AMENDED AND RESTATED ACCOUNTS RECEIVABLE
MANAGEMENT AND SECURITY AGREEMENT
This Amended and Restated Accounts Receivable Management and Security
Agreement is made as of the 9th day of April, 1998 by and among BNY FINANCIAL
CORPORATION ("Lender") having offices at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 and RENAISSANCE WORLDWIDE, INC. ("RWI") a Massachusetts
corporation having a principal place of business at 000 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, RENAISSANCE WORLDWIDE PROFESSIONALS, INC. ("RWP") a
California corporation having a principal place of business at 000 Xxxxxxxxxx
Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, THE HUNTER GROUP, INC.
("THG"), a Maryland corporation having a principal place of business at 000 Xxxx
Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxx 00000, RENAISSANCE WORLDWIDE
STRATEGY, INC. ("RWST"), a Delaware corporation having a principal place of
business at 00 Xxx XxxxxxxXxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000, AMERICA"S
REGISTRY, INC. ("ARI"),a Massachusetts corporation having a principal place of
business at 000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, and SHAMROCK COMPUTER
RESOURCES, LTD. ("SCR") an Iowa corporation having a principal place of business
at 000 00xx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000 and THE REGISTRY, INC.
NETWORK CONSULTING PRACTICE ("TRNCP") a New Hampshire corporation having a
principal place of business at 000 Xxxxxxxxxx Xxxxxx, X.X. Xxx 000, Xxxxxxxx,
Xxx Xxxxxxxxx 00000. RWI, RWP, THG, RWST, ARI, SCR and TRNCP are hereinafter
individually and collectively referred to as the "Borrower". The liability of
RWI, RWP, THG, RWST, ARI, SCR and TRNCP hereunder shall be joint and several.
BACKGROUND
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1. The Registry Inc., ARI and TRNCP (collectively, the "Original Borrowers")
are parties to an Accounts Receivable Management and Security Agreement dated as
of February 29, 1996 (the "Original ARM Agreement").
2. On December 3, 1997, Renaissance Solutions, Inc, THG, and SCR became
additional Borrowers under the Original Arm Agreement.
3. Borrowers subsequently restructured the organization of their various
subsidiaries and affiliates. In connection with such restructuring, (i) The
Registry, Inc. changed its name to Renaissance Worldwide, Inc., (ii) certain
affiliates of The Registry, Inc. merged into and with RWP, (iii) certain other
affiliates of The Registry, Inc. merged into and with Renaissance Solutions,
Inc., which then changed its name to Renaissance Worldwide Strategy, Inc., (iv)
RWP and RWST became wholly-owned subsidiaries of RWI and (v)TRNCP became a
wholly-owned subsidiary of THG.
4. The Original Borrowers are presently indebted to Lender under the Original
ARM Agreement in the aggregate principal sum of $________________, plus all
interest accrued thereon. Borrower has requested and Lender has agreed to
increase the Maximum Loan Amount (hereafter defined) and the Maximum Revolving
Amount (hereafter defined) under the Original ARM Agreement and to provide
certain amendments to the terms of the Original ARM Agreement. The parties
intend (a) that all amounts advanced or financial accommodations provided
pursuant to the Original ARM Agreement will remain outstanding and all security
interests and liens granted pursuant to the instruments and documents executed
in connection with the Original ARM Agreement shall remain in full force and
effect, (b) to restate and amend the Original ARM Agreement on the terms and
conditions hereafter set forth, (c) that the terms and conditions of all
existing and future Loans (as hereafter defined) and Collateral (as hereafter
defined) interests shall be governed by this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
and the terms and conditions contained herein, the parties hereto agree that as
of the date of this Agreement, the terms, conditions, covenants, agreements,
representations and warranties contained in the Original ARM Agreement shall be
deemed amended and restated in their entirety as follows and the Original ARM
Agreement shall be consolidated with and into and superseded by this Agreement;
provided, however, that except as otherwise provided herein, nothing contained
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in this Agreement shall impair, limit or affect the liens and security interests
heretofore granted, pledged in or assigned to Lender as security for Borrower"s
obligations to Lender under the Original ARM Agreement.
Accordingly, the parties hereto agree as follows:
1. (A) General Definitions. When used in this Agreement, the
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following terms shall have the following meanings:
"Advance Rates" means the Receivables Advance Rate.
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"Affiliate" of any Person means (a) any Person which, directly or
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indirectly, is in control of, is controlled by, or is under common control with
such Person, or (b) any Person who is a director or officer (i) of such Person,
(ii) of any Subsidiary of such Person or (iii) of any Person described in clause
(a) above. For purposes of this definition, control of a Person shall mean the
power, direct or indirect, (i) to vote 5% or more of the securities having
ordinary voting power for the election of directors of such Person, or (ii) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"Alternate Base Rate" means, for any day, a rate per
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annum equal to the higher of (i) the Prime Rate in effect on such day and (ii)
the Federal Funds Rate in effect on such day plus 1/2 of 1%.
"Alternate Base Rate Loan" means the Loan or any portion thereof
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bearing interest at a rate determined by reference to the Alternate Base Rate.
"Ancillary Agreements" means all agreements, instruments, and
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documents including, without limitation, mortgages, pledges, powers of attorney,
consents, assignments, contracts, notices, security agreements, trust agreements
whether heretofore, concurrently, or hereafter executed by or on behalf of
Borrower or delivered to Lender, relating to the Original ARM Agreement, this
Agreement or to the transactions contemplated by this Agreement.
"Bank" means The Bank of New York.
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"Business Day" means any day other than a day on which commercial
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banks in New York are authorized or required by law to close.
"Change of Control" means (a) any transfer (whether in one or more
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transactions) of ownership whereby any Person, acting alone or together with one
or more other Persons which would constitute a "group" for purposes of Section
13(d) of the Securities Exchange Act of 1934, as in effect at the time (the
"Exchange Act"), or any Affiliates thereof, shall acquire beneficial ownership
(as defined in Rule 13d-3 under the Exchange Act) of 50% or more of the total
voting power of all classes of capital stock of RWI entitled to vote generally
in the election of the Board of Directors of RWI (any shares of capital stock of
which such Persons are the beneficial owners that are not then outstanding being
deemed outstanding for purposes of calculating such percentage) or (b) any
merger, consolidation or sale of substantially all of the property or assets of
RWI.
"Closing Date" means April 9, 1998 or such other date as may be
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agreed upon by the parties hereto.
"Collateral" means and includes:
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(A) all Receivables;
(B) all General Intangibles;
(C) all books, records, ledgercards, files, correspondence,
computer programs, tapes, disks and related data processing software (owned by
Borrower or in which it has an interest) which at any time evidence or contain
information relating to (A) and (B) above or are otherwise necessary or helpful
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in the collection thereof or realization thereupon;
(D) documents of title, policies and certificates of insurance,
securities, chattel paper, other documents or instruments evidencing or
pertaining to (A), (B) and (C) above;
(E) all guaranties, liens on real or personal property, leases,
and other agreements and property which in any way secure or relate to (A) and
(B) above, or are acquired for the purpose of securing and enforcing any item
thereof;
(F) (i) all cash held as cash collateral to the extent not
otherwise constituting Collateral, all other cash or property at any time on
deposit with or held by Lender for the account of Borrower (whether for
safekeeping, custody, pledge, transmission or otherwise), (ii) all present or
future deposit accounts (whether time or demand or interest or non-interest
bearing) of Borrower with Lender or any other Person including those to which
any such cash may at any time and from time to time be credited, (iii) all
investments and reinvestments (however evidenced) of amounts from time to time
credited to such accounts, and (iv) all interest, dividends, distributions and
other proceeds payable on or with respect to (x) such investments and
reinvestments and (y) such accounts; and
(G) all products and proceeds of (A), (B), (C), (D), (E) and (F)
above (including, but not limited to, all claims to items referred to in (A),
(B), (C), (D), (E) and (F) above) and all claims of Borrower against third
parties (x) for (i) loss of, damage to, or destruction of, and (ii) payments due
or to become due under leases, rentals and hires of, any or all of (A), (B),
(C), (D), (E) and (F) above and (y) proceeds payable under, or unearned premiums
with respect to policies of insurance in whatever form.
"Consolidated EBITDA" means, for any period, the sum of (i) Consolidated
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Net Income for such period, plus (ii) an amount which, in the determination of
Consolidated Net Income for such period, has been deducted for (A) Consolidated
Interest Expense, (B) total federal, state, local and foreign income, value
added and similar taxes and (C) depreciation and amortization expense, all as
determined in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, interest expense
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(including the amortization of debt discount and premium, the interest component
under capital leases and the implied interest component under synthetic leases)
of the consolidated entities on a consolidated basis for such period, as
determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, net income(excluding
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extraordinary items and non-operating gains and losses(including, without
limitation, currency gains and losses))
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after taxes for such period of RWI on a consolidated basis.
"Contract Rate" means an interest rate per annum equal to (i)
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Alternate Base Rate plus (ii) one-half percent (.5%) provided, however that if
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the Loans or a portion thereof are a Libor Rate Loan then in such event with
respect to such Loan or portion thereof it shall mean the Libor Rate in effect
for the month for which such calculation is made, plus two and one half (2.5%)
percent. The Contract Rate shall not at any time be less than six (6%) percent.
"Contract Year" means the annual period from March 1, 1998 to the
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first anniversary thereof and any subsequent anniversary thereof.
"Credit Risk" means the risk of loss resulting solely and exclusively
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from a Customer's financial inability to pay at maturity with respect to any
Receivable purchased hereunder.
"Customer" means and includes the account debtor with respect to any
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Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with Borrower, pursuant
to which Borrower is to deliver any personal property or perform any services.
"Default Rate" means a rate equal to two (2%) percent per annum in
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excess of the Contract Rate or the Overadvance Rate, as the case may be.
"Dispute" means any cause asserted for nonpayment of Receivables,
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including, without limitation, any alleged defense, counterclaim, offset,
dispute or other claim (real or merely asserted) whether arising from or
relating to the sale of goods or rendition of services or arising from or
relating to any other transaction or occurrence.
"Eligible Receivables" means and includes each Receivable which
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conforms to the following criteria: (a) shipment of the merchandise or the
rendition of services has been completed; (b) no return, rejection or
repossession of the merchandise has occurred; (c) merchandise or services shall
not have been rejected or disputed by the Customer and there shall not have been
asserted any offset, defense, counterclaim, or Dispute; (d) continues to be in
full conformity with the representations and warranties made by Borrower to
Lender with respect thereto; (e) Lender is, and continues to be, satisfied with
the credit standing of the Customer in relation to the amount of credit
extended; (f) is documented by an invoice in a form approved by Lender and shall
not be unpaid more than 105 days from invoice date or more than 90 days from due
date; (g) less than 50% of the unpaid amount of invoices due from
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such Customer remain unpaid more than 105 days from invoice date nor more than
90 days from due date; (h) is not evidenced by chattel paper or an instrument of
any kind with respect to or in payment of the Receivable unless such instrument
is duly endorsed to and in possession of Lender or represents a check in payment
of a Receivable; (i) if the Customer is located outside of the United States,
the goods which gave rise to such Receivable were shipped after receipt by
Borrower from or on behalf of the Customer of an irrevocable letter of credit,
assigned and delivered to Lender and confirmed by a financial institution
acceptable to Lender and is in form and substance acceptable to Lender, payable
in the full amount of the Receivable in United States dollars at a place of
payment located within the United States; (j) such Receivable is not subject to
any lien, other than Permitted liens; (k) does not arise out of transactions
with any employee, officer, agent, director, stockholder or Affiliate of
Borrower; (l) is payable to Borrower; (m) does not arise out of a xxxx and hold
sale prior to shipment and, if the Receivable arises out of a sale to any Person
to which Borrower is indebted, the amount of such indebtedness, and any
anticipated indebtedness, is deducted in determining the face amount of such
Receivable; (n) is net of any returns, discounts, claims, credits and
allowances; (o) if the Receivable arises out of contracts between Borrower and
the United States, any state, or any department, agency or instrumentality of
any of them, Borrower has so notified Lender, in writing, prior to the creation
of such Receivable, and, if Lender so requests, there has been compliance with
any governmental notice or approval requirements, including without limitation,
compliance with the Federal Assignment of Claims Act; (p) is a good and valid
account representing an undisputed bona fide indebtedness incurred by the
Customer therein named, for a fixed sum as set forth in the invoice relating
thereto with respect to an unconditional sale and delivery upon the stated terms
of goods sold by Borrower, or work, labor and/or services rendered by Borrower;
and (q) is otherwise satisfactory to Lender as determined in good faith by
Lender in the reasonable exercise of its discretion.
Notwithstanding anything to the contrary contained herein Lender (i)
acknowledges that certain customers of Borrower are billed by Borrower monthly,
although invoices for the services provided to such customers are generated
internally by Borrower weekly and (ii) agrees that provided Borrower (A)
furnishes Lender with a current aged trial balance showing detailed invoice
information with respect to such invoices, (B) such invoices are rendered to the
customer(s) no later than the fifth (5th) Business Day following the last day of
the month in which the related services were performed and (C) all other
criteria for eligibility have been met, such unbilled Receivables, will not be
deemed ineligible, during the month in which the related services were
performed, solely by reason of the invoices for such Receivables not having been
rendered to the customer(s).
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"Event of Default" means the occurrence of any of the events set forth
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in paragraph 18.
"Federal Funds Rate" means, for any day, the weighted average of the
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rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by The Bank of New York from three Federal funds brokers
of recognized standing selected by The Bank of New York.
"Formula Amount" shall have the meaning set forth in paragraph 2(d).
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"GAAP" means generally accepted accounting principles, practices and
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procedures in effect from time to time.
"General Intangibles" means and includes all of Borrower's now owned
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or hereafter acquired general intangibles as said term is defined in the Uniform
Commercial Code in effect in the State of New York including, without
limitation, trademarks, tradenames, tradestyles, trade secrets, equipment
formulation, manufacturing procedures, quality control procedures, product
specifications, patents, patent applications, copyrights, registrations,
contract rights, choses in action, causes of action, corporate or other business
records, inventions, designs, goodwill, claims under guarantees, licenses,
franchises, tax refunds, tax refund claims, computer programs, computer data
bases, computer program flow diagrams, source codes, object codes and all other
intangible property of every kind and nature.
"Guarantor" means any Person who may guarantee payment or
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performance of the whole or any part of the Obligations and "Guarantors" means
collectively all such Persons.
"Guarantor Security Agreements" means any Security Agreements which
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are executed by a Guarantor in favor of Lender.
"Guaranty Agreements" means collectively the Guaranties which are
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executed by any Guarantor in favor of Lender.
"Hazardous Substance" means, without limitation, any flammable
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explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated byphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and
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27 of the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"Incipient Event of Default" means any act or event which, with the
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giving of notice or passage of time or both, would constitute an Event of
Default.
"Interest Coverage Ratio" means, with respect to RWI on a consolidated
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basis for the twelve month period ending on the last day of any fiscal quarter
of the consolidated entities, the ratio of (a) Consolidated EBITDA for such
period to (b) Consolidated Interest Expense for such period.
"LIBOR Rate" means the rate of interest equal to the rate per annum
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published in the Wall Street Journal for the London Interbank Offered Rate for a
one month period, averaged and calculated monthly.
"Loans" means the Revolving Credit Advances and all other extensions
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of credit hereunder.
"Matured Funds Rate" means the rate of interest, announced by Lender
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from time to time, as the rate applicable to matured funds, such rate to be
adjusted automatically on the effective date of any change in such rate as
announced by Lender.
"Maximum Loan Amount" means $75,000,000.
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"Maximum Revolving Amount" means $75,000,000.
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"Net Face Amount" of Receivables means the gross face invoice amount
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thereof, less returns, discounts (the calculation of which shall be determined
by Lender where optional terms are given), anticipation or any other unilateral
deductions taken by Customers, and credits and allowances to Customers of any
nature.
"Obligations" means and includes all Loans, all advances, debts,
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liabilities, obligations, covenants and duties owing by Borrower to Lender (or
any corporation that directly or indirectly controls or is controlled by or is
under common control with Lender) of every kind and description (whether or not
evidenced by any note or other instrument and whether or not for the payment of
money or the performance or non-performance of any act), direct or indirect,
absolute or contingent, due or to become due, contractual or tortious,
liquidated or unliquidated, whether existing by operation of law or otherwise
now existing or hereafter arising including, without limitation, any debt,
liability or obligation owing from Borrower to others which Lender may have
obtained by assignment or otherwise and further including, without limitation,
all interest, charges or any other payments Borrower is required to make by law
or otherwise arising under or as a result of this
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Agreement and the Ancillary Agreements or otherwise, together with all
reasonable expenses and reasonable attorneys' fees chargeable to Borrower's
account or incurred by Lender in connection with Borrower's account whether
provided for herein or in any Ancillary Agreement.
"Original Owner" means G. Xxxx Xxxxxx.
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"Overadvance Rate" means a rate equal to one-half (.5%) percent per
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annum in excess of the Contract Rate.
"Permitted Liens" means (i) liens of carriers, warehousemen, mechanics
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and materialmen incurred in the ordinary course of business securing sums not
overdue; (ii) liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, relating to employees, securing sums (a) not
overdue or (b) being diligently contested in good faith provided that adequate
reserves with respect thereto are maintained on the books of Borrower in
conformity with GAAP, (iii) liens in favor of Lender, (iv) liens for taxes,
assessments or other governmental charges (a) not yet due or (b) being
diligently contested in good faith, provided that adequate reserves with respect
thereto are maintained on the books of Borrower in conformity with GAAP, (v)
liens specified on Schedule 1(A) hereto, (vii) deposits pledged to secure trade
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contracts, leases (which are otherwise permitted under this Agreement) and
performance bonds incurred in the ordinary course of Borrower's business, if
any, (viii) liens on leased capital equipment under any capitalized lease
obligation which is otherwise permitted by and in compliance with the terms of
this Agreement, (ix) encumbrances consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, landlord's or lessor's liens under leases
to which the Borrower is a party, and other minor liens or encumbrances, which
do not interfere materially with the use of the property affected in the
ordinary conduct of the business of the Borrower and which defects do not
individually or in the aggregate have a materially adverse effect on the
business of the Borrower, and (x) purchase money security interests in or
purchase money mortgages on real or personal property, incurred in connection
with the acquisition of such property, which security interests or mortgages
cover only the real or personal property so acquired.
"Person" means an individual, partnership, corporation, limited
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liability company or limited liability partnership, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
"Prime Rate" means the prime commercial lending rate of The Bank of
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New York as publicly announced in New York, New York to be in effect from time
to time, such rate to be adjusted
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automatically, without notice, on the effective date of any change in such rate.
This rate of interest is determined from time to time and is neither tied to any
external rate of interest or index nor does it necessarily reflect the lowest
rate of interest actually charged to any particular class or category of
customers.
"Receivables" means and includes all of Borrower's now owned or
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hereafter acquired accounts and contract rights, instruments, insurance
proceeds, documents, chattel paper, letters of credit and Borrower's rights to
receive payment thereunder, any and all rights to the payment or receipt of
money or other forms of consideration of any kind at any time now or hereafter
owing or to be owing to Borrower, whether or not an invoice or other form of
billing, for any of the foregoing, has been rendered to the customer, all
proceeds thereof and all files in which Borrower has any interest whatsoever
containing information identifying or pertaining to any of Borrower's
Receivables, together with all of Borrower's rights to any merchandise which is
represented thereby, and all Borrower's right, title, security and guaranties
with respect to each Receivable, including, without limitation, all rights of
stoppage in transit, replevin and reclamation and all rights as an unpaid
vendor.
"Receivables Advance Rate" shall have the meaning set forth in the
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definition of Receivables Availability.
"Receivables Availability" means the amount of Revolving Credit
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Advances against Eligible Receivables Lender may from time to time during the
term of this Agreement make available to Borrower up to 85% ("Receivables
Advance Rate") of the net face amount of Borrower's Eligible Receivables.
"Reports" shall have the meaning set forth in Section 14.
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"Retained Goods" shall have the meaning set forth in Section 8(h).
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"Revolving Credit Advances" shall have the meaning set forth in
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paragraph 2(d).
"Settlement Date" means two (2) Business Days after the day on which
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the applicable Receivable or payment (including, without limitation, those
described in Section 9 of this Agreement) is actually collected by Lender.
"Subsidiary" of any Person means a corporation or other entity of
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whose shares of stock or other ownership interests having ordinary voting power
(other than stock or other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
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"Tangible Net Worth" at a particular date means (a) the aggregate
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amount of all assets of Borrower as may be properly classified as such in
accordance with GAAP consistently applied excluding such other assets as are
properly classified as intangible assets under GAAP, less (b) the aggregate
amount of all liabilities of the Borrower.
"Term" means the Closing Date through February 28, 1999 subject to
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acceleration upon the occurrence of an Event of Default hereunder or other
termination hereunder.
(B) Accounting Terms. Any accounting terms used in this Agreement
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which are not specifically defined shall have the meanings customarily given
them in accordance with GAAP. As used herein, the phrase "on a consolidated
basis" shall mean RWI and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
(C) Other Terms. All other terms used in this Agreement and defined
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in the Uniform Commercial Code as adopted in the State of New York, shall have
the meaning given therein unless otherwise defined herein.
2. Sale of Receivables; Purchase Price; Accounts Receivables
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Management; Loans.
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(a) Borrower hereby assigns and sells to Lender, as absolute owner,
and Lender hereby purchases from Borrower all Receivables created on and after
the date hereof, which arise from Borrower's sale of merchandise or rendition of
services.
(b) Lender shall not assume the Credit Risk on any Receivables, it
being understood that the commission payable by Borrower to Lender under Section
5(e) is in consideration of the accounts receivable management and record
keeping services to be performed by Lender and not in consideration of the
assumption of Credit Risk by Lender. Accordingly, all Receivables shall be
purchased by Lender with full recourse to Borrower in the event of non-payment
thereof for any reason whatsoever and Lender may charge back to Borrower's
account the amount of any Receivable that is not paid on its due date. The
procedure manual Lender has delivered to Borrower describes Lender's current
practices and procedures regarding its accounts receivable management and record
keeping services. Lender reserves the right to vary such practices and
procedures from time to time in its sole discretion. Lender's liability to
Borrower for any alleged failure on Lender's part to provide adequate accounts
receivable management and record keeping services shall be expressly limited to
a refund of commissions paid by Borrower during the period of such alleged
failure and Lender shall have no liability of any kind whatsoever for
consequential or other damages or penalties based upon any such alleged failure
on Lender's part.
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(c) The purchase price of Receivables shall be the Net Face Amount
thereof less Lender's commission described in Section 5(e). The purchase price
will be credited to Borrower's account and remitted to Borrower on the
Settlement Date. Lender may deduct from the amount payable to Borrower on any
Settlement Date reserves for all Obligations then chargeable to Borrower's
account and Obligations which in Lender's sole judgment may be chargeable to
Borrower's account thereafter.
(d) Subject to the terms and conditions set forth herein and in the
Ancillary Agreements, Lender may, in its sole discretion, make revolving credit
advances (the "Revolving Credit Advances") to Borrower from time to time during
the Term which, in the aggregate at any time outstanding, will not exceed the
lesser of (x) the Maximum Revolving Amount or (y) an amount equal to the sum of:
(i) Receivables Availability, minus
(ii) such reserves as Lender may reasonably deem proper and
necessary from time to time.
The difference of 2(d)(i), minus (ii) shall be referred to as the "Formula
Amount". In this regard, Borrower agrees that it shall submit a Borrowing Base
Certificate to Lender, in form and substance and with such frequency, as more
fully described in Section 9 below, to include such calculations, in each
instance that Lender may deem necessary or desirable in order to verify whether
Borrower is in compliance with the preceding limitations pertaining to Revolving
Credit Advances.
(e) Notwithstanding the limitations set forth above, Lender retains
the right to lend Borrower from time to time such amounts in excess of such
limitations as Lender may determine in its sole discretion.
(f) Borrower acknowledges that the exercise of Lender's discretionary
rights hereunder may result during the term of this Agreement in one or more
increases or decreases in the Advance Rates and Borrower hereby consents to any
such increases or decreases which may limit or restrict advances requested by
Borrower.
(g) If Borrower does not pay any interest, fees, costs, charges or
commissions to Lender when due, Borrower shall thereby be deemed to have
requested, and Lender is hereby authorized at its discretion to make and charge
to Borrower's account, a Revolving Credit Advance to Borrower as of such date in
an amount equal to such unpaid interest, fees, costs, charges or commissions.
(h) Any sums expended by Lender due to Borrower's
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failure to perform or comply with its obligations under this Agreement,
including but not limited to the payment of taxes, insurance premiums or
leasehold obligations, shall be charged to Borrower's account as a Revolving
Credit Advance and added to the Obligations.
(i) Lender will account to Borrower monthly with a statement of all
Loans and other advances, charges and payments made pursuant to this Agreement,
and such account rendered by Lender shall be deemed final, binding and
conclusive unless Lender is notified by Borrower in writing to the contrary
within thirty (30) days of the date each account was rendered specifying the
item or items to which objection is made.
(j) During the Term, Borrower may borrow, prepay and reborrow
Revolving Credit Advances, all in accordance with the terms and conditions
hereof.
(k) The aggregate balance of Loans outstanding at any time shall not
exceed the Maximum Loan Amount. The aggregate balance of Revolving Credit
Advances outstanding at any time shall not exceed the Formula Amount.
(l) Each Borrower agrees that RWI is granted an irrevocable power of
attorney to execute any documents, reports, convey any security interests or
title and issue all requests and directives on behalf of itself, RWP, THG, RWST,
ARI, SCR and TRNCP to Lender, including without limitation all requests for
Loans. The proceeds of Loans, shall be remitted, in Lender's discretion, to
RWI which shall distribute such proceeds, to the extent necessary and
appropriate, to itself, RWP, THG, RWST, ARI, SCR and TRNCP. Each Borrower
hereby irrevocably appoints RWI as agent for all purposes of this Agreement,
including, without limitation, requesting Loans and disbursing the proceeds
thereof. Each Borrower shall be jointly and severally liable for all of the
Obligations.
(m) Deposits Unavailable. If Lender (or any corporation or bank
--------------------
controlling Lender) shall have determined that by reason of circumstances
affecting the London interbank market, adequate means do not exist for
ascertaining the interest rate applicable hereunder to Libor Rate Loans, then,
upon notice from Lender to Borrower, Lender's obligations under this Agreement
to make, convert, or continue the Loans or any portion thereof as a Libor Rate
Loan shall forthwith be suspended until Lender shall notify Borrower that the
circumstances causing such suspension no longer exist.
3. Repayment of Loans.
------------------
Borrower shall be required to (i) make a mandatory prepayment
hereunder at any time that the aggregate outstanding principal balance of the
Loans made by Lender to Borrower hereunder
-13-
is in excess of the Maximum Loan Amount or Formula Amount in an amount equal to
such excess, and (ii) repay on the expiration of the Term (x) the then aggregate
outstanding principal balance of Revolving Credit Advances made by Lender to
Borrower hereunder together with accrued and unpaid interest, fees, charges and
commissions and (y) all other amounts owed Lender under this Agreement and the
Ancillary Agreements.
4. Procedure for Revolving Credit Advances. The Borrower may by
---------------------------------------
written notice request a borrowing of Revolving Credit Advances prior to 1:00
P.M. New York time on the Business Day of its request to incur, on that day, a
Revolving Credit Advance. All Revolving Credit Advances shall be disbursed
from whichever office or other place Lender may designate from time to time and,
together with any and all other Obligations of Borrower to Lender, shall be
charged to the Borrower's account on Lender's books. The proceeds of each
Revolving Credit Advance made by the Lender shall be made available to the
Borrower on the day so requested by way of credit to the Borrower's operating
account maintained with such bank as Borrower designates to Lender. Any and all
Obligations due and owing hereunder may be charged to Borrower's account and
shall constitute Revolving Credit Advances.
5. Interest; Fees; Commissions.
---------------------------
(a) Interest.
(i) Interest on Loans shall be payable in arrears on the last day of
each month. Interest payments hereunder may, at Lender's option be charged by
Lender to Borrower's account. Interest charges shall be computed on the unpaid
balance of the Loans for each day they are outstanding at a rate per annum equal
to, with respect to Revolving Credit Advances, the Contract Rate. In the event
the aggregate amount of Revolving Credit Advances exceeds the Formula Amount for
five (5) or more days in any month during the Term, the average daily balance of
Revolving Credit Advances in that month shall bear interest at the Overadvance
Rate.
(ii) Upon three (3) days notice from the Borrower to Lender, a portion of
the Revolving Credit Advances designated by the Borrower shall bear interest at
the Libor Rate. Borrower shall not have the option to use the Libor Rate for
Revolving Credit Advances following the occurrence of an Event of Default or
Incipient Event of Default hereunder or during any period in which the aggregate
amount of Revolving Credit Advances exceeds the Formula Amount.
(iii) Interest shall be computed on the basis of actual days elapsed
over a 360-day year.
(iv) Upon the occurrence and during the continuance of an Event of
Default, interest shall be payable at the Default Rate.
-14-
(v) Notwithstanding the foregoing, in no event shall interest exceed the
maximum rate permitted under any applicable law or regulation, and if any
provision of this Agreement or an Ancillary Agreement is in contravention of any
such law or regulation, such provision shall be deemed amended to provide for
interest at said maximum rate and any excess amount shall either be applied, at
Lender's option, to the outstanding Loans in such order as Lender shall
determine or refunded by Lender to Borrower.
(vi) Borrower shall pay principal, interest and all other amounts
payable hereunder, or under any Ancillary Agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any set-off or
counterclaim.
(b) Fees.
(i) Collateral Monitoring Fee. Upon Lender's performance of any
-------------------------
collateral monitoring - namely any field examination, collateral analysis or
other business analysis, the need for which is to be determined by Lender and
which monitoring is undertaken by Lender or for Lender's benefit, a per diem
amount equal to Lender's then standard rate per person, for each person
employed to perform such monitoring together with all costs, disbursements and
expenses incurred by the Lender and the person performing such collateral
monitoring shall be charged to Borrower's account.
(c) Increased Costs. In the event that any applicable law, treaty or
---------------
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by Lender (for purposes of this Section 5(c),
the term "Lender" shall include Lender and any corporation or bank controlling
Lender) with any request or directive (whether or not having the force of law)
from any central bank or other financial, monetary or other authority, shall:
(i) subject Lender to any tax of any kind whatsoever with respect to
this Agreement or change the basis of taxation of payments to Lender of
principal, fees, interest or any other amount payable hereunder or under any
Ancillary Agreements (except for changes in the rate of tax on the overall net
income of Lender by the jurisdiction in which it maintains its principal
office);
(ii) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office of
Lender, including (without limitation) pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or
(iii) impose on Lender any other condition with respect to
-15-
this Agreement or any Ancillary Agreements; and the result of any of the
foregoing is to increase the cost to Lender of making, renewing or maintaining
its Loans hereunder by an amount that Lender deems to be material or to reduce
the amount of any payment (whether of principal, interest or otherwise) in
respect of any of the Loans by an amount that Lender deems to be material, then,
in any case Borrower shall promptly pay Lender, upon its demand, such additional
amount as will compensate Lender for such additional cost or such reduction, as
the case may be. Lender shall certify the amount of such additional cost or
reduced amount to Borrower, and such certification shall be conclusive absent
manifest error.
(d) Capital Adequacy.
----------------
(i) In the event that Lender shall have determined that any applicable
law, rule, regulation or guideline regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender (for purposes
of this Section 5(d), the term "Lender" shall include Lender and any corporation
or bank controlling 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 Lender's capital as a consequence of its obligations hereunder to a
level below that which Lender could have achieved but for such adoption, change
or compliance (taking into consideration Lender's policies with respect to
capital adequacy) by an amount deemed by Lender to be material, then, from time
to time, Borrower shall pay promptly to Lender upon its demand such additional
amount or amounts as will compensate Lender for such reduction. In determining
such amount or amounts, Lender may use any reasonable averaging or attribution
methods. The protection of this Section shall be available to Lender regardless
of any possible contention of invalidity or inapplicability with respect to the
applicable law, regulation or condition.
(ii) A certificate of Lender setting forth such amount or amounts as
shall be necessary to compensate Lender with respect to Section 5(d) hereof when
delivered to Borrower shall be conclusive absent manifest error.
(e) Commission.
----------
(i) Borrower shall pay to Lender an annual commission of $100,000 for
the first Contract Year and each Contract Year thereafter (unless this Agreement
is terminated pursuant to the terms of Section 17 of this Agreement with
respect to any subsequent Contract Year). The commission for each Contract Year
shall be earned on the first day of such Contract Year and shall be
-16-
payable in 12 equal monthly installments commencing on the 1st day of each
Contract Year payment of which may be charged to Borrower"s Loan account.
(f) Matured Funds. On the last day of each month during the Term,
-------------
Lender shall credit Borrower's account with interest at the Matured Funds Rate
in effect during such month on the average daily balance during such month of
any amounts payable by Lender to Borrower hereunder which are not drawn by
Borrower on the Settlement Date.
6. Security Interest.
-----------------
(a) To secure the prompt payment to Lender of the Obligations,
Borrower hereby assigns, pledges and grants to Lender a continuing security
interest in and to the Collateral, whether now owned or existing or hereafter
acquired or arising and wheresoever located (whether or not the same is subject
to Article 9 of the Uniform Commercial Code). All of the Borrower's ledger
sheets, files, records, books of account, business papers and documents relating
to the Collateral shall, until delivered to or removed, following an Event of
Default, by Lender, be kept by Borrower in trust for Lender until all
Obligations have been paid in full. Each confirmatory assignment schedule or
other form of assignment hereafter executed by Borrower shall be deemed to
include the foregoing grant, whether or not the same appears therein.
(b) Lender may file one or more financing statements disclosing
Lender's security interest in the Collateral without Borrower's signature
appearing thereon or Lender may sign on Borrower's behalf as provided in
paragraph 13 hereof. The parties agree that a carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement. If
any Receivable becomes evidenced by a promissory note or any other instrument
for the payment of money, Borrower will immediately deliver such instrument to
Lender appropriately endorsed.
7. Representations Concerning the Collateral. Borrower represents
-----------------------------------------
and warrants (each of which such representations and warranties shall be deemed
repeated upon the making of each request for a Revolving Credit Advance and made
as of the time of each and every Revolving Credit Advance hereunder):
(a) all the Collateral (i) is owned by Borrower free and clear of all
claims, liens, security interests and encumbrances (including without limitation
any claims of infringement) except (A) those in Lender's favor and (B) Permitted
Liens and (ii) is not subject to any agreement prohibiting the granting of a
security interest or requiring notice of or consent to the granting of a
security interest;
-17-
(b) all Receivables (i) represent complete bona fide transactions
which require no further act under any circumstances on Borrower's part to make
such Receivables payable by Customers excepting, only , furnishing the invoice
therefor to customer on or before the fifth Business Day following the last day
of the month in which the services related to such invoice have been performed,
(ii) to the best of Borrower's knowledge, are not subject to any present, future
or contingent Disputes and (iii) do not represent xxxx and hold sales,
consignment sales, guaranteed sales, sale or return or other similar
understandings or obligations of any Affiliate or Subsidiary of Borrower.
8. Covenants Concerning the Collateral. During the Term, Borrower
-----------------------------------
covenants that it shall:
(a) not dispose of any of the Collateral whether by sale, lease or
otherwise except for the licensing of intellectual property in the ordinary
course of business;
(b) not encumber, mortgage, pledge, assign or grant any security
interest in any Collateral or any of Borrower's other assets to anyone other
than Lender except (i) as set forth on Schedule 1(A) attached hereto and made a
-------------
part hereof and (ii) Permitted Liens;
(c) place notations upon Borrower's books of account and any financial
statement prepared by Borrower to disclose Lender's security interest in the
Collateral;
(d) defend the Collateral against the claims and demands of all
parties.
(f) not extend the payment terms of any Receivable without prompt
notice thereof to Lender;
(g) perform all other steps reasonably requested by Lender to create
and maintain in Lender's favor a valid perfected first security interest in all
Collateral; and
(h) promptly provide Lender with duplicate originals of all credits
which Borrower issues to its Customers and immediately notify Lender of any
Disputes. Borrower shall settle all Disputes at no cost or expense to Lender.
Should Lender so elect, upon the occurrence of any Event of Default, Lender may
at any time in its discretion (i) withdraw Borrower's authority to issue credits
to its Customers without Lender's prior written consent; (ii) litigate Disputes
or settle them directly with Customers on terms acceptable to Lender.
-18-
9. Collection and Maintenance of Collateral and Records.
----------------------------------------------------
Lender may at any time verify Borrower's Receivables utilizing an
audit control company or any other agent of Lender. Lender or Lender's designee
may notify Customers, at any time at Lender's sole discretion, of Lender's
security interest in Receivables, (and Lender shall endeavor to inform Borrower
of such notification upon having so notified customers, provided, however, that
failure of Lender to so inform Borrower will not constitute a breach of this
Agreement by Lender) collect them directly and charge the collection costs and
expenses to Borrower's account, but, unless and until Lender does so or gives
Borrower other instructions, Borrower shall instruct all of its Customers which
were previously Customers of The Registry, Inc., ARI or TRNCP ("Lock Box
Customers")to make payments on account of Receivables arising from sales to such
Lock Box Customers to an account under Lender's dominion and control at such
bank as Lender may designate, as provided by the terms of Section 23. To the
extent Borrower receives any payments on account of Receivables of Lock Box
Customers, it shall hold such payments for Lender's benefit in trust as Lender's
trustee and immediately deliver them to Lender in their original form with all
necessary endorsements or, as directed by Lender, deposit such payments as
directed by Lender pursuant to Section 22 hereof. With respect to all other
Customers of Borrower, Borrower shall instruct such Customers to make payments
on account of Receivables only to Deposit Accounts of Borrower as described in
Section 23 hereof. Lender will credit (conditional upon final collection) all
such payments to Borrower's account on the Settlement Date. Promptly after the
creation of any Receivables, Borrower shall provide Lender with schedules
describing all Receivables created or acquired by Borrower and shall execute and
deliver confirmatory written assignments of such Receivables to Lender, but
Borrower's failure to execute and deliver such schedules or written confirmatory
assignments of such Receivables shall not affect or limit Lender's security
interest or other rights in and to the Receivables. Borrower shall furnish, at
Lender's request, copies of contracts, invoices or the equivalent, and any
original shipping and delivery receipts for all merchandise sold or services
rendered and such other documents and information as Lender may require. All of
Borrower's invoices shall bear the terms stated on the applicable customer
order, and no change from the original terms of such customer order shall be
made without the prior written consent of Lender. Borrower shall provide Lender
on a monthly (within ten (10) days after the end of each month), or more
frequent basis, as requested by Lender, an aged trial balance of Borrower's
existing accounts payable. Borrower shall provide Lender, as requested by
Lender, such other schedules, documents and/or information regarding the
Collateral as Lender may reasonably require. Without limiting the foregoing,
Borrower shall provide to Lender a borrowing base certificate in form annexed
-19-
hereto as Schedule 9("Borrowing Base Certificate"), and by means of electronic
----------
transmission, detailed information regarding Borrower"s Receivables ("Detail
Transmission") with the following frequency, based upon the availability from
time to time under the Formula Amount:
------------------------------------------------------------------------------------------------
AVAILABILITY UNDER FREQUENCY OF DELIVERY OF FREQUENCY OF DELIVERY OF
FORMULA AMOUNT BORROWING BASE DETAIL TRANSMISSION
CERTIFICATE
------------------------------------------------------------------------------------------------
$0 TO $5,000,000 DAILY DAILY
------------------------------------------------------------------------------------------------
$5,000,000 - $9,999,999 WEEKLY MONTHLY
------------------------------------------------------------------------------------------------
$10,000,000 AND ABOVE MONTHLY QUARTERLY
------------------------------------------------------------------------------------------------
Daily submissions shall be delivered to Lender before 12:00 noon on each
Business Day. Weekly submissions shall be delivered to Lender on or before the
close of business on the last Business Day of each week. Monthly submissions
shall be delivered to Lender within five (5) days following the end of each
month. Quarterly submissions shall be delivered within fifteen (15) days
following the end of each calendar quarter.
Notwithstanding anything to the contrary contained in this Agreement, upon
the occurrence of an Event of Default or Incipient Event of Default hereunder,
Lender may require daily submission of Borrowing Base Certificates and Detail
Transmissions. The Borrowing Base Certificate and Detail Transmission must be
in form and substance acceptable to Lender. The Borrowing Base Certificate
shall certify to Lender, and shall contain sufficient information and
calculations as Lender may deem necessary or desirable, in order to verify any
Receivables Availability, the applicable Formula Amount and whether or not
Receivables included therein are Eligible Receivables. Without limiting the
foregoing, a Borrowing Base Certificate must be executed and delivered by
Borrower to Lender at the time of or prior to each request for Revolving Credit
Advances pursuant to Section 4.
10. Inspections. At all times during normal business hours, Lender shall
-----------
have the right to (a) visit and inspect Borrower's properties and the
Collateral, (b) inspect, audit and make extracts from Borrower's relevant books
and records, including, but not limited to, management letters prepared by
independent accountants, and (c) discuss with the Borrower's principal officers,
and independent accountants, Borrower's business, assets, liabilities, financial
condition, results of operations and business prospects. Borrower will deliver
to Lender any instrument necessary for Lender to obtain records from any service
bureau maintaining records for Borrower.
-20-
11. Financial Information. Borrower shall provide Lender (a) as soon as
---------------------
available, but in any event within ninety (90) days after the end of each of
Borrower's fiscal years, Borrower's balance sheet as at the end of such fiscal
year and the related statements of income, retained earnings and statement of
cash flow for such fiscal year, setting forth in comparative form, on a
consolidated basis, the figures as at the end of and for the previous fiscal
year, which shall have been reported on by independent certified public
accountants who shall be satisfactory to Lender and shall be accompanied by an
unqualified audit report issued by such independent certified public
accountants; and (b)contemporaneously with the filing thereof, copies of
Borrower"s Forms 10-Q and 10-K and any other reports required to be filed with
the United States Securities and Exchange Commission or other governmental
authorities. All financial statements required to be delivered by Borrower
hereunder shall be prepared in accordance with GAAP and shall be subject to
year-end audit adjustments. Together with the annual financial statements
referred to above, Borrower shall deliver a certificate of Borrower's certified
public accountants addressed to Lender stating that (i) they have caused this
Agreement and the Ancillary Agreements to be reviewed and (ii) in making the
examination necessary for the issuance of such financial statements, nothing has
come to their attention to lead them to believe that any Event of Default or
Incipient Event of Default exists and, in particular, they have no knowledge of
any Event of Default or Incipient Event of Default or, if such is not the case,
specifying such Event of Default or Incipient Event of Default and its nature,
when it occurred and whether it is continuing. At the times the financial
statements are furnished pursuant to (a) above, a certificate of Borrower's
President or Chief Financial Officer shall be delivered to Lender stating that,
to the best of his knowledge, no Event of Default or Incipient Event of Default
exists, or, if such is not the case, specifying such Event of Default or
Incipient Event of Default and its nature, when it occurred, whether it is
continuing and the steps being taken by Borrower with respect to such event.
In addition to the foregoing financial statements, Borrower shall
furnish Lender no less than thirty (30) days prior to the beginning of each
fiscal year commencing with fiscal year 1997, a month by month projected
operating budget and cash flow for such fiscal year (including an income
statement for each month and a balance sheet as at the end of the last month in
each fiscal quarter), such projections to be accompanied by a certificate signed
by Borrower's President or Chief Financial Officer to the effect that such
projections have been prepared on the basis of sound financial planning practice
consistent with past budgets and financial statements and that such officer has
no reason to question the reasonableness of any material assumptions on which
such projections were prepared.
-21-
12. Additional Representations, Warranties and
-------------------------------------------
Covenants. Borrower represents and warrants (each of which such
---------
representations and warranties shall be deemed repeated upon the making of a
request for a Revolving Credit Advance and made as of the time of each Revolving
Credit Advance made hereunder), and covenants that:
(a) Borrower is a corporation duly organized and validly existing
under the laws of the State of its incorporation and duly qualified and in good
standing in every other state or jurisdiction in which the nature of Borrower's
business requires such qualification except where the failure to be so qualified
would not have a material adverse effect on the business, assets or financial
conditions of the Borrowers or create a defense to the collectibility of any
Receivables;
(b) the execution, delivery and performance of this Agreement and the
Ancillary Agreements (i) have been duly authorized, (ii) are not in
contravention of Borrower's certificate of incorporation, by-laws or of any
indenture, agreement or undertaking to which Borrower is a party or by which
Borrower is bound and (iii) are within Borrower's corporate powers;
(c) this Agreement and the Ancillary Agreements executed and delivered
by Borrower are Borrower's legal, valid and binding obligations, enforceable in
accordance with their terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or other similar
laws affecting the enforcement or creditors' rights and remedies generally;
(d) it keeps and will continue to keep all of its books and records
concerning the Collateral at Borrowers" executive offices located at the
addresses set forth in the introductory paragraph of this Agreement and will not
move such books and records without giving Lender at least thirty (30) days
prior written notice;
(e) (i) the operation of Borrower's business is and will continue to
be in compliance in all material respects with all applicable federal, state and
local laws, including but not limited to all applicable environmental laws and
regulations.
(ii) in the event the Borrower obtains, gives or receives notice of
any release or threat of release of a reportable quantity of any Hazardous
Substances on its property (any such event being hereinafter referred to as a
"Hazardous Discharge") or receives any notice of violation, request for
information or notification that it is potentially responsible for investigation
or cleanup of environmental conditions on its property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of any environmental laws affecting its property or
Borrower's interest therein (any of
-22-
the foregoing is referred to herein as an "Environmental Complaint") from any
Person or entity, including any state agency responsible in whole or in part for
environmental matters in the state in which such property is located or the
United States Environmental Protection Agency (any such person or entity
hereinafter the "Authority"), then the Borrower shall, within five (5) Business
Days, give written notice of same to the Lender detailing facts and
circumstances of which the Borrower is aware giving rise to the Hazardous
Discharge or Environmental Complaint and periodically inform Lender of the
status of the matter. Such information is to be provided to allow the Lender to
protect its security interest in the Collateral and is not intended to create
nor shall it create any obligation upon the Lender with respect thereto.
(iii) Borrower shall respond promptly to any Hazardous Discharge or
Environmental Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid subjecting the Collateral to any lien, charge,
claim or encumbrance. If Borrower shall fail to respond promptly to any
Hazardous Discharge or Environmental Complaint or Borrower shall fail to comply
with any of the requirements of any environmental laws, the Lender may, but
without the obligation to do so, for the sole purpose of protecting the Lender's
interest in Collateral: (A) give such notices or (B) enter onto Borrower's
property (or authorize third parties to enter onto such property) and take such
actions as the Lender (or such third parties as directed by the Lender) deem
reasonably necessary or advisable, to clean up, remove, mitigate or otherwise
deal with any such Hazardous Discharge or Environmental Complaint. All
reasonable costs and expenses incurred by the Lender (or such third parties) in
the exercise of any such rights, including any sums paid in connection with any
judicial or administrative investigation or proceedings, fines and penalties,
together with interest thereon from the date expended at the Default Rate for
Revolving Credit Advances shall be paid upon demand by the Borrower, and until
paid shall be added to and become a part of the Obligations secured by the Liens
created by the terms of this Agreement or any other agreement between Lender and
Borrower.
(iv) Borrower shall defend and indemnify the Lender and hold the
Lender harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's fees, suffered or
incurred by the Lender under or on account of any environmental laws, including,
without limitation, the assertion of any lien thereunder, with respect to any
Hazardous Discharge, the presence of any hazardous substances affecting
Borrower's property, whether or not the same originates or emerges from
Borrower's property or any contiguous real estate, including any loss of value
of the Collateral as a result of the foregoing except to the extent such loss,
liability, damage and expense is attributable to any Hazardous Discharge
resulting from
-23-
actions on the part of the Lender. The Borrower's obligations under this
paragraph 12(e) shall arise upon the discovery of the presence of any Hazardous
Substances on the Borrower's property, whether or not any federal, state, or
local environmental agency has taken or threatened any action in connection with
the presence of any hazardous substances. The Borrower's obligation and the
indemnifications hereunder shall survive the termination of this Agreement.
(v) For purposes of paragraph 12(e) all references to Borrower's
property shall be deemed to include all of Borrower's right, title and interest
in and to all owned and/or leased premises;
(f) based upon the Employee Retirement Income Security Act of 1974
("ERISA"), and the regulations and published interpretations thereunder: (i)
Borrower has not engaged in any Prohibited Transactions as defined in paragraph
406 of ERISA and paragraph 4975 of the Internal Revenue Code, as amended; (ii)
Borrower has met all applicable minimum funding requirements under paragraph 302
of ERISA in respect of its plans; (iii) Borrower has no knowledge of any event
or occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any employee benefit
plan(s); (iv) Borrower has no fiduciary responsibility for investments with
respect to any plan existing for the benefit of persons other than Borrower's
employees; and (v) Borrower has not withdrawn, completely or partially, from any
multiemployer pension plan so as to incur liability under the Multiemployer
Pension Plan Amendments Act of 1980;
(g) it is solvent, able to pay its debts as they mature, has capital
sufficient to carry on its business and all businesses in which it is about to
engage and the fair saleable value of its assets (calculated on a going concern
basis) is in excess of the amount of its liabilities;
(h) except as listed on Schedule 12(h), there is no pending or
--------------
threatened litigation, actions or proceeding which involve the possibility of
materially and adversely affecting the Borrower's business, assets, operations,
condition or prospects, financial or otherwise (on a consolidated basis) or the
Collateral or the ability of Borrower to perform this Agreement;
(i) all balance sheets and income statements of the Borrower which
have been delivered to Lender are in accordance with GAAP, are complete and
correct and fairly, state Borrower's financial condition on a basis consistent
with that of previous financial statements and there has been no material
adverse change in Borrower's financial condition as reflected in such statements
since the date thereof. There are no contingent liabilities of Borrower as of
the date of such financial statements involving
-24-
material amounts and of a nature customarily reflected on a balance sheet in
accordance with GAAP known to the officers of Borrower and not disclosed on such
balance sheets and the related notes thereto;
(j) (x) it possesses all of the licenses, patents, copyrights,
trademarks, tradenames and permits necessary to conduct its business, (y) there
has been no assertion or claim of violation or infringement with respect thereof
and (z) all such licenses, patents, copyrights, trademarks, tradenames and
permits are listed on Schedule 12(j);
--------------
(k) it will pay or discharge when due all taxes, assessments and
governmental charges or levies imposed upon it except if such amounts are being
contested in good faith and adequate reserves for which have been established;
(l) it will promptly inform Lender in writing of: (i) the commencement
of all proceedings and investigations by or before and/or the receipt of any
notices from, any governmental or nongovernmental body and all actions and
proceedings in any court or before any arbitrator against or in any way
concerning any of Borrower's properties, assets or business, which might singly
or in the aggregate, have a materially adverse effect on Borrower; (ii) any
amendment of Borrower's certificate of incorporation or by-laws; (iii) any
change in Borrower's business, assets, liabilities, condition (financial or
otherwise), results of operations or business prospects which has had or might
have a materially adverse effect on Borrower; (iv) any Event of Default or
Incipient Event of Default; (v) any default or any event which with the passage
of time or giving of notice or both would constitute a default under any
agreement for the payment of money to which Borrower is a party or by which
Borrower or any of Borrower's properties may be bound which would have a
material adverse effect on Borrower's business, operations, property or
condition (financial or otherwise) or the Collateral; (vi) any change in the
location of Borrower's executive offices; (vii) any change in Borrower's
corporate name; (viii) any material delay in Borrower's performance of any of
its obligations to any Customer and of any assertion of any material claims,
offsets, counterclaims or Disputes by any Customer and of any allowances,
credits and/or other monies granted by it to any Customer; and (ix) furnish to
and inform Lender of all material adverse information relating to the financial
condition of any account debtor with respect to any Receivable in excess of
$50,000.
(m) it will not (i) create, incur, assume or suffer to exist any
indebtedness (exclusive of trade debt but inclusive of obligations under
capitalized leases) whether secured or unsecured in excess of $15,000,000 in the
aggregate, other than Borrower's indebtedness to Lender and other than (a)
indebtedness in respect of taxes, assessments, governmental charges or levies
and claims for labor, materials and supplies to the extent that payment
-25-
therefor shall not at the time be required to be made because such amounts are
being then contested in good faith and for which adequate reserves have been
established by Borrower; (b) subordinated indebtedness, with the prior written
consent of the Lender; (c) purchase money indebtedness secured by liens
permitted under the definition of "Permitted Liens" up to but not exceeding
$150,000 at any one time outstanding; (d) indebtedness of the Borrower to its
officers and employees under deferred compensation arrangements entered into in
the ordinary course of business; (e) subject to the provisions of Section 12(t)
of this Agreement, inter-company indebtedness (ii) declare, pay or make any
dividend or distribution on any shares of the common stock or preferred stock of
Borrower (except to RWI and provided such dividends or distributions are
retained by RWI and used for RWI"s business operations) or apply any of its
funds, property or assets to the purchase, redemption or other retirement of any
common or preferred stock of Borrower (iii) directly or indirectly, prepay any
indebtedness (other than to Lender and other than the permissible indebtedness
in the amount of up to $15,000,000 referred to above), or repurchase, redeem,
retire or otherwise acquire any indebtedness of Borrower; (iv) makes advances,
loans or extensions of credit to any Person except that (A) Original Owner may
be indebted to Borrower in an amount not to exceed $500,000 in the aggregate at
any time; (B) all employees, officers and directors of Borrower (excepting for
Original Owner) may be indebted to Borrower, in amounts not to exceed, at any
time, $25,000 to any one individual and $250,000 in the aggregate;(C) Borrower
may make advances to officers and employees with respect to expenses incurred by
them in the ordinary course of their duties that are properly reimbursable by
Borrower ;and (D) subject to Section 12(t) of this Agreement, inter-company
advances, loans or extensions of credit (v) become either directly or
contingently liable upon the obligations of any Person (other than a Subsidiary
which is a Borrower or a Guarantor of the Loans) by assumption, endorsement or
guaranty thereof or otherwise; (vi) enter into any acquisition, merger,
consolidation or other reorganization of, with or into any other Person or
acquire all or a portion of the assets (except for acquisition of equipment or
inventory in the ordinary course of the business of Borrower) or stock of any
Person or permit any other Person to consolidate with or merge with it unless
(a) the target of such acquisition, merger or consolidation is a Person which
conducts a similar business to that in which Borrower or any of its Subsidiaries
is currently engaged; (b) Borrower"s Tangible Net Worth (on a consolidated
basis) prior to and following the date of such acquisition, merger or
consolidation is not less than $70,000,000; (c) Borrower is the surviving entity
following such acquisition, merger or consolidation, provided, however, that
Borrower may create a subsidiary for the purpose of acquiring the assets of
another entity or a merger with another entity and in the case of a merger such
subsidiary or other entity may be the surviving entity provided (A) in the event
any such entity is to become a Borrower hereunder, such entity will promptly
execute such
-26-
instruments and agreements as Lender shall request in order for
such entity to become a Borrower hereunder, (B) the Receivables of such
surviving entity shall not be deemed Eligible Receivables hereunder until all
requirements of eligibility hereunder shall be satisfied, in Lender"s
discretion, and (C) if such surviving entity is not to be a Borrower hereunder,
such entity promptly executes and delivers to Lender a guaranty agreement and
security agreement in favor of Lender in form and substance as that executed by
the Guarantors; (d)Borrower shall have delivered to Lender the Certificate of
Borrower"s President or Chief Financial Officer stating that to the best of his
or her knowledge, such acquisition, merger or consolidation will not cause or
result in the occurrence of an Event of Default or Incipient Event of Default
under this Agreement; and (e) in the case of an acquisition in which a Borrower
acquires accounts receivable of another entity or a direct merger of a Borrower
with another entity, Borrower shall have executed and delivered to Lender within
thirty (30) days following the date of such acquisition, merger or consolidation
such instruments and documents as Lender deems reasonably necessary to ensure
that all of the accounts, accounts receivable and general intangibles of the
Person acquired in such acquisition, merger or consolidation shall be part of
the Collateral hereunder and that Lender shall have a first priority security
interest therein provided, however, that no such account or account receivable
-------- -------
shall be deemed an Eligible Receivable until such time as Borrower shall have
complied with this subsection 12(m)(vi)(e) to the satisfaction of Lender; (vii)
form any Subsidiary (except as otherwise permitted pursuant to (vi) above) or
enter into any partnership, joint venture or similar arrangement; (viii)
materially change the nature of the business in which it is presently engaged;
(ix) change its fiscal year or make any changes in accounting treatment and
reporting practices without prior written notice to Lender except as required by
GAAP or in the tax reporting treatment or except as required by law; (x) enter
into any transaction with any Affiliate except in ordinary course on arms-
length terms provided that in the case of transactions with Subsidiaries, such
transactions need only be in the ordinary course of business and need not be on
arms-length terms; or (xi) except as set forth in Schedule 12(m) annexed hereto,
--------------
xxxx Receivables under any name except the present name of the Borrower; (xii)
sell, transfer or lease or otherwise dispose of any of its properties or assets,
except in the ordinary course of its business and except as permitted pursuant
to Section 8(a) hereof;
(n) it shall not permit its Tangible Net Worth (on a consolidated
basis) to be less than $70,000,000 on June 30, 1998 and $100,000,000 on December
31, 1998;
(o) it shall not at any time permit its Interest Coverage Ratio to be
less than 5.0 to 1.0.
(p) all financial projections of Borrower's performance
-27-
prepared by Borrower or at Borrower's direction and delivered to Lender will
represent, at the time of delivery to Lender, Borrower's best estimate of
Borrower's future financial performance and will be based upon assumptions which
are reasonable in light of Borrower's past performance and then current business
conditions;
(q) none of the proceeds of the Loans hereunder will be used directly
or indirectly to "purchase" or "carry" "margin stock" or to repay indebtedness
incurred to "purchase" or "carry" "margin stock" within the respective meanings
of each of the quoted terms under Regulation G of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect; and
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(r) it will bear the full risk of loss from any loss of any nature
whatsoever with respect to the Collateral. At its own cost and expense in
amounts and with carriers acceptable to Lender, it shall (i) keep all its
insurable properties and properties in which it has an interest insured against
the hazards of fire, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is customary
in the case of companies engaged in businesses similar to Borrower's including,
without limitation, business interruption insurance; (ii) maintain a bond in
such amounts as is customary in the case of companies engaged in businesses
similar to Borrower's insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of Borrower
either directly or through authority to draw upon such funds or to direct
generally the disposition of such assets; (iii) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (iv) maintain all such workmen's compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which Borrower is engaged in business; (v) furnish Lender with (x) copies of all
policies and evidence of the maintenance of such policies at least thirty (30)
days before any expiration date, and (y) appropriate loss payable endorsements
in form and substance satisfactory to Lender, naming Lender as loss payee and
providing that as to Lender the insurance coverage shall not be impaired or
invalidated by any act or neglect of Borrower and the insurer will provide
Lender with at least thirty (30) days notice prior to cancellation. Borrower
shall instruct the insurance carriers that in the event of any loss thereunder,
the carriers shall make payment for such loss to Lender and Borrower jointly.
After the occurrence of an Event of Default Lender may endorse Borrower's name
on any check, draft or other instrument in payment of insurance losses and do
such other things as Lender may deem advisable to reduce the same to cash.
Lender is hereby authorized to adjust and compromise claims. All loss
recoveries received by Lender upon any such insurance may be applied to the
Obligations, in such order as Lender in its sole discretion shall determine.
Any surplus shall be paid by Lender to Borrower or applied as may be otherwise
required by law. Any deficiency thereon shall be paid by Borrower to Lender, on
demand.
(s) it shall not purchase or acquire obligations or stock of, or any
other interest in, or make any investment in any entity, except (A) obligations
issued or guaranteed by the United State of America or any agency thereof, (B)
commercial paper with maturities of not more than 180 days and a published
rating of not less than A-1 or P-1 (or the equivalent rating), (C) certificates
of time deposit and bankers' acceptances having maturities of not more than 180
days and repurchase agreements backed by United States government securities of
a commercial bank if (x) such bank has a combined capital and surplus of at
least $500,000,000, or (y)
-29-
its debt obligations, or those of a holding company of which it is a subsidiary,
are rated not less than A (or the equivalent rating) by a nationally recognized
investment rating agency, (D) U.S. money market funds that invest solely in
obligations issued or guaranteed by the United States of America or an Agency
thereof, (E) Eurodollar time deposits with financial institutions with a
published rating of not less than A-1 or P-1 (or the equivalent rating), and
(F) as permitted pursuant to Section 12(m) hereof.
(t) Borrower shall use the proceeds of the Revolving Credit Advances
hereunder (i) for Borrower"s working capital needs; (ii) for acquisitions of
other Persons and/or such Person"s assets by Borrower (subject to the
restrictions contained in Section 12(m) hereof); and (iii) to support the
operations of Subsidiaries of Borrower which are not Borrowers hereunder,
provided, however, that the aggregate amount of outstanding Loans hereunder to
be utilized for the purpose described in clause (iii) of this subsection (t)
shall not at any time exceed $10,000,000.
13. Power of Attorney. Borrower hereby appoints Lender or any other
-----------------
Person whom Lender may designate as Borrower's attorney, with power to: (i)
endorse Borrower's name on any checks, notes, acceptances, money orders, drafts
or other forms of payment or security that may come into Lender's possession;
(ii) sign Borrower's name on any invoice or xxxx of lading relating to any
Receivables, drafts against Customers, schedules and assignments of Receivables,
notices of assignment, financing statements and other public records,
verifications of account and notices to or from Customers; (iii) verify the
validity, amount or any other matter relating to any Receivable by mail,
telephone, telegraph or otherwise with Customers; (iv) do all things necessary
to carry out this Agreement, any Ancillary Agreement and all related documents;
and (v) on or after the occurrence and continuation of an Event of Default,
notify the post office authorities to change the address for delivery of
Borrower's mail to an address designated by Lender, and to receive, open and
dispose of all mail addressed to Borrower. Borrower hereby ratifies and
approves all acts of the attorney. Neither Lender nor the attorney will be
liable for any acts or omissions or for any error of judgment or mistake of fact
or law. This power, being coupled with an interest, is irrevocable so long as
any Receivable which is assigned to Lender or in which Lender has a security
interest remains unpaid and until the Obligations have been fully satisfied.
14. Expenses. Borrower shall pay all of Lender's out-of-pocket costs
--------
and expenses, including without limitation reasonable fees and disbursements of
counsel retained or employed by Lender and appraisers, in connection with the
preparation, execution and delivery of this Agreement and the Ancillary
Agreements, and in connection with the prosecution or defense of
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any action, contest, dispute, suit or proceeding concerning any matter in any
way arising out of, related to or connected with this Agreement or any Ancillary
Agreement. Borrower shall also pay all of Lender's out-of-pocket costs and
expenses, including without limitation reasonable fees and disbursements of
counsel retained or employed by Lender, in connection with (a) the preparation,
execution and delivery of any waiver, any amendment thereto or consent proposed
or executed in connection with the transactions contemplated by this Agreement
or the Ancillary Agreements, (b) Lender's obtaining performance of the
Obligations under this Agreement and any Ancillary Agreements, including, but
not limited to, the enforcement or defense of Lender's security interests,
assignments of rights and liens hereunder as valid perfected security interests,
(c) any attempt to inspect, verify, protect, collect, sell, liquidate or
otherwise dispose of any Collateral in accordance with the terms of this
Agreement, and (d) any consultations in connection with any of the foregoing.
Borrower shall also pay Lender's then standard price for furnishing Borrower or
its designees copies of any statements, records, files or other data
(collectively, "Reports") requested by Borrower or its designees, other than
reports of the kind furnished to Borrower and Lender's other borrowers on a
regular, periodic basis in the ordinary course of Lender's business. Borrower
shall also pay Lender's customary bank charges, including, without limitation,
all wire transfer fees incurred by Lender, for all bank services performed or
caused to be performed by Lender for Borrower at Borrower's request. All such
costs and expenses together with all filing, recording and search fees, taxes
and interest payable by Borrower to Lender shall be payable on demand and shall
be secured by the Collateral. If any tax by any governmental authority is or may
be imposed on or as a result of any transaction between Borrower and Lender
which Lender is or may be required to withhold or pay, Borrower agrees to
indemnify and hold Lender harmless in respect of such taxes, and Borrower will
repay to Lender the amount of any such taxes which shall be charged to
Borrower's account; and until Borrower shall furnish Lender with indemnity
therefor (or supply Lender with evidence satisfactory to it that due provision
for the payment thereof has been made), Lender may hold without interest any
balance standing to Borrower's credit and Lender shall retain its security
interests in any and all Collateral. Borrower hereby acknowledges that Lender
shall not be liable in any manner whatsoever for any selling expenses, orders,
purchases or contracts of any kind resulting from any transaction between
Borrower and any other Person and Borrower hereby indemnifies and holds Lender
harmless with respect thereto, which indemnity shall survive termination of this
Agreement.
15. Assignment. Lender may assign any or all of the Obligations
----------
together with any or all of the security therefor and any transferee shall
succeed to all of Lender's rights with respect thereto. Upon such transfer,
Lender shall be released from all responsibility for the Collateral to the
extent same is assigned to
-31-
any transferee. Lender may from time to time sell or otherwise grant
participations in any of the Obligations and the holder of any such
participation shall, subject to the terms of any agreement between Lender and
such holder, be entitled to the same benefits as Lender with respect to any
security for the Obligations in which such holder is a participant. Borrower
agrees that each such holder may exercise any and all rights of banker's lien,
set-off and counterclaim with respect to its participation in the Obligations as
fully as though Borrower were directly indebted to such holder in the amount of
such participation. Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of Lender,
and no such assignment or transfer of any such obligation shall relieve Borrower
thereof unless Lender shall have consented to such release in a writing
specifically referring to the obligation from which Borrower is to be released.
16. Waivers. Borrower waives presentment and protest of any
-------
instrument and notice thereof, notice of default and all other notices to which
Borrower might otherwise be entitled.
17. Term of Agreement. Lender may terminate this Agreement at any
-----------------
time upon sixty (60) days prior written notice to Borrower. If not so
terminated, this Agreement shall continue in full force and effect until the
expiration of the Term. The Term shall be automatically extended for successive
periods of one (1) year each unless either party shall have provided the other
with a written notice of termination, at least sixty (60) days prior to the
expiration of the Term or any renewal Term. The Borrower may terminate this
Agreement at any time upon sixty (60) days' prior written notice ("Termination
Date") upon payment in full of the Obligations; provided, that Borrower pays an
--------
early termination fee in an amount equal to $250,000 if Borrower terminates this
Agreement prior to the first anniversary of the Closing Date, or prior to any
subsequent anniversary of the Closing Date. Notwithstanding anything to the
contrary contained in this Section 17, provided Borrower delivers to Lender
written notice of termination at least sixty (60) days prior to the expiration
of the Term or any renewal Term as aforesaid and the Termination Date is on any
anniversary of the Closing Date, no early termination fee shall be payable.
18. Events of Default. The occurrence of any of the following shall
-----------------
constitute an Event of Default:
(a) failure to make payment of any of the Obligations when required
hereunder;
(b) failure to pay any taxes when due unless such taxes are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been provided on Borrower's books;
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(c) committing any breach under paragraph 12(n) or 12(o) hereof;
(d) occurrence of a default under any agreement to which Borrower is a
party with third parties which has a material adverse affect (on a consolidated
basis with respect to RWI and its Subsidiaries) upon Borrower's business,
operations, property or condition (financial or otherwise).
(e) any representation, warranty or statement made by Borrower
hereunder, in any Ancillary Agreement, any certificate, statement or document
delivered pursuant to the terms hereof, or in connection with the transactions
contemplated by this Agreement should at any time be false or misleading in any
material respect;
(f) attachments or levies are made upon any of Borrower's assets
having an aggregate value in excess of an aggregate of $300,000, or judgments
are rendered against Borrower or any of Borrower's property involving a
liability of more than $300,000 in the aggregate, which shall not have been
vacated, discharged, stayed or bonded pending appeal within sixty (60) days from
the entry thereof;
(g) any change in Borrower's condition or affairs (financial or
otherwise) which in Lender's opinion impairs the Collateral or the ability of
Borrower to perform its Obligations;
(h) any lien created hereunder or under any Ancillary Agreement for
any reason ceases to be or is not a valid and perfected lien having a first
priority interest;
(i) if Borrower shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of creditors, (iii) commence a voluntary case under
the federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated
a bankrupt or insolvent, (v) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (vi) acquiesce to, or fail to
have dismissed, within sixty (60) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (vii) take any action for the
purpose of effecting any of the foregoing;
(j) Borrower shall admit in writing its inability, or be generally
unable to pay its debts as they become due or cease operations of its present
business;
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(k) any Subsidiary or any Guarantor shall (i) apply for or consent to
the appointment of, or the taking possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property, (ii)
admit in writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business, (iii) make a general
assignment for the benefit of creditors, (iv) commence a voluntary case under
the federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated
a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (vii) acquiesce to, or fail to
have dismissed, within sixty (60) days, any petition filed against it in any
involuntary case under such bankruptcy laws, (viii) take any action for the
purpose of effecting any of the foregoing;
(l) Borrower directly or indirectly sells, assigns, transfers,
conveys, or suffers or permits to occur any sale, assignment, transfer or
conveyance of any assets of Borrower or any interest therein, except as
permitted herein;
(m) Borrower fails to maintain its current line of business;
(n) Lender shall in good xxxxx xxxx itself insecure or unsafe or shall
fear diminution in value, removal or waste of the Collateral;
(o) a default by Borrower in the payment, when due, of any principal
of or interest on any indebtedness for money borrowed in an aggregate principal
amount of $1,000,000 or more;
(p) if any Guarantor attempts to terminate, challenges the validity
of, or its liability under any Guaranty Agreement or Guarantor Security
Agreement;
(q) should any Guarantor default in its obligations under any Guaranty
Agreement or any Guarantor Security Agreement or if any proceeding shall be
brought to challenge the validity, binding effect of any Guaranty Agreement or
any Guarantor Security Agreement, or should any Guarantor breach any
representation, warranty or covenant contained in any Guaranty Agreement or any
Guarantor Security Agreement or should any Guaranty Agreement or Guarantor
Security Agreement cease to be a valid, binding and enforceable obligation;
(r) any Change of Control shall have occurred;
(s) if at any time for any reason any two (2) of Xxxx Xxxxxx, Xxxxxx
Xxxxx, Xxxxx Xxxxx, or Xxxxx Xxxxxx (the "Current Executives") shall cease to be
employed by Borrower in an executive managerial capacity and Lender shall not
have delivered its written consent to a successor executive within sixty (60)
days following
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the date any such two (2) Current Executives shall cease to be so employed; or
(t) failure to perform under and/or committing any breach of this
Agreement or any Ancillary Agreement or any other agreement between Borrower and
Lender which breach is not otherwise specifically enumerated in subparagraphs
(a) through (s) of this paragraph 18 and which breach remains uncured for a
period of thirty (30) days from the occurrence thereof.
19. Remedies. (a) Upon the occurrence of an Event of Default
--------
pursuant to paragraph 18 (i) herein, all Obligations shall be immediately due
and payable and this Agreement shall be deemed terminated; upon the occurrence
and continuation of any other of the Events of Default, Lender shall have the
right to demand repayment in full of all Obligations, whether or not otherwise
due and/or to terminate this Agreement without advance notice. Until all
Obligations have been fully satisfied, Lender shall retain its security interest
in all Collateral. Lender shall have, in addition to all other rights provided
herein, the rights and remedies of a secured party under the Uniform Commercial
Code, and under other applicable law, all other legal and equitable rights to
which Lender may be entitled, including without limitation, the right to take
immediate possession of the Collateral, to require Borrower to assemble the
Collateral, at Borrower's expense, and to make it available to Lender at a place
designated by Lender which is reasonably convenient to both parties and to enter
any of the premises of Borrower or wherever the Collateral shall be located,
with or without force or process of law, and to keep and store the same on said
premises until sold (and if said premises be the property of Borrower, Borrower
agrees not to charge Lender for storage thereof for a period up to at least
sixty (60) days after sale or disposition of said Collateral). Further, Lender
may, at any time or times after default by Borrower, sell and deliver all
Collateral held by or for Lender at public or private sale for cash, upon credit
or otherwise, at such prices and upon such terms as Lender, in Lender's sole
discretion, deems advisable or Lender may otherwise recover upon the Collateral
in any commercially reasonable manner as Lender, in its sole discretion, deems
advisable. Except as to that part of the Collateral which is perishable or
threatens to decline speedily in nature or is of a type customarily sold on a
recognized market, the requirement of reasonable notice shall be met if such
notice is mailed postage prepaid to Borrower at Borrower's address as shown in
Lender's records, at least ten (10) days before the time of the event of which
notice is being given. Lender may be the purchaser at any sale, if it is
public. The proceeds of sale shall be applied first to all costs and expenses
of sale, including attorneys' fees, and second to the payment (in whatever order
Lender elects) of all Obligations. Lender will return any excess to Borrower
and Borrower shall remain liable to Lender for any deficiency.
-35-
20. Waiver; Cumulative Remedies. Failure by Lender to exercise any
---------------------------
right, remedy or option under this Agreement or any supplement hereto or any
other agreement between Borrower and Lender or delay by Lender in exercising the
same, will not operate as a waiver; no waiver by Lender will be effective unless
it is in writing and then only to the extent specifically stated. Lender's
rights and remedies under this Agreement will be cumulative and not exclusive of
any other right or remedy which Lender may have.
21. Application of Payments. Borrower irrevocably waives the right
-----------------------
to direct the application of any and all payments at any time or times hereafter
received by Lender from or on Borrower's behalf and Borrower hereby irrevocably
agrees that Lender shall have the continuing exclusive right to apply and
reapply any and all payments received at any time or times hereafter against
Borrower's Obligations hereunder in such manner as Lender may deem advisable
notwithstanding any entry by Lender upon any of Lender's books and records.
22. Depository Accounts. Any payment received by Borrower on account
-------------------
of any Collateral shall be held by Borrower in trust for Lender and Borrower
shall promptly deliver same in kind to Lender or deposit all such payments into
a cash collateral account at such bank as Lender may designate for application
to payment of the Obligations. Borrower shall also execute such further
documents as Lender may deem necessary to establish such an account and all
funds deposited in such account shall immediately be deemed Lender's property.
23. Lock Box Accounts/Deposit Accounts.
----------------------------------
(a) Borrower shall instruct all of its Lock Box Customers to make such
payments on account of Receivables to an account under Lender's dominion and
control at such bank as Lender may designate. Borrower shall also execute such
further documents as Lender may deem necessary to establish such an account and
all funds deposited in such account shall immediately be deemed Lender's
property.
(b) With respect to all other Customers of Borrower, Borrower shall
instruct such Customers to make payments on account of Receivables only to such
deposit accounts in which Lender holds a first priority security interest and
only at such banks with which Lender has entered into an agreement whereby such
banks will, upon receipt of written direction by Lender, remit all deposits in
such deposit accounts directly to Lender (the "Deposit Accounts"). Borrower
shall execute such instruments and documents as Lender shall request to grant
and pledge in favor of Lender a first priority security interest in and to such
Deposit Accounts and will execute and deliver to Lender such letters of
instruction and other documents as Lender shall request to permit such banks to
remit all deposits in the Deposit Accounts directly to Lender.
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(c) Notwithstanding anything to the contrary contained herein,
Borrower shall, at Lender"s request, instruct all of its Customers to make
payments on account of Receivables in accordance with subsection 23(a) above.
24. Revival. Borrower further agrees that to the extent Borrower
-------
makes a payment or payments to Lender, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
then, to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made.
25. Notices. Any notice or request hereunder may be given to
-------
Borrower or Lender at the respective addresses set forth below or as may
hereafter be specified in a notice designated as a change of address under this
paragraph. Any notice or request hereunder shall be given by registered or
certified mail, return receipt requested, or by overnight mail or by telecopy
(confirmed by mail). Notices and requests shall be, in the case of those by
mail or overnight mail, deemed to have been given when deposited in the mail or
with the overnight mail carrier, and, in the case of a telecopy, when confirmed.
Notices shall be provided as follows:
If to the Lender: BNY Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Borrower: Renaissance Worldwide, Inc.
000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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26. Governing Law and Waiver of Jury Trial. THIS AGREEMENT SHALL BE
--------------------------------------
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. LENDER SHALL HAVE THE RIGHTS AND REMEDIES OF A SECURED PARTY UNDER
APPLICABLE LAW INCLUDING, BUT NOT LIMITED TO, THE UNIFORM COMMERCIAL CODE OF NEW
YORK. BORROWER AGREES THAT ALL ACTIONS AND PROCEEDINGS RELATING DIRECTLY OR
INDIRECTLY TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR ANY OTHER OBLIGATIONS
SHALL BE LITIGATED IN THE FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW
YORK OR, AT LENDER'S OPTION, IN ANY OTHER COURTS LOCATED IN NEW YORK STATE OR
ELSEWHERE AS LENDER MAY SELECT AND THAT SUCH COURTS ARE CONVENIENT FORUMS AND
BORROWER SUBMITS TO THE PERSONAL JURISDICTION OF SUCH COURTS. BORROWER WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS THAT SERVICE OF PROCESS UPON BORROWER
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED
TO BORROWER AT BORROWER'S ADDRESS APPEARING ON LENDER'S RECORDS, AND SERVICE SO
MADE SHALL BE DEEMED COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN SO
MAILED. BOTH PARTIES HERETO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BETWEEN BORROWER AND LENDER.
27. Limitation of Liability. Borrower acknowledges and understands
-----------------------
that in order to assure repayment of the Obligations hereunder Lender may be
required to exercise any and all of Lender's rights and remedies hereunder and
agrees that neither Lender nor any of Lender's agents shall be liable for acts
taken or omissions made in connection herewith or therewith except for actual
bad faith or gross negligence.
28. Entire Understanding. This Agreement and the Ancillary
--------------------
Agreements contain the entire understanding between Borrower and Lender and any
promises, representations, warranties or guarantees not herein contained shall
have no force and effect unless in writing, signed by the Borrower's and
Lender's respective officers. Neither this Agreement, the Ancillary Agreements,
nor any portion or provisions thereof may be changed, modified, amended, waived,
supplemented, discharged, canceled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing, signed by the
party to be charged.
29. Modification. This Agreement and the Ancillary Agreements
------------
constitute the complete agreement between the parties with respect to the
subject matter hereof and thereof and may not be modified, altered or amended
except by an agreement in writing signed by the parties hereto and thereto.
30. Severability. Wherever possible each provision of this Agreement
------------
or the Ancillary Agreements shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or the Ancillary Agreements shall be prohibited by or invalid under applicable
law such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or
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the remaining provisions thereof.
31. Captions. All captions are and shall be without substantive
--------
meaning or content of any kind whatsoever.
32. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which taken together shall constitute one and the same
instrument.
33. Construction. The parties acknowledge that each party and its
------------
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
34. Facsimile Signatures. This Agreement may be executed by the
--------------------
parties and delivered via facsimile transmission and any such facsimile
signature shall be deemed to be an original signature.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first above written.
RENAISSANCE WORLDWIDE, INC. RENAISSANCE WORLDWIDE PROFESSIONALS, INC.
By:______________________ By:___________________________
Title: Title:
THE HUNTER GROUP, INC. RENAISSANCE WORLDWIDE STRATEGY, INC.
By:______________________ By:___________________________
Title: Title:
THE REGISTRY, INC. NETWORK AMERICA'S REGISTRY, INC.
CONSULTING PRACTICE
By:_______________________ By:___________________________
Title: Title:
SHAMROCK COMPUTER RESOURCES, LTD.
By:_______________________
Title:
BNY FINANCIAL CORPORATION
By:_______________________
Title:
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SCHEDULES
---------
Schedule 1(A) - Permitted Liens
--------------------------------
Schedule 12(h) - Pending Litigation
-----------------------------------
Schedule 12(j) - Licenses, Patents, Trademarks and Copyrights
-------------------------------------------------------------
Schedule 12(l) - Locations
--------------------------
Schedule 12(m) - Permitted Indebtedness
---------------------------------------
Schedule 12 (m) - Trade Names
-----------------------------
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