver; Remedies. No failure on the part of
-------------------
either party hereto to exercise, and no delay in exercising, any right under any
of the Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under any of the Loan Documents preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 10.5 Costs and Expenses. The Borrower shall pay to the
------------------
Agent promptly after receipt of notice the full amount of all costs and expenses
("Lender Group Expenses"), including reasonable attorneys' fees (to include
outside counsel fees), incurred by the Agent in connection with the negotiation,
syndication, preparation, execution and administration of any commitment letter
or this Agreement and each other of the Loan Documents, and the preparation of
any amendments and waivers hereto and thereto; or incurred by the Agent, the
Lender Group, or the Issuing Bank in connection with (a) the enforcement of the
Lender Group's or the Issuing Bank's rights and/or the collection of any amounts
which become due to the Lender Group or the Issuing Bank under any of the Loan
Documents (including, without limitation, in appellate, bankruptcy, insolvency,
liquidation, reorganization, moratorium or other similar proceedings) or the
restructuring of the Loan Documents, and (b) 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.
SECTION 10.6 Assignments and Participations. (a) Any Lender
------------------------------
may, with the written consent of the Agent, and, prior to the occurrence and
continuance of an Event of Default, consent of the Borrower, which consent shall
not be unreasonably withheld, conditioned or delayed, assign and delegate to one
or more assignees (each an "Assignee") all, or any ratable part of all, of the
Revolving Loans, the Commitments and the other rights and obligations of such
Lender hereunder and under the other Loan Documents, in a minimum amount of
$5,000,000; provided, however, that the Borrower and the Agent may continue to
deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Borrower and the Agent by such Lender and
the Assignee; (ii) such Lender and its Assignee shall have delivered to the
Borrower and the Agent an Assignment and Acceptance; and (iii) the assignor
Lender or Assignee has paid to the Agent for the Agent's sole and separate
account a processing fee in the amount of $3,500. Anything contained herein to
the contrary notwithstanding, the consent of the Agent or the Borrower shall not
be required (and payment of any fees shall not be required) if such assignment
is in connection with any merger, consolidation, sale, transfer, or other
disposition of all or any substantial portion of the business or loan portfolio
of such Lender.
61.
(b) From and after the date that the Agent notifies the assignor Lender
that it has received an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except with respect to Section 9.7 hereof)
and be released from its obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement and the other Loan
Documents, such Lender shall cease to be a party hereto and thereto), and such
assignment shall effect a novation between the Borrower and the Assignee.
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (1) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto;
(2) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto; (3) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(4) such Assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (5) such
Assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (6) such Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
62.
(e) Any Lender may at any time, with the written consent of the Agent, and,
prior to the occurrence and continuance of an Event of Default, consent of the
Borrower, which consent shall not be unreasonably withheld, conditioned or
delayed, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
-----------
in the Revolving Loans, the Commitment, and the other rights and interests of
that Lender (the "originating Lender") hereunder and under the other Loan
------------------
Documents; provided, however, that (i) the originating Lender's obligations
under this Agreement shall remain unchanged, (ii) the originating Lender shall
remain solely responsible for the performance of such obligations, (iii) the
Borrower and the Agent shall continue to deal solely and directly with the
originating Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the sole and exclusive right to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document, except to the
extent such amendment to, or consent or waiver with respect to this Agreement or
of any other Loan Document would (A) extend the final maturity date of the
Revolving Loans hereunder in which such Participant is participating; (B) reduce
the interest rate applicable to the Revolving Loans hereunder in which such
Participant is participating; (C) release all or a material portion of the
Collateral or guaranties (except to the extent expressly provided herein or in
any of the Loan Documents) supporting the Obligations hereunder in which such
Participant is participating; (D) postpone the payment of, or reduce the amount
of, the interest or fees payable to such Participant through such Lender; or (E)
change the amount or due dates of scheduled principal repayments or prepayments
or premiums; and (v) all amounts payable by the Borrower hereunder shall be
determined as if such Lender had not sold such participation; except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement. The rights of any Participant
only shall be derivative through the originating Lender with whom such
Participant participates and no Participant shall have any direct rights as to
the other Lenders, the Agent, the Borrower, the Collections, the Collateral, or
otherwise in respect of the Revolving Loans. No Participant shall have the
right to participate directly in the making of decisions by the Lenders among
themselves.
(f) In connection with any such assignment or participation or proposed
assignment or participation, a Lender may disclose all documents and information
which it now or hereafter may have relating to the Borrower or the Borrower's
business.
(g) Any other provision in this Agreement notwithstanding, any Lender may
at any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement in favor of any Federal Reserve Bank
in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR (S)203.14, and
63.
such Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
SECTION 10.7 Effectiveness; Binding Effect. This Agreement shall
-----------------------------
become effective when it shall have been executed by the Borrower, each member
of the Lender Group whose signature is provided for on the signature page
hereof, and the Agent and thereafter shall be binding upon and inure to the
benefit of the Borrower, each Lender, the Agent, and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Lenders.
SECTION 10.8 Governing Law; Choice of Forum; Service of Process;
---------------------------------------------------
Jury Trial Waiver.
-----------------
(a) The validity, interpretation and enforcement of this
Agreement and the other Loan Documents and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of California
(without giving effect to principles of conflicts of law).
(b) The Borrower, each Lender, the Issuing Bank, and the Agent
irrevocably consent and submit to the non-exclusive jurisdiction of the state
courts of the County of Los Angeles and the United States District Court for the
Central District of California and waive any objection based on venue or forum
-----
non conveniens with respect to any action instituted therein arising under this
--- ----------
Agreement or any of the other Loan Documents or in any way connected with or
related or incidental to the dealings of the parties hereto in respect of this
Agreement or any of the other Loan Documents or the transactions related hereto
or thereto, in each case whether now existing or hereafter arising, and whether
in contract, tort, equity or otherwise, and agree that any dispute with respect
to any such matters shall be heard only in the courts described above.
(c) The Borrower hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by certified
mail (return receipt requested) directed to its address set forth on the
signature pages hereof and service so made shall be deemed to be completed five
(5) days after the same shall have been so deposited in the U.S. mails, or, at
the Agent's option, by service upon the Borrower in any other manner provided
under the rules of any such courts.
(d) THE BORROWER, EACH LENDER, THE ISSUING BANK, AND THE AGENT EACH
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR
(2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND
64.
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE BORROWER, EACH LENDER, THE
ISSUING BANK, AND THE AGENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY
AND THAT THE BORROWER, EACH LENDER, OR THE AGENT MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Neither the Lender Group nor the Issuing Bank shall have any
liability to the Borrower (whether in tort, contract, equity or otherwise) for
losses suffered by the Borrower in connection with, arising out of, or in any
way related to the transactions or relationships contemplated by this Agreement,
or any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on the
Lender Group or the Issuing Bank, as the case may be, that the losses were the
result of acts or omissions constituting gross negligence or willful misconduct.
In any such litigation, the Lender Group or the Issuing Bank, as the case may
be, shall be entitled to the benefit of the rebuttable presumption that it acted
in good faith and with the exercise of ordinary care in the performance by it of
the terms of this Agreement.
SECTION 10.9 Waiver of Notices. The Borrower hereby expressly
-----------------
waives demand, presentment, protest and notice of protest and notice of dishonor
with respect to any and all instruments and commercial paper, included in or
evidencing any of the obligations, and any and all other demands and notices of
any kind or nature whatsoever with respect to the obligations and this
Agreement, except such as are expressly provided for herein. No notice to or
demand on the Borrower which the Agent may elect to give shall entitle the
Borrower to any other or further notice or demand in the same, similar or other
circumstances.
SECTION 10.10 Destruction of Borrower's Documents. The Lender
-----------------------------------
Group will not be obligated to return any schedules, invoices, statements,
budgets, forecasts, reports or other papers delivered by the Borrower. The
Lender Group will destroy or otherwise dispose of such materials at such time as
each member of the Lender Group, in its discretion, deems appropriate .
SECTION 10.11 Entire Agreement. This Agreement with Exhibits and
----------------
Schedules and the other Loan Documents embody the entire agreement and
understanding between the parties hereto and supersede all prior agreements and
understandings relating to the subject matter hereof.
SECTION 10.12 Severability of Provisions. In case any one or
--------------------------
more of the provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
65.
SECTION 10.13 Execution in 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 shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 10.14 Confidentiality. Each Lender shall hold all
---------------
non-public information obtained pursuant to the requirements of this Agreement
which has been identified as confidential by Borrower in accordance with such
lender's customary procedures for handling confidential information of this
nature, it being understood and agreed by Borrower that in any event a Lender
may make disclosures to its examiners, outside auditors, counsel and other
professional advisors, or Affiliates of such Lender, or disclosures reasonably
required by any bona fide assignee, transferee or participant in connection with
the contemplated assignment or transfer by such Lender of any loans or any sale
or participations therein, or disclosures required or requested by any
governmental agency or representative thereof, or pursuant to legal process:
provided that, unless specifically prohibited by applicable law or court order,
--------
each Lender shall notify Borrower of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; and provided, further that in no event shall any Lender be
-------- -------
obligated or required to return any materials furnished by Borrower or any of
its Subsidiaries.
66.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
AGENT: BORROWER:
----- --------
MELLON BANK, N.A., as Agent EMERGENT INFORMATION TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. XxXxxxx By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxxx X. XxXxxxx Name: Xxxxxx X. Xxxxx
Title: Vice President Title: Chief Executive Officer
Address: Address:
Mellon Bank Emergent Information Technologies, Inc.
Mellon Bank Center 0000 XxxXxxxxx Xxxxx
000 Xxxxx Xxxx Xxxxxx 0xx Xxxxx
0xx Xxxxx Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Xxx Xxxxxxx, Xxxxxxxxxx 00000 Attention: Xxxxxx X. Xxxxx,
Chief Executive Officer
Attention: Xxxxxxx X. XxXxxxx,
Vice President
CO-AGENT: LENDERS:
-------- -------
XXXXX FARGO BANK, N.A., as Co-Agent MELLON BANK, N.A.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxxx X. XxXxxxx
Name: Xxxxx Xxxxxxx Name: Xxxxxxx X. XxXxxxx
Title: Vice President Title: Vice President
Address: Address:
Xxxxx Fargo Bank, X.X. Xxxxxx Bank
0000 Xxxx Xxxxxx Xxxxxx Xxxx Xxxxxx
Xxxxx 000 000 Xxxxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000 5th Floor
67.
Attention: Xxxxx Xxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000
Vice President Attention: Xxxxxxx X. XxXxxxx,
Vice President
XXXXX FARGO BANK, N.A.
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Vice President
Address:
Xxxxx Fargo Bank, N.A.
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Vice President
IMPERIAL BANK
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Vice President
Address:
Imperial Bank
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Vice President
68.
SCHEDULES AND EXHIBITS
EXHIBIT A-1 FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT RN-1 FORM OF PROMISSORY NOTE
v.
EXHIBIT A-1
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment Agreement") is
made as of ________, 200_, by and between [], ("Assignor"), and [] ("Assignee").
Reference is made to that certain Second Amended and Restated Credit and
Security Agreement (the "Credit Agreement") described in Item 2 of Annex I
annexed hereto. Capitalized terms used herein and not defined herein shall have
the meanings ascribed to them in the Credit Agreement.
1. In accordance with the terms and conditions of Section 10.6 of the Credit
Agreement, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
the Assignor's rights and obligations under the Loan Documents as of the date
hereof with respect to the Obligations owing to the Assignor, and the
Commitments to make Revolving Loans, all as specified in Item 4.b and Item 4.c
of Annex I. After giving effect to such sale and assignment the Assignee's
total Commitments will be as set forth in Item 4.b and Item 4.c of Annex I.
2. The Assignor (i) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim; (ii) makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Documents or any other instrument or document furnished pursuant
thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or the
performance or observance by Borrower of any of its obligations under the Loan
Documents or any other instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received copies of the Credit
Agreement and the other Loan Documents, together with copies of the financial
statements referred to therein and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment Agreement; (ii) agrees that it will, independently and
without reliance, as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan Documents;
(iii) confirms that it is eligible as an assignee under the terms of the Credit
Agreement; (iv) appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers under the Loan Documents as are
delegated to Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Documents
are required to be performed by it as a Lender [and (vi) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying as to
the Assignee's status for purposes of determining exemption from United States
withholding
i.
taxes with respect to all payments to be made to the Assignee under the Credit
Agreement or such other documents as are necessary to indicate that all such
payments are subject to such rates at a rate reduced by an applicable tax
treaty.]/1/
4. Following the execution of this Assignment Agreement by the Assignor and
Assignee, it will be delivered to the Agent for recording by the Agent. The
effective date of this Assignment (the "Settlement Date") shall be the later of
(i) the date of the execution hereof by the Assignor and the Assignee, the
payment by Assignor or Assignee to Agent for Agent's sole and separate account a
processing fee in the amount of $3,500, and the receipt of any consent of the
Agent, and (ii) the date specified in item 5 of Annex I.
5. Upon such acceptance and recording by the Agent, as of the Settlement Date
(i) the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment Agreement, have the rights and obligations of a
Lender thereunder and under the other Loan Documents, and (ii) the Assignor
shall, to the extent provided in this Assignment Agreement, relinquish its
rights and be released from its obligations under the Credit Agreement and the
other Loan Documents.
6. Upon such acceptance and recording by the Agent, from and after the
Settlement Date, the Agent shall make all payments under the Credit Agreement
and the other Loan Documents in respect of the interest assigned hereby
(including, without limitation, all payments or principal, interest and
commitment fees (if applicable) with respect thereto) to the Assignee. Upon the
Settlement Date, the Assignee shall pay to the Assignor the Assigned Share of
the principal amount of any outstanding Loans under the Credit Agreement and the
other Loan Documents. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the other Loan Documents
for periods prior to the Settlement Date directly between themselves on the
Settlement Date.
7. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS ASSIGNMENT AGREEMENT
AND ANY DISPUTE ARISING OUT OF THE RELATIONSHIP BETWEEN THE PARTIES HERETO,
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA (WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW).
[Signature page to follow.]
______________________
/1/ If the Assignee is organized under the laws of a jurisdiction outside
the United States.
ii.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to
be executed by their respective officers thereunto duly authorized, as of the
first date above written, such execution being made on Annex I hereto.
[NAME OF ASSIGNOR]
as Assignor
By:___________________________
Title:________________________
[NAME OF ASSIGNEE]
as Assignee
By:___________________________
Title:________________________
ACCEPTED AND CONSENTED TO THIS
____ DAY OF __________, 200_
MELLON BANK, N.A.,
AS AGENT
By:____________________
Title:_________________
CONSENTED TO THIS
___ DAY OF ___________, 200_
EMERGENT INFORMATION
TECHNOLOGIES, INC.
By:____________________
Title:_________________
iii.
ANNEX FOR ASSIGNMENT AND ACCEPTANCE
ANNEX I
1. Borrower: EMERGENT INFORMATION TECHNOLOGIES, INC.
2. Name and Date of Credit Agreement:
Second Amended and Restated Credit and Security Agreement, dated as of
December __, 2000, among Borrower, the financial institutions
signatory thereto (the "Lenders"), and Mellon Bank, N.A., as Agent for
the Lenders.
3. Date of Assignment Agreement:_____________________
4. Amounts (as of date in Item #3 above):
a. Commitment to make Revolving Loans __________$
b. Assigned Share of Commitment ________%
to make Revolving Loans:
c. Amount of Assigned Share of $__________
Commitment to make Revolving Loans
5. Settlement Date:/2/ ______________
6. Notice and Payment Instructions, etc.
Assignee:
_________________________________
_________________________________
_________________________________
with a copy to:
_________________________________
_________________________________
_________________________________
___________________________
/2/ Should be no earlier than the date of acceptance by the Agent.
i.
7. Agreed and Accepted:
Name of Assignor Name of Assignee
By:____________________ By:____________________
Title:_________________ Title:_________________
Accepted and Consented to:
MELLON BANK, N.A.,
as Agent
By:___________________
Title:________________
Consented to:
EMERGENT INFORMATION
TECHNOLOGIES, INC.
By:___________________
Title:________________
ii.
EXHIBIT RN-1
------------
FORM OF
SECOND AMENDED AND RESTATED
PROMISSORY NOTE
[$11,350,000 - Mellon Bank] December __, 2000
[$4,540,000 - Imperial Bank] Los Angeles , California
[$6,810,000 - Xxxxx Fargo Bank]
FOR VALUE RECEIVED, EMERGENT INFORMATION TECHNOLOGIES, INC., a California
corporation formerly known as SM&A Corporation (the "Borrower"), promises to pay
--------
to the order of [MELLON BANK, N.A.] [IMPERIAL BANK] [XXXXX FARGO BANK, N.A.]
(the "Bank") on the Maturity Date (as defined in the Credit Agreement referred
----
to below) the principal amount of [Mellon: $11,350,000] [Imperial: $4,540,000]
[Xxxxx: $6,810,000], or, if less, the aggregate amount of Revolving Loans (as
defined in the Credit Agreement) made by the Bank to the Borrower pursuant to
the Credit Agreement outstanding on the Maturity Date. All unpaid amounts of
principal and interest shall be due and payable in full on the Maturity Date.
This Second Amended and Restated Promissory Note (this "Note") amends and
restates that certain Amended and Restated Promissory Note dated May 26, 2000,
executed by Borrower in favor of Bank.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid at the rates and at the times which shall
be determined in accordance with the provisions of the Credit Agreement. Any
interest not paid when due shall be compounded and shall thereafter accrue
interest at the rates and at the times which shall be determined in accordance
with the provisions of the Credit Agreement.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
office of the Bank located at [Mellon: 000 Xxxxx Xxxx Xxxxxx, 0xx Xxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000] [Imperial: 000 Xxxx Xxxxxx Xxxxx, Xxxxx Xxxx,
Xxxxxxxxxx 00000] [Xxxxx: 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000]
or at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Until notified of the
transfer of this Note, the Borrower shall be entitled to deem the Bank or such
person who has been so identified by the transferor in writing to the Borrower
as the holder of this Note, as the owner and holder of this Note. Each of the
Bank and any subsequent holder of this Note agrees that before disposing of this
Note or any part hereof, it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid on the schedule attached hereto, if any; provided, however, that the
-------- -------
failure to make notation of any payment made on this
i.
Note shall not limit or otherwise affect the obligation of the Borrower
hereunder with respect to payments of principal or interest on this Note.
This Note is referred to in, and is entitled to the benefits of, that
certain Second Amended and Restated Credit and Security Agreement dated as of
December __, 2000 (as amended from time to time, the "Credit Agreement") between
----------------
the Borrower on the one hand, and on the other hand, each of the financial
institutions (including the Bank) signatory thereto ("Lenders") and Mellon Bank,
N.A., as agent for the Lenders (in such capacity, "Agent"). The Credit
Agreement, among other things, (i) provides for the making of advances (the
"Loans") by the Bank to the Borrower from time to time in an aggregate amount
------
not to exceed at any time outstanding the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each such Loan being
evidenced by this Note, and (ii) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.
The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligation of the Borrower,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.
The Borrower promises to pay all reasonable costs and expenses, including
reasonable attorneys' fees, incurred in the collection and enforcement of this
Note. The Borrower hereby consents to renewals and extensions of time at or
after the maturity hereof, without notice, and, subject to the Credit Agreement,
hereby waives diligence, presentment, protest, demand and notice of every kind
and, to the full extent permitted by law, the right to plead any statute of
limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the date and the place first
above-written.
EMERGENT INFORMATION TECHNOLOGIES, INC.,
a California corporation formerly known as
SM&A Corporation
By:_____________________________________
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
ii.
SCHEDULE OF
TRANSACTIONS ON
NOTE
Interest Paid
Through
Amount of Amount of Principal Notation
Principal Paid Balance Made By
-------------- ------- -------
Loan Made Interest Paid
--------- -------------
i.
