EXHIBIT 10.10
CREDIT AGREEMENT
Dated as of December 20, 1995
By and Between
FormMaker Software, Inc.
and
NationsBank of Georgia, National Association
TABLE OF CONTENTS
1. DEFINITIONS AND ACCOUNTING MATTERS........................................1
1.1 Certain Defined Terms...............................................1
1.2 Accounting Terms and Determinations................................14
2. LOANS....................................................................15
2.1 Amount of Loans....................................................15
2.2 Borrowings.........................................................15
2.3 Repayment of Loans.................................................16
2.4 Interest...........................................................16
2.5 Voluntary Reductions of Commitment.................................19
2.6 Continuation and Conversion of Loans...............................19
2.7 Minimum Amounts....................................................20
2.8 Fees...............................................................20
2.9 Note...............................................................20
2.10 Optional Prepayments...............................................21
2.11 Mandatory Prepayments of Loans.....................................21
2.12 Conversion to Term Loan............................................21
2.13 Use of Proceeds....................................................22
3. PAYMENTS; COMPUTATIONS; TAXES; ETC.......................................22
3.1 Payments...........................................................22
3.2 Computations.......................................................22
3.3 Certain Notices....................................................22
3.4 Taxes..............................................................23
3.5 Additional Costs...................................................24
3.6 Limitation on Types of Loans.......................................26
3.7 Illegality.........................................................26
3.8 Treatment of Affected Loans........................................26
3.9 Compensation.......................................................27
4. CONDITIONS PRECEDENT.....................................................27
4.1 Initial Loans......................................................27
4.3. Conditions to Acquisitions.........................................32
4.4 Closing Documents for Non-Significant Acquisitions.................34
5. REPRESENTATIONS AND WARRANTIES...........................................36
5.1 Corporate Existence................................................36
5.2 Authorization; No Conflict.........................................36
5.3 Enforceability.....................................................37
5.4 Approvals..........................................................37
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5.5 Financial Condition................................................37
5.6 Litigation.........................................................38
5.7 Federal Reserve Regulations........................................38
5.8 ERISA..............................................................38
5.9 Taxes..............................................................39
5.10 Investment Company Act.............................................39
5.11 Public Utility Holding Company Act.................................40
5.12 Material Agreements................................................40
5.13 Environmental and Safety Matters...................................40
5.14 Subsidiaries.......................................................41
5.15 Compliance with Law................................................41
5.16 Capitalization.....................................................41
5.17 Title to Properties................................................41
5.18 Solvency...........................................................41
5.19 Conduct of Business................................................41
5.20 Representations and Warranties in Acquisition Documents
and Investment.....................................................42
5.21 Performance of Contracts, Etc......................................42
5.22 Disclosure.........................................................42
5.23 Representations Regarding Acquisitions.............................42
6. AFFIRMATIVE COVENANTS....................................................43
6.1 Financial Statements and Other Information.........................43
6.2 Litigation.........................................................46
6.3 Corporate Existence, Etc...........................................46
6.4 Insurance..........................................................47
6.5 Obligations and Taxes..............................................47
6.6 Maintaining Records; Access to Properties and Inspections..........47
6.7 Environmental and Safety Matters...................................48
6.8 Additional Security................................................48
6.9 Deposit Accounts/Cash Management Service...........................48
6.10 Change in Management Group.........................................49
6.11 Enforcement of Remedies under Acquisition Documents................49
7. NEGATIVE COVENANTS.......................................................49
7.1 Prohibition of Fundamental Changes.................................49
7.2 Limitation on Liens................................................50
7.3 Indebtedness and Guarantees........................................50
7.4 Investments........................................................50
7.5 Restricted Payments................................................50
7.6 Accounting.........................................................50
7.7 Amendment of Certain Documents.....................................50
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8. EVENTS OF DEFAULT........................................................51
8.1 Payments under Credit Documents....................................51
8.2 Other Indebtedness.................................................51
8.3 Representations and Warranties.....................................51
8.4 Other Obligations..................................................51
8.5 Ability to Pay Debts...............................................52
8.6 Voluntary Proceedings..............................................52
8.7 Involuntary Proceedings............................................52
8.8 Judgments..........................................................52
8.9 ERISA Event........................................................53
8.10 Change in Control..................................................53
8.11 Interest Expense Coverage..........................................54
8.12 Certain Actions by Guarantors......................................54
8.13 Guarantor Credit Agreement.........................................54
9. MISCELLANEOUS............................................................55
9.1 Waiver.............................................................55
9.2 Notices............................................................55
9.3 Expenses, Etc......................................................56
9.4 Amendments, Etc....................................................57
9.5 Successors and Assigns.............................................57
9.6 Assignments and Participations.....................................57
9.7 Survival...........................................................58
9.8 Table of Contents: Descriptive Headings............................58
9.9 Counterparts.......................................................58
9.10 Governing Law......................................................58
9.11 Arbitration........................................................58
9.12 Acknowledgments....................................................59
9.13 Confidentiality....................................................59
9.14 Obligations with Respect to Loan Parties...........................60
EXHIBITS:
Exhibit A Form of Guaranty
Exhibit B Form of Security Agreement
Exhibit C Form of Notice of Borrowing
Exhibit D Form of Notice of Continuation
Exhibit E Form of Notice of Conversion
Exhibit F Form of Acquisition Note
Exhibit G Form of Opinion of Counsel to Company
Exhibit H Form of Opinion of Counsel to Guarantor
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SCHEDULES:
Schedule 5.1. Corporate Existence
Schedule 5.6. Litigation
Schedule 5.8. ERISA
Schedule 5.9. Taxes
Schedule 5.12. Material Agreements
Schedule 5.16. Capitalization
Schedule 5.17. Title to Properties
Schedule 7.3. Indebtedness
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CREDIT AGREEMENT (this "Agreement") dated as of December 20, 1995 by and
between FORMMAKER SOFTWARE, INC., a Georgia corporation (the "Company") and
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION (the "Lender").
The Company has requested that the Lender make certain loans to the
Company in an aggregate principal amount up to but not exceeding $10,000,000 at
any one time outstanding, and the Lender is willing to make such loans upon the
terms hereof and subject to the conditions contained herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree as follows:
1. DEFINITIONS AND ACCOUNTING MATTERS
1.1 Certain Defined Terms
As used herein, the following terms shall have the following meanings (all
terms defined in this Section or in other provisions of this Agreement in the
singular to have the same meanings when used in the plural and vice versa):
"Acquisition" shall mean, with respect to a Seller, the acquisition by the
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Company directly, or indirectly through any of its Subsidiaries, of
substantially all of the assets of, assets constituting a distinct operating
division of, or the outstanding capital stock of, such Seller as contemplated by
the applicable Acquisition Documents.
"Acquisition Commitment" shall mean the obligation of the Lender to make
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Acquisition Loans in an aggregate principal amount at any one time outstanding
up to but not exceeding $10,000,000, as the same may be reduced from time to
time pursuant to the terms hereof.
"Acquisition Documents" shall mean, with respect to an Acquisition,
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collectively, the Purchase Agreement for such Seller and all related agreements
and conveyance instruments executed in connection therewith or pursuant thereto.
"Adjusted LIBO Rate" shall mean, with respect to each Interest Period for
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any LIBOR Loan, the rate obtained by dividing (a) LIBOR for such Interest Period
by (b) a percentage equal to I minus the stated maximum rate (stated as a
decimal) of all reserves, if any, required to be maintained against
"Eurocurrency liabilities" as specified in Regulation D of the Board of
Governors of the Federal Reserve System (or against any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Loans is determined or any category of extensions of credit or other
assets which includes loans by an office of the Lender outside of the United
States of America to residents of the United States of America).
"Affiliate" shall mean, as to any Person, any other Person which directly
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or indirectly
controls, or is under common control with, or is controlled by, such Person and,
if such Person is an individual, any member of the immediate family (including
parents, spouse and children) of such individual, any trust whose principal
beneficiary is such individual or one or more members of such individual's
immediate family and any Person who is controlled by any such member or trust.
As used in this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies of the subject Person (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise); provided that, in any event, any Person which owns directly or
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indirectly 5% or more of the securities having ordinary voting power for the
election of directors or other governing body of a corporation or 5% or more of
the partnership or other ownership interests of any other Person (other than as
a limited partner of such other Person) will be deemed an Affiliate of such
corporation or other Person. The term "Affiliate" shall include Policy
Management Systems Corp. only if it is such by virtue of the immediately
preceding proviso.
"Applicable Law" shall mean all applicable provisions of constitutions,
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statutes, rules, regulations and orders of all governmental bodies and all
orders, rulings and decrees of all courts and arbitrators.
"Applicable Lending Office" shall mean, for the Lender, 600 Peachtree
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Street, 00xx Xxxxx, Xxxxxxx, Xxxxxxx 00000 or such other office of the Lender
(or of an affiliate of the Lender) in the United States of America as the Lender
may from time to time specify in writing to the Company as the office by which
the Loans are to be made and maintained.
"Assignment of Acquisition Documents" shall mean each assignment of fights
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under Acquisition Documents executed by any Loan Party in favor of the Lender
after the Closing Date pursuant to Section 4.3., each such assignment to be in
form and substance satisfactory to the Lender.
"Bankruptcy Code" means the United States Bankruptcy Code of 1978, as
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amended from time to time, or any successor federal statute.
"Base Rate" shall mean, for any day, the higher of (a) the Federal Funds
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Rate for such day plus 1/2 of 1% per annum and (b) the Prime Rate for such day.
Each change in any interest rate provided for herein resulting from a change in
the Base Rate shall take effect at the time of such change in the Base Rate. If
for any reason the Lender shall have determined that it is unable to ascertain
the Federal Funds Rate for such day, including, without limitation, the
inability or failure of the Lender to obtain sufficient bids or publications as
contemplated by the definition of the Federal Funds Rate, the Base Rate for such
day shall be the Prime Rate,
"Base Rate Loan" shall mean a Loan which bears interest at a rate based on
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the Base Rate.
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"Business Day" shall mean (a) any day other than a Saturday, Sunday or
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other day on which commercial banks are authorized or required to close in
Atlanta, Georgia and (b) with reference to a LIBOR Loan, any such day that is
also a day on which dealings in Dollar deposits are carried out in the London
interbank market.
"Capitalized Lease Obligation" means Indebtedness represented by
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obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with such principles.
"Closing Date" shall mean the date upon which the conditions precedent to
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the initial extension of credit hereunder set forth in Article 4. have been
satisfied and the initial extension of credit hereunder made, but in no event
later than December 29, 1995.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
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to time, or any successor statute.
"Collateral" means any collateral security hereafter pledged by any Loan
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Party to secure the Obligations or any portion thereof.
"Commitment" means the Lender's obligation, subject to the terms hereof,
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to make Acquisition Loans pursuant to Section 2.1. in an amount up to, but not
exceeding, the amount of the Acquisition Commitment.
"Consolidated Subsidiary" shall mean, as to any Person, each Subsidiary of
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such Person (whether now existing or hereafter created or acquired) the
financial statements of which are required to be consolidated with the financial
statements of such Person in accordance with GAAP.
"Continue", "Continuation" and "Continued" each refers to the continuation
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of a LIBOR Loan from one Interest Period to the next Interest Period pursuant to
Section 2.6.(a).
"Control Group" shall mean the Guarantors.
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"Convert", "Conversion" and "Converted" each refers to the conversion of a
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Loan of one Type into a Loan of another Type pursuant to Section 2.6.(b).
"Credit Documents" shall mean, collectively, this Agreement, the Note, the
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Guaranty, the Security Documents, and any other documents and instruments
executed and delivered by any Loan Party or any Guarantor in connection with
this Agreement or any of the foregoing documents.
"Credit Facility" shall mean the credit facility for Loans extended by the
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Lender to the
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Company under this Agreement,
"Default" shall mean an Event of Default or an event which with notice or
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lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of America.
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"Employee Benefit Plan" shall mean any employee benefit plan within the
---------------------
meaning of Section 3(3) of ERISA maintained or contributed to by any Loan Party
or any of its ERISA Affiliates, other than a Multi-employer Plan.
"Environmental Claim" shall mean, with respect to any Person, any notice,
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claim, demand or other communication (whether written or oral) alleging or
asserting such Person's liability for investigatory costs, cleanup costs,
governmental response costs, damages to natural resources or other property,
personal injuries, fines or penalties arising out of, based on or resulting from
(a) the presence, handling, generation, treatment, storage, disposal, Release or
threatened Release into the environment of any Hazardous Material at any
location, whether or not owned by such Person, or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" shall mean any and all federal, state, local and
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foreign statutes, laws, regulations, ordinances and similar provisions having
the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and common law concerning public
health or safety, worker health or safety or pollution or protection of the
environment, including without limitation those relating to any emissions,
discharges or Releases of Hazardous Materials to ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, control, clean-up or
handling of Hazardous Materials.
"Equity Investment" means the investment in the Company by the Guarantors
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contemplated by the Investment Documents.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
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amended from time to time, or any successor statute.
"ERISA Affiliate" of any Person shall mean any corporation or trade or
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business which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as such Person or which is under
common control (within the meaning of Section 414(c) of the Code) with such
Person.
"ERISA Event" with respect to any Person shall mean (a) the occurrence of
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a reportable event, within the meaning of Section 4043 of ERISA, with respect to
any Plan of such Person or any of its ERISA Affiliates, unless the 30-day notice
requirement with respect to such event has
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been waived by the PBGC; (b) the provision by the administrator of any Plan of
such Person or any of its ERISA Affiliates of a notice of intent to terminate
such Plan pursuant to Section 4041 (a)(2) of ERISA (including any such notice
with respect to a plan amendment referred to in Section 4041(a)(2) of ERISA);
(c) the cessation of operations at a facility of such Person or any of its ERISA
Affiliates in the circumstances described in Section 4062(e) of ERISA with
respect to a Plan; (d) the withdrawal by such Person or any of its ERISA
Affiliates from a Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (e) the failure by such
Person or any of its ERISA Affiliates to make a payment to a Plan required under
Section 302(f)(1) of ERISA; (f) the adoption of an amendment to a Plan of such
Person or any of its ERISA Affiliates requiring the provision of security to
such Plan pursuant to Section 307 of ERISA; or (g) the institution by the PBGC
of proceedings to terminate a Plan of such Person or any of its ERISA Affiliates
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that could constitute grounds for the
termination of, or the appointment of a trustee to administer, such Plan.
"Federal Funds Rate" shall mean, for any day, the rate per annum (rounded
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upwards, if necessary, to the nearest 1/16 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (i) if the day for which such rate is to be determined is not
a Business Day, the Federal Funds Rate for such day shall be the Federal Funds
Rate for the immediately preceding Business Day, and (ii) if such rate is not so
published for any Business Day, the Federal Funds Rate for such day shall be the
average rate charged by three federal funds brokers of recognized standing
selected by the Lender on such day for such transactions as determined by the
Lender.
"GAAP" shall mean generally accepted accounting principles applied in the
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United States of America and practices which are recognized as such by the
American Institute of Certified Public Accountants, applied on a basis
consistent with those which, in accordance with Section 1.2.(a), are to be used
in making the calculations for purposes of determining compliance with the terms
of this Agreement.
"Governmental Approvals" shall mean all authorizations, consents,
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approvals, licenses and exemptions of, registrations and filings with, and
reports to, all Governmental Authorities.
"Governmental Authority" shall mean any federal, state, local or foreign
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court or governmental agency, authority, instrumentality or regulatory body.
"Guarantee" shall mean a guarantee, an endorsement, a contingent agreement
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to purchase or to furnish funds for the payment or maintenance of, or otherwise
to be or become contingently liable under or with respect to, any Indebtedness
or other obligations, net worth, working capital or earnings of any Person, or a
guarantee of the payment of dividends or other distributions upon the stock or
equity interests of any Person, or an agreement to purchase, sell or lease (as
lessee or
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lessor) property, products, materials, supplies or services primarily for the
purpose of enabling a debtor to make payment of its obligations or an agreement
to assure a creditor against loss, and including, without limitation, causing a
bank to issue a letter of credit for the benefit of another Person, but
excluding endorsements for collection or deposit in the ordinary course of
business. Usage of the term "Guarantee" as a verb shall have a corresponding
meaning.
"Guarantor" shall mean each of (a) Safeguard Scientifics (Delaware), Inc.,
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a Delaware corporation; (b) Technology Leaders II L.P., a Delaware limited
partnership and (c) Technology Leaders II OFFSHORE C.V., a Netherlands Antilles
limited partnership.
"Guarantor Credit Agreement" shall mean that certain Second Amended and
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Restated Credit Agreement dated as of February 1, 1995, as amended as of
August __, 1995, by and among the Safeguard Scientific, Inc., Safeguard
Scientific (Delaware), Inc. and Midlantic Bank, N.A.
"Guaranty" shall mean each of (a) the Guaranty substantially in the form
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of Exhibit A executed by a Guarantor in favor of the Lender and (b) a guaranty
executed by a Loan Party in favor of the Lender after the Closing Date pursuant
to Section 4.3. by which such Loan Party Guarantees payment and performance of
all of the Obligations, such guaranty to be in form and substance satisfactory
to the Lender.
"Hazardous Materials" shall mean all or any of the following: (a)
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substances that are defined or listed in, or otherwise classified pursuant to,
any applicable Environmental Laws as "hazardous substances" "hazardous
materials", "hazardous wastes", "toxic substances" or any other formulation
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
reproductive toxicity or "TLCP" toxicity, "EP toxicity"; (b) oil, petroleum or
petroleum derived substances, natural gas, natural gas liquids or synthetic gas
and drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (c) any flammable substances or explosives or any radioactive
materials; and (d) asbestos in any form or (e) electrical equipment which
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million.
"Indebtedness" shall mean, without duplication, as to any Person (a)
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indebtedness created, issued or incurred by such Person for borrowed money
(whether by loan or the issuance or sale of debt securities) whether or not
recourse is limited to specific assets of such Person; (b) obligations of such
Person to pay the deferred purchase or acquisition price of property or
services, other than trade accounts payable arising in the ordinary course of
business so long as such trade accounts payable are not for borrowed money;
(c) Indebtedness of others secured by a Lien on the property of such Person,
whether or not the Indebtedness so secured has been assumed by such Person;
(d) reimbursement obligations of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for the account of such Person; (e) Capitalized Lease Obligations of such
Person; and (f) Indebtedness
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of others Guaranteed by such Person.
"Insufficiency" shall mean, with respect to any Plan, the amount, if any,
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of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"Interest Expense" shall mean for any period of computation thereof, cash
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interest expense attributable to Indebtedness for money borrowed (including
without limitation, Capitalized Lease Obligations) of the Company and its
Consolidated Subsidiaries actually paid during such period.
"Interest Period" shall mean with respect to any LIBOR Loan, the period
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commencing on the date of the borrowing, Conversion or Continuation of such Loan
and ending on the last day of the period selected by the Company pursuant to the
provisions below. The duration of each Interest Period shall be one, two or
three months, in each case as the Company may, in an appropriate Notice of
Borrowing, Notice of Continuation or Notice of Conversion, select. In no event
shall an Interest Period of a Loan extend beyond the Termination Date. Whenever
the last day of any Interest Period would otherwise occur on a day other than a
Business Day, the last day of such Interest Period shall be extended to occur on
the next succeeding Business Day; provided, however, that if such extension
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would cause the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the next
preceding Business Day.
"Inventory" shall mean (a) all inventory of the Company and all goods
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intended for sale or lease by the Company, (b) all work-in-process, (c) all raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, packing, shipping,
selling or furnishing of such goods or otherwise used or consumed in the
business of the Company, and (d) all documents relating to any of the foregoing.
"Investment" in any Person shall mean (a) the acquisition (whether for
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cash, property, services or securities or otherwise) of capital stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of, or any contribution to the capital of, such Person(b) any deposit with, or
advance, loan or other extension of credit to, such Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person (other than any such deposit, advance, loan, extension of credit or
commitment representing (i) the purchase price of inventory or supplies sold in
the ordinary course of business or (ii) a deposit for, or prepayment of, rents
or utilities made in the ordinary course of business); or (c) any Guarantee of,
or other contingent obligation with respect to, Indebtedness or other liability
of such Person.
"Investment Documents" means (a) the Stock Purchase Agreement and (b) the
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other Transaction Documents (as defined in such Stock Purchase Agreement).
"LIBOR" shall mean, with respect to any Interest Period and a LIBOR Loan,
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the offered
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rate per annum in the London interbank market for deposits in Dollars of amounts
equal or comparable to the principal amount of such LIBOR Loan offered for a
term comparable to such Interest Period, as currently shown on the Reuters
Screen LIBOR page as of 11:00 a.m., Greenwich Mean Time, two Business Days
prior to the first day of such Interest Period; provided, however, that (a) if
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more than one offered rate as described above appears on the Reuters Screen
LIBOR page, the rate used to determine LIBOR will be the arithmetic average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of such offered
rates, or (b) if no such offered rates appear, the rate used for such Interest
Period will be the arithmetic average (rounded upward, if necessary, to the next
higher 1/16 of 1 %) of rates quoted by the Lender at approximately 10: 00 a.m.,
New York time, two Business Days prior to the first day of such Interest Period
for deposits in Dollars offered to leading European banks for a period
comparable to such Interest Period in an amount comparable to the principal
amount of such LIBOR Loan. If the Lender ceases to use the Reuters Screen LIBOR
page for determining interest rates based on eurodollar deposit rates, a
comparable internationally recognized interest rate reporting service shall be
used to determine such offered rates.
"LIBOR Loan" shall mean a Loan bearing interest at a rate based on LIBOR.
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"Lien" shall mean, as applied to the property of any Person, (a) any
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security interest, encumbrance, mortgage, deed to secure debt, deed of trust,
pledge, lien, charge or lease constituting a Capitalized Lease Obligation,
conditional sale or other title retention agreement, or other security title or
encumbrance of any kind in respect of any property of such Person, or upon the
income or profits therefrom; (b) any arrangement, express or implied, under
which any property of such Person is transferred, sequestered or otherwise
identified for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to the payment of the
general, unsecured creditors of such Person; and (c) the filing of, or any
agreement to give, any financing statement under the Uniform Commercial Code or
its equivalent in any jurisdiction.
"Loan Party" means each of the Company, its Subsidiaries and each Person
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(other than the Guarantors) who Guarantees all or a portion of the Obligations
and/or who grants a Lien in any of the Collateral to secure all or a portion of
the Obligations. The term "Loan Party" shall not include the Guarantors.
"Loans" shall mean, collectively, the Acquisition Loans and the
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Acquisition Term Loan.
"Management Group" shall mean Xxxxxx X. Xxxxxx, Xxx X. Xxxx, Hsi-Xxxx Xxx
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and R. Xxx Xxxxxx.
"Material Adverse Effect" shall mean any event, circumstance or condition
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that, individually or when aggregated with all other similar events,
circumstances or conditions, could reasonably be expected to have a material
adverse effect on (a) the business, property, assets, liabilities, condition
(financial or otherwise), operations, results of operations or prospects of (i)
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the Company and its Subsidiaries taken as a whole or (ii) any Guarantor; (b) the
ability of the Company, any other Loan Party or any Guarantor to perform its
obligations under any of the Credit Documents to which it is a party; (c) the
validity or enforceability of any of the Credit Documents; or (d) the rights and
remedies of the Lender under any of the Credit Documents.
"Material Contract" shall mean, with respect to the Company and the other
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Loan Parties, any, contract, agreement or binding understanding or arrangement
(whether or not in written form) the termination or loss of which could
reasonably be expected to have a Material Adverse Effect.
"Mid-Size Acquisition" shall mean any Acquisition in which the aggregate
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amount of consideration payable by the Company and its Subsidiaries in
connection therewith is less than $3,000,000 but greater than or equal to
$1,000,000. For purposes of this definition, such consideration shall include,
but not be limited to, the types of consideration described in the definition of
"Significant Acquisition".
"Multiemployer Plan" of any Person shall mean a multiemployer plan defined
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as such in Section 3(37) of ERISA to which contributions have been made by such
Person or any ERISA Affiliate of such Person and which is covered by Title IV of
ERISA.
"New Subsidiary" means, with respect to an Acquisition, any Subsidiary of
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the Company formed in connection with, and for the purpose of effecting, such
Acquisition. If all of the outstanding capital stock of a Seller is being
acquired by the Company or any of its Subsidiaries in connection with an
Acquisition, then such Seller shall also constitute a New Subsidiary.
"Note" shall mean the Acquisition Note.
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"Operating Account" shall mean account number 325-164-1140 maintained by
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the Company with the Lender, or such other account as the Company and the Lender
may designate as the "Operating Account."
"Obligations" shall mean, individually and collectively:
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(a) the Acquisition Loans and the Acquisition Term Loan;
(b) all other obligations and indebtedness of the Company owing to the
Lender of every kind, nature and description, under or with respect to this
Agreement, the Note or any of the other Credit Documents, whether direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by any note;
(c) all other obligations and indebtedness owing by the Company to the
Lender and all future advances made to the Company by the Lender, however and
whenever created, arising or evidenced, whether direct or indirect, through
assignment from third parties, whether absolute
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or contingent, or otherwise, now or hereafter existing, or due or to become due,
including, without limitation, obligations under all guaranties, letters of
credit and overdrafts- and
(d) any and all renewals, modifications, extensions and supplements to
any of the foregoing.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Permitted Investments" of any Person shall mean: (a) direct obligations
---------------------
of the United States of America or of any agency thereof, or obligations
guaranteed as to principal and interest by the United States of America or of
any agency thereof, in either case maturing not more than 90 days from the date
of acquisition thereof by such Person; (b) time deposits or certificates of
deposit issued by any bank or trust company organized under the laws of the
United States of America or any state thereof and having capital, surplus and
undivided profits of at least $200,000,000, maturing not more than 90 days from
the date of acquisition thereof by such Person; and (c) commercial paper having
the highest rating from Standard & Poor's Rating Group, a division of XxXxxx-
Xxxx, Inc. or Xxxxx'x Investors Services, Inc. maturing not more than 90 days
from the date of acquisition thereof by such Person.
"Permitted Liens" shall mean:
---------------
(a) Liens created pursuant to the Security Documents;
(b) Liens imposed by any Governmental Authority for taxes, assessments
or charges not yet due or which are being contested in accordance with
Section 6.5.;
(c) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business not yet delinquent
or which are being contested in accordance with Section 6.5.;
(d) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(e) deposits to secure the performance of bids, trade contracts (other
than a trade contract which constitutes Indebtedness), leases (other than
Capitalized Lease Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(f) easements, rights-of-way, zoning restrictions and other similar
encumbrances of record on real property incurred in the ordinary course of
business which, in the aggregate, are not material in dollar amount, and which
do not in any case materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of the
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Company or any of the other Loan Parties;
(g) Liens existing on the date hereof and disclosed on Schedule 5.17.
hereto; and
(h) Purchase Money Liens securing Indebtedness of the Company permitted
under Section 7.3.(c).
"Person" shall mean an individual, corporation, partnership, limited
------
liability company, association, trust or unincorporated organization, or a
government or any agency or political subdivision thereof
"Plan" of the Company or any of the other Loan Parties shall mean an
----
employee benefit or other plan established or maintained by such Person or any
ERISA Affiliate of such Person and which is covered by Title IV of ERISA, other
than a Multiemployer Plan of such Person.
"Pledge Agreement" shall mean each pledge agreement entered into between a
----------------
Loan Party and the Lender after the Closing Date pursuant to Section 4.3. by
which such Loan Party grants to the Lender a Lien in all capital stock of each
Subsidiary directly owned by such Loan Party, such pledge agreement to be in
form and substance satisfactory to the Lender.
"Prime Rate" shall mean the rate of interest from time to time announced by
----------
the Lender in Atlanta, Georgia as its prime commercial lending rate. The Prime
Rate is not necessarily intended to be the lowest rate of interest determined by
the Lender in connection with extensions of credit.
"Purchase Agreement" shall mean, with respect to an Acquisition, the asset
------------------
purchase agreement, stock purchase agreement or other primary agreement to which
the Company and/or one or more of its Subsidiaries is a party and pursuant to
which the Company or such Subsidiary or Subsidiaries is acquiring substantially
all of the assets, assets constituting a distinct operating division, or the
outstanding capital stock, of the Seller that is the target of such Acquisition.
"Purchase Money Lien" shall mean a Lien on any fixed asset or equipment
-------------------
(and any intangible assets associated therewith) acquired after the date hereof,
provided, however, that: (a) such Lien attaches only to the property being
-------- -------
acquired; (b) the Indebtedness incurred in connection with such acquisition
shall not exceed the purchase price of such property and (c) such Lien shall
secure only such Indebtedness.
"Regulations D, G, T, U and X" shall mean, respectively, Regulations D, G,
----------------------------
T, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be amended or supplemented from time to time.
"Regulatory Change" shall mean, with respect to the Lender, any change
-----------------
enacted or adopted after the date of this Agreement in United States Federal,
state or foreign law or
-11-
regulations (including, without limitation, Regulation D) or the adoption or
publication after the date of this Agreement of any interpretations, directives
or requests (whether or not having the force of law) applying to a class of
banks including the Lender of or under any United States Federal, state or
foreign law or regulations by any court or governmental or monetary authority
charged with the interpretation or administration thereof
"Release" shall mean any "release" as such term is defined in 42 U.S.C.
-------
(S)9601(22), or any successor federal statute or analogous state law.
"Restricted Payment" shall mean (a) dividends by or on behalf of a Loan
------------------
Party on, or other payments or distributions on account of or with respect to,
or the setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of capital stock of such Loan Party, or (b) any prepayment by a Loan Party
of principal, optional redemption, purchase, retirement prior to stated
maturity, defeasance, or similar optional prepayment with respect to any
Indebtedness for borrowed money other than the Loans.
"Revolving Termination Date" shall mean December 20, 1997.
--------------------------
"Security Documents" shall mean (a) the Security Agreement dated as of the
------------------
date hereof by and between the Company and the Lender and (b) each security
agreement entered into between a Loan Party and the Lender after the Closing
Date pursuant to Section 4.3., in each case, substantially in the form of
Exhibit B.
"Security Documents" shall mean, collectively, the Security Agreements, the
------------------
Pledge Agreements, the Assignments of Acquisition Documents, each of the UCC
financing statements naming a Loan Party as debtor and the Lender as secured
party and covering the Collateral, and any other security documents executed and
delivered to the Lender. by a Loan Party.
"Seller" shall mean the Person being acquired in an Acquisition.
------
"Significant Acquisition" shall mean any Acquisition in which the aggregate
-----------------------
amount of consideration payable by the Company and its Subsidiaries in
connection therewith equals or exceeds $3,000,000. For purposes of this
definition, such consideration shall include (without duplication), but shall
not be limited to, the following: (a) the amount of cash paid, together with
the fair market value of all other assets (excluding assets of the type
described in the following clause (b)) conveyed, by the Company and its
Subsidiaries in consideration for such Acquisition; (b) the fair market value of
all capital stock, warrants and options to acquire capital stock, of the Company
conveyed by the Company in consideration for such Acquisition; (c) the aggregate
amount of Indebtedness acquired, incurred or assumed by the Company and its
Subsidiaries in connection with such Acquisition; (d) all amounts paid or to be
paid by the Company and its Subsidiaries in respect of any covenant not to
compete granted in connection with such Acquisition and accruing to the benefit
of any New Subsidiary or other Loan Party; (e) the
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aggregate capitalized amount of consulting or other similar fees or payments to
be paid by such New Subsidiary or other Loan Party to a Seller or any Affiliate
of such Seller in connection with, or as a result of, such Acquisition; (f) the
aggregate amount of earn-out payments, similar payments or other contingent
obligations required to be made by the Company and its Subsidiaries in
connection with such Acquisition and which payments or other obligations are to
be capitalized by the Company and its Subsidiaries and (g) the amount of all
transaction fees and expenses (including, without limitation, legal, accounting
and brokers' fees and expenses) incurred by the Company and its Subsidiaries in
connection with such Acquisition.
"Small Acquisition" shall mean any Acquisition that is not a Significant
-----------------
Acquisition nor a Mid-Size Acquisition.
"Solvent" shall mean, when used with respect to any Person, that (a) the
-------
fair value and the fair salable value of its assets (excluding any Indebtedness
due from any Affiliate of such Person) are each in excess of the fair valuation
of its total liabilities (including all contingent liabilities)and (b) such
Person is able to pay its debts or other obligations in the ordinary course as
they mature and (c) the Person has capital not unreasonably small to carry on
its business and all business in which it proposes to be engaged.
"Stock Purchase Agreement" shall mean that certain Stock Purchase Agreement
------------------------
dated as of November 15, 1995 by and among Safeguard Scientifics (Delaware),
Inc., Technology Leaders II L.P., Technology Leaders II OFFSHORE C.V., the
Company and certain stockholders of the Company.
"Subsidiary" shall mean, with respect to any Person, any corporation,
----------
partnership, association or other business entity of which more than 50% of the
total voting power of shares of stock (or equivalent ownership or controlling
interest) entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or any combination thereof
"Termination Date" shall mean December 20, 1999.
----------------
"Transactions" shall mean (a) the making of the Loans hereunder, (b) any
------------
Acquisition, (c) the Equity Investment, (d) the execution and delivery of each
of the Credit Documents, the Investment Documents and the Acquisition Documents
and (e) the consummation of all of the other transactions contemplated by the
Credit Documents, the Investment Documents and the Acquisition Documents.
"Type" with respect to a Loan, refers to whether such Loan is a LIBOR Loan
or a Base Rate Loan.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time
---
in the
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State of Georgia.
"Wholly-Owned Subsidiary" of a Person shall mean any corporation,
-----------------------
association or other business entity of which 100% of the outstanding shares of
all classes of capital stock or other ownership interests is at the time owned
directly or indirectly by, such Person or one or more of the other Wholly-Owned
Subsidiaries of such Person or a combination thereof.
In addition to the above definitions, the following terms are defined in
this Agreement on the indicated pages:
Acquisition Date................................................ 29
Acquisition Historical Financial Statements..................... 29
Acquisition Loans............................................... 14
Acquisition Note................................................ 18
Acquisition Projected Financial Statements...................... 30
Acquisition Term Loan........................................... 19
Additional Costs................................................ 22
Change in Control............................................... 49
Default Rate.................................................... 16
Event of Default................................................ 46
General Partner................................................. 26
Historical Financial Statements................................. 27
Margin Stock.................................................... 35
Notice of Borrowing............................................. 14
Notice of Continuation.......................................... 17
Notice of Conversion............................................ 17
Other Taxes..................................................... 21
Pro Forma Opening Balance Sheet................................. 27
Projected Financial Statements.................................. 42
SSD............................................................. 26
Taxes........................................................... 21
TL Offshore..................................................... 26
TLII............................................................ 26
TLIIM........................................................... 26
1.2 Accounting Terms and Determinations
(a) Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, all calculations for purposes of determining
compliance with the terms of this Agreement shall be made, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Lender hereunder shall be prepared in accordance with GAAP
applied for all periods to the extent practicable on a basis consistent with
that used in the preparation of the Historical Financial Statements, so as to
present fairly the
-14-
financial condition and the results of operations of the applicable Person. In
the event of a change in GAAP that is applicable to the Company, compliance with
the financial covenants contained herein shall continue to be determined in
accordance with GAAP as in effect prior to such change; provided, however, that
the Company and the Lender will thereafter negotiate in good faith to revise
such covenants to the extent necessary to conform such covenants to GAAP as then
in effect.
(b) To enable the ready and consistent determination of compliance with
the covenants set forth in Article 7. and Article 8., the Company will not,
without the prior written consent of the Lender, change the last day of its
fiscal year from December 31 of each year or the last days of the first three
fiscal quarters in each of its fiscal years from the last day in March, June and
September of each year, respectively.
(c) All terms defined in the UCC and not otherwise defined herein are used
herein as defined in the UCC. References in this Agreement to "Sections",
"Articles", "Exhibits" and "Schedules" are to sections, articles, exhibits and
schedules herein and hereto unless otherwise indicated. References in this
Agreement to any document, instrument or agreement (i) shall include all
exhibits, schedules and other attachments thereto, (ii) shall include all
documents, instruments or agreements issued or executed in replacement thereof,
and (iii) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, modified or supplemented from time to time and
in effect at any given time.
2. LOANS
2.1 Amount of Loans
The Lender agrees, on the terms and subject to the conditions contained
herein, to make loans to the Company during the period from and including the
Closing Date to but excluding the Revolving Termination Date in an aggregate
principal amount at any one time outstanding of up to but not exceeding the
Acquisition Commitment (such Loans being herein called "Acquisition Loans").
During the period from and including the Closing Date to but excluding the
Revolving Termination Date and subject to the terms contained herein, the
Company may borrow, repay and reborrow the Acquisition Loans.
2.2 Borrowings
(a) The Company shall give the Lender notice of each borrowing of a Loan
hereunder as provided in Section 3.3., which notice when given shall be
irrevocable. Each notice of borrowing (which shall be in the form of Exhibit C,
each a "Notice of Borrowing") shall specify:(a) the requested amount of such
Loan; (b) the proposed use of the proceeds of such Loan; (c) the date such Loan
is to be made; and (d) in the case of a Loan which is initially to be a LIBOR
Loan, the initial Interest Period therefor. Not later than 2:00 p.m. (Atlanta,
Georgia time) on the date specified for each borrowing hereunder, the Lender
shall make the amount of the
-15-
Loan available to the Company by depositing the same, in immediately available
funds, in an account of the Company maintained at the Applicable Lending Office.
(b) At 5:00 p.m. on each Business Day the Company shall be deemed to have
requested that the Lender make to the Company an Acquisition Loan in an amount
equal to the amount by which drafts against the Operating Account exceed the
available balance contained therein at such time. The Lender shall make the
proceeds of each such Loan available to the Company by depositing such proceeds
into the Operating Account. Loans advance to the Company under this subsection
may initially be only Base Rate Loans. The provisions of this subsection and of
Section 2.1 I.(b) shall not become effective until the Company has executed and
delivered the Lender's customary documentation relating to its "Auto Borrow" and
"Auto Sweep" programs.
2.3 Repayment of Loans
(a) Acquisition Loans. On the Revolving Termination Date, the aggregate
-----------------
principal amount of all Acquisition Loans then outstanding and that has not been
converted into the Acquisition Term Loan pursuant to Section 2.12. shall be due
and payable in full.
(b) Acquisition Term Loan. The principal balance of the Acquisition Term
---------------------
Loan shall be repaid in 24 consecutive monthly installments due and payable on
the first day of each calendar month commencing with the first such day
following the Revolving Termination Date. The first 23 such installments shall
each be in an amount equal to 1/36th of the initial principal balance of the
Acquisition Term Loan and the final installment shall be equal to the remaining
principal balance of the Acquisition Term Loan. Notwithstanding the foregoing,
on the Termination Date, the principal amount of the Acquisition Term Loan then
outstanding shall be due and payable in full. The Company may request the
Lender to extend the initial maturity date of the Acquisition Term Loan for an
additional twelve-month period by delivering to the Lender at least 120 days but
no more than 150 days prior to the Termination Date, a written request for such
extension. The Company acknowledges that the Lender has not promised (either
expressly or impliedly), nor does the Lender have any obligation or commitment
whatsoever, to extend the maturity date of the Acquisition Term Loan. If the
Lender, in its sole and absolute discretion, consents to such an extension, the
Lender shall evidence such consent and the extension of the maturity date of the
Acquisition Term Loan by delivering to the Company, no later than the date 60
days prior to the Termination Date, a letter evidencing such extension. If the
Lender does not deliver such written direction in accordance with the preceding
sentence, such failure shall be deemed a denial of the Company's request for
such extension.
2.4 Interest
(a) The Company agrees to pay to the Lender in accordance with Section
3.2. interest on the unpaid principal amount of each Loan for the period from
and including the date of such Loan to but excluding the date such Loan shall be
paid in full, at the following per annum rates:
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(i) during the periods that such Loan is a Base Rate Loan, at the
Base Rate (as in effect from time to time);
(ii) during the periods that such Loan is a LIBOR Loan, for each
Interest Period relating thereto, at the Adjusted LIBO Rate for such Loan
for such Interest Period plus two percent (2.0%); and
(iii) in the case of the Acquisition Term Loan if the Company has
given the Lender written notice (which notice shall be irrevocable once
given) that the Company has elected that the Acquisition Term Loan bear
interest at a fixed rate, at a fixed per annum rate equal to the prevailing
yield reported in the Wall Street Journal as of the date of receipt by the
Lender of such notice, as the yield, based on the "bid" price, for actively
traded United States Treasury securities with a maturity comparable in
duration to the period from the date of receipt by the Lender of such
notice to the Termination Date plus (B) two and one-half of one percent
----
(2.5%). Once the Company has elected that the Acquisition Term Loan bear
interest at the fixed rate provided under this clause (iii), such Loan may
not bear interest as provided in the preceding clauses (i) and (ii).
Accrued interest on each Loan shall be payable (i) in the case of a Base
Rate Loan or the Acquisition Term Loan, monthly in arrears on the last Business
Day of each calendar month; (ii) in the case of a LIBOR Loan, on the last day of
each Interest Period thereof, (iii) in the case of each Loan, upon the payment
or prepayment thereof or the Conversion of such Loan to a Loan of another Type
(but only on the principal amount so paid, prepaid or Converted) and (iv) in the
case of each Loan, on the Revolving Termination Date and on the Termination
Date.
(b) If an Event of Default shall have occurred and be continuing, the
Company agrees to pay to the Lender interest, for the period such Event of
Default is continuing, on the unpaid principal amount of each Loan (and, to the
extent permitted by law, on the unpaid amount of all interest, fees and other
amounts payable hereunder or under the Credit Documents that is not paid when
due) at a rate per annum (the "Default Rate") equal at all times to 3% per annum
above the rate per annum required to be paid on such Loans pursuant to Section
2.4.(a).
(c) In no event shall the amount of interest due or payable on the Loans
exceed the maximum rate of interest allowed by Applicable Law and, in the event
any such payment is paid by the Company or received by the Lender, then such
excess sum shall be credited as a payment of principal, unless the Company shall
notify the Lender in writing that the Company elects to have such excess sum
returned to it forthwith. It is the express intent of the parties hereto that
the Company not pay and the Lender not receive, directly or indirectly, in any
manner whatsoever, interest in excess of that which may be lawfully paid by the
Company under Applicable Law.
(d) THE PARTIES HERETO HEREBY AGREE AND STIPULATE THAT TEE ONLY CHARGE
IMPOSED UPON THE COMPANY FOR THE USE OF MONEY IN
-17-
CONNECTION WITH THIS AGREEMENT IS AND SHALL BE THE INTEREST DESCRIBED IN SECTION
2.4. (a) THE PARTIES HERETO FURTHER AGREE AND STIPULATE THAT ALL OTHER CHARGES
IMPOSED BY THE LENDER ON THE COMPANY IN CONNECTION WITH THIS AGREEMENT,
INCLUDING ALL COMMITMENT FEES, FACILITY FEES, UNDERWRITING FEES, DEFAULT
CHARGES, LATE CHARGES, ATTORNEYS' FEES AND REIMBURSEMENT FOR COSTS AND EXPENSES
PAID BY THE LENDER TO THIRD PARTIES OR FOR DAMAGES INCURRED BY THE LENDER, ARE
CHARGES MADE TO COMPENSATE THE LENDER FOR UNDERWRITING OR ADMINISTRATIVE
SERVICES AND COSTS OR LOSSES PERFORMED OR INCURRED, AND TO BE PERFORMED OR
INCURRED, BY THE LENDER IN CONNECTION WITH THIS AGREEMENT AND SHALL UNDER NO
CIRCUMSTANCES BE DEEMED TO BE CHARGES FOR THE USE OF MONEY PURSUANT TO OFFICIAL
CODE OF GEORGIA ANNOTATED SECTION 7-4-2 AND 7-4-18. ALL CHARGES OTHER THAN
CHARGES FOR THE USE OF MONEY SHALL BE FULLY EARNED AND NONREFUNDABLE WHEN DUE.
2.5 Voluntary Reductions of Commitment
The Company shall have the right to terminate or reduce the amount of the
Acquisition Commitment at any time or from time to time; provided that: (i) the
Company shall give notice of each such termination or reduction as provided in
Section 3.3., which notice when given shall be irrevocable and (ii) each partial
reduction shall be in an aggregate amount at least equal to $100,000 or an
integral multiple of $100,000 in excess thereof. The Acquisition Commitment
once terminated or reduced may not be reinstated or increased.
2.6 Continuation and Conversion of Loans
(a) So long as no Default or Event of Default shall have occurred and be
continuing, the Company may on any Business Day, with respect to any LIBOR Loan,
elect to maintain such LIBOR Loan or any portion thereof as a LIBOR Loan by
selecting a new Interest Period for such LIBOR Loan or portion. Each new
Interest Period selected under this Section shall commence on the last day of
the immediately preceding Interest Period. Each selection of a new Interest
Period shall be made by the Company's giving of a notice in the form of Exhibit
D (a "Notice of Continuation") within the time prescribed by Section 3.3. Such
notice by the Company of a Continuation shall specify (a) the effective date of
such Continuation, (b) the LIBOR Loan and portion thereof subject to such
Continuation and (c) the duration of the selected Interest Period, all of which
shall be specified in such manner as is necessary to comply with all limitations
on Loans outstanding hereunder. If the Company shall fail to select in a timely
manner a new Interest Period for any LIBOR Loan in accordance with this Section,
such Loan will automatically, on the last day of the current Interest Period
therefor, Convert into a Base Rate Loan notwithstanding failure of the Company
to comply with the immediately following subsection (b).
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(b) So long as no Default or Event of Default shall have occurred and be
continuing, the Company may on any Business Day, upon the Company's giving of a
notice in the form of Exhibit E (a "Notice of Conversion"), Convert all or a
portion of a Loan of one Type into a Loan of another Type. In connection with
any Conversion of a LIBOR Loan into a Base Rate Loan on a day other than the
last day of an Interest Period for such LIBOR Loan the Company as a condition to
such Conversion shall pay all amounts contemplated by Section 3.9. Each such
Notice of Conversion shall be given within the time prescribed by Section 3.3.
Subject to the restrictions specified above, each Notice of Conversion shall
specify (a) the requested date of such Conversion, (b) the Type of Loan to be
Converted, (c) the portion of such Type of Loan to be Converted, (d) the Type of
Loan such Loan is to be Converted into and (e) if such Conversion is into a
LIBOR Loan, the requested duration of the initial Interest Period of such Loan.
(c) No more than six separate Interest Periods in respect of LIBOR Loans
may be outstanding at any one time.
2.7 Minimum Amounts
Except for Conversions or prepayments made pursuant to Section 3.8., (a)
each borrowing of LIBOR Loans (including a Continuation of, or Conversion into,
LIBOR Loans) shall be in an amount at least equal to $1,000,000 and integral
multiples of $500,000 in excess thereof, (b) each borrowing of Base Rate Loans
(including a Continuation of, or Conversion into, Base Rate Loans) shall be in
an amount at least equal to $250,000 and integral multiples of $5,000 in excess
thereof, and (c) each voluntary prepayment of Loans shall be in an amount at
least equal to $100,000 and integral multiples thereof (borrowings, prepayments
or Conversions of Loans into Loans of different Types or, in the case of LIBOR
Loans, having different Interest Periods, shall be deemed to be separate
borrowings, prepayments or Conversions for purposes of the foregoing, one for
each Type or Interest Period).
2.8 Fees
(a) The Company shall pay to the Lender on January 2, 1996 a fee on the
Commitment in the amount of $25,000, representing one-quarter of one percent
(0.25%) of the Commitment.
(b) If during any calendar month the daily average unused amount of the
Acquisition Commitment for such month shall be less than an amount equal to 35%
of the Acquisition Commitment, then the Company shall pay to the Lender, during
the period beginning of the first day of the following month through the last
day of the month in which the daily average unused amount of the Acquisition
Commitment for such month shall first equal or exceed such amount, a fee on the
daily average unused amount of the Acquisition Commitment at a per annum rate,
computed in accordance with Section 3.2., equal to three-eighths of one percent
(0.375%). Accrued unused commitment fees shall be payable monthly in arrears on
the first Business Day of each month.
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(c) All fees shall be fully earned and non-refundable upon receipt.
2.9 Note
(a) The Acquisition Loans and the Acquisition Term Loan shall be evidenced
by a single promissory note (the "Acquisition Note") to be executed by the
----------------
Company in substantially the form of Exhibit F, dated the date hereof, payable
to the Lender in a principal amount equal to the amount of the Acquisition
Commitment as originally in effect and otherwise duly completed.
(b) The date and amount of each Loan made by the Lender to the Company,
and each payment made on account of the principal thereof, shall be recorded by
the Lender on its books and, prior to any transfer of the Note evidencing such
Loans held by it, endorsed by the Lender on the schedule attached to the Note or
any continuation thereof, provided that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligations of the Company
to make a payment when due of any amount owing under the Note. Any such
recordations or endorsements made by the Lender on its books or the Note shall
be conclusive and binding. on the Company absent manifest error.
2.10 Optional Prepayments
The Company shall have the right to prepay Loans in whole or in part at any
time or from time to time, without premium or penalty, except that in connection
with any prepayment of LIBOR Loans on a day other than the last day of the
Interest Period applicable thereto or the prepayment of the Acquisition Term
Loan while it bears interest at a fixed rate as provided in Section 2.4.(a)(iii)
on a day other than the Termination Date, the Company as a condition to such
prepayment shall pay all amounts contemplated by Section 3.9. in connection with
such prepayment. Optional prepayments of the Acquisition Term Loan shall be
applied to reduce scheduled repayments of such Loan in inverse order of
maturity.
2.11 Mandatory Prepayments of Loans
(a) Loans in Excess of Commitment. If at any time the aggregate amount of
-----------------------------
Loans outstanding shall exceed the amount of the Acquisition Commitment in
effect at such time, the Company shall, within one Business Day, prepay the
Loans in such amounts as shall be necessary to eliminate such excess.
(b) Sweep of Operating Account. At 5:00 p.m. of each Business Day, the
--------------------------
Company shall repay a principal amount of Acquisition Loans by an amount equal
to the positive balance, if any, of available funds on deposit in the Operating
Account as determined by the Lender at such time. The Company hereby authorizes
the Lender to deduct such amount from the Operating Account without notice to
the Company, and to apply such amount in repayment of the then outstanding
principal balance of Loans. Neither the provisions of Section 2.7. nor 3.3.
shall apply to repayments made pursuant to this subsection.
-20-
2.12 Conversion to Term Loan
Subject to the terms and conditions of this Agreement, the Company may
elect to convert the aggregate principal amount of Acquisition Loans outstanding
on the Revolving Termination Date into a single term loan (the "Acquisition Term
Loan") provided (a) the Company has given the Lender thirty-days' prior notice
of the Company's intention to so convert the Acquisition Loans and (b) the
conditions set forth in Section 4.2. have been satisfied as of the date such
conversion.
2.13 Use of Proceeds
The Company may use the proceeds of Acquisition Loans to finance
Acquisitions, for working capital purposes and for other general corporate
purposes.
3. PAYMENTS; COMPUTATIONS; TAXES; ETC.
3.1 Payments
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Company under this
Agreement and the Note and, except to the extent otherwise provided therein, all
payments to be made by the Company under any other Credit Document, shall be
made in Dollars, in immediately available funds, without deduction, setoff or
counterclaim, to the Lender at its Applicable Lending Office, not later than
12:00 noon Atlanta time on the date on which such payment shall become due (each
such payment made after such time on such due date to be deemed to have been
made on the next succeeding Business Day).
(b) The Company shall, at the time of making each payment under this
Agreement or the Note, specify to the Lender the Loans or other Obligations to
which such payment is to be applied (and in the event that it fails to so
specify, or if an Event of Default has occurred and is continuing, the Lender
may apply such payment to the Loans in such manner as it may determine to be
appropriate).
(c) If the due date of any payment under this Agreement or the Note would
otherwise fall on a day which is not a Business Day, such date shall be extended
to the next succeeding Business Day and interest shall be payable for any
principal so extended for the period of such extension.
3.2 Computations
Interest on Loans and commitment fees shall be computed on the basis of a
year of 360 days comprised of twelve thirty-day months for the actual days
elapsed (including the first day but excluding the last day) occurring in the
period for which such amounts are payable.
-21-
3.3 Certain Notices
Notwithstanding anything contained in Section 9.2. to the contrary, Notices
of Borrowings, of optional terminations or reductions of the Acquisition
Commitment, optional prepayments of Loans, Notices of Conversion and Notices of
Continuations shall be irrevocable and shall be effective only if received by
the Lender in writing not later than 12:00 noon Atlanta, Georgia time on the
number of Business Days prior to the date of the relevant optional termination,
reduction, borrowing, Continuation, Conversion or prepayment specified below:
Number of
Business
Notice Days Prior
------ ----------
Initial Borrowing on Closing Date 1
Subsequent Borrowing of Base Rate Loans Same Day
Subsequent Borrowing of LIBOR Loans 3
Notice of Conversion to a LIBOR Loan 3
Notice of Conversion to a Base Rate Loan 1
Notice of Continuation 3
Termination or reduction of Commitment 2
Prepayment of Loans 1
Subject to Section 2.5., each such notice of optional termination or
reduction of the Acquisition Commitment shall specify the amount of the
Acquisition Commitment to be terminated or reduced. Each notice of borrowing,
Conversion or optional prepayment shall specify the Type of Loans to be
borrowed, Converted or prepaid and the amount of each Loan to be borrowed,
Converted or prepaid and the date thereof (which shall be a Business Day).
3.4 Taxes
(a) Any and all payments by the Company hereunder shall be paid (except to
the extent required by law) free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding franchise
taxes and taxes based on net income imposed on the Lender by the United States
(or any political subdivision thereof) in which the Lender has its Applicable
Lending Office (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and
-22-
liabilities being hereinafter referred to as "Taxes"). If the Company shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Lender (i) the sum payable by the Company shall be increased by
the amount necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 3.4.) the
Lender shall receive an amount equal to the sum it would have received had no
such deductions been made, (ii) the Company shall make such deductions, and
(iii) the Company shall pay the full amount deducted to the relevant taxing
authority or other Governmental Authority in accordance with Applicable Law.
(b) In addition, the Company agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Credit Document (hereinafter referred to as "Other Taxes").
(c) The Company will indemnify the Lender for the full amount of Taxes and
Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 3.4.) paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Such indemnification shall be made within five Business Days after
the date of receipt of a written demand therefor from the Lender.
(d) Within 30 days after the date of any payment of Taxes or Other Taxes
withheld by the Company in respect of any payment to the Lender, the Company
will furnish to the Lender, at its address referred to in Section 9.2., the
original or a certified copy of a receipt evidencing payment thereof.
(e) If the Lender claims any additional amounts payable pursuant to this
Section, the Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document reasonably
requested by the Company if the making of such a filing would avoid the need for
or reduce the amount of any such additional amounts which may thereafter accrue
and would not, in the sole determination of the Lender, be otherwise
disadvantageous to the Lender.
3.5 Additional Costs
(a) Events Entitling the Lender to Receive Compensation. The Company
---------------------------------------------------
shall pay directly to the Lender from time to time such amounts as the Lender
may determine in good faith to be necessary to compensate it for any costs which
it determines are attributable to its making or maintaining any Loans or its
obligation to make any Loans hereunder, or any reduction in any amount
receivable by the Lender hereunder in respect of any of such Loans or such
obligation (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs") resulting from any Regulatory Change which:
-23-
(i) changes the basis of taxation of any amounts payable to the
Lender under this Agreement or its Note in respect of any of such Loans
(other than taxes imposed on or measured by the overall net income of the
Lender or of its Applicable Lending Office for any of such Loans by the
jurisdiction in which the Lender has its Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of, the Lender (including any of
such Loans or any deposits referred to in the definition of "LIBOR" in
Section 1.1.), or any commitment of the Lender (including the Commitment)
hereunder.
(b) Determination of Amount of Compensation. Without limiting the effect
---------------------------------------
of the foregoing provisions of this Section 3.5. (but without duplication), the
Company shall pay directly to the Lender from time to time on request such
amounts as the Lender may determine to be necessary to compensate the Lender
(or, without duplication, the bank holding company of which the Lender is a
subsidiary) for any increased costs which it determines in good faith are
attributable to the maintenance by the Lender (or any Applicable Lending Office
or such bank holding company) of capital in respect of the Commitment or Loans
pursuant to any law or regulation or any interpretation, directive or request
(whether or not having the force of law) of any court or governmental or
monetary authority (i) following any Regulatory Change or (ii) implementing any
risk-based capital guideline or requirement (whether or not having the force of
law and whether or not the failure to comply therewith would be unlawful)
hereafter issued by any government or governmental or supervisory authority
implementing at the national level the Base Accord (including, without
limitation, the Final Risk-Based Capital Guidelines of the Board of Governors of
the Federal Reserve System (12 CFR Part 208, Appendix A; 00 XXX Xxxx 000,
Xxxxxxxx X) and the Final Risk-Based Capital Guidelines of the Office of the
Comptroller of the Currency (12 CFR Part 3, Appendix A)), such compensation to
include, without limitation, an amount equal to any reduction of the rate of
return on assets or equity of the Lender (or any Applicable Lending Office or
such bank holding company) to a level below that which the Lender (or any
Applicable Lending Office or such bank holding company) could have achieved but
for such law, regulation, interpretation, directive or request. For purposes of
this Section 3.5.(b), "Base Accord" shall mean the proposals for risk-based
capital framework described by the Base Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended, modified
and supplemented and in effect from time to time or any replacement thereof.
(c) Notice of the Occurrence of an Event Entitling Lender to Compensation.
---------------------------------------------------------------------
The Lender shall notify the Company of any event occurring after the date of
this Agreement that will entitle the Lender to compensation under Section
3.5.(a) or (b) as promptly as practicable and shall furnish to the Company a
certificate setting forth the basis and amount of each request by the Lender for
compensation, together with calculations in reasonable detail of such amount.
Determinations and allocations by the Lender for purposes of this Section 3.5.
of the effect of
-24-
any Regulatory Change pursuant to Section 3.5.(a), of the effect of capital
maintained pursuant to Section 3.5.(b) on its costs or rate of return of
maintaining Loans or its obligation to make Loans or on amounts receivable by it
in respect of Loans, and of the amounts required to compensate the Lender under
this Section, shall be made in a manner consistent with that applied by the
Lender in similar contexts and shall be conclusive in the absence of manifest
error.
3.6 Limitation on Types of Loans
Anything herein to the contrary notwithstanding, if on or prior to the
determination of LIBOR for any Interest Period the Lender determines (which
determination shall be conclusive) that:
(a) quotations of interest rates for the relevant deposits referred to
in the definition of "LIBOR" are not being provided in the relevant amounts
or for the relevant maturities for purposes of determining rates of
interest for LIBOR Loans as provided herein; or
(b) the relevant rates of interest referred to in the definition of
LIBOR in this Agreement upon the basis of which the rate of interest for
LIBOR Loans for such Interest Period is to be determined are not likely to
adequately cover the cost to the Lender of making or maintaining LIBOR
Loans for such Interest Period;
then the Lender shall give the Company notice thereof, and so long as such
condition remains in effect, the Lender shall be under no obligation to make
additional LIBOR Loans, to Continue LIBOR Loans or to Convert Base Rate Loans
into LIBOR Loans, and the Company shall, on the last day(s) of the then-current
Interest Period(s) for the outstanding LIBOR Loans, either prepay such Loans or
Convert such Loans into Base Rate Loans in accordance with Section 2.6.
3.7 Illegality
Notwithstanding any other provision of this Agreement, if it becomes
unlawful for the Lender to honor its obligation to make or maintain LIBOR Loans
hereunder, then the Lender shall promptly notify the Company thereof and the
Lender's obligation to make or Continue, or to Convert Base Rate Loans into,
LIBOR Loans shall be suspended until such time as the Lender may again make and
maintain LIBOR Loans.
3.8 Treatment of Affected Loans
If the obligation of the Lender to make, Continue or Convert Base Rate
Loans into LIBOR Loans shall be suspended pursuant to either of the immediately
preceding Sections, all outstanding LIBOR Loans shall be automatically Converted
into Base Rate Loans on the last day(s) of the current Interest Period(s) for
such LIBOR Loans (or, in the case of a Conversion required by Sections 3.6. or
3.7., on such earlier date as the Lender may specify to the Company)
-25-
and, unless and until the Lender gives notice as provided below that the
circumstances specified in Sections 3.6. or 3.7. which gave rise to such
Conversion no longer exist:
(a) to the extent that any LIBOR Loans have been so Converted, all
payments and prepayments of principal which would otherwise be applied to
such LIBOR Loans shall be applied instead to the Base Rate Loans; and
(b) all Loans which would otherwise be made or Continued as LIBOR Loans
shall be made or Continued instead as Base Rate Loans and all Base Rate
Loans which would otherwise be Converted into LIBOR Loans shall remain as
Base Rate Loans.
If the Lender gives notice to the Company that the circumstances specified
in Sections 3.6. or 3.7. which gave rise to the Conversion of LIBOR Loans
pursuant to this Section no longer exist at a time when LIBOR Loans are
outstanding, the Lender's Base Rate Loans shall be automatically Converted, at
the option of the Company.
3.9 Compensation
The Company shall pay the Lender such amount or amounts as shall be
sufficient to compensate the Lender for any loss, cost, or expense which the
Lender determines in good faith is attributable to: (a) any payment, prepayment
or Conversion of a LIBOR Loan for any reason (including, without limitation, the
acceleration of the Loans pursuant to Article 8.) on a date other than the last
day of the Interest Period for such Loan; (b) any prepayment of the Acquisition
Term Loan while it bears interest at a fixed rate as provided in Section
2.4.(a)(iii) for any reason (including, without limitation, the acceleration of
the Loans pursuant to Article 8.) on a date other than the Termination Date; or
(c) any failure by the Company for any reason, including without limitation, the
failure of any of the conditions precedent specified in Article 4. to be
satisfied, to (i) borrow a LIBOR Loan from the Lender on the date for such
borrowing specified in the relevant Notice of Borrowing given pursuant to
Section 2.2.(a) or (ii) to convert the Acquisition Loans into the Acquisition
Term Loan pursuant to Section 2.12. after giving the Lender notice of such
conversion. Without limiting the effect of the preceding sentence, such
compensation shall include with respect to a LIBOR Loan an amount equal to the
excess, if any, of (i) the amount of interest which otherwise would have accrued
on the principal amount so paid, prepaid or Converted or not borrowed for the
period from the date of such payment, prepayment, Conversion or failure to
borrow to the last day of the then-current Interest Period for such Loan (or, in
the case of a failure to borrow, the Interest Period for such Loan which would
have commenced on the date specified for such borrowing) at the applicable rate
of interest for such Loan provided for herein over (ii) the amount of interest
which would otherwise have accrued on such principal amount at a rate per annum
equal to the sum of (x) the Adjusted LIBO Rate which would apply to a LIBOR Loan
having a principal amount equal to or comparable to such principal amount and
with maturities comparable to such period (as determined in good faith by the
Lender) plus (y) two percent (2.0%).
-26-
4. CONDITIONS PRECEDENT
4.1 Initial Loans
The obligation of the Lender to make the initial Loans hereunder on the
Closing Date is subject to the following conditions:
(a) Corporate Documents. The Lender shall have received the following
-------------------
documents, each certified as indicated below:
(i) a copy of the charter, as amended, of the Company, certified as
of a recent date by the Secretary of State of the jurisdiction of its
formation, and a certificate as of a recent date from such Secretary of
State as to the good standing of the Company;
(ii) a certificate as of a recent date from the Secretary of State of
each state in which the Company is required to qualify to do business as a
foreign corporation to the effect that the Company is so qualified;
(iii) a certificate of the secretary of the Company, dated the Closing
Date and certifying (A) that attached thereto is a true and complete copy
of such Loan Party's by laws as in effect on the date of such certificate,
(B) that attached thereto is a true and complete copy of resolutions duly
adopted by such Loan Party's board of directors authorizing the execution,
delivery and performance of each of the Credit Documents to which such Loan
Party is a party, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C) that such Loan
Party's charter has not been amended since the date of the certification
thereto furnished pursuant to subsection (i) above, and (D) as to the
incumbency and specimen signature of each of such Loan Party's officers
executing each of the Credit Documents to which the Company is a party (and
the Lender may conclusively rely on such certificate until the Lender
receives notice in writing from such Loan Party, to the contrary);
(iv) a certificate of another officer of such Loan Party as to the
incumbency and specimen signature of the secretary of such Loan Party;
(v) a copy of the charter, as amended, of Safeguard Scientifics
(Delaware), Inc. ("SSD") certified as of a recent date by the Secretary of
State of the jurisdiction of its formation, and a certificate as of a
recent date from such Secretary of State as to the good standing of SSD;
(vi) a certificate of the secretary of SSD, dated the Closing Date and
certifying (A) that attached thereto is a true and complete copy of SSD's
by-laws as in effect on the date of such certificate, (B) that attached
thereto is a true and complete copy of resolutions duly adopted by SSD's
board of directors authorizing the execution, delivery and performance of
each of the
-27-
Credit Documents to which SSD is a party, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect, (C) that
SSD's charter has not been amended since the date of the certification thereto
furnished pursuant to subsection (v) above, and (D) as to the incumbency and
specimen signature of each of SSD's officers executing each of the Credit
Documents to which SSD is a party (and the Lender may conclusively rely on such
certificate until the Lender receives notice in writing from SSD, to the
contrary);
(vii) a certificate of another officer of SSD as to the incumbency and
specimen signature of the secretary of SSD;
(viii) a copy of the certificate of limited partnership (or other
analogous public document), as amended, of each of Technology Leaders II
L.P. ("TLII"), Technology Leaders II OFFSHORE C.V. ("TL Offshore") and
Technology Leaders 11 Management L.P. ("TLIIM"), certified as of a recent
date by the appropriate Governmental Authority;
(ix) a copy of the partnership agreement, as amended, of each of
TLII, TL Offshore and TLIIM, certified as true, correct and complete by the
secretary of Technology Leaders Management, Inc. (the "General Partner");
(x) a copy of the charter, as amended, of the General Partner
certified as of a recent date by the Secretary of State of the jurisdiction
of its formation, and a certificate as of a recent date from such Secretary
of State as to the good standing of the General Partner;
(xi) a certificate of the secretary of the General Partner, dated the
Closing Date and certifying (A) that attached thereto is a true and
complete copy of the General Partner's by-laws as in effect on the date of
such certificate, (B) that attached thereto is a true and complete copy of
resolutions duly adopted by the General Partner's board of directors
authorizing the execution, delivery and performance by the General Partner
on behalf of TLII, TL Offshore or TLIIM of each of the Credit Documents to
which TLII, TL Offshore or TLIIM is a party, and that such resolutions have
not been modified, rescinded or amended and are in full force and effect,
(C) that the General Partner's charter has not been amended since the date
of the certification thereto furnished pursuant to subsection (x) above,
and (D) as to the incumbency and specimen signature of each of the General
Partner's officers executing on behalf of TLII, TL Offshore or TLIIM each
of such Credit Documents (and the Lender may conclusively rely on such
certificate until the Lender receives notice in writing from the General
Partner, to the contrary);
(xii) a certificate of another officer of the General Partner as to
the incumbency and specimen signature of the secretary of the General
Partner;
(b) Note. The Lender shall have received the Acquisition Note, duly
----
completed and executed by the Company.
-28-
(c) Opinions of Counsel. The Lender shall have received the opinion of
-------------------
(i) Xxxxxx, Golden & Xxxxxxx, counsel to the Company, substantially in the form
of Exhibit G and (ii) Xxxxxx, Xxxxx & Xxxxxxx, counsel to the Guarantors,
substantially in the form of Exhibit H.
(d) Insurance. The Lender shall have received certificates of insurance
---------
evidencing the existence of all insurance required to be maintained by each Loan
Party pursuant to the Credit Documents to which it is a party and Section 6.4.
hereof, together with loss payable clauses as required by such Credit Documents.
In addition, the Company shall have delivered a certificate of the chief
financial officer of the Company stating that such insurance is in full force
and effect and that all premiums then due and payable thereon have been paid.
(e) Historical Financial Statements. The Lender shall have received the
-------------------------------
following in form and substance satisfactory to the Lender: (i) the respective
audited consolidated balance sheets and statements of operations and cash flows
of the Company and of each Guarantor for the fiscal year ended December 31, 1994
and (ii) the respective unaudited consolidated balance sheets and statements of
operations and cash flows of the Company and each Guarantor for the nine (9)
month period ending September 30, 1995 (collectively, the "Historical Financial
Statements").
(f) Pro Forma Statements. The Lender shall have received a pro forma
--------------------
balance sheet of the Company as of the Closing Date in form and substance
satisfactory to the Lender and reflecting the consummation of the Equity
Investment (the "Pro Forma Opening Balance Sheet").
(g) Investment. On the Closing Date: (i) the Lender shall have received
----------
fully executed copies of all of the Investment Documents and any amendments
thereto; (ii) the Investment Documents shall be in full force and effect and no
material term or condition thereof shall have been amended, modified or waived
after the execution thereof except with the prior written consent of the Lender;
(iii) none of the parties to the Investment Documents shall have failed to
perform any material obligation or covenant required thereunder to be performed
or complied with by it on or before the Closing Date; and (iv) the Lender shall
have received a certificate from the Company's chief executive or chief
financial officer to the effect set forth in the immediately preceding clauses
(i) through (iii).
(h) Fees, Expenses and Other Consideration. The Lender shall have received
--------------------------------------
all amounts payable by the Company in respect of fees and expenses, including
the fees required by Section 2.8.(a), (b) and (d) and attorney's fees, to the
extent due and payable on or prior to the making of the initial Loans hereunder.
(i) Lien Searches. The Lender shall have received favorable UCC, tax,
-------------
judgment and lien search reports (including without limitation, searches of the
records of the United States Patent and Trademark Office) with respect to the
Company in all necessary or appropriate jurisdictions and under all legal and
appropriate trade names indicating that there are no prior liens on any of the
Collateral other than Permitted Liens.
-29-
(j) Repayment of Existing Indebtedness. The Lender shall have received
----------------------------------
evidence that all Indebtedness of the Company (other than Indebtedness to be
incurred hereunder and the Indebtedness permitted under Section 7.3.) in
existence on the Closing Date shall have been repaid in full as of the Closing
Date and that any Liens on the assets of the Company (other than Permitted
Liens) shall have been released; and the Lender shall have received Such UCC
termination statements and other instruments, in each case in proper form for
recording, as the Lender shall have requested to release and terminate of record
all Liens on any such assets (or arrangements for such release and termination
satisfactory to the Lender shall have been made).
(k) Guaranty. The Lender shall have received each Guaranty, duly executed
--------
and delivered by a Guarantor.
(l) Security Agreement and Financing Statements. The Lender shall have
-------------------------------------------
received the Security Agreement to be executed by the Company, duly executed and
delivered by the Company. In addition, the Company shall delivered to the
Lender appropriately completed and duly executed copies of UCC financing
statements as the Lender may request in order to perfect the security interests
created pursuant to the Security Agreement.
(m) Guarantor Credit Agreement. The Lender shall have received a true,
--------------------------
correct and complete copy of the Guarantor Credit Agreement, including all
exhibits and schedules attached thereto.
(n) Other Documents. The Lender shall have received such other documents,
---------------
instruments, agreements and certifications as the Lender or counsel to the
Lender may reasonably request in connection with this Agreement.
4.2. Initial and Subsequent Extensions of Credit
The obligation of the Lender to make any Loan hereunder (including the
initial Loans), and the Company's right to convert Acquisition Loans into the
Acquisition Term Loan pursuant to Section 2. 12., are each subject to the
further condition precedent that, both immediately prior to the making of such
Loan, or the conversion of such Loans, and also after giving effect thereto:
(a) no Default or Event of Default shall have occurred and be continuing,
(b) the representations and warranties made or deemed made by the Company
in Article 5. and by the Company and the other Loan Parties in each of the other
Credit Documents shall be true, complete and correct in all material respects on
and as of the date of the making of such extension of credit with the same force
and effect as if made on and as of such date (or, in the case of any such
representation and warranty made only as of a particular date, as of such
particular date);
(c) no change that is material and adverse shall have occurred in the
business,
-30-
property, assets, liabilities, condition (financial or otherwise), operations,
results of operations or prospects of the Company, or any Guarantor and its
Subsidiaries taken as a whole, since December 31, 1994; and
(d) the Lender shall have timely received (1) in the case of a borrowing
of a Loan, a duly executed Notice of Borrowing and (ii) in the case of the
conversion of Acquisition Loans under Section 2.12., the applicable notice
required under such Section.
Each Notice of Borrowing hereunder, and any notice given under Section
2.12., shall constitute a certification by the Company to the effect set forth
in subsections (a) through (d) above (both as of the date of such notice and as
of the date of such extension of credit).
4.3. Conditions to Acquisitions
The ability of the Company to consummate an Acquisition of a Seller without
violating Section 7. I., and the obligation of the Lender to make any
Acquisition Loan hereunder, the proceeds of which will be used to finance such
Acquisition, are subject to the condition precedent that on or prior to the date
(the "Acquisition Date") such Acquisition Loan is to be made or such Acquisition
is to be consummated (or such earlier date as may be provided below):
(a) Description of Transaction. The Lender shall have received not less
--------------------------
than 30 days prior to the Acquisition Date (or in the case of a Small
Acquisition, on or prior to the Acquisition Date), (x) a written description of
the Acquisition in detail reasonably satisfactory to the Lender, such
description to include a description of (i) the purchase price of such
Acquisition, (ii) the method and structure of payment thereof and (iii) the
Seller and (y) in the case of a Significant Acquisition, the current draft of
the Purchase Agreement
(b) Historical Financial Statements. If such Acquisition is a Significant
-------------------------------
Acquisition or a Md-Size Acquisition, the Lender shall have received not less
than 15 days prior to the Acquisition Date (or in the case of a Mid-Size
Acquisition, on or prior to the Acquisition Date), the following: (1) an audited
(or unaudited if audited statements are not available) balance sheet, statement
of operations and statement of cash flows for such Seller for the two fiscal
years most recently ended and (ii) if then available, an unaudited balance
sheet, statement of operations and statement of cash flows for such Seller for
the fiscal quarter most recently ending prior to the Acquisition Date
(collectively, the "Acquisition Historical Financial Statements").
(c) Pro Forma Financial Statements. If such Acquisition is a Significant
------------------------------
Acquisition or a Mid-Size Acquisition, the Lender shall have received not less
than 15 days prior to the Acquisition Date (or in the case of a Mid-Size
Acquisition, on or prior to the Acquisition Date), pro forma projected financial
statements in form reasonably satisfactory to the Lender reflecting the forecast
financial condition and results of operations of such Seller, the Company and
its Consolidated Subsidiaries on a monthly basis for the next fiscal year (the
"Acquisition Projected Financial Statements").
-31-
(d) Corporate Documents. If such Acquisition is a Significant Acquisition
-------------------
and involves any New Subsidiaries, the Lender shall have received the following
documents, each certified as indicated below:
(i) a copy of the charter of each such New Subsidiary, certified as
of a recent date by the Secretary of State of the jurisdiction of its
formation, and a certificate as of a recent date from such Secretary of
State as to the good standing of such New Subsidiary;
(ii) a certificate as of a recent date from the Secretary of State of
each state in which each such New Subsidiary is required to qualify to do
business as a foreign corporation to the effect that such New Subsidiary is
so qualified, or, if unavailable, evidence satisfactory to the Lender that
each such New Subsidiary has taken appropriate steps to so qualify,
(iii) a certificate of the secretary of each such New Subsidiary, dated
the Acquisition Date and certifying (A) that attached thereto is a true and
complete copy of such New Subsidiary's by-laws as in effect on the date of
such certificate, (B) that attached thereto is a true and complete copy of
resolutions duly adopted by such New Subsidiary's board of directors
authorizing the execution, delivery and performance of each of the Credit
Documents to which such New Subsidiary is or is to be a party, and that
such resolutions have not been modified, rescinded or amended and are in
full force and effect, (C) that such New Subsidiary's charter has not been
amended since the date of the certification thereto furnished pursuant to
subsection (i) above, and (D) as to the incumbency and specimen signature
of each of such New Subsidiary's officers executing each of such Credit
Documents (and the Lender may conclusively rely on such certificate until
the Lender receives notice in writing from such New Subsidiary, to the
contrary); and
(iv) a certificate of another officer of such New Subsidiary as to the
incumbency and specimen signature of the secretary of such New Subsidiary.
(e) Acquisition Documents. In the case of a Significant Acquisition, on
---------------------
the Acquisition Date: (i) the Lender shall have received fully executed copies
of all of the Acquisition Documents and any amendments thereto, (ii) the
applicable Purchase Agreement shall be in full force and effect and (iii) the
Lender shall have received a certificate from the Company's chief executive or
chief financial officer to the effect set forth in the immediately preceding
clauses (i) and (ii).
(f) Assignment of Acquisition Documents. In the case of a Significant
-----------------------------------
Acquisition, the Lender shall have received an Assignment of Acquisition
Documents duly executed by any New Subsidiary or any other existing Loan Party
having rights under such Purchase Agreement or any of the other Acquisition
Documents being executed in connection with such Purchase Agreement. In
addition, the Lender shall have received the acknowledgment respect to the
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Assignment of Acquisition Documents, in the form attached thereto.
(g) Lien Searches. In the case of a Significant Acquisition, the Lender
-------------
shall have received UCC, tax, judgment and lien search reports in form and
substance satisfactory to the Lender with respect to the Seller and each New
Subsidiary in all necessary or appropriate jurisdictions and under all legal and
appropriate trade names indicating that there are no prior liens on any of the
Collateral other than Permitted Liens or Liens to be released prior to or at the
time of the consummation of such Significant Acquisition.
(h) Security Agreements. In the case of a Significant Acquisition, the
-------------------
Lender shall have received a Security Agreement from each such New Subsidiary.
In addition, each such New Subsidiary shall have filed appropriately completed
and duly executed copies of UCC financing statements, and taken such other
action, as the Lender shall have reasonably requested in order to perfect the
security interests created pursuant to such Security Agreement.
(i) Pledge Agreements. In the case of a Significant Acquisition, the
-----------------
Lender shall have received from each Loan Party owning any issued and
outstanding capital stock of each such New Subsidiary, (i) if such Loan Party
has previously executed and delivered a Pledge Agreement, an amendment (in form
and substance satisfactory to the Lender) to such Pledge Agreement subjecting to
the Lien thereof such capital stock or (ii) if such Loan Party not has
previously executed and delivered a Pledge Agreement, a Pledge Agreement
granting to the Lender a Lien in such capital stock. In addition, the Lender
shall have received each of the following: (x) all stock certificates
representing all of such capital stock, and (y) stock powers duly endorsed in
blank by the applicable Loan Parties relating to all such stock certificates.
(j) Guaranties. In the case of a Significant Acquisition, the Lender shall
----------
have received a Guaranty from each such New Subsidiary
(k) Opinions of Counsel. In the case of a Significant Acquisition, the
-------------------
Lender shall have received an opinion counsel to the Loan Parties regarding (i)
the due organization of each such New Subsidiary; (ii) the corporate authority
of any New Subsidiary or other Loan Party delivering a Credit Document pursuant
to this Section; (iii) the execution, delivery and enforceability of such Credit
Documents; (iv) noncontravention of Applicable Law by such Acquisition or by the
execution, delivery and performance by such New Subsidiary and such Loan Parties
of such Credit Documents; (v) validity and perfection of any security interests
granted under any Security Document delivered under this Section and (vi) such
other matters as the Lender or its counsel may reasonably request.
(l) Other Documents. The Lender shall have received such other documents,
---------------
instruments, agreements and certifications as the Lender or its counsel may
reasonably request.
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4.4 Closing Documents for Non-Significant Acquisitions
Within 15 days after the date of consummation of an Acquisition that is not
a Significant Acquisition, the Company shall deliver to the Lender, each of the
following in form and substance satisfactory to the Lender-.
(a) Corporate Documents. If such Acquisition involved any New
-------------------
Subsidiaries, the following documents, each certified as indicated below:
(i) a copy of the charter of each such New Subsidiary, certified as
of a recent date by the Secretary of State of the Jurisdiction of its
formation, and a certificate as of a recent date from such Secretary of
State as to the good standing of such New Subsidiary;
(ii) a certificate as of a recent date from the Secretary of State of
each state in which each such New Subsidiary is required to qualify to do
business as a foreign corporation to the effect that such New Subsidiary is
so qualified;
(iii) a certificate of the secretary of each such New Subsidiary, dated
the Acquisition Date and certifying (A) that attached thereto is a true and
complete copy of such New Subsidiary's by-laws as in effect on the date of
such certificate, (B) that attached thereto is a true and complete copy of
resolutions duly adopted by such New Subsidiary's board of directors
authorizing the execution, delivery and performance of each of the Credit
Documents to which such New Subsidiary is or is to be a party, and that
such resolutions have not been modified, rescinded or amended and are in
full force and effect, (C) that such New Subsidiary's charter has not been
amended since the date of the certification thereto furnished pursuant to
subsection (i) above, and (D) as to the incumbency and specimen signature
of each of such New Subsidiary's officers executing each of such Credit
Documents (and the Lender may conclusively rely on such certificate until
the Lender receives notice in writing from such New Subsidiary, to the
contrary); and
(iv) a certificate of another officer of such New Subsidiary as to the
incumbency and specimen signature of the secretary of such New Subsidiary.
(b) Acquisition Documents. (i) the Lender shall have received fully
---------------------
executed copies of all of the Acquisition Documents and any amendments thereto
and (ii) the Lender shall have received a certificate from the Company's chief
executive or chief financial officer to the effect set forth in the immediately
preceding clause (i) and also stating that the applicable Purchase Agreement is
in full force and effect.
(c) Lien Searches. The Lender shall have received UCC, tax, judgment and
-------------
lien search reports in form and substance satisfactory to the Lender with
respect to the Seller and each
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New Subsidiary in all necessary or appropriate jurisdictions and under all legal
and appropriate trade names indicating that there are no prior liens on any of
the Collateral other than Permitted Liens or Liens that were released prior to
or in connection with such Significant Acquisition (together with evidence of
such release).
(d) Security Agreements. The Lender shall have received a Security
-------------------
Agreement from each such New Subsidiary. In addition, each such New Subsidiary
shall have filed appropriately completed and duly executed copies of UCC
financing statements, and taken such other action, as the Lender shall have
reasonably requested in order to perfect the security interests created pursuant
to such Security Agreement.
(e) Pledge Agreements. The Lender shall have received from each Loan Party
-----------------
owning any issued and outstanding capital stock of each such New Subsidiary, (i)
if such Loan Party has previously executed and delivered a Pledge Agreement, an
amendment (in form and substance satisfactory to the Lender) to such Pledge
Agreement subjecting to the Lien thereof such capital stock or (ii) if such Loan
Party not has previously executed and delivered a Pledge Agreement, a Pledge
Agreement granting to the Lender a Lien in such capital stock. In addition, the
Lender shall have received each of the following: (x) all stock certificates
representing all of such capital stock, and (y) stock powers duly endorsed in
blank by the applicable Loan Parties relating to all such stock certificates.
(f) Guaranties. The Lender shall have received a Guaranty from each such
----------
New Subsidiary.
(g) Other Documents. The Lender shall have received such other documents,
---------------
instruments, agreements and certifications as the Lender or its counsel may
reasonably request.
5. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Lender that the following
statements are, and after giving effect to the Transactions, will be, true and
correct:
5.1 Corporate Existence
Each of the Company and the other Loan Parties (a) is a corporation duly
organized and validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite corporate power, and has
all Governmental Approvals, necessary to own its assets and carry on its
business as now being or as proposed to be conducted and to consummate the
Transactions- and (c) is qualified to do business in all jurisdictions in which
the nature of the business conducted by it makes such qualification necessary,
except where failure so to qualify would not have a Material Adverse Effect, all
of which such jurisdictions are set forth on Schedule 5.1.
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5.2 Authorization; No Conflict
The execution, delivery and performance by the Company and the other Loan
Parties of each of the Credit Documents, the Investment Documents and the
Acquisition Documents to which any is a party and the consummation of the
Transactions (a) have been duly authorized by all requisite corporate and, if
required, stockholder action on the part of the Company and each such Loan Party
and (b) will not (i) violate any provision of Applicable Law, or any order of
any Governmental Authority or any provision of the charter or by-laws of the
Company or any other Loan Party, (ii) violate, conflict with, result in a breach
of or constitute (alone or with notice or lapse of time or both) a default or an
event of default under any Material Contract to which the Company or any other
Loan Party is a party or by which the Company or any other Loan Party or any of
its property is or may be bound, or (iii) result in the creation or imposition
of any Lien upon any property or assets of the Company or any other Loan Party
(except pursuant to the Security Documents).
5.3 Enforceability
This Agreement, each other Credit Document, and each Investment Document
have been duly executed and delivered by the Company and each of the other Loan
Parties (to the extent it is a party thereto) and constitute the legal, valid
and binding obligations of the Company and the other Loan Parties enforceable
against the Company and the other Loan Parties in accordance with their
respective terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other laws affecting
generally the enforcement of creditors' rights and by general principles of
equity (regardless of whether considered in a proceeding in equity or at law).
5.4 Approvals
No Governmental Approvals are necessary for the execution, delivery or
performance by the Company and the other Loan Parties of the Credit Documents,
the Acquisition Documents and the Investment Documents to which any of them is a
party or for the validity or enforceability thereof, except for filings and
recordings in respect of the Liens created pursuant to the Security Documents.
5.5 Financial Condition
(a) The Historical Financial Statements of the Company are complete and
correct in all material respects and fairly present the financial condition and
results of operations of the Company as of and for the periods covered thereby.
Since December 31, 1994, there has been no material adverse change in the
business, property, assets, liabilities, condition (financial or otherwise),
operations, results of operations or prospects of the Company.
(b) The Pro Forma Opening Balance Sheet fairly present the pro forma
financial
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condition of the Company as of the Closing Date. The Projected Financial
Statements, when delivered to the Lender, will be based on the assumptions set
forth therein and will constitute, in the good faith judgment of the Company,
reasonable estimations of future performance of the Company.
(c) With respect to a given Significant Acquisition or Mid-Size
Acquisition, to the Company's actual knowledge (i) the Acquisition historical
Financial Statements of the Seller fairly present the financial condition and
results of operations of the Seller as of and for the periods covered thereby;
and (ii) the Acquisition Projected Financial Statements are based on the
assumptions set forth therein and constitute, in the good faith judgment of the
Company, reasonable estimations of future performance of the Company, its
Consolidated Subsidiaries and the applicable Seller.
5.6 Litigation
Except as set forth on Schedule 5.6., there are no actions, suits or
proceedings at law or in equity by or before any Governmental Authority now
pending or, to the Company's knowledge, threatened against the Company or any
other Loan Party or their respective business, property or rights (i) which
involve any Credit Document, any Acquisition Document, any Investment Document
or any Transaction or (ii) which, if adversely determined could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
There exists no judgment, order, injunction or other restraint issued or filed
which is material to the Company or any other Loan Party, or any of their
respective businesses, properties or rights, or which prohibits or adversely
affects any of the Transactions.
5.7 Federal Reserve Regulations
Neither the Company nor any of the other Loan Parties is engaged in the
business of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying Margin Stock. No part of the proceeds of any
extension of credit hereunder, whether directly or indirectly, and whether
immediately, incidentally or ultimately, will be used (i) to purchase or carry
Margin Stock or to extend credit to others for the purpose of purchasing or
carrying Margin Stock or to refund indebtedness originally incurred for such
purpose, or (ii) for any purpose which entails a violation of, or which is
inconsistent with, the provisions of the Regulations of the Board of Governors
of the Federal Reserve System, including Regulations G, T, U or X. As used
herein, the term "Margin Stock" shall mean margin stock within the meaning of
Regulations G, T, U and X.
5.8 ERISA
(a) Neither the Company nor any other Loan Party maintains or contributes
to any Employee Benefit Plan or Multi-employer Plan other than those identified
on Schedule 5.8.
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(b) The Company and each other Loan Party are in compliance in all
material respects with all applicable provisions of ERISA and the Code with
respect to all Employee Benefit Plans. Each Employee Benefit Plan that is
intended to be qualified under Section 401 (a) of the Code has been determined
by the Internal Revenue Service to be so qualified, and each trust related to
such Plan has been determined to be exempt from federal income tax under Section
5 01 (a) of the Code. The actuarial present value of all accumulated benefit
obligations under each Plan, as disclosed in the most recent actuarial report
with respect to such Plan, does not exceed the fair market value of the assets
of such Plan. No material liability has been incurred by the Company or any
other Loan Party or any of their ERISA Affiliates which remains unsatisfied for
any taxes, penalties or other amount (other than contributions in the ordinary
course) with respect to any Employee Benefit Plan or any Multi-employer Plan,
and to the Company's actual knowledge no such material liability is expected to
be incurred.
(c) Neither the Company nor any other Loan Party has: (i) engaged in a
nonexempt prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code; (ii) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are no premium payments
which are due and unpaid; (iii) failed to make a required contribution or
payment to a Multi-employer Plan; or (iv) failed to make a required installment
or other required payment under Section 412 of the Code.
(d) No ERISA Event has occurred or is reasonably expected to occur with
respect to any Plan or Multi-employer Plan maintained or contributed to by the
Company or any other Loan Party which could have a Material Adverse Effect.
(e) No proceeding, claim (other than routine claims for benefits), lawsuit
and/or investigation is existing or, to the Company's actual knowledge,
threatened concerning or involving any Employee Benefit Plan or Multi-employer
Plan maintained or contributed to by the Company or any other Loan Party.
5.9 Taxes
Except as set forth on Schedule 5.9., each of the Company and the other
Loan Parties has filed all federal income tax returns and all other tax returns
and reports, domestic and foreign, required to be filed by it and has paid all
taxes, assessments, fees and other governmental charges shown to be due and
payable by it on such returns or reports. All such returns are true and correct
in all material respects. Except as set forth on such Schedule, each of the
Company and the other Loan Parties has paid or, in the case of taxes which are
not yet due and payable or are being contested in good faith, has provided
adequate reserves for the payment of, all federal, state and foreign taxes
applicable for all prior fiscal years and for the current fiscal year to the
date hereof To the Company's actual knowledge, there is no proposed tax
assessment against the Company or any other Loan Party.
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5.10 Investment Company Act
Neither the Company nor any other Loan Party is an "investment company" nor
a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
5.11 Public Utility Holding Company Act
Neither the Company nor any other Loan Party is a "holding company" nor an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 193 5,
as amended.
5.12 Material Agreements
Other than this Agreement, the other Credit Documents, the Acquisition
Documents and except as set forth on Schedule 5.12., neither the Company nor any
other Loan Party is a party to or otherwise bound or affected by (a) except as
otherwise permitted by Sections 7.3. and 7.4., any credit agreement, loan
agreement, indenture, guarantee or other arrangement providing for or otherwise
relating to any Indebtedness or any extension of credit (or commitment for any
extension of credit) to, or Guarantee by, the Company or any other Loan Party,
or (b) any collective bargaining agreement, management agreement, employment
agreement or consulting agreement. Neither the Company nor any other Loan Party
is a party to any agreement or instrument or subject to any corporate
restriction that has resulted or could reasonably be expected to result in a
Material Adverse Effect. The representations and warranties in subsection (b)
of the first sentence of this Section are made as of the Closing Date only.
5.13 Environmental and Safety Matters
The Company and each of the other Loan Parties has obtained all
Governmental Approvals which are required under Environmental Laws and is in
compliance with all terms and conditions of such Governmental Approvals the
failure with which to be in compliance would have a Materially Adverse Effect.
Each of the Company and each other Loan Party is also in material compliance
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables contained in the
Environmental Laws. The Company is not aware of, and has not received notice
of, any past, present, or future events, conditions, circumstances, activities,
practices, incidents, actions, or plans which, with respect to the Company or
any of the other Loan Parties, may interfere with or prevent compliance or
continued compliance with Environmental Laws, or may give rise to any common-law
or legal liability, or otherwise form the basis of any claim, action, demand,
suit, proceeding, hearing, study, or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling or the emission, discharge, release or threatened release
into the environment, of any pollutant, containment, chemical, or industrial,
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toxic, or other Hazardous Material; and there is no civil, criminal, or
administrative action, suit, demand, claim, hearing, notice, or demand letter,
notice or violation, investigation, or proceeding pending or, to the Company's
knowledge, threatened, against the Company or any of the other Loan Parties
relating in any way to Environmental Laws.
5.14 Subsidiaries
Except as set forth on Schedule 5.16., the Company has no Subsidiaries, and
except as set forth on such Schedule, all such Subsidiaries are Wholly-Owned
Subsidiaries of the Company.
5.15 Compliance with Law
The Company and each of the other Loan Parties are in compliance with all
Applicable Laws of, and all applicable restrictions imposed by, all Governmental
Authorities in respect of the conduct of their respective business and the
ownership of their respective property, except such noncompliance as could not
reasonably be expected to individually or in the aggregate, have a Material
Adverse Effect.
5.16 Capitalization
All of the outstanding capital stock of the Company is validly issued,
fully paid and non assessable and, after giving effect to the Equity Investment,
owned, beneficially and of record, by the Persons set forth on Schedule 5.16.
Schedule 5.16. correctly sets forth the corporate structure and ownership
interests of each of the Loan Parties, including the correct legal name of each
such Loan Parties, and the shareholders or other Persons holding equity
interests in the such Loan Parties and their percentage equity or voting
interest. Except as set forth on Schedule 5.16., there are no outstanding
securities convertible into or exchangeable for any capital stock (collectively,
"capital stock equivalents") of the Company or any other Loan Party or any
outstanding subscriptions, options, warrants, calls, rights (including without
limitation, preemptive fights) or other agreements or commitments of any nature
relating to or exercisable for capital stock or capital stock equivalents of the
Company or any other Loan Party.
5.17 Title to Properties
Except as set forth on Schedule 5.17, each of the Company and the other
Loan Parties have good, indefeasible and insurable title to, or valid leasehold
interests in, all its real properties and good title to its other assets, free
and clear of all Liens other than Permitted Liens.
5.18 Solvency.
After giving effect to the Transactions, the Company and each other Loan
Party will be Solvent.
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5.19 Conduct of Business.
The Company and its Subsidiaries are engaged in the business of developing
and marketing document automation software and providing both related and
complementary services. The Company's software is primarily for use in forms
intensive industries such as insurance, financial services, health care and
government. The services provided generally include consulting, software
support and implementation, print processing and postal zip-sort mail
processing.
5.20 Representations and Warranties in Acquisition Documents and Investment
Documents.
Each representation and warranty made or deemed made by the Company or any
other Loan Party in any of the other Credit Documents, the Acquisition Documents
and the Investment Documents is hereby deemed made to and for the benefit of the
Lender as if the same were set forth herein in full.
5.21 Performance of Contracts, Etc.
Neither the Company nor any of the other Loan Parties is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any contract, agreement, indenture, mortgage, lease or
other binding understanding or arrangement of any such Person, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, in each case, that could have a Material Adverse
Effect.
5.22 Disclosure
No representation or warranty of the Company or any other Loan Party made
or deemed made in this Agreement, any other Credit Document, any Acquisition
Document, any Investment Documents, the financial statements referred to in
Section 4.1.(e) and (f), or any other document, certificate or written statement
furnished to the Lender by or on behalf of any such Person for use in connection
with any of the Transactions, contained, as of the date made or deemed made or
as of the date thereof, any untrue statement of a material fact or omitted,
omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made. There is no material fact known to
the Company that has had or will have a Material Adverse Effect and that has not
been disclosed herein or in such other documents, certificates and statements
furnished to the Lender for use in connection with the transactions contemplated
hereby.
5.23 Representations Regarding Acquisitions
To the extent any representation or warranty contained in this Article 5.
relates to an Acquisition and the Transactions relating thereto, such
representation or warranty shall be
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deemed made only on and as of the (a) the date such Acquisition has been
consummated and (b) the date of the making of the Loan any of the proceeds of
which are used in whole or in part to finance such Acquisition.
6. AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as the Credit Facility is in
effect or the principal or interest on any Loan or any Obligation shall remain
unpaid, the Company will, and (as applicable) will cause each of the other Loan
Parties to:
6.1 Financial Statements and Other Information
Deliver to the Lender:
(a) as soon as available and in any event within 120 days after the end of
each fiscal year of the Company, audited consolidated statements of income,
retained earnings and cash flow of the Company and its Consolidated Subsidiaries
for such fiscal year and the related audited consolidated balance sheet as of
the end of such fiscal year, accompanied by an unqualified report of the
Company's independent auditors (who shall be of nationally recognized standing),
stating that such financial statements fairly present the consolidated financial
condition and results of operations of the Company and its Consolidated
Subsidiaries in accordance with GAAP;
(b) as soon as available and in any event within 45 days after the end of
each fiscal quarter of each fiscal year of the Company, a consolidated
statements of income, retained earnings and cash flow of the Company and its
Consolidated Subsidiaries for such fiscal quarter and for the period from the
beginning of the current fiscal year to the end of such fiscal quarter, and the
related consolidated balance sheet as of the end of such period, accompanied by
a certificate of the chief financial officer of the Company, which certificate
shall state that such consolidated financial statements fairly present the
consolidated financial condition and results of operations of the Company and
its Consolidated Subsidiaries in accordance with GAAP (subject to normal year-
end adjustments and absence of full footnote disclosures);
(c) simultaneously with the delivery of the annual financial statements
referred to in Section 6.1.(a), a report addressed to the Company by the
independent auditors who audited such statements (i) stating that, in connection
with their audit of such statements (and without conducting any procedures other
than those customarily conducted in a year-end audit), such auditors have
obtained no knowledge of any condition or event which constitutes a Default or
Event of Default as at the end of such fiscal year of the Company, or if such
auditors shall have obtained knowledge of any such condition or event,
specifying in such report each such condition or event of which they have
knowledge and the nature and status thereof and (ii) setting forth in reasonable
detail the computations necessary to determine whether the Company is in
compliance with the covenants contained in Sections 7.3. and 7.4.;
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(d) simultaneously with the delivery of the quarterly financial statements
pursuant to Section 6.1.(b), a certificate of the chief financial officer of the
Company (i) to the effect that no Default or Event of Default has occurred and
is continuing (or, if any Default or Event of Default has occurred and is
continuing, describing the same in reasonable detail and describing the action
that the Company (or such other Person, as appropriate) has taken and proposes
to take with respect thereto) and (ii) setting forth in reasonable detail the
computations necessary to determine whether the Company is in compliance with
the covenants contained in Sections 7.3. and 7.4., in each case as of the end of
the period for which such financial statements are delivered;
(e) promptly upon the receipt thereof, copies of all "management letters"
received by the Company or any other Loan Party from its independent
accountants;
(f) as soon as possible, and in any event within thirty days after the
Company or any other Loan Party knows or has reason to know that any of the
events or conditions specified below have occurred or exist, a statement signed
by the chief financial officer of the Company setting forth details respecting
such event or condition and the action, if any, which the Company, any other
Loan Party or its ERISA Affiliates proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to the PBGC by
the Company or any other Loan Party or any of its ERISA Affiliates as of such
date with respect to such event or condition);
(i) any reportable event, as defined in Section 4043(b) of ERISA and
the regulations issued thereunder, with respect to a Plan of the Company or
any other Loan Party or any of its ERISA Affiliates, as to which the PBGC
has not by regulation waived the requirement of Section 4043 (a) of ERISA
that it be notified within 30 days of the occurrence of such event
(provided that a failure to meet the minimum funding standard of Section
412 of the Code or Section 302 of ERISA shall be a reportable event
regardless of the issuance of any waivers in accordance with Section 412(d)
of the Code);
(ii) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan of the Company or any other Loan Party or any of its
ERISA Affiliates or the termination of any such Plan;
(iii) the institution by the PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan of the Company or any other Loan Party or any of its
ERISA Affiliates, or the receipt by the Company or any other Loan Party or
any of its ERISA Affiliates of a notice from a Multi-employer Plan of the
Company or any other Loan Party or any of its ERISA Affiliates that such
action has been taken by the PBGC with respect to such Multi-employer Plan;
(iv) the complete or partial withdrawal by the Company or any other
Loan Party or any of its ERISA Affiliates under Section 4201 or 4204 of
ERISA from a Multi-employer Plan, or the receipt by the Company or any
other Loan Party or any such
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ERISA Affiliate of notice from such a Multi-employer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or
that it intends to terminate or has terminated under Section 4041A of
ERISA, which in any such case could reasonably be expected to result in the
imposition of withdrawal liability upon the Company or any other Loan Party
or any of its ERISA Affiliates;
(v) the institution of a proceeding by a fiduciary of any Multi-
employer Plan against the Company or any other Loan Party or any of its
ERISA Affiliates to enforce Section 515 of ERISA, which proceeding is not
dismissed within 30 days; and
(vi) the fair market value of the assets of any Plan does not equal or
exceed the accumulated benefit obligations with respect to such Plan, as
disclosed on the most recent actuarial report with respect to such Plan.
(g) promptly after the Company obtains knowledge of the occurrence of any
Default or Event of Default, a notice of such Default or Event of Default
describing the same in reasonable detail together with a description of the
action that the Company (or such other appropriate party, as the case may be)
has taken and proposes to take with respect thereto;
(h) promptly after receipt of written request from the Lender, such other
information regarding the business, affairs or financial condition of the
Company or any other Loan Party as the Lender may reasonably request;
(i) as soon as possible, and in any event within ten Business Days after
the Company receives notice or otherwise has knowledge that any of the following
events have occurred or exist, a statement signed by the chief financial officer
of the Company setting forth details regarding such event or condition and the
action, if any, which the Company proposes to take with respect thereto (along
with all relevant documentations (A) any violation by the Company or any other
Loan Party of any Environmental Laws which could reasonably be expected to have
a Material Adverse Effect; (B) any request for information or notice of
potential responsibility under Environmental Laws with respect to cleanup of any
property or facility of the Company or any other Loan Party or any offsite
location; (C) the imposition of any Lien on any assets of the Company or any
other Loan Party under Environmental Laws; (D) the commencement of any
litigation, enforcement action or investigation with respect to the Company or
any other Loan Party under Environmental Laws; or (E) any Release or threatened
Release of any Hazardous Material at or from any property or facility of the
Company or any other Loan Party;
(j) promptly upon their becoming available, copies of any statements,
reports and other communications, if any, which the Company or any other Loan
Party shall have provided to its stockholders or filed with the Securities and
Exchange Commission (or any governmental agency substituted therefor), any
national securities exchange or the National Association of Securities Dealers,
Inc.;
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(k) as promptly as possible but in any event no later than January 31,
1996, pro forma projected financial statements reflecting the forecasted
financial condition and results of operations of the Company on a quarterly
basis for the period from January 1, 1996 through December 31,1996 (the
"Projected Financial Statements");
(l) promptly upon receipt thereof, copies of any notification or other
communication regarding any claim or potential claim for indemnification under
any Acquisition Documents relating to any Significant Acquisition;
(m) prompt notice of the terms of any proposed amendment to, or
modification or waiver of any of the material terms of any of the Acquisition
Documents relating to any Significant Acquisition; and
(n) simultaneously with the delivery of the annual financial statements
referred to in Section 6.1., capital and operating expense budgets, projections
of sources and applications of funds and profit and loss projections for the
Company (and each of its Consolidated Subsidiaries) on a consolidated basis for
each month of the next succeeding fiscal year, all itemized in reasonable detail
and prepared by the Company. Any material revisions made in such budgets or
projects shall be furnished promptly to the Lender.
6.2 Litigation
Promptly (and in any event within three Business Days of receipt) give to
the Lender notice of the filing or commencement of, or any written notice of
intention of any Person to file or commence, any action, suit or proceeding
affecting the Company or any of the other Loan Parties, whether at law or in
equity by or before any Governmental Authority which if adversely determined
could reasonably be expected to result in liability to the Company or any of the
other Loan Parties in an amount equal to or exceeding $250,000 (including the
amount of any deductible paid or required to be paid by the Company or any other
Loan Party under the terms of its insurance policies, but net of any amounts
---
acknowledged in writing by the applicable insurer(s) to be fully covered by
insurance) or would otherwise have a Material Adverse Effect, and of any adverse
development in respect of such legal or other proceedings.
6.3 Corporate Existence, Etc.
Except as expressly permitted by this Agreement: preserve and maintain its
corporate existence, and all of its material rights, privileges and franchises;
comply in all material respects with the requirements of all Applicable Laws,
rules, regulations and orders of all Governmental Authorities; maintain all of
its material properties used in its business in sufficient working order and
condition so as to permit such Loan Party to conduct its business; and preserve
and enforce its rights (including fights to indemnification) under any Material
Contracts, except where the failure to do so would not have a Material Adverse
Effect in the reasonable judgment of the Lender.
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6.4 Insurance
Keep insured by financially sound and reputable insurers all property of a
character usually insured by entities engaged in the same or similar business
similarly situated against loss or damage of the kinds and in the amounts
customarily insured against by such businesses and carry such other insurance as
is usually carried by such businesses. Without limiting the obligations of the
Company and the other Loan Parties under the foregoing provisions of this
Section, in the event the Company or any of the other Loan Parties shall fail to
maintain in full force and effect insurance as required by the foregoing
provisions of this Section or any of the other Credit Documents, then the Lender
may upon notice to the Company or such other Loan Party, but shall have no
obligation to, procure insurance covering the interests of the Lender in such
amounts and against such risks as the Lender shall deem appropriate, and the
Company shall reimburse the Lender in respect of any premiums paid by the Lender
as provided in Section 9.3.(c).
6.5 Obligations and Taxes
Pay its Indebtedness and other obligations in accordance with their terms
and pay and discharge promptly all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits or in respect of its
property, and in any event before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might give rise to a Lien upon such properties or
any part thereof, provided however. that such payment and discharge shall not be
--------
required so long as the validity or amount thereof shall be contested in good
faith by appropriate proceedings which effectively stay the execution of any
such Lien and the Company shall (or shall cause the applicable Loan Party to)
set aside on its books adequate reserves in accordance with GAAP with respect
thereto.
6.6 Maintaining Records; Access to Properties and Inspections
Maintain all financial records in accordance with GAAP and permit any
representatives designated by the Lender upon reasonable notice to visit and
inspect the properties of the Company or any of the other Loan Parties and to
inspect their financial and business records and make extracts therefrom and
copies thereof, all at reasonable times during normal business hours and in a
manner so as not to unreasonably disrupt the operations of the Company or the
other Loan Parties and as often as reasonably requested, and permit the Lender
or any representatives designated by the Lender upon reasonable notice to
discuss the affairs, finances and condition of the Company or any of the other
Loan Parties with the officers thereof and, after prior notice to the Company
(so long as no Event of Default has occurred and is continuing), independent
accountants therefor.
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6.7 Environmental and Safety Matters
For the purposes of protecting the Lender's security interest in the
Collateral and preserving the Company's ability to satisfy its Obligations:
(a) Comply with all Environmental Laws applicable to it or any of its
property or facilities in all material respects.
(b) Keep its properties and facilities free from any Liens which could
reasonably be expected to have a Material Adverse Effect arising under any
Environmental Laws.
(c) Respond promptly to any Release or threatened Release of any Hazardous
Materials in a manner which complies in all material respects with all
Environmental Laws and mitigates any associated risk to human health or the
environment to the maximum extent commercially practicable.
(d) If the Lender at any time has reason to believe that any property or
facility owned or operated by the Company or any other Loan Party has been or
may be either (i) operated in violation of any Environmental Laws; (ii)
contaminated with any Hazardous Materials; or (iii) subject to any government-
imposed obligation to conduct any environmental investigation or clean-up, any
of which, in the good faith judgment of the Lender may impair in any material
respect the value of the Collateral or the ability of the Company or any of the
other Loan Parties to satisfy any of their respective Obligations, the Company
shall, upon the written request of the Lender, at the Company's sole cost and
expense, conduct such investigation or study, through retention of a consulting
firm reasonably satisfactory to the Lender, as is necessary in the good faith
judgment of the Lender to demonstrate that no such impairment could reasonably
be expected to have a Material Adverse Effect.
6.8 Additional Security
If and to the extent requested by the Lender from time to time, execute and
deliver such additional documents and take such other action as may be necessary
or desirable in the reasonable opinion of the Lender in order to assure and
confirm that all Obligations are secured in a manner acceptable to the Lender by
a first priority Lien on substantially all present and future assets of the
Company and the other Loan Parties subject only to Permitted Liens.
6.9 Deposit Accounts/Cash Management Service
For the purpose of protecting the Lender's security interest in the
Collateral and enabling the Lender to monitor the proceeds of Collateral and the
uses of cash by the Company and the other Loan Parties, maintain all of its
primary operating accounts and cash management service relationships with the
Lender.
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6.10 Change in Management Group
Immediately notify the Lender if any member of the Management Group shall
terminate their employment with the Company or otherwise cease to be employed by
the Company in a senior management position.
6.11 Enforcement of Remedies under Acquisition Documents
If the Company becomes aware of or otherwise has knowledge of any facts
that could give rise to any material claim for indemnification from any party
under any Acquisition Document, assert or cause the assertion of such claim
against such party before the date on which such claim may no longer be made
under such Acquisition Document, and in asserting any such claim shall comply
with all requirements for asserting such claims under the Acquisition Documents.
7. NEGATIVE COVENANTS
The Company covenants and agrees that, so long as the Credit Facility is in
effect or the principal or interest on any Loan or any Obligation shall remain
unpaid, the Company will not, nor will it permit any of the Loan Parties to:
7.1 Prohibition of Fundamental Changes
Effect any of the following: (i) any transaction of merger, consolidation,
recapitalization, reorganization, liquidation or dissolution (other than the
merger of a Subsidiary of the Company with and into (x) the Company pursuant to
which the Company is the surviving corporation, (y) any Wholly-Owned Subsidiary
of the Company pursuant to which such Wholly-Owned Subsidiary is the surviving
corporation or (z) another Person which Person becomes a Wholly Owned Subsidiary
after giving effect to such merger); or (ii) the sale, transfer, lease,
contribution or other conveyance, or the granting of options, warrants or other
rights (excluding options, warrants or other rights with respect to the
Company's stock) with respect to, any of its assets to any Person other than
sales of assets in the ordinary course of business; or (iii) engage in any line
of business other than those engaged in or similar to those engaged in by the
Company or such other Loan Party, as applicable, on the Closing Date; or (iv)
any Acquisition or any other transaction of acquisition of another Person, or of
substantially all of the assets of another Person, or of a distinct operating
division of another Person, unless (A) at the time of such transaction, such
other Person is engaged in, or such assets are to be used in, the same or
similar line(s) of business as those described in Section 5.19., (B) no Default
or Event of Default has occurred and is continuing or would occur after giving
effect to such transaction, and (C) the applicable conditions precedent
contained in Section 4.3. have been satisfied.
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7.2 Limitation on Liens
Without the Lender's prior written consent, create, incur, assume or suffer
to exist any Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired, except Permitted Liens.
7.3 Indebtedness and Guarantees
Without the Lender's prior written consent (which will not be unreasonably
withheld), create, incur or suffer to exist any Indebtedness or Guarantees
except (a) Indebtedness to the Lender created hereunder and under any of the
Credit Documents; (b) Indebtedness existing on the Closing Date and described on
attached Schedule 7.3.; (c) Indebtedness in an aggregate amount not to exceed
$500,000.00 during any fiscal year of the Company, (d) Indebtedness otherwise
permitted by Section 7.4. and (e) loans and advances to employees of the Company
for moving, entertainment, travel and other similar expenses in the ordinary
course of business consistent with past practices.
7.4 Investments
Make or permit to remain outstanding any Investments except (i) Permitted
Investments, (ii) the ownership of the capital stock of Subsidiaries by the
Company or its Subsidiaries, the acquisition of which is permitted by Section
7.1. (iv), and (iii) loans or advances to the Company by one or more of its
Subsidiaries, provided that (a) any such loans or advances are evidenced by a
promissory note and (b) the repayment of any such loans or advances are
subordinated in writing in a manner satisfactory to the Lender to the prior
satisfaction in full of the Obligations.
7.5 Restricted Payments
Make any Restricted Payment; provided, however, that Subsidiaries of the
-------- -------
Company may make dividends, payments or other distributions to the Company or to
any Wholly-Owned Subsidiary of the Company.
7.6 Accounting
Change its accounting methods or practices (except as required to confirm
to changes in GAAP or permitted by GAAP) or, without the prior written consent
of the Lender, which consent shall not be unreasonably withheld, change its
fiscal year end from December 31.
7.7 Amendment of Certain Documents
Enter into any amendment, modification or waiver of any of the terms of any
of the Acquisition Documents which amendment, modification or waiver would have
a Material
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Adverse Effect in the reasonable judgment of the Lender.
8. EVENTS OF DEFAULT
If one or more of the following events (herein collectively called "Events
of Default" and singularly called an "Event of Default") shall occur and be
continuing:
8.1 Payments under Credit Documents
The Company or any Guarantor shall default in the payment when due of any
principal of any Loan. The Company shall default in the payment when due of any
interest on any Loan or any fee or any other Obligations payable by it hereunder
or under any other Credit Document, or any other Loan Party or any Guarantor
shall default in the payment when due of any other amount payable by it under
any Credit Document to which such Loan Party is a party and such default shall
continue unremedied for a period of five days after the Company, such other Loan
Party or such Guarantor receives notice of such default.
8.2 Other Indebtedness
The Company or any other Loan Party shall default in the payment when due
of any principal of or interest on any Indebtedness, having a principal amount
outstanding, individually or in the aggregate, equal to or exceeding $250,000.00
(other than the Obligations) and such default shall continue unremedied beyond
any applicable grace or cure periods- or any event specified in any note,
agreement, indenture or other document evidencing or relating to any
Indebtedness of the Company or any other Loan Party shall occur if the effect of
such event is to cause, or to permit the holder thereof to cause (with the
giving of notice or lapse of time or both), such Indebtedness to become due or
to be required to be prepaid (whether by redemption, purchase or otherwise)
prior to its stated maturity, and such event shall remain unremedied beyond any
applicable grace or cure periods.
8.3 Representations and Warranties
Any representation, warranty or certification made or deemed to be made in
any Credit Document by the Company, any other Loan Party or any Guarantor or any
certificate, financial statement or other information furnished in writing to
the Lender pursuant to the provisions hereof or thereof, shall prove to have
been false or misleading in any material respect as of the time made or deemed
to be made.
8.4 Other Obligations
(i) The Company shall default in the performance of any of its obligations
under Section 2.13., Section 6.1. (which default shall continue for ten Business
Days) or Article 7.; (ii) the Company shall default in the performance of any of
its other obligations in this Agreement
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and such default shall continue unremedied for a period of 30 days after the
Company receives notice or otherwise has actual knowledge thereof, (iii) an
"Event of Default" as defined in any other Credit Document shall have occurred
and be continuing; (iv) any Guarantor shall fail to comply with any of its other
obligations under its Guaranty and such failure shall continue unremedied for a
period of 30 days after such Guarantor receives notice or otherwise has actual
knowledge thereof or (v) an "Event of Default" under and as defined in the
Guarantor Credit Agreement shall have occurred and be continuing.
8.5 Ability to Pay Debts
The Company, any other Loan Party, any Guarantor, TLII, TL Offshore, TLIIM
or the General Partner shall admit in writing its inability to, or be generally
unable to, pay its debts as such debts become due.
8.6 Voluntary Proceedings
The Company, any other Loan Party, the Guarantor, TLII, TL Offshore, TLIIM
or the General Partner shall (i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or readjustment of debts, (v) acquiesce in writing to, any petition
filed against it in an involuntary case under the Bankruptcy Code, or (vi) take
any corporate action for the purpose of effecting any of the foregoing.
8.7 Involuntary Proceedings
A proceeding or case shall be commenced against the Company, any other Loan
Party, the Guarantor, TLII, TL Offshore, TLIIM or the General Partner, without
its application or consent, in any court of competent jurisdiction, seeking (i)
its liquidation, reorganization, dissolution or winding-up, or the composition
or readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of all or any substantial part of its assets,
or (iii) similar relief under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 or more days; or an order for relief
against the Company, any other Loan Party, the Guarantor, TLII, TL Offshore,
TLIIM or the General Partner shall be entered in an involuntary case under the
Bankruptcy Code.
8.8 Judgments
A judgment or judgments for the payment of money in excess of $250,000.00
in the
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aggregate (exclusive of judgment amounts to the extent covered by insurance
where the Company has submitted a claim and the insurer has not contested
liability in respect of such judgment) shall be rendered by a court or courts
against the Company or any other Loan Party and the same shall not be vacated,
bonded or discharged (or provision shall not be made for such discharge), or a
stay of execution thereof shall not be procured, within 60 days from the date of
entry thereof.
8.9 ERISA Event
(a) Any ERISA Event shall have occurred with respect to the Company or any
other Loan Party and the sum of the Insufficiency of such Plan (determined as of
the date of occurrence of such ERISA Event) and the Insufficiency of any and all
other Plans (determined as of the date of occurrence of such ERISA Event) of the
Company or any other Loan Party with respect to which an ERISA Event shall have
occurred (or the liability of the Company or any other Loan Party or its ERISA
Affiliates related to such ERISA Event) exceeds $250,000, or (b) the Company or
any other Loan Party or any of its ERISA Affiliates shall have been notified by
a Multi-employer Plan that it has incurred withdrawal liability to such Multi-
employer Plan and the imposition of such liability is reasonably likely to be
incurred in an amount that, when aggregated with all other amounts required to
be paid to Multi-employer Plans by the Company or any other Loan Party and its
ERISA Affiliates as withdrawal liability (determined as of the date of such
notification indemnification), requires payments exceeding $250,000 per annum or
$250,000 in the aggregate; or (c) the Company or any other Loan Party or any of
its ERISA Affiliates shall have been notified by a Multi-employer Plan that such
Multi-employer Plan is in reorganization or is being terminated within the
meaning of Title IV of ERISA, and as a result of such reorganization or
termination the aggregate annual contributions of such Person and its ERISA
Affiliates to all Multi-employer Plans that are then in reorganization or being
terminated have been or will be increased over the amounts contributed to such
Multi-employer Plans for the plan years of such Multi-employer Plans immediately
preceding the plan year in which such reorganization or termination occurs by an
amount exceeding $250,000.
8.10 Change in Control
A Change in Control shall have occurred without the prior written consent
of the Lender. As used in this Section the term "Change in Control" shall mean
any of the following: (i) the Control Group shall fail to own, on a fully-
diluted basis, at least 5 1 % prior to a registered public offering of capital
stock of the Company; (ii) if after any such offering any Person or two or more
Persons (other than the members of the Control Group) acting in concert, shall
acquire "beneficial ownership" within the meaning of Rule 13d-3 of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), directly
or indirectly, of capital stock or securities of the Company representing 20% or
more of the aggregate voting power of all classes of capital stock and
securities of the Company; or (iii) if, (x) in any twelve-month period, any
member of the Management Group shall terminate his employment with the Company
or otherwise cease to be employed by the Company in a senior management position
and (y) within 120 days after
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such member shall terminate his employment or shall otherwise cease to be so
employed, the Company shall fail to replace such member with an individual
having comparable industry experience.
8.11 Interest Expense Coverage
If at any time the amount by which the Acquisition Commitment exceeds the
outstanding principal balance of Acquisition Loans shall be less than the
Interest Expense reasonably estimated to be incurred by the Company in the
immediately following two fiscal quarters.
8.12 Certain Actions by Guarantors
Any Guarantor shall (a) merge or consolidate with any Person (other than a
merger or consolidation with a Subsidiary of Safeguard Scientifics, Inc.
pursuant to which the Guarantor is the surviving entity), (b) dissolve,
liquidate or cease to exist, or shall take any action authorizing any of the
foregoing or (c) sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or substantially all of its assets.
8.13 Guarantor Credit Agreement
If at any time both: (i) the amount of Revolving Loans (as defined in the
Guarantor Credit Agreement) which S SD could then borrow under the Guarantor
Credit Agreement shall be less than $7,034,000 and (ii) the value of all
Qualifying Securities (as defined below) minus twice the amount of Indebtedness
-----
then owing under the Guarantor Credit Agreement plus all cash and cash
----
equivalents then held by SSD shall be less than $14,068,000. For purposes of
this Section, the term "Qualifying Security" means any common stock owned by SSD
in a Subsidiary whose common stock (A) is listed on the New York Stock Exchange,
the American Stock Exchange or some other principal national securities exchange
or has price quotations in the over-the-counter market reported by the National
Association of Securities Dealers Automated Quotation System; (B) is not subject
to any instrument, document or agreement which in any way prohibits the sale of
such common stock by SSD for any specified period of time or otherwise; and (C)
the offer and sale of which by SSD would not then be subject to any registration
requirements or other restrictions under the Securities Act of 1933, as amended
(the "Securities Act"), or other Applicable Law, including without limitation,
volume limitations imposed under Rule 144 of the Securities Act.
THEREUPON: (1) In the case of an Event of Default, other than an Event of
Default referred to in Section 8.6. or Section 8.7., the Lender may, by notice
to the Company, terminate its Commitment, cancel the Credit Facility and/or
declare the then-outstanding principal amount of, and the accrued interest on,
the Loans and all other Obligations payable by the Company hereunder and under
the Note (including, without limitation, any amounts payable under Section
9.3.), whereupon such amounts shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the
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Company; (2) in the case of the occurrence of an Event of Default referred to in
Section 8.6. or Section 8.7. above, the Commitment and the Credit Facility shall
automatically be canceled and the then-outstanding principal amount of, and the
accrued interest on, the Loans and all other Obligations payable by the Company
hereunder and under the Note (including, without limitation, any amounts payable
under Section 9.3.) shall automatically become immediately due and payable
without presentment, demand, protest or other formalities of any kind, all of
which are hereby expressly waived by the Company; and (3) in the case of any
Event of Default, may exercise any and all remedies available under the Security
Documents or under Applicable Law.
9. MISCELLANEOUS
9.1 Waiver
No failure on the part of the Lender to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege under this Agreement or the Note or other Credit Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
fight, power or privilege under this Agreement or any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
9.2 Notices
All notices, demands or other communications to be given or delivered under
or by reason of the provisions of this Agreement shall be in writing and
delivered personally, mailed by certified or registered mail, return receipt
requested and postage prepaid, sent via a nationally recognized overnight
courier, or sent via facsimile. Such notices, demands and other communications
will be sent to the address indicated below:
To the Company:
FormMaker Software, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxx 000 Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: President
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
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To the Lender:
NationsBank of Georgia, National Association
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party;
provided, however, that the failure to deliver copies of notices as indicated
above shall not affect the validity of any notice. Any such communication shall
be deemed to have been received (i) when delivered, if personally delivered, or
sent by nationally-recognized overnight courier or sent via facsimile or (ii) on
the third Business Day following the date on which the piece of mail containing
such communication is posted if sent by certified or registered mail.
9.3 Expenses, Etc.
(a) Agreement to Pay and Reimburse. The Company agrees to pay or reimburse
------------------------------
the Lender for the following as incurred by Lender: (i) all out-of pocket costs
and expenses (including, without limitation, the reasonable fees and expenses of
Xxxxxx & Bird, counsel to the Lender) in connection with (A) the negotiation,
preparation, execution and delivery of this Agreement and the other Credit
Documents and the extension of credit hereunder and (B) any amendment,
modification or waiver of any of the terms of this Agreement or any of the other
Credit Documents; (ii) all costs and expenses of the Lender (including
reasonable counsel's fees and expenses) in connection with (A) any Default and
any enforcement or collection proceedings resulting therefrom and (B) the
enforcement of this Section; and (iii) all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or revenue
authority in respect of this Agreement or any of the other Credit Documents or
any other document referred to herein or therein and all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated by
this Agreement or any other Credit Document or any other document referred to
herein or therein.
(b) Indemnity. The Company agrees to indemnify the Lender and its
---------
directors, officers, employees and agents for, and hold each of them harmless
against, any and all losses, liabilities, claims (including Environmental
Claims), damages or expenses incurred by any of them arising out of or by reason
of any investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings) relating to the
extensions of credit hereunder or any actual or proposed use by the Company or
any Loan Party of the proceeds of any of the extensions of credit hereunder or
the past, present or future business activities of the Company or any Loan Party
including, without limitation, the reasonable fees and disbursements
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of counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims, damages
or expenses that are determined pursuant to a final, non-appealable order of a
court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of the Person to be indemnified).
(c) Expenses Paid On Behalf of the Company. If the Company fails to pay
--------------------------------------
when due any costs, expenses or other amounts payable by it under any Credit
Document, including, without limitation, fees and expenses of counsel,
indemnities and insurance premiums, such amount may be paid on behalf of the
Company by the Lender, in its sole discretion. Any such payment by the Lender
shall constitute for all purposes of this Agreement the making by the Lender of
a Loan, which shall bear interest at the Base Rate, in the amount of such
payment (but without any requirement for compliance with the conditions set
forth in Article 4.). In the event that such payment is not reimbursed by the
Company by 12:00 noon Atlanta time on the first Business Day after such payment,
the Lender shall be deemed to have made a Loan to the Company in such amount,
which Loan shall be deemed to bear interest at the Default Rate with respect to
Base Rate Loans from the date such Loan is made until the same is repaid.
9.4 Amendments, Etc.
Any term, covenant, agreement or condition of this Agreement or any of the
other Credit Documents may be amended or waived and any departure therefrom may
be consented to if, but only if, such amendment, waiver or consent is in writing
signed by the Lender and, in the case of an amendment, by the Company. Unless
otherwise specified in such waiver or consent, a waiver or consent given
hereunder shall be effective only in the specific instance and for the specific
purpose for which given.
9.5 Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
9.6 Assignments and Participations
The Company may not assign its rights or obligations hereunder or under the
other Credit Documents without the prior consent of the Lender. The Lender may
assign to one or more Persons, or sell participations to one or more Persons in,
all or a portion of its fights and obligations hereunder, under the Note and the
other Credit Documents. The Lender may, in connection with any assignment or
proposed assignment or sale or proposed sale of participation, disclose to the
assignee or proposed assignee or participant or proposed participant any
information relating to the Company furnished to the Lender by or on behalf of
the Company.
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9.7 Survival
The obligations of the Company and its Subsidiaries under Sections 3.4. and
9.3. shall survive the repayment of the Loans and the termination of the Credit
Facility.
9.8 Table of Contents: Descriptive Headings
The table of contents and captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
9.9 Counterparts
This Agreement may be executed in any number of counterparts, each of which
need not contain the signature of more than one party and all of which taken
together shall constitute one and the same original instrument.
9.10 Governing Law
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Georgia, without giving effect to any choice of law or
conflict of law provision or rule.
9.11 Arbitration
ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT
NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY CREDIT
DOCUMENT, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT
(OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND
MEDIATION SERVICES, INC. (J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW.
IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT
UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY
PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED
PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS
AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE
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CITY OF THE COMPANY'S DOMICILE AT THE TIME OF THIS AGREEMENT'S EXECUTION AND
ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE
OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN
ARBITRATION ASSOCIATION WELL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED
WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL
ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH
HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO
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(I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION
OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER BY
THE LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDER
HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF,
OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO
OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED
TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE
LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR
OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE
PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT.
NEITHER THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF
AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE
A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION,
TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH
REMEDIES.
9.12 Acknowledgments
The Company hereby acknowledges that (a) it has been advised by counsel in
the negotiation, execution and delivery of this Agreement and the other Credit
Documents to which it is a party; (b) the Lender has no fiduciary relationship
with or fiduciary duty to the Company or any of the other Loan Parties, and the
relationship between the Lender on one hand, and the Company on the other hand,
is solely that of debtor and creditor; and (c) no joint venture exists between
the Lender on one hand, and the Company on the other hand.
9.13 Confidentiality
Except as otherwise provided by Applicable Law, the Lender shall utilize
all non-public
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information obtained pursuant to the requirements of this Agreement which has
been identified as confidential or proprietary by the Company in accordance with
the Lender's customary procedure for handling confidential information of this
nature and in accordance with safe and sound banking practices but in any event
may make disclosure: (a) to any of its Affiliates (provided they shall agree to
keep such information confidential in accordance with the terms of this
Section); (b) as a reasonably required by any bona fide transferee or
participant in connection with the contemplated transfer of any of the Loans or
the Lender's commitments hereunder, or participations therein, as permitted
hereunder; (c) as required by any Governmental Authority or representative
thereof or pursuant to legal process; (d) to the Lender's independent auditors
and other professional advisors (provided they shall be notified of the
confidential nature of the information), and (e) after the happening and during
the continuance of an Event of Default, to any other Person, in connection with
the exercise of the Lender's rights hereunder or under any of the other Credit
Documents.
9.14 Obligations with Respect to Loan Parties.
The obligations of the Company to direct or prohibit the taking of certain
actions by the other Loan Parties as specified herein and in the other Credit
Documents shall be absolute and not subject to any defense the Company may have
that the Company does not control such Loan Parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed as of the day and year first above written.
FORMMAKER SOFTWARE, INC.
By:
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Name:
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Title:
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NATIONSBANK OF GEORGIA, NATIONAL
ASSOCIATION
By:
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Name:
---------------------------
Title:
--------------------------
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