EXHIBIT 99.3
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LOAN AND SECURITY AGREEMENT
BY AND AMONG
INTERVOICE-BRITE, INC
AS BORROWER,
AND
FOOTHILL CAPITAL CORPORATION
AS LENDER
DATED AS OF AUGUST 29, 2002
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION.............................................................................1
1.1 Definitions.....................................................................................1
1.2 Accounting Terms...............................................................................28
1.3 Code...........................................................................................28
1.4 Construction...................................................................................28
1.5 Schedules and Exhibits.........................................................................28
2. LOAN AND TERMS OF PAYMENT...............................................................................29
2.1 Revolver Advances..............................................................................29
2.2 Term Loan......................................................................................30
2.3 Borrowing Procedures and Settlements...........................................................30
2.4 Payments.......................................................................................31
2.5 Overadvances...................................................................................33
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.....................33
2.7 Cash Management................................................................................34
2.8 Crediting Payments; Float Charge...............................................................35
2.9 Designated Account.............................................................................37
2.10 Maintenance of Loan Account; Statements of Obligations.........................................37
2.11 Fees; Reduction of the Maximum Revolver Amount.................................................37
2.12 Letters of Credit..............................................................................37
2.13 LIBOR Option...................................................................................40
2.14 Capital Requirements...........................................................................43
3. CONDITIONS; TERM OF AGREEMENT...........................................................................43
3.1 Conditions Precedent to the Initial Extension of Credit........................................43
3.2 Conditions Subsequent to the Initial Extension of Credit.......................................46
3.3 Conditions Precedent to all Extensions of Credit...............................................47
3.4 Term...........................................................................................47
3.5 Effect of Termination..........................................................................47
3.6 Early Termination by Borrower..................................................................48
4. CREATION OF SECURITY INTEREST...........................................................................49
4.1 Grant of Security Interest.....................................................................49
4.2 Negotiable Collateral..........................................................................49
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral.........................49
4.4 Delivery of Additional Documentation Required..................................................49
4.5 Power of Attorney..............................................................................50
4.6 Right to Inspect...............................................................................50
4.7 Control Agreements.............................................................................50
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5. REPRESENTATIONS AND WARRANTIES..........................................................................51
5.1 No Encumbrances................................................................................51
5.2 Eligible Accounts..............................................................................51
5.3 [Intentionally Omitted]........................................................................51
5.4 Equipment......................................................................................51
5.5 Location of Inventory and Equipment............................................................51
5.6 Inventory Records..............................................................................51
5.7 Location of Chief Executive Office; FEIN.......................................................51
5.8 Due Organization and Qualification; Subsidiaries...............................................52
5.9 Due Authorization; No Conflict.................................................................52
5.10 Litigation.....................................................................................53
5.11 No Material Adverse Change.....................................................................53
5.12 Fraudulent Transfer............................................................................53
5.13 Employee Benefits..............................................................................53
5.14 Environmental Condition........................................................................53
5.15 Brokerage Fees.................................................................................54
5.16 Intellectual Property..........................................................................54
5.17 Leases.........................................................................................54
5.18 DDAs...........................................................................................54
5.19 Complete Disclosure............................................................................54
5.20 Indebtedness...................................................................................54
5.21 Inactive and Foreign Subsidiaries..............................................................55
6. AFFIRMATIVE COVENANTS...................................................................................55
6.1 Accounting System..............................................................................55
6.2 Collateral Reporting...........................................................................55
6.3 Financial Statements, Reports, Certificates....................................................56
6.4 [Intentionally omitted]........................................................................58
6.5 [Intentionally omitted]........................................................................58
6.6 Maintenance of Properties......................................................................59
6.7 Taxes..........................................................................................59
6.8 Insurance......................................................................................59
6.9 Location of Inventory and Equipment............................................................60
6.10 Compliance with Laws...........................................................................60
6.11 Leases.........................................................................................60
6.12 Brokerage Commissions..........................................................................60
6.13 Existence......................................................................................61
6.14 Environmental..................................................................................61
6.15 Disclosure Updates.............................................................................61
6.16 Refinance Dallas Mortgage Loan. Refinance the Dallas Mortgage Loan, on terms
satisfactory to Lender, no later than March 29, 2005...........................................64
7. NEGATIVE COVENANTS......................................................................................61
7.1 Indebtedness...................................................................................61
7.2 Liens..........................................................................................62
7.3 Restrictions on Fundamental Changes............................................................62
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7.4 Disposal of Assets.............................................................................63
7.5 Change Name....................................................................................63
7.6 Guarantee......................................................................................63
7.7 Nature of Business.............................................................................63
7.8 Prepayments and Amendments.....................................................................63
7.9 [Intentionally omitted]........................................................................64
7.10 Consignments...................................................................................64
7.11 Distributions..................................................................................64
7.12 Accounting Methods.............................................................................64
7.13 Investments....................................................................................64
7.14 Transactions with Affiliates...................................................................64
7.15 Suspension.....................................................................................65
7.16 [Intentionally omitted]........................................................................65
7.17 Use of Proceeds................................................................................65
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees.............65
7.19 Securities Accounts............................................................................65
7.20 Financial Covenants............................................................................65
7.21 Inactive and Foreign Subsidiaries..............................................................67
8. EVENTS OF DEFAULT.......................................................................................68
9. LENDER'S RIGHTS AND REMEDIES............................................................................70
9.1 Rights and Remedies............................................................................70
9.2 Remedies Cumulative............................................................................72
10. TAXES AND EXPENSES......................................................................................72
11. WAIVERS; INDEMNIFICATION................................................................................73
11.1 Demand; Protest................................................................................73
11.2 Lender's Liability for Collateral..............................................................73
11.3 Indemnification................................................................................73
12. NOTICES.................................................................................................74
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..............................................................75
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS..............................................................76
14.1 Assignments and Participations.................................................................76
14.2 Successors.....................................................................................78
15. AMENDMENTS; WAIVERS.....................................................................................78
15.1 Amendments and Waivers.........................................................................78
15.2 No Waivers; Cumulative Remedies................................................................78
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16. GENERAL PROVISIONS......................................................................................78
16.1 Effectiveness..................................................................................78
16.2 Section Headings...............................................................................78
16.3 Interpretation.................................................................................78
16.4 Severability of Provisions.....................................................................78
16.5 Confidentiality................................................................................79
16.6 Amendments in Writing..........................................................................79
16.7 Counterparts; Telefacsimile Execution..........................................................79
16.8 Revival and Reinstatement of Obligations.......................................................79
16.9 Integration....................................................................................80
16.10 Expense Deposit................................................................................80
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EXHIBITS AND SCHEDULES
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Exhibit P-1 Form of Principal Officers Certificate
Schedule D-1 Designated Account and Designated Account Bank
Schedule L-1 Lender's Account
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.8(a) Cash Management Banks
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(c) Capitalization of Borrower's Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
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LOAN AND SECURITY AGREEMENT
THIS
LOAN AND SECURITY AGREEMENT (this "Agreement"), is
entered into as of August 29, 2002, between FOOTHILL CAPITAL CORPORATION, a
California corporation ("Lender") and INTERVOICE-BRITE, INC., a Texas
corporation ("Borrower").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following definitions:
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"Accounts" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"ACH Transactions" means any cash management or related
services (including the Automated Clearing House processing of electronic funds
transfers through the direct Federal Reserve Fedline system) provided by ▇▇▇▇▇
Fargo or its Affiliates for the account of Borrower or its Subsidiaries.
"Additional Documents" has the meaning set forth in Section
4.4.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for purposes of the definitions of Eligible
Domestic Accounts and Eligible UK Accounts and Section 7.14 hereof: (a) any
Person which owns directly or indirectly 20% or more of the securities having
ordinary voting power for the election of directors or other members of the
governing body of a Person or 20% or more of the partnership or other ownership
interests of a Person (other than as a limited partner of such Person) shall be
deemed to control such Person, (b) each director (or comparable manager) of a
Person shall be deemed to be an Affiliate of such Person, and (c) each
partnership or joint venture in which a Person is a partner or joint venturer
shall be deemed to be an Affiliate of such Person.
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"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Base Rate Margin" means, as of any date of
determination, the following margin based upon Borrower's most recent TTM EBITDA
calculation (determined as set forth in the following paragraph); provided,
however, that for the period from the Domestic Revolver Closing Date through the
date Lender receives the certified calculation of the TTM EBITDA in respect of
the testing period ending May 31, 2003, delivered by Borrower pursuant to
Section 6.3(a)(iii), the Applicable Base Rate Margin shall be 1.00 percentage
points:
Level TTM EBITDA Applicable Base Rate Margin
------------------------- ----------------------------------------------- -------------------------------------------
I greater than or equal to $20,000,000 0.50 percentage points
II greater than or equal to $10,000,000 but less 1.00 percentage points
than $20,000,000
III less than $10,000,000 1.50 percentage points
The Applicable Base Rate Margin shall be based upon Borrower's
most recent TTM EBITDA calculation and shall be redetermined each fiscal quarter
of Borrower on the date Lender receives the certified calculation of the TTM
EBITDA pursuant to Section 6.3(a)(iii) hereof; provided, however, that if
Borrower fails to provide such certification when such certification is due,
upon written notice by Lender to Borrower, the Applicable Base Rate Margin shall
be set at the margin in the row styled "Level III" as of the date on which the
certification was required to be delivered until the date on which such
certification is delivered (on which date (but not retroactively), without
constituting a waiver of any Default or Event of Default occasioned by the
failure to timely deliver such certification, the Applicable Base Rate Margin
shall be set at the margin based upon the TTM EBITDA calculation disclosed by
such certification).
"Applicable LIBOR Rate Margin" means, as of any date of
determination, the following margin based upon Borrower's most recent TTM EBITDA
calculation (determined as set forth in the following paragraph); provided,
however, that for the period from the Domestic Revolver Closing Date through the
date Lender receives the certified calculation of the TTM EBITDA in respect of
the testing period ending May 31, 2003, delivered by Borrower pursuant to
Section 6.3(a)(iii), the Applicable LIBOR Rate Margin shall be 3.50 percentage
points:
Level TTM EBITDA Applicable LIBOR Rate Margin
------------------------- ----------------------------------------------- -------------------------------------------
I greater than or equal to $20,000,000 3.00 percentage points
II greater than or equal to $10,000,000 but less 3.50 percentage points
than $20,000,000
III less than $10,000,000 4.00 percentage points
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The Applicable LIBOR Rate Margin shall be based upon
Borrower's most recent TTM EBITDA calculation and shall be redetermined each
fiscal quarter of Borrower on the date Lender receives the certified calculation
of the TTM EBITDA pursuant to Section 6.3(a)(iii) hereof; provided, however,
that if Borrower fails to provide such certification when such certification is
due, upon written notice by Lender to Borrower, the Applicable LIBOR Rate Margin
shall be set at the margin in the row styled "Level III" as of the date on which
the certification was required to be delivered until the date on which such
certification is delivered (on which date (but not retroactively), without
constituting a waiver of any Default or Event of Default occasioned by the
failure to timely deliver such certification, the Applicable LIBOR Rate Margin
shall be set at the margin based upon the TTM EBITDA calculation disclosed by
such certification).
"Applicable Prepayment Premium" means the product of the
Applicable Prepayment Premium Rate times the Maximum Revolver Amount immediately
prior the date of termination of this Agreement
"Applicable Prepayment Premium Rate" means, as of any date of
determination (a) during the period of time from and after the date of the
execution and delivery of this Agreement up to the date that is the first
anniversary of the date hereof, 3%, (b) during the period of time from and
including the date that is the first anniversary of the date hereof up to the
date that is the second anniversary of the date hereof, 2%, and (c) during the
period of time from and including the date that is the second anniversary of the
date hereof up to the Maturity Date, 1%.
"Assignee" has the meaning set forth in Section 14.1(a).
"Authorized Person" means any officer or other employee of
Borrower.
"Availability" means, as of any date of determination, if such
date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Borrower is entitled to borrow as Advances under
Section 2.1 (after giving effect to all then outstanding Obligations (other than
Bank Products Obligations) and all sublimits and reserves applicable hereunder).
"Bank Product Agreements" means those certain cash management
service agreements entered into from time to time by Borrower or its
Subsidiaries in connection with any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Borrower or
its Subsidiaries to ▇▇▇▇▇ Fargo or its Affiliates pursuant to or evidenced by
the Bank Product Agreements and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all such amounts that Borrower
is obligated to reimburse to Lender as a result of Lender purchasing
participations or executing indemnities or reimbursement obligations with
respect to the
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Bank Products provided to Borrower or its Subsidiaries pursuant to the Bank
Product Agreements.
"Bank Products" means any service or facility extended to
Borrower or its Subsidiaries by ▇▇▇▇▇ Fargo or any Affiliate of ▇▇▇▇▇ Fargo
including: (a) credit cards, (b) credit card processing services, (c) debit
cards, (d) purchase cards, (e) ACH Transactions, (f) cash management, including
controlled disbursement, accounts or services, or (g) Hedge Agreements.
"Bank Product Reserves" means, as of any date of
determination, the amount of reserves that Lender has been instructed to
establish by ▇▇▇▇▇ Fargo or its Affiliate for Bank Products then provided or
outstanding based upon the formula, procedure or maximum amount for determining
the credit exposure set forth in the applicable Bank Product Agreement for the
applicable Bank Product or, in the absence of such a formula, procedure or
maximum amount, based upon ▇▇▇▇▇ Fargo's or such Affiliate's reasonable
determination of the credit exposure in respect of the applicable Bank Product.
"Bankruptcy Code" means the United States Bankruptcy Code, as
in effect from time to time.
"Base LIBOR Rate" means the rate per annum, determined by
Lender in accordance with its customary procedures, and utilizing such
electronic or other quotation sources as it considers appropriate (rounded
upwards, if necessary, to the next 1/16%), on the basis of the rates at which
Dollar deposits are offered to major banks in the London interbank market on or
about 11:00 a.m. (
California time) 2 Business Days prior to the commencement of
the applicable Interest Period, for a term and in amounts comparable to the
Interest Period and amount of the LIBOR Rate Loan requested by Borrower in
accordance with this Agreement, which determination shall be conclusive in the
absence of manifest error.
"Base Rate" means, the rate of interest announced within ▇▇▇▇▇
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as ▇▇▇▇▇ Fargo may designate.
"Base Rate Loan" means each portion of an Advance or the Term
Loan that bears interest at a rate determined by reference to the Base Rate.
"Base Rate Term Loan Margin" means 2.75 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate
of Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
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"Board of Directors" means the board of directors (or
comparable managers) of Borrower or any committee thereof duly authorized to act
on behalf of the board.
"Books" means Borrower's and its Subsidiaries' now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of Borrower's or its Subsidiaries' Records relating to its or their business
operations or financial condition, and all of its or their goods or General
Intangibles related to such information).
"Borrower" has the meaning set forth in the preamble to this
Agreement.
"Borrower Collateral" means all of Borrower's now owned or
hereafter acquired right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment, but excluding any Equipment that is
subject to a Permitted Lien securing Permitted Purchase Money Indebtedness if
the agreement governing such Permitted Purchase Money Indebtedness prohibits
other Liens on the subject Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) money or other assets of Borrower that now or
hereafter come into the possession, custody, or control of Lender, and
(j) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
"Borrowing" means a borrowing hereunder of an Advance.
"Borrowing Base" has the meaning set forth in Section 2.1.
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"Borrowing Base Certificate" means a certificate in the form
of Exhibit B-1.
"Borrowing Base Participant" means (a) Borrower and (b) after
satisfaction of the UK Conditions, the UK Obligor.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which national banks are authorized or required to close, except
that, if a determination of a Business Day shall relate to a LIBOR Rate Loan,
the term "Business Day" also shall exclude any day on which banks are closed for
dealings in Dollar deposits in the London interbank market.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness
represented by obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or ▇▇▇▇▇'▇,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or ▇▇▇▇▇'▇, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or
▇▇▇▇▇'▇, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
"Cash Management Bank" has the meaning set forth in Section
2.7(a).
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash
management service agreements, in form and substance satisfactory to Lender,
each of which is among Borrower, Lender, and one of the Cash Management Banks.
"Change of Control" means (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 20%, or more, of the Stock of Borrower having the right to vote
for the election of members of the Board of Directors, or (b) a majority of the
members of the Board of Directors do not constitute Continuing Directors, or (c)
Borrower ceases to directly or indirectly own and control 100% of the
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outstanding capital Stock of each of its Subsidiaries extant as of the date
hereof except (a) as a result of a transaction permitted under Section 7.13 or
(b) if required by applicable law with respect to a Foreign Subsidiary,
ownership of up to 20% of such Subsidiary by foreign qualifying directors or
shareholders of such Subsidiary.
"Closing Date Business Plan" means the set of Projections of
Borrower for the 3 year period following the Domestic Revolver Closing Date (on
a year by year basis, and for the 1 year period following the Domestic Revolver
Closing Date, on a month by month basis), in form and substance (including as to
scope and underlying assumptions) satisfactory to Lender.
"Code" means the
California Uniform Commercial Code, as in
effect from time to time.
"Collateral" means all of the assets of any Obligor that are
hypothecated in favor of Lender pursuant to the Loan Documents.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance reasonably satisfactory to Lender.
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrower.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C-1 delivered by the chief financial officer or chief
accounting officer of Borrower to Lender.
"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Borrower on the date
hereof, and (b) any individual who becomes a member of the Board of Directors
after the date hereof if such individual was appointed or nominated for election
to the Board of Directors by a majority of the Continuing Directors, but
excluding any such individual originally proposed for election in opposition to
the Board of Directors in office at the date hereof in an actual or threatened
election contest relating to the election of the directors (or comparable
managers) of Borrower (as such terms are used in Rule 14a-11 under the Exchange
Act) and whose initial assumption of office resulted from such contest or the
settlement thereof.
"Control Agreement" means a control agreement, in form and
substance satisfactory to Lender, executed and delivered by Borrower, Lender,
and the applicable securities intermediary with respect to a Securities Account
or bank with respect to a deposit account.
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"Copyright Security Agreement" means a copyright security
agreement executed and delivered by Borrower, IVLP and Lender, the form and
substance of which is satisfactory to Lender.
"Daily Balance" means, with respect to each day during the
term of this Agreement, the amount of an Obligation owed at the end of such day.
"Dallas Mortgage Loan" means the Indebtedness of Borrower to
▇▇▇▇ Bank, S.S.B. in the original principal amount of $14,000,000, secured by a
first priority Lien on the Real Property consisting of Borrower's corporate
headquarters located in Dallas, Texas.
"DDA" means any checking or other demand deposit account
maintained by Borrower.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Demonstration Goods" means Equipment or Inventory used for
exhibition or trade show purposes or in the possession of customers for
demonstration or evaluation purposes.
"Designated Account" means that certain DDA of Borrower
identified on Schedule D-1.
"Designated Account Bank" means that certain bank identified
on Schedule D-1.
"Dilution" means, as of any date of determination, a
percentage, based upon the experience of the immediately prior 90 days, that is
the result of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Accounts during such period, by (b) Borrower's gross ▇▇▇▇▇▇▇▇ with respect to
Accounts during such period (excluding extraordinary items).
"Dilution Reserve" means, as of any date of determination, an
amount sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.
"Disbursement Letter" means an instructional letter executed
and delivered by Borrower to Lender regarding the extensions of credit to be
made on the Domestic Revolver Closing Date or the Term Loan Closing Date, as the
case may be, the form and substance of which is satisfactory to Lender.
"Dollars" or "$" means United States dollars.
"Domestic Revolver Closing Date" means the date on which all
of the conditions precedent in Section 3.1 are satisfied.
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"Due Diligence Letter" means the due diligence letter sent by
Lender's counsel to Borrower, together with Borrower's completed responses to
the inquiries set forth therein, the form and substance of such responses to be
satisfactory to Lender.
"EBITDA" means, with respect to any fiscal period, Borrower's
and its Subsidiaries consolidated net earnings (or loss) as determined in
accordance with GAAP, minus extraordinary gains, plus interest expense, income
and franchise taxes, depreciation and amortization expense, as determined in
accordance with GAAP, in each case to the extent included in the determination
of such net earnings (or loss), plus non-cash charges associated with the
redemption of the Junior Notes in an amount not to exceed $2,000,000 and the
cash redemption premium associated with the redemption of the Junior Notes in an
amount not to exceed $500,000 (not already included in interest expense, income
and franchise taxes, and depreciation and amortization expense), plus non-cash
charges related to the write-off of goodwill and intangibles, plus
non-recurring, cash restructuring charges for severance, benefits and
dilapidation paid during the 6 month period ending February 28, 2003, in an
amount not to exceed $2,000,000, plus non-cash charges associated with pre-paid
alert licenses in an aggregate amount not to exceed $4,000,000 during the
three fiscal quarters of Borrower ending February 28, 2003.
"Eligible Accounts" means Eligible Domestic Accounts and
Eligible UK Accounts.
"Eligible Domestic Accounts" means those Accounts created by
Borrower in the ordinary course of its business, that arise out of Borrower's
sale of goods or rendition of services, that comply with each of the
representations and warranties respecting Eligible Domestic Accounts made by
Borrower in the Loan Documents, and that are not excluded as ineligible by
virtue of one or more of the criteria set forth below; provided, however, that
such criteria may be fixed and revised from time to time by Lender in Lender's
Permitted Discretion to address the results of any audit performed by Lender
from time to time after the Domestic Revolver Closing Date. In determining the
amount to be included, amounts payable in Canadian Dollars, if any, shall be
calculated at their Dollar equivalent. Eligible Domestic Accounts shall not
include the following:
(a) Accounts that the Account Debtor has failed to
pay within 90 days of original invoice date,
(b) Accounts owed by an Account Debtor (or its
Affiliates) where 50% or more of all Accounts owed by that Account Debtor and
its Affiliates in the aggregate are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor
is an employee, Affiliate, or agent of Borrower,
(d) Accounts arising in a transaction wherein goods
are placed on consignment or are sold pursuant to a sale or return, a sale on
approval, a ▇▇▇▇ and hold, or any other terms by reason of which the payment by
the Account Debtor is conditional;
-9-
provided that Accounts shall not be excluded (i) as a result of a sale subject
to acceptance or other condition after the goods, which are the subject of such
sale, have been so accepted or the condition has been satisfied or (ii) as a
result of warranties, guaranties or indemnities provided by the seller,
(e) Accounts that are not payable in Dollars or
Canadian Dollars,
(f) Accounts with respect to which the Account Debtor
(i) does not maintain its chief executive office in the United States or Canada,
or (ii) is not organized under the laws of the United States or any state
thereof, or Canada or any province thereof, or (iii) is the government of any
foreign country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, unless (x) the Account Debtor
maintains an office in the United States, the goods related to the Account are
installed or the services related to the Account are rendered in the United
States, and the Account is billed to and paid from an office in the United
States, or (y) the Account is supported by an irrevocable letter of credit
satisfactory to Lender (as to form, substance, and issuer or domestic confirming
bank) that has been delivered to Lender and is directly drawable by Lender, or
(z) the Account is covered by credit insurance in form, substance, and amount,
and by an insurer, satisfactory to Lender,
(g) Accounts with respect to which the Account Debtor
is either (i) the United States or any department, agency, or instrumentality of
the United States (exclusive, however, of Accounts with respect to which
Borrower has complied, to the reasonable satisfaction of Lender, with the
Assignment of Claims Act, 31 USC Section 3727), or (ii) any state of the United
States (exclusive, however, of (y) Accounts owed by any state that does not have
a statutory counterpart to the Assignment of Claims Act, or (z) Accounts owed by
any state that does have a statutory counterpart to the Assignment of Claims Act
as to which Borrower has complied to Lender's satisfaction),
(h) Accounts with respect to which the Account Debtor
is a creditor of Borrower, has or has asserted a right of setoff, has disputed
its liability on the Account or has an unapplied deposit or cash remittance to
Borrower, to the extent of such claim, right of setoff, dispute, deposit or
remittance,
(i) (i) Accounts owed by Siemens ▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇ Limited or British Telecom PLC and each of their respective
Affiliates to the extent the obligations owing by any such Account Debtor to the
Borrowing Base Participants exceed 30% of all Eligible Accounts (such percentage
as applied to any such Account Debtor being subject to reduction by Lender in
its Permitted Discretion if the creditworthiness of any such Account Debtor
deteriorates), and (ii) Accounts with respect to any other Account Debtor whose
total obligations owing to the Borrowing Base Participants exceed 10% (such
percentage as applied to a particular Account Debtor being subject to reduction
by Lender in its Permitted Discretion if the creditworthiness of such Account
Debtor deteriorates) of all
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Eligible Accounts, to the extent of the obligations owing by such Account Debtor
in excess of such percentage,
(j) Accounts with respect to which the Account Debtor
is subject to an Insolvency Proceeding, is not Solvent, has gone out of
business, or as to which Borrower has received notice of an imminent Insolvency
Proceeding,
(k) Accounts with respect to which the Account Debtor
is located in the states of New Jersey, Minnesota, or West Virginia (or any
other state that requires a creditor to file a business activity report or
similar document in order to bring suit or otherwise enforce its remedies
against such Account Debtor in the courts or through any judicial process of
such state), unless Borrower has qualified to do business in New Jersey,
Minnesota, West Virginia, or such other states, or has filed a business
activities report with the applicable division of taxation, the department of
revenue, or with such other state offices, as appropriate, for the then-current
year, or is exempt from such filing requirement,
(l) Accounts, the collection of which, Lender, in its
Permitted Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition,
(m) Accounts that are not subject to a valid and
perfected first priority Lender's Lien,
(n) Accounts with respect to which (i) the goods
giving rise to such Account have not been shipped and billed to the Account
Debtor, or (ii) the services giving rise to such Account have not been performed
and billed to the Account Debtor,
(o) Accounts that represent the right to receive
progress payments or other advance ▇▇▇▇▇▇▇▇ that are due prior to the completion
of performance by Borrower of the subject contract for goods or services, or
(p) Accounts arising from RealCare Maintenance
Contracts or Software Support Contracts.
"Eligible UK Accounts" means those Accounts created by a
Borrowing Base Participant in the ordinary course of its business, that arise
out of such Borrowing Base Participant's sale of goods or rendition of services,
that comply with each of the representations and warranties respecting Eligible
UK Accounts made by Borrower or UK Obligor in the Loan Documents, and that are
not excluded as ineligible by virtue of one or more of the criteria set forth
below; provided, however, that such criteria may be fixed and revised from time
to time by Lender in Lender's Permitted Discretion to address the results of any
audit performed by Lender from time to time after the satisfaction of the UK
Conditions. In determining the amount to be included, amounts payable in a
currency other than Dollars shall be calculated at their Dollar equivalent.
Eligible UK Accounts shall not include the following:
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(a) Accounts that the Account Debtor has failed to
pay within 90 days of original invoice date,
(b) Accounts owed by an Account Debtor (or its
Affiliates) where 50% or more of all Accounts owed by that Account Debtor and
its Affiliates in the aggregate are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor
is an employee, Affiliate, or agent of a Borrowing Base Participant,
(d) Accounts arising in a transaction wherein goods
are placed on consignment or are sold pursuant to a sale or return, a sale on
approval, a ▇▇▇▇ and hold, or any other terms by reason of which the payment by
the Account Debtor is conditional; provided that Accounts shall not be excluded
(i) as a result of a sale subject to acceptance or other condition after the
goods, which are the subject of such sale, have been so accepted or the
condition has been satisfied or (ii) as a result of warranties, guaranties or
indemnities provided by the seller,
(e) Accounts that are not payable in Dollars, UK
Currency, or Euros,
(f) Accounts with respect to which the Account Debtor
either (i) does not maintain its chief executive office in the United Kingdom,
or (ii) is not organized under the laws of the United Kingdom or any political
subdivision thereof, or (iii) is the government of the United Kingdom or any
other country or sovereign state, or of any political subdivision thereof, or of
any department, agency, public corporation, or other instrumentality thereof,
unless (x) the Account Debtor maintains an office in the United Kingdom, the
goods related to the Account are installed or the services related to the
Account are rendered in the United Kingdom, and the Account is billed to and
paid from an office in the United Kingdom, or (y) the Account is supported by an
irrevocable letter of credit satisfactory to Lender (as to form, substance, and
issuer or domestic confirming bank) that has been delivered to Lender and is
directly drawable by Lender, or (z) the Account is covered by credit insurance
in form, substance, and amount, and by an insurer, satisfactory to Lender,
(g) Accounts with respect to which the Account Debtor
is a creditor of Borrower, has or has asserted a right of setoff, has disputed
its liability on the Account or has an unapplied deposit or cash remittance to
Borrower, to the extent of such claim, right of setoff, dispute, deposit or
remittance,
(h) (i) Accounts owed by Siemens ▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇ Limited or British Telecom PLC and each of their respective
Affiliates to the extent the obligations owing by such Account Debtor to the
Borrowing Base Participants exceed 30% of all Eligible Accounts (such percentage
as applied to such Account Debtor being subject to reduction by Lender in its
Permitted Discretion if the creditworthiness of such Account Debtor
deteriorates), and (ii) Accounts with respect to any other Account Debtor whose
total
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obligations owing to the Borrowing Base Participants exceed 10% (such percentage
as applied to a particular Account Debtor being subject to reduction by Lender
in its Permitted Discretion if the creditworthiness of such Account Debtor
deteriorates) of all Eligible Accounts, to the extent of the obligations owing
by such Account Debtor in excess of such percentage,
(i) Accounts with respect to which the Account Debtor
is subject to an Insolvency Proceeding, is not Solvent, has gone out of
business, or as to which a Borrowing Base Participant has received notice of an
imminent Insolvency Proceeding,
(j) Accounts, the collection of which, Lender, in its
Permitted Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition,
(k) Accounts that are not subject to a valid and
perfected first priority Lender's Lien,
(l) Accounts with respect to which (i) the goods
giving rise to such Account have not been shipped and billed to the Account
Debtor, or (ii) the services giving rise to such Account have not been performed
and billed to the Account Debtor,
(m) Accounts that represent the right to receive
progress payments or other advance ▇▇▇▇▇▇▇▇ that are due prior to the completion
of performance by a Borrowing Base Participant of the subject contract for goods
or services, or
(n) Accounts arising from RealCare Maintenance
Contracts or Software Support Contracts.
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy, or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Borrower, relating to the environment, employee health and safety, or Hazardous
Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33
USC Section 1251 et seq; the Toxic Substances Control Act, 15 USC, Section 2601
et seq; the Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water
Act, 42 USC. Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC.
Section 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act
of 1986, 42 USC. Section 11001 et seq.; the Hazardous Material Transportation
Act, 49 USC Section 1801
-13-
et seq.; and the Occupational Safety and Health Act, 29 USC. Section 651 et seq.
(to the extent it regulates occupational exposure to Hazardous Materials); any
state and local or foreign counterparts or equivalents, in each case as amended
from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles), tools, parts, goods (other than consumer goods, farm products,
or Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with Borrower and whose employees are aggregated with the employees of Borrower
under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of the Borrowing Base Participants aged in
excess of 90 days from invoice date or Royalties reporting date, as applicable,
and the aggregate amount, if any, of all book overdrafts in excess of historical
practices with respect thereto, in each case as determined by Lender in its
Permitted Discretion.
-14-
"Exchange Act" means the Securities Exchange Act of 1934, as
in effect from time to time.
"Exchange Rate Reserve" means, as of any date of
determination, an amount equal to 10% of the Eligible Accounts payable in a
currency other than Dollars.
"Existing Lender" means Bank of America, N.A.
"Expense Deposit" has the meaning set forth in Section 16.10.
"Fee Letter" means that certain fee letter, dated as of even
date herewith, between Borrower and Lender, in form and substance satisfactory
to Lender.
"FEIN" means Federal Employer Identification Number.
"Foreign Subsidiary" means each of Singapore Sub, Brite
Holding AG, a Switzerland corporation, InterVoice-Brite AG, a Switzerland
corporation, InterVoice-Brite Spc, an Italy corporation, Brite Voice Systems
S.A. (Proprietary) Ltd, a South Africa corporation, InterVoice Do Brasil Ltd, a
Brazil corporation, InterVoice-Brite de Colombia, Inc., a Colombia corporation,
and each other Subsidiary of Borrower from time to time formed to conduct
operations or business outside of the United States and the United Kingdom.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section
2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency or any court,
-15-
tribunal, administrative hearing body, arbitration panel, commission, or other
similar dispute-resolving panel or body.
"Guarantor" means each of Brite Voice Systems, Inc., a Kansas
corporation, InterVoice GP, Inc., a Nevada corporation, InterVoice LP, Inc., a
Nevada corporation, and IVLP and each other Subsidiary of Borrower that from
time to time shall execute a Guaranty in favor of Lender.
"Guarantor Security Agreement" means a security agreement, in
form and substance satisfactory to Lender, executed and delivered by Guarantors
to Lender.
"Guaranty" means that certain general continuing guaranty
executed and delivered by Guarantors in favor of Lender, in form and substance
satisfactory to Lender.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all transactions, agreements,
or documents now existing or hereafter entered into between Borrower or its
Subsidiaries and ▇▇▇▇▇ Fargo or its Affiliates, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging Borrower's or its Subsidiaries' exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.
"Inactive Subsidiary" means each of BVSI, Inc., a Delaware
corporation, BVS Investco, Inc., a Delaware corporation, InterVoice Acquisition
Subsidiary, Inc., a Nevada corporation, InterVoice Acquisition Subsidiary II,
Inc., a Nevada corporation, and InterVoice II, Inc., a Nevada corporation.
"Indebtedness" means (a) all obligations for borrowed money,
(b) all obligations evidenced by bonds (other than surety, bid or performance
bonds), debentures, notes, or other similar instruments and all reimbursement or
other obligations in respect of letters of credit, bankers acceptances, or
interest rate , credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
-16-
transactions, (c) all obligations under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of Borrower or its
Subsidiaries, irrespective of whether such obligation or liability is assumed,
(e) all obligations for the deferred purchase price of assets (other than trade
debt incurred in the ordinary course of business and repayable in accordance
with customary trade practices), and (f) any obligation guaranteeing or intended
to guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section
11.3.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria or compositions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
"Intercompany Investments" means Investments by Borrower or
any of its Subsidiaries in a Subsidiary of Borrower.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by the Obligors and Lender, the form and
substance of which is satisfactory to Lender.
"Interest Period" means, with respect to each LIBOR Rate Loan,
a period commencing on the date of the making of such LIBOR Rate Loan and ending
1, 2, 3 or 6 months thereafter; provided, however, that (a) if any Interest
Period would end on a day that is not a Business Day, such Interest Period shall
be extended (subject to clauses (c)-(e) below) to the next succeeding Business
Day, (b) interest shall accrue at the applicable rate based upon the LIBOR Rate
from and including the first day of each Interest Period to, but excluding, the
day on which any Interest Period expires, (c) any Interest Period that would end
on a day that 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 next preceding Business Day, (d) with
respect to an Interest Period that 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), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, 3 or 6 months
after the date on which the Interest Period began, as applicable, and (e)
Borrower may not elect an Interest Period which will end after the Maturity
Date.
"Inventory" means all Borrower's now owned or hereafter
acquired right, title, and interest with respect to inventory, including goods
held for sale or lease or to be
-17-
furnished under a contract of service, goods that are leased by Borrower as
lessor, goods that are furnished by Borrower under a contract of service, and
raw materials, work in process, or materials used or consumed in Borrower's
business.
"Investment" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Investment Property" means all of Borrower's now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
"IVLP" means InterVoice Limited Partnership, a Nevada limited
partnership.
"Junior Notes" means those certain Convertible Notes issued by
Borrower pursuant to the Securities Purchase Agreement.
"Junior Notes Subordination Agreement" means a subordination
agreement relative to payment of the Junior Notes, executed and delivered by the
holders of the Junior Notes and Lender, in form and substance satisfactory to
Lender.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by Lender pursuant to
a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section
2.12(a).
"Lender" has the meaning set forth in the preamble to this
Agreement.
"Lender Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by an Obligor under any of
the Loan Documents that are paid or incurred by Lender in accordance with the
provisions of the Loan Documents, (b) fees or charges paid or incurred by Lender
in connection with Lender's transactions with the Obligors, including, fees or
charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, litigation, and
UCC searches and including searches with the patent and trademark office or the
copyright office), filings, recordings, publications, audits, appraisals, real
estate surveys, real estate title policies and endorsements, and environmental
audits; provided that the fees
-18-
and charges for audits and appraisals after the date hereof (except for the
audit to be conducted in connection with the satisfaction of the UK Conditions)
shall be limited to the amounts permitted under Section 2.11, (c) costs and
expenses incurred by Lender in the disbursement of funds to or for the account
of Borrower (by wire transfer or otherwise), (d) charges paid or incurred by
Lender resulting from the dishonor of checks, (e) reasonable costs and expenses
paid or incurred by Lender to correct any default or enforce any provision of
the Loan Documents, or, after an Event of Default, in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) reasonable costs and expenses
incurred by Lender in enforcing or defending the Loan Documents or in connection
with the transactions contemplated by the Loan Documents or Lender's
relationship with Borrower or any guarantor of the Obligations, including costs
and expenses described in Section 11.3, (g) Lender's reasonable fees and
expenses (including reasonable attorneys fees) incurred in advising,
structuring, drafting, reviewing, administering, or amending the Loan Documents,
and (h) Lender's reasonable fees and expenses (including reasonable attorneys
fees) incurred in terminating, enforcing (including reasonable attorneys fees
and expenses incurred in connection with a "workout," a "restructuring," or an
Insolvency Proceeding concerning any Obligor or in exercising rights or remedies
under the Loan Documents), or defending the Loan Documents, irrespective of
whether suit is brought, or in taking any Remedial Action concerning the
Collateral.
"Lender-Related Person" means Lender, Lender's Affiliates, and
the officers, directors, employees, and agents of Lender.
"Lender's Account" means the account identified on Schedule
L-1.
"Lender's Liens" means the Liens granted by Borrower to Lender
under this Agreement or the other Loan Documents.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of
determination, the aggregate undrawn amount of all outstanding Letters of Credit
plus 100% of the amount of outstanding time drafts accepted by an Underlying
Issuer as a result of drawings under Underlying Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section
2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit
L-1.
"LIBOR Rate" means, for each Interest Period for each LIBOR
Rate Loan, the rate per annum determined by Lender (rounded upwards, if
necessary, to the next 1/16%) by dividing (a) the Base LIBOR Rate for such
Interest Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.
-19-
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product
Agreements, the Cash Management Agreements, the Control Agreements, the
Copyright Security Agreement, the Disbursement Letter, the Due Diligence Letter,
the Fee Letter, the Guarantor Security Agreement, the Guaranty, the Intercompany
Subordination Agreement, the Junior Notes Subordination Agreement, the Letters
of Credit, the Mortgage, the Officers' Certificate, the Patent Security
Agreement, the Pledge Agreement, the Principal Officers Certificate, the
Trademark Security Agreement, the UK Guarantee and Debenture and any other UK
Security Documents, any note or notes executed by Borrower in connection with
this Agreement and payable to Lender, and any other agreement entered into, now
or in the future, by Borrower and Lender in connection with this Agreement.
"Maintenance Contract" means a contract providing for an
agreed upon periodic payment (as opposed to an episodic payment, e.g.,
move-add-change and maintenance-per-call) for the provision of maintenance
services and ongoing support.
"Material Adverse Change" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrower and its
Subsidiaries, taken as a whole, (b) a material impairment of an Obligor's
ability to perform its obligations under the Loan Documents to which it is a
party or of Lender's ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
the Lender's Liens with respect to the Collateral as a result of an action or
failure to act on the part of an Obligor.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $25,000,000.
"Mortgage" means the deed of trust executed and delivered by
Borrower in favor of Lender, in form and substance satisfactory to Lender, that
encumbers the Real Property Collateral and the related improvements thereto.
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"Negotiable Collateral" means all of Borrower's now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Obligations" means (a) all loans (including the Term Loan),
Advances, debts, principal, interest (including any interest that, but for the
provisions of the Bankruptcy Code, would have accrued), contingent reimbursement
obligations with respect to outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to Borrower's Loan Account pursuant hereto),
obligations, fees (including the fees provided for in the Fee Letter), charges,
costs, Lender Expenses (including any fees or expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties of any kind and description owing by Borrower
to Lender pursuant to or evidenced by the Loan Documents and irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all Lender Expenses that Borrower
is required to pay or reimburse by the Loan Documents, by law, or otherwise, and
(b) all Bank Product Obligations. Any reference in this Agreement or in the Loan
Documents to the Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
"Obligor" means Borrower, UK Obligor and each Guarantor.
"Officers' Certificate" means the representations and
warranties of officers form submitted by Lender to Borrower, together with
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Lender.
"Originating Lender" has the meaning set forth in Section
14.1(d).
"Overadvance" has the meaning set forth in Section 2.5.
"Participant" has the meaning set forth in Section 14.1(d).
"Patent Security Agreement" means a patent security agreement
executed and delivered by Borrower, IVLP and Lender, the form and substance of
which is satisfactory to Lender.
"Pay-Off Letter" means a letter, in form and substance
satisfactory to Lender, from Existing Lender to Lender respecting the amount
necessary to repay in full all of the obligations of Borrower owing to Existing
Lender and obtain a release of all of the Liens existing in favor of Existing
Lender in and to the assets of Borrower and its Subsidiaries.
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"Permitted Discretion" means a determination made in good
faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions
by Borrower or its Subsidiaries of Equipment that is substantially worn,
damaged, or obsolete or not useful in the business of Borrower, (b) sales by
Borrower or its Subsidiaries of Inventory (i) to buyers in the ordinary course
of business, or (ii) that is considered scrappage, or (iii) that is obsolete and
sold outside of ordinary sales channels in an amount not to exceed $1,000,000
during any fiscal year of Borrower so long as, with respect to clauses (ii) and
(iii) above, an appropriate reserve is reflected on the Books prior to such
sale, (c) the use or transfer of money or Cash Equivalents by Borrower or its
Subsidiaries in a manner that is not prohibited by the terms of this Agreement
or the other Loan Documents, and (d) the licensing by Borrower or its
Subsidiaries, on a non-exclusive basis, of patents, trademarks, copyrights,
software and other intellectual property rights in the ordinary course of
business, (e) sales, exclusive licensing or other dispositions of customer
specific software, (f) sale, abandonment or release by Borrower or its
Subsidiaries of patents, trademarks, copyrights, software, and other
intellectual property rights not useful in the business of Borrower or its
Subsidiaries, (g) transfers to Borrower or its Subsidiaries to the extent
constituting a Permitted Investment and (h) other sales or dispositions not in
excess of $250,000 for any individual sale or disposition and not in excess of
$1,000,000 for all such sales or dispositions occurring during any fiscal year
of Borrower.
"Permitted Intercompany Investments" means an Intercompany
Investment in any entity that is or becomes a Subsidiary of Borrower, other than
an Inactive Subsidiary, so long as no Event of Default exists at the time of the
making of such Intercompany Investment or would exist after giving effect
thereto; provided that (i) each such Subsidiary, other than a Foreign
Subsidiary, shall have provided a Guaranty to Lender and its Stock shall have
been pledged to Lender, (ii) Intercompany Investments in Foreign Subsidiaries
made after the date hereof shall not exceed $750,000 in the aggregate amount
made during any month, (iii) Intercompany Investments in Foreign Subsidiaries
(in addition to those referenced in clause (ii) above) in an amount not to
exceed $250,000 in the aggregate until this Agreement is terminated and the
Obligations paid in full, and (iv) Intercompany Investments in UK Obligor are
not permitted until the UK Conditions have been satisfied.
"Permitted Investments" means (a) investments in Cash
Equivalents, (b) investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) Investments taken in connection with the discharge of a
doubtful Account (e) Investments existing on the date hereof in Subsidiaries of
Borrower and (f) Permitted Intercompany Investments.
"Permitted Liens" means (a) Liens held by Lender, (b) Liens
for unpaid taxes, assessments or other governmental charges that either (i) are
not yet delinquent, or (ii) do not constitute an Event of Default hereunder and
are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1 and
renewals and extensions thereof, (d) the interests of licensors
-22-
or lessors under any license or operating leases and the interests of licensees
or lessees under any license or operating leases, (e) purchase money Liens or
the interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
Liens arising by contract or operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, or laborers, and Liens arising by
operation of law in favor of suppliers, in each case incurred in the ordinary
course of business and not in connection with the borrowing of money, and which
Liens either (i) are for sums not yet delinquent, or (ii) are the subject of
Permitted Protests, (g) Liens arising from deposits made in connection with
obtaining worker's compensation or other unemployment insurance, (h) Liens or
deposits to secure performance of bids, tenders, leases, or statutory
obligations incurred in the ordinary course of business and not in connection
with the borrowing of money or to secure letters of credit in respect of such
performance, (i) Liens granted as security for surety or performance bonds
obtained in the ordinary course of business or appeal bonds, (j) Liens resulting
from any judgment or award that is not an Event of Default hereunder, (k) Liens
with respect to the Real Property Collateral that are exceptions to the
commitments for title insurance issued in connection with the Mortgage, as
accepted by Lender, including the first priority mortgage Lien on the Real
Property Collateral in favor of ▇▇▇▇ Bank, S.S.B., (l) with respect to any Real
Property that is not part of the Real Property Collateral, easements, rights of
way, zoning restrictions and other encumbrances that do not materially interfere
with or impair the use or operation thereof, (m) precautionary UCC financing
statement filings regarding operating leases, and (n) Liens of depositories to
the extent securing obligations for fees, chargebacks and incidental expenses
arising in connection with deposit accounts and Liens of financial
intermediaries to the extent securing obligations for fees, chargebacks and
incidental expenses arising in connection with securities accounts.
"Permitted Priority Liens" means Permitted Liens that are
entitled to have priority over the Lender's Liens, which shall consist of (a)
Liens securing the Dallas Mortgage Loan, (b) Liens securing Permitted Purchase
Money Indebtedness, (c) Liens on cash deposits under clauses (g), (h) and (i) of
the definition of "Permitted Liens" and (d) Liens under clause (n) of the
definition of "Permitted Liens".
"Permitted Protest" means the right of Borrower or any of its
Subsidiaries, as applicable, to protest any Lien (other than any such Lien that
secures the Obligations), taxes (other than payroll taxes or taxes that are the
subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on the Books in
such amount as is required under GAAP, (b) any such protest is instituted
promptly and prosecuted diligently by Borrower or any of its Subsidiaries, as
applicable, in good faith, and (c) while any such protest is pending, no
impairment of the enforceability, validity, or priority of any of the Lender's
Liens occurs.
"Permitted Purchase Money Indebtedness" means, as of any date
of determination, Purchase Money Indebtedness incurred after the date hereof in
an aggregate principal amount outstanding at any one time not in excess of
$1,000,000.
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"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Borrower Collateral
other than Real Property.
"Pledge Agreement" means a pledge agreement, in form and
substance satisfactory to Lender, executed and delivered by Borrower and certain
of its Subsidiaries to Lender with respect to the pledge of the Stock and
partnership interests owned by Borrower and such Subsidiaries.
"Principal Officers Certificate" means a certificate
substantially in the form of Exhibit P-1 delivered by the principal executive
officer and principal financial officer of Borrower to Lender.
"Projections" means Borrower's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"RealCare Maintenance Contract" means a contract pursuant to
which Borrower or UK Obligor agrees to provide to a customer 1-800 telephone
support, technical assistance, remote troubleshooting, applicable software patch
releases and minor revision releases, and if required, on-site hardware repair
services.
"Real Property" means any estates or interests in real
property now owned or hereafter acquired by Borrower and the improvements
thereto.
"Real Property Collateral" means the parcel or parcels of Real
Property identified on Schedule R-1 and any Real Property hereafter acquired by
Borrower.
"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Recurring Maintenance Revenues" means, with respect to any
period, the revenues of Borrower and UK Obligor for such period that are derived
from contractual provisions providing for an agreed upon periodic payment (as
opposed to a episodic payment, e.g., move-add-change and maintenance-per-call)
for the provision of maintenance
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services and ongoing services and support as reflected in the financial
statements of Borrower and UK Obligor prepared in accordance with their
historical practices.
"Remedial Action" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Report" has the meaning set forth in Section 16.17.
"Required Availability" means the sum of Excess Availability
plus unrestricted cash and Cash Equivalents, in an amount of not less than
$5,000,000.
"Reserve Percentage" means, on any day, for Lender, the
maximum percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of Lender, but so long as
Lender is not required or directed under applicable regulations to maintain such
reserves, the Reserve Percentage shall be zero.
"Revolver Usage" means, as of any date of determination, the
sum of (a) the then extant amount of outstanding Advances, plus (b) the then
extant amount of the Letter of Credit Usage.
"Royalties" means royalties that are payable by Borrower or
any of its Subsidiaries pursuant to any agreements relating to licensing
software from a third Person and providing related services.
"Royalties Reserve" means an amount equal to 50% of accrued
Royalties (assuming payment on a quarterly basis) from the immediately preceding
quarterly period, accrued on a monthly basis plus 100% of past-due, accrued
Royalties from any prior quarterly periods, if unpaid, measured monthly and
effective as of the first day of each month. For the avoidance of doubt, the
following example illustrates the mechanics of the Royalties Reserve: If the
Royalties for the quarterly period January 1 through March 31 total $1,200,000,
the Royalties Reserve from April 1 through April 30 is $200,000, from May 1
through May 31 is $400,000, and from June 1 through June 30 is $600,000. If
after June 30 the Royalties for the January 1 - March 31 quarter are not paid,
$1,200,000 will be added to the Royalties Reserve as of July 1.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
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"Securities Account" means a "securities account" as that term
is defined in the Code.
"Securities Purchase Agreement" means that certain Securities
Purchase Agreement dated as of May 29, 2002, among Borrower, HFTP Investment
L.L.C., Gaia Offshore Master Fund, Ltd., and Caerus Fund Ltd.
"Singapore Sub" means Brite Voice Systems, Plc Ltd, a
Singapore corporation.
"Software Support Contract" means a contract pursuant to which
Borrower or UK Obligor agrees to provide a customer with updates to standard
software or feature or interface software over the term of the contract.
"Solvent" means, with respect to any Person on a particular
date, that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
"Taxes" has the meaning set forth in Section 16.5.
"Term Loan" has the meaning set forth in Section 2.2.
"Term Loan Amount" means $10,000,000.
"Term Loan Closing Date" means the date after the Domestic
Revolver Closing Date on which all of the Term Loan Conditions are satisfied and
the Term Loan is funded.
"Term Loan Conditions" means (a) Lender shall have received
certified copies of the policies of insurance, together with the endorsements
thereto, in respect of assets owned by UK Obligor, as are required hereby, the
form and substance of which shall be satisfactory to Lender, (b) the UK
Guarantee and Debenture and any other UK Security Documents shall have been
executed and delivered to Lender, (c) Lender shall have received a Collateral
Access Agreement with respect to UK Obligor's location in Manchester, England,
(d) Lender shall have received satisfactory evidence that the security interests
-26-
granted in favor of Lender pursuant to the UK Security Documents have been duly
perfected and are senior in priority to all other liens, claims, security
interests, or encumbrances, except for Permitted Liens and all conditions to the
effectiveness of the UK Security Documents have been satisfied, (e) Lender shall
have received an opinion of UK Obligor's counsel, in form and substance
satisfactory to Lender, (f) Lender shall have received a certificate from the
Secretary of UK Obligor attesting to the resolutions of UK Obligor's Board of
Directors (or the UK equivalent thereof) authorizing the execution, delivery,
and performance of the Loan Documents to which UK Obligor is a party and
authorizing specific officers of UK Obligor to execute the same, (g) Lender
shall have received copies of UK Obligor's Governing Documents, as amended,
modified, or supplemented to the Term Loan Closing Date, certified by the
Secretary of UK Obligor, (h) Lender shall have received a certificate of status
with respect to UK Obligor, dated within 20 days of the Term Loan Closing Date,
such certificate to be issued by the appropriate officer of the jurisdiction of
organization of UK Obligor, which certificate shall indicate that UK Obligor is
in good standing in such jurisdiction, and (i) satisfaction of the conditions in
Section 3.1.
"Trademark Security Agreement" means a trademark security
agreement executed and delivered by Borrower, IVLP and Lender, the form and
substance of which is satisfactory to Lender.
"TTM EBITDA" means, as of any date of determination, the
EBITDA of Borrower and its Subsidiaries for the 12 month period most recently
ended for which Borrower has delivered (or is obligated to have delivered)
financial statements pursuant hereto.
"UK Conditions" means (a) satisfaction of the Term Loan
Conditions and (b) Lender shall have completed a collateral audit with respect
to the assets of UK Obligor and an examination of UK Obligor's Books,.
"UK Currency" means the lawful money of the United Kingdom.
"UK Obligor" means Intervoice-Brite Limited, a private limited
company incorporated in England and Wales with company number 02601740.
"UK Guarantee and Debenture" means that certain Guarantee and
Debenture between UK Obligor and Lender, in form and substance reasonably
satisfactory to Lender.
"UK Security Documents" means, collectively, such instruments,
agreements, and documents governed by the laws of the United Kingdom or any
political subdivision thereof, as Lender may require in order to secure the
obligations of UK Obligor, including the UK Guarantee and Debenture.
"Underlying Issuer" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of Lender for the benefit of Borrower.
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"Underlying Letter of Credit" means a letter of credit that
has been issued by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in Section 16.8.
"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). All references to the satisfaction of Lender, acceptability
to Lender or similar references shall mean to the reasonable satisfaction of
Lender. All references to a schedule to this Agreement at the time of any
restatement or deemed restatement of any representation or warranty after the
date hereof shall include each amendment or supplement to such schedule provided
by Borrower to Lender prior to the date of such restatement or deemed
restatement. Any reference herein to any Person shall be construed to include
such Person's successors and assigns. Any requirement of a writing contained
herein or in the other Loan Documents shall be satisfied by the transmission of
a Record and any Record transmitted shall constitute a representation and
warranty as to the accuracy and completeness of the information contained
therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
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2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, Lender agrees to make advances ("Advances")
to Borrower in an amount at any one time outstanding not to exceed an amount
equal to the lesser of (i) the Maximum Revolver Amount less the sum of (y) the
then outstanding principal amount of the Term Loan, and (z) the Letter of Credit
Usage, or (ii) the Borrowing Base less the Letter of Credit Usage. For purposes
of this Agreement, "Borrowing Base," as of any date of determination, shall mean
the result of:
(y) (A) 85% of the amount of Eligible Domestic
Accounts; provided that Eligible Domestic Accounts
with respect to which the Account Debtor maintains
its chief executive office in Canada or is organized
under the laws of Canada or any province thereof
shall be limited such that Advances attributable to
such Eligible Domestic Accounts do not exceed
$1,000,000 (U.S. Dollars) at any one time
outstanding, plus (B) after the satisfaction of the
UK Conditions, the lesser of (1) 75% of the amount of
Eligible UK Accounts and (2) $5,000,000, less (C) the
amount, if any, of the Dilution Reserve,
minus
(z) the sum of (i) the Bank Products Reserve, (ii)
the Exchange Rate Reserve, (iii) the Royalties
Reserve, and (iv) the aggregate amount of reserves,
if any, established by Lender under Section 2.1(b).
(b) Anything to the contrary in this Section 2.1
notwithstanding, but without duplication of any matter otherwise subject to any
reserve under Section 2.1(a) or used to exclude or reduce any portion of
Accounts from Eligible Accounts, Lender shall have the right to establish
reserves in such amounts, and with respect to such matters, as Lender in its
Permitted Discretion shall deem necessary or appropriate, against the Borrowing
Base, including reserves with respect to (i) sums that Borrower or any of its
Subsidiaries is required to pay (such as taxes, assessments, insurance premiums,
or, in the case of leased assets, rents or other amounts payable under such
leases) and has failed to pay under any Section of this Agreement or any other
Loan Document, and (ii) amounts owing by Borrower or any of its Subsidiaries to
any Person to the extent secured by a Lien on, or trust over, any item of
Collateral (other than any Permitted Priority Lien), which Lien or trust, in the
Permitted Discretion of Lender likely would have a priority superior to the
Lender's Liens (such as Liens or trusts in favor of landlords, warehousemen,
carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for
ad valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral.
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(c) Lender shall have no obligation to make additional
Advances hereunder to the extent such additional Advances would cause the
Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
(e) Borrower may request, at any time and from time to time,
that any of its Subsidiaries that is not an Inactive Subsidiary or a Foreign
Subsidiary be made a Borrowing Base Participant and Lender agrees that its
consent to such request shall not be unreasonably withheld.
2.2 TERM LOAN.
Subject to the terms and conditions of this Agreement, on the
Term Loan Closing Date Lender agrees to make a term loan (the "Term Loan") to
Borrower in an amount equal to the Term Loan Amount. The principal amount of the
Term Loan shall be repaid in (a) 35 equal monthly installments of principal in
the amount of $277,778 which shall be due and payable on the first day of each
month commencing on the first day of the month following the Term Loan Closing
Date, and (b) a final installment of all outstanding unpaid principal which
shall be due and payable on the Maturity Date. The outstanding unpaid principal
balance and all accrued and unpaid interest under the Term Loan shall be due and
payable on the date of termination of this Agreement, whether by its terms, by
prepayment, or by acceleration. All amounts outstanding under the Term Loan
shall constitute Obligations. Borrower may, without premium or penalty, prepay
the principal amount of the Term Loan in full or, from time to time, in part, at
any time upon three Business Days prior notice to Lender so long as the amount
prepaid is at least $1,000,000 and, after giving effect to such prepayment,
Borrower has Excess Availability plus unrestricted cash and Cash Equivalents in
an amount of at least $5,000,000. Any optional prepayment of the Term Loan shall
be accompanied with accrued interest on the amount prepaid to the date of such
prepayment. Any partial prepayments of the Term Loan in amounts of $3,000,000 or
more shall be applied to installments due under the Term Loan pro rata with
respect to each remaining installment of principal. Any partial prepayments of
the Term Loan in amounts of less than $3,000,000 shall be applied to
installments due under the Term Loan in inverse order of maturity.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by a
request by an Authorized Person delivered to Lender (which notice must be
received by Lender no later than 10:00 a.m. (
California time) on the Business
Day that is the requested Funding Date specifying (i) the amount of such
Borrowing, and (ii) the requested Funding Date, which shall be a Business Day.
At Lender's election, in lieu of delivering the above-described request in
writing, any Authorized Person may give Lender telephonic notice of such
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request by the required time, with such telephonic notice to be confirmed in
writing within 24 hours of the giving of such notice.
(b) MAKING OF ADVANCES. If Lender has received a timely
request for a Borrowing in accordance with the provisions hereof, and subject to
the satisfaction of the applicable terms and conditions set forth herein, Lender
shall make the proceeds of such Advance available to Borrower on the applicable
Funding Date by transferring immediately available funds equal to such proceeds
to Borrower's Designated Account.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWER.
(i) Except as otherwise expressly provided herein, all
payments by Borrower shall be made to Lender's Account and shall
be made in immediately available funds, no later than 11:00 a.m.
(
California time) on the date specified herein. Any payment
received by Lender later than 11:00 a.m. (
California time) shall
be deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue until
such following Business Day.
(b) APPLICATION AND REVERSAL OF PAYMENTS.
(i) All payments shall be remitted to Lender and all such
payments (other than payments received while no Event of Default
has occurred and is continuing and which relate to the payment of
principal or interest of specific Obligations or which relate to
the payment of specific fees), and all proceeds of Accounts or
other Collateral received by Lender, shall be applied as follows:
(A) first, to pay any Lender Expenses then due to
Lender under the Loan Documents, until paid in full,
(B) second, to pay any fees then due to Lender under
the Loan Documents until paid in full,
(C) third, ratably to pay interest due in respect of
the Advances and the Term Loan until paid in full,
(D) fourth, to pay all principal amounts then due and
payable (other than as a result of an acceleration thereof)
with respect to the Term Loan until paid in full,
(E) fifth, so long as no Event of Default has
occurred and is continuing, and at Lender's election, to pay
amounts then due and
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owing by Borrower or its Subsidiaries in respect of Bank
Products, until paid in full,
(F) sixth, so long as no Event of Default has
occurred and is continuing, to pay the principal of all
Advances until paid in full,
(G) seventh, if an Event of Default has occurred and
is continuing, ratably (i) to pay the principal of all
Advances until paid in full, and (ii) to Lender, to be held by
Lender, for the benefit of ▇▇▇▇▇ Fargo or its Affiliates, as
applicable, as cash collateral in an amount up to the amount
of the Bank Products Reserve established prior to the
occurrence of, and not in contemplation of, the subject Event
of Default until Borrower's and its Subsidiaries' obligations
in respect of the then extant Bank Products have been paid in
full or the cash collateral amount has been exhausted,
(H) eighth, if an Event of Default has occurred and
is continuing, to pay the outstanding principal balance of the
Term Loan (in the inverse order of the maturity of the
installments due thereunder) until the Term Loan is paid in
full,
(I) ninth, if an Event of Default has occurred and is
continuing, to be held by Lender as cash collateral in an
amount up to 105% of the then extant Letter of Credit Usage
until paid in full,
(J) tenth, to pay any other Obligations until paid in
full, and
(K) eleventh, to Borrower (to be wired to the
Designated Account) or such other Person entitled thereto
under applicable law.
(ii) In each instance, so long as no Event of Default has
occurred and is continuing, Section 2.4(b) shall not be deemed to
apply to any payment by Borrower specified by Borrower to be for
the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
(iii) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to
the terms thereof, including loan fees, service fees, professional
fees, interest (and specifically including interest accrued after
the commencement of any Insolvency Proceeding), default interest,
interest on interest, and expense reimbursements, whether or not
the same would be or is allowed or disallowed in whole or in part
in any Insolvency Proceeding.
(iv) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in
any other Loan
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Document, it is the intention of the parties hereto that such
priority provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in concert with
each other. In the event of any actual, irreconcilable conflict
that cannot be resolved as aforesaid, the terms and provisions of
this Section 2.4 shall control and govern.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrower to Lender
pursuant to Sections 2.1 and 2.12 is greater than either the Dollar or
percentage limitations set forth in Sections 2.1 or 2.12, (an "Overadvance"),
Borrower immediately shall pay to Lender, in cash, the amount of such excess,
which amount shall be used by Lender to reduce the Obligations in accordance
with the priorities set forth in Section 2.4(b). In addition, Borrower hereby
promises to pay the Obligations (including principal, interest, fees, costs, and
expenses) in Dollars in full to Lender as and when due and payable under the
terms of this Agreement and the other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below,
all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest on the Daily Balance thereof as follows (i) if
the relevant Obligation is a portion of the Term Loan, at a per annum rate equal
to the Base Rate plus the Base Rate Term Loan Margin, (ii) if the relevant
Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate equal to
the LIBOR Rate plus the Applicable LIBOR Rate Margin, and (iii) otherwise, at a
per annum rate equal to the Base Rate plus the Applicable Base Rate Margin.
The foregoing notwithstanding, at no time shall any portion of the
Obligations (other than Bank Product Obligations) bear interest on the Daily
Balance thereof at a per annum rate less than 5.0%. To the extent that interest
accrued hereunder at the rate set forth herein would be less than the foregoing
minimum daily rate, the interest rate chargeable hereunder for such day
automatically shall be deemed increased to the minimum rate.
(b) LETTER OF CREDIT FEE. Borrower shall pay Lender a Letter
of Credit fee (in addition to the charges, commissions, fees, and costs set
forth in Section 2.12(e)) which shall accrue at a rate equal to 2.00% per annum
times the Daily Balance of the undrawn amount of all outstanding Letters of
Credit.
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default, upon notice by Lender to Borrower that the
Default Rate shall apply,
(i) all Obligations (except for undrawn Letters of
Credit and except for Bank Product Obligations) that have been
charged to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof at a per annum rate
equal to 3 percentage points above the per annum rate
otherwise applicable hereunder, and
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(ii) the Letter of Credit fee provided for above
shall be increased to 3 percentage points above the per annum
rate otherwise applicable hereunder.
(d) PAYMENT. Interest, Letter of Credit fees, and all other
fees payable hereunder shall be due and payable, in arrears, on the first day of
each month at any time that Obligations or obligation to extend credit hereunder
are outstanding. Borrower hereby authorizes Lender, from time to time without
prior notice to Borrower, to charge such interest and fees, all Lender Expenses
(as and when incurred), the charges, commissions, fees, and costs provided for
in Section 2.12(e) (as and when accrued or incurred), the fees and costs
provided for in Section 2.11 (as and when accrued or incurred), and all other
payments as and when due and payable under any Loan Document (including the
installments due and payable with respect to the Term Loan and including any
amounts due and payable to ▇▇▇▇▇ Fargo or its Affiliates in respect of Bank
Products up to the amount of the then extant Bank Products Reserve) to
Borrower's Loan Account, which amounts thereafter shall constitute Advances
hereunder and shall accrue interest at the rate then applicable to Advances
hereunder. Any interest not paid when due shall be compounded by being charged
to Borrower's Loan Account and shall thereafter constitute Advances hereunder
and shall accrue interest at the rate then applicable to Advances that are Base
Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrower and Lender, in executing and delivering
this Agreement, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; provided, however, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then, ipso
facto, as of the date of this Agreement, Borrower is and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Borrower in excess of such legal maximum, whenever received, shall be applied to
reduce the principal balance of the Obligations to the extent of such excess.
2.7 CASH MANAGEMENT.
(a) Borrower shall (i) establish and maintain cash management
services of a type and on terms satisfactory to Lender at one or more of the
banks set forth on Schedule 2.7(a) (each, a "Cash Management Bank"), and shall
request in writing and
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otherwise take such reasonable steps to ensure that all of its Account Debtors
forward payment of the amounts owed by them directly to such Cash Management
Bank, and (ii) deposit or cause to be deposited promptly, and in any event no
later than the first Business Day after the date of receipt thereof, all
Collections (including those sent directly by Account Debtors to a Cash
Management Bank) into a bank account in Lender's name (a "Cash Management
Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain
Cash Management Agreements with Lender and Borrower, in form and substance
acceptable to Lender. Each such Cash Management Agreement shall provide, among
other things, that (i) all items of payment deposited in such Cash Management
Account and proceeds thereof are held by such Cash Management Bank as agent or
bailee-in-possession for Lender, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to the Lender's
Account.
(c) So long as no Default or Event of Default has occurred and
is continuing, Borrower may amend Schedule 2.7(a) to add or replace a Cash
Management Bank or Cash Management Account; provided, however, that (i) such
prospective Cash Management Bank shall be satisfactory to Lender and Lender
shall have consented in writing in advance to the opening of such Cash
Management Account with the prospective Cash Management Bank, and (ii) prior to
the time of the opening of such Cash Management Account, Borrower and such
prospective Cash Management Bank shall have executed and delivered to Lender a
Cash Management Agreement. Borrower shall close any of its Cash Management
Accounts (and establish replacement cash management accounts in accordance with
the foregoing sentence) promptly and in any event within 30 days of notice from
Lender that the creditworthiness of any Cash Management Bank is no longer
acceptable in Lender's reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from Lender that the operating performance,
funds transfer, or availability procedures or performance of the Cash Management
Bank with respect to Cash Management Accounts or Lender's liability under any
Cash Management Agreement with such Cash Management Bank is no longer acceptable
in Lender's reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Borrower is hereby deemed to
have granted a Lien to Lender.
2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt of any payment item
by Lender (whether from transfers to Lender by the Cash Management Banks
pursuant to the Cash Management Agreements or otherwise) shall not be considered
a payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Lender's Account or unless and until such
payment item is honored when presented for payment. Should any payment item not
be honored when presented for payment, then
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Borrower shall be deemed not to have made such payment and interest shall be
calculated accordingly. Anything to the contrary contained herein
notwithstanding, any payment item shall be deemed received by Lender only if it
is received into the Lender's Account on a Business Day on or before 11:00 a.m.
(
California time). If any payment item is received into the Lender's Account on
a non-Business Day or after 11:00 a.m. (
California time) on a Business Day, it
shall be deemed to have been received by Lender as of the opening of business on
the immediately following Business Day. From and after the Domestic Revolver
Closing Date, Lender shall be entitled to charge Borrower for 1 Business Day of
`clearance' or `float' at the rate applicable to Base Rate Loans under Section
2.6 on all Collections that are received by Borrower (regardless of whether
forwarded by the Cash Management Banks to Lender). This across-the-board 1
Business Day clearance or float charge on all Collections is acknowledged by the
parties to constitute an integral aspect of the pricing of the financing of
Borrower and shall apply irrespective of whether or not there are any
outstanding monetary Obligations; the effect of such clearance or float charge
being the equivalent of charging 1 Business Day of interest on such Collections.
2.9 DESIGNATED ACCOUNT. Lender is authorized to make the Advances and
the Term Loan, and Lender is authorized to issue the Letters of Credit, under
this Agreement based upon telephonic or other instructions received from an
Authorized Person, or without instructions if pursuant to Section 2.6(d).
Borrower agrees to establish and maintain the Designated Account with the
Designated Account Bank for the purpose of receiving the proceeds of the
Advances requested by Borrower and made by Lender hereunder. Unless otherwise
agreed by Lender and Borrower, any Advance requested by Borrower and made by
Lender hereunder shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Lender
shall maintain an account on its books in the name of Borrower (the "Loan
Account") on which Borrower will be charged with the Term Loan, all Advances
made by Lender to Borrower or for Borrower's account, the Letters of Credit
issued by Lender for Borrower's account, and with all other payment Obligations
hereunder or under the other Loan Documents (except for Bank Product
Obligations), including, accrued interest, fees and expenses, and Lender
Expenses. In accordance with Section 2.8, the Loan Account will be credited with
all payments received by Lender from Borrower or for Borrower's account,
including all amounts received in the Lender's Account from any Cash Management
Bank. Lender shall render statements regarding the Loan Account to Borrower,
including principal, interest, fees, and including an itemization of all charges
and expenses constituting Lender Expenses owing, and such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrower and Lender unless, within 30 days after receipt thereof
by Borrower, Borrower shall deliver to Lender written objection thereto
describing the error or errors contained in any such statements.
2.11 FEES; REDUCTION OF THE MAXIMUM REVOLVER AMOUNT. Borrower shall pay
to Lender the following fees and charges, which fees and charges shall be
non-refundable when paid, except for corrections of errors in the determination
thereof (irrespective of whether this Agreement is terminated thereafter):
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(a) UNUSED LINE FEE. On the first day of each month during the
term of this Agreement, an unused line fee in an amount equal to 0.50% per annum
times the result of (a) the Maximum Revolver Amount, less (b) the sum of (i) the
average Daily Balance of Advances that were outstanding during the immediately
preceding month, plus (ii) the average Daily Balance of the Letter of Credit
Usage during the immediately preceding month, plus (iii) the average Daily
Balance of principal that was outstanding on the Term Loan during the
immediately preceding month.
(b) FEE LETTER FEES. As and when due and payable under the
terms of the Fee Letter, Borrower shall pay to Lender the fees set forth in the
Fee Letter, and
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. Audit, appraisal,
and valuation fees and charges as follows (i) a fee of $850 per day, per
auditor, plus reasonable out-of-pocket expenses for each financial audit of
Borrower performed by personnel employed by Lender, (ii) if implemented, a one
time charge of $5,000 plus reasonable out-of-pocket expenses for expenses for
the establishment of electronic collateral reporting systems, (iii) a fee of
$1,500 per day per appraiser, plus reasonable out-of-pocket expenses, for each
appraisal of the Collateral performed by personnel employed by Lender, and (iv)
the actual charges paid or incurred by Lender if it elects to employ the
services of one or more third Persons to perform financial audits of Borrower,
to appraise the Collateral, or any portion thereof, or to assess Borrower's
business valuation. Unless an Event of Default has occurred and is continuing,
Borrower shall not be obligated to pay the fees under this Section 2.11(c) with
respect to more than one audit during any period of three consecutive calendar
months or with respect to more than one appraisal of the Collateral during any
period of twelve calendar months.
(d) Borrower may voluntarily reduce the Maximum Revolver
Amount in a minimum amount of $5,000,000 and increments of $1,000,000 above such
amount at any time or from time to time upon 10 days written notice to Lender,
so long as after giving effect to such reduction, the Maximum Revolver Amount is
not less than the sum of the outstanding Advances plus the Letter of Credit
Usage plus outstanding principal on the Term Loan. At the time of any such
reduction (other than upon a termination of this Agreement pursuant to Section
3.6), Borrower shall pay to Lender a fee in the amount of the product of the
Applicable Prepayment Premium Rate times the amount of such reduction of the
Maximum Revolver Amount.
2.12 LETTERS OF CREDIT
(a) Subject to the terms and conditions of this Agreement,
Lender agrees to issue letters of credit for the account of Borrower (each, an
"L/C") or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an "L/C Undertaking") with respect to
letters of credit issued by an Underlying Issuer (as of the Domestic Revolver
Closing Date, such issuing bank to be ▇▇▇▇▇ Fargo) for the account of Borrower.
To request the issuance of an L/C or an L/C Undertaking (or the amendment,
renewal, or extension of an outstanding L/C or L/C Undertaking), Borrower shall
hand
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deliver or telecopy (or transmit by electronic communication, if arrangements
for doing so have been approved by Lender) to Lender and Lender (reasonably in
advance of the requested date of issuance, amendment, renewal, or extension) a
notice requesting the issuance of an L/C or L/C Undertaking, or identifying the
L/C or L/C Undertaking to be amended, renewed, or extended, the date of
issuance, amendment, renewal, or extension, the date on which such L/C or L/C
Undertaking is to expire, the amount of such L/C or L/C Undertaking, the name
and address of the beneficiary thereof (or the beneficiary of the Underlying
Letter of Credit, as applicable), and such other information as shall be
necessary to prepare, amend, renew, or extend such L/C or L/C Undertaking. If
requested by Lender, Borrower also shall be an applicant under the application
with respect to any Underlying Letter of Credit that is to be the subject of an
L/C Undertaking. Lender shall have no obligation to issue a Letter of Credit if
any of the following would result after giving effect to the requested Letter of
Credit:
(i) the Letter of Credit Usage would exceed the
Borrowing Base less the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed
$2,500,000, or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount less the sum of (y) the outstanding
principal amount of the Term Loan, and (z) the then extant
amount of outstanding Advances.
Borrower and Lender acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Domestic Revolver Closing Date. Each Letter of
Credit (and corresponding Underlying Letter of Credit) shall be in form and
substance acceptable to Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Lender is obligated to advance funds under a Letter of Credit,
Borrower immediately shall reimburse such L/C Disbursement to Lender by paying
to Lender an amount equal to such L/C Disbursement not later than 11:00 a.m.,
California time, on the date that such L/C Disbursement is made, if Borrower
shall have received written or telephonic notice of such L/C Disbursement prior
to 10:00 a.m.,
California time, on such date, or, if such notice has not been
received by Borrower prior to such time on such date, then not later than 11:00
a.m., California time, on the Business Day that Borrower receives such notice,
if such notice is received prior to 10:00 a.m., California time, on the date of
receipt, and, in the absence of such reimbursement, the L/C Disbursement
immediately and automatically shall be deemed to be an Advance hereunder and,
thereafter, shall bear interest at the rate then applicable to Advances that are
Base Rate Loans under Section 2.6. To the extent an L/C Disbursement is deemed
to be an Advance hereunder, Borrower's obligation to reimburse such L/C
Disbursement shall be discharged and replaced by the resulting Advance.
(b) Borrower hereby agrees to indemnify, save, defend,
and hold Lender harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees
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incurred by Lender arising out of or in connection with any Letter of Credit;
provided, however, that Borrower shall not be obligated hereunder to indemnify
for any loss, cost, expense, or liability that is caused by the gross negligence
or willful misconduct of Lender. Borrower agrees to be bound by the Underlying
Issuer's regulations and interpretations of any Underlying Letter of Credit or
by Lender's interpretations of any L/C issued by Lender to or for Borrower's
account, even though this interpretation may be different from Borrower's own,
and Borrower understands and agrees that Lender shall not be liable for any
error, negligence, or mistake, whether of omission or commission, in following
Borrower's instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto except any loss, cost,
expense, or liability that is caused by the gross negligence or willful
misconduct of Lender. Borrower understands that the L/C Undertakings may require
Lender to indemnify the Underlying Issuer for certain costs or liabilities
arising out of claims by Borrower against such Underlying Issuer. Borrower
hereby agrees to indemnify, save, defend, and hold Lender harmless with respect
to any loss, cost, expense (including reasonable attorneys fees), or liability
incurred by Lender under any L/C Undertaking as a result of Lender's
indemnification of any Underlying Issuer; provided, however, that Borrower shall
not be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of
Lender.
(c) Borrower hereby authorizes and directs any Underlying
Issuer to deliver to Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon Lender's instructions with respect to all
matters arising in connection with such Underlying Letter of Credit and the
related application.
(d) Any and all charges, commissions, fees, and costs
incurred by Lender relating to Underlying Letters of Credit shall be Lender
Expenses for purposes of this Agreement and immediately shall be reimbursable by
Borrower to Lender for the account of Lender; it being acknowledged and agreed
by Borrower that, as of the date hereof, the issuance charge imposed by the
prospective Underlying Issuer is .825% per annum times the face amount of each
Underlying Letter of Credit, that such issuance charge may be changed from time
to time, and that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals.
(e) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Underlying
Issuer or Lender with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or monetary
authority including, Regulation D of the Federal Reserve Board as from time to
time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or
shall be imposed or modified in respect of any Letter of
Credit issued hereunder, or
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(ii) there shall be imposed on the Underlying Issuer or
Lender any other condition regarding any Underlying Letter of
Credit or any Letter of Credit issued pursuant hereto,
and the result of the foregoing is to increase, directly or indirectly, the cost
to Lender of issuing, making, guaranteeing, or maintaining any Letter of Credit
or to reduce the amount receivable in respect thereof by Lender, then, and in
any such case, Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify Borrower,
and Borrower shall pay on demand such amounts as Lender may specify to be
necessary to compensate Lender for such additional cost or reduced receipt,
together with interest on such amount from the date of such demand until payment
in full thereof at the rate then applicable to Base Rate Loans hereunder. The
determination by Lender of any amount due pursuant to this Section, as set forth
in a certificate setting forth the calculation thereof in reasonable detail,
shall, in the absence of manifest or demonstrable error, be final and conclusive
and binding on all of the parties hereto.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having
interest charged at the rate based upon the Base Rate, Borrower shall have the
option (the "LIBOR Option") to have interest on all or a portion of the Advances
be charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR
Rate Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the occurrence of an Event of Default in
consequence of which Lender has elected to accelerate the maturity of all or any
portion of the Obligations, or (iii) termination of this Agreement pursuant to
the terms hereof; provided that with respect to Interest Periods of 6 months,
interest shall also be payable on first day of each month during such Interest
Period. On the last day of each applicable Interest Period, unless Borrower
properly has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrower no longer
shall have the option to request that Advances bear interest at the LIBOR Rate
and Lender shall have the right to convert the interest rate on all outstanding
LIBOR Rate Loans to the rate then applicable to Base Rate Loans hereunder so
long as Borrower is not charged for any Funding Losses as a result thereof.
(b) LIBOR ELECTION.
(i) Borrower may, at any time and from time to time, so long
as no Event of Default has occurred and is continuing, elect to
exercise the LIBOR Option by notifying Lender prior to 11:00 a.m.
(California time) at least 3 Business Days prior to the commencement of
the proposed Interest Period (the "LIBOR Deadline"). Notice of
Borrower's election of the LIBOR Option for a permitted portion of the
Advances or the Term Loan and an Interest Period pursuant to this
Section shall be made by delivery to Lender of a LIBOR
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Notice received by Lender before the LIBOR Deadline, or by telephonic
notice received by Lender before the LIBOR Deadline (to be confirmed by
delivery to Lender of a LIBOR Notice received by Lender prior to 5:00
p.m. (California time) on the same day.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrower. In connection with each LIBOR Rate Loan, Borrower shall
indemnify, defend, and hold Lender harmless against any loss, cost, or
expense incurred by Lender as a result of (a) the payment of any
principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event
of Default), (b) the conversion of any LIBOR Rate Loan other than on
the last day of the Interest Period applicable thereto, or (c) the
failure to borrow, convert, continue or prepay any LIBOR Rate Loan on
the date specified in any LIBOR Notice delivered pursuant hereto (such
losses, costs, and expenses, collectively, "Funding Losses"). Funding
Losses shall be deemed to equal the amount determined by Lender to be
the excess, if any, of (i) the amount of interest that would have
accrued on the principal amount of such LIBOR Rate Loan had such event
not occurred, at the LIBOR Rate that would have been applicable
thereto, for the period from the date of such event to the last day of
the then current Interest Period therefor (or, in the case of a failure
to borrow, convert, or continue, for the period that would have been
the Interest Period therefor), minus (ii) the amount of interest that
would accrue on such principal amount for such period at the interest
rate which Lender would be offered were it to be offered, at the
commencement of such period, Dollar deposits of a comparable amount and
period in the London interbank market. A certificate of Lender
delivered to Borrower setting forth any amount or amounts that Lender
is entitled to receive pursuant to this Section shall be conclusive
absent manifest error.
(iii) Borrower shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrower only may exercise the LIBOR Option
for LIBOR Rate Loans of at least $1,000,000 and integral multiples of
$500,000 in excess thereof.
(c) PREPAYMENTS. Borrower may prepay LIBOR Rate Loans at any
time; provided, however, that in the event that LIBOR Rate Loans are prepaid on
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Lender of proceeds of Collections in accordance with Section
2.4(b) or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, Borrower shall indemnify, defend, and hold Lender and its
Participants harmless against any and all Funding Losses in accordance with
clause (b)(ii) above. Lender agrees that so long as no Event of Default has
occurred and is continuing, at any time that outstanding Advances consist solely
of LIBOR Rate Loans, Collections shall not be applied
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to LIBOR Rate Loans (other than on the last day of an Interest Period), but
rather shall be remitted to Borrower.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Lender on a prospective
basis to take into account any additional or increased costs to Lender
of maintaining or obtaining any eurodollar deposits or increased costs
due to changes in applicable law occurring subsequent to the
commencement of the then applicable Interest Period, including changes
in tax laws (except changes of general applicability in corporate
income tax laws) and changes in the reserve requirements imposed by the
Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs
would increase the cost of funding loans bearing interest at the LIBOR
Rate. In any such event, Lender shall give Borrower notice of such a
determination and adjustment and, upon its receipt of the notice from
Lender, Borrower may, by notice to Lender (y) require Lender to furnish
to Borrower a statement setting forth the basis for adjusting such
LIBOR Rate and the method for determining the amount of such
adjustment, or (z) repay the LIBOR Rate Loans with respect to which
such adjustment is made (together with any amounts due under clause
(b)(ii) above).
(ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the date
hereof, in the reasonable opinion of Lender, make it unlawful or
impractical for Lender to fund or maintain LIBOR Advances or to
continue such funding or maintaining, or to determine or charge
interest rates at the LIBOR Rate, Lender shall give notice of such
changed circumstances to Borrower and (y) in the case of any LIBOR Rate
Loans that are outstanding and to the extent necessary to comply with
such change, the date specified in Lender's notice shall be deemed to
be the last day of the Interest Period of such LIBOR Rate Loans, and
interest upon the LIBOR Rate Loans thereafter shall accrue interest at
the rate then applicable to Base Rate Loans, and (z) Borrower shall not
be entitled to elect the LIBOR Option until Lender determines that it
would no longer be unlawful or impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the
contrary contained herein notwithstanding, neither Lender, nor any of its
Participants, is required actually to acquire eurodollar deposits to fund or
otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
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2.14 CAPITAL REQUIREMENTS. If, after the date hereof, Lender determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by Lender
or its parent bank holding company with any guideline, request, or directive of
any such entity regarding capital adequacy (whether or not having the force of
law), the effect of reducing the return on Lender's or such holding company's
capital as a consequence of Lender's obligations hereunder to a level below that
which Lender or such holding company could have achieved but for such adoption,
change, or compliance (taking into consideration Lender's or such holding
company's then existing policies with respect to capital adequacy and assuming
the full utilization of such entity's capital) by any amount deemed by Lender to
be material, then Lender may notify Borrower thereof. Following receipt of such
notice, Borrower agrees to pay Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by Lender of a statement in the amount and setting forth
in reasonable detail Lender's calculation thereof and the assumptions upon which
such calculation was based (which statement shall be deemed true and correct
absent manifest error). In determining such amount, Lender may use any
reasonable averaging and attribution methods.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of Lender to make the initial Advance (or otherwise to extend any
credit provided for hereunder other than the funding of the Term Loan), is
subject to the fulfillment, to the satisfaction of Lender, of each of the
conditions precedent set forth below:
(a) the Domestic Revolver Closing Date shall occur on or
before September 16, 2002;
(b) Lender shall have filed all financing statements required
by Lender, duly authorized by Borrower, and Lender shall have received searches
reflecting the filing of all such financing statements;
(c) Lender shall have received each of the following
documents, in form and substance satisfactory to Lender, duly executed, and each
such document shall be in full force and effect:
(i) the Control Agreements,
(ii) the Copyright Security Agreement,
(iii) the Disbursement Letter,
(iv) the Fee Letter,
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(v) the Guarantor Security Agreement,
(vi) the Guaranty,
(vii) the Intercompany Subordination Agreement,
(viii) the Junior Notes Subordination Agreement (unless the
Junior Notes are paid in full on the Domestic Revolver Closing
Date or the amount for such payment has been provided for pursuant
to Section 7.17(b)),
(ix) the Mortgage,
(x) the Officers' Certificate,
(xi) the Patent Security Agreement,
(xii) the Pay-Off Letter, together with UCC termination
statements and other documentation evidencing the termination by
Existing Lender of its Liens in and to the properties and assets of
Borrower and its Subsidiaries,
(xiii) the Pledge Agreement, together with certificates
representing 100% of the shares of Stock of certain of Borrower's
Subsidiaries, as well as Stock powers with respect thereto endorsed
in blank, and
(xiv) the Trademark Security Agreement;
(d) Lender shall have received a certificate from the
Secretary of Borrower attesting to the resolutions of Borrower's Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which Borrower is a party and authorizing
specific officers of Borrower to execute the same;
(e) Lender shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Domestic Revolver
Closing Date, certified by the Secretary of Borrower;
(f) Lender shall have received a certificate of status with
respect to Borrower, dated within 20 days of the Domestic Revolver Closing Date,
such certificate to be issued by the appropriate officer of the jurisdiction of
organization of Borrower, which certificate shall indicate that Borrower is in
good standing in such jurisdiction;
(g) Lender shall have received certificates of status with
respect to Borrower, each dated within 30 days of the Domestic Revolver Closing
Date, such certificates to be issued by the appropriate officer of the
jurisdictions (other than the jurisdiction of organization of Borrower) in which
its failure to be duly qualified or licensed would constitute a Material Adverse
Change, which certificates shall indicate that Borrower is in good standing in
such jurisdictions;
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(h) Lender shall have received a certificate from the
Secretary of the Guarantors attesting to the resolutions of the Guarantors'
Boards of Directors authorizing their execution, delivery, and performance of
the Loan Documents to which the Guarantors are parties and authorizing specific
officers of the Guarantors to execute the same;
(i) Lender shall have received copies of the Guarantors'
Governing Documents, as amended, modified, or supplemented to the Domestic
Revolver Closing Date, certified by the Secretary of the Guarantors;
(j) Lender shall have received certificates of status with
respect to each Guarantor, dated within 20 days of the Domestic Revolver Closing
Date, such certificate to be issued by the appropriate officer of the
jurisdiction of organization of each such Guarantor, which certificate shall
indicate that such Obligor is in good standing in such jurisdiction;
(k) Lender shall have received certificates of status with
respect to each Guarantor, each dated within 30 days of the Domestic Revolver
Closing Date, such certificates to be issued by the appropriate officer of the
jurisdictions (other than the jurisdiction of organization) in which its failure
to be duly qualified or licensed would constitute a Material Adverse Change,
which certificates shall indicate that each such Guarantor is in good standing
in such jurisdictions;
(l) Lender shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8, the form
and substance of which shall be satisfactory to Lender;
(m) Lender shall have received a Collateral Access Agreement
with respect to Borrower's Orlando Florida location;
(n) Lender shall have received an opinion of Borrower's and
Guarantors' counsel in form and substance satisfactory to Lender;
(o) Lender shall have received a certificate of the chief
financial officer of Borrower stating that all tax returns required to be filed
by Borrower have been timely filed and all taxes upon Borrower or its
properties, assets, income, and franchises (including Real Property taxes and
payroll taxes) have been paid prior to delinquency, except such taxes that are
the subject of a Permitted Protest;
(p) Borrower shall have the Required Availability after giving
effect to the initial extensions of credit hereunder including the extension of
credit required to pay the Junior Notes in full;
(q) Borrower shall have filed with the United States Copyright
Office the source code of the most recent commercialized versions of its
proprietary software programs known as InVision, Intersoft and Omvia, and Lender
shall have received
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satisfactory evidence that such copyrighted material and the proceeds thereof
are specifically encumbered by the Copyright Security Agreement;
(r) Lender shall have received Borrower's Closing Date
Business Plan;
(s) Borrower shall have paid all Lender Expenses incurred in
connection with the transactions evidenced by this Agreement;
(t) Lender shall have received (i) an appraisal of the Real
Property Collateral satisfactory to Lender, and (ii) a mortgagee title insurance
policy (or a marked commitment to issue the same) for the Real Property
Collateral issued by a title insurance company satisfactory to Lender ("Mortgage
Policy") in an amount satisfactory to Lender assuring Lender that the Mortgage
on such Real Property Collateral is a valid and enforceable second priority
mortgage Lien on such Real Property Collateral free and clear of all defects and
encumbrances except Permitted Liens, and the Mortgage Policy otherwise shall be
in form and substance satisfactory to Lender;
(u) Lender shall have received a phase-I environmental report
and a real estate survey with respect to each parcel composing the Real Property
Collateral; the environmental consultants and surveyors retained for such
reports or surveys, the scope of the reports or surveys, and the results thereof
shall be acceptable to Lender;
(v) Borrower shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by Borrower of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby;
(w) Lender shall have received an appraisal of the Recurring
Maintenance Revenues, such appraisal shall be conducted by an appraiser
acceptable to Lender, and the results of such appraisal shall be satisfactory to
Lender;
(x) Lender shall have received a license agreement between
IVLP, as licensor, and Borrower, as licensee, with respect to the licensing of
intellectual property owned by IVLP to Borrower, and the same shall be in form
and substance satisfactory to Lender; and
(y) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Lender.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of Lender to continue to make Advances (or otherwise extend credit
hereunder) is subject to the fulfillment, on or before the date applicable
thereto, of each of the conditions subsequent set forth below (the failure by
Borrower to so perform or cause to be performed constituting an Event of
Default):
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(a) within 30 days after the Domestic Revolver Closing Date,
deliver to Lender certified copies of the policies of insurance, together with
the endorsements thereto, as are required by Section 6.8, the form and substance
of which shall be satisfactory to Lender and its counsel;
(b) within 30 days after the Domestic Revolver Closing Date,
the UK Conditions shall have been satisfied; and
(c) within 30 days after the Domestic Revolver Closing Date,
Borrower and Lender shall have entered into Cash Management Agreements with a
Cash Management Bank reasonably acceptable to Lender and Borrower shall have
transferred its cash management to such Cash Management Bank.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
Lender to make all Advances (or to extend any other credit hereunder) shall be
subject to the following conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date),
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof,
(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
Borrower, Lender, or any of their Affiliates.
(d) no Material Adverse Change shall have occurred and be
continuing, except as disclosed to Lender in writing prior to the date of this
Agreement.
3.4 TERM. This Agreement shall continue in full force and effect for a
term ending on August 29, 2005 (the "Maturity Date"). The foregoing
notwithstanding, Lender shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default, and Borrower shall have the right to
terminate this Agreement in accordance with the provisions of Section 3.6.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrower with respect to outstanding Letters of Credit and including all Bank
Products Obligations) immediately shall become due and payable without notice or
demand (including (a) either (i) providing cash collateral to be held by Lender
in an amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to Lender, and (b)
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providing cash collateral to be held by Lender for the benefit of ▇▇▇▇▇ Fargo or
its Affiliates with respect to the then extant Bank Products Obligations). No
termination of this Agreement, however, shall relieve or discharge Borrower of
its duties, Obligations, or covenants hereunder and the Lender's Liens in the
Collateral shall remain in effect until all Obligations have been fully and
finally discharged and Lender's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all
of the Obligations have been fully and finally discharged and Lender's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Lender will, at Borrower's sole expense, execute and
deliver (or upon Borrower's request authorize, if applicable) any UCC
termination statements, lien releases, mortgage releases, re-assignments of
trademarks, discharges of security interests, and other similar discharge or
release documents (and, if applicable, in recordable form) as are reasonably
necessary to release, as of record, the Lender's Liens and all notices of
security interests and liens previously filed by Lender with respect to the
Obligations.
3.6 EARLY TERMINATION BY BORROWER. Borrower has the option, at any time
upon 60 days prior written notice to Lender, to terminate this Agreement by
paying to Lender, in cash, the Obligations (including (a) either (i) providing
cash collateral to be held by Lender in an amount equal to 105% of the then
extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to Lender, and (b) providing cash collateral to be held by Lender
for the benefit of ▇▇▇▇▇ Fargo or its Affiliates with respect to the then extant
Bank Products Obligations), in full, together with the Applicable Prepayment
Premium. If Borrower has sent a notice of termination pursuant to the provisions
of this Section, then Lender's obligations to extend credit hereunder shall
terminate and Borrower shall be obligated to repay the Obligations (including
(a) either (i) providing cash collateral to be held by Lender in an amount equal
to 105% of the then extant Letter of Credit Usage, or (ii) causing the original
Letters of Credit to be returned to Lender, and (b) providing cash collateral to
be held by Lender for the benefit of ▇▇▇▇▇ Fargo or its Affiliates with respect
to the then extant Bank Products Obligations), in full, together with the
Applicable Prepayment Premium, on the date set forth as the date of termination
of this Agreement in such notice. In the event of the termination of this
Agreement and repayment of the Obligations at any time prior to the Maturity
Date, for any other reason, including (a) termination upon the election of
Lender to terminate after the occurrence of an Event of Default, (b) foreclosure
and sale of Collateral, (c) sale of the Collateral in any Insolvency Proceeding,
or (iv) restructure, or compromise of the Obligations by the confirmation of a
plan of reorganization or any other plan of compromise, restructure, or
arrangement in any Insolvency Proceeding, then, in view of the impracticability
and extreme difficulty of ascertaining the actual amount of damages to Lender or
profits lost by Lender as a result of such early termination, and by mutual
agreement of the parties as to a reasonable estimation and calculation of the
lost profits or damages of Lender, Borrower shall pay the Applicable Prepayment
Premium to Lender, measured as of the date of such termination. The foregoing to
the contrary notwithstanding, (a) in the event that any termination of this
Agreement by Borrower occurs prior to the Domestic Revolver Closing Date and
prior to September 16, 2002, no prior notice of termination shall be required
and no Applicable Prepayment Premium shall be payable so long as the closing fee
described in the Fee Letter is paid to Lender (and Borrower hereby
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acknowledges that such fee and the commitment fee described in the Fee Letter
are fully earned and non-refundable) or (b) in the event that any termination of
this Agreement by Borrower pursuant to the first sentence of this Section 3.6
occurs as a proximate result of or in proximate connection with a refinancing of
the Obligations by Borrower occurring more than 6 months after the Domestic
Revolver Closing Date and if such financing is provided by a commercial banking
unit of ▇▇▇▇▇ Fargo, then the Applicable Prepayment Premium shall equal zero.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Lender a
continuing security interest in all of its right, title, and interest in all
currently existing and hereafter acquired or arising Personal Property
Collateral in order to secure prompt repayment of any and all of the Obligations
in accordance with the terms and conditions of the Loan Documents and in order
to secure prompt performance by Borrower of each of its covenants and duties
under the Loan Documents. The attachment of the Lender's Liens in and to the
Personal Property Collateral shall be postponed until the Domestic Revolver
Closing Date, at which time Lender's Liens shall immediately attach to all
Personal Property Collateral without further act on the part of Lender or
Borrower. Anything contained in this Agreement or any other Loan Document to the
contrary notwithstanding, except for Permitted Dispositions, Borrower has no
authority, express or implied, to dispose of any item or portion of the
Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection of priority of Lender's security interest is
dependent on or enhanced by possession, Borrower, immediately upon the request
of Lender, shall endorse and deliver physical possession of such Negotiable
Collateral to Lender.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Lender or Lender's designee may (a) notify Account Debtors of
Borrower that the Accounts, chattel paper, or General Intangibles have been
assigned to Lender or that Lender has a security interest therein, or (b)
collect the Accounts, chattel paper, or General Intangibles directly and charge
the collection costs and expenses to the Loan Account. Borrower agrees that it
will hold in trust for Lender, as Lender's trustee, any Collections that it
receives and immediately will deliver said Collections to Lender or a Cash
Management Bank in their original form as received by Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time upon the
request of Lender, Borrower shall execute and deliver to Lender, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents (the "Additional
Documents") that Lender may request in its Permitted Discretion, in form and
substance satisfactory to Lender, to perfect and continue perfected or
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better perfect the Lender's Liens in the Collateral (whether now owned or
hereafter arising or acquired), to create and perfect Liens in favor of Lender
in any Real Property acquired after the date hereof, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, Borrower
authorizes Lender to file any financing statements, continuation statements and
original financing statements in lieu of continuation statements necessary to
perfect Lenders security interest in the Collateral.
4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes, constitutes,
and appoints Lender (and any of Lender's officers, employees, or agents
designated by Lender) as Borrower's true and lawful attorney, with power to (a)
if Borrower refuses to, or fails timely to execute and deliver any of the
documents described in Section 4.4, sign the name of Borrower on any of the
documents described in Section 4.4, (b) at any time that an Event of Default has
occurred and is continuing, sign Borrower's name on any invoice or ▇▇▇▇ of
lading relating to the Collateral, drafts against Account Debtors, or notices to
Account Debtors, (c) send requests for verification of Accounts, (d) endorse
Borrower's name on any Collection item that may come into Lender's possession,
(e) at any time that an Event of Default has occurred and is continuing, make,
settle, and adjust all claims under Borrower's policies of insurance and make
all determinations and decisions with respect to such policies of insurance, and
(f) at any time that an Event of Default has occurred and is continuing, settle
and adjust disputes and claims respecting the Accounts, chattel paper, or
General Intangibles directly with Account Debtors, for amounts and upon terms
that Lender determines to be reasonable, and Lender may cause to be executed and
delivered any documents and releases that Lender determines to be necessary. The
appointment of Lender as Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and Lender's
obligations to extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Lender and its officers, employees, or agents
shall have the right, from time to time hereafter, upon reasonable notice and
during normal business hours, to inspect the Books and to check, test, and
appraise the Collateral in order to verify Borrower's financial condition or the
amount, quality, value, condition of, or any other matter relating to, the
Collateral.
4.7 CONTROL AGREEMENTS. Borrower agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
and, if to another securities intermediary, unless each of Borrower, Lender, and
the substitute securities intermediary have entered into a Control Agreement. No
arrangement contemplated hereby or by any Control Agreement in respect of any
Securities Accounts or other Investment Property shall be modified by Borrower
without the prior written consent of Lender. Upon the occurrence and during the
continuance of a Default or Event of Default, Lender may notify any securities
intermediary to liquidate the applicable Securities Account or any related
Investment Property maintained or held thereby and remit the proceeds thereof to
the Lender's Account.
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5. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement,
Borrower makes the following representations and warranties to Lender which
shall be true, correct, and complete, in all material respects, as of the date
hereof, and shall be true, correct, and complete, in all material respects, as
of the date hereof, and at and as of the date of the making of each Advance (or
other extension of credit) made thereafter, as though made on and as of the date
of such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 NO ENCUMBRANCES. The Obligors have good and indefeasible title to
the Collateral and the Real Property, free and clear of Liens except for
Permitted Liens.
5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide existing
payment obligations of Account Debtors created by the sale and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of the applicable Borrowing Base Participant's business, owed to such
Borrowing Base Participant after giving effect to defenses, disputes, offsets,
counterclaims, or rights of return or cancellation. As to each Account that is
identified by Borrower as an Eligible Account in a borrowing base report
submitted to Lender, such Account is not excluded as ineligible by virtue of one
or more of the excluding criteria set forth in the definitions of Eligible
Domestic Accounts or Eligible UK Accounts, as applicable.
5.3 [INTENTIONALLY OMITTED]
5.4 EQUIPMENT. All of the Equipment is used or held for use in the
business of Borrower and its Subsidiaries and is fit for such purposes.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and Equipment
are not stored with a bailee, warehouseman, or similar party and are located
only at the locations identified on Schedule 5.5, except for Equipment that is
substantially worn, damaged or obsolete; provided that (a) Inventory may be
stored with third Persons who are processing or otherwise adding value to such
Inventory in amounts at any one time not to exceed $300,000 with any single such
Person and $500,000 in the aggregate, valued at standard cost and (b)
Demonstration Goods may be used or displayed at trade shows or exhibitions or at
customers' premises.
5.6 INVENTORY RECORDS. Borrower and its Subsidiaries keep correct and
accurate records itemizing and describing the type, quality, and quantity of
their Inventory and the book value thereof.
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive
office of Borrower and its Subsidiaries is located at the address indicated in
Schedule 5.7 and FEIN of Borrower and each of the Guarantors is identified in
Schedule 5.7.
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5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Borrower and each of its Subsidiaries is duly organized
and existing and in good standing under the laws of the jurisdiction of its
organization and qualified to do business in any state where the failure to be
so qualified reasonably could be expected to have a Material Adverse Change.
(b) Borrower is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital Stock or any security convertible into or exchangeable for any of its
capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate
list of Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization and (ii) the percentage of the outstanding
shares owned directly or indirectly by Borrower and, with respect to the Foreign
Subsidiaries, qualifying directors and shareholders. All of the outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of Borrower's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Neither Borrower nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Borrowers' Subsidiaries'
capital Stock or any security convertible into or exchangeable for any such
capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) The execution, delivery, and performance by each Obligor
of the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Obligor.
(b) The execution, delivery, and performance by each Obligor
of the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Obligor, the Governing Documents of such Obligor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Obligor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
Obligor, (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of Obligor, other than
Permitted Liens, or (iv) require any approval of such Obligor's interestholders
or any approval or consent of any Person under any material contractual
obligation of such Obligor.
(c) Other than the filing of financing statements, fixture
filings, and the Mortgage, the execution, delivery, and performance by each
Obligor the Loan Documents to
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which it is a party do not and will not require any registration with, consent,
or approval of, or notice to, or other action with or by, any Governmental
Authority or other Person.
(d) The Loan Documents to which each Obligor is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Obligor will be the legally valid and binding obligations of such
Obligor, enforceable against such Obligor in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors' rights generally.
(e) The Lender's Liens are validly created, perfected, and
first priority Liens, subject only to Permitted Liens.
5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrower, threatened against Borrower or any of its Subsidiaries, as applicable,
except for (a) matters that are fully covered by insurance (subject to customary
deductibles), and (b) matters arising after the date hereof that, if decided
adversely to Borrower, or any of its Subsidiaries, as applicable, reasonably
could not be expected to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrower or any of its Subsidiaries that have been delivered by Borrower to
Lender have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects, such
Person's financial condition as of the date thereof and results of operations
for the period then ended. There has not been a Material Adverse Change with
respect to Borrower or any of its Subsidiaries since the date of the latest
financial statements submitted to Lender on or before the date hereof, except as
disclosed to Lender in writing prior to the date of this Agreement.
5.12 FRAUDULENT TRANSFER.
(a) Each Obligor is Solvent.
(b) No transfer of property is being made by an Obligor and no
obligation is being incurred by an Obligor in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of such Obligor.
5.13 EMPLOYEE BENEFITS. None of Borrower, any of its Subsidiaries, or
any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14, (a)
to Borrower's knowledge, none of the assets of Borrower or any of its
Subsidiaries has ever been used by such Person or by previous owners or
operators in the disposal of, or to produce, store, handle, treat, release, or
transport, any Hazardous Materials, where such production, storage, handling,
treatment, release or transport was in violation, in any material
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respect, of applicable Environmental Law, (b) to Borrower's knowledge, none of
properties or assets of Borrower or any of its Subsidiaries has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) Borrower and its
Subsidiaries have not received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by any such Person, and (d) Borrower and its Subsidiaries have not
received a summons, citation, notice, or directive from the Environmental
Protection Agency or any other federal or state governmental agency concerning
any action or omission by any such Person resulting in the releasing or
disposing of Hazardous Materials into the environment.
5.15 BROKERAGE FEES. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, Borrower has
not utilized the services of any broker or finder in connection with Borrower's
obtaining financing from Lender under this Agreement and no brokerage commission
or finders fee is payable by Borrower in connection herewith.
5.16 INTELLECTUAL PROPERTY. Borrower or IVLP owns, or holds licenses
in, all trademarks, trade names, copyrights, patents, patent rights, and
licenses that are necessary to the conduct of the business of Borrower and its
Subsidiaries as currently conducted.
5.17 LEASES. Borrower and its Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
any such Person is a party or under which any such Person is operating. All of
such leases are valid and subsisting and no material default by Borrower or any
of its Subsidiaries exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of Borrower's and its
Subsidiaries' DDAs, including, with respect to each depository (i) the name and
address of such depository, and (ii) the account numbers of the accounts
maintained with such depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Borrower and its Subsidiaries in writing to Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents, or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrower and its Subsidiaries in writing to Lender will be, true and
accurate, in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. On the Domestic Revolver Closing Date, the Closing Date Projections
represent, and as of the date on which any other Projections are delivered to
Lender, such additional Projections represent Borrower's good faith best
estimate of its future performance for the periods covered thereby.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of Borrower and its Subsidiaries outstanding
immediately prior to the date hereof that is to remain outstanding after the
Domestic Revolver Closing Date and such
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Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
5.21 INACTIVE AND FOREIGN SUBSIDIARIES. The Inactive Subsidiaries do
not own any material assets and do not engage in any material business activity.
The Foreign Subsidiaries do not own any material assets and do not engage in any
material business activity except the maintenance of sales offices.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower shall and shall cause each of its Subsidiaries to do all
of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Lender. Borrower also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2 COLLATERAL REPORTING. Provide Lender with the following documents
at the following times in form satisfactory to Lender:
For Borrower: (a) a sales journal, collection journal, and credit register
daily if Advances since the last such schedule and a calculation of the Borrowing
are outstanding Base as of such date, and
and weekly
otherwise
(b) notice of all returns, disputes, or claims.
For UK Obligor:
weekly
Monthly (not (c) Inventory reports specifying Borrower's cost and the
later than the wholesale market value of its Inventory, by category, with
10th day of each additional detail showing additions to and deletions from
month) the Inventory,
(d) a Borrowing Base Certificate containing a detailed
calculation of the Borrowing Base (including detail regarding
those Accounts that are not Eligible Accounts),
(e) a detailed aging, by total, of the Accounts of
Borrower and UK Obligor, together with a
reconciliation to the detailed calculation of the
Borrowing Base previously provided to Lender,
(f) a summary aging trial balance of Borrower's and UK Obligors'
accounts payable and any book overdraft, and
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(g) a calculation of Dilution for the prior month.
Quarterly (h) a detailed list of each Borrowing Base Participant's
customers, and
(i) a report regarding each Borrowing Base Participant's
accrued, but unpaid, ad valorem taxes.
Upon request by (j) copies of invoices in connection with the Accounts,
Lender credit memos, remittance advices, deposit slips, shipping
and delivery documents in connection with the Accounts
and, for Inventory and Equipment acquired by Borrowing
Base Participants, purchase orders and invoices, and
(k) such other reports as to the Collateral, or the
financial condition of Borrower or any of its Subsidiaries,
as Lender may request.
In addition, Borrower agrees to cooperate fully with Lender to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Lender:
(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year) after the end of each month during each of Borrower's
fiscal years,
(i) a company prepared consolidated balance sheet and income
statement covering Borrower's and its Subsidiaries' operations
during such period,
(ii) a certificate signed by the chief financial officer or
chief accounting officer of Borrower to the effect that:
(A) the financial statements delivered hereunder have
been prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and
fairly present in all material respects the financial
condition of Borrower and its Subsidiaries,
(B) the representations and warranties of Borrower
contained in this Agreement and the other Loan Documents are
true and correct in all material respects on and as of the
date of such certificate, as though made on and as of such
date (except to the extent that such representations and
warranties relate solely to an earlier date), and
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(C) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent
of any non-compliance, describing such non-compliance as to
which he or she may have knowledge and what action Borrower
has taken, is taking, or proposes to take with respect
thereto), and
(iii) for each month that is the date on which a financial
covenant in Section 7.20 is to be tested, a Compliance Certificate
(A) demonstrating, in reasonable detail, compliance at the end of
such period with the applicable financial covenants contained in
Section 7.20, (B) setting forth a calculation of TTM EBITDA, (C)
setting forth a detailed calculation of Recurring Maintenance
Revenues for the prior month, (D) setting forth an updated list of
Maintenance Contracts, (E) setting forth a detailed calculation of
all Royalties paid by Borrower during the prior month and the
balance of Royalties payable at the end of such month, (F)
certifying that all obligations for the payment of Royalties that
are due and payable have been paid, and (G) certifying that no
material change in Borrower's and UK Obligor's billing practices
has occurred, and
(iv) for each month that is the end of a fiscal quarter of
Borrower, (A) a Principal Officers Certificate and (B) a company
prepared consolidated statement of cash flows for Borrower and its
Subsidiaries for such period, and
(b) as soon as available, but in any event within 90 days
after the end of each of Borrower's fiscal years,
(i) financial statements of Borrower and its Subsidiaries for
each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Lender and certified, without
any qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include
a balance sheet, income statement, and statement of cash flow and,
if prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to Lender
stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under Section 7.20,
and
(iii) an updated appraisal of the Recurring Maintenance
Revenues performed by an appraiser satisfactory to Lender,
(c) as soon as available, but in any event within 30 days
prior to the start of each of Borrower's fiscal years,
(i) copies of Borrower's Projections, in form and substance
(including as to scope and underlying assumptions) satisfactory to
Lender, in
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its sole discretion, for the forthcoming 3 years, year by year, and
for the forthcoming fiscal year, month by month, certified by the
chief financial officer or chief accounting officer of Borrower as
being such officer's good faith best estimate of the financial
performance of Borrower during the period covered thereby,
(d) if and when filed by Borrower,
(i) Form 10-Q quarterly reports, Form 10-K annual reports, and
Form 8-K current reports,
(ii) any other filings made by Borrower with the SEC,
(iii) copies of Borrower's federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
(iv) any other information that is provided by Borrower to its
shareholders generally,
(e) as requested by Lender, satisfactory evidence of payment
of applicable excise taxes in each jurisdiction in which (i) Borrower conducts
business or is required to pay any such excise tax, (ii) where Borrower's
failure to pay any such applicable excise tax would result in a Lien on the
properties or assets of Borrower, or (iii) where Borrower's failure to pay any
such applicable excise tax reasonably could be expected to result in a Material
Adverse Change,
(f) as soon as Borrower has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and,
within 5 Business Days after such knowledge is obtained, a statement of the
curative action that Borrower proposes to take with respect thereto, and
(g) upon the request of Lender, any other report reasonably
requested relating to the financial condition of Borrower.
In addition to the financial statements referred to above, Borrower
agrees to deliver financial statements prepared on both a consolidated and
consolidating basis and agrees that, unless a Foreign Subsidiary is required to
have a fiscal year that is different than that of Borrower pursuant to
applicable law, no Subsidiary of Borrower will have a fiscal year different from
that of Borrower. Borrower agrees that, with Borrower's prior consent, Lender
may contact directly any such accounting firm or service bureau in order to
obtain such information.
6.4 [INTENTIONALLY OMITTED].
6.5 [INTENTIONALLY OMITTED].
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6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its
properties which are necessary or useful in the proper conduct to its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee
so as to prevent any loss or forfeiture thereof or thereunder, except where the
failure to so maintain, preserve or comply would not reasonably be expected to
have a Material Adverse Effect.
6.7 TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower
or any of its Subsidiaries or any of their assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity or amount of such assessment or tax shall be the
subject of a Permitted Protest. Borrower and its Subsidiaries will make timely
payment or deposit of all tax payments and withholding taxes required of it by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, except to the extent
that the validity or amount of such payments or taxes shall be the subject of a
Permitted Protest, and will, upon request, furnish Lender with proof
satisfactory to Lender indicating that such payments or deposits have been made.
Upon request by Lender, Borrower shall deliver satisfactory evidence of payment
of applicable excise taxes in each jurisdictions in which Borrower or any if its
Subsidiaries is required to pay any such excise tax, except evidence of such
payment shall not be required to the extent that the validity or amount of any
such excise tax shall be the subject of a Permitted Protest.
6.8 INSURANCE.
(a) At Borrower's expense, maintain insurance respecting its
assets wherever located, covering loss or damage by fire, theft, explosion, and
all other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses. Borrower also shall maintain business
interruption, public liability, and product liability insurance, as well as
insurance against larceny, embezzlement, and criminal misappropriation. All such
policies of insurance shall be in such amounts and with such insurance companies
as are reasonably satisfactory to Lender. Borrower shall deliver copies of all
such policies to Lender with a satisfactory lender's loss payable endorsement
naming Lender as sole loss payee or additional insured, as appropriate. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 30 days prior written notice to Lender in the event of
cancellation of the policy for any reason whatsoever.
(b) Borrower shall give Lender prompt notice of any loss
covered by such insurance in excess of $500,000. Subject to the rights of the
holder of the Dallas Mortgage Loan, during the continuation of an Event of
Default, Lender shall have the exclusive right to adjust any losses payable
under any such insurance policies, without any liability to Borrower whatsoever
in respect of such adjustments. Any monies received as payment for any loss
under any insurance policy mentioned above (other than liability insurance
policies) or as payment of any award or compensation for condemnation or taking
by eminent domain, shall be paid over to Lender, and, subject to the rights of
the holder of
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the Dallas Mortgage Loan, shall be disbursed to Borrower under staged payment
terms reasonably satisfactory to Lender for application to the cost of repairs,
replacements, or restorations; provided that during the continuation of an Event
of Default, Lender shall have the option of applying any such monies to the
repayment of the Obligations or to the cost of repairs, replacements, or
restorations. Any such repairs, replacements, or restorations shall be effected
with reasonable promptness and shall be of a value at least equal to the value
of the items of property destroyed prior to such damage or destruction.
(c) Borrower will not take out separate insurance concurrent
in form or contributing in the event of loss with that required to be maintained
under this Section 6.8, unless Lender is included thereon as named insured with
the loss payable to Lender under a lender's loss payable endorsement or its
equivalent. Borrower immediately shall notify Lender whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies promptly
shall be provided to Lender.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory and
Equipment only at the locations identified on Schedule 5.5 or as otherwise
permitted in Section 5.5; provided, however, that Borrower may amend Schedule
5.5 so long as such amendment occurs by written notice to Lender not less than
10 days prior to the date on which Inventory or Equipment is moved to such new
location, so long as such new location is within the continental United States
or, with respect to the Inventory of UK Obligor, the United Kingdom, and so long
as, at the time of such written notification, Borrower provides any financing
statements, fixture filings or other documentation necessary to perfect and
continue perfected the Lender's Liens on such assets and also provides to Lender
a Collateral Access Agreement.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably would not
be expected to result in a Material Adverse Change.
6.11 LEASES. Pay when due all rents and other amounts payable under any
leases to which Borrower or any of its Subsidiaries is a party or by which
Borrower or any of its Subsidiaries' properties and assets are bound, unless
such payments are the subject of a Permitted Protest.
6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finder's fees incurred in connection with or as a result of Borrower's obtaining
financing from Lender under this Agreement. Borrower agrees and acknowledges
that payment of all such brokerage commissions or finders fees shall be the sole
responsibility of Borrower, and Borrower agrees to indemnify, defend, and hold
Lender harmless from and against any claim of any broker or finder arising out
of Borrower's obtaining financing from Lender under this Agreement.
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6.13 EXISTENCE. At all times preserve and keep in full force and effect
Borrower's and its Subsidiaries' valid existence and good standing and any
rights and franchises material to their businesses, except with respect to any
Inactive Subsidiary or any liquidation of any Subsidiary not in violation of
this Agreement.
6.14 ENVIRONMENTAL.
(a) Keep any property either owned or operated by Borrower or
any of its Subsidiaries free of any Environmental Liens or post bonds or other
financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Lender documentation of such compliance
which Lender reasonably requests, (c) promptly notify Lender of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by Borrower or any of its Subsidiaries and take any Remedial Actions
required to ▇▇▇▇▇ said release or otherwise to come into compliance with
applicable Environmental Law, and (d) promptly provide Lender with written
notice within 10 days of the receipt of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of Borrower or any of its Subsidiaries, (ii) commencement of any Environmental
Action or notice that an Environmental Action will be filed against Borrower or
any of its Subsidiaries, and (iii) notice of a violation, citation, or other
administrative order which reasonably would be expected to result in a Material
Adverse Change.
6.15 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Lender if any written
information, exhibit, or report furnished to Lender contained any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.16 REFINANCE DALLAS MORTGAGE LOAN. Refinance the Dallas Mortgage
Loan, on terms satisfactory to Lender, no later than March 29, 2005.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower will not and will not permit any of its Subsidiaries to do
any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit,
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(b) Indebtedness set forth on Schedule 5.20,
(c) Permitted Purchase Money Indebtedness, and
(d) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b) and (c) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not, materially
impair the prospects of repayment of the Obligations by Borrower or materially
impair Borrower's creditworthiness, (ii) such refinancings, renewals, or
extensions do not result in an increase in the principal amount of, or interest
rate with respect to, the Indebtedness so refinanced, renewed, or extended,
(iii) such refinancings, renewals, or extensions do not result in a shortening
of the average weighted maturity of the Indebtedness so refinanced, renewed, or
extended, nor are they on terms or conditions that, taken as a whole, are
materially more burdensome or restrictive to Borrower, and (iv) if the
Indebtedness that is refinanced, renewed, or extended was subordinated in right
of payment to the Obligations, then the terms and conditions of the refinancing,
renewal, or extension Indebtedness must include subordination terms and
conditions that are at least as favorable to Lender as those that were
applicable to the refinanced, renewed, or extended Indebtedness
(e) Indebtedness composing Permitted Investments;
(f) Guaranties of Indebtedness that is permitted by this
Section 7.1; and
(g) Other Indebtedness in an aggregate amount at any one time
outstanding not to exceed $500,000.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock;
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution); or
(c) Convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets; provided that (i) a Subsidiary of Borrower that
is not an Obligor may wind-up, dissolve or liquidate if its assets are
transferred to Borrower or another Subsidiary, and an Obligor, other
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than Borrower, may wind-up, dissolve or liquidate if its assets are transferred
to Borrower or another Obligor, and (ii) a Subsidiary of Borrower that is not an
Obligor may merge or consolidate with Borrower or with any other Subsidiary of
Borrower, and an Obligor may merge or consolidate with Borrower or with any
other Obligor.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of
Borrower's or any of its Subsidiaries' assets.
7.5 CHANGE NAME. Change Borrower's or any of its Subsidiaries' name,
FEIN, corporate structure, or identity, or add any new fictitious name;
provided, however, that Borrower or any of its Subsidiaries may change its name
upon at least 15 days prior written notice to Lender of such change and so long
as, at the time of such written notification, Borrower or such Subsidiary
provides any financing statements, fixture filings or other documentation
necessary to perfect and continue perfected the Lender's Liens.
7.6 GUARANTEE. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrower or which
are transmitted or turned over to Lender.
7.7 NATURE OF BUSINESS. Make any change in the principal nature of the
business of Borrower and its Subsidiaries.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except (i) in connection with a refinancing permitted by
Section 7.1(d), (ii) the prepayment of the Junior Notes as set forth in Section
7.17, and (iii) if Borrower has Excess Availability of $10,000,000 after giving
effect thereto and no Event of Default has occurred and is continuing, prepay,
redeem, defease, purchase, or otherwise acquire any Indebtedness of Borrower or
any of its Subsidiaries, other than the Obligations in accordance with this
Agreement; provided that Borrower shall not prepay the Dallas Mortgage Loan
prior to September 1, 2003, and
(b) Except in connection with a refinancing permitted by
Section 7.1(d), directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under Sections 7.1(b) or (c) ("Indebtedness Amendment") unless (i) the terms and
conditions of such Indebtedness Amendment do not, materially impair the
prospects of repayment of the Obligations by Borrower or materially impair
Borrower's creditworthiness, (ii) such Indebtedness Amendment does not result in
an increase in the principal amount of, or interest rate with respect to, the
Indebtedness so amended, (iii) such Indebtedness Amendment does not result in a
shortening of the average weighted maturity of the Indebtedness so amended, nor
is such Indebtedness Amendment on terms or conditions that, taken as a whole,
are materially more burdensome or restrictive to Borrower, and (iv) if the
Indebtedness that is amended was subordinated in right of payment to the
Obligations, then the terms and conditions of the amended Indebtedness must
include
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subordination terms and conditions that are at least as favorable to Lender as
those that were applicable to the Indebtedness prior to such amendment.
7.9 [INTENTIONALLY OMITTED].
7.10 CONSIGNMENTS. Consign any Inventory or sell any Inventory on ▇▇▇▇
and hold, sale or return, sale on approval, or other conditional terms of sale.
7.11 DISTRIBUTIONS. Make any distribution or declare or pay any
dividends (in cash or other property, other than common Stock) on, or purchase,
acquire, redeem, or retire any of Borrower's or any of its Subsidiaries' Stock,
of any class, whether now or hereafter outstanding; provided that (a) any
Subsidiary of Borrower may make and declare dividends and distributions to, or
redeem any of its Stock from, Borrower or another Subsidiary of Borrower, (b)
Borrower or any of its Subsidiaries may purchase or acquire the Stock of any
Subsidiary of Borrower so long as such transaction qualifies as a Permitted
Intercompany Investment, and (c) any Foreign Subsidiary may purchase or acquire
its Stock from one of its foreign qualifying directors or shareholders so long
as the aggregate amount of such acquisitions does not exceed $100,000 during any
fiscal year of Borrower.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrower's accounting records without said accounting firm or
service bureau agreeing to provide Lender information regarding the Collateral
or Borrower's financial condition.
7.13 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Borrower and its Subsidiaries shall not have Permitted Investments
(other than in the Cash Management Accounts) in deposit accounts or Securities
Accounts in excess of $100,000 outstanding at any one time unless Borrower or
its Subsidiary, as applicable, and the applicable securities intermediary or
bank have entered into Control Agreements governing such Permitted Investments,
as Lender shall determine in its Permitted Discretion, to perfect (and further
establish) the Lender's Liens in such Permitted Investments.
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of Borrower except (a)
transactions that are in the ordinary course of the business of Borrower and its
Subsidiaries, upon fair and reasonable terms, and are no less favorable to
Borrower or any of its Subsidiaries than would be obtained in an arm's length
transaction with a non-Affiliate; provided that transactions between an Obligor,
on the one hand, and a Foreign Subsidiary, on the other hand, may have terms
that are less favorable to the Foreign Subsidiary than would be obtained in an
arm's length transaction with a non-Affiliate, (b) transactions that are in the
ordinary course of business among the Obligors and Foreign Subsidiaries in the
nature of intercompany services, sales and agencies, and (c) transactions
between Borrower or a Subsidiary of
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Borrower, on the one hand, and a Subsidiary of Borrower, on the other hand, that
are not specifically prohibited under this Agreement.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.16 [INTENTIONALLY OMITTED].
7.17 USE OF PROCEEDS.
(a) Use the proceeds of the Advances (i) on the Domestic
Revolver Closing Date for any purpose other than to repay, in full, the
outstanding principal, accrued interest, and accrued fees and expenses, if any,
owing to Existing Lender and to pay transactional fees, costs, and expenses
incurred in connection with this Agreement, the other Loan Documents, and the
transactions contemplated hereby and thereby and (ii) on and after the Domestic
Revolver Closing Date for any purpose other than general corporate purposes and
other lawful and permitted purposes; and
(b) Use the proceeds of the Term Loan on the Term Loan Closing
Date for any purpose other than to repay, in full, the outstanding principal,
accrued interest, prepayment fees or premium and accrued fees and expenses owing
in respect of the Junior Notes (or to deposit that portion of the proceeds of
the Term Loan required to so pay the Junior Notes in full in a blocked deposit
account subject to a Control Agreement in favor of Lender until such time as the
applicable notice of prepayment period under the Junior Notes has elapsed) and
to pay transactional fees, costs, and expenses incurred in connection with this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and thereby and to the extent of any excess Term Loan proceeds, for its general
corporate purposes and other lawful and permitted purposes.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without providing 20 days prior written notification thereof to Lender and so
long as, at the time of such written notification, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Lender's Liens and also provides to Lender a Collateral Access
Agreement with respect to such new location. The Inventory and Equipment shall
not at any time now or hereafter be stored with a bailee, warehouseman, or
similar party without Lender's prior written consent.
7.19 SECURITIES ACCOUNTS. Establish or maintain any Securities Account
in excess of $100,000 unless Lender shall have received a Control Agreement in
respect of such Securities Account. Borrower shall not transfer assets out of
any Securities Account; provided, however, that, so long as no Event of Default
has occurred and is continuing or would result therefrom, Borrower may use such
assets (and the proceeds thereof) to the extent not prohibited by this
Agreement.
7.20 FINANCIAL COVENANTS.
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(a) Fail to maintain:
(i) MINIMUM EBITDA. EBITDA of not less than the required
amount set forth in the following table for the applicable period set
forth opposite thereto;
Applicable Amount Applicable Period
--------------------------------------- -------------------------------------------------------------------
$(5,500,000) For the 1 month period
ending 9/30/02
--------------------------------------- -------------------------------------------------------------------
$(9,400,000) For the 2 month period
ending 10/31/02
--------------------------------------- -------------------------------------------------------------------
$0 For the 3 month period
ending 11/30/02
--------------------------------------- -------------------------------------------------------------------
$(5,200,000) For the 4 month period
ending 12/31/02
--------------------------------------- -------------------------------------------------------------------
$(8,800,000) For the 5 month period
ending 1/31/03
--------------------------------------- -------------------------------------------------------------------
$2,000,000 For the 6 month period
ending 2/28/03
--------------------------------------- -------------------------------------------------------------------
$(2,900,000) For the 7 month period
ending 3/31/03
--------------------------------------- -------------------------------------------------------------------
$(6,200,000) For the 8 month period
ending 4/30/03
--------------------------------------- -------------------------------------------------------------------
$5,000,000 For the 9 month period
ending 5/31/03
--------------------------------------- -------------------------------------------------------------------
$(300,000) For the 10 month period
ending 6/30/03
--------------------------------------- -------------------------------------------------------------------
$(3,200,000) For the 11 month period
ending 7/31/03
--------------------------------------- -------------------------------------------------------------------
$9,000,000 For the 12 month period
ending 8/31/03
--------------------------------------- -------------------------------------------------------------------
$15,000,000 For the 12 month period
ending 11/30/03
--------------------------------------- -------------------------------------------------------------------
$20,000,000 For the 12 month period
ending 2/28/04
--------------------------------------- -------------------------------------------------------------------
$25,000,000 For the 12 month period
ending each fiscal quarter thereafter
--------------------------------------- -------------------------------------------------------------------
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(ii) MINIMUM RECURRING MAINTENANCE REVENUES. Recurring
Maintenance Revenues, measured as of the last day of each month for the
three month period then ended, of not less than $10,000,000.
(iii) MINIMUM MAINTENANCE CONTRACTS. An aggregate amount of
expected Recurring Maintenance Revenues owing under Maintenance
Contracts, measured as of the last day of each month, of not less than
$40,000,000.
(iv) COLLECTIONS. The Obligations, measured as of the last day
of each month, in an amount that is not greater than 66.67% of
Borrower's and UK Obligor's Collections with respect to Accounts for
the immediately preceding 90 day period.
(v) APPRAISED VALUE OF RECURRING MAINTENANCE REVENUES. The
Obligations owing under the Term Loan in an amount that is not greater
than 30% of the then appraised value of the Recurring Maintenance
Revenues, measured upon the annual delivery of such appraisal required
under Section 6.3(b)(iii).
(b) Make:
(i) CAPITAL EXPENDITURES. Capital expenditures (A) in excess
of $1,600,000 during the 6 month period ending on February 28, 2003 or
(B) in excess of $4,000,000 during any fiscal year thereafter; provided
Borrower may incur capital expenditures in excess of such amounts to
acquire Equipment to perform a service contract business, subject to
the prior written approval of Lender, such approval to not be
unreasonably withheld or delayed.
7.21 INACTIVE AND FOREIGN SUBSIDIARIES. Permit (a) the Inactive
Subsidiaries to own any material assets or engage in any business activity or
(b) the Foreign Subsidiaries to own any material assets or engage in any
business activity except in connection with the establishment, maintenance and
support of sales offices outside of the United States.
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8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
8.1 If Borrower fails to pay when due and payable, or when declared due
and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due Lender,
reimbursement of Lender Expenses, or other amounts constituting Obligations) and
such failure continues unremedied for 1 Business Day;
8.2 If Borrower or any of its Subsidiaries fail or neglect to (a)
perform, keep, or observe any covenant or other provision contained in Sections
6.2 or 6.3 hereof and such failure or neglect continues for a period of 5
Business Days after the date on which Borrower knows or reasonably should have
known of such failure or neglect, or (b) perform, keep, or observe any covenant
or other provision contained in Sections 6.1, 6.7, 6.10, 6.11 or 6.13 hereof and
such failure or neglect continues for a period of 15 Business Days after the
date on which Borrower knows or reasonably should have known of such failure or
neglect, or (c) perform, keep, or observe any other covenant or other provision
contained in any Section of this Agreement (other than a Section that is
expressly dealt with elsewhere in this Section 8), including failure to satisfy
a condition subsequent set forth in Section 3.2 within the time period stated,
or the other Loan Documents (other than a Section of such other Loan Documents
dealt with elsewhere in this Section 8 or that has a grace period specified in
such Loan Document); provided that, during any period of time that any such
failure referred to in this paragraph exists, even if such failure is not yet an
Event of Default by virtue of the existence of a grace or cure period, Lender
shall be relieved of its obligation to extend credit hereunder;
8.3 If any material portion of Borrower's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person and the same is not
discharged before the earlier of 30 days after the date it first arises or 5
days prior to the date on which such property or asset is subject to forfeiture
by Borrower or the applicable Subsidiary;
8.4 If an Insolvency Proceeding is commenced by Borrower or any of its
Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against Borrower, or any
of its Subsidiaries, and any of the following events occur: (a) Borrower or the
Subsidiary consents to the institution of such Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 60 calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, Lender shall be relieved of
its obligations to extend credit hereunder, (d) an interim trustee is appointed
to take possession of all or any substantial portion of the properties or assets
of, or to operate all
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or any substantial portion of the business of, Borrower or any of its
Subsidiaries, or (e) an order for relief shall have been entered therein;
8.6 If Borrower or any of its Subsidiaries is enjoined, restrained, or
in any way prevented by court order from continuing to conduct all or any
material part of its business affairs and such injunction or restraint continues
in effect for more than 15 days;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower's or any of its Subsidiaries' assets by the United
States, or any department, agency, or instrumentality thereof, or by any state,
county, municipal, or governmental agency, or if any taxes or debts owing at any
time hereafter to any one or more of such entities becomes a Lien (other than a
United States federal tax Lien), whether ▇▇▇▇▇▇ or otherwise, upon any of
Borrower's or any of its Subsidiaries' assets and the same is not discharged
before the earlier of 30 days after the date it first arises or 5 days prior to
the date on which such assets are subject to forfeiture by Borrower or the
applicable Subsidiary;
8.8 Any of Borrower's or any of its Subsidiaries' assets become subject
to a United States federal tax Lien;
8.9 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of Borrower's or any of its Subsidiaries' assets and the same
is not released, discharged, bonded against, or stayed pending appeal before the
earlier of 30 days after the date it first arises or 5 days prior to the date on
which such assets are subject to being forfeited by the applicable Borrower or
Subsidiary;
8.10 If there is a default in any agreement governing or evidencing
indebtedness for borrowed money in an aggregate amount in excess of $1,000,000
or any material agreement that does not govern or evidence indebtedness for
borrowed money to which Borrower or any of its Subsidiaries is a party and such
default (a) occurs at the final maturity of the obligations thereunder, or (b)
results in a right by the other party thereto, irrespective of whether
exercised, to accelerate the maturity of Borrower's or its Subsidiaries'
obligations thereunder, to terminate such agreement, or to refuse to renew such
agreement pursuant to an automatic renewal right therein;
8.11 If Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.12 If any material misstatement or material misrepresentation exists
now or hereafter in any representation or warranty in this Agreement or in any
material statement or material Record made to Lender by Borrower, its
Subsidiaries, or any officer, employee, agent, or director of Borrower or any of
its Subsidiaries;
8.13 If the obligation of any Guarantor under the Guaranty is limited
or terminated by operation of law or by any Guarantor thereunder; provided that
if such limitation or
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termination is due to a change in applicable law, such Guarantor shall have 15
days after Lender becomes aware of such limitation or termination to deliver a
new guaranty or alternative form of credit support in form and substance
satisfactory to Lender;
8.14 If the obligation of UK Obligor under the UK Security Documents is
limited or terminated by operation of law or by UK Obligor thereunder; provided
that if such limitation or termination is due to a change in applicable law, UK
Obligor shall have 15 days after Lender becomes aware of such limitation or
termination to deliver new UK Security Documents or alternative form of credit
support in form and substance satisfactory to Lender;
8.15 If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby;
8.16 Any material provision of any Loan Document shall at any time for
any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by an Obligor, or a proceeding shall be commenced by
an Obligor, or by any Governmental Authority having jurisdiction over an
Obligor, seeking to establish the invalidity or unenforceability thereof, or any
Obligor shall deny that it has any liability or obligation purported to be
created under any Loan Document; or
8.17 Any Change of Control shall occur.
9. LENDER'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, Lender (at its election but without notice
of its election and without demand) may do any one or more of the following, all
of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrower and Lender;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of Lender, but without
affecting any of the Lender's Liens in the Collateral and without affecting the
Obligations;
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Lender considers advisable, and in such
cases, Lender will credit Borrower's Loan Account with only the net amounts
received by Lender in
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payment of such disputed Accounts after deducting all Lender Expenses incurred
or expended in connection therewith;
(e) Cause Borrower to hold all returned Inventory in trust for
Lender, segregate all returned Inventory from all other assets of Borrower or in
Borrower's possession and conspicuously label said returned Inventory as the
property of Lender;
(f) Without notice to or demand upon any Obligor, make such
payments and do such acts as Lender considers necessary or reasonable to protect
its security interests in the Collateral. Borrower agrees to assemble the
Personal Property Collateral if Lender so requires, and to make the Personal
Property Collateral available to Lender at a place that Lender may designate
which is reasonably convenient to both parties. Borrower authorizes Lender to
enter the premises where the Personal Property Collateral is located, to take
and maintain possession of the Personal Property Collateral, or any part of it,
and to pay, purchase, contest, or compromise any Lien that in Lender's
determination appears to conflict with the Lender's Liens and to pay all
expenses incurred in connection therewith and to charge Borrower's Loan Account
therefor. With respect to any of Borrower's owned or leased premises, Borrower
hereby grants Lender a license to enter into possession of such premises and to
occupy the same, without charge, in order to exercise any of Lender's rights or
remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Lender
(including any amounts received in the Cash Management Accounts), or (ii)
Indebtedness at any time owing to or for the credit or the account of Borrower
held by Lender;
(h) Hold, as cash collateral, any and all balances and
deposits of Borrower held by Lender, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Personal Property Collateral. Borrower hereby grants to Lender a
license or other right to use, without charge, Borrower's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Personal Property Collateral, in completing production of, advertising for sale,
and selling any Personal Property Collateral and Borrower's rights under all
licenses and all franchise agreements shall inure to Lender's benefit;
(j) Sell the Personal Property Collateral at either a public
or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including Borrower's
premises) as Lender determines is commercially reasonable. It is not necessary
that the Personal Property Collateral be present at any such sale;
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(k) Lender shall give notice of the disposition of the
Personal Property Collateral as follows:
(i) Lender shall give Borrower a notice in writing of the time
and place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the
Personal Property Collateral, then the time on or after which the
private sale or other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Borrower as provided in Section 12, at least 10
days before the earliest time of disposition set forth in the notice;
no notice needs to be given prior to the disposition of any portion of
the Personal Property Collateral that is perishable or threatens to
decline speedily in value or that is of a type customarily sold on a
recognized market;
(l) Lender may credit bid and purchase at any public sale; and
(m) Lender may seek the appointment of a receiver or keeper to
take possession of all or any portion of the Collateral or to operate same and,
to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing;
(n) Lender shall have all other rights and remedies available
at law or in equity or pursuant to any other Loan Document; and
(o) Any deficiency that exists after disposition of the
Personal Property Collateral as provided above will be paid immediately by
Borrower. Any excess will be returned, without interest and subject to the
rights of third Persons, by Lender to Borrower.
9.2 REMEDIES CUMULATIVE. The rights and remedies of Lender under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default shall be deemed a continuing waiver. No delay by Lender
shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Lender, in its Permitted
Discretion and with not less than 5 days prior notice to Borrower, may do any or
all of the following: (a) make payment of the same or any part thereof, (b) set
up such reserves in Borrower's Loan Account as Lender deems necessary to protect
Lender from the
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exposure created by such failure, or (c) in the case of the failure to comply
with Section 6.8 hereof, obtain and maintain insurance policies of the type
described in Section 6.8 and take any action with respect to such policies as
Lender deems prudent. Any such amounts paid by Lender shall constitute Lender
Expenses and any such payments shall not constitute an agreement by Lender to
make similar payments in the future or a waiver by Lender of any Event of
Default under this Agreement. So long as Lender in good faith believes that it
is acting to protect the Collateral or avoid any impairment of the repayment of
the Obligations, Lender need not inquire as to, or contest the validity of, any
such expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST. Except for notices specifically required under
this Agreement, Borrower waives demand, protest, notice of protest, notice of
default or dishonor, notice of payment and nonpayment, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of documents,
instruments, chattel paper, and guarantees at any time held by Lender on which
Borrower may in any way be liable.
11.2 LENDER'S LIABILITY FOR COLLATERAL. Borrower hereby agrees that:
(a) so long as Lender complies with its obligations, if any, under the Code,
Lender shall not in any way or manner be liable or responsible for: (i) the
safekeeping of the Collateral, (ii) any loss or damage thereto occurring or
arising in any manner or fashion from any cause, (iii) any diminution in the
value thereof, or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person, and (b) all risk of loss, damage, or
destruction of the Collateral shall be borne by Borrower.
11.3 INDEMNIFICATION. Borrower shall pay, indemnify, defend, and hold
the Lender-Related Persons, each Participant, and each of their respective
officers, directors, employees, agents, and attorneys-in-fact (each, an
"Indemnified Person") harmless (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution, delivery, enforcement,
performance, or administration of this Agreement, any of the other Loan
Documents, or the transactions contemplated hereby or thereby, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, Borrower shall have no obligation to
any Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person.
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This provision shall survive the termination of this Agreement and the repayment
of the Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which Borrower
was required to indemnify the Indemnified Person receiving such payment, the
Indemnified Person making such payment is entitled to be indemnified and
reimbursed by Borrower with respect thereto. WITHOUT LIMITATION, THE FOREGOING
INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED
LIABILITIES WHICH IN WHOLE OR IN PART CAUSED BY OR ARISE OUT OF ANY NEGLIGENT
ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Borrower or Lender to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Borrower or Lender, as applicable, may designate to
each other in accordance herewith), or telefacsimile to Borrower or Lender, as
the case may be, at its address set forth below:
If to Borrower: INTERVOICE-BRITE, INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇-▇▇▇ ▇▇▇▇▇▇
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: INTERVOICE-BRITE, INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: ▇▇▇▇▇▇▇▇ & KNIGHT
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
If to Lender: FOOTHILL CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance Division Manager
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
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with copies to: ▇▇▇▇▇▇▇, PHLEGER & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ Hilson, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
Lender and Borrower may change the address at which they are
to receive notices hereunder, by notice in writing in the foregoing manner given
to the other party. All notices or demands sent in accordance with this Section
12, other than notices by Lender in connection with enforcement rights against
the Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Borrower acknowledges and agrees that notices sent by
Lender in connection with the exercise of enforcement rights against Collateral
under the provisions of the Code shall be deemed sent when deposited in the mail
or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND
LENDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
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(c) BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWER AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Lender may assign and delegate to one or more assignees
(each an "Assignee") all, or any ratable part of all, of the Obligations and the
other rights and obligations of Lender hereunder and under the other Loan
Documents; provided, however, that Borrower may continue to deal solely and
directly with Lender in connection with the interest so assigned to an Assignee
until (i) written notice of such assignment, together with payment instructions,
addresses, and related information with respect to the Assignee, have been given
to Borrower by Lender and the Assignee, and (ii) Lender and its Assignee have
delivered to Borrower an appropriate assignment and acceptance agreement.
(b) From and after the date that Lender provides Borrower with
such written notice and executed assignment and acceptance agreement, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment and
acceptance agreement, shall have the assigned and delegated rights and
obligations of Lender under the Loan Documents, and (ii) Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned and delegated by it pursuant to such assignment and
acceptance agreement, relinquish its rights (except with respect to Section 11.3
hereof) and be released from its obligations under this Agreement (and in the
case of an assignment and acceptance covering all or the remaining portion of
Lender's rights and obligations under this Agreement and the other Loan
Documents, Lender shall cease to be a party hereto and thereto), and such
assignment shall affect a novation between Borrower and the Assignee.
(c) Immediately upon Borrower's receipt of such fully executed
assignment and acceptance agreement, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee and the resulting adjustment of the rights and duties of Lender
arising therefrom.
(d) Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of such Lender (a
"Participant") participating interests in the Obligations and the other rights
and interests of Lender
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hereunder and under the other Loan Documents; provided, however, that (i) Lender
shall remain the "Lender" for all purposes of this Agreement and the other Loan
Documents and the Participant receiving the participating interest in the
Obligations and the other rights and interests of Lender shall not constitute a
"Lender" hereunder or under the other Loan Documents and Lender's obligations
under this Agreement shall remain unchanged, (ii) Lender shall remain solely
responsible for the performance of such obligations, (iii) Borrower and Lender
shall continue to deal solely and directly with each other in connection with
Lender's rights and obligations under this Agreement and the other Loan
Documents, (iv) Lender shall not transfer or grant any participating interest
under which the Participant has the right to approve any amendment to, or any
consent or waiver with respect to, this Agreement or any other Loan Document,
except to the extent such amendment to, or consent or waiver with respect to
this Agreement or of any other Loan Document would (A) extend the final maturity
date of the Obligations hereunder in which such Participant is participating,
(B) reduce the interest rate applicable to the Obligations hereunder in which
such Participant is participating, (C) release all or substantially all of the
Collateral or guaranties (except to the extent expressly provided herein or in
any of the Loan Documents) supporting the Obligations hereunder in which such
Participant is participating, (D) postpone the payment of, or reduce the amount
of, the interest or fees payable to such Participant through Lender, or (E)
change the amount or due dates of scheduled principal repayments or prepayments
or premiums, and (v) all amounts payable by Borrower hereunder shall be
determined as if Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as
Lender under this Agreement. The rights of any Participant only shall be
derivative through Lender and no Participant shall have any rights under this
Agreement or the other Loan Documents or any direct rights as to Borrower, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by Lender.
(e) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrower or
Borrower's business to an assignee or participant that has executed a
confidentiality agreement in accordance with Section 16.5.
(f) Any other provision in this Agreement notwithstanding,
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank
may enforce such pledge or security interest in any manner permitted under
applicable law.
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14.2 SUCCESSORS. This Agreement shall bind and inure to the
benefit of the respective successors and assigns of each of the parties;
provided, however, that Borrower may not assign this Agreement or any rights or
duties hereunder without Lender's prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to assignment by
Lender shall release Borrower from its Obligations. Lender may assign this
Agreement and the other Loan Documents and its rights and duties hereunder and
thereunder pursuant to Section 14.1 hereof and, except as expressly required
pursuant to Section 14.1 hereof, no consent or approval by Borrower is required
in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by Borrower therefrom, shall be effective unless the
same shall be in writing and signed by Lender and Borrower and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
15.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Lender in exercising the same, will operate as a waiver
thereof. No waiver by Lender will be effective unless it is in writing, and then
only to the extent specifically stated. No waiver by Lender on any occasion
shall affect or diminish Lender's rights thereafter to require strict
performance by Borrower of any provision of this Agreement. Lender's rights
under this Agreement and the other Loan Documents will be cumulative and not
exclusive of any other right or remedy that Lender may have.
16. GENERAL PROVISIONS.
16.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrower and Lender, the Fee Letter has been executed
by Borrower and Lender, and the commitment fee described in the Fee Letter has
been paid to Lender.
16.2 SECTION HEADINGS. Headings and numbers have been set
forth herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each Section applies equally to this entire
Agreement.
16.3 INTERPRETATION. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed against Lender or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
16.4 SEVERABILITY OF PROVISIONS. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
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16.5 CONFIDENTIALITY.
Lender agrees to use reasonable precautions to keep
confidential, in accordance with its customary procedures for handling
confidential information of this nature and in accordance with safe and sound
practices of comparable commercial finance companies, any non-public information
supplied to it by Borrower pursuant to this Agreement or the other Loan
Documents (and which at the time is not, and does not thereafter become,
publicly available or available to Lender from another source not known to be
subject to a confidentiality obligation to Lender not to disclose such
information), provided that nothing herein shall limit the disclosure of any
such information (i) to the extent required by statute, rule, regulation or
judicial process, (ii) to counsel for Lender, (iii) to examiners, auditors, or
accountants, (iv) in connection with any litigation to which Lender is a party
or (v) to any assignee or participant (or prospective assignee or participant)
so long as such assignee or participant (or prospective assignee or participant)
first agrees, in writing, to be bound by confidentiality provisions similar in
substance to this Section 16.5. Lender agrees that, upon receipt of a request or
identification of the requirement for disclosure pursuant to clause (iv) hereof,
it will make reasonable efforts to keep Borrower informed of such request or
identification; provided that Borrower acknowledges that Lender may make
disclosure as required or requested by any Governmental Authority or
representative thereof and that Lender may be subject to review by regulatory
agencies and may be required to provide to, or otherwise make available for
review by, the representatives of such parties or agencies any such non-public
information.
16.6 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing signed by Lender and Borrower.
16.7 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
16.8 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by Borrower or any Obligor or the transfer to Lender
of any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if Lender is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount
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thereof that Lender is required or elects to repay or restore, and as to all
reasonable costs, expenses, and attorneys fees of Lender related thereto, the
liability of Borrower or such Obligor automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.
16.9 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
16.10 EXPENSE DEPOSIT
Borrower has previously delivered to Lender an expense deposit
(the "Expense Deposit") to cover certain Lender Expenses incurred in conducting
due diligence and drafting and negotiating the Loan Documents. If after this
Agreement is executed, Borrower declines to borrow from Lender hereunder or
fails to satisfy the conditions precedent to the initial extension of credit
hereunder (through no fault of Lender), Lender shall be entitled to retain the
full amount of the Expense Deposit, irrespective of the amount of Lender
Expenses incurred by Lender. If the conditions precedent to the initial
extension of credit hereunder are satisfied and Borrower borrows from Lender
hereunder, the Expense Deposit will be returned to Borrower after deducting all
Lender Expenses incurred by Lender. The Expense Deposit will not be segregated
and may be commingled with other funds. Borrower will not be entitled to receive
interest on the Expense Deposit. Lender may require additional deposits in the
event the Lender Expenses associated with closing the financing hereunder
exceed, or are projected to exceed, the initial amount of the Expense Deposit.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
INTERVOICE-BRITE, INC.,
a Texas corporation
By:
--------------------------------
Title:
FOOTHILL CAPITAL CORPORATION,
a California corporation
By:
--------------------------------
Title:
S-1
SCHEDULE D-1
DESIGNATED ACCOUNT AND DESIGNATED ACCOUNT BANK
Bank of America Texas
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA #▇▇▇▇▇▇▇▇▇
For the Account of:
Inter Voice-Brite, Inc.
Account #▇▇▇-▇▇▇▇▇▇-▇.
SCHEDULE L-1
LENDER'S ACCOUNT
An account at a bank designated by Lender from time to time as
the account into which Borrower shall make all payments to Lender under this
Agreement and the other Loan Documents; unless and until Lender notifies
Borrower to the contrary, Lender's Account shall be that certain deposit account
bearing account number 323-266193 and maintained by Lender with JPMorgan Chase
Bank, 4 New York Plaza, 15th Floor, New York, New York 10004, ABA #▇▇▇▇▇▇▇▇▇.