EXHIBIT 10.1
AMENDED AND RESTATED TERM LOAN AGREEMENT (this "Agreement"), dated as of
April 2, 2004, among INFOCROSSING, INC., a Delaware corporation (the
"Borrower"), the several banks and other financial institutions from time to
time parties to this Agreement (the "Lenders") and CapitalSource Finance LLC, a
Delaware limited liability company, as agent for the Lenders hereunder.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Borrower, Agent and Lenders are parties to that certain Term Loan
Agreement dated as of October 21, 2003 (as amended, supplemented or otherwise
modified prior to the date hereof, the "Original Loan Agreement");
WHEREAS, on the Original Closing Date, pursuant to the Exchange Agreement,
the Borrower exchanged all of the outstanding Existing Preferred Stock and the
outstanding Existing Warrants of the Borrower owned by the Investors for (i)
$55,000,000 in cash and (ii) proceeds of Loans outstanding under the Original
Loan Agreement in the aggregate original principal amount of $25,000,000
represented by Notes issued by the Borrower in favor of the Investors;
WHEREAS, pursuant to that certain (i) Agreement Regarding Transitional
Matters dated as of February 13, 2004 between Infocrossing Agent, Inc. (the
"Retired Agent") and Agent, and (ii) Master Assignment and Assumption Agreement
dated as of February 13, 2004 among the Retired Agent, the Agent, the Investors,
the Lenders, the Borrower and the Subsidiaries party thereto, among other
things, the Agent was appointed as "Agent" under the Original Loan Agreement,
and all outstanding Loans under the Original Loan Agreement were assigned to the
Lenders and the Lenders became parties to the Original Loan Agreement and the
other Loan Documents, respectively; and
WHEREAS, Borrower, Agent and Lenders desire to amend and restate the
Original Loan Agreement in its entirety without constituting a novation thereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto hereby agree to
amend and restate the Original Loan Agreement in its entirety as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"Affiliate": with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent": CapitalSource Finance LLC, as agent for the Lenders under this
Agreement and the other Loan Documents, together with its successors and assigns
in such capacity.
"Agreement": this Amended and Restated Term Loan Agreement, as amended,
restated, supplemented or otherwise modified from time to time.
"Applicable Interest Rate": means (a) with respect to Term Loan A, 9% per
annum and (b) with respect to Term Loan B, the greater from time to time of (i)
9% per annum and (ii) an interest rate per annum equal to 3% plus the Prime Rate
in effect from time to time.
"Applicable Law": as to any Person (a) any United States federal, state,
local or foreign law, statute, rule, regulation, order, writ, injunction,
judgment, decree or permit of any Governmental Authority and (b) any rule or
listing requirement of any applicable national stock exchange or listing
requirement of any national stock exchange or SEC recognized trading market, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Assignee": as defined in subsection 9.6(c).
"Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender and an Assignee (with the consent of any party whose consent is
required by Section 9.6), and accepted by the Agent, in the form of Exhibit B.
"Borrower Deposit Account Control Agreements": the Deposit Account Control
Agreements executed and delivered by the Borrower, Agent and the relevant
financial institutions substantially in the form of Exhibit C or otherwise in a
form acceptable to the Agent, as the same may be amended, supplemented or
otherwise modified from time to time.
"Borrower Property": as defined in subsection 3.16.
"Borrower Security Documents": the collective reference to the Borrower
Deposit Account Control Agreements, the Security Agreements to which Borrower is
a party and the Stock Pledge Agreements to which the Borrower is a party.
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in New York City or Chevy Chase, Maryland are authorized or
required by law to close.
"Capital Expenditures": for any period, with respect to any Person, the
aggregate of all expenditures by such Person for the acquisition or leasing
(pursuant to a capital lease) of fixed or capital assets or additions to
equipment (including replacements, capitalized repairs and improvements during
such period) which are or should be capitalized under GAAP on a balance sheet of
such Person; provided that, Capital Expenditures shall not include the cash
purchase price of either the SMS Acquisition or investments that constitute
Permitted Acquisitions pursuant to subsection 6.9(h).
"Capital Stock": (i) with respect to any Person that is a corporation, any
and all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock and (ii) with respect to any other Person, any
and all partnership or other equity interests of such Person and any and all
warrants or options to purchase any of the foregoing.
"Cash Equivalents": (a) securities with maturities of one year or less from
the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date of
acquisition and overnight bank deposits of any Lender or of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
of any Lender or of any commercial bank satisfying the requirements of clause
(b) of this definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-2 by
Standard and Poor's Rating Group ("S&P") or P-2 by ▇▇▇▇▇'▇ Investors Service,
Inc. ("Moody's"), (e) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States, by any political subdivision or taxing authority
of any such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's, (f) securities with maturities of one year or less from
the date of acquisition backed by standby letters of credit issued by any Lender
or any commercial bank satisfying the requirements of clause (b) of this
definition or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"Change of Control": means the occurrence of any of the following events,
whether in a single transaction or a series of related transactions, and any
other similar events: (a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 and 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 50% of the total Voting Capital Stock of the Borrower; or (b) the Borrower
consolidates with, or merges with or into, another Person or Persons or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person or Persons, or any Person or
Persons consolidate with, or merge with or into the Borrower, in any such event
pursuant to a transaction in which (i) the holders of the outstanding Voting
Capital Stock of the Borrower immediately prior to such transaction hold less
than 50% of the outstanding Voting Capital Stock of the surviving or transferee
company or its direct or indirect parent company immediately after the
transaction or (ii) immediately after such transaction any "person" or "group"
(as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person shall be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total Voting Capital Stock of the surviving
or transferee company or its direct or indirect parent company immediately after
the transaction; or (c) during any consecutive two-year period, individuals who
at the beginning of such period constituted the Board of Directors of the
Borrower (together with any new directors whose election by the Board of
Directors of the Borrower or whose nomination for election by the stockholders
of the Borrower was approved by a vote of a majority of the directors then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Borrower then
in office provided, however, that the change in individuals constituting the
Board of Directors in connection with the closing of the transactions
contemplated by the Exchange Agreement shall be deemed not to result in a Change
of Control pursuant to this clause (c); or (d) any transaction subject to Rule
13e-3 under the Exchange Act if following such Rule 13e-3 transaction such
Person owns more than 50% of the total Voting Capital Stock of the Borrower.
"Claim": for purposes of the definition of "Environmental Claims" contained
in subsection 3.16, as defined herein.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Collateral": all assets of the Loan Parties, now owned or hereinafter
acquired, upon which a Lien is purported to be created by any Security Document.
"Collateral Assignment of Acquisition Agreement": the Collateral Assignment
of Acquisition Agreement to be executed and delivered by the Borrower in form
and substance satisfactory to Agent, as the same may be amended, supplemented or
otherwise modified from time to time.
"Commitments": collectively, the Term Loan A Commitment, the Term Loan B
Commitment, the Term Loan A Interest Reserve Commitment and the Term Loan B
Interest Reserve Commitment.
"Commonly Controlled Entity": an entity, whether or not incorporated, which
is under common control with the Borrower within the meaning of Section 4001 of
ERISA or is part of a group which includes the Borrower and which is treated as
a single employer under Section 414(b) or (c) of the Code.
"Common Stock": the common stock, par value $.01 per share, of the
Borrower.
"Consolidated Current Assets": of any Person at any date, all amounts
(other than cash and Cash Equivalents) that would, in conformity with GAAP, be
set forth opposite the caption "total current assets" (or any like caption) on a
consolidated balance sheet of such Person and its Subsidiaries at such date.
"Consolidated Current Liabilities": of any Person at any date, all amounts
that would, in conformity with GAAP, be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet of
such Person and its Subsidiaries at such date, but excluding, with respect to
the Borrower, (a) the current portion of any Funded Debt of the Borrower and its
Subsidiaries and (b), without duplication, all Indebtedness consisting of
revolving credit loans to the extent otherwise included therein.
"Consolidated EBITDA": for any period, Consolidated Net Income of the
Borrower and its Subsidiaries for such period plus, without duplication and to
the extent deducted in determining such Consolidated Net Income for such period,
the sum of (a) consolidated income tax expense, (b) consolidated interest
expense, amortization or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with Indebtedness,
(c) depreciation and amortization expense, (d) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, (e) any
extraordinary non-cash charges agreed to by Agent in its reasonable discretion
and (f) any other non-cash charges agreed to by Agent in its reasonable
discretion, and minus, to the extent included in determining such Consolidated
Net Income for such period, the sum of (a) any extraordinary non-cash gains and
(b) any other non-cash items, all as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Fixed Charges": with respect to the Borrower and its
Subsidiaries on a consolidated basis for any period, the aggregate of (i)
regularly scheduled principal payments of all Funded Debt made or to be made by
the Borrower and its Subsidiaries on a consolidated basis during such period and
discount or premium relating to such Funded Debt for such period, whether
expensed or capitalized, (ii) without duplication, all payments made by Borrower
and its Subsidiaries with respect to the Strategix Earnout during such period,
(iii) Consolidated Interest Expense during such period, both expensed and
capitalized, (iv) dividends and/or distributions paid in cash, and (v) cash paid
for stock repurchases and/or redemptions in each case determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense": of any Person for any period, total cash
interest expense (including that attributable to Financing Leases) of the
Borrower and its Subsidiaries for such period with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries (including, without
limitation, all commissions, discounts and other fees and charges owed by such
Person with respect to letters of credit and bankers' acceptance financing and
net costs of such Person under hedge agreements in respect of interest rates to
the extent such net costs are allocable to such period in accordance with GAAP).
"Consolidated Net Income": for any period, the net income or loss of the
Borrower and the Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded (a) the
income of any Person (other than a Loan Party) in which any other Person (other
than the Borrower or any Subsidiary or any director holding qualifying shares in
compliance with applicable law) owns an equity interest, except to the extent of
the amount of dividends or other cash distributions actually paid to the
Borrower or any of the Subsidiaries during such period, and (b) the income or
loss of any Person accrued prior to the date it becomes Subsidiary or is merged
into or consolidated with the Borrower or any Subsidiary or the date that such
Person's assets are acquired by the Borrower or any Subsidiary.
"Consolidated Total Debt": as of any date, the sum of (a) the aggregate
principal amount of Indebtedness of the Borrower and the Subsidiaries
outstanding as of such date, in the amount that would be reflected on a balance
sheet prepared as of such date on a consolidated basis in accordance with GAAP,
plus (b) the aggregate principal amount of Indebtedness of the Borrower and the
Subsidiaries outstanding as of such date that is not required to be reflected on
a balance sheet in accordance with GAAP, determined on a consolidated basis,
provided, that for purposes of clause (b) above, the term "Indebtedness" shall
not include contingent obligations of the Borrower or any Subsidiary as an
account party in respect of any letter of credit or letter or guaranty unless
such letter of credit or letter of guaranty supports an obligation that
constitutes Indebtedness.
"Consolidated Working Capital": at any date, the difference of (a)
Consolidated Current Assets of the Borrower and its Subsidiaries on such date
less (b) Consolidated Current Liabilities of the Borrower and its Subsidiaries
on such date.
"Contractual Obligation": as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
"Default": any of the events specified in Section 7, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"Deposit Account Control Agreements": the collective reference to the
Borrower Deposit Account Control Agreements and the Subsidiaries Deposit Account
Control Agreements.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Subsidiary": any Subsidiary of the Borrower organized under the
laws of any jurisdiction within the United States.
"Environmental Claims": as defined in subsection 3.16.
"Environmental Laws": as defined in subsection 3.16.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended,
and all regulations promulgated thereunder, as in effect from time to time.
"Event of Default": any of the events specified in Section 7, provided that
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the difference, if
any, of (a) the sum, without duplication, of (i) Consolidated Net Income for
such fiscal year, (ii) the amount of all non-cash charges (including
depreciation and amortization) deducted in arriving at such Consolidated Net
Income, (iii) the amount of the decrease, if any, in Consolidated Working
Capital for such fiscal year (without giving effect to any reduction in the
realization reserve of deferred income tax benefits), (iv) the aggregate net
amount of non-cash loss on the disposition of property by the Borrower and its
Subsidiaries during such fiscal year (other than sales of inventory in the
ordinary course of business), to the extent deducted in arriving at such
Consolidated Net Income and (v) the net increase during such fiscal year (if
any) in long-term deferred tax accounts of the Borrower minus (b) the sum,
without duplication, of (i) the amount of all non-cash credits included in
arriving at such Consolidated Net Income, (ii) the aggregate amount actually
paid by the Borrower and its Subsidiaries in cash during such fiscal year on
account of Capital Expenditures (except to the extent attributable to the
incurrence of capital lease obligations or other Indebtedness in connection with
such expenditures and except to the extent such expenditures are financed with
the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount of
all optional prepayments of the Funded Debt during such fiscal year (to the
extent otherwise permitted hereunder) and mandatory prepayments made pursuant to
subsection 2.3(b) with the proceeds of Prepayment Events described in clause (C)
of the definition thereof during such year to the extent such proceeds are
included in the calculation of Consolidated Net Income for such fiscal year,
(iv) the aggregate amount of all regularly scheduled principal payments of
Funded Debt of the Borrower and its Subsidiaries made during such fiscal year,
(v) the amount of the increase, if any, in Consolidated Working Capital for such
fiscal year (without giving effect to any increase in the realization reserve of
deferred income tax benefits), (vi) the aggregate net amount of non-cash gain on
the disposition of property by the Borrower and its Subsidiaries during such
fiscal year (other than sales of inventory in the ordinary course of business),
to the extent included in arriving at such Consolidated Net Income, and (vii)
the net decrease during such fiscal year (if any) in long-term deferred tax
accounts of the Borrower.
"Exchange Act": Securities Exchange Act of 1934, as amended.
"Exchange Agreement": the Exchange Agreement entered into between the
Borrower and the Investors relating to the Recapitalization.
"Existing Preferred Stock": the Series A Cumulative Convertible
Participating Preferred Stock, par value $.01 per share, previously issued by
Borrower to the Investors and none of which is outstanding as of the Restatement
Effective Date.
"Existing Warrants": the warrants to purchase the Borrower's Common Stock
at a purchase price of $.01 per share previously issued to the Investors and
none of which is outstanding as of the Restatement Effective Date.
"Federal Funds Rate": for any day, the rate per annum (rounded upward to
the nearest 1/100th of 1%) equal to the weighted average of the rates on
overnight federal funds transactions with members of the United Stated Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate
quoted to the Agent on such day on such transactions as determined by the Agent
in a commercially reasonable manner.
"Financing Lease": any lease of property, real or personal, the obligations
of the lessee in respect of which are required in accordance with GAAP to be
capitalized on a balance sheet of the lessee.
"First Amendment Closing Date": February 13, 2004.
"Fixed Early Prepayment Amount": an amount equal to 101% of the outstanding
aggregate principal amount of the Loans to be prepaid.
"Foreign Subsidiary": any Subsidiary of the Borrower organized under the
laws of any jurisdiction outside the United States of America.
"Funded Debt": means, with respect to the Borrower and its Subsidiaries as
of the date of determination thereof, all Indebtedness of the Borrower and its
Subsidiaries on a consolidated basis outstanding at such time (including the
current portion thereof and amounts outstanding in the final year of any Funded
Debt) which matures more than one year after the date of calculation, and any
such Indebtedness maturing within one year from such date of calculation which
is renewable or extendable at the option of the obligor to a date more than one
year from such date and including in any event the Loans.
"GAAP": generally accepted accounting principles in the United States of
America, consistently applied, which are in effect on the date of this
Agreement; provided, that, if any changes in GAAP are hereafter required or
permitted by the rules, regulations, pronouncements and opinions of the
Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with similar functions)
and are adopted by the Borrower with the agreement of its independent certified
public accountants and such changes result in a change in the method of
calculation of any of the covenants, standards or terms found in this Agreement,
the Borrower may request that the parties hereto enter into negotiations in
order to amend such provisions so as to equitably reflect such changes;
provided, however, that no change in GAAP that would affect the method of
calculation of any of the covenants, standards or terms shall be given effect in
such calculations until such provisions are amended, in a manner satisfactory to
the Required Lenders and the Borrower, to so reflect such change in GAAP.
"Governmental Authority": (i) any foreign, Federal, state or local court or
governmental or regulatory agency or authority, (ii) any arbitration board,
tribunal or mediator and (iii) any national stock exchange or SEC recognized
trading market on which securities issued by the Borrower or any of the
Subsidiaries are listed or quoted.
"Guarantee Obligation": as to any Person (the "guaranteeing person"), any
obligation of (a) the guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the creation
of which the guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefore,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
"Guarantor": any Person party to a Security Agreement other than the
Borrower and the Agent.
"Hazardous Materials": as defined in subsection 3.16.
"Indebtedness": with respect to the Borrower or any specified Person, all
obligations, contingent or otherwise, which in accordance with GAAP are required
to be classified upon the balance sheet of the Borrower (or other specified
Person) as liabilities, but in any event including (without duplication):
(a) all indebtedness of such Person for borrowed money,
(b) for the deferred purchase price of assets, securities, property or
services, including related non-competition, consulting and stock repurchase
obligations (other than current trade liabilities incurred in the ordinary
course of business),
(c) any other indebtedness of such Person which is evidenced by a note,
bond, debenture or similar instrument,
(d) all obligations of such Person upon which interest charges are
customarily paid,
(e) all obligations of such Person under conditional sale or other title
retention agreements relating to property acquired by such Person,
(f) all obligations of such Person under Financing Leases or synthetic
leases or other similar off-balance sheet leases,
(g) all obligations of such Person in respect of bankers' acceptances,
letters of credit, hedging arrangements or similar facilities,
(h) all liabilities secured by any Lien on any property owned or acquired
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof,
(i) obligations that are immediately and directly due and payable out of
the proceeds of or production from property,
(j) mandatory redemption or cash dividend rights on Capital Stock (or other
equity securities), or
(k) all Guarantee Obligations in respect of the Indebtedness of others.
"Insolvency": with respect to any Multiemployer Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": domestic and foreign patents, patent applications,
patent licenses, software licenses, know-how licenses, trade names, trademarks,
copyrights, unpatented inventions, service marks, trademark registrations and
applications, service ▇▇▇▇ registrations and applications, copyright
registrations and applications, uniform resource locators, Internet domain
names, trade secrets and other confidential and proprietary information.
"Interest Advances": collectively, the Term Loan A Interest Advances and
the Term Loan B Interest Advances.
"Interest Payment Date": the last day of each March, June, September and
December of each year.
"Investors": collectively, Sandler Capital Partners V, L.P., Sandler
Capital Partners V FTE, L.P., Sandler Technology Partners Subsidiary, LLC,
Sandler Co-Investment Partners, L.P., Sandler Capital Partners V Germany, L.P.,
Price Family Limited Partners and MidOcean Capital Investors, L.P.
"ITO Holdings": ITO Holdings, LLC, a California limited liability company.
"Leverage Ratio": on any date, with respect to the Borrower and its
Subsidiaries on a consolidated basis, the ratio of (a) Consolidated Total Debt
as of such date to (b) Consolidated EBITDA for the period of four consecutive
fiscal quarters of the Borrower ended on such date (or, if such date is not the
last day of a fiscal quarter, ended on the last day of the fiscal quarter of the
Borrower most recently ended prior to such date).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing).
"Loan": collectively, any Term Loan A or Term Loan B held by any Lender
pursuant to this Agreement, and such loans being referred to collectively as the
"Loans."
"Loan Documents": this Agreement, the Notes, the Security Documents and all
other agreements, instruments and certificates contemplated hereby and thereby
in each case, as amended, restated, supplemented or otherwise modified from time
to time in accordance with Section 9.1.
"Loan Interest Reserve": as of any date, a reserve equal to the amount, if
any, by which (a) the product of (x) 2.5% (two and one-half percent), multiplied
by (y) $39,875,156.25 less the amount of repayments of the Loans pursuant to
Section 2.2(a)(i) as and when made, exceeds (b) all additional loans made by the
Lenders under the Loan Interest Reserve pursuant to subsection 2.1(b) after the
First Amendment Closing Date.
"Loan Obligations": (a) the due and punctual payment by the Borrower of (i)
the principal of, and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, and (ii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Borrower to the Agent and the Lenders
under the Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Borrower under or pursuant to the
Loan Documents, and (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of the Guarantors under or
pursuant to the Loan Documents.
"Loan Parties": the Borrower and each Subsidiary of the Borrower which is a
party to a Loan Document.
"Master Reaffirmation Agreement": the Master Reaffirmation Agreement to be
executed and delivered by the Borrower and each Subsidiary, in form and
substance satisfactory to Agent, as the same may be amended, supplemented or
otherwise modified from time to time.
"Material Adverse Effect": a material adverse effect on (a) the condition
(financial or otherwise), business, properties, assets, liabilities, operations
or results of operations of the Borrower and the Subsidiaries, taken as a whole
or (b) the validity or enforceability of this or any of the other Loan Documents
or the rights or remedies of the Agent or the Lenders hereunder or thereunder.
"Maturity Date": October 21, 2008.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Proceeds": means, with respect to (a) any sale, transfer or other
disposition of any property or asset of the Borrower or any Subsidiary, (b) any
casualty or condemnation event or (c) any other event set forth in the
definition of Prepayment Event, (i) the cash proceeds received in respect of
such event, including (x) in the case of a casualty, insurance proceeds, and (y)
in the case of a condemnation or similar event, condemnation awards and similar
payments, net of (ii) the sum of (x) all reasonable fees and out-of-pocket
expenses paid by the Borrower and the Subsidiaries to third parties (other than
Affiliates) in connection with such event and (y) the amount of taxes paid or
reasonably estimated to be payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements).
"Non-Excluded Taxes": as defined in subsection 2.8(a).
"Note": any of the promissory notes executed pursuant to subsection 2.2(e).
"Obligations": means the principal, interest, premium, fees,
indemnifications, reimbursements, expenses, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Original Closing Date": October 21, 2003.
"Original Closing Date Term Loan A": as defined in Section 2.1(a).
"Original Loan Agreement": as defined in the Recitals.
"Participant": as defined in subsection 9.6(b).
"Past Due Interest" " as defined in subsection 2.1(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA.
"Permitted Acquisition": the acquisition by the Borrower or any Domestic
Subsidiary of the Borrower of all or any portion of the assets or stock or other
equity interests of any Person engaged in a business that would be permitted
under subsection 6.15, including pursuant to a merger or consolidation; provided
that all such acquisitions are approved by the Board of Directors and
stockholders, if required, of the Borrower or such Domestic Subsidiary and the
acquiree and are not otherwise hostile and, in the case of a merger (x)
involving the Borrower, the surviving entity is the Borrower or (y) involving
any such Domestic Subsidiary, the surviving entity is such Domestic Subsidiary
or otherwise becomes a Loan Party upon consummation thereof; and provided,
further, that:
(i) if such acquisition is an asset acquisition, the subject assets are
located in the continental United States or, if such acquisition is a stock or
other equity acquisition or a merger, the acquiree or target is an entity
incorporated or otherwise organized under the laws of a State of the United
States;
(ii) on the closing date of such acquisition, both before and immediately
after giving effect to such proposed acquisition, no Default or Event of Default
has occurred or will occur or be continuing;
(iii) after giving effect to any such acquisition there shall be no
negative effect on Consolidated EBITDA on a pro forma basis, and the Borrower
would remain in compliance with the covenants set forth in subsection 6.1 on a
pro forma basis (determined on a pro forma basis (A) as of the last day of the
most recently ended fiscal quarter of the Borrower for which financial
statements are available (computed on the basis of (x) balance sheet amounts as
of the most recently completed fiscal quarter, and (y) income statement amounts
for the most recently completed period of four consecutive fiscal quarters) and
(B) on the basis of twelve month projections updated to give effect to such
acquisition) and the Borrower delivers a certificate of a Responsible Officer
certifying compliance with this clause (iii);
(iv) any Person or business acquired becomes a wholly-owned Subsidiary of
the Borrower or of a Guarantor following such acquisition and such Person
becomes a Guarantor, and the Borrower shall, and shall cause any applicable
Subsidiary to, execute any documents and take all actions that may be required
under applicable law or that the Agent reasonably may request, in order to
comply with subsection 5.10 herein, and the Borrower shall have used
commercially reasonable efforts to either (A) obtain and deliver to Agent a
collateral assignment of representations, warranties and indemnities in respect
of the documentation evidencing such acquisition, acknowledged in writing by the
related sellers thereunder, or (B) include in such documentation a provision
expressly permitting such a collateral assignment, in each case in form and
substance satisfactory to the Agent; and
(v) Borrower shall give written notice to Agent no less than five (5)
Business Days prior to the consummation of any such contemplated acquisition.
"Person": an individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is covered by
ERISA and in respect of which the Borrower or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Prepayment Event": means (A) any sale, transfer or other disposition of
any property or asset of the Borrower or any Subsidiary (including pursuant to a
sale and leaseback transaction) (other than sales, transfers or other
dispositions permitted under subsections 6.5(c), 6.5(d) and 6.5(e) hereof) or
(B) any casualty or other insured damage to, or any taking under power of
eminent domain or by condemnation or similar proceeding of, any property or
asset of the Borrower or any Subsidiary after the Original Closing Date or (C)
the receipt by the Borrower or any Subsidiary of any unscheduled payment in
excess of $1,000,000 during any fiscal year of the Borrower under any contract
with any third Person including, without limitation, an amount on account of
early termination of such contract; provided that such events shall not
constitute "Prepayment Events" to the extent that (1) the aggregate Net Proceeds
from all such casualty events are less than $250,000 during any fiscal year of
the Borrower or (2) the aggregate Net Proceeds from the sale, transfer or other
disposition of assets of the Borrower or any Subsidiary are less than $250,000
during any fiscal year of the Borrower.
"Prepayment Premium Amount": with respect to any prepayment of the Loans to
which a Prepayment Premium Amount is to be calculated, the greater of (x) two
percent (2.0%) of the amount so prepaid and (y) the Related Yield Maintenance
Fee in respect of such amount so prepaid.
"Prime Rate": a fluctuating interest rate per annum equal at all times to
the greater of (i) the rate of interest announced publicly from time to time by
Bloomberg, L.P. as the prime rate; provided, that such rate is not necessarily
the best rate offered to its customers, and, should Agent be unable to determine
such rate, such other indication of the prevailing prime rate of interest as may
reasonably be chosen by Agent, and (ii) the sum of the Federal Funds Rate in
effect from time to time, plus one half of one percent (0.5%). Any change in the
Prime Rate due to a change in such prime rate or the Federal Funds Rate shall be
effective immediately on the effective date of such change in such prime rate or
the Federal Funds Rate.
"Pro Rata Share: as to any Lender, at any time, the percentage which the
aggregate principal amount of such Lender's Loans then outstanding constitutes
of the aggregate principal amount of the total Loans then outstanding at such
time.
"Recapitalization": the recapitalization transaction in which the Investors
exchanged all of their outstanding Existing Preferred Stock and Existing
Warrants of the Borrower for (i) $55,000,000 in cash and (ii) loans outstanding
under this Agreement in the aggregate original principal amount of $25,000,000
represented by promissory notes of the Borrower issued under the Original Loan
Agreement.
"Register": as defined in subsection 9.6(d).
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Reinvestment Amount": with respect to any Reinvestment Event, the amount
expended prior to the relevant Reinvestment Prepayment Date to acquire real
property, equipment or other tangible assets used in or useful in the Borrower's
business.
"Reinvestment Deferred Amount": with respect to any Reinvestment Event, the
aggregate Net Proceeds received by the Borrower or any of its Subsidiaries in
connection therewith that are not applied to prepay the Loans pursuant to
subsection 2.3(b) as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Prepayment Event in respect of which the Borrower
has delivered a Reinvestment Notice.
"Reinvestment Notice": with respect to Net Proceeds from a Prepayment Event
specified in paragraphs (A) or (B) of the definition of Prepayment Event, a
written notice executed by a Responsible Officer stating (i) that no Default or
Event of Default has occurred and is continuing, (ii) with respect to Net
Proceeds from a Prepayment Event specified in paragraph (A) of the definition of
Prepayment Event, the aggregate amount of Reinvestment Amounts expended by the
Borrower with respect to Prepayment Events specified in paragraph (A) of the
definition of Prepayment Event (directly or indirectly through a Subsidiary)
during the term of this Agreement does not and will not exceed $5,000,000
(including the specified portion of the Net Proceeds the subject of such
Reinvestment Notice) and specifying such aggregate amount of such Reinvestment
Amounts to date and (iii) that the Borrower (directly or indirectly through a
Subsidiary) intends and expects to use all or a specified portion of the Net
Proceeds of any Prepayment Event to acquire real property, equipment or other
tangible assets used in or useful in its business.
"Reinvestment Prepayment Amount": with respect to any Reinvestment Event,
the Reinvestment Deferred Amount relating thereto less the Reinvestment Amount
relating thereto.
"Reinvestment Prepayment Date": with respect to any Reinvestment Event, the
earlier of (a) the date occurring 180 days after such Reinvestment Event and (b)
the date on which the Borrower shall have determined not to, or shall have
otherwise ceased to, acquire real property, equipment or other tangible assets
used in or useful in the Borrower's business with all or any portion of the
relevant Reinvestment Deferred Amount.
"Related Yield Maintenance Fee": with respect to any prepayment of the
Loans, the present value (discounted at the one year Treasury rate in effect on
the day that is two (2) Business Days prior to the date on which such prepayment
is made, determined by the Agent in its reasonable discretion) of the total
interest and fees which could be earned on the amount so prepaid from the
effective date of such prepayment through the date that is the first anniversary
of the Restatement Effective Date.
"Release": as defined in subsection 3.16.
"Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections 13, 14, 16, 18, 19 or 20 of PBGC ▇▇▇.▇▇. 2615.
"Required Lenders": at any time, Lenders whose Pro Rata Shares aggregate at
least 51%.
"Requirement of Law": as to any Person, the Certificate of Incorporation
and By-Laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Responsible Officer": the chief executive officer and the president of the
Borrower or, with respect to financial matters, the chief financial officer of
the Borrower.
"Restatement Effective Date": the date on which the conditions precedent
set forth in Section 4 shall be satisfied. The execution and delivery of this
Agreement by the Borrower shall be deemed a representation and warranty by such
Person that such conditions precedent have been satisfied in all respects as of
the date hereof.
"Restatement Effective Date Term Loan B": as defined in Section 2.1(a).
"Restricted Payment": means any dividend or other distribution (whether in
cash, securities or other property) with respect to any Capital Stock in the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Capital Stock or any option, warrant or other right to acquire any such
Capital Stock.
"SEC": United States Securities and Exchange Commission.
"SEC Filings": all reports, registration statements and other filings filed
by the Borrower with the SEC (and all notes, exhibits and schedules thereto and
all documents incorporated by reference therein).
"SEC Reports" as defined in subsection 3.1.
"Securities Act": the Securities Act of 1933, as amended.
"Security Agreements": collectively, any and all Guarantee and Security
Agreements executed and delivered by the Borrower and/or the Subsidiaries,
substantially in the form of Exhibit D, as the same may be amended, supplemented
or otherwise modified from time to time.
"Security Documents": the collective reference to the Deposit Account
Control Agreements, the Security Agreements, the Stock Pledge Agreements, the
Collateral Assignment of Acquisition Agreement, the Master Reaffirmation
Agreement and all other security documents hereafter delivered to the Agent
granting a Lien on any asset or assets of any Person to secure the obligations
and liabilities of the Borrower hereunder and under any of the other Loan
Documents or to secure any guarantee of any such obligations and liabilities.
"Single Employer Plan": any Plan which is covered by Title IV of ERISA, but
which is not a Multiemployer Plan. "SMS": as defined in subsection 3.15. ---
"SMS Acquisition": the acquisition by Borrower of all of the issued and
outstanding capital stock of SMS pursuant to the SMS Stock Purchase Agreement.
"SMS Acquisition Documents": collectively the SMS Stock Purchase Agreement,
that certain Escrow Agreement dated as of the Restatement Effective Date among
Borrower, ▇▇▇▇▇ Fargo and ITO Holdings, and the other "Transaction Documents" as
such term is defined in the SMS Stock Purchase Agreement.
"SMS Stock Purchase Agreement": that certain Stock Purchase Agreement dated
as of March 3, 2004 between Borrower and ITO Holdings.
"Stock Pledge Agreements": collectively, any and all Stock Pledge
Agreements executed and delivered by the Borrower and each relevant Subsidiary,
substantially in the form of Exhibit F, as the same may be amended, supplemented
or otherwise modified from time to time.
"Strategix Purchase Agreement": that certain Asset Purchase Agreement dated
as of February 29, 2004 among Strategix, Ltd., ePassage, Inc., and SMS.
"Strategix Earnout": collectively, Indebtedness consisting of deferred
purchase price obligations payable by SMS to ePassage, Inc. pursuant to (i) the
Strategix Purchase Agreement and (ii) that certain Consulting Services Agreement
dated as of March 1, 2004 between SMS and ePassage, Inc.
"Subject Period": see Section 2.3(a).
"Subsidiaries Deposit Account Control Agreements": the Deposit Account
Control Agreements executed and delivered, or to be executed and delivered, as
applicable, by each relevant Subsidiary, substantially in the form of Exhibit E
or otherwise in a form acceptable to the Agent, as the same may be amended,
supplemented or otherwise modified from time to time.
"Subsidiaries Security Documents": the collective reference to the
Subsidiaries Deposit Account Control Agreements, the Security Agreements to
which any Subsidiary is a party and the Stock Pledge Agreements to which any
Subsidiary is a party.
"Subsidiary": as to any Person, a corporation, partnership or other entity
of which shares of stock or other ownership interests having ordinary voting
power (other than stock or such other ownership interests having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower.
"Term Loan A": collectively, the Original Closing Date Term Loan A and the
Term Loan A Interest Advances.
"Term Loan A Commitment": with respect to each Lender, the commitment of
such Lender with respect to the Original Closing Date Term Loan A hereunder,
expressed as an amount representing the maximum principal amount of the Original
Closing Date Term Loan A held by such Lender hereunder. The amount of each
Lender's Term Loan A Commitment as of the Restatement Effective Date is set
forth on Schedule 2.1. The aggregate amount of the Lenders' Term Loan A
Commitments as of the Original Closing Date was $25,000,000.
"Term Loan A Interest Advances": see Section 2.1(b).
"Term Loan A Interest Reserve Commitment": with respect to each Lender, the
Term Loan A Interest Reserve Commitment set forth on Schedule 2.1.
"Term Loan B": collectively, the Restatement Effective Date Term Loan B and
the Term Loan B Interest Advances.
"Term Loan B Commitment": with respect to each Lender, the commitment of
such Lender with respect to the Restatement Effective Date Term Loan B,
expressed as an amount representing the maximum principal amount of the
Restatement Effective Date Term Loan B to be held by such Lender hereunder on
the Restatement Effective Date. The amount of each Lender's Term Loan B
Commitment is set forth on Schedule 2.1. The aggregate amount of the Lenders'
Term Loan B Commitments as of the Restatement Effective Date is $15,000,000.
"Term Loan B Interest Advances": see Section 2.1(b).
"Term Loan B Interest Reserve Commitment": with respect to each Lender, the
Term Loan B Interest Reserve Commitment set forth on Schedule 2.1.
"Transferee": as defined in subsection 9.6(f).
"Voting Capital Stock": means with respect to any Person, securities of any
class or classes of Capital Stock in such Person ordinarily entitling the
holders thereof (whether at all times or at the times that such class of Capital
Stock has voting power by reason of the happening of any contingency) to vote in
the election of members of the board of directors or comparable governing body
of such Person.
"▇▇▇▇▇ Fargo": means ▇▇▇▇▇ Fargo Bank, N.A.
"▇▇▇▇▇ Fargo Cash Collateral Account": means that certain ▇▇▇▇▇ Fargo Bank
Market Rate Account 40300005508.
"▇▇▇▇▇ Fargo Deposit Accounts": means all deposit, checking and similar
accounts (other than the ▇▇▇▇▇ Fargo Account) maintained by Borrower and/or any
of its Subsidiaries with ▇▇▇▇▇ Fargo.
"▇▇▇▇▇ Fargo Letter of Credit": means that certain Irrevocable Letter of
Credit No. NZS49355 issued by ▇▇▇▇▇ Fargo on August 26, 2003, in the amount of
$1,000,000, on behalf of Borrower in favor of Alternative Financing & Leasing,
LLC.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
any Notes or any certificate or other document made or delivered pursuant
hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to
the Borrower and its Subsidiaries not defined in subsection 1.1 and
accounting terms partly defined in subsection 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. GENERAL TERMS
2.1 Loans. (a) Subject to the terms and conditions hereof, each Lender
severally agrees to make (i) a loan to the Borrower on the Original Closing Date
in an amount not to exceed the amount of the Term Loan A Commitment of such
Lender then in effect (the "Original Closing Date Term Loan A"), and (ii) a loan
to the Borrower on the Restatement Effective Date in an amount not to exceed the
amount of the Term Loan B Commitment of such Lender then in effect (the
"Restatement Effective Date Term Loan B"). The Borrower agrees to issue Notes to
the Lenders representing the Loans under this Agreement in the form reasonably
requested by Agent. Amounts paid or prepaid in respect of the Loans may not be
reborrowed. Unless otherwise directed by the Agent pursuant to Section 2.1(b),
the Lenders are under no obligation to make any additional loans to the Borrower
hereunder after the Restatement Effective Date. The outstanding principal
balance of Term Loan A as of the Restatement Effective Date is $24,875,156.25.
(b) Upon the failure of the Borrower to pay interest pursuant to the
terms of this Agreement when due after giving effect to any applicable
grace period for such payment of interest (the amount of any such overdue
unpaid interest, the "Past Due Interest"), and regardless of whether or not
any other Default or Event of Default then exists or would result
therefrom, the Agent shall be entitled, in its sole and absolute
discretion, to cause the Lenders to make additional loans to the Borrower
not to exceed the amount of such Lender's Term Loan A Interest Reserve
Commitment and/or Term Loan B Interest Reserve Commitment, as applicable,
the proceeds of which shall be used by the Borrower to pay such Past Due
Interest; provided that such additional loans shall not exceed in the
aggregate the Loan Interest Reserve then in effect and each such additional
loan made in respect of (i) Term Loan A (all such additional loans, "Term
Loan A Interest Advances") and (ii) Term Loan B (all such additional loans,
"Term Loan B Interest Advances") shall be deemed part of the outstanding
principal balance of the Term Loan A or Term Loan B, as applicable, in
proportion to the underlying Loan upon which interest was payable and shall
constitute Loan Obligations. The Borrower hereby irrevocably and
unconditionally agrees to pay to the Agent, for the ratable benefit of the
Lenders, all Interest Advances in accordance with the payment terms
relating to the other portions of the Loans. Any Event of Default arising
from the failure of the Borrower to pay interest pursuant to this Agreement
when due (after the expiration of any grace period for such payment) shall
be deemed cured by utilization of the Loan Interest Reserve; provided,
that, the making of Interest Advances shall not be deemed to cure any other
Default or Event of Default that may then exist or result therefrom.
2.2 Repayment of Loans; Evidence of Debt. (a) (i) The Borrower hereby
unconditionally promises to pay to the Agent for the account of each Lender each
Lender's pro rata share of the unpaid principal amount of the Loans in
installments as specified on Schedule 2.2 on each date set forth on Schedule
2.2. Each such payment made pursuant to this subsection 2.2(a)(i) shall be
applied prorata to the unpaid principal amounts of each of Term Loan A and Term
Loan B based on the respective outstanding principal balances thereof.
(ii) To the extent not otherwise paid pursuant to subsection
2.2(a)(i), the Borrower hereby unconditionally promises to pay to the Agent
for the account of each Lender the then unpaid principal amount of each
Loan on the Maturity Date (or the then unpaid principal amount of such
Loan, on the date that the Loans become due and payable pursuant to Section
7).
(iii) In any event, to the extent not previously paid, all Loans shall
be due and payable on the Maturity Date.
(iv) The Borrower hereby further agrees to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum, and on the
dates, set forth in subsection 2.4.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such
Lender, including the amounts of principal and interest payable and paid to
such Lender from time to time under this Agreement.
(c) The Agent shall maintain the Register pursuant to subsection
9.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, (ii) any assignments
of Loans pursuant to subsection 9.6, (iii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to
each Lender hereunder and (iv) both the amount of any sum received by the
Agent hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 2.2(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Agent to maintain the Register or any such
account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest and premium,
if any) the Loans held by such Lender in accordance with the terms of this
Agreement.
(e) The Borrower agrees that, upon the request to the Agent by any
Lender, and in any event within five (5) Business Days of any such request,
the Borrower will (i) execute and deliver to such Lender a promissory note
of the Borrower evidencing each Loan and Commitment of such Lender,
substantially in the form of Exhibit A with appropriate insertions as to
date and principal amount (a "Note") and (ii) execute and deliver to the
Agent new Notes and/or split or divide the Notes in exchange for then
existing Notes in such smaller amounts or denominations as the Agent or
such Lender shall specify in their respective sole and absolute discretion
(and no Lender shall be required to return an existing Note to the Borrower
until receipt of a new Note); provided, that the aggregate principal amount
of such new, split or divided Notes does not exceed the aggregate principal
amount of such existing Notes to be exchanged therefor
2.3 Prepayments. (a) The Borrower shall have the right at any time and from
time to time to prepay the Loans in whole or in part subject to the requirements
of this Section without penalty or premium; provided, that (i) if the Borrower
has entered into an agreement for a Change of Control or the Borrower or any
other Person otherwise has publicly announced its intention to consummate a
transaction that would institute a Change of Control, in either case after the
last day of the Subject Period (as defined below), the Borrower may only prepay
the Loans at a prepayment amount equal to the Fixed Early Prepayment Amount,
plus accrued and unpaid interest to the date of prepayment, and (ii) if the
Borrower optionally prepays any portion of the Loans pursuant to Section 2.3(a)
during the period commencing on the Restatement Effective Date and ending on the
first anniversary thereof (the "Subject Period"), the Borrower shall pay to the
Agent, for the ratable benefit of the Lenders, an amount equal to the applicable
Prepayment Premium Amount applicable to the amount so prepaid, which Prepayment
Premium Amounts shall be due and payable on the respective dates of prepayment;
provided, that:
(I) the Borrower shall not be required to pay any such Prepayment
Premium Amount unless the aggregate amount of all prepayments made during
the Subject Period exceed $15,000,000 in total, in which case the Borrower
shall be required to pay Prepayment Premium Amounts in accordance with the
foregoing in respect of all prepayments of Loans made during the Subject
Period (excluding the first $15,000,000 of such prepayments made during the
Subject Period); and
(II) if, during the Subject Period:
(1) the Borrower shall have delivered to the Agent a term sheet,
commitment letter or letter of intent describing the material terms of a
proposed Specified Acquisition (the "Presented Terms");
(2) the Loan Obligations are either (x) prepaid in full in cash from
the proceeds of any refinancing made by any financial institution other
than CapitalSource Finance LLC and that is not an Affiliate of the Borrower
(a "Third Party Financing Source") or (y) purchased in full by a Third
Party Financing Source at par (plus accrued and unpaid interest, fees and
other amounts then due and owing) (any transaction of the type described in
this clause (2) is referred to as a "Third Party Refinancing"); and
(3) (x) such Third Party Refinancing occurred within sixty (60) days
after the Agent shall have notified the Borrower in writing that the
Required Lenders intend to withhold consent to a Specified Acquisition
based on the Presented Terms and (y) prior to the occurrence of such Third
Party Refinancing, the related Third Party Financing Source shall have
consented in writing to the consummation of such Specified Acquisition on
terms substantially similar to the Presented Terms;
then the Borrower shall not be required to pay a Prepayment Premium
Amount in respect of such full prepayment. For purposes of the foregoing, a
"Specified Acquisition" shall mean an acquisition that otherwise
constitutes a Permitted Acquisition, the total cash purchase price
(specifically excluding any Indebtedness or other obligations to be assumed
or incurred in connection therewith and the value of any non-cash
consideration, including any imputed value of any non-competition,
non-solicitation and similar arrangements) of which exceeds $10,000,000.
(b) In the event and on each occasion that any Net Proceeds are
received by or on behalf of the Borrower or any Subsidiary in respect of
any Prepayment Event, then, unless a Reinvestment Notice shall be delivered
with respect to Net Proceeds from a Prepayment Event specified in
paragraphs (A) or (B) of the definition of Prepayment Event, the Borrower
shall, within three (3) Business Days after such Net Proceeds are received,
prepay Loans in an aggregate amount equal to such Net Proceeds; provided,
that, on each Reinvestment Prepayment Date, the Loans shall be repaid in an
amount equal to the Reinvestment Prepayment Amount with respect to the
Reinvestment Event.
(c) Following the end of (i) the fiscal year of Borrower ending
December 31, 2004, the Borrower shall prepay Loans in an aggregate amount
equal to 25% of Excess Cash Flow for such fiscal year and (ii) each fiscal
year of the Borrower thereafter, commencing with the fiscal year that
begins on January 1, 2005, for which there is any Excess Cash Flow, the
Borrower shall prepay Loans in an aggregate amount equal to 50% of Excess
Cash Flow for such fiscal year. Each prepayment pursuant to this paragraph
shall be made on or before the date on which financial statements are
delivered pursuant to subsection 5.1(a) with respect to the fiscal year for
which Excess Cash Flow is being calculated (and in any event within 90 days
after the end of such fiscal year).
(d) In the event and on each occasion that the Borrower or any
Subsidiary after the Original Closing Date receives cash proceeds from the
sale of Capital Stock or other equity securities, or otherwise receives a
cash capital contribution from any third Person, or raises any private or
public capital in cash (other than cash proceeds received in connection
with (i) the exercise of options and warrants to acquire the common stock
of the Borrower that are issued or outstanding on the date hereof or issued
under a Plan, or pursuant to anti-dilution provisions in such options or
warrants or applicable thereto or (ii) the issuance of common stock of the
Borrower pursuant to that certain Securities Purchase Agreement dated as of
March 24, 2004 among Borrower and the Persons named therein as
"Purchasers"), the Borrower shall, within three (3) Business Days after the
receipt thereof, prepay Loans in an amount equal to 50% of the net amount
received.
(e) Upon the occurrence of a Change of Control, the Borrower shall,
within three (3) Business Days after the occurrence thereof, prepay all of
the Loans at a prepayment price equal to the Fixed Early Prepayment Amount,
plus accrued and unpaid interest, if any, to the date of prepayment.
(f) In the event of a prepayment hereunder, the Borrower shall give at
least three (3) Business Days' irrevocable notice to the Agent and the
Lenders, specifying the date, the reason for the prepayment and amount of
prepayment. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together
with any amounts payable pursuant to subsection 2.9 and accrued interest to
such date on the amount prepaid. Each prepayment of principal of the Loans
shall be applied prorata to the unpaid principal amounts of each of Term
Loan A and Term Loan B based on the respective outstanding principal
balances thereof in the inverse order of their scheduled maturities.
Amounts prepaid on account of the Loans may not be reborrowed. Partial
prepayments under subsection 2.3(a) shall be in an aggregate principal
amount of $250,000 or a whole multiple thereof.
2.4 Interest Rates and Payment Dates. (a) Each Loan shall bear interest at
a rate per annum equal to the Applicable Interest Rate.
(b) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon or (iii) any other amount payable hereunder shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise), the principal of the Loans and any such overdue interest or
other amount shall bear interest at a rate per annum equal to the
Applicable Interest Rate plus 3%, in each case from the date of such
non-payment until such overdue principal, interest or other amount is paid
in full (as well after as before judgment).
(c) Interest shall be payable in arrears on the first day of each
calendar month (each an "Interest Payment Date"), provided that interest
accruing pursuant to paragraph (b) of this subsection shall be payable from
time to time on demand. Interest accrued under the Original Loan Agreement
and unpaid as of the Restatement Effective Date shall continue to accrue
after the Restatement Effective Date and be paid on the first Interest
Payment Date after the Restatement Effective Date.
2.5 Computation of Interest. (a) Interest shall be calculated on the basis
of a 360-day year and payable for the actual number of days elapsed.
(b) Each determination of an interest rate, including without
limitation, the Applicable Interest Rate and the Prime Rate, by the Agent
pursuant to any provision of this Agreement shall be conclusive and binding
on the Borrower and the Lenders in the absence of manifest error.
2.6 Pro Rata Treatment and Payments. Each payment (including each
prepayment) by the Borrower on account of principal of, interest and premium, if
any, on the Loans shall be made pro rata according to the respective Pro Rata
Share of the outstanding principal amount of the Loans then held by the Lenders.
All payments (including prepayments) to be made by the Borrower hereunder,
whether on account of principal, interest, fees or otherwise, shall be made
without set off or counterclaim and shall be made prior to 12:00 Noon, New York
City time, on the due date thereof to the Lenders (or, if the Agent so directs,
directly to the account of the Agent at the office specified in subsection 9.2),
for the account of the Lenders, at the offices of the Lenders notified from time
to time to the Borrower by the Agent, in Dollars and in immediately available
funds. The Agent shall distribute such payments to the Lenders promptly upon
receipt in like funds as received. If any payment hereunder becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest and premium, if any, thereon shall be payable at the then applicable
rate during such extension. The Borrower absolutely and unconditionally promises
to pay, when due and payable pursuant hereto, principal, interest and all other
amounts and Loan Obligations payable hereunder and under any other Loan
Document, without any right of rescission and without any deduction whatsoever,
including any deduction for set-off, recoupment or counterclaim, notwithstanding
any damage to, defects in or destruction of the Collateral or any other event,
including obsolescence of any property or improvements.
2.7 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note or any Loan made by it, or change
the basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes and income taxes and franchise taxes);
(ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any other acquisition of
funds by, any office of such Lender; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Loans or to reduce any amount receivable hereunder in
respect thereof, then, in any such case, the Borrower shall promptly pay such
Lender such additional amount or amounts as will compensate such Lender for such
increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof shall have the
effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder to a
level below that which such Lender or such corporation could have achieved
but for such adoption, change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time,
the Borrower shall promptly pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Borrower (with a
copy to the Agent) of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to
this subsection submitted by such Lender to the Borrower (with a copy to
the Agent) shall be conclusive in the absence of manifest error. The
agreements in this subsection shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable
hereunder.
2.8 Taxes. (a) (i) All payments made by the Borrower under this Agreement
and any Notes shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise or similar
taxes (imposed in lieu of net income taxes), including branch profits tax and
minimum tax imposed on the Agent or any Lender as a result of a present or
former connection between the Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Agent or such Lender having executed, delivered or performed its obligations
or received a payment under, or enforced, this Agreement or any Note). If any
such non-excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") or Other Taxes are required to be withheld
from any amounts payable to the Agent or any Lender hereunder or under any Note
(A) the amounts so payable to the Agent or such Lender shall be increased as
necessary so that after making all required deductions of Non-Excluded Taxes or
Other Taxes (including deductions of Non-Excluded Taxes or Other Taxes
applicable to additional sums payable under this subsection) the Agent or such
Lender (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, and (B) the Borrower shall pay the
full amount withheld to the relevant Governmental Authority in accordance with
applicable law, provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender that is not organized under the
laws of the United States of America or a state thereof (x) if such Lender fails
to comply with the requirements of paragraph (b) of this subsection or (y) to
the extent of any Non-Excluded Taxes that are in effect and would apply to a
payment under this Agreement or any Note made to such Lender as of the date such
Lender becomes a party to this Agreement or any Note, or, in the case of any
other Lender which changes its lending office with respect to the Loans or any
Note to an office outside the U.S., any Non-Excluded Taxes that are in effect
and would apply to a payment to such Lender as of the date of the change of the
lending office.
(ii) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law. "Other
Taxes" shall mean any and all present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement.
(iii) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to
the Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof, or, if the Borrower cannot, using
reasonable efforts, obtain such receipts, other evidence of such payment by
the Borrower reasonably satisfactory to the Agent or such Lender. If the
Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the
appropriate taxing authority or fails to remit to the Agent the required
receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of
any such failure.
(iv) The agreements in this subsection shall survive the termination
of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) deliver to the Borrower and the Agent two duly completed copies of
United States Internal Revenue Service Form W-8BEN or Form W-8ECI (or
successor applicable form) claiming that amounts received by the Lender
under this Agreement are either exempt from United States federal
withholding tax under an applicable tax treaty or are effectively connected
income, as the case may be, on or before the date it becomes a party to
this Agreement;
(ii) deliver to the Borrower and the Agent two further copies of any
such form or certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recent form previously delivered by it
to the Borrower; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower or
the Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the Agent.
Such Lender shall certify that it is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes. Each Person that shall become a Lender or a Participant pursuant to
subsection 9.6 shall, upon the effectiveness of the related transfer, be
required to provide all of the forms and statements required pursuant to this
subsection, provided that in the case of a Participant such Participant shall
furnish all such required forms and statements to the Lender from which the
related participation shall have been purchased.
(c) If the Borrower is required to pay additional amounts to or for the account
of any Lender pursuant to this subsection 2.8 as a result of a change in law or
treaty occurring after such Lender first became a party to this Agreement, and
such Lender has a lending office in another jurisdiction, then such Lender will,
at the request of the Borrower, change the jurisdiction of its applicable
lending office if such change (i) will eliminate or reduce any such additional
payment which may thereafter accrue and (ii) is, in such Lender's sole,
reasonable discretion, determined not to be materially disadvantageous or cause
unreasonable hardship to such Lender, provided that fees, charges, costs or
expenses that are related to such change shall be borne by the Borrower on
behalf of a Lender, and the mere existence of such expenses, fees or costs shall
not be deemed to be materially disadvantageous or cause undue hardship to the
Lender.
(d) If and to the extent that any Lender is able, in its sole opinion, to
receive any tax refund arising out of or in conjunction with any deduction or
withholding which gives rise to an obligation on the Borrower to pay any
Non-Excluded Taxes or Other Taxes pursuant to this subsection 2.8 then such
Lender shall, to the extent that in its sole opinion it can do so without
prejudice to the retention of the refund and without any other adverse tax
consequences for such Lender, reimburse to the Borrower at such time as such
refund shall have actually been received by such Lender such amount as such
Lender shall, in its sole opinion, have determined to be attributable to the
relevant deduction or withholding and as will leave such Lender in no better or
worse position than it would have been in if the payment of such Non-Excluded
Taxes or Other Taxes had not been required.
2.9 Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with
the provisions of this Agreement. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest which
would have accrued on the amount so prepaid, for the period from the date
of such prepayment to the last day of such Interest Payment Date in each
case at the applicable rate of interest for such Loans provided for herein
over (ii) the amount of interest (as reasonably determined by such Lender)
which would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the
interbank eurodollar market. This covenant shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
2.10 Fees. The Borrower agrees to pay to the Agent (a) for its own account
the following non-refundable administrative fees: (i) $8,750, payable in full on
the Restatement Effective Date and (ii) $40,000, payable in full on October 22,
2004 and each anniversary of such date thereafter; and (b) for the ratable
benefit of the Lenders, on the Restatement Effective Date a fully-earned,
non-refundable commitment fee in an amount equal to $150,000 (which amount
equals the Term Loan B Commitment multiplied by one percent (1%)). Any fee
accrued under the Original Loan Agreement and unpaid as of the Restatement
Effective Date shall continue to accrue after the Restatement Effective Date and
be paid when due hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and to
make the Loans, the Borrower hereby represents and warrants to the Agent and
each Lender that the following are, and after giving effect to the SMS
Acquisition will be, true, correct and complete:
3.1 Financial Condition. (a) Since January 1, 2001, each of the Borrower
and each Subsidiary have duly filed all forms, reports, schedules, proxy
statements and documents required to be filed by it with the SEC. True and
correct copies of all filings made by the Borrower and each Subsidiary with the
SEC since such date and prior to the date hereof (the "SEC Reports"), whether or
not under Requirement of Law and including any registration statement filed by
the Borrower or a Subsidiary under the Securities Act, have been either made
available or are publicly available to the Agent. As of their respective dates,
the SEC Reports (other than preliminary material) complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the SEC thereunder applicable to
such SEC Reports and none of the SEC Reports, at the time filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. No other
Person included in the Loan Parties is subject to periodic reporting
requirements of the Exchange Act or is otherwise required to file documents with
the SEC or comparable Governmental Authority or any national securities exchange
or quotation service.
(b) The consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at December 31, 2002 and the related
consolidated statements of income and of cash flows for the fiscal year
ended on such date, reported on by Ernst & Young LLP, copies of which have
heretofore been furnished to each Lender, present fairly the consolidated
financial condition of the Borrower and its consolidated Subsidiaries as at
such date, and the consolidated results of their operations and their
consolidated cash flows for the fiscal year then ended. The unaudited
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at December 31, 2003 and the related unaudited consolidated
statements of income and of cash flows for the six-month period ended on
such date, certified by a Responsible Officer, copies of which have
heretofore been furnished to each Lender, present fairly the consolidated
financial condition of the Borrower and its consolidated Subsidiaries as at
such date, and the consolidated results of their operations and their
consolidated cash flows for the twelve-month period then ended (subject to
normal year-end audit adjustments and the absence of footnotes). All such
financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout
the periods involved (except as approved by such accountants or Responsible
Officer, as the case may be, and as disclosed therein). Neither the
Borrower nor any of its consolidated Subsidiaries had, at the date of the
most recent balance sheet referred to above, any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-term
lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange
transaction, which is not reflected in the foregoing statements or in the
notes thereto. During the period from December 31, 2003 to and including
the date hereof there has been no sale, transfer or other disposition by
the Borrower or any of its consolidated Subsidiaries of any material part
of its business or property and no purchase or other acquisition of any
business or property (including any capital stock of any other Person)
material in relation to the consolidated financial condition of the
Borrower and its consolidated Subsidiaries at December 31, 2003, other than
the SMS Acquisition and all acquisitions and sales by SMS prior to the
Restatement Effective Date disclosed on Schedule 3.1(b) hereto.
3.2 Absence of Certain Changes. (a) Except (i) for liabilities incurred in
connection with this Agreement or the transactions contemplated hereby, (ii) as
disclosed by the SEC Reports or (iii) as set forth in Schedule 3.2 to this
Agreement, since December 31, 2002 (a) none of the Borrower or any Subsidiary
have suffered any change, condition, event or development that has had, or could
reasonably be expected to have, a Material Adverse Effect, (b) each of the
Borrower or any Subsidiary have conducted in all material respects their
respective businesses only in the ordinary course consistent with past practice,
except for the negotiation and execution and delivery of this Agreement and the
SMS Acquisitions Documents and (c) the Borrower has not (i) incurred any
Indebtedness or Guarantee Obligation in excess of $100,000, (ii) granted any
Lien in respect of any material asset to any Person, (iii) made any Restricted
Payment or investment in excess of $250,000 or (iv) entered into any transaction
(including any merger or consolidation) with any Person, except, in each case,
as would be permitted under this Agreement.
3.3 Corporate Existence; Compliance with Law. Each of the Borrower and its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the corporate power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
and (d) is in compliance with all Requirements of Law, except in the case of the
foregoing clauses (c) and (d), to the extent that the failure to be so qualified
or to comply therewith could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations. The Borrower
has the corporate power and authority, and the legal right, to make, deliver and
perform the Loan Documents to which it is a party and to borrow hereunder and
has taken all necessary corporate action to authorize the borrowings on the
terms and conditions of this Agreement and any Notes and to authorize the
execution, delivery and performance of the Loan Documents and the SMS
Acquisition Documents to which it is a party. No consent or authorization of,
filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person (including, without limitation, Board of
Directors, stockholder, warrant holder or NASDAQ consents, waivers and
approvals) is required in connection with the Recapitalization, the borrowings
hereunder, the issuance of Notes hereunder or the consummation of the SMS
Acquisition or with the execution, delivery, performance, validity or
enforceability of the Loan Documents or the SMS Acquisition Documents to which
the Borrower is a party, except consents, authorizations, filings and notices
described on Schedule 3.4. This Agreement has been, and each other Loan Document
to which it is a party will be, duly executed and delivered on behalf of the
Borrower. This Agreement constitutes, and each other Loan Document to which it
is a party when executed and delivered will constitute, a legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing. Each of the Security Documents
creates and grants to the Agent, for its own benefit and for the benefit of the
Lenders, a legal, valid and duly perfected Lien in the Collateral identified
therein prior and superior in right to all other Persons, except Liens permitted
pursuant to subsections 6.3(f), (g), (h), (l) and (m) and the other Liens
permitted under subsection 6.3 that have priority over the Agent's Lien by
operation of law. Such Collateral is not subject to any other Liens whatsoever,
except Liens permitted by Section 6.3 hereof.
3.5 No Legal Bar. The execution, delivery and performance of the Loan
Documents to which the Borrower is a party and the borrowings hereunder will not
violate any Requirement of Law or Contractual Obligation (other than as set
forth on Schedule 3.4) of the Borrower or of any of its Subsidiaries and will
not result in, or require, the creation or imposition of any Lien on any of its
or their respective properties or revenues pursuant to any such Requirement of
Law or Contractual Obligation (other than Liens created by the Security
Documents).
3.6 No Material Litigation. No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any of its
Subsidiaries or against any of its or their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) that, if reasonably likely to be
adversely determined, which could reasonably be expected to have a Material
Adverse Effect.
3.7 Contracts and No Default. Each of the Borrower and the Subsidiaries is
in compliance with respect to all of its Contractual Obligations, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
3.8 Ownership of Property; Liens. Each of the Borrower and its Subsidiaries
has good record and marketable title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other property, and none of such property is subject to any
Lien except as permitted by subsection 6.3.
3.9 Intellectual Property. As of the Restatement Effective Date, Schedule
3.9 contains an accurate and complete list of all material Intellectual Property
which is used in the business of the Borrower or any of its Subsidiaries, other
than off-the-shelf software that is commercially available. Unless otherwise
indicated in the SEC Filings or on Schedule 3.9, as of the Restatement Effective
Date, the Borrower (or the Subsidiary indicated) owns the entire right, title
and interest in and to the Intellectual Property listed on such Schedule 3.9
(including, without limitation, the exclusive right to ▇▇▇ and license the same)
free and clear of any Liens, other than Liens permitted by subsection 6.3 hereof
(and without obligation to pay any royalty or other fee with respect thereto)
and each item constituting part of the Intellectual Property which is owned by
the Borrower or any of its Subsidiaries and listed on Schedule 3.9 has been, to
the extent indicated in Schedule 3.9, duly registered with, filed in or issued
by, as the case may be, the United States Patent and Trademark Office or such
other government entities, domestic or foreign, or a duly accredited and
appropriate domain name registrar, as are indicated in Schedule 3.9 and such
registrations, filings and issuances remain in full force and effect. As of the
Restatement Effective Date, to the best knowledge of the Borrower, neither the
Borrower's nor any of its Subsidiaries' use or practice of the Intellectual
Property infringes any other Person's rights thereto. As of the Restatement
Effective Date, no Intellectual Property set forth on Schedule 3.9 has been
canceled, abandoned, or otherwise terminated and all renewal fees (if
applicable) in respect thereof have been duly paid. Except as stated in Schedule
3.9, as of the Restatement Effective Date there are no pending or to the best
knowledge of the Borrower, threatened proceedings or litigation or other adverse
claims affecting or with respect to the Intellectual Property listed on Schedule
3.9. Schedule 3.9 lists all notices or claims pending as of the Restatement
Effective Date or received by the Borrower or any of its Subsidiaries during the
two years immediately preceding the Restatement Effective Date which claim, as
applicable, infringement, contributory infringement, inducement to infringe,
misappropriation, misuse or breach by the Borrower or any of its Subsidiaries
with respect to any Intellectual Property or license thereof and, except as set
forth on Schedule 3.9, as of the Restatement Effective Date there is, to the
knowledge of the Borrower, no reasonable basis upon which any such claim may be
asserted. As of the Restatement Effective Date, to the best knowledge of the
Borrower, except as indicated on Schedule 3.9, no Person is infringing,
misappropriating or misusing any of the Intellectual Property.
3.10 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation as of the Restatement Effective Date of the Borrower or any of its
Subsidiaries could reasonably be expected to have a Material Adverse Effect.
3.11 Taxes. Except as set forth on Schedule 3.11:
(a) Each of the Borrower and its Subsidiaries has timely filed or
caused to be timely filed (including by way of permitted extensions) all
income Tax Returns and all material other United States federal, state,
county, local and foreign Tax Returns required to be filed by or with
respect to it, and all such Tax Returns are complete and accurate in all
material respects. Each of the Borrower and its Subsidiaries has timely
paid all material Taxes for which it is directly or indirectly liable and
any assessments made against it or any of its property and all other Taxes,
fees or other charges imposed on it or any of its property by any
Governmental Authority, other than any taxes, fees or other charges the
amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity
with GAAP have been provided on the December 31, 2003 balance sheet of the
Borrower.
(b) There are no audits, examinations, actions, suits, proceedings,
investigations, claims or assessments pending or, to the knowledge of the
Borrower, threatened, against the Borrower or any of its Subsidiaries for
any alleged deficiency in any Tax (a "Tax Controversy") and the Borrower
has not been notified in writing of any proposed Tax Controversy against
the Borrower or any of its Subsidiaries (other than a Tax Controversy set
forth on Schedule 3.11 which is being contested in good faith).
(c) For purposes of this Agreement, the term "Tax" means any United
States federal, state, county or local, or foreign or provincial income,
gross receipts, profits, capital gains, capital stock, occupation,
severance, stamp, withholding, property, sales, use, license, excise,
franchise, employment, payroll, value added, alternative or added minimum,
ad valorem or transfer tax, or any other tax, levy, custom, duty or
governmental fee or other like assessment or charge of any kind whatsoever
(whether payable directly or by withholding and whether or not requiring
the filing of a Tax Return), together with all estimated taxes, deficiency
assessments, additions to tax, interest or penalties imposed by any
Governmental Authority, and shall include any liability for such amounts as
a result either of being a member of a combined, consolidated, unitary or
affiliated group or of a contractual obligation to indemnify any person or
other entity. The term "Tax Return" means any and all reports, returns or
other information (including any attached schedules or any amendments to
such reports, returns or other information) required to be supplied to or
filed with any Governmental Authority with respect to any Tax, including an
information return, claim for refund, amended return or declaration or
estimated Tax.
3.12 Federal Regulations. No part of the proceeds of any Loans will be used
for "purchasing" or "carrying" any "margin stock" within the respective meanings
of each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. If
requested by any Lender or the Agent, the Borrower will furnish to the Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-1 or FR Form U-1 referred to in said Regulation U.
3.13 ERISA. (a) Schedule 3.13 sets forth as of the Restatement Effective
Date a true and complete list of each "employee benefit plan" (as defined in
Section 3(3) of ERISA) of the Borrower and its Subsidiaries in which current or
former employees, agents, directors, or independent contractors of the Borrower
or its Subsidiaries ("Employees") participate or pursuant to which the Borrower
or any of its Subsidiaries may have a liability with respect to Employees (each,
an "Employee Plan"). Except as disclosed in the SEC Filings or on Schedule 3.13,
as of the Restatement Effective Date, neither the Borrower nor any of its
Subsidiaries has any commitment to establish any additional Employee Plans or to
modify or change materially any existing Employee Plan. The Borrower has made
available to the Lenders with respect to each Employee Plan as of the
Restatement Effective Date: (i) a true and complete copy of all written
documents comprising such Employee Plan (including amendments and individual
agreements relating thereto) or, if there is no such written document, an
accurate and complete description of such Employee Plan; and (ii) the most
recent financial statements, if any.
(b) Each Employee Plan has been established and maintained in
substantial compliance with its terms and the requirements of all
Applicable Law, and all contributions required to be made to the Employee
Plans have been made in a timely fashion.
(c) Each Employee Plan which is intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a favorable
determination letter or opinion letter from the Internal Revenue Service
and, to the Borrower's knowledge, no event has occurred and no condition
exists which could reasonably be expected to result in the revocation of
any such determination letter or opinion letter.
(d) Neither the Borrower nor any of its Subsidiaries currently
maintains or contributes to, or has at any time maintained or contributed
to or been obligated to contribute to, any plan, program or arrangement
covered by Title IV of ERISA or subject to Section 412 of the Code or
Section 302 of ERISA.
(e) Neither the Borrower nor any of its Subsidiaries, nor, to the
Borrower's knowledge, any other "disqualified person" or "party in
interest" (as defined in Section 4975(e)(2) of the Code and Section 3(14)
of ERISA, respectively) has engaged in any transactions in connection with
any Employee Plan that could reasonably be expected to result in the
imposition of a material penalty pursuant to Section 502 of ERISA, material
damages pursuant to Section 409 of ERISA or a material tax pursuant to
Section 4975 of the Code.
(f) There are no actions, suits, arbitrations, inquiries,
investigations or other proceedings (other than routine claims for
benefits) pending or, to the Borrower's knowledge, threatened, with respect
to any Employee Plan, except for any of the foregoing that do not and would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(g) The Borrower and its Subsidiaries are in compliance in all
material respects with the terms and provisions of the Immigration Reform
and Control Act of 1986, as amended, and all related regulations
promulgated thereunder (the "Immigration Laws"). As of the Restatement
Effective Date, the Borrower and its Subsidiaries have never been the
subject of any inspection or investigation relating to its compliance with
or violation of the Immigration Laws, nor have they been warned, fined or
otherwise penalized by reason of any such failure to comply with the
Immigration Laws, nor is any such proceeding pending or to the Borrower's
knowledge, threatened.
(h) Except as set forth in the SEC Filings or on Schedule 3.13, the
Borrower and its Subsidiaries are in compliance in all material respects
with all Applicable Laws respecting employment and employment practices,
terms and conditions and wages and hours.
3.14 Investment Company Act; Other Regulations. The Borrower is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
3.15 Subsidiaries. The following constitute all the Subsidiaries of the
Borrower as of the Restatement Effective Date: Infocrossing Services, Inc., ETG,
Inc., AmQUEST, Inc., AmQUEST Services, Inc. and, after giving effect to the SMS
Acquisition, ITO Acquisition Corporation ("SMS"). ---
3.16 Environmental Matters. Except as set forth in the SEC Filings or on
Schedule 3.16: (a) Hazardous Materials have not at any time been generated, use,
treated or stored on, or transported to or from, any Borrower Property by the
Borrower or any Subsidiary in a manner which has resulted or is reasonably
likely to result in a material Environmental Claim, (b) Hazardous Materials have
not at any time been Released or disposed of on any Borrower Property in a
manner which has resulted or is reasonably likely to result in a material
Environmental Claim, (c) the Borrower and each of its Subsidiaries are in
compliance in all material respects with all applicable Environmental Laws and
the requirements of any permits issued under such applicable Environmental Laws
with respect to any Borrower Property, (d) there are no pending or, to the
knowledge of the Borrower, threatened or unresolved past material Environmental
Claims against the Borrower or any of its Subsidiaries or any Borrower Property,
(e) there are no facts, conditions or circumstances that, to the knowledge of
the Borrower, could reasonably be expected to form the basis of a material
Environmental Claim, and (f) to the knowledge of Borrower, there are not now and
never have been any underground storage tanks located on any Borrower Property.
For purposes of this Agreement, the following terms shall have the
following meanings: (a) "Borrower Property" means any real property and
improvements currently or formerly owned or leased by the Borrower or any of its
Subsidiaries; (b) "Hazardous Materials" means (i) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or is reasonably
likely to become friable, urea formaldehyde foam insulation, polychlorinated
biphenyls, and radon gas; and (ii) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," or words of similar
import, under any applicable Environmental Law; (c) "Environmental Law" means
any federal, state or local statute, law, rule, regulation, ordinance, code or
rule of common law in effect and in each case as amended as of the Restatement
Effective Date, applicable to the Borrower or its operations or Borrower
Property as of the Restatement Effective Date, including any judicial or
administrative order, consent decree or judgment relating to the environment,
occupational safety and health or Hazardous Materials; and (d) "Environmental
Claims" means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings under any Environmental Law or any permit issued
under any such Environmental Law (for purposes of this subclause (d), "Claims"),
including without limitation (i) any and all Claims by any Governmental
Authority for enforcement, cleanup, removal, response, remedial or other actions
or damages pursuant to any applicable Environmental Law and (ii) any and all
Claims by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous Materials
or arising from alleged injury or threat of injury to health, safety or the
environment; and (e) "Release" means disposing, discharging, injecting,
spilling, leaking, leaching, dumping, emitting, escaping, emptying or seeping
into or upon any land or water or air, or otherwise entering into the
environment.
3.17 Solvency. As of the Restatement Effective Date and without regard to
any inter-company debt obligations between the Loan Parties:
(a) the amount of the "present fair saleable value" of the assets of
each of the Loan Parties will, as of such date, exceed the amount of all
"liabilities of such Loan Party, contingent or otherwise", as of such date,
as such quoted terms are determined in accordance with applicable federal
and state laws governing determinations of the insolvency of debtors,
(b) the present fair saleable value of the assets of each Loan Party
will, as of such date, be greater than the amount that will be required to
pay the liability of such Loan Party on its debts as such debts become
absolute and matured,
(c) each Loan Party will not have, as of such date, an unreasonably
small amount of capital with which to conduct its business, and
(d) each Loan Party is then able and expects to be able to pay its
debts as they mature.
For purposes of this subsection 3.17, (i) "debt" means liability on a
"claim", and (ii) "claim" means any (x) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or
unsecured.
3.18 Full Disclosure. No statement of fact made by or on behalf of any
Person other than the Lenders in this Agreement, the Security Documents, the
documents relating to the Recapitalization or in any certificate or schedule
furnished to the Lenders pursuant hereto or thereto contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained therein or herein not misleading. There is no fact
presently known to the Borrower which has not been disclosed to the Lenders in
writing which has had or, as far as the Borrower can reasonably foresee, could
reasonably be expected to have a Material Adverse Effect.
3.19 Equity Securities. (a) The outstanding equity securities of the
Borrower and each of its Subsidiaries have been duly authorized and validly
issued and are fully paid and nonassessable; and (b) neither the Borrower nor
any of its Subsidiaries (i) has issued any rights which can be convertible into
or exchangeable or exercisable for any of the equity securities of any such
Subsidiary, or any rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
any such equity securities of any Subsidiary of the Borrower or any securities
convertible into or exchangeable or exercisable for any such equity securities
or (ii) is subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of the equity securities of the Borrower or any
of its Subsidiaries or other convertible rights or options or debt securities.
3.20 SMS Acquisition Documents. (a) All representations of the Borrower or
any Subsidiary of Borrower set forth in the SMS Acquisition Documents were and
are true and correct as of the date made or deemed made thereunder and as of the
Restatement Effective Date, provided, that, any such representation or warranty
that by its express terms is made as of a specific date, such representation and
warranty shall have been true and correct as of such specific date. Without
limiting the scope of the other representations and warranties contained herein
and in the other Loan Documents, the representations and warranties made in the
SMS Acquisition Documents hereby are incorporated herein by this reference,
mutatis mutandis, and are deemed made by the Borrower to and for the benefit of
Agent and Lenders as if expressly set forth herein.
(b) Borrower has heretofore furnished to the Agent true and correct
copies of all SMS Acquisition Documents.
(c) Each of Borrower and, to Borrower's knowledge, each other party to
the SMS Stock Purchase Agreement has duly taken all necessary corporate,
partnership or other organizational action to authorize the execution,
delivery and performance of the SMS Stock Purchase Agreement and the
consummation of transactions contemplated thereby and by the other SMS
Acquisition Documents.
(d) The purchase transaction contemplated by the SMS Stock Purchase
Agreement will comply with all applicable material legal requirements, and
all material governmental, regulatory, creditor, shareholder, partner and
other material consents, approvals and exemptions required to be obtained
by Borrower and, to Borrower's knowledge, each other party to the SMS Stock
Purchase Agreement in connection with the SMS Acquisition will be, prior to
consummation thereof, duly obtained and will be in full force and effect.
As of the date of the SMS Stock Purchase Agreement, all applicable waiting
periods with respect to the SMS Acquisition will have expired without any
action being taken by any competent Governmental Authority which restrains,
prevents or imposes material adverse conditions upon the consummation
thereof.
(e) The execution and delivery of the SMS Stock Purchase Agreement did
not, and the consummation of the SMS Acquisition will not, (i) violate any
applicable statute or regulation of the United States (including any
securities law) or of any state or other applicable jurisdiction, or any
order, judgment or decree of any court or Governmental Authority binding on
Borrower or, to Borrower's knowledge, any other party to the SMS Stock
Purchase Agreement, or (ii) result in a breach of, or constitute a default
under, any material agreement, indenture, instrument or other material
document, except as set forth in the SMS Stock Purchase Agreement, or (iii)
result in a breach of, or constitute a default under any judgment, order or
decree, to which Borrower is a party or by which Borrower is bound or, to
the Borrower's knowledge, to which any other party to the SMS Stock
Purchase Agreement is a party or by which any such party is bound.
(f) No statement or representation made in the SMS Stock Purchase
Agreement by Borrower or, to Borrower's knowledge, any other Person
contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under which they
are made, not misleading.
3.21 Strategix Earnout. The aggregate amount due and payable under the
terms of the Strategix Earnout from and after the Restatement Effective Date
through the fourth anniversary thereof shall not exceed $1,700,000.
3.22 Acxiom Collateral. As of the Restatement Effective Date, the aggregate
value of Collateral attributable to assets (excluding the value of customer
lists and goodwill) purchased by SMS from Acxiom Corporation is not more than
$1,000,000.
SECTION 4. CONDITIONS PRECEDENT TO CLOSING
The making of the Loans hereunder and the agreement of each Lender to be a
party to this Agreement is subject to the satisfaction, prior to or on the
Restatement Effective Date, of the following conditions precedent:
(a) Loan Documents. The Lenders shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the
Borrower, (ii) the Notes, executed and delivered by a duly authorized
officer of the Borrower, (iii) the Stock Pledge Agreements, each executed
and delivered by a duly authorized officer of the parties thereto, (iv) the
Security Agreements, each executed and delivered by a duly authorized
officer of the parties thereto and (v) each of the Deposit Account Control
Agreements, each executed and delivered by a duly authorized officer of the
party thereto.
(b) Related Agreements. (i) The Lenders shall have received true and
correct copies, certified as to authenticity by the Borrower, of (A) the
Exchange Agreement and the other documents relating to the
Recapitalization, and (B) the SMS Acquisition Documents, each on terms
mutually acceptable to the Lenders and the Borrower, and such other
documents or instruments as may be reasonably requested by the Lenders,
including, without limitation, a copy of any debt instrument, security
agreement or other material contract to which the Borrower, or its
Subsidiaries may be a party.
(ii) The Lenders shall have received evidence satisfactory to them in
their sole discretion that the closing conditions under each of the SMS
Acquisition Documents have been satisfied.
(c) Closing Certificate. The Lenders shall have received a certificate
of the Borrower, dated the Restatement Effective Date, substantially in the
form of Exhibit G, with appropriate insertions and attachments, including
financial statements requested by the Lenders, confirming compliance with
the conditions set forth in Section 4, satisfactory in form and substance
to the Lenders, executed by the Chairman of the Board, the President or any
Vice President of the Borrower.
(d) Corporate Proceedings of the Borrower. The Lenders shall have
received a copy of the resolutions, in form and substance satisfactory to
the Lenders, of the Board of Directors of the Borrower authorizing (i) the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party, (ii) the Loans contemplated hereunder and
(iii) the granting by it of the Liens created pursuant to the Borrower
Security Documents, certified by the Secretary or an Assistant Secretary of
the Borrower as of the Restatement Effective Date, which certificate shall
be in form and substance satisfactory to the Lenders and shall state that
the resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(e) Borrower Incumbency Certificate. The Lenders shall have received a
Certificate of the Borrower, dated the Restatement Effective Date, as to
the incumbency and signature of the officers of the Borrower executing any
Loan Document satisfactory in form and substance to the Lenders, executed
by the President or any Vice President and the Secretary or any Assistant
Secretary of the Borrower.
(f) SMS Acquisition. The SMS Acquisition shall have closed in the
manner contemplated by the SMS Acquisition Documents and all conditions
precedent to such closing shall have been satisfied without any amendment
thereto or waiver thereunder unless specifically consented to by the Agent.
(g) Due Diligence. Satisfactory completion of due diligence by the
Lenders, including, without limitation, legal and tax due diligence,
customer and vendor reference checks and calls, and a pre-closing audit and
other due diligence of SMS as required by Agent in its sole discretion to
determine the liquidity and the general financial and operational state of
the Borrower and SMS, in each instance to the satisfaction of the Lenders
in their sole and absolute discretion.
(h) Corporate Proceedings of Subsidiaries. The Lenders shall have
received a copy of the resolutions, in form and substance satisfactory to
the Lenders, of the Board of Directors of each Subsidiary of the Borrower
which is a party to a Loan Document authorizing (i) the execution, delivery
and performance of the Loan Documents and the SMS Acquisition Documents to
which it is a party and (ii) the granting by it of the Liens created
pursuant to the Subsidiaries Security Documents to which it is a party,
certified by the Secretary or an Assistant Secretary of each such
Subsidiary as of the Restatement Effective Date, which certificate shall be
in form and substance satisfactory to the Lenders and shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded.
(i) Subsidiary Incumbency Certificates. The Lenders shall have
received a certificate of each Subsidiary of the Borrower which is a Loan
Party, dated the Restatement Effective Date, as to the incumbency and
signature of the officers of such Subsidiaries executing any Loan Document,
satisfactory in form and substance to the Lenders, executed by the
President or any Vice President and the Secretary or any Assistant
Secretary of each such Subsidiary.
(j) Corporate Documents. The Lenders shall have received true and
complete copies of the certificate of incorporation and by-laws of each
Loan Party, certified as of the Restatement Effective Date as complete and
correct copies thereof by the Secretary or an Assistant Secretary of such
Loan Party.
(k) Consents, Licenses and Approvals. The Lenders shall have received
a certificate of a Responsible Officer of the Borrower stating that all
consents, authorizations and filings referred to in subsection 3.4 (except
for those described in Schedule 3.4) are in full force and effect, and each
such consent, authorization and filing shall be in form and substance
satisfactory to the Lenders in their sole and absolute discretion.
(l) Fees. As of the Restatement Effective Date, all fees owed to the
Agent, the Lenders and their respective Affiliates under this Agreement and
all legal fees and expenses of counsel to the Agent and the Lenders
incurred through such date shall have been paid in full.
(m) Legal Opinions. The Lenders shall have received the following
executed legal opinions:
(i) the executed legal opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to the
Borrower and the other Loan Parties substantially in the form of Exhibit H;
(ii) the executed legal opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special
California counsel to the Borrower and, after giving effect to the SMS
Acquisition, SMS;
(iii) the executed legal opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, special
Georgia counsel to the Borrower and certain of its Subsidiaries; and
(iv) the executed legal opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, counsel to
ITO Holdings, with appropriate reliance language in favor of Agent and the
Lenders; and
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Lenders may require in
their sole and absolute discretion.
(n) Pledged Stock; Stock Powers. The Agent shall have received the
certificates representing the shares pledged pursuant to the Stock Pledge
Agreements, together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof.
(o) Actions to Perfect Liens. The Lenders shall have received evidence
in form and substance satisfactory to it that all filings, recordings,
registrations and other actions, including, without limitation, the filing
of duly executed financing statements on form UCC-1, necessary or, in the
opinion of the Lenders, desirable to perfect the first priority Liens
created by the Security Documents shall have been completed.
(p) Lien Searches. The Lenders shall have received the results of a
recent search by a Person satisfactory to the Lenders, of the Uniform
Commercial Code, judgment and tax lien filings which may have been filed
with respect to personal property of the Borrower, and the results of such
search shall be satisfactory to the Lenders in their sole and absolute
discretion.
(q) Representations and Warranties. Each of the representations and
warranties made by the Borrower and the Subsidiaries in or pursuant to the
Loan Documents shall be true and correct in all material respects (or, with
respect to any such representation or warranty that, by its terms, is
qualified by materiality, Material Adverse Effect or similar qualification,
such representation or warranty shall be true and correct in all respects),
on and as of the Restatement Effective Date; provided that any such
representations and warranties that by their express terms are made as of a
specific date shall have been true and correct as of such specific date in
all material respects (or, with respect to any such representation or
warranty that, by its terms, is qualified by materiality, Material Adverse
Effect or similar qualification, such representation or warranty shall be
true and correct in all respects as of such specific date).
(r) No Default. At the time of and immediately after giving effect to
the making of the Loans and the consummation of the SMS Acquisition, no
Default or Event of Default shall have occurred and be continuing.
(s) No Material Adverse Effect. At the time of and immediately after
giving effect to the making of the Loans and the consummation of the SMS
Acquisition, no Material Adverse Effect shall have occurred.
(t) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement, the other Loan Documents and
the Exchange Agreement shall be satisfactory in form and substance to the
Lenders, and the Lenders shall have received such other documents in
respect of any aspect or consequence of the transactions contemplated
hereby or thereby as it shall reasonably request.
(u) Closing. The Restatement Effective Date shall have occurred before
April 15, 2004, unless otherwise agreed to by the Lenders in their sole and
absolute discretion.
(v) Registration Rights Agreement. The Lenders shall have received
evidence satisfactory to Lenders in their reasonable discretion of the
termination of that certain Amended and Restated Registration Rights
Agreement dated June 27, 2003 by and among ITO Holdings, SMS and each other
Person party thereto.
(w) Insurance. The Lenders shall have received evidence of the
compliance by the Borrower with subsection 5.5, satisfactory to the Lenders
in their sole and absolute discretion.
(x) Employment Agreements. The Lenders shall have received true and
correct copies, certified as to authenticity by the Borrower, of all
employment agreements between Borrower on the one hand and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ on the other hand, in each case satisfactory to the
Agent in its reasonable discretion.
(y) Minimum Contributed EBITDA. After giving effect to the SMS
Acquisition, there shall be a positive effect on Consolidated EBITDA on a
pro forma basis of no less than $4,000,000, which shall be determined and
calculated in a manner acceptable to Agent.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as any amount is owing to any
Lender or the Agent hereunder or under any other Loan Document, the Borrower
shall and (except in the case of delivery of financial information, reports and
notices) shall cause each of its Subsidiaries to:
5.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income and retained
earnings and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a
"going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by Ernst & Young LLP or other
independent certified public accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and retained
earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments and the absence of footnotes); and
(c) as soon as available, but in any event not later than 30 days
after the end of each month, the unaudited consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at the end of such month
and the related monthly unaudited consolidated statements of income and
retained earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such months and the portion of the fiscal year through the
end of such month, setting forth in each case in comparative form the
figures for the previous month and the figures from the budget, together
with a narrative of the performance of the Borrower and its consolidated
Subsidiaries for such period in the same form as delivered to the Board of
Directors or the senior executives of the Borrower, certified by a
Responsible Officer as being fairly stated in all material respects;
all such financial statements shall be complete and correct in all
material respects and shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein and with prior periods (except as approved by such accountants or
officer, as the case may be, and disclosed therein).
5.2 Certificates; Other Information. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 5.1(a), a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefore no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 5.1(a), (b) and (c), (A) a certificate of a
Responsible Officer stating that, to the best of such Officer's knowledge,
during such period (i) no Subsidiary has been formed or acquired (or, if
any such Subsidiary has been formed or acquired, the Borrower has complied
with the requirements of subsection 5.10 with respect thereto, (ii) neither
the Borrower nor any of its Subsidiaries has changed its name, its
principal place of business, its chief executive office, the location of
any material item of tangible Collateral, its jurisdiction of organization
or its organization identification number, if any, without complying with
the requirements of this Agreement and the Security Documents with respect
thereto and (iii) the Borrower has observed or performed all of its
covenants and other agreements contained in this Agreement and the other
Loan Documents to be observed, performed or satisfied by it, and that such
Officer has obtained no knowledge of any Default or Event of Default except
as specified in such certificate; and (B) a certificate of a Responsible
Officer evidencing the compliance by the Borrower and its Subsidiaries with
the financial covenants contained in subsections 6.1 and 6.8, including a
calculation thereof, as of the last day of the period covered by such
financial statements;
(c) not later than thirty days prior to the end of each fiscal year of
the Borrower, a copy of the projections by the Borrower of the operating
budget and cash flow budget of the Borrower and its Subsidiaries for the
succeeding fiscal year, such projections to include a profit and loss
statement, balance sheet and statement of cash flows and to be accompanied
by a certificate of a Responsible Officer stating that such projections are
based on estimates, information and assumptions reasonably believed by such
Responsible Officer to be reasonable on the date of delivery thereof;
(d) within five days after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders, and
within five days after the same are filed, copies of all financial
statements and reports which the Borrower may make to, or file with, the
SEC or any successor or analogous Governmental Authority; and
(e) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Borrower or its Subsidiaries, as the case may be.
5.4 Conduct of Business and Maintenance of Existence. (a) Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises material to
the normal conduct of its business except as otherwise permitted pursuant to
subsection 6.5; and (b) comply with all Contractual Obligations and Requirements
of Law except to the extent that failure to comply therewith could not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
5.5 Maintenance of Property; Insurance.
(a) Maintain in all material respects all property necessary and
useful in the conduct of its business, in good operating condition and
repair, ordinary wear and tear excepted.
(b) Maintain with financially sound and reputable insurers having a
rating of at least A- or better by Best Rating Guide, insurance against
loss or damage by fire with extended coverage; theft, burglary, pilferage
and loss in transit; public liability and third party property damage;
larceny, embezzlement or other criminal liability; business interruption
and such other hazards or of such other types as is customary for Persons
engaged in the same or similar business. Without limiting the foregoing, in
the event that any real estate owned or leased by any Loan Party on which
is located any inventory or equipment of a Loan Party is determined to be
located within an area that has been identified by the Director of the
Federal Emergency Management Agency as a Special Flood Hazard Area
("SFHA"), such Loan Party shall purchase and maintain flood insurance on
the improved real estate and any equipment and inventory located on such
real estate. The amount of said flood insurance will be reasonably
determined by the Agent, and such insurance shall, at a minimum (subject to
customary deductibles), comply with applicable federal regulations as
required by the Flood Disaster Protection Act of 1973, as amended. Such
Loan Party shall also maintain flood insurance for its inventory and
equipment which is, at any time, located in a SFHA.
(c) Cause the Agent, for the ratable benefit of the Agent and the
Lenders, to be named as secured party or mortgagee and loss payee as its
interest may appear or additional insured, in a manner reasonably
acceptable to the Agent on each policy of insurance of such Loan Party.
Such Loan Party shall use commercially reasonable efforts to cause each
policy of insurance of such Loan Party to contain a clause or endorsement
requiring the insurer to give not less than thirty (30) days' prior written
notice to the Agent in the event of cancellation of the policy for any
reason whatsoever (other than non-payment of premiums, in which case not
less than ten (10) days' prior written notice is sufficient). Each policy
of such Loan Party for property insurance shall contain a clause or
endorsement stating that the interest of the Agent shall not be impaired or
invalidated by any act or neglect of any Loan Party or any of its
Subsidiaries or the owner of any real estate for purposes more hazardous
than are permitted by such policy. All premiums for such insurance shall be
paid by such Loan Party when due, and certificates of insurance and, if
requested by the Agent or any Lender, photocopies of the policies, shall be
delivered to the Agent, in each case in sufficient quantity for
distribution by the Agent to each of the Lenders. If a Loan Party fails to
procure such insurance or to pay the premiums therefore when due, the Agent
may do so, but at the Borrowers' expense and without any responsibility on
the Agent's part for obtaining the insurance, the solvency of the insurance
companies, the adequacy of the coverage, or the collection of claims.
(d) Such Loan Party shall promptly notify the Agent and the Lenders of
any loss, damage or destruction to any of the Collateral in an amount in
excess of $250,000, whether or not covered by insurance. To the extent that
the Borrower or its Subsidiaries are not permitted to reinvest insurance
and condemnation proceeds hereunder, the Agent is hereby authorized to
collect all insurance and condemnation proceeds in respect of Collateral
and directly after deducting from such proceeds the reasonable expenses, if
any, incurred by the Agent in the collection or handling thereof, the Agent
shall apply such proceeds to the payment of the Loans in the manner
provided for in this Agreement.
5.6 Books and Records; Inspection of Property.
(a) Keep proper books of records and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall
be made of all dealings and transactions in relation to its business and
activities.
(b) Permit representatives of the Agent and Lenders (at the expense of
the Loan Parties) to visit and inspect any of its properties, to examine
its corporate, financial and operating records, and make copies thereof or
abstracts therefrom and to discuss its affairs, finances and accounts with
its directors (or Persons serving a similar function), officers and
independent public accountants, at such reasonable times during normal
business hours and as soon as may be reasonably desired, upon reasonable
advance notice to such Loan Party; provided, however, when an Event of
Default exists, the Agent or any Lender may do any of the foregoing at the
expense of the Loan Parties at any time during normal business hours and
without advance notice.
5.7 Notices. Promptly give notice to the Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any of its Subsidiaries and any Governmental Authority, which
in either case, if not cured or if reasonably likely to be adversely
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $250,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows thereof: (i) the occurrence or expected
occurrence of any Reportable Event with respect to any Plan, a failure to
make any required contribution to a Plan, the creation of any Lien in favor
of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the terminating, Reorganization or
Insolvency of, any Plan; and
(e) any development or event which could reasonably be expected to
have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement
of a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower proposes to take with respect
thereto.
5.8 Environmental Laws. (a) Comply with, and ensure compliance by all of
Borrower's tenants and subtenants on any Borrower Property, if any, with, all
applicable Environmental Laws and obtain and comply with and maintain, and
ensure that all such tenants and subtenants obtain and comply with and maintain,
any and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws except, in each case, to the extent
that failure to do so could not be reasonably expected, individually or in the
aggregate, to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and testing,
and all remedial, removal and other actions that the Borrower or any of its
Subsidiaries are required to complete and conduct under applicable Environmental
Laws and promptly comply with all related lawful orders and directives of all
Governmental Authorities regarding applicable Environmental Laws except to the
extent that (i) the same are being contested, if deemed reasonably necessary to
contest by the Borrower, in good faith by appropriate proceedings and (ii) such
investigations, action or compliance could not be reasonably expected to have a
Material Adverse Effect.
5.9 Further Assurances. Upon the request of the Agent, promptly perform or
cause to be performed any and all acts and execute or cause to be executed any
and all documents (including, without limitation, financing statements and
continuation statements) for filing under the provisions of the Uniform
Commercial Code or any other Requirement of Law which are necessary or advisable
to maintain in favor of the Agent, for the benefit of the Lenders, a fully
perfected Lien on the Collateral prior and superior in right to all other
Persons except Liens permitted pursuant to subsection 6.3(f), (g), (h), (l) and
(m) and other Liens permitted under subsection 6.3 that have priority over the
Agent's Lien by operation of law.
5.10 Additional Collateral. (a) With respect to any assets acquired after
the Restatement Effective Date by the Borrower or any of its Subsidiaries that
are intended to be subject to the Lien created by any of the Security Documents
but which are not so subject (other than (x) any assets described in paragraph
(b) or (c) of this subsection and (y) immaterial assets a Lien on which cannot
be perfected by filing UCC-1 financing statements), promptly (and in any event
within 30 days after the acquisition thereof): (i) execute and deliver to the
Agent such amendments to the relevant Security Documents or such other documents
as the Agent shall deem necessary or advisable to grant to the Agent, for the
benefit of the Lenders, a Lien on such assets, (ii) take all actions necessary
or advisable to cause such Lien to be duly perfected in accordance with all
applicable Requirements of Law, including, without limitation, the filing of
financing statements in such jurisdictions as may be requested by the Agent, and
(iii) if requested by the Agent, deliver to the Agent legal opinions relating to
the matters described in clauses (i) and (ii) immediately preceding, which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Agent.
(b) With respect to any Person that, subsequent to the Restatement
Effective Date, becomes a Subsidiary, promptly upon the request of the Agent:
(i) execute and deliver to the Agent, for the benefit of the Lenders, a new
pledge agreement or such amendments to the applicable Stock Pledge Agreement as
the Agent shall deem necessary or advisable to grant to the Agent, for the
benefit of the Lenders, a Lien on the Capital Stock of such Subsidiary which is
owned by the Borrower or any of its Subsidiaries, (ii) deliver to the Agent the
certificates representing such Capital Stock, together with undated stock powers
executed and delivered in blank by a duly authorized officer of the Borrower or
such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to
become a party to a Security Agreement, in each case pursuant to documentation
which is in form and substance satisfactory to the Agent, and (B) to take all
actions necessary or advisable to cause the Lien created by such Security
Agreement to be duly perfected in accordance with all applicable Requirements of
Law, including, without limitation, the filing of financing statements in such
jurisdictions as may be requested by the Agent and (iv) if requested by the
Agent, deliver to the Agent legal opinions relating to the matters described in
clauses (i), (ii) and (iii) immediately preceding, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the Agent.
(c) Notwithstanding the foregoing, no Foreign Subsidiary constituting a
"controlled foreign corporation," as defined in Section 957 of the Code, shall
be required to deliver any guaranty of the Loan Obligations or grant a security
interest in any of its property to secure any such guaranty, and neither
Borrower nor any of its Subsidiaries shall be required to pledge more than
sixty-five percent (65%) (or other applicable greater percentage) of the voting
equity securities of any such Foreign Subsidiary as security for the Loan
Obligations, to the extent, in any such case, such guaranty or granting, or a
pledge of additional equity securities, would result in material and adverse tax
consequences to Borrower under Section 956 of the Code as determined by Agent in
its good faith determination.
(d) Notwithstanding anything to the contrary in this subsection 5.10,
paragraphs (a) and (b) shall not apply to any property or Domestic Subsidiary
created or acquired after the Restatement Effective Date, as applicable, to
which the Agent has determined in its sole discretion that the collateral value
thereof is insufficient to justify the difficulty, time and/or expense of
obtaining a perfected security interest therein.
(e) If the Borrower or any Subsidiary creates any initial or additional
Lien pursuant to subsection 6.3(l) upon any of its property, assets or revenues
to secure Indebtedness incurred under subsection 6.2(i), such Borrower or
Subsidiary shall simultaneously (i) grant a first priority Lien on such
property, assets or revenues to secure the Loan Obligations and (ii) shall enter
into an intercreditor and subordination agreement with the to-be-holders of such
Indebtedness and the Agent, for the benefit of the Lenders, in form and
substance satisfactory to the Agent. If any Subsidiary that is not a Guarantor
guarantees the payment of Indebtedness incurred under subsection 6.2(i) of the
Borrower or any Subsidiary, then such Subsidiary shall simultaneously become a
party to a Security Agreement and a Guarantor.
5.11 ▇▇▇▇▇ Fargo Accounts. Borrower shall, and shall cause its Subsidiaries
to, (i) within thirty (30) days after the Restatement Effective Date, (a) close
the ▇▇▇▇▇ Fargo Deposit Accounts or (ii) enter into a Deposit Account Control
Agreement with ▇▇▇▇▇ Fargo with respect to each ▇▇▇▇▇ Fargo Deposit Account; and
(b) no later than August 30, 2004 (i) close the ▇▇▇▇▇ Fargo Cash Collateral
Account or (ii) enter into a Deposit Account Control Agreement with ▇▇▇▇▇ Fargo
with respect to the ▇▇▇▇▇ Fargo Cash Collateral Account.
5.12 Tax Returns. At the request of the Agent or the Required Lenders, the
Borrower will deliver to the Lenders correct and complete copies of all United
States federal, state, and foreign income Tax Returns (to the extent filed as of
the date hereof or, if not filed, correct and complete copies of extensions
thereof), examination reports, statements of deficiencies assessed against or
agreed to by the Borrower and any of its Subsidiaries, or any other similar
correspondence from a taxing authority, relating to taxable years 2000, 2001 and
2002.
5.13 Post Closing Deliverables. The Borrower shall deliver each item
contained on Schedule 5.13 within the applicable time periods set forth therein.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as any amount is owing to any
Lender or the Agent hereunder or under any other Loan Document, the Borrower
shall not, and (except with respect to subsection 6.1) shall not permit any of
its Subsidiaries to, directly or indirectly:
6.1 Financial Condition Covenants.
(a) Leverage. Permit the Leverage Ratio at any time during any period
set forth on Schedule 6.1(a) to be greater than the ratio set forth
opposite such period specified on Schedule 6.1(a).
(b) Minimum Consolidated EBITDA. Permit Consolidated EBITDA for any
period of four consecutive fiscal quarters ending on the date set forth on
Schedule 6.1(b) to be less than the amount set forth opposite such period
specified on Schedule 6.1(b).
(c) Fixed Charge Ratio. Permit for any period of four consecutive
fiscal quarters ending on the date set forth on Schedule 6.1(c), the ratio
of (a) Consolidated EBITDA for such period, minus Capital Expenditures
(other than to the extent attributable to the incurrence of capital lease
obligations or other Indebtedness) during such period minus taxes paid in
cash during such period, to (b) Consolidated Fixed Charges for such period
to be less than the amount set forth opposite such period specified on
Schedule 6.1(c).
6.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness, except:
(a) Indebtedness of the Borrower and its Subsidiaries under the Loan
Documents;
(b) Indebtedness of the Borrower to any Subsidiary which is a Loan
Party and of any Subsidiary to the Borrower or any other Subsidiary which
is a Loan Party;
(c) Indebtedness of the Borrower and any of its Subsidiaries incurred
to finance the acquisition of fixed or capital assets pursuant to one or
more Financing Leases in an aggregate principal amount not exceeding as to
the Borrower and its Subsidiaries $4,000,000 at any time outstanding,
provided that such Indebtedness shall be created substantially
simultaneously with the capitalization or recapitalization of such fixed or
capital assets on the balance sheet of the Borrower and its Subsidiaries;
(d) Indebtedness of the Borrower or any of its Subsidiaries
outstanding on the Restatement Effective Date and listed on Schedule 6.2(d)
and extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof or interest thereon
(other than with respect to any reasonable fees) or shorten any maturity or
average life to maturity thereof and otherwise on substantially similar
terms to such existing Indebtedness;
(e) Indebtedness of a Person which becomes a Subsidiary after the date
hereof, provided that (i) such indebtedness existed at the time such
corporation became a Subsidiary and was not created in anticipation
thereof, (ii) such indebtedness is in an aggregate principal amount not
exceeding as to the Borrower and its Subsidiaries $5,000,000 at any time
outstanding and (iii) immediately after giving effect to the acquisition of
such Person by the Borrower no Default or Event of Default shall have
occurred and be continuing;
(f) Guarantee Obligations made in the ordinary course of business by
the Borrower or any of its Subsidiaries of obligations of the Borrower or
any other Loan Party which obligations are otherwise permitted under this
Agreement;
(g) Indebtedness of the Borrower or any of its Subsidiaries in respect
of worker's compensation claims, performance, bid and surety bonds and
completion guarantees, in each case, in the ordinary course of business;
(h) Indebtedness of the Borrower or any of its Subsidiaries consisting
of customary overdraft and similar protections in connection with deposit
accounts;
(i) Indebtedness of the Borrower or any of its Subsidiaries in an
aggregate principal amount (for the Borrower and all Subsidiaries) not to
exceed $5,000,000 at any time outstanding to the extent, prior to any such
creation, incurrence, assumption or sufferance, the Borrower, the
Subsidiaries, the to-be-holders of such Indebtedness and the Agent, for the
benefit of the Lenders, shall have entered into an intercreditor and
subordination agreement in form and substance satisfactory to the Agent;
(j) unsecured Indebtedness of the Borrower or any of its Subsidiaries
in an aggregate principal amount (for the Borrower and all Subsidiaries)
not to exceed $1,000,000 at any time outstanding;
(k) the Strategix Earnout; and
(l) Indebtedness evidenced by the ▇▇▇▇▇ Fargo Letter of Credit
provided that all obligations of Borrower under the ▇▇▇▇▇ Fargo Letter of
Credit are terminated no later than August 30, 2004.
6.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(f) Liens in existence on the Restatement Effective Date listed on
Schedule 6.3, securing Indebtedness permitted by subsection 6.2(d),
provided that no such Lien is spread to cover any additional property after
the Restatement Effective Date and that the amount of Indebtedness secured
thereby is not increased;
(g) Liens securing Indebtedness of the Borrower and its Subsidiaries
permitted by subsection 6.2(c) incurred to finance the acquisition of fixed
or capital assets, provided that (i) such Liens and the Indebtedness
secured thereby shall be created or incurred substantially simultaneously
with the capitalization or recapitalization of such fixed or capital assets
on the balance sheet of the Borrower and its Subsidiaries, (ii) such Liens
do not at any time encumber any property other than the property financed
by such Indebtedness, (iii) the amount of Indebtedness secured thereby is
not increased and (iv) the principal amount of Indebtedness secured by any
such Lien shall at no time exceed 100% of the original purchase price of
such property at the time it was acquired;
(h) Liens on the property or assets of a corporation which becomes a
Subsidiary after the date hereof securing Indebtedness permitted by
subsection 6.2(e), provided that (i) such Liens existed at the time such
corporation became a Subsidiary and were not created in anticipation
thereof, (ii) any such Lien is not spread to cover any property or assets
of such corporation or any other Loan Party after the time such corporation
becomes a Subsidiary, and (iii) the amount of Indebtedness secured thereby
is not increased;
(i) Liens created pursuant to the Security Documents;
(j) any interest or title of a lessor under any lease entered into by
the Borrower or any of its Subsidiaries in the ordinary course of its
business and covering only the assets so leased and any Lien arising from
precautionary Uniform Commercial Code financing statements (or equivalent
filings, registrations or agreements in foreign jurisdictions) relating to
and covering only equipment leased in accordance with any Loan Document
(and such Lien does not apply to any additional property or assets of the
Borrower or any Subsidiary);
(k) Liens arising from judgments and attachments in connection with
court proceedings provided that the attachment or enforcement of such Liens
would not result in an Event of Default hereunder and such Liens are being
contested in good faith by appropriate proceedings, adequate reserves have
been set aside, no material property is subject to a material risk of loss
or forfeiture, the claims in respect of such Liens are fully covered by
insurance (subject to ordinary and customary deductibles) and a stay of
execution pending appeal or proceeding for review is in effect;
(l) Liens securing Indebtedness of the Borrower or any of its
Subsidiaries permitted under subsection 6.2(i), provided, that, (a) such
Lien shall only be permitted hereunder if the Leverage Ratio of the
Borrower and its Subsidiaries calculated at the time of incurrence of such
Indebtedness and after giving effect thereto and using Consolidated EBITDA
for the most recently completed period of four consecutive fiscal quarters
is less than 3.00:1.00; (b) the Borrower, the Subsidiaries, the
to-be-holders of such Indebtedness and the Agent, for the benefit of the
Lenders, shall have entered into an intercreditor and subordination
agreement which subordinates such Liens to the Lien securing the Loan
Obligations and otherwise is in form and substance satisfactory to the
Agent; (c) the aggregate amount of Indebtedness secured by such Lien does
not exceed (i) $2,500,000 if the Leverage Ratio at the time of such
incurrence and after giving effect thereto is less than 3.0:1.0 and greater
than or equal to 2.0:1.0 or (ii) $5,000,000 if the Leverage Ratio at the
time of such incurrence and after giving effect thereto is less than
2.0:1.0; provided that for purposes of this subsection 6.3(l), the time of
incurrence with respect to Indebtedness under any revolving credit facility
shall be deemed to be the date such revolving credit facility was
established and the amount incurred shall be the full committed amount of
such revolving credit facility and (d) (i) no portion of the principal of
such Indebtedness is stated to be payable or is required to be paid prior
to the Maturity Date, (ii) the material terms, conditions and restrictive
covenants contained in the instrument governing such Indebtedness, taken as
a whole, are no less favorable to the Borrower or any of its Subsidiaries,
as the case may be, than the terms, conditions and restrictive covenants
contained in this Agreement and (iii) no Default or Event of Default shall
be in effect at the time of or shall have occurred after giving effect to
the incurrence of such Indebtedness;
(m) Liens on the ▇▇▇▇▇ Fargo Cash Collateral Account securing
Indebtedness of the Borrower permitted by subsection 6.2(k); and
(n) Liens consisting of precautionary UCC financing statement filings
against SMS, Acxiom Corporation or Systems Management Specialists, Inc.
with respect to specific items of leased equipment subject to leases that
are obligations of SMS as of the Restatement Effective Date.
6.4 Limitation on Fundamental Changes. Enter into any merger, consolidation
or amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except that, if at the time thereof and immediately after giving
effect thereto, no Default or Event of Default shall have occurred and be
continuing:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned
Subsidiaries of the Borrower (provided that the wholly owned Subsidiary or
Subsidiaries shall be the continuing or surviving corporation and is a Loan
Party);
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or any other wholly owned Subsidiary of the
Borrower that is a Loan Party; and
(c) the Borrower or any Subsidiary thereof may merge with any Person
organized or existing under the laws of the United States of America, any
State thereof or the District of Columbia in connection with a Permitted
Acquisition; provided that if such transaction involves the Borrower, the
Borrower shall be the continuing or surviving corporation and, if such
transaction involves any other Loan Party, the surviving person must be a
Domestic Subsidiary and must become a Guarantor of the obligations of the
Borrower hereunder.
6.5 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), whether now owned or hereafter
acquired; or (ii) in the case of any Subsidiary, issue or sell any shares of
such Subsidiary's Capital Stock to any Person other than the Borrower or any
wholly owned Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out property in
the ordinary course of business;
(b) the sale or other disposition of any property in the ordinary
course of business, provided that (other than inventory) the aggregate book
value of all assets so sold or disposed of in any period of twelve
consecutive months shall not exceed 10% of consolidated total assets of the
Borrower and its Subsidiaries as at the beginning of such twelve-month
period;
(c) the sale of inventory in the ordinary course of business;
(d) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof;
(e) as permitted by subsection 6.4(b); and
(f) dispositions of equipment in exchange for other equipment of
reasonably equivalent or greater value in the ordinary course of business.
6.6 Limitation on Amendments to Material Agreements. The Borrower will not,
nor will it permit any Subsidiary to, amend, modify or waive any of its rights
under its certificate of incorporation, by-laws or other organizational
documents (other than to change its name) or amend any SMS Acquisition Document,
except, in each case, for such amendments, modifications or waivers that could
not be reasonably expected to effect any change materially adverse to the
interests and rights of the Agent or the Lenders under any Loan Document.
6.7 Limitation on Dividends. Declare or pay any dividend on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of Capital Stock of the Borrower or any warrants or
options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Subsidiary, except
(i) any Subsidiary may make Restricted Payments to the Borrower or any
Subsidiary Guarantor;
(ii) the Borrower may declare and pay dividends with respect to its
Capital Stock payable solely in additional Capital Stock;
(iii) so long as no Default or Event of Default shall have occurred
and be continuing, the Borrower may purchase its common stock or common
stock options from present or former officers or employees of the Borrower
or any Subsidiary upon the death, disability or termination of employment
of such officer or employee, provided, that the aggregate amount of
payments under this clause (iii) subsequent to the date hereof (net of any
proceeds received by the Borrower subsequent to the date hereof in
connection with resales of any common stock or common stock options so
purchased) shall not exceed $500,000; and
(iv) the Borrower may consummate repurchases of Capital Stock that are
deemed to occur upon the non-cash exercise of permitted stock options and
warrants.
6.8 Limitation on Capital Expenditures. Make or commit to make (by way of
the acquisition of securities of a Person or otherwise) any Capital Expenditures
(excluding any such asset acquired in connection with normal replacement and
maintenance programs properly charged to current operations) except for Capital
Expenditures in the ordinary course of business not exceeding, for each fiscal
year of the Borrower set forth below, the amount set forth opposite such fiscal
year set forth below:
Fiscal Year Amount
----------- ------
Fiscal Year 2004 $6,000,000
Fiscal Year 2005 $6,000,000
Fiscal Year 2006 $6,000,000
Fiscal Year 2007 $6,000,000
Fiscal Year 2008 $6,000,000
provided, that (i) if at the end of any fiscal year of the Borrower, the amount
specified pursuant to this section for such Capital Expenditures during such
fiscal year exceeds the aggregate amount of Capital Expenditures made or
incurred by the Borrower and its Subsidiaries on a consolidated basis during
such fiscal year (the amount of such excess being referred to herein as the
"Excess Amount"), the Borrower and its Subsidiaries shall be entitled to make
additional Capital Expenditures in the succeeding fiscal year (and only in such
succeeding fiscal year) in an aggregate amount equal to the Excess Amount and
(ii) Capital Expenditures made pursuant to this subsection 6.8 during any fiscal
year shall be deemed made first, in respect of amounts permitted for such fiscal
year as provided above (without giving effect to amounts carried over from the
prior fiscal year pursuant to clause (i) above) and second, in respect of the
Excess Amount carried over from the prior fiscal year pursuant to clause (i)
above.
6.9 Limitation on Investments, Loans and Advances. Make any advance, loan,
extension of credit or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting a business
unit of, or make any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of the Borrower or its
Subsidiaries for travel, entertainment and relocation expenses in the
ordinary course of business in an aggregate amount for the Borrower and its
Subsidiaries not to exceed $100,000 at any one time outstanding;
(d) investments and advances by the Borrower in its Subsidiaries which
are Loan Parties and investments and advances by such Subsidiaries in the
Borrower and in other Subsidiaries which are Loan Parties;
(e) investments in real property, equipment or other tangible assets
useful in the Borrower's or the applicable Subsidiaries business made by
the Borrower or any of its Subsidiaries with the proceeds of any
Reinvestment Deferred Amount;
(f) investments, loans and advances consisting of pay-in-kind interest
on employee loans existing as of the date hereof;
(g) investments received in connection with the bankruptcy,
reorganization or settlement of delinquent agreements or disputes with
customers and suppliers, in each case, in the ordinary course of business;
(h) Permitted Acquisitions (other than the SMS Acquisition) by the
Borrower or any of its Subsidiaries to the extent the total cash purchase
price (specifically excluding any Indebtedness or other obligations to be
assumed or incurred in connection therewith and the value of any non-cash
consideration, including any imputed value of any non-competition,
non-solicitation and similar arrangements) of all such Permitted
Acquisitions does not exceed $10,000,000 during the term of this Agreement;
and
(i) the SMS Acquisition on the Restatement Effective Date in
accordance with the terms of the SMS Acquisition Documents.
6.10 Modifications of Debt Instruments. Amend, modify or change, or consent
or agree to any amendment, modification or change to any of the terms of any
material Indebtedness, except for such amendments, modifications or waivers that
could not reasonably be expected to effect any change materially adverse to the
interests and rights of the Agent or the Lenders under any Loan Document.
6.11 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) not prohibited under this Agreement, (b) in the ordinary
course of the Borrower's or such Subsidiary's business and (c) upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary, as the
case may be, than it would obtain in a comparable arm's length transaction with
a Person which is not an Affiliate.
6.12 Limitation on Sales and Leasebacks. Enter into any arrangement with
any Person providing for the leasing by the Borrower or any Subsidiary of real
or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary.
6.13 Limitation on Changes in Fiscal Year. Permit the fiscal year of the
Borrower to end on a day other than December 31.
6.14 Limitation on Negative Pledge Clauses. Enter into with any Person any
agreement, other than (a) this Agreement, (b) any industrial revenue bonds,
purchase money mortgages or Financing Leases permitted by this Agreement (in
which cases, any prohibition or limitation shall only be effective against the
assets securing such Indebtedness) and (c) any secured Indebtedness permitted
under subsection 6.2(i), which prohibits or limits the ability of the Borrower
or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired.
6.15 Limitation on Lines of Business. Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the Restatement Effective Date or
which are directly related thereto.
6.16 Limitation on Foreign Subsidiaries. Create, form, organize or permit
to exist any Foreign Subsidiaries, including, without limitation, for purposes
of consummating any acquisition.
6.17 ▇▇▇▇▇ Fargo Accounts. Permit the aggregate amount on deposit in the
▇▇▇▇▇ Fargo Account to exceed $800,000 at any time.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms thereof or hereof; or the Borrower shall fail
to pay any interest on any Loan, or any other amount payable hereunder,
within five days after any such interest or other amount becomes due in
accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
or any other Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or
any such other Loan Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in subsections 5.1,
5.4(a), 5.5, 5.6, 5.7, 5.9 or Section 6 hereof; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the
Loans) or in the payment of any Guarantee Obligation, beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument or
agreement under which such Indebtedness or Guarantee Obligation was
created; or (ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or Guarantee
Obligation or contained in any instrument or agreement evidencing, securing
or relating thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to become due prior to
its stated maturity or such Guarantee Obligation to become payable;
provided, that a default, event or condition described in clause (i), or
(ii) of this paragraph (e) shall not at any time constitute an Event of
Default unless, at such time, one or more defaults, events or conditions of
the type described in clauses (i) and (ii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $250,000; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its Subsidiaries
shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) the Borrower or any of its Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $250,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 60 days from the entry thereof;
(i) Any of the Security Documents shall cease, for any reason, to be
in full force and effect, or the Borrower or any other Loan Party which is
a party to any of the Security Documents shall so assert or (ii) the Lien
created by any of the Security Documents shall cease to be enforceable and
of the same effect and priority purported to be created thereby (other than
by reason of the express release thereof pursuant to the Security
Documents); or
(j) The Borrower, any of its Subsidiaries or any of their respective
executive managers shall be criminally indicted or convicted (x) of a
felony or (y) under any law that could lead to a forfeiture of any material
(as determined by Agent in its reasonable discretion) Collateral; or
(k) The occurrence of any Material Adverse Effect;
then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) of this Section with respect to
the Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (B) if such
event is any other Event of Default, with the consent of the Required Lenders,
the Agent may, or upon the request of the Required Lenders, the Agent shall, by
notice to the Borrower declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except
as expressly provided above in this Section, presentment, demand, protest and
all other notices of any kind are hereby expressly waived. Without limiting the
foregoing, upon the occurrence and during the continuance of any Event of
Default, the Agent may, and shall at the request of the Required Lenders,
exercise on behalf of itself and the Lenders all rights and remedies available
to it and the Lenders under the Loan Documents, applicable law (including,
without limitation, the Uniform Commercial Code) or otherwise. Notwithstanding
anything to contrary contained in this Agreement, payments collected or received
after the occurrence and during the continuation of an Event of Default shall be
applied as follows:
first, to payment of costs and expenses, including attorneys' fees, of
Agent payable or reimbursable by Borrower or any other Loan Party under the
Loan Documents;
second, to payment of attorneys' fees of Lenders payable or
reimbursable by Borrower or any other Loan Party under the Loan Documents;
third, to payment of all accrued unpaid fees (including fees payable
to Agent) and interest then due and owing on the Loan Obligations;
fourth, to payment of principal of the Loan Obligations;
fifth, to payment of any other amounts owing constituting Loan
Obligations; and
sixth, any remainder shall be for the account of and paid to whoever
may be lawfully entitled thereto
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Agent and Lenders shall receive an
amount equal to its pro rata share of amounts available to be applied pursuant
to clauses second, third, fourth and fifth above.
SECTION 8. THE AGENT
8.1 Appointment. Each Lender hereby irrevocably designates and appoints the
Agent as the agent of such Lender under this Agreement and the other Loan
Documents, and each such Lender irrevocably authorizes the Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
8.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it.
8.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any other Loan Document (except
for its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Agent under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or for any failure
of the Borrower to perform its obligations hereunder or thereunder. The Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrower.
8.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, counsel
to the Borrower), independent accountants and other experts selected by the
Agent. The Agent may deem and treat the payee of any Note as the owner thereof
for all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Agent. The Agent shall be fully justified
in failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in accordance with a
request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
8.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless the
Agent has received notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give notice thereof to the Lenders. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided that unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
8.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon the Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its members, partners, officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
8.7 Indemnification. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Pro Rata Share in effect on the date on which indemnification is
sought, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of, the Commitments,
this Agreement, any of the other Loan Documents or any documents contemplated by
or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Agent's gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Loans and all other amounts payable
hereunder.
8.8 Agent in Its Individual Capacity. The Agent and its Affiliates may make
loans to, make investments in, hold equity interest in, accept deposits from and
generally engage in any kind of business with the Borrower as though the Agent
were not the Agent hereunder and under the other Loan Documents. With respect to
the Loans made by it, the Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as though it were not the Agent, and the terms "Lender" and "Lenders" shall
include the Agent in its individual capacity.
8.9 Successor Agent. The Agent may resign as Agent upon 10 days' notice to
the Lenders and the Borrower. If the Agent shall resign as Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, which successor agent
(provided that it shall have been approved by the Borrower), shall succeed to
the rights, powers and duties of the Agent hereunder. Effective upon such
appointment and approval, the term "Agent" shall mean such successor agent, and
the former Agent's rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement or any holders of the Loans. After any retiring
Agent's resignation as Agent, the provisions of this Section 8 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement and the other Loan Documents.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Agent may, from time to time, (a) enter into with the Borrower written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Borrower
hereunder or thereunder or (b) waive, on such terms and conditions as the
Required Lenders or the Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (i) reduce the amount or extend the scheduled date of maturity of any Loan
or of any installment thereof, or reduce the stated rate of any interest or fee
payable hereunder or extend the scheduled date of any payment thereof or
increase the amount or extend the expiration date of any Lender's Commitments,
in each case without the consent of each Lender affected thereby, or (ii) amend,
modify or waive any provision of this subsection or reduce the percentage
specified in the definition of Required Lenders or consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents or release all or substantially all of
the Collateral, in each case without the written consent of all the Lenders or
(iii) amend, modify or waive any provision of Section 8 without the written
consent of the then Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the Lenders, the Agent and all future holders of the Loans.
In the case of any waiver, the Borrower, the Lenders and the Agent shall be
restored to their former positions and rights hereunder and under the other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereon.
9.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile
transmission) and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made (a) in the case of delivery by hand, when
delivered, (b) in the case of delivery by mail, three days after being deposited
in the mails, postage prepaid, or (c) in the case of delivery by facsimile
transmission, when sent and receipt has been confirmed, addressed as follows in
the case of the Borrower and the Agent, and as set forth in Schedule I in the
case of the other parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto:
The Borrower: Infocrossing, Inc.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Esq., Senior Vice
President and General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Agent: CapitalSource Finance LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
; provided that any notice, request or demand to or upon the
Agent or the Lenders shall not be effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Agent or any Lender, any right, remedy, power or
privilege hereunder or under the other Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
9.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Agent and each Lender and their Affiliates for all their
reasonable out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement, waiver
or modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Agent and each Lender and their Affiliates, provided, that, from and after the
Restatement Effective Date, such reimbursement for legal fees shall be limited
to the fees and disbursements of one primary counsel except as provided in
clause (b) of this subsection 9.5, (b) to pay or reimburse each Lender and the
Agent and their Affiliates for all its costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Agreement, the
other Loan Documents and any such other documents, including, without
limitation, the fees and disbursements of counsel to each Lender and of counsel
to the Agent, (c) to pay, indemnify, and hold each Lender and the Agent and
their Affiliates and the respective members, partners, directors, officers,
employees, agents and advisors of such Person and such Person's Affiliates
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents, and (d) to pay, indemnify, and hold
each Lender and the Agent and their Affiliates and the respective members,
partners, directors, officers, employees, agents and advisors of such Person and
such Person's Affiliates harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents, documents in connection with the
Recapitalization, any Permitted Acquisition, the SMS Acquisition and any such
other documents, including, without limitation, any of the foregoing relating to
any Environmental Claims or noncompliance with Environmental Laws applicable to
the operations of the Borrower, any of its Subsidiaries or any of the Borrower
Property (all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided that the Borrower shall have no obligation hereunder to
the Agent or any Lender with respect to indemnified liabilities to the extent
determined in the final non-appealable judgment of a court of competent
jurisdiction to have arisen from the gross negligence or willful misconduct of
the Agent or any such Lender. The agreements in this subsection shall survive
repayment of the Loans and all other amounts payable hereunder.
9.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Agent and their respective successors and assigns, except that the
Borrower may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of Agent and each Lender.
(b) Any Lender may at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to such Lender or any
other interest of such Lender hereunder and under the other Loan Documents. In
the event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. No Lender shall
be entitled to create in favor of any Participant, in the participation
agreement pursuant to which such Participant's participating interest shall be
created or otherwise, any right to vote on, consent to or approve any matter
relating to this Agreement or any other Loan Document except for those specified
in clauses (i) and (ii) of the proviso to subsection 9.1. The Borrower agrees
that if amounts outstanding under this Agreement are due or unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff 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 a
Lender under this Agreement, provided that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in subsection 9.7(a) as fully as if it
were a Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of subsections 2.7, 2.8 and 2.9 (Requirements of Law,
Taxes and Indemnity) with respect to its participation in the Loans from time to
time as if it was a Lender; provided that, in the case of subsection 2.8
(Taxes), such Participant shall have complied with the requirements of said
subsection and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such subsection than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) Any Lender may at any time and from time to time assign to any Lender,
any affiliate thereof or any other entity having total assets in excess of
$5,000,000 (an "Assignee") all or any part of its rights and obligations under
this Agreement and the other Loan Documents pursuant to an Assignment and
Acceptance, executed by such Assignee, such assigning Lender (and, in the case
of an Assignee that is not then a Lender or an affiliate thereof, by the Agent)
and delivered to the Agent for its acceptance and recording in the Register,
provided that, in the case of any such assignment to any Person other than an
Affiliate of a Lender, the sum of the aggregate principal amount of the Loans
being assigned and, if such assignment is of less than all of the rights and
obligations of the assigning Lender, the sum of the aggregate principal amount
of the Loans remaining with the assigning Lender are each not less than 5% of
the aggregate principal amount of the Loans then outstanding (or such lesser
amount as may be agreed to by the Borrower and the Agent). Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder as set forth therein, and
(y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto). At the request of the
Assignee and/or the assigning Lender, new Notes shall be executed and delivered
by the Borrower for any assignment. Anything contained in the Loan Documents to
the contrary notwithstanding, (i) CapitalSource Finance LLC and its Affiliates
shall not be required to execute and deliver any Assignment and Acceptance in
connection with any transaction involving its Affiliates or its or its
Affiliates' lenders or funding or financing sources, (ii) no lender to or
Affiliate, funding or financing source of CapitalSource Finance LLC or its
Affiliates shall be considered a Lender hereunder, and (iii) there shall be no
limitation or restriction on (A) the ability of CapitalSource Finance LLC, any
of its Affiliates or any of its or its Affiliates' lenders or funding or
financing sources to assign or otherwise transfer any Loan Document, Commitment
or Loan Obligation to any Affiliate, lender or financing or funding source or
(B) any such lender's or funding or financing source's ability to assign or
otherwise transfer any Loan Document, Commitment or Loan Obligation; provided,
however, CapitalSource Finance LLC shall continue to be liable as a "Lender"
under the Loan Documents unless such Affiliate, lender or funding or financing
source executes an Assignment and Acceptance and becomes a "Lender."
(d) The Agent, on behalf of the Borrower, shall maintain at the address of
the Agent referred to in subsection 9.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of the names
and addresses of the Lenders the principal amount(s) of the Loans owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, the Agent and the Lenders may
(and, in the case of any Loan or other obligation hereunder not evidenced by a
Note, shall) treat each Person whose name is recorded in the Register as the
owner of a Loan or other obligation hereunder as the owner thereof for all
purposes of this Agreement and the other Loan Documents, notwithstanding any
notice to the contrary. Except as provided in the penultimate sentence of
subsection 9.6(c), any assignment of any Loan or other obligation hereunder not
evidenced by a Note shall be effective only upon appropriate entries with
respect thereto being made in the Register. Any assignment of any Loan or other
obligation hereunder evidenced by a Note shall be effective only if effected by
the surrender of the Note to the Borrower (or other acceptable affidavit of lost
or misplaced Note from the applicable Lender).
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Agent) together with payment to
the Agent of a registration and processing fee of $4,000, the Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Borrower.
(f) The Borrower authorizes each Lender to disclose to any Participant or
Assignee (each, a "Transferee") and any prospective Transferee, any and all
financial information in such Lender's possession concerning the Borrower and
its Affiliates which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Borrower in connection with such Lender's credit
evaluation of the Borrower and its Affiliates prior to becoming a party to this
Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this subsection concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
9.7 Adjustments; Set-off. (a) If any Lender (a "benefited Lender") shall at
any time receive any payment of all or part of its Loans, or interest thereon,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 7(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Loans, or interest thereon, such benefited Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Agent after any such set-off and application made by such
Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application.
9.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Agent.
9.9 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.10 Integration. This Agreement and the other Loan Documents represent the
agreement of the Borrower, the Agent and the Lenders with respect to the subject
matter hereof, and there are no promises, undertakings, representations or
warranties by the Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in subsection 9.2 or at such other
address of which the Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right of Agent or any Lender to bring proceedings against Borrower in the
courts of any other jurisdiction having jurisdiction;
(e) agrees that any judicial proceedings against Agent or any Lender
involving, directly or indirectly, the Loan Obligations, any Loan Document
or any related agreement shall be brought only in courts of the State of
New York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof; and
(f) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this subsection any special, exemplary, punitive or consequential
damages.
9.13 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary relationship
with or duty to the Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between
Agent and Lenders, on one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrower and the Lenders.
9.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND THE LENDERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
9.15 Confidentiality. Each of the Agent and the Lenders agrees to keep
confidential all non-public information provided to it by the Borrower or any
Subsidiary pursuant to this Agreement that is designated by the Borrower or such
Subsidiary as confidential; provided that nothing herein shall prevent the Agent
or any Lender from disclosing any such information (i) to the Agent, any other
Lender or any affiliate of any thereof, (ii) to any Transferee or prospective
Transferee that agrees to comply with the provisions of this Section or
substantially equivalent provisions, (iii) to any of its employees, directors,
agents, attorneys, accountants and other professional advisors, (iv) upon the
request or demand of any Governmental Authority having jurisdiction over it, (v)
in response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any Requirement of Law, (vi) that has been
publicly disclosed other than in breach of this Section, (vii) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about a
Lender's investment portfolio in connection with ratings issued with respect to
such Lender.
9.16 Release of Collateral and Guarantee Obligations.
(a) Notwithstanding anything to the contrary contained herein or in
any other Loan Document, upon request of the Borrower in connection with
any disposition of property permitted by the Loan Documents, the Agent
shall take such actions as shall be required to release its security
interest in any Collateral being disposed of in such disposition, and to
release any Guarantee Obligations under any Loan Document of any Person
being disposed of in such disposition, to the extent necessary to permit
consummation of such disposition in accordance with the Loan Documents.
(b) Notwithstanding anything to the contrary contained herein or any
other Loan Document, when all Obligations (other than contingent
indemnification Obligations to the extent no claim giving rise thereto has
been asserted) have been indefeasibly paid in full in cash and all
Commitments have terminated or expired, upon request of the Borrower, the
Agent shall take such actions as shall be required to release its security
interest in all Collateral, and to release all Guarantee Obligations
provided for in any Loan Documents. Any such release of Guarantee
Obligations shall be deemed subject to the provision that such Guarantee
Obligations shall be reinstated if after such release any portion of any
payment in respect of the Obligations guaranteed thereby shall be rescinded
or must otherwise be restored or returned upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or
otherwise, all as though such payment had not been made.
9.17 Continued Effect; No Novation. Notwithstanding anything contained
herein, this Agreement is not intended to and does not serve to effect a
novation of the Loans. Instead, it is the express intention of the parties
hereto to reaffirm the indebtedness created under the Original Loan Agreement
which is evidenced by the notes provided for therein and secured by the
Collateral. The Borrower acknowledges and confirms that the liens and security
interests granted pursuant to the Loan Documents secure the indebtedness,
liabilities and obligations of the Borrower to the Agent and the Lenders under
the Original Loan Agreement, as amended and restated hereby, and that the terms
"Loans", "Loan Obligations", "Obligations" and "Indebtedness" as used in the
Loan Documents (or any other term used therein to describe or refer to the
indebtedness, liabilities and obligations of the Borrower to the Agent and the
Lenders) includes, without limitation, the indebtedness, liabilities and
obligations of the Borrower under the Notes to be delivered hereunder, and under
the Original Loan Agreement, as amended and restated hereby, as the same may be
further amended, modified, supplemented or restated from time to time. The Loan
Documents and all agreements, instruments and documents executed or delivered in
connection with any of the foregoing shall each be deemed to be amended to the
extent necessary to give effect to the provisions of this Agreement.
Cross-references in the Loan Documents to particular section numbers in the
Original Loan Agreement shall be deemed to be cross-references to the
corresponding sections, as applicable, of this Agreement.
[Remainder of page intentionally left blank; signature page follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
INFOCROSSING, INC.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President - Finance
CAPITALSOURCE FINANCE LLC, as Agent and as a Lender
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: General Counsel
SCHEDULE I
Lenders' Addresses
CapitalSource Finance LLC
CAPITALSOURCE FINANCE LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Wire Instructions:
Bank: Bank of America, Baltimore, MD
Account: 003939396662
ABA: ▇▇▇▇▇▇▇▇▇
Account Name: CapitalSource Funding LLC - CFG
Reference: Infocrossing
SCHEDULE 2.1
LENDERS' COMMITMENTS
Term Loan A Commitment
======================================= ============================== ================================ ===============
OUTSTANDING AMOUNT OF
TERM LOAN A AS OF THE
LENDER TERM LOAN A COMMITMENT RESTATEMENT EFFECTIVE DATE PRO RATA SHARE
--------------------------------------- ------------------------------ -------------------------------- ---------------
CapitalSource Finance LLC $25,000,000 $24,875,156.25 100%
--------------------------------------- ------------------------------ -------------------------------- ---------------
TOTALS $25,000,000 $24,875,156.25 100%
======================================= ============================== ================================ ===============
Term Loan B Commitment
================================================== ============================== ====================================
LENDER TERM LOAN B COMMITMENT PRO RATA SHARE
-------------------------------------------------- ------------------------------ ------------------------------------
CapitalSource Finance LLC $15,000,000 100%
-------------------------------------------------- ------------------------------ ------------------------------------
TOTALS $15,000,000 100%
================================================== ============================== ====================================
Term Loan A Interest Reserve Commitment
================================================== ============================== ====================================
LENDER TERM LOAN A INTEREST RESERVE PRO RATA SHARE
COMMITMENT
-------------------------------------------------- ------------------------------ ------------------------------------
CapitalSource Finance LLC $621,878.91 100%
-------------------------------------------------- ------------------------------ ------------------------------------
TOTALS $621,878.91 100%
================================================== ============================== ====================================
Term Loan B Interest Reserve Commitment
================================================== ============================== ====================================
LENDER TERM LOAN B INTEREST RESERVE PRO RATA SHARE
COMMITMENT
-------------------------------------------------- ------------------------------ ------------------------------------
CapitalSource Finance LLC $375,000 100%
-------------------------------------------------- ------------------------------ ------------------------------------
TOTALS $375,000 100%
================================================== ============================== ====================================
Schedule 2.2
Amortization of Loans
December 1, 2004 $312,500
January 1, 2005 $312,500
February 1, 2005 $312,500
March 1, 2005 $312,500
April 1, 2005 $312,500
May 1, 2005 $312,500
June 1, 2005 $312,500
July 1, 2005 $312,500
August 1, 2005 $312,500
September 1, 2005 $312,500
October 1, 2005 $312,500
November 1, 2005 $312,500
December 1, 2005 $312,500
January 1, 2006 $312,500
February 1, 2006 $312,500
March 1, 2006 $312,500
April 1, 2006 $312,500
May 1, 2006 $312,500
June 1, 2006 $312,500
July 1, 2006 $312,500
August 1, 2006 $312,500
September 1, 2006 $312,500
October 1, 2006 $312,500
November 1, 2006 $312,500
December 1, 2006 $312,500
January 1, 2007 $312,500
February 1, 2007 $312,500
March 1, 2007 $312,500
April 1, 2007 $312,500
May 1, 2007 $312,500
June 1, 2007 $312,500
July 1, 2007 $312,500
August 1, 2007 $312,500
September 1, 2007 $312,500
October 1, 2007 $312,500
November 1, 2007 $312,500
December 1, 2007 $312,500
January 1, 2008 $312,500
February 1, 2008 $312,500
March 1, 2008 $312,500
April 1, 2008 $312,500
May 1, 2008 $312,500
June 1, 2008 $312,500
July 1, 2008 $312,500
August 1, 2008 $312,500
September 1, 2008 $312,500
October 1, 2008 $312,500
Maturity Date 100% of all Loans less
amounts previously paid
------------------------
Schedule 6.1(a)
Leverage Ratio
Fiscal quarter ended Ratio
--------------------- -----
December 31, 2003 3.65 to 1.00
March 31, 2004 3.50 to 1.00
June 30, 2004 4.50 to 1.00
September 30, 2004 3.75 to 1.00
December 31, 2004 3.00 to 1.00
March 31, 2005 2.50 to 1.00
June 30, 2005 2.25 to 1.00
September 30, 2005 2.00 to 1.00
December 31, 2005 2.00 to 1.00
March 31, 2006 2.00 to 1.00
June 30, 2006 2.00 to 1.00
September 30, 2006 1.50 to 1.00
December 31, 2006 1.50 to 1.00
March 31, 2007 1.50 to 1.00
June 30, 2007 1.50 to 1.00
September 30, 2007 1.50 to 1.00
December 31, 2007 1.50 to 1.00
March 31, 2008 1.50 to 1.00
June 30, 2008 1.50 to 1.00
September 30, 2008 1.50 to 1.00
Schedule 6.1(b)
Minimum Consolidated EBITDA
Fiscal quarter ended Amount
December 31, 2003 $9,000,000
March 31, 2004 $9,500,000
June 30, 2004 $10,500,000
September 30, 2004 $12,000,000
December 31, 2004 $14,000,000
March 31, 2005 $16,000,000
June 30, 2005 $18,500,000
September 30, 2005 $20,000,000
December 31, 2005 $21,000,000
March 31, 2006 $22,000,000
June 30, 2006 $22,000,000
September 30, 2006 $22,000,000
December 31, 2006 $22,000,000
March 31, 2007 $25,000,000
June 30, 2007 $25,000,000
September 30, 2007 $25,000,000
December 31, 2007 $25,000,000
March 31, 2008 $25,000,000
June 30, 2008 $25,000,000
September 30, 2008 $25,000,000
Schedule 6.1(c)
Fixed Charge Ratio
Fiscal quarter ended Ratio
--------------------- -----
December 31, 2003 0.90 to 1.00
March 31, 2004 0.95 to 1.00
June 30, 2004 1.50 to 1.00
September 30, 2004 1.50 to 1.00
December 31, 2004 1.50 to 1.00
March 31, 2005 1.25 to 1.00
June 30, 2005 1.25 to 1.00
September 30, 2005 1.25 to 1.00
December 31, 2005 1.25 to 1.00
March 31, 2006 1.25 to 1.00
June 30, 2006 1.25 to 1.00
September 30, 2006 1.25 to 1.00
December 31, 2006 1.25 to 1.00
March 31, 2007 1.25 to 1.00
June 30, 2007 1.25 to 1.00
September 30, 2007 1.25 to 1.00
December 31, 2007 1.25 to 1.00
March 31, 2008 1.25 to 1.00
June 30, 2008 1.25 to 1.00
September 30, 2008 1.25 to 1.00
Schedule 5.13
Post Closing Deliverables
1. Within thirty (30) days after the Restatement Effective Date, Borrower
shall use commercially reasonable best efforts to procure a landlord
waiver and consent, in form and substance reasonably acceptable to
Agent, for each of its leased properties located in (a) Leonia, New
Jersey; (b) Norcross, Georgia and (c) Brea, California, and in the
event that Borrower fails to obtain any such landlord waiver and
consent within the proscribed time period, Agent shall have the right,
in its sole and absolute discretion, to charge Borrower a collateral
agent's fee of $5,000 payable upon such failure and on the first day of
each month thereafter.
2. Within thirty (30) days after the Restatement Effective Date, Borrower
deliver a good standing certificate issued by the California Secretary
of State for SMS reflecting its correct legal name: "ITO Acquisition
Corporation".