EXHIBIT 10.2
$7,850,000
FINANCING AGREEMENT
Dated as of April 1, 2005
Among
ENHERENT CORP.,
and its Subsidiaries listed as borrowers
on the signature pages hereto
as Borrowers
and
ABLECO FINANCE LLC
as Lender and as Agent
EXECUTION COPY
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; CERTAIN TERMS............................................................................. 4
Section 1.01 Definitions................................................................................ 4
Section 1.02 Terms Generally............................................................................ 24
Section 1.03 Accounting and Other Terms................................................................. 24
Section 1.04 Time References............................................................................ 24
ARTICLE II THE LOANS............................................................................................. 24
Section 2.01 Commitments................................................................................ 24
Section 2.02 Making the Loans........................................................................... 25
Section 2.03 Repayment of Loans; Evidence of Debt....................................................... 25
Section 2.04 Interest................................................................................... 26
Section 2.05 Reduction of Revolving Credit Commitment; Prepayment of Loans.............................. 27
Section 2.06 Loan Servicing Fee......................................................................... 29
Section 2.07 Securitization............................................................................. 29
Section 2.08 Taxes...................................................................................... 30
ARTICLE III PAYMENTS AND OTHER COMPENSATION...................................................................... 32
Section 3.01 Payments; Computations and Statements...................................................... 32
ARTICLE IV CONDITIONS TO LOANS................................................................................... 33
Section 4.01 Conditions Precedent to Effectiveness...................................................... 33
Section 4.02 Conditions Precedent to Subsequent Loans................................................... 36
ARTICLE V REPRESENTATIONS AND WARRANTIES......................................................................... 37
Section 5.01 Representations and Warranties............................................................. 37
ARTICLE VI COVENANTS OF THE BORROWER............................................................................. 45
Section 6.01 Affirmative Covenants...................................................................... 45
Section 6.02 Negative Covenants......................................................................... 54
Section 6.03 Financial Covenants........................................................................ 61
ARTICLE VII MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL........................ 61
Section 7.01 Collection of Accounts Receivable; Management of Collateral................................ 61
Section 7.02 Accounts Receivable Documentation.......................................................... 63
Section 7.03 Status of Accounts Receivable and Other Collateral......................................... 63
Section 7.04 Collateral Custodian....................................................................... 64
ARTICLE VIII EVENTS OF DEFAULT................................................................................... 64
Section 8.01 Events of Default.......................................................................... 64
ARTICLE IX [RESERVED]............................................................................................ 67
ARTICLE X MISCELLANEOUS.......................................................................................... 67
Section 10.01 Notices, Etc............................................................................... 67
Section 10.02 Amendments, Etc............................................................................ 69
Section 10.03 No Waiver; Remedies, Etc................................................................... 69
Section 10.04 Expenses; Taxes; Attorneys' Fees........................................................... 69
Section 10.05 Right of Set-off........................................................................... 70
Section 10.06 Severability............................................................................... 70
Section 10.07 Assignments and Participations............................................................. 70
Section 10.08 Counterparts............................................................................... 73
Section 10.09 GOVERNING LAW.............................................................................. 73
Section 10.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE...................................... 73
Section 10.11 WAIVER OF JURY TRIAL, ETC.................................................................. 74
Section 10.12 Consent by the Lender...................................................................... 74
Section 10.13 No Party Deemed Drafter.................................................................... 74
Section 10.14 Reinstatement; Certain Payments............................................................ 74
Section 10.15 Indemnification............................................................................ 75
Section 10.16 Records.................................................................................... 75
Section 10.17 Binding Effect............................................................................. 76
Section 10.18 Confidentiality............................................................................ 76
Section 10.19 Joint and Several.......................................................................... 76
Section 10.20 The Administrative Borrower as Agent for Borrowers......................................... 76
Section 10.21 No Novation................................................................................ 77
Schedule A Account Debtors
Schedule 1.01(A) Inventory Locations
Schedule 5.01(f) Subsidiaries
Schedule 5.01(g) Litigation/Commercial Tort Claims
Schedule 5.01(j) ERISA
Schedule 5.01(p) Real Property - Owned and Leased
Schedule 5.01(s) Operating Leases
Schedule 5.01(t) Environmental Matters
Schedule 5.01(u) Insurance
Schedule 5.01(x) Bank Accounts
Schedule 5.01(y) Intellectual Property
Schedule 5.01(z) Material Contracts
Schedule 5.01(ff) Inventory Locations
Schedule 6.01(l) Collateral Locations
Schedule 6.02(a) Existing Liens
Schedule 6.02(b) Existing Indebtedness (Including Existing Guarantees)
Schedule 6.02(e) Existing Investments
Schedule 6.02(h)(C) Management Agreements, Etc.
Schedule 6.02(j) Transactions with Affiliates
Schedule 6.02(k)(B) Permitted Restricted Agreements
Exhibit A Form of Security Agreement
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Exhibit B Form of Pledge and Security Agreement
Exhibit C Form of Notice of Borrowing
Exhibit D Form of Opinion of Counsel
Exhibit E Form of Borrowing Base Certificate
Exhibit F Form of Assignment and Acceptance
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AMENDED AND RESTATED
FINANCING AGREEMENT
Amended and Restated Financing Agreement, dated as of April 1, 2005
by and among ENHERENT CORP., a Delaware corporation ("enherent" or the
"Parent"), and each Subsidiary of Parent listed as a borrower on the signature
pages hereto (together with the Parent, each, a "Borrower" and collectively, the
"Borrowers"), and ABLECO FINANCE LLC, a Delaware limited liability company
("Ableco") as lender and as agent (in such capacity, the "Agent") for itself and
each Person that purchases any portion of Ableco's rights and obligations under
this Agreement pursuant to Sections 2.07 and 10.07 (collectively with Ableco,
the "Lender").
RECITALS
Dynax Solutions, Inc. (formerly known as Dynax Acquisition Corp.), a
Delaware corporation ("Dynax"), and various of its subsidiaries (collectively,
the "Original Borrowers") were extended credit by the Lender consisting of (a) a
term loan in the original principal amount of $350,000, (b) a special loan in
the original principal amount of $1,700,000 and (c) a revolving credit facility
in an aggregate principal amount not to exceed $4,000,000 at any time
outstanding pursuant to the Financing Agreement dated as of March 24, 1999, as
amended, modified and supplemented prior to the date hereof (the "Original
Financing Agreement").
Concurrently with the execution of this Agreement, Dynax and the
Parent shall merge, the Parent shall emerge as the surviving corporation and, as
a result of such merger, the Parent shall assume all of Dynax's rights and
obligations under the Original Financing Agreement and all other related loan
documents.
The Borrowers have asked the Lender to continue extending credit to
the Borrowers consisting of (x) a term loan A the outstanding principal amount
of which is approximately $150,000 on the date hereof, (y) a term loan B the
outstanding principal amount of which is $1,700,000 on the date hereof and (z) a
revolving credit facility in an aggregate principal amount not to exceed
$6,000,000 at any time outstanding. The proceeds of the term loans and the loans
made under the revolving credit facility shall be used to (i) restate the loans
under the Original Financing Agreement outstanding on the date hereof, (ii) pay
certain costs and expenses relating to the transactions contemplated hereby and
(iii) fund the Borrowers' ongoing working capital requirements. The Lender is
willing to continue extending such credit to the Borrowers subject to the terms
and conditions hereinafter set forth.
In consideration of the premises and the covenants and agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN TERMS
Section 1.01 Definitions. As used in this Agreement, the following
terms shall have the respective meanings indicated below, such meanings to be
applicable equally to both the singular and plural forms of such terms:
"Account Debtor" means each debtor, customer or obligor in any way
obligated on or in connection with any Account Receivable.
"Account Receivable" means any and all rights of the Borrowers to
payment for goods sold and services rendered, including accounts, general
intangibles and any and all such rights evidenced by chattel paper, instruments
or documents, whether due or to become due and whether or not earned by
performance, whether or not billed and whether now or hereafter acquired or
arising in the future and any proceeds arising therefrom or relating thereto,
but excluding all rights of any Borrower to payment relating to the sale of IBM
Equipment.
"Acquisition" means the acquisition of all of the Capital Stock of
any Person or all or substantially all of the assets of any Person.
"Action" has the meaning specified therefor in Section 10.12.
"Administrative Borrower" has the meaning specified therefor in
Section 10.20.
"Affiliate" means, as to any Person, any other Person that directly
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (i)
vote 10% or more of the Capital Stock having ordinary voting power for the
election of directors of such Person or (ii) direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
Notwithstanding anything herein to the contrary, in no event shall the Lender be
considered an "Affiliate" of any Loan Party.
"Agent" has the meaning specified therefor in the preamble hereto.
"Agent Account" means an account at a bank designated by the Agent
from time to time as the account into which the Borrowers shall make all
payments to the Agent and the Lender under this Agreement and the other Loan
Documents.
"Agent's Office" means the Agent's office located at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other office or offices
of the Agent as may be designated in writing from time to time by the Agent to
the Administrative Borrower.
"Agreement" means this Amended and Restated Financing Agreement,
together with all Exhibits and Schedules hereto, as the same may be amended,
modified, supplemented or restated from time to time.
"Assignment and Acceptance" means an assignment and acceptance
entered into by an assigning Lender and an assignee, and accepted by the Agent,
in accordance with Section 10.07 hereof and substantially in the form of Exhibit
F hereto or such other form acceptable to the Agent.
"Authorized Officer" means, with respect to any Person, the chief
executive officer, chief financial officer, president or executive vice
president of such Person.
"Board" means the Board of Governors of the Federal Reserve System
of the United States.
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"Board of Directors" means, with respect to any Person, the board of
directors (or comparable managers) of such Person or any committee thereof duly
authorized to act on behalf of the board.
"Borrower" has the meaning specified therefor in the preamble
hereto.
"Borrowing Base" means, at any time, (a) the sum of (i) 85% of the
Net Amount of Eligible Accounts Receivable at such time, plus (ii) 80% of the
Net Amount of Unbilled Accounts Receivable at such time less, with respect to
each Account Debtor, the aggregate amount of accounts payable by the Borrowers
to such Account Debtor at such date, less (b) the FCR Reserve and any other
reserves reasonably established by the Agent from time to time.
"Borrowing Base Certificate" means a certificate signed by an
executive officer of the Administrative Borrower and setting forth the
calculation of the Borrowing Base in compliance with Section 6.01(a)(vi),
substantially in the form of Exhibit E.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required to
close.
"Capital Expenditures" means, with respect to any Person for any
period, the sum of (i) the aggregate of all expenditures by such Person and its
Subsidiaries during such period that in accordance with GAAP are or should be
included in "property, plant equipment" or similar fixed asset account on its
balance sheet, whether such expenditures are paid in cash or financed and
including all Capitalized Lease Obligations paid or payable during such period,
and (ii) to the extent not covered by clause (i) above, the aggregate of all
expenditures by such Person and its Subsidiaries to acquire by purchase or
otherwise the business or fixed assets of, or the Capital Stock of, any other
Person.
"Capitalized Lease" means, with respect to any Person, any lease of
real or personal property by such Person as lessee which is required under GAAP
to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means, with respect to any Person,
obligations of such Person and its Subsidiaries under Capitalized Leases, and,
for purposes hereof, the amount of any such obligation shall be the capitalized
amount thereof determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Cash and Cash Equivalents" means all cash and any presently
existing or hereafter arising deposit account balances, certificates of deposit
or other financial instruments properly classified as cash equivalents under
GAAP.
"Change of Control" means each occurrence of any of the following:
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(a) the acquisition, directly or indirectly, by any person or group
(within the meaning of Section 13(d)(3) of the Exchange Act) of beneficial
ownership of 50% or more of the aggregate outstanding voting power of the
Capital Stock of the Parent;
(b) during any period of twelve consecutive months, a majority of
the Board of Directors of the Parent ceases to be composed of individuals (i)
who were members of the Board of Directors on the first day of such period, or
(ii) any new directors whose nomination and election to such Board of Directors
was approved by a vote of at least a majority of the directors of the Parent
then still in office who were either directors at the beginning of such period,
or whose election and nomination for election was so previously approved);
(c) the Parent shall cease to have beneficial ownership (as defined
in Rule 13d-3 under the Exchange Act) of 100% of the aggregate voting power of
the Capital Stock of each other Loan Party, free and clear of all Liens (other
than any Liens granted hereunder and Permitted Liens);
(d) except as permitted under Section 6.02(c)(i), (i) any Loan Party
consolidates or amalgamates with or merges into another entity or conveys,
transfers or leases all or substantially all of its property and assets to
another Person, or (ii) any entity consolidates or amalgamates with or merges
into any Loan Party in a transaction pursuant to which the outstanding voting
Capital Stock of such Loan Party is reclassified or changed into or exchanged
for cash, securities or other property, other than any such transaction
described in this clause (ii) in which either (A) in the case of any such
transaction involving the Parent, no person or group (within the meaning of
Section 13(d)(3) of the Exchange Act) has, directly or indirectly, acquired
beneficial ownership of 50% or more of the aggregate outstanding voting Capital
Stock of the Parent or (B) in the case of any such transaction involving a Loan
Party other than the Parent, the Parent has beneficial ownership of 100% of the
aggregate voting power of all Capital Stock of the resulting, surviving or
transferee entity; or
(e) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall cease to be involved in the day to day
operations and management of the business of the Parent, and a successor
reasonably acceptable to the Agent and the Lenders is not appointed on terms
reasonably acceptable to the Agent and the Lenders within 45 days of such
cessation of involvement.
"Collateral" means all of the property and assets and all interests
therein and proceeds thereof now owned or hereafter acquired by any Person upon
which a Lien is granted or purported to be granted by such Person as security
for all or any part of the Obligations.
"Commitment" means the Revolving Credit Commitment.
"Consolidated EBITDA" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period, plus,
without duplication, the sum of the following amounts of such Person and its
Subsidiaries for such period and to the extent deducted in determining
Consolidated Net Income of such Person for such period: (A) Consolidated Net
Interest Expense, (B) income tax expense, (C) depreciation expense, (D)
amortization expense (including amortization of intangible assets and financing
costs) net of negative goodwill amortization from acquisitions, (E) (i)
extraordinary or unusual losses and other losses from sales
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of assets other than Inventory sold in the ordinary course of business less (ii)
extraordinary or unusual gains and other gains from sales of assets other than
Inventory sold in the ordinary course of business and (F) with respect to the
Parent only, the Expense Addbacks. In determining Consolidated EBITDA for any
period, pro forma effect will be given to the acquisition (whether by purchase,
merger or otherwise) or disposition (whether by sale, merger or otherwise) of
any company, entity or business acquired or disposed of by such Person since the
first day of such period, as if such acquisition or disposition occurred at the
beginning of such period.
"Consolidated Net Income" means, with respect to any Person for any
period, the net income (loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis and in accordance with GAAP, but
excluding from the determination thereof (without duplication) (a) any
extraordinary or non-recurring gains or losses or gains or losses from
Dispositions, (b) restructuring charges, (c) effects of discontinued operations,
(d) interest income, (e) the cumulative effect of any non-cash changes in GAAP,
and (f) the amortization of deferred financing costs.
"Consolidated Net Interest Expense" means, with respect to any
Person for any period, gross interest expense of such Person and its
Subsidiaries for such period determined in conformity with GAAP (including,
without limitation, interest expense paid to Affiliates of such Person), less
(i) the gains for such period on Hedging Agreements (to the extent not included
in interest income above and to the extent not deducted in the calculation of
such gross interest expense), plus (ii) the sum of (A) losses for such period on
Hedging Agreements (to the extent not included in such gross interest expense)
and (B) the upfront costs or fees for such period associated with Hedging
Agreements (to the extent not included in gross interest expense), each
determined on a consolidated basis and in accordance with GAAP for such Person
and its Subsidiaries.
"Contingent Obligation" means, with respect to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, (i) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of a primary obligor, (ii) the obligation to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement, (iii) any obligation of such Person,
whether or not contingent, (A) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (B) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (C) to
purchase property, assets, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (D) otherwise to assure or
hold harmless the holder of such primary obligation against loss in respect
thereof; provided, however, that the term "Contingent Obligation" shall not
include any products warranties extended in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation with respect to which
such Contingent Obligation is made (or, if less, the maximum amount of such
primary obligation for which such Person may be liable pursuant to the terms of
the instrument evidencing such
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Contingent Obligation) or, if not stated or determinable, the maximum reasonably
anticipated liability with respect thereto (assuming such Person is required to
perform thereunder), as determined by such Person in good faith.
"Default" means an event which, with the giving of notice or the
lapse of time or both, would constitute an Event of Default.
"Disposition" means any transaction, or series of related
transactions, pursuant to which the Parent or any of its Subsidiaries sells,
assigns, transfers or otherwise disposes of any property or assets (whether now
owned or hereafter acquired) to any other Person, in each case whether or not
the consideration therefor consists of cash, securities or other assets owned by
the acquiring Person, excluding any sales of Inventory in the ordinary course of
business on ordinary business terms or sales or other dispositions of Permitted
Investments.
"Dollar," "Dollars" and the symbol "$" each means lawful money of
the United States of America.
"Domestic Subsidiary" means any Subsidiary organized under the law
of a state of the United States.
"Dynax" has the meaning specified therefor in the recitals hereto.
"Dynax Seller Notes" means (i) the Secured Subordinate Promissory
Note made by Dynax in favor of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ dated March
24, 1999 in the original principal amount of $500,000 with an outstanding
principal balance on December 31, 2004 of $111,616; (ii) the Subordinated
Promissory Note made by Dynax and DSI Acquisition Corp. in favor of Software
Automation, Inc. dated August 16, 1999 in the original principal amount of
$200,000 with an outstanding principal balance on December 31, 2004 of $147,707;
and (iii) the Subordinated Promissory Note made by Dynax and DSI Acquisition
Corp. in favor of Software Automation, Inc. dated August 16, 1999 in the
original principal amount of $1,250,000 with an outstanding principal balance on
December 31, 2004 of $197,500.
"Effective Date" means the date, on or before April 1, 2005, on
which all of the conditions precedent set forth in Article IV are satisfied or
waived.
"EFG Note" means that certain subordinated secured promissory note
made by Parent in favor of EFG Eurofinancial Investment Company dated April 1,
2005 in the original principal amount of $187,500.with an outstanding principal
balance of $187,500 on the date hereof.
"Eligible Accounts Receivable" means the Accounts Receivable that
are, and at all times continue to be, acceptable to the Agent in the exercise of
its reasonable business judgment. In general, an Account Receivable may, in the
sole and absolute discretion of the Agent, be deemed to be eligible if: (i)
delivery of the merchandise or the rendition of the services has been completed;
(ii) with respect to such Account Receivable, no return, rejection, repossession
or dispute has occurred, the Account Debtor has not asserted any setoff, defense
or counterclaim, and there has not occurred any extension of the time for
payment without the consent of the Agent, provided that, in the case of any
dispute, setoff, defense or counterclaim
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with respect to an Account Receivable, the portion of such Account Receivable
not subject to such dispute, setoff, defense or counterclaim will not be
ineligible solely by reason of this clause (ii); (iii) such Account Receivable
is lawfully owned by a Borrower free and clear of any Lien other than in favor
of the Agent and otherwise continues to be in full conformity with all
representations and warranties made by such Borrower to the Agent with respect
thereto in the Loan Documents; (iv) such Account Receivable is unconditionally
payable in Dollars within 90 days or, with respect to each Account Debtor listed
on Schedule A hereto or any other Account Debtor approved in writing by the
Agent, 120 days, from the invoice date and is not evidenced by a promissory
note, chattel paper or any other instrument or other document; (v) no more than
60 days have elapsed from the invoice due date and no more than 90 days have
elapsed from the invoice date with respect to such Account Receivable; (vi) such
Account Receivable is not due from an Affiliate of any Borrower; (vii) such
Account Receivable does not constitute an obligation of the United States or any
other Governmental Authority (unless all steps required by the Agent in
connection therewith, including notice to the United States Government under the
Federal Assignment of Claims Act, have been duly taken in a manner satisfactory
to the Agent); (viii) the Account Debtor (or the applicable office of the
Account Debtor) with respect to such Account Receivable is located in the
continental United States, unless such Account Receivable is supported by a
letter of credit or other similar obligation satisfactory to the Agent; (ix) the
Account Debtor with respect to such Account Receivable is not also a supplier to
or creditor of a Borrower, unless such Account Debtor has executed a no-offset
letter satisfactory to the Agent; (x) not more than 50% of the aggregate amount
of all Accounts Receivable of the Account Debtor with respect to such Account
Receivable have remained unpaid 60 days past the invoice due date or 90 days or,
with respect to each Account Debtor listed on Schedule A hereto or any other
Account Debtor approved in writing by the Agent, 120 days, past the invoice
date; (xi) the Account Debtor with respect to such Account Receivable (A) has
not filed a petition for bankruptcy or any other relief under the Bankruptcy
Code or any other law relating to bankruptcy, insolvency, reorganization or
relief of debtors, made an assignment for the benefit of creditors, had filed
against it any petition or other application for relief under the Bankruptcy
Code or any such other law, (B) has not failed, suspended business operations,
become insolvent or called a meeting of its creditors for the purpose of
obtaining any financial concession or accommodation, (C) has not had or suffered
to be appointed a receiver or a trustee for all or a significant portion of its
assets or affairs or (D) in the case of an Account Debtor who is an individual,
is not an employee of a Borrower or any of its Affiliates and has not died or
been declared incompetent; and (xii) the Agent is, and continues to be,
satisfied with the credit standing of the Account Debtor in relation to the
amount of credit extended and the Agent believes, in its discretion, that the
prospect of collection of such Account Receivable is not impaired for any
reason.
"Employee Plan" means an employee benefit plan (other than a
Multiemployer Plan) covered by Title IV of ERISA and maintained (or was
maintained at any time during the six (6) calendar years preceding the date of
any borrowing hereunder) for employees of any Borrower or any of its ERISA
Affiliates.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter or other communication from any
Governmental Authority involving violations of Environmental Laws or Releases of
Hazardous Materials (i) from any assets, properties or
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businesses of the Parent or any of its Subsidiaries or any predecessor in
interest; (ii) from adjoining properties or businesses; or (iii) onto any
facilities which received Hazardous Materials generated by any Borrower or any
predecessor in interest.
"Environmental Indemnity Agreement" means an Environmental Indemnity
Agreement, in form and substance satisfactory to the Lender made by the Parent
and/or one of its Subsidiaries in favor of the Lender, as amended, supplemented
or otherwise modified from time to time.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601, et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801, et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.), the Federal
Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.) and the Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.), as such laws may be amended or otherwise modified from time to time, and
any other present or future federal, state, local or foreign statute, ordinance,
rule, regulation, order, judgment, decree, permit, license or other binding
determination of any Governmental Authority imposing liability or establishing
standards of conduct for protection of the environment or other government
restrictions relating to the protection of the environment or the Release,
deposit or migration of any Hazardous Materials into the environment.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts and consultants
and costs of investigations and feasibility studies), fines, penalties,
sanctions and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any environmental
condition or a Release of Hazardous Materials from or onto (i) any property
presently or formerly owned by any Loan Party or any of its Subsidiaries or (ii)
any facility which received Hazardous Materials generated by any Loan Party or
any of its Subsidiaries.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.
"ERISA Affiliate" means, with respect to any Person, any trade or
business (whether or not incorporated) which is a member of a group of which
such Person is a member and which would be deemed to be a "controlled group"
within the meaning of Sections 414(b), (c), (m) and (o) of the Code.
"Event of Default" means any of the events set forth in Section
8.01.
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"Excess Availability" means, at any time as determined by the Agent,
the amount equal to the sum of (a) the amount of the Revolving Loans available
to the Borrowers, subject to the Borrowing Base, plus (b) the aggregate amount
of the Borrowers' unrestricted Cash and Cash Equivalents.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Subsidiaries" means each Subsidiary listed on Schedule
5.01(f) on the Effective Date.
"Expense Addbacks" means for the fiscal quarter ending June 30, 2005
only, an amount equal to the sum of (A) $400,000 of severance expenses, (B)
$70,000 of "stay bonus" expenses related to stay-bonuses granted to employees of
enherent, (C) $180,000 of third-party professional fees and expenses related to
consolidation and relocation of operations and (D) $50,000 of third-party
professional fees and expenses with respect to the Borrowers' Sarbanes Oxley
obligations.
"FCR Reserve" means an amount equal to $300,000 which FCR Reserve
shall terminate at such time as the Fixed Charge Coverage Ratio shall not be
less than 1:0 to 1:0 for two consecutive fiscal quarters.
"Final Maturity Date" means April 1, 2010, or such earlier date on
which any Loan shall become due and payable, in whole or in part, in accordance
with the terms of this Agreement and the other Loan Documents.
"Financial Statements" means (i) the audited consolidated balance
sheet of enherent and its Subsidiaries for the Fiscal Year ended December 31,
2004 and the related consolidated statement of operations, shareholders' equity
and cash flows for the Fiscal Year then ended and (ii) the unaudited
consolidated balance sheet of Dynax and its Subsidiaries for the Fiscal Year
ended December 31, 2004 and the related consolidated statement of operations,
shareholders' equity and cash flows for the Fiscal Year then ended.
"Fiscal Year" means the fiscal year of enherent and its Subsidiaries
ending on December 31 of each year and the fiscal year of Dynax and its
Subsidiaries ending on December 31 of 2004, as applicable.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of
(i) Consolidated EBITDA of the Parent and its Subsidiaries for such period, to
(ii) the sum of (A) all principal of Indebtedness of the Parent and its
Subsidiaries scheduled to be paid or prepaid during such period (not including
prepayments of the Revolving Loans unless such prepayments are accompanied by a
reduction of the Revolving Credit Commitment), plus (B) Consolidated Net
Interest Expense of the Parent and its Subsidiaries for such period, plus (C)
income taxes paid or payable by the Parent and its Subsidiaries during such
period, plus (D) cash dividends or distributions paid by the Parent or its
Subsidiaries (other than dividends or distributions paid to a Borrower) during
such period to the extent permitted herein, plus (E) Capital Expenditures made
by the Parent and its Subsidiaries during such period, plus (F) all amounts paid
or payable by the Parent and its Subsidiaries on Capitalized Lease Obligations
having a scheduled due date during such period. In determining the Fixed Charge
Coverage Ratio for any period, pro forma effect will be given to: (A) the
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incurrence of Indebtedness by a Borrower since the first date of such period
under this Agreement and (if applicable) the application of the net proceeds
therefrom, including to refinance other Indebtedness, as if such Indebtedness
was incurred and the application of such proceeds occurred at the beginning of
such period, (B) the incurrence, repayment or retirement of any other
Indebtedness by a Borrower since the first day of such period as if such
Indebtedness was incurred, repaid or retired at the beginning of such period and
(C) the acquisition (whether by purchase, merger or otherwise) or disposition
(whether by sale, merger or otherwise) of any company, entity or business
acquired or disposed of by a Borrower since the first day of such period, as if
such acquisition or disposition occurred at the beginning of such period. In
making a computation under the foregoing clause (A) or (B), (I) interest on
Indebtedness bearing a floating interest rate will be computed as if the rate in
effect on the date of computation had been the applicable rate for the entire
period, (II) if such Indebtedness bears, at the option of a Borrower, a fixed or
floating rate of interest, interest thereon will be computed by applying, at the
option of such Borrower, either the fixed or floating rate and (III) the amount
of Indebtedness under a revolving credit facility will be computed based upon
the average daily balance of such Indebtedness during such period.
"Former Chairman's Settlement" means that certain Settlement
Agreement, made by Dynax in favor of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ dated May 17, 2004 in the
original principal amount of $500,000 with an outstanding principal balance of
$406,250 on the date hereof.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States, applied on a consistent basis, provided that
for the purpose of Section 6.03 hereof and the definitions used therein, "GAAP"
shall mean generally accepted accounting principles in effect on the date hereof
and consistent with those used in the preparation of the Financial Statements,
provided, further, that if there occurs after the date of this Agreement any
change in GAAP that affects in any respect the calculation of any covenant
contained in Section 6.03 hereof, the Lender and the Borrowers shall negotiate
in good faith amendments to the provisions of this Agreement that relate to the
calculation of such covenant with the intent of having the respective positions
of the Lender and the Borrowers after such change in GAAP conform as nearly as
possible to their respective positions as of the date of this Agreement and,
until any such amendments have been agreed upon, the covenants in Section 6.03
hereof shall be calculated as if no such change in GAAP has occurred.
"Governmental Authority" means any nation or government, any
Federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Hazardous Materials" means (a) any element, compound or chemical
that is defined, listed or otherwise classified as a contaminant, pollutant,
toxic pollutant, toxic or hazardous substances, extremely hazardous substance or
chemical, hazardous waste, special waste, or solid waste under Environmental
Laws; (b) petroleum and its refined products; (c) polychlorinated biphenyls; (d)
any substance exhibiting a hazardous waste characteristic, including but not
limited to, corrosivity, ignitability, toxicity or reactivity as well as any
radioactive or
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explosive materials; and (e) any raw materials, building components, including
but not limited to asbestos-containing materials and manufactured products
containing hazardous substances.
"Hedging Agreement" means any interest rate, foreign currency,
commodity or equity swap, collar, cap, floor or forward rate agreement, or other
agreement or arrangement designed to protect against fluctuations in interest
rates or currency, commodity or equity values (including, without limitation,
any option with respect to any of the foregoing and any combination of the
foregoing agreements or arrangements), and any confirmation executed in
connection with any such agreement or arrangement.
"IBM" means International Business Machines Corporation.
"IBM Equipment" means all equipment, machinery and any other goods
and merchandise acquired by any Borrower from IBM on which IBM maintains a Lien
from time to time pursuant to any equipment lease, marketing or service
agreement or any other similar agreement between such Borrower and IBM.
"Indebtedness" means, without duplication, with respect to any
Person, (i) all indebtedness of such Person for borrowed money; (ii) all
obligations of such Person for the deferred purchase price of property or
services (other than trade payables or other account payables incurred in the
ordinary course of such Person's business and not past due for more than 90 days
after the date such payable was created); (iii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments or upon which
interest payments are customarily made; (iv) all obligations and liabilities of
such Person created or arising under any conditional sales or other title
retention agreement with respect to property used and/or acquired by such
Person, even though the rights and remedies of the lessor, seller and/or lender
thereunder are limited to repossession or sale of such property; (v) all
Capitalized Lease Obligations of such Person; (vi) all obligations and
liabilities, contingent or otherwise, of such Person, in respect of letters of
credit, acceptances and similar facilities; (vii) all obligations and
liabilities, calculated on a basis satisfactory to the Lender and in accordance
with accepted practice, of such Person under Hedging Agreements; (viii) all
Contingent Obligations; (ix) liabilities incurred under Title IV of ERISA with
respect to any plan (other than a Multiemployer Plan) covered by Title IV of
ERISA and maintained for employees of such Person or any of its ERISA
Affiliates; (x) withdrawal liability incurred under ERISA by such Person or any
of its ERISA Affiliates to any Multiemployer Plan; (xi) all other items which,
in accordance with GAAP, would be included as indebtedness on the liability side
of the balance sheet of such Person; and (xii) all obligations referred to in
clauses (i) through (xi) of this definition of another Person secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) a Lien upon property owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness. The Indebtedness of any Person shall include the Indebtedness of
any partnership of or joint venture in which such Person is a general partner or
a joint venturer.
"Indemnified Matters" has the meaning specified therefor in Section
10.15.
"Indemnitees" has the meaning specified therefor in Section 10.15.
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"Intercreditor Agreement" means the Intercreditor and Subordination
Agreement, dated as of the date hereof, among the Agent and the holders of the
Preferred Holders Notes, as the same may be amended, modified or supplemented
from time to time.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended (or any successor statute thereto) and the regulations thereunder.
"Inventory" means all goods and merchandise of the Borrowers,
including, without limitation, all raw materials, work-in-process, piece goods,
trim and finished goods, whether now owned or hereafter acquired, and all such
other property the sale or other disposition of which would give rise to an
Account Receivable, but excluding all IBM Equipment.
"Lease" means any lease of real property to which the Parent or any
of its Subsidiaries is a party as lessor or lessee.
"Lender" has the meaning specified therefor in the preamble hereto.
"Liabilities" has the meaning specified therefor in Section 2.07.
"Lien" means any mortgage, deed of trust, pledge, lien (statutory or
otherwise), security interest, charge or other encumbrance or security or
preferential arrangement of any nature, including, without limitation, any
conditional sale or title retention arrangement, any Capitalized Lease and any
assignment, deposit arrangement or financing lease intended as, or having the
effect of, security.
"Loan" means any of the Term Loan A, the Term Loan B and the
Revolving Loans.
"Loan Account" means an account maintained hereunder by the Agent on
its books of account, at the Agent's office and with respect to the Borrowers,
in which the Borrowers will be charged with all Loans made to, and all other
Obligations incurred by, the Borrowers.
"Loan Documents" means this Agreement, the Notes (if any), the
Guaranties, the Security Agreements, the Pledge Agreements, the Environmental
Indemnity Agreement, the Subordination Agreement, the Intercreditor Agreement
and all other agreements, instruments, and other documents executed and
delivered pursuant hereto or thereto or otherwise evidencing or securing any
Loan or other Obligation.
"Loan Parties" means the Parent and each of its Subsidiaries listed
as a borrower on the signature pages hereto.
"Loan Servicing Fee" has the meaning specified therefor in Section
2.06.
"Material Adverse Effect" means a material adverse effect on any of
(i) the operations, business, assets, properties, condition (financial or
otherwise) or prospects of the Parent and its Subsidiaries taken as a whole,
(ii) the ability of the Parent or any of its Subsidiaries to perform any of its
obligations under any Loan Document to which it is a party, (iii) the legality,
validity or enforceability of this Agreement or any other Loan Document, (iv)
the rights and remedies of the Lender under any Loan Document, (v) the validity,
perfection or priority of a Lien
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in favor of the Lender on any of the Collateral, or (vi) the value of any
material portion of the Collateral.
"Material Contract" means, with respect to any Person, (i) each
contract or agreement to which such Person or its Subsidiary is a party
involving aggregate consideration payable to or by such Person or such
Subsidiary of $225,000 or more (other than purchase orders in the ordinary
course of the business of such Person and other than contracts that by their
terms may be terminated by such Person or Subsidiary in the ordinary course of
its business upon less than 60 days' notice without penalty or premium) and (ii)
all other contracts or agreements material to the business, operations,
condition (financial or otherwise), performance, prospects or properties of such
Person or such Subsidiary.
"Merger" means the merger of Dynax Solutions, Inc. with and into the
Parent pursuant to the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of Merger dated as
of October 12, 2004 as amended by the First Amendment dated November 4, 2004, as
further amended by letter agreement of February 7, 2005, by and between the
Parent and Dynax.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and any successor
thereto.
"Mortgage" means each Mortgage, Deed of Trust or Deed to Secure
Debt, in form and substance satisfactory to the Lender, made by the Parent or
any of its Subsidiaries in favor of the Lender, securing the Obligations and
delivered to the Lender pursuant to Section 6.01(b).
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA for which any Borrower or any ERISA Affiliate has
contributed to, or has been obligated to contribute to, at any time during the
preceding six (6) years.
"Net Amount of Eligible Accounts Receivable" means the aggregate
unpaid invoice amount of Eligible Accounts Receivable less, without duplication,
sales, excise or similar taxes, returns, discounts, chargebacks, claims, advance
payments, credits and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed with respect to such Eligible
Accounts Receivable.
"Net Amount of Unbilled Accounts Receivable" means the aggregate
amount of Unbilled Accounts Receivable less, without duplication, sales, excise
or similar taxes, returns, discounts, chargebacks, claims, advance payments,
credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed with respect to such Unbilled Accounts
Receivable.
"Net Cash Proceeds" means, (i) with respect to any Disposition by
any Person, the amount of cash received (directly or indirectly) from time to
time (whether as initial consideration or through the payment of deferred
consideration) by or on behalf of such Person or any of its Subsidiaries or
Affiliates, in connection therewith after deducting therefrom only (A) the
principal amount of any Indebtedness secured by any Lien permitted by Section
6.02(a) on any asset (other than Indebtedness assumed by the purchaser of such
asset) which is required to be, and is, repaid in connection with such
Disposition (other than Indebtedness under this
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Agreement), (B) reasonable expenses related thereto reasonably incurred by a
Borrower or such Affiliate in connection therewith, (C) transfer taxes paid or
payable within 60 days by a Borrower or such Affiliate in connection therewith
and (D) net income taxes to be paid in connection with such Disposition (after
taking into account any tax credits or deductions and any tax sharing
arrangements and (ii) with respect to the issuance or incurrence of any
Indebtedness by any Person, or the sale or issuance by any Person of any shares
of its Capital Stock, the aggregate amount of cash received (directly or
indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of such Person or any of its
Subsidiaries or Affiliates in connection therewith after deducting therefrom
only reasonable brokerage commissions, underwriting fees and discounts, legal
fees and similar fees and commissions.
"Notes" means any revolving credit note and any term note issued
pursuant to Section 2.03(g).
"Notice of Borrowing" has the meaning specified therefor in Section
2.02.
"Obligations" means (i) the obligations of the Borrowers to pay, as
and when due and payable (by scheduled maturity, required prepayment,
acceleration, demand or otherwise), all amounts from time to time owing by it in
respect of the Loan Documents, whether for principal, interest (including,
without limitation, all interest that accrues after the commencement of any
case, proceeding or other action relating to bankruptcy, insolvency or
reorganization of a Borrower), fees, indemnification payments, expense
reimbursements or otherwise, and (ii) the obligations of the Borrowers to
perform or observe all of its obligations from time to time existing under the
Loan Documents.
"Operating Lease Obligations" means all obligations for the payment
of rent for any real or personal property under leases or agreements to lease,
other than Capitalized Lease Obligations.
"Original Borrowers" has the meaning specified therefor in the
recitals hereto.
"Original Effective Date" means the "Effective Date" under and as
defined in the Original Financing Agreement.
"Original Financing Agreement" has the meaning specified therefor in
the recitals hereto.
"Original Revolving Loan" has the meaning specified therefor in
Section 2.01(c).
"Parent" means enherent Corp., a Delaware corporation.
"Participant Register" has the meaning specified therefor in Section
10.07(g).
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Acquisition" has the meaning specified therefor in
Section 6.02(e).
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"Permitted Indebtedness" means:
(a) any Indebtedness owing to the Lender;
(b) any other Indebtedness listed on Schedule 6.02(b), and any
extension of maturity, refinancing or modification of the terms thereof;
provided, however, that (i) such extension, refinancing or modification is
pursuant to terms that are not less favorable to the Borrowers than the terms of
the Indebtedness being extended, refinanced or modified and (ii) after giving
effect to the extension, refinancing or modification, such Indebtedness is not
greater than the amount of Indebtedness outstanding immediately prior to such
extension, refinancing or modification;
(c) Indebtedness evidenced by Capitalized Lease Obligations entered
into in order to finance Capital Expenditures made by the Parent or any of its
Subsidiaries (other than Excluded Subsidiaries) in accordance with the
provisions of Section 6.02(g), which Indebtedness, when aggregated in the
principal amount of all Indebtedness incurred under this clause (c) and clause
(d) of this definition, does not exceed $500,000 at any time outstanding;
(d) Indebtedness permitted by clause (e) of the definition of
"Permitted Lien";
(e) Subordinated Indebtedness;
(f) Guarantees of the Borrowers or any Subsidiary in respect of
Indebtedness otherwise permitted hereunder of the Borrower or any Subsidiary;
(g) Indebtedness of a Borrower owed to another Borrower or any
Subsidiary;
(h) Indebtedness of any Person that becomes a Subsidiary of the
Borrower after the date hereof to the extent permitted under Section 6.02(e);
(i) Contingent Obligations of Borrower or any of its Subsidiaries;
(j) additional unsecured Indebtedness of the Borrowers not expressly
permitted by clauses (a) through (i) above, provided that the aggregate
principal amount of the Indebtedness outstanding under this clause (j) shall not
at any time exceed $300,000; and
(k) such other Indebtedness as the Agent may consent to in writing
from time to time (in its sole and absolute discretion).
"Permitted Investments" means (i) marketable direct obligations
issued or unconditionally guaranteed by the United States Government or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within six months from the date of acquisition
thereof; (ii) commercial paper, maturing not more than 270 days after the date
of issue rated P-1 by Moody's or A-1 by Standard & Poor's; (iii) certificates of
deposit maturing not more than 270 days after the date of issue, issued by
commercial banking institutions and money market or demand deposit accounts
maintained at commercial banking institutions, each of which is a member of the
Federal Reserve System and has a combined capital and surplus and undivided
profits of not less than $500,000,000; and (iv) repurchase
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agreements having maturities of not more than 90 days from the date of
acquisition which are entered into with major money center banks included in the
commercial banking institutions described in clause (iii) above and which are
secured by readily marketable direct obligations of the Government of the United
States of America or any agency thereof.
"Permitted Liens" means:
(a) Liens securing the Obligations;
(b) Liens for taxes, assessments and governmental charges the
payment of which is not required under Section 6.01(c);
(c) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and other similar Liens arising (provided that they
are subordinate to the Lender's Liens on Collateral) in the ordinary course of
business and securing obligations (other than Indebtedness for borrowed money)
that are not overdue by more than 30 days or are being contested in good faith
and by appropriate proceedings promptly initiated and diligently conducted, and
a reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made therefor;
(d) Liens described on Schedule 6.02(a), but not, unless permitted
under item (b) of the definition of "Permitted Indebtedness", the extension of
coverage thereof to other property or the extension of maturity, refinancing or
other modification of the terms thereof or the increase of the Indebtedness
secured thereby;
(e) (i) purchase money Liens on property or equipment acquired or
held by the Parent or any of its Subsidiaries (other than Excluded Subsidiaries)
in the ordinary course of its business to secure the purchase price of such
property or equipment or Indebtedness incurred solely for the purpose of
financing the acquisition of such property or equipment or (ii) Liens existing
on such property or equipment at the time of its acquisition; provided, however,
that (A) no such Lien shall extend to or cover any other property of the Parent
or any of its Subsidiaries, (B) the principal amount of the Indebtedness secured
by any such Lien shall not exceed the cost of the property so held or acquired
and (C) the aggregate principal amount of Indebtedness secured by any or all
such Liens shall not exceed at any one time outstanding $500,000;
(f) deposits and pledges securing (i) obligations incurred in
respect of workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits, (ii) the performance of bids, tenders,
leases, contracts (other than for the payment of money) and statutory
obligations or (iii) obligations on surety or appeal bonds, but only to the
extent such deposits or pledges are incurred or otherwise arise in the ordinary
course of business and secure obligations not past due;
(g) easements, zoning restrictions and similar encumbrances on real
property and minor irregularities in the title thereto that do not (i) secure
obligations for the payment of money or (ii) materially impair the value of such
property or its use by a Borrower in the normal conduct of such Person's
business;
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(h) Liens in favor of IBM on the IBM Equipment;
(i) Liens resulting from any judgment or award so long as (i) such
judgment or award does not constitute an Event of Default under Section 8.01(l),
(ii) the enforcement of such judgment or award has been stayed by reason of a
pending appeal or otherwise and (iii) the aggregate amount of the claims payable
in accordance with such judgment or award shall not exceed $150,000; and
(j) such other Liens as the Agent may consent to in writing from
time to time (in its sole and absolute discretion).
"Person" means an individual, corporation, limited liability
company, partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or Governmental Authority.
"Pledge Agreement" means the Pledge and Security Agreement, dated as
of the date hereof, made by the Parent in favor of the Lender in respect of the
outstanding Capital Stock of each Subsidiary of the Parent, substantially in the
form of Exhibit B hereto.
"Post-Default Rate" means a rate of interest per annum equal to the
rate of interest otherwise in effect from time to time pursuant to the terms of
this Agreement plus 2%, or, if a rate of interest is not otherwise in effect,
the Reference Rate plus 5%, provided that, with respect to the Term Loan B, for
any payment default relating to the Term Loan B that remains uncured, the
Post-Default Rate shall mean 12%, and provided further that, until such time as
such payment default relating to the Term B Loan is cured, the Post-Default Rate
shall, on each six-month anniversary of such payment default, increase by 2% up
to a maximum Post-Default Rate of 18%.
"Preferred Holders Notes" means the EFG Note and the Tudor Notes.
"Primesoft Note" means that certain promissory note by Parent in
favor of Primesoft LLC dated April 1, 2004 in the original principal amount of
$150,000 with an outstanding principal balance on the date hereof of $150,000.
"Property" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"Rating Agencies" has the meaning specified therefor in Section
2.07.
"Reference Bank" means JPMorgan Chase Bank, N.A., its successors or
any other commercial bank designated by the Agent to the Borrowers from time to
time.
"Reference Rate" means the greater of (a) 7.75% and (b) the rate of
interest publicly announced by the Reference Bank in New York, New York from
time to time as its prime rate or base rate. With reference to clause (b) of
this definition, the prime rate or base rate is determined from time to time by
the Reference Bank as a means of pricing some loans to its borrowers and neither
is tied to any external rate of interest or index nor necessarily reflects the
lowest rate of interest actually charged by the Reference Bank to any particular
class or category
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of customers. Each change in the Reference Rate shall be effective from and
including the date such change is publicly announced as being effective.
"Register" has the meaning specified therefor in Section 10.07(d).
"Registered Loan" has the meaning specified therefor in Section
10.07(d).
"Regulation T", "Regulation U" and "Regulation X" mean,
respectively, Regulations T, U and X of the Board or any successor, as the same
may be amended or supplemented from time to time.
"Related Fund" means, with respect to any Person, an Affiliate of
such Person, or a fund or account managed by such Person or an Affiliate of such
Person
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, seeping, migrating,
dumping or disposing of any Hazardous Material (including the abandonment or
discarding of barrels, containers and other closed receptacles containing any
Hazardous Material) into the indoor or outdoor environment, including ambient
air, soil, surface or ground water.
"Remedial Action" means all actions taken to (i) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate or in any other way address
Hazardous Materials in the indoor or outdoor environment; (ii) prevent or
minimize a Release or threatened Release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations and post-remedial operation and maintenance activities; or (iv)
any other actions authorized by 42 U.S.C. 9601.
"Reportable Event" means an event described in Section 4043 of ERISA
(other than an event not subject to the provision for 30-day notice to the PBGC
under the regulations promulgated under such Section).
"Revolving Credit Commitment" means the commitment of the Lender to
make Revolving Loans to the Borrowers in an aggregate principal amount at any
time outstanding not to exceed $6,000,000.00, as such amount may be terminated,
reduced or increased from time to time in accordance with the terms of this
Agreement.
"Revolving Loan" has the meaning specified therefor in Section
2.01(c).
"Revolving Loan Maturity Date" means April 1, 2008 or such earlier
date on which the Revolving Loans shall become due and payable, in whole or in
part, in accordance with the terms of this Agreement and the other Loan
Documents.
"SEC" means the Securities and Exchange Commission or any other
similar or successor agency of the Federal government administering the
Securities Act.
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"Securities Act" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time.
"Securitization" has the meaning specified therefor in Section 2.07.
"Securitization Party" has the meaning specified therefor in Section
2.07.
"Security Agreement" means any of (a) the Security Agreement by the
Borrowers in favor of the Agent, as amended and restated and dated as of the
date hereof, and (b) any Security Agreement made by any other Person that
guarantees, pursuant to Section 6.01(b) all or part of the Obligations, in favor
of the Agent, each substantially in the form of Exhibit A.
"Seller" means any Person that sells Capital Stock or other property
or assets to the Parent or a Subsidiary of the Parent in a Permitted
Acquisition.
"Solvent" means, with respect to any Person on a particular date,
that on such date (i) the fair value of the property of such Person is not less
than the total amount of its liabilities of such Person, (ii) the present fair
salable value of the assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its existing debts
as they become absolute and matured, (iii) such Person is able to realize upon
its assets and pay its debts and other liabilities, contingent obligations and
other commitments as they mature in the normal course of business, (iv) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (v) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and any successor thereto.
"Subordinated Indebtedness" means Indebtedness of a Borrower (a)
under the Dynax Seller Notes, the Primesoft Note, the Former Chairman's
Settlement and the Preferred Holders Notes and (b) (i) the terms and conditions
of which are satisfactory to the Agent (including, without limitation, payment
terms, interest rates, covenants, remedies, defaults and other material terms)
and (ii) which has been expressly subordinated in right of payment to all
Indebtedness of the Borrowers under the Loan Documents (A) by the execution and
delivery of a subordination agreement, in form and substance satisfactory to the
Lender, or (B) otherwise on terms and conditions (including, without limitation,
subordination provisions, payment terms, interest rates, covenants, remedies,
defaults and other material terms) satisfactory to the Lender.
"Subordination Agreement" means the Subordination Agreement, dated
March 24, 1999, among ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Dynax and the Agent,
as the same may be amended, modified or supplemented from time to time.
"Subsidiary" means, with respect to any Person at any date, any
corporation, limited or general partnership, limited liability company, trust,
association or other entity (i) the accounts of which would be consolidated with
those of such Person in such Person's
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consolidated financial statements if such financial statements were prepared in
accordance with GAAP or (ii) of which more than 50% of (A) the outstanding
Capital Stock having (in the absence of contingencies) ordinary voting power to
elect a majority of the board of directors of such corporation, (B) the interest
in the capital or profits of such partnership or limited liability company or
(C) the beneficial interest in such trust or estate is, at the time of
determination, owned or controlled directly or indirectly through one or more
intermediaries, by such Person.
"Termination Event" means (i) a Reportable Event with respect to any
Employee Plan, (ii) any event that causes a Borrower or any of its ERISA
Affiliates to incur liability under Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of the
Code, (iii) the filing of a notice of intent to terminate an Employee Plan or
the treatment of an Employee Plan amendment as a termination under Section 4041
of ERISA, (iv) the institution of proceedings by the PBGC to terminate an
Employee Plan, or (v) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Employee Plan.
"Term Loan A" has the meaning specified therefor in Section 2.01(a).
"Term Loan A Maturity Date" means April 1, 2006 or such earlier date
on which the Term Loan A shall become due and payable, in whole or in part, in
accordance with the terms of this Agreement and the other Loan Documents.
"Term Loan B" has the meaning specified therefor in Section 2.01(b).
"Term Loan B Maturity Date" means April 1, 2010 or such earlier date
on which the Term Loan B shall become due and payable, in whole or in part, in
accordance with the terms of this Agreement and the other Loan Documents.
"Term Loans" means the Term Loan A and the Term Loan B.
"Title Insurance Policy" means the mortgagee's loan policy, together
with all indorsements made from time to time thereto, issued by or on behalf of
a title insurance company satisfactory in form and substance to the Lender,
insuring the Lien created by the Mortgage in an amount and on terms satisfactory
to the Lender, delivered to the Lender pursuant to Section 6.01(b).
"Transferee" has the meaning specified therefor in Section 2.08(a).
"Tudor Notes" means those certain subordinated secured promissory
notes, each dated April 1, 2005, made by Parent (i) in favor of Tudor BVI Global
Portfolio Ltd. in the original principal amount of $731,776.32, (ii) in favor of
Raptor Global Portfolio Ltd., in the original principal amount of $455,953.87,
and (iii) in favor of Tudor Arbitrage Partners L.P. in the original principal
amount of $224,769.81.
"Unbilled Accounts Receivable" means, on any date of determination,
any and all Accounts Receivable of the Borrowers with respect to which the
applicable Borrower has not, as of such date, delivered an invoice to the
applicable Account Debtor evidencing such Account Debtor's obligation to pay
such Account Receivable, provided that no additional goods need be
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provided to or further services need be performed for such Account Debtor by the
Borrowers as a condition to such Account Debtor's obligation to pay such Account
Receivable.
"WARN" has the meaning specified therefor in Section 5.01(bb).
Section 1.02 Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise, (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights. References in this
Agreement to "determination" by the Lender include good faith estimates by the
Lender (in the case of quantitative determinations) and good faith beliefs by
the Lender (in the case of qualitative determinations).
Section 1.03 Accounting and Other Terms. Unless otherwise expressly
provided herein, each accounting term used herein shall have the meaning given
it under GAAP applied on a basis consistent with those used in preparing the
Financial Statements. All terms used in this Agreement which are defined in
Article 8 or Article 9 of the Uniform Commercial Code in effect in the State of
New York on the date hereof and which are not otherwise defined herein shall
have the same meanings herein as set forth therein.
Section 1.04 Time References. Unless otherwise indicated herein, all
references to time of day refer to Eastern standard time or Eastern daylight
saving time, as in effect in New York City on such day. For purposes of the
computation of a period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding"; provided, however, that with respect to a computation
of fees or interest payable to the Lender, such period shall in any event
consist of at least one full day.
ARTICLE II
THE LOANS
Section 2.01 Commitments. (a) Prior to the Effective Date, the
Lender made a Term Loan (as defined in the Original Financing Agreement) to the
Original Borrowers under
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the Original Financing Agreement (the "Term Loan A"). The principal amount of
the Term Loan A outstanding on the date hereof is $150,102.98. The Borrowers
hereby agree that they are jointly and severally liable to repay the Term Loan A
pursuant to the terms and conditions set forth in this Agreement and the other
Loan Documents. Any principal amount of the Term Loan A which is repaid or
prepaid by the Borrowers may not be reborrowed.
(b) Prior to the Effective Date, the Lender made a Special Loan (as
defined in the Original Financing Agreement) to the Original Borrowers under the
Original Financing Agreement (the "Term Loan B"). The principal amount of the
Term Loan B outstanding on the date hereof is $1,700,000. The Borrowers hereby
agree that they are jointly and severally liable to repay the Term Loan B
pursuant to the terms and conditions set forth in this Agreement and the other
Loan Documents. Any principal amount of the Term Loan B which is repaid or
prepaid by the Borrowers may not be reborrowed.
(c) Prior to the Effective Date, the Lender made revolving loans to
the Original Borrowers under the Original Financing Agreement (the "Original
Revolving Loans"). The aggregate principal amount of the Original Revolving
Loans outstanding on the date hereof is $2,418,507.91. The Lender agrees, on the
terms and conditions hereinafter set forth, to make additional revolving loans
(together with the Original Revolving Loans, the "Revolving Loans") to the
Borrowers from time to time on any Business Day during the period commencing on
the date hereof and ending on, but excluding, the Revolving Loan Maturity Date,
in an aggregate principal amount at any time outstanding not to exceed the
lesser of (i) the amount of the Revolving Credit Commitment and (ii) the amount
of the Borrowing Base then in effect. The Borrowers hereby agree that they are
jointly and severally liable to repay the Revolving Loans pursuant to the terms
and conditions set forth in this Agreement and the other Loan Documents. Within
the limit of the amount of the Revolving Credit Commitment, the Borrowers may
borrow, prepay and reborrow Revolving Loans pursuant to this Article II.
Section 2.02 Making the Loans. The Administrative Borrower shall
give the Agent prior telephone notice (immediately confirmed in writing, in
substantially the form of Exhibit C hereto (a "Notice of Borrowing")), not later
than 11:00 a.m. (New York City time) five Business Days prior to the date of the
proposed Loan. Such Notice of Borrowing shall be irrevocable and shall specify
(i) the principal amount of the proposed Loan, (ii) the use of the proceeds of
such proposed Loan and (iii) the proposed borrowing date, which must be a
Business Day. The Agent may act without liability upon the basis of written,
telecopied or telephonic notice believed by the Agent in good faith to be from
the Administrative Borrower (or from any Authorized Officer thereof designated
in writing purportedly from the Borrowers to the Agent). Each Borrower hereby
waives the right to dispute the Agent's record of the terms of any such
telephonic Notice of Borrowing. Each Notice of Borrowing shall be irrevocable
and binding on the Borrowers. Each Revolving Loan shall be made in a minimum
amount of $100,000 and shall be in an integral multiple of $50,000. The Agent,
on behalf of the Lender, will make the proceeds of such Loan available to the
Borrowers on the day of the proposed Loan by causing an amount, in immediately
available funds, to be deposited in an account designated by the Administrative
Borrower to the Agent at a commercial bank reasonably satisfactory to the Agent.
Section 2.03 Repayment of Loans; Evidence of Debt. (a) The
outstanding principal of all Revolving Loans shall be due and payable on the
Revolving Loan Maturity Date.
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(b) The Term Loan A shall be repayable in consecutive monthly
installments, on the first day of each month, commencing on May 1, 2005,
consisting of equal installments of $25,000 until the Term Loan A Maturity Date;
provided, however, that the last such installment shall be in the amount
necessary to repay in full the unpaid principal amount of the Term Loan A.
(c) The Term Loan B shall be repayable in consecutive semi-annual
installments of $212,500 commencing on October 1, 2007 with such installments
increasing to $425,000 on October 1, 2009 until the Term Loan B Maturity Date,
provided, however, that the last such installment shall be in the amount
necessary to repay in full the unpaid principal amount of the Term Loan B; and
provided, further, that the principal amount of the Term Loan B will be reduced
by $250,000 if the outstanding principal of the Term Loan B less such $250,000
reduction has been repaid in full on or before April 1, 2006; provided, further
that the principal amount of the Term Loan B will be reduced by $125,000 if the
outstanding principal of the Term Loan B less such $125,000 reduction has been
repaid in full after April 1, 2006 but on or before April 1, 2007.
(d) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the Indebtedness of the Borrowers to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(e) The Agent shall maintain accounts in which it shall record (i)
the amount of each Loan made hereunder, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrowers to each
Lender hereunder and (iii) the amount of any sum received by the Agent hereunder
for the account of the Lenders and each Lender's share thereof.
(f) The entries made in the accounts maintained pursuant to
paragraph (d) or (e) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of the Lender to maintain such accounts or any error therein shall not
in any manner affect the obligation of the Borrowers to repay the Loans in
accordance with the terms of this Agreement.
(g) The Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrowers shall execute and deliver to the
Lender a promissory note payable to the order of the Lender (or, if requested by
the Lender, to its registered assigns) in a form furnished by the Lender and
reasonably acceptable to the Administrative Borrower. Thereafter, the Loans
evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 10.07) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
Section 2.04 Interest.
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(a) Loans. The Term Loan A, the Term Loan B and each Revolving Loan
shall bear interest on the principal amount thereof from time to time
outstanding, from the date of such Loan until such principal amount becomes due,
at a rate per annum equal to either:
(i) with respect to each Revolving Loan, the Reference Rate
plus 3%.
(ii) with respect to the Term Loan A, 12.25%.
(iii) with respect to the Term Loan B, 3%.
(b) Default Interest. To the extent permitted by law, upon the
occurrence and during the continuance of an Event of Default, the principal of,
and all accrued and unpaid interest on, all Loans, and all fees, indemnities or
any other Obligations of the Borrowers under this Agreement, the Notes, if any,
and other Loan Documents shall bear interest, from the date such Event of
Default occurred until such Event of Default is cured or waived in writing in
accordance herewith, at a rate per annum equal at all times to the Post-Default
Rate. For the avoidance of doubt, the parties hereto confirm that the
Obligations shall not bear interest at the Post-Default Rate until such time as
the cure period, if any, with respect to such Event of Default has expired.
(c) Interest Payment.
(i) Interest on each Revolving Loan shall be payable in
immediately available funds monthly, in arrears, on the first day of each
month of each year, commencing on the first day of the month following the
month in which such Loan is made and at maturity (whether upon demand, by
acceleration or otherwise).
(ii) Interest on each Term Loan shall be payable in
immediately available funds monthly, in arrears, on the first day of each
month of each year, commencing on the first day of the month following the
month in which the Term Loans are made and at maturity (whether upon
demand, by acceleration or otherwise).
(iii) Interest at the Post-Default Rate shall be payable on
demand.
(iv) Each Borrower hereby authorizes the Agent to, and the
Agent may, from time to time, charge the Loan Account pursuant to Section
3.01 with the amount of any interest payment due hereunder.
(d) General. All interest shall be computed on the basis of a year
of 360 days for the actual number of days, including the first day but excluding
the last day, elapsed.
Section 2.05 Reduction of Revolving Credit Commitment; Prepayment of
Loans.
(a) Reduction of Revolving Credit Commitment. The Administrative
Borrower may, without premium or penalty, reduce the Revolving Credit Commitment
to an amount (which may be zero) not less than the sum of (i) the aggregate
unpaid principal amount of all Revolving Loans then outstanding and (ii) the
aggregate principal amount of all Revolving
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Loans not yet made as to which a Notice of Borrowing has been given by the
Administrative Borrower under Section 2.02. Each such reduction shall be in an
amount which is an integral multiple of $100,000, shall be made by providing not
less than three Business Days' prior written notice to the Lender and shall be
irrevocable. Once reduced the Revolving Credit Commitment may not be increased.
(b) Optional Prepayment.
(i) Revolving Loans. The Borrowers may prepay without penalty
or premium the principal of any Revolving Loan, in whole or in part.
(ii) Term Loans. The Borrowers may, upon at least five (5)
Business Days' prior written notice to the Agent, prepay without penalty
or premium (A) the principal of the Term Loan A, in whole or in part, and
(B) to the extent the outstanding principal balance of Term Loan A has
been reduced to zero, the outstanding principal of the Term Loan B. Each
such prepayment shall be applied against the remaining installments of
principal due on the Term Loan A or the Term Loan B, as applicable, in the
inverse order of maturity.
(c) Mandatory Prepayment. (i) The Borrowers will immediately prepay
the Revolving Loans at any time when the aggregate principal amount of all
Revolving Loans exceeds the Borrowing Base, to the full extent of any such
excess. On each day that any Revolving Loans are outstanding, the Borrowers
shall hereby be deemed to represent and warrant to the Lender that the Borrowing
Base calculated as of such day equals or exceeds the aggregate principal amount
of all Revolving Loans outstanding on such day.
(ii) [intentionally omitted]
(iii) [intentionally omitted]
(iv) Immediately upon any Disposition by a Borrower or any of
its Subsidiaries pursuant to Section 6.02(c)(ii) (other than clause (A) of
such subsection), the Borrowers shall prepay the outstanding principal of
the Term Loan A and, if the Term Loan A has been paid in full, then the
Term Loan B (or, if the Term Loans have been paid in full, the Revolving
Loans) in an amount equal to 100% of the Net Cash Proceeds received by the
Parent or any of its Subsidiaries or Affiliates in connection with such
Disposition. Upon the loss, destruction or taking by condemnation of any
Collateral, the Borrowers shall prepay the outstanding principal of the
Term Loan A and, if the Term Loan A has been paid in full, then the Term
Loan B (or, if the Term Loans have been paid in full, the Revolving Loans)
in an amount equal to 100% of the proceeds received by the Parent its
Subsidiaries or Affiliates in connection therewith, net of any reasonable
expenses incurred in collecting such net proceeds. Any prepayment of
Revolving Loans pursuant to this Section 2.05(c)(iv) shall automatically
and immediately reduce the Revolving Credit Commitment permanently by an
amount equal to such prepayment.
(v) Upon the issuance or incurrence by the Parent, any
Borrower or any of its Subsidiaries of any Indebtedness (except as
permitted by Section 6.02(b)), or the sale or issuance by the Parent or
any of its Subsidiaries of any shares of its Capital
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Stock (except as permitted by Section 6.02(1)), the Borrowers shall prepay
the outstanding amount of the Term Loan A and, if the Term Loan A has been
paid in full, then the Term Loan B (or, if the Term Loans have been paid
in full, the Revolving Loans) in an amount equal to 100% of the Net Cash
Proceeds received by the Parent or any of its Subsidiaries or Affiliates
in connection therewith. The provisions of this subsection (v) shall not
be deemed to be implied consent to any such issuance, incurrence or sale
otherwise prohibited by the terms and conditions hereof. Any prepayment of
Revolving Loans pursuant to this Section 2.05(c)(v) shall automatically
and immediately reduce the Revolving Credit Commitment permanently by an
amount equal to such prepayment.
(d) Interest and Fees. Any prepayment made pursuant to this Section
2.05 shall be accompanied by accrued interest on the principal amount being
prepaid to the date of prepayment, and if such prepayment would reduce the
amount of the outstanding Loans to zero at a time when the Revolving Credit
Commitment has been terminated, such prepayment shall be accompanied by the
payment of the fees due but unpaid to such date pursuant to Section 2.06.
(e) Cumulative Prepayments. Except as otherwise expressly provided
in this Section 2.05, payments with respect to any subsection of this Section
2.05 are in addition to payments made or required to be made under any other
subsection of this Section 2.05.
Section 2.06 Loan Servicing Fee. From and after the Effective Date
and until the Final Maturity Date, the Borrowers shall pay to the Agent, for its
own account, a non-refundable loan servicing fee (the "Loan Servicing Fee")
equal to $5,250 each month, payable monthly in advance on the Effective Date and
the first day of each calendar month thereafter.
Section 2.07 Securitization. Each Borrower hereby acknowledges that
the Lender and any of its Affiliates may sell or securitize the Loans (a
"Securitization") through the pledge of the Loans as collateral security for
loans to the Lender or its Affiliates or through the sale of the Loans or the
issuance of direct or indirect interests in the Loans, which loans to the Lender
or its Affiliate or direct or indirect interests will be rated by ▇▇▇▇▇'▇,
Standard & Poor's or one or more other rating agencies (the "Rating Agencies").
Each Borrower shall cooperate with the Lender and its Affiliates to effect the
Securitization including, without limitation, by (a) amending this Agreement and
the other Loan Documents, and executing such additional documents, as reasonably
requested by the Lender in connection with the Securitization, provided that (i)
any such amendment or additional documentation does not impose material
additional costs on any Borrower and (ii) any such amendment or additional
documentation does not materially adversely affect the rights, or materially
increase the obligations, of any Borrower under the Loan Documents or change or
affect in a manner adverse to any Borrower the financial terms of the Loans, (b)
providing such information as may be reasonably requested by the Lender in
connection with the rating of the Loans or the Securitization, and (c) providing
in connection with any rating of the Loans a certificate (i) agreeing to
indemnify the Lender and any of its Affiliates, any of the Rating Agencies, or
any party providing credit support or otherwise participating in the
Securitization (collectively, the "Securitization Parties") for any losses,
claims, damages or liabilities (the "Liabilities") to which the Lender, its
Affiliates or such Securitization Parties may become subject insofar as the
Liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Loan
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Document or in any writing delivered by or on behalf of any Borrower and its
Affiliates to the Lender in connection with any Loan Document or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and such indemnity shall survive any transfer by the Lender or its
successors or assigns of the Loans and (ii) agreeing to reimburse the Lender and
any of its Affiliates for any legal or other expenses reasonably incurred by
such Persons in connection with defending the Liabilities.
Section 2.08 Taxes. (a) Any and all payments by any Loan Party
hereunder shall be made 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 taxes imposed on the net
income (however denominated or calculated) of the Agent or any Lender (or any
transferee or assignee thereof, including a participation holder (any such
entity, a "Transferee")) by the jurisdiction in which such Person is organized
or has its principal lending office (all such nonexcluded taxes, levies,
imposts, deductions, charges withholdings and liabilities, collectively or
individually, "Taxes"). If any Loan Party shall be required to deduct any Taxes
from or in respect of any sum payable hereunder to the Agent or any Lender (or
any Transferee), (i) the sum payable shall be increased by the amount (an
"additional amount") necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.08) the Agent or such Lender (or such Transferee) shall receive an amount
equal to the sum it would have received had no such deductions been made, (ii)
such Loan Party shall make such deductions and (iii) such Loan Party shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.
(b) In addition, each Loan Party agrees to pay to the relevant
Governmental Authority in accordance with applicable law any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
("Other Taxes"). Each Loan Party shall deliver to the Agent and each Lender
official receipts in respect of any Taxes or Other Taxes payable hereunder
promptly after payment of such Taxes or Other Taxes.
(c) The Loan Parties hereby jointly and severally indemnify and
agree to hold the Agent and each Lender harmless from and against Taxes and
Other Taxes (including, without limitation, Taxes and Other Taxes imposed on any
amounts payable under this Section 2.08) paid by such Person, whether or not
such Taxes or Other Taxes were correctly or legally asserted. Such
indemnification shall be paid within 10 days from the date on which any such
Person makes written demand therefore specifying in reasonable detail the nature
and amount of such Taxes or Other Taxes.
(d) Each Lender (or Transferee) that is organized under the laws of
a jurisdiction other than the United States, any State thereof or the District
of Columbia (a "non-U.S. Lender") shall deliver to the Agent two properly
completed and duly executed copies of any of U.S. Internal Revenue Service Form
W-8BEN, Form W-8IMY or Form W-8ECI, or, any subsequent versions thereof or
successors thereto, in each case claiming complete exemption from U.S. Federal
withholding tax on payments by the Loan Parties under this Agreement. In
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addition, if such Non-U.S. Lender is claiming exemption from U.S. Federal
withholding tax under Section 87(h) or 881(c) of the Code, such Non-U.S. Lender
hereby represents and warrants that such Non-U.S. Lender is not a bank for
purposes of Section 881(c) of the Internal Revenue Code, is not a 10-percent
shareholder (within the meaning of Section 87(h)(3)(B) of the Internal Revenue
Code), of any Borrower and is not a controlled foreign corporation related to
any Borrower (within the meaning of Section 364(d)(4) of the Internal Revenue
Code), and such Non-U.S. Lender agrees that it shall provide the Agent, or, in
the case of an assignment, the assigning Lender, with prompt written notice at
any time after becoming a Lender hereunder in the event that at such time it
could no longer make any of the foregoing representations and warranties). Such
forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of a Transferee that is a
participation holder, on or before the date such participation holder becomes a
Transferee hereunder) and on or before the date, if any, such Non-U.S. Lender
changes its applicable lending office by designating a different lending office
(a "New Lending Office"). In addition, each Non-U.S. Lender shall deliver such
forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender. Notwithstanding any other provision of this
Section 2.08, a Non-U.S. Lender shall not be required to deliver after the date
hereof any form pursuant to this Section 2.08 that such Non-U.S. Lender is not
legally able to deliver.
(e) The Loan Parties shall not be required to indemnify any Non-U.S.
Lender, or pay any additional amounts to any Non-U.S. Lender, in respect of
United States Federal withholding tax pursuant to this Agreement to the extent
that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Non-U.S. Lender became a party
to this Agreement (or, in the case of a Transferee that is a participation
holder, on the date such participation holder became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Non-U.S. Lender
designated such New Lending Office with respect to a Loan; provided, however,
that this clause (i) shall not apply to the extent the indemnity payment or
additional amounts any Transferee, or Lender (or Transferee) through a New
Lending Office, would be entitled to receive (without regard to this clause (i))
do not exceed the indemnity payment or additional amounts that the person making
the assignment, participation or transfer to such Transferee, or Lender (or
Transferee) making the designation of such New Lending Office, would have been
entitled to receive in the absence of such assignment, participation, transfer
or designation, or (ii) the obligation to pay such additional amounts does not
result from a change in applicable tax law (including, without limitation,
applicable judicial decisions, statutes, regulations or other administrative
interpretations) occurring after the date hereof.
(f) Any Lender (or Transferee) claiming any indemnity payment or
additional payment amounts payable pursuant to this Section 2.08 shall use
reasonable efforts (consistent with legal and regulatory restrictions) to file
any certificate or document reasonably requested in writing by the
Administrative Borrower or to change the jurisdiction of its applicable lending
office if the making of such a filing or change would avoid the need for or
reduce the amount of any such indemnity payment or additional amount which may
thereafter accrue, would not require such Lender (or Transferee) to disclose any
information such Lender (or Transferee) deems confidential and would not, in the
sole determination of such Lender (or Transferee), be otherwise disadvantageous
to such Lender (or Transferee).
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(g) The obligations of the Loan Parties under this Section 2.08
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder until such time as the applicable statute of
limitations with respect to any such underlying obligation expires (unless prior
to such time the Agent, any Lender, or Government Authority shall have notified
any Loan Party of any reason such obligation shall be extended beyond its
applicable statute of limitations).
ARTICLE III
PAYMENTS AND OTHER COMPENSATION
Section 3.01 Payments; Computations and Statements. The Borrowers
will make each payment under this Agreement, the Notes, if any, and the other
Loan Documents (whether of principal, interest, fees, expense reimbursements or
otherwise) not later than 11:00 a.m. (New York City time) on the day when due,
in lawful money of the United States of America and in immediately available
funds, to the Agent, on behalf of the Lender, at the Agent Account. All such
payments received by the Agent after 11:00 a.m. (New York City time) on any
Business Day will be credited to the Loan Account on the next succeeding
Business Day. All such payments shall be made by the Borrowers without defense,
set-off or counterclaim to the Agent. Each Borrower and the Lender hereby
authorizes the Agent to, and the Agent may, from time to time charge the Loan
Account with all Obligations and any other amount due and payable under any Loan
Document to which any Borrower is a party, whether or not any Event of Default
or Default shall have occurred or be continuing or whether any of the conditions
precedent in Section 4.02 have been satisfied. Any amount charged to the Loan
Account shall be deemed a Revolving Loan hereunder made by the Lender to the
Borrowers. Each Borrower confirms that any charges which the Agent may so make
to the Loan Account as herein provided will be made as an accommodation to the
Borrowers and solely at the Agent's discretion. It is expressly understood and
agreed by each Borrower that the Agent shall have no responsibility to inquire
into the correctness of the apportionment, allocation or disposition of the
Loans made to the Borrowers or any fees, costs or expenses for which the
Borrowers are obligated under this Agreement. Whenever any payment to be made
under any such Loan Document shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be, provided that, if any such payment is made
by a charge to the Loan Account, such charge may be made by the Agent on any
day, whether or not a Business Day. All computations of interest and fees shall
be made by the Agent on the basis of a year of 360 days for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest or fee is payable. Each determination by the
Agent of an interest rate, fees or expense reimbursement hereunder shall be
conclusive and binding for all purposes in the absence of manifest error.
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ARTICLE IV
CONDITIONS TO LOANS
Section 4.01 Conditions Precedent to Effectiveness. The obligation
of the Agent and the Lender to amend and restate the Original Financing
Agreement is subject to the fulfillment, in a manner satisfactory to the Agent,
of each of the following conditions precedent:
(a) Payment of Fees, Etc. The Borrowers shall have paid on or before
the date of this Agreement all fees, costs, expenses and taxes then payable
pursuant to Sections 2.06 and 10.04.
(b) Representations and Warranties; No Event of Default. The
following statements shall be true and correct: (i) the representations and
warranties contained in Article V and in each other Loan Document, certificate
or other writing delivered to the Agent pursuant hereto or thereto on or prior
to the Effective Date are true and correct on and as of the Effective Date as
though made on and as of such date and (ii) no Default or Event of Default shall
have occurred and be continuing on the Effective Date or would result from this
Agreement or the other Loan Documents becoming effective in accordance with its
or their respective terms, both immediately before and immediately after giving
effect to Loan made on the date hereof.
(c) Legality. The making of the any Loan made on the date hereof
shall not contravene any law, rule or regulation applicable to the Lender or any
Borrower.
(d) Delivery of Documents. The Agent shall have received on or
before the Effective Date the following, each in form and substance satisfactory
to the Agent and, unless indicated otherwise, dated the Effective Date:
(i) this Agreement, duly executed by each of the parties
hereto;
(ii) the Subordination Agreement, duly executed by the parties
thereto;
(iii) a Security Agreement, duly executed by each Borrower;
(iv) the Pledge Agreement, duly executed by the Parent
together with (A) such original stock certificates or other certificated
securities or instruments representing all of Capital Stock of each
Subsidiary of the Parent, (B) undated stock powers executed in blank with
signature guaranteed, and (C) such opinion of counsel and such approving
certificate of the issuer of such Capital Stock as the Agent may
reasonably request with respect to complying with any legend on any such
certificate or any other matter relating to such Capital Stock;
(v) appropriate financing statements on Form UCC-1, duly filed
in such office or offices as may be necessary or, in the opinion of the
Agent, desirable to perfect the security interests purported to be created
by the Security Agreement and the Pledge Agreement;
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(vi) certified copies of request for copies of information on
Form UCC-11, listing all effective financing statements which name as
debtor each Borrower or any of its Subsidiaries and which are filed in the
offices referred to in paragraph (viii) below, together with copies of
such financing statements, none of which, except as otherwise agreed in
writing by the Agent or that are related to Permitted Liens, shall cover
any of the Collateral and the results of searches for any tax Lien and
judgment Lien filed against such Person or its property, which results,
except as otherwise agreed to in writing by the Lender, shall not show any
such Liens other than Permitted Liens;
(vii) a copy of the resolutions of each Borrower, certified as
of the Effective Date by an Authorized Officer thereof, authorizing (A)
the borrowings hereunder and the transactions contemplated by the Loan
Documents to which such Borrower is or will be a party, and (B) the
execution, delivery and performance by such Borrower of each Loan Document
and the execution and delivery of the other documents to be delivered by
such Borrower in connection herewith and therewith;
(viii) a certificate of an Authorized Officer of each
Borrower, certifying the names and true signatures of the representatives
of such Borrower authorized to sign each Loan Document to which such
Borrower is or will be a party and the other documents to be executed and
delivered by such Borrower in connection herewith and therewith, together
with evidence of the incumbency of such authorized officers;
(ix) a certificate of the appropriate official(s) of the state
of organization and each state of foreign qualification of each Borrower
certifying as to the subsistence in good standing of, and the payment of
taxes by, such Borrower in such states, certified as of a date not more
than 5 days prior to the Effective Date by such official(s);
(x) a true and complete copy of the charter, certificate of
formation, certificate of limited partnership or other publicly filed
organizational document of each Borrower certified as of a date not more
than 30 days prior to the Effective Date by an appropriate official of the
state of organization of such Borrower;
(xi) a copy of the by-laws, limited liability company
agreement, operating agreement, agreement of limited partnership or other
organizational document of each Borrower, together with all amendments
thereto, certified as of the Effective Date by an Authorized Officer of
such Borrower;
(xii) an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P. counsel to the
Borrowers, substantially in the form of Exhibit D and as to such other
matters as the Agent may reasonably request;
(xiii) a certificate of an Authorized Officer of each
Borrower, certifying as to the matters set forth in subsection (b) of this
Section 4.01;
(xiv) a copy of the Financial Statements, certified as
complete and correct by an Authorized Officer of the Parent;
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(xv) evidence of the insurance coverage required by Section
6.01(h) and the terms of the Security Agreement delivered pursuant to
Section 4.01(d)(iii) and such other insurance coverage with respect to the
business and operations of the Borrowers and their Affiliates as the Agent
may reasonably request, in each case, where requested by the Agent, with
such indorsements as to the named insureds or loss payees thereunder as
the Agent may request and providing that such policy may be terminated or
canceled (by the insurer or the insured thereunder) only upon 30 days'
prior written notice to the Agent and each such named insured or loss
payee, together with evidence of the payment of all premiums due in
respect thereof for such period as the Agent may request;
(xvi) [Intentionally Omitted]
(xvii) a certificate of an Authorized Officer of each
Borrower, certifying the names and true signatures of the persons that are
authorized to provide Notices of Borrowings and all other notices under
this Agreement and the other Loan Documents;
(xviii) a landlord waiver, in form and substance satisfactory
to the Agent and which may be included as a provision contained in the
relevant Lease, executed by the landlord with respect to the Leases set
forth on Schedule 5.01(p);
(xix) copies of the agreements, instruments and other
documents executed and delivered by any Borrower in connection with any
Material Contract as in effect on the Effective Date, certified as true
and correct copies thereof by an Authorized Officer of each Borrower,
together with a certificate of an Authorized Officer of such Borrower
stating that such agreements remain in full force and effect and that such
Borrower has not breached or defaulted in any of its obligations under
such agreements;
(xx) a stamped, recorded copy of the Certificate of Merger
evidencing the merger of Dynax with and into the Parent as filed with the
Secretary of State of the State of Delaware, together with an executed
copy of the Merger Agreement certified as a true and correct copy thereof
by an Authorized Officer of the Parent; and
(xxi) such other agreements, instruments, approvals, opinions
and other documents, each satisfactory to the Lender in form and
substance, as the Lender may reasonably request.
(e) Material Adverse Change. The Lender shall have determined, in
its sole judgment, that no material adverse change shall have occurred in the
business, operations, condition (financial or otherwise), properties or
prospects of the Parent or any Subsidiary of the Parent since December 31, 2004.
(f) Merger. Prior to or concurrently with the execution hereof, the
Merger shall have become effective in accordance with the Certificate of Merger
dated April 1, 2005 between the Parent and Dynax Solutions, Inc. and the General
Corporation Law of the State of Delaware.
(g) Proceedings; Receipt of Documents. All proceedings in connection
with the making of the Loans and the other transactions contemplated by this
Agreement and the other
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Loan Documents, and all documents incidental hereto and thereto, shall be
satisfactory to the Agent and its counsel, and the Agent and such counsel shall
have received all such information and such counterpart originals or certified
or other copies of such documents as the Agent or such counsel may reasonably
request.
(h) Management Reference Checks. The Agent shall have received
satisfactory reference checks for key management of each Borrower.
(i) Due Diligence. The Agent shall have completed its business,
legal and collateral due diligence with respect to each Loan Party and the
results thereof shall be acceptable to the Agent, in its sole and absolute
discretion. Without limiting the foregoing, such due diligence shall include the
following:
(i) The Agent's satisfaction with the financial condition of
the Borrowers including a satisfactory review of the 2003 Fiscal Year
financial statements, and an initial examination of the books and records
of the Borrowers;
(ii) Agent shall be satisfied, based on financial statements
(actual and pro forma), projections and other evidence provided by the
Borrowers, or requested by Agent, that Borrowers after incurring the
indebtedness contemplated by this Agreement, will be Solvent;
(iii) The ownership, capital, corporate, tax, organizational
and legal structure of Borrowers shall be acceptable to Agent; and
(iv) A satisfactory review of the Borrowers' material customer
contracts, if any exist.
(j) Excess Availability. On the Effective Date, Excess Availability
shall be equal to or greater than $2,000,000, after giving effect to (i) the
Loans to be made on the Effective Date and (ii) the payment of all fees, costs,
expenses and taxes then payable pursuant to Sections 2.06 and 10.04. The
Administrative Borrower shall deliver to the Agent a certificate of the chief
operating officer, chief financial officer or treasurer of the Administrative
Borrower certifying as to the matters set forth in clauses (i) and (ii) above
and containing the calculation of Availability.
(k) Accounts Payable. The Agent shall have approved the aggregate
amount and condition of the accounts payable of the Borrowers.
Section 4.02 Conditions Precedent to Subsequent Loans. The
obligation of the Lender to make any Loan subsequent to the Effective Date is
subject to the fulfillment, in a manner satisfactory to the Agent, of each of
the following conditions precedent:
(a) Payment of Fees, Etc. The Borrowers shall have paid all fees,
costs, expenses and taxes then payable by the Borrowers pursuant to this
Agreement and the other Loan Documents, including, without limitation, Sections
2.06 and 10.04 hereof.
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(b) Representations and Warranties; No Event of Default. The
following statements shall be true and correct, and the submission by the
Administrative Borrower to the Agent of a Notice of Borrowing with respect to
such Loan, and the Borrowers' acceptance of the proceeds of such Loan, shall
each be deemed to be a representation and warranty by the Borrowers on the date
of such Loan that: (i) the representations and warranties contained in Article V
and in each other Loan Document, certificate or other writing delivered to the
Agent and/or the Lender pursuant hereto or thereto on or prior to the date of
such Loan are true and correct on and as of such date as though made on and as
of such date, (ii) at the time of and after giving effect to the making of such
Loan and the application of proceeds thereof, no Default or Event of Default has
occurred and is continuing or would result from the making of the Loan to be
made on such date and (iii) the conditions set forth in this Section 4.02 have
been satisfied as of the date of such request.
(c) Legality. The making of such Loan shall not contravene any law,
rule or regulation applicable to the Agent, the Lender or any Borrower.
(d) Borrowing Notice. The Agent shall have received a Notice of
Borrowing pursuant to Section 2.02.
(e) Delivery of Documents. The Agent shall have received such other
agreements, instruments, approvals, opinions and other documents, each in form
and substance satisfactory to the Agent, as the Agent may reasonably request.
(f) Proceedings; Receipt of Documents. All proceedings in connection
with the making of such Loan and the other transactions contemplated by this
Agreement and the other Loan Documents, and all documents incidental hereto and
thereto, shall be satisfactory to the Agent and its counsel, and the Agent and
such counsel shall have received all such information and such counterpart
originals or certified or other copies of such documents, in form and substance
satisfactory to the Agent, as the Agent or such counsel may reasonably request.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01 Representations and Warranties. Each Loan Party hereby
represents and warrants to the Agent and the Lender as follows:
(a) Organization, Good Standing, Etc. Each of the Loan Parties (i)
is a corporation, limited liability company or limited partnership duly
organized, validly existing and in good standing under the laws of the state of
its organization, (ii) has all requisite entity power and authority to conduct
its business as now conducted and as presently contemplated and to make the
borrowings hereunder, and to execute and deliver each Loan Document to which it
is a party, and to consummate the transactions contemplated thereby, and (iii)
is duly qualified to do business and is in good standing in each jurisdiction in
which the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification
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necessary, except where such failure to qualify or be in good standing could not
reasonably be expected to have a Material Adverse Effect.
(b) Authorization, Etc. The execution, delivery and performance by
each Loan Party of each Loan Document to which it is or will be a party, (i)
have been or, with respect to domestic Subsidiaries of any Loan Party formed or
acquired hereafter, will be duly authorized by all necessary action, (ii) do not
and will not contravene its charter or by-laws, its limited liability company or
operating agreement or its certificate of partnership or partnership agreement,
as applicable, or any applicable law or any contractual restriction binding on
or otherwise affecting it or any of its properties, (iii) do not and will not
result in or require the creation of any Lien (other than pursuant to any Loan
Document) upon or with respect to any of its properties, and (iv) do not and
will not result in any suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to its
operations or any of its properties.
(c) Governmental Approvals. No authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority is
required in connection with the due execution, delivery and performance by any
Loan Party of any Loan Document to which it is or will be a party, except in
connection with the perfection of the Agent's security interest in the
Collateral, the filing of the UCC-1 financing statements required by the
Security Agreement and any Mortgages.
(d) Enforceability of Loan Documents. This Agreement is, and each
other Loan Document to which any Loan Party is or will be a party, when
delivered hereunder, will be, a legal, valid and binding obligation of such
Person, enforceable against such Person in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws.
(e) [Intentionally Omitted]
(f) Subsidiaries. As of the Effective Date, Schedule 5.01(f) is
a complete and correct description of the name, jurisdiction of incorporation
and ownership of the outstanding Capital Stock of each direct and indirect
Subsidiary of the Parent in existence on the date hereof. All of the issued and
outstanding shares of Capital Stock of such Subsidiaries have been validly
issued and are fully paid and nonassessable, and the holders thereof are not
entitled to any preemptive, first refusal or other similar rights. Except as
indicated on such Schedule, all such Capital Stock is owned by the Parent or one
or more of its wholly-owned Subsidiaries, free and clear of all Liens, other
than Liens in favor of the Agent. Except as set forth on Schedule 5.01(f), there
are no outstanding debt or equity securities of the Parent or any of its
Subsidiaries and no outstanding obligations of the Parent or any of its
Subsidiaries convertible into or exchangeable for, or warrants, options or other
rights for the purchase or acquisition from the Parent or any of its
Subsidiaries, or other obligations of any Subsidiary to issue, directly or
indirectly, any shares of Capital Stock of any Subsidiary of the Parent.
(g) Litigation. Except as set forth in Schedule 5.01(g), (i) there
is no pending or, to the knowledge of any Loan Party, threatened action, suit or
proceeding affecting any Loan Party before any court or other Governmental
Authority or any arbitrator that (A) if adversely
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determined, could reasonably be expected to have a Material Adverse Effect or
(B) relates to this Agreement, the Notes, if any, or any other Loan Document or
any transaction contemplated hereby or thereby and (ii) as of the Effective
Date, no Loan Party holds any commercial tort claims in respect of which a claim
has been filed in a court of law or a written notice by an attorney has been
given to a potential defendant.
(h) Financial Condition.
(i) The Financial Statements, copies of which have been
delivered to the Agent, fairly present the consolidated financial
condition of each of (A) enherent and its Subsidiaries and (B) Dynax and
its Subsidiaries, each at December 31, 2004 and the consolidated results
of operations of each of (Y) enherent and its Subsidiaries and (Z) Dynax
and its Subsidiaries for the fiscal period ended on December 31, 2004, all
in accordance with GAAP, and since December 31, 2004 no event or
development has occurred that has had or could reasonably be expected to
have a Material Adverse Effect.
(ii) The Parent has heretofore furnished to the Agent (i) pro
forma balance sheets, income statements and statements of cash flows of
the Parent and its Subsidiaries for the Fiscal Year ended December 31,
2004 and the months of January and February 2005, and (ii) projected
annual operating budget of the Parent and its Subsidiaries for the Fiscal
Year ending December 31, 2005 after giving effect to the Merger as updated
from time to time pursuant to Section 6.01(a)(vii). Such projections, as
so updated, are believed by the Parent at the time furnished to be
reasonable, have been prepared on a reasonable basis and in good faith by
the Parent, and have been based on assumptions believed by the Parent to
be reasonable at the time made and upon the best information then
reasonably available to the Parent, and Parent is not aware of any facts
or information that would lead it to believe that such projections, as so
updated, are incorrect or misleading in any material respect.
(i) Compliance with Law, Etc. No Loan Party is in violation of (i)
its organizational documents, any law, rule, regulation, judgment or order of
any Governmental Authority applicable to it or any of its property or assets,
except in each case where such violation, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect, or (ii) any
material term of any agreement or instrument (including, without limitation, any
Material Contract) binding on or otherwise affecting it or any of its
properties, and no Default or Event of Default has occurred and is continuing.
(j) ERISA. Except as set forth on Schedule 5.01(j), (i) each
Employee Plan is in substantial compliance with ERISA and the Internal Revenue
Code, (ii) no Termination Event has occurred nor is reasonably expected to occur
with respect to any Employee Plan, (iii) the most recent annual report (Form
5500 Series) with respect to each Employee Plan, including any required Schedule
B (Actuarial Information) thereto, copies of which have been filed with the
Internal Revenue Service and delivered to the Agent, is complete and correct and
fairly presents the funding status of such Employee Plan, and since the date of
such report there has been no material adverse change in such funding status,
(iv) copies of each agreement entered into with the PBGC, the U.S. Department of
Labor or the Internal Revenue Service with respect to any Employee Plan have
been delivered to the Agent, (v) no Employee Plan had an accumulated or
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waived funding deficiency or permitted decrease which would create a deficiency
in its funding standard account or has applied for an extension of any
amortization period within the meaning of Section 412 of the Internal Revenue
Code at any time during the previous 60 months, and (vi) no Lien imposed under
the Internal Revenue Code or ERISA exists or is likely to arise on account of
any Employee Plan within the meaning of Section 412 of the Internal Revenue
Code. Except as set forth on Schedule 5.01(j), no Loan Party or any of its ERISA
Affiliates has incurred any withdrawal liability under ERISA with respect to any
Multiemployer Plan, or is aware of any facts indicating that it or any of its
ERISA Affiliates may in the future incur any such withdrawal liability. No Loan
Party or any of its ERISA Affiliates nor any fiduciary of any Employee Plan has
(i) engaged in a nonexempt prohibited transaction described in Sections 406 of
ERISA or 4975 of the Internal Revenue Code, (ii) failed to pay any required
installment or other payment required under Section 412 of the Internal Revenue
Code on or before the due date for such required installment or payment, (iii)
engaged in a transaction within the meaning of Section 4069 of ERISA or (iv)
incurred any liability to the PBGC which remains outstanding other than the
payment of premiums, and there are no premium payments which have become due
which are unpaid. There are no pending or, to the best knowledge of any Loan
Party, threatened claims, actions, proceedings or lawsuits (other than claims
for benefits in the normal course) asserted or instituted against (i) any
Employee Plan or its assets, (ii) any fiduciary with respect to any Employee
Plan, or (iii) any Loan Party or any of its ERISA Affiliates with respect to any
Employee Plan. Except as required by Section 4980B of the Internal Revenue Code,
no Loan Party or any of its ERISA Affiliates maintains an employee welfare
benefit plan (as defined in Section 3(1) of ERISA) which provides health or
welfare benefits (through the purchase of insurance or otherwise) for any
retired or former employee of any Loan Party or any of its ERISA Affiliates or
coverage after a participant's termination of employment.
(k) Taxes, Etc. All Federal, state and local tax returns and other
reports required by applicable law to be filed by any Loan Party have been
filed, or extensions have been obtained, and all taxes, assessments and other
governmental charges imposed any Loan Party or any property of any Loan Party
and which have become due and payable on or prior to the date hereof have been
paid, except to the extent contested in good faith by proper proceedings which
stay the imposition of any penalty, fine or Lien resulting from the non-payment
thereof and with respect to which adequate reserves have been set aside for the
payment thereof on the Financial Statements in accordance with GAAP.
(l) Regulations T, U, and X. No Loan Party is or will be engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations T, U or X), and no proceeds of
any Loan will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock.
(m) Nature of Business. No Loan Party is engaged in any business
other than those activities in which it is engaged in on the Effective Date,
which consists of information technology consulting services, technical staff
augmentation and custom software development services, systems integration and
implementation, systems engineering and management, software training, and
software, equipment and administrative staffing in connection with the
foregoing.
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(n) Adverse Agreements, Etc. No Loan Party is a party to any
agreement or instrument, or subject to any charter, limited liability company
agreement, partnership agreement or other corporate, partnership or limited
liability company restriction or any judgment, order, regulation, ruling or
other requirement of a court or other Governmental Authority, which has, or in
the future could reasonably be expected to have, a Material Adverse Effect.
(o) Permits, Etc. Each Loan Party has, and is in compliance with,
all permits, licenses, authorizations, approvals, entitlements and
accreditations required for such Person lawfully to own, lease, manage or
operate, or to acquire, each business currently owned, leased, managed or
operated, or to be acquired, by such Person, expect where the failure to do so
could not reasonably be expected to have a Material Adverse Effect. No condition
exists or event has occurred which, in itself or with the giving of notice or
lapse of time or both, would result in the suspension, revocation, impairment,
forfeiture or non-renewal of any such permit, license, authorization, approval,
entitlement or accreditation, and there is no claim that any thereof is not in
full force and effect.
(p) Properties. (i) Each Loan Party has good and marketable title
to, valid leasehold interests in or valid licenses to use, all property and
assets material to its business, free and clear of all Liens except Permitted
Liens. The properties are in good working order and condition, ordinary wear and
tear and damage due to casualty (to the extent such damage due to casualty is
fully covered by insurance) excepted.
(ii) Schedule 5.01(p) sets forth a complete and accurate list
as of the Effective Date of the location, by state and street address, of
all real property owned or leased by each Loan Party. As of the Effective
Date, each Loan Party has valid leasehold interests in the Leases
described on Schedule 5.01(p) to which it is a party. Schedule 5.01(p)
sets forth with respect to each such Lease, the commencement date,
termination date, renewal options (if any) and annual base rents. Each
such Lease is valid and enforceable in accordance with its terms in all
material respects and is in full force and effect. No consent or approval
of any landlord or other third party in connection with any such Lease is
necessary for the Parent or any of its Subsidiaries to enter into and
execute the Loan Documents to which it is a party, except as set forth on
Schedule 5.01(p). To the knowledge of each Loan Party, no other party to
any such Lease is in default of its obligations thereunder, and no Loan
Party (or any other party to any such Lease) has not at any time delivered
or received any notice of default which remains uncured under any such
Lease and, as of the Effective Date, no event has occurred which, with the
giving of notice or the passage of time or both, would constitute a
default under any such Lease.
(q) Full Disclosure. Each Loan Party has disclosed to the Lender all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could result in a Material Adverse Effect.
None of the other reports, financial statements, certificates or other written
information furnished by or on behalf of the Loan Parties to the Lender in
connection with the negotiation of this Agreement or delivered hereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which it
was made, not misleading; provided that, with respect to projected financial
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information, each Loan Party represents only that such information was prepared
in good faith based upon assumptions believed to be reasonable at the time.
There is no contingent liability or fact that may have a Material Adverse Effect
which has not been set forth in a footnote included in the Financial Statements
or a schedule hereto.
(r) [Intentionally Omitted.]
(s) Operating Lease Obligations. On the Effective Date, no Loan
Party has any obligations as lessee for the payment of rent for any personal
property other than the Operating Lease Obligations set forth on Schedule
5.01(s).
(t) Environmental Matters. Except as set forth on Schedule 5.01(t),
(i) the operations of each Loan Party are in material compliance with all
Environmental Laws; (ii) there has been no Release at any of the properties
owned or operated by any Loan Party or a predecessor in interest, or at any
disposal or treatment facility which received Hazardous Materials generated by
any Loan Party or any predecessor in interest which could have a Material
Adverse Effect; (iii) no Environmental Action has been asserted against any Loan
Party or any predecessor in interest nor does any Loan Party have knowledge or
notice of any threatened or pending Environmental Action against any Loan Party
or any predecessor in interest which could have a Material Adverse Effect; (iv)
no Environmental Actions have been asserted against any facilities that may have
received Hazardous Materials generated by any Loan Party or any predecessor in
interest which could have a Material Adverse Effect; (v) no property now or
formerly owned or operated by a Loan Party has been used as a treatment or
disposal site for any Hazardous Material; (vi) no Loan Party has failed to
report to the proper Governmental Authority any Release which is required to be
so reported by any Environmental Laws which could have a Material Adverse
Effect; (vii) each Loan Party holds all licenses, permits and approvals required
under any Environmental Laws in connection with the operation of the business
carried on by it, except for such licenses, permits and approvals as to which a
Loan Party's failure to maintain or comply with could not have a Material
Adverse Effect; and (viii) no Loan Party has received any notification pursuant
to any Environmental Laws that (A) any work, repairs, construction or Capital
Expenditures are required to be made in respect as a condition of continued
compliance with any Environmental Laws, or any license, permit or approval
issued pursuant thereto or (B) any license, permit or approval referred to above
is about to be reviewed, made, subject to limitations or conditions, revoked,
withdrawn or terminated, in each case, except as could not have a Material
Adverse Effect.
(u) Insurance. Each Loan Party keeps its property adequately insured
and maintains (i) insurance to such extent and against such risks, including
fire, as is customary with companies in the same or similar businesses, (ii)
workmen's compensation insurance or similar arrangements required by applicable
law, (iii) public liability insurance, which shall include product liability
insurance, in the amount customary with companies in the same or similar
business against claims for personal injury or death on properties owned,
occupied or controlled by it, and (iv) such other insurance as may be required
by law or as may be reasonably required by the Agent (including, without
limitation, against larceny, embezzlement or other criminal misappropriation).
Schedule 5.01(u) sets forth a list of all insurance maintained by the Loan
Parties on the Effective Date.
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(v) Use of Proceeds. The proceeds of the Loans shall be used to (i)
pay the costs and expenses relating to the transactions contemplated hereby; and
(ii) fund the Borrowers ongoing working capital requirements.
(w) Solvency. After giving effect to the transactions contemplated
by this Agreement and the Merger and before and after giving effect to each
Loan, each of the Loan Parties is, and the Loan Parties on a consolidated basis
are, Solvent.
(x) Location of Bank Accounts. Schedule 5.01(x) sets forth a
complete and accurate list as of the Effective Date of all deposit, checking and
other bank accounts, all securities and other accounts maintained with any
broker dealer and all other similar accounts maintained by each Loan Party,
together with a description thereof (i.e., the bank or broker dealer at which
such deposit or other account is maintained and the account number and the
purpose thereof).
(y) Intellectual Property. Except as set forth on Schedule 5.01(y),
each Loan Party owns or licenses or otherwise has the right to use all licenses,
permits, patents, patent applications, trademarks, trademark applications,
service marks, tradenames, copyrights, copyright applications, franchises,
authorizations and other intellectual property rights that are necessary for the
operations of its businesses, without infringement upon or conflict with the
rights of any other Person with respect thereto, except for such infringements
and conflicts which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. Set forth on Schedule 5.01(y) is a
complete and accurate list as of the Effective Date of all such material
licenses, permits, patents, patent applications, trademarks, trademark
applications, service marks, tradenames, copyrights, copyright applications,
franchises, authorizations and other intellectual property rights of each Loan
Party. No slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by any Loan Party infringes upon or conflicts with any rights owned by
any other Person, and no claim or litigation regarding any of the foregoing is
pending or, to the knowledge of any Loan Party, threatened, except for such
infringements and conflicts which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. To the best
knowledge of each Loan Party, no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard or code is pending or
proposed, which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
(z) Material Contracts. Set forth on Schedule 5.01(z) is a complete
and accurate list as of the Effective Date of all Material Contracts of each
Loan Party, showing the parties and subject matter thereof and amendments and
modifications thereto. Each such Material Contract (i) is in full force and
effect and is binding upon and enforceable against each of each such Loan Party
that is a party thereto and, to the knowledge of such Loan Party, all other
parties thereto in accordance with its terms, (ii) has not been otherwise
amended or modified, and (iii) is not in default due to the action of any Loan
Party or, to the knowledge of any Loan Party, any other party thereto.
(aa) Holding Company and Investment Company Acts. No Loan Party is
(i) a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended, or (ii) an "investment company"
or an "affiliated person" or "promoter" of, or
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"principal underwriter" of or for, an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
(bb) Employee and Labor Matters. (i) There is (A) no unfair labor
practice complaint pending or, to the best knowledge of each Loan Party,
threatened against any Loan Party before any Governmental Authority and no
grievance or arbitration proceeding pending or, to the knowledge of any Loan
Party, threatened against any Loan Party which arises out of or under any
collective bargaining agreement, (B) no strike, labor dispute, slowdown,
stoppage or similar action or grievance pending or, to the knowledge of any Loan
Party, threatened against the Loan Party and (C) to the best knowledge of each
Loan Party, no union representation question existing with respect to the
employees of the Parent or any of its Subsidiaries and no union organizing
activity taking place with respect to any of the employees of any of them. No
Loan Party or any of its ERISA Affiliates has incurred any liability or
obligation under the Worker Adjustment and Retraining Notification Act ("WARN")
or similar state law, which remains unpaid or unsatisfied. The hours worked and
payments made to employees of any Loan Party have not been in violation of the
Fair Labor Standards Act or any other applicable legal requirements, except to
the extent such violations could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. All material
payments due from any Loan Party on account of wages and employee health and
welfare insurance and other benefits have been paid or accrued as a liability on
the books of such Loan Party, except where the failure to do so could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(cc) Customers and Suppliers. There exists no actual or, to the
knowledge of any Loan Party, threatened termination, cancellation or limitation
of, or modification to or change in, the business relationship between (A) the
Parent or any of its Subsidiaries, on the one hand, and any customer or any
group thereof, on the other hand, whose agreements with the Parent or any such
Subsidiary are individually or in the aggregate material to the business or
operations of the Parent or any of its Subsidiaries, or (B) the Parent or any of
its Subsidiaries, on the one hand, and any material supplier thereof, on the
other hand; and there exists no present state of facts or circumstances that
could reasonably be expected to give rise to or result in any such termination,
cancellation, limitation, modification or change that could reasonably be
expected to have a Material Adverse Effect.
(dd) No Bankruptcy Filing. No Loan Party is contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
laws or the liquidation of all or a major portion of its assets or property, and
no Loan Party has any knowledge of any Person contemplating the filing of any
such petition against it.
(ee) Consummation of Merger. The Parent has delivered to the Agent a
complete and correct copy of (i) the Certificate of Merger dated April 1, 2005
between the Parent and Dynax, which has been duly filed with the office of the
Secretary of State of the State of Delaware, and (ii) the Merger Agreement,
including all schedules and exhibits thereto. The Merger Agreement sets forth
the entire agreement and understanding of the parties thereto relating to the
subject matter thereof, and there are no other agreements, arrangements or
understandings, written or oral, relating to the maters covered thereby. The
execution, delivery and performance of the Merger Agreement has been duly
authorized by all necessary action
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(including, without limitation, the obtaining of any consent of stockholders or
other holders of Capital Stock required by law or by any applicable corporate or
other organizational documents) on the part of each such Person. No
authorization or approval or other action by, and no notice of filing with or
license from, any Governmental Authority is required for such sale other than
such as have been obtained on or prior to the Effective Date. The Merger
Agreement is the legal, valid and binding obligation of the parties thereto,
enforceable against such parties in accordance with its terms.
(ff) Location of Inventory; Place of Business; Chief Executive
Office. As of the Effective Date, there is no location that any Loan Party has
any Inventory (except for Inventory in transit) other than those locations
listed on Schedule 5.01(ff). Schedule 5.01(ff) hereto contains a true, correct
and complete list, as of the Effective Date, of the legal names and addresses of
each warehouse at which Inventory of each Loan Parties is stored. None of the
receipts received by any Loan Party from any warehouse states that the goods
covered thereby are to be delivered to bearer or to the order of a named Person
or to a named Person and such named Person's assigns. Schedule 5.01(ff) sets
forth a complete and accurate list as of the Effective Date of (A) each place of
business of the Loan Parties and (B) the chief executive office of the Loan
Parties.
(gg) Dissolution of Subsidiaries. Prior to the Effective Date, the
Parent and Dynax, as applicable, have initiated the required legal procedures in
the jurisdiction of organization of each of the Subsidiaries set forth on
Schedule 5.01(f) (except for enherent (Barbados) Ltd.) to terminate, dissolve
and wind down such Subsidiaries. As of the Effective Date, none of the
Subsidiaries set forth on Schedule 5.01(f) conducts any business or operations
or owns any assets. Prior to the effective dissolution of any Subsidiary set
forth on Schedule 5.01(f), the Parent has not, and will not, (i) pledge the
Capital Stock of such Subsidiary to any Person (other than the Agent), nor (ii)
deliver the stock certificate for such Subsidiary to any Person (other than the
Agent or a Governmental Authority as may be required pursuant to the dissolution
proceedings for such Subsidiary).
(hh) Dissolution of enherent (Barbados) Ltd. Upon the resolution of
the litigation in the matter of ▇▇▇▇▇ ▇▇▇▇▇▇ set forth on Schedule 5.01(g), the
Parent shall promptly terminate, dissolve and wind down enherent (Barbados) Ltd.
and provide the Agent with evidence thereof.
ARTICLE VI
COVENANTS OF THE BORROWER
Section 6.01 Affirmative Covenants. So long as any principal of or
interest on any Loan or any other Obligations (whether or not due) shall remain
unpaid or the Lender shall have any Commitment hereunder, each Loan Party or, if
otherwise specified below, the Parent will, unless the Agent shall otherwise
consent in writing:
(a) Reporting Requirements. Furnish to the Agent:
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(i) as soon as available, and in any event within 35 days of
the end of each fiscal month, (A) internally prepared consolidated and
consolidating balance sheets, consolidated and consolidating statements of
operations and consolidated and consolidating statements of cash flows of
the Parent and its Subsidiaries for such fiscal month and for the period
from the beginning of such Fiscal Year to the end of such fiscal month,
all in reasonable detail and certified by an Authorized Officer as fairly
presenting, in all material respects, the financial position of the Parent
and its Subsidiaries as of the end of such fiscal month and the results of
operations and cash flows of the Parent and its Subsidiaries for such
fiscal month, in accordance with GAAP applied in a manner consistent with
that of the most recent audited financial statements furnished to the
Lender, subject to normal year-end adjustments, and (B) a statement
indicating Consolidated EBITDA (together with the calculations thereof)
for the twelve month period preceding such fiscal month (except that for
the period from the Effective Date through the first anniversary of the
Effective Date such statement of Consolidated EBITDA shall only be
required to be delivered for any month ending on a fiscal quarter and
shall consist of the Consolidated EBITDA for the four fiscal quarters
preceding such month);
(ii) as soon as available, and in any event within 90 days
after the end of each Fiscal Year (commencing with the Fiscal Year ending
December 31, 2005) consolidated balance sheets, consolidated statements of
operations and retained earnings and consolidated statements of cash flows
of the Parent and its Subsidiaries as at the end of such Fiscal Year,
setting forth in comparative form the corresponding figures for the
immediately preceding Fiscal Year, all in reasonable detail and prepared
in accordance with GAAP, and accompanied by a report and an unqualified
opinion, prepared in accordance with generally accepted auditing
standards, of independent certified public accountants of recognized
standing selected by the Parent and satisfactory to the Lender (which
opinion shall be without (A) a "going concern" or like modification or
exception, (B) any qualification or exception as to the scope of such
audit or (C) any qualification which relates to the treatment or
classification of any item and which, as a condition to the removal of
such qualification, would require an adjustment to such item, the effect
of which would be to cause any noncompliance with the provisions of
Section 6.03, together with a written statement of such accountants (1) to
the effect that, in making the examination necessary for their opinion on
such financial statements, they have not obtained any knowledge of the
existence of an Event of Default or a Default and (2) if such accountants
shall have obtained any knowledge of the existence of an Event of Default
or such Default (other than any Default or Event of Default which has been
waived by the Lender in writing), describing the nature thereof;
(iii) simultaneously with the delivery of the financial
statements of the Parent and its subsidiaries required by clauses (i) and
(ii) of this Section 6.01(a), a certificate of an Authorized Officer (A)
stating that such Authorized Officer has reviewed the provisions of this
Agreement and the other Loan Documents and has made or caused to be made
under his or her supervision a review of the condition and operations of
the Parent and its Subsidiaries during the period covered by such
financial statements with a view to determining whether the Parent and its
Subsidiaries were in compliance with all of the provisions of such Loan
Documents at the times such compliance is required by
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the Loan Documents, and that such review has not disclosed, and such
Authorized Officer has no knowledge of, the existence during such period
of an Event of Default or Default or, if an Event of Default or Default
existed, describing the nature and period of existence thereof and the
action which the Parent and its Subsidiaries propose to take or have taken
with respect thereto and (B) attaching a schedule showing the calculations
specified in Section 6.03;
(iv) on Friday of each week (or if such day is not a Business
Day, on the next succeeding Business Day), commencing on the first Friday
following the Effective Date, a certificate of an Authorized Officer of
the Parent setting forth the aggregate amount of collections relating to
the Loan Parties' Accounts Receivable paid during the preceding 90
calendar days ending on the close of business on Friday of the prior week;
(v) as soon as available and in any event within 30 days of
the end of each fiscal month of the Loan Parties, reports in detail
satisfactory to the Lender and certified by an Authorized Officer as being
accurate and complete (A) listing all Accounts Receivable of the Parent
and its Subsidiaries as of the last Business Day of such month, which
shall include the amount and age of each Account Receivable, showing
separately those which are more than 30, 60, 90 and 120 days old and a
description of all Liens, set-offs, defenses and counterclaims with
respect thereto, together with a reconciliation of such schedule with the
schedule delivered to the Lender pursuant to this clause (v)(A) for the
immediately preceding month and the name of each Account Debtor with
respect to each such Account Receivable and such other information as the
Lender request, and (B) listing all accounts payable of the Parent and its
Subsidiaries as of the last Business Day of such month which shall
indicate the invoice date of each account payable and the name of each
account creditor and such other information as the Lender may request;
(vi) by Friday of each week (or if such day is not a Business
Day, on the next succeeding Business Day) a Borrowing Base Certificate as
of the close of business on the Wednesday of such week, supported by
schedules showing the derivation thereof and containing such detail and
other information as the Lender may request from time to time (including,
without limitation, a schedule listing Unbilled Accounts Receivable to the
extent such Unbilled Accounts Receivable constitute a portion of the
Borrowing Base), provided, that (A) the Borrowing Base set forth in the
Borrowing Base Certificate shall be effective from and including the date
such Borrowing Base Certificate is duly received by the Lender but not
including the date on which a subsequent Borrowing Base Certificate is
received by the Lender, unless the Lender disputes the eligibility of any
property for inclusion in the calculation of the Borrowing Base or the
valuation thereof by notice of such dispute to the Administrative Borrower
and (B) in the event of any dispute about the eligibility of any property
for inclusion in the calculation of the Borrowing Base or the valuation
thereof, the Lender's good faith judgment shall control;
(vii) on or before December 1 of each year, financial
projections supplementing and superseding the financial projections for
such period referred to in
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Section 5.01(h)(ii), prepared on a monthly basis and otherwise in form and
substance satisfactory to the Lender, for the immediately succeeding
Fiscal Year for the Parent and its Subsidiaries, all such financial
projections to be reasonable, to be prepared on a reasonable basis and in
good faith, and to be based on assumptions believed by the Parent to be
reasonable at the time made and from the best information then available
to the Parent;
(viii) promptly after submission to any Government Authority,
all documents and information furnished to such Government Authority in
connection with any investigation of the Parent or any of its Subsidiaries
other than routine inquiries by such Governmental Authority;
(ix) as soon as possible, and in any event within three
Business Days after the occurrence of an Event of Default or Default or
the occurrence of any event or development that could have a Material
Adverse Effect, the written statement of an Authorized Officer setting
forth the details of such Event of Default, Default, other event or
Material Adverse Effect and the action which the Loan Parties propose to
take with respect thereto;
(x) (A) as soon as possible and in any event (1) within 10
days after any Loan Party or any ERISA Affiliate thereof knows or has
reason to know that any Termination Event described in clause (i) of the
definition of Termination Event with respect to any Employee Plan has
occurred, (2) within 10 days after any Loan Party or any ERISA Affiliate
thereof knows or has reason to know that any other Termination Event with
respect to any Employee Plan has occurred, or (3) within 10 days after any
Loan Party or any ERISA Affiliate thereof knows or has reason to know that
an accumulated funding deficiency has been incurred or an application has
been made to the Secretary of the Treasury for a waiver or modification of
the minimum funding standard (including installment payments) or an
extension of any amortization period under Section 412 of the Code with
respect to an Employee Plan, a statement of an Authorized Officer setting
forth the details of such occurrence and the action, if any, which such
Borrower or such ERISA Affiliate propose to take with respect thereto, (B)
promptly and in any event within three days after receipt thereof by any
Loan Party or any ERISA Affiliate thereof from the PBGC, copies of each
notice received by any Loan Party or any ERISA Affiliate thereof of the
PBGC's intention to terminate any Plan or to have a trustee appointed to
administer any Plan, (C) promptly and in any event within 10 days after
the filing thereof with the Internal Revenue Service if requested by the
Lender, copies of each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) with respect to each Employee Plan and
Multiemployer Plan, (D) promptly and in any event within 10 days after any
Loan Party or any ERISA Affiliate thereof knows or has reason to know that
a required installment within the meaning of Section 412 of the Code has
not been made when due with respect to an Employee Plan, (E) promptly and
in any event within three days after receipt thereof by any Loan Party or
any ERISA Affiliate thereof from a sponsor of a Multiemployer Plan or from
the PBGC, a copy of each notice received by any Loan Party or any ERISA
Affiliate thereof concerning the imposition or amount of withdrawal
liability under Section 4202 of ERISA or indicating that such
Multiemployer Plan may enter reorganization status under Section 4241 of
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ERISA, and (F) promptly and in any event within 10 days after any Loan
Party or any ERISA Affiliate thereof send notice of a plant closing or
mass layoff (as defined in WARN) to employees, copies of each such notice
sent by any Loan Party or any ERISA Affiliate thereof;
(xi) promptly after the commencement thereof but in any event
not later than 5 Business Days after service of process with respect
thereto on, or the obtaining of knowledge thereof by, any Loan Party,
notice of each action, suit or proceeding before any court or other
Governmental Authority or other regulatory body or any arbitrator which,
if adversely determined, could have a Material Adverse Effect;
(xii) as soon as possible and in any event within 10 days
after execution, receipt or delivery thereof, copies of any material
notices that any Loan Party executes or receives from or sends to any
other party to a Material Contract in connection with such Material
Contract;
(xiii) promptly after the sending or filing thereof, copies of
all statements, reports and other information any Loan Party sends to any
holders of its Indebtedness or its securities or files with the SEC or any
national (domestic or foreign) securities exchange;
(xiv) promptly upon receipt thereof, copies of all financial
reports (including, without limitation, management letters), if any,
submitted to the Parent or any of its Subsidiaries by its auditors in
connection with any annual or interim audit of the books thereof;
(xv) simultaneously with the delivery of the financial
statements required by clause (i) of this Section 6.01(a), a certificate
of an Authorized Officer describing the status of dissolution or
termination of each Excluded Subsidiary and providing evidence of each
such dissolution or termination; and
(xvi) promptly upon request, such other information concerning
the condition or operations, financial or otherwise, of any Loan Party or
any of its Affiliates as the Agent may from time to time may reasonably
request.
(b) Additional Guaranties and Collateral Security. Cause:
(i) each domestic Subsidiary of a Borrower not in existence on
the Effective Date to execute and deliver to the Agent promptly and in any
event within three Business Days after the formation or acquisition
thereof (A) joinder agreement, in form and substance satisfactory to the
Agent, pursuant to which such Person becomes a Borrower hereunder and
jointly and severally liable for the Obligations, (B) a Security
Agreement, (C) if such Subsidiary has any Subsidiaries, a Pledge
Agreement, together with (x) certificates evidencing all of the Capital
Stock of any Person owned by such Subsidiary, (y) undated stock powers
executed in blank with signature guaranteed, and (z) such opinion of
counsel and such approving certificate of such Subsidiary as the Agent may
reasonably request in respect of complying with any legend on any such
certificate or any other matter relating to such shares, (D) one or more
Mortgages creating on the real
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property of such Subsidiary a perfected, first priority Lien on such real
property, a Title Insurance Policy covering such real property, a current
ALTA survey thereof and a surveyor's certificate, each in form and
substance satisfactory to the Agent, together with such other agreements,
instruments and documents as the Agent may require whether comparable to
the documents required under Section 6.01(o) or otherwise, and (E) such
other agreements, instruments, approvals, legal opinions or other
documents reasonably requested by the Agent in order to create, perfect,
establish the first priority of or otherwise protect any Lien purported to
be covered by any such Security Agreement, Pledge Agreement or Mortgage or
otherwise to effect the intent that such Subsidiary shall become bound by
all of the terms, covenants and agreements contained in the Loan Documents
and that all property and assets of such Subsidiary shall become
Collateral for the Obligations; and
(ii) each owner of the Capital Stock of any such Subsidiary to
execute and deliver promptly and in any event within three days after the
formation or acquisition of such Subsidiary a Pledge Agreement, together
with (A) certificates evidencing all of the Capital Stock of such
Subsidiary, (B) undated stock powers or other appropriate instruments of
assignment executed in blank with signature guaranteed, (C) such opinion
of counsel and such approving certificate of such Subsidiary as the Agent
may reasonably request in respect of complying with any legend on any such
certificate or any other matter relating to such shares and (D) such other
agreements, instruments, approvals, legal opinions or other documents
requested reasonably by the Agent;
(c) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders (including, without limitation, all Environmental
Laws), such compliance to include, without limitation, (i) paying before the
same become delinquent all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or upon any of its properties, and
(ii) paying all lawful claims which if unpaid might become a Lien or charge upon
any of its properties, except in either case to the extent contested in good
faith by proper proceedings which stay the imposition of any penalty, fine or
Lien resulting from the non-payment thereof and with respect to which adequate
reserves have been set aside for the payment thereof.
(d) Preservation of Existence, Etc. Except for such Subsidiaries set
forth on Schedule 5.01(f) with a status of "dissolution pending", maintain and
preserve, and cause each of its Subsidiaries to maintain and preserve, its
existence, rights and privileges, and become or remain duly qualified and in
good standing in each jurisdiction in which the character of the properties
owned or leased by it or in which the transaction of its business makes such
qualification necessary, except where such failure to so qualify or be in good
standing could not reasonably be expected to result in a Material Adverse
Effect.
(e) Keeping of Records and Books of Account. Keep, and cause each of
its Subsidiaries to keep, adequate records and books of account, with complete
entries made in accordance with GAAP.
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(f) Inspection Rights. Permit, and cause each of its Subsidiaries to
permit, the Agent or any agents or representatives thereof at any time and from
time to time during normal business hours upon reasonable (but no less than five
(5) days) prior notice to the Administrative Borrower unless an Event of Default
has occurred and is continuing (in which case no prior notice is required), to
examine and make copies of and abstracts from their records and books of
account, to visit and inspect their properties, to verify materials, leases,
notes, accounts receivable, deposit accounts and other assets of the Parent and
its Subsidiaries, to conduct audits, physical counts, valuations, appraisals,
environmental assessments or examinations and to discuss their affairs, finances
and accounts with any of the directors, officers, managerial employees,
independent accountants or other representatives thereof. Each Loan Party agrees
to pay the reasonable cost of any such audit, appraisal, assessment or
examination, provided that, unless an Event of Default has occurred and is
continuing, the Loan Parties shall only be required to pay such costs related to
no more than two (2) audits, appraisals, assessments or examinations conducted
in any calendar year.
(g) Maintenance of Properties, Etc. Maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of their properties which
are necessary or useful in the proper conduct of their business in good working
order and condition, ordinary wear and tear and damage due to casualty (to the
extent such damage due to casualty is fully covered by insurance) excepted, and
comply, and cause each of its Subsidiaries to comply, at all times with the
provisions of all leases to which each of them is a party as lessee or under
which each of them occupies property, so as to prevent any loss or forfeiture
thereof or thereunder.
(h) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations (including, without limitation, comprehensive general
liability, hazard, rent and business interruption insurance) with respect to
their properties (including all real properties leased or owned by them) and
business, in such amounts and covering such risks as is required by any
Governmental Authority having jurisdiction with respect thereto or as is carried
generally in accordance with sound business practice by companies in similar
businesses similarly situated and in any event in amount, adequacy and scope
reasonably satisfactory to the Agent. All policies covering the Collateral are
to be made payable to the Agent, as its interests may appear, in case of loss,
under a standard non-contributory "lender" or "secured party" clause and are to
contain such other provisions as the Agent may require to fully protect the
Agent's interest in the Collateral and to any payments to be made under such
policies. All certificates of insurance are to be delivered to the Agent and the
policies are to be premium prepaid, with the loss payable and additional insured
endorsement in favor of Agent and such other Persons as the Agent may designate
for time to time, and shall provide for not less than 30 days' prior written
notice to the Agent of the exercise of any right of cancellation. If the Parent
or any of its Subsidiaries fails to maintain such insurance, the Agent may
arrange for such insurance, but at the Loan Parties' expense and without any
responsibility on the Agent's part for obtaining the insurance, the solvency of
the insurance companies, the adequacy of the coverage, or the collection of
claims. Upon the occurrence of an Event of Default, the Agent shall have the
sole right, in the name of the Agent and the Parent and its Subsidiaries, to
file claims under any insurance policies, to receive, receipt and give
acquittance for any payments that may be payable thereunder, and to execute any
and all endorsements, receipts, releases, assignments, reassignments or other
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documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
(i) Obtaining of Permits, Etc. Obtain, maintain and preserve, and
cause each of its Subsidiaries to obtain, maintain and preserve, all permits,
licenses, authorizations, approvals, entitlements and accreditations which are
necessary or useful in the proper conduct of its business and become or remain,
and cause each of its Subsidiaries to become or remain, duly qualified and in
good standing in each jurisdiction in which the character of the properties
owned or leased by it or in which the transaction of its business makes such
qualification necessary, except where such failure to do so could not reasonably
be expected to result in a Material Adverse Effect.
(j) Environmental. (i) Keep any property either owned or operated by
it or any of its Subsidiaries free of any Environmental Liens; (ii) comply, and
cause it Subsidiaries to comply, in all material respects with Environmental
Laws and provide to the Agent documentation of such compliance which the Agent
reasonably requests; (iii) immediately notify the Agent of any Release of a
Hazardous Material in excess of any reportable quantity from or onto property
owned or operated by the Parent or any of its Subsidiaries and take any Remedial
Actions required to ▇▇▇▇▇ said Release; (iv) promptly provide the Agent with
written notice within 10 days of the receipt of any of the following: (A) notice
that an Environmental Lien has been filed against any property of the Parent or
any of its Subsidiaries; (B) commencement of any Environmental Action or notice
that an Environmental Action will be filed against the Parent or any of its
Subsidiaries; and (C) notice of a violation, citation or other administrative
order which could have a Material Adverse Effect and (v) defend, indemnify and
hold harmless the Lender and its transferees, and their respective employees,
Lenders, officers and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs or expenses
(including, without limitation, reasonable attorney and consultant fees,
investigation and laboratory fees, court costs and litigation expenses) arising
out of (A) the presence, disposal, release or threatened release of any
Hazardous Materials on any property at any time owned or occupied by the Parent
or any of its Subsidiaries (or its respective predecessors in interest or
title), (B) any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to such Hazardous Materials, (C)
any investigation, lawsuit brought or threatened, settlement reached or
government order relating to such Hazardous Materials and/or (D) any violation
of any Environmental Law.
(k) Further Assurances. Take such action and execute, acknowledge
and deliver, and cause each of its Subsidiaries to take such action and execute,
acknowledge and deliver, at its sole cost and expense, such agreements,
instruments or other documents as the Agent may require from time to time in
order (i) to carry out more effectively the purposes of this Agreement and the
other Loan Documents, (ii) to subject to valid and perfected first priority
Liens any of the Collateral or any other property of any Loan Party and its
Subsidiaries, (iii) to establish and maintain the validity and effectiveness of
any of the Loan Documents and the validity, perfection and priority of the Liens
intended to be created thereby, and (iv) to better assure, convey, grant,
assign, transfer and confirm unto the Agent and the Lender the rights now or
hereafter intended to be granted to the Agent and the Lender under this
Agreement or any other Loan Document.
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(l) Change in Collateral; Collateral Records. (i) Give the Agent not
less than 30 days' prior written notice of any change in the location of any
Collateral, other than to locations set forth on Schedule 6.01(l) and with
respect to which the Agent has filed financing statements and otherwise fully
perfected its Liens thereon, (ii) advise the Agent promptly, in sufficient
detail, of any material adverse change relating to the type, quantity or quality
of the Collateral or the Lien granted thereon and (iii) execute and deliver, and
cause each of its Subsidiaries to execute and deliver, to the Agent for the
benefit of the Lender from time to time, solely for the Agent's convenience in
maintaining a record of Collateral, such written statements and schedules as the
Agent may reasonably require, designating, identifying or describing the
Collateral.
(m) Landlord Waivers. At the reasonable request of the Agent, obtain
at the time any Loan Party enters into a lease for real property not occupied on
the Effective Date a landlord's waiver from the landlord of such real property
(which waiver may be contained in such lease), in form and substance reasonably
satisfactory to the Agent.
(n) Subordination. Cause all Indebtedness and other obligations now
or hereafter owed by the Parent or any Subsidiary to any of its Affiliates, to
be subordinated in right of payment and security to the Indebtedness and other
Obligations owing to the Lender in accordance with a subordination agreement in
form and substance satisfactory to the Lender.
(o) After Acquired Real Property. Upon the acquisition by the Parent
or any of its Subsidiaries after the date hereof of any interest (whether fee or
leasehold) in any real property (wherever located) (each such interest being an
"After Acquired Property") (x) with a Current Value (as defined below) in excess
of $100,000 in the case of a fee interest, or (y) requiring the payment of
annual rent exceeding in the aggregate $20,000 in the case of leasehold
interest, immediately so notify the Agent, setting forth with specificity a
description of the interest acquired, the location of the real property, any
structures or improvements thereon and either an appraisal or such Borrower's
good-faith estimate of the current value of such real property (for purposes of
this Section, the "Current Value"). The Agent shall notify the Administrative
Borrower whether it intends to require a Mortgage and the other documents
referred to below or in the case of leasehold, a leasehold Mortgage or
landlord's waiver (pursuant to Section 6.01(m) hereof). Upon receipt of such
notice requesting a Mortgage, the Person which has acquired such After Acquired
Property shall promptly furnish to the Agent the following, each in form and
substance satisfactory to the Agent: (i) a Mortgage and an Environmental
Indemnity Agreement with respect to such real property and related assets
located at the After Acquired Property, each duly executed by such Person and in
recordable form; (ii) evidence of the recording of the Mortgage referred to in
clause (i) above in such office or offices as may be necessary or, in the
opinion of the Agent, desirable to create and perfect a valid and enforceable
first priority lien on the property purported to be covered thereby or to
otherwise protect the rights of the Agent thereunder, (iii) a Title Insurance
Policy, (iv) a survey of such real property, certified to the Agent and to the
issuer of the Title Insurance Policy by a licensed professional survey or
reasonably satisfactory to the Agent, (v) phase I environmental assessment
reports with respect to such real property, certified to the Agent by a company
reasonably satisfactory to the Agent, (vi) in the case of a leasehold interest,
a certified copy of the lease between the landlord and such Person with respect
to such real property in which such Person has a leasehold interest, and the
certificate of occupancy with respect thereto, (vii) in the case of a leasehold
interest, an attornment and nondisturbance agreement between the landlord (and
any fee mortgagee) with respect to such real property and the
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Agent, and (viii) such other documents or instruments (including guarantees and
opinions of counsel) as the Agent may reasonably require. Each Loan Party shall
pay all fees and expenses, including reasonable attorneys' fees and expenses,
and all title insurance charges and premiums, in connection with their
obligations under this Section 6.01(o).
(p) Fiscal Year. Cause the Fiscal Year of the Parent and its
Subsidiaries to end on December 31 of each calendar year unless the Lender
consents to a change in such Fiscal Year (and appropriate related changes to
this Agreement).
Section 6.02 Negative Covenants. So long as any principal of or
interest on any Loan or any other Obligation (whether or not due) shall remain
unpaid or the Lender shall have any Commitment hereunder, each Loan Party shall
not, unless the Agent shall otherwise consent in writing:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist any Lien
upon or with respect to any of its property, whether now owned or hereafter
acquired, to file or suffer to exist under the Uniform Commercial Code or any
similar law or statute of any jurisdiction, a financing statement (or the
equivalent thereof) that names the Parent or any of its Subsidiaries as debtor,
to sign or suffer to exist any security agreement authorizing any secured party
thereunder to file such financing statement (or the equivalent thereof), to sell
any of its property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets (including sales
of accounts receivable) with recourse to the Parent or any of its Subsidiaries
or assign or otherwise transfer, or permit any of its Subsidiaries to assign or
otherwise transfer, any account or other right to receive income, other than
Permitted Liens.
(b) Indebtedness. Create, incur, assume, guarantee or suffer to
exist, or otherwise become or remain liable with respect to, or permit any of
its Subsidiaries to create, incur, assume, guarantee or suffer to exist or
otherwise become or remain liable with respect to, any Indebtedness other than
Permitted Indebtedness.
(c) Fundamental Changes. Wind-up, liquidate or dissolve itself, or
permit or suffer any thereof, (excepting in all cases Excluded Subsidiaries) or
merge, consolidate or amalgamate with any Person, convey, sell, lease or
sublease, transfer or otherwise dispose of, whether in one transaction or a
series of related transactions, all or any part of its business, property or
assets, whether now owned or hereafter acquired (or agree to do any of the
foregoing), or purchase or otherwise acquire, whether in one transaction or a
series of related transactions, all or substantially all of the assets of any
Person (or any division thereof) (or agree to do any of the foregoing), or
permit any of its Subsidiaries to do any of the foregoing; provided, however,
that
(i) any wholly-owned Subsidiary of a Borrower may be merged
into such Borrower or another such wholly-owned Subsidiary of a Borrower,
or may consolidate with another such wholly-owned Subsidiary of a
Borrower, so long as (A) no other provision of this Agreement would be
violated thereby, (B) the Administrative Borrower gives the Agent at least
60 days' prior written notice of such merger or consolidation, (C) no
Default or Event of Default shall have occurred and be continuing either
before or after giving effect to such transaction, (D) the Agent's rights
in any
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Collateral, including, without limitation, the existence, perfection and
priority of any Lien thereon, are not adversely affected by such merger or
consolidation and (E) the surviving domestic Subsidiary, if any, is a
party to a Guaranty and a Security Agreement and the Capital Stock of
which Subsidiary is the subject of a Pledge Agreement, in each case which
is in full force and effect on the date of and immediately after giving
effect to such merger or consolidation;
(ii) any Loan Party and its Subsidiaries may (A) sell
Inventory in the ordinary course of business, (B) dispose of obsolete or
worn-out equipment in the ordinary course of business, provided that the
Net Cash Proceeds of all such Dispositions since the Effective Date do not
exceed $250,000 in the aggregate and (C) sell or otherwise dispose of
other property or assets for cash in an aggregate amount not less than the
fair market value of such property or assets, provided that the Net Cash
Proceeds of such Dispositions do not exceed $100,000 in the aggregate in
any twelve-month period and are paid to the Agent pursuant to the terms of
Section 2.05(c)(iv); and
(iii) the parties to the Merger Agreement may consummate the
Merger contemplated thereby.
(d) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business as
carried on at the date hereof or any business reasonably related or ancillary
thereto.
(e) Loans, Advances, Investments, Etc. Make or commit or agree to
make any loan, advance guarantee of obligations, other extension of credit or
capital contributions to, or hold or invest in or commit or agree to hold or
invest in, or purchase or otherwise acquire or commit or agree to purchase or
otherwise acquire any shares of the Capital Stock, bonds, notes, debentures or
other securities of, or make or commit or agree to make any other investment in,
any other Person, or purchase or own any futures contract or otherwise become
liable for the purchase or sale of currency or other commodities at a future
date in the nature of a futures contract, or permit any of its Subsidiaries to
do any of the foregoing, except for: (i) investments existing on the date
hereof, as set forth on Schedule 6.02(e) hereto, but not any increase in the
amount thereof as set forth in such Schedule or any other modification of the
terms thereof, (ii) Permitted Investments, (iii) loans and advances in an amount
not to exceed $100,000 in the aggregate at any one time to (x) officers,
directors and employees of Borrower and its Subsidiaries (other than Excluded
Subsidiaries) not to exceed at any one time $100,000 in the aggregate for
travel, entertainment, relocation and analogous ordinary business purposes, (y)
independent sales Persons not to exceed at any one time $100,000 in the
aggregate against commissions and (z) the officers, directors and employees
itemized on Schedule 6.02(e) not to exceed at any one time $100,000 in the
aggregate, (iv) investments by a Borrower in any other Borrower, (v) investments
received in satisfaction or partial satisfaction thereof from financially
troubled account debtors to the extent reasonably necessary in order to prevent
or limit loss, (vi) Contingent Obligations permitted by Section 6.02(b), (vii)
other investments (excluding investments in Excluded Subsidiaries) not exceeding
$100,000 in the aggregate in any Fiscal Year, and (viii) any Acquisition by a
Borrower or any wholly owned Subsidiary of the Borrower to the extent that each
of the following conditions shall have been satisfied (each, a "Permitted
Acquisition:
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(A) the Borrower shall have furnished to the Agent at least 10
Business Days prior to the consummation of such Acquisition (1) an
executed term sheet and/or commitment letter (setting forth in
reasonable detail the terms and conditions of such Acquisition) and,
at the request of the Agent, such other information and documents
that the Agent may request, including, without limitation, executed
counterparts of the respective agreements, documents or instruments
pursuant to which such Acquisition is to be consummated (including,
without limitation, any related management, non-compete, employment,
option or other material agreements), any schedules to such
agreements, documents or instruments and all other material
ancillary agreements, instruments and documents to be executed or
delivered in connection therewith, (2) pro forma financial
statements of the Parent and its Subsidiaries after the consummation
of such Acquisition, (3) a certificate of the chief financial
officer of the Administrative Borrower, demonstrating on a pro forma
basis compliance with all covenants set forth in Section 6.03 after
the consummation of such Acquisition, and (4) copies of such other
agreements, instruments and other documents (including, without
limitation, the Loan Documents required by Section 6.01(b)) as the
Agent shall reasonably request;
(B) the agreements, instruments and other documents referred
to in paragraph (B) above shall provide that (1) neither the Parent
nor any of its Subsidiaries shall, in connection with such
Acquisition, assume or remain liable in respect of any Indebtedness
of the Seller or Sellers, or other obligation of the Seller or
Sellers (except for obligations incurred in the ordinary course of
business in operating the property so acquired and necessary and
desirable to the continued operation of such property and except for
Indebtedness that the Agent otherwise expressly consents to in
writing after its review of the terms of the proposed Acquisition),
and (2) all property to be so acquired in connection with such
Acquisition shall be free and clear of any and all Liens, except for
Permitted Liens (and if any such property is subject to any Lien not
permitted by this clause (2) then concurrently with such Acquisition
such Lien shall be released);
(C) the Subsidiary to be acquired or formed as a result of
such Acquisition shall be engaged in a similar business as the
Borrowers and such Subsidiary will be a direct wholly-owned
Subsidiary of a Borrower;
(D) such Acquisition shall be effected in such a manner so
that the acquired Capital Stock or assets are owned either by a
Borrower or a wholly owned Subsidiary of the Borrower and, if
effected by merger or consolidation involving a Borrower, such
Borrower shall be the continuing or surviving Person;
(E) any such domestic Subsidiary (and its equityholders) shall
execute and deliver the agreements, instruments and other documents
required by Section 6.01(b); and
(F) the Agent shall otherwise have consented to the
Acquisition.
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(f) Lease Obligations. Create, incur or suffer to exist, or permit
any of its Subsidiaries to create, incur or suffer to exist, any obligations as
lessee (i) for the payment of rent for any real or personal property in
connection with any sale and leaseback transaction, or (ii) for the payment of
rent for any real or personal property under leases or agreements to lease other
than (A) Capitalized Lease Obligations which would not cause the aggregate
amount of all obligations under Capitalized Leases entered into after the
Effective Date owing by the Parent and its Subsidiaries in any Fiscal Year to
exceed the amounts set forth in subsection (g) of this Section 6.02, and (B)
Operating Lease Obligations which would not cause the aggregate amount of all
Operating Lease Obligations owing by the Parent and its Subsidiaries Parties in
any Fiscal Year to exceed $500,000.
(g) Capital Expenditures. Make or commit or agree to make, or permit
any of its Subsidiaries to make or commit or agree to make, any Capital
Expenditure (by purchase or Capitalized Lease) that would cause the aggregate
amount of all such Capital Expenditures made by the Parent and its Subsidiaries
to exceed $500,000 in any Fiscal Year.
(h) Restricted Payments. (i) Declare or pay any dividend or other
distribution, direct or indirect, on account of any Capital Stock of the Parent
or any of its Subsidiaries, now or hereafter outstanding, (ii) make any
repurchase, redemption, retirement, defeasance, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any Capital
Stock of any Borrower, now or hereafter outstanding, (iii) make any payment to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights for the purchase or acquisition of shares of any class of Capital
Stock of any Borrower, now or hereafter outstanding, (iv) except for the
transaction contemplated by the Merger Agreement, return any of capital to any
shareholders or other equity holders of the Parent or any of its Subsidiaries,
or make any other distribution of property, assets, shares of Capital Stock,
warrants, rights, options, obligations or securities thereto as such or (v) pay
any management fees or any other fees or expenses (including the reimbursement
thereof by the Parent or any of its Subsidiaries) pursuant to any management,
consulting or other services agreement to any of the shareholders or other
equityholders of the Parent or any of its Subsidiaries or other Affiliates, or
to any other Subsidiaries or Affiliates of any Borrower; provided, however, that
so long as no Event of Default shall have occurred and be continuing or would
result therefrom:
(A) The direct and indirect Subsidiaries of the Parent may
declare and pay cash and stock dividends, return capital and make
distributions of assets to their respective parent;
(B) the Parent may declare and pay dividends and distributions
payable solely in shares of its common stock;
(C) the Loan Parties may pay management fees, consulting fees
or any other similar fees or expenses (1) to the Persons listed on
Schedule 6.02(h)(C) hereto and (2) to any other Person not listed on
such Schedule, provided that such fees and expenses are paid for
fair consideration and on terms no less favorable to any Loan Party
than would be obtainable in a comparable arm's length transaction
with such Person that is not a shareholder, equityholder or
Affiliate of a Borrower;
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(D) each Borrower may make Restricted Payments to any other
Borrower; and
(E) the Borrower and each Subsidiary may repurchase, redeem or
otherwise acquire or retire for value any equity interests of
Borrower or any Subsidiary held by any current or former employee of
Borrower or any Subsidiary pursuant to the terms of any employee
equity subscription agreement, stock option agreement or similar
agreement entered into in the ordinary course of business provided
that (i) the amount of such repurchases, redemptions, acquisitions
or retirements for value shall not exceed $100,000 in the aggregate
during the term of this Agreement and (ii) immediately preceding any
such repurchase, redemption, acquisition or retirement for value and
immediately after giving effect thereto, Excess Availability shall
be equal to or greater than $2,500,000.
(i) Federal Reserve Regulations. Permit any Loan or the proceeds of
any Loan under this Agreement to be used for any purpose that would cause such
Loans to be margin loans under the provisions of Regulation T, U or X.
(j) Transactions with Affiliates. Enter into, renew, extend or be a
party to, or permit any of its Subsidiaries to enter into, renew, extend or be a
party to any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease, transfer or exchange of property or
assets of any kind or the rendering of services of any kind) with any of its
Affiliates, other than (A) each of the transactions listed on Schedule 6.02(j)
hereto, (B) loans or advances from a Borrower to any other Borrower to the
extent permitted under Section 6.02(k), and (C) in the ordinary course of
business in a manner and to an extent consistent with past practice and
necessary or desirable for the prudent operation of its business, for fair
consideration and on terms no less favorable to the applicable Borrower than
would be obtainable in a comparable arm's length transaction with a Person that
is not an Affiliate thereof.
(k) Limitations on Dividends and Other Payment Restrictions
Affecting Subsidiaries. Create or otherwise cause, incur, assume, suffer or
permit to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any of its Subsidiaries (i) to pay dividends or to
make any other distribution on any shares of Capital Stock of such Subsidiary
owned by the Parent or any of its Subsidiaries, (ii) to pay or prepay or to
subordinate any Indebtedness owed to the Parent or any of its Subsidiaries,
(iii) to make loans or advances to the Parent or any of its Subsidiaries or (iv)
to transfer any of its property or assets to the Parent or any of its
Subsidiaries, or permit any of its Subsidiaries to do any of the foregoing;
provided, however, that nothing in any of clauses (i) through (iv) of this
Section 6.02(k) shall prohibit or restrict:
(A) this Agreement and the other Loan Documents;
(B) any agreements in effect on the date of this Agreement and
described on Schedule 6.02(k)(B);
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(C) any applicable law, rule or regulation (including, without
limitation, applicable currency control laws and applicable state
corporate statutes restricting the payment of dividends in certain
circumstances);
(D) in the case of clause (iv) any agreement setting forth
customary restrictions on the subletting, assignment or transfer of
any property or asset that is a lease, license, conveyance or
contract of similar property or assets; or
(E) in the case of clause (iv) any holder of a Permitted Lien
from restricting on customary terms the transfer of any property or
assets subject thereto; or
(F) in the case of clause (i), as permitted by Section
6.02(h)(B).
(l) Limitation on Issuance of Capital Stock.
(i) The Parent shall not issue or sell or enter into any
agreement or arrangement for the issuance and sale of any shares of its
Capital Stock, any securities convertible into or exchangeable for its
Capital Stock or any warrants, options or other rights for the purchase or
acquisition of any of its Capital Stock, except for the issuance of shares
of its Capital Stock pursuant to the terms of any employee equity
subscription agreement, stock option agreement or similar agreement with
any director, officer or employee of the Parent, provided that the
foregoing limitation shall not apply if, but only if, the Agent shall
receive at least 20 days prior to such issuance or sale or entry of any
such agreement or arrangement a certificate from an Authorized Officer of
the Parent, certifying to the Agent that the proceeds received by the
Parent in connection with such issuance and sale of its Capital Stock will
be used to pay in full the principal of, and interest on, the Loans and
all other Obligations under this Agreement and the other Loan Documents
and to terminate the Revolving Credit Commitment, and such proceeds are in
fact used in accordance with such certificate.
(ii) The Parent shall not permit any of its Subsidiaries to
issue or sell or enter into any agreement or arrangement for the issuance
and sale of any shares of its Capital Stock, any securities convertible
into or exchangeable for its Capital Stock or any warrants.
(m) Modifications of Indebtedness, Organizational Documents and
Certain Other Agreements; Etc. (i) Amend, modify or otherwise change (or permit
the amendment, modification or other change in any manner of) any of the
provisions of any Indebtedness of the Parent or any of its Subsidiaries or of
any instrument or agreement (including, without limitation, any purchase
agreement, indenture, loan agreement or security agreement) relating to any such
Indebtedness if such amendment, modification or change would shorten the final
maturity or average life to maturity of, or require any payment to be made
earlier than the date originally scheduled on, such Indebtedness, would increase
the interest rate applicable to such Indebtedness, or would change the
subordination provision, if any, of such Indebtedness, or would otherwise be
adverse to the issuer of such Indebtedness in any respect, (ii) except for the
Obligations, make any voluntary or optional payment, prepayment, redemption or
other
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acquisition for value of any Indebtedness of the Parent or any of its
Subsidiaries (including, without limitation, by way of depositing money or
securities with the trustee therefor before the date required for the purpose of
paying any portion of such Indebtedness when due), or refund, refinance, replace
or exchange any other Indebtedness for any such Indebtedness, or make any
prepayment, redemption or repurchase of any outstanding Indebtedness as a result
of any asset sale, change of control, issuance and sale of debt or equity
securities or similar event, or give any notice with respect to any of the
foregoing, or (iii) amend, modify or otherwise change its certificate of
incorporation or bylaws (or other similar organizational documents), including,
without limitation, by the filing or modification of any certificate of
designation, or any agreement or arrangement entered into by it, with respect to
any of its Capital Stock (including any shareholders' agreement), or enter into
any new agreement with respect to any of its Capital Stock except any such
amendments, modifications or changes or any such new agreements or arrangements
pursuant to this clause (iii) that either individually or in the aggregate,
could have a Material Adverse Effect.
(n) Investment Company Act of 1940. Engage in any business, enter
into any transaction, use any securities or take any other action or permit any
of its Subsidiaries to do any of the foregoing, that would cause it or any of
its Subsidiaries to become subject to the registration requirements of the
Investment Company Act of 1940, as amended, by virtue of being an "investment
company" or a company "controlled" by an "investment company" not entitled to an
exemption within the meaning of such Act.
(o) Compromise of Accounts Receivable. Compromise or adjust any
Account Receivable (or extend the time of payment thereof) or grant any
discounts, allowances or credits or permit any of its Subsidiaries to do so,
other than, provided no Default or Event of Default has occurred and is
continuing, in the ordinary course of business of the Parent or its
Subsidiaries, as the case may be in a manner and to an extent consistent with
past practice; provided, however, (i) in no event shall the aggregate amount of
any such discounts, allowances or credits exceed three percent (3%) of year to
date sales calculated as of the date of such discount, allowance or credit, and
(ii) the applicable Borrower shall have provided written notice to the Agent
before granting any compromise, discount, allowance or credit of more than
$100,000.
(p) Environmental. Permit the use, handling, generation, storage,
treatment, release or disposal of Hazardous Materials at any property owned or
leased by the Parent or any of its Subsidiaries except in compliance with
Environmental Laws and so long as such use, handling, generation, storage,
treatment, release or disposal of Hazardous Materials does not result in a
Material Adverse Effect.
(q) Certain Agreements.
(i) Agree to amend or otherwise modify its certificate of
incorporation or by-laws, or any agreement, instrument or other document
evidencing or otherwise governing any Subordinated Indebtedness or
preferred stock issued by such Person.
(ii) Agree to any material amendment or other material change
to or material waiver of any other document, instrument or agreement
relating to any Permitted Acquisition, without the prior written consent
of the Agent.
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(r) Retirement of Subordinated Indebtedness. Enter into or permit
any amendment or other modification of any provision relating to the payment of
any Subordinated Indebtedness or any provision purporting to subordinate such
Subordinated Indebtedness to the Obligations, or pay, purchase, prepay, redeem
or otherwise retire any Subordinated Indebtedness otherwise than by the
conversion of such Subordinated Indebtedness into shares of the common stock of
the Parent; provided, however, that so long as no Event of Default has occurred
and is continuing, the Parent may make scheduled payments of principal of and
interest on the Indebtedness evidenced by the Preferred Holders Notes, the
Former Chairman's Settlement and the Primesoft Note.
Section 6.03 Financial Covenants. So long as any principal of or
interest on any Loan or any other Obligation (whether or not due) shall remain
unpaid or the Lender shall have any Commitment hereunder, the Borrowers shall
not, unless the Agent shall otherwise consent in writing:
(a) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage
Ratio, at the end of the fiscal quarter of the Parent and its Subsidiaries
ending June 30, 2005 to be less than 0.6 to 1.0 and at the end of any fiscal
quarter of the Parent and its Subsidiaries thereafter, to be less than 1.0 to
1.0.
(b) Consolidated EBITDA. Permit Consolidated EBITDA of the Parent
and its Subsidiaries, at the end of the fiscal quarter of the Parent and its
Subsidiaries ending June 30, 2005 to be less than $210,000 and at the end of any
fiscal quarter of the Parent and its Subsidiaries thereafter, to be less than
$300,000.
ARTICLE VII
MANAGEMENT, COLLECTION AND STATUS OF
ACCOUNTS RECEIVABLE AND OTHER COLLATERAL
Section 7.01 Collection of Accounts Receivable; Management of
Collateral. (a) With respect to the Account Receivables, the Parent shall and
shall cause its Subsidiaries to, irrevocably instruct the Account Debtors to
remit to the Agent Account all payments to be made by check or other draft and
all payments to be made by wire transfer. Until the Agent has advised the Loan
Parties to the contrary after the occurrence and during the continuance of an
Event of Default, the Loan Parties may and will enforce, collect and receive all
amounts owing on the Account Receivables for the Agent's benefit and on the
Agent's behalf, but at the Loan Parties' expense; such privilege shall
terminate, at the election of the Agent, upon the occurrence and during the
continuance of any Event of Default. All checks, drafts, notes, money orders,
acceptances, cash and other evidences of Indebtedness received directly by any
Loan Party from any Account Debtor, as proceeds from Accounts Receivable, or as
proceeds of any other Collateral, shall be received and held by such Person in
trust for the Agent and deposited by such Person in original form and no later
than the next Business Day after receipt thereof into the Agent Account. No Loan
Party shall commingle such collections with any such Loan Party's own funds or
the funds of any Subsidiary or Affiliate of such Loan Party or with the proceeds
of any assets not included in the Collateral. The Agent shall charge the Loan
Account on the last day of each month with three (3) collection days for all
such collections, except wire transfers or
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other transfers of good funds. All funds received in the Agent Account pursuant
to this Section 7.01(a) shall be credited to the Loan Account for application at
the end of each Business Day to reduce the then principal balance of the
Revolving Loans, conditional upon final payment to the Agent. No checks, drafts
or other instruments received by the Agent shall constitute final payment to the
Agent unless and until such instruments have actually been collected.
(b) After the occurrence and during the continuance of an Event of
Default, the Agent may send a notice of assignment and/or notice of the Agent's
security interest to any and all Account Debtors or third parties holding or
otherwise concerned with any of the Collateral, and thereafter the Agent shall
have the sole right to collect the Accounts Receivable and/or take possession of
the Collateral and the books and records relating thereto. The Parent shall not,
and shall not permit its Subsidiaries to, without prior written consent of the
Agent, grant any extension of time of payment of any Account Receivable,
compromise or settle any Account Receivable for less than the full amount
thereof, release, in whole or in part, any Person or property liable for the
payment thereof, or allow any credit or discount whatsoever thereon, except, in
the absence of a continuing Event of Default, as permitted by Section 6.02(o).
(c) Each Loan Party hereby appoints the Agent or its designee on
behalf of the Agent as each such Loan Party's attorney-in-fact with power
exercisable during the continuance of any Default or Event of Default to endorse
any Loan Party's name upon any notes, acceptances, checks, drafts, money orders
or other evidences of payment relating to the Accounts Receivable, to sign such
Loan Party's name on any invoice or ▇▇▇▇ of lading relating to any of the
Accounts Receivable, drafts against Account Debtors with respect to Accounts
Receivable, assignments and verifications of Accounts Receivable and notices to
Account Debtors with respect to Accounts Receivable, to send verification of
Accounts Receivable, and, to notify the Postal Service authorities to change the
address for delivery of mail addressed to the Parent or any of its Subsidiaries
to such address as the Agent may designate and to do all other acts and things
necessary to carry out this Agreement. All acts of said attorney or designee are
hereby ratified and approved, and said attorney or designate shall not be liable
for any acts of omission or commission (other than acts or omissions
constituting gross negligence or willful misconduct), or for any error of
judgment or mistake of fact or law; this power being coupled with an interest is
irrevocable until all of the Loans and other Obligations under the Loan
Documents are paid in full and all of the Loan Documents are terminated.
(d) Nothing herein contained shall be construed to constitute the
Agent as agent of the Parent or any Subsidiary for any purpose whatsoever, and
the Agent shall not be responsible or liable for any shortage, discrepancy,
damage, loss or destruction of any part of the Collateral wherever the same may
be located and regardless of the cause thereof (other than from acts or
omissions of the Agent constituting gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction). The Agent
shall not, under any circumstance or in any event whatsoever, have any liability
for any error or omission or delay of any kind occurring in the settlement,
collection or payment of any of the Accounts Receivable or any instrument
received in payment thereof or for any damage resulting therefrom (other than
acts or omissions of the Agent constituting gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction). The Agent, by anything herein or in any assignment or otherwise,
does not assume any of the obligations under any contract or
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agreement assigned to the Agent and shall not be responsible in any way for the
performance by the Parent or any Subsidiary of any of the terms and conditions
thereof.
(e) If any Account Receivable includes a charge for any tax payable
to any Governmental Authority, the Agent is hereby authorized (but in no event
obligated) in its discretion to pay the amount thereof to the proper taxing
authority for the applicable Loan Party's account and to charge the Loan Parties
therefor. Each Loan Party shall notify the Agent if any Account Receivable
includes any taxes due to any such Governmental Authority and, in the absence of
such notice, the Agent shall have the right to retain the full proceeds of such
Account Receivable and shall not be liable for any taxes that may be due by
reason of the sale and delivery creating such Account Receivable.
Section 7.02 Accounts Receivable Documentation. The Loan Parties
will at such intervals as the Agent may require, execute and deliver
confirmatory written assignments of the Accounts Receivable to the Agent and
furnish such further schedules and/or information as the Agent may reasonably
require relating to the Accounts Receivable, including, without limitation,
sales invoices or the equivalent, credit memos issued, remittance advises,
reports and copies of deposit slips and copies of original shipping or delivery
receipts for all merchandise sold. In addition, the Loan Parties shall notify
the Agent of any non-compliance in respect of the representations, warranties
and covenants contained in Section 7.03. The items to be provided under this
Section 7.02 are to be in form reasonably satisfactory to the Agent and are to
be executed and delivered to the Agent from time to time solely for its
convenience. A Loan Party's failure to give any of such items to the Agent shall
not affect, terminate, modify or otherwise limit the Agent's Lien on the
Collateral. The Loan Parties shall not re-date any invoice or sale or make sales
on extended dating beyond that customary in the Loan Parties' industry and in
the ordinary course of such Loan Party's business. In addition, the Loan Party
shall not re-▇▇▇▇ any Accounts Receivable without promptly disclosing the same
to the Agent and providing the Agent with copy of such re-billing, identifying
the same as such; provided, however, if the original invoice amount of any
Account Receivable proposed to be re-billed equals or exceeds $50,000, the Loan
Party shall give the Agent prior written notice thereof together with a copy of
the proposed re-billing; provided, further, the Loan Party shall not be required
to notify the Agent of any Accounts Receivable which are re-billed in order to
correct invoice errors or which are re-billed in the ordinary course of business
and in a manner and an amount consistent with past business practice to the
extent the aggregate amount of such re-billed Accounts Receivable do not exceed
$50,000 during any month. If any Loan Party becomes aware of anything materially
detrimental to any of the Loan Party's customers' credit, such Loan Party will
promptly advise the Agent thereof.
Section 7.03 Status of Accounts Receivable and Other Collateral.
With respect to Collateral of any Loan Party at the time the Collateral becomes
subject to the Agent's Lien, each Loan Party covenants, represents and warrants:
(a) the Loan Party shall be the sole owner, free and clear of all Liens except
in the favor of the Agent or otherwise permitted hereunder, and fully authorized
to sell, transfer, pledge and/or grant a security interest in each and every
item of said Collateral; (b) each Account Receivable shall be a good and valid
account representing an undisputed bona fide indebtedness incurred or an amount
indisputably owed by the Account Debtor therein named, for a fixed sum as set
forth in the invoice relating thereto with respect to any absolute sale and
delivery upon the specified terms of goods sold or services rendered by the
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Loan Party; (c) no Account Receivable shall be subject to any defense, offset,
counterclaim, discount or allowance except as may be stated in the invoice
relating thereto, discounts and allowances as may be customary in the Loan
Party's business and as otherwise disclosed to the Agent; (d) none of the
transactions underlying or giving rise to any Account Receivable shall violate
any applicable state or federal laws or regulations, and all documents relating
thereto shall be legally sufficient under such laws or regulations and shall be
legally enforceable in accordance with their terms; (e) no agreement under which
any deduction or offset of any kind, other than normal trade discounts, may be
granted or shall have been made by the Loan Party at or before the time such
Accounts Receivable is created; (f) all agreements, instruments and other
documents relating to any Account Receivable shall be true and correct in all
material respects and what they purport to be; (g) all signatures and
endorsements that appear on all material agreements, instruments and other
documents relating to Accounts Receivable shall be genuine and all signatories
and endorsers shall have full capacity to contract; (h) the Loan Party shall
maintain books and records pertaining to said Collateral in such detail, form
and scope as the Agent shall reasonably require; (i) the Borrower shall
immediately notify the Agent if any accounts arise out of contracts with the
United States or any department, agency, or instrumentality thereof and will
execute any instruments and take any steps required by the Agent in order that
all monies due or to become due under any such contract shall be assigned to the
Agent and notice thereof given to the United States Government under the Federal
Assignment of Claims Act; (j) the Loan Party will, immediately upon learning
thereof, report to the Agent any material loss or destruction of, or substantial
damage to, any of the Collateral, and any other matters affecting the value,
enforceability or collectibility of any of the Collateral; (k) if any amount
payable under or in connection with any Account Receivable is evidenced by a
promissory note or other instrument, such promissory note or instrument shall be
immediately pledged, endorsed, assigned and delivered to the Agent as additional
Collateral; (l) the Loan Party shall not re-date any invoice or sale or make
sales on extended dating beyond that which is customary in the ordinary course
of its business and in the industry; and (m) the Loan Party is not and shall not
be entitled to pledge the Agent or the Lender's credit on any purchases or for
any purpose whatsoever.
Section 7.04 Collateral Custodian. Upon the occurrence and during
the continuance of any Event of Default, the Agent may at any time and from time
to time employ and maintain on the premises of any Loan Party a custodian
selected by the Agent who shall have full authority to do all acts necessary to
protect the Agent's interests. Each Loan Party hereby agrees to, and to cause
its Subsidiaries to, cooperate with any such custodian and to do whatever the
Agent may reasonably request to preserve the Collateral. All costs and expenses
incurred by the Agent by reason of the employment of the custodian shall be the
responsibility of the Loan Party and charged to the Loan Account.
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01 Events of Default. If any of the following Events of
Default shall occur and be continuing:
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(a) any Borrower fails to pay any principal of any Loan when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise); or any Borrower fails to pay any interest on any Loan, or any fee,
indemnity or other amount payable under this Agreement or any other Loan
Document within two (2) Business Days of the date when due;
(b) any representation or warranty made or deemed made by or on
behalf of any Loan Party or by any officer of the foregoing under or in
connection with any Loan Document or under or in connection with any report,
certificate, or other document delivered to the Agent or the Lender pursuant to
any Loan Document shall have been incorrect in any material respect when made or
deemed made;
(c) [Intentionally Omitted.]
(d) any Loan Party fails to perform or comply with any covenant or
agreement contained in paragraphs (b), (c), (d), (f), (h), (j), (k), (l), (m),
(n), (o) and (p) of Section 6.01, Section 6.02 or Section 6.03 (other than
paragraph (b) of Section 6.03);
(e) any Loan Party fails to perform or comply (i) with any covenant
or agreement contained in Section 6.01(a) and such failure shall continue
unremedied for a period of three (3) days, provided that no such cure period
shall apply if (A) a default under Section 6.01(a) shall occur twice during any
two consecutive week period and (B) the Loan Parties have defaulted under
Section 6.01(a) on more than ten separate occasions in any calendar year, (ii)
with any covenant or agreement contained in paragraphs (e), (g) and (i) of
Section 6.01, Section 5 of the Security Agreement or Section 6 of the Pledge
Agreement and such default shall continue unremedied for a period of three (3)
Business Days, and (iii) with any covenant or agreement contained in Section
6.03(b) and such failure shall continue unremedied for a period of ten (10)
Business Days;
(f) any Loan Party fails to perform or comply with any other term,
covenant or agreement contained in any Loan Document to be performed or observed
by it and, except as set forth in subsections (a), (b), (c), (d) and (e) of this
Section 8.01, such failure, if capable of being remedied, shall remain
unremedied for 20 days after the earlier of the date a senior officer of any
Borrower becomes aware of such failure and the date written notice of such
default shall have been given by the Agent to such Borrower.
(g) any Loan Party fails to pay any principal of or interest on any
of its Indebtedness (excluding Indebtedness evidenced by the Seller Notes, if
any,) in excess of $100,000, or any interest or premium thereon, when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Indebtedness, or
any other default under any agreement or instrument relating to any such
Indebtedness, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such Indebtedness
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), redeemed, purchased or defeased
or an offer to
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prepay, redeem, purchase or defease such Indebtedness shall be required to be
made, in each case prior to the stated maturity thereof;
(h) any Loan Party (i) shall institute any proceeding or voluntary
case seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for any such Person or for any substantial part of its
property, (ii) shall be generally not paying its debts as such debts become due
or shall admit in writing its inability to pay its debts generally, (iii) shall
make a general assignment for the benefit of creditors, or (iv) shall take any
action to authorize or effect any of the actions set forth above in this
subsection (h);
(i) any proceeding shall be instituted against any Loan Party
seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for any
such Person or for any substantial part of its property, and either such
proceeding shall remain undismissed or unstayed for a period of 60 days or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against any such Person or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property) shall occur;
(j) any provision of any Loan Document shall at any time for any
reason (other than pursuant to the express terms thereof) cease to be valid and
binding on or enforceable against any Loan Party intended to be a party thereto,
or the validity or enforceability thereof shall be contested by any party
thereto, or a proceeding shall be commenced by any Loan Party or any
Governmental Authority having jurisdiction over any of them, seeking to
establish the invalidity or unenforceability thereof, or any Loan Party shall
deny in writing that it has any liability or obligation purported to be created
under any Loan Document;
(k) any Security Agreement, any Pledge Agreement or any other
security document, after delivery thereof pursuant hereto, shall for any reason
fail or cease to create a valid and perfected and, except to the extent
permitted by the terms hereof or thereof, first priority Lien in favor of the
Lender on any Collateral purported to be covered thereby;
(l) one or more judgments or orders for the payment of money
exceeding $150,000 in the aggregate shall be rendered against any Loan Party and
remain unsatisfied and either (i) enforcement proceedings shall have been
commenced by any creditor upon any such judgment or order, or (ii) there shall
be a period of 10 Business Days after entry thereof during which a stay of
enforcement of any such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; provided, however, that any such judgment or
order shall not give rise to an Event of Default under this subsection (l) if
and for so long as (A) the amount of such judgment or order is covered by a
valid and binding policy of insurance between the defendant and the insurer
covering full payment thereof and (B) such insurer has been notified, and has
not disputed the claim made for payment, of the amount of such judgment or
order; or
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(m) any Loan Party or any of its ERISA Affiliates shall have made a
complete or partial withdrawal from a Multiemployer Plan, and, as a result of
such complete or partial withdrawal, any Loan Party or such ERISA Affiliate
incurs a withdrawal liability in an annual amount exceeding $100,000; or a
Multiemployer Plan enters reorganization status under Section 4241 of ERISA,
and, as a result thereof, any Loan Party's or such ERISA Affiliate's annual
contribution requirement with respect to such Multiemployer Plan increases in an
annual amount exceeding $100,000;
(n) any Termination Event with respect to any Employee Plan shall
have occurred, and, 30 days after notice thereof shall have been given to any
Loan Party by the Lender, (i) such Termination Event (if correctable) shall not
have been corrected, and (ii) the then current value of such Employee Plan's
vested benefits exceeds the then current value of assets allocable to such
benefits in such Employee Plan by more than $100,000 (or, in the case of a
Termination Event involving liability under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of
the Code, the liability is in excess of such amount);
(o) a Change of Control shall have occurred; or
(p) an event or development occurs which has a Material Adverse
Effect;
then, and in any such event, the Agent may, by notice to the Administrative
Borrower, (i) terminate the Commitments, whereupon the Commitments shall
terminate immediately, (ii) declare all Loans then outstanding to be due and
payable, whereupon the aggregate principal of such Loans, all accrued and unpaid
interest thereon, all fees and all other amounts payable under this Agreement
shall become due and payable immediately, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived by each
Borrower and (iii) exercise any and all of its other rights and remedies under
applicable law, hereunder and under the other Loan Documents; provided, however,
that upon the occurrence of any Event of Default with respect to any Borrower
described in subsection (h) or (i) of this Section 8.01, without any notice to
the Borrowers or any other Person or any act by the Agent, the Commitments shall
automatically terminate and the Loans then outstanding, together with all
accrued and unpaid interest thereon, all fees and all other amounts due under
this Agreement shall become due and payable automatically and immediately,
without presentment, demand, protest or notice of any kind, all of which are
expressly waived by each Borrower.
ARTICLE IX
[RESERVED]
ARTICLE X
MISCELLANEOUS
Section 10.01 Notices, Etc. All notices and other communications
provided for hereunder shall be in writing and shall be mailed, telecopied or
delivered, if to a Borrower, at the following address:
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enherent Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Agent or the Lender, to it at the following address:
Ableco Finance LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section 10.01. All such notices and other communications shall be
effective, (i) if mailed, when received or five days after deposited in the
mails, whichever occurs first, (ii) if telecopied, when transmitted and
confirmation received, (iii) if sent by express courier guaranteeing next day
delivery, on the day after delivery to such express courier, or (iv) if
delivered, upon delivery, except that notices to the Agent and/or Lender
pursuant to Article II shall not be effective until received by the Agent and/or
Lender.
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Section 10.02 Amendments, Etc. No amendment or waiver of any
provision of this Agreement or any Note, and no consent to any departure by any
Loan Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 10.03 No Waiver; Remedies, Etc. No failure on the part of
the Agent and/or Lender to exercise, and no delay in exercising, any right
hereunder or under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any right under any Loan Document
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Agent and the Lender provided herein and
in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of the Agent
and the Lender under any Loan Document against any party thereto are not
conditional or contingent on any attempt by the Agent and/or the Lender to
exercise any of their rights under any other Loan Document against such party or
against any other Person.
Section 10.04 Expenses; Taxes; Attorneys' Fees. Each Borrower will
pay on demand all reasonable costs and expenses incurred by or on behalf of the
Agent and the Lender, regardless of whether the transactions contemplated hereby
are consummated, including, without limitation, reasonable fees, costs, client
charges and expenses of counsel for the Agent (including the Agent's in-house
counsel), accounting, due diligence, periodic field audits, physical counts,
valuations, fees of Rating Agencies associated with the rating of the Loans,
investigations, monitoring of assets, appraisals of Collateral, environmental
assessments, miscellaneous disbursements, examination, travel, lodging and
meals, arising from or relating to: (a) the negotiation, preparation, execution,
delivery, performance and administration of this Agreement and the other Loan
Documents, (including, without limitation, the preparation of any additional
Loan Documents pursuant to Section 6.01(b) or the review of any of the
agreements, instruments and documents referred to in Section 6.02(e)), (b) any
requested amendments, waivers or consents to this Agreement or the other Loan
Documents whether or not such documents become effective or are given, (c) the
preservation and protection of any of the Agent's and Lender's rights under this
Agreement or the other Loan Documents, (d) the defense of any claim or action
asserted or brought against the Agent and/or Lender by any Person that arises
from or relates to this Agreement, any other Loan Document, the Agent's and
Lender's claims against the Borrowers, or any and all matters in connection
therewith, (e) the commencement or defense of, or intervention in, any court
proceeding arising from or related to this Agreement or any other Loan Document,
(f) the filing of any petition, complaint, answer, motion or other pleading by
the Agent and/or Lender, or the taking of any action in respect of the
Collateral or other security, in connection with this Agreement or any other
Loan Document, (g) the protection, collection, lease, sale, taking possession of
or liquidation of, any Collateral or other security in connection with this
Agreement or any other Loan Document, (h) any attempt to enforce any Lien or
security interest in any Collateral or other security in connection with this
Agreement or any other Loan Document, (i) any attempt to collect from the
Borrowers, (j) the receipt by the Agent and/or Lender of any advice from its
professionals with respect to any of the foregoing, (k) all liabilities and
costs arising from or in connection with the past, present or future operations
of any Loan Party involving any damage to real or personal property or natural
resources or harm or injury alleged to have resulted from any Release of
Hazardous Materials on, upon or into such
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property, (l) any Environmental Liabilities and Costs incurred in connection
with the investigation, removal, cleanup and/or remediation of any Hazardous
Materials present or arising out of the operations of any facility of any Loan
Party, or (m) any Environmental Liabilities and Costs incurred in connection
with any Environmental Lien. Without limitation of the foregoing or any other
provision of any Loan Document: (x) each Borrower agrees to pay all stamp,
document, transfer, recording or filing taxes or fees and similar impositions
now or hereafter determined by the Lender to be payable in connection with this
Agreement or any other Loan Document, and each Borrower agrees to save the Agent
and the Lender harmless from and against any and all present or future claims,
liabilities or losses with respect to or resulting from any omission to pay or
delay in paying any such taxes, fees or impositions, (y) each Borrower agrees to
pay all broker fees that may become due in connection with the transactions
contemplated by this Agreement, and (z) if any Borrower fails to perform any
covenant or agreement contained herein or in any other Loan Document within the
time period specified in the applicable provision, the Agent may itself perform
or cause performance of such covenant or agreement, and the expenses of the
Agent incurred in connection therewith shall be reimbursed on demand by the
Borrowers.
Section 10.05 Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Lender may, and is hereby authorized
to, at any time and from time to time, without notice to the Borrowers (any such
notice being expressly waived by the Borrowers) and to the fullest extent
permitted by law, set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Lender to or for the credit or the account of the
Borrowers against any and all obligations of either now or hereafter existing
under any Loan Document, irrespective of whether or not the Lender shall have
made any demand hereunder or thereunder and although such obligations may be
contingent or unmatured. The Lender agrees to notify the Borrowers promptly
after any such set-off and application made by the Lender provided that the
failure to give such notice shall not affect the validity of such set-off and
application.
Section 10.06 Severability. Any provision of this Agreement, which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction.
Section 10.07 Assignments and Participations.
(a) This Agreement and the other Loan Documents shall be binding
upon and inure to the benefit of each Loan Party and the Agent and each Lender
and their respective successors and assigns; provided, however, that no Loan
Party may assign or transfer any of its rights hereunder without the prior
written consent of the Agent and any such assignment without the Agent's prior
written consent shall be null and void.
(b) Each Lender may assign to one or more other lenders or other
entities all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments and the
Loans made by it); provided, however, that (i) such assignment is in an amount
which is at least $1,000,000 or a multiple of $100,000 in excess thereof (or the
remainder of such Lender's Commitment) (except such minimum amount shall
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not apply to an assignment by a Lender to (x) an Affiliate of such Lender or a
Related Fund of such Lender or (y) a group of new Lenders, each of whom is an
Affiliate or Related Fund of each other to the extent the aggregate amount to be
assigned to all such new Lenders is at least $1,000,000 or a multiple of
$100,000 in excess thereof), (ii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance, an Assignment and
Acceptance, together with any promissory note subject to such assignment and
such parties shall deliver to the Agent a processing and recordation fee of
$5,000 (except the payment of such fee shall not be required in connection with
an assignment by a Lender to an Affiliate of such Lender or Related Fund of such
Lender) and (iii) any such assignment shall be made with the written consent of
the Agent. Upon such execution, delivery and acceptance, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least three Business Days after the delivery thereof to the Agent
(or such shorter period as shall be agreed to by the Agent and the parties to
such assignment), (A) the assignee thereunder shall become a "Lender" hereunder
and, in addition to the rights and obligations hereunder held by it immediately
prior to such effective date, have the rights and obligations hereunder that
have been assigned to it pursuant to such Assignment and Acceptance and (B) the
assigning Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Loan Document
furnished pursuant hereto; (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Loan Party or any of its Subsidiaries or the performance or observance by
any Loan Party of any of its obligations under this Agreement or any other Loan
Document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement and the other Loan Documents, together with
such other documents and information it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the assigning
Lender, the Agent or any Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement and the other Loan
Documents; (v) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other Loan Documents as are delegated to the Agent by the terms hereof
and thereof, together with such powers as are reasonably incidental hereto and
thereto; and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Loan Documents are required to be performed by it as a Lender.
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(d) The Agent shall, acting solely for this purpose as a
non-fiduciary agent of the Borrowers, maintain, or cause to be maintained at the
Payment Office, a copy of each Assignment and Acceptance delivered to and
accepted by it and a register (the "Register") for the recordation of the names
and addresses of the Lenders and the Commitments of, and principal amount of the
Loans (the "Registered Loans") owing to each Lender from time to time. Other
than in connection with an assignment by a Lender to an Affiliate of such Lender
or a Related Fund of such Lender, the entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Agent and the Lenders shall treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Administrative
Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with any promissory notes subject to
such assignment, the Agent shall, if the Agent consents to such assignment and
if such Assignment and Acceptance has been completed (i) accept such Assignment
and Acceptance and (ii) record the information contained therein in the
Register.
(f) A Registered Loan (and the registered note, if any, evidencing
the same) may be assigned or sold in whole or in part only by registration of
such assignment or sale on the Register (and each registered note shall
expressly so provide). Any assignment or sale of all or part of such Registered
Loan (and the registered note, if any, evidencing the same) may be effected only
by registration of such assignment or sale on the Register, together with the
surrender of the registered note, if any, evidencing the same duly endorsed by
(or accompanied by a written instrument of assignment or sale duly executed by)
the holder of such registered note, whereupon, at the request of the designated
assignee(s) or transferee(s), one or more new registered notes in the same
aggregate principal amount shall be issued to the designated assignee(s) or
transferee(s). Prior to the registration of assignment or sale of any Registered
Loan (and the registered note, if any, evidencing the same), the Agent shall
treat the Person in whose name such Registered Loan (and the registered note, if
any, evidencing the same) is registered as the owner thereof for the purpose of
receiving all payments thereon and for all other purposes, notwithstanding
notice to the contrary.
(g) In the event that any Lender sells participations in a
Registered Loan, such Lender shall, acting solely for this purpose as a
non-fiduciary agent of the Borrowers, maintain a register on which it enters the
name of all participants in the Registered Loans held by it (the "Participant
Register"). A Registered Loan (and the registered note, if any, evidencing the
same) may be participated in whole or in part only by registration of such
participation on the Participant Register (and each registered note shall
expressly so provide). Any participation of such Registered Loan (and the
registered note, if any, evidencing the same) may be effected only by the
registration of such participation on the Participant Register.
(h) Any foreign Person who purchases or is assigned or participates
in any portion of such Registered Loan shall comply with Section 2.08(d).
(i) Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement and the other Loan
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Documents (including, without limitation, all or a portion of its Commitments
and the Loans made by it); provided, that (i) such Lender's obligations under
this Agreement (including without limitation, its Commitments hereunder) and the
other Loan Documents shall remain unchanged; (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and the Borrowers, the Agent and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Loan Documents; and
(iii) a participant shall not be entitled to require such Lender to take or omit
to take any action hereunder except (A) action directly effecting an extension
of the maturity dates or decrease in the principal amount of the Loans, (B)
action directly effecting an extension of the due dates or a decrease in the
rate of interest payable on the Loans or the fees payable under this Agreement,
or (C) actions directly effecting a release of all or a substantial portion of
the Collateral or any Loan Party. The Loan Parties agree that each participant
shall be entitled to the benefits of Section 2.08 of this Agreement with respect
to its participation in any portion of the Commitments and the Loans as if it
was a Lender.
Section 10.08 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
Section 10.09 GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
Section 10.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ IN THE COUNTY OF
NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY
IRREVOCABLY ACCEPT IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
THE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS AND
IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS FOR NOTICES AS
SET FORTH IN SECTION 10.01, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER
SUCH MAILING. THE BORROWER HEREBY IRREVOCABLY APPOINTS THE SECRETARY OF STATE OF
THE STATE OF NEW YORK AS ITS LENDER FOR SERVICE OF PROCESS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER
TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION.
THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW,
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ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING
OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND
ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO
THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
Section 10.11 WAIVER OF JURY TRIAL, ETC. THE BORROWER, THE AGENT AND
THE LENDER HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, THE NOTES OR OTHER
LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR
OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION
THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION
WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE BORROWER CERTIFIES THAT
NO OFFICER, REPRESENTATIVE, LENDER OR ATTORNEY OF THE LENDER HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF ANY ACTION,
PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. THE BORROWER
HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER
ENTERING INTO THIS AGREEMENT.
Section 10.12 Consent by the Lender. Except as otherwise expressly
set forth herein, if the consent, approval, satisfaction, determination,
judgment, acceptance or similar action (an "Action") of the Agent and/or the
Lender shall be permitted or required pursuant to any provision hereof or any
provision of any other agreement to which any Borrower is a party and to which
the Agent or the Lender has succeeded thereto, such Action shall be required to
be in writing and may be withheld or denied by the Agent or Lender with or
without any reason, and without being subject to question or challenge on the
grounds that such Action was not taken in good faith.
Section 10.13 No Party Deemed Drafter. Each of the parties hereto
agrees that no party hereto shall be deemed to be the drafter of this Agreement.
Section 10.14 Reinstatement; Certain Payments. If any claim is ever
made upon the Lender for repayment or recovery of any amount or amounts received
by the Lender in payment or on account of any of the Obligations, the Lender
shall give prompt notice of such claim to the Administrative Borrower, and if
the Lender repays all or part of such amount by reason of (i) any judgment,
decree or order of any court or administrative body having jurisdiction over the
Lender or any of its property, or (ii) any good faith settlement or
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compromise of any such claim effected by the Lender with any such claimant, then
and in such event each Borrower agrees that (A) any such judgment, decree,
order, settlement or compromise shall be binding upon it notwithstanding the
cancellation of any Note or other instrument evidencing the Obligations or the
other Loan Documents or the termination of this Agreement or the other Loan
Documents, and (B) it shall be and remain liable to the Lender hereunder for the
amount so repaid or recovered to the same extent as if such amount had never
originally been received by the Lender.
Section 10.15 Indemnification. In addition to each Borrower's other
Obligations under this Agreement, each Borrower agrees, jointly and severally,
to defend, protect, indemnify and hold harmless the Agent, the Lender, any
Securitization Party and all of their respective officers, directors, employees,
attorneys, consultants and agents (collectively called the "Indemnitees") from
and against any and all losses, damages, liabilities, obligations, penalties,
fees, reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees, costs and expenses) incurred by such Indemnitees, whether prior
to or from and after the Effective Date, whether direct, indirect or
consequential, as a result of or arising from or relating to or in connection
with any of the following: (i) the negotiation, preparation, execution or
performance or enforcement of this Agreement, any other Loan Document or of any
other document executed in connection with the transactions contemplated by this
Agreement, (ii) the Lender's furnishing of funds to the Borrowers under this
Agreement, including, without limitation, the management of any such Loans,
(iii) any matter relating to the financing transactions contemplated by this
Agreement or the other Loan Documents or by any document executed in connection
with the transactions contemplated by this Agreement or the other Loan
Documents, or (iv) any claim, litigation, investigation or proceeding relating
to any of the foregoing, whether or not any Indemnitee is a party thereto
(collectively, the "Indemnified Matters"); provided, however, that the Borrowers
shall not have any obligation to any Indemnitee under this Section 10.15 for any
Indemnified Matter caused by the gross negligence or willful misconduct of such
Indemnitee, as determined by a final judgment of a court of competent
jurisdiction. Such indemnification for all of the foregoing losses, damages,
fees, costs and expenses of the Indemnitees are chargeable against the Loan
Account. To the extent that the undertaking to indemnify, pay and hold harmless
set forth in this Section 10.15 may be unenforceable because it is violative of
any law or public policy, the Borrowers shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law, to the payment
and satisfaction of all Indemnified Matters incurred by the Indemnitees. This
Indemnity shall survive the repayment of the Obligations and the discharge of
the Liens granted under the Loan Documents until such time as the applicable
statute of limitations with respect to any such underlying obligation expires
(unless prior to such time the Agent, any Lender, or Government Authority shall
have notified any Loan Party of any reason such obligation shall be extended
beyond its applicable statute of limitations).
Section 10.16 Records. The unpaid principal of and interest on the
Notes, if any, the interest rate or rates applicable to such unpaid principal
and interest, the duration of such applicability, the Revolving Credit
Commitment, and the accrued and unpaid fees payable pursuant to Section 2.06
hereof, including, without limitation, the Loan Servicing Fee, shall at all
times be ascertained from the records of the Lender, which shall be conclusive
and binding absent manifest error.
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Section 10.17 Binding Effect. This Agreement shall become effective
when it shall have been executed by each of the Borrowers, the Agent and the
Lender and when the conditions precedent set forth in Section 4.01 hereof have
been satisfied or waived in writing by the Agent, and thereafter shall be
binding upon and inure to the benefit of the Borrowers, the Agent and the Agent,
and their respective successors and assigns, except that the Borrowers shall not
have the right to assign their rights hereunder or any interest herein without
the prior written consent of the Agent, and any assignment by the Agent shall be
governed by Section 10.07 hereof.
Section 10.18 Confidentiality. Each of the Agent and the Lender
agrees (on behalf of itself and each of its affiliates, directors, officers,
employees and representatives) to use reasonable precautions to keep
confidential, in accordance with its customary procedures for handling
confidential information of this nature and in accordance with safe and sound
practices of comparable commercial finance companies, any non-public information
supplied to it by any Borrower pursuant to this Agreement or the other Loan
Documents which is identified by any Borrower as being confidential at the time
the same is delivered to such Person (and which at the time is not, and does not
thereafter become, publicly available or available to such Person from another
source not known to be subject to a confidentiality obligation to such Person
not to disclose such information), provided that nothing herein shall limit the
disclosure of any such information (i) to the extent required by statute, rule,
regulation or judicial process, (ii) to counsel for the Agent, (iii) to
examiners, auditors, accountants or Securitization Parties, (iv) in connection
with any litigation to which the Agent and/or Lender is a party or (v) to any
assignee or participant (or prospective assignee or participant) so long as such
assignee or participant (or prospective assignee or participant) first agrees,
in writing, to be bound by confidentiality provisions similar in substance to
this Section 10.18. Each of the Agent and the Lender agrees that, upon receipt
of a request or identification of the requirement for disclosure pursuant to
clause (iv) hereof, it will make reasonable efforts to keep the Borrowers
informed of such request or identification; provided that each Borrower
acknowledges that the Agent and the Lender may make disclosure as required or
requested by any Governmental Authority or representative thereof and that the
Lender may be subject to review by Securitization Parties or other regulatory
agencies and may be required to provide to, or otherwise make available for
review by, the representatives of such parties or agencies any such non-public
information.
Section 10.19 Joint and Several. The obligations of the Borrowers
hereunder are joint and several. Each of the Agent and the Lender may, in its
sole and absolute discretion, enforce the provisions hereof against any of the
Borrowers and shall not be required to proceed against all Borrowers jointly or
seek payment from the Borrowers ratably. In addition, the Agent may, in its sole
and absolute discretion, select the Collateral of any Borrower for sale or
application to the Obligations, without regard to the ownership of such
Collateral, and shall not be required to make such selection ratably from the
Collateral owned by each of the Borrowers. The release or discharge of any
Borrower by the Agent shall not release or discharge the other Loan Party from
the obligations of such Person hereunder.
Section 10.20 The Administrative Borrower as Agent for Borrowers.
Each Borrower hereby irrevocably appoints the Parent as the administrative
borrower, agent and attorney-in-fact for the Borrowers (the "Administrative
Borrower"), which appointment shall remain in full force and effect unless and
until the Agent shall have received prior written notice
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signed by all of the Borrowers that such appointment has been revoked and that
another Borrower has been appointed Administrative Borrower. Each Borrower
hereby irrevocably appoints and authorizes the Administrative Borrower (i) to
provide the Agent with all notices with respect to all Loans obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain all Loans and to exercise such other powers
as are reasonably incidental thereto to carry out the purposes of this
Agreement. Each Borrower hereby irrevocably appoints and authorizes the
Administrative Borrower to provide the Agent with all notices. It is understood
that the handling of the Loan Account and Collateral of the Borrowers in a
combined fashion, as more fully set forth herein, is done solely as an
accommodation to the Borrowers in order to utilize the collective borrowing
powers of the Borrowers in the most efficient and economical manner and at their
request, and that the Agent shall not incur liability to any of the Borrowers as
a result hereof. Each of the Borrowers expects to derive benefit, directly or
indirectly, from the handling of the Loan Account and the Collateral in a
combined fashion since the successful operation of each Borrower is dependent on
the continued successful performance of the integrated group. To induce the
Agent to do so, and in consideration thereof, each of the Borrowers hereby
jointly and severally agrees to indemnify the Indemnified Parties and hold the
Indemnities harmless against any and all liability, expense, loss or claim of
damage or injury, made against the Indemnities by the Borrowers or by any third
party whosoever, arising from or incurred by reason of (a) the handling of the
Loan Account and Collateral of the Borrowers as herein provided, (b) the Agent
relying on any instructions of the Administrative Borrower, or (c) any other
action taken by the Agent hereunder or under the other Loan Documents.
Section 10.21 No Novation. Notwithstanding anything to the contrary
contained herein, this Agreement is not intended to and does not serve to effect
a novation of the Obligations. Instead it is the express intention of the
parties hereto to reaffirm the indebtedness created under the Original Financing
Agreement which may be evidenced by the notes provided for therein and secured
by the Collateral. Each Borrower acknowledges and confirms that the Liens
granted pursuant to the Loan Documents secured the indebtedness, liabilities and
obligations of Borrowers to Agent and the Lender under the Original Financing
Agreement, as amended and restated hereby, and that the term "Obligations" as
used in the Loan Documents (or any other terms used therein to describe to refer
to the indebtedness, liabilities and obligations of Borrowers to Agent and
Lenders) includes, without limitation, the indebtedness, liabilities and
obligations of each Borrower under the Notes, if any, to be delivered hereunder,
and under the Original Financing Agreement, all as amended and restated hereby,
as the same may be further amended, modified, supplemented or restated from time
to time. The Loan Documents and all agreements, instruments and documents
executed or delivered in connection with any of the foregoing shall each be
deemed to be amended in the extent necessary to give effect to the provisions of
this Agreement. Cross-references in the Loan Documents to particular section
numbers in the Original Loan Agreement shall be deemed to be cross-references to
the corresponding sections, as applicable, to this Agreement. This Agreement and
the other Loan Documents referred to herein set forth the entire understanding
of the parties with respect to the subject matter hereof. Any previous term
sheets or commitment letters between the parties regarding the subject matter
hereof are merged into and superseded by this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BORROWERS:
ENHERENT CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and CEO
LENDER:
ABLECO FINANCE LLC, as lender and agent,
on behalf of itself and its affiliate
assigns
By: /s/ ▇▇▇ ▇▇▇▇
---------------------------------
Name: ▇▇▇ ▇▇▇▇
Title: Senior Vice President
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