1
EXHIBIT 4.2
LOAN AGREEMENT
BY AND BETWEEN
CONVERGENT GROUP CORPORATION
AND
FLEET NATIONAL BANK, AS AGENT AND A LENDER
AND
THE OTHER FINANCIAL INSTITUTIONS NOW OR
HEREAFTER PARTIES HERETO
$25,000,000 SECURED REVOLVING CREDIT LOAN
AUGUST 12,1999
(Loan Agreement - Fleet/Convergent)
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INDEX TO
LOAN AGREEMENT
Page
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ARTICLE 1. DEFINITIONS AND ACCOUNTING AND OTHER TERMS ...................................... 1
SECTION 1.1. CERTAIN DEFINED TERMS ....................................................... 1
SECTION 1.2. ACCOUNTING TERMS ............................................................ 17
SECTION 1.3. OTHER TERMS ................................................................. 17
ARTICLE 2. AMOUNT AND TERMS OF THE LOANS ................................................... 18
SECTION 2.1. THE LOANS ................................................................... 18
Section 2.1.0. The Revolving Credit Loans .............................................. 18
SECTION 2.2. INTEREST AND FEES ON THE LOANS .............................................. 19
Section 2.2.1. Interest ................................................................ 19
Section 2.2.2. Fees .................................................................... 20
Section 2.2.3. Increased Costs - Capital ............................................... 21
SECTION 2.3. NOTATIONS ................................................................... 22
SECTION 2.4. COMPUTATION OF INTEREST ..................................................... 22
SECTION 2.5. TIME OF PAYMENTS AND PREPAYMENTS IN IMMEDIATELY AVAILABLE FUNDS ............. 23
Section 2.5.1. Time .................................................................... 23
Section 2.5.2. Setoff, etc. ............................................................ 24
Section 2.5.3. Unconditional Obligations and No Deductions ............................. 24
SECTION 2.6. PREPAYMENT AND CERTAIN PAYMENTS ............................................. 26
Section 2.6.1. Mandatory Payments ...................................................... 26
Section 2.6.2. Voluntary Prepayments ................................................... 28
Section 2.6.3. Prepayment of Libor Loans ............................................... 28
Section 2.6.4. Permanent Reduction of Revolving Credit Loan Commitment ................. 28
SECTION 2.7. PAYMENT ON NON-BUSINESS DAYS ................................................ 28
SECTION 2.8. USE OF PROCEEDS ............................................................. 28
SECTION 2.9. SPECIAL LIBOR LOAN PROVISIONS ............................................... 29
Section 2.9.1. Requests ................................................................ 29
Section 2.9.2. Libor Loans Unavailable ................................................. 29
Section 2.9.3. Libor Lending Unlawful .................................................. 30
Section 2.9.4. Additional Costs on Libor Loans ......................................... 30
Section 2.9.5. Libor Funding Losses .................................................... 32
Section 2.9.6. Banking Practices ....................................................... 32
Section 2.9.7. Borrower's Options on Unavailability or Increased Cost of Libor Loans ... 33
Section 2.9.8. Assumptions Concerning Funding of Libor Loans ........................... 33
ARTICLE 3. CONDITIONS OF LENDING ........................................................... 34
SECTION 3.1. CONDITIONS PRECEDENT TO THE REVOLVING CREDIT LOAN COMMITMENT AND TO
ALL LOANS ................................................................... 34
Section 3.1.1. The Revolving Credit Loan Commitment and Initial Loans .................. 34
Section 3.1.2. The Revolving Credit Loan Commitment and the Loans ...................... 37
ARTICLE 4. REPRESENTATIONS AND WARRANTIES .................................................. 37
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER .............................. 37
Section 4.1.1. Organization and Existence .............................................. 38
Section 4.1.2. Authorization and Absence of Defaults ................................... 38
Section 4.1.3. Acquisition of Consents ................................................. 38
Section 4.1.4. Validity and Enforceability ............................................. 38
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(Loan Agreement - Fleet/Convergent)
3
Section 4.1.5. Financial Information ................................................... 38
Section 4.1.6. No Litigation ........................................................... 39
Section 4.1.7. Regulation U ............................................................ 39
Section 4.1.8. Absence of Adverse Agreements ........................................... 39
Section 4.1.9. Taxes ................................................................... 40
Section 4.1.10. ERISA .................................................................. 40
Section 4.1.11. Ownership of Properties ................................................ 40
Section 4.1.12. Accuracy of Representations and Warranties ............................. 41
Section 4.1.13. No Investment Company .................................................. 41
Section 4.1.14. Solvency, etc. ......................................................... 41
Section 4.1.15. Approvals .............................................................. 41
Section 4.1.16. Ownership Interests .................................................... 41
Section 4.1.17. Licenses, Registrations, Compliance with Laws, etc. .................... 41
Section 4.1.18. Principal Place of Business; Books and Records ......................... 42
Section 4.1.19. Subsidiaries ........................................................... 42
Section 4.1.20. Copyright .............................................................. 42
Section 4.1.21. Environmental Compliance ............................................... 42
Section 4.1.22. Material Agreements, etc. .............................................. 43
Section 4.1.23. Patents, Trademarks and Other Property Rights .......................... 43
Section 4.1.24. Related Transaction Documents .......................................... 43
Section 4.1.25. Material Adverse Effect ................................................ 43
Section 4.1.26. Year 2000 .............................................................. 43
ARTICLE 5. COVENANTS OF THE BORROWER ....................................................... 44
SECTION 5.1. AFFIRMATIVE COVENANTS OF THE BORROWER OTHER THAN REPORTING REQUIREMENTS ..... 44
Section 5.1.1. Payment of Taxes, etc. .................................................. 44
Section 5.1.2. Maintenance of Insurance ................................................ 44
Section 5.1.3. Preservation of Existence, etc. ......................................... 45
Section 5.1.4. Compliance with Laws, etc. .............................................. 45
Section 5.1.5. Visitation Rights ....................................................... 45
Section 5.1.6. Keeping of Records and Books of Account ................................. 45
Section 5.1.7. Maintenance of Properties, etc. ......................................... 45
Section 5.1.8. Post-Closing Items ...................................................... 45
Section 5.1.9. Other Documents, etc. ................................................... 45
Section 5.1.10. Minimum Interest Coverage Ratio ........................................ 46
Section 5.1.10(A). Minimum Profitability ............................................... 46
Section 5.1.11. Minimum Debt Service Coverage Ratio .................................... 46
Section 5.1.12. Maximum Ratio of Total Indebtedness for Borrowed Money to EBITDA ....... 46
Section 5.1.12(A). Minimum Quick Ratio ................................................. 46
Section 5.1.12(B). Receivables and Accrued Revenues .................................... 47
Section 5.1.13. Officer's Certificates and Requests .................................... 47
Section 5.1.14. Depository ............................................................. 47
Section 5.1.15. Chief Executive Officer ................................................ 47
Section 5.1.16. Notice of Purchase of Real Estate, Leases, etc. ........................ 47
Section 5.1.17. Additional Assurances .................................................. 48
Section 5.1.18. Appraisals ............................................................. 48
Section 5.1.19. Environmental Compliance ............................................... 48
Section 5.1.20. Remediation ............................................................ 48
Section 5.1.21. Site Assessments ....................................................... 48
Section 5.1.22. Indemnity .............................................................. 48
Section 5.1.23. Trademarks, Copyrights, etc. ........................................... 49
Section 5.1.24. ▇▇▇▇▇▇▇▇▇▇ Loan ........................................................ 49
SECTION 5.2. NEGATIVE COVENANTS OF THE BORROWER .......................................... 49
Section 5.2.1. Liens, etc. ............................................................. 49
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(Loan Agreement - Fleet/Convergent)
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Section 5.2.2. Assumptions, Guaranties, etc. of Indebtedness of Other Persons .......... 50
Section 5.2.3. Acquisitions, Dissolution, etc. ......................................... 50
Section 5.2.4. Change in Nature of Business ............................................ 51
Section 5.2.5. Ownership ............................................................... 51
Section 5.2.6. Sale and Leaseback; Synthetic Leases .................................... 51
Section 5.2.7. Sale of Accounts, etc. .................................................. 51
Section 5.2.8. Indebtedness ............................................................ 52
Section 5.2.9. Other Agreements ........................................................ 53
Section 5.2.10. Payment or Prepayment of Equity or Subordinated Debt ................... 53
Section 5.2.11. Dividends, Payments and Distributions .................................. 53
Section 5.2.12. Investments in or to Other Persons ..................................... 54
Section 5.2.13. Transactions with Affiliates ........................................... 54
Section 5.2.14. Change of Fiscal Year .................................................. 54
Section 5.2.15. Subordination of Claims ................................................ 54
Section 5.2.16. Compliance with ERISA .................................................. 54
Section 5.2.17. [Intentionally Omitted] ................................................ 55
Section 5.2.18. Hazardous Material ..................................................... 55
Section 5.2.19. Other Restrictions on Liens or Dividends ............................... 55
Section 5.2.20. Limitation on Creation of Subsidiaries, etc. ........................... 55
SECTION 5.3. REPORTING REQUIREMENTS ...................................................... 55
ARTICLE 6. EVENTS OF DEFAULT ............................................................... 57
SECTION 6.1. EVENTS OF DEFAULT ........................................................... 57
ARTICLE 7. REMEDIES OF LENDERS ............................................................. 59
ARTICLE 8. AGENT ........................................................................... 59
SECTION 8.1. APPOINTMENT ................................................................. 59
SECTION 8.2. POWERS; GENERAL IMMUNITY .................................................... 60
Section 8.2.1. Duties Specified ........................................................ 60
Section 8.2.2. No Responsibility For Certain Matters ................................... 60
Section 8.2.3. Exculpatory Provisions .................................................. 60
Section 8.2.4. Agent Entitled to Act as Lender ......................................... 61
SECTION 8.3. REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR
APPRAISAL OF CREDITWORTHINESS ............................................... 61
SECTION 8.4. RIGHT TO INDEMNITY .......................................................... 61
SECTION 8.5. PAYEE OF NOTE TREATED AS OWNER .............................................. 61
SECTION 8.6. RESIGNATION BY AGENT ........................................................ 62
SECTION 8.7. SUCCESSOR AGENT ............................................................. 62
ARTICLE 9. MISCELLANEOUS ................................................................... 62
SECTION 9.1. CONSENT TO JURISDICTION AND SERVICE OF PROCESS .............................. 62
SECTION 9.2. RIGHTS AND REMEDIES CUMULATIVE .............................................. 63
SECTION 9.3. DELAY OR OMISSION NOT WAIVER ................................................ 63
SECTION 9.4. WAIVER OF STAY OR EXTENSION LAWS ............................................ 64
SECTION 9.5. AMENDMENTS, ETC. ............................................................ 64
SECTION 9.6. ADDRESSES FOR NOTICES, ETC. ................................................. 64
SECTION 9.7. COSTS, EXPENSES AND TAXES ................................................... 66
SECTION 9.8. PARTICIPATIONS .............................................................. 66
SECTION 9.9. BINDING EFFECT; ASSIGNMENT .................................................. 66
SECTION 9.10. ACTUAL KNOWLEDGE ........................................................... 66
SECTION 9.11. SUBSTITUTIONS AND ASSIGNMENTS .............................................. 67
SECTION 9.12. PAYMENTS PRO RATA .......................................................... 69
SECTION 9.13. INDEMNIFICATION ............................................................ 69
SECTION 9.14. CONFIDENTIAL INFORMATION ................................................... 70
iii
(Loan Agreement - Fleet/Convergent)
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SECTION 9.15. GOVERNING LAW .............................................................. 71
SECTION 9.16. SEVERABILITY OF PROVISIONS ................................................. 71
SECTION 9.17. HEADINGS ................................................................... 71
SECTION 9.18. COUNTERPARTS ............................................................... 71
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(Loan Agreement - Fleet/Convergent)
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SCHEDULE OF EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
EXHIBIT 1.1 EQUITY INVESTMENTS, OWNERSHIP INTERESTS AND SUBSIDIARIES
EXHIBIT 1.2 RELATED TRANSACTION DOCUMENTS
EXHIBIT 1.4 FORM OF INTEREST RATE ELECTION
EXHIBIT 1.5 FORM OF REVOLVING CREDIT NOTE
EXHIBIT 1.8 PERMITTED ENCUMBRANCES
EXHIBIT 1.9 PRO RATA SHARES, AGENT'S AND LENDERS' NOTICE ADDRESSES AND WIRE
TRANSFER INSTRUCTIONS
EXHIBIT 1.10 FORM OF REQUEST
EXHIBIT 1.12 PROJECTIONS
EXHIBIT 2.1.0 FORM OF BORROWING BASE CERTIFICATE
EXHIBIT 3.1.1.8 PERMITTED INDEBTEDNESS AND CAPITALIZED LEASES
EXHIBIT 3.1.1.10 FORM OF COMPLIANCE CERTIFICATE
EXHIBIT 4.1.1 FOREIGN QUALIFICATIONS
EXHIBIT 4.1.2 AUTHORIZATIONS
EXHIBIT 4.1.3 CONSENTS
EXHIBIT 4.1.6 LITIGATION
EXHIBIT 4.1.8 ADVERSE AGREEMENTS
EXHIBIT 4.1.9 TAXES
EXHIBIT 4.1.11 REAL PROPERTY
EXHIBIT 4.1.17 GOVERNMENTAL PERMITS
EXHIBIT 4.1.20 COPYRIGHTS
EXHIBIT 4.1.21 HAZARDOUS WASTE
EXHIBIT 4.1.22 MATERIAL CONTRACTS
EXHIBIT 4.1.23 INTELLECTUAL PROPERTY
EXHIBIT 5.1.12(A) ELIGIBLE RECEIVABLES
EXHIBIT 5.2.2 GUARANTIES
EXHIBIT 5.2.12 EXISTING INVESTMENTS IN SUBSIDIARIES AND PARTNERSHIPS
EXHIBIT 5.2.13 TRANSACTIONS WITH AFFILIATES
EXHIBIT 9.11.1 FORM OF ASSIGNMENT AND ACCEPTANCE
V
(Loan Agreement - Fleet/Convergent)
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LOAN AGREEMENT
CONVERGENT GROUP CORPORATION, a Delaware corporation with a principal
place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter the "Borrower"), FLEET NATIONAL BANK, a
national banking association organized under the laws of the United States
and having an office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter sometimes the "Agent" in its capacity as Agent for itself and
each of the other Lenders who now and/or hereafter become parties to this
Agreement pursuant to the terms of Section 9.11 hereof (the "Lenders"),
sometimes in each of its capacities "Fleet" and sometimes in its capacity
as a Lender, "Lender", and the Lenders, hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING AND OTHER TERMS
Section 1.1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined):
"Adjusted Libor Rate" means, with respect to any Libor Loan to be made
by the Lenders for the Interest Period applicable to such Libor Loan, the
interest rate per annum determined by the Agent (fixed throughout such
Interest Period (subject to adjustments for the Libor Rate Reserve
Percentage)) and rounded upwards, if necessary, to the next 1/16 of 1%)
which is equal to the quotient of (i) the rate of interest determined by
the Agent to be the average of the interest rates per annum at which Dollar
deposits in immediately available funds are offered to each Reference
Lender by first-class banks in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the Business Day on
which such Interest Period begins, in an amount approximately equal to the
principal amount of such Libor Loan, for a period of time equal to such
Interest Period and (ii) a number equal to the number one minus the Libor
Rate Reserve Percentage. The "Libor Rate Reserve Percentage" applicable to
any Interest Period means the average of the maximum effective rates
(expressed as a decimal) of the statutory reserve requirements (without
duplication, but including, without limitation, basic, supplemental,
marginal and emergency reserves) applicable to each Reference Lender during
such Interest Period under regulations of the Board of Governors of the
Federal Reserve System (or any successor), including without limitation
Regulation D or any other regulation dealing with maximum reserve
requirements which are applicable to each Reference Lender with respect to
its "Eurocurrency Liabilities", as that term may be defined from time to
time by the Board of Governors of the Federal Reserve System (or any
successor) or are otherwise imposed by the Board of Governors of the
Federal Reserve System (or any successor) and which in any other respect
relate directly to the funding of loans bearing interest at rates based on
the interest rates at which Dollar deposits in immediately available funds
are offered to banks by first-class banks in the London interbank market.
If any Reference Lender fails to provide its offered quotation to the
Agent, the Adjusted Libor Rate shall be determined on the basis of the
offered quotation of the other Reference Lender. The Adjusted Libor Rate
shall be adjusted automatically on and as of the effective date of any
change in the Libor Rate Reserve Percentage.
"Advance" and "Advances" means the funding by any Lender of all or a
portion of the Loans in accordance with this Agreement.
(Loan Agreement - Fleet/Convergent)
8
"Affiliate" means singly and collectively, the New Stockholders and
any Person (other than a Subsidiary) which, directly or indirectly, is in
control of, is controlled by, or is under common control with, the
Borrower. For purposes of this definition, a Person shall be deemed to be
"controlled by" another Person and "control" shall be deemed to exist if
the latter Person possesses, directly or indirectly, power either to (i)
vote 10% or more of the securities 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, and the legal representative, successor or assign of any such
Person.
"Agent" means Fleet or any other Person which is at the time in
question serving as the agent under the terms of Article 8 hereof and the
other Financing Documents.
"Agreement" means this loan agreement, as the same may from time to
time be amended.
"A.M." means a time from and including 12 o'clock midnight to and
excluding 12 o'clock noon on any Business Day using Eastern Standard
(Daylight Savings) time.
"Applicable Margin" means for each Libor Loan, two and one-half
percent (2.50%) per annum; provided, however, that if, at any time on or
after the receipt by the Agent of the Borrower's annual audited financial
statements for the Borrower's December 31, 1999 fiscal year and of the
Borrower's quarterly financial statements for each subsequent Borrower
fiscal quarter provided to the Agent by the Borrower pursuant to Sections
5.3.2 or 5.3.3 hereof, the ratio of (a) total Indebtedness for Borrowed
Money of the Borrower and its Subsidiaries on a consolidated basis as of
the last day of the most recently ended fiscal quarter of the Borrower to
(b) EBITDA for such fiscal quarter and for the three immediately preceding
Borrower fiscal quarters, (i) is less than 2.5:1.0, but greater than or
equal to 2.0:1.0 and if and so long as no Event of Default or Default
exists and is continuing, the Applicable Margin shall, subject to the last
sentence of this definition, be two and one-quarter percent (2.25%), or
(ii) is less than 2.0:1.0, but greater than or equal to 1.0:1.0 and if and
so long as no Event of Default or Default exists and is continuing, the
Applicable Margin shall, subject to the next-to-last sentence of this
definition, be two percent (2.00%), or (iii) less than 1.0:1.0 and if
and so long as no Event of Default or Default exists and is continuing, the
Applicable Margin shall, subject to the next-to-last sentence of this
definition, be one and one-half percent (1.50%); provided further, however,
that if on any date the Borrower would be entitled to an Applicable Margin
other than 2.50% except for the fact that a Default exists, the Applicable
Margin shall not change until the first to occur of (a) such Default
becoming an Event of Default and (b) waiver or cure of such Default, at
which time the Applicable Margin shall be adjusted or remain the same in
accordance with the provisions of this definition preceding this further
proviso.
Any change in the Applicable Margin required pursuant to the foregoing
shall become effective on the fifth Business Day after the Agent receives
the Borrower's financial statement for the Borrower's fiscal quarter or
year-end, as the case may be, in question; provided, however, that each of
the above-referenced interest rates shall remain in effect only so long as
Borrower qualifies therefor in accordance with this definition and provided
further, however, that interest rate reductions shall become final only on
the basis of Borrower's annual audited financial statements and in the
event that such annual audited financial statements establish that the
Borrower was not entitled to a rate reduction which was previously granted,
the Borrower shall, upon written demand by the Agent, repay to the Agent
for the account of each Lender an amount equal to the excess of interest at
the rate which should have been charged based on such annual audited
financial statements and the rate actually charged on the basis of
Borrower's quarterly financial statement(s) (provided that in the event of
a dispute as to the appropriate fiscal quarter
2
(Loan Agreement - Fleet/Convergent)
9
as to which any adjustment should be allocated, the decision of the
independent accountants of the Borrower shall be made in accordance with
GAAP and shall be binding upon the Agent, the Lenders and the Borrower
absent manifest error); and provided further, however, that in the event
that Borrower fails to provide any financial statement on a timely basis in
accordance with Sections 5.3.2 or 5.3.3, any interest rate increase payable
as a result thereof shall be retroactively effective to the date on which
the financial statement in question should have been received by the Agent
in accordance with Section 5.3.2 or 5.3.3, and the Borrower shall pay any
amount due as a result thereof upon written demand from the Agent. The
Agent shall send the Borrower written acknowledgment of each change in the
Applicable Margin in accordance with the Agent's customary procedures as in
effect from time to time, but the failure to send such acknowledgment shall
have no effect on the effectiveness or applicability of the foregoing
provisions of this definition or Borrower's obligations with respect to
payment and calculation of interest on Libor Loans.
"Authorized Representative" means such senior personnel of the
Borrower as shall be duly authorized and designated in writing by the
Borrower to execute documents, instruments and agreements on its behalf and
to perform the functions of Authorized Representative under any of the
Financing Documents.
"Borrowed Money" means any obligation to repay funded Indebtedness,
any Indebtedness evidenced by notes, bonds, debentures, guaranties or
similar obligations including without limitation the Loans and any
Subordinated Indebtedness and any obligation to pay money under a
conditional sale or other title retention agreement, the net aggregate
rentals payable under any Capitalized Lease Obligation, any reimbursement
obligation for any letter of credit and any obligations in respect of
banker's and other acceptances or similar obligations.
"Borrower" has the meaning assigned in the first paragraph of this
Agreement.
"Borrowing Base" means, during each Borrower fiscal quarter, an amount
equal to the product of multiplication of (i) EBITDA for Borrower's most
recently ended fiscal quarter and the three immediately preceding Borrower
fiscal quarters and (ii) the maximum ratio of (a) total Indebtedness for
Borrowed Money to (b) EBITDA permitted under Section 5.1.12 for the
Borrower fiscal quarter in question; provided that for any Borrower fiscal
quarter included in such definition in which a Permitted Acquisition
occurred, EBITDA shall be calculated on a pro forma basis as described in
Section 5.2.3.
"Budget" has the meaning assigned to such term in Section 5.3.7.
"Business Condition" means the financial condition, business, assets,
liabilities and operations of a Person.
"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day on which banks in Boston, Massachusetts or New
York, New York are not authorized or required by applicable law to close;
and (ii) with respect to all notices and determinations in connection with,
and payments of principal and interest on, Libor Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by
and between banks in Dollar deposits in the London interbank market.
"Capital Expenditures" means all expenditures paid or incurred by the
Borrower or any Subsidiary in respect of (i) the acquisition, construction,
improvement or replacement of land, buildings, machinery, equipment, any
other fixed assets or leaseholds and (ii) to the extent related
3
(Loan Agreement - Fleet/Convergent)
10
to and not included in (i) above, materials, contract labor and direct
labor, which expenditures have been or should be, in accordance with GAAP,
capitalized on the books of the Borrower or such Subsidiary. Where a fixed
asset is acquired by a lease which is required to be capitalized pursuant
to Statement of Financial Accounting Standards number 13 or any successor
thereto, the amount required to be capitalized in accordance therewith
shall be considered to be an expenditure in the year such asset is first
leased.
"Capitalized Lease Obligations" means all lease obligations which have
been or should be, in accordance with GAAP, capitalized on the books of the
lessee.
"Capitalized Software Development Costs" means the Borrower's and any
Subsidiaries' costs of software development which are capitalized on the
financial statements and books and records of the Person incurring such
costs.
"Cash Equivalent Investments" means any Investment in (i) direct
obligations of the United States or any agency, authority or
instrumentality thereof, or obligations guaranteed by the United States or
any agency, authority or instrumentality thereof, whether or not supported
by the full faith and credit of, a right to borrow from or the ability to
be purchased by the United States; (ii) commercial paper rated in the
highest grade by a nationally recognized statistical rating agency or
which, if not rated, is issued or guaranteed by any issuer with outstanding
long-term debt rated A or better by any nationally recognized statistical
rating agency; (iii) demand and time deposits with, and certificates of
deposit and bankers acceptances issued by, any office of the Agent, any
Lender or any other bank or trust company which is organized under the laws
of the United States or any state thereof and has capital, surplus and
undivided profits aggregating at least $500,000,000, the outstanding
long-term debt of which or of the holding company of which it is a
subsidiary is rated A or better by any nationally recognized statistical
rating agency, (iv) any short-term note which has a rating of MIG-2 or
better by ▇▇▇▇▇'▇ Investors Service Inc. or a comparable rating from any
other nationally recognized statistical rating agency; (v) any municipal
bond or other governmental obligation (including without limitation any
industrial revenue bond or project note) which is rated A or better by any
nationally recognized statistical rating agency; (vi) any other obligation
of any issuer, the outstanding long-term debt of which is rated A or better
by any nationally recognized statistical rating agency; (vii) any
repurchase agreement with any financial institution described in clause
(iii) above, relating to any of the foregoing instruments and fully
collateralized by such instruments, (viii) shares of any open-end
diversified investment company that has its assets invested only in
investments of the types described in clause (i) through (vii) above at the
time of purchase and which maintains a constant net asset value per share;
and (ix) shares of any open-end diversified investment company registered
under the Investment Company Act of 1940, as amended, which maintains a
constant net asset value per share in accordance with regulations of the
Securities & Exchange Commission, has aggregate net assets of not less than
$50,000,000 on the date of purchase and either derives at least 95% of its
gross income from interest on or gains from the sale of investments of the
type described in clauses (i) through (vii), above or has at least 85% of
the weighted average value of its assets invested in investments of such
types; provided that the purchase of any shares in any particular
investment company shall be limited to an aggregate amount owned at any one
time of $500,000. Each Cash Equivalent Investment shall have a maturity of
less than one year at the time of purchase; provided that the maturity of
any repurchase agreement shall be deemed to be the repurchase date and not
the maturity of the subject security and that the maturity of any variable
or floating rate note subject to prepayment at the option of the holder
shall be the period remaining (including any notice period remaining)
before the holder is entitled to prepayment.
4
(Loan Agreement - Fleet/Convergent)
11
"Change of Control" means, at any time (A) prior to the completion of
a Qualified Initial Public Offering, any one of the following events: (i)
any change in the ownership of the Borrower such that the Stockholders
listed on Exhibit 1.1 as owning shares of capital stock of the Borrower on
the first Business- Day after the Closing Date in the aggregate own less
than 50.1% of the equity interests in the Borrower or (ii) any decrease in
any of the voting rights in the Borrower now held by said Stockholders such
that they cease to collectively hold 50.1% or more of the voting rights in
the Borrower or (iii) any change in the ownership of the Borrower such that
the InSight/UBS Stockholders in the aggregate own less than 20% of the
equity interests in the Borrower and (B) after completion of a Qualified
Initial Public Offering, (i) any "person" or "group" (each as used in
Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended from time to time) other than the New Stockholders and their
Affiliates either (A) becomes the "beneficial owner" (as defined in Rule
l3d-3 of the Exchange Act), directly or indirectly, of voting capital stock
of the Borrower (or securities convertible into or exchangeable for such
voting capital stock) representing 20% or more of the combined voting power
of all voting capital stock of the Borrower (on a fully diluted basis) or
(B) otherwise has the ability, directly or indirectly, to elect a majority
of the board of directors of the Borrower; or (ii) during any period of up
to 24 consecutive months, after the Closing Date, individuals who at the
beginning of such 24-month period were directors of the Borrower shall
cease for any reason (other than (A) the death, disability or retirement of
a director or (B) the death, disability or retirement of an officer of the
Borrower that is serving as a director at such time so long as another
officer of the Borrower replaces such Person as a director) to constitute a
majority of the board of directors of the Borrower; or (iii) any Person or
two or more Persons acting in concert other than the New Stockholders and
their Affiliates shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement that, upon consummation
thereof, will result in its or their acquisition of the power to exercise,
directly or indirectly, a controlling influence on the management or
policies of the Borrower.
"Closing Date" means the date on which all of the conditions precedent
set forth in Section 3.1 of this Agreement have been satisfied and the Term
Loan is funded in accordance with this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Commonly Controlled Entity" means a Person, whether or not
incorporated, which is under common control with the Borrower within the
meaning of section 414(b) or (c) of the Code.
"Consolidated Tangible Net Worth" means the excess of the total assets
of the Borrower and the Subsidiaries over Consolidated Total Liabilities,
excluding, however, from the determination of total assets the total book
value of all assets which would be classified as intangible assets under
GAAP, including, without limitation, goodwill, patents, trademarks, trade
names, copyrights and franchises, all determined on a consolidated basis in
accordance with GAAP.
"Consolidated Total Liabilities" means all liabilities of the Borrower
and the Subsidiaries which would, in accordance with GAAP on a consolidated
basis, be classified as liabilities of such Persons, including, without
limitation, the capitalized amount of Capitalized Lease Obligations and
fixed prepayments of, and sinking fund payment and reserves with respect
to, Indebtedness.
"Current Liabilities" means all liabilities of the Borrower and the
Subsidiaries which would, in accordance with GAAP on a consolidated basis,
be classified as current liabilities of
5
(Loan Agreement - Fleet/Convergent)
12
such Persons, including without limitation, all lease rental payments under
Capitalized Lease Obligations and fixed prepayments of, and sinking fund
payments and reserves with respect to, Indebtedness, in each case required
to be made within one year from the date of determination.
"Debt Service Coverage Ratio" means the ratio of (i) EBITDA minus all
Capital Expenditures paid during each Borrower fiscal quarter during the
period in question, and taxes payable during each Borrower fiscal quarter
during the period in question to (ii) Total Debt Service.
"Default" means an event or condition which with the giving of notice
or lapse of time or both would become an Event of Default.
"Discharged Rights and Obligations" shall have the meaning assigned to
such term in Section 9.11.4.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBITDA" means Net Income plus, to the extent accounted for in Net
Income, (i) Interest Expense, (ii) taxes, (iii) depreciation, (iv)
amortization, (v) without duplication other noncash charges and
non-recurring extraordinary costs incurred by the Borrower and any
Subsidiaries prior to September 30, 1999 in connection with closing of the
Loans and the Related Transactions, (vi) without duplication, for periods
ending on or prior to the Closing Date, quarterly compensation payments
expensed according to GAAP for the benefit of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in excess of the
compensation to be paid to them under their new employment agreements with
the Borrower effective on closing of the Related Transactions, if any (vii)
without duplication, other non-cash charges and non-cash non-recurring
extraordinary costs incurred by the Borrower in connection with closing
each Permitted Acquisition, (viii) an amount of reasonable cash charges and
cash non-recurring extraordinary costs incurred by the Borrower in
connection with closing each Permitted Acquisition, and (ix) other pro
forma reductions of expenses on the income statements of a Person acquired
in a Permitted Acquisition relating to excess compensation and related
items, less, to the extent accounted for in Net Income, (x) Capitalized
Software Development Costs, (xi) pro forma increases of expenses on the
income statements of a Person acquired in a Permitted Acquisition as may be
reasonably advisable to comply with sound business and investment
practices, and (xii) Permitted Acquisition earn out and other post-closing
purchase price payments for such period, all determined on an accrual and
consolidated basis in accordance with GAAP and all for the Borrower fiscal
quarter in question and the immediately preceding three Borrower fiscal
quarters.
"Effective Prime" means the Prime Rate plus three quarters percent
(.75%) per annum; provided, however, that if, at any time on or after the
receipt by the Agent of the Borrower's annual audited financial statements
for the Borrower's December 31, 1999 fiscal year and of the Borrower's
quarterly financial statements for each subsequent Borrower fiscal quarter
provided to the Agent by the Borrower pursuant to Sections 5.3.2 or 5.3.3
hereof, the ratio of (a) total Indebtedness for Borrowed Money of the
Borrower and its Subsidiaries on a consolidated basis as of the last day of
the most recently ended fiscal quarter of the Borrower to (b) EBITDA for
such fiscal quarter and for the three immediately preceding Borrower
fiscal quarters, (i) is less than 2.5:1.0, but greater than or equal to
2.0:1.0 and if and so long as no Event of Default or Default exists and is
continuing, Effective Prime shall, subject to the last sentence of this
definition, be the Prime Rate plus one-half percent (.50%), or (ii) is less
than 2.0:1.0, but greater than or equal to 1.0:1.0 and if and so long as
no Event of Default or Default exists and is continuing, Effective
6
(Loan Agreement - Fleet/Convergent)
13
Prime shall, subject to the next-to-last sentence of this definition, be
the Prime Rate plus one quarter percent (.25%), or (iii) is less than
1.0-1.0 and if and so long as no Event of Default or Default exists and is
continuing, Effective Prime shall, subject to the next-to-last sentence of
this definition, be the Prime Rate; provided, further, however, that if
on any date the Borrower would be entitled to an Effective Prime other than
the Prime Rate plus .75% except for the fact that a Default exists, the
Effective Prime shall not change until the first to occur of (a) such
Default becoming an Event of Default and (b) waiver or cure of such
Default, at which time the Effective Prime shall be adjusted or remain the
same in accordance with the provisions of this definition preceding this
further proviso.
Any change in Effective Prime required pursuant to the foregoing shall
become effective on the fifth Business Day after the Agent receives the
Borrower's financial statement for the Borrower's fiscal quarter or
year-end, as the case may be, in question; provided, however, that each of
the above-referenced interest rates shall remain in effect only so long as
Borrower qualifies therefor in accordance with this definition and provided
further, however, that interest rate reductions shall become final only on
the basis of Borrower's annual audited financial statements and in the
event that such annual audited financial statements establish that the
Borrower was not entitled to a rate reduction which was previously granted,
the Borrower shall, upon written demand by the Agent repay to the Agent for
the account of each Lender an amount equal to the excess of interest at the
rate which should have been charged based on such annual audited financial
statements and the rate actually charged on the basis of Borrower's
quarterly financial statement(s) (provided that in the event of a dispute
as to the appropriate fiscal quarter as to which any adjustment should be
allocated, the decision of the independent accountants of the Borrower
shall be made in accordance with GAAP and shall be binding upon the Agent,
the Lenders and the Borrower absent manifest error); and provided further,
however, that in the event that Borrower fails to provide any financial
statement on a timely basis in accordance with Section 5.3.2 or Section
5.3.3, any interest rate increase payable as a result thereof shall be
retroactively effective to the date on which the financial statement in
question should have been received by the Agent in accordance with Section
5.3.2 or 5.3.3, and the Borrower shall pay any amount due as a result
thereof upon written demand from the Agent. The Agent shall send the
Borrower written acknowledgment of each change in the Effective Prime in
accordance with the Agent's customary procedures as in effect from time to
time, but the failure to send such acknowledgment shall have no effect on
the effectiveness or applicability of the foregoing provisions of this
definition or Borrower's obligations with respect to payment and
calculation of interest on Prime Rate Loans.
"Eligible Receivables" means accounts receivable of the Borrower and
any Subsidiaries evidencing Indebtedness of Persons to the Borrower or a
Subsidiary for goods actually sold and delivered or services actually
performed in the ordinary course of business by the Borrower or a
Subsidiary to or for such Person, as to which goods or services no written
notice has been received by Borrower or such Subsidiary from such Person
that alleges a breach by the Borrower or such Subsidiary of its obligation
to deliver such goods and/or services and which accounts receivable have
been outstanding for less than ninety (90) days since their respective
invoicing dates, but excluding, however, (i) accounts receivable owing by
officers, directors, shareholders or employees of Borrower or a Subsidiary,
(ii) accounts receivable with respect to which goods are placed on
consignment, guaranteed sale, "▇▇▇▇ and hold" or other terms by reason of
which the payment by the account debtor may be conditional, (iii) accounts
receivable owing by the United States or any agency, department or
instrumentality thereof unless such accounts are freely assignable to the
Agent under the United States Assignment of Claims Act and the Borrower or
a Subsidiary has separately assigned each such account to the Agent in
compliance with such Act, (iv) accounts receivable owing by the Borrower,
any Subsidiary or Affiliate of Borrower, (v)
7
(Loan Agreement - Fleet/Convergent)
14
accounts receivable with respect to which Borrower or any Subsidiary or
Affiliate is liable to the account debtor for goods sold or services
provided to Borrower or any Subsidiary or Affiliate by such account debtor
to the extent of Borrower's or any Subsidiary's or Affiliate's liability to
such account debtor, (vi) accounts receivable which are due and payable to
Borrower or a Subsidiary from an account debtor located outside the United
States of America or Canada unless the Agent shall have, in its sole
discretion, specifically approved such receivable, (vii) any accounts
receivable as to which the account debtor has claimed in writing any setoff
or any dispute as to the amount owing by the account debtor to the extent
of the amount in dispute, (viii) any accounts receivable subject to any
Lien other than pursuant to the Security Documents, (ix) any accounts
receivable owing by any Person which is insolvent and/or the subject of any
bankruptcy, receivership or other insolvency proceeding, and (x) any
accounts receivable deemed uncollectible by the Agent in the Agent's
reasonable discretion exercised in good faith and based on an occurrence or
condition described in writing to the Borrower by the Agent which as to
account debtors as of the Closing Date shall constitute a change of
circumstances from those in effect on the Closing Date.
"Environmental Law" shall mean any statute, ordinance, code, law, or
regulation or any other requirement enacted or adopted by any Governmental
Authority relating to pollution or protection of public health, safety or
welfare or the environment, including without limitation (i) those relating
to emissions, discharges, releases or threatened releases of Hazardous
Materials into the environment (including ambient air, surface water,
ground water or land), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials, (ii) the Clean Air Act, 42 U.S.C. Section
2001, et seq., the Federal Water Pollution Control Act, 33 U.S.C. Section
1247, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et seq.,
the Toxic Substance Control Act, 42 U.S.C. Section 2501, et seq., and any
state law counterparts, including the law of nuisance and strict liability.
"Equity" means the Investments in Dollars by the New Stockholders in
the Borrower, made on or prior to the date of this Agreement in the
aggregate amount of not less than $45,500,000 as set forth in Exhibit 1.1.
"Equity Documents" means, collectively, all documents entered into by
the Borrower, the Old Stockholders and/or any of the New Stockholders in
connection with the investment of the Equity.
"ERISA" means the Employee Retirement Income Security Act of 1974 as
amended from time to time.
"Events of Default" has the meaning assigned to that term in Section
6.1 of this Agreement.
"Exhibit" means, when followed by a letter, the exhibit attached to
this Agreement bearing that letter and by such reference fully incorporated
in this Agreement.
"Facility Fee" means, the facility fee payable by the Borrower in
accordance with Section 2.2.2.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/16th of 1%) equal to the weighted
average of the rates on overnight
8
(Loan Agreement - Fleet/Convergent)
15
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York, provided that (i) if such day is not a Business
Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next succeeding Business Day as so published, and (ii)
if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to the
Agent on such day on such transactions as determined by the Agent in its
discretion exercised in good faith.
"Fee Letter" means that certain side letter of even date with this
Agreement between the Borrower and the Agent regarding certain fees payable
by the Borrower.
"Financing Documents" means, collectively, this Agreement, each Note,
the Security Documents, the Fee Letter, the Post-Closing Letter, any Letter
of Credit, any Letter of Credit Agreement, any agreement with any Lender
providing any interest rate protection arrangement, foreign exchange,
overdraft or other banking or credit facility and each other agreement,
instrument or document now or hereafter executed in connection herewith or
therewith.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States of America.
"Governmental Authority" means the United States of America, any
state, commonwealth, territory, or possession thereof, and any political
subdivision or quasigovernmental authority of any of the same, including
any court, tribunal, department, bureau, commission or board.
"Hazardous Material" shall mean any substance or material defined or
designated as a hazardous or toxic waste, hazardous or toxic material,
hazardous or toxic substance, or other similar term, by any Environmental
Law.
"Indebtedness" means, as to any Person and whether recourse is secured
by or is otherwise available against all or only a portion of the assets of
such Person and whether or not contingent, but without duplication:
(i) every obligation of such Person for Borrowed Money.
(ii) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including without
limitation securities repurchase agreements and any earn-outs or
similar obligations with respect to Permitted Acquisitions, but
excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business which are not overdue or which are being
contested in good faith);
(iii) every obligation of such Person under any lease (a
"synthetic lease") treated as an operating lease under GAAP and as a
loan or financing for United States income tax purposes;
(iv) all sales by such Person of (A) accounts or general
intangibles for money due or to become due, (B) chattel paper,
instruments or documents creating or evidencing a right to payment of
money or (C) other receivables (collectively "receivables"), whether
pursuant to a purchase facility or otherwise, other than in connection
with the disposition of the business operations of such Person
relating thereto or a disposition of defaulted receivables for
collection and not as a financing arrangement, and together with any
9
(Loan Agreement - Fleet/Convergent)
16
obligation of such Person to pay any discount, interest, fees, indemnities,
penalties, recourse, expenses or other amounts in connection therewith;
(v) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for value any
shares of capital stock of any class issued by such Person, any warrants,
options or other rights to acquire any such shares, or any rights measured
by the value of such shares, warrants, options or other rights;
(vi) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing agreement or arrangement
(including, without limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon interest rates, currency
exchange rates, commodities or other indices (a "derivative contract");
(vii) every obligation in respect of Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to
the extent that such Person is liable therefor as a result of such Person's
ownership interest in or other relationship with such entity, except to the
extent that the terms of such Indebtedness provide that such Person is not
liable therefor; and
(viii) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of clauses
(i) through (vii) (the "primary obligation") of another Person (the
"primary obligor"), in any manner, whether directly or indirectly, and
including, without limitation, any obligation of such Person (A) to
purchase or pay (or advance or supply funds for the purchase of) any
security for the payment of such primary obligation, or (B) to purchase
property, securities or services for the purpose of assuring the payment of
such primary obligation, or (C) to maintain working capital, equity capital
or other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that
is less than the principal amount at maturity thereof, shall be the amount
of the liability in respect thereof determined in accordance with GAAP, (v)
any Capitalized Lease shall be the principal component of the aggregate of
the rentals obligation under such Capitalized Lease payable over the term
thereof that is not subject to termination by the lessee, (w) any sale of
receivables shall be the amount of unrecovered capital or principal
investment of the purchaser (other than the Borrower or any of its
wholly-owned Subsidiaries) thereof, excluding amounts representative of
yield or interest earned on such investment, (x) any synthetic lease shall
be the stipulated loss value, termination value or other equivalent amount,
(y) any derivative contract shall be the maximum amount of any termination
or loss payment required to be paid by such Person if such derivative
contract were, at the time of determination, to be terminated by reason of
any event of default or early termination event thereunder, whether or not
such event of default or early termination event has in fact occurred and
(z) any equity related purchase obligation shall be the maximum fixed
redemption or purchase price thereof inclusive of any accrued and unpaid
dividends to be comprised in such redemption or purchase price.
10
(Loan Agreement - Fleet/Convergent)
17
"Ineligible Securities" means Securities which may not be underwritten
or dealt in by member banks of the Federal Reserve System under Section 16
of the Banking Act of 1993 (12 U.S.C. Section 24, Seventh), as amended.
"InSight/UBS Stockholders" means InSight Capital Partners III, L.P., a
Delaware limited partnership, InSight Capital Partners III (Cayman), a
company of limited liability under the law of the Cayman Islands, InSight
Capital Partners III (Co-Investors), L.P., a Delaware limited partnership,
UBS Capital II LLC, a Delaware limited liability company and any venture
capital or other fund controlled by, under common control with or
controlling any of the foregoing named entities.
"Interest Adjustment Date" means (i) as to any Prime Rate Loan to be
converted to a Libor Loan the Business Day elected by the Borrower in its
applicable Interest Rate Election, but being not less than three (3)
Business Days after the receipt by the Agent before 12:00 o'clock P.M. on a
Business Day of an Interest Rate Election electing the Libor Rate as the
interest rate on such Loan; and (ii) as to any Libor Loan, the last
Business Day of the Interest Period pertaining to such Libor Loan.
"Interest Expense" means, with respect to any fiscal quarter, the
aggregate amount required to be accrued by the Borrower and any
Subsidiaries in such fiscal quarter for interest, fees (excluding, however,
the Facility Fee being paid to the Agent on the Closing Date), charges and
expenses, however characterized, on its Indebtedness, including, without
limitation, all such interest, fees, charges and expenses required to be
accrued with respect to Indebtedness under the Financing Documents, all
determined in accordance with GAAP.
"Interest Period" means:
With respect to each Libor Loan:
(i) initially, the period commencing on the date of such Libor
Loan and ending one, two, three, six or such greater number of months
thereafter as may be acceptable to all of the Lenders and as the
Borrower may elect in the applicable Interest Rate Election and
subject to Section 2.9; and
(ii) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such Libor Loan
and ending one, two, three, six or such greater number of months
thereafter as may be acceptable to all of the Lenders and as the
Borrower may elect in the applicable Interest Rate Election and
subject to Section 2.9;
provided that clauses (i) and (ii) of this definition are subject to
the following:
(A) any Interest Period (other than an Interest Period determined
pursuant to clause (C) below) which would otherwise end on a day which is
not a Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in another calendar month, in which case
such Interest Period shall end on the immediately preceding Business Day;
(B) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (C) below, end on the last Business Day of a calendar
month; and
11
(Loan Agreement - Fleet/Convergent)
18
(C) no Interest Period shall end after the Revolving Credit Repayment
Date; and
(D) with respect to all Libor Loans, no more than six (6) Interest
Periods may be in effect at any time.
"Interest Rate Election" means the Borrower's irrevocable telecopied
or telephonic notice of election, which shall be promptly confirmed by a
written notice of election that Effective Prime or the Libor Rate shall
apply to all or any portion of the Loans, which shall, subject to this
Agreement, be effective on the next Interest Adjustment Date, such
telecopied or telephonic notice and written confirmation thereof to be in
the form of Exhibit 1.4 and to be received by the Agent prior to
12:00 o'clock P.M. on a Business Day and at least three (3) Business Days
prior to an Interest Adjustment Date in the case of a Libor Loan, and by
12:00 p.m. on an Interest Adjustment Date in the case of a Prime Rate Loan
(or four (4) Business Days in the case of an Interest Rate Election as to
which the consent of the Lenders is required), each such Interest Rate
Election, subject to the terms of this Agreement to apply to the Advance or
the Loan referred to in such Interest Rate Election or to effect a change
in the interest rate on the applicable portion of the Loans then
outstanding, as applicable, with respect to which such Interest Rate
Election was made, such change to occur on the Interest Adjustment Date
next succeeding receipt of such Interest Rate Election by the Agent. Any
Interest Rate Election received by the Agent after 12 o'clock P.M. on a
Business Day shall be deemed, for all purposes of this Agreement to have
been received prior to 12 o'clock P.M. on the next succeeding Business Day.
"Investment" means any investment in any Person whether by means of a
purchase of capital stock, notes, bonds, debentures or other evidences of
Indebtedness and/or by means of a capital or partnership contribution,
loan, deposit, advance or other means, excluding amounts due from customers
for services or products delivered or sold in the ordinary course of
business.
"Lender" means Fleet, or any financial institution which hereafter
becomes a party hereto pursuant to the terms of Section 9.11, each in their
individual capacity, and "Lenders" means Fleet and each of such financial
institutions.
"Letter of Credit" means an irrevocable stand-by or commercial letter
of credit issued by the Agent for the account of the Borrower pursuant to a
Letter of Credit Agreement subject to and in accordance with this
Agreement.
"Letter of Credit Agreement" means an application and agreement for
stand-by or commercial letter of credit in such form as may at any time be
customarily required by the Agent for its issuance of stand-by or
commercial letters of credit.
"Libor Loan" means any portion of any Loan bearing interest at the
Libor Rate.
"Libor Rate" means, for any Interest Period, the Adjusted Libor Rate
in effect on the first day of such Interest Period (subject to adjustment
as provided in the definition of Adjusted Libor Rate) plus the Applicable
Margin for Libor Loans from time to time in effect.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other) or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including without limitation any conditional sale or other title retention
agreement and any Capitalized Lease Obligation) having substantially the
same economic effect as any of the foregoing and the filing of any
financing statement under the
12
(Loan Agreement - Fleet/Convergent)
19
applicable Uniform Commercial Code or comparable law of any jurisdiction in
respect of any of the foregoing.
"Loans" and "Loan" means at any time the outstanding principal amount
of Indebtedness owed to the Lenders or to any Lender, as the context may
require pursuant to this Agreement.
"Majority Lenders" means Lenders holding an aggregate Pro Rata Share
of the outstanding principal balance of the Loans in an amount equal to or
in excess of 66.67% of the total outstanding principal balance of the Loans
and if there is no outstanding principal balance of the Loans, Lenders
having at least 66.67% of the Revolving Credit Loan Commitment.
"Material Adverse Effect" means material adverse effect on (i) the
ability of the Borrower or any Subsidiary to fulfill their obligations
under any of the Financing Documents or (ii) the Business Condition of the
Borrower or any Subsidiary.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Income" means, for any fiscal period, the net after tax income
(loss) of the Borrower and any Subsidiaries for such period determined on
an accrual and consolidated basis in accordance with GAAP.
"Net Outstanding Amount of Eligible Receivables" means the net amount
of Eligible Receivables outstanding after eliminating from the aggregate
amount of outstanding Eligible Receivables all payments, adjustments and
credits applicable thereto.
"New Stockholders" means the InSight/UBS Stockholders and WI Software
Investors LLC, a Delaware limited liability company, Imprimis SB LP, a
Delaware limited partnership, GS Private Equity Partners II, L.P., GS
Private Equity Partners II Offshore, L.P., GS Private Equity Partners III,
L.P., GS Private Equity Partners III Offshore, L.P., NBK/GS Private Equity
Partners, L.P. and any venture capital or other fund controlled by, under
common control with or controlling any of said latter three named entities
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"Note" means any promissory note of the Borrower payable to the order
of a Lender and substantially in the form of Exhibit 1.5 and evidencing all
or a portion of the Loan and "Notes" means all of the Notes, collectively.
"Obligations" mean any and all Indebtedness, obligations and
liabilities of Borrower and/or any Subsidiaries under any of the Financing
Documents to any one or more of the Lenders and/or the Agent of every kind
and description, absolute or contingent, due or to become due, whether for
payment or performance, now existing or hereafter arising, including,
without limitation, all Loans, interest, taxes, fees, charges, and expenses
under the Financing Documents and attorneys' fees chargeable to the
Borrower and/or any Subsidiaries or incurred by any of the Lenders and/or
the Agent under any of the Financing Documents.
"Officer's Certificate" means a certificate signed by an Authorized
Representative and delivered to the Agent on behalf of the Lenders.
"Old Stockholders" means those Persons listed under the heading "Old
Stockholders" on Exhibit 1.1.
13
(Loan Agreement - Fleet/Convergent)
20
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to subtitle A of Title IV of ERISA.
"P.M." mean a time from and including 12 o'clock noon on any Business
Day to the end of such Business Day using Eastern Standard (Daylight
Savings) time.
"Permitted Encumbrances" means each Lien granted pursuant to any of
the Security Documents, those Liens, security interests and defects in
title permitted under Section 5.2.1 and those Liens listed on Exhibit 1.8.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, trust, or unincorporated organization, or
a government or any agency or political subdivision thereof
"Plan" means an employee benefit plan as defined in Section 3(3) of
ERISA maintained for employees of the Borrower or any Commonly Controlled
Entity.
"Post-Closing Letter" means that certain letter agreement between the
Borrower and the Agent dated the Closing Date and listing certain
post-closing actions to be completed by the Borrower.
"Premises" has the meaning assigned to such term in Section 4.1.21.1.
"Prime Rate" means the higher of (i) the floating rate of interest per
annum designated from time to time by Fleet as being its "prime rate" of
interest, such interest rate to be adjusted on the effective date of any
change thereof by Fleet, it being understood that such rate of interest may
not be the lowest rate of interest from time to time charged by Fleet and
(ii) the Federal Funds Rate plus one-half percent (.50%), such interest
rate to be adjusted on the effective date of any change thereof by the
Federal Reserve Bank of New York.
"Prime Rate Loan(s)" means any portion of the Loans bearing interest
at Effective Prime.
"Projections" means the Borrower's written projections of Borrower's
5-year future performance on a consolidated basis dated May 23, 1999
delivered to the Agent prior to the Closing and attached to this Agreement
as Exhibit 1.12.
"Pro Rata Share" means (i) with respect to the Revolving Credit Loan
Commitment, each Lender's percentage share of the Revolving Credit Loan
Commitment as set forth immediately opposite such Lender's name on Exhibit
1.9, and (ii) with respect to the Loans, each Lender's percentage share of
the aggregate outstanding principal balance of the Loans and "Pro Rata
Shares" means such percentage shares of the Lenders.
"Qualified Initial Public Offering" means the Borrower and/or any
Subsidiary filing a Form S-1 or any other form of registration statement
then available for registration with the Securities and Exchange Commission
or otherwise conducting an initial public offering of any class of the
Borrower's or any Subsidiary's securities, which such offering generates
$25,000,000 or more in net proceeds.
"Quick Ratio" means the ratio of the (i) the sum of (w) cash on hand
or on deposit in any bank or trust company which has not suspended
business, (x) Cash Equivalent Investments (without duplication with (w))
and (y) Net Outstanding Amount of Eligible Receivables plus
14
(Loan Agreement - Fleet/Convergent)
21
accrued revenue to (ii) (x) Current Liabilities less the amount of any
deferred revenue. Each item described in clauses (i) and (ii) of this
definition shall be calculated as of the last day of the Borrower fiscal
quarter and include only the item(s) in question of the Borrower and its
Subsidiaries on a consolidated basis and calculated in accordance with
GAAP.
"Reference Lender(s)" means the Agent unless the Agent resigns said
responsibility, at which time and thereafter such term means one or two
Lenders selected by the Agent in its discretion from time to time as a
reference lender for purposes of determining the Adjusted Libor Rate.
"Related Funds" means, with respect to any Lender which is a fund that
invests in loans, any other fund that invests in loans and is managed by
the same investment advisor as such Lender or by an affiliate of such
Lender.
"Related Transactions" means the Borrower's receipt of the Equity, the
Borrower's repurchase of certain capital stock from certain of the Old
Stockholders on or prior to the Closing Date, the purchase by the New
Stockholders of Borrower capital stock from certain of the Old Stockholders
and the Borrower's issuance of capital stock to the New Stockholders,
exercise of certain stock options for Borrower's capital stock, payment of
certain Borrower deferred compensation liability, buyout of certain
Borrower employment agreements, the completion of the conditions precedent
to the Borrower's receipt of the Equity as set forth in the Related
Transaction Documents and any other transactions described in the Related
Transaction Documents.
"Related Transaction Documents" means the documents listed on Exhibit
1.2.
"Reportable Event" shall have the meaning assigned to that term in
Section 4043 of ERISA for which the requirement of 30 days' notice to the
PBGC has not been waived by the PBGC.
"Request" means a written request for the Loans in the form of Exhibit
1.10, received by the Agent on behalf of the Lenders from the Borrower in
accordance with this Agreement, specifying the date on which the Borrower
desires such Loans and the disbursement instructions of the Borrower with
respect thereto.
"Revolving Credit Loan" means the revolving credit loans to be made by
the Lenders to the Borrower from time to time in the maximum outstanding
principal amount of the Revolving Credit Loan Commitment, all subject and
pursuant to Section 2.1.0.
"Revolving Credit Loan Commitment" means the Lenders' several
commitments to make Revolving Credit Loans to the Borrower and to issue or
participate in Letters of Credit in accordance with Section 2.1.0 and this
Agreement and in the maximum outstanding amount of each Lender's Pro Rata
Share of the lesser of (i) the Borrowing Base and (ii) $25,000,000, as such
amount may be reduced pursuant to Section 2.6.1 or 2.6.4.
"Revolving Credit Note" means each revolving credit note of the
Borrower, payable to the order of a Lender in the form of Exhibit 1.5
hereto evidencing the Indebtedness of the Borrower to such Lender with
respect to the Revolving Credit Loan.
15
(Loan Agreement - Fleet/Convergent)
22
"Revolving Credit Repayment Date" means the earlier to occur of (i)
August 12, 2003 and (ii) such earlier date on which the Revolving Credit
Loan becomes due and payable pursuant to the terms hereof.
"Section" means, when followed by a number, the section or
subsection of this Agreement bearing that number.
"Section 20 Subsidiary " means a subsidiary of the bank holding
company controlling any Lender, which subsidiary has been granted authority
by the Federal Reserve Board to underwrite and deal in certain Ineligible
Securities.
"Security Documents" means any and all documents, instruments and
agreements now or hereafter providing security for the Loans and any other
Indebtedness hereunder and/or under any of the Financing Documents of the
Borrower or any Subsidiary to any of the Lenders and/or the Agent,
including without limitation the following documents, instruments and
agreements between the Agent and the Borrower or any Subsidiary: any
mortgages on and collateral assignments of real property interests (fee,
leasehold and easement) of the Borrower and any Subsidiary granting Liens
thereon; landlord lien waivers and consents as may be reasonably requested
by the Agent; security agreements granting first Liens on all Borrower's
and any Subsidiary's fixtures and tangible and intangible personal property
including without limitation any copyrights, trademarks, servicemarks,
patents and any applications therefor; collateral assignments of Borrower's
and any Subsidiary's contracts, licenses, permits, easements and leases;
collateral assignments of Borrower's and any Subsidiary's copyrights;
conditional assignments of Borrower's and any Subsidiary's trademarks and
patents; any subordination agreement; pledge of any promissory notes of any
Borrower officer or shareholder evidencing Indebtedness owing to the
Borrower or any Subsidiary and any assignment, pledge and security
agreement granting Agent a first Lien on any collateral for any such
promissory note; any guaranty by a Subsidiary; any pledge of the capital
stock of any Subsidiary; casualty and liability insurance policies
providing coverage to the Agent for the benefit of the Lenders; collateral
assignment of keyman life insurance on Borrower's chief executive officer;
UCC-1 financing statements or similar filings perfecting the
above-referenced security interests, pledges and assignments, all as
executed, delivered to and accepted by the Agent on or prior to the Closing
Date or subsequent to the Closing Date as may be required by this
Agreement, as any of the foregoing may be amended in writing by the Agent
and any other party or parties thereto.
"Selling Lender" shall have the meaning assigned to such term in
Section 9.11.1.
"Single Employer Plan" means any Plan as defined in Section
4001(a)(15) of ERISA.
"Stockholders" means, collectively, the Old Stockholders, the New
Stockholders and the holders of Borrower stock granted pursuant to the
Stock Option Plan.
"Stock Option Plan" means the Convergent Group Corporation 1996 Stock
Option Plan and the Convergent Group Corporation 1999 Stock Option Plan.
"Subsidiary" means any corporation or entity other than the Borrower
of which more than 50% of the outstanding capital stock or voting interests
or rights having ordinary voting power to elect a majority of the board of
directors or other managers of such entity (irrespective of whether or not
at the time capital stock or voting interests or rights of any other class
or classes of such Person shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned
by the Borrower or by the Borrower and/or one or more Subsidiaries
16
(Loan Agreement - Fleet/Convergent)
23
or the management of which corporation or entity is under control of the
Borrower and/or any other Subsidiary, directly or indirectly through one or
more Persons and any other Person which, under GAAP, should at any time for
financial reporting purposes be consolidated or combined with the Borrower
and/or any other Subsidiary.
"Subordinated Indebtedness" means any Indebtedness of the Borrower or
a Subsidiary which is subordinated, both as to payment and as to security,
to the Obligations by a Subordination Agreement.
"Subordination Agreement" means an agreement subordinating
Subordinated Indebtedness to the Obligations and which agreement provides
for (a) a per annum rate of interest not to exceed 10%, (b) no amortization
for at least 5 years, (c) payment of interest only "in kind", i.e., by
issuance of additional Subordinated Indebtedness in the amount of such
interest except as permitted by Section 5.2.11 and (d) no prepayment or
payment of principal or fees during said 5-year period, and which is
otherwise in form and substance reasonably satisfactory to the Majority
Lenders, it being understood that the foregoing restrictions on payment of
principal, interest and fees are deemed reasonable.
"Substituted Lender" has the meaning set forth in Section 9.11 hereof.
"Substitution Agreement" has the meaning assigned to such term in
Section 9.11.1.
"Total Debt Service" means, at any date of determination, the sum of
(i) Interest Expense, (ii) scheduled and mandatory principal payments for
the fiscal period in question due on account of any Indebtedness for
Borrowed Money of the Borrower, but excluding any mandatory payments of
principal required pursuant to Sections 2.6.1.3, 2.6.1.4 and 2.6.1.5, (iii)
the quotient of the amount of the Revolving Credit Loan Commitment divided
by: for the Borrower fiscal quarters ending (w) December 31, 1998, March
31, June 30, September 30 and December 31, 1999 and March 31 and June 30,
2000, 10; (x) September 30 and December 31, 2000 and March 31 and June
30, 2001, 6, (y) September 30 and December 31, 2001 and March 31 and June
30, 2002, 5 and (z) for each fiscal quarter ending thereafter, 4, all of
the foregoing being calculated for the most recent Borrower fiscal quarter
and the three immediately preceding Borrower fiscal quarters on a
consolidated basis in accordance with GAAP.
"Unused Amount" has the meaning assigned to such term in Section
2.2.2.
"Unused Fees" has the meaning assigned to such term in Section 2.2.2.
Section 1.2. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, calculations of
amounts for the purposes of calculating any financial covenants or ratios
hereunder shall be made in accordance with GAAP applied on a basis
consistent with those used in the Borrower's financial statements referred
to in Section 4.1.5 (other than departures therefrom not material in their
impact), and all financial data submitted pursuant to this Agreement shall
be prepared in accordance with GAAP (except, in the case of unaudited
financial statements, the absence of footnotes and that such statements are
subject to changes resulting from year-end adjustments made in accordance
with GAAP).
Section 1.3. Other Terms. References to "Articles", "Sections",
"subsections" and "Exhibits" shall be to Sections, subsections and Exhibits
and of this Agreement unless otherwise specifically provided. In this
Agreement, "hereof," "herein," "hereto," "hereunder" and the like mean and
refer to this Agreement as a whole and not merely to the specific section,
paragraph or
17
(Loan Agreement - Fleet/Convergent)
24
clause in which the respective word appears; words importing any gender
include the other genders; references to "writing" include printing,
typing, lithography and other means of reproducing words in a tangible
visible form; the words "including," "includes" and "include" shall be
deemed to be followed by the words "without limitation"; references to
agreements and other contractual instruments shall be deemed to include
subsequent amendments, assignments, and other modifications thereto, but
only to the extent such amendments, assignments and other modifications are
not prohibited by the terms of this Agreement or any other Financing
Document; references to Persons include their respective permitted
successors and assigns or, in the case of governmental Persons, Persons
succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of same and
any successor statutes and regulations.
ARTICLE 2.
AMOUNT AND TERMS OF THE LOANS
Section 2.1. The Loans.
Section 2.1.0. The Revolving Credit Loans. Each of the
Lenders severally agrees, subject to the terms and conditions of this
Agreement, to make Advances of Revolving Credit Loans to the Borrower from
time to time after receipt by the Agent from time to time before the
Revolving Credit Repayment Date of, and at the times provided for in, a
Request and an Interest Rate Election from the Borrower in accordance with
this Agreement, during the period commencing on the Closing Date and ending
on the Business Day immediately preceding the Revolving Credit Repayment
Date, in an aggregate principal amount at any one time outstanding not to
exceed the lesser of (i) such Lender's Pro Rata Share of the Revolving
Credit Loan Commitment less (ii) in each case, such Lender's Pro Rata Share
of the aggregate outstanding stated amount of any Letters of Credit and,
without duplication, Letter of Credit Agreements and any unreimbursed
amounts drawn thereunder.
Promptly after receipt of a Request and Interest Rate Election, Agent
shall notify each Lender by telephone, telex or telecopy of the proposed
borrowing. Subject to the immediately preceding paragraph, each Lender
agrees that after its receipt of notification from Agent of Agent's receipt
of a Request and Interest Rate Election, such Lender shall send its Pro
Rata Share (or such portion thereof as may be necessary to provide Agent
with such Pro Rata Share in Dollars and in immediately available funds,
without consideration or use of any contra accounts of any Lender) of the
requested Loan by wire transfer to Agent so that Agent receives such Pro
Rata Share in Dollars and in immediately available funds not later than
12:00 P.M. (Boston, Massachusetts time) on the first day of the Interest
Period for any such requested Libor Loan and on the Business Day for such
Advance set forth in Borrower's Request for any such requested Prime Rate
Loan, and Agent shall advance funds to the Borrower by depositing such
funds in Borrower's account with the Agent upon Agent's receipt of such Pro
Rata Shares in the amount of the Pro Rata Shares of such Loan in Agent's
possession. Unless Agent shall have been notified by any Lender (which
notice may be telephonic if confirmed promptly in writing) prior to the
first day of the Interest Period in respect of any Loan which such Lender
is obligated to make under this Agreement, that such Lender does not intend
to make available to Agent such Lender's Pro Rata Share of such Loan on
such date, Agent may assume that such Lender has made such amount available
to Agent on such date and Agent in its sole discretion may, but shall not
be obligated to, make available to the Borrower a corresponding amount on
such date. If such corresponding amount is not in fact made available to
Agent by such Lender, Agent shall be
18
(Loan Agreement - Fleet/Convergent)
25
entitled to recover such corresponding amount from such Lender
promptly upon demand by Agent together with interest thereon, for each
day from such date until the date such amount is paid to Agent, at the
Federal Funds Rate for three (3) Business Days and thereafter at the
interest rate on the Loan in question. If such Lender does not pay
such corresponding amount forthwith upon Agent's demand therefor,
Agent shall promptly notify the Borrower and the Borrower shall
promptly pay such corresponding amount to Agent. Nothing contained in
this Section shall be deemed to relieve any Lender from its obligation
to fulfill its obligations hereunder or to prejudice any rights which
the Borrower may have against any Lender as a result of any default by
such Lender hereunder.
Throughout the term of the Revolving Credit Loans, $1,000,000 of
the Revolving Credit Loan Commitment and principal amount of the
Revolving Credit Loans may, at the Borrower's request and with the
Agent's approval which shall not be unreasonably withheld or delayed,
be made available to the Borrower prior to the Revolving Credit
Repayment Date by issuance of Letters of Credit having an expiration
date prior to the earlier to occur of (a) the first anniversary date
of the date of issuance of any such Letter of Credit or (b) three (3)
Business Days prior to the Revolving Credit Repayment Date, reasonably
promptly after submission by the Borrower to the Agent of a Letter of
Credit Agreement, duly completed and executed by the Borrower and
otherwise in form and substance satisfactory to the Agent. The
Borrower shall pay upon demand by the Agent such fees and costs as the
Agent may from time to time establish generally for its customers for
issuance, transfer, amendment and negotiation of each Letter of Credit
and shall pay to the Agent for the Agent's account upon issuance of
any Letter of Credit an annual Letter of Credit fee in an amount equal
to the product of (i) the stated amount of each Letter of Credit
multiplied by (ii) the Applicable Margin then in effect with respect
to any Revolving Credit Loan which is a Libor Loan. In the event that
the Borrower shall fail to reimburse the Agent under any Letter of
Credit or Letter of Credit Agreement, and any outstanding Indebtedness
of the Borrower relating thereto, the Agent shall promptly notify each
Lender of the unreimbursed amount together with accrued interest
thereon, and each Lender agrees to purchase, and it shall be deemed to
have purchased, a participation in such Letter of Credit or Letter of
Credit Agreement and such Indebtedness in an amount equal to its Pro
Rata Share of the unpaid amount together with unpaid interest thereon.
Upon one (1) Business Day's notice from the Agent, each Lender shall
deliver to the Agent an amount equal to its respective participation
in same day funds, at the place and on the date and by the time
notified by the Agent. The obligation of each Lender to deliver to
the Agent an amount equal to its respective participation pursuant to
the foregoing sentence shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or
continuation of an Event of Default or the failure to satisfy any
condition set forth in Article III of this Agreement.
As soon as is practicable following the close of each month after
the Closing Date and in any event within fifteen (15) days thereafter,
the Borrower will submit to the Agent a borrowing base certificate in
the form of Exhibit 2.1.0.
Section 2.2. Interest and Fees on the Loans.
Section 2.2.1. Interest. Interest shall accrue and be
paid currently on the Loans at Effective Prime or the Libor Rate
for each of the Loans' Interest Periods in accordance with the
Borrower's Interest Rate Elections for the Loans subject to and
in accordance with the terms and conditions of this Agreement
and the Note(s); provided that if a Default or an Event of
Default exists and is continuing, no Interest Rate Election
made during such period electing the Libor Rate shall be
effective and any Prime Rate Loan shall bear interest, payable on
demand, at Effective Prime plus, so long as an Event of Default
exists and is continuing, four percent (4.0%)
19
(Loan Agreement - Fleet/Convergent)
26
and each Libor Loan shall bear interest, payable on demand, at
the Libor Rate plus four percent (4.0%); all of the foregoing
being applicable until such Default or Event of Default is cured
or waived and an Interest Rate Election electing the Libor Rate
for such Loan or portion thereof which is effective in accordance
with this Agreement is submitted to the Agent. The Borrower shall
pay such interest to the Agent for the pro rata account of each
Lender in arrears on the Loans (including without limitation
Libor Loans) outstanding from time to time after the Closing
Date, such payments to be made, with respect to Libor Loans with
Interest Periods of three months or less on each Interest
Adjustment Date for such Loans, and with respect to Libor Loans
with Interest Periods of more than three months and with respect
to Prime Rate Loans, every 90 days after the day of making of
such Loan or the commencement of the Interest Period in question
and on the Interest Adjustment Date for each of such Libor Loans.
In the event no Interest Rate Election has been made by the
Borrower with respect to any Loan or Advance (or an Interest Rate
Election shall have expired without an effective substitute
Interest Rate Election), Effective Prime shall be the rate
applicable to such Loan or Advance. All provisions of each Note
and any other agreements between the Borrower and the Lenders
are expressly subject to the condition that in no event, whether
by reason of acceleration of maturity of the Indebtedness
evidenced by any Note or otherwise, shall the amount paid or
agreed to be paid to the Lenders which is deemed interest under
applicable law exceed the maximum permitted rate of interest
under applicable law (the "Maximum Permitted Rate"), which shall
mean the law in effect on the date of this Agreement, except that
if there is a change in such law which results in a higher
Maximum Permitted Rate, then each Note shall be governed by such
amended law from and after its effective date. In the event that
fulfillment of any provision of any Note, or this Agreement or
any document, instrument or agreement providing security for any
Note results in the rate of interest charged under any Note being
in excess of the Maximum Permitted Rate, the obligation to be
fulfilled shall automatically be reduced to eliminate such
excess. If, notwithstanding the foregoing, any Lender receives an
amount which under applicable law would cause the interest rate
under any Note to exceed the Maximum Permitted Rate, the portion
thereof which would be excessive shall automatically be deemed a
prepayment of and be applied to the unpaid principal balance of
such Note to the extent of then outstanding Prime Rate Loans and
not a payment of interest and to the extent said excessive
portion exceeds the outstanding principal amount of Prime Rate
Loans, said excessive portion shall be repaid to the Borrower.
Section 2.2.2. Fees. On the last Business Day of each
March, June, September and December commencing September 30, 1999
and continuing through the Revolving Credit Repayment Date, the
Borrower shall pay to the Agent for the pro rata account of each
Lender, a fee in an amount equal to .50% per annum of the amount,
if any, by which the average actual daily amount of the Revolving
Credit Loan Commitment for the quarterly period just ended (or in
the case of the first such payment, the period from the Closing
Date to the date such payment is due) exceeds the average of the
actual daily outstanding principal balances of the Revolving
Credit Loans plus the average of the actual daily aggregate
outstanding stated amounts of any Letters of Credit and, without
duplication, Letter of Credit Agreements, and any unreimbursed
amounts thereunder (the "Unused Amount"); provided, however, that
if at any time after the receipt by the Agent of the annual
audited financial statements for the Borrower's December 31,
1999 fiscal year and of the Borrower's quarterly financial
statements for each subsequent Borrower fiscal quarter provided
to the Agent by the Borrower pursuant to Section 5.3.2 or 5.3.3
hereof, the ratio of (a) total Indebtedness for Borrowed Money of
the Borrower and its Subsidiaries on a consolidated basis as of
the last day of the most recently ended fiscal quarter of the
Borrower to (b) EBITDA, (i) is less than 2.5:1.0 and greater
than or equal to 2.0:1.0 and if and so long as no Event of
Default or Default exists and is continuing, subject to the
next-to-last sentence of the next paragraph, the Borrower shall
pay to the Agent for the pro rata account of each Lender a fee in
an amount equal to .40% per annum of the Unused Amount, if any,
(ii) is less than 2.0:1.0 and
20
(Loan Agreement - Fleet/Convergent)
27
greater than or equal to 1.0:1.0 and if and so long as no Event
of Default or Default exists and is continuing, subject to the
next-to-last sentence of the next paragraph, the Borrower shall
pay to the Agent for the pro rata account of each Lender a fee in
an amount equal to .30% per annum of the Unused Amount, if any;
(iii) is less than 1.0:1.0 and if and so long as no Event of
Default or Default exists and is continuing, subject to the
next-to-last sentence of the next paragraph, the Borrower shall
pay to the Agent for the pro rata account of each Lender a fee in
an amount equal to .25% per annum of the Unused Amount, if any
(the "Unused Fees"). In addition, the Borrower shall pay to the
Agent certain other fees as specified in the Fee Letter; provided
further, however, that if on any date the Borrower would be
entitled to an Unused Fee other than .50% except for the fact
that a Default exists, the Unused Fee shall not change until the
first to occur of (a) such Default becoming an Event of Default
and (b) waiver or cure of such Default, at which time the Unused
Fee shall be adjusted or remain the same in accordance with the
provisions of this definition preceding this further proviso.
Any change in the Unused Fee required pursuant to the
foregoing shall become effective on the fifth Business Day after
the Agent receives the Borrower's financial statement for the
Borrower's fiscal quarter or year-end, as the case may be, in
question; provided, however, that each of the above-referenced
Unused Fees shall remain in effect only so long as Borrower
qualifies therefor in accordance with this definition and
provided further, however, that Unused Fee reductions shall
become final only on the basis of Borrower's annual audited
financial statements and in the event that such annual audited
financial statements establish that the Borrower was not entitled
to an Unused Fee reduction which was previously granted, the
Borrower shall, upon written demand by the Agent, repay to the
Agent for the account of each Lender an amount equal to the
excess of the Unused Fee at the rate which should have been
charged based on such annual audited financial statements and the
rate actually charged on the basis of Borrower's quarterly
financial statement(s) (provided that in the event of a dispute
as to the appropriate fiscal quarter as to which any adjustment
should be allocated, the decision of the independent accountants
of the Borrower shall be made in accordance with GAAP and shall
be binding upon the Agent, the Lenders and the Borrower absent
manifest error); and provided further, however, that in the event
that Borrower fails to provide any financial statement on a
timely basis in accordance with Sections 5.3.2 or 5.3.3 any
Unused Fee increase payable as a result thereof shall be
retroactively effective to the date on which the financial
statement in question should have been received by the Agent in
accordance with Section 5.3.2 or 5.3.3, and the Borrower shall
pay any amount due as a result thereof upon written demand from
the Agent. The Agent shall send the Borrower written
acknowledgment of each change in the Unused Fee in accordance
with the Agent's customary procedures as in effect from time to
time, but the failure to send such acknowledgment shall have no
effect on the effectiveness or applicability of the foregoing
provisions of this definition or Borrower's obligations with
respect to payment and calculation of Unused Fees.
Section 2.2.3. Increased Costs - Capital. If, after the
date hereof, any Lender shall have reasonably determined that the
adoption after the date hereof of any applicable law,
governmental rule, regulation or order regarding capital adequacy
of banks or bank holding companies, or any change therein, or any
change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance
by such Lender or such Lender's holding company with any policy,
guideline, directive or request regarding capital adequacy
(whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) of any such
authority, central bank or comparable agency, has or would have
the effect of reducing the rate of return on the capital of such
Lender or such Lender's holding company as a consequence of the
obligations hereunder of such Lender to a level below that which
such Lender could have achieved but for
21
(Loan Agreement - Fleet/Convergent)
28
such adoption, change or compliance (taking into consideration
the policies of such Lender or such Lender's holding company with
respect to capital adequacy immediately before such adoption,
change or compliance and assuming that the capital of such Lender
or such Lender's holding company was fully utilized prior to such
adoption, change or compliance) by an amount reasonably deemed by
such Lender to be material, then such Lender shall notify the
Agent and the Borrower thereof and the Borrower shall pay to the
Agent for the account of such Lender from time to time as
specified by such Lender such additional amounts as shall be
sufficient to compensate such Lender for such reduced return,
each such payment to be made by the Borrower within five (5)
Business Days after each demand by such Lender; provided that the
liability of the Borrower to pay such costs shall only accrue
with respect to costs accruing from and after the 180th day prior
to the date of each such demand. A certificate in reasonable
detail of one of the officers of such Lender describing the event
giving rise to such reduction and setting forth the amount to be
paid to such Lender hereunder and a computation of such amount
shall accompany any such demand and shall, in the absence of
manifest error, be conclusive. In determining such amount, such
Lender shall act reasonably and will use any reasonable averaging
and attribution methods. If the Borrower shall, as a result of
the requirements of this Section 2.2.3 above, be required to pay
any Lender the additional costs referred to above and the
Borrower, in its sole discretion, shall deem such additional
amounts to be material, the Borrower shall have the right to
substitute another bank satisfactory to the Agent for such Lender
which has certified the additional costs to the Borrower, and the
Agent shall use reasonable efforts at no cost to the Agent to
assist the Borrower to locate such substitute bank. Any such
substitution shall take place in accordance with Section 9.11 and
shall otherwise be on terms and conditions reasonably
satisfactory to the Agent, and until such time as such
substitution shall be consummated, the Borrower shall continue to
pay such additional costs. Upon any such substitution, the
Borrower shall pay or cause to be paid to the Lender that is
being replaced, all principal, interest (to the date of such
substitution) and other amounts owing hereunder to such Lender
and such Lender will be released from liability hereunder.
Section 2.3. Notations. At the time of (i) the making
of each Advance evidenced by any Note, (ii) each change in the
interest rate under any Note effected as a result of an Interest
Rate Election; and (iii) each payment or prepayment of any Note,
each Lender may enter upon its records an appropriate notation
evidencing (a) such Lender's Pro Rata Share of the Loans and (b)
the interest rate and Interest Adjustment Date applicable thereto
or (c) such payment or prepayment (voluntary or involuntary) of
principal and (d) in the case of payments or prepayments
(voluntary or involuntary) of principal, the portion of the
applicable Loan which was paid or prepaid. No failure to make any
such notation shall affect the Borrower's unconditional
obligations to repay the Loans and all interest, fees and other
sums due in connection with this Agreement and/or any Note in
full, nor shall any such failure, standing alone, constitute
grounds for disproving a payment of principal by the Borrower,
However, in the absence of manifest error, such notations and
each Lender's records containing such notations shall constitute
presumptive evidence of the facts stated therein, including,
without limitation, the outstanding amount of such Lender's Pro
Rata Share of the Loans and all amounts due and owing to such
Lender at any time. Any such notations and such Lender's records
containing such notations may be introduced in evidence in any
judicial or administrative proceeding relating to this Agreement,
the Loans or any Note.
Section 2.4. Computation of Interest. Interest due
under this Agreement and any Note shall be computed on the basis
of a year of 360 days for the actual number of days elapsed.
22
(Loan Agreement - Fleet/Convergent)
29
Section 2.5. Time of Payments and Prepayments in Immediately
Available Funds.
Section 2.5.1. Time. All payments and prepayments of
principal, fees, interest and any other amounts owed from time
to time under this Agreement and/or under each Note shall be made
to the Agent for the pro rata account of each Lender at the
address referred to in Section 9.6 in Dollars and in immediately
available funds prior to 12:00 o'clock P.M. on the Business Day
that such payment is due, provided that the Borrower hereby
authorizes and instructs the Agent to charge against the
Borrower's accounts with the Agent on each date on which a
payment is due hereunder and/or under any Note and on any
subsequent date if and to the extent any such payment is not made
when due an amount up to the principal, interest and fees due and
payable to the Lenders, the Agent or any Lender hereunder and/or
under any Note and such charge shall be deemed payment hereunder
and under the Note(s) in question to the extent that immediately
available funds are then in such accounts. The Agent shall use
reasonable efforts in accordance with the Agent's customary
procedures to give subsequent notice of any such charge to the
Borrower, but the failure to give such notice shall not affect
the validity of any such charge. To the extent that immediately
available funds are then in such accounts, the failure of the
Agent to charge any such account or the failure of the Agent to
charge any such account prior to 12 o'clock P.M. shall not be
basis for an Event of Default under Section 6.1.1 and any amount
due on the Loans on such date shall be deemed paid; provided that
the Agent shall have the right to charge any such account on any
subsequent date for such unpaid payment and an Event of Default
shall exist if sufficient immediately available funds are not in
such accounts on the date the Agent so charges such account after
the expiration of any applicable cure period. In the event of any
charge against the Borrower's accounts by the Agent pursuant to
the immediately preceding sentence, the Agent shall use
reasonable efforts to provide notice to the Borrower of such
charge in accordance with the Agent's customary procedures, but
the failure to provide such notice shall not in any way be a
basis for any liability of the Agent nor shall such failure
adversely affect the validity and effectiveness of any such
action by the Agent. Any such payment or prepayment which is
received by the Agent in Dollars and in immediately available
funds after 12 o'clock P.M. on a Business Day shall be deemed
received for all purposes of this Agreement on the next
succeeding Business Day unless the failure by Agent to receive
such funds prior to 12 o'clock P.M. is due to Agent's failure to
charge the account of Borrower prior to 12 o'clock P.M., except
that solely for the purpose of determining whether a Default or
Event of Default has occurred under Section 6.1.1., any such
payment or prepayment, if received by the Agent prior to the
close of the Agent's business on a Business Day, shall be deemed
received on such Business Day. All payments of principal,
interest, fees and any other amounts which are owing to any or
all of the Lenders or the Agent hereunder and/or under any of the
Notes that are received by the Agent in immediately available
Dollars prior to 12:00 o'clock P.M. on any Business Day shall, to
the extent owing to the Lenders other than the Agent, be sent by
wire transfer by the Agent to any such other Lenders (in each
case, without deduction for any claim, defense or offset of any
type) before 3:00 o'clock P.M. on the same Business Day. Each
such wire transfer shall be addressed to each Lender in
accordance with the wire instructions set forth in Exhibit 1.9
hereto. The amount of each payment wired by the Agent to each
such Lender shall be such amount as shall be necessary to provide
such Lender with its Pro Rata Share of such payment (without
consideration or use of any contra accounts of any Lender), or
with such other amount as may be owing to such Lender in
accordance with this Agreement (in each case, without deduction
for any claim, defense or offset of any type). Each such wire
transfer shall be sent by the Agent only after the Agent has
received immediately available Dollars from or on behalf of the
Borrower and each such wire transfer shall provide each Lender
receiving same with immediately available Dollars on receipt by
such Lender. Any such payments of immediately available Dollars
received by the Agent after 12:00 o'clock P.M. and before 3:00
o'clock P.M. on any Business Day shall be forwarded in the same
manner by the Agent to such Lender(s) as soon as practicable on
said Business Day, and if
23
(Loan Agreement - Fleet/Convergent)
30
any such payments of immediately available Dollars are received
by the Agent after 3:00 o'clock P.M. on a Business Day, the
Agent shall so forward same to such Lender(s) before 10:00
o'clock A.M. on the immediately succeeding Business Day.
Section 2.5.2. Setoff, etc. Borrower and any
Subsidiaries hereby grant to the Agent and each Lender a Lien,
security interest and right of setoff as security for all
Obligations to the Agent and such Lender whether now existing or
hereafter arising. Regardless of the adequacy of any collateral
for any of the Obligations, and subject to the provisions of
Article 7.1 upon the occurrence and during the continuance of any
Event of Default, each Lender is hereby authorized at any time
and from time to time, without notice to the Borrower (any such
notice being expressly waived by the Borrower), to set off and
apply any and all deposits (general or special, time or demand,
provisional or final) credits, collateral and property at any
time in the possession , custody, safekeeping or control of such
Lender or any entity under the control of any Lender's holding
company or in transit to any of them and any other Indebtedness
at any time owing by such Lender to or for the credit or the
account of the Borrower against any and all of the Obligations of
the Borrower irrespective of whether or not such Lender shall
have made any demand under this Agreement or any Note and
although such obligations may be unmatured. Each such Lender
agrees to promptly notify the Borrower and the Agent after any
such setoff and application; provided that the failure to give
such notice shall not affect the validity of such setoff and
application. Promptly following any notice of setoff received by
the Agent from a Lender pursuant to the foregoing, the Agent
shall notify each other Lender thereof. The rights of each Lender
under this Section 2.5.2 are in addition to all other rights and
remedies (including, without limitation, other rights of setoff)
which such Lender may have and are subject to Section 9.12. ANY
AND ALL RIGHTS TO REQUIRE THE AGENT OR ANY LENDER TO EXERCISE ITS
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
SECURES THE LOANS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE
BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
Section 2.5.3. Unconditional Obligations and No Deductions.
Section 2.5.3.1 The Borrower's obligation to make all
payments provided for in this Agreement and the other Financing
Documents shall be unconditional. Each such payment shall be made
without deduction for any claim, defense or offset of any type,
including without limitation any withholdings and other
deductions on account of income or other taxes (except to the
extent provided in Section 2.5.3.2) and regardless of whether any
claims, defenses or offsets of any type exist.
Section 2.5.3.2. (a) Any and all payments by the
Borrower to or for the account of any Lender or the Agent
hereunder or under any other Financing Document shall be made
free and clear of and without deduction for any and all present
or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, taxes
imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender (or its
applicable lending office) or the Agent (as the case may be) is
organized or any political subdivision thereof, other than to the
extent such income or franchise tax is imposed solely as a result
of the activities of the Agent or a Lender pursuant to or in
respect of this Agreement or any of the other Financing Documents
(all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings, and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum
payable under this Agreement or any other Financing
24
(Loan Agreement - Fleet/Convergent)
31
Document to any Lender or the Agent, (i) the sum payable shall be
increased as necessary so that after making all required
deductions (including deductions applicable to additional sums
payable under this Section 2.5.3.2) such Lender or the Agent
receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such
deductions, (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in
accordance with applicable law, and (iv) the Borrower shall
furnish to the Agent, at its address referred to in Section 9.6
hereof, the original or a certified copy of a receipt evidencing
payment thereof.
(b) In addition, the Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise
or property taxes or charges or similar levies which arise from
any payment made under this Agreement or any other Financing
Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the
Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed or asserted
by any jurisdiction on amounts payable under this Section
2.5.3.2) paid by such Lender or the Agent (as the case may be)
and any liability (including penalties, interest, and expenses)
arising therefrom or with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its
execution and delivery of this Agreement in the case of each
Lender listed on the signature pages hereof and on or prior to
the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing
by the Borrower or the Agent (but only so long as such Lender
remains lawfully able to do so), shall provide the Borrower and
the Agent with (i) a properly completed Internal Revenue Service
Form 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such
Lender is entitled to benefits under an income tax treaty to
which the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that the
income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United
States, (ii) a properly completed Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Lender is
exempt from United States backup withholding, and (iii) any other
form or certificate required by any taxing authority (including
any certificate required by Sections 871(h) and 881(c) of the
Internal Revenue Code), certifying that such Lender is entitled
to an exemption from or a reduced rate of tax on payments
pursuant to this Agreement or any of the other Financing
Documents.
(e) For any period with respect to which a Lender has failed
to provide the Borrower and the Agent with the appropriate form
pursuant to Section 2.5.3.2(d) hereof (unless such failure is due
to a change in treaty, law, or regulation occurring subsequent to
the date on which a form originally was required to be provided),
such Lender shall not be entitled to indemnification under
Sections 2.5.3.1. 2.5.3.2(a) or 2.5.3.2(b) hereof with respect to
Taxes imposed by the United States; provided, however, that
should a Lender, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes because
of its failure to deliver a form required hereunder, the Borrower
shall take such steps as such Lender shall reasonably request and
at such Lender's cost to assist such Lender to recover such
Taxes.
(f) If the Borrower is required to pay additional amounts to
or for the account of any Lender pursuant to this Section
2.5.3.2, then such Lender will agree to use reasonable efforts to
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(Loan Agreement-Fleet/Convergent)
32
change the jurisdiction of its applicable lending office so as to
eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Lender,
is not otherwise disadvantageous to such Lender. Alternatively,
in the event of such an additional cost, the Borrower shall have
the right to substitute another bank satisfactory to the Agent,
and the Agent and such Lender shall use reasonable efforts at no
cost to the Agent and such Lender to assist the Borrower to
locate and effect the substitution in favor of such substitute
bank. Any such substitution shall take place in accordance with
Section 9.11 and shall otherwise be on terms and conditions
reasonably satisfactory to the Agent, and until such time as such
substitution shall be consummated, the Borrower shall continue to
pay such additional costs. Upon any such substitution, the
Borrower shall pay or cause to be paid to the Lender that is
being replaced, all principal, interest (to the date of such
substitution) and other amounts owing hereunder to such Lender
and such Lender will be released from liability hereunder.
(g) Within thirty (30) days after the date of any payment of
Taxes, the Borrower shall furnish to the Agent the original or a
certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.5.3.2 shall survive until
the first anniversary of the Repayment Date.
(i) If the Borrower makes any additional payment to any
Lender pursuant to this Section 2.5.3.2 in respect of any Taxes,
and such Lender determines that it has received (i) a refund of
such Taxes, or (ii) a credit against, relief or remission for, or
a reduction in the amount of, any tax or other governmental
charge as a result of any deduction or credit for any Taxes with
respect to which it has received payments under this Section
2.5.3.2, such Lender shall, to the extent that it can do so
without prejudice to the retention of such refund, credit,
relief, remission or reduction, pay to the Borrower such amount
as shall be reasonably determined by such Lender to be solely
attributable to the deduction or withholding of such Taxes. If
such Lender later determines that it was not entitled to such
refund, credit, relief, remission or reduction to the full extent
of any payment made pursuant to the first sentence of this
Section 2.5.3.2(i), the Borrower shall upon demand of such Lender
promptly repay the amount of such overpayment. Nothing in this
Section 2.5.3.2(i) shall be construed as requiring such Lender to
conduct its business or to arrange or alter in any respect its
tax or financial affairs so that it is entitled to receive such a
refund, credit or reduction or as allowing any Person to inspect
any records, including tax returns, of such Lender.
Section 2.6. Prepayment and Certain Payments.
Section 2.6.1. Mandatory Payments.
Section 2.6.1.1. In addition to each other
principal payment required hereunder, the outstanding principal
balances of the Revolving Credit Loans shall be repaid on the
Revolving Credit Repayment Date.
Section 2.6.1.2. [Intentionally omitted.]
Section 2.6.1.3. In the event that the Borrower or
any Subsidiary is entitled to receive, collectively, proceeds
from any casualty insurance policies maintained by any of them on
account of any interest of the Borrower and/or any Subsidiary in
any property, which proceeds are in an aggregate amount in excess
of $100,000 during the term of this Agreement, such proceeds
shall be received by the Agent and, to the extent that such
proceeds result from a
26
(Loan Agreement - Fleet/Convergent)
33
casualty to property of the Borrower and/or any Subsidiary, so
long as no Default or Event of Default exists and is continuing
and the Borrower or such Subsidiary elects to repair, replace or
restore such property, such proceeds shall be released to the
Borrower or such Subsidiary subject to reasonable procedures and
conditions established by the Agent to the extent necessary to so
repair, replace or restore such property within 3 months (or as
soon as reasonably practicable if such restoration, replacement
or repair is not susceptible to being completed within 3 months)
from the date of receipt of such proceeds by the Agent and to the
extent such proceeds are not so used or do not result from such a
casualty, the amount of such proceeds shall (a) be released to
Borrower and (b) permanently reduce the Revolving Credit Loan
Commitment and to the extent that the outstanding principal
balance of the Loans exceeds the Revolving Credit Loan Commitment
as so reduced, the Borrower shall make a prepayment of the Loans
for the accounts of the Lenders in accordance with their Pro Rata
Shares upon written notice from the Agent.
Section 2.6.1.4. In the event that the Borrower
and/or any Subsidiary sells, assigns or otherwise transfers title
to any asset other than in the ordinary course of its business
for net cash proceeds in the aggregate since the Closing Date in
excess of $200,000, the Borrower and/or such Subsidiary shall
remit 100% of the net cash proceeds of such sale, assignment or
other transfer to the Agent as a prepayment of the Loans for the
accounts of the Lenders in accordance with their Pro Rata Shares
within 10 Business Days of the date of Borrower's or any
Subsidiary's receipt of such net cash proceeds; provided,
however, that Borrower may sell any of its equipment which is
obsolete, worn-out or no longer used or useful in Borrower's
business and Borrower may use the proceeds of such sale to
purchase other equipment which is useful or necessary in the
operation of Borrower's business and provided further that the
Borrower can sell assets as permitted by Section 5.2.3 without
complying with this Section.
Section 2.6.1.5. In the event that the Borrower
and/or any Subsidiary files a Form S-1 or any other form of
registration statement then available for registration with the
Securities and Exchange Commission (other than an offering on
Form S-4 or S-8 or their successor forms) or otherwise conducts a
Qualified Initial Public Offering of any class of the Borrower's
or any Subsidiary's securities, the Borrower and/or such
Subsidiary upon receipt of the net aggregate cash consideration
from the sale of any such registered shares of its capital stock
shall prepay to the Agent for the accounts of the Lenders in
accordance with their Pro Rata Shares an amount of the
outstanding principal balances of the Loans equal to that amount
necessary to reduce the Borrower's average ratio of total
Indebtedness for Borrowed Money as of the Borrower fiscal quarter
ends in the four Borrower fiscal quarter period consisting of the
Borrower's most recent fiscal quarter and the immediately
preceding three Borrower fiscal quarters to EBITDA to less than
1.0:1.0, and the Revolving Credit Loan Commitment shall be
permanently reduced to an amount which, if fully outstanding as
Loans and Letters of Credit and, without duplication, Letter of
Credit Agreements or unreimbursed amounts drawn thereunder would
result in such ratio being less than 1.0:1.0.
Section 2.6.1.6. If at any time the aggregate
principal amount of the Revolving Credit Loans plus the aggregate
outstanding stated amounts of any Letters of Credit and, without
duplication, Letter of Credit Agreements and any unreimbursed
amounts drawn thereunder shall exceed the Revolving Credit Loan
Commitment, the Borrower shall immediately pay to the Agent in
immediately available Dollars the amount of such excess.
Section 2.6.1.7. Any amounts repaid by the
Borrower and/or any Subsidiary under this Section 2.6.1 shall be
paid without premium or penalty. In the event that any payment or
prepayment of a Libor Loan under this Section 2.6.1 is received
on a date other than the last day of an Interest Period, such
payment or prepayment shall be held by the Agent in
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(Loan Agreement - Fleet/Convergent)
34
a separate account and be pledged to the Agent as collateral for
the Obligations of the Borrower arising in connection with the
Financing Documents until the last day of the then current
Interest Period, at which time the Agent shall apply such payment
or prepayment, for the account of the Lenders in accordance with
their Pro Rata Shares, to the outstanding Libor Loans, for which
such day is an Interest Adjustment Date; provided that if on or
prior to the date of such payment or prepayment the Borrower
provides the Agent with written notice of Borrower's election to
have such payment or prepayment applied to the Libor Loan in
question, such payment or prepayment shall be so applied and
Borrower shall pay the Agent for the accounts of the Lenders any
amount due in accordance with Section 2.9.
Section 2.6.2. Voluntary Prepayments. All or any
portion of the unpaid principal balance of the Loans (other than
portions of any Loans constituting Libor Loans) may be prepaid at
any time, without premium or penalty, by giving the Agent at
least 3 days' prior written notice of such prepayment and by a
payment to the Agent for the accounts of the Lenders in
accordance with their Pro Rata Shares of such prepayment in
immediately available Dollars by the Borrower; provided that each
such partial payment or prepayment of principal of the Loans
shall be in a principal amount of at least $100,000 or an
integral multiple of $50,000 in excess thereof.
Section 2.6.3. Prepayment of Libor Loans.
Notwithstanding anything to the contrary contained in any Note or
in any other agreement executed in connection herewith or
therewith, the Borrower shall be permitted to prepay any portion
of the Loans constituting Libor Loans only in accordance with
Section 2.9 hereof.
Section 2.6.4. Permanent Reduction of Revolving
Credit Loan Commitment. At the Borrower's option the Revolving
Credit Loan Commitment may be permanently and irrevocably reduced
in whole or in part by an amount of at least $1,000,000 and to
the extent in excess thereof in integral multiples of $500,000 or
if less, the Revolving Credit Loan Commitment, at any time;
provided that (i) the Borrower gives the Agent written notice of
the exercise of such option at least three (3) Business Days
prior to the effective date thereof, (ii) the aggregate
outstanding balance of the Revolving Credit Loans, plus the
aggregate outstanding amount of any Letters of Credit and,
without duplication, Letter of Credit Agreement and any
unreimbursed drawn amounts thereunder, if any, does not exceed
the Revolving Credit Loan Commitment, as so reduced in any such
case on the effective date of such reduction and (iii) the
Borrower is not, and after giving effect to such reduction, would
not be in violation of Section 2.6.3. Any such reduction shall
concurrently reduce the Dollar amount of each Lender's Pro Rata
Share of the Revolving Credit Loan Commitment.
Section 2.7. Payment on Non-Business Days.
Whenever any payment to be made hereunder or under any Note shall
be stated to be due on a day other than a Business Day, such
payment may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the
computation of payment of fees, if any, and interest under this
Agreement and under such Note.
Section 2.8. Use of Proceeds. (a) The Borrower
shall use the proceeds of the Loans to repurchase capital stock
from the Old Stockholders, to pay certain deferred compensation
liabilities and the costs of buying out certain employment
contracts, to pay costs incurred by the Borrower in connection
with the closing of the Loans, including without limitation, the
Facility Fee and costs incurred in connection with the Related
Transactions, to refinance existing bank debt, to make a loan in
a maximum amount of $2,000,000 to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., for
Borrower's general corporate purposes, including working capital
needs and for Investments
28
(Loan Agreement - Fleet/Convergent)
35
permitted by Section 5.2.12. The Borrower shall obtain any
Letters of Credit solely for working capital and general
corporate purposes.
(b) No portion of the proceeds of any Loans is to
be used, and no portion of any Letter of Credit is to be
obtained, for the purpose of (a) knowingly purchasing, or
providing credit support for the purchase of, Ineligible
Securities from a Section 20 Subsidiary during any period in
which such Section 20 Subsidiary makes a market in such
Ineligible Securities, (b) knowingly purchasing, or providing
credit support for the purchase of, during the underwriting or
placement period, any Ineligible Securities being underwritten or
privately placed by a Section 20 Subsidiary, or (c) making, or
providing credit support for the making of, payments of principal
or interest on Ineligible Securities underwritten or privately
placed by a Section 20 Subsidiary and issued by or for the
benefit of the Borrower or any Subsidiary or other Affiliate of
the Borrower.
Section 2.9. Special Libor Loan Provisions. The Libor Loans
shall be subject to and governed by the following terms and
conditions:
Section 2.9.1. Requests. Each Request accompanied by an
Interest Rate Election selecting the Libor Rate must be received
by the Agent in accordance with the definition of Interest Rate
Election.
Section 2.9.2. Libor Loans Unavailable. Notwithstanding any
other provision of this Agreement, if, prior to or on the date on
which all or any portion of the Loans is to be made as or
converted into a Libor Loan, any of the Lenders (or the Agent
with respect to (ii) below) shall reasonably determine (which
determination shall be conclusive and binding on the Borrower),
that
(i) Dollar deposits in the relevant amounts and for the
relevant Interest Period are not offered to such Lender in the
London interbank market,
(ii) by reason of circumstances affecting the London
interbank market, adequate and reasonable means do not exist for
ascertaining the Adjusted Libor Rate, or
(iii) the Adjusted Libor Rate shall no longer represent the
effective cost to such Lender for Dollar deposits in the London
interbank market for reasons other than the fact, standing alone,
that the Adjusted Libor Rate is based on an averaging of rates
determined by the Agent and that such Lender's rate may exceed
such average,
such Lender may elect not to accept any Interest Rate Election
electing a Libor Loan and such Lender shall notify the Agent by
telephone or telex thereof, stating the reasons therefor, not
later than the close of business on the second Business Day prior
to the date on which such Libor Loan is to be made. The Agent
shall promptly give notice of such determination and the reason
therefor to the Borrower, and all or such portion of the Loans,
as the case may be, which are subject to any of Section 2.9.2
(i), (ii) through (iii) as a result of such Lender's
determination shall be made as or converted into, as the case may
be, Prime Rate Loans and such Lender shall have no further
obligation to make Libor Loans, until further written notice to
the contrary is given by the Agent to the Borrower. If such
circumstances subsequently change so that such Lender shall no
longer be so affected, such Lender's obligation to make or
maintain its Pro Rata Share of all or any portion of the Loans as
Libor Loans shall be reinstated when such Lender obtains actual
knowledge of such change of circumstances and promptly after
obtaining such actual knowledge such Lender shall forward written
notice thereof to the Agent. After receipt of such notice, the
29
(Loan Agreement - Fleet/Convergent)
36
Agent shall promptly forward written notice thereof to the
Borrower. Upon or after receipt by the Borrower of such written
notice, the Borrower may submit an Interest Rate Election in
accordance with this Agreement electing an Interest Period ending
no later than the Interest Adjustment Date for the then current
Interest Period for the other Lenders' Pro Rata Shares of Libor
Loans and electing the Libor Rate for such Lenders' or Lender's
Pro Rata Share(s) of the Loans as to which such Lender's or
Lenders' obligation(s) to make or maintain its or their Pro Rata
Share(s) of the Loans as Libor Loans was suspended and such Pro
Rata Share(s) shall be converted to Libor Loans in accordance
with this Agreement. During any period throughout which any of
the Lenders has or have no obligation to make or maintain its or
their Pro Rata Share(s) of the Loans as Libor Loans, no Interest
Rate Elections electing the Libor Rate shall be effective with
regard to the Loans to the extent of the Pro Rata Share(s) of
such Lender(s), but shall be effective as to the other Lenders.
Section 2.9.3. Libor Lending Unlawful. In the event that
after the date hereof any change in applicable laws or
regulations (including the introduction of any new applicable law
or regulation) or in the interpretation thereof (whether or not
having the force of law) by any governmental or other regulatory
authority charged with the administration thereof, shall make it
unlawful for any of the Lenders to make or continue to maintain
its Pro Rata Share of all or any portion of the Loans as Libor
Loans, each such Lender shall promptly notify the Agent by
telephone or telex thereof, and of the reasons therefor, and the
obligation of such Lender to make or maintain its Pro Rata Share
of the Loans or such portion thereof as Libor Loans shall, upon
the happening of such event, terminate and the Agent shall, by
telephonic notice to the Borrower, declare that such obligation
has so terminated with respect to such Lender, and such Pro Rata
Share of the Loans or any portion thereof to the extent then
maintained as Libor Loans, shall, on the last day on which such
Lender can lawfully continue to maintain such Pro Rata Share of
the Loans or any portion thereof as Libor Loans, automatically
convert into Prime Rate Loans without additional cost to the
Borrower. If circumstances subsequently change so that such
Lender shall no longer be so affected, such Lender's obligation
to make or maintain its Pro Rata Share of all or any portion of
the Loans as Libor Loans shall be reinstated when such Lender
obtains actual knowledge of such change of circumstances, and
promptly after obtaining such actual knowledge such Lender shall
forward written notice thereof to the Agent. After receipt of
such notice, the Agent shall promptly forward written notice
thereof the Borrower. Upon or after receipt by the Borrower of
such written notice, the Borrower may submit an Interest Rate
Election in accordance with this Agreement electing an Interest
Period ending no later than the Interest Adjustment Date for the
then current Interest Period for the other Lenders' Pro Rata
Shares of Libor Loans and electing the Libor Rate for such
Lenders' or Lender's Pro Rata Share(s) of the Loans as to which
such Lender's or Lenders' obligation(s) to make or maintain its
or their Pro Rata Share(s) of the Loans as Libor Loans was
suspended and such Pro Rata Share(s) shall be converted to Libor
Loans in accordance with this Agreement. During any period
throughout which any of the Lenders has or have no obligation to
make or maintain its or their Pro Rata Share(s) of the Loans as
Libor Loans, no Interest Rate Elections electing the Libor Rate
shall be effective with regard to the Loans to the extent of the
Pro Rata Share(s) of such Lender(s), but shall be effective as to
the other Lenders.
Section 2.9.4. Additional Costs on Libor Loans. The Borrower
further agrees to pay to the Agent for the account of the
applicable Lender or Lenders such amounts as will compensate any
of the Lenders for any increase in the cost to such Lender of
making or maintaining (or of its obligation to make or maintain)
all or any portion of its Pro Rata Share of the Loans as Libor
Loans and for any reduction in the amount of any sum receivable
by such Lender under this Agreement in respect of making or
maintaining all or any portion of such
30
(Loan Agreement - Fleet/Convergent)
37
Lender's Pro Rata Share of the Loans as Libor Loans, in either case,
from time to time by reason of:
(i) any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, such Lender, under or pursuant to any law, treaty,
rule, regulation (including, without limitation, any Regulations
of the Board of Governors of the Federal Reserve System) or
requirement in effect after the date hereof, any interpretation
thereof by any governmental authority charged with administration
thereof or by any central bank or other fiscal or monetary
authority or other authority, or any requirement imposed by any
central bank or such other authority whether or not having the
force of law; or
(ii) any change in (including the introduction of any new)
applicable law, treaty, rule, regulation or requirement or in the
interpretation thereof by any official authority, or the
imposition of any requirement of any central bank, whether or not
having the force of law, which shall subject such Lender to any
tax (other than taxes on net income imposed on such Lender),
levy, impost, charge, fee, duty, deduction or withholding of any
kind whatsoever or change the taxation of such Lender with
respect to making or maintaining all or any portion of its Pro
Rata Share of the Loans as Libor Loans and the interest thereon
(other than any change which affects, and to the extent that it
affects, the taxation of net income of such Lender), in each
case, after the date hereof; provided, that with respect to any
withholding the foregoing shall not apply to any withholding tax
described in sections 1441, 1442 or 3406 of the Code, or any
succeeding provision of any legislation that amends, supplements
or replaces any such section, or to any tax, levy, impost, duty,
charge, fee, deduction or withholding that results from any
noncompliance by a Lender with any federal, state or foreign law
or from any failure by a Lender to file or furnish any report,
return, statement or form the filing or furnishing of which would
not have an adverse effect on such Lender and would eliminate
such tax, impost, duty, deduction or withholding;
In any such event, such Lender shall promptly notify the Agent
thereof, and of the reasons therefor, and the Agent shall promptly
notify the Borrower thereof in writing stating the reasons provided to
the Agent by such Lender therefor and the additional amounts required
to fully compensate such Lender for such increased or new cost or
reduced amount as reasonably determined by such Lender. Such
additional amounts shall be payable on each date on which interest is
to be paid hereunder or, if there is no outstanding principal amount
under any of the Notes, within 10 Business Days after the Borrower's
receipt of said notice. Such Lender's certificate as to any such
increased or new cost or reduced amount (including calculations, in
reasonable detail, showing how such Lender computed such cost or
reduction) shall be submitted by the Agent to the Borrower and shall,
in the absence of manifest error, be conclusive. In determining any
such amount, the Lender(s) may use any reasonable averaging and
attribution methods. Notwithstanding anything to the contrary set
forth above, the Borrower shall not be obligated to pay any amounts
pursuant to this Section 2.9.4 as a result of any requirement or
change referenced above with respect to any period prior to the one
hundred and eightieth (180th) day prior to the date on which the
Borrower is first notified thereof (other than any amounts which
relate to any such requirement or change which is adopted with
retroactive effect in which case the Borrower shall be obligated to
pay all such amounts accrued from the date as of which such
requirement or change is retroactively effective) unless the failure
to give such notice within such one hundred and eighty (180) day
period resulted from reasonable circumstances beyond such Lender's
reasonable control.
31
(Loan Agreement - Fleet/Convergent)
38
Section 2.9.5. Libor Funding Losses. In the event that any
payment or prepayment of a Libor Loan is received on a date other than
the last day of an Interest Period, such payment or prepayment shall
be held by the Agent in a separate account and be pledged to the Agent
as collateral for the obligations of the Borrower arising in
connection with this Agreement, the Notes and the other Financing
Documents until the end of the then current Interest Period, at which
time the Agent shall apply such payment or prepayment, for the
accounts of the Lenders in accordance with their Pro Rata Shares, to
the outstanding Libor Loans; provided that if on or prior to the date
of such payment or prepayment the Borrower provides the Agent with
written notice of Borrower's election to have such payment or
prepayment applied to the Libor Loan in question, such payment or
prepayment shall be so applied. Notwithstanding the foregoing, in the
event any of the Lenders shall incur any loss or expense (including,
without limitation, any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by
such Lender to fund or maintain all or any portion of the Loans as
Libor Loans) as a result of:
(i) payment or prepayment by the Borrower of all or any
portion of any Libor Loan on a date other than the Interest
Adjustment Date for such Libor Loan, for any reason;
(ii) conversion of all or any portion of any Libor Loan on a
day other than the last day of an Interest Period applicable to
such Loan to a Prime Rate Loan for any reason including, without
limitation, acceleration of the Loans upon or after an Event of
Default, any Interest Rate Election or any other cause whether
voluntary or involuntary and whether or not referred to or
described in this Agreement, other than any such conversion
resulting solely from application of Sections 2.9.2 or 2.9.3 by
any Lender; provided, however that this clause shall not be
deemed to grant the Borrower any right to convert a Libor Loan to
a Prime Rate Loan prior to the end of any Interest Period or to
imply such right; or
(iii) any failure by the Borrower to borrow the Loans as
Libor Loans on the date specified in any Interest Rate Election
selecting the Libor Rate, other than any such failure resulting
solely from application of Sections 2.9.2 or 2.9.3 by any Lender;
such Lender shall promptly notify the Agent thereof, and of the
reasons therefor. Upon the request of the Agent, the Borrower shall
pay directly to the Agent for the account of such Lender such amount
as will (in the reasonable determination of such Lender, which shall
be conclusive in the absence of manifest error) reimburse such Lender
for such loss or expense. Each Lender shall furnish to the Borrower,
upon written request from the Borrower received by the Agent, a
written statement setting forth the computation of any such amounts
payable to such Lender under this Section 2.9.5.
Section 2.9.6. Banking Practices. Each Lender agrees that upon
the occurrence of any of the events described in Sections 2.2.3 and/or
2.9.2, 2.9.4 or 2.9.5. such Lender will exercise all reasonable
efforts to take such reasonable actions at no expense to such Lender
(other than reasonable expenses which are covered by the Borrower's
advance deposit of funds with such Lender for such purpose, or if such
Lender agrees, which the Borrower has agreed to pay or reimburse to
such Lender in full upon demand), in accordance with such Lender's
usual banking practices in such situations and subject to any
statutory or regulatory requirements applicable to such Lender, as
such Lender may take without the consent or participation of any other
Person to, in the case of an event described in Sections 2.2.3 and/or
2.9.4 or 2.9.5, mitigate the cost of such events to the Borrower and,
in the case of an event described in Sections 2.9.2(i), (ii) or "iii,
to seek Dollar deposits in any other interbank Libor market in which
such Lender regularly
32
(Loan Agreement - Fleet/Convergent)
39
participates and in which the applicable determination(s) described in
Sections 2.9.2(i), (ii) or (iii), as the case may be, does not apply.
Section 2.9.7. Borrower's Options on Unavailability or Increased
Cost of Libor Loans. In the event of any conversion of all or any
portion of any Lender's Pro Rata Share of any Libor Loans to a Prime
Rate Loan for reasons beyond the Borrower's control or in the event
that any Lender's Pro Rata Share of all or any portion of the Libor
Loans becomes subject, under Sections 2.9.4 or 2.9.5, to additional
costs, the Borrower shall have the option, subject to the other terms
and conditions of this Agreement, to convert such Lender's Pro Rata
Share to a Prime Rate Loan by making Interest Rate Elections for
Interest Periods which (i) end on the Interest Adjustment Date for
such Libor Loan or (ii) end on Business Days occurring prior to such
Interest Adjustment Date, in which case, at the end of the last of
such Interest Periods any such Libor Rate Loan shall automatically
convert to a Prime Rate Loan and the Borrower shall have no further
right to make an Interest Rate Election with respect to such Prime
Rate Loan other than an Interest Rate Election which is effective on
the Interest Adjustment Date for such Libor Loan. The Borrower's
options set forth in this Section 2.9.7 may be exercised, if and only
if the Borrower pays, concurrently with delivery to the Agent of each
such Interest Rate Election and thereafter in accordance with Sections
2.9.4, 2.9.5 and 2.9.6 all amounts provided for therein to the Agent
in accordance with this Agreement.
If the Borrower shall, as a result of the requirements of Section
2.9.4 above, be required to pay any Lender the additional costs
referred to therein, but not be required to pay such additional costs
to the other Lender or Lenders and the Borrower, in its sole
discretion, shall deem such additional amounts to be material or in
the event that Libor Loans from a Lender are unavailable to the
Borrower as a result solely of the provisions of Sections 2.9.2,
2.9.3 or 2.9.4, but are available from the other Lender or Lenders,
the Borrower shall have the right to substitute another bank
satisfactory to the Agent for such Lender which is entitled to such
additional costs or which is relieved from making Libor Loans and the
Agent shall use reasonable efforts (with all reasonable costs of such
efforts by the Agent to be borne by the Borrower) to assist the
Borrower to locate such substitute bank. Any such substitution shall
take place in accordance with Section 9.11 and otherwise be on terms
and conditions reasonably satisfactory to the Agent, and until such
time as such substitution shall be consummated, the Borrower shall
continue to pay such additional costs and comply with the
above-referenced Sections. Upon any such substitution, the Borrower
shall pay or cause to be paid to the Lender that is being replaced,
all principal, interest (to the date of such substitution) and other
amounts owing hereunder to such Lender and such Lender will be
released from liability hereunder.
Section 2.9.8. Assumptions Concerning Funding of Libor Loans. The
calculation of all amounts payable to the Lenders under this Section
2.9 shall be made as though each Lender actually funded its relevant
Libor Loans through the purchase of a deposit in the London interbank
market bearing interest at the Libor Rate in an amount equal to that
Libor Loan and having a maturity comparable to the relevant Interest
Period and through the transfer of such deposit from an offshore
office of such Lender to a domestic office of such Lender in the
United States of America; provided, however, that each Lender may fund
each of its Libor Loans in any manner it sees fit and the foregoing
assumption shall be utilized solely for the calculation of amounts
payable under this Section 2.9.
33
(Loan Agreement - Fleet/Convergent)
40
ARTICLE 3.
CONDITIONS OF LENDING
Section 3.1. Conditions Precedent to the Revolving Credit Loan Commitment
and to all Loans.
Section 3.1.1. The Revolving Credit Loan Commitment and Initial
Loans. The Revolving Credit Loan Commitment and the obligation of the Lenders to
make the initial Advances of the Loans and/or to issue any Letter of Credit or
Letter of Credit Agreement are subject to performance by the Borrower of all of
its obligations under this Agreement and to the satisfaction of the conditions
precedent that all legal matters incident to the transactions contemplated
hereby or incidental to the Loans shall be reasonably satisfactory to counsel
for the Agent and that the Lenders shall have received on or before the Closing
Date all of the following, each dated the Closing Date or another date
acceptable to the Lenders and each to be in form and substance reasonably
satisfactory to the Agent or if any of the following is not a deliverable, the
satisfaction of such condition in form and substance reasonably satisfactory to
the Agent:
Section 3.1.1.1. The Financing Documents, including, without
limitation, those hereinafter set forth and the Borrower's and any Subsidiary's
certificate of incorporation or other organizational documents, by-laws and each
agreement or instrument relating thereto.
Section 3.1.1.2. Certificate of the secretary, clerk or similar
officer of the Borrower and each Subsidiary certifying as to the resolutions of
the shareholders or board of directors of the Borrower and each Subsidiary
authorizing and approving each of the Financing Documents to which the Borrower
and each Subsidiary is a party and other matters contemplated hereby and
certifying as to the names and signatures of the Authorized Representative(s) of
the Borrower and each Subsidiary authorized to sign each Financing Document to
be executed and delivered by or on behalf of the Borrower and each Subsidiary.
The Agent and the Lenders may conclusively rely on each such certificate until
the Agent shall receive a further certificate canceling or amending the prior
certificate and submitting the signatures of the Authorized Representative(s)
named in such further certificate.
Section 3.1.1.3. Favorable opinions of Holland & ▇▇▇▇, counsel for
the Borrower, in form and substance reasonably satisfactory to the Agent.
Section 3.1.1.4. An Officer's Certificate stating that:
Section 3.1.1.4.1. The representations and warranties
contained in Section 4.1 and/or contained in any of the other Financing
Documents are correct on and as of the Closing Date as though made on and as of
such date; and
Section 3.1.1.4.2. No Default or Event of Default has
occurred and is continuing, or would result from the making of the Loans.
Section 3.1.1.5. Certificates of good standing or legal existence of
the secretaries of state (or equivalent officials) of the states (or
jurisdictions) of organization and qualification of and covering the Borrower
and any Subsidiaries dated reasonably near the Closing Date.
34
(Loan Agreement - Fleet/Convergent)
41
Section 3.1.1.6. Evidence that (i) the ownership interests in the
Borrower are as set forth in Exhibit 1.1, (ii) the New Stockholders have
invested the Equity in the Borrower on or prior to the Closing Date, as set
forth on Exhibit 1.1 and (iii) that except for receipt and application of
certain proceeds of the Loans, the Related Transactions have been completed in
accordance with the Related Transaction Documents without any waiver or
amendment of any term or condition contained therein without the prior written
approval of the Lenders, and in compliance with any applicable laws and
necessary governmental authority approvals.
Section 3.1.1.7. A Request and an Interest Rate Election.
Section 3.1.1.8. All documents, instruments and agreements necessary
to terminate, cancel and discharge the documents, instruments and agreements
evidencing or securing any and all existing Indebtedness of the Borrower and any
Subsidiary and Liens securing such Indebtedness other than those listed in
Exhibit 3.1.1.8.
Section 3.1.1.9. Payment to the Agent of the fees specified in this
Agreement or in the Fee Letter as being payable on the Closing Date and all
reasonable out-of-pocket costs and expenses incurred by the Agent in connection
with the transactions contemplated hereby, including, but not limited to,
reasonable outside legal expenses (subject to a maximum of $40,000 in legal fees
plus out-of-pocket disbursements all with respect to closing of the Loans) and
any accounting fees, auditing fees, appraisal fees, and other fees associated
with any independent analyses of the Borrower and any Subsidiary and evidence
that all other reasonable fees and costs payable by the Borrower in connection
with the transactions contemplated by the Financing Documents and completed on
the Closing Date have been paid in full.
Section 3.1.1.10. An Officer's Certificate in the form of Exhibit
3.1.1.10, duly completed and reflecting, inter alia, compliance by the Borrower
as of the opening of business on the first Business Day after the Closing Date
but based on the Borrower's financial information as of the last day of the
Borrower's most recent fiscal quarter, adjusted to give effect to the Loans made
on the Closing Date and completion of the Related Transactions to be completed
on or prior to the Closing Date, with the financial covenants provided for
herein.
Section 3.1.1.11. Such other information about the Borrower, any
Subsidiaries and/or their Business Condition as the Lenders may reasonably
request.
Section 3.1.1.12. True copies of, and/or true copies of any
revisions to, the financial statements, the Projections, the pro forma Closing
Date financial statements giving effect to the Loans, the Equity to be received
on or prior to the Closing Date and completion of the other Related Transactions
to be completed on or prior to the Closing Date, and other information provided
pursuant to Section 4.1.5 and certification by the Borrower of the Projections.
Section 3.1.1.13. Certificates of fire, business interruption,
liability and extended coverage insurance policies, each such policy to name the
Agent as mortgagee and loss payee and, on all liability policies, as additional
insured.
Section 3.1.1.14. True descriptions of any pending or threatened
litigation against or by Borrower or any Subsidiary.
35
(Loan Agreement - Fleet/Convergent)
42
Section 3.1.1.15. Evidence that all necessary material third party
consents to the Related Transactions and the Loans have been obtained and remain
in effect without the imposition of any terms or condition not reasonably
acceptable to the Lenders and all required filings with any governmental
authority have been duly completed.
Section 3.1.1.16. The financial statements described in Section
4.1.5 together with the Borrower's pro forma Closing Date balance sheet and any
updates to the Projections. Such financial statements shall be accompanied by an
Officer's Certificate of the chief financial officer of the Borrower to the
effect that (i) the representations of the Borrower set forth in Section 4.1.14
are accurate as of the Closing Date and (ii) that no Material Adverse Effect
has occurred since the date of the Borrower's most recent audited financial
statements delivered to the Lenders except as set forth or reflected in the
financial statements described in Section 4.1.5 or otherwise disclosed in
writing and acceptable to the Agent.
Section 3.1.1.17. True copies of (i) the Equity Documents, (ii) all
other documents, instruments and agreements relating to the Borrower's capital
structure and (iii) the Related Transaction Documents.
Section 3.1.1.18. The fact that the representations and warranties
of the Borrower contained in Article 4, infra, and in each of the other
Financing Documents are true and correct in all material respects on and as of
the Closing Date except as altered hereafter by actions not prohibited
hereunder. The Borrower's delivery of each Note and Letter of Credit Agreement
to the Lenders and of each Request to the Agent shall be deemed to be a
representation and warranty by the Borrower as of the date thereof to such
effect.
Section 3.1.1.19. That there has been no enactment of any law or
regulation by any Governmental Authority which would make it (i) unlawful, or
(ii) prevent, restrain or impose conditions which the Lenders determine to be
adverse, in any respect as to the foregoing, to the making of the Loans and/or
the completion of the Related Transactions.
Section 3.1.1.20. A completed Year 2000 questionnaire covering the
Borrower and any Subsidiaries.
Section 3.1.1.21. The Security Documents, after the completion of
any required filings or recordations, will grant to the Agent perfected, first
priority security interests or mortgages, as the case may be, with respect to
the collateral identified therein and the Agent shall received the favorable
opinions of counsel referred to in Section 3.1.1.3 above with respect to such
perfection. The Agent shall also have received such searches, landlord consents,
access agreements and/or title insurance commitments as reasonably requested by
the Agent, all in form and substance reasonably satisfactory to the Agent and/or
its counsel. Without limiting the generality of the foregoing, the Agent shall
be reasonably satisfied with the terms and conditions of all real property
leases in which the Borrower and any Subsidiary has a leasehold interest,
including the terms of such leaseholds and the assumability of the lessee's
obligations thereunder upon the transfer of or foreclosure upon of the
Borrower's or any Subsidiary's leasehold interest.
Section 3.1.1.22. No Material Adverse Effect has occurred and there
shall exist no action, suit, investigation, litigation or proceeding pending or
threatened in any court or before any arbitrator or Governmental Authority that
could reasonably be expected to result in a Material Adverse Effect.
36
(Loan Agreement - Fleet/Convergent)
43
Section 3.1.1.23. All information and materials supplied to the
Agent prior to the date hereof shall be true and correct in all material
aspects; and no additional information shall have come to the attention of the
Agent or the Lenders that is inconsistent in any material respect with the
information and materials supplied to the Agent prior to the date hereof or that
could reasonably be expected to have a Material Adverse Effect.
Section 3.1.1.24. The Agent shall be satisfied with the results of
its due diligence examination of the report on the Borrower prepared by Ernst &
Young, and review of other business and financial information about the Borrower
and any Subsidiaries as may be requested from time to time by the Agent.
Section 3.1.2. The Revolving Credit Loan Commitment and the Loans.
The Revolving Credit Loan Commitment and the obligation of each Lender to make
or maintain its Pro Rata Share of any Advance or Loan and/or to issue any Letter
of Credit or Letter of Credit Agreement are subject to performance by the
Borrower of all its obligations under this Agreement and to the satisfaction of
the following further conditions precedent:
(a) The fact that, immediately prior to and upon the making of each Loan,
no Event of Default or Default shall have occurred and be continuing;
(b) The fact that the representations and warranties of the Borrower
contained in Article 4, infra and in each of the other Financing Documents, are
true and correct in all material respects on and as of the date of each Advance
or Loan except as altered hereafter by actions consented to or not prohibited
hereunder. The Borrower's delivery of the Notes to the Lenders and of each
Request to the Agent shall be deemed to be a representation and warranty by the
Borrower as of the date of such Advance or Loan as to the facts specified in
Sections 3.1.2(a) and (b);
(c) Receipt by Agent on or prior to the Business Day specified in the
definition of Interest Rate Election of a written Request stating the amount
requested for the Loan or Advance in question and an Interest Rate Election for
such Loan or Advance, all signed by a duly authorized officer of the Borrower on
behalf of the Borrower;
(d) That there exists no law or regulation by any governmental authority
having jurisdiction over the Agent or any of the Lenders which would make it
unlawful in any respect for such Lender to make its Pro Rata Share of the Loan
or Advance, including, without limitation, Regulations U, T and X of the Board
of Governors of the Federal Reserve System; and
(e) No Material Adverse Effect has occurred.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Borrower. The Borrower
represents and warrants to the Agent and the Lenders that, after giving effect
to the Loans and the application of the proceeds thereof (which representations
and warranties shall survive the making of the Loans) as follows:
37
(Loan Agreement - Fleet/Convergent)
44
Section 4.1.1. Organization and Existence. The Borrower and any Subsidiary
is a corporation, duly organized, validly existing and in good standing under
the laws of the state (or applicable jurisdiction) of its incorporation or
organization and is duly qualified to do business in all jurisdictions in which
such qualification is required, all as noted on Exhibit 4.1.1., except where
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect, and has all requisite power and authority to conduct its
business, to own its properties and to execute and deliver, and to perform all
of its obligations under the Financing Documents.
Section 4.1.2. Authorization and Absence of Defaults. Except as described
on Exhibit 4.1.2, the execution, delivery to the Agent and/or the Lenders and
performance by the Borrower and any Subsidiary of the Financing Documents and
Related Transaction Documents have been duly authorized by all necessary
corporate and governmental action and do not and will not (i) require any
consent or approval of the shareholders or board of directors of the Borrower or
any Subsidiary which has not been obtained, (ii) violate any provision of any
law, rule, regulation (including, without limitation, Regulations U and X of
the board of governors of the federal reserve system), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower and/or any Subsidiary and/or the articles of
organization or by-laws, as applicable, of the Borrower and/or any Subsidiary,
(iii) result in a material breach of or constitute a material default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Borrower and/or any Subsidiary is or are a party or
parties or by which it or they or its or their properties may be bound or
affected, or (iv) result in, or require, the creation or imposition of any Lien
on any of the Borrower's and/or any Subsidiary's respective properties or
revenues other than Liens granted to the Agent by any of the Financing Documents
securing the Obligations. The Borrower and any Subsidiary are in compliance with
any such applicable law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award or any such indenture, other agreement, lease or
instrument, except where the failure to be in compliance could not reasonably be
expected to have a Material Adverse Effect.
Section 4.1.3. Acquisition of Consents. Except as noted on Exhibit 4.1.3.,
no authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, other than those which
have been obtained, is or will be necessary to the valid execution and delivery
to the Agent and/or the Lenders or performance by the Borrower or any Subsidiary
of any Financing Documents and each of the foregoing which has been obtained is
in full force and effect.
Section 4.1.4. Validity and Enforceability. Each of the Financing Documents
when delivered hereunder will constitute the legal, valid and binding
obligations of each of the Borrower and any Subsidiary which is or are a party
thereto enforceable against the Borrower, and any Subsidiary which is or are a
party thereto in accordance with their respective terms except as the
enforceability thereof may be limited by the effect of general principles of
equity and bankruptcy and similar laws affecting the rights and remedies of
creditors generally.
Section 4.1.5. Financial Information. The following information with
respect to the Borrower has heretofore been furnished to the Agent:
Section 4.1.5.1. Audited annual financial statements of the Borrower
for the periods ended December 31, 1997 and December 31, 1998; and
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(Loan Agreement - Fleet/Convergent)
45
Section 4.1.5.2. Interim, consolidated balance sheets of the Borrower
and any Subsidiaries as of the end of the most recent fiscal quarter prior to
the Closing and the related statements of income and cash flows and
shareholders' equity, such balance sheets and statements to be prepared and
certified by an Authorized Representative in an Officer's Certificate as having
been prepared in accordance with GAAP except for footnotes and year-end
adjustments, and to be in form reasonably satisfactory to the Agent;
Section 4.1.5.3. The Projections.
Section 4.1.5.4. The pro forma financial statements of the Borrower as
of the Closing Date provided pursuant to Section 3.1.1.12.
Each of the financial statements referred to above in Section 4.1.5.1
and 4.1.5.2 was prepared in accordance with GAAP (subject, in the case of
interim statements, to the absence of footnotes and normal year-end adjustments)
applied on a consistent basis, except as stated therein. To the best of the
Borrower's knowledge, each of the financial statements referred to above in
Sections 4.1.5.1, 4.1.5.2 and 4.1.5.4 fairly presents the financial condition or
pro forma financial condition, as the case may be, of the Person being reported
on at such dates and is complete and correct in all material respects and no
Material Adverse Effect has occurred since the date thereof. The Projections
were prepared by the Borrower in good faith.
Section 4.1.6. No Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened against or affecting
the Borrower and/or any Subsidiary or any of their properties before any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which if determined adversely to the
Borrower and/or any Subsidiary would draw into question the legal existence of
the Borrower and/or any such Subsidiary and/or the validity, authorization
and/or enforceability of any of the Financing Documents and/or any provision
thereof and/or could not reasonably be expected to have a Material Adverse
Effect except those matters, if any, described on Exhibit 4.1.6 none of which,
in Borrower's good faith opinion, will (i) have such Material Adverse Effect or
(ii) draw into question (a) the legal existence of the Borrower and/or any such
Subsidiary or (b) the validity, authorization and/or enforceability of any of
the Financing Documents and/or any provision thereof.
Section 4.1.7. Regulation U. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying "margin stock" within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System (12 CFR Part 221), does not own and has no present intention of acquiring
any such margin stock or a "margin security" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System (12 CFR, Part 207). None
of the proceeds of the Loans will be used directly or indirectly by the Borrower
for the purpose of purchasing or carrying, or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry,
any such margin security or margin stock or for any other purpose which might
constitute the transaction contemplated hereby a "purpose credit" within the
meaning of said Regulation U, or cause this Agreement to violate any other
regulation of the Board of Governors of the Federal Reserve System or the
Securities and Exchange Act of 1934, as amended, or any rules or regulations
promulgated under either said statute.
Section 4.1.8. Absence of Adverse Agreements. Neither the Borrower nor any
Subsidiary is a party to any indenture, loan or credit agreement or any lease or
other agreement or
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46
instrument or subject to any corporate or partnership restriction which could
reasonably be expected to have a Material Adverse Effect.
Section 4.1.9. Taxes. The Borrower and each Subsidiary has filed all tax
returns (federal, state and local) required to be filed and paid all taxes shown
thereon to be due, including interest and penalties, except for those taxes, if
any, which are being contested in good faith and by appropriate proceedings, and
for which proper reserve or other provision has been made in accordance with
GAAP and except where any failure to file or pay could not reasonably be
expected to have a Material Adverse Effect on the Borrower or any Subsidiary and
except as described in Exhibit 4.1.9.
Section 4.1.10. ERISA. Borrower and any Commonly Controlled Entity do not
maintain or contribute to any Plan which is not in substantial compliance with
ERISA, or any Single Employer Plan which has incurred any accumulated funding
deficiency within the meaning of sections 412 and 418 of the Code or which has
applied for or obtained a waiver from the Internal Revenue Service of any
minimum funding requirement under section 412 of the Code. Borrower and any
Commonly Controlled Entity have not incurred any liability to the PBGC in
connection with any Plan covering any employees of Borrower or any Commonly
Controlled Entity in amount exceeding Fifty Thousand Dollars ($50,000) in the
aggregate or ceased operations at any facility or withdrawn from any Plan in a
manner which could subject any of them to liability under sections 4062(e), 4063
or 4064 of ERISA in amount exceeding Fifty Thousand Dollars ($50,000) in the
aggregate, and know of no facts or circumstance which might give rise to any
liability of Borrower or any Commonly Controlled Entity to the PBGC under Title
IV of ERISA in amount exceeding Fifty Thousand Dollars ($50,000) in the
aggregate. Borrower and any Commonly Controlled Entity have not incurred any
withdrawal liability in amount exceeding Fifty Thousand Dollars ($50,000) in the
aggregate (including but not limited to any contingent or secondary withdrawal
liability) within the meaning of sections 4201 and 4202 of ERISA, to any
Multiemployer Plan, and no event has occurred, and there exists no condition or
set of circumstances known to the Borrower, which presents a risk of the
occurrence of any withdrawal from or the partition, termination, reorganization
or insolvency of any Multiemployer Plan which could result in any liability to a
Multiemployer Plan in amount exceeding Fifty Thousand Dollars ($50,000) in the
aggregate.
Except for payments for which the minimum funding requirement has been
waived under section 412 of the Code, full payment has been made of all amounts
which Borrower and any Commonly Controlled Entity are required to have paid as
contributions to any Plan under applicable law or under any plan or any
agreement relating to any Plan to which Borrower or any Commonly Controlled
Entity is a party. Borrower and each Commonly Controlled Entity have made
adequate provision for reserves to meet contributions that have not been made
because they are not yet due under the terms of any Plan or related agreements.
Neither Borrower nor any Commonly Controlled Entity has any knowledge, nor
do any of them have any reason to believe, that any Reportable Event which could
result in a liability or liabilities of Fifty Thousand Dollars ($50,000) or more
in the aggregate has occurred with respect to any Plan.
Section 4.1.11. Ownership of Properties.
Section 4.1.11.1. Except for Permitted Encumbrances, Borrower and any
Subsidiary has good title to all of its properties and assets free and clear of
all restrictions and Liens of any kind other than those which could not
reasonably be expected to have a Material
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(Loan Agreement - Fleet/Convergent)
47
Adverse Effect or a material adverse effect on the validity, authorization
and/or enforceability of the Financing Documents and/or any provision thereof.
Section 4.1.11.2. Exhibit 4.1.11 accurately and completely lists the
location of all real property owned or leased by Borrower or any Subsidiary.
Borrower and each Subsidiary enjoys quiet possession under all material leases
of real property to which it is a party as a lessee, and all of such leases are
valid, subsisting and, to Borrower's knowledge, in full force and effect.
Section 4.1.11.3. To Borrower's knowledge, except as specified in
Exhibit 4.1.11, none of the real property occupied by Borrower or any
Subsidiary is located within any federal, state or municipal flood plain zone.
Section 4.1.11.4. Except as set forth in Exhibit 4.1.11, all of the
material properties used in the conduct of the Borrower's and each Subsidiary's
business (i) are in good repair, working order and condition (reasonable wear
and tear excepted) and reasonably suitable for use in the operation of
Borrower's, and each Subsidiary's business; and (ii) to Borrower's knowledge are
currently operated and maintained, in all material respects, in accordance with
the requirements of applicable governmental authorities.
Section 4.1.12. Accuracy of Representations and Warranties. None of
Borrower's representations or warranties set forth in this Agreement or in any
document or certificate furnished pursuant to this Agreement or in connection
with the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary to make any statement
of fact contained herein or therein, in light of the circumstances under which
it was made, not misleading; except that unless provided otherwise any such
document or certificate which is dated speaks as of the date stated and not the
present.
Section 4.1.13. No Investment Company. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company" as such terms are defined in the Investment Company Act of
1940, as amended, which is required to register thereunder.
Section 4.1.14. Solvency, etc. After giving effect to the consummation of
each Loan outstanding and to be made under this Agreement as of the time this
representation and warranty is given, the Borrower (a) will be able to pay its
debts as they become due and (b) will have funds and capital sufficient to carry
on its business and all businesses in which it is about to engage. The Borrower
will not be rendered insolvent by the execution and delivery of this Agreement
and the consummation of any transactions contemplated herein.
Section 4.1.15. Approvals. Except as set forth in Exhibit 4.1.3, all
approvals required from all Persons including without limitation all
governmental authorities with respect to the Financing Documents have been
obtained.
Section 4.1.16. Ownership Interests. The schedule of ownership interests in
the Borrower and any Subsidiaries set forth in Exhibit 1.1 is true, accurate
and complete and the Investments to be made for all ownership interests
disclosed therein have in fact been fully paid in immediately available Dollars
after giving effect to the closing of the Related Transactions.
Section 4.1.17. Licenses, Registrations, Compliance with Laws, etc. Exhibit
4.1.17 accurately and completely describes all permits, governmental licenses,
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48
registrations and approvals, material to carrying out of Borrower's and each of
the Subsidiaries' businesses as presently conducted and as required by law or
the rules and regulations of any Governmental Authority or foreign governmental
agency, body, instrumentality or commission having jurisdiction over the
Borrower or any of the Subsidiaries, including but not limited to the United
States Environmental Protection Agency, the United States Department of Labor,
the United States Occupational Safety and Health Administration, the United
States Equal Employment Opportunity Commission, the Federal Trade Commission and
the United States Department of Justice and analogous and related state and
foreign agencies. All existing authorizations, licenses and permits are in full
force and effect, are duly issued in the name of, or validly assigned to the
Borrower or a Subsidiary and the Borrower or a Subsidiary has full power and
authority to operate thereunder. There is no material violation or material
failure of compliance or, to Borrower's knowledge, allegation of such violation
or failure of compliance on the part of the Borrower or any Subsidiary with any
of the foregoing permits, licenses, registrations, approvals, rules or
regulations and there is no action, proceeding or investigation pending or to
the knowledge of the Borrower threatened nor has the Borrower or any Subsidiary
received any notice of such which might result in the termination or suspension
of any such permit, license, registration or approval which in any case could be
reasonably expected to have a Material Adverse Effect.
Section 4.1.18. Principal Place of Business; Books and Records. The
Borrower's chief executive offices (as that term is used in the Uniform
Commercial Code) are located at Borrower's addresses set forth in Section 9.6.
All of the Borrower's books and records are kept at one or more of its addresses
set forth in Section 9.6.
Section 4.1.19. Subsidiaries. As of the Closing Date, the Borrower has only
the Subsidiaries identified on Exhibit 1.1.
Section 4.1.20. Copyright. Except as set forth in Exhibit 4.1.20 the
Borrower has not violated any of the provisions of the Copyright Revision Act of
1976, 17 U.S.C.101, et seq. The Borrower has filed all registration statements,
notices and statements of account and all necessary supplements and adjustment
schedules thereto with the United States Copyright Office and has made all
payments to the United States Copyright Office that are required. Exhibit 4.1.20
accurately and completely sets forth all copyrights held by the Borrower or any
of the Subsidiaries and contains exceptions to the representations contained in
this Section 4.1.20. To the best of Borrower's knowledge, no claim of
infringement of a copyright by the Borrower or any subsidiary has been made or
threatened by any other Person.
Section 4.1.21. Environmental Compliance. Neither the Borrower nor, to the
knowledge of the Borrower, any other Person:
Section 4.1.21.1. has ever caused, permitted, or suffered to exist
any Hazardous Material to be spilled, placed, held, located or disposed of on,
under, or about, any of the facilities owned, leased or used by the Borrower
(the "Premises"), or from the Premises into the atmosphere, any body of water,
any wetlands, or on any other real property, nor to Borrower's knowledge does
any Hazardous Material exist on, under or about the Premises other than as
disclosed on Exhibit 4.1.21, or in respect of Hazardous Material used or
disposed of in compliance with law;
Section 4.1.21.2. has ever used any of the Premises as a treatment,
storage or disposal (whether permanent or temporary) site for any Hazardous
Material as defined in 42 U.S.C.A. 6901, et seq. (the Resource Recovery and
Conservation Act); and
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(Loan Agreement - Fleet/Convergent)
49
Section 4.1.21.3. has received any notice of violation, Lien or
other notice issued by any Governmental Authority with respect to the
environmental condition of the Premises or any other property occupied by the
Borrower, or any other property which was included in the property description
of the Premises or such other real property within the preceding three years
except as disclosed to the Agent.
Section 4.1.22. Material Agreements, etc. Exhibit 4.1.22 attached hereto
accurately and completely lists, as of the Closing Date, all material agreements
to which the Borrower or any of the Subsidiaries are a party including without
limitation all software licenses, and all material construction, engineering,
consulting, employment, management, operating and related agreements, if any,
which are presently in effect. All of the material agreements to which Borrower
or any Subsidiary is a party, are legally valid, binding, and, to Borrower's
knowledge, in full force and effect and neither the Borrower, any of the
Subsidiaries nor, to Borrower's knowledge, any other parties thereto are in
material default thereunder.
Section 4.1.23. Patents, Trademarks and Other Property Rights. Exhibit
4.1.23 attached hereto contains, as of the Closing Date, a complete and accurate
schedule of all registered trademarks, registered copyrights and patents of the
Borrower and/or any of the Subsidiaries, and pending applications therefor, and
all other intellectual property in which the Borrower and/or any of the
Subsidiaries has any rights other than "off-the shelf" software which is
generally available to the general public at retail. Except as set forth in
Exhibit 4.1.23, the Borrower and any Subsidiaries own, possess, or have licenses
to use all the patents, trademarks, service marks, trade names, copyrights and
non-governmental licenses, and all rights with respect to the foregoing,
necessary for the conduct of their respective businesses as now conducted,
without, to the Borrower's knowledge any conflict with the rights of others with
respect thereto.
Section 4.1.24. Related Transaction Documents. The Borrower has, prior to
the date hereof, delivered to the Agent true copies of the Related Transaction
Documents, and each and every amendment or modification thereto and, except for
receipt and application of certain proceeds of the Loans, the Related
Transactions have been completed in accordance with the Related Transaction
Documents, without any waiver or amendment of any term or condition contained
therein without the prior written approval of the Lenders, and in compliance
with any applicable laws and necessary governmental authority approvals.
Section 4.1.25. Material Adverse Effect. No Material Adverse Effect has
occurred and there exists no action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental or regulatory agency or authority that could reasonably be expected
to result in a Material Adverse Effect.
Section 4.1.26. Year 2000. On the basis of comprehensive review and
assessment undertaken by the Borrower of the Borrowers' and its Subsidiaries'
computer applications and an assessment by the Borrower of its and its
Subsidiaries' material suppliers, vendors and customers, the Borrower reasonably
believes that the "Year 2000 Problem" (that is, the risk that computer
applications used by any person may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999) will not result in a Material Adverse Effect.
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(Loan Agreement - Fleet/Convergent)
50
ARTICLE 5.
COVENANTS OF THE BORROWER
Section 5.1. Affirmative Covenants of the Borrower Other than Reporting
Requirements. From the date hereof and thereafter for so long as there is
Indebtedness of the Borrower to any Lender and/or the Agent under any of the
Financing Documents or any part of the Revolving Credit Loan Commitment is in
effect, the Borrower will, with respect to itself and, unless noted otherwise
below, with respect to each of its Subsidiaries, ensure that each Subsidiary
will, unless the Majority Lenders shall otherwise consent in writing:
Section 5.1.1. Payment of Taxes, etc. Pay and discharge all taxes and
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims for the same which, if
unpaid, might become a Lien upon any of its properties, provided that (unless
and until foreclosure, restraint, sale or any similar proceeding is pending and
is not stayed, discharged or bonded within 30 days after commencement) the
Borrower shall not be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings and for
which proper reserve or other provision has been made in accordance with GAAP,
unless failure to pay could not reasonably be expected to result in a Material
Adverse Effect.
Section 5.1.2. Maintenance of Insurance. Maintain on the collateral
under any of the Security Documents insurance against loss by fire, hazards
included within the term "extended coverage", and such other hazards, casualties
and contingencies as the Agent may from time to time require, in an amount equal
to one hundred percent (100%) of the replacement cost of the collateral under
any of the Security Documents and business interruption insurance in the amount
of at least $4,000,000. All policies of such insurance and all renewals thereof
shall be in form and substance acceptable to Agent, shall be made payable in
case of loss to the Agent as loss payee and mortgagee and shall contain an
endorsement requiring thirty (30) days prior written notice to the Agent prior
to cancellation or change in the coverage, scope or amount of any such policies.
Borrower shall also keep in full force and effect a policy of public liability
insurance against claims of bodily injury, death or property damage occurring in
any building in which the limits of liability shall not be less than $1,000,000
per person and $2,000,000 per accident, together with an excess liability policy
in the amount of $5,000,000 which shall be in addition to the limits above set
forth. Borrower shall increase the limits of such liability insurance to such
higher amounts as the Agent may from time to time reasonably require.
Certificates of all such insurance shall be delivered to the Agent concurrently
with the execution and delivery of this Agreement, and thereafter all renewal or
replacement certificates shall be delivered to the Agent not less than thirty
(30) days prior to the expiration date of the policy to be renewed or replaced,
accompanied by evidence satisfactory to the Agent that all premiums payable with
respect to such policies have been paid by Borrower. Borrower shall have the
right of free choice in the selection of the agent or the insurer through or by
which the insurance required hereunder is to be placed; provided, however, said
insurer has at all times a general policyholders' rating of A or A+ in Best's
latest rating guide. Furthermore, the Agent shall have the right and is hereby
constituted and appointed the true and lawful attorney irrevocable of Borrower,
in the name and stead of Borrower, but in the uncontrolled discretion of said
attorney, (i) to adjust, ▇▇▇ for, compromise and collect any amounts due under
such insurance policies in the event of loss and (ii) to give releases for any
and all amounts received in settlement of losses under such policies; and the
same shall, subject to Section 2.6.1.3 of this Agreement, at the option of the
Agent, be applied, after first deducting the costs of collection, on account of
any Indebtedness the payment of which is
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(Loan Agreement - Fleet/Convergent)
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secured by any of the Financing Documents, whether or not then due, or,
notwithstanding the claims of any subsequent lienor, be used or paid over to
Borrower in accordance with reasonable procedures established by the Agent for
use in repairing or replacing any damaged or destroyed collateral under any of
the Security Documents.
Section 5.1.3. Preservation of Existence, etc. Preserve and maintain in
full force and effect its legal existence, and all material rights, franchises
and privileges in the jurisdiction of its organization, preserve and maintain
(except for sales licenses or other scopes of use granted in the ordinary course
of Borrower's business consistent with past practice) all material licenses,
governmental approvals, trademarks, patents, trade secrets, copyrights and trade
names owned or possessed by it and which are necessary or, in the reasonable
business judgment of the Borrower, desirable in view of its business and
operations or the ownership of its properties and qualify or remain qualified as
a foreign corporation in each jurisdiction in which such qualification is
necessary or, in its reasonable business judgment, desirable in view of its
business and operations and ownership of its properties except where the failure
to so qualify could reasonably be expected to have a Material Adverse Effect.
Section 5.1.4. Compliance with Laws, etc. Comply with the requirements
of all present and future applicable laws, rules, regulations and orders of any
governmental authority having jurisdiction over it and/or its business
including, without limitation, regulations of the United States Copyright Office
and the Copyright Royalty Tribunal, except where the failure to comply could not
be reasonably expected to have a Material Adverse Effect.
Section 5.1.5. Visitation Rights. Permit, during normal business hours
and upon the giving of reasonable notice, the Agent, the Lenders and any agents
or representatives thereof, to examine and make copies of (at Borrower's cost
and expense) and abstracts from the records and books of account of, and visit
the properties of the Borrower and any Subsidiary to discuss the affairs,
finances and accounts of the Borrower or any Subsidiary with any of their
partners, officers or management level employees and/or any independent
certified public accountant of the Borrower and/or any Subsidiary.
Section 5.1.6. Keeping of Records and Books of Account. Keep adequate
records and books of account, in which complete entries will be made in
accordance with GAAP and with applicable requirements of any governmental
authority having jurisdiction over the Borrower and/or any Subsidiary in
question, reflecting all financial transactions.
Section 5.1.7. Maintenance of Properties, etc. Maintain and preserve
all of its properties necessary or useful in the proper conduct of its business,
in good working order and condition, ordinary wear and tear excepted, and in
accordance with each of the Security Documents and except as otherwise permitted
by other provisions of this Agreement.
Section 5.1.8. Post-Closing Items. Complete in a timely fashion all
actions required in the Post-Closing Letter.
Section 5.1.9. Other Documents, etc. Except as otherwise required by
this Agreement, pay, perform and fulfill all of its material obligations and
covenants under each material document, instrument or agreement to which it is a
party including, without limitation, the Related Transaction Documents; provided
that so long as the Borrower or any Subsidiary is contesting any claimed default
by it or them under any of the foregoing by proper proceedings conducted in good
faith and for which any proper reserve or other provision in accordance with
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(Loan Agreement - Fleet/Convergent)
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and to the extent required by GAAP has been made, such default shall not be
deemed a violation of this covenant.
Section 5.1.10. Minimum Interest Coverage Ratio. Maintain at the end of
each Borrower fiscal quarter a ratio of EBITDA to Interest Expense of not less
than 3.0:1.0, such ratio to be measured at each Borrower fiscal quarter end
commencing September 30, 1999 as follows: (i) for the Borrower fiscal quarter
ending September 30, 1999 Interest Expense shall be Interest Expense for such
fiscal quarter times four, (ii) for the Borrower fiscal quarter ending December
31, 1999 Interest Expense shall be Interest Expense for such fiscal quarter plus
Interest Expense for the Borrower fiscal quarter ending September 30, 1999 times
two, (iii) for the Borrower fiscal quarter ending March 31, 2000 Interest
Expense shall be Interest Expense for such fiscal quarter plus Interest Expense
for the Borrower fiscal quarters ending September 30, 1999 and December 31, 1999
times one and one third and (iv) for the Borrower fiscal quarter ending June 30,
2000 and thereafter Interest Expense shall be Interest Expense for the rolling
four Borrower fiscal quarter period consisting of the Borrower fiscal quarter
then ending and the three immediately preceding Borrower fiscal quarters. EBITDA
shall be, at all Borrower fiscal quarter ends, EBITDA for the rolling four
Borrower fiscal quarter period consisting of the Borrower fiscal quarter then
ending and the three immediately preceding Borrower fiscal quarters.
Section 5.1.10(A). Minimum Profitability. Have EBITDA at each
Borrower fiscal quarter end for such fiscal quarter and at each Borrower fiscal
year end for such fiscal year of at least 80.1% of the EBITDA projected in the
most recent Budget received by the Agent in compliance with Section 5.3.7;
provided that for September 30, 1999 and December 31, 1999 this EBITDA
requirement shall be based on EBITDA in the Projections.
Section 5.1.11. Minimum Debt Service Coverage Ratio. Maintain a Debt
Service Coverage Ratio of not less than 1.25:1.00, such ratio to be measured at
each Borrower fiscal quarter end for the rolling four Borrower fiscal quarter
period consisting of the Borrower fiscal quarter then ending and the three
immediately preceding Borrower fiscal quarters; provided that for purposes of
this covenant Interest Expense shall be calculated as provided in Section
5.1.10.
Section 5.1.12. Maximum Ratio of Total Indebtedness for Borrowed Money
to EBITDA. Maintain at the end of each fiscal quarter of the Borrower in each
period set forth below a ratio of (i) total Indebtedness for Borrowed Money of
the Borrower and its Subsidiaries on a consolidated basis as of the last day of
such fiscal quarter to (ii) EBITDA for the rolling four Borrower fiscal quarter
period consisting of such fiscal quarter and the three immediately preceding
Borrower fiscal quarters of not greater than the ratio set forth below opposite
such period:
Borrower Fiscal Quarter Ending Ratio
------------------------------ -----
June 30, September 30 and December 31, 1999 3.00:1.00
March 31, 2000 2.75:1.00
June 30, 2000 through December 31, 2000 2.50:1.00
March 31, 2001 through March 31, 2002 2.00:1.00
June 30, 2002 and thereafter 1.50:1.00
Section 5.1.12(A). Minimum Quick Ratio. Maintain a Quick Ratio of
not less than 1.10:1.00 at the Borrower fiscal quarter end September 30, 1999
and at each Borrower fiscal quarter end thereafter. As soon as is practicable
following the close of each month after the Closing Date and in any event within
fifteen (15) days thereafter, the Borrower will submit to the
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(Loan Agreement - Fleet/Convergent)
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Agent an Eligible Receivables certificate in the form of Exhibit 5.1.12(A) or on
such other form as the Agent may from time to time prescribe, which certificate
shall contain information adequate to identify accounts receivable which the
Borrower wishes to include in Eligible Receivables. During the continuance of a
Default or Event of Default, the Borrower shall also, if the Agent so requests,
accompany such information with assignments of accounts in form and substance
satisfactory to the Agent which assignments shall give the Agent full power to
collect, compromise or otherwise deal with the assigned accounts as the sole
owner thereof. Concurrently with each of such reports, and immediately if
material in amount, the Borrower shall notify the Agent of each return or
adjustment, rejection, repossession or loss, theft or damage of or to
merchandise represented by Eligible Receivables or any other collateral for any
Indebtedness of the Borrower to the Agent and of any credit, adjustment or
dispute arising in connection with the goods or services represented by Eligible
Receivables. All payments on Eligible Receivables and all adjustments and
credits with respect thereto, whether unilateral, negotiated or otherwise,
shall, to the extent they exceed $50,000 in the aggregate, be immediately
reflected in the Net Outstanding Amount of Eligible Receivables.
Section 5.1.12(B). Receivables and Accrued Revenues. Maintain at each
Borrower fiscal quarter end accounts receivable and accrued revenues days
outstanding determined in accordance with GAAP not to exceed 75 days. Accounts
receivable and accrued revenues days outstanding shall be calculated as follows:
the quotient of the Borrower's revenues for the trailing four quarter period
consisting of the Borrower's most recent fiscal quarter and the immediately
preceding three Borrower fiscal quarters divided by the sum of the average
ending accounts receivable balance for the immediately preceding 12 months plus
the average ending accrued revenues balance for the immediately preceding 12
months shall be divided into 365 and the quotient of the latter division shall
be the amount of accounts receivable and accrued revenue days outstanding.
Section 5.1.13. Officer's Certificates and Requests. Provide each
Officer's Certificate required under this Agreement and each Request so that the
statements contained therein are accurate and complete in all material respects.
Section 5.1.14. Depository. Use the Agent and ▇▇▇▇▇ Fargo Bank,
National Association as principal depositories of Borrower's funds.
Section 5.1.15. Chief Executive Officer. Maintain ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
▇▇. as chief executive officer of the Borrower and as the Person with principal
executive, operating and management responsibility for the Borrower's business
or obtain a replacement of comparable experience and training in the Borrower's
industry within 150 days of his ceasing to act in such capacity.
Section 5.1.16. Notice of Purchase of Real Estate, Leases, etc.
Promptly notify the Agent in the event that the Borrower shall purchase any real
estate or enter into any lease of real estate or of equipment material to the
operation of the Borrower's business, supply the Agent with a copy of the
related purchase agreement or of such lease, as the case may be, promptly notify
the Agent in the event that the Borrower shall have assets having a value of
$100,000 or more located in any jurisdiction in which Agent does not have a
perfected Lien on such assets and promptly notify the Agent if Borrower acquires
any item referred to in Section 4.1.23 and, if requested by the Agent, execute
and deliver, or cause to be executed and delivered, to the Agent for the benefit
of the Lenders a Uniform Commercial Code financing statement, Security Document,
Security Document amendment, deed of trust, mortgage, assignment or other
document, together with landlord consents, in the case of leased property,
reasonably satisfactory
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in form and substance to the Agent, granting a valid first Lien (subject to any
Liens permitted under Section 5.2.1 hereof) on such real property or leasehold
or personal property as security for the Financing Documents, all subject to the
limitations of Section 5.2.17.
Section 5.1.17. Additional Assurances. From time to time hereafter,
execute and deliver or cause to be executed and delivered, such additional
instruments, certificates and documents, and take all such actions, as the Agent
shall reasonably request for the purpose of implementing or effectuating the
provisions of the Financing Documents, and upon the exercise by the Agent of any
power, right, privilege or remedy pursuant to the Financing Documents which
requires any consent, approval, registration, qualification or authorization of
any governmental authority or instrumentality, exercise and deliver all
applications, certifications, instruments and other documents and papers that
the Agent may be so required to obtain. In addition, upon receipt of an
affidavit of an officer of any Lender as to the loss, theft, destruction or
mutilation of any of such Lender's Notes or any Security Document which is not
of public record, and, in the case of any such loss, theft, destruction or
mutilation, upon cancellation of any such Note or Security Document, Borrower
will issue, in lieu thereof, a replacement Note or Security Document in the same
principal amount thereof and otherwise of like tenor.
Section 5.1.18. Appraisals. Permit the Agent and its agents, at any
time and in the sole discretion of the Agent or at the request of the Majority
Lenders, to conduct appraisals of the Borrower's business, the cost of which
shall be borne by the Borrower; provided that so long as no Event of Default
exists the Borrower shall not be required to bear the cost of any such
appraisals (a) on more than two occasions during any 12 month period and (b) in
excess of $5,000 per appraisal.
Section 5.1.19. Environmental Compliance. Comply strictly and in all
material respects with the requirements of all federal, state, and local
environmental laws; notify the Lenders promptly in the event of any spill of
Hazardous Material materially affecting the Premises occupied by the Borrower
from time to time; forward to the Lenders promptly any written notices relating
to such matters received from any governmental agency; and pay promptly when due
any uncontested fine or assessment against the Premises.
Section 5.1.20. Remediation. Immediately contain and remove any
Hazardous Material found on the Premises in compliance with applicable laws and
at the Borrower's expense, subject however, to the right of the Agent, at the
Agent's option but at the Borrower's expense, to have an environmental engineer
or other representative review the work being done.
Section 5.1.21. Site Assessments. Promptly upon the request of the
Agent, based upon the Agent's reasonable belief that a material Hazardous Waste
or other environmental problem exists with respect to any Premises, provide the
Agent with a Phase I environmental site assessment report and, if Agent finds a
reasonable basis for further assessment in such Phase I assessment, a Phase II
environmental site assessment report, or an update of any existing report, all
in scope, form and content and performed by such company as may be reasonably
satisfactory to the Agent.
Section 5.1.22. Indemnity. Indemnify, defend, and hold the Agent and
the Lenders harmless from and against any claim, cost, damage (including without
limitation consequential damages), expense (including without limitation
reasonable attorneys' fees and expenses), loss, liability, or judgment now or
hereafter arising as a result of any claim for environmental cleanup costs, any
resulting damage to the environment and any other environmental claims against
the Borrower, any Subsidiary, the Lenders and/or the Agent arising
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55
out of the transactions contemplated by this Agreement, or any of the Premises.
The provisions of this Section shall continue in effect and shall survive (among
other events), until the applicable statute of limitations has expired, any
termination of this Agreement, foreclosure, a deed in lieu transaction,
payment and satisfaction of the Obligations of Borrower, and release of any
collateral for the Loans.
Section 5.1.23. Trademarks, Copyrights, etc. Concurrently with the
acquisition of any trademark, tradename, copyright, patent or service ▇▇▇▇
collaterally assign and grant a first priority perfected Lien thereon to the
Agent pursuant to documents in form and substance reasonably satisfactory to the
Agent.
Section 5.1.24. ▇▇▇▇▇▇▇▇▇▇ Loan. Cause that certain $2,000,000 loan
made by the Borrower to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. on or about the Closing Date to
be repaid to the Borrower in full and in Dollars on or prior to the 270th day
after the Closing Date, provided that so long as the Borrower is in the process
of registration for a Qualified Initial Public Offering or has completed same,
said period shall be extended for 90 days.
Section 5.2. Negative Covenants of the Borrower. From the date hereof and
thereafter for so long as there is Indebtedness of the Borrower to any Lender
and/or the Agent under any of the Financing Documents or any part of the
Revolving Credit Loan Commitment is in effect, the Borrower will not, with
respect to itself and, unless noted otherwise below, with respect to each of the
Subsidiaries, will ensure that each such Subsidiary will not, without the prior
written consent of the Majority Lenders:
Section 5.2.1. Liens, etc. Create, incur, assume or suffer to exist any
Lien of any nature, upon or with respect to any of its properties, now owned or
hereafter acquired, or assign as collateral or otherwise convey as collateral,
any right to receive income, except that the foregoing restrictions shall not
apply to any Liens:
Section 5.2.1.1. For taxes, assessments or governmental charges or
levies on property if the same shall not at the time be delinquent or thereafter
can be paid without penalty or interest, or (if foreclosure, distraint, sale or
other similar proceedings shall not have been commenced or if commenced not
stayed, bonded or discharged within 30 days after commencement) are being
contested in good faith and by appropriate proceedings diligently conducted and
for which proper reserve or other provision has been made in accordance with and
to the extent required by GAAP;
Section 5.2.1.2. Imposed by law, such as landlords', carriers',
warehousemen's and mechanics' liens, bankers' set off rights and other similar
Liens arising in the ordinary course of business for sums not yet due or being
contested in good faith and by appropriate proceedings diligently conducted and
for which proper reserve or other provision has been made in accordance with and
to the extent required by GAAP;
Section 5.2.1.3. Arising in the ordinary course of business out of
pledges or deposits under worker's compensation laws, unemployment insurance,
old age pensions, or other social security or retirement benefits, or similar
legislation;
Section 5.2.1.4. Arising from or upon any judgment or award,
provided that such judgment or award is being contested in good faith by proper
appeal proceedings and only so long as execution thereon shall be stayed;
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Section 5.2.1.5. Those set forth on Exhibit 1.8;
Section 5.2.1.6. Those now or hereafter granted pursuant to the
Security Documents or otherwise now or hereafter granted to the Agent for the
benefit of the Lenders as collateral for the Loans and/or Borrower's other
Obligations arising in connection with or under any of the Financing Documents;
Section 5.2.1.7. Deposits to secure the performance of bids, trade
contracts (other than for Borrowed Money), leases, statutory obligations, surety
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of the Borrower's or any Subsidiary's business;
Section 5.2.1.8. Easements, rights of way, restrictions and other
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of business by any Borrower or any
Subsidiary;
Section 5.2.1.9. Liens securing Indebtedness permitted to exist
under Section 5.2.8.3; provided that the Lien securing any such Indebtedness is
limited to the item of property purchased or leased in each case;
Section 5.2.1.10. UCC-1 financing statements filed solely for notice
or precautionary purposes by lessors under operating leases which do not secure
Indebtedness and which are limited to the items of equipment leased pursuant to
the lease in question; and
Section 5.2.2. Assumptions, Guaranties, etc. of Indebtedness of Other
Persons. Assume, guarantee, endorse or otherwise become directly or contingently
liable in connection with any obligation or Indebtedness of any other Person,
except:
Section 5.2.2.1. Guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business;
Section 5.2.2.2. Assumptions, guaranties, endorsements and
contingent liabilities within the definition of Indebtedness and permitted by
Section 5.2.8; and
Section 5.2.2.3. Those set forth on Exhibit 5.2.2.
Section 5.2.3. Acquisitions. Dissolution. etc. Acquire, in one or a
series of transactions, all or any substantial portion of the assets or
ownership interests in another Person, or dissolve, liquidate, wind up, merge or
consolidate or combine with another Person or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) any
material assets, whether now owned or hereafter acquired, other than assets
which are replaced within 30 days of any asset sale, assignment, lease or
disposition with assets of like kind, usefulness and value; provided that during
the term of this Agreement Borrower can (a) sell, assign, lease or otherwise
dispose of up to an aggregate of $200,000 of assets other than (i) accounts
receivable and intellectual property including without limitation any trade
secrets, proprietary information, copyrights, patents, trademarks or any
applications therefor, software and source and object codes relating thereto and
(ii) any of the Borrower's or any Subsidiary's interests in real property and
(b) in the ordinary course of its business license, sell, assign, lease or
otherwise dispose of intellectual property or rights therein; provided that it
will not, subsequent to
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the Closing Date, sell, assign, lease or otherwise dispose of (but may in the
ordinary course of its business license) any intellectual property which it owns
as of the Closing Date; provided, however, that Borrower shall be permitted to
acquire all or any portion of the assets of or ownership interests in another
Person (by merger, consolidation or otherwise so long as the Borrower survives)
having aggregate (for all such acquisitions since the Closing Date but excluding
the Related Transactions) consideration not to exceed $5,000,000 in cash and
$5,000,000 in total non-cash consideration including shares of Borrower's
capital stock if (a) at the time of any such acquisition the Borrower shall
provide or grant or cause to be provided or granted to the Agent a guaranty of
the Obligations by any Subsidiary resulting from any such acquisition and in any
event a first priority perfected Lien (subject only to Permitted Encumbrances)
on the assets or ownership interests acquired, including without limitation the
assets owned by any Subsidiary, but in the case of any Subsidiary organized
under the laws of a country other than the United States so long as such foreign
Subsidiary has contracts providing in the aggregate for revenues of less than
$2,000,000, Agent shall receive a pledge of only 65% of the ownership interests
in such Subsidiary, and such foreign Subsidiary shall not be required to
guaranty the Obligations or grant the Agent a lien on its assets to the extent
that the Agent does not already have such a Lien and (b) that prior to the
consummation of any such acquisition, Borrower shall submit to the Agent a
pro-forma compliance certificate on a consolidated basis (including the
to-be-acquired assets and any assumed liabilities or if ownership interests are
acquired, the to-be-acquired Person if such Person is to be a Subsidiary and if
not, the to-be-acquired ownership interests, all measured as set forth below in
this Section 5.2.3), which pro-forma compliance certificate shall indicate that
no Default or Event of Default exists or would exist following consummation of
the acquisition and that the Borrower would be in compliance with (on a
consolidated basis including the to-be-acquired assets and any assumed
liabilities or if ownership interests are acquired, the to-be-acquired Person if
such Person is to be a Subsidiary and if not, the to-be-acquired ownership
interests), Sections 5.1.10, 5.1.10A, 5.1.11, 5.1.12 and 5.1.12(A) on a pro
forma basis following consummation of the acquisition, including the
to-be-acquired assets, Person or ownership interests and the operating results
thereof on the same basis and for the same periods as the Borrower is measured
for each such covenant, respectively and, in the event that any such acquisition
is for total consideration exceeding $5,000,000, the Borrower shall have
provided the Agent at least 14 days prior to the closing of the acquisition in
question with audited financial statements for the Person being acquired as of
the last day of the most recent fiscal quarter ending prior to such acquisition
of the Person being acquired and such acquisition shall be approved by the
Majority Lenders (each, a "Permitted Acquisition") and provided further that
Borrower may make the Investments permitted under Section 5.2.12.
Section 5.2.4. Change in Nature of Business. Make any material change
in the nature of its business.
Section 5.2.5. Ownership. Cause or permit the occurrence of any Change
of Control.
Section 5.2.6. Sale and Leaseback; Synthetic Leases. Enter into any
sale and leaseback arrangement with any lender or investor, enter into any lease
treated as an operating lease under GAAP and as a loan or financing for United
States income tax purposes, or enter into any leases except in the normal course
of business at reasonable rents comparable to those paid for similar leasehold
interests in the area.
Section 5.2.7. Sale of Accounts. etc. Sell, assign, discount or dispose
in any way of any accounts receivable, promissory notes or trade acceptances
held by the Borrower or any
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58
Subsidiary, with or without recourse, except in the ordinary course of the
Borrower's or any Subsidiary's business.
Section 5.2.8 Indebtedness. Incur, create, become or be liable directly
or indirectly in any manner with respect to or permit to exist any Indebtedness
except:
Section 5.2.8.1. Indebtedness under the Financing Documents;
Section 5.2.8.2. Indebtedness with respect to trade payable
obligations and other normal accruals and customer deposits in the ordinary
course of business not yet due and payable in accordance with customary trade
terms or with respect to which the Borrower or any Subsidiary is contesting in
good faith the amount or validity thereof by appropriate proceedings and then
only to the extent such person has set aside on its books adequate reserves
therefor in accordance with and to the extent required by GAAP;
Section 5.2.8.3. Indebtedness with respect to Capitalized Lease
Obligations and purchase money Indebtedness with respect to real or personal
property in an aggregate amount outstanding at any time not to exceed $1,000,000
plus the amount of the Hewlett-Packard and NEC leases listed on Exhibit 3.1.1.8
under "Existing Capitalized Lease Obligations"; provided that the amount of any
purchase money Indebtedness does not exceed 90% of the lesser of the cost or
fair market value of the asset purchased with the proceeds of such Indebtedness;
Section 5.2.8.4. Unsecured Indebtedness in an aggregate amount
outstanding at any time not to exceed $250,000;
Section 5.2.8.5. Indebtedness listed on Exhibit 3.1.1.8;
Section 5.2.8.6. Indebtedness owing by the Borrower to any Affiliate
or Subsidiary or by any Subsidiary to the Borrower or an Affiliate or any other
Subsidiary; provided, however, that any Indebtedness owing by the Borrower or
any Subsidiary to an Affiliate shall be subordinated to the Obligations on terms
and conditions satisfactory to the Majority Lenders.
Section 5.2.8.7. Indebtedness permitted by Section 5.2.2.
Section 5.2.8.8. So long as no Default or Event of Default exists or
would exist after the incurrence thereof, Subordinated Indebtedness in aggregate
outstanding principal amount not to exceed (a) $1,500,000 incurred to fund any
of Borrower's indemnification obligations under Article X of the
Recapitalization Agreement which is one of the Related Transaction Documents
plus any amount of Subordinated Indebtedness issued as "payment in kind" of
interest thereon and (b) the remainder of subtracting the aggregate amount of
payments made by Borrower for redemption of employee stock upon termination of
employment from $500,000, which Subordinated Indebtedness is incurred solely to
fund such employment termination redemptions plus any amount of Subordinated
Indebtedness issued as "payment in kind" of interest thereon.
Section 5.2.8.9. Indebtedness outstanding as a refinancing of
Indebtedness permitted under another clause of this Section 5.2.8 other than
Sections 5.2.8.2 or 5.2.8.9; provided that such Indebtedness as refinanced
continues to qualify as permitted Indebtedness under the clause of this Section
5.2.8 under which the refinanced Indebtedness was permitted under this Section
5.2.8.
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Section 5.2.9. Other Agreements. Amend any of the terms or conditions
of any of the Related Transaction Documents in a manner materially adverse to
the Agent or any of the Lenders, its certificate of incorporation (other than to
provide for stock splits and combinations), bylaws (or comparable applicable
charter or governance document), any other subordination agreement or any
indenture, agreement, document, note or other instrument evidencing, securing or
relating to any other Indebtedness permitted under Section 5.2.8.
Section 5.2.10. Payment or Prepayment of Equity. Make any payment or
prepayment of any principal of or interest on or any payment, prepayment,
redemption, defeasance, sinking fund payment, other repayment of principal or
capital or deposit for the purpose of any of the foregoing on or in connection
with the Equity or any other equity or ownership interests in the Borrower,
except for: (a) payments in respect of redemptions or repurchases of the
Borrower's stock under the Stock Option Plan, employee stock plans and programs
approved by Borrower's Board of Directors and redemptions of employee stock upon
termination of employment not to exceed, without duplication, $500,000 in the
aggregate, all of the foregoing not to exceed in the aggregate, without
duplication, 10% of Borrower's issued and outstanding capital stock, and (b)
payments by the Borrower to any of the Old Stockholders required under the
Related Transaction Documents made on or prior to the Closing Date or as to the
"Contingent Payments" in aggregate amounts not to exceed $3,218,934 as further
defined in Section 1.11 and Schedule IV of the Recapitalization Agreement which
is one of the Related Transaction Documents, within 45 days after the Closing
Date.
Section 5.2.11. Dividends. Payments and Distributions. Declare or pay
any dividends, management fees or like fees or make any other distribution of
cash or property or both to any of the Stockholders other than, (i) so long as
no Default or Event of Default exists or would exist immediately after payment
thereof, the quarterly management fee payable to InSight Capital Partners III,
L.P., or any successor entity, not to exceed $125,000 in any Borrower fiscal
quarter and (ii) directors' fees and compensation for services rendered to the
Borrower and/or any Subsidiary or use any of its assets for payment, purchase,
conversion, redemption, retention, acquisition or retirement of any beneficial
interest in the Borrower or set aside or reserve assets for sinking or like
funds for any of the foregoing purposes, make any other distribution by
reduction of capital or otherwise in respect of any beneficial interest in the
Borrower or permit any Subsidiary which is not a wholly-owned Subsidiary so to
do or pay any amount on account of the Subordinated Indebtedness which is not
permitted to be paid under the Subordination Agreement; provided, however, that
so long as no Default or Event of Default exists, (a) the Borrower shall be
permitted to make payments to Stockholders and to redeem or repurchase stock to
the extent permitted under Section 5.2.10, (b) subsequent to completion of a
Qualified Initial Public Offering and so long as Borrower maintains a ratio of
total Indebtedness for Borrowed Money to EBITDA of less than or equal to
1.0:1.0 before and after any such payment, Borrower may make regularly scheduled
payments of interest on Subordinated Indebtedness and (c) the Borrower may issue
its capital stock to the New Stockholders pursuant to Section 10.1(e) of the
Recapitalization Agreement which is one of the Related Transaction Documents and
may issue its capital stock, up to 10% of Borrower's issued and outstanding
capital stock in connection with the Stock Option Plan and, to the extent
permitted by Section 5.2.3, in connection with Permitted Acquisitions, all so
long as no Change of Control exists or results therefrom. Notwithstanding
anything to the contrary set forth in this Agreement, the New Stockholders may
at any time convert their shares of the Borrower's convertible participating
preferred stock in accordance with the provisions of the Borrower's Amended and
Restated Certificate of Incorporation.
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Section 5.2.12. Investments in or to Other Persons. Make or commit to
make any Investment in or to any other Person (including, without limitation,
any Subsidiary) other than (i) advances to employees for business expenses not
to exceed $20,000 in the aggregate outstanding for any one employee and not to
exceed in the aggregate outstanding at any one time to all such employees an
amount equal to the product of (a) the number of employees of Borrower and/or
any Subsidiaries and (b) $1,000, (ii) other employee loans not to exceed
$100,000 in the aggregate outstanding at any one time to all such employees
(excluding, solely during the period described in Section 5.1.24, any amounts up
to a maximum of $2,000,000 principal amount owing under the Closing Date loan to
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.), (iii) Cash Equivalent Investments, (iv) Permitted
Acquisitions, (v) Investments in accounts, contract rights and chattel paper (as
defined in the Uniform Commercial Code) and notes receivable, arising or
acquired in the ordinary course of business or as permitted by other provisions
of this Agreement; provided that the Borrower and any Subsidiaries which
guaranty the Obligations shall not make Investments in the aggregate in any
Subsidiary which is not a guarantor of the Obligations in excess of $500,000 and
(vi) Investments described on Exhibit 5.2.2 or 5.2.12.
Section 5.2.13. Transactions with Affiliates. Except as contemplated by
the Equity Documents and Related Transaction Documents, engage in any
transaction or enter into any agreement with an Affiliate, or in the case of
Affiliates or Subsidiaries, with the Borrower or another Affiliate or
Subsidiary, except in the ordinary course of business or as permitted by any
other provision of this Agreement and then only on an arm's length basis except
as set forth on Exhibit 5.2.13; provided that the Related Transactions shall be
deemed to be effected on an arm's length basis.
Section 5.2.14. Change of Fiscal Year. Change its accounting policies,
reporting practices or its fiscal year from those in effect on the Closing Date.
Section 5.2.15. Subordination of Claims. Subordinate any present or
future claim against or obligation of another Person, except as ordered in a
bankruptcy or similar creditors' remedy proceeding of such other Person.
Section 5.2.16. Compliance with ERISA. With respect to Borrower and any
Commonly Controlled Entity (a) withdraw from or cease to have an obligation to
contribute to, any Multiemployer Plan so as to result in any material liability
of the Borrower or any Commonly Controlled Entity to PBGC or to any
Multiemployer Plan, (b) engage in any "prohibited transaction" (as defined in
Section 4975 of the Code) involving any Plan which would result in a material
liability of the Borrower or any Commonly Controlled Entity for an excise tax or
civil penalty in connection therewith, (c) except for any deficiency caused by a
waiver of the minimum funding requirement under sections 412 and/or 418 of the
Code, as described above, incur or suffer to exist any material "accumulated
funding deficiency" (as defined in section 302 of ERISA and section 412 of the
Code) of the Borrower or any Commonly Controlled Entity, whether or not waived,
involving any Single Employer Plan, (d) incur or suffer to exist any Reportable
Event or the appointment of a trustee or institution of proceedings for
appointment of a trustee for any Single Employer Plan if, in the case of a
Reportable Event, such event continues unremedied for ten (10) days after notice
of such Reportable Event pursuant to sections 4043(a), (c) or (d) of ERISA is
given, if in the reasonable opinion of the Majority Lenders any of the foregoing
is likely to result in a material liability of the Borrower or any Commonly
Controlled Entity, (e) permit the assets held under any Plan to be insufficient
to protect all accrued benefits, (f) allow or suffer to exist any event or
condition, which presents a material risk of incurring a material liability of
the Borrower or any Commonly Controlled Entity to PBGC by reason of termination
of any such Plan or (g) cause or permit any Plan maintained by Borrower and/or
any Commonly Controlled
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Entity to be out of compliance with ERISA. For purposes of this Section 5.2.16
"material liability" shall be deemed to mean any liability of Fifty Thousand
Dollars ($50,000) or more in the aggregate.
Section 5.2.17. [Intentionally omitted.]
Section 5.2.18. Hazardous Material. Become involved, or permit, to the
extent reasonably possible after the exercise by the Borrower of reasonable due
diligence and preventive efforts, any tenant of its real property to become
involved, in any operations at such real property generating, storing,
disposing, or handling Hazardous Material or any other activity that could
reasonably be expected to lead to the imposition on the Borrower or the Agent or
any Lender, or any such real property of any material liability or Lien under
any environmental laws.
Section 5.2.19. Other Restrictions on Liens or Dividends. Enter into
any agreement or otherwise agree to or grant any restriction substantially
similar to the provisions of Section 5.2.1 hereof or which would otherwise have
the effect of prohibiting, restricting, impeding or interfering with the
creation subsequent to the Closing Date of additional Liens to secure the
Obligations.
Section 5.2.20. Limitation on Creation of Subsidiaries, etc.
Establish, create or acquire any Subsidiary or become the general partner in any
partnership, except for wholly-owned Subsidiaries and partnerships the sole
partners in which are the Borrower and one or more Subsidiaries and then only to
the extent permitted under Section 5.2.3 or 5.2.12 including to the extent such
establishment or creation would be permitted under Section 5.2.3 or 5.2.12 if it
were treated as an acquisition.
Section 5.3. Reporting Requirements. From the date hereof and thereafter for
so long as the Borrower is indebted to any Lender and/or the Agent under any of
the Financing Documents, the Borrower will, unless the Majority Lenders shall
otherwise consent in writing, furnish or cause to be furnished to the Agent for
distribution to the Lenders:
Section 5.3.1. As soon as possible and in any event upon acquiring
knowledge of an Event of Default or Default, continuing on the date of such
statement, the written statement of an Authorized Representative setting forth
details of such Event of Default or Default and the actions which the Borrower
has taken and proposes to take with respect thereto;
Section 5.3.2. As soon as practicable after the end of each Borrower
fiscal year and in any event within 90 days after the end of each such fiscal
year, consolidated and consolidating balance sheets of the Borrower and any
Subsidiaries as at the end of such year, and the related statements of income
and cash flows or shareholders' equity of the Borrower and any Subsidiaries
setting forth in each case the corresponding figures for the preceding fiscal
year, such statements to be certified by a firm of independent certified public
accountants selected by Borrower and reasonably acceptable to the Majority
Lenders, to be accompanied by a true copy of said auditors' management letter,
if one was provided to the Borrower;
Section 5.3.3. As soon as is practicable after the end of each fiscal
quarter of each Borrower fiscal year and in any event within 45 days thereafter,
consolidated balance sheets of the Borrower and any Subsidiaries as of the end
of such period and the related statements of income and cash flows and
shareholders' equity of the Borrower and any Subsidiaries, subject to changes
resulting from year-end adjustments, together, subject to Section 5.3.7, with a
comparison to the Budget for the applicable period, such balance sheets and
statements to be prepared under the
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supervision of, and certified by, an Authorized Representative in an Officer's
Certificate as having been prepared in accordance with GAAP except for footnotes
and year-end adjustments, and to be in form reasonably satisfactory to the
Agent;
Section 5.3.4. Simultaneously with the furnishing of each of the
year-end consolidated and consolidating financial statements of the Borrower and
any Subsidiaries to be delivered pursuant to Section 5.3.2 and each of the
consolidated quarterly statements of the Borrower and the Subsidiaries to be
delivered pursuant to Section 5.3.3 an Officer's Certificate of an Authorized
Representative which shall contain a statement in the form of Exhibit 3.1.1.10
to the effect that no Event of Default or Default has occurred, without having
been waived in writing, or if there shall have been an Event of Default not
previously waived in writing pursuant to the provisions hereof, or a Default,
such Officer's Certificate shall disclose the nature thereof and the actions the
Borrower has taken and prepare to take with respect thereto. Each such Officer's
Certificate shall also contain a calculation of and certify to the accuracy of
the amounts required to be calculated in the financial covenants of the Borrower
contained in this Agreement and described in Exhibit 3.1.1.10;
Section 5.3.5. Promptly after the commencement thereof, notice of all
material actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Borrower and/or any Subsidiary;
Section 5.3.6. The borrowing base certificates required pursuant to
Section 2.1 hereof and the Eligible Receivables reports required by Section
5.1.12(A);
Section 5.3.7. On or before January 31 of each fiscal year of the
Borrower, an updated proposed budget, prepared on a quarterly basis, and updated
financial projections for the Borrower and any Subsidiaries on a consolidated
basis (together, the "Budget") for such fiscal year, setting forth in detail
reasonably satisfactory to the Agent the projected results of operations of the
Borrower and any Subsidiaries on a consolidated quarterly basis, detailed
Capital Expenditures plan and stating underlying assumptions and accompanied by
a written statement of an Authorized Representative certifying as to the
approval of such Budget by Borrower's board of directors.
Section 5.3.8. Such other information respecting the Business Condition
of the Borrower or any Subsidiaries as the Agent or any Lender may from time to
time reasonably request;
Section 5.3.9. Written notice of the fact and of the details of any
sale or transfer of any ownership interest in the Borrower or any Subsidiary
given promptly after the Borrower acquires knowledge thereof; provided, however,
that this clause shall not be deemed to constitute or imply any consent to any
such sale or transfer;
Section 5.3.10. Prompt written notice of (i) loss of or the termination
or resignation of any officer or director and (ii) any Material Adverse Effect
and an explanation thereof and of the actions the Borrower and/or such
Subsidiary propose to take with respect thereto; and
Section 5.3.11. Written notice of the following events, as soon as
possible and in any event within 15 days after the Borrower knows or has reason
to know thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Plan, or (ii) the
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institution of proceedings or the taking or expected taking of any other action
by PBGC or the Borrower or any Commonly Controlled Entity to terminate, withdraw
or partially withdraw from any Plan and, with respect to any Multiemployer Plan,
the Reorganization (as defined in Section 4241 of ERISA) or Insolvency (as
defined in Section 4245 of ERISA) of such Multiemployer Plan and in addition to
such notice, deliver to the Agent whichever of the following may be applicable:
(a) an Officer's Certificate setting forth details as to such Reportable Event
and the action that the Borrower or Commonly Controlled Entity proposes to take
with respect thereto, together with a copy of any notice of such Reportable
Event that may be required to be filed with PBGC, or b) any notice delivered by
PBGC evidencing its intent to institute such proceedings or any notice to PBGC
that such Plan is to be terminated, as the case may be.
ARTICLE 6.
EVENTS OF DEFAULT
Section 6.1. Events of Default. The Borrower shall be in default under each
of the Financing Documents, upon the occurrence of any one or more of the
following events ("Events of Default"):
Section 6.1.1. If the Borrower shall fail to make due and punctual
payment of any principal, fees, interest and/or other amounts payable under this
Agreement as provided in any Note and/or in this Agreement when the same is due
and payable except that it shall not be an Event of Default if any interest,
fees and/or other amounts (excluding principal) is paid within 5 days after it
is due and payable, whether at the due date thereof or at a date fixed for
prepayment or if the Borrower shall fail to make any such payment of fees,
interest, principal and/or any other amount under this Agreement and/or under
any Note on the date when such payment becomes due and payable by acceleration;
Section 6.1.2. If the Borrower or any Subsidiary shall make an
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall admit in writing its inability to pay its
debts as they become due or shall file a voluntary petition in bankruptcy, or
shall file any petition or answer seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution or similar relief under the
present or any future federal bankruptcy laws or other applicable federal, state
or other statute, law or regulation, or shall seek or consent to or acquiesce in
the appointment of any trustee, receiver or liquidator of it or of all or any
substantial part of its properties, or if partnership or corporate action shall
be taken for the purpose of effecting any of the foregoing; or
Section 6.1.3. To the extent not described in Section 6.1.2, (i) if the
Borrower or any Subsidiary shall be the subject of a bankruptcy proceeding, or
(ii) if any proceeding against any of them seeking any reorganization,
arrangement, composition, adjustment, liquidation, dissolution, or similar
relief under the present or any future federal bankruptcy law or other
applicable federal, foreign, state or other statute, law or regulation shall be
commenced, or (iii) if any trustee, receiver or liquidator of any of them or of
all or any substantial part of any or all of their properties shall be appointed
without their consent or acquiescence; provided that in any of the cases
described above in this Section 6.1.3, such proceeding or appointment shall not
be an Event of Default if the Borrower or the Subsidiary in question shall cause
such proceeding or appointment to be discharged, vacated, dismissed or stayed
within sixty (60) days after commencement thereof; or
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Section 6.1.4. If final judgment or judgments aggregating more than
$200,000 shall be rendered against the Borrower or any Subsidiary and shall
remain undischarged, unstayed or unpaid for an aggregate of thirty (30) days
(whether or not consecutive) after entry thereof; or
Section 6.1.5. If the Borrower or any Subsidiary shall default (after
giving effect to any applicable grace period) in the due and punctual payment of
the principal of or interest on any Indebtedness exceeding in the aggregate
$200,000 (other than the Loans), or if any default shall have occurred and be
continuing after any applicable grace period under any mortgage, note or other
agreement evidencing, securing or providing for the creation of such
Indebtedness, which results in the acceleration of such Indebtedness or which
permits, or with the giving of notice would permit, any holder or holders of any
such Indebtedness to accelerate the stated maturity thereof; or
Section 6.1.6. If there shall be a default in the performance of the
Borrower's obligations under Section 5.1.3 (insofar as such Section requires the
preservation of the corporate existence of the Borrower or any Subsidiary), any
of Sections 5.1.2., 5.1.10 through 5.1.13 or Section 5.2 of this Agreement or
under any covenant, representation or warranty contained in any of the Security
Documents for which no cure period is provided in such Security Document; or
Section 6.1.7. If there shall be any Default in the performance of any
covenant or condition contained in this Agreement or in any of the other
Financing Documents to be observed or performed pursuant to the terms hereof or
any Financing Document, as the case may be, or to the extent such Default would
have a Material Adverse Effect, by the Borrower under any of the Related
Transaction Documents, other than a covenant or condition referred to in any
other subsection of this Section 6.1 and such Default shall continue unremedied
or unwaived, (i) in the case of any covenant or condition contained in Section
5.3, for fifteen (15) Business Days, or (ii) in the case of any other covenant
or condition for which no other grace period is provided, for thirty (30) days,
or (iii) in the case of any other covenant or condition for which another grace
period is provided, for such grace period, or (iv) if any of the representations
and warranties made or deemed made by the Borrower to the Agent and/or any
Lender pursuant to any of the Financing Documents proves to have been false or
misleading in any material respect when made and such falseness or misleading
representation or warranty would be reasonably likely to have a material adverse
effect on the Agent or any Lender or their rights and remedies or a Material
Adverse Effect; or
Section 6.1.8. If there shall be any attachment of any deposits or
other property of the Borrower and/or any Subsidiary in the possession of any
Lender or any attachment of any other property of the Borrower and/or any
Subsidiary in an amount exceeding $200,000, which shall not be discharged,
vacated or stayed within thirty (30) days of the date of such attachment; or
Section 6.1.9. Any certification of the financial statements, furnished
to the Agent pursuant to Section 5.3.2, shall contain any qualification;
provided, however, that such qualifications will not be deemed an Event of
Default if in each case (i) such certification shall state that the examination
of the financial statements covered thereby was conducted in accordance with
generally accepted auditing standards, including but not limited to all such
tests of the accounting records as are considered necessary in the circumstances
by the independent certified public accountants preparing such statements, (ii)
such financial statements were prepared in accordance with GAAP and (iii) such
qualification does not involve the "going concern" status of the entity being
reported upon.
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ARTICLE 7.
REMEDIES OF LENDERS
Upon the occurrence and during the continuance of any one or more of
the Events of Default, the Agent, at the request of the Majority Lenders, shall,
by written notice to the Borrower, declare the obligation of the Lenders to make
or maintain the Loans to be terminated, whereupon the same and the Revolving
Credit Loan Commitment shall forthwith terminate, and the Agent, at the request
of the Majority Lenders, shall, by notice to the Borrower, declare the entire
unpaid principal amount of each Note and all fees and interest accrued and
unpaid thereon and/or under this Agreement, and/or any of the other Financing
Documents and any and all other Indebtedness under this Agreement, each Note
and/or any of the other Financing Documents to the Agent and/or any of the
Lenders and/or to any holder of all or any portion of each Note to be forthwith
due and payable, whereupon each Note, and all such accrued fees and interest and
other such Indebtedness shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, however, that upon the
occurrence of an Event of Default under Sections 6.1.2 or 6.1.3, all of the
unpaid principal amount of each Note, all fees and interest accrued and unpaid
thereon and/or under this Agreement and/or under any of the other Financing
Documents and any and all other such Indebtedness of the Borrower to any of the
Lenders and/or to any such holder shall thereupon be due and payable in full
without any need for the Agent and/or any Lender to make any such declaration or
take any action and the Lenders' obligations to make the Loans shall
simultaneously terminate. The Agent shall, in accordance with the votes of the
Majority Lenders, exercise all remedies on behalf of and for the account of each
Lender and on behalf of its respective Pro Rata Share of the Loans, its Note and
Indebtedness of the Borrower owing to it or any of the foregoing, including,
without limitation, all remedies available under or as a result of this
Agreement, the Notes or any of the other Financing Documents or any other
document, instrument or agreement now or hereafter securing any Note without any
such exercise being deemed to modify in any way the fact that each Lender shall
be deemed a separate creditor of the Borrower to the extent of its Note and Pro
Rata Share of the Loans and any other amounts payable to such Lender under this
Agreement and/or any of the other Financing Documents and the Agent shall be
deemed a separate creditor of the Borrower to the extent of any amounts owed by
the Borrower to the Agent.
ARTICLE 8.
AGENT
Section 8.1. Appointment. The Agent is hereby appointed as
administrative and collateral agent, hereunder and each Lender hereby authorizes
the Agent to act under the Financing Documents as its Agent hereunder and
thereunder, respectively. The Agent agrees to act as such upon the express
conditions contained in this Article 8. The provisions of this Article 8 are
solely for the benefit of the Agent, and, except as expressly provided in
Section 8.6, neither the Borrower nor any third party shall have any rights as a
third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Financing Documents to
which the Agent is a party, the Agent shall act solely as Agent of the Lenders
and does not assume nor shall the Agent be deemed to have assumed any obligation
towards or relationship of agency or trust with or for the Borrower, any of the
Stockholders, any Affiliate or any Subsidiary.
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Section 8.2. Powers; General Immunity
Section 8.2.1. Duties Specified. Each Lender irrevocably authorizes the
Agent to take such action on such Lender's behalf, including, without
limitation, to execute and deliver the Financing Documents to which the Agent is
a party and to exercise such powers hereunder and under the Financing Documents
and other instruments and agreements referred to herein as are specifically
delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. The Agent shall have only those
duties and responsibilities which are expressly specified in this Agreement or
in any of the Financing Documents and may perform such duties by or through its
agents or employees. The duties of the Agent shall be mechanical and
administrative in nature; and the Agent shall not have by reason of this
Agreement or any of the Financing Documents a fiduciary relationship in respect
of any Lender; and nothing in this Agreement or any of the Security Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Agreement or any of the Financing
Documents or the other instruments and agreements referred to herein except as
expressly set forth herein or therein.
Section 8.2.2. No Responsibility For Certain Matters. The Agent shall
not be responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of any of the Financing
Documents or any other document, instrument or agreement now or hereafter
executed in connection herewith or therewith, or for any representations,
warranties, recitals or statements made herein or therein or made in any written
or oral statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith by or on
behalf of the Borrower, any of the Affiliates, and/or any Subsidiary to the
Agent or any Lender, or be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained herein or therein or as to the use of the proceeds of
the Loans or of the existence or possible existence of any Default or Event of
Default.
Section 8.2.3. Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees or agents shall be liable to any Lender for any
action taken or omitted hereunder or under any of the Financing Documents, or in
connection herewith or therewith unless caused by its or their gross negligence
or willful misconduct. If the Agent shall request instructions from Lenders with
respect to any action (including the failure to take an action) in connection
with any of the Financing Documents, the Agent shall be entitled to refrain from
taking such action unless and until the Agent, shall have received instructions
from the Majority Lenders (or all of the Lenders if the action requires their
consent). Without prejudice to the generality of the foregoing, (i) the Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for the Borrower, any of the Affiliates, and/or
any Subsidiary), accountants, experts and other professional advisors selected
by it; and (ii) no Lender shall have any right of action whatsoever against the
Agent as a result of the Agent acting or (where so instructed) refraining from
acting under any of the Financing Documents or the other instruments and
agreements referred to herein in accordance with the instructions of the
Majority Lenders (or all of the Lenders if the action requires their consent).
The Agent shall be entitled to refrain from exercising any power, discretion or
authority vested in it under any of the Financing Documents or the other
instruments and agreements referred to herein unless and until it has obtained
the instructions of the Majority Lenders (or all of the Lenders if the action
requires their consent).
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Section 8.2.4. Agent Entitled to Act as Lender. The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Fleet in its individual capacity as a
Lender hereunder. With respect to its participation in the Loans and the
Revolving Credit Loan Commitment, Fleet shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
performing the duties and functions delegated to it hereunder, and the term
"Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include Fleet in its individual capacity. The Agent and its
affiliates may accept deposits from, lend money to and generally engage in any
kind of banking, trust, financial advisory or other business with the Borrower,
any of the Stockholders, or any Affiliate or Subsidiary as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Borrower and/or any of such other Persons for services in
connection with this Agreement and otherwise without having to account for the
same to Lenders.
Section 8.3. Representations and Warranties; No Responsibility for
Appraisal of Creditworthiness. Each Lender represents and warrants that it has
made its own independent investigation of the financial condition and affairs of
the Borrower, the Stockholders and any Subsidiaries of any of them in connection
with the making of the Loans hereunder and has made and shall continue to make
its own appraisal of the creditworthiness of the Borrower, the Stockholders and
the Subsidiaries. The Agent shall not have any duty or responsibility, either
initially or on a continuing basis, to make any such investigation or any such
appraisal on behalf of Lenders or to provide any Lender with any credit or other
information with respect thereto whether coming into its possession before the
making of any Loan or any time or times thereafter (except for information
received by the Agent under Section 5.3 hereof which the Agent will promptly
forward to the Lenders), and the Agent shall further not have any responsibility
with respect to the accuracy of or the completeness of the information provided
to any of the Lenders.
Section 8.4. Right to Indemnity. Each Lender severally agrees to indemnify
the Agent proportionately to its Pro Rata Share of the Loans, to the extent the
Agent shall not have been reimbursed by or on behalf of the Borrower, for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
counsel fees and disbursements) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
performing its duties hereunder or in any way relating to or arising out of this
Agreement and/or any of the other Financing Documents; provided that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished.
Section 8.5. Payee of Note Treated as Owner. The Agent may deem and treat
the payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof shall have been
filed with the Agent. Any request, authority or consent of any person or entity
who, at the time of making such request or giving such authority or consent, is
the holder of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of that Note or of any Note or Notes issued in exchange
for such Note.
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Section 8.6. Resignation by Agent.
Section 8.6.1. The Agent may resign from the performance of all its
functions and duties under the Financing Documents at any time by giving 30
days' prior written notice to the Borrower and each of the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent, of
appointment pursuant to Sections 8.6.2 and 8.6.3 below or as otherwise provided
below.
Section 8.6.2. Upon any such notice of resignation, the Majority
Lenders shall appoint a successor Agent, who shall be a Lender and, so long as
no Default or Event of Default exists and is continuing, who shall be reasonably
satisfactory to the Borrower and in any event shall be an incorporated bank or
trust company with a combined surplus and undivided capital of at least Five
Hundred Million Dollars ($500,000,000).
Section 8.6.3. If a successor Agent shall not have been so appointed
within said 30 day period, the resigning Agent, with the consent of the
Borrower, which shall not be unreasonably withheld or delayed, shall then
appoint a successor Agent, who shall be a Lender and who shall serve as the
Agent, until such time, if any, as the Majority Lenders, and so long as no
Default or Event of Default exists and is continuing, with the consent of the
Borrower, which shall not be unreasonably withheld or delayed, appoint a
successor Agent as provided above.
Section 8.6.4. If no successor Agent has been appointed pursuant to
Sections 8.6.2 or 8.6.3 by the 40th day after the date such notice of
resignation was given by the resigning Agent, the resigning Agent's resignation
shall become effective and the Majority Lenders shall thereafter perform all the
duties of the resigning Agent under the Financing Documents including without
limitation directing the Borrower on how to submit Requests and Interest Rate
Elections and otherwise on administration of the Agent's duties under the
Financing Documents and the Borrower shall comply therewith so long as such
directions do not have a Material Adverse Effect on the Borrower or any
Subsidiary until such time, if any, as the Majority Lenders, and so long as no
Default or Event of Default exists and is continuing, with the consent of the
Borrower, which shall not be unreasonably withheld or delayed, appoint a
successor Agent, as provided above.
Section 8.7. Successor Agent. Upon the acceptance of any appointment as
the Agent hereunder by a successor Agent, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent, shall be discharged from its
duties and obligations as the Agent under the Financing Documents. After any
retiring Agent's resignation hereunder as the Agent the provisions of this
Article 8 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Agent under the Financing Documents.
ARTICLE 9.
MISCELLANEOUS
Section 9.1. Consent to Jurisdiction and Service of Process.
Section 9.1.1. Except to the extent prohibited by applicable law, the
Borrower irrevocably:
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Section 9.1.1.1. agrees that any suit, action, or other legal
proceeding arising out of any of the Financing Documents or any of the Loans may
be brought in the courts of record of the Commonwealth of Massachusetts, the
State of Colorado or any other state(s) in which any of the Borrower's or any
Subsidiary's assets are located or the courts of the United States located in
the Commonwealth of Massachusetts, the State of Colorado or any other state(s)
in which any of the Borrower's or any Subsidiary's assets are located;
Section 9.1.1.2. consents to the jurisdiction of each such court in
any such suit, action or proceeding; and
Section 9.1.1.3. waives any objection which it may have to the
laying of venue of such suit, action or proceeding in any of such courts.
For such time as any of the Indebtedness of the Borrower to any Lender
and/or the Agent shall be unpaid in whole or in part and/or the Revolving Credit
Loan Commitment is in effect, the Borrower irrevocably designates the registered
agent or agent for service of process of the Borrower as reflected in the
records of the Secretary of State of Colorado as its registered agent, and, in
the absence thereof, the Secretary of State of Colorado as its agent to accept
and acknowledge on its behalf service of any and all process in any such suit,
action or proceeding brought in any such court and agrees and consents that any
such service of process upon such agent and written notice of such service to
the Borrower by registered or certified mail shall be taken and held to be valid
personal service upon the Borrower regardless of where the Borrower shall then
be doing business and that any such service of process shall be of the same
force and validity as if service were made upon it according to the laws
governing the validity and requirements of such service in each such state and
waives any claim of lack of personal service or other error by reason of any
such service. Any notice, process, pleadings or other papers served upon the
aforesaid designated agent shall, within three (3) Business Days after such
service, be sent by the method provided therefor under Section 9.6 to the
Borrower at its address set forth in this Agreement. BORROWER, AGENT AND EACH
LENDER MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT
TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT, ANY NOTE, OR ANY OTHER FINANCING DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR EACH OF THE LENDERS TO
ENTER INTO THIS AGREEMENT, ACCEPT ITS NOTE AND MAKE THE LOANS.
Section 9.2. Rights and Remedies Cumulative. No right or remedy conferred
upon or reserved to the Agent and/or the Lenders in any of the Financing
Documents is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given under any of the Financing
Documents or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy under any of the Financing
Documents, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 9.3. Delay or Omission not Waiver. No delay in exercising or
failure to exercise by the Agent and/or the Lenders of any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by any of the Financing
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Documents or by law to the Agent and/or any of the Lenders may be exercised from
time to time, and as often as may be deemed expedient, by the Agent and/or any
of the Lenders.
Section 9.4. Waiver of Stay or Extension Laws. The Borrower covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of any of the Financing
Documents; and the Borrower (to the extent that it may lawfully do so) hereby
expressly waives all benefit and advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Agent and/or any of the Lenders, but will suffer and permit the execution of
every such power as though no such law had been enacted, except to the extent
the Agent or any Lender is guilty of willful misconduct or gross negligence.
Section 9.5. Amendments, etc. No amendment, modification, termination, or
waiver of any provision of any of the Financing Documents nor consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be in a written notice given to the Borrower by the Agent and
consented to in writing by the Majority Lenders (or by the Agent acting alone if
any specific provision of this Agreement provides that the Agent, acting alone,
may grant such amendment, modification, termination, waiver or departure) and
the Agent shall give any such notice if the Majority Lenders so consent or
direct the Agent to do so; provided, however, that any such amendment,
modification, termination, waiver or consent shall require a written notice
given to the Borrower by the Agent and consented to in writing by all of the
Lenders if the effect thereof is to (i) change any of the provisions affecting
the interest rate or fees on the Loans so as to reduce said interest rate or
fees, (ii) extend or modify the Revolving Credit Loan Commitment, (iii)
discharge or release the Borrower from its obligation to repay all principal due
under the Loans or release any collateral or guaranty for the Loans, (iv) change
any Lender's Pro Rata Share of the Revolving Credit Loan Commitment or the
Loans, (v) modify this Section 9.5, (vi) change the definition of Majority
Lenders, (vii) extend any scheduled due date for payment of principal, interest
or fees or (viii) permit the Borrower to assign any of its rights under or
interest in this Agreement, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. Any
amendment or modification of this Agreement must be signed by the Borrower, the
Agent and at least all of the Lenders consenting thereto who shall then hold the
Pro Rata Shares of the Loans required for such amendment or modification under
this Section 9.5 and the Agent shall sign any such amendment if such Lenders so
consent or direct the Agent to do so provided that any Lender dissenting
therefrom shall be given an opportunity to sign any such amendment or
modification. Any amendment of any of the Security Documents must be signed by
each of the parties thereto. No notice to or demand on the Borrower and no
consent, waiver or departure from the terms of this Agreement granted by the
Agent and/or the Lenders in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances.
Section 9.6. Addresses for Notices, etc. All notices, requests, demands and
other communications provided for hereunder (other than those which, under the
terms of this Agreement, may be given by telephone, which shall be effective
when received verbally) shall be in writing (including telecopied communication)
and mailed (provided that in the case of items referred to in the next-to-last
sentence of Section 9.1 and the items set forth below as requiring a copy to
legal counsel for the Borrower, the Agent or a Lender, such items shall be
mailed by overnight courier for delivery the next Business Day), telecopied or
delivered to the applicable party at the addresses indicated below:
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If to the Borrower:
Convergent Group Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Controller
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to (if given pursuant to any of Sections 5.3.1, 5.3.5, 5.3.9,
5.3.10 and 5.3.11):
Holland & ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
InSight Capital Partners III, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Nissan, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Fleet as the Agent and/or a Lender:
Fleet National Bank
Mail Stop MA OF D07A
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to (if given pursuant to any of Sections 5.3.1, 5.3.5, 5.3.9.
5.3.10 and 5.3.11)
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇ III, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to any other Lender, to the address set forth on Exhibit 1.9.
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or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to the delivery with the
terms of this Section. All such notices, requests, demands and other
communications shall be effective when received. Requests, certificates, other
items provided pursuant to Section 5.3 and other routine mailings or notices
need not be accompanied by a copy to legal counsel for the Lenders or the
Borrower.
Section 9.7. Costs, Expenses and Taxes. The Borrower agrees to pay on
demand the reasonable fees and out-of-pocket expenses of Messrs. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
& ▇▇▇▇▇▇, counsel for the Agent and of any local counsel retained by the Agent
in connection with (i) the preparation, execution, delivery and initial
syndication of the Financing Documents and the Loans subject to the limitation
in Section 3.1.1.9 and (ii) the administration of the Loans. The Borrower agrees
to pay on demand all reasonable costs and expenses (including without limitation
reasonable attorneys' fees) incurred by the Agent and/or any Lender, upon or
after the occurrence and during the continuance of any Default or Event of
Default, if any, in connection with the enforcement of any of the Financing
Documents and any amendments, waivers or consents with respect thereto. In
addition, the Borrower shall pay on demand any and all stamp and other taxes and
fees payable or determined to be payable in connection with the execution and
delivery of the Financing Documents, and agrees to save the Lenders and the
Agent harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes or fees, except
those resulting from the Lenders' or Agent's gross negligence or willful
misconduct.
Section 9.8. Participations. Subject to compliance with the proviso in the
first sentence of Section 9.11, any Lender may sell participations in all or
part of the Loans made by it and/or its Pro Rata Share of the Revolving Credit
Loan Commitment or any other interest herein to a financial institution having
at least $500,000,000 of assets, in which event the participant shall not have
any rights under any of the Financing Documents (the participant's rights
against such Lender in respect of that participation to be those set forth in
the Agreement executed by such Lender in favor of the participant relating
thereto) and all amounts payable by the Borrower hereunder or thereunder shall
be determined as if such Lender had not sold such participation. Such Lender may
furnish any information concerning the Borrower and any Subsidiary in the
possession of such Lender from time to time to participants (including
prospective participants); provided that such Lender and any participant comply
with the proviso in Section 9.11.7 as if any such participant was a Substituted
Lender.
Section 9.9. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the Borrower, the Agent and the Lenders and
their respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Agent and the Lenders. This Agreement and all
covenants, representations and warranties made herein and/or in any of the other
Financing Documents shall survive the making of the Loans, the execution and
delivery of the Financing Documents and shall continue in effect so long as any
amounts payable under or in connection with any of the Financing Documents or
any other Indebtedness of the Borrower to the Agent and/or any Lender remains
unpaid or the Revolving Credit Loan Commitment remains outstanding; provided,
however, that Sections 2.2.3 and 9.7 shall, except to the extent agreed to in a
pay-off letter by the Agent and the Lenders in their complete discretion,
survive and remain in full force and effect for 90 days following repayment in
full of all amounts payable under or in connection with all of the Financing
Documents and any other such Indebtedness.
Section 9.10. Actual Knowledge. For purposes of this Agreement, neither
the Agent nor any Lender shall be deemed to have actual knowledge of any fact or
state of facts unless the senior loan officer or any other officer responsible
for the Borrower's account established
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(Loan Agreement - Fleet/Convergent)
73
pursuant to this Agreement at the Agent or such Lender, shall, in fact, have
actual knowledge of such fact or state of facts or unless written notice of such
fact shall have been received by the Agent or such Lender in accordance with
Section 9.6.
Section 9.11. Substitutions and Assignments. Upon the request of any
Lender, the Agent and such Lender may assign or pledge all or any portion of
such Lender's Pro Rata Share of the Revolving Credit Loan Commitment and the
Loans to an affiliate or Related Fund of a Lender (so long as such affiliate or
Related Fund is at least adequately capitalized under any applicable federal
regulations) or to another Lender and may, subject to the terms and conditions
hereinafter set forth and with the prior written consent of the Agent and, so
long as no Default or Event of Default exists, the Borrower, which shall not be
unreasonably withheld or delayed, take the actions set forth below to substitute
one or more other funds or financial institutions having at least $500,000,000
in assets and being at least adequately capitalized under applicable federal
regulations (all of the foregoing assignees other than a Federal Reserve Bank
being hereinafter called a "Substituted Lender") as a Lender or Lenders
hereunder having an amount of the Loans as specified in the relevant Assignment
and Acceptance executed in connection therewith; provided that no Lender,
together with any affiliate or Related Fund of such Lender, shall have or shall
assign a Pro Rata Share of the Revolving Credit Loan Commitment and the Loans in
the aggregate of less than 10% and Fleet and/or its affiliates shall retain for
their own account at least 20% of the Revolving Credit Loan Commitment.
Section 9.11.1. In connection with any such substitution the
Substituted Lender and the Agent shall enter into a Substitution Agreement in
the form of Exhibit 9.11.1 hereto (a "Substitution Agreement") pursuant to
which such Substituted Lender shall be substituted for the Lender requesting the
substitution in question (any such Lender being hereinafter referred to as a
"Selling Lender") to the extent of the reduction in the Selling Lender's portion
of the Loans specified therein. In addition, such Substituted Lender shall
assume such of the obligations of each Selling Lender under the Financing
Documents as may be specified in such Substitution Agreement and this Agreement
shall be amended by execution and delivery of each Substitution Agreement to
include such Substituted Lender as a Lender for all purposes under the Financing
Documents and to substitute for the then existing Exhibit 1.9 to this Agreement
a new Exhibit 1.9 in the form of Schedule A to such Substitution Agreement
setting forth the portion of the Loans belonging to each Lender following
execution thereof. The Agent, each Selling Lender and the Borrower shall
countersign and accept delivery of each Substitution Agreement.
Section 9.11.2. Without prejudice to any other provision of this
Agreement, each Substituted Lender shall, by its execution of a Substitution
Agreement, agree that neither the Agent nor any Lender is any way responsible
for or makes any representation or warranty as to: (a) the accuracy and/or
completeness of any information supplied to such Substituted Lender in
connection therewith, (b) the financial condition, creditworthiness, affairs,
status or nature of the Borrower, any of the Affiliates and/or any of the
Subsidiaries or the observance by the Borrower, or any other party of any of its
obligations under this Agreement or any of the other Financing Documents or (c)
the legality, validity, effectiveness, adequacy or enforceability of any of the
Financing Documents.
Section 9.11.3. The Agent shall be entitled to rely on any Substitution
Agreement delivered to it pursuant to this Section 9.11 which is complete and
regular on its face as to its contents and appears to be signed on behalf of the
Substituted Lender which is a party thereto, and the Agent shall have no
liability or responsibility to any party as a consequence of relying thereon and
acting in accordance with and countersigning any such Substitution Agreement.
The effective date of each Substitution Agreement shall be the date specified as
such therein and each
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(Loan Agreement - Fleet/Convergent)
74
Lender prior to such effective date shall, for all purposes hereunder, be deemed
to have and possess all of their respective rights and obligations hereunder up
to 12:00 o'clock Noon on the effective date thereof.
Section 9.11.4. Upon delivery to the Agent of any Substitution
Agreement pursuant to and in accordance with this Section 9.11 and acceptance
thereof by the Agent (which delivery shall be evidenced and accepted exclusively
and conclusively by the Agent's countersignature thereon pursuant to the terms
hereof without which such Substitution Agreement shall be ineffective): (i)
except as provided hereunder and in Section 9.11.5, the respective rights of
each Selling Lender and the Borrower against each other under the Financing
Documents with respect to the portion of the Loans being assigned or delegated
shall be terminated and each Selling Lender and the Borrower shall each be
released from all further obligations to the other hereunder with respect
thereto (all such rights and obligations to be so terminated or released being
referred to in this Section 9.11 as "Discharged Rights and Obligations"); and
(ii) the Borrower and the Substituted Lender shall each acquire rights against
each other and assume obligations towards each other which differ from the
Discharged Rights and Obligations only in so far as the Borrower and the
Substituted Lender have assumed and/or acquired the same in place of the Selling
Lender in question; and (iii) the Agent, the Substituted Lender and the other
Lenders shall acquire the same rights and assume the same obligations between
themselves as they would have acquired and assumed had such Substituted Lender
been an original party to this Agreement as a Lender possessing the Discharged
Rights and Obligations acquired and/or assumed by it in consequence of the
delivery of such Substitution Agreement to the Agent.
Section 9.11.5. Discharged Rights and Obligations shall not include,
and there shall be no termination or release pursuant to this Section 9.11 of
(i) any rights or obligations arising pursuant to any of the Financing Documents
in respect of the period or in respect of payments hereunder made during the
period prior to the effective date of the relevant Substitution Agreement or,
(ii) any rights or obligations relating to the payment of any amount which has
fallen due and not been paid hereunder prior to such effective date or rights or
obligations for the payment of interest, damages or other amounts becoming due
hereunder as a result of such nonpayment.
Section 9.11.6. With respect to any substitution of a Substituted
Lender taking place after the Closing Date, the Borrower shall issue to such
Substituted Lender and to such Selling Lender, new Notes reflecting the
inclusion of such Substituted Lender as a Lender and the reduction in the
respective Loans of such Selling Lender, such new Notes to be issued against
receipt by the Borrower of the existing Notes of such Lender. The Selling Lender
or the Substituted Lender shall pay to the Agent for its own account an
assignment fee in the amount of $3,000 for each assignment hereunder, which
shall be payable at or before the effective date of the assignment.
Section 9.11.7. Each Lender may furnish to any financial institution
having at least $500,000,000 in assets which such Lender proposes to make a
Substituted Lender or to a Substituted Lender any information concerning such
Lender, the Borrower, Stockholders and any Subsidiary in the possession of that
Lender from time to time; provided that any Lender providing any confidential
information about the Borrower, any of the Stockholders and/or any Subsidiary to
any such financial institution shall first obtain such financial institution's
agreement to keep confidential any such confidential information in accordance
with Section 9.14.
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(Loan Agreement - Fleet/Convergent)
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Section 9.11.8. In addition to the foregoing, the Agent and each Lender
may at any time pledge all or any portion of its rights to under the Financing
Documents, including any portion of the Notes, to any of the twelve Federal
Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C.
Section 341. No such pledge or the enforcement thereof shall release the Agent
or such Lender from its obligations hereunder or under any of the other
Financing Documents.
Section 9.12. Payments Pro Rata. The Agent agrees that promptly after its
receipt of each payment from or on behalf of the Borrower in respect of any
obligations of the Borrower hereunder it shall distribute such payment to the
Lenders pro rata based upon their respective Pro Rata Shares, if any, of the
obligations with respect to which such payment was received. Each of the Lenders
agrees that, if it should receive any amount hereunder (whether by voluntary
payment, by realization upon security, by the exercise of the right of setoff
under Section 2.5.2 or otherwise or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Financing Documents, or
otherwise), which is applicable to the payment of the Obligations of a sum which
with respect to the related sum or sums received by other Lenders is in a
greater proportion than the total amount of such Obligation then owed and due to
such Lender bears to the total amount of such Obligation then owed and due to
all of the Lenders immediately prior to such receipt, except for any amounts
received pursuant to Section 2.2.3, then such Lender receiving such excess
payment shall purchase for cash without recourse or warranty from the other
Lenders an interest in the Obligations of the Borrower to such Lenders in such
amount as shall result in a proportional participation by all the Lenders in
such amount; provided further, however, that if all or any portion of such
excess amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
Section 9.13. Indemnification. The Borrower irrevocably agrees to and does
hereby indemnify and hold harmless Agent and each of the Lenders, their agents
or employees and each Person, if any, who controls any of the Agent and the
Lenders within the meaning of Section 15 of the Securities Act of 1933, as
amended, and each and all and any of them (the "Indemnified Parties"), against
any and all losses, claims, actions, causes of action, damages or liabilities
(including any amount paid in settlement of any action, commenced or threatened
and any amount described in Section 8.4) (collectively, the "Damages"), joint or
several, to which they, or any of them, may become subject under statutory law
or at common law, and to reimburse the Indemnified Parties for any legal or
other out-of-pocket expenses reasonably incurred by it or them in connection
with investigating, preparing for or defending against any of the Indemnified
Parties, insofar as such losses, claims, damages, liabilities or actions arise
out of or are related to any act or omission of the Borrower and/or any
Subsidiary with respect to any of (i) the Related Transactions, (ii) any of the
Financing Documents, (iii) any of Loans, (iv) any use made or proposed to be
made with the proceeds of the Loans, (v) any acquisition or proposed acquisition
or any other similar business combination or proposed business combination by
the Borrower and/or any of its Subsidiaries and/or its Affiliates (whether by
acquisition or exchange of capital stock or other securities or by acquisition
of all or substantially all of the assets of any Person), (vi) any offering of
securities by the Borrower and/or any Subsidiary after the date hereof and/or in
connection with the Securities and Exchange Act of 1933 and/or (vii) any failure
to comply with any applicable federal, state or foreign governmental law, rule,
regulation, order or decree, including without limitation, any Damages which
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact with respect to matters relative to any of the foregoing
contained in any document distributed in connection therewith, or the omission
or alleged omission to state in any of the foregoing a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, but
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(Loan Agreement - Fleet/Convergent)
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excluding any Damages to the extent arising from or due to, as determined in a
final nonappealable judgment by a court of competent jurisdiction, the gross
negligence or willful misconduct of any of the Indemnified Parties; provided,
however, that notwithstanding the foregoing, no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort of otherwise) to the
Borrower, any Affiliates or any Subsidiaries or to their respective security
holders or creditors except for direct (as opposed to consequential) damages
determined in a final nonappealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or proceeding to
which the indemnity described in this paragraph applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by the Borrower, any Affiliates or any Subsidiary or to their respective
security holders or creditors or an Indemnified Party or an Indemnified Party is
otherwise a party thereto and whether or not the Related Transaction and the
transactions contemplated by the Financing Documents are consummated.
Promptly upon receipt of notice of the commencement of any action, or
information as to any threatened action against any of the Indemnified Parties
in respect of which indemnity or reimbursement may be sought from the Borrower
on account of the agreement contained in this Section 9.13, notice shall be
given to the Borrower in writing of the commencement or threatening thereof,
together with a copy of all papers served, but the omission so to notify the
Borrower of any such action shall not release the Borrower from any liability
which it may have to such Indemnified Parties unless, and only to the extent
that, such omission materially prejudiced Borrower's ability to defend against
such action.
In case any such action shall be brought against any of the Indemnified
Parties, the Borrower shall be entitled to participate in (and, to the extent
that it shall wish, to select counsel and to direct) the defense thereof at its
own expense. Any of the Indemnified Parties shall have the right to employ its
or their own counsel in any case, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless the employment of such
counsel shall have been authorized in writing by the Borrower in connection with
the defense of such action or the Borrower shall not have employed counsel to
have charge of the defense of such action or such Indemnified Party shall have
received an opinion from an independent counsel that there may be defenses
available to it which are different from or additional to those available to the
Borrower (in which case the Borrower shall not have the right to direct the
defense of such action on behalf of such Indemnified Party), in any of which
events the same shall be borne by the Borrower. If any Indemnified Party settles
any claim or action with respect to which the Borrower has agreed to indemnify
such Indemnified Party pursuant to the terms hereof, the Borrower shall have no
liability pursuant to this Section 9.13 to such Indemnified Party with respect
to such claim or action unless the Borrower shall have consented in writing to
the terms of such settlement.
The provisions of Section 9.13 shall be effective only to the fullest
extent permitted by law. The provisions of this Section 9.13 shall continue in
effect and shall survive (among other events), until the applicable statute of
limitations has expired, any termination of this Agreement, foreclosure, a deed
in lieu transaction, payment and satisfaction of the Obligations of Borrower,
and release of any collateral for the Loans.
Section 9.14. Confidential Information. The Lenders and the Agent shall,
with respect to any and all financial statements or other reports or documents
delivered by or on behalf of the Borrower or any related parties to the Lenders
or the Agent pursuant to Section 5.3 and any other information provided to any
Lender or the Agent (other than in a public forum, including an
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analyst's meeting and other than any such information which is publicly
available other than solely as a result of disclosure by the Agent or any of the
Lenders) and to the extent that such information therein contained or provided
has not theretofore otherwise been disclosed in such a manner as to render
such information no longer confidential (other than as a result of disclosure by
the Agent or a Lender in violation of its obligation hereunder), employ
reasonable procedures designed to maintain the confidential nature of the
information therein contained; provided, however, that any Lender or the Agent
may disclose or disseminate such information to: (a) such Lender's or the
Agent's respective employees, agents, attorneys and accountants who would
ordinarily have access to such information in the normal course of the
performance of their duties in connection with the administration of the Loans;
(b) such third parties as such Lender or the Agent may, in its discretion, deem
reasonably necessary in connection with or in response to (i) compliance with
any law, ordinance or governmental order, regulation, rule, subpoena, or
investigation, or (ii) any order, decree, judgment, subpoena, notice of
discovery or similar ruling or pleading issued, filed, served or purported on
its face to be issued, filed or served (x) by or under authority of any court,
tribunal, arbitration board or any governmental agency, commission, authority
board or similar entity or (y) in connection with any proceeding, case or matter
pending (or on its face purported to be pending) before any court, tribunal,
arbitration board or any governmental agency, commission, authority, board or
similar entity; provided that without notice to the Borrower, the Agent and any
Lender may disclose such information to bank examiners of governmental agencies
having regulatory authority over the Agent or such Lender in question in
connection with such examiner's examinations of Agent or such Lender's books and
records, or (iii) collection by judicial proceeding of any of the Indebtedness
now or hereafter owing by the Borrower and/or any Subsidiary to the Agent and/or
any of the Lenders or enforcement of any rights or remedies now or hereafter
possessed by Agent and/or any of the Lenders pursuant to this Agreement, any of
the Notes or any of the other Financing Documents; (c) subject to Section 9.11,
any prospective purchaser (including an affiliate of any Lender), in connection
with the resale or proposed resale by it of any portion of its Notes or other
participation in its Pro Rata Share of the Loans; provided that the prospective
participant has signed an agreement binding such participant under this Section
9.14 as if it were a Lender; and (d) any entity utilizing such information to
rate or classify any Lender's or the Agent's debt or equity securities for sale
to the public; provided that such rating agency has agreed to keep such
information confidential pursuant to an agreement reasonably satisfactory to the
Borrower.
Section 9.15. Governing Law. This Agreement and each Note shall be governed
by, and construed in accordance with, the laws of The Commonwealth of
Massachusetts without regard to such state's conflict of laws rules.
Section 9.16. Severability of Provisions. 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 provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 9.17. Headings. Article and Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
Section 9.18. Counterparts. This Agreement may be executed and delivered in
any number of counterparts each which shall be deemed an original, and this
Agreement shall be effective when at least one counterpart hereof has been
executed by each of the parties hereto.
71
(Loan Agreement - Fleet/Convergent)
78
SIGNATURES APPEAR ON NEXT PAGE
72
(Loan Agreement - Fleet/Convergent)
79
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument by their respective officers thereunto duly
authorized, as of August 12, 1999.
In the presence of: CONVERGENT GROUP CORPORATION
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------- ---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: V/P Finance
In the presence of: FLEET NATIONAL BANK, as Agent for
the Lenders and as a Lender
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------- ---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
73
(Loan Agreement - Fleet/Convergent)
80
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument by their respective officers thereunto duly
authorized, as of August 12, 1999.
In the presence of: CONVERGENT GROUP CORPORATION
By:
------------------------------- ---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
In the presence of: FLEET NATIONAL BANK, as Agent for
the Lenders and as a Lender
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------- ---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
74
(Loan Agreement - Fleet/Convergent)
81
EXHIBIT 1.1 -- EQUITY INVESTMENTS,
OWNERSHIP INTERESTS, SUBSIDIARIES AND SUBORDINATED DEBT
Organization
1. Convergent Group Corporation ("CVG or the "Borrower") is a Delaware
corporation qualified as a foreign corporation in California and
Colorado
2. Utility Graphics Consultants Corporation ("UGC"), a wholly-owned
subsidiary of the Borrower, is a Colorado corporation qualified as a
foreign corporation in California, Colorado, Ohio, and Texas.
3. Convergent Group Ltd., a wholly-owned subsidiary of the Borrower, is an
Ontario, Canada corporation qualified to do business in British
Colombia and Saskatchewan.
4. Graphic Data Systems Corporation ("GDS"), a wholly-owned subsidiary of
the Borrower, is a Delaware corporation qualified as a foreign
corporation in California, Colorado, District of Columbia, Indiana,
Kentucky, Massachusetts, North Carolina, Nebraska, New Hampshire, Ohio,
Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, and
Wisconsin.
5. Graphic Data Systems Limited ("GDSL"), a wholly-owned subsidiary of
GDS, is a corporation of England and Wales.
6. GIS Research Corporation (Inactive), a wholly-owned subsidiary of UGC,
is a Colorado corporation.
7. UGC General Partnership I is a general partnership owned 51% by UGC and
49% by CVG.
Equity Investments
1. Informatix
GDS owns 6,000 shares (15%) of Informatix Incorporated, a Japanese
Corporation. The share certificates are registered in the name of EDS
World Corporation (Far East), the prior owner of the shares. GDS is in
the process of having the shares transferred into its name.
82
Capital Stock
1. Shareholder ownership of the Borrower's capital stock prior to the
Closing Date:
Class A Series A Series B
Common Common Preferred Preferred
------------ ------------ ------------ ------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2,068,000
Electronic Data
Systems Corporation 282,000 5,725 34,816
GMJM Stock Partnership 372,240
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust 372,240
LEHE Family
Partners, LTD. 372,240
EAS Trust 50,000
RBS Trust 50,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 53,826
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 57,152
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 14,288
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 26,226
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 25,051
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 18,753
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 12,408
▇▇▇▇ ▇. Zastava 12,408
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 95,860
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 4,875
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 195
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 500
Other Shareholders 322,784
Option Holders 32,239
------------ ------------ ------------ ------------
Total 1,893,285 2,350,000 5,725 34,816
============ ============ ============ ============
2. Equity invested in Borrower by New Stockholders on or prior to Closing
Date:
New Stockholder Investment in ▇▇▇▇▇▇
--------------- --------------------
InSight Capital Partners III L.P. $12,360,343.11
InSight Capital Partners III(Cayman) $3,061,875.02
83
New Stockholder Investment in Borrower
--------------- ----------------------
InSight Capital Partners III L.P. $12,360,343.11
InSight Capital Partners III (Cayman) $ 3,061,875.02
InSight Capital Partners III (Co-Investors) $ 1,850,552.87
UBS Capital II LLC $17,272,741.00
GS Private Equity Partners II, L.P. $ 1,711,610.00
GS Private Equity Partners II Offshore, L.P. $ 886,329.00
GS Private Equity Partners III, L.P. $ 1,794,008.00
GS Private Equity Partners III Offshore, L.P. $ 418,227.00
NBK/GS Private Equity Partners, L.P. $ 189,763.00
WI Software Investors LLC $ 3,000,000.00
Imprimis SB LP $ 2,000,000.00
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ $ 1,000,000
--------------
Total 45,545,449.00
3. Shareholder ownership of the Borrower's capital stock immediately
subsequent to the Closing Date: See attached Schedule.
84
SERIES A
SHAREHOLDER COMMON PREFERRED PREFERRED
----------- ------ --------- ---------
▇▇▇▇▇▇, ▇▇▇ 54,775
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 216,394 102,974
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 201,470 98,360
▇▇▇▇▇▇, ▇▇▇▇▇▇ 18,831
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ 1,901
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. 5,869
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ 978
▇▇▇▇▇▇, ▇▇▇▇▇ 19,562
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 1,901
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 3,912
▇▇▇▇▇, ▇▇▇▇▇ 3,912
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 1,956
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 1,956
▇▇▇▇▇▇, ▇▇▇▇ 1,956
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 1,588
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. 9,441
▇▇▇▇ ▇. Zastava 97,004 48,718
EAS Trust 406,672 196,319
▇▇▇▇▇▇▇, ▇▇▇▇ ▇. 49,521
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 4,066 1,963
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 97,004 48,718
▇▇▇▇▇▇, ▇▇▇▇ 66,512
▇▇▇▇▇▇▇, ▇▇▇▇ 22,008
Gay, ▇▇▇▇▇▇ ▇. 42,302
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ 978
GMJM Stock Partnership, Ltd. 6,323,561 2,412,621
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 1,588
▇▇▇▇▇, ▇▇▇▇▇ ▇. 12,594
▇▇▇▇▇▇▇, ▇▇▇ 16,507
▇▇▇▇▇▇ ▇▇▇▇▇▇ K. 23,596
▇▇▇▇▇▇, ▇▇▇▇▇ 19,562
▇▇▇▇▇, ▇▇▇▇▇ 1,565
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 210,729 211,342
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 776,034 376,383
▇▇▇▇▇, ▇▇▇▇▇ ▇. 2,543
▇▇▇▇▇, ▇▇▇ 978
▇▇▇▇, ▇▇▇▇▇▇ ▇. 35,212
▇▇▇▇▇, ▇▇▇▇▇ 39,125
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. 39,371
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 32,278
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. 5,501
▇▇▇▇▇, ▇▇▇▇▇ 3,912
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 13,083
▇▇▇▇▇▇, ▇▇▇▇▇ 1,956
▇▇▇▇▇▇▇, ▇▇▇ 1,956
LEHE Family Partners, Ltd. 6,323,561 2,412,621
▇▇▇▇▇, ▇▇▇▇▇ 9,781
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 20,419
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust 6,323,561 2,412,621
▇▇▇▇▇▇, ▇▇▇▇▇ 11,737
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 5,869
▇▇▇▇▇▇▇▇, ▇▇▇▇ 1,956
▇▇▇▇▇▇, ▇▇▇▇ 9,781
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. 14,429
85
Series A
Shareholder Common Preferred Preferred
----------- ------ --------- ---------
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 9,586
▇▇▇▇, ▇▇▇▇▇▇▇ ▇. 18,831
▇▇▇▇▇, ▇▇▇ 65,534
▇▇▇▇▇▇▇▇, ▇▇▇▇ 978
▇▇▇▇▇▇, ▇▇▇▇▇ 1,956
Post, ▇▇▇▇ 5,869
▇▇▇▇▇, ▇▇▇ 1,956
▇▇▇▇▇▇▇▇, ▇▇▇▇ 1,956
RBS Trust 406,672 196,319
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 55,938 56,100
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 763 766
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. 1,588
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,619,312 779,312
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. 11,006
▇▇▇▇▇▇, ▇▇▇▇ 0
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 1,956
▇▇▇▇▇▇▇▇, ▇▇▇▇ 7,848
▇▇▇, ▇▇▇▇▇▇▇ 31,300
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 19,086 19,142
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 149,237 73,632
▇▇▇▇, ▇▇▇▇▇▇▇ ▇. 47,196
Tram, ▇▇▇▇ 13,694
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 145,533
▇▇▇▇▇, ▇▇▇▇▇▇ 50,620
▇▇▇▇▇▇▇▇, ▇▇▇▇ 11,370
▇▇▇▇▇▇▇, ▇▇▇▇▇ 1,588
▇▇▇▇▇, ▇▇▇▇ ▇. 27,387
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. 275,636
Zastava, ▇▇▇▇ ▇. 19,684
Zhou, Minjian 782
GS PRIVATE EQUITY PARTNERS II OFFSHORE, L.P. 816,918
GS PRIVATE EQUITY PARTNERS III OFFSHORE, L.P. 385,475
GS PRIVATE EQUITY PARTNERS III, L.P. 1,653,515
GS PRIVATE EQUITY PARTNERS II, L.P. 1,577,569
IMPRIMIS SB LP 1,843,376
INSIGHT CAPITAL PARTNERS III (CAYMAN), L.P. 2,822,094
INSIGHT CAPITAL PARTNERS III (CO-INVESTORS), LP. 1,705,632
INSIGHT CAPITAL PARTNERS III, L.P. 11,392,380
NBK/GS PRIVATE EQUITY PARTNERS, L.P. 174,902
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 921,688
UBS CAPITAL II LLC 15,920,076
WI SOFTWARE INVESTORS LLC 2,765,064
Option Holders 1,389,023
---------- ---------- ---------- ----------
TOTALS 1,389,023 24,620,088 9,447,911 41,978,689
========== ========== ========== ==========
86
4. Borrower's Authorized and Outstanding Capital Stock
a) Authorized Shares:* Par Value:
7,500,000 shares of Common Stock, $0.01
further subdivided into:
2,500,000 shares of Common Stock $0.01
3,500,000 shares of Class A Common Stock $0.01
1,500,000 shares of Class B Common Stock $0.01
44,725 shares of Preferred Stock
further subdivided into:
5,725 shares of Series A Preferred Stock $0.10
39,000 shares of Series B Preferred Stock $0.10
* The 5,725 shares of outstanding Series A Preferred Stock are
convertible into 2,085,000 shares of Class B Common Stock. However,
the 1,500,000 authorized shares of Class B Common Stock are not
sufficient to allow issuance of 2,085,000 shares of Class B Common
Stock upon conversion of the Series A Preferred Stock. The Certificate
of Designations for the Series A Preferred Stock requires such shares
to be available.
b) Outstanding Shares:
1,538,262 shares of Common Stock
2,350,000 shares of Class A Common Stock
2,085,000 shares of Class B Common Stock
5,725 shares of Series A Preferred Stock
34,816 shares of Series B Preferred Stock
5. Authorized and Outstanding Capital Stock of Subsidiaries
A. UGC
Authorized shares: 8,000,000 Total
600,000 shares of Common Stock, no par value
200,000 shares of Series A Preferred Stock $.01 par value
Outstanding shares: 316,400 Common shares owned by the Borrower
17,958 shares of Series A Preferred Stock owned by
the Borrower
B. Convergent Group LTD.
Authorized shares: Unlimited number of Common Shares
Outstanding shares: 800 Shares of Common owned by the Borrower
C. GDS
87
Authorized shares: 59,000 Total
3,000 Common par value $.01
500 non-voting Common par value $.01
55,500 Preferred Stock Par Value $.10
1,000 Series A Convertible Exchangeable Preferred Stock par value $.01
24,500 Series B Exchangeable Preferred Stock par value $.01
30,000 Series C Exchangeable Preferred Stock $.01
Outstanding shares: 1,000 shares Common Stock owned by the Borrower
13,980 Shares Series B Preferred Stock owned by the Borrower
D. Graphic Data Systems Limited
Authorized shares: 5,000,000 shares of Common at 1 Pound Sterling each
Outstanding shares: 100 shares of Common Stock owned by GDS
E. GIS Research Corporation
Authorized shares: 50,000 shares of Common Stock - no par value
Outstanding shares: 10,000 shares Common Stock owned by UGC
88
EXHIBIT 1.2 - RELATED TRANSACTION DOCUMENTS
Recapitalization Agreement, dated as of August 12, 1999, by and among Convergent
Group Corporation, certain shareholders of the Borrower, certain Investors and
InSight capital Partners III, L.P.
Stock Purchase and Redemption Agreement.
Shareholder Agreement (2 versions)
Registration Rights Agreement
89
EXHIBIT 1.2 - RELATED TRANSACTION DOCUMENTS
To be provided at closing.
1
90
EXHIBIT 1.4 - FORM OF INTEREST RATE ELECTION
Fleet National Bank Date:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Re: Interest Rate Election
Gentlemen:
Reference is made to that certain Loan Agreement, dated as of August _,
1999 by and among the undersigned, you, and the Lenders, (the "Loan Agreement").
Capitalized terms used herein shall have the same meaning as in the Loan
Agreement.
The undersigned hereby elects, pursuant to the Loan Agreement, that the
[Libor Rate or Effective Prime] shall be the interest rate applicable to that
certain [outstanding] Loan [requested pursuant to the Request attached hereto]
in the principal amount of and no/100 Dollars ($ ). [The Interest
Adjustment Date for said Loan is .]
The undersigned hereby elects an Interest Period for such Loan of []
months. [Complete only if electing Adjusted Libor Rate].
The undersigned hereby certifies to the Lenders that as of the date
hereof:
A. No Event of Default and no Default has occurred and is continuing;
and
B. The representations and warranties of the Borrower contained in
Article 4 of the Loan Agreement and/or in any of the other Financing Documents
are true and correct in all material respects except as altered by actions
permitted under the Loan Agreement.
CONVERGENT GROUP CORPORATION
By:
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
cc: Fleet National Bank
Mailstop MA OF D07A
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (617) 346-0151
1
91
EXHIBIT 1.5 - FORM OF REVOLVING CREDIT NOTE
REVOLVING CREDIT NOTE
[Insert Maximum Amount of _________, 19__
Lenders Pro Rata Share of
Revolving Credit Loan
Commitment]
FOR VALUE RECEIVED, CONVERGENT GROUP CORPORATION, a Delaware with a
business address of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter referred to as the "Borrower"), promises to pay to the order
of [insert name of Lender], [a national banking association organized and
existing under the laws of the United States of America] [a __________ banking
corporation _______] (the "Lender"), at the Lender's office located at [insert
address] or to Fleet National Bank or any successor agent under the Loan
Agreement (defined below) (the "Agent") in accordance with the Loan Agreement
(defined below), the lesser of (i) the principal sum of [insert Lender's Pro
Rata Share of the Revolving Credit Loan Commitment] ($__________.00), or (ii)
the aggregate unpaid principal amount of all advances of funds under the
Revolving Credit Loan made by the Lender to the Borrower or by the Lender
through the Agent to the Borrower pursuant to that certain Loan Agreement dated
as of the date hereof by and among the Borrower, the Agent, the other Lenders
party thereto and the Lender, as the same may be amended (the "Loan Agreement").
The Borrower shall pay in full all unpaid principal, interest, fees and
other amounts due under this Note on the Revolving Credit Repayment Date.
The Borrower promises to pay to the order of the Lender interest before
and after maturity on the principal amount of this Note outstanding from time to
time from the date hereof until payment in full of all principal, interest, fees
and other sums due under this Note in accordance with the Loan Agreement.
Upon the occurrence and during the continuance of any Event of Default
each Prime Rate Loan evidenced by this Note, shall bear interest, payable on
demand, at a floating interest rate per annum equal to four percent (4.0%) above
Effective Prime and each Libor Loan evidenced by this Note shall bear interest
at the Libor Rate plus four percent (4.0%). In addition, in the event that the
Borrower fails to pay any amount of principal or interest hereof within ten (10)
days after such payment is due, the Borrower shall pay to the Lender upon demand
by the Agent or the Lender, a late charge in an amount equal to five percent
(5%) of such amount of principal or interest.
Principal, interest, fees and other sums are payable in immediately
available Dollars to the Agent at its address set forth in the Loan Agreement or
as otherwise directed in writing from the Agent to the Borrower.
This Note is one of the Revolving Credit Notes referred to in, and is
entitled to the benefits of, the Loan Agreement. The applicable terms and
provisions of the Loan Agreement are incorporated herein by reference as if
fully set forth herein. In the event of any conflict between any provision of
this Note and any provision(s) of the Loan Agreement, such provision(s) of the
Loan Agreement shall control. Each capitalized term used in this Note and not
expressly defined
1
92
in this Note shall have the meaning ascribed to such term in the Loan Agreement.
The Loan Agreement, among other things, contains provisions for acceleration of
the maturity of this Note upon the happening of certain stated events and also
for prepayments on account of principal of this Note prior to the maturity of
this Note upon the terms and conditions specified in the Loan Agreement.
This Note is secured by the Security Documents.
If this Note shall not be paid when due and shall be placed by the
holder hereof in the hands of an attorney for collection, through legal
proceedings or otherwise, the Borrower will pay reasonable attorneys' fees to
the holder hereof together with reasonable costs and expenses of collection.
All provisions of this Note and any other agreements between the
Borrower and the Lender are expressly subject to the condition that in no event,
whether by reason of acceleration of maturity of the Indebtedness evidenced by
this Note or otherwise, shall the amount paid or agreed to be paid to the Lender
which is deemed interest under applicable law exceed the maximum permitted rate
of interest under applicable law (the "Maximum Permitted Rate"), which shall
mean the law in effect on the date of this Note, except that if there is a
change in such law which results in a higher Maximum Permitted Rate, then this
Note shall be governed by such amended law from and after its effective date. In
the event that fulfillment of any provision of this Note, or the Loan Agreement
or any document, instrument or agreement providing security for this Note
results in the rate of interest charged hereunder being in excess of the Maximum
Permitted Rate, the obligation to be fulfilled shall automatically be reduced to
eliminate such excess. If, notwithstanding the foregoing, the Lender receives an
amount which under applicable law would cause the interest rate hereunder to
exceed the Maximum Permitted Rate, the portion thereof which would be excessive
shall automatically be deemed a prepayment of and be applied to the unpaid
principal balance of this Note to the extent of then outstanding Prime Rate
Loans and not a payment of interest and to the extent said excessive portion
exceeds the outstanding principal amount of Prime Rate Loans, said excessive
portion shall be repaid to the Borrower.
The Borrower expressly waives presentment, notice of acceleration and
intent to accelerate, demand for payment and protest and notice of protest and
nonpayment.
This Note shall for all purposes be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts without regard to
such state's conflict of laws rules.
Executed as a sealed instrument as of the date first above written.
In the presence of: CONVERGENT GROUP CORPORATION
By:
------------------------------------ --------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
2
93
EXHIBIT 1.8 - PERMITTED ENCUMBRANCES
None. The existing security interest of Norwest Business Credit will be released
at the Closing Date. However, owners of leased equipment have made notification
filings under the UCC.
94
EXHIBIT 1.9 - PRO RATA SHARES
AGENT'S AND LENDERS'
NOTICE ADDRESSES AND WIRE TRANSFER INSTRUCTIONS
Name of AGENT, address for notices
and wire transfer instructions:
Fleet National Bank
Mailstop MA OF D07A
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: High Tech Group
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Wire Transfer Instructions:
Fleet National Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABA#: ▇▇▇▇▇▇▇▇▇
Account: Commercial Loan Services
Attn: Agent Bank MA
Account#: ▇▇▇▇▇▇▇ G/L
Re: Convergent Group
Name of LENDER, address for notices
and wire transfer instructions: Pro Rata Share
Fleet National Bank 100%
Mailstop MA OF D07A
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: High Tech Group
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Wire Transfer Instructions:
Fleet National Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABA#: ▇▇▇▇▇▇▇▇▇
Account: Commercial Loan Services
Attn: Agent Bank MA
Account#: ▇▇▇▇▇▇▇ G/L
Re: Convergent Group
1
95
Name of LENDER, address for notices and
wire transfer instructions:
For Credit Matters: Pro Rata Share
-------------------------- []%
--------------------------
--------------------------
Tel:
----------------------
Fax:
----------------------
For Administrative/Operations Matters:
--------------------------
--------------------------
--------------------------
Tel:
----------------------
Fax:
----------------------
Wire Transfer Instructions:
--------------------------
--------------------------
--------------------------
ABA #:
--------------------
Account Name:
-------------
Attn:
---------------------
Re:
-----------------------
2
96
EXHIBIT 1.10 - FORM OF REQUEST
Date:
Fleet National Bank.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
RE: Request for Loan
Gentlemen:
Reference is made to that certain Loan Agreement dated as of August __,
1999 by and among the undersigned, you and the Lenders (the "Loan Agreement").
Capitalized terms used herein shall have the same meaning as in the Loan
Agreement.
The undersigned hereby requests a Revolving Credit Loan from the
Lenders pursuant to the Loan Agreement in the amount of
and no/100 Dollars ($ .00) at the interest rate set forth in the Interest
Rate Election pertaining to such Loan.
The undersigned requests that each Lender fund its Pro Rata Share of
such Loan on , 19 and such date is in accordance with the terms and
conditions of the Loan Agreement.
The undersigned hereby certifies to the Lenders that as of the date
hereof:
(a) no Event of Default and no Default has occurred and is continuing;
and
(b) the representations and warranties of the Borrower contained in
Article 4 of the Loan Agreement and/or contained in any of the other Financing
Documents are true and correct in all material respects except as altered by
actions not prohibited under the Loan Agreement.
CONVERGENT GROUP CORPORATION
By:
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
cc: Fleet National Bank
Mailstop MA OF D07A
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (617) 346-0151
1
97
EXHIBIT 1.12 - PROJECTIONS
Attached
98
SECTION 1.12-PROJECTIONS
CONVERGENT GROUP CORPORATION
FIVE YEAR OPERATING FORECAST BASE PLAN
Fiscal year ended: 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------------ ------------ ------------ ------------ ------------
Revenue:
Technology Integration Services 35,821,917 43,901,468 58,196,626 77,146,562 102,266,959
Conversion Revenue and Subcontractor Fees 17,511,613 20,310,195 26,923,583 35,690,418 47,311,901
Billed Expenses 2,238,085 1,689,993 2,240,287 2,969,768 3,936,781
Workbench and Application Licenses 3,350,385 4,587,362 8,027,883 14,048,795 24,585,392
Third Party Software Sales 2,280,134 5,548,116 6,688,058 8,062,218 9,718,719
Hardware Sales 1,270,961 3,153,802 3,689,949 4,317,240 5,051,171
Hardware and Software Maintenance 1,797,968 3,528,907 6,175,587 10,807,277 18,912,734
GDS Maintenance and other GDS Income 1,439,359 -- -- -- --
Other Income 84,000 139,000 152,000 168,000 184,000
------------ ------------ ------------ ------------ ------------
Total Revenue 65,794,422 82,858,843 112,093,973 153,210,278 211,967,657
Cost of Revenue:
Employee Compensation and Benefits 17,531,540 20,194,675 26,770,448 35,487,419 47,042,801
Conversion and Subcontractor Costs 16,458,936 18,279,176 24,231,225 32,121,376 42,580,711
Billable Project Expense 2,179,512 1,689,993 2,240,287 2,969,768 3,936,781
Workbench and Application Costs 333,146 3,440,522 6,020,912 10,536,596 18,439,044
Third Party Software Costs 1,010,469 2,885,020.32 1,010,469 1,010,469 1,010,469
Hardware Costs 1,063,529 2,680,732 3,136,457 3,669,654 4,293,495
Hardware and Software Maintenance Costs 1,369,886 2,823,126 4,940,470 8,645,822 15,130,187
GDS Maintenance and other GDS Costs 1,082,211 -- -- -- --
Other Expense 899,655 2,634,088 3,491,798 4,628,794 6,136,018
------------ ------------ ------------ ------------ ------------
Total cost of Revenue 41,928,884 54,627,331 71,842,065 99,069,897 138,569,506
------------ ------------ ------------ ------------ ------------
Gross Margin 23,865,538 28,231,512 40,251,908 54,140,381 73,398,151
Selling, General and Administrative Expense 13,378,737 14,254,568 19,107,600 25,932,906 35,686,631
(normalized for executive compensation 1999)
------------ ------------ ------------ ------------ ------------
EBITDA 10,486,801 13,976,944 21,144,309 28,207,475 37,711,520
Interest expense (income) net 689,167 1,654,000 1,654,000 1,654,000 1,654,000
Depreciation, amortization expense 1,464,107 1,525,000 2,028,000 2,657,000 3,454,000
Tax expense (614,359) (1,509,827) 6,810,300 9,319,625 12,715,373
Transaction costs 2,911,000
------------ ------------ ------------ ------------ ------------
Net income 6,036,886 12,307,771 10,652,008 14,576,849 19,888,147
============ ============ ============ ============ ============
99
SECTION 1.12-PROJECTIONS
CONVERGENT GROUP CORPORATION
FIVE YEAR OPERATING FORECAST STRETCH PLAN
Fiscal year ended: 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------------ ------------ ------------ ------------ ------------
Revenue:
Technology Integration Services 35,821,917 49,772,000 66,188,447 86,708,008 112,721,767
Conversion Revenue and Subcontractor Fees 17,511,613 25,504,000 33,633,952 44,403,513 58,717,298
Billed Expenses 2,238,085 1,833,664 1,871,200 2,712,800 3,975,200
Workbench and Application Licenses 3,350,385 8,845,000 17,690,000 30,957,500 46,436,250
Third Party Software Sales 2,280,134 5,983,075 6,636,150 8,680,920 11,635,020
Hardware Sales 1,270,961 3,504,225 2,929,500 3,880,500 5,239,500
Hardware and Software Maintenance 1,797,968 2,923,951 3,940,600 6,207,300 9,454,400
GDS Maintenance and other GDS Income 1,439,359 -- -- -- --
Other Income 84,000 139,000 152,000 168,000 184,000
------------ ------------ ------------ ------------ ------------
Total Revenue 65,794,422 98,504,915 133,041,849 183,718,541 248,363,435
Cost of Revenue:
Employee Compensation and Benefits 17,531,540 26,677,000 35,540,000 46,529,000 60,439,000
Conversion and Subcontractor Costs 16,458,936 22,953,000 30,298,000 39,994,000 52,792,000
Billable Project Expense 2,179,512 1,834,000 1,871,000 2,712,000 3,975,000
Workbench and Application Costs 333,146 2,211,000 4,422,000 7,739,000 11,609,000
Third Party Software Costs 1,010,469 3,111,000 3,451,000 4,514,000 6,050,000
Hardware Costs 1,063,529 2,978,000 2,491,000 3,299,000 4,454,000
Hardware and Software Maintenance Costs 1,369,886 2,339,000 3,153,000 4,966,000 7,563,000
GDS Maintenance and other GDS Costs 1,082,211 -- -- -- --
Other Expense 899,655 2,986,000 3,972,000 5,204,000 6,764,000
------------ ------------ ------------ ------------ ------------
Total cost of Revenue 41,928,894 65,089,000 85,198,000 114,957,000 153,646,000
------------ ------------ ------------ ------------ ------------
Gross Margin 23,865,538 33,415,915 47,843,949 68,761,541 94,717,435
Selling, General and Administrative Expense 13,378,737 17,742,000 22,882,000 30,473,000 40,090,000
(normalized for executive compensation 1999)
------------ ------------ ------------ ------------ ------------
EBITDA 10,486,801 15,673,915 24,961,849 38,288,541 54,627,435
Interest expense (income) net 689,167 1,654,000 1,654,000 1,654,000 1,654,000
Depreciation, amortization expense 1,464,107 1,525,000 2,028,000 2,657,000 3,454,000
Tax expense (614,359) (848,008) 8,299,141 13,251,241 19,312,580
Transaction costs 2,911,000
------------ ------------ ------------ ------------ ------------
Net income 6,036,886 13,342,923 12,980,708 20,726,300 30,206,855
============ ============ ============ ============ ============
100
EXHIBIT 2.1.0 - FORM OF BORROWING BASE CERTIFICATE
Fleet National Bank
Mailstop MA OF D07A
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Re: Borrowing Base Certificate Required by Section 2.1.0 of the
Loan Agreement dated as of August __, 1999 by and among you as
Agent, the undersigned and certain Lenders, as same may have
been amended (the "Loan Agreement")
Gentlemen:
This certificate is submitted by the undersigned (hereinafter the
"Borrower") pursuant to Section 2.1.0 of the Loan Agreement. Capitalized terms
used herein have the same meaning as in the Loan Agreement.
The Borrower hereby certifies to the Agent and the Lenders that the
following information is true, accurate and complete as of , 19 .
I Revolving Credit Loan Commitment
(a) $25,000,000
(b) less reductions $
(c) equals $
and
(d) EBITDA for four most recent
quarters $
(e) times maximum permitted ratio under
Section 5.1.12 ___:1.0
(f) equals $
(g) Revolving Credit Loan Commitment is
lesser of (c) and (f) $
The Borrower further certifies to the Lenders that as of the date
hereof no Event of Default or Default has occurred without having been waived in
writing.
CONVERGENT GROUP CORPORATION
By:
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
1
101
EXHIBIT 3.1.1.8 - PERMITTED INDEBTEDNESS AND CAPITALIZED LEASES
Promissory Note(s) issued in connection with stock repurchase agreement(s) with:
CHDH Family Partners, Ltd.
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
As of June 30, 1999, the Borrower and its Subsidiaries had the following
intercompany balances (before certain tax related intercompany allocations):
$1,312,528.88 owed to Convergent Group Ltd. (Canada) from CVG,
$3,438,051.09 owed to ▇▇▇. ▇▇▇▇ ▇▇▇,
▇▇▇▇.▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇. (▇▇▇▇▇▇ ▇▇▇▇▇▇▇) from GDS
$7,828,760.13 owed by GDS. to CVG,
$282,770.34 owed by UGC. to GDS,
$21,463.19 owed by GDSL to CVG, and
$173,643.00 owed by GDSL. to UGC
The balances shown on the books and records of the Borrower are a result of
intercompany transactions and do not constitute formal loans between the
entities. These intercompany transactions are eliminated in the consolidated
financial statements of the Borrower.
Employment Letter Agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - Exhibit 4.1.22.
NEC America, Inc. Lease, terminating September 1999, and the Master Equipment
Lease Agreement between Convergent Capital Corporation and Convergent Group
Corporation dated June 10, 1999, which will commence September, 1999.
Hewlett Packard Equipment Lease.
102
EXHIBIT 3.1.1.10 - FORM OF COMPLIANCE CERTIFICATE
Fleet National Bank
Mailstop MA OF D07A
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Re: Compliance Certificate Required by Sections 3.1.1.10 or 5.3.4
of the Loan Agreement dated as of August _____, 1999 by and
among you as Agent, the undersigned and certain Lenders, as
same may have been amended (the "Loan Agreement")
Gentlemen:
This certificate is submitted by the undersigned (hereinafter the
"Borrower") pursuant to Sections 3.1.1.10 or 5.3.4 of the Loan Agreement.
Capitalized terms used herein have the same meaning as in the Loan Agreement.
The Borrower hereby certifies to the Agent and the Lenders that the
following information is true, accurate and complete as of , 19 .
I. Definitions.
1.1 Interest Expense
(a) Interest on Indebtedness under $
Financing Documents
(b) Other fees, charges and expenses on $
Indebtedness under Financing
Documents (not including Facility
Fees)
(c) Interest, fees and other charges on $____
other Indebtedness
(d) (a)+(b)+(c) = total Interest Expense $
1.2 EBITDA (all for a Borrower fiscal quarter)
(a) Net Income (loss) on GAAP basis $
(b) plus Interest Expense $
(c) plus taxes $
(d) plus depreciation $
1
103
(e) plus amortization $
(f) plus other non-cash charges and $
extraordinary pre-9/30/99 Loans and
Related Transactions costs
(g) plus pre-Closing Date excess $
compensation payments, if
applicable
(h) plus non-cash Permitted Acquisition $
charges, if any
(i) plus cash Permitted Acquisition $
costs, if any
(j) plus pro forma Permitted $
Acquisition expense reductions, if any
(k) less Capitalized Software Development costs $
(1) less pro forma Permitted Acquisition $
expense increases, if any
(m) less Permitted Acquisition earn $
out, etc. purchase price payments,
if any
(n) sum of (a) through (j) $
(o) sum of (k) through (m) $
(p) (n) - (o) $
(q) (n) - (p) = EBITDA $
1.3 EBITDA for covenants
(a) EBITDA for most recent Borrower $
fiscal quarter
(b) EBITDA for immediately preceding $
Borrower fiscal quarter
(c) EBITDA for second immediately $
preceding Borrower fiscal quarter
(d) EBITDA for third immediately $
preceding Borrower fiscal quarter
(e) Sum of (a) through (d) equals $
----
2
104
1.4 Total Debt Service (for Borrower fiscal quarter
ending on date of determination and three Borrower
fiscal quarters next preceding such Borrower fiscal
quarter)
(a) Interest Expense from 1.5 below $
(b) plus scheduled and mandatory $
principal amortization on Loans
(c) less any Sections 2.6.1.3, 2.6.1.4 $
and 2.6.1.5 mandatory payments
required
(d) plus scheduled and mandatory $
payments on other Indebtedness and
Capitalized Lease Obligations
(e) plus the quotient of: $
(i) Revolving Credit Loan Commitment $
(ii) divided by ________ $
(iii) equals $
(f) (a)+(b)-(c)+(d)+(e) = Total Debt $
Service ----------
1.5 Interest Coverage Ratio
(a) EBITDA for current and 3 preceding $
quarters
(b) Interest Expense for _________ $
quarters
(c) times _____ = $
or
(d) Interest Expense for current and 3 $
preceding quarters
(e) (a)/(c) or (d) = Interest Coverage ___:1.0
Ratio
II. Section 5.1.10. Minimum Interest Coverage Ratio.
(a) Interest Coverage Ratio ___:1.0
(b) Minimum ratio permitted 3.0:1.0
3
105
III. Section 5.1.11. Minimum Debt Service Coverage Ratio.
(a) EBITDA $
less the sum of:
(b) taxes paid or payable $
(c) Capital Expenditures $
(d) (b)+(c) = $
(e) (a)-(d) = $
(f) Total Debt Service $
(g) Ratio of (e) to (f) ____:1.0
(h) Minimum Ratio permitted 1.25:1.0
IV. Section 5.1.12. Maximum Ratio of Total Indebtedness for Borrowed Money
to EBITDA.
(a) Total Indebtedness for Borrowed $
Money
(b) EBITDA $
(c) Ratio of (a) to (b) ____:1.0
(d) Maximum ratio permitted ____:1.0
V. Section 5.1.12(A). Minimum Quick Ratio.
(a) Quick Ratio ____:1.0
(b) Minimum quick ratio permitted 1.10:1.0
VI. Section 5.1.12(B). Accounts Receivables and Accrued Revenues.
(a) Revenues for 4 quarters $
(b) average ending accounts receivable $
balance for immediately preceding
12 months
(c) plus average ending accrued $
revenues balance for immediately
preceding 12 months
(d) (a)/sum of (b) and (c) $
4
106
(e) 365/(d) = days outstanding $
(f) Maximum days outstanding 75
The Borrower further certifies to the Lenders that as of the date
hereof no Event of Default or Default has occurred without having been waived in
writing.
CONVERGENT GROUP CORPORATION
By:
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
5
107
EXHIBIT 4.1.1 - FOREIGN QUALIFICATIONS
See Exhibit 1.1.
1
108
EXHIBIT 4.1.2 - AUTHORIZATIONS
None.
1
109
EXHIBIT 4.1.3 - CONSENTS
None.
1
110
EXHIBIT 4.1.6 - LITIGATION
EEOC claim attached.
111
[SEAL]
Equal Employment Opportunity Commission
Denver District ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Charging Party: ▇▇▇▇▇▇▇▇, ▇▇▇▇ E
Charge No.: 320990415
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇
Owner
Convergent Group
▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇▇:
Your organization is hereby requested to submit information and records relevant
to the subject charge of discrimination. The Commission is required by law to
investigate charges filed with it, and the enclosed request for information does
not necessarily represent the entire body of evidence which we need to obtain
from your organization in order that a proper determination as to the merits of
the charge can be made. Please submit a response to the requested information by
the deadline cited below.
You may be assured that any information or explanation supplied by your
organization will not be made public.
Sincerely
/s/ ▇▇▇▇▇▇ DAKOTA
for
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Compliance Manager
Response Deadline Date: 031199
The following dates are considered to be the "relevant period" for the attached
Request for Information: 120297 - 120298.
112
PERSON FILING [ILLEGIBLE]
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION ▇▇▇▇▇▇▇▇,▇▇▇▇ E
THIS PERSON(check one)
[X] CLAIMS TO BE AGGRIEVED
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇ [ ] IS FILING ON BEHALF OF ANOTHER
Owner
Convergent Group DATE OF ALLEGED VIOLATION
6200 So. Syracuse Way Earliest Most Recent
Suite 200 12/02/1998 12/02/1998
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ PLACE OF ALLEGED VIOLATION
Englewood, CO
CHARGE NUMBER
320990415
--------------------------------------------------------------------------------
NOTICE OF CHARGE OF DISCRIMINATION
(See EEOC "Rules and Regulations" before completing this Form)
You are hereby notified that a charge of employment discrimination has been
filed against your organization under:
[ ] TITLE VII OF THE CIVIL RIGHTS ACT OF 1964
[X] THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967
[ ] THE AMERICANS WITH DISABILITIES ACT
[ ] THE EQUAL PAY ACT (29 U.S.C., SECT. 206(d)) investigation will be
conducted concurrently with our investigation of this charge.
The boxes checked below apply to your organization:
1. [ ] No action is required on your part at this time.
2. [x] Please submit by 03/11/99 a statement of your position with respect to
the allegation(s) contained in this charge, with copies of any supporting
documentation. This material will be made a part of the file and will be
considered at the time that we investigate this charge. Your prompt
response to this request will make it easier to conduct and conclude our
investigation of this charge.
3. [x] Please respond fully by 03/11/99 to the attached request for information
which pertains to the allegations contained in this charge. Such
information will be made a part of the file and will be considered by the
Commission during the course of its investigation of the charge.
For further inquiry on this matter, please use the charge number shown above.
Your position statement, your response to our request for information, or any
inquiry you may have should be directed to:
Denver District ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Compliance Manager
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ----------------------------------
(Commission Representative)
(▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------
(Telephone Number)
[ ] Enclosure: Copy of Charge
-------------------------------------------------------------------------------------------------------------
BASIS OF DISCRIMINATION
[ ] RACE [ ] COLOR [ ] SEX [ ] RELIGION [ ] NAT. ORIGIN [x] AGE [ ]DISABILITY [ ] RETALIATION [ ] OTHER
--------------------------------------------------------------------------------------------------------------
CIRCUMSTANCES OF ALLEGED VIOLATION
see enclosed charge of discrimination form 5
--------------------------------------------------------------------------------
DATE TYPED NAME/TITLE OF AUTHORIZED EEOC OFFICIAL SIGNATURE
2/19/99 ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇. /s/ ▇▇▇▇▇▇ NAHATE
--------------------------------------------------------------------------------
RESPONDENT'S COPY
113
[STAMP]
THIS FORM IS AFFECTED BY THE PRIVACY ACT OF 1974; SEE PRIVACY [ ] FEPA
ACT STATEMENT BEFORE COMPLETING THIS FORM. [X] EEOC 3209904
--------------------------------------------------------------------------------
Colorado Civil Rights Division and EEOC
---------------------------------------------------------
State or local Agency, if any
FEB 1 1999
--------------------------------------------------------------------------------
NAME (Indicate Mr., Ms., Mrs.) HOME TELEPHONE (Include Area Code)
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ AND ZIP CODE DATE OF [ILLEGIBLE]
▇▇▇▇▇ ▇. ▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05/25/1 [ILLEGIBLE]
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NAMED IS THE EMPLOYER, LABOR ORGANIZATION, EMPLOYMENT AGENCY APPRENTICESHIP
[ILLEGIBLE] STATE OR LOCAL GOVERNMENT AGENCY WHO DISCRIMINATED AGAINST ME (IF
MORE THAN ONE LIST BELOW.)
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NAME NUMBER OF EMPLOYEES, MEMBERS TELEPHONE (Include Area Code)
Convergent Group Cat B (101-200) (303) 741-840[ILLEGIBLE]
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 005
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NAME TELEPHONE (Include Area Code)
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STREET ADDRESS CITY, STATE AND ZIP CODE COUNTY
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CAUSE OF DISCRIMINATION BASED ON (Check appropriate box(es))
[ ]RACE [ ]COLOR [ ]SEX [ ]RELIGION [ ]NATIONAL ORIGIN
[ ]RETALIATION [X]AGE [ ]DISABILITY [ ] OTHER (Specify)
DATE DISCRIMINATION TOOK PL[ILLEGIBLE]
EARLIEST LATEST
12/02/1998 12/02/19[ILLEGIBLE]
[ ]CONTINUING ACTION
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THE PARTICULARS ARE (If additional space is needed, attach extra sheet(s)):
I. On December 2, 1998, I was informed that I had not been hired for the
position of Buyer.
II. I was told someone else had been hired and that they were looking a
[ILLEGIBLE] "...more junior..." person.
III. I feel I was discriminated against because of my age (53) in violation of
the 1967 Age Discrimination in Employment Act, as amended, for the
following reasons:
A. My date of birth is May 25, 1945.
B. The duties and responsibilities of the buyer's job for which I
was applying appeared to the same as those I performed during
previous employment with this company as the purchasing manager.
C. I received excellent reports on my job performance during my prior
employment.
D. A person who is approximately 35 years of age was hired for the
position.
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[ ] I want this charge filed with both the EEOC and the State or local Agency,
if any. I will advise the agencies if I change my address or telephone number
and cooperate fully with them in the processing of my charge in accordance with
their procedures.
--------------------------------------------------------------------------------
I declare under penalty of perjury that the foregoing is true and correct.
DATE 2/12/99 Charging Party (Signature)
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NOTARY (When necessary for State Local Requirements [ILLEGIBLE]
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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I swear or affirm that I have read the above charge and that [ILLEGIBLE]
it is true to the best of my knowledge, information and bel [ILLEGIBLE]
--------------------------------------------------------------------------------
SIGNATURE OF COMPLAINANT
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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SUBSCRIBED AND SWORN TO BEFORE ME THIS DATE [ILLEGIBLE]
(Day, Month, and Year)
12-2-99
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EEOC FORM 5 (Rev. 06/92) [NOTARY SEAL]
114
PRIVACY ACT STATEMENT
(This form is covered by the Privacy Act of 1974, Public Law 93-579: Authority
for requesting the personal data and the [ILLEGIBLE] below.)
1. FORM NUMBER/TITLE/DATE. EEOC Form 5. CHARGE OF DISCRIMINATION, March 1984.
2. AUTHORITY. 42 U.S.C. Section 2000e-5(b). 29 U.S.C. Section 211.29 U.S.C.
Section 626
3. PRINCIPAL PURPOSE(S). The purpose of the charge, whether recorded initially
on this form or in some other way [ILLEGIBLE] writing and later recorded on
this form, is to invoke the jurisdiction of the Commission.
4. ROUTINE USES. This form is used to determine the existence of facts which
fall within the Commission's jurisdiction to investigate, determine,
consolidate and litigate charges of unlawful employment practices.
Information provided on this form will be used by Commission employees to
guide the Commission's investigatory activities. This form may be disclosed
to State, local and federal agencies as may be appropriate or necessary to
carrying out the Commission's functions. A copy of the charge will
ordinarily be served upon the person against whom the charge is made.
5. WHETHER DISCLOSURE IS MANDATORY OR VOLUNTARY AND EFFECT ON INDIVIDUAL FOR
NOT PROVIDING INFORMATION. Charges must be in writing and should identify
the parties and action or policy complained of. Failure to have a charge
which identifies the parties in writing may result in the Commission not
accepting the charge. Charges under Title VII must be sworn to or affirmed.
Charges under the ADEA should ordinarily be signed. Charges may be
clarified or amplified later by amendment. It is not mandatory that this
form be used to provide the requested information.
6. [ ] Under Section 706 of Title VII of the Civil Rights Act of 1964, as
amended, this charge will be deferred to and will be processed by the State
or local agency indicated. Upon completion of the agency's processing, you
will be notified of its final resolution in your case. If you wish EEOC to
give Substantial Weight Review to the agency's findings, you must send us a
request to do so, in writing, within fifteen (15) days of your receipt of
the agency's finding. Otherwise, we will adopt the agency's finding as
EEOC's and close your case.
NOTICE OF NON-RETALIATION REQUIREMENTS
SECTION 704(a) of the Civil Rights Act of 1964, as amended, and Section 4(d) of
the Age Discrimination in Employment Act, as amended, state:
It shall be an unlawful employment practice for an employer to
discriminate against any of his employees or applicants for employment, for an
employment agency to discriminate against any individual, or for a labor
organization to discriminate against member thereof or applicant for membership,
because he has opposed a practice made an unlawful employment practice by
[ILLEGIBLE] title or because he has made a charge, testified, assisted, or
participated in any manner in an investigation, proceeding, or [ILLEGIBLE] under
this title.
The Equal Pay Act of 1963 contains similar provisions. Persons filing charges of
discrimination are advised of these Non-[ILLEGIBLE] Requirements and are
instructed to notify EEOC if any attempt at retaliation is made.
115
Feb 12 11:34 1999 CP Initials RB Chg #, Attachment Page 1
-----------------------------------------------------------------------
Equal Employment Opportunity Commission
Form 5 - Charge of Discrimination, Additional Text
------------------------------------------------------------------------
E. To my knowledge, most of the employees in current work force
of this company are much younger than I am.
MY NAME MAY BE USED IN THE PROCESSING OF THIS CHARGE.
116
[SEAL]
[U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION LETTERHEAD]
NOTICE TO RESPONDENT
The Equal Employment Opportunity Commission (EEOC) Denver District Office
(DENDO) requests that you provide a copy of your position statement and any
non-confidential exhibits referenced in your position statement to the Charging
Party and or his/her attorney if applicable. Please furnish with your response
to EEOC a certificate of service, confirming the date you provided the position
statement to the Charging Party.
Part of the EEOC's investigative process is to provide to the Charging Party a
copy of the position statement to review and the opportunity to rebut any
material presented. A copy of the position statement will be sent to the
Charging Party if one is not provided by your organization. Charging Party's
response to this material, or lack of response, will be used in determining
what further investigation is warranted.
Thank you for your cooperation.
SUPERVISOR, CHARGE RECEIPT
TECHNICAL INFORMATION UNIT (CRTIU)
DENDO
117
--------------------------------------------------------------------------------
Equal Employment Opportunity Commission
REQUEST FOR INFORMATION
--------------------------------------------------------------------------------
Chg. Party: ▇▇▇▇▇▇▇▇, ▇▇▇▇ E
Respondent: Convergent Group
Charge No.:
1. Give the correct name and address of the facility named in the charge.
2. Submit a written position statement on each of the allegations of the
charge, accompanied by documentary evidence and/or written statements,
where appropriate. Also include any additional information and
explanation you deem relevant to the charge.
3. Submit copies of all written rules, policies and procedures relating to
the issue(s) raised in the charge. If such does not exist in written
form, explain the rules, policies and procedures.
Issue: HIRING
1. Submit a copy of your hiring policies. If actual hiring practice is
different from the written policy, describe actual practice.
2. Describe in detail the method(s) used by your organization to receive,
screen, and process applications for employment for the position in
question. Your description should include, but not be limited to, the
following information:
a. the manner in which persons are recruited for the position in
question,
b. the manner in which a person is determined to be an applicant
for the position,
c. whether applications are solicited or accepted whether or not
vacancies exist for the position,
d. the time period for which applications are considered active
and the time period for which applications are retained,
e. the forms of written documentation used which reflect the
solicitation, receipt and processing of an application,
f. how applications for the position are reviewed for the purpose
of selecting an applicant. Include the name, position, and
date of birth of person(s) responsible, and
g. whether applicants are interviewed during the application
process and if so, by whom (include name, position, and date
of birth of individual(s)).
3. Provide the total number of applications received for the position in
question during the relevant period. Submit copies of all applications
and other records received from prospective employees.
4. State whether the charging party applied for the position in question
during the relevant period. If yes, for each time the charging party
did apply, include the following:
a. the date of and the nature of application, whether written or
oral,
b. a copy of the application and/or resume filed by the charging
party and/or any other notation made during the processing of
the charging party's application,
c. the exact job title and job grade or wage level sought by the
charging party, and
d. whether the charging party sought full-time, part-time,
temporary, seasonal or other type of employment.
5. State whether the charging party was considered for the position. If
your answer is no, state each reason why the charging party was not
considered
118
for the position.
6. State whether the position in question was filed during the relevant
period. If your answer is yes, provide the following for each person
selected for the position:
a. name, and date of birth
b. the date of and the nature of application, whether written or
oral,
c. a copy of the application and/or resume filed by the charging
party and/or any other notation made during the processing of
the charging party's application,
d. the date on which the person applied for or otherwise
indicated interest in the position,
e. the job title, and job grade or wage level for which the
person was hired, and
f. the date the person was hired and whether hired as full-time,
part-time, temporary, seasonal or other.
7. State each and every reason why the charging party was not selected for
the position in question. Provide any written documents which reflect
the bases of the decision not to select the charging party. For each
person involved in the decision not to select the charging party, list
their name, position, and date of birth
8. State each and every reason why you contend the person(s) selected for
the position was/were selected instead of the charging party. Provide
any written documents which reflect the bases of your decision to
select those persons who were hired into the position.
9. List all persons hired during the relevant period, including name, hire
date, position applied for, position hired to, and date of birth
119
[HOLLAND & ▇▇▇▇ LLP LETTERHEAD]
April 15, 1999
VIA HAND DELIVERY
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Compliance Manager
Equal Employment Opportunity Commission
Denver District ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and Convergent Group Corporation
Charge No. 320990415
Dear ▇▇. ▇▇▇▇▇:
This will constitute the position statement and response to request for
information of Respondent Convergent Group Corporation ("Convergent Group" or
"the Company") with respect to the above-captioned charge of discrimination.
Thank you for your cooperation in allowing Convergent Group an extension of time
to respond.
Charging Party ▇▇▇▇ ▇▇▇▇▇▇▇▇ filed his charge of discrimination on or
about February 12, 1999, alleging that Convergent Group failed to hire him for
the position of "Buyer" because of his age, 53 (DOB 5/25/45). ▇▇▇▇▇▇▇▇ alleges
that the duties and responsibilities of the job were the same as what he had
performed during his previous employment with the Company as a purchasing
manager, from which he was laid off in 1996. In fact, the job duties and
responsibilities for the position of Technical Purchasing Agent, the position in
question, were substantially different from ▇▇▇▇▇▇▇▇'▇ prior position with
Convergent Group. The Technical Purchasing Agent position required not only
purchasing experience, which ▇▇▇▇▇▇▇▇ possessed, but also technical expertise in
configuring computer systems, which ▇▇▇▇▇▇▇▇ lacked. Because he did not have the
technical qualifications for the position, ▇▇▇▇▇▇▇▇ was not interviewed or
selected. Instead, the position went to a more-qualified candidate, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇.
The Company denies that age played any role in the consideration of the
candidates for the Technical Purchasing Agent position, and further denies that
▇▇▇▇▇▇▇▇
120
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ 15, 1999
Page 2
was not selected because of his age or that it unlawfully discriminated against
him in any way because of his age.
By way of background, Convergent Group is North America's largest
spatial systems integration and consulting firm. The Company partners with
electric, gas, and waste/wastewater utilities and city/county government clients
to provide value-added project management and consulting services in the areas
of geographic information systems, outage management systems, work management
systems, computer-aided dispatch/mobile data terminal, engineering analysis, and
related spatial information and management technologies. Convergent Group has
approximately 220 employees at present and is headquartered in Englewood,
Colorado.
▇▇▇▇▇▇▇▇ was employed by Convergent Group from October 1, 1993 until
March 29, 1996 in the position of Purchasing Manager. (Prior to October 1, 1993,
▇▇▇▇▇▇▇▇ had been employed with GDS, which was acquired by Convergent Group.) In
his Purchasing Manager position, ▇▇▇▇▇▇▇▇'▇ job duties and responsibilities were
restricted to purchasing activities, and he performed these activities in a
satisfactory manner. However, effective as of March 29, 1996, his position was
eliminated as part of a larger reduction in force. In all, 36 employees were
laid off at that time. ▇▇▇▇▇▇▇▇, as with the other laid-off employees, received
a severance package from Convergent Group.
During the Fall of 1998, it was determined that the Company had need
for a new position, Technical Purchasing Agent. Because of changes in the nature
of the Company's business, Convergent Group found itself needing to purchase
more hardware and software as part of the services being provided to its
clients. The new position required not only purchasing experience, but also the
ability to configure PC's and servers.(1) The position description for the new
Technical Purchasing Agent position is attached to the Hiring Requirement Form,
dated November 5, 1998, which is attached hereto as Exhibit A. Note especially
that the position description for Technical Purchasing Agent includes as job
responsibilities "[r]eviews hardware configurations provided by technical staff
with 3rd party planners or vendors" and that the education/experience
requirements include "developing technical specifications for hardware, or at a
minimum, working with a set of requirements to determine configurations with
vendors."
-----------------
(1) A Convergent Group employee, ▇▇▇ ▇▇▇▇▇▇▇▇▇, had previously
performed in a somewhat similar role, including configuring systems, but he
voluntarily resigned from the Company during 1997. His job title was Manager,
Systems Distribution Installation.
121
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ 15, 1999
Page 3
The Technical Purchasing Agent position was posted, internally and
externally, on the Internet. A copy of the posting, dated November 5, 1998, is
attached hereto as Exhibit B.
One of the Company's primary sources of candidates for technical
positions is an outside recruitment firm, State of the Art Recruiting, Inc. In
this case, on November 16, 1998, ▇▇▇▇▇ ▇▇▇▇▇▇, owner of State of the Art,
provided a summary sheet briefly describing five potential candidates, together
with their resumes. See Exhibit C attached hereto.(2) After reviewing the
resumes, ▇▇▇▇▇ ▇▇▇▇, Vice President and General Manager, Applications and
Technology, determined to schedule personal interviews with two of the
candidates, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇. Both candidates were interviewed
by ▇▇▇▇ and his team on November 19, 1998. At that time, consistent with Company
policy, the candidates each filled out an employment application, an affirmative
action questionnaire, and a release form. These materials, as well as some of
the interviewers' notes for ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, are attached hereto as Exhibits
D and E, respectively.(3) Following the interviews, ▇▇▇▇▇▇▇ was selected for the
position, in large part because of his experience in configuring PC's and
servers.
▇▇▇▇▇▇▇▇ did not formally apply for the Technical Purchasing Agent
position. However, he learned of the opening from his friend, ▇▇▇ ▇▇▇▇▇, a
current employee of Convergent Group. ▇▇▇▇▇▇▇▇ faxed his resume to Preis, who,
in turn, forwarded it to ▇▇▇▇▇▇▇▇▇▇, who reported to ▇▇▇▇ and who was, together
with ▇▇▇▇, one of the key decisionmakers for the hiring decision. ▇▇▇▇▇▇▇▇▇▇ did
not know ▇▇▇▇▇▇▇▇ as she had joined Convergent Group after ▇▇▇▇▇▇▇▇ was gone.
She reviewed his resume and discussed it with ▇▇▇▇. ▇▇▇▇▇▇▇▇▇▇ determined that
▇▇▇▇▇▇▇▇ lacked the technical qualifications for the position. He had
substantial purchasing experience, but he did not have experience in technical
configuration of systems. ▇▇▇▇ had known ▇▇▇▇▇▇▇▇ from his previous employment
with Convergent Group, and regarded him as a good person and a good employee,
but he agreed with ▇▇▇▇▇▇▇▇▇▇ that ▇▇▇▇▇▇▇▇ lacked the technical qualifications
for the job. Thus, ▇▇▇▇▇▇▇▇ was not selected for an interview or given further
consideration for the Technical Purchasing Agent position.
In the meanwhile, ▇▇▇▇▇▇▇▇ contacted several persons within Convergent
Group to check on the status of his "application." For example, he called
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Manager,
----------
(2) Exhibit C includes the Technical Purchasing Agent Candidate Overview,
together with the resumes of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇,
the resumes of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇, the two candidates interviewed
by the Company, are included in Exhibits D and E, infra.
(3) ▇▇▇▇'▇ interview notes for ▇▇▇▇▇▇▇ and those of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Manager,
Technical Operations, for both ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, apparently were not
retained.
122
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ 15, 1999
Page 4
Corporate Benefits and Employee Relations, to ask if he was being considered for
the position. ▇▇▇▇▇ checked with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Manager, Human Resources, who
was and is in charge of the Company's recruiting efforts. ▇▇▇▇▇▇▇▇▇ did not have
a record of having received a resume from ▇▇▇▇▇▇▇▇ (as Preis had forwarded it
directly to ▇▇▇▇▇▇▇▇▇▇). ▇▇▇▇▇▇▇▇▇ checked with the hiring manager, ▇▇▇▇, and
also with ▇▇▇▇▇ ▇▇▇▇▇▇, Chief Financial Officer of Convergent Group. They agreed
that ▇▇▇▇▇▇▇▇'▇ job skills and experience were simply not a good match with the
requirements of the position.(4)
▇▇▇▇▇▇▇▇ also attempted to contact ▇▇▇▇ ▇▇▇▇▇▇▇, Executive Vice
President, Consulting Business Development, and the former President of GDS, the
Convergent Group subsidiary for whom ▇▇▇▇▇▇▇▇ had worked previously. Eventually,
after a series of internal communications between and among ▇▇▇▇▇▇▇, Schley,
Tidd, McAllister, Kirby, and ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ was asked to call ▇▇▇▇▇▇▇▇ and
inform him that he had not been selected for the position.
In his charge, ▇▇▇▇▇▇▇▇ alleges, in Section I, that "[o]n December 2,
1998, I was informed that I had not been hired for the position Buyer," and, in
Section III.B, that "[t]he duties and responsibilities of the buyer's job for
which I was applying appeared to [be] the same as those I performed during
previous employment with this Company as the purchasing manager." ▇▇▇▇▇▇▇▇ is
simply wrong with respect to these matters; the Technical Purchasing Agent
position was not the same as his prior Purchasing Manager position. ▇▇▇▇▇▇▇▇ did
not have the experience in configuring systems that the new position required.
That, not his age, was the reason why he was not interviewed or selected.
It is somewhat curious that ▇▇▇▇▇▇▇▇ believes that his rejection for
the Technical Purchasing Agent position was due to age discrimination. Following
his layoff in March 1996, but prior to November 1998, ▇▇▇▇▇▇▇▇ had applied for
two other positions with Convergent Group, without success. During the Spring of
1997, he applied for the position of Business Relations Analyst, a position
which had been formerly held by ▇▇▇▇▇▇ ▇▇▇▇▇. His skills and experience did not
match those required for the position and he was not hired for the job.
Similarly, in March of 1998, ▇▇▇▇▇▇▇▇ informally expressed interest, via Preis,
in the Production Room Manager position, which had been formerly held by ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇. After Preis discussed the position with ▇▇▇▇▇▇▇▇▇, who was
primarily responsible for filling the position, ▇▇▇▇▇▇▇▇ did not submit his
resume or otherwise formally apply for the job. Significantly, ▇▇▇▇▇▇▇▇ did not
complain that his
----------
(4) ▇▇▇▇▇▇ was generally familiar with ▇▇▇▇▇▇▇▇'▇ performance as an employee of
Convergent Group, as he had overall responsibility for ▇▇▇▇▇▇▇▇'▇ department. In
fact, after ▇▇▇▇▇▇▇▇ was laid off, ▇▇▇▇▇▇ had written a letter of recommendation
for ▇▇▇▇▇▇▇▇.
123
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▇▇▇▇▇ 15, 1999
Page 5
failure to be hired for either of these positions constituted age discrimination
on the part of Convergent Group(5).
In Section II of the charge, ▇▇▇▇▇▇▇▇ alleges that he was told (by some
unnamed source) that the Company was looking for a "more junior" person.
Convergent Group does not know who is supposed to have made such a statement,
but it denies that any such statement was, in fact, made by anyone. ▇▇▇▇▇▇▇▇ did
ask ▇▇▇▇▇▇▇▇▇ what the job paid, to which she replied that the range for the
position was $35-45,000, again, substantially less than the $60,000 per year
which ▇▇▇▇▇▇▇▇ had been paid at the time he was laid off in 1996.
In Section III.C of the charge, ▇▇▇▇▇▇▇▇ alleges that he received
"excellent reports on [his] job performance during [his] prior employment." The
Company does not dispute that ▇▇▇▇▇▇▇▇ was a good employee during his prior
employment; however, such fact is not particularly relevant to the present case,
as ▇▇▇▇▇▇▇▇ was laid off in March of 1996 because his position was eliminated.
He was not terminated for poor performance, nor does the Company contend that he
was not rehired because of past poor performance.
In Section III.D, the Charging Party alleges that a 35-year old was
hired for the position, and, in Section III.E, he alleges that "[t]o my
knowledge, most of the employees in [the] current workforce of this Company are
much younger than I am." While it is true that ▇▇▇▇▇▇▇ was 35 years old at the
time he was hired (DOB 11/4/63), the principal decisionmakers with respect to
the hiring decision were ▇▇▇▇▇▇▇▇▇▇ (DOB 6/22/45), who is almost exactly the
same age as ▇▇▇▇▇▇▇▇ (DOB 5/25/45), and ▇▇▇▇ (DOB 8/9/51), who was 47 years old
at the time. Moreover, Charging Party's allegation that most of Convergent
Group's workforce is younger than him is not particularly relevant to the
individual hiring decision which is at issue in this matter; indeed, such is
probably true for most workplaces in this country and in no way evidences age
discrimination on their part or the part of Convergent Group.
The fact that Convergent Group does not discriminate against older
workers is demonstrated by its treatment of ▇▇▇▇▇ ▇▇▇▇▇▇ (DOB 10/10/47), an
employee who, like ▇▇▇▇▇▇▇▇, was laid off in the March 29, 1996 reduction.
▇▇▇▇▇▇ was a Credit Manager and, in fact, worked next to ▇▇▇▇▇▇▇▇. After the
layoff, the Company realized that it needed ▇▇▇▇▇▇'▇ skill set, but only on a
part-time basis, and thus, he was hired to perform such services and continued
to do so until late in 1998. This example clearly illustrates
----------
(5) It is interesting to note that both of these jobs paid in the mid-$30,000
range, far less than ▇▇▇▇▇▇▇▇'▇ former salary with Convergent Group ($60,000).
124
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ 15, 1999
Page 6
that Convergent Group is interested in the skills and experience its employees
bring to the company, not their age.
In conclusion, as is readily apparent on the face of his charge,
▇▇▇▇▇▇▇▇ is under the mistaken impression that the Technical Purchasing Agent
position was the same as the one which he had previously held with the Company.
As can be seen, such was simply not the case. ▇▇▇▇▇▇▇▇ was not qualified for the
new position because he lacked the key requisite of having technical experience
in configuring PC's and servers. It was for this reason, not his age, that he
was not selected for the position. Thus, ▇▇▇▇▇▇▇▇'▇ charge of age discrimination
is without merit and should be dismissed.
Convergent Group's response to the Commission's request for information
is enclosed. It is our intent to cooperate with the Commission's investigation
of this charge in every reasonable manner. If you have any further questions or
need any additional information, please do not hesitate to contact me.
We look forward to a prompt conclusion of the investigation and to the
Commission's dismissal of this charge.
Sincerely,
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
of Holland & ▇▇▇▇ LLP
Attorneys for Respondent
Convergent Group Corporation
JTJ:vf
Enclosures
bcc: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
125
RESPONSE TO REQUEST FOR INFORMATION
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ v. Convergent Group Corporation
Charge No. 320990415
Request No. 1: Give the correct name and address of the facility named in
the charge.
Response to Request No. 1: Convergent Group Corporation, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Request No. 2: Submit a written position statement on each of the
allegations of the charge, accompanied by documentary evidence and/or written
statements, where appropriate. Also include any additional information and
explanation you deem relevant to the charge.
Response to Request No. 2: See position statement.
Request No. 3: Submit copies of all written rules, policies and procedures
relating to the issue(s) raised in the charge. If such does not exist in written
form, explain the rules, policies and procedures.
Response to Request No. 3: Convergent Group does not have written
rules, policies, or procedures relating to the hiring process. See position
statement.
ISSUE: HIRING
Request No. 1: Submit a copy of your hiring policies. If actual hiring
practice is different from the written policy, describe actual practice.
Response to Request No, 1: See Response to Request No. 3, supra.
Request No. 2: Describe in detail the method(s) used by your organization
to receive, screen, and process applications for employment for the position in
question. Your description should include, but not be limited to, the following
information:
a. the manner in which persons are recruited for the position in
question,
b. the manner in which a person is determined to be an applicant for the
positions,
C. whether applications are solicited or accepted whether or not
vacancies for the position,
126
d. the time period for which applications are considered active and the
time period for which applications are retained,
e. the forms or written documentation used which reflect the
solicitation, receipt and processing of an application,
f. how applications for the position are reviewed for the purpose of
selecting an applicant. Include the name, position, and date of birth
of person(s) responsible, and
g. whether applicants are interviewed during the application process and
if so, by whom (include name, position, and date of birth of
individual(s)).
Response to Request No. 2: See position statement.
Request No. 3: Provide the total number of applications received for the
position in question during the relevant period. Submit copies of all
applications and other records received from prospective employees.
Response to Request No. 3: See position statement and exhibits thereto.
Note that Convergent Group received five resumes from State of the Art
Recruiting, Inc., as well as the Charging Party's resume, which he submitted
informally through a Convergent Group employee, Preis. Application forms were
completed only by the two employees who were interviewed for the Technical
Purchasing Agent position, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇.
Request No. 4: State whether the charging party applied for the position in
question during the relevant time period. If yes, for each time the charging
party did apply, include the following:
a. the date of and the nature of application, whether written or oral,
b. a copy of the application and/or resume filed by the charging party,
and/or any other notations made during the processing of the charging
party's application,
c. the exact job title and job grade or wage level sought by the charging
party, and
d. whether the charging party sought full-time, part-time, temporary,
seasonal or other type of employment.
Response to Request No. 4: See position statement. Charging Party did
not formally "apply" for the position by submitting his resume to the
Convergent Group Human Resources Department. However, his resume was
considered by the primary decisionmakers, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇. The Company
has been unable to locate a copy of the resume submitted by Charging Party.
Request No. 5: State whether the charging party was considered for the
position. If your answer is no, state each reason why the charging party was not
considered for the position.
2
127
Response to Request No. 5: Yes. See position statement.
Request No. 6: State whether the position in question was filed during the
relevant period. If your answer is yes, provide the following for each person
selected for the position:
a. name, and date of birth,
b. the date of and the nature of application, whether written or oral,
c. a copy of the application and/or resume filed by the charging party
and/or any other notation made during the processing of the charging
party's application,
d. the name on which the person applied for or otherwise indicated
interest in the position,
e. the job title, and job grade or wage level for which the person was
hired, and
f. the date the person was hired and whether hired as full-time,
part-time, temporary, seasonal or other.
Response to Request No. 6: See position statement.
Request No. 7: State each and every reason why the charging party was not
selected for the position in question. Provide any written documents which
reflect the bases of the decision not to select the charging party. For each
person involved in the decision not to select the charging party, list their
name, position, and date of birth.
Response to Request No. 7: See position statement.
Request No. 8: State each and every reason why you contend the person(s)
selected for the position was/were selected instead of the charging party.
Provide any written documents which reflect the bases of your decision to select
those persons who were hired into the position.
Response to Request No. 8: See position statement.
Request No. 9: List all persons hired during the relevant period, including
name, hire date, position applied for, position hired to, and date of birth.
Response to Request No. 9: See Exhibit F attached hereto.
3
128
EXHIBIT 4.1.8 - ADVERSE AGREEMENTS
None.
1
129
EXHIBIT 4.1.9 - TAXES
The Borrower has requested extensions of time within which to file its U.S.
Corporation Income Tax Return (consolidated) and separate company and
consolidated/combined state income tax returns for the fiscal year ended
December 31, 1998. These returns have not been filed, however, are expected to
be filed within the time prescribed for filing as required by the extended due
dates. See Schedule attached for list.
Graphic Data Systems Corporation's December 31, 1993 Form 1120, U.S. Corporation
Income Tax Return was examined by the Internal Revenue Service and adjustment
made in the amount of $131,237.00 reducing expenses claimed for that year. The
Borrower, proposing the adjustment to the Internal Revenue Service which
represented a mistake in the return, as originally filed, agreed with the final
Internal Revenue Agent's adjustment and reduced the net operating loss carry
forward accordingly for tax return purposes.
The Borrower's records do not reflect the performance of a study to limit the
annual utilization of tax net operating losses pursuant to Internal Revenue Code
Section 382 which was brought forward and present at the time Convergent Group
Corporation was formed on April 9, 1994. The tax net operating loss brought
forward from that date will be utilized in the December 31, 1998 U.S.
Consolidated Federal Income Tax Return of Convergent Group Corporation.
Management believes that any adjustment to the net operating loss available
for use in the December 31, 1998 return, if any, would be nominal.
The Borrower presently recognizes potential exposures to tax and or tax
penalties in the following areas:
For the fiscal years 1993 and 1996, Convergent Group Ltd. (Canada) failed
to file timely Form T106, Information Return. The Canadian tax authority
(Revenue Canada) assessed penalty and interest in the total amount of
Can$6,113.69. The penalty and interest for 1993 was successfully abated,
reducing the outstanding penalty and interest by Cad$3,485.60 to Can$2,628.09.
A request for the abatement of this amount has been submitted to Revenue Canada,
with response pending.
For the fiscal year 1997, GDS Ltd. (United Kingdom), failed to file Form
CT200, Corporation Tax Return. GDS Ltd. expects the return to reflect a net
operating loss for such period and therefore, no taxes will be due with the
return. The Inland Revenue may assess penalties of up to 100 British Pounds for
each month the return is late. GDS Ltd. has not received notice of such
assessment and believes it has meritorious defense to such assessment.
In connection with the Borrower's discontinuance of GDS Ltd.'s operations
in the United Kingdom, employees were notified of the discontinuance and
provided notice of
130
separation and severance during January 1997. Administrative personnel
performance subsequent to the notification resulted in misplacement of certain
documents related to its transactions with branch operations in Europe. GDS
Ltd.'s ability to substantiate income and expense transactions with its European
branch operation in France could be questioned by the Inland Revenue and expense
items disallowed. Management believes that any adjustment would result in
nominal, if any, additional income tax expense in the United Kingdom.
GDS Ltd. received notice from Tresor Public with regard to outstanding
Business Privilege tax due for the fiscal years 1995 and 1997 in the total
amount of FF 191.591, including penalty and interest. FF 31,963 of this amount
has been satisfied with the remaining balance of FF 159,628 outstanding. The
assessment related to 1997 was based upon the tax authority's estimate of tax
due. No return for fiscal 1997 was prepared due to lack of complete records
related to the French branch operation for that year. (The records were
maintained in the United Kingdom and were misplaced or inadvertently destroyed
during the reduction in the GDS Ltd.'s operations in that country.) GDS Ltd.
does not believe an assessment of Business Privilege tax for 1997 is appropriate
due to losses realized during that year and has no record of the original 1995
return or assessment notice.
California has recently notified the Borrower that minimum franchise tax
related to prior periods is outstanding. California appears to have misapplied
franchise tax paid during and prior to the organization of the consolidated
group in fiscal 1994 and the Borrower has responded to the State on this basis.
A response has not been received. The Borrower believes the exposure to
additional tax and penalty to be nominal.
The filing of the Form 5500 for the CVG Health and Welfare Plan for the
calendar years 1995, 1996, 1997 and 1998 are delinquent, and the maximum penalty
for such late filings is estimated to be from $15,000 to $20,000.
-------------------
LIST OF FEDERAL AND
STATE TAX RETURNS
ON EXTENSION FOR
1998
JURISDICTION-ENTITY:
--------------------
Alabama-CVG Michigan-GDS
Alabama-UGC Michigan-UGC
Alaska-GDS Minnesota-CVG
Arizona-CVG Mississippi-UGC
Arizona-GDS Missouri-GDS
Arizona-UGC Nebraska-CVG
Arkansas-GDS Nebraska-GDS
131
California-CVG New Hampshire-CVG
California-GDS New Hampshire-GDS
California-UGC New Jersey-GDS
Colorado-CVG New Jersey-UGC
Colorado-GDS New York-CVG
Connecticut-GDS New York-GDS
Delaware-GDS N. Carolina-CVG
Dist. of Columbia-GDS N. Carolina-UGC
Florida-CVG N. Carolina-GDS
Florida-GDS Ohio, Columbus-CVG
Florida-UGC Ohio, Columbus-GDS
Georgia-GDS Ohio, Columbus-UGC
Georgia-UGC Ohio-GDS
Hawaii-CVG Ohio-UGC
Hawaii-UGC Oklahoma-CVG
Illinois-CVG Oklahoma-GDS
Illinois-GDS Oklahoma-UGC
Indiana-CVG Oregon-CVG
Indiana-GDS Oregon-GDS
Indiana-Partner Oregon, Portland-CVG
Iowa-CVG Pennsylvania-GDS
Iowa-UGC Rhode Island-GDS
Kansas-GDS S. Carolina-GDS
Kentucky-CVG S. Carolina-UGC
Kentucky-GDS Tennessee-GDS
Kentucky-UGC Tennessee-UGC
Louisiana-CVG Texas-CVG
Louisiana-GDS Texas-GDS
Maine-CVG Texas-UGC
Maine-GDS Virginia-GDS
Maryland-CVG Virginia-UGC
Maryland-GDS Washington-GDS
Maryland-UGC Wisconsin-CVG
Massachusetts-GDS Wisconsin-GDS
Michigan-CVG Wisconsin-UGC
FEDERAL RETURNS:
----------------
Federal-Partnership Form Convergent Group
1065 Partnership
Federal-Consolidated Form Convergent Group
1120 Corporation
132
\
EXHIBIT 4.1.11 - REAL PROPERTY
The Borrower leases real property at the following locations:
1. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(Leased through September 30, 1999)
2. Fiddler's Green Center Building I
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(Lease estimated to commence September 24, 1999)
3. ▇▇▇▇▇▇ ▇▇▇▇▇ Storage
▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇
4. Arapahoe and ▇▇▇▇▇ Storage
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
5. ▇▇▇▇▇▇▇▇▇ & Associates (Apartment)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
6. JPI Executive Quarters (Apartment)
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. #▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
7. Globe Corporate Stay (Apartment)
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
8. Globe Corporate Stay (Apartment)
▇▇▇▇ ▇-▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
9. Globe Corporate Stay (Apartment)
▇▇▇▇ ▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
10. Globe Corporate Stay (Apartment)
▇▇▇▇ ▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
133
EXHIBIT 4.1.17 - GOVERNMENTAL PERMITS
None.
1
134
EXHIBIT 4.1.17 - GOVERNMENTAL PERMITS
None.
135
EXHIBIT 4.1.20 - COPYRIGHTS
The Borrower has not filed any Copyright Registration Statements.
136
EXHIBIT 4.1.21 - HAZARDOUS WASTE
None.
137
EXHIBIT 4.1.22 - MATERIAL CONTRACTS
Employment Agreements
Employment Agreement between Convergent and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ dated
December 31, 1997 (to be terminated at closing).
1996-97 Deferred Payment Agreement between Convergent and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇. dated December 31, 1997.
Employment Agreement between Convergent and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated
December 31, 1997 (to be terminated at closing).
1996-97 Deferred Payment Agreement between Convergent and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ dated December 31, 1997.
Employment Agreement between Convergent and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ dated
December 31, 1997 (to be terminated at closing).
1996-97 Deferred Payment Agreement between Convergent and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ dated December 31, 1997.
Consulting Agreement among Convergent, Convergent Associates and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ dated January 1, 1997 (to be amended at closing).
Amended and Restated Employment Agreement between Convergent and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated February 1, 1997 (terminates January 31, 2000).
Employment Agreement between Convergent and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated May
31, 1999.
Letter Agreement between Convergent and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated June 1,
1998.
Separation Agreement and Release between Convergent and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
dated March 30, 1999.
Compensation Plan between Convergent and ▇▇▇▇▇▇ Oxbrow dated January 1,
1999.
Compensation Plan between Convergent and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ dated
January 1, 1999.
Employment Letter Agreement and Nondisclosure, Invention Assignment and
Non Compete Agreement between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and Graphic Data Systems.
138
Indemnification Agreements between Convergent and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ dated February 24, 1997.
Agreements
a. Set forth below are material contracts of the Borrower with a remaining
value of $1,000,000 in any given calendar year or greater period of time.
The Borrower is not making any representation or warranty that any of the
contracts listed in this Item g will involve an aggregate consideration in
excess of $1,000,000. (NOTE: By agreement with the Investors, amendments to
the contracts have not been separately listed.)
1. Master Agreement between Cinergy Services, Inc. and Convergent Group
Corporation (CVG No. U159) dated July 10, 1997.
2. UGC General Partnership 1 Software maintenance and Support Agreement
for Master Agreement U159 between Cinergy Services, Inc. and UGC
General Partnership 1 dated April 3, 1998.
3. Agreement between SigCorp, Inc. and UGC General Partnership 1 (CVG No.
U166) dated September 3, 1997.
4. UGC General Partnership 1 Hardware and Software Maintenance and
support Agreement between UGC General Partnership and Sigcorp, Inc.
dated June 11, 1998.
5. Smallworld Software Product and Support Agreement between Smallworld
Systems, Inc. and Convergent Group Corporation dated November 6, 1997.
6. Agreement between Citizens Utilities Company and Convergent Group
Corporation (CVG No. U181) dated September 15,1997.
7. Convergent Group Software Maintenance and Support Agreement between
Convergent Group Corporation and Citizens Utilities Company dated
December 15, 1997.
8. Smallworld Software Product Maintenance and Support Agreement between
Smallworld Systems, Inc. and Convergent Group Corporation dated
November 24, 1997.
139
9. Agreement between The Regis Agency and Convergent Group Corporation
(CVG No. U226) dated November 24, 1998.
10. Agreement between IES Industries, Inc. and Convergent Group
Corporation (CVG No. U109) dated August 21, 1996.
11. Convergent Group Software and Maintenance support Agreement between
Convergent Group Corporation and IES Industries dated August 25, 1997.
12. Software Services Agreement between Mobile Data Solutions, Inc. and
Convergent Group Corporation dated February 3, 1998.
13. Smallworld Systems Product Maintenance and Support Agreement between
Smallworld Systems, Inc. and Convergent Group Corporation dated May
30, 1997.
14. Software Maintenance Agreement between ▇▇▇▇▇▇ ▇▇▇▇▇ Systems and
Convergent Group Corporation dated September 21, 1997.
15. Consultant Agreement between City of Columbus, Ohio and Utility
Graphics Consultants Corporation dated June 29, 1995, as amended by
Amendment 3, dated March 31, 1999.
16. Agreement between Piedmont Natural Gas Company and Convergent Group
Corporation (CVG No. U283) dated June 3, 1999.
17. Agreement between Central Illinois Light Company and Convergent Group
Corporation (CVG No. U206) dated June 9, 1998.
18. Software Maintenance and Support Agreement between Convergent Group
Corporation and Central Illinois Light Company dated January 27, 1998.
19. Subcontractor Agreement between UGC General Partnership 1 and SCT
Software and Resource Management Corporation, dated March 7, 1997.
20. Subcontract Agreement between Smallworld Systems Canada, Ltd. and
Convergent Group, Ltd. for Ontario Hydro (CVG No. U256) dated June
30,1999.
21. Convergent Group Software Maintenance And, Support Agreement between
Convergent Group Corporation and Kentucky Utilities, dated December
12, 1997.
22. Agreement for Services between City of Portland, Oregon and Convergent
Group Corporation, dated July 22, 1998.
140
23. Letter Agreement between Analytical Surveys, Inc. and Convergent Group
Corporation, dated March 31, 1999.
24. Subcontract Agreement between Convergent Group Corporation and MSE
Corporation dated August 14, 1997, for Cinergy Services, Inc.
25. Subcontractor Agreement between Convergent Group Corporation and MSE
Corporation for IES Industries Data Conversion dated December 30,
1996.
26. Subcontractor Agreement between Convergent Group Corporation and
Analytical Surveys, Inc. for Central Illinois Light Company dated
September 29, 1998.
27. Subcontractor Agreement between Utility Graphics Consultants
Corporation and BBS Corporation for City of Columbus dated March 5,
1998.
28. Subcontractor Agreement between UGC General Partnership 1 and
Analytical Surveys, Inc. for Sigcorp, dated September 23, 1997.
29. Subcontractor Agreement between Convergent Group and Analytical
Surveys, Inc. for Citizens Utilities, dated September 30, 1997.
b. The following contracts have a minimum purchase obligation in excess of
$50,000 per year:
1. Office lease between Fiddlers Green Center and Convergent Group
Corporation dated August 28, 1998.
2. Master Equipment Lease Agreement between Convergent Capital Corporation
and Convergent Group Corporation dated June 10, 1999.
3. Acceptance by Convergent Group Corporation, dated May 26, 1999, of the
Network Design Systems, Inc. Proposal dated May 4, 1999 relating to cabling
for the new location.
4. Acceptance by Convergent Group Corporation, dated May 24, 1999, of the
RIA Corporation Proposal dated May 14, 1999 relating to audiovisual for new
location.
5. Lease Agreement between Utility Graphics Consultants Corporation and
Xerox, dated December 27,1997.
141
6. MCI WorldCom Flex T1 Internet Agreement, dated May 18, 1999.
7. Acceptance by Convergent Group Corporation, dated May 26, 1999, of the
Proposal of Local Area Network Technologies, Inc. dated May 25, 1999,
relating to the LAN for the new location.
8. Hewlett Packard Equipment Lease.
9. Acceptance by Convergent Group Corporation, dated May 28, 1999, of the
Indoff proposal relating to modular furniture.
c. The following contracts prohibit the Company freely engaging in business:
1. Voyageur Technology Transfer, Business Partner Program and Joint
Marketing Agreement between Convergent Group Corporation and
Environmental Systems Research Institute, Inc. dated March 10, 1997.
2. Software License Purchase and Sale Agreement between Smallworld
Systems, Inc. and Convergent Group Corporation and Graphic Data
systems Corporation dated January 24, 1997.
3. World Class Partner Agreement between Smallworld Systems, Inc. and
Convergent Group Corporation dated May 23, 1997.
4. Account Specific Teaming Agreement between Smallworld Systems and
Convergent Group Corporation for Targeted Business Development dated
September 23, 1998.
5. Restructuring Agreement.
6. Agreement for Reorganization among the Company, GDS, UGC, Graphic Data
Systems Ltd., ARC Information Systems, Inc., Spatial Systems Nominees
Pty Ltd, Spatial Enterprise Systems Pty Ltd, Cadgraphics Australia Pty
Ltd, Convergent Group Asia Pacific Pty Ltd, and UGC Consulting Asia
Pacific Pty Ltd.
7. Informatix Maintenance Agreement.
8. Asset Purchase Agreement dated June 4, 1997 among Geopak
Transportation Management Systems, Inc., GDS and the Company.
142
EXHIBIT 4.1.23 - INTELLECTUAL PROPERTY
Intellectual Property
a. See attached list of filings.
b. The Borrower and its Subsidiaries have all Intellectual Property Rights
necessary or required for the conduct of the Subject Business as currently
conducted. In many cases, title to such Intellectual Property Rights are
held by third parties, as for example hardware or software used in the
conduct of the Subject Business or hardware or software which is re-sold or
re-licensed by the Borrower to its customers. Such Intellectual Property
Rights used in the conduct of the Subject Business are made available to
the Borrower under license or otherwise by agreement with such third party,
and the Borrower's rights are subject to the continuance of such licenses
or agreements. Moreover, since the Borrower's rights are often limited
under such licenses or agreement, the Borrower does not have the unimpaired
right to use, sell, license and dispose of or the right to bring actions
for the infringement of all Intellectual Property Rights necessary or
required for the conduct of the Subject Business.
Borrower, in its ordinary course of business, has developed custom software
which is too numerous to list separately.
c. The Borrower must pay a royalty to the following entities if the
Borrower resells the Intellectual Property developed specifically for
such entities:
1. The Regis Agency (only for sales within Michigan)
2. Riverside, California
3. Oshkosh, Wisconsin
4. Piedmont Natural Gas
d. The following entities own the Intellectual Property developed
specifically for such entities:
143
o City of Columbus
o City of Portland
e. Convergent and the Subsidiaries have granted interests in Intellectual
Property Rights to its customers in the ordinary course of business.
Convergent and the Subsidiaries have granted interests in Intellectual
Property Rights outside the ordinary course of business in connection with
the following agreements:
1) Voyageur Technology Transfer, Business Partner Program and Joint
Marketing Agreement between Convergent and Environmental Systems
Research Institute, Inc. dated March 10, 1997.
2) Agreement for Reorganization among the Borrower, GDS, UGC, Graphic
Data Systems Ltd., ARC Information Systems, Inc., Spatial Systems
Nominees Pty Ltd, Spatial Enterprise Systems Pty Ltd, Cadgraphics
Australia Pty Ltd, Convergent Group Asia Pacific Pty Ltd, and UGC
Consulting Asia Pacific Pty Ltd.
3) Software License Agreement between GDS and Geopak Transportation
Management Systems, Inc. dated June 4, 1997.
4) Agreement for Asset Transfer by and among CVG, GDS, GDSL and
Informatix Software International Limited and Informatix, Inc., dated
April 25, 1997.
5) Agreement for provision of Software Maintenance and Support Services
by and among CVG, GDS, GDSL and Informatix Software International
Limited, dated April 25, 1997 ("Informatix Maintenance Agreement").
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Trademark Registration Activities
August 6, 1999
------------------------------------------------------------------------------------------------------------------------
OWNER ▇▇▇▇ STATUS REG. NO. NEXT ACTION
H&H FILE NO. CLASS APP. NO. REG. DATE AND DEADLINE
APP. DATE RENEW DATE
-----------------------------------------------------------------------------------------------------------------------
Convergent Group Corp. CONVERGENT APPLICATIONS PENDING FILING RECEIPT PENDING
36139.840019.000 (0007) 09 and 42 75/736,274
06/24/99
-----------------------------------------------------------------------------------------------------------------------
Convergent Group Corp. CONVERGENT GROUP PENDING FILING RECEIPT PENDING
36139.840017.000 (0005) 09 and 42
07/22/99
-----------------------------------------------------------------------------------------------------------------------
Convergent Group Corp. CONVERGENT SOLUTIONS PENDING FILING RECEIPT PENDING
36139.840018.000 (0006) 09 and 42
07/22/99
-----------------------------------------------------------------------------------------------------------------------
Convergent Group Corp. ENOM PENDING FILING RECEIPT PENDING
36139.840020.000 (0008) 09
7/22/99
-----------------------------------------------------------------------------------------------------------------------
Convergent Group Corp. SOLUTIONS WORKBENCH PENDING FILING RECEIPT PENDING
36139.840014.000 (0003) 09 75/552,601
07/16/99
-----------------------------------------------------------------------------------------------------------------------
Convergent Group Corp. WHERE BUSINESS AND PENDING NOTICE OF PUBLICATION
TECHNOLOGY COME TOGETHER PENDING
36139.840015.000 (0002) 09 75/548,300
09/04/98
-----------------------------------------------------------------------------------------------------------------------
Convergent Group Corp. WHERE DO WE GROW FROM PENDING NOTICE OF ALLOWANCE
HERE PENDING
36139.840016.000 42 75/558,064
09/23/98
-----------------------------------------------------------------------------------------------------------------------
145
GRAPHIC DATA SYSTEMS CORPORATION
OWNER TRADEMARK REPORT BY ▇▇▇▇ PRINTED: 7/19/99 PAGE
STATUS: ACTIVE
COUNTRY REFERENCE# FILED APPL# REGDT REG# STATUS CLASSES
-------------------------------------------------------------------------------------------------------------
GDS
-----------------------------------------------------------------------------------------------------------------
FRANCE DL-M-55017 12/19/90 257,017 12/19/90 1,634,436 REGISTERED 09.16
09-ELECTRICAL AND SCIENTIFIC APPARATUS
16-PAPER GOODS
42-MISCELLANEOUS SERVICE MARKS
UNITED STATES DL-M-55016 8/3/92 74/300,345 8/3/93 1,786,297 REGISTERED 0
09-COMPUTER SOFTWARE IN THE FIELD OF FEATURE BASED GEOGRAPHIC INFORMATION SYSTMES AND MANUALS SOLD AS A UNIT
----------------------------------------------------------------------------------------------------------------
END OF REPORT TOTAL ITEMS SELECTED=2
146
[ILLEGIBLE] TITLE COUNTRY SERIAL NO. ▇▇▇/REG NO. GRANT DATE FILE DATE ASSIGNEE STATUS
----------------------------------------------------------------------------------------------------------------------------------
000 DB-ABLE UNITED STATES 74/439,658 1,846,631 9/24/93 OPEN
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 690,256 1,493,734 10/19/87 OPEN
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 74/214,571 1,853,331 10/18/91 OPEN
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 690,257 1,495,520 10/19/87 OPEN
CONSULTANTS
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 74/439,672 1,850,987 9/24/93 OPEN
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 74/439,771 9/24/93 OPEN
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 74/801,609 ABANDON
147
EXHIBIT 5.1.12(A)-FORM OF ELIGIBLE RECEIVABLES CERTIFICATE
FLEET NATIONAL BANK
--------------------------------------------------------------------------------
Company Name: CONVERGENT GROUP CORPORATION Date: / /
--------------------------------------------------------------------------------
1. Period End Accounts Receivable as of ___/___/___ $_________
2. Ineligible Accounts Receivable as of ___/___/___
Sum of:
Accounts over 90 days from Invoice Date $__________
Officer, etc. Accounts $__________
Consignment, "▇▇▇▇ and hold" etc. Account $__________
Government Accounts $__________
Subsidiary/Affiliate Accounts $__________
Contra Accounts $__________
Foreign Accounts (other than Canadian Accounts) $__________
Disputed Accounts $__________
Accounts subject to other Liens $__________
Insolvent debtor Accounts $_________
Uncollectible Accounts $__________
TOTAL INELIGIBLES $__________
3. Eligible Accounts Receivable (Line 1 minus Line 2) $__________
4. Less payments, adjustments and credits $__________
5. Net Outstanding Amount of Eligible Receivables $__________
The Company named in the box above labeled "Company Name" (the "Company"),
by its duly authorized officer signing below, hereby certifies that (a) the
information set forth in this certificate is true and correct as of the
date(s) indicated herein and (b) the Company is in compliance with all
terms and provisions in (i) the loan or other agreement between the
Company, Fleet National Bank as Agent and a Lender and any other Lenders
pursuant to which this certificate is delivered (the "Agreement") and (ii)
any and all documents, instruments and agreements evidencing, governing or
securing the Agreement or otherwise executed in connection therewith.
CONVERGENT GROUP CORPORATION
__________________________ By:________________________
Prepared by Authorized Signature
148
EXHIBIT 5.2.2 - GUARANTIES
Utility Graphics Consultants Corporation and Graphic Data systems Corporation
are guarantors under The NorWest Credit Agreement.
Convergent has guaranteed certain obligations of GDS and GDSL pursuant to the
Informatix Asset Agreement.
149
EXHIBIT 5.2.12 - EXISTING INVESTMENTS IN SUBSIDIARIES AND
PARTNERSHIPS.
See Schedule 1.1
150
EXHIBIT 5.2.13 - TRANSACTIONS WITH AFFILIATES
See Exhibit 3.1.1.8.
151
EXHIBIT 9.11.1 - FORM OF ASSIGNMENT AND ACCEPTANCE
Form of Assignment and Acceptance
Assignment and Acceptance made and entered into as of __ day of
_________, 19__ by and between ____________, a _________ having a principal
place of business at _______________ (the "Substituted Lender"), ______________,
a ________________ having a place of business at _______________ (the "Selling
Lender"), CONVERGENT GROUP CORPORATION, a Delaware corporation (the "Borrower")
and FLEET NATIONAL BANK, acting as Agent for the Lenders which are parties to
the Loan Agreement (defined below) (the "Agent").
1. This Agreement relates to a Loan Agreement (the "Loan
Agreement") dated August __, 1999, as same may have been or be
amended, made between the Borrower, the Lenders and the Agent,
upon and subject to the terms of which the Lenders agreed to
make available to the Borrower the Loans in an aggregate
principal amount up to $25,000,000. Terms defined in the Loan
Agreement shall, unless otherwise defined herein, have the
same meanings herein.
2. The Selling Lender hereby irrevocably sells and assigns to the
Substituted Lender without recourse to the Selling Lender, and
the Substituted Lender hereby irrevocably purchases and
assumes from the Selling Lender without recourse to the
Selling Lender, as of ___________, ____ (the "Effective Date")
the interest described in Schedule A hereto (the "Assigned
Interest") in and to the Selling Lender's rights and
obligations under the Loan Agreement as set forth on Schedule
A hereto (the "Assigned Facility").
3. The Selling Lender (i) makes no representation or warranty and
assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with
the Loan Agreement or with respect to the execution, legality,
validity, enforceability, genuineness, sufficiency or value of
the Loan Agreement, any other Financing Document or any other
instrument or document furnished pursuant thereto, other than
that the Selling Lender has not created any adverse claim upon
the Assigned Interest, has full right, power and authority to
sell and assign the Assigned Interest and that the Assigned
Interest is free and clear of any such adverse claim; (ii)
makes no. representation or warranty and assumes no
responsibility with respect to the financial condition of the
Borrower or any Subsidiary or any other obligor or the
performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective
obligations under the Loan Agreement or any other Financing
Document or any other instrument or document furnished
pursuant hereto or thereto; and (iii) attaches any Notes held
by it evidencing the Assigned Facility and (a) requests that
the Agent, upon request by the Substituted Lender, exchange
the attached Notes for a new Note or Notes payable to the
Substituted Lender and (b) if the Selling Lender has retained
any interest in the Loans, requests that the Agent exchange
the attached Notes for a new Note or Notes payable to the
Selling Lender, in each case in amounts which reflect the
assignment being made hereby (and after giving effect to any
other assignments which have become effective on the Effective
Date).
1
152
4. The Substituted Lender (i) represents and warrants that it is
legally authorized to enter into this Assignment and
Acceptance; (ii) confirms that it has received a copy of the
Loan Agreement, together with copies of the financial
statements delivered pursuant to Section 5.3 thereof and such
other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (iii) agrees that it will,
independently and without reliance upon the Selling Lender,
the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking
action under the Loan Agreement, the other Financing Documents
or any other instrument or document furnished pursuant hereto
or thereto; (iv) appoints and authorizes the Agent to take
such action as Agent on its behalf and to exercise such powers
and discretion under the Loan Agreement, the other Financing
Documents or any other instrument or document furnished
pursuant hereto or thereto as are delegated to the Agent by
the terms thereof, together with such powers as are incidental
thereto; and (v) agrees that it will be bound by the
provisions of the Loan Agreement and will perform in
accordance with its terms all the obligations which by the
terms of the Loan Agreement are required to be performed by it
as a Lender including, if it is organized under the laws of a
jurisdiction outside the United States, its obligation
pursuant to Section 2.5.3.2 of the Loan Agreement.
5. The Substituted Lender hereby agrees to become a Lender
pursuant to the terms of Section 9.11 of the Loan Agreement
having a Pro Rata Share of the Loans and the Revolving Credit
Loan Commitment in the amount set forth opposite the
Substituted Lender's name on Schedule A hereto and to fund its
Pro Rata Share of any outstanding Loans in which it is
purchasing a Pro Rata Share by wire transfer to the Selling
Lender in accordance with Schedule A hereto on the Effective
Date.
6. The Selling Lender hereby agrees that, effective as of the
Effective Date, its Pro Rata Share of the Loans and the
Revolving Credit Loan Commitment shall be reduced to the Pro
Rata Share set forth opposite its name on Schedule A hereto.
7. The Substituted Lender hereby agrees (i) that its address for
notices for the purposes of Section 9.6 of the Loan Agreement
shall be the address set forth opposite its name on Schedule A
hereto and (ii) that the instructions for wire transfers of
funds to the Agent and for wire transfers of funds to the
Substituted Lender are as set forth on Schedule A hereto.
8. The Substituted Lender hereby requests the Agent to accept, on
behalf of the Borrower and the Lenders, this Agreement as an
Assignment and Acceptance delivered to the Agent pursuant to
and for the purposes of Section 9.11 of the Loan Agreement so
as to take effect in accordance with the terms hereof and
thereof on Effective Date.
9. The Substituted Lender hereby acknowledges the correctness of
the details specified in Schedule A hereto.
2
153
10. This Agreement and the rights and obligations of the parties
hereunder shall be governed by, and construed in accordance
with the laws of The Commonwealth of Massachusetts without
regard to such state's conflict of laws rules.
CONVERGENT GROUP CORPORATION
By:
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
FLEET NATIONAL BANK, as Agent for
itself in its individual capacity
and as agent for the Borrower,
[INSERT NAME(S) OF SELLING
LENDER(S)] and any other Lenders
By:
-------------------------------
3
154
SCHEDULE A
Name of AGENT, address for notices
and wire transfer instructions:
Fleet National Bank
Mailstop MA OF D07A
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: High Tech Group
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Wire Transfer Instructions:
Fleet National Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABA#: ▇▇▇▇▇▇▇▇▇
Account: Commercial Loan Services
Attn: Agent Bank MA
Account#: ▇▇▇▇▇▇▇ G/L
Re: Convergent Group
Name of LENDER, address for notices
and wire transfer instructions: Pro Rata Share
Fleet National Bank 100%
Mailstop MA OF D07A
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: High Tech Group
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Wire Transfer Instructions:
Fleet National Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABA#: ▇▇▇▇▇▇▇▇▇
Account: Commercial Loan Services
Attn: Agent Bank MA
Account#: ▇▇▇▇▇▇▇ G/L
Re: Convergent Group
1
155
Name of LENDER, address for notices and wire
transfer instructions:
For Credit Matters: Pro Rata Share
[ ]%
-----------------------------
-----------------------------
-----------------------------
Tel:
-------------------------
Fax:
-------------------------
For Administrative/Operations Matters:
-----------------------------
-----------------------------
-----------------------------
Tel:
-------------------------
Fax:
-------------------------
Wire Transfer Instructions:
-----------------------------
-----------------------------
ABA #:
-----------------------
Account Name:
----------------
Attn:
------------------------
Re:
--------------------------
2