EXHIBIT 10.34
PROXYMED, INC., KEY COMMUNICATIONS SERVICE, INC.,
and MEDUNITE INC.
as Borrowers
LOAN AND SECURITY AGREEMENT
Dated: December 4, 2003
$12,500,000
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Lender
TABLE OF CONTENTS
Section 1. DEFINITIONS, TERMS AND REFERENCES....................... 1
1.1. Certain Definitions..................................... 1
1.2. Accounting Terms........................................ 31
1.3. Other Terms............................................. 31
1.4. Certain Matters of Construction......................... 31
1.5. Schedules and Exhibits.................................. 32
Section 2. CREDIT facility......................................... 32
2.1. Revolver Commitment..................................... 32
2.2. Intentionally Omitted................................... 33
2.3. LC Facility............................................. 33
Section 3. INTEREST, fees and charges.............................. 36
3.1. Interest................................................ 36
3.2. Fees.................................................... 39
3.3. Computation of Interest and Fees........................ 40
3.4. Reimbursement of Expenses............................... 40
3.5. Lender Charges.......................................... 41
3.6. Illegality.............................................. 41
3.7. Increased Costs......................................... 42
3.8. Capital Adequacy........................................ 43
3.9. Funding Losses.......................................... 44
3.10. Maximum Interest........................................ 44
Section 4. LOAN ADMINISTRATION..................................... 46
4.1. Manner of Borrowing and Funding Revolver Loans.......... 46
4.2. Special Provisions Governing Euro-Dollar Loans.......... 47
4.3. Borrowers' Representative............................... 48
4.4. All Loans to Constitute One Obligation.................. 48
Section 5. PAYMENTS; NATURE OF EACH BORROWER'S LIABILITY........... 48
5.1. General Repayment Provisions............................ 48
5.2. Repayment of Revolver Loans............................. 49
5.3. Conditional Application Exemption....................... 50
5.4. Payment of Other Obligations............................ 50
5.5. Marshaling; Payments Set Aside.......................... 51
5.6. Application of Payments and Collateral Proceeds......... 51
5.7. Loan Account; Account Stated............................ 51
5.8. Gross Up for Taxes...................................... 52
5.9. Nature and Extent of Each Borrower's Liability.......... 52
Section 6. TERM AND TERMINATION OF COMMITMENTS..................... 54
6.1. Term of Commitments..................................... 54
6.2. Termination or Reduction................................ 54
Section 7. COLLATERAL SECURITY..................................... 55
7.1. Grant of Security Interest in Collateral................ 55
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7.2. Lien on Deposit Accounts................................ 56
7.3. Intentionally Omitted................................... 57
7.4. Other Collateral........................................ 57
7.5. No Assumption of Liability.............................. 57
7.6. Lien Perfection; Further Assurances..................... 57
7.7. Exclusion for Certain Contracts and Leases.............. 58
Section 8. COLLATERAL ADMINISTRATION............................... 58
8.1. General................................................. 58
8.2. Administration of Accounts.............................. 60
8.3. Administration of Inventory............................. 61
8.4. Administration of Equipment............................. 62
8.5. Borrowing Base Certificates............................. 63
Section 9. REPRESENTATIONS AND WARRANTIES.......................... 63
9.1. General Representations and Warranties.................. 63
9.2. Reaffirmation of Representations and Warranties......... 70
9.3. Survival of Representations and Warranties.............. 70
Section 10. COVENANTS AND CONTINUING AGREEMENTS..................... 70
10.1. Affirmative Covenants................................... 70
10.2. Negative Covenants...................................... 74
10.3. Specific Financial Covenant............................. 78
Section 11. CONDITIONS PRECEDENT.................................... 79
11.1. Conditions Precedent to Initial Credit Extensions....... 79
11.2. Conditions Precedent to All Credit Extensions........... 81
11.3. Limited Waiver of Conditions Precedent.................. 82
Section 12. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT....... 83
12.1. Events of Default....................................... 83
12.2. Acceleration of Obligations; Termination of
Commitments............................................. 86
12.3. Other Remedies.......................................... 86
12.4. Setoff.................................................. 88
12.5. Remedies Cumulative; No Waiver.......................... 88
Section 13. MISCELLANEOUS........................................... 89
13.1. Power of Attorney....................................... 89
13.2. General Indemnity....................................... 90
13.3. Survival of All Indemnities............................. 90
13.4. Modification of Agreement; Sale of Interest............. 90
13.5. Severability............................................ 91
13.6. Cumulative Effect; Conflict of Terms.................... 91
13.7. Execution in Counterparts............................... 91
13.8. Lender's Consent........................................ 91
13.9. Notice.................................................. 91
13.10. Performance of Borrowers' Obligations................... 92
13.11. Credit Inquiries........................................ 93
13.12. Time of Essence......................................... 93
13.13. Indulgences Not Waivers................................. 93
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13.14. Entire Agreement; Successors and Assigns................ 93
13.15. Interpretation.......................................... 93
13.16. Advertising and Publicity............................... 94
13.17. Governing Law; Consent To Forum......................... 94
13.18. Waivers by Borrower..................................... 94
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LIST OF EXHIBITS
Exhibits
Exhibit A-1 Form of Revolver Note
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Notice of Borrowing
Exhibit D Form of Compliance Certificate
Exhibit E Form of Borrowers' Counsel Opinion
Exhibit F Form of Letter of Credit Procurement Request
Exhibit H Form of Borrowing Base Certificate
Exhibit I Form of Blocked Account Agreement
Exhibit J Form of Covenant Calculation Report
Exhibit K Form of Guaranty Agreement
Exhibit L Form of Guarantors' Security Agreement
Exhibit M Form of Patent and Trademark Security Agreement
Exhibit N Form of Copyright Security Agreement
Exhibit O Form of Secretary's Certificate
Schedules
1.1 Lockbox
8.1.1 Business Locations
8.1.2 Insurance
8.4 Fixtures
9.1.1 Jurisdictions in which Borrowers and their Subsidiaries are
Authorized to do Business
9.1.4 Capital Structure
9.1.5 Corporate Names
9.1.12 Surety Obligations
9.1.13 Tax Identification Numbers
9.1.15 Patents, Trademarks, Copyrights and Licenses
9.1.19 Litigation
9.1.21 Capitalized and Operating Leases
9.1.22 Pension Plans
9.1.23 Trade Relations
9.1.24 Labor Contracts
9.1.28 Hazardous Materials
10.2.3 Permitted Subordinated Debt
10.2.5 Permitted Liens
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made on December 4, 2003, by and
among PROXYMED, INC., a Florida corporation ("ProxyMed" individually and, in its
capacity as the representative of the other Borrowers pursuant to SECTION 4.3
hereof, "Borrowers' Agent"), KEY COMMUNICATIONS SERVICE, INC., an Indiana
corporation ("Key Communications"), and MEDUNITE INC., a Delaware corporation
("Medunite" and together with ProxyMed and Key Communications, collectively, the
"Borrowers" and each individually, a "Borrower"), and WACHOVIA BANK, NATIONAL
ASSOCIATION (together with its successors and assigns, "Lender"), a national
banking association.
R E C I T A L S:
Each Borrower has requested that Lender make available revolving credit
and letter of credit facilities to Borrowers, which facilities shall be used by
Borrowers to finance their mutual and collective enterprise. In order to utilize
the financial powers of each Borrower in the most efficient and economical
manner, and in order to facilitate the financing of each Borrower's needs,
Lender will, at the request of any Borrower, make loans to Borrowers under the
credit facilities on a combined basis and in accordance with the provisions
hereinafter set forth. Borrowers' business is a mutual and collective
enterprise, and Borrowers believe that the consolidation of all loans under this
Agreement will enhance the aggregate borrowing powers of each Borrower and ease
the administration of their loan relationship with Lender, all to the mutual
advantage of Borrowers. Lender's willingness to extend credit to Borrowers and
to administer each Borrower's collateral security therefor, on a combined basis
as more fully set forth in this Agreement, is done solely as an accommodation to
Borrowers and at Borrowers' request in furtherance of Borrowers' mutual and
collective enterprise.
Lender is willing to extend financing to Borrowers in accordance with
the terms hereof upon the execution of this Agreement by Borrowers, compliance
by Borrowers with all of the terms and provisions of this Agreement and
fulfillment of all conditions precedent to Lender's obligations herein
contained.
NOW, THEREFORE, to induce Lender to extend the financing provided for
herein, and for other good and valuable consideration, the sufficiency and
receipt of all of which are acknowledged by Borrowers, the parties hereto hereby
agree as follows:
SECTION 1. DEFINITIONS, TERMS AND REFERENCES
1.1. CERTAIN DEFINITIONS. In addition to such other terms as elsewhere
defined herein, as used in this Agreement, in any Exhibits and in any
Supplements, the following terms shall have the following meanings:
Account - shall have the meaning ascribed to "account" in the
UCC and shall include any and all of a Borrower's now owned or
hereafter acquired accounts and all other rights to payment for goods
sold or leased or for services rendered that are not
evidenced by an Instrument or Chattel Paper, whether or not they have
been earned by performance.
Account Debtor - a Person who is or becomes obligated under or
on account of an Account, Instrument, Chattel Paper or Payment
Intangible.
Accounts Collateral - all Accounts of a Borrower and all
right, title and interest of a Borrower in or to any returned Goods the
sale or other disposition of which gave rise to an Account, together
with all rights, titles, securities and guarantees with respect to any
Account, including any rights to stoppage in transit, replevin,
reclamation and resales, and all related security Liens, whether
voluntary or involuntary, in each case whether now existing or owned or
hereafter created, arising or acquired.
Accounts Formula Amount - on any date of determination
thereof, an amount equal to the lesser of (i) the Revolver Commitment
Amount on such date or (ii) an amount equal to eighty percent (80%) of
Eligible Accounts on such date, subject to dilution of less than ten
percent (10%) (or such lesser percentage as Lender may in its
reasonable credit judgment determine from time to time). As used
herein, the phrase "net amount of Eligible Accounts" shall mean the
face amount of such Accounts on any date less any and all returns,
Rebates, discounts (which may, at Lender's option, be calculated on
shortest terms), credits, allowances or Taxes (including sales, excise
or other taxes) at any time issued, owing, claimed by Account Debtors,
granted, outstanding or payable in connection with, or any interest
accrued on the amount of, such Accounts at such date.
Adjusted Euro-Dollar Rate - with respect to each Interest
Period for a Euro-Dollar Loan, an interest rate per annum (rounded
upwards, to the next 1/16 of 1%) equal to the quotient of (a) the
Euro-Dollar Rate in effect for such Interest Period divided by (b) a
percentage (expressed as a decimal) equal to 100% minus Statutory
Reserves.
Adjusted Net Earnings - with respect to any fiscal period of
Borrowers, the net earnings (or loss) for such fiscal period, all as
reflected on the financial statement of Borrowers supplied to Lender
pursuant to SECTION 10.1.3 hereof, but excluding: (i) any gain arising
from the sale of capital assets; (ii) any gain arising from any
write-up of assets during such period; (iii) earnings of any Subsidiary
accrued prior to the date it became a Subsidiary; (iv) earnings of any
Person, substantially all the assets of which have been acquired in any
manner by Borrowers, realized by such Person prior to the date of such
acquisition; (v) net earnings of any entity (other than a Subsidiary of
Borrowers) in which Borrowers has an ownership interest unless such net
earnings have actually been received by Borrowers in the form of cash
Distributions; (vi) any portion of the net earnings of any Subsidiary
which for any reason is unavailable for payment of Distributions to
Borrowers; (vii) the earnings of any Person to which any assets of
Borrowers shall have been sold, transferred or disposed of, or into
which a Borrower shall have merged, or been a party to any
consolidation or other form of reorganization, prior to the date of
such transaction; (viii) any gain arising from the acquisition of any
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Securities by Borrowers; and (ix) any gain arising from extraordinary
or non-recurring items, all as determined in accordance with GAAP.
Affiliate - a Person (other than a Subsidiary): (i) which
directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, a Person; (ii) which
beneficially owns or holds 10% or more of any class of the Equity
Interests of a Person; or (iii) 10% or more of the Equity Interests
with power to vote of which is beneficially owned or held by a Person
or a Subsidiary of a Person. For purposes hereof, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
the ownership of any Equity Interest, by contract or otherwise.
Agreement - this Loan and Security Agreement, and all Exhibits
and Schedules hereto.
Applicable Law - all laws, rules and regulations applicable to
the Person, conduct, transaction, covenant, Loan Document or Material
Contract in question, including all applicable common law and equitable
principles; all provisions of all applicable state, federal and foreign
constitutions, statutes, rules, regulations and orders of governmental
bodies; and orders, judgments and decrees of all courts and
arbitrators.
Applicable Margin - As of any measurement date in which the
Revolver Loan Balance is equal to or less than an amount equal to 95%
of the average amount of Liquid Collateral included in the Borrowing
Base for such date, a percentage equal to 0.75% with respect to
Revolver Loans that bear interest as a Euro-Dollar Loan and 0% with
respect to Revolver Loans that bear interest as Base Rate Loans. As of
any measurement date in which the Revolver Loan Balance is greater than
an amount equal to 95% of the average amount of Liquid Collateral
included in the Borrowing Base for such date, (i) with respect to
borrowings against Liquid Collateral, a percentage equal to 0.75% with
respect to Revolver Loans that bear interest as a Euro-Dollar Loan and
0% with respect to Revolver Loans that bear interest as Base Rate
Loans, and (ii) with respect to borrowings against components of the
Borrowing Base other than Liquid Collateral, a percentage equal to
2.25% with respect to Revolver Loans that bear interest as a
Euro-Dollar Loan and 0% with respect to Revolver Loans that bear
interest as Base Rate Loans.
Availability - on any date, the amount that Borrowers are
entitled to borrow as Revolver Loans on such date, such amount being
the difference derived when the sum of the principal amount of Revolver
Loans then outstanding (including any amounts that Lender may have paid
for the account of Borrowers pursuant to any of the Loan Documents and
that have not been reimbursed by Borrowers) is subtracted from the
Borrowing Base. If the amount outstanding is equal to or greater than
the Borrowing Base, then Availability is zero.
Availability Reserve - on any date of determination thereof,
if deemed necessary by Lender in its sole and absolute discretion, an
amount equal to the sum of the following
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(without duplication) (i) the Inventory Reserve; (ii) all amounts of
past due rent, fees or other charges owing at such time by any Obligor
to any landlord of any premises where any of the Collateral is located
or to any processor, repairman, mechanic or other Person who is in
possession of any Collateral or has asserted any Lien or claim thereto;
(iii) any amounts which any Obligor is obligated to pay pursuant to the
provisions of any of the Loan Documents that Lender elects to pay for
the account of such Obligor in accordance with authority contained in
any of the Loan Documents; (iv) the LC Reserve; (v) reserves
established by Lender with respect to any Banking Relationship Debt, to
the extent past due or payable; (vi) all customer deposits or other
prepayments held by any Borrower; (vii) the Foreign Exchange Agreement
Reserve, if any; (viii) the Interest Rate Contract Reserve; and (ix)
such additional reserves as Lender in the exercise of its reasonable
credit judgment may elect to impose from time to time; provided,
however, that items (i), (ii) and (vi) shall not apply in the
calculation of Availability Reserves for borrowings against Liquid
Collateral.
Average Availability - for any period, an amount equal to the
sum of the actual amount of Availability on each day during such
period, as determined by Lender, divided by the number of days in such
period.
Banking Relationship Debt - Debt or other obligations of a
Borrower to Lender (or any Affiliate of Lender), including any Debt
arising out of or relating to (i) checking and operating account
relationships between a Borrower and Lender (or any Affiliate of
Lender), including any obligations under Cash Management Agreements,
(ii) Interest Rate Contracts with Lender (or any Affiliate or Lender),
(iii) Foreign Exchange Contracts, and (iv) other products provided by
Lender (or any Affiliate of Lender) to a Borrower, including ACH
transfer services.
Bankruptcy Code - Title 11 of the United States Code.
Base Rate - the greater from time to time of (i) the rate of
interest announced or quoted by Lender from time to time as its prime
rate or (ii) the Federal Funds Rate in effect from time to time plus
0.5%. The prime rate announced by Lender is a reference rate and does
not necessarily represent the lowest or best rate charged by Lender.
Lender may make loans or other extensions of credit at, above or below
its announced prime rate. If the prime rate is discontinued by Lender
as a standard, a comparable reference rate designated by Lender as a
substitute therefor shall be the Base Rate.
Base Rate Loan - a Loan, or portion thereof, during any period
in which it bears interest at a rate based upon the Base Rate.
Blocked Account - a Deposit Account of a Borrower which is
subject to a Blocked Account Agreement.
Blocked Account Agreement - means an agreement among a
Borrower, the Lender and a Clearing Bank, substantially in the form
attached hereto as EXHIBIT I, concerning
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the collection, treatment and remission of payments or other deposits
which represent the proceeds of Collateral.
Board of Governors - the Board of Governors of the Federal
Reserve System.
Borrowing - a borrowing consisting of Loans of one Type made
on the same day and of the same Type by Lender or a conversion of a
Loan or Loans of one Type from Lender on the same day.
Borrowing Base - On any date of determination thereof which is
prior to the date on which the Expanded Borrowing Base Conditions have
been satisfied, an amount equal to the lesser of (a) an amount equal to
(i) the Revolver Commitment Amount minus (ii) the aggregate LC
Outstandings on such date, or (b) an amount equal to (i) 95% of the
amount of Liquid Collateral on such date minus (ii) the Availability
Reserve on such date. On any date of determination thereof which is on
or after the date on which the Expanded Borrowing Base Conditions have
been satisfied, an amount equal to the lesser of (a) an amount equal to
(i) the Revolver Commitment Amount minus (ii) the aggregate LC
Outstandings on such date, or (b) an amount equal to (i) 95% of the
amount of Liquid Collateral on such date plus (ii) the Accounts Formula
Amount on such date plus (iii) an amount equal to the lesser of (A) the
Inventory Formula Amount on such date or (B) $2,000,000 minus (iv) the
Availability Reserve on such date.
Borrowing Base Certificate - a certificate, in the form
attached hereto as EXHIBIT H, by which Borrowers shall certify to
Lender the respective amounts of the components of the Borrowing Base
as of the date of the certificate and the calculation or other
determination of such amounts.
Borrowing Base Reporting Event - means the occurrence of the
following on any date: the Revolver Loan Balance shall exceed an amount
equal to 95% of the Liquid Collateral on such date minus the
Availability Reserve on such date.
Business Day - any day excluding Saturday, Sunday and any
other day that is a legal holiday under the laws of the State of
Georgia and the State of North Carolina or is a day on which banking
institutions located in such state are closed; provided, however, that
when used with reference to a Euro-Dollar Loan (including the making,
continuing, prepaying or repaying of any Euro-Dollar Loan), the term
"Business Day" shall mean a "Euro-Dollar Business Day."
Capital Expenditures - with respect to any Person,
expenditures made or liabilities incurred by such Person for
capitalized software or for the acquisition or leasing pursuant to a
capital lease of any fixed or capital assets or improvements,
replacements, substitutions or additions thereto, to the extent that
the same are properly treated as capital expenditures under GAAP on a
balance sheet of such Person, including the total principal portion of
Capitalized Lease Obligations.
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Capitalized Lease Obligation - any Debt represented by
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Cash Collateral - cash or Cash Equivalents, and any interest
earned thereon, that is deposited in an account opened with and
maintained by Lender in accordance with this Agreement as security for
any of the Obligations.
Cash Collateral Account - a demand deposit, money market or
other account established with and maintained by Lender, which account
shall be in Lender's name and subject to Lender's Liens.
Cash Equivalents - (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed
by the full faith and credit of the United States government having
maturities of not more than 12 months from the date of acquisition;
(ii) domestic certificates of deposit and time deposits having
maturities of not more than 12 months from the date of acquisition,
bankers' acceptances having maturities of not more than 12 months from
the date of acquisition and overnight bank deposits, in each case
issued by any commercial bank organized under the laws of the United
States, any state thereof or the District of Columbia, which at the
time of acquisition are rated A-1 (or better) by S&P or P-1 (or better)
by ▇▇▇▇▇'▇ and (unless issued by Lender) not subject to offset rights
in favor of such bank arising from any banking relationship with such
bank; (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clauses (i) and
(ii) entered into with any financial institution meeting the
qualifications specified in clause (ii) above; and (iv) commercial
paper having at the time of investment therein or a contractual
commitment to invest therein a rating of A-1 (or better) by S&P or P-1
(or better) by ▇▇▇▇▇'▇ and having a maturity within 9 months after the
date of acquisition thereof.
Cash Management Agreements - any agreement entered into at any
time between a Borrower or any of its Subsidiaries, on the one hand,
and Lender or any of its Affiliates in connection with cash management
services for operating, collections, payroll and trust accounts of such
Borrower or its Subsidiaries provided by such banking or financial
institution, including automatic clearinghouse services, controlled
disbursement services, electronic funds transfer services, information
reporting services, lockbox services, stop payment services and wire
transfer services.
CERCLA - the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. Section 9601 et seq. and its implementing
regulations.
Change of Control - shall mean the occurrence of any of the
following:
(a) with respect to any Borrower, less than a majority of
the members of such Borrower's Board of Directors
shall be persons who either (i) were serving as
directors on the Closing Date or (ii) were nominated
as directors by a majority of
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the directors who are either directors referred to in
clause (i) above or directors nominated and approved
pursuant to this clause (ii); or
(b) with respect to any Borrower, the stockholders of
such Borrower shall approve any plan or proposal for
the liquidation or dissolution of the Borrower; or
(c) a Person or group of Persons acting in concert (i)
shall, as a result of a tender or exchange offer,
open market purchases, privately negotiated purchases
or otherwise, have become the direct or indirect
beneficial owner (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended
from time to time) of Equity Interests of ProxyMed
aggregating more than forty-nine percent (49%) of the
combined voting power of the outstanding Equity
Interests in ProxyMed entitled to vote for the
election of directors, or (ii) with respect to any
Borrower, shall have the right to elect a majority of
the Board of Directors of such Borrower.
Chattel Paper - shall have the meaning ascribed to "chattel
paper" in the UCC and shall include Electronic Chattel Paper.
Claim - any and all claims, demands, liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, awards, remedial
response, costs, expenses or disbursements of any kind or nature
whatsoever (including reasonable attorneys', accountants' or
consultants' fees and expenses), whether arising under or in connection
with the Loan Documents, under any Applicable Law (including any
Environmental Laws) or otherwise, that may now or hereafter be suffered
or incurred by a Person and whether suffered or incurred in or as a
result of any investigation, litigation, arbitration or other judicial
or non-judicial proceeding or any appeals related thereto.
Clearing Bank - means any banking institution with which a
Blocked Account has been established pursuant to an Blocked Account Agreement.
Closing Date - the date on which all of the conditions
precedent in SECTION 11.4 of this Agreement are satisfied.
Collateral - all of the Property and interests in Property
described in SECTION 7 of this Agreement, all Property described in any
of the Security Documents as security for payment or performance of the
Obligations and all other Property and interests in Property that now
or hereafter secure (or are intended to secure) the payment and
performance of any of the Obligations.
Collateral Reserve Account - a Deposit Account which has been
opened and maintained by the Borrowers with the Lender pursuant to
SECTION 11.1.8.
Commercial Tort Claim - shall have the meaning ascribed to
"commercial tort claim" in the UCC.
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Commitment Termination Date - the date that is the soonest to
occur of (i) the last day of the Term; (ii) the date on which Borrowers
elect to terminate the Commitments pursuant to SECTION 6.2 of this
Agreement; or (iii) the date on which the Commitments are automatically
terminated pursuant to SECTION 12.2 of this Agreement.
Commitments - at any date, the Revolver Commitment Amount.
Compliance Certificate - a Compliance Certificate to be
provided by Borrowers to Lender in accordance with, and in the form
annexed as EXHIBIT D to, this Agreement.
Consolidated - the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies in reference
to two or more Persons.
Consolidating - the presentation of the separate accounts or
other items to which such term applies in reference to two or more
Persons where such accounts or items are also presented on a
Consolidated basis, in accordance with GAAP.
Consolidated EBITDA - for any period, an amount equal to the
sum for such period of (i) Adjusted Net Earnings, plus (ii) provision
for Taxes based on income that are actually deducted in calculating
Adjusted Net Earnings, plus (iii) Interest Expense, plus (iv)
depreciation and amortization expense, on a Consolidated basis.
Contingent Obligation - with respect to any Person, any
obligation of such Person arising from any guaranty, indemnity or other
assurance or payment or performance of any Debt, lease, dividend or
other obligation ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
including (i) the direct or indirect guaranty endorsement (other than
for collection or deposit in the Ordinary Course of Business),
co-making, discounting with recourse or sale with recourse by such
Person of the obligation of a primary obligor, (ii) the obligation to
make take-or-pay or similar payments, if required, regardless of
nonperformance by any other party or parties to an agreement, (iii) any
obligation of such Person, whether or not contingent, (A) to purchase
any such primary obligation or any Property constituting direct or
indirect security therefor, (B) to advance or supply funds (1) for the
purchase or payment of any such primary obligations or (2) to maintain
working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (C) to
purchase Property, Securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (D)
otherwise to assure or hold harmless the holder of such primary
obligation against loss in respect thereof; provided, however, that the
term "Contingent Obligation" shall not include any product warranties
extended in the Ordinary Course of Business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation with respect to
which such Contingent Obligation is made (or, if less, the maximum
amount of such primary obligation for which such Person may be liable
pursuant to the terms of the instrument evidencing such Contingent
Obligation) or, if not
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stated or determinable, the maximum reasonably anticipated liability
with respect thereto (assuming such Person is required to perform
thereunder), as determined by such Person in good faith.
Control or controlled by or under common control - possession,
directly or indirectly, of the power to direct or cause the direction
of management or policies (whether through ownership of Voting
Securities, by contract or otherwise, but not solely by being an
officer or director of a Person); provided, however, that any Person
which beneficially owns, directly or indirectly, 10% or more (in number
of votes) of the Equity Interests ordinarily having Voting Power with
respect to a corporation shall be conclusively presumed to control such
corporation.
Controlled Disbursement Account - a demand deposit account
maintained by Borrowers at Lender and to which proceeds of Revolver
Loans will be deposited from time to time.
Copyright Security Agreement - the Copyright Security
Agreement to be executed by Borrowers in favor of Lender and by which
Borrowers shall assign to Lender, as security for the Obligations, all
of their right, title and interest in and to all of their copyrights.
Current Assets - at any date, the amount at which all of the
current assets of a Person would be properly classified as current
assets shown on a balance sheet at such date in accordance with GAAP
except that amounts due from Affiliates and investments in Affiliates
shall be excluded therefrom.
CWA - the Clean Water Act (33 U.S.C. Sections 1251 et seq.).
Debt - as applied to a Person means, without duplication: (i)
all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Debt is to be
determined, including Capitalized Lease Obligations; (ii) all
Contingent Obligations of such Person; (iii) all reimbursement
obligations in connection with letters of credit or letter of credit
guaranties issued for the account of such Person; and (iv) in the case
of Borrowers (without duplication), the Obligations. The Debt of a
Person shall include any recourse Debt of any partnership or joint
venture in which such Person is a general partner or joint venturer.
Default - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an
Event of Default.
Default Rate - on any date, a rate per annum that is equal to
2% plus the highest Applicable Margin for Base Rate Loans plus the Base
Rate in effect on such date.
9
Deposit Accounts - a demand, time, savings, passbook, money
market or other depository account, and a certificate of deposit
maintained by a Person with any bank, savings and loan association,
credit union or other depository institution.
Distribution - in respect of any entity, (i) any payment of
any dividends or other distributions on Equity Interests of the entity
(except distributions in such Equity Interests) and (ii) any purchase,
redemption or other acquisition or retirement for value of any Equity
Interests of the entity or any Affiliate of the entity unless made
contemporaneously from the net proceeds of the sale of Equity
Interests.
Document - shall have the meaning given to "document" in the
UCC.
Dollar Equivalent - with respect to any monetary amount in any
foreign currency at any date for the determination thereof, the amount
of Dollars obtained by converting such foreign currency into Dollars at
the spot rate for the purchase of Dollars with such foreign currency as
quoted by Bank at approximately 11:00 a.m. on the date of determination
thereof.
Dollars and the sign "$" - lawful money of the United States
of America.
Domestic Subsidiary - a Subsidiary of Borrower that is
incorporated under the laws of a state of the United States or the
District of Columbia.
Effective Date - the date on which all of the conditions
precedent in SECTION 11 of this Agreement are satisfied.
Electronic Chattel Paper - shall have the meaning ascribed to
"electronic chattel paper" in the UCC.
Eligible Account - an Account that arises in the Ordinary
Course of Business of a Borrower from the sale of goods or rendition of
services, is payable in Dollars, is subject to Lender's duly perfected
first priority security interest, uses the Lockbox remittance address
for invoices with respect to such Account, meets such other specific
criteria as Lender, in its reasonable credit judgment, may determine
after Lender undertakes the Initial Field Exam, and is deemed by
Lender, in its reasonable credit judgment, to be an Eligible Account.
Without limiting the generality of the foregoing and without
duplication, no Account shall be an Eligible Account if: (i) it arises
out of a sale of goods or rendition of services made by a Borrower to
an Excluded Account Debtor; (ii) it is unpaid for more than 60 days
after the original due date shown on the invoice; (iii) it is due or
unpaid more than 90 days after the original invoice date; (iv) 50% or
more of the Accounts from the Account Debtor are not deemed Eligible
Accounts hereunder; (v) the total unpaid Accounts of the Account Debtor
exceed 10% of the net amount of all Eligible Accounts in the aggregate,
to the extent of such excess; (vi) any covenant, representation or
warranty contained in this Agreement with respect to such Account has
been breached; (vii) the Account Debtor is also a Borrower's creditor
or supplier, or the
10
Account Debtor has disputed liability with respect to such Account, or
the Account Debtor has made any claim with respect to any other Account
due from such Account Debtor to a Borrower, or the Account otherwise is
or may become subject to any right of setoff, counterclaim, recoupment,
reserve or chargeback (including, in any such case, with respect to any
royalty or licensing fees payable by a Borrower), provided that, the
Accounts of such Account Debtor shall be ineligible only to the extent
of such offset, counterclaim, disputed amount, reserve or chargeback;
(viii) it arises from a sale to an Account Debtor organized under the
laws of a jurisdiction outside of the United States of America
(including the District of Columbia and the Commonwealth of Puerto
Rico, but otherwise excluding its territories and possessions) or
having its principal office, assets or place of business outside the
United States of America (including the District of Columbia and the
Commonwealth of Puerto Rico, but otherwise excluding its territories
and possessions), unless the sale is backed by an irrevocable letter of
credit issued or confirmed by a bank acceptable to Lender and that is
in form and substance acceptable to Lender in the exercise of its
reasonable credit judgment and payable in the full amount of the
Account in freely convertible Dollars at a place of payment within the
United States and, if requested by Lender, such letter of credit, or
amounts payable thereunder, is assigned to Lender (with such assignment
acknowledged by the issuing or confirming bank); (ix) it arises from a
sale to the Account Debtor on a ▇▇▇▇ and hold in excess of $500,000 at
any one time (provided that it shall be ineligible only to the extent
of such excess), guaranteed sale, sale or return, sale on approval,
consignment or any other repurchase or return basis; (x) the Account
Debtor is the United States of America or any department, agency or
instrumentality thereof, unless such Borrower is not prohibited from
assigning the Account and does assign its right to payment of such
Account to Lender, if requested by Lender, in a manner satisfactory to
Lender in the exercise of its reasonable credit judgment, so as to
comply with the Assignment of Claims Act of 1940 (31 U.S.C. Section
3727 and 41 U.S.C. Section 15), or is a state, county or municipality,
or a political subdivision or agency thereof and Applicable Law
disallows or restricts an assignment of Accounts on which it is the
Account Debtor in a manner that prohibits Borrower from assigning such
account to Lender; (xi) the Account is subject to a Lien other than a
Permitted Lien; (xii) the goods giving rise to such Account have not
been delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by such Borrower
and accepted by the Account Debtor or the Account otherwise does not
represent a final sale; (xiii) the Account is evidenced by Chattel
Paper or an Instrument of any kind, or has been reduced to judgment;
(xiv) the Account represents a progress billing or a retainage; (xv)
such Borrower has made any agreement with the Account Debtor for any
deduction therefrom, except for discounts or allowances which are made
in the Ordinary Course of Business provided that it shall be ineligible
only to the extent of discounts or allowances which are reflected in
the calculation of the face value of each invoice related to such
Account; (xvi) the Account represents, in whole or in part, a billing
for interest, fees or late charges, or includes amounts which
constitute rebates or advertising or similar allowances from a vendor,
provided that such Account shall be ineligible only to the extent of
the amount of such billing; (xvii) the Account Debtor has made a
partial payment with respect to such Account, but only to the
11
extent of the unpaid balance of such payment, or any Payment Item
previously given by or on behalf of the Account Debtor was returned
unpaid or otherwise dishonored, but only to the extent of the
dishonored or returned amount; (xviii) it arises from a retail sale of
Inventory to a Person who is purchasing the same primarily for
personal, family or household purposes; (xix) it arises out of a sale
of goods or rendition of services that contravenes in any material
respect any Applicable Law (including laws relating to usury, consumer
protection, truth-in-lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and
privacy) or with respect to which any party to the contract therefor is
in violation of any such law that could have an adverse effect upon the
collectibility, value or payment terms of such Account; (xx) it
constitutes a rebilled amount arising from a deduction taken by an
Account Debtor with respect to a previously arising Account; (xxii) the
right to payment thereof is not freely assignable; (xxii) the Account
represents in whole or in part a pre-billing to the extent of such
pre-billing; or (xxiii) Lender otherwise determines such Account to be
ineligible hereunder based upon Lender's reasonable credit judgment
following not less than five (5) days prior written notice to Borrower
of such ineligibility.
Eligible Cash - as of any date, an amount equal to the
aggregate amount of all Cash Collateral provided by the Borrowers to,
and held by, the Lender which has been designated by the Borrowers and
the Lender as "Eligible Cash" for purposes of inclusion in the
Borrowing Base, expressly excluding the amount of any Cash Collateral
which is permitted or required to be deposited with the Lender pursuant
to this Agreement or any of the other Loan Documents for any purpose
other than creating Availability under the Borrowing Base.
Eligible Inventory - Inventory which is owned by a Borrower
(other than packaging materials, display items, labels, samples, bags,
replacement parts and supplies) and of a type held for sale in the
Ordinary Course of Business of such Borrower, meets such other specific
criteria as Lender, in its reasonable credit judgment, may determine
after Lender undertakes the Initial Field Exam and which Lender, in its
reasonable credit judgment, deems to be Eligible Inventory.
Environmental Laws - all federal, state, local and foreign
laws, rules, regulations, codes, ordinances, orders and consent decrees
(together with all programs, permits and guidance documents promulgated
by regulatory agencies, to the extent having the force of law), now or
hereafter in effect, that relate to public health (but excluding
occupational safety and health, to the extent regulated by OSHA) or the
protection or pollution of the environment, whether new or hereafter in
effect, including CERCLA, RCRA and CWA.
Environmental Liabilities - means all liabilities,
obligations, responsibilities, remedial actions, removal costs, losses,
damages of whatever nature, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim,
suit, action or demand of whatever nature by any
12
Person and which relate to any health or safety condition regulated
under any Environmental Law, environmental permits or in connection
with any Environmental Release, threatened Environmental Release, or
the presence of a Hazardous Material.
Environmental Release - a release as defined in CERCLA or
under any other applicable Environmental Laws.
Equipment - shall have the meaning ascribed to "equipment" in
the UCC and shall include Fixtures.
Equity Interest - the interest of (i) a shareholder in a
corporation, (ii) a partner (whether general or limited) in a
partnership (whether general, limited or limited liability), (iii) a
member in a limited liability company, or (iv) any other Person having
any other form of equity security or ownership interest.
ERISA - the Employee Retirement Income Security Act of 1974
and all rules and regulations from time to time promulgated thereunder.
Eurocurrency Liabilities - as defined in Regulation D.
Euro-Dollar Business Day - means any Domestic Business Day on
which dealings in Dollar deposits are carried out in the London
interbank market.
Euro-Dollar Lending Office - the office designated as a
Euro-Dollar Lending Office for Lender on the signature page hereof and
such other office of Lender or any of its Affiliates that is hereafter
designated by Lender as provided in SECTION 4.2.3 of this Agreement.
Euro-Dollar Loan - a Loan, or portion thereof, during any
period in which it bears interest at a rate based upon the applicable
Adjusted Euro-Dollar Rate.
Euro-Dollar Rate - with respect to the applicable Interest
Period of any Euro-Dollar Loan, an interest rate per annum determined
by Lender from time to time on the basis of the offered rate for
deposits in Dollars in the London Interbank borrowing market of amounts
equal to or comparable to the principal amount of a requested
Euro-Dollar Loan, as applicable, to which such Interest Period relates
offered for a term comparable to such Interest Period, which rate
appears on the display designated as page "3750" on the Telerate
Service as of 11:00 a.m. (London Time), 2 Euro-dollar Business Days
prior to the first day of such Interest Period (which rate shall be
rounded upward, if necessary, to the next higher 1/10,000 of 1%);
provided, however, that if no such offered rates appear on such page or
if more than one such offered rate appears on such service on such
date, the "Euro-Dollar Rate" for such Interest Period will be the
arithmetic average (rounded upward, if necessary, to the next higher
1/100th of 1%) of the offered rates quoted by not less than 2 major
banks in New York City, selected by the Lender, at approximately 10:00
a.m., New York City time, 2 Euro-Dollar Business Days prior to the
13
first day of such Interest Period, for deposits in Dollars offered by
leading European banks in the London Interbank borrowing market for a
period comparable to such Interest Period in amounts equal or
comparable to the principal amount of the requested Euro-Dollar Loan.
Event of Default - as defined in SECTION 12.1 of this
Agreement.
Excluded Account Debtor - an Account Debtor that (i) is a
Subsidiary, Affiliate, officer, agent or employee of a Borrower; (ii)
is a Person controlled by an Affiliate of a Borrower; (iii) has
suspended or ceased business or has ceased to be Solvent; (iv) has
filed, or has had filed against it, an Insolvency Proceeding; (v) is
located in any state or other jurisdiction that imposes conditions on
the right of a creditor to collect accounts receivable, unless such
Borrower has either qualified to transact business in such state as a
foreign entity or filed any required Notice of Business Activities
Report or other required report or notice with the appropriate
officials in such state or jurisdiction for the then current year; (vi)
is located in a state in which a Borrower is deemed to be doing
business under the laws of such state and which denies creditors access
to its courts in the absence of qualification to transact business in
such state or the filing of any reports with such state, unless such
Borrower has qualified as a foreign entity authorized to transact in
such state or has filed all required reports; or (vii) is designated as
an Excluded Account Debtor upon 10 days written notice from Lender to
Borrowers.
Expanded Borrowing Base Conditions - means each and all of the
following:
(i) Lender has conducted a Field Exam, with results
satisfactory to the Lender in its sole discretion, within 90
days prior to the date of the initial request for a borrowing
against components of the Borrowing Base other than Liquid
Collateral; and
(ii) the Fixed Charge Coverage Ratio of the Borrowers, on a
consolidated basis, which shall be calculated by using
annualized amounts of each and all of Consolidated EBITDA,
Capital Expenditures, cash income taxes, cash Distributions,
and cash interest expense, has not been less than 1.0 to 1 for
each of the three most recent successive Fiscal Months prior
to the date of the initial request for a borrowing against
components of the Borrowing Base other than Liquid Collateral
(as used herein, the term "annualized" shall mean multiplied
by 4), evidence of which shall be provided to the Lender on a
Covenant Calculation Report in the form of EXHIBIT J attached
hereto; and
(iii) there exists no Default or Event of Default.
Extraordinary Expenses - all costs, expenses, fees and
advances which Lender may suffer or incur in connection with an Event
of Default, and whether prior to, after or during the pendency of an
Insolvency Proceeding of an Obligor, on account of or in connection
with (i) the audit, inspection, repossession, storage, repair,
appraisal, insuring,
14
completion of the manufacture of, preparing for sale, advertising for
sale, selling, collecting or otherwise preserving or realizing upon any
Collateral; (ii) the defense of Lender's Lien upon any Collateral or
the priority thereof or any adverse claim with respect to the Loans,
the Loan Documents or the Collateral asserted by any Obligor, any
receiver or trustee for any Obligor or any creditor or representative
of creditors of any Obligor; (iii) the settlement or satisfaction of
any Liens upon any Collateral (whether or not such Liens are Permitted
Liens); (iv) the collection or enforcement of any of the Obligations;
(v) the negotiation, documentation, and closing of any restructuring or
forbearance agreement with respect to the Loan Documents or
Obligations; (vi) amounts advanced by Lender pursuant to SECTION 8.1.3
of this Agreement; (vii) the enforcement of any of the provisions of
any of the Loan Documents; or (viii) any payment under a guaranty,
indemnity or other payment agreement provided by Lender which is
reimbursable to Lender by Borrowers pursuant to SECTION 3.4 of this
Agreement. Such costs, expenses, fees and advances may include transfer
fees, taxes, storage fees, insurance costs, permit fees, utility
reservation and standby fees, legal fees, appraisal fees, brokers' fees
and commissions, auctioneers' fees and commissions, accountants' fees,
environmental study fees, wages and salaries paid to employees of a
Borrower or independent contractors in liquidating any Collateral,
travel expenses, all other fees and expenses payable or reimbursable by
a Borrower or any other Obligor under any of the Loan Documents, and
all other fees and expenses associated with the enforcement of rights
or remedies under any of the Loan Documents, but excluding compensation
paid to employees (including inside legal counsel who are employees) of
Lender.
Federal Funds Rate - for any period, a fluctuating interest
rate per annum equal for each date during such period to the weighted
average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) in Atlanta, Georgia by the
Federal Reserve Bank of Atlanta, or if such rate is not so published
for any day which is a Business Day, the average of the quotations for
such day on such transactions received by Lender from 3 federal funds
brokers of recognized standing selected by Lender.
FEIN - with respect to any Person, the Federal Employer
Identification Number of such Person.
Field Exam - any field examination after the Closing Date by
Lender of Borrower's property comprising Collateral and Borrower's
records, reporting systems and other items or matters related thereto.
Financed Capital Expenditures - Capital Expenditures that are
financed by a Borrower with Funded Debt.
Finished Goods - Inventory consisting of completed goods that
require no additional processing or manufacturing in order to be sold
in the Ordinary Course of Business of a Borrower.
15
Fiscal Month - each of the twelve (12) monthly accounting
periods of a Borrowers comprising its Fiscal Year.
Fiscal Quarter - each consecutive period of 13 weeks beginning
on the first day of a Fiscal Year (and, in the case of any Fiscal Year
of 53 weeks, the 14-week period occurring at the end thereof).
Fiscal Year - the fiscal year of Borrowers and their
Subsidiaries for accounting and tax purposes, which ends on December 31
of each year.
Fixed Charge Coverage Ratio - for any period of a Person, the
ratio of such Person's (i) Consolidated EBITDA minus cash income taxes
paid minus Capital Expenditures (other than Financed Capital
Expenditures) for such period minus cash Distributions permitted under
this Agreement and paid, to (ii) Fixed Charges for such period.
Fixed Charges - for any fiscal period of a Person, the sum of
such Person's (i) cash interest expense in respect of its Funded Debt,
plus (ii) the current portion of Funded Debt due during the immediately
succeeding 12-month period, plus (iii) without duplication, cash
payments of principal and interest on Subordinated Debt made during
such period. Without duplication, and solely for purposes of the
definition of Fixed Charge Coverage Ratio, the preceding subsection
(iii) of this definition of "Fixed Charges" shall refer to annualized
payments of principal and interest on Subordinated Debt made during
such period.
Fixtures - shall have the meaning ascribed to "fixtures" in
the UCC.
FLSA - the Fair Labor Standards Act of 1938.
Foreign Exchange Contract - any foreign exchange contract,
currency swap agreement and other similar agreement and arrangement at
any time entered into by a Borrower with Lender that is designed to
protect such Borrower against fluctuations in foreign exchange rates.
Foreign Exchange Contract Reserve - on any date, a reserve
imposed by Lender in its discretion, equal to the aggregate amount, as
determined by Lender, of all Foreign Exchange Contracts with Lender or
any of its Affiliates and in effect on such date, as determined by
Lender applying its customary methodology.
Foreign Subsidiary - a Subsidiary that is not a Domestic
Subsidiary.
Full Payment - as with respect to any of the Obligations,
full, final and indefeasible payment of such Obligations in cash or
immediately available funds and, in the case of any Contingent
Obligations (including any LC Outstandings that exist by virtue of an
outstanding undrawn Letter of Credit), Lender's receipt of either cash
or a direct pay letter of credit naming Lender as beneficiary and in
form and substance, and from an
16
issuing bank, acceptable to Lender, in each case in an amount not less
than 105% of the aggregate amount of all such Contingent Obligations.
Funded Debt - collectively, for any Person, (a) the aggregate
principal amount of Debt for Money Borrowed which would, in accordance
with GAAP, be classified as long-term debt, together with the current
maturities thereof, plus (b) all Debt outstanding under any revolving
credit, line of credit or renewals thereof, notwithstanding that any
such Debt is created or incurred within one year of the expiration of
such facility, plus (c) all Capitalized Lease Obligations.
GAAP - generally accepted accounting principles in the United
States of America in effect from time to time.
General Intangibles - shall have the meaning ascribed to
"general intangible" in the UCC and shall include Payment Intangibles,
Software, inventions, blueprints, designs, patents, patent
applications, trademarks, trademark applications, trade names, trade
secrets, service marks, goodwill, brand names, copyrights,
registrations, licenses, franchises, customer lists, tax refund claims,
operational manuals, permits, internet addresses and domain names,
insurance refunds and premium rebates, and all rights of a Borrower to
indemnification and all other intangible property of a Borrower of
every kind and nature (other than Accounts).
Goods - shall have the meaning ascribed to "goods" in the UCC.
Governmental Approvals - all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with,
and reports to, all Governmental Authorities.
Governmental Authority - any federal, state, municipal,
national or other governmental department, commission, board, bureau,
court, agency or instrumentality or political subdivision thereof or
any entity or officer exercising executive, legislative, judicial,
regulatory or administrative functions (within the scope of his/her
authority) of or pertaining to any government or any court, in each
case whether associated with a state of the United States, the District
of Columbia or a foreign entity or government.
Guarantors - means WPJ, Inc., a California corporation and
ProxyMed Acquisition Corp II, a/k/a Davie Corporation, a Florida
corporation.
Guarantors' Security Agreement - a Guarantors' Security
Agreement substantially in the form of EXHIBIT L, attached hereto,
executed by each of the Guarantors in favor of Lender.
Guaranty Agreements - the Guaranty Agreements, each
substantially in the form of EXHIBIT K, attached hereto, executed by
the Guarantors in favor of Lender with respect to the Obligations.
17
Hazardous Material - means any substance, material or waste
that is regulated by or forms the basis of liability now or hereafter
under, any Environmental Laws, including any material or substance that
is (a) defined as a "solid waste," "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste,"
"restricted hazardous waste," "pollutant," "contaminant," "hazardous
constituent," "special waste," "toxic substance" or other similar term
or phrase under any Environmental Laws, (b) petroleum or any fraction
or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
any radioactive substance."Hazardous Waste" has the meaning ascribed to
such term in the Resource Conservation and Recovery Act (42 U.S.C.
Sections 6901 et. seq.).
Indemnified Amount - in the case of Lender Indemnitees, the
amount of any loss, cost, expenses or damages suffered or incurred by
Lender Indemnitees and against which any Borrower or any other Obligor
has agreed to indemnify Lender Indemnitees pursuant to the terms of
this Agreement or any of the other Loan Documents.
Indenture - has the meaning ascribed to such term in SECTION
9.1.27 of this Agreement.
Indenture Debt - Debt incurred by ProxyMed under the
Indenture.
Initial Field Exam - the first Field Exam after the Closing
Date.
Insolvency Proceeding - any action, case or proceeding
commenced by or against an Obligor, or any agreement of such Obligor,
for (i) the entry of an order for relief under any chapter of the
Bankruptcy Code or other insolvency or debt adjustment law (whether
state, federal or foreign), (ii) the appointment of a receiver,
trustee, liquidator or other custodian for such Obligor or any part of
its Property which remains unstayed for sixty (60) days, (iii) an
assignment or trust mortgage for the benefit of creditors of such
Obligor, or (iv) the liquidation, dissolution or winding up of the
affairs of such Obligor.
Instrument - shall have the meaning ascribed to the term
"instrument" in the UCC.
Intellectual Property - all intellectual and similar Property
of a Person of every kind and description, including inventions,
designs, patents, patent applications, copyrights, trademarks, service
marks, trade names, mask works, trade secrets, confidential or
proprietary information, know-how, software and databases and all
embodiments or fixations thereof and related documentation,
registrations and franchises, all books and records describing or used
in connection with the foregoing and all licenses, or other rights to
use any of the foregoing.
Intellectual Property Claim - the assertion by any Person of a
claim (whether asserted in writing, by action, suit or proceeding or
otherwise) that a Borrower's ownership, use, marketing, sale or
distribution of any Inventory, Equipment, Intellectual Property or
other Property is violative of any ownership or right to use any
Intellectual
18
Property of such Person, which claim has not been resolved within sixty
(60) days of receipt by the Borrower thereof.
Interest Expense - for any fiscal period of a Person, total
interest expense of such Person during such period, (including that
portion attributable to capitalized leases and capitalized interest)
with respect to all outstanding Debts of such Person, including all
commissions, discounts and other fees and charges owed with respect to
Letters of Credit and net cost under Interest Rate Contracts, as
determined on a Consolidated basis in accordance with GAAP.
Interest Period - shall have the meaning ascribed to it in
SECTION 3.1.3 of this Agreement.
Interest Rate Contract - any interest rate agreement, interest
rate collar agreement, interest rate swap agreement, or other agreement
or arrangement at any time entered into by a Borrower with Lender that
is designed to protect against fluctuations in interest rates.
Interest Rate Contract Reserve - on any date, a reserve
imposed by Lender in its discretion, equal to the aggregate amount, as
determined by Lender, of all Interest Rate Contracts with Lender or any
of its Affiliates and in effect on such date, as determined by Lender
applying its customary methodology.
Inventory - shall have the meaning ascribed to "inventory" in
the UCC and shall include all goods intended for sale or lease by a
Borrower, for display or demonstration, all work in process, all raw
materials and other materials and supplies of every nature and
description used or usable in connection with the manufacture,
printing, packing, shipping, advertising, selling, leasing or
furnishing of such goods or otherwise used or consumed in such
Borrower's business (but excluding Equipment).
Inventory Formula Amount - on any date of determination
thereof, an amount equal to up to thirty percent (30%) of the Value of
Eligible Inventory on such date as Lender, in its reasonable credit
judgment, establishes, with notice to the Borrowers, after the Initial
Field Exam (or such lesser percentage as Lender may in its reasonable
credit judgment determine from time to time).
Inventory Reserve - such reserves as may be established from
time to time by Lender in the exercise of its reasonable credit
judgment to reflect changes in the salability of any Eligible Inventory
in the Ordinary Course of Business or such other factors as may
negatively affect the Value of any Eligible Inventory. Without limiting
the generality of the foregoing, such reserves may include a reserve
based upon obsolescence, seasonality, theft or other shrinkage,
imbalance, change in composition or mix, or markdowns; (ii) a reserve
for discrepancies that arise pertaining to Inventory quantities on hand
between Borrowers' perpetual accounting system and physical counts of
the Inventory, which shall equal an amount reasonably determined by
Lender; and (iii) a lower of cost or market
19
reserve for any differences between Borrowers' actual cost to produce
versus its selling price to third parties, determined on a product-line
basis.
Investment Property - shall have the meaning ascribed to
"investment property" in the UCC and shall include all Securities
(whether certificated or uncertificated), security entitlements,
securities, accounts, commodity contracts and commodity accounts.
LC Application - an application by Borrowers to Lender,
pursuant to a form approved by Lender, for the issuance of a Letter of
Credit that is submitted to Lender at least 5 Business Days prior to
the requested issuance of such Letter of Credit.
LC Conditions - the following conditions, the satisfaction of
each of which is required before Lender shall be obligated to issue any
Letter of Credit: (i) each of the conditions set forth in SECTION 11 of
this Agreement has been and continues to be satisfied, including the
absence of any Default or Event of Default; (ii) after giving effect to
the issuance of the requested Letter of Credit and all other unissued
Letters of Credit for which an LC Application has been signed by
Lender, the LC Outstandings would not exceed $5,000,000, and no
Out-of-Formula Condition would exist, and, if no Revolver Loans are
outstanding, the LC Outstandings do not, and would not upon the
issuance of the requested Letter of Credit, exceed the Revolver
Commitment Amount; (iii) such Letter of Credit has an expiration date
that is no more than 365 days from the date of issuance in the case of
standby Letters of Credit and no more than 180 days from the date of
issuance in the case of documentary Letters of Credit and, in either
event, such expiration date is at least 30 days prior to the last day
of the Term; and (iv) the currency in which payment is to be made under
the Letter of Credit is Dollars.
LC Documents - any and all agreements, instruments and
documents (other than an LC Application) required by Lender to be
executed by a Borrower or any other Person and delivered to Lender for
the issuance of a Letter of Credit.
LC Facility - a subfacility of the Revolver Facility
established pursuant to SECTION 2.3 of this Agreement.
LC Outstandings - on any date of determination thereof, an
amount (in Dollars) equal to the sum of (i) all amounts then due and
payable by any Obligor on such date by reason of any payment made on or
before such date by Lender, plus (ii) the aggregate undrawn amount of
all Letters of Credit which are then outstanding or for which an LC
Application has been delivered to and accepted by Lender.
LC Request - a Letter of Credit Procurement Request from
Borrowers to Lender in the form of EXHIBIT F attached hereto.
LC Reserve - on any date, the aggregate of all LC Outstandings
on such date, other than the LC Outstandings that are fully secured by
Cash Collateral.
20
Lender Indemnitees - Lender and each of its Affiliates and
each officer, director, employee, agent, attorney and shareholder of
Lender or any of its Affiliates.
Letter of Credit - any standby letter of credit or documentary
letter of credit issued by Lender for the account of a Borrower.
Letter of Credit Rights - shall have the meaning ascribed to
"letter of credit right" in the UCC.
License Agreement - any agreement between a Borrower and a
Licensor pursuant to which such Borrower is authorized to use any
Intellectual Property in connection with the manufacturing, marketing,
sale or other distribution of any Inventory of such Borrower.
Licensor - any Person from whom a Borrower obtains the right
to use (whether on an exclusive or non-exclusive basis) any
Intellectual Property in connection with such Borrower's manufacture,
marketing, sale or other distribution of any Inventory or other Goods.
Licensor/Lender Agreement - an agreement between Lender and a
Licensor by which Lender is given the unqualified right, upon notice to
such Licensor if notice is required by the Licensor, vis-a-vis such
Licensor, to enforce Lender's Liens with respect to, and to dispose of
Borrowers' Inventory with the benefit of any Intellectual Property
applicable thereto, irrespective of Borrowers' default under any
License Agreement with such Licensor and which is otherwise in form and
substance satisfactory to Lender.
Lien - any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on common law, statute or contract. The
term "Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting Property. For the
purpose of this Agreement, a Borrower shall be deemed to be the owner
of any Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes.
Lien Waiver - an agreement duly executed in favor of Lender,
in form and content acceptable to Lender, by which (i) for locations
leased by an Obligor, an owner or mortgagee of premises upon which any
Property of an Obligor is located agrees to waive or subordinate any
Lien it may have with respect to such Property in favor of Lender's
Lien therein and to permit Lender to enter upon such premises and
remove such Property or to use such premises to store or dispose of
such Property, or (ii) for locations at which any Obligor places
Inventory with a warehouseman or a processor, such warehouseman or
processor agrees to waive or subordinate any Lien it may have with
respect to such Property in favor of Lender's Lien therein and to
permit Lender to enter upon such
21
premises and remove such Property or to use such premises to store or
dispose of such Property.
Liquid Collateral - as of any date, the aggregate amount of
Eligible Cash.
Loan - a Revolver Loan (and each Base Rate Loan and
Euro-Dollar Loan comprising any such Loan).
Loan Account - the loan account established by Lender on its
books pursuant to SECTION 5.7 of this Agreement.
Loan Documents - this Agreement, the Guaranty Agreements, the
Other Agreements and the Security Documents.
Loan Year - a period commencing each calendar year on the same
month and day as the date of this Agreement and ending on the same
month and day in the immediately succeeding calendar year, with the
first such period (i.e., the first Loan Year) to commence on the date
of this Agreement.
Lockbox - the lockbox belonging to Lender identified on
SCHEDULE 1.1.
Margin Stock - shall have the meaning ascribed to it in
Regulation U of the Board of Governors.
Material Adverse Effect - the effect of any event, condition,
action, omission or circumstance which, alone or when taken together
with other events, conditions, actions, omissions or circumstances
occurring or existing concurrently therewith, (i) has a material
adverse effect upon the business, operations, Properties or condition
(financial or otherwise) or any Obligor; (ii) has or could be
reasonably expected to have any material adverse effect whatsoever upon
the validity or enforceability of any of the Loan Documents; (iii) has
any material adverse effect upon the value of the whole or any material
part of the Collateral, the Liens of Lender with respect to the
Collateral or the priority of such Liens; (iv) materially impairs the
ability of any Obligor to perform its obligations under this Agreement
or any of the other Loan Documents, including repayment of any of the
Obligations when due; or (v) materially impairs the ability of Lender
to enforce or collect the Obligations or realize upon any of the
Collateral in accordance with the Loan Documents and Applicable Law.
Material Contract - an agreement to which an Obligor is a
party (other than the Loan Documents) (i) which is deemed to be a
material contract as provided in Regulation S-K promulgated by the SEC
under the Securities Act of 1933 or (ii) for which breach, termination,
cancellation, nonperformance or failure to renew could reasonably be
expected to have a Material Adverse Effect.
Maximum Rate - the maximum non-usurious rate of interest
permitted by Applicable Law that at any time, or from time to time, may
be contracted for, taken,
22
reserved, charged or received on the Debt in question or, to the extent
that at any time Applicable Law may thereafter permit a higher maximum
non-usurious rate of interest, then such higher rate. Notwithstanding
any other provision hereof, the Maximum Rate shall be calculated on a
daily basis (computed on the actual number of days elapsed over a year
of 365 or 366 days, as the case may be).
Money Borrowed - as applied to any Obligor, (i) Debt arising
from the lending of money by any other Person to such Obligor; (ii)
Debt, whether or not in any such case arising from the lending of money
by another Person to such Obligor, (A) which is represented by notes
payable or drafts accepted that evidence extensions of credit, (B)
which constitutes obligations evidenced by bonds, debentures, notes or
similar instruments, or (C) upon which interest charges are customarily
paid (other than accounts payable) or that was issued or assumed as
full or partial payment for Property; (iii) Debt that constitutes a
Capitalized Lease Obligation; (iv) reimbursement obligations with
respect to letters of credit or guaranties of letters of credit, and
(v) Debt of such Obligor under any guaranty of obligations that would
constitute Debt for Money Borrowed under clauses (i) through (iii)
hereof, if owed directly by such Obligor.
▇▇▇▇▇'▇ - ▇▇▇▇▇'▇ Investors Services, Inc.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Net Disposition Proceeds - with respect to a disposition of
any Collateral, proceeds (including cash receivable (when received) by
way of deferred payment) received by a Borrower in cash from the sale,
lease, transfer or other disposition of the Collateral, including
insurance proceeds and awards of compensation received with respect to
the destruction or condemnation of all or part of the Collateral, net
of: (i) the reasonable and customary costs and expenses of such sale,
lease, transfer or other disposition (including legal fees and sales
commissions); (ii) amounts applied to repayment of Debt (other than the
Obligations) secured by a Permitted Lien on such Collateral disposed of
that is senior to Lender's Liens; and (iii) in connection with any sale
of Collateral, a reasonable reserve (not to exceed 5% of the total
purchase price) for post-closing adjustments to the purchase price,
provided that upon the expiration of not more than 90 days after the
sale any remaining reserve balance is remitted to Lender for
application to the Obligations.
Notes - each of the Revolver Note and any other promissory
note executed by a Borrower at Lender's request to evidence any of the
Obligations.
Notice of Borrowing - as defined in SECTION 4.1.1(i) of this
Agreement.
Notice of Conversion/Continuation - as defined in SECTION
3.1.2(ii) of this Agreement.
Obligations - in each case, whether now in existence or
hereafter arising, (i) the principal of, and interest and premium, if
any, on, the Loans; (ii) all LC Outstandings and
23
all other obligations of any Obligor to Lender or any Affiliate of
Lender arising in connection with the issuance of any Letter of Credit;
(iii) all Debt and other obligations of any Borrower to Lender or any
Affiliate of Lender under or in connection with any Interest Rate
Contract or Foreign Exchange Contract, including any premature
termination or breakage costs; and (iv) all other Debts, covenants,
duties and obligations (including Contingent Obligations) now or at any
time or times hereafter owing by any Obligor to Lender under or
pursuant to any of the Loan Documents or owing by any Obligor to Lender
or any Affiliate of Lender with respect to any Banking Relationship
Debt, whether evidenced by a note or other writing, whether arising
from any extension of credit, opening of a letter of credit,
acceptance, loan, guaranty, indemnification or otherwise, and whether
direct or indirect, absolute or contingent, due or to become due,
primary or secondary, or joint or several, including all interest,
charges, expenses, fees or other sums (including Extraordinary
Expenses) chargeable to any or all Obligors under any of the Loan
Documents or any Other Agreement.
Obligor - each Borrower, each Guarantor and each other Person
that is at any time liable for the payment of the whole or any part of
the Obligations or that has granted in favor of Lender a Lien upon any
of any of such Person's assets to secure payment of any of the
Obligations.
Ordinary Course of Business - with respect to any transaction
involving any Person, the ordinary course of such Person's business, as
conducted by such Person in accordance with past practices and
undertaken by such Person in good faith and not for the purpose of
evading any covenant or restriction in any Loan Document.
Organization Documents - with respect to any Person, its
charter, certificate or articles of incorporation, bylaws, articles of
organization, operating agreement, partnership agreement or similar
agreement or instrument governing this formation or operation of such
Person.
OSHA - the Occupational Safety and Hazard Act of 1970.
Other Agreements - each Licensor/Lender Agreement, each
Interest Rate Contract, the Notes, the Foreign Exchange Contracts and
any and all other agreements, instruments and documents (other than
this Agreement and the Security Documents), heretofore, now or
hereafter executed by a Borrower, any other Obligor or any other Person
and delivered to Lender in respect of the transactions contemplated by
this Agreement.
Out-of-Formula Condition - as defined in SECTION 2.1.2 of this
Agreement.
Out-of-Formula Loan - a Revolver Loan made when an
Out-of-Formula Condition exists or the amount of any Revolver Loan
which, when funded, results in an Out-of-Formula Condition.
24
Participant - each Person who shall be granted the right by
Lender to participate in any of the Loans described in this Agreement
and who shall have entered into a participation agreement in form and
substance satisfactory to Lender.
Patent and Trademark Security Agreement - the Patent and
Trademark Security Agreement to be executed by Borrowers in favor of
Lender and by which Borrowers shall assign to Lender, as security for
the Obligations, all of their right, title and interest in and to all
of their trademarks and patents.
Payment Intangibles - shall have the meaning ascribed to
"payment intangible" in the UCC.
Payment Items - all checks, drafts, or other items of payment
payable to a Borrower, including proceeds of any of the Collateral.
Pending Revolver Loans - at any date, the aggregate principal
amount of all Revolver Loans which have been requested in any Notice of
Borrowing received by Lender but which have not theretofore been
advanced by Lender.
Permitted Contingent Obligations - Contingent Obligations
arising from endorsements of Payment Items for collection or deposit in
the Ordinary Course of Business; Contingent Obligations arising from
Interest Rate Contracts entered into in the Ordinary Course of Business
pursuant to this Agreement or with Lender's prior written consent;
Contingent Obligations of a Borrower and its Subsidiaries existing as
of the Closing Date, including extensions and renewals thereof that do
not increase the amount of such Contingent Obligations as of the date
of such extension or renewal; Contingent Obligations arising under
indemnity agreements to title insurers to cause such title insurers to
issue to Lender title insurance policies; Contingent Obligations with
respect to customary indemnification obligations in favor of purchasers
in connection with dispositions of Equipment permitted under SECTION
8.4 of this Agreement; Contingent Obligations consisting of
reimbursement obligations from time to time owing by a Borrower to
Lender with respect to Letters of Credit (but in no event to include
reimbursement obligations at any time owing by Borrower to any other
Person that may issue letters of credit for the account of a Borrower);
and other Contingent Obligations not to exceed $300,000 in the
aggregate at any time.
Permitted Lien - a Lien of a kind specified in SECTION 10.2.5
of this Agreement.
Permitted Purchase Money Debt - Purchase Money Debt of a
Borrower and its Subsidiaries which is incurred after the date of this
Agreement and that is secured by no Lien or only by a Purchase Money
Lien, provided that the aggregate amount of Purchase Money Debt
outstanding at any time does not exceed $3,000,000, and the incurrence
of such Purchase Money Debt does not violate any limitation in the Loan
Documents regarding Capital Expenditures. For the purposes of this
definition, the principal amount
25
of any Purchase Money Debt consisting of capitalized leases shall be
computed as a Capitalized Lease Obligation.
P.O.S. Devices - point of sale devices leased by Borrowers to
their "provider" customers (i.e. physicians) for card-swipe health care
insurance eligibility verification.
Person - an individual, partnership, corporation, limited
liability company, limited liability partnership, joint stock company,
land trust, business trust or unincorporated organization or a
Governmental Authority.
Plan - an employee benefit plan now or hereafter maintained
for employees of a Borrower that is covered by Title IV of ERISA.
Projections - (i) prior to December 31, 2003 and thereafter
until Lender receives new projections pursuant to SECTION 10.1.6
hereof, the projections of Borrowers' Consolidated financial condition,
results of operations, cash flow and projected Availability, prepared
on a monthly basis for the Fiscal Years ending December 31, 2003 and
2004, and (ii) thereafter, the projections most recently received by
Lender pursuant to and as required by SECTION 10.1.6 hereof.
Properly Contested - in the case of any Debt of an Obligor
(including any Taxes) that is not paid as and when due or payable by
reason of such Obligor's bona fide dispute concerning its liability to
pay same or concerning the amount thereof, (i) such Debt is being
properly contested in good faith by appropriate proceedings promptly
instituted and diligently conducted; (ii) such Obligor has established
appropriate reserves as shall be required in conformity with GAAP;
(iii) the non-payment of such Debt will not have a Material Adverse
Effect and will not result in a forfeiture of any assets of such
Obligor; (iv) no Lien is imposed upon any of such Obligor's assets with
respect to such Debt unless such Lien is at all times junior and
subordinate in priority to the Liens in favor of Lender (except only
with respect to property taxes that have priority as a matter of
applicable state law) and enforcement of such Lien is stayed during the
period prior to the final resolution or disposition of such dispute;
(v) if the Debt results from, or is determined by the entry, rendition
or issuance against an Obligor or any of its assets of a judgment,
writ, order or decree, enforcement of such judgment, writ, order or
decree is stayed pending a timely appeal or other judicial review; and
(vi) if such contest is abandoned, settled or determined adversely (in
whole or in part) to such Obligor, such Obligor forthwith pays such
Debt and all penalties, interest and other amounts due in connection
therewith.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
Purchase Money Debt - means and includes (i) Debt (other than
the Obligations) for the payment of all or any part of the purchase
price of any Equipment or other fixed assets of a Borrower, (ii) any
Debt (other than the Obligations) incurred at the time of or
26
within 10 days prior to or after the acquisition of any Equipment or
other fixed assets of a Borrower for the purpose of financing all or
any part of the purchase price thereof, and (iii) any renewals,
extensions or refinancings, but not any increases in the principal
amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon Equipment or other fixed
assets of a Borrower which secures Purchase Money Debt, but only if
such Lien shall at all times be confined solely to the fixed assets
acquired through the incurrence of the Purchase Money Debt secured by
such Lien and such Lien constitutes a purchase money security interest
under the UCC.
Rebates - quantifiable rebates for specific accounts as
indicated on a separate line item of the invoice for the corresponding
Account.
Receipts - all payments on Accounts and all payments
constituting proceeds of Inventory and other Collateral in the form in
which such payments are made, whether by cash, check, credit card sales
drafts, credit card sales, charge slips or any other manner whatsoever.
Refinancing Conditions - the following conditions, each of
which must be satisfied before Refinancing Debt shall be permitted
under SECTION 10.2.3 of this Agreement: (i) the Refinancing Debt is in
an aggregate principal amount that does not exceed the aggregate
principal amount outstanding of the Debt being extended, renewed or
refinanced, (ii) the Refinancing Debt has a later or equal final
maturity and a longer or equal weighted average life than the Debt
being extended, renewed or refinanced, (iii) the Refinancing Debt does
not bear a rate of interest that exceeds a market rate (as determined
in good faith by a Senior Officer) as of the date of such extension,
renewal or refinancing, (iv) if the Debt being extended, renewed or
refinanced is subordinate to the Obligations, the Refinancing Debt is
subordinated to the same extent, (v) the covenants contained in any
instrument or agreement relating to the Refinancing Debt are no less
favorable to Borrowers than those relating to the Debt being extended,
renewed or refinanced, and (vi) at the time of and after giving effect
to such extension, renewal or refinancing, no Default or Event of
Default shall exist.
Refinancing Debt - Debt of a Borrower for Money Borrowed that
is permitted by SECTION 10.2.3 and that is the subject of or the result
of an extension, renewal or refinancing.
Regulation D - Regulation D of the Board of Governors.
Reimbursement Date - as defined in SECTION 2.3.1(iii) of this
Agreement.
Rentals - as defined in SECTION 10.2.14 of this Agreement.
Reportable Event - any of the events set forth in Section
4043(b) of ERISA.
27
Reporting Month - any Fiscal Month in which a Borrowing Base
Reporting Event has occurred.
Restricted Investment - any acquisition of Property by a
Borrower or any of its Subsidiaries in exchange for cash or other
Property, whether in the form of an acquisition of Equity Interests or
Debt, or the purchase or acquisition by a Borrower or any of its
Subsidiaries of any other Property, or a loan, advance, capital
contribution or subscription, except acquisitions of the following: (i)
fixed assets to be used in the Ordinary Course of Business of a
Borrower or any of its Subsidiaries so long as the acquisition costs
thereof constitute Capital Expenditures permitted hereunder; (ii) goods
held for sale or lease or to be used in the manufacture of goods or the
provision of services by a Borrower or any of its Subsidiaries in the
Ordinary Course of Business; (iii) Current Assets arising from the sale
or lease of goods or the rendition of services in the Ordinary Course
of Business of a Borrower or any of its Subsidiaries; (iv) investments
in Subsidiaries to the extent existing on the Closing Date; (v) Cash
Equivalents to the extent they are not subject to rights of offset in
favor of any Person other than Lender; (vi) loans and other advances of
money to the extent not prohibited by SECTION 10.2.2, and (vii)
investments disclosed in writing to Lender and subject to Lender's
consent, which consent shall not be unreasonably withheld.
Restrictive Agreement - an agreement (other than a Loan
Document) that, if and for so long as an Obligor or any Subsidiary of
such Obligor is a party thereto, would prohibit, condition or restrict
such Obligor's or Subsidiary's right to incur or repay Debt for Money
Borrowed (including any of the Obligations); grant Liens upon any of
such Obligor's or Subsidiary's assets (including Liens granted in favor
of Lender pursuant to the Loan Documents); declare or make
Distributions; amend, modify, extend or renew any agreement evidencing
Debt for Money Borrowed (including any of the Loan Documents); or repay
any Debt owed to another Obligor.
Revolver Commitment - the commitment of Lender to make
Revolver Loans to Borrowers in accordance with the provisions of
SECTION 2.1 hereof, not to exceed $12,500,000.
Revolver Commitment Amount - $12,500,000.
Revolver Facility - the loan facility established by Lender
pursuant to SECTION 2.1 of this Agreement.
Revolver Loan - a loan made by Lender as provided in SECTION
2.1 of this Agreement (including any Out-of-Formula Loan).
Revolver Loan Balance - for any day, the amount obtained by
adding the aggregate of the unpaid balance of Revolver Loans and LC
Outstandings at the end of such day.
28
Revolver Note - a Revolver Note to be executed by Borrowers in
favor of Lender in the form of EXHIBIT A-1 attached hereto, which shall
be in the face amount of the Revolver Commitment Amount and which shall
evidence all Revolver Loans made by Lender to Borrowers pursuant to
this Agreement.
S&P - Standard & Poor's Ratings Group, a division of
▇▇▇▇▇▇-▇▇▇▇, Inc.
Schedule of Accounts - as defined in SECTION 8.2.1 of the
Agreement.
Secured Parties - Lender and each Affiliate of Lender.
Security - shall have the same meaning as in Section 2(1) of
the Securities Act of 1933.
Security Documents - the Patent and Trademark Security
Agreement, the Copyright Security Agreement, the Guarantors' Security
Agreement and all other instruments and agreements now or at any time
hereafter securing the whole or any part of the Obligations.
Senior Officer - the chairman of the board of directors, the
president or the chief financial officer of, or in-house legal counsel
to, a Borrower.
Slow-Moving Inventory - Inventory that has not been sold by a
Borrower within the 6-month period following such Borrower's
acquisition of such Inventory.
Software - shall have the meaning ascribed to "software" in
the UCC.
Solvent - as to any Person, such Person (i) owns Property
whose fair saleable value is greater than the amount required to pay
all of such Person's Debts (including contingent Debts), (ii) is able
to pay all of its Debts as such Debts mature, (iii) has capital
sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage; and (iv) is not
"insolvent" within the meaning of Section 101(32) of the Bankruptcy
Code.
Statutory Reserves - on any date, the percentage (expressed as
a decimal) established by the Board of Governors which is the then
stated maximum rate for all reserves (including, any emergency,
supplemental or other marginal reserve requirements) applicable to any
member bank of the Federal Reserve System in respect to Eurocurrency
Liabilities (or any successor category of liabilities under Regulation
D). Such reserve percentage shall include those imposed pursuant to
said Regulation D. The Statutory Reserve shall be adjusted
automatically on and as of the effective date of any change in such
percentage.
Subordinated Debt - unsecured Debt, including the Indenture
Debt, incurred by a Borrower that is expressly subordinated and made
junior to the payment and performance
29
in full of the Obligations and contains terms and conditions (including
terms relating to interest, fees, repayment and subordination)
satisfactory to Lender.
Subsidiary - any Person in which 50% or more of its
outstanding Voting Securities or 50% or more of all Equity Interests is
owned directly or indirectly by a Borrower or by one or more other
Subsidiaries or by a Borrower and one or more other Subsidiaries.
Supporting Obligation - shall have the meaning ascribed to
"supporting obligation" in the UCC.
Taxes - any present or future taxes, levies, imposts, duties,
fees, assessments, deductions, withholdings or other charges of
whatever nature, including income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise
taxes now or hereafter imposed or levied by the United States, or any
other Governmental Authority and all interest, penalties, additions to
tax and similar liabilities with respect thereto.
Term - as defined in SECTION 6.1 of this Agreement.
Termination Date - the date on which this Agreement is
terminated pursuant to SECTION 6.2 of this Agreement.
Type - any type of a Loan determined with respect to the
interest option applicable thereto, which shall be either a Euro-Dollar
Loan or a Base Rate Loan.
UCC - the Uniform Commercial Code (or any successor statute)
as adopted and in force in the State of Georgia or, when the laws of
any other state govern the method or manner of the perfection or
enforcement of any security interest in any of the Collateral, the
Uniform Commercial Code (or any successor statute) of such state.
Upstream Payment - a payment or distribution of cash or other
Property by a Subsidiary to a Borrower, whether in repayment of Debt
owed by such Subsidiary to such Borrower, as a dividend or distribution
on account of such Borrower's ownership of Equity Interests, or
otherwise.
Value - with reference to the value of Eligible Inventory in
Dollars, value determined on the basis of the lower of cost or market
of such Eligible Inventory, with the cost thereof calculated on a
first-in, first-out basis, determined in accordance with GAAP.
Voting Power - with respect to any Person, the power
ordinarily (without the occurrence of a contingency) to elect the
members of the Board of Directors (or Persons performing similar
functions) of such Person.
30
Voting Securities - Equity Interests of any class or classes
of a corporation or other entity the holders of which are ordinarily,
in the absence of contingencies, entitled to elect a majority of the
corporate directors (or Persons performing similar functions).
1.2. ACCOUNTING TERMS. Unless otherwise specified herein, all terms of
an accounting character used in this Agreement shall be interpreted, all
accounting determinations under this Agreement shall be made, and all financial
statements required to be delivered under this Agreement shall be prepared, in
accordance with GAAP, applied on a basis consistent with the most recent audited
Consolidated financial statements of Borrowers and their Subsidiaries heretofore
delivered to Lender and using, if applicable, the same method for inventory
valuation as used in such audited financial statements, except for any change
required by GAAP; provided, however, that for purposes of determining Borrower's
compliance with financial covenants contained in SECTION 10.3 of this Agreement,
all accounting terms shall be interpreted and all accounting determinations
shall be made in accordance with GAAP as in effect on the date of this Agreement
and applied on a basis consistent with the application used in the financial
statements referred to in SECTION 9.1.9 of this Agreement unless (i) Borrowers
shall have objected to determining such compliance on such basis at the time of
delivery of such financial statements or (ii) Lender shall so object in writing
within 30 days after the delivery of such financial statements, in either of
which events such calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as to which such
objection shall not have been made. In the event of any change in GAAP that
occurs after the date of this Agreement and that is material to Borrowers,
Lender shall the right to require either that conforming adjustments be made to
any financial covenants set forth in this Agreement, or the components thereof,
that are affected by such change or that Borrowers report their financial
condition based on GAAP as in effect immediately prior to the occurrence of such
change.
1.3. OTHER TERMS. All other terms contained in this Agreement shall
have, when the context so indicates, the meanings provided for by the UCC to the
extent the same are used or defined therein.
1.4. CERTAIN MATTERS OF CONSTRUCTION. The terms "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of this Agreement. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations; to any agreement, instrument or
other document (including any of the Loan Documents) shall include any and all
modifications or supplements thereto and any and all restatements, extensions or
renewals thereof to the extent such modifications, supplements, restatements,
extensions or renewals of any such documents are permitted by the terms thereof;
to any Person shall mean and include the successors and permitted assigns of
such Person; to "including" and "include" shall be understood to mean
"including, without limitation" (and, for purposes of this Agreement and each
other Loan Document, the parties agree that the rule of
31
ejusdem generis shall not be applicable to limit a general statement,
which is followed by or referable to an enumeration of specific matters to
matters similar to the matters specifically mentioned); or to the time of day
shall mean the time of day on the day in question in Atlanta, Georgia, unless
otherwise expressly provided in this Agreement. A Default or an Event of Default
shall be deemed to exist at all times during the period commencing on the date
that such Default or Event of Default occurs to the date on which such Default
or Event of Default is waived in writing by Lender pursuant to this Agreement
or, in the case of a Default, is cured within any period of cure expressly
provided in this Agreement; and an Event of Default shall "continue" or be
"continuing" until such Event of Default has been waived in writing by Lender.
All calculations of Value shall be in Dollars, all Loans shall be funded in
Dollars and all Obligations shall be repaid in Dollars. Whenever the phrase "to
the best of any Borrower's knowledge" or words of similar import relating to the
knowledge or the awareness of any Borrower are used in this Agreement or other
Loan Documents, such phrase shall mean and refer to (i) the actual knowledge of
a Senior Officer of any Borrower or (ii) the knowledge that a Senior Officer
would have obtained if he had engaged in good faith in the diligent performance
of his duties, including the making of such reasonably specific inquiries as may
be necessary of the officers, employees or agents of such Borrower and a good
faith attempt to ascertain the existence or accuracy of the matter to which such
phrase relates.
1.5. SCHEDULES AND EXHIBITS. All Schedules and Exhibits attached hereto
are by reference made a part hereof.
1.6. ELIGIBLE ACCOUNTS AND ELIGIBLE INVENTORY DEFINITIONS. Following
the Initial Field Exam and pursuant to the results thereof, Lender shall make
any changes to the definitions of Eligible Accounts and Eligible Inventory that,
in its reasonable credit judgment, Lender deems necessary in furtherance of the
agreements of the parties contained in this Agreement.
SECTION 2. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a total credit facility of up to $12,500,000
available to Borrowers as follows:
2.1. REVOLVER COMMITMENT.
2.1.1. Revolver Loans. Lender agrees, to the extent of the
Revolver Commitment and upon the terms and subject to the conditions set forth
herein, to make Revolver Loans to Borrowers on any Business Day during the
period from the date hereof through the Business Day before the last day of the
Term, which Revolver Loans may be repaid and reborrowed in accordance with the
provisions of this Agreement; provided, however, that Lender shall have no
obligation to Borrowers whatsoever to make any Revolver Loan on or after the
Commitment Termination Date or if at the time of the proposed funding thereof
the aggregate principal amount of all of the Revolver Loans then outstanding and
Pending Revolver Loans exceeds, or would exceed after the funding of such
Revolver Loan, the Borrowing Base. The Revolver Loans shall bear interest as set
forth in SECTION 3.1 hereof. Each Revolver Loan shall,
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at the option of Borrowers, be made or continued as, or converted into, part of
one or more Borrowings that, unless specifically provided herein, shall consist
entirely of Base Rate Loans or Euro-Dollar Loans.
2.1.2. Out-of-Formula Loans. If the unpaid balance of Revolver
Loans outstanding at any time should exceed the Borrowing Base at such time (an
"Out-of-Formula Condition"), such Revolver Loans shall nevertheless constitute
Obligations that are secured by the Collateral and entitled to all of the
benefits of the Loan Documents. In the event that Lender is willing in its sole
and absolute discretion to make Out-of-Formula Loans, such Out-of-Formula Loans
shall be payable ON DEMAND and shall bear interest as provided in SECTION 3.1.5.
2.1.3. Use of Proceeds. The proceeds of the Revolver Loans
shall be used by Borrowers solely for one or more of the following purposes: (i)
to satisfy any Debt owing on the Effective Date to Lender; (ii) to pay the fees
and transaction expenses associated with the closing of the transactions
described herein; (iii) to pay any of the Obligations; and (iv) to make
expenditures for other lawful corporate purposes of Borrowers to the extent such
expenditures are not prohibited by this Agreement or Applicable Law. In no event
may any Revolver Loan proceeds be used by Borrowers to make a contribution to
the equity of any Subsidiary, to purchase or to carry, or to reduce, retire or
refinance any Debt incurred to purchase or carry, any Margin Stock or for any
related purpose that violates the provisions of Regulations T, U or X of the
Board of Governors.
2.1.4. Revolver Note. The Revolver Loans made by Lender and
interest accruing thereon shall be evidenced by the records of Lender and by the
Revolver Note, which shall be executed by Borrowers and delivered to Lender on
the Closing Date. All outstanding principal amounts and accrued interest under
the Revolver Note shall be due and payable as set forth in SECTION 5.2 hereof.
2.2. INTENTIONALLY OMITTED.
2.3. LC FACILITY.
2.3.1. Procurement of Letters of Credit. Subject to all of the
terms and conditions hereof, Lender agrees to establish the LC Facility pursuant
to which, during the period from the date hereof to (but excluding) the
thirtieth day prior to the last day of the Term, and provided no Default or
Event of Default exists, Lender shall issue one or more Letters of Credit on
Borrowers' request therefor from time to time:
(i) Borrowers acknowledge that Lender's willingness
to issue any Letter of Credit is conditioned upon Lender's receipt of
(A) an LC Application with respect to the requested Letter of Credit
and (B) such other instruments and agreements as Lender may customarily
require for the issuance of a letter of credit of equivalent type and
amount as the requested Letter of Credit. Lender shall have no
obligation to issue any Letter of Credit unless (x) Lender receives an
LC Request from Borrowers at least 5 Business Days prior to the date on
which Borrowers desires to submit such
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LC Application to Lender and (y) each of the LC Conditions is satisfied
on the date of Lender's receipt of the LC Request and at the time of
the requested execution of the LC Application. In no event shall Lender
have any liability or obligation to Borrowers or any Subsidiary for any
failure or refusal by Lender to issue, for Lender's delay in issuing,
or for any error of Lender in issuing any Letter of Credit.
(ii) Letters of Credit may be requested by Borrowers
only if they are to be used (a) to support obligations of Borrowers
incurred in the Ordinary Course of Business of Borrowers or (b) for
such other purposes as Lender may approve from time to time in writing.
(iii) Borrowers shall comply with all of the terms
and conditions imposed on Borrowers by Lender, whether such terms and
conditions are contained in an LC Application or in any agreement with
respect thereto. Borrowers agree to reimburse Lender for any draw under
any Letter of Credit as hereinafter provided, and to pay Lender the
amount of all other liabilities and obligations payable to Lender under
or in connection with any Letter of Credit when due, irrespective of
any claim, setoff, defense or other right that Borrowers may have at
any time against Lender or any other Person. If Lender shall pay any
amount under any Letter of Credit, then Borrowers shall pay to Lender,
in Dollars on the first Business Day following the date on which
payment was made by Lender under such Letter of Credit (the
"Reimbursement Date"), an amount equal to the amount paid by Lender
under such Letter of Credit together with interest from and after the
Reimbursement Date until payment in full is made by Borrowers at the
Default Rate for Revolver Loans constituting Base Rate Loans. Until
Lender has received payment from Borrowers in accordance with the
foregoing provisions of this clause (iii), Lender, in addition to all
of its other rights and remedies under this Agreement, shall be fully
subrogated to the rights and remedies of each beneficiary under such
Letter of Credit whose claims against Borrowers has been discharged
with the proceeds of such Letter of Credit. Whether or not a Borrower
submits any Notice of Borrowing to Lender, Borrowers shall be deemed to
have requested from Lender a Borrowing of Base Rate Loans in an amount
necessary to pay to Lender all amounts due Lender on any Reimbursement
Date, irrespective of whether or not any Default or Event of Default
has occurred or exists, the Revolver Commitment has been terminated,
the funding of the Borrowing deemed requested by Borrowers would result
in, or increase the amount of, any Out-of-Formula Condition or any of
the conditions set forth in SECTION 11 hereof are not satisfied.
(iv) Borrowers assume all risks of the acts,
omissions or misuses of any Letter of Credit by the beneficiary
thereof. The obligation of Borrowers to reimburse Lender for any
payment made by Lender under the Letter of Credit shall be absolute,
unconditional and irrevocable and shall be paid without regard to any
lack of validity or enforceability of any Letter of Credit, the
existence of any claim, setoff, defense or other right which Borrowers
may have at any time against a beneficiary of any Letter of Credit, or
improper honor by Lender of any draw request under a Letter of Credit.
If
34
presentation of a demand, draft, certificate or other document does not
comply with the terms of a Letter of Credit and Borrowers contend that,
as a consequence of such noncompliance it has no obligation to
reimburse Lender for any payment made with respect thereto, Borrowers
shall nevertheless be obligated to reimburse Lender for any payment
made under such Letter of Credit, but without waiving any claim
Borrowers may have against Lender in connection therewith; provided,
however, that the Borrowers shall not be obligated to reimburse the
Lender for such payment if the Lender was grossly negligent in the
making of such payment.
(v) No Letter of Credit shall be extended or amended
in any respect that is not solely ministerial, unless all of the LC
Conditions are met as though a new Letter of Credit were being
requested and issued.
2.3.2. Cash Collateral Account. If any LC Outstandings
(whether or not then due or payable) shall exist (i) at any time that an Event
of Default has occurred and is continuing, (ii) on any date that Availability
would, but for the last sentence of the definition thereof set forth
hereinabove, be less than zero, or (iii) on or at any time after the Commitment
Termination Date, then Borrowers shall, on Lender's request, forthwith deposit
with Lender, in cash, an amount equal to 105% of the aggregate amount of all LC
Outstandings. If Borrowers fail to make such deposit on the first Business Day
following Lender's demand therefor, Lender may advance such amount as a Revolver
Loan (whether or not an Out-of-Formula Condition is created thereby and
irrespective of the Commitment Termination Date). Such cash (together with any
interest accrued thereon) shall be held by Lender in the Cash Collateral Account
and may be invested, in Lender's discretion, in Cash Equivalents. Each Borrower
hereby pledges to Lender and grants to Lender a security interest in the Cash
Collateral Account and in all Cash Collateral from time to time deposited
thereto, as security for the payment of all Obligations, whether or not then due
or payable. From time to time after cash is deposited in the Cash Collateral
Account, Lender may apply Cash Collateral then held in the Cash Collateral
Account to the payment of any amounts, in such order as Lender may elect, as
shall be or shall become due and payable by Borrowers to Lender or any Lender
with respect to the LC Outstandings. Neither Borrowers nor any other Person
claiming by, through or under or on behalf of Borrowers shall have any right to
withdraw any of the Cash Collateral held in the Cash Collateral Account,
including any accrued interest, provided that upon termination or expiration of
all Letters of Credit and the payment and satisfaction of all of the LC
Outstandings, any Cash Collateral remaining in the Cash Collateral Account shall
be returned to Borrowers unless an Event of Default then exists (in which event
Lender may apply such Cash Collateral to the payment of any other Obligations
outstanding, with any surplus remaining after Full Payment of the Obligations to
be turned over to Borrowers).
2.3.3. Indemnifications. In addition to any other indemnity
which Borrowers may have to Lender under any of the other Loan Documents and
without limiting such other indemnification provisions, Borrowers hereby agrees
to indemnify and defend each Lender Indemnitee and to hold each Lender
Indemnitee harmless from and against any and all Claims which any Lender
Indemnitee (other than as the actual result of the gross negligence or willful
35
misconduct of any Lender Indemnitee) incur or be subject to as a consequence,
directly or indirectly, of (a) the issuance of, payment or failure to pay or any
performance or failure to perform under any Letter of Credit or (b) any suit,
investigation or proceeding as to which Lender is or may become a party to as a
consequence, directly or indirectly, of the issuance of any Letter of Credit or
the payment or failure to pay thereunder.
SECTION 3. INTEREST, FEES AND CHARGES
3.1. INTEREST.
3.1.1. Rates of Interest.
Borrowers jointly and severally agree to pay interest in
respect of all unpaid principal amounts of the Revolver Loans from the
respective dates such principal amounts are advanced until paid (whether at
stated maturity, on acceleration or otherwise) at a rate per annum equal to the
applicable rate indicated below:
(a) for Revolver Loans made or outstanding as Base
Rate Loans, the Applicable Margin for Revolver Loans that are Base Rate
Loans plus the Base Rate in effect from time to time; or
(b) for Revolver Loans made or outstanding as
Euro-Dollar Loans, the Applicable Margin for Revolver Loans that are
Euro-Dollar Loans plus the Adjusted Euro-Dollar Rate for the applicable
Interest Period selected by Borrowers in conformity with this
Agreement.
Upon determining the Adjusted Euro-Dollar Rate for any
Interest Period requested by Borrowers, Lender shall promptly notify Borrowers
thereof by telephone and, if so requested by Borrowers, confirm the same in
writing. Such determination shall, absent manifest error, be final, conclusive
and binding on all parties and for all purposes. The applicable rate of interest
for all Loans (or portions thereof) bearing interest based upon the Base Rate
shall be increased or decreased, as the case may be, by an amount equal to any
increase or decrease in the Base Rate, with such adjustments to be effective as
of the opening of business on the day that any such change in the Base Rate
becomes effective. Interest on each Loan shall accrue from and including the
date on which such Loan is made, converted to a Loan of another Type or
continued as a Euro-Dollar Loan to (but excluding) the date of any repayment
thereof; provided, however, that, if a Loan is repaid on the same day made, one
day's interest shall be paid on such Loan.
3.1.2. Conversions and Continuations.
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(i) Borrowers may on any Business Day, subject to the
giving of a proper Notice of Conversion/Continuation as hereinafter described,
elect (A) to continue all or any part of a Euro-Dollar Loan by selecting a new
Interest Period therefor, to commence on the last day of the immediately
preceding Interest Period, or (B) to convert all or any part of a Loan of one
Type into a Loan of another Type; provided, however, that no outstanding Loans
may be converted into or continued as Euro-Dollar Loans when any Default or
Event of Default exists unless Lender otherwise consents at such time. Any
conversion of a Euro-Dollar Loan into a Base Rate Loan shall be made on the last
day of the Interest Period for such Euro-Dollar Loan.
(ii) Whenever Borrowers desire to convert or continue
Loans under SECTION 3.1.2(i), Borrowers shall give Lender written notice (or
telephonic notice promptly confirmed in writing) substantially in the form of
EXHIBIT B (a "Notice of Conversion/Continuation") signed by an authorized
officer of Borrowers prior to 11:00 a.m., at least 1 Business Day before the
requested conversion date in the case of a conversion into Base Rate Loans, and
at least 3 Business Days before the requested conversion or continuation date,
in the case of a conversion into or continuation of Euro-Dollar Loans. Each such
Notice of Conversion/Continuation shall be irrevocable and shall specify the
aggregate principal amount of the Loans to be converted or continued, the date
of such conversion or continuation (which shall be a Business Day) and whether
the Loans are being converted into or continued as Euro-Dollar Loans (and, if
so, the duration of the Interest Period to be applicable thereto and, in the
absence of any specification by Borrowers of an Interest Period, an Interest
Period of one month will be deemed specified) or Base Rate Loans. If, upon the
expiration of any Interest Period in respect of any Euro-Dollar Loans, Borrowers
shall have failed to deliver the Notice of Conversion/Continuation, Borrowers
shall be deemed to have elected to convert such Euro-Dollar Loans to Base Rate
Loans.
3.1.3. Interest Periods. In connection with the making or
continuation of, or conversion into, each Borrowing of Euro-Dollar Loans,
Borrowers shall select an interest period (each an "Interest Period") to be
applicable to such Euro-Dollar Loan, which interest period shall commence on the
date such Euro-Dollar Loan is made and shall end on a numerically corresponding
day in the first, second or third month thereafter; provided, however, that:
(i) the initial Interest Period for a Euro-Dollar
Loan shall commence on the date of such Borrowing (including the date
of any conversion from a Loan of another Type) and each Interest Period
occurring thereafter in respect of such Loan shall commence on the date
on that the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on
a day that is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day, provided that if any Interest Period
in respect of Euro-Dollar Loans would otherwise expire on a day that is
not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on
the next preceding Business Day;
37
(iii) any Interest Period that begins on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period shall expire on the last Business
Day of such calendar month;
(iv) no Interest Period with respect to any portion
of principal of a Loan shall extend beyond a date on which a Borrower
is required to make a scheduled payment of such portion of principal;
and
(v) no Interest Period shall extend beyond the last
day of the Term.
3.1.4. Interest Rate Not Ascertainable. If Lender shall
determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) that on any date for determining the
Adjusted Euro-Dollar Rate for any Interest Period, by reason of any changes
arising after the date of this Agreement affecting the London interbank market
or Lender's position in such market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of Adjusted Euro-Dollar Rate, then, and in any such event, Lender
shall forthwith give notice (by telephone confirmed in writing) to Borrowers of
such determination. Until Lender notifies Borrowers that the circumstances
giving rise to the suspension described herein no longer exist, the obligation
of Lender to make Euro-Dollar Loans shall be suspended, and such affected Loans
then outstanding shall, at the end of the then applicable Interest Period or at
such earlier time as may be required by Applicable Law, bear the same interest
as Base Rate Loans.
3.1.5. Default Rate of Interest. Borrowers shall pay interest
at a rate per annum equal to the Default Rate (i) with respect to the principal
amount of any portion of the Obligations (and, to the extent permitted by
Applicable Law, all past due interest) that is not paid on the due date thereof
(whether due at stated maturity, on demand, upon acceleration or otherwise)
until paid in full; (ii) with respect to the principal amount of all of the
Obligations (and, to the extent permitted by Applicable Law, all past due
interest) upon the earlier to occur of (x) a Borrower's receipt of notice of
Lender's election to charge the Default Rate based upon the existence of any
Event of Default, whether or not acceleration or demand for payment of the
Obligations has been made, or (y) the commencement by or against any Borrower of
an Insolvency Proceeding, whether or not under the circumstances described in
clause (i) or (ii) hereof Lender elects to accelerate the maturity or demand
payment of any of the Obligations; and (iii) with respect to the principal
amount of any Out-of-Formula Loans, whether or not demand for payment thereof
has been made by Lender. To the fullest extent permitted by Applicable Law, the
Default Rate shall apply and accrue on any judgment entered with respect to any
of the Obligations and to the unpaid principal amount of the Obligations during
any Insolvency Proceeding of a Borrower. Each Borrower acknowledges that the
cost and expense to Lender attendant upon the occurrence of an Event of Default
are difficult to ascertain or estimate and that the Default Rate is a fair and
reasonable estimate to compensate Lender for such added cost and expense.
Interest accrued at the Default Rate shall be payable ON DEMAND.
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3.2. FEES. In consideration of Lender's establishment of the
Commitments in favor of Borrowers, Borrowers agree to pay to Lender the
following fees:
3.2.1. Closing Fee. Borrowers shall pay to Lender a closing
fee of $25,000, which shall be paid concurrently with the initial Loans
hereunder.
3.2.2. Administrative Fee. Borrowers shall pay to Lender a fee
of $25,000 on the first annual anniversary of the Closing Date.
3.2.3. LC Facility Fees. Borrowers shall be jointly and
severally obligated to pay to Lender: (i) for each Letter of Credit issued under
the LC Facility, a fee per annum equal to the Applicable Margin for Revolver
Loans that are Euro-Dollar Loans in effect from time to time and that are
supported by the same type of collateral (whether Liquid Collateral or non
Liquid Collateral) as that supporting the Letter of Credit, based on the maximum
amount available to be drawn under all Letters of Credit outstanding, payable in
advance of issuance; and (ii) all normal and customary charges associated with
the issuance, amending, negotiating, processing and administration of Letters of
Credit.
3.2.4. Field Exam, Audit and Appraisal Fees. Borrowers shall
reimburse Lender for all reasonable costs and expenses incurred by Lender in
connection with all Field Exams, audits and appraisals of any Obligor's books
and records and such other matters pertaining to any Obligor or any Collateral
as Lender shall deem appropriate. Borrowers shall reimburse Lender for all
reasonable costs and expenses in connection with appraisals of any Collateral as
Lender shall deem appropriate and shall pay to Lender $750 per day plus
out-of-pocket expenses for each day that an employee or agent of Lender shall be
engaged in a Field Exam or any other examination or review of any Borrower's
books and records; provided, however, that, so long as no Default or Event of
Default shall exist, (a) Lender shall not conduct any Field Exams at Borrowers'
expense so long as (i) the Revolving Loan Amount does not exceed, as of any
date, an amount equal to (A) 95% of the amount of Liquid Collateral on such date
minus (B) the Availability Reserve on such date, and thereafter (b) Lender shall
not conduct more than two (2) Field Exams at Borrowers' expense so long as
Availability is equal to or greater than $2,500,000.
3.2.5. Revolving Credit Facility Fee. In the event that as of
any measurement date during any Fiscal Month (a) the Revolver Loan Balance is
greater than an amount equal to 95% of the average amount of Liquid Collateral
included in the Borrowing Base for such Fiscal Month, and (b) the amount of
Liquid Collateral included in the Borrowing Base for such date is greater than
zero, the Borrowers shall pay the Lender a fee of $1,000 for such Fiscal Month,
which fee is fully earned and non-refundable upon the occurrence of the events
described in (a) and (b) above, and which is payable on the first day of the
immediately succeeding Fiscal Month.
3.2.6. General Provisions. All fees shall be fully earned by
Lender when due and payable (and, in the case of Letters of Credit, upon each
issuance, renewal or extension of such Letter of Credit) and, except as
otherwise set forth herein or required by Applicable Law, shall not be subject
to rebate, refund or proration. All fees provided for in this SECTION 3.2 are
39
and shall be deemed to be for compensation for services and are not, and shall
not be deemed to be, interest or any other charge for the use, forbearance or
detention of money.
3.3. COMPUTATION OF INTEREST AND FEES. All fees and other charges
provided for in this Agreement that are calculated as a per annum percentage of
any amount and all interest shall be calculated daily and shall be computed on
the actual number of days elapsed over a year of 360 days. For purposes of
computing interest and other charges hereunder, all Payment Items received by
Lender and deposited in the Collateral Reserve Account shall be deemed applied
by Lender on account of the Obligations (subject to final payment of such items)
on the Business Day that Lender receives such items in immediately available
funds in the Collateral Reserve Account, and Lender shall be deemed to have
received such Payment Item on the date specified in SECTION 5.6 hereof.
3.4. REIMBURSEMENT OF EXPENSES.
3.4.1. Borrowers shall reimburse Lender for all legal,
accounting, appraisal and other fees and expenses incurred by Lender in
connection with (i) the negotiation and preparation of any of the Loan
Documents, any amendment or modification thereto, any waiver of any Default or
Event of Default thereunder, or any restructuring or forbearance with respect
thereto; (ii) the administration of the Loan Documents and the transactions
contemplated thereby, to the extent that such fees and expenses are expressly
provided for in this Agreement or any of the other Loan Documents; (iii) action
taken to perfect or maintain the perfection or priority of any of Lender's Liens
with respect to any of the Collateral; (iv) any inspection of or audits
conducted with respect to Borrowers' books and records or any of the Collateral;
(v) any effort to verify, protect, preserve, or restore any of the Collateral or
to collect, sell, liquidate or otherwise dispose of or realize upon any of the
Collateral; (vi) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by or against Lender, any Obligor or any other Person) in
any way arising out of or relating to any of the Collateral (or the validity,
perfection or priority of any of Lender's Liens thereon), any of the Loan
Documents or the validity, allowance or amount of any of the Obligations; (vii)
the protection or enforcement or any rights or remedies of Lender in any
Insolvency Proceeding; and (viii) any other action taken by Lender to enforce
any of the rights or remedies of Lender against any Obligor or any Account
Debtors to enforce collection of any of the Obligations or payments with respect
to any of the Collateral. All amounts chargeable to Borrowers under this SECTION
3.4 and SECTION 3.2.4 shall constitute Obligations that are secured by all of
the Collateral and shall be payable ON DEMAND to Lender. Notwithstanding
anything herein to the contrary, Lender acknowledges and agrees that the
aggregate amount of all legal, accounting, appraisal and other fees and expenses
incurred by Lender in connection with the closing of the Revolver Facility and
payable by Borrower to Lender pursuant to this SECTION 3.4 shall not exceed
$20,000, which amount has been received by the Lender on or prior to the date
hereof. Borrowers shall also reimburse Lender for expenses incurred by Lender in
its administration of any of the Collateral to the extent and in the manner
provided in SECTION 8 hereof or in any of the other Loan Documents. The
foregoing shall be in addition to, and shall not be construed to limit, any
other provision of any of the Loan Documents regarding the reimbursement by
Borrowers of costs, expenses or liabilities suffered or incurred by Lender.
40
3.4.2. If at any time Lender shall agree to indemnify any
Person (including any Affiliate of Lender) against losses or damages that such
Person may suffer or incur in its dealings or transactions with a Borrower, or
shall guarantee any liability or obligation of a Borrower to such Person, or
otherwise shall provide assurances of a Borrower's payment or performance under
any agreement with such Person, including indemnities, guaranties or other
assurances of payment or performance given by Lender with respect to Banking
Relationship Debt, then the Contingent Obligation of Lender providing any such
indemnity, guaranty or other assurance of payment or performance, together with
any payment made or liability incurred by Lender in connection therewith, shall
constitute Obligations that are secured by the Collateral and Borrowers shall
repay, ON DEMAND, any amount so paid or any liability incurred by Lender in
connection with any such indemnity, guaranty or other assurance, except that
repayment with respect to any Letter of Credit shall be due on the Reimbursement
Date as provided in SECTION 2.3.1(iii). Nothing herein shall be construed to
impose upon Lender any obligation to provide any such indemnity, guaranty or
assurance except to the extent provided in SECTION 2.3 hereof. The foregoing
agreement of Borrowers shall apply whether or not such indemnity, guaranty or
assurance is in writing or oral and regardless of a Borrower's knowledge of the
existence thereof, and shall be in addition to any of the provision of the Loan
Documents regarding reimbursement by Borrowers of costs, expenses or liabilities
suffered or incurred by Lender.
3.5. LENDER CHARGES. Borrowers shall pay to Lender, ON DEMAND, any and
all fees, costs or expenses which Lender or any Participant pays to a bank or
other similar institution (including any fees paid by Lender to any Participant)
arising out of or in connection with (i) the forwarding to a Borrower or any
other Person on behalf of a Borrower, by Lender or any Participant, of proceeds
of Loans made by Lender to Borrowers pursuant to this Agreement and (ii) the
depositing for collection, by Lender or any Participant, of any Payment Item
received or delivered to Lender or any Participant on account of the
Obligations. Each Borrower acknowledges and agrees that Lender may charge such
costs, fees and expenses to Borrowers based upon Lender's good faith estimate of
such costs, fees and expenses as they are incurred by Lender.
3.6. ILLEGALITY. Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (i) any change in any law or regulation or in
the interpretation thereof by any Governmental Authority charged with the
administration thereof shall make it unlawful for Lender to make or maintain a
Euro-Dollar Loan or to give effect to its obligations as contemplated hereby
with respect to a Euro-Dollar Loan or (ii) at any time Lender determines that
the making or continuance of any Euro-Dollar Loan has become impracticable as a
result of a contingency occurring after the date hereof which adversely affects
the London interbank market or the position of Lender in such market, then
Lender shall give Borrowers' Agent notice of such determination and may
thereafter (1) declare that Euro-Dollar Loans will not thereafter be made by
Lender, whereupon any request by Borrowers for a Euro-Dollar Loan shall be
deemed a request for a Base Rate Loan unless Lender's declaration shall be
subsequently withdrawn (which declaration shall be withdrawn promptly after the
cessation of the circumstances described in clause (i) or (ii) above); and (2)
require that all outstanding Euro-Dollar Loans made by Lender be converted to
Base Rate Loans, under the circumstances of
41
clause (i) or (ii) of this SECTION 3.6 insofar as Lender determines the
continuance of Euro-Dollar Loans to be impracticable, in which event all such
Euro-Dollar Loans shall be converted automatically to Base Rate Loans as of the
date of Borrowers' Agent's receipt of the aforesaid notice from Lender.
3.7. INCREASED COSTS. If, by reason of (a) the introduction of or any
change (including any change by way of imposition or increase of Statutory
Reserves or other reserve requirements) in or in the interpretation of any law
or regulation, or (b) the compliance with any guideline or request from any
central bank or other Governmental Authority or quasi-Governmental Authority
exercising control over banks or financial institutions generally (whether or
not having the force of law):
(i) Lender shall be subject after the date hereof to
any Taxes, duty or other charge with respect to any Euro-Dollar Loan or
its obligation to make Euro-Dollar Loans, or a change shall result in
the basis of taxation of payment to Lender of the principal of or
interest on its Euro-Dollar Loans or its obligation to make Euro-Dollar
Loans (except for changes in the rate of tax on the overall net income
or gross receipts of Lender imposed by the jurisdiction in which
Lender's principal executive office is located); or
(ii) any reserve (including any imposed by the Board
of Governors), special deposits or similar requirement against assets
of, deposits with or for the account of, or credit extended by, Lender
shall be imposed or deemed applicable or any other condition affecting
its Euro-Dollar Loans or its obligation to make Euro-Dollar Loans shall
be imposed on Lender or the London interbank market;
and as a result thereof there shall be any increase in the cost to Lender of
agreeing to make or making, funding or maintaining Euro-Dollar Loans (except to
the extent already included in the determination of the applicable Adjusted
Euro-Dollar Rate for Euro-Dollar Loans), or there shall be a reduction in the
amount received or receivable by Lender, then Lender shall, promptly after
determining the existence or amount of any such increased costs for which Lender
seeks payment hereunder, give Borrowers notice thereof and Borrowers shall from
time to time, upon written notice from and demand by Lender, pay to Lender,
within 5 Business Days after the date specified in such notice and demand, an
additional amount sufficient to indemnify Lender against such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrowers by
Lender, shall be final, conclusive and binding for all purposes, absent manifest
error.
If at any time, because of the circumstances described hereinabove in
this SECTION 3.7 or any other circumstances arising after the date of this
Agreement affecting Lender or the London interbank market or Lender's position
in such market, the Adjusted Euro-Dollar Rate, as determined by Lender, will not
adequately and fairly reflect the cost to Lender of funding Euro-Dollar Loans,
then, and in any such event:
42
(i) Lender shall forthwith give notice (by telephone
confirmed in writing) to Borrowers of such event;
(ii) Borrowers' right to request and Lender's
obligation to make Euro-Dollar Loans shall be immediately suspended and
Borrowers' right to continue a Euro-Dollar Loan as such beyond the then
applicable Interest Period shall also be suspended, until each
condition giving rise to such suspension no longer exists; and
(iii) Lender shall make a Base Rate Loan as part of
the requested Borrowing of Euro-Dollar Loans, which Base Rate Loan
shall, for all purposes, be considered part of such Borrowing.
For purposes of this SECTION 3.7, all references to Lender shall be
deemed to include any bank holding company or bank parent of Lender.
3.8. CAPITAL ADEQUACY. If Lender determines that after the date hereof
(a) the adoption of any Applicable Law regarding capital requirements for banks
or bank holding companies or the subsidiaries thereof, (b) any change in the
interpretation or administration of any such Applicable Law by any Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or (c) compliance by Lender or its holding company with
any request or directive of any such Governmental Authority, central bank or
comparable agency regarding capital adequacy (whether or not having the force of
law), has the effect of reducing the return on Lender's capital to a level below
that which Lender could have achieved (taking into consideration Lender's and
its holding company's policies with respect to capital adequacy immediately
before such adoption, change or compliance and assuming that Lender's capital
was fully utilized prior to such adoption, change or compliance) but for such
adoption, change or compliance as a consequence of Lender's commitment to make
the Loans pursuant hereto by any amount deemed by Lender to be material:
(i) Lender shall promptly give notice of its
determination of such occurrence to Borrowers' Agent; and
(ii) Borrowers shall pay to Lender as an additional
fee from time to time, ON DEMAND, such amount as Lender certifies to be
the amount reasonably calculated to compensate Lender for such
reduction.
A certificate of Lender claiming entitlement to compensation as set
forth above will be conclusive in the absence of manifest error. Such
certificate will set forth the nature of the occurrence giving rise to such
compensation, the additional amount or amounts to be paid to Lender (including
the basis for Lender's determination of such amount), and the method by which
such amounts were determined. In determining such amount, Lender may use any
reasonable averaging and attribution method. For purposes of this SECTION 3.8,
all references to Lender shall be deemed to include any bank holding company or
bank parent of Lender.
43
3.9. FUNDING LOSSES. If for any reason (other than due to a default by
Lender or as a result of Lender's refusal to honor a Euro-Dollar Loan request
due to circumstances described in SECTIONS 3.6 or 3.7 hereof) a Borrowing of, or
conversion to or continuation of, Euro-Dollar Loans does not occur on the date
specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation
(whether or not withdrawn), or if any repayment (including any conversions
pursuant to SECTION 3.1.2 hereof) of any of its Euro-Dollar Loans occurs on a
date that is not the last day of an Interest Period applicable thereto, or if
for any reason Borrowers default in their obligation to repay Euro-Dollar Loans
when required by the terms of this Agreement, then Borrowers shall pay to
Lender, within 10 days after Lender's demand therefor, an amount (if a positive
number) computed pursuant to the following formula:
L = (R - T) x P x D
---------------
360
where
L = amount payable
R = interest rate applicable to the Euro-Dollar Loan
unborrowed or prepaid
T = effective interest rate per annum at which any
readily marketable bond or other obligations of the
United States, selected at Lender's sole discretion,
maturing on or nearest the last day of the then
applicable or requested Interest Period for such
Euro-Dollar Loan and in approximately the same amount
as such Euro-Dollar Loan, can be purchased by Lender
on the day of such payment of principal or failure to
borrow
P = the amount of principal paid or the amount of the
Euro-Dollar Loan requested or to have been continued
or converted
D = the number of days remaining in the Interest Period
as of the date of such prepayment or the number of
days in the requested Interest Period
Borrowers shall pay such amount upon presentation by Lender of a statement
setting forth the amount and Lender's calculation thereof pursuant hereto, which
statement shall be deemed true and correct absent manifest error. For purposes
of this SECTION 3.9, all references to Lender shall be deemed to include any
bank holding company or bank parent of Lender. The calculations of all amounts
payable to Lender under this SECTION 3.9 shall be made as though Lender had
actually funded or committed to fund its Euro-Dollar Loan through the purchase
of an underlying deposit in an amount equal to the amount of such Euro-Dollar
Loan and having a maturity comparable to the relevant Interest Period for such
Euro-Dollar Loan; provided, however, Lender may fund its Euro-Dollar Loans in
any manner it deems fit and the foregoing assumption shall be utilized only for
the calculation of amounts payable under this SECTION 3.9.
3.10. MAXIMUM INTEREST. Regardless of any provision contained in any of
the Loan Documents, in no contingency or event whatsoever shall the aggregate of
all amounts that are contracted for, charged or received by Lender pursuant to
the terms of any of the Loan Documents and that are deemed interest under
Applicable Law exceed the highest rate permissible under any Applicable Law. No
agreements, conditions, provisions or stipulations contained in any of the Loan
Documents or the exercise by Lender of the right to accelerate the
44
payment or the maturity of all or any portion of the Obligations, or the
exercise of any option whatsoever contained in any of the Loan Documents, or the
prepayment by Borrowers of any of the Obligations, or the occurrence of any
contingency whatsoever, shall entitle Lender to charge or receive in any event,
interest or any charges, amounts, premiums or fees deemed interest by Applicable
Law (such interest, charges, amounts, premiums and fees referred to herein
collectively as "Interest") in excess of the Maximum Rate and in no event shall
Borrowers be obligated to pay Interest exceeding such Maximum Rate, and all
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel Borrowers to pay
Interest exceeding the Maximum Rate shall be without binding force or effect, at
law or in equity, to the extent only of the excess of Interest over such Maximum
Rate. If any Interest is charged or received in excess of the Maximum Rate
("Excess"), each Borrower acknowledges and stipulates that any such charge or
receipt shall be the result of an accident and bona fide error, and such Excess,
to the extent received, shall be applied first to reduce the principal
Obligations and the balance, if any, returned to Borrowers, it being the intent
of the parties hereto not to enter into a usurious or otherwise illegal
relationship. The right to accelerate the maturity of any of the Obligations
does not include the right to accelerate any Interest that has not otherwise
accrued on the date of such acceleration, and Lender does not intend to collect
any unearned Interest in the event of any such acceleration. Each Borrower
recognizes that, with fluctuations in the rates of interest set forth in SECTION
3.1.1 of this Agreement or in any Note and the Maximum Rate, such an
unintentional result could inadvertently occur. All monies paid to Lender
hereunder or under any of the other Loan Documents, whether at maturity or by
prepayment, shall be subject to any rebate of unearned Interest as and to the
extent required by Applicable Law. By the execution of this Agreement, each
Borrower covenants that (i) the credit or return of any Excess shall constitute
the acceptance by Borrowers of such Excess, and (ii) no Borrower shall seek or
pursue any other remedy, legal or equitable, against Lender, based in whole or
in part upon contracting for, charging or receiving any Interest in excess of
the Maximum Rate. For the purpose of determining whether or not any Excess has
been contracted for, charged or received by Lender, all Interest at any time
contracted for, charged or received from Borrowers in connection with any of the
Loan Documents shall, to the extent permitted by Applicable Law, be amortized,
prorated, allocated and spread in equal parts throughout the full term of the
Obligations. Borrowers and Lender shall, to the maximum extent permitted under
Applicable Law, (i) characterize any non-principal payment as an expense, fee or
premium rather than as Interest and (ii) exclude voluntary prepayments and the
effects thereof. The provisions of this Section shall be deemed to be
incorporated into every Loan Document (whether or not any provision of this
Section is referred to therein). All such Loan Documents and communications
relating to any Interest owed by Borrowers and all figures set forth therein
shall, for the sole purpose of computing the extent of Obligations, be
automatically recomputed by Borrowers, and by any court considering the same, to
give effect to the adjustments or credits required by this SECTION 3.10.
45
SECTION 4. LOAN ADMINISTRATION
4.1. MANNER OF BORROWING AND FUNDING REVOLVER LOANS. Borrowings under
the Revolver Commitment established pursuant to SECTION 2.1 hereof shall be made
and funded as follows:
4.1.1. Notice of Borrowing.
(i) Whenever Borrowers desire to make a Borrowing
under SECTION 2 of this Agreement (other than a Borrowing resulting
from a conversion or continuation pursuant to SECTION 3.1.2), Borrowers
shall give Lender prior written notice (or telephonic notice promptly
confirmed in writing) of such Borrowing request (a "Notice of
Borrowing"), which shall be in the form of EXHIBIT C annexed hereto and
signed by an authorized officer of Borrowers. Such Notice of Borrowing
shall be given by Borrowers no later than 11:00 a.m. at the office of
Lender designated by Lender from time to time (a) on the Business Day
of the requested funding date of such Borrowing, in the case of Base
Rate Loans, and (b) at least 2 Business Days prior to the requested
funding date of such Borrowing, in the case of Euro-Dollar Loans.
Notices received after 11:00 a.m. shall be deemed received on the next
Business Day. Each Notice of Borrowing (or telephonic notice thereof)
shall be irrevocable and shall specify (a) the principal amount of the
Borrowing, (b) the date of Borrowing (which shall be a Business Day),
(c) whether the Borrowing is to consist of Base Rate Loans or
Euro-Dollar Loans, (d) in the case of Euro-Dollar Loans, the duration
of the Interest Period to be applicable thereto, and (e) the account of
Borrowers to which the proceeds of such Borrowing are to be disbursed.
Borrowers may not request any Euro-Dollar Loans if a Default or Event
of Default exists unless Lender otherwise consents at such time.
(ii) Unless payment is otherwise timely made by
Borrowers, the becoming due of any amount required to be paid with
respect to any of the Obligations (whether as principal, accrued
interest, fees or other charges, including the repayment of any LC
Outstandings and any amounts owed to any Affiliate of Lender) shall be
deemed irrevocably to be a request (without the requirement for the
submission of a Notice of Borrowing) for Revolver Loans on the due date
of, and in an aggregate amount required to pay, such Obligations, and
Lender may disburse the proceeds of such Revolver Loans by way of
direct payment of the relevant Obligation and such Revolver Loans shall
bear interest as Base Rate Loans. Lender shall have no obligation to
Borrowers to honor any deemed request for a Revolver Loan on or after
the Commitment Termination Date or when an Out-of-Formula Condition
exists or would result therefrom or when any condition precedent set
forth in SECTION 11 hereof is not satisfied, but may do so in its
discretion and without regard to the existence of, and without being
deemed to have waived, any Default or Event of Default.
(iii) If Borrowers elect to establish a Controlled
Disbursement Account with Lender or any Affiliate of Lender, then the
presentation for payment by Lender of any check or other item of
payment drawn on the Controlled Disbursement Account at a
46
time when there are insufficient funds in such account to cover such
items shall be deemed irrevocably to be a request (without any
requirement for the submission of a Notice of Borrowing) for Revolver
Loans on the date of such presentation and in an amount equal to the
aggregate amount of the items presented for payment, and Lender may
disburse the proceeds of such Revolver Loans by way of direct payment
to the Controlled Disbursement Account and such Revolver Loans shall
bear interest as Base Rate Loans. Lender shall have no obligation to
honor any deemed request for a Revolver Loan after the Commitment
Termination Date or when an Out-of-Formula Condition exists or would
result therefrom or when any condition precedent in SECTION 11 hereof
is not satisfied, but may do so in its discretion and without regard to
the existence of, and without being deemed to have waived, any Default
or Event of Default and regardless whether such Revolver Loan is funded
after the Commitment Termination Date.
(iv) As an accommodation to Borrowers, Lender may
permit telephonic requests for Borrowings and electronic transmittal of
instructions, authorizations, agreements or reports to Lender by
Borrowers; provided, however, that Borrowers shall confirm each such
telephonic request for a Borrowing of Euro-Dollar Loans by delivery of
the required Notice of Borrowing to Lender by facsimile transmission
promptly, but in no event later than 4:00 p.m. on the same day as such
telephonic request. Lender shall have no liability to Borrowers for any
loss or damage suffered by Borrowers as a result of Lender's honoring
of any requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it telephonically
or electronically and purporting to have been sent to Lender by a
Borrower and Lender shall have no duty to verify the origin of any such
communication or the identity or authority of the Person sending it.
4.1.2. Disbursement Authorization. Each Borrower hereby
irrevocably authorizes Lender to disburse the proceeds of each Revolver Loan
requested by any Borrower, or deemed to be requested pursuant to SECTION 4.1.1,
as follows: (i) the proceeds of each Revolver Loan requested under SECTION
4.1.1(i) shall be disbursed by Lender in accordance with the terms of the
written disbursement letter from Borrowers in the case of the initial Borrowing,
and, in the case of each subsequent Borrowing, by wire transfer to such bank
account as may be agreed upon by any Borrower and Lender from time to time; and
(ii) the proceeds of each Revolver Loan requested under SECTION 3.1.1(a)(ii)
shall be disbursed by Lender by way of direct payment of the relevant interest
or other Obligation. Any Loan proceeds received by any Borrower or in payment of
any of the Obligations shall be deemed to have been received by all Borrowers.
4.2. SPECIAL PROVISIONS GOVERNING EURO-DOLLAR LOANS.
4.2.1. Number of Euro-Dollar Loans. In no event may the number
of Euro-Dollar Loans outstanding at any time exceed 6.
4.2.2. Minimum Amounts. Each Borrowing of Euro-Dollar Loans
pursuant to SECTION 4.1.1(i), and each continuation of or conversion to
Euro-Dollar Loans pursuant to SECTION 3.1.2 hereof, shall be in a minimum amount
of $500,000 and integral multiples of
47
$100,000 in excess of that amount (or, if less, the aggregate principal amount
equal to the remaining Availability).
4.2.3. Euro-Dollar Lending Office. Lender's initial
Euro-Dollar Lending Office is set forth opposite its name on the signature pages
hereof. Lender shall have the right at any time and from time to time to
designate a different office of itself or of any Affiliate as Lender's
Euro-Dollar Lending Office, and to transfer any outstanding Euro-Dollar Loans to
such Euro-Dollar Lending Office. No such designation or transfer shall result in
any liability on the part of Borrowers for increased costs or expenses resulting
solely from such designation or transfer for the purpose of complying with
Applicable Law). Increased costs for expenses resulting from a change in
Applicable Law occurring subsequent to any such designation or transfer shall be
deemed not to result solely from such designation or transfer.
4.3. BORROWERS' REPRESENTATIVE. Each Borrower hereby irrevocably
appoints ProxyMed, Inc. as, and ProxyMed, Inc. shall act under this Agreement
as, the agent and representative of itself and each other Borrower for all
purposes under this Agreement, including requesting Borrowings, selecting
whether any Loan or portion thereof is to bear interest as a Base Rate Loan or a
Euro-Dollar Loan, and receiving account statements and other notices and
communications to Borrowers (or any of them) from Lender. Lender may rely, and
shall be fully protected in relying, on any Notice of Borrowing, Notice of
Conversion/Continuation, disbursement instructions, reports, information or any
other notice or communication made or given by ProxyMed, Inc., whether in its
own name, on behalf of any Borrower or on behalf of "the Borrowers," and Lender
shall have no obligation to make any inquiry or request any confirmation from or
on behalf of any other Borrower as to the binding effect on such Borrower of any
such request, instruction, report, information, notice or communication, nor
shall the joint and several character of Borrowers' liability for the
Obligations be affected, provided that the provisions of this SECTION 4.3 shall
not be construed so as to preclude any Borrower from directly requesting
Borrowings or taking other actions permitted to be taken by "a Borrower"
hereunder. Lender may maintain a single Loan Account in the name of "ProxyMed"
hereunder, and each Borrower expressly agrees to such arrangement and confirms
that such arrangement shall have no effect on the joint and several character of
such Borrower's liability for the Obligations.
4.4. ALL LOANS TO CONSTITUTE ONE OBLIGATION. The Loans shall constitute
one general obligation of Borrowers and (unless otherwise expressly provided in
any Security Document) shall be secured by Lender's Lien upon all of the
Collateral.
SECTION 5. PAYMENTS; NATURE OF EACH BORROWER'S LIABILITY
5.1. GENERAL REPAYMENT PROVISIONS. All payments (including all
prepayments) of principal of and interest on the Loans , LC Outstandings and
other Obligations shall be made to Lender in Dollars without any offset or
recoupment and free and clear of (and without deduction for) any present or
future Taxes, and, with respect to payments made other than by application of
balances in the Collateral Reserve Account, in immediately available funds not
later than 2:00
48
p.m. on the due date (and payment made after such time on the due date to be
deemed to have been made on the next succeeding Business Day).
5.2. REPAYMENT OF REVOLVER LOANS.
5.2.1. Payment of Principal. The outstanding principal amount
of the Revolver Loans shall be repaid as follows:
(i) Any portion of the Revolver Loans consisting of
Base Rate Loans shall be paid by Borrowers to Lender, unless timely
converted to a Euro-Dollar Loan in accordance with this Agreement,
immediately upon (a) each receipt by Lender or a Borrower of any
proceeds of any Collateral (subject to SECTIONS 5.3 and 8.4.2), to the
extent of such proceeds, and (b) the Commitment Termination Date.
Except as otherwise provided in SECTION 5.3, the Lender shall deposit
all Payment Items received in the Lockbox and all Receipts and other
funds on deposit in a Blocked Account in the Collateral Reserve Account
for application to the Obligations.
(ii) Any portion of the Revolver Loans consisting of
Euro-Dollar Loans shall be paid by Borrowers to Lender, unless
converted to a Base Rate Loan or continued as a Euro-Dollar Loan in
accordance with the terms of this Agreement, upon (a) the last day of
the Interest Period applicable thereto and (b) the Commitment
Termination Date. In no event shall Borrowers be authorized to make a
voluntary prepayment with respect to any portion of the Revolver Loan
outstanding as a Euro-Dollar Loan prior to the last day of the Interest
Period applicable thereto unless (x) otherwise agreed in writing by
Lender or Borrowers are otherwise authorized or required by any other
provision of this Agreement to pay any Euro-Dollar Loan outstanding on
a date other than the last day of the Interest Period applicable
thereto, and (y) Borrowers pay to Lender concurrently with any
prepayment of a Euro-Dollar Loan any amount due Lender under SECTION
3.9 as a consequence of such prepayment. Notwithstanding the foregoing
provisions of this SECTION 5.2.1(ii), if, on any date that Lender
receives proceeds of any Collateral, there are no Revolver Loans
outstanding as Base Rate Loans, Lender may hold such proceeds as Cash
Collateral for the Obligations and apply the same to the payment of any
Base Rate Loans thereafter made or to any Euro-Dollar Loans as the same
become due and payable whether at the end of the applicable Interest
Periods or on the Commitment Termination Date.
(iii) Notwithstanding anything to the contrary
contained elsewhere in this Agreement, if an Out-of-Formula Condition
shall exist, Borrowers shall, on the sooner to occur of Lender's demand
or the first Business Day after a Borrower has obtained knowledge of
such Out-of-Formula Condition, repay the outstanding Revolver Loans
that are Base Rate Loans in an amount sufficient to reduce the
aggregate unpaid principal amount of all Revolver Loans by an amount
equal to such excess; and, if such payment of Base Rate Loans is not
sufficient to eliminate the Out-of-Formula Condition, then Borrowers
shall deposit with Lender for application to any outstanding Revolver
Loans that are Euro-Dollar Loans as the same become due and payable
(whether at the
49
end of the applicable Interest Periods or on the Commitment Termination
Date) cash in an amount sufficient to eliminate such Out-of-Formula
Condition, and Lender may (a) hold such deposit as Cash Collateral
pending application to any Euro-Dollar Loans or to any Base Rate Loans
thereafter made, or (b) if a Default or Event of Default exists, apply
such Cash Collateral to pay the Obligations, including any Revolver
Loans outstanding as Euro-Dollar Loans (in which event, Borrower shall
also pay to Lender any and all amounts required by SECTION 3.9 hereof
to be paid by reason of the prepayment of a Euro-Dollar Loan prior to
the last day of the Interest Period applicable thereto).
5.2.2. Payment of Interest. Interest accrued on the Revolver
Loans shall be due and payable on (i) the first calendar day of each month (for
the immediately preceding month), computed through the last calendar day of the
preceding month, with respect to any Revolver Loan (whether a Base Rate Loan or
Euro-Dollar Loan) and (ii) the last day of the applicable Interest Period in the
case of a Euro-Dollar Loan. Accrued interest shall also be paid by Borrowers on
the Commitment Termination Date. With respect to any Base Rate Loan converted
into a Euro-Dollar Loan pursuant to SECTION 3.1.2 on a day when interest would
not otherwise have been payable with respect to such Base Rate Loan, accrued
interest to the date of such conversion on the amount of such Base Rate Loan so
converted shall be paid on the conversion date.
5.3. CONDITIONAL APPLICATION EXEMPTION. Notwithstanding provisions to
the contrary set forth elsewhere herein, Payment Items representing collections
in respect of Accounts in the Lockbox and all Receipts and other funds on
deposit in a Blocked Account shall not be deposited in the Collateral Reserve
Account for application to the Obligations, but shall instead be deposited in
such bank account as the Borrowers may direct, for so long as (i) no Default or
Event of Default shall have occurred, and (ii) Availability exceeds $2,500,000
as of such date. Otherwise, the Lender will deposit any such Payment Items from
the Lockbox and all Receipts and other funds on deposit in a Blocked Account
into the Collateral Reserve Account promptly upon receipt thereof and, except as
otherwise set forth herein, apply such funds to the Revolver Loans and to the
remaining Obligations in accordance with SECTION 5.2.1 hereof. During the
existence of an Event of Default, the Lender may, at any time in its sole
discretion, (A) direct Account Debtors to make payment on the Borrowers'
Accounts, Chattel Paper, or General Intangibles, or portions thereof, directly
to the Lender, and Account Debtors are hereby authorized and directed by the
Borrowers to make such payments directly to the Lender upon its direction; any
such funds received by Lender from Account Debtors may be deposited by the
Lender in the Collateral Reserve Account for application to the Obligations; and
(B) require Borrowers to establish a lockbox (the "New Lockbox") and to direct
any Payment Items in respect of Accounts that are not already directed to the
Lockbox to the New Lockbox. Payment Items representing collection in respect of
Accounts that are currently directed to a Lockbox shall continue to be so
directed.
5.4. PAYMENT OF OTHER OBLIGATIONS. The balance of the Obligations
requiring the payment of money, including the LC Outstandings and Extraordinary
Expenses incurred by
50
Lender, shall be repaid by Borrowers to Lender as and when provided in the
relevant Loan Documents, or, if no date of payment is otherwise specified in the
Loan Documents, ON DEMAND.
5.5. MARSHALING; PAYMENTS SET ASIDE. Lender shall be under no
obligation to marshal any assets in favor of any Borrower or any other Obligor
or against or in payment of any or all of the Obligations. To the extent that
any Borrower makes a payment or payments to Lender or Lender receives payment
from the proceeds of any Collateral or exercises its right of setoff, and such
payment or payments or the proceeds of such enforcement or setoff (or any part
thereof) are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other Person, then to the extent of any loss by Lender, the Obligations or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment or proceeds had not been made received and any such enforcement or
setoff had not occurred. The provisions of the immediately preceding sentence of
this SECTION 5.5 shall survive any termination of the Commitments and Full
Payment of the Obligations.
5.6. APPLICATION OF PAYMENTS AND COLLATERAL PROCEEDS. All Payment Items
received by Lender by 2:00 p.m. on any Business Day shall be deemed received on
that Business Day. All Payment Items received after 2:00 p.m. on any Business
Day shall be deemed received on the following Business Day. Except as otherwise
expressly provided in SECTION 5.3, each Borrower irrevocably waives the right to
direct the application of any and all payments and Collateral proceeds at any
time or times hereafter received by Lender from or on behalf of such Borrower,
and each Borrower does hereby irrevocably agree that Lender shall have the
continuing exclusive right to apply and reapply any and all such payments and
Collateral proceeds received at any time or times hereafter by Lender or its
Lender against the Obligations, in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records.
5.7. LOAN ACCOUNT; ACCOUNT STATED.
5.7.1. Loan Account. Lender shall establish an account on its
books (the "Loan Account") and shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrowers
on any Obligations and all proceeds of Collateral which are finally paid to
Lender, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrowers.
5.7.2. Statements of Account. Lender will account to Borrowers
monthly with a statement of Loans, charges and payments made pursuant to this
Agreement, and such accounting rendered by Lender shall be deemed final, binding
and conclusive upon Borrowers unless Lender is notified by Borrowers in writing
to the contrary within 30 days after the date each accounting is deemed to have
been sent pursuant to SECTION 13.9. Such notice shall only be deemed an
objection to those items specifically objected to therein. Failure of Lender to
render any such account shall in no way affect the rights of Lender hereunder.
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5.8. GROSS UP FOR TAXES. If Borrowers shall be required by Applicable
Law to withhold or deduct any Taxes from or in respect of any sum payable under
this Agreement or any of the other Loan Documents, (a) the sum payable to Lender
shall be increased as may be necessary so that, after making all required
withholding or deductions, Lender receives an amount equal to the sum it would
have received had no such withholding or deductions been made, (b) Borrowers
shall make such withholding or deductions, and (c) Borrowers shall pay the full
amount withheld or deducted to the relevant taxation authority or other
authority in accordance with Applicable Law.
5.9. NATURE AND EXTENT OF EACH BORROWER'S LIABILITY.
5.9.1. Joint and Several Liability. Each Borrower shall be
liable for, on a joint and several basis, and hereby guarantees the timely
payment by all other Borrowers of, all of the Loans and other Obligations,
regardless of which Borrower actually may have received the proceeds of any
Loans or other extensions of credit hereunder or the amount of such Loans
received or the manner in which Lender accounts for such Loans or other
extensions of credit on its books and records, it being acknowledged and agreed
that Loans to any Borrower inure to the mutual benefit of all Borrowers and that
Lender is relying on the joint and several liability of Borrowers in extending
the Loans and other financial accommodations hereunder. Each Borrower hereby
unconditionally and irrevocably agrees that upon default in the payment when due
(whether at stated maturity, by acceleration or otherwise) of any principal of,
or interest owed on, any of the Loans or other Obligations, such Borrower shall
forthwith pay the same, without notice or demand.
5.9.2. Unconditional Nature of Liability. Each Borrower's
joint and several liability hereunder with respect to, and guaranty of, the
Loans and other Obligations shall, to the fullest extent permitted by Applicable
Law, be unconditional irrespective of (i) the validity, enforceability,
avoidance or subordination of any of the Obligations or of any promissory note
or other document evidencing all or any part of the Obligations, (ii) the
absence of any attempt to collect any of the Obligations from any other Obligor
or any Collateral or other security therefor, or the absence of any other action
to enforce the same, (iii) the waiver, consent, extension, forbearance or
granting of any indulgence by Lender with respect to any of the Obligations or
any Instrument or agreement evidencing or securing the payment of any of the
Obligations, or any other agreement now or hereafter executed by any other
Borrower and delivered to Lender, (iv) the failure by Lender to take any steps
to perfect or maintain the perfected status of its security interest in or Lien
upon, or to preserve its rights to, any of the Collateral or other security for
the payment or performance of any of the Obligations, or Lender's release of any
Collateral or of its Liens upon any Collateral, (v) Lender' election, in any
proceeding instituted under the Bankruptcy Code, for the application of Section
1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security
interest by any other Borrower, as debtor-in-possession under Section 364 of the
Bankruptcy Code, (vii) the release or compromise, in whole or in part, of the
liability of any Obligor for the payment of any of the Obligations, (viii) any
amendment or modification of any of the Loan Documents or waiver of any Default
or Event of Default thereunder, (ix) any increase in the amount of the
Obligations beyond any limits imposed herein or in the amount of any interest,
fees or other charges payable in connection therewith, or any
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decrease in the same, (x) the disallowance of all or any portion of Lender's
claims for the repayment of any of the Obligations under Section 502 of the
Bankruptcy Code, or (xi) any other circumstance that might constitute a legal or
equitable discharge or defense of any Obligor. At any time an Event of Default
exists, Lender may proceed directly and at once, without notice to any Obligor,
against any or all of Obligors to collect and recover all or any part of the
Obligations, without first proceeding against any other Obligor or against any
Collateral or other security for the payment or performance of any of the
Obligations, and each Borrower waives any provision that might otherwise require
Lender under Applicable Law to pursue or exhaust its remedies against any
Collateral or Obligor before pursuing such Borrower or another Obligor. Each
Borrower consents and agrees that Lender shall be under no obligation to marshal
any assets in favor of any Obligor or against or in payment of any or all of the
Obligations.
5.9.3. No Reduction in Liability for Obligations. No payment
or payments made by an Obligor or received or collected by Lender from a
Borrower or any other Person by virtue of any action or proceeding or any setoff
or appropriation or application at any time or from time to time in reduction of
or in payment of the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of any Borrower under this Agreement (except to
the extent of such reduction of the Obligations), each of which shall remain
jointly and severally liable for the payment and performance of all Loans and
other Obligations until the Obligations are paid in full and the Commitments are
terminated.
5.9.4. Contribution. Each Borrower is unconditionally
obligated to repay the Obligations as a joint and several obligor under this
Agreement. If, as of any date, the aggregate amount of payments made by a
Borrower on account of the Obligations and proceeds of such Borrower's
Collateral that are applied to the Obligations exceed the aggregate amount of
Loan proceeds actually used by such Borrower in its business (such excess amount
being referred to as an "Accommodation Payment"), then each of the other
Borrowers shall be obligated to make contribution to such Borrower (the "Paying
Borrower") in an amount equal to (A) the product derived by multiplying the sum
of each Accommodation Payment of each Borrower by the Allocable Percentage of
the Borrowers from whom contribution is sought less (B) the amount, if any, of
the then outstanding Accommodation Payment of such Contributing Borrower (such
last mentioned amount which is to be subtracted from the aforesaid product to be
increased by any amounts theretofore paid by such Contributing Borrower by way
of contribution hereunder, and to be decreased by any amounts theretofore
received by such Contributing Borrower by way of contribution hereunder);
provided, however, that a Paying Borrower's recovery of contribution hereunder
from the other Borrowers shall be limited to that amount paid by the Paying
Borrower in excess of its Allocable Percentage of all Accommodation Payments
then outstanding of all Borrowers. As used herein, the term "Allocable
Percentage" shall mean, on any date of determinations thereof, a fraction the
denominator of which shall be equal to the number of Borrowers who are parties
to this Agreement on such date and the numerator of which shall be 1; provided,
however, that such percentages shall be modified in the event that contribution
from a Borrower is not possible by reason of insolvency, bankruptcy or otherwise
by reducing such Borrower's Allocable Percentage equitably and by adjusting the
Allocable Percentage of the other Borrowers proportionately so that the
Allocable Percentages of all Borrowers at all times equals 100%.
53
5.9.5. Subordination. Each Borrower hereby subordinates any
claims, including any right of payment, subrogation, contribution and indemnity,
that it may have from or against any other Obligor, and any successor or assign
of any other Obligor, including any trustee, receiver or debtor-in-possession,
howsoever arising, due or owing or whether heretofore, now or hereafter
existing, to the payment in full of all of the Obligations.
SECTION 6. TERM AND TERMINATION OF COMMITMENTS
6.1. TERM OF COMMITMENTS. Subject to Lender's right to cease making
Loans and other extensions of credit to Borrowers when any Default or Event of
Default exists or upon termination of the Commitments as provided in SECTION 6.2
hereof, the Commitments shall be in effect from the date hereof through the
earlier of (i) the close of business on the second anniversary of the Closing
Date, or (ii) the close of business on the date that is six months prior to the
Final Maturity Date of the guaranteed indebtedness described in that certain
consent letter ("Consent Letter"), dated as of the date hereof, from Lender to
ProxyMed regarding certain Permitted Investments (the "Term"). As used herein,
the term "Final Maturity Date" shall have the meaning ascribed to such term in
the documents evidencing the aforementioned guaranteed indebtedness, as amended
pursuant to paragraph 2(c) of the Consent Letter.
6.2. TERMINATION OR REDUCTION.
6.2.1. Termination by Lender. Lender may terminate the
Commitments without notice upon or after the occurrence of an Event of Default;
provided, however, that the Commitments shall automatically terminate as
provided in SECTION 12.2 hereof.
6.2.2. Termination or Reduction by Borrowers. Borrowers may,
at their option, terminate the Commitments upon at least 10 days prior written
notice to Lender. In addition, upon at least 10 days prior written notice to
Lender, Borrowers may, at their option, either (i) terminate the Commitments or
(ii) reduce the Commitments, in increments of $1,000,000, down to a minimum
amount of not less than $7,500,000; provided, however, that (x) no such
termination by Borrowers shall be effective without Lender's written consent
until Full Payment of the Obligations, and (y) no such reduction shall be
permitted if the reduced Commitments would be less than the aggregate amount of
outstanding and unsatisfied Obligations. Any notice of termination given by
Borrowers shall be irrevocable unless Lender otherwise agrees in writing. No
section of this Agreement or Type of Loan available hereunder may be terminated
by Borrowers singly.
6.2.3. Intentionally Omitted.
6.2.4. Effect of Termination. On the effective date of
termination of the Commitments by Lender or by Borrowers, all of the Obligations
shall be immediately due and payable and Lender shall have no obligation to make
any Loans or to procure any Letters of Credit. All undertakings, agreements,
covenants, warranties and representations of each Borrower contained in the Loan
Documents shall survive any such termination and Lender shall retain its Liens
in the Collateral and all of its rights and remedies under the Loan Documents
54
notwithstanding such termination until Borrowers have satisfied the Obligations
and Lender's receipt from Obligors of a full release of Claims in form and
substance satisfactory to Lender. For purposes of this Agreement, Full Payment
of the Obligations shall not be deemed to have occurred until all Obligations
for the payment of money have been paid to Lender in same day funds and all
Obligations that are at the time in question contingent (including all LC
Outstandings that exist by virtue of an outstanding Letter of Credit) have been
fully cash collateralized to the satisfaction of Lender or Lender has received
as beneficiary a direct pay letter of credit in form and from an issuing bank
acceptable to Lender in its reasonable credit judgment and providing for direct
payment to Lender of all such contingent Obligations at the time they become
fixed (including reimbursement of all sums paid by Lender under any Letter of
Credit). Notwithstanding Full Payment of the Obligations, Lender shall not be
required to terminate its security interests in any of the Collateral unless,
with respect to any loss or damage Lender may incur as a result of the dishonor
or return of any Payment Item applied to the Obligations, Lender shall have
received or retained either (i) a written agreement, executed by Borrowers and
any Person whose loans or other advances to Borrowers are used in whole or in
part to satisfy the Obligations, indemnifying Lender from any such loss or
damage; or (ii) such monetary reserves and Liens on the Collateral for such
period of time as Lender, in its reasonable discretion, may deem necessary to
protect Lender from any such loss or damage. The provisions of SECTION 5.5 and
all obligations of Borrowers to indemnify Lender shall be joint and several and
pursuant to any of the Loan Documents shall in all events survive any
termination of the Commitments.
SECTION 7. COLLATERAL SECURITY
7.1. GRANT OF SECURITY INTEREST IN COLLATERAL. To secure the prompt
payment and performance of all of the Obligations, each Borrower hereby grants
to Lender, for the benefit of itself and of the other Secured Parties, a
continuing security interest in and Lien upon all of such Borrower's assets,
including all of the following Property and interests in Property of such
Borrower, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located:
(i) all Accounts Collateral;
(ii) all Goods, including all Inventory and Equipment;
(iii) all Instruments;
(iv) all Chattel Paper;
(v) all Documents;
(vi) all General Intangibles;
(vii) all Deposit Accounts;
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(viii) all Investment Property (but excluding any portion
thereof that constitutes Margin Stock unless otherwise expressly
provided in any Security Document), to the extent the grant of a
security interest and Lien thereon by Borrowers to Lender is not
prohibited by any provision of any statute, rule, regulation or order
issued by the Securities and Exchange Commission;
(ix) all Letter of Credit Rights;
(x) all Supporting Obligations;
(xi) all monies now or at any time or times hereafter in the
possession or under the control of Lender or a bailee or Affiliate of
Lender, including any Cash Collateral in the Cash Collateral Account;
(xii) all accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (i) through
(xi) above, including proceeds of and unearned premiums with respect to
insurance policies insuring any of the Collateral and claims against
any Person for loss of, damage to, or destruction of any of the
Collateral; and
(xiii) all books and records (including customer lists, files,
correspondence, tapes, computer programs, print-outs, and other
computer materials and records) of such Borrower pertaining to any of
(i) through (xii) above.
7.2. DEPOSIT ACCOUNTS/BLOCKED ACCOUNT AGREEMENTS. On or before the
December 31, 2003 and, thereafter prior to establishing any Deposit Account (the
establishment of which shall be subject to the prior written consent of the
Lender), each bank at which a Deposit Account is or will be located shall have
entered into a Blocked Account Agreement with Borrowers and Lender, satisfactory
in form and substance to Lender, which shall become operative, in the case of
Deposit Accounts existing as of the Closing Date, on the Closing Date, and with
respect to those established after the Closing Date, on the date such account is
established. Each Blocked Account Agreement shall be substantially in the form
of EXHIBIT I hereto and shall provide for, among other things, (A) that the
Receipts and any and all other funds on deposit in such Blocked Account are the
collateral of Lender and are held by such Clearing Bank as agent or
bailee-in-possession for Lender, (B) that such bank has no lien upon, or right
to setoff against, such Blocked Account, the Receipts, or any other funds from
time to time on deposit therein, other than for its service fees and other
charges relating to such account and for returned checks, credit card disputes
or other items of payment, and (C) subject to the terms of SECTION 5.3 hereof,
that such bank will wire, or otherwise transfer, in next day funds on a daily
basis, all Receipts and other funds on deposit in such accounts, into the
Collateral Reserve Account for application on account of the Obligations.
Subject to the rights of the Borrowers hereunder, Borrowers agree that all
deposits made in, and payments made to, a Blocked Account and other funds
received and collected by Lender, whether on the Accounts or as proceeds of
Inventory or other Collateral or otherwise shall be the collateral of Lender,
subject to the sole dominion and control of the Lender. If the Borrower is
unable to obtain a Blocked
56
Account Agreement with respect to a Deposit Account, Lender may, at its option,
establish a reserve against the non Liquid Collateral portion of the Borrowing
Base sufficient, based upon the determination of the Lender in its sole
discretion, to insure that there will be no impairment of the Collateral.
7.3. INTENTIONALLY OMITTED.
7.4. OTHER COLLATERAL.
7.4.1. Cash Collateral. In addition to the items of Property
referred to in SECTION 7.1 above, the Obligations shall also be secured by the
Cash Collateral to the extent provided herein and all of the other items of
Property from time to time described in any of the Security Documents as
security for any of the Obligations.
7.4.2. Commercial Tort Claims. Borrowers shall promptly notify
Lender in writing upon any Borrower's obtaining a Commercial Tort Claim after
the Closing Date against any Person and, upon Lender's written request, promptly
enter into an amendment to this Agreement (or any of the other Loan Documents)
and do such other acts or things deemed appropriate by Lender to confer upon
Lender a security interest in each such Commercial Tort Claim.
7.4.3. Certain After-Acquired Collateral. Borrowers shall promptly
notify Lender in writing upon any Borrower's obtaining any Collateral after the
Closing Date consisting of Deposit Accounts, Investment Property,
Letter-of-Credit Rights or Electronic Chattel Paper and, upon Lender's request,
shall promptly execute such documents and do such other acts or things deemed
appropriate by Lender to confer upon Lender control with respect to such
Collateral, promptly notify Lender in writing upon any Borrower's obtaining any
Collateral after the Closing Date consisting of Documents or Instruments and,
upon Lender's request, shall promptly execute such documents and do such other
acts or things deemed appropriate by Lender to deliver to it possession of such
Documents as are negotiable and Instruments, and, with respect to non-negotiable
Documents, to have such non-negotiable Documents issued in the name of Lender;
and with respect to Collateral in the possession of a third party, other than
certificated securities and Goods covered by a Document, Borrowers shall obtain
an acknowledgment from the third party that is in possession of such Collateral
that such third party holds the Collateral for the benefit of Lender.
7.5. NO ASSUMPTION OF LIABILITY. The security interest granted pursuant
to this Agreement is granted as security only and shall not subject Lender to,
or in any way alter or modify, any obligation of liability of Borrowers with
respect to or arising out of any of the Collateral.
7.6. LIEN PERFECTION; FURTHER ASSURANCES. Promptly after Lender's
request therefor, Borrowers shall execute or cause to be executed and deliver to
Lender such instruments, assignments, title certificates or other documents as
are necessary under the UCC or other Applicable Law to perfect (or continue the
perfection of) Lender's security interest in the
57
Collateral and shall take such other action as may be requested by Lender to
give effect to or carry out the intent and purposes of this Agreement. Unless
prohibited by Applicable Law, each Borrower hereby irrevocably authorizes Lender
to execute and file in any jurisdiction any financing statement or amendment
thereto on such Borrower's behalf, including financing statements that indicate
the Collateral (i) as all assets or all personal property of Borrowers or words
to similar effect or (ii) as being of an equal or lesser scope, or with greater
or lesser detail, than as set forth in this SECTION 7. Borrowers also hereby
ratify any filing by Lender in any jurisdiction any like financing statement or
amendment thereto if filed prior to the date hereof. The parties agree that a
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement and may be filed in any appropriate office in lieu
thereof.
7.7. EXCLUSION FOR CERTAIN CONTRACTS AND LEASES. Notwithstanding
anything to the contrary set forth in SECTION 7.1 above, the types or items of
Collateral described in such Section shall not include any rights or interests
in any contract, lease, permit, license, charter or license agreement covering
real or personal Property, as such, if under the terms of such contract, lease,
permit, license, charter or license agreement, or Applicable Law with respect
thereto, the valid grant of a security interest or Lien therein to Lender is
prohibited and such prohibition has not been or is not waived or the consent of
the other party to such contract, lease, permit, license, charter or license
agreement has not been or is not otherwise obtained or under Applicable Law such
prohibition cannot be waived, provided that the foregoing exclusion shall in no
way be construed (a) to apply if any such prohibition is unenforceable under
Section 9-318 of the UCC or other Applicable Law or (b) so as to limit, impair
or otherwise affect Lender's unconditional continuing security interests in and
Liens upon any rights or interests of Borrowers in or to monies due or to become
due under any such contract, lease, permit, license, charter or license
agreement (including any Accounts).
SECTION 8. COLLATERAL ADMINISTRATION
8.1. GENERAL.
8.1.1. Location of Collateral. All tangible items of
Collateral, other than Inventory in transit, intelligent remote printing devices
used for laboratory results, P.O.S. Devices leased to customers, and equipment
used in home offices of employees, shall at all times be kept by Borrowers at
one or more of the business locations of a Borrower set forth in SCHEDULE 8.1.1
hereto and shall not be moved therefrom, without the prior written approval of
Lender, which approval shall not be unreasonably withheld, except (unless Lender
otherwise notifies Borrower at the time that an Event of Default exists), a
Borrower may (i) make sales of Inventory in the Ordinary Course of Business and
(ii) dispose of Equipment to the extent authorized by SECTION 8.4.2 hereof and
(iii) move Inventory, Equipment or any record relating to any Collateral to a
location in the United States other than those shown on SCHEDULE 8.1.1 hereto so
long as (A) with respect to any Inventory, record relating to any Collateral
other than Equipment, or, subject to subsection (B) below, Equipment or record
relating to such Equipment, such Borrowers have given Lender at least 30 days
prior written notice of such new location, or (B) with respect to any Equipment
of less than $100,000 in value during any six month period or record relating to
such Equipment, Borrowers give to the Lender written notice of such new
58
location not later than 10 days following such move, and prior to moving any
Inventory or Equipment to such location where there have been filed any UCC-1
financing statements and any other appropriate documentation necessary to
perfect or continue the perfection of Lender's first priority Liens with respect
to such Inventory or Equipment. Notwithstanding anything to the contrary
contained in this Agreement, no Borrower shall be permitted to keep, store or
otherwise maintain any Collateral at any location (including any location
described in SCHEDULE 8.1.1) unless (i) such Borrower is the owner of such
location, (ii) such Borrower leases such location and the landlord has executed
in favor of Lender a Lien Waiver, or (iii) the Collateral consists of Inventory
placed with a warehouseman or processor, Lender has received from such
warehouseman, bailee or processor an acceptable Lien Waiver and an appropriate
UCC-1 financing statement has been filed with the appropriate Governmental
Authority in the jurisdiction where such warehouseman, bailee or processor is
located in order to perfect, or to maintain the uninterrupted perfection of,
Lender's security interest in such Inventory.
8.1.2. Insurance of Collateral; Condemnation Proceeds. Each
Borrower shall maintain and pay for insurance upon all Collateral, wherever
located, covering products liability, business interruption, casualty, hazard,
public liability, theft, embezzlement or other criminal misappropriation,
malicious mischief, and such other risks in such amounts and with such insurance
companies as are reasonably satisfactory to Lender. SCHEDULE 8.1.2 describes all
insurance of each Borrower in effect on the date hereof. All proceeds payable
under each such policy relating to coverage for loss of Collateral shall be
payable to Lender for application to the Obligations. Each Borrower shall
deliver the originals or certified copies of such policies to Lender with
satisfactory lender's loss payable endorsements reasonably satisfactory to
Lender, naming Lender as sole lender's loss payee, assignee or additional
insured, as appropriate. Each policy of insurance or endorsement shall contain a
clause requiring the insurer to give not less than 30 days prior written notice
to Lender in the event of cancellation of the policy for any reason whatsoever
and a clause specifying that the interest of Lender shall not be impaired or
invalidated by any act or neglect of any Borrower or the owner of the Property
or by the occupation of the premises for purposes more hazardous than are
permitted by said policy. If any Borrower fails to provide and pay for such
insurance, Lender may, at its option, but shall not be required to, procure the
same and charge each Borrower therefor. Each Borrower agrees to deliver to
Lender, promptly as rendered, true copies of all reports made in any reporting
forms to insurance companies. For so long as no Event of Default exists, each
Borrower shall have the right to settle, adjust and compromise any claim with
respect to any insurance maintained by each Borrower provided that all proceeds
thereof are applied in the manner specified in this Agreement, and Lender agrees
promptly to provide any necessary endorsement to any checks or drafts issued in
payment of any such claim. At any time that an Event of Default exists and there
are borrowings outstanding in excess of Liquid Collateral, only Lender shall be
authorized, upon 5 day prior written notice to Borrowers, to settle, adjust and
compromise such claims. Lender shall have all rights and remedies with respect
to such policies of insurance as are provided for in this Agreement and the
other Loan Documents.
8.1.3. Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, all Taxes imposed by any Applicable Law on any of the Collateral or
in respect of the sale thereof, and all other payments required to
59
be made by Lender to any Person to realize upon any Collateral shall be borne
and paid by Borrowers. Lender shall not be liable or responsible in any way for
the safekeeping of any of the Collateral or for any loss or damage thereto
(except for reasonable care in the custody thereof while any Collateral is in
Lender's actual possession) or for any diminution in the value thereof, or for
any act or default of any warehouseman, carrier, forwarding agency, or other
Person whomsoever, but the same shall be at Borrowers' sole risk.
8.1.4. Defense of Title to Collateral. Borrowers shall at all
times defend their title to the Collateral and Lender's Liens therein against
all Persons and all claims and demands whatsoever other than Permitted Liens.
8.2. ADMINISTRATION OF ACCOUNTS.
8.2.1. Schedules of Accounts.
(a) During each Reporting Month, each Borrower shall provide
to Lender (i) within 20 days after the end of each such Reporting Month, a sales
and collection report prepared as of the last day of the immediately preceding
month, (ii) within 20 days after the end of each such Reporting Month, a listing
of ineligible Accounts and ineligible Inventory prepared as of the last day of
the immediately preceding month, and (iii) on or before the 20th day of each
such Reporting Month, a detailed aged trial balance of all of its Accounts
existing as of the last day of the preceding month, specifying the names, face
value, dates of invoices and due dates for each Account Debtor obligated on an
Account so listed and identifying any foreign Accounts ("Schedule of Accounts").
In addition, on an annual basis, each Borrower shall provide the addresses of
each Account Debtor in conjunction with the information required in the
preceding clause (iii).
(b) Upon Lender's request therefor in respect of any Reporting
Month, each Borrower also shall provide to Lender copies of proof of delivery
and a copy of all documents, including repayment histories and present status
reports relating to the Accounts so scheduled in the Schedule of Accounts and
such other matters and information relating to the status of then existing
Accounts as Lender shall reasonably request. In addition, if Accounts in an
aggregate face amount in excess of $750,000 cease to be Eligible Accounts in
whole or in part, Borrowers shall notify Lender of such occurrence promptly (and
in any event within 3 Business Days) after any Borrower's having obtained
knowledge of such occurrence and the Borrowing Base shall thereupon be adjusted
to reflect such occurrence. Each Borrower shall deliver to Lender copies of
invoices or invoice registers related to all of its Accounts.
8.2.2. Discounts, Disputes and Returns. If any Borrower grants
any discounts, allowances or credits that are not shown on the face of the
invoice for the Account involved, Borrowers shall report such discounts,
allowances or credits, as the case may be, to Lender as part of the next
required Schedule of Accounts. If any amounts due and owing in excess of
$200,000 are in dispute between any Borrower and any Account Debtor, or if any
returns are made in excess of $200,000 with respect to any Accounts owing from
an Account Debtor, Borrowers shall provide Lender with written notice thereof at
the time of submission of the next
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Schedule of Accounts, explaining in detail the reason for the dispute or return,
all claims related thereto and the amount in controversy. Upon and after the
occurrence and continuance of an Event of Default, if there are borrowings
outstanding in excess of Liquid Collateral, Lender shall have the right to
settle or adjust all disputes and claims directly with the Account Debtor and to
compromise the amount or extend the time for payment of the Accounts upon such
terms and conditions as Lender may deem advisable, and to charge the
deficiencies, costs and expenses thereof, including reasonable attorneys' fees,
to Borrowers.
8.2.3. Taxes. If an Account of any Borrower includes a charge
for any Taxes payable to any governmental taxing authority, Lender is
authorized, in its sole discretion, to pay the amount thereof to the proper
taxing authority for the account of such Borrower and to charge Borrowers
therefor; provided, however, that Lender shall not be liable for any Taxes that
may be due by any Borrower.
8.2.4. Account Verification. Whether or not a Default or an
Event of Default exists, Lender shall have the right, at any time or times
hereafter, in the name of Lender, any designee of Lender or any Borrower, to
verify the validity, amount or any other matter relating to any Accounts of any
Borrower by mail, telephone, telegraph or otherwise. Borrowers shall cooperate
fully with Lender in an effort to facilitate and promptly conclude any such
verification process.
8.2.5. Records of Accounts. Each Borrower shall keep accurate
and complete records of its Accounts and all payments and collections thereon.
8.3. ADMINISTRATION OF INVENTORY.
8.3.1. Reports of Inventory. During each Reporting Month,
Borrowers shall furnish Lender Inventory reports respecting such Inventory in
form and detail reasonably satisfactory to Lender at such times as Lender may
request, but so long as no Default or Event of Default exists no more frequently
than once a month, within 20 days after the end of each month, at all other
times. Borrowers shall conduct periodic cycle counts consistent with Borrowers'
historical practices and shall provide to Lender a report based on each such
cycle count promptly thereafter, showing in reasonable detail the locations of
and values for specific items of Inventory and such other information and
supporting documents regarding Inventory that the Lender deems necessary. Lender
may participate in and observe each cycle count of inventory, which
participation shall be at Borrowers' expense.
8.3.2. Returns of Inventory. No Borrower shall return any of
its Inventory to a supplier or vendor thereof, or any other Person, whether for
cash, credit against future purchases or then existing payables, or otherwise,
unless (i) such return is in the Ordinary Course of Business of such Borrower
and such Person, (ii) no Default or Event of Default exists or would result
therefrom, (iii) the return of such Inventory will not result in an
Out-of-Formula Condition, (iv) Borrowers promptly notify Lender if the aggregate
Value of all Inventory returned in any month exceeds $250,000, and (v) any
payment received by any Borrower in connection with any
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such return is promptly turned over to Lender for application to the
Obligations, subject to the terms of SECTION 5.3.
8.3.3. Acquisitions of Inventory. No Borrower shall acquire or
accept any Inventory on consignment or approval and each Borrower will use its
best efforts to insure that all Inventory that is produced in the United States
of America will be produced in accordance with the FLSA.
8.3.2 Records of Inventory. Each Borrower shall keep accurate
and complete records of its Inventory.
8.4. ADMINISTRATION OF EQUIPMENT.
8.4.1. Schedules of Equipment. Each Borrower shall furnish to
Lender a current schedule itemizing and describing the kind, type, quantity and
cost of its Equipment other than P.O.S. Devices or intelligent remote printing
devices and all dispositions made in accordance with SECTION 8.4.2 hereof if and
with such frequency as may be requested by Lender. Promptly after request
therefor by Lender, Borrowers shall deliver to Lender any and all evidence of
ownership, if any, of any of the Equipment.
8.4.2. Dispositions of Equipment. No Borrower will sell, lease
or otherwise dispose of or transfer any of its Equipment or any part thereof
except in the Ordinary Course of Business without the prior written consent of
Lender; provided, however, that the foregoing restriction shall not apply, for
so long as no Default or Event of Default exists, to (i) dispositions of
Equipment which, in the aggregate as to all Borrowers during any consecutive
twelve-month period, has a fair market value or book value, whichever is more,
of $500,000 or less, provided that all Net Disposition Proceeds thereof are,
subject to the terms of SECTION 5.3, remitted to Lender for application to the
Obligations, or (ii) replacements of Equipment that is substantially worn,
damaged or obsolete with Equipment of like kind, function and value, provided
that the replacement Equipment shall be acquired prior to or concurrently with
any disposition of the Equipment that is to be replaced, the replacement
Equipment shall be free and clear of Liens other than Permitted Liens.
8.4.3. Condition of Equipment. The Equipment is in good
operating condition and repair, and all necessary replacements of and repairs
thereto shall be made so that the value and operating efficiency of the
Equipment shall be maintained and preserved, reasonable wear and tear excepted.
Borrowers shall ensure that the Equipment shall be mechanically and structurally
sound, capable of performing the functions for which the Equipment was
originally designed, in accordance with the manufacturer's published and
recommended specifications. Except as set forth in SCHEDULE 8.4, no Borrower
will permit any of the Equipment to become affixed to any real Property leased
to such Borrower so that an interest arises therein under the real estate laws
of the applicable jurisdiction unless the landlord of such real Property has
executed a landlord waiver or leasehold mortgage in favor of and in form
reasonably acceptable to Lender, and no Borrower will permit any of the
Equipment to become an accession to any personal Property that is subject to a
Lien unless the Lien is a Permitted Lien.
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8.4.4. Records of Equipment. Each Borrower shall keep accurate
records itemizing and describing the kind, type, quality, quantity and cost of
its Equipment and all dispositions made in accordance with SECTION 8.4.2 hereof.
8.5. BORROWING BASE CERTIFICATES. Unless otherwise agreed to by Lender
in writing, on the Closing Date Borrowers shall deliver to Lender a Borrowing
Base Certificate prepared as of the close of business on September 30, 2003. In
addition, Borrowers shall deliver to Lender a Borrowing Base Certificate (a)
with respect to any Reporting Month, (i) on or before the fifteenth day of the
following month if Availability during the applicable Reporting Month is equal
to or greater than $5,000,000, or (ii) at such times and with such frequency and
including such additional information, as Lender may request, if Availability
during the applicable Reporting Month is less than $5,000,000, and (b) if a
Default or Event of Default has occurred, at such times and with such frequency
and including such additional information, as Lender may request. Such Borrowing
Base Certificates shall be prepared as of the close of business on the last day
of the applicable Reporting Month or as otherwise indicated by Lender and shall
be in the form attached hereto as EXHIBIT H. All calculations of Availability in
connection with the preparation of any Borrowing Base Certificate shall
originally be made by Borrowers and certified by a Senior Officer of Borrowers'
Agent to Lender, provided, that, Lender shall have the right to review and
adjust, in the exercise of its reasonable credit judgment, any such calculation
(i) to reflect its reasonable estimates of declines in value of any of the
Collateral described therein and (ii) to the extent that such calculation is not
in accordance with this Agreement or does not accurately reflect the amount of
the Availability Reserve. In no event shall the amount of the Borrowing Base be
deemed to exceed the amount of the Borrowing Base shown on the Borrowing Base
Certificate last received by Lender prior to such date, as such Borrowing Base
Certificate may be adjusted as herein authorized.
SECTION 9. REPRESENTATIONS AND WARRANTIES
9.1. GENERAL REPRESENTATIONS AND WARRANTIES. To induce Lender to enter
into this Agreement and to make available the Commitments hereunder, each
Borrower warrants and represents to Lender that:
9.1.1. Organization and Qualification. Each Borrower and each
of its Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization. Each Borrower
and each of its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on SCHEDULE 9.1.1 hereto and in all other states and jurisdictions in
which the failure of such Borrower or any of such Subsidiaries to be so
qualified would have a Material Adverse Effect.
9.1.2. Power and Authority. Each Borrower and each of its
Subsidiaries is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of the
other Loan Documents have been duly authorized by all necessary action and do
not and will not (i) require any consent or approval of any of the holders
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of the Equity Interests of any Borrower or any of its Subsidiaries; (ii)
contravene any Borrower's or any of its Subsidiaries' Organization Documents;
(iii) violate, or cause any Borrower or any of its Subsidiaries to be in default
under, any provision of any Applicable Law, order, writ, judgment, injunction,
decree, determination or award in effect having applicability to such Borrower
or any of its Subsidiaries; (iv) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease or
instrument to which any Borrower or any of its Subsidiaries is a party or by
which it or its Properties may be bound or affected; or (v) result in, or
require, the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the Properties now owned or hereafter acquired by
any Borrower or any of its Subsidiaries.
9.1.3. Legally Enforceable Agreement. This Agreement is, and
each of the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each Borrower and each of its
Subsidiaries signatories thereto enforceable against it in accordance with the
respective terms of such Loan Documents, except as the enforceability thereof
may be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors' rights.
9.1.4. Capital Structure. As of the date hereof, SCHEDULE
9.1.4 hereto states (i) the correct name of each Subsidiary, its jurisdiction of
organization and the percentage of its Equity Interests having voting powers
owned by each Person, (ii) the name of each Borrower's corporate or joint
venture Affiliates and the nature of the affiliation, (iii) the number, nature
and holder of all outstanding Equity Interests of each Borrower and each of its
Subsidiaries and (iv) the number of authorized and issued Equity Interests (and
treasury shares) of each Borrower and each of its Subsidiaries. Each Borrower
has good title to all of the shares it purports to own of the Equity Interests
of each of its Subsidiaries, free and clear in each case of any Lien other than
Permitted Liens. All such Equity Interests have been duly issued and are fully
paid and non-assessable. Except as otherwise set forth on SCHEDULE 9.1.4 hereto,
(x) there are no outstanding options to purchase, or any rights or warrants to
subscribe for, or any commitments or agreements to issue or sell, or any Equity
Interests or obligations convertible into, or any powers of attorney relating
to, shares of the capital stock of any Borrower or any of its Subsidiaries, and
(y) there are no outstanding agreements or instruments binding upon the holders
of any Borrower's Equity Interests relating to the ownership of its Equity
Interests.
9.1.5. Names. During the 5-year period preceding the date of
this Agreement, neither any Borrower nor any of its Subsidiaries has been known
as or used any name (whether a fictitious name, trade name or otherwise) except
those listed on SCHEDULE 9.1.5 hereto. Except as set forth on SCHEDULE 9.1.5, no
Borrower nor any of its Subsidiaries has been the surviving corporation of a
merger or consolidation or acquired all or substantially all of the assets of
any Person.
9.1.6. Business Locations; Agent for Process. As of the date
hereof, the chief executive office and other places of business of each Borrower
and each of its Subsidiaries are as listed on SCHEDULE 8.1.1 hereto. During the
five-year period preceding the date of this Agreement, no Borrower nor any of
its Subsidiaries has had an office, place of business or agent
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for service of process other than as listed on SCHEDULE 8.1.1. Except as shown
on SCHEDULE 8.1.1 on the date hereof, no Inventory of any Borrower or any of its
Subsidiaries is stored with a bailee, warehouseman or similar Person, nor is any
Inventory consigned to any Person.
9.1.7. Title to Properties; Priority of Liens. Each Borrower
and each of its Subsidiaries has good and marketable title to and fee simple
ownership of, or valid and subsisting leasehold interests in, all of its real
Property, and good title to all of its personal Property, including all Property
reflected in the financial statements referred to in SECTION 9.1.9 or delivered
pursuant to SECTION 10.1.3, in each case free and clear of all Liens except
Permitted Liens. Each Borrower has paid or discharged, and has caused each
Subsidiary to pay and discharge, all lawful claims which, if unpaid, might
become a Lien against any Borrower's Properties that is not a Permitted Lien.
The Liens granted to Lender pursuant to this Agreement and the Security
Documents are first priority Liens, subject only to those Permitted Liens which
are expressly permitted by the terms of this Agreement to have priority over the
Liens of Lender.
9.1.8. Accounts. Lender may rely, in determining which
Accounts are Eligible Accounts, on all statements and representations made by a
Borrower with respect to any Account. Unless otherwise indicated in writing to
Lender, with respect to each Account, Borrower warrants that:
(i) It is genuine and in all respects what it
purports to be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and
delivery of goods or rendition of services by a Borrower in the
Ordinary Course of Business and in accordance with the terms and
conditions of all purchase orders, contracts or other documents
relating thereto and forming a part of the contract between a Borrower
and the Account Debtor;
(iii) It is for a sum certain maturing as stated in
the duplicate invoice covering such sale or rendition of services, a
copy of which has been furnished or is available to Lender on request;
(iv) Such Account, and Lender's security interest
therein, is not, and will not (by voluntary act or omission of a
Borrower) be in the future, subject to any offset, Lien, deduction,
defense, dispute, counterclaim or any other adverse condition except
for disputes resulting in returned goods where the amount in
controversy is deemed by Lender to be immaterial, and each such Account
is absolutely owing to a Borrower and is not contingent in any respect
or for any reason;
(v) The contract under which such Account arose does
not condition or restrict any Borrower's right to assign to Lender the
right to payment thereunder unless Borrowers have obtained the Account
Debtor's consent to such collateral assignment or complied with any
conditions to such assignment (regardless of whether under the UCC
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or other Applicable Law any such restrictions are ineffective to
prevent the grant of a Lien upon such Account in favor of Lender);
(vi) Such Borrower has made no agreement with any
Account Debtor for any extension, compromise, settlement or
modification of any such Account or any deduction therefrom, except
discounts or allowances which are granted by a Borrower in the ordinary
course of its business for prompt payment and which are reflected in
the calculation of the net amount of each respective invoice related
thereto and are reflected in the Schedules of Accounts submitted to
Lender pursuant to SECTION 8.2.1 hereof;
(vii) To the best of such Borrower's knowledge, there
are no facts, events or occurrences which are reasonably likely to
impair the validity or enforceability of any of its Accounts or reduce
the amount payable thereunder from the face amount of the invoice and
statements delivered to Lender with respect thereto;
(viii) To the best of such Borrower's knowledge, the
Account Debtor thereunder (1) had the capacity to contract at the time
any contract or other document giving rise to the Account was executed
and (2) such Account Debtor is Solvent;
(ix) To the best of such Borrower's knowledge, there
are no proceedings or actions which are threatened or pending against
any Account Debtor which might result in any material adverse change in
such Account Debtor's financial condition or the collectibility of such
Account; and
(x) There are no restrictions on such Borrower's
right to assign to Lender the right to payment represented by the
Account or any Lien upon the Account.
9.1.9. Financial Statements; Fiscal Year. The balance sheets
of Borrowers and such other Persons described therein (including the accounts of
all Subsidiaries of Borrowers for the respective periods during which a
Subsidiary relationship existed) as of December 31, 2002, and the related
statements of income, changes in stockholder's equity, and changes in financial
position for the periods ended on such dates, have been prepared in accordance
with GAAP, and present fairly the financial positions of Borrowers and such
Persons at such dates and the results of Borrowers' operations for such periods.
Since July 31, 2003, there has been no material change in the condition,
financial or otherwise, of any Borrower or such other Persons as shown on the
balance sheet as of such date and no change in the aggregate value of Equipment
and real Property owned by any Borrower or such other Persons.
9.1.10. Full Disclosure. The financial statements referred to
in SECTION 9.1.9 hereof do not contain any untrue statement of a material fact
and neither this Agreement nor any other written statement contains or omits any
material fact necessary to make the statements contained herein or therein not
materially misleading. There is no fact or circumstances in existence on the
date hereof which any Borrower has failed to disclose to Lender in writing that
may reasonably be expected to have a Material Adverse Effect.
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9.1.11. Solvent Financial Condition. Each Borrower and each of
its Subsidiaries is now Solvent and, after giving effect to the Loans to be made
hereunder, the Letters of Credit to be issued in connection herewith and the
consummation of the other transactions described in the Loan Documents, each
Borrower and each of its Subsidiaries will be Solvent.
9.1.12. Surety Obligations. Except as set forth on SCHEDULE
9.1.12 hereto, no Borrower nor any of its Subsidiaries is obligated as surety or
indemnitor under any surety or similar bond or other contract issued or entered
into any agreement to assure payment, performance or completion of performance
of any undertaking or obligation of any Person.
9.1.13. Taxes. The FEIN of each Borrower and each of its
Subsidiaries is as shown on SCHEDULE 9.1.13 hereto. Each Borrower and each of
its Subsidiaries has filed all federal, state and local tax returns and other
reports it is required by law to file and has paid, or made provision for the
payment of, all Taxes upon it, its income and Properties as and when such Taxes
are due and payable, except to the extent being Properly Contested. The
provision for Taxes on the books of Borrowers and their Subsidiaries are
adequate for all years not closed by applicable statutes, and for their current
Fiscal Year.
9.1.14. Brokers. There are no claims for brokerage
commissions, finder's fees or investment banking fees in connection with the
transactions contemplated by this Agreement or any of the other Loan Documents.
9.1.15. Intellectual Property. Each Borrower and each of its
Subsidiaries owns or has the lawful right to use all Intellectual Property
necessary for the present and planned future conduct of its business without any
conflict with the rights of others; there is no objection to or pending or, to
the knowledge of any Borrower, threatened Intellectual Property Claim with
respect to any Borrower's right to use any such Intellectual Property and no
Borrower is aware of any grounds for challenge or objection thereto; and, except
as may be described on SCHEDULE 9.1.15, no Borrower pays any royalty or other
compensation to any Person for the right to use any Intellectual Property. All
such patents, trademarks, service marks, trade names, copyrights, licenses and
other similar rights are listed on SCHEDULE 9.1.15 hereto, to the extent they
are registered under any Applicable Law or are otherwise material to any
Obligor's business.
9.1.16. Governmental Approvals. To the best of Borrowers'
knowledge, each Borrower and each of its Subsidiaries has, and is in good
standing with respect to all Governmental Approvals necessary to continue to
conduct its business as heretofore or proposed to be conducted by it and to own
or lease and operate its Properties as now owned or leased by it.
9.1.17. Compliance with Laws. To the best of Borrowers'
knowledge, each Borrower and each of its Subsidiaries has duly complied with,
and its Properties, business operations and leaseholds are in compliance in all
material respects with, the provisions of all Applicable Law (except to the
extent that any such noncompliance with Applicable Law could not reasonably be
expected to have a Material Adverse Effect) and there have been no citations,
notices or orders of noncompliance issued to any Borrower or any of its
Subsidiaries under any such law, rule or regulation. No Inventory has been
produced in violation of the FLSA.
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9.1.18. Burdensome Contracts. No Borrower nor any of its
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which has or could be reasonably expected to have a
Material Adverse Effect. No Borrower nor any of its Subsidiaries is a party or
subject to any Restrictive Agreement.
9.1.19. Litigation; Commercial Tort Claims. Except as set
forth on SCHEDULE 9.1.19 hereto, there are no actions, suits, proceedings or
investigations pending, or to the knowledge of any Borrower, threatened, against
or affecting any Borrower or any of its Subsidiaries, or the business,
operations, Properties, prospects, profits or condition of any Borrower or any
of its Subsidiaries, (i) which relate to any of the Loan Documents or any of the
transactions contemplated thereby or (ii) which, if determined adversely to
Borrower or any Subsidiary, could reasonably be expected to have a Material
Adverse Effect. To the knowledge of Borrowers and their Subsidiaries, no
Borrower or any of its Subsidiaries is in default on the date hereof with
respect to any order, writ, injunction, judgment, decree or rule of any court,
Governmental Authority or arbitration board or tribunal. Except as set forth on
SCHEDULE 9.1.19 hereto, no Borrower has any Commercial Tort Claims.
9.1.20. No Defaults. No event has occurred and no condition
exists which would, upon or after the execution and delivery of this Agreement
or Borrowers' performance hereunder, constitute a Default or an Event of
Default. No Borrower nor any of its Subsidiaries is in default, and no event has
occurred and no condition exists which constitutes or which with the passage of
time or the giving of notice or both would constitute a default, under any
Material Contract or in the payment of any Debt to any Person for Money
Borrowed.
9.1.21. Leases. SCHEDULE 9.1.21 hereto is a complete listing
of each capitalized and operating lease of each Borrower and each of its
Subsidiaries on the date hereof that constitutes a Material Contract. Each
Borrower and each of its Subsidiaries is in substantial compliance with all of
the terms of each of its respective capitalized and operating leases and, to the
knowledge of Borrowers, there is no basis upon which the lessors under any such
leases could terminate same or declare any Borrower or any of its Subsidiaries
in default thereunder.
9.1.22. Pension Plans. Except as disclosed on SCHEDULE 9.1.22
hereto, no Borrower nor any of its Subsidiaries has any Plan on the date hereof.
Each Borrower and each of its Subsidiaries are in full compliance with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. No fact or situation that is reasonably likely to result in a
material adverse change in the financial condition of any Borrower or any of its
Subsidiaries exists in connection with any Plan. No Borrower nor any of its
Subsidiaries has any withdrawal liability in connection with a Multiemployer
Plan.
9.1.23. Trade Relations. To the best of Borrowers' knowledge,
except as otherwise set forth on SCHEDULE 9.1.23, there exists no actual or
threatened termination, cancellation or limitation of, or any modification or
change in, the business relationship between any Borrower or any of its
Subsidiaries and any Person or any group of customers whose purchases
individually or in the aggregate are material to the business of any Borrower or
any of its Subsidiaries, or with any material supplier, and there exists no
condition or state of facts or
68
circumstances which would have a Material Adverse Effect or prevent any Borrower
or any of its Subsidiaries from conducting such business after the consummation
of the transactions contemplated by this Agreement in substantially the same
manner in which it has heretofore been conducted.
9.1.24. Labor Relations. Except as described on SCHEDULE
9.1.24 hereto, no Borrower nor any of its Subsidiaries is a party to any
collective bargaining agreement on the date hereof. On the date hereof, there
are no material grievances, disputes or controversies with any union or any
other organization of any Borrower's or any of its Subsidiaries' employees, or,
to any Borrower's knowledge, threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.
9.1.25. Not a Regulated Entity. No Obligor is (i) an
"investment company" or a "person directly or indirectly controlled by or acting
on behalf of an investment company" within the meaning of the Investment Company
Act of 1940; or (ii) a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935; or (iii) subject to regulation under the Federal
Power Act, the Interstate Commerce Act, any public utilities code or any other
Applicable Law regarding its authority to incur Debt.
9.1.26. Margin Stock. No Borrower nor any Subsidiary of a
Borrower is engaged, principally or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying any
Margin Stock.
9.1.27. Designated Senior Debt. The Loan and all other
Obligations of Borrowers hereunder shall be deemed "Designated Senior Debt"
under that certain Indenture between ProxyMed and LaSalle Bank, N.A., as trustee
dated December 31, 2002 (the "Indenture").
9.1.28. Hazardous Materials.
Except as set forth in SCHEDULE 9.1.28, as of the Closing
Date, (a) each real property location owned, leased or occupied by each Borrower
(the "Real Property") is maintained free of contamination from any Hazardous
Material, (b) no Borrower is subject to any Environmental Liabilities or, to any
Borrower's knowledge, potential Environmental Liabilities, in excess of $50,000
in the aggregate, (c) no notice has been received by any Borrower identifying it
as a "potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of any Borrower, there are no
facts, circumstances or conditions that may result in any Borrower being
identified as a "potentially responsible party" under CERCLA or analogous state
statutes; and (d) each Borrower has provided to Lender copies of all existing
environmental reports, reviews and audits and all written information pertaining
to actual or potential Environmental Liabilities, in each case relating to any
Borrower.
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9.2. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be deemed to be reaffirmed by each Borrower on each day that any
Obligations are outstanding or that Borrowers request or are deemed to have
requested an extension of credit hereunder, except for changes in the nature of
a Borrower's or, if applicable, any of its Subsidiaries' business or operations
that may occur after the date hereof in the Ordinary Course of Business so long
as Lender has consented to such changes (which consent shall not be unreasonably
withheld) or such changes are not violative of any provision of this Agreement.
Notwithstanding the foregoing, representations and warranties which by their
terms are applicable only to a specific date shall be deemed made only at and as
of such date.
9.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Borrowers contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION 10. COVENANTS AND CONTINUING AGREEMENTS
10.1. AFFIRMATIVE COVENANTS. For so long as there are any Commitments
outstanding and thereafter until payment in full of the Obligations, each
Borrower covenants that, unless otherwise consented to by Lender in writing, it
shall and shall cause each Subsidiary to:
10.1.1. Visits and Inspections. Permit representatives of
Lender, from time to time, as often as may be reasonably requested (and in no
event more than twice per year unless (i) an Event of Default has occurred and
is continuing, or (ii) Availability falls below $2,500,000), but only during
normal business hours and (except when a Default or Event of Default exists)
upon 3 days prior notice to such Borrowers, to visit and inspect its Properties
and the Properties of each Subsidiary, inspect, audit and make extracts from
such Borrower's and Subsidiary's books and records, and discuss with such
Borrower's and Subsidiary's officers, employees and independent accountants,
such Borrower's and each of its Subsidiary's business, financial condition,
business prospects and results of operations. Lender shall not have any duty to
make any such inspection and shall not incur any liability by reason of its
failure to conduct or delay in conducting any such inspection. Borrowers
acknowledge and agree that any one inspection or audit may last for several
days.
10.1.2. Notices. Notify Lender in writing promptly after any
Borrower's obtaining knowledge thereof (i) of the commencement of any litigation
affecting any Obligor or any of its Properties, whether or not the claims
asserted in such litigation are considered by such Borrower to be covered by
insurance, and of the institution of any administrative proceeding, to the
extent that such litigation or proceeding, if determined adversely to such
Obligor, could reasonably be expected to have a Material Adverse Effect; (ii) of
any pending or threatened strike, work stoppage, unfair labor practice claim or
any other labor dispute affecting any Obligor or any Subsidiary in a manner that
could reasonably be expected to have a Material Adverse Effect, and the
expiration of any labor contract to which any Obligor or a Subsidiary is a party
or by which it is bound; (iii) of any material default by any Obligor under, or
termination
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of, any Material Contract or any note, indenture, loan agreement, mortgage,
lease, deed, guaranty or other similar agreement relating to any Debt of such
Obligor exceeding $500,000; (iv) of the existence of any Default or Event of
Default; (v) of any default by any Person under any note or other evidence of
Debt payable to an Obligor in an amount exceeding $500,000; (vi) of any judgment
against any Obligor in an amount exceeding $500,000; (vii) of the assertion by
any Person of any Intellectual Property Claim, the adverse resolution of which
could reasonably be expected to have a Material Adverse Effect; (viii) of any
violation or asserted violation by any Obligor of any Applicable Law (including
ERISA, OSHA, FLSA or any Environmental Laws), the adverse resolution of which
could reasonably be expected to have a Material Adverse Effect; (ix) of any
Environmental Release by an Obligor or on any Property owned or occupied by an
Obligor; and (x) of the discharge of Borrowers' independent accountants or any
withdrawal or resignation by such independent accountants from their acting in
such capacity. In addition, Borrowers shall give Lender at least 30 Business
Days' prior written notice of any Obligor's opening of any new office or place
of business (but excluding field representative and home sales offices).
10.1.3. Financial and Other Information. Keep adequate records
and books of account with respect to its business activities in which proper
entries are made in accordance with GAAP reflecting all of its financial
transactions; and cause to be prepared and furnished to Lender the following
(all to be prepared in accordance with GAAP applied on a consistent basis,
unless Borrowers' certified public accountants concur in any change therein and
such change is disclosed to Lender and is consistent with GAAP and, if required
by Lender, the financial covenants set forth in SECTION 10.3 are amended in a
manner requested by Lender to take into account the effects of such change):
(i) as soon as available, and in any event within 90
days after the close of each Fiscal Year of Borrowers, audited balance
sheets of each Borrower and its Subsidiaries as of the end of such
Fiscal Year and the related statements of income, shareholders' equity
and cash flow, on a Consolidated and Consolidating basis, certified by
a firm of independent certified public accountants of recognized
standing selected by Borrowers but reasonably acceptable to Lender and
unqualified (except for a qualification for a change in accounting
principles with which the accountant concurs), and setting forth in
each case in comparative form the corresponding Consolidated and
Consolidating figures for the preceding Fiscal Year;
(ii) as soon as available, and in any event within 30
days after the end of each month hereafter, including the last month of
Borrowers' Fiscal Year, unaudited balance sheets of each Borrower and
its Subsidiaries as of the end of such month and the related statements
of income for such month and for the portion of such Borrower's Fiscal
Year then elapsed, on a Consolidated and Consolidating basis, setting
forth in each case in comparative form (i) the corresponding
Consolidated and Consolidating figures for the preceding Fiscal Year
and (ii) a variance analysis compared to the relevant Projections, and
certified by the principal financial officer of such Borrower as
prepared in accordance with GAAP and fairly presenting the Consolidated
financial position and results of operations of such Borrower and its
Subsidiaries for such month and period
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subject only to changes from audit and year-end adjustments and except
that such statements need not contain notes;
(iii) as soon as available, and in any event within
45 days after the end of each quarter hereafter, including the last
quarter of Borrowers' Fiscal Year, unaudited balance sheets of each
Borrower and its Subsidiaries as of the end of such quarter and the
related statements of income, shareholders' equity and cash flow for
such quarter and for the portion of such Borrower's Fiscal Year then
elapsed, on a Consolidated and Consolidating basis, setting forth in
each case in comparative form (i) the corresponding Consolidated and
Consolidating figures for the preceding Fiscal Year and (ii) a variance
analysis compared to the relevant Projections, and certified by the
principal financial officer of such Borrower as prepared in accordance
with GAAP and fairly presenting the Consolidated financial position and
results of operations of such Borrower and its Subsidiaries for such
quarter and period subject only to changes from audit and year-end
adjustments and except that such statements need not contain notes;
(iv) after the occurrence of the Borrowing Base
Reporting Event, not later than 20 days after each calendar month, a
listing of all of Borrowers' trade payables as of the last Business Day
of such month or week, as applicable, specifying the name of and
balance due each trade creditor, and, a monthly detailed trade payable
agings in form acceptable to Lender;
(v) promptly after the sending or filing thereof, as
the case may be, copies of any proxy statements, financial statements
or reports which any Borrower has made available to its shareholders
and copies of any regular, periodic and special reports or registration
statements which any Borrower files with the Securities and Exchange
Commission or any Governmental Authority which may be substituted
therefor, or any national securities exchange;
(vi) promptly after the filing thereof, copies of any
annual report to be filed in accordance with ERISA in connection with
each Plan; and
(vii) such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request,
bearing upon or related to the Collateral or any Borrower's and any of
its Subsidiaries' financial condition or results of operations.
Concurrently with the delivery of the financial statements
described in clause (i) of this SECTION 10.1.3, Borrowers shall deliver to
Lender a copy of the accountants' letter to Borrowers' management that is
prepared in connection with such financial statements and shall cause to be
prepared and shall deliver to Lender a certificate of the aforesaid certified
public accountants stating to Lender that, based upon their examination of the
financial statements of Borrowers and their Subsidiaries performed in connection
with their examination of said financial statements, nothing came to their
attention that caused them to believe that Borrowers
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were not in compliance with SECTIONS 10.2.2, 10.2.3, 10.2.4, 10.2.6, 10.2.7,
10.2.8, 10.2.14, 10.2.15, 10.2.16 OR 10.3 hereof, or, if they are aware of such
noncompliance, specifying the nature thereof, and acknowledging, in a manner
satisfactory to Lender, that they are aware that Lender is relying on such
financial statements in making its decisions with respect to the Loans.
Concurrently with the delivery of the financial statements described in clauses
(i) and (ii) of this SECTION 10.1.3, or more frequently if requested by Lender
during any period that a Default or an Event of Default exists, Borrowers shall
cause to be prepared and furnished to Lender a Compliance Certificate executed
by the chief financial officer of Borrowers.
10.1.4. Landlord and Storage Agreements. Provide Lender with
copies of all existing agreements, and promptly after execution thereof provide
Lender with copies of all future agreements, between any Borrower or any of its
Subsidiaries and any landlord, warehouseman or bailee which owns any premises at
which any Collateral may, from time to time, be kept.
10.1.5. Intentionally Omitted.
10.1.6. Projections. No later than (i) December 31, 2003,
deliver to Lender month by month Projections from the Closing Date through
December 31, 2004, giving effect to Borrowers' projected Borrowings under this
Agreement, and (ii) 30 days prior to the end of each Fiscal Year of Borrowers,
deliver to Lender the Projections of Borrowers for the forthcoming Fiscal Year,
month by month.
10.1.7. Taxes. Pay and discharge all Taxes prior to the date
on which such Taxes become delinquent or penalties attach thereto, except and to
the extent only that such Taxes are being Properly Contested.
10.1.8. Compliance with Laws. Comply with all Applicable Law,
including ERISA, all Environmental Laws, FLSA, OSHA and all laws, statutes,
regulations and ordinances regarding the collection, payment and deposit of
Taxes, and obtain and keep in force any and all Governmental Approvals necessary
to the ownership of its Properties or to the conduct of its business, to the
extent that any such failure to comply, obtain or keep in force could be
reasonably expected to have a Material Adverse Effect. Without limiting the
generality of the foregoing, if any Environmental Release shall occur at or on
any of the Properties of any Borrower or any of its Subsidiaries, Borrowers
shall, or shall cause the applicable Subsidiary to, act promptly and diligently
to investigate and report to Lender and all appropriate Governmental Authorities
the extent of, and to make appropriate remedial action to eliminate, such
Environmental Release, whether or not ordered or otherwise directed to do so by
any Governmental Authority.
10.1.9. Insurance. In addition to the insurance required
herein with respect to the Collateral, maintain with financially sound and
reputable insurers, insurance with respect to its Properties and business
against such casualties and contingencies of such type (including product
liability, business interruption, workers' compensation, or larceny,
embezzlement or other
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criminal misappropriation insurance) and in such amounts and with such
coverages, limits and deductibles as is customary in the business of such
Borrower or such Subsidiary.
10.1.10. Intellectual Property. Promptly after applying for or
otherwise acquiring any Intellectual Property, deliver to Lender, in form and
substance acceptable to Lender and in recordable form, all documents necessary
for Lender to perfect its Lien on such Intellectual Property.
10.1.11. License Agreements. Keep each License Agreement in
full force and effect for so long as a Borrower has any Inventory the
manufacture, sale or distribution of which is in any manner governed by or
subject to such License Agreement.
10.2. NEGATIVE COVENANTS. For so long the Commitments are outstanding
and thereafter until payment in full of the Obligations, each Borrower covenants
that, unless Lender has otherwise consented in writing, it shall not and shall
not permit any Subsidiary to:
10.2.1. Fundamental Changes. Except as otherwise disclosed in
writing to Lender and subject to Lender's consent, which consent shall not be
unreasonably withheld, merge, reorganize, consolidate or amalgamate with any
Person, or liquidate, wind up its affairs or dissolve itself, in each case
whether in a single transaction or in a series of related transactions, except
for mergers or consolidations of any Subsidiary with another Subsidiary; or
change its name or conduct business under any new fictitious name; change its
FEIN, organizational identification number or state of organization; or fail to
remain in good standing and qualified to transact business as a foreign entity
in any state or other jurisdiction in which it is required to be qualified to
transact business as a foreign entity and in which the failure to be so
qualified could reasonably be expected to have a Material Adverse Effect.
10.2.2. Loans. Following the Closing Date, make any loans or
other advances of money to any Person other than to an officer or employee of
Borrowers for salary, travel advances, advances against commissions and other
similar advances in the Ordinary Course of Business, not to exceed $150,000 in
the aggregate at any time.
10.2.3. Permitted Debt. Create, incur, assume, guarantee or
suffer to exist any Debt, except:
(i) the Obligations;
(ii) the Indenture Debt;
(iii) accounts payable by such Borrower or any of its
Subsidiaries to trade creditors and current operating expenses (other
than for Money Borrowed) that are not aged more than 90 days from
billing date or more than 60 days from the due date, in each case
incurred in the Ordinary Course of Business and paid within such time
period, unless the same are being Properly Contested;
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(iv) obligations to pay Rentals permitted by SECTION
10.2.14;
(v) Permitted Purchase Money Debt;
(vi) Debt for accrued payroll and related taxes
incurred in the Ordinary Course of Business of such Borrower or such
Subsidiary, including obligations under Cash Management Agreements, in
each case so long as payment thereof is not past due and payable
unless, in the case of Taxes, such Taxes are being Properly Contested;
(vii) Debt for Money Borrowed by such Borrower (other
than the Obligations, Permitted Purchase Money Debt and Subordinated
Debt permitted herein), but only to the extent that such Debt is
outstanding on the date of this Agreement and is not to be satisfied on
or about the Closing Date;
(viii) Permitted Contingent Obligations;
(ix) Debt not included in the preceding paragraphs of
this SECTION 10.2.3 which is not secured by a Lien (unless such Lien is
a Permitted Lien) and does not exceed at any time, in the aggregate,
the sum of $250,000 as to Borrowers and all of their Subsidiaries;
(x) Refinancing Debt so long as each of the
Refinancing Conditions is met; and
(xi) the obligations set forth on SCHEDULE 10.2.3.
10.2.4. Affiliate Transactions. Enter into, or be a party to
any transaction with any Affiliate or stockholder, except: (i) the transactions
contemplated by the Loan Documents; (ii) transactions with Affiliates that were
consummated prior to the date hereof and have been disclosed to Lender prior to
the Closing Date; (iii) transactions with Affiliates in the Ordinary Course of
Business and pursuant to the reasonable requirements of such Borrower's or such
Subsidiary's business and upon fair and reasonable terms which are fully
disclosed to Lender and are no less favorable to such Borrower or such
Subsidiary than would obtain in a comparable arm's length transaction with a
Person not an Affiliate or stockholder of such Borrower or such Subsidiary, and
(iv) transactions for raising capital from investing Affiliates.
10.2.5. Limitation on Liens. Create or suffer to exist any
Lien upon any of its Property, income or profits, whether now owned or hereafter
acquired, except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for Taxes (excluding any Lien imposed
pursuant to any of the provisions of ERISA) not yet due or being
Properly Contested;
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(iii) statutory Liens (excluding any Lien imposed
pursuant to any of the provisions of ERISA) arising in the Ordinary
Course of Business of a Borrower or a Subsidiary, but only if and for
so long as (x) payment in respect of any such Lien is not at the time
required or the Debt secured by any such Liens is being Properly
Contested and (y) such Liens do not materially detract from the value
of the Property of such Borrower or such Subsidiary and do not
materially impair the use thereof in the operation of such Borrower's
or such Subsidiary's business;
(iv) Purchase Money Liens securing Permitted Purchase
Money Debt;
(v) Liens arising by virtue of the rendition, entry
or issuance against such Borrower or any of its Subsidiaries, or any
Property of such Borrower or any of its Subsidiaries, of any judgment,
writ, order, or decree for so long as each such Lien (a) is in
existence for less than 25 consecutive days after it first arises or is
being Properly Contested and (b) is at all times junior in priority to
the Liens in favor of Lender;
(vi) Liens incurred or deposits made in the Ordinary
Course of Business to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Money Borrowed), statutory
obligations and other similar obligations or arising as a result of
progress payments under government contracts; provided that, to the
extent any such Liens attach to any of the Collateral, such Liens are
at all times subordinate and junior to the Liens upon the Collateral in
favor of Lender.
(vii) easements, rights-of-way, restrictions,
covenants or other agreements of record or other similar charges or
encumbrances on real Property of a Borrower or a Subsidiary that do not
secure any monetary obligation and do not interfere with the ordinary
conduct of the business of such Borrower or such Subsidiary;
(viii) normal and customary rights of setoff upon
deposits of cash in favor of banks and other depository institutions
and Liens of a collection bank arising under the UCC on Payment Items
in the course of collection;
(ix) Liens in existence immediately prior to the
Closing Date that are satisfied in full and released on the Closing
Date as a result of the application of Borrowers' cash on hand as of
the Closing Date;
(x) such other Liens as appear on SCHEDULE 10.2.5
hereto, to the extent provided therein; and
(xi) such other Liens as Lender in its sole
discretion may hereafter approve in writing.
The foregoing negative pledge shall not apply to any Margin Stock to the extent
that the application of such negative pledge to such Margin Stock would require
filings or other actions
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by Lender under Regulation U of the Board of Governors or under any similar
regulation or otherwise result in a violation of any such regulations.
10.2.6. Subordinated Debt. Make any payment of all or any part
of any Subordinated Debt or take any other action or omit to take any other
action in respect of any Subordinated Debt, except in accordance with the
subordination agreement relating thereto; or amend or modify the terms of any
agreement applicable to any Subordinated Debt, other than to extend the time of
payment thereof or to reduce the rate of interest payable in connection
therewith. To the extent that any payment is permitted to be made with respect
to any Subordinated Debt pursuant to the provisions of the subordination
agreement relating thereto, as a condition precedent to Borrowers' authorization
to make any such payment, Borrowers shall provide to Lender, not less than 5
Business Days prior to the scheduled payment, a certificate from a Senior
Officer of Borrowers' Agent stating that no Default or Event of Default is in
existence as of the date of the certificate or will be in existence as of the
date of such payment (both with and without giving effect to the making of such
payment), and specifying the amount of principal and interest to be paid.
10.2.7. Distributions. Declare or make any Distributions,
except for Upstream Payments.
10.2.8. Upstream Payments. Create or suffer to exist any
encumbrance or restriction on the ability of a Subsidiary to make any Upstream
Payment, except for encumbrances or restrictions (i) pursuant to the Loan
Documents, or (ii) existing under Applicable Law.
10.2.9. Transfers to Subsidiaries. From the Closing Date up to
and including the Termination Date, make any payments or contributions of cash
or other Property, or any other advances of money in an aggregate amount of more
than $100,000 to its Subsidiaries; provided, however, this limitation shall not
apply to payments or contributions of cash or other Property, or any other
advances of money between Borrowers.
10.2.10. Disposition of Assets. Sell, lease or otherwise
dispose of any of its Properties, including any disposition of Property as part
of a sale and leaseback transaction, to or in favor of any Person, except (i)
sales of Inventory in the Ordinary Course of Business, (ii) dispositions of
Equipment to the extent authorized by SECTION 8.4.2 hereof, (iii) a transfer of
Property to such Borrower by its Subsidiary,(iv) non-exclusive licenses of
technology and other Intellectual Property by and among Borrower and any of its
Subsidiaries, and (v) other dispositions expressly authorized by other
provisions of the Loan Documents or by the Lender, in writing, which
authorization shall not be unreasonably withheld or delayed.
10.2.11. Subsidiaries. Form any Subsidiary after the Closing
Date, unless such Subsidiary immediately upon formation enters into a joinder
agreement in respect of this Agreement which is, in form and substance,
satisfactory to Lender in its sole discretion, or acquire any Subsidiary after
the Closing Date or permit any existing Subsidiary to issue any additional
Equity Interests except director's qualifying shares.
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10.2.12. Intentionally Omitted.
10.2.13. Restricted Investments. Make or have any Restricted
Investment.
10.2.14. Leases. After the Closing Date, become a lessee under
any operating lease (other than a lease under which a Borrower or any of its
Subsidiaries is lessor and other than a renewal of an existing lease) of
Property if the aggregate Rentals payable during any current or future period of
12 consecutive months under the lease in question and all other leases under
which Borrowers or any of their Subsidiaries is then lessee would exceed
$500,000. The term "Rentals" means, as of the date of determination, all
payments which the lessee is required to make by the terms of any lease.
10.2.15. Tax Consolidation. File or consent to the filing of
any consolidated income tax return with any Person other than a Borrower or a
Subsidiary of a Borrower.
10.2.16. Accounting Changes. Make any significant change in
accounting treatment or reporting practices, except as may be required by GAAP,
or establish a fiscal year different from the Fiscal Year.
10.2.17. Organization Documents. Amend, modify or otherwise
change any of the terms or provisions and any of its Organization Documents as
in effect on the date hereof, except for changes that do not affect in any way
such Borrower's or such Subsidiary's rights and obligations to enter into and to
perform the Loan Documents to which it is a party and to pay all of the
Obligations and that do not otherwise have a Material Adverse Effect.
10.2.18. Restrictive Agreements. Enter into or become a party
to any Restrictive Agreement; provided that (i) the foregoing shall not apply to
restrictions or conditions imposed by any Restrictive Agreement relating to
secured Debt permitted by this Agreement if such restrictions or conditions
apply only to the Properties securing such Debt and (ii) the foregoing shall not
apply to customary provisions in leases and other contracts restricting the
assignment thereof.
10.2.19. Interest Rate Contracts. Enter into any Interest Rate
Contract other than Interest Rate Contracts entered into in the Ordinary Course
of Business to hedge or mitigate risks to which such Borrower or any Subsidiary
is exposed in the conduct of its business or the management of its liabilities
and not for any speculative purpose.
10.2.20. Conduct of Business. Engage in any business other
than the business engaged in by it on the Closing Date and any business or
activities which are substantially similar, related or incidental thereto.
10.3. SPECIFIC FINANCIAL COVENANT.
10.3.1. Fixed Charge Coverage Ratio. Commencing with the first
Fiscal Month in which the Revolver Loan Balance first exceeds an amount equal to
(a) 95% of the amount of Liquid Collateral on such date minus (b) the
Availability Reserve on such date (such Fiscal
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Month being referred to as the "Initial Covenant Month", and such Fiscal Month
and each Fiscal Month thereafter being sometimes hereinafter referred to as a
"Covenant Month"), and for so long as there are any Commitments outstanding and
thereafter until payment in full of the Obligations, Borrowers covenant that,
unless otherwise consented to by Lender in writing, they shall, on a
consolidated basis, maintain a Fixed Charge Coverage Ratio of 1.00 to 1,
calculated as of each Covenant Month-end as follows:
(a) With respect to the Initial Covenant Month, the Fixed Charge
Coverage Ratio shall be calculated by using annualized amounts
of each and all of Consolidated EBITDA, Capital Expenditures,
cash income taxes, cash Distributions, and cash interest
expense (collectively the "Relevant Performance Measurements")
for the three-Fiscal Month period ended as of the last day of
the Initial Covenant Month (the first Fiscal Month of such
three-Fiscal Month period is referred to hereinafter as the
"First Covenant Measurement Month" and, as used in this clause
(a), the term "annualized" shall mean multiplied by 4), and
(b) for each Covenant Month thereafter (the "Current Covenant
Month"), through and including the eleventh Fiscal Month after
the First Covenant Measurement Month, the Fixed Charge
Coverage Ratio shall be calculated by using annualized amounts
of each and all of the Relevant Performance Measurements for
the period beginning with the initial Covenant Month and
ending with the last day of such Covenant Month (as used in
this clause (b), the term "annualized" shall mean the
respective amounts calculated under the following formula,
which shall be computed separately as to each Relevant
Performance Measurement: AA= [RPM/NM] x 12, where "AA" means
the annualized amount, "RPM" means one of the Relevant
Performance Measurements, and "NM" means the number of
Covenant Months in the period), and
(c) With respect to all Covenant Months other than those falling
within subsections (a) or (b) hereinabove, the Relevant
Performance Measurements in respect of the Fixed Charge
Coverage Ratio shall be determined with reference to the
twelve-Fiscal Month period ended on the last day of such
Covenant Month.
SECTION 11. CONDITIONS PRECEDENT
11.1. CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSIONS. Lender shall
not be required to fund any Loan requested by Borrowers, procure any Letter of
Credit or otherwise extend credit to Borrowers unless, on or before December 31,
2003, each of the following conditions (except those conditions described in
SECTIONS 11.1.16, 11.1.18, AND 11.1.22, which conditions may be satisfied after
December 31, 2003 but must be satisfied on or prior to the date that the initial
Loans are made under this Agreement) has been and continues to be satisfied:
11.1.1. Loan Documents. Each of the Loan Documents shall have
been duly executed and delivered to Lender by each of the signatories thereto in
form and substance
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satisfactory to Lender and shall have been accepted by Lender, and each Obligor
shall be in compliance with all of the terms thereof.
11.1.2. Opinion Letters. Lender shall have received favorable,
written opinions of Holland & Knight LLP, counsel to Borrowers, as to the
transactions contemplated by this Agreement and the matters set forth in EXHIBIT
E attached hereto.
11.1.3. Evidence of Perfection and Priority of Liens in
Collateral. Lender shall have received copies of all filing receipts or
acknowledgments issued by any Governmental Authority to evidence any filing or
recordation necessary to perfect the Liens of Lender in the Collateral and
evidence in form satisfactory to Lender that such Liens constitute valid and
perfected security interests and Liens, and that there are no other Liens upon
any Collateral except for Permitted Liens.
11.1.4. Organization Documents. Lender shall have received
copies of the Organization Documents of each Obligor, and all amendments
thereto, certified by the Secretary of State or other appropriate official of
the jurisdiction of such Obligor's organization.
11.1.5. Good Standing Certificates. Lender shall have received
good standing certificates for each Obligor, issued by the Secretary of State or
other appropriate official of such Obligor's jurisdiction of organization and
each jurisdiction where the conduct of such Obligor's business activities or
ownership of its Property necessitates qualification.
11.1.6. [Intentionally Reserved].
11.1.7. Insurance. Lender shall have received certified copies
of the casualty insurance policies of Obligors, together with loss payable
endorsements on Lender's standard form of loss payee endorsement naming Lender
as lender's loss payee and copies of each Obligor's liability insurance
policies, including product liability policies, together with endorsements
naming Lender as an additional insured, all as required by the Loan Documents.
11.1.8. Lockbox; Blocked Account Agreements. Lender shall have
received the duly executed agreements establishing the Lockbox and the
Collateral Reserve Account for the collection or servicing of the Accounts and a
Blocked Account Agreement between Lender and the Borrowers sufficient to give
"control" (within the meaning of the UCC) to Lender over the Collateral Reserve
Account and any other Deposit Account of any Borrower existing as of the Closing
Date, all in form and substance satisfactory to Lender.
11.1.9. Lien Waivers. Lender shall have received Lien Waivers
with respect to all premises at which any Collateral may be located.
11.1.10. [Intentionally Omitted].
11.1.11 Intentionally Omitted No Material Adverse Change. No
material adverse change in the financial condition of any Obligor or in the
quality, quantity or value of any Collateral shall have occurred since the
Closing Date.
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11.1.13. License Agreements. Lender shall have received,
reviewed and found reasonably satisfactory in all material respects all License
Agreements pursuant to which any Borrower manufacturers, markets, distributes or
sells any of its Inventory and shall have received a duly executed
Licensor/Lender Agreement from each Licensor.
11.1.14. [Intentionally Reserved].
11.1.15. [Intentionally Reserved].
11.1.16. Disbursement Letter. Lender shall have received
written instructions from Borrowers directing application of proceeds of the
Loans, if any, to be made pursuant to this Agreement as of the Effective Date,
and an initial Borrowing Base Certificate from Borrowers in form satisfactory to
Lender.
11.1.17. Intentionally Omitted.
11.1.18. Solvency Certificate. Lender shall have received
certificates satisfactory to it from one or more knowledgeable Senior Officers
of each Borrower that, after giving effect to the financing under this Agreement
and the issuance of the Letters of Credit, such Borrower is Solvent.
11.1.19. Intentionally Omitted.
11.1.20. Intentionally Omitted.
11.1.21. Intentionally Omitted.
11.1.22. LC Conditions. With respect to the procurement of any
Letter of Credit on the Effective Date, each of the LC Conditions is satisfied.
11.1.23. Intentionally Omitted.
11.1.24. Material Contracts. Lender shall have reviewed and
found acceptable in its reasonable credit judgment all Material Contracts.
11.2. CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Notwithstanding
any other provision of this Agreement or any of the other Loan Documents, and
without affecting in any manner the rights of Lender under the other sections of
this Agreement, Lender shall not be required to make any Loan or otherwise
extend any credit or other financial accommodations to or for the benefit of any
Borrower, unless and until each of the following conditions has been and
continues to be satisfied:
11.2.1. No Default. No Default or Event of Default exists at
the time of, or would result from, the funding of any Loan or other extension of
credit.
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11.2.2. Satisfaction of Conditions in Other Loan Documents.
Each of the conditions precedent set forth in any other Loan Document shall be
satisfied.
11.2.3. No Litigation. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or arises
out of this Agreement or any of the other Loan Documents or the consummation of
the transactions contemplated hereby or thereby.
11.2.4. No Material Adverse Effect. No event shall have
occurred and no condition shall exist which has or could be reasonably expected
to have a Material Adverse Effect.
11.2.5. Borrowing Base Certificate; Notice of Borrowing.
Lender shall have received each Borrowing Base Certificate and all supporting
documentation required by the terms of this Agreement or otherwise requested by
Lender and a Notice of Borrowing for each requested loan, if any.
11.2.6. LC Conditions. With respect to the procurement of any
Letter of Credit each of the LC Conditions is satisfied.
11.2.7 Representations and Warranties. Each representation and
warranty made or deemed to be made in this Agreement and in each of the Loan
Documents is true and correct in all material respects on and as of the date of
(except to the extent that any such representation or warranty relates to a
prior specific date or period) the requested loan.
11.3. LIMITED WAIVER OF CONDITIONS PRECEDENT. If Lender shall make any
Loans, procure any Letter of Credit or otherwise extend any credit to Borrowers
under this Agreement at a time when any of the foregoing conditions precedent
are not satisfied (regardless of whether the failure of satisfaction of any such
conditions precedent was known or unknown to Lender), the funding of such Loans
or the extension of such credit shall not operate as a waiver of the right of
Lender to insist upon the satisfaction of all condition precedent with respect
to each subsequent Borrowing requested by Borrowers or a waiver of any default
or Event of Default as a consequence of the failure of any such conditions to be
satisfied, unless Lender, in writing waives the satisfaction of any condition
precedent in which event such waiver shall only be applicable for the specific
instance given and only to the extent and for the period of time expressly
stated in such written waiver.
11.4. CONDITIONS PRECEDENT TO CLOSING. The parties hereby agree that
each of the following conditions must be satisfied on or prior to the Closing
Date:
11.4.1. Loan Documents. Except for the Interest Rate
Contracts, Licensor/Lender Agreements, and Foreign Exchange Contracts, if any,
and except as otherwise specifically set forth in SECTION 11.1 with respect to
Loan Documents to be delivered on or prior to December 31, 2003, each of the
Loan Documents, including the Guaranty Agreements and the Guarantors'
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Security Agreement, shall have been duly executed and delivered to Lender by
each of the signatories thereto in form and substance satisfactory to Lender and
shall have been accepted by Lender, and each Obligor shall be in compliance with
all of the terms thereof.
11.4.2. Secretary's Certificate. Lender shall have received
duly executed certificate of the Secretary or Assistant Secretary of each
Borrower and each Guarantor substantially in the form attached hereto as EXHIBIT
O, which shall include Board of Director resolutions, approving and authorizing
the transactions to be consummated in connection herewith. The parties hereto
acknowledge and agree that this Agreement and all transactions contemplated
herein shall not be deemed effective until such Board of Director resolutions,
have been duly executed and a copy thereof has been delivered to the Lender.
11.4.3. Compliance with Laws and Other Agreements. Lender
shall have determined or received assurances reasonably satisfactory to it that
none of the Loan Documents entered into as of the Closing Date or any of the
transactions contemplated thereby violate any Applicable Law, court order or
agreement binding upon any Obligor.
11.4.4. No Material Adverse Change. No material adverse change
in the financial condition of any Obligor or in the quality, quantity or value
of any Collateral shall have occurred since July 31, 2003
11.4.5. Solvency Certificate. Lender shall have received
certificates satisfactory to it from one or more knowledgeable Senior Officers
of each Borrower that, as of the Closing Date, such Borrower is Solvent.
11.4.6. Audited Financial Statements. Lender shall have
received from Borrowers audited financial statements of Borrowers for Borrowers'
Fiscal Year ending December 31, 2002, in form and substance reasonably
satisfactory to Lender in all material respects.
11.4.7. Payment of Fees. Borrowers shall have paid, or made
provision for the payment on the Closing Date of, all fees and expenses to be
paid hereunder to Lender on the Closing Date.
SECTION 12. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
12.1. EVENTS OF DEFAULT. The occurrence or existence of any one or more
of the following events or conditions shall constitute an "Event of Default":
12.1.1. Payment of Obligations. Borrowers shall fail to pay
any of the Obligations on the due date thereof (whether due at stated maturity,
on demand, upon acceleration or otherwise).
12.1.2. Misrepresentations. Any representation, warranty or
other written statement to Lender by or on behalf of any Obligor, whether made
in or furnished in compliance with or in reference to any of the Loan Documents,
proves to have been false or misleading in any material respect when made or
furnished or when reaffirmed pursuant to SECTION 9.2 hereof.
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12.1.3. Breach of Specific Covenants. Any Obligor shall fail
or neglect to perform, keep or observe any covenant contained in SECTIONS 7.4,
7.6, 8.1.1,8.2.4, 8.2.5, 8.4.2, 8.5, 10.1.1, 10.1.3, 10.1.6, 10.1.8, 10.1.9,
10.1.10, 10.1.11, 10.2 OR 10.3 hereof on the date that such Borrower is required
to perform, keep or observe such covenant.
12.1.4. Breach of Other Covenants. Any Borrower shall fail or
neglect to perform, keep or observe any covenant contained in this Agreement
(other than a covenant which is dealt with specifically elsewhere in SECTION
12.1 hereof) and the breach of such other covenant is not cured to Lender's
satisfaction within 20 days after the sooner to occur of such Borrower's receipt
of notice of such breach from Lender or the date on which such failure or
neglect first becomes known to any Senior Officer of such Borrower; provided,
however, that such notice and opportunity to cure shall not apply in the case of
any failure to perform, keep or observe any covenant which is not capable of
being cured within such 20-day period or which results from a willful and
knowing breach by a Borrower.
12.1.5. Default Under Security Documents/Other Agreements. Any
Borrower or any other Obligor shall default in the due and punctual observance
or performance of any term, covenant, condition or agreement contained in any of
the Security Documents or any of the Other Agreements.
12.1.6. Other Defaults. There shall occur any default or event
of default on the part of any Borrower or any Subsidiary under any material
agreement, document or instrument to which a Borrower or any Subsidiary is a
party or by which a Borrower or any Subsidiary or any of their respective
Properties are bound, creating or relating to any Debt (other than the
Obligations) if the payment or maturity of such Debt may be, with the giving of
notice or lapse of time, accelerated in consequence of such event of default or
demand for payment of such Debt may be made.
12.1.7. Uninsured Losses. Any loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance if the amount not
covered by insurance exceeds $250,000.
12.1.8. Material Adverse Effect. There shall occur any event
or condition that has a Material Adverse Effect.
12.1.9. Solvency. Any Obligor shall cease to be Solvent.
12.1.10. Insolvency Proceeding. Any Insolvency Proceeding
shall be commenced by any Obligor, an Insolvency Proceeding is commenced against
any Obligor and any of the following events occur: such Obligor consents to the
institution of the Insolvency Proceeding against it, the petition commencing the
Insolvency Proceeding is not timely controverted by such Obligor, the petition
commencing the Insolvency Proceeding is not dismissed within 60 days after the
date of the filing thereof (provided that, in any event, during the pendency of
any such period, Lender shall be relieved from their obligation to make Loans or
otherwise extend credit to or for the benefit of Borrowers hereunder), an
interim trustee is
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appointed to take possession of all or a substantial portion of the Properties
of such Obligor or to operate all or any substantial portion of the business of
such Obligor, or an order for relief shall have been issued or entered in
connection with such Insolvency Proceeding; or any Obligor shall make an offer
of settlement, extension or composition to its unsecured creditors generally.
12.1.11. Business Disruption; Condemnation. There shall occur
a cessation of a substantial part of the business of any Obligor for a period
that may be reasonably expected to have a Material Adverse Effect; or any
Obligor shall suffer the loss or revocation of any license or permit now held or
hereafter acquired by such Obligor which is necessary to the continued or lawful
operation of its business; or any Obligor shall be enjoined, restrained or in
any way prevented by court, governmental or administrative order from conducting
all or any material part of its business affairs; or any material lease or
agreement pursuant to which any Obligor leases or occupies any premises on which
any Collateral is located shall be canceled or terminated prior to the
expiration of its stated term and such cancellation or termination has a
Material Adverse Effect or results in an Out-of-Formula Condition; or any
material part of the Collateral shall be taken through condemnation or the value
of such Property shall be materially impaired through condemnation.
12.1.12. ERISA. A Reportable Event shall occur which Lender,
in its reasonable discretion, shall determine constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if any Obligor is in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting
from such Obligor's complete or partial withdrawal from such Plan.
12.1.13. Intentionally Omitted.
12.1.14. Judgment. One or more judgments or orders for the
payment of money in an amount that exceeds $250,000, individually, or in the
aggregate, $500,000 shall be entered against any Obligor and either (i)
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order, or (ii) there shall be any period of 20 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect or (iii) results in the
creation or imposition of a Lien upon any of the Collateral that is not a
Permitted Lien.
12.1.15. Intentionally Omitted.
12.1.16. Intentionally Omitted.
12.1.17. Change of Control. A Change of Control shall have
occurred.
12.1.18. Change of Management. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall cease to
be the Chief Executive Officer of ProxyMed, Inc. for any reason; or ▇▇▇▇▇ ▇▇▇
shall cease to be the Chief Operating Officer and President of ProxyMed, Inc.
for any reason, and, in each such case, such
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individual is not replaced as such officer by an individual satisfactory to
Lender within 150 days after the date on which such individual ceases to be such
officer.
12.2. ACCELERATION OF OBLIGATIONS; TERMINATION OF COMMITMENTS. Without
in any way limiting the right of Lender to demand payment of any portion of the
Obligations payable on demand in accordance with this Agreement:
12.2.1. Upon or at any time after the occurrence of an Event
of Default (other than pursuant to SECTION 12.1.10 hereof) and for so long as
such Event of Default shall exist, Lender may in its discretion (a) declare the
principal of and any accrued interest on the Loans and all other Obligations
owing under any of the Loan Documents to be, whereupon the same shall become
without further notice or demand (all of which notice and demand each Borrower
expressly waives), forthwith due and payable and Borrowers shall forthwith pay
to Lender the entire principal of and accrued and unpaid interest on the Loans
and other Obligations plus reasonable attorneys' fees and expenses if such
principal and interest are collected by or through an attorney-at-law and (b)
terminate the Commitments.
12.2.2. Upon the occurrence of an Event of Default specified
in SECTION 12.1.10 hereof, all of the Obligations shall become automatically due
and payable without declaration, notice or demand by Lender to or upon Borrower
and the Commitments shall automatically terminate as if terminated by Lender
pursuant to SECTION 6.2.1 hereof and with the effects specified in SECTION 6.2.4
hereof; provided, however, that, if Lender shall continue to make Loans or
otherwise extend credit to Borrowers pursuant to this Agreement after an
automatic termination of the Commitments by reason of the commencement of an
Insolvency Proceeding by or against any Borrower, such Loans and other credit
shall nevertheless be governed by this Agreement and enforceable against and
recoverable from each Obligor as if such Insolvency Proceeding had never been
instituted.
12.3. OTHER REMEDIES. Upon and after the occurrence of an Event of
Default, and for so long as such Event of Default shall exist, Lender may in its
discretion exercise from time to time the following rights and remedies:
12.3.1. All of the rights and remedies of a secured party
under the UCC or under other Applicable Law, and all other legal and equitable
rights to which Lender may be entitled under any of the Loan Documents, all of
which rights and remedies shall be cumulative and shall be in addition to any
other rights or remedies contained in this Agreement or any of the other Loan
Documents, and none of which shall be exclusive.
12.3.2. The right to collect all amounts at any time payable
to a Borrower from any Account Debtor or other Person at any time indebted to
such Borrower, including the right to settle or adjust all disputes and claims
directly with the Account Debtor and to compromise the amount or extend the time
for payment of any Accounts or other rights to payment comprising a part of the
Collateral upon such terms and conditions as Lender may deem advisable, and to
charge the deficiencies, costs and expenses thereof, including attorneys' fees,
to Borrowers.
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12.3.3. The right to take immediate possession of all Goods or
other tangible items of the Collateral, and to (i) require Borrowers to assemble
any and all of such Collateral, at Borrowers' expense, and make it available to
Lender at a place designated by Lender which is reasonably convenient to both
parties, and (ii) enter any premises where any of the Collateral shall be
located and to keep and store the Collateral on said premises until sold (and if
said premises be the Property of a Borrower, then such Borrower agrees not to
charge Lender for storage thereof).
12.3.4. The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by Applicable Law, in lots or in bulk, for cash or on credit, all as
Lender, in its sole discretion, may deem advisable. Borrowers agree that any
requirement of notice to Borrowers or any other Obligor of any proposed public
or private sale or other disposition of Collateral by Lender shall be deemed
reasonable notice thereof if given at least 10 days prior thereto, and such sale
may be at such locations as Lender may designate in said notice. Lender shall
have the right to conduct such sales on any Borrower's or any other Obligor's
premises, without charge therefor, and such sales may be adjourned from time to
time in accordance with Applicable Law. Lender shall have the right to sell,
lease or otherwise dispose of the Collateral, or any part thereof, for cash,
credit or any combination thereof, and Lender may purchase all or any part of
the Collateral at public or, if permitted by Applicable Law, private sale and,
in lieu of actual payment of such purchase price, may set off the amount of such
price against the Obligations. The proceeds realized from the sale or other
disposition of any Collateral may be applied, after allowing 2 Business Days for
collection, first to any Extraordinary Expenses incurred by Lender, second to
interest accrued with respect to any of the Obligations, third, to the principal
of the Obligations, and fourth, if any excess remains, to the Borrower. If any
deficiency shall arise, Obligors shall remain jointly and severally liable to
Lender therefor.
12.3.5. The right to the appointment of a receiver, without
notice of any kind whatsoever, to take possession of all or any portion of the
Collateral and to exercise such rights and powers as the court appointing such
receiver shall confer upon such receiver.
12.3.6. Intentionally Omitted.
12.3.7. The right to require Borrowers to deposit with Lender
funds equal to 105% of the LC Outstandings and, if Borrowers fail promptly to
make such deposit, Lender may advance such amount as a Revolver Loan (whether or
not an Out-of-Formula Condition exists or is created thereby). Any such deposit
or advance shall be held by Lender as a reserve to fund future payments on any
Letter of Credit. At such time as all Letters of Credit have been drawn upon or
expired, any amounts remaining in such reserve shall be applied against any
outstanding Obligations, or, if Full Payment of all Obligations has occurred,
returned to Borrowers.
Lender is hereby granted an irrevocable, non-exclusive license or other right to
use, license or sub-license (exercisable without payment of royalty or other
compensation to any Obligor or any other Person) each Borrower's Intellectual
Property and all of each Borrower's computer
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hardware and software, trade secrets, brochures, customer lists, promotional and
advertising materials, labels, and packaging materials, and any Property of a
similar nature, in advertising for sale, marketing, selling and collecting and
in completing the manufacturing of any Collateral, and each Borrower's rights
under all licenses and all franchise agreements shall inure to Lender's benefit,
provided that such license or other right to use, license or sublicense shall be
limited to be used for the purposes set forth in this SECTION 12.3 and for the
purpose of enabling the Lender to realize on the Collateral and to permit any
purchaser of any portion of the Collateral through a foreclosure sale or any
other exercise of the Lender's rights and remedies under the Loan Documents to
use, sell or otherwise dispose of the Collateral. Lender shall be liable to
Borrower for any misuse by Lender of Borrower's Intellectual Property.
12.4. SETOFF. In addition to any Liens granted under any of the Loan
Documents and any rights now or hereafter available under Applicable Law, Lender
(and each of its Affiliates) is hereby authorized by Borrowers at any time that
an Event of Default exists, without notice to Borrowers or any other Person (any
such notice being hereby expressly waived) to set off and to appropriate and to
apply any and all deposits, general or special (including Debt evidenced by
certificates of deposit whether matured or unmatured (but not including trust
accounts)) and any other Debt at any time held or owing by Lender or its
Affiliates to or for the credit or the account of any Borrower against and on
account of the Obligations of Borrowers arising under the Loan Documents to
Lender or any of its Affiliates, including all Loans and LC Outstandings all
claims of any nature or description arising out of or in connection with this
Agreement, irrespective of whether or not (i) Lender shall have made any demand
hereunder, (ii) Lender shall have declared the principal of and interest on the
Loans and other amounts due hereunder to be due and payable as permitted by this
Agreement and even though such Obligations may be contingent or unmatured or
(iii) the Collateral for the Obligations is adequate.
12.5. REMEDIES CUMULATIVE; NO WAIVER.
12.5.1. All covenants, conditions, provisions, warranties,
guaranties, indemnities, and other undertakings of Borrowers contained in this
Agreement and the other Loan Documents, or in any document referred to herein or
contained in any agreement supplementary hereto or in any schedule or in any
guaranty agreement given to Lender or contained in any other agreement between
Lender and any or all Borrowers, heretofore, concurrently, or hereafter entered
into, shall be deemed cumulative to and not in derogation or substitution of any
of the terms, covenants, conditions, or agreements of Borrowers herein
contained. The rights and remedies of Lender under this Agreement and the other
Loan Documents shall be cumulative and not exclusive of any rights or remedies
that Lender would otherwise have.
12.5.2. The failure or delay of Lender to require strict
performance by Borrowers of any provision of any of the Loan Documents or to
exercise or enforce any rights, Liens, powers, or remedies under any of the Loan
Documents with respect to any Collateral shall not operate as a waiver of such
performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and all other Obligations owing or to become owing from
Borrowers to Lender shall have been fully satisfied. None of the undertakings,
agreements, warranties, covenants and
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representations of Borrowers contained in this Agreement or any of the other
Loan Documents and no Default or Event of Default by any Borrower under this
Agreement or any other Loan Documents shall be deemed to have been suspended or
waived by Lender, unless such suspension or waiver is by an instrument in
writing specifying such suspension or waiver and is signed by a duly authorized
representative of Lender and directed to Borrowers.
12.5.3. If at any time that a Default or an Event of Default
exists Lender shall accept performance by a Borrower, in whole or in part, of
any obligation that a Borrower is required by any of the Loan Documents to
perform, or if Lender shall exercise any right or remedy under any of the Loan
Documents that may not be exercised other than when a Default or Event of
Default exists, Lender's acceptance of such performance by a Borrower or
Lender's exercise of any such right or remedy shall not operate to waive any
such Event of Default or to preclude the exercise by Lender of any other right
or remedy, unless otherwise expressly agreed in writing by Lender, as the case
may be.
SECTION 13. MISCELLANEOUS
13.1. POWER OF ATTORNEY. Each Borrower hereby irrevocably designates,
makes, constitutes and appoints Lender (and all Persons designated by Lender) as
such Borrower's true and lawful attorney (and agent-in-fact) and Lender, or
Lender's designee, may, without notice to such Borrower and in either any
Borrower's or Lender's name, but at the cost and expense of Borrowers:
13.1.1. At such time or times as Lender or said designee, in
its sole discretion, may determine, endorse such Borrower's name on any Payment
Item or proceeds of the Collateral which come into the possession of Lender or
under Lender's control.
13.1.2. At any time that an Event of Default exists: (i)
demand payment of the Accounts and other rights to payment from the Account
Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and
generally exercise all of such Borrower's rights and remedies with respect to
the collection of the Accounts; (ii) settle, adjust, compromise, discharge or
release any of the Accounts or other Collateral or any legal proceedings brought
to collect any of the Accounts or other Collateral; (iii) sell or assign any of
the Accounts and other Collateral upon such terms, for such amounts and at such
time or times as Lender deems advisable; (iv) take control, in any manner, of
any item of payment or proceeds relating to any Collateral; (v) prepare, file
and sign such Borrower's name to a proof of claim in bankruptcy or similar
document against any Account Debtor or to any notice of lien, assignment or
satisfaction of lien or similar document in connection with any of the
Collateral; (vi) receive, open and dispose of all mail addressed to such
Borrower and to notify postal authorities to change the address for delivery
thereof to such address as Lender may designate; (vii) endorse the name of such
Borrower upon any of the items of payment or proceeds relating to any Collateral
and deposit the same to the account of Lender on account of the Obligations;
(viii) endorse the name of such Borrower upon any Chattel Paper, Document,
Instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar document or
agreement relating to any Accounts, Inventory or other Collateral; (ix) use such
Borrower's stationery and sign the name of such Borrower to verifications of the
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Accounts, Payment Intangibles and Chattel Paper and notices thereof to Account
Debtors; (x) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Accounts,
Inventory, Equipment and any other Collateral; (xi) make and adjust claims under
policies of insurance; (xii) sign the name of a Borrower on any proof of claim
in bankruptcy against Account Debtors and on notices of Liens, claims of
mechanic's Liens or assignments or releases of mechanic's Liens securing any
Accounts; (xiii) take all action as may be necessary to obtain the payment of
any letter of credit or banker's acceptance of which a Borrower is a
beneficiary; and (xiv) do all other acts and things necessary, in Lender's
determination, to fulfill Borrowers' obligations under this Agreement.
13.2. GENERAL INDEMNITY. Borrowers hereby agree to indemnify and defend
the Lender Indemnitees against and to hold the Lender Indemnitees harmless from
any Claim ever suffered or incurred by any of the Lender Indemnitees that arises
out of or relates to this Agreement or any of the other Loan Documents, any
transactions entered into pursuant to any of the Loan Documents, Lender's Lien
upon any of the Collateral, or the performance by Lender of its duties or the
exercise of any of its rights or remedies under this Agreement or any of the
other Loan Documents, or that results from Borrowers' failure to observe,
perform or discharge any of Borrowers' duties hereunder. Without limiting the
generality of the foregoing, this indemnity shall extend to any Claims asserted
against or incurred by any of the Lender Indemnitees by any Person under any
Environmental Laws or similar laws by reason of Borrowers' or any other Person's
(except a Lender Indemnitee or its agents) failure to comply with laws
applicable to solid or hazardous waste materials or other toxic substances.
Additionally, if any Taxes (excluding Taxes imposed upon or measured solely by
the net income of Lender, but including any intangibles tax, stamp tax,
recording tax or franchise tax) shall be payable by Lender or any Obligor on
account of the execution or delivery of this Agreement, or the execution,
delivery, issuance or recording of any of the other Loan Documents, or the
creation or repayment of any of the Obligations, by reason of any Applicable Law
now or hereafter in effect, Borrowers will pay (or will promptly reimburse
Lender for the payment of) all such Taxes, including any interest and penalties
thereon, and will indemnify and hold Lender Indemnitees harmless from and
against all liability in connection therewith. The foregoing indemnities shall
not apply to Claims incurred by any of the Lender Indemnitees as a direct and
proximate result of any Lender Indemnitee's own gross negligence or willful
misconduct.
13.3. SURVIVAL OF ALL INDEMNITIES. Notwithstanding anything to the
contrary in this Agreement or any of the other Loan Documents, the obligation of
each Borrower with respect to each indemnity given by it in this Agreement, or
shall survive the Full Payment of the Obligations and termination of the
Commitments.
13.4. MODIFICATION OF AGREEMENT; SALE OF INTEREST. This Agreement may
not be modified, altered or amended, except by an agreement in writing signed by
Borrowers and Lender. No Borrower may sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, any of the Obligations,
including such Borrower's rights, title, interests, remedies, powers, and duties
hereunder or thereunder. Lender may sell participations to one or more banks or
other entities in all or a portion of its rights and obligations under this
Agreement, or assign, transfer or otherwise dispose, at any time or times
hereafter, of the Obligations, this
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Agreement and any of the other Loan Documents, or of any portion hereof or
thereof, including Lender's rights, title, interests, remedies, powers, and
duties hereunder or thereunder. Lender shall provide Borrowers with 10 days
prior notice of any such sales of participations, assignments, transfers or
other dispositions. In the case of an assignment, the assignee shall have, to
the extent of such assignment, the same rights, benefits and obligations as it
would if it were "Lender" hereunder and Lender shall be relieved of all
obligations hereunder upon any such assignment. Each Borrower further agrees
that Lender may disclose (i) any publicly available information regarding such
Borrower and its Subsidiaries to any potential participant or assignee, and,
(ii) subject to the prior written consent of such Borrower, any other credit
information regarding such Borrower and its Subsidiaries, provided that, prior
to any such disclosure under subsection (ii), each such-assignee, proposed
assignee, participant or proposed participant shall agree with such Borrower or
Lender (which in the case of an agreement with only Lender, such Borrower shall
be recognized as a third party beneficiary thereof) to preserve the
confidentiality of any confidential information relating to such Borrower
received from Lender.
13.5. SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
13.6. CUMULATIVE EFFECT; CONFLICT OF TERMS. The provisions of the other
Loan Documents are hereby made cumulative with the provisions of this Agreement.
Without limiting the generality of the foregoing, the parties acknowledge that
this Agreement and the other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters and
that such limitations, tests and measures are cumulative and each must be
performed, except as may be expressly stated to the contrary in this Agreement.
Except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
13.7. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
13.8. LENDER'S CONSENT. Whenever Lender's consent is required to be
obtained under this Agreement or any of the other Loan Documents as a condition
to any action, inaction, condition or event, Lender shall be authorized to give
or withhold its consent in its sole and absolute discretion and to condition its
consent upon the giving of additional collateral security for the Obligations,
the payment of money or any other matter.
13.9. NOTICE. All notices, requests and demands to or upon a party
hereto shall be in writing and shall be sent by certified or registered mail,
return receipt requested, personal
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delivery against receipt or by telecopier or other facsimile transmission and
shall be deemed to have been validly served, given or delivered when delivered
against receipt, 3 Business Days after mailing, or, in the case of facsimile
transmission, when received (if on a Business Day and, if not received on a
Business Day, then on the next Business Day after receipt) at the office where
the noticed party's telecopier is located, in each case, addressed as follows:
If to Lender: Wachovia Bank, National Association
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
30th Floor, Mail Code GA 8056
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Asset Based Lending
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
With a courtesy copy to: Hunton & ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrowers: ProxyMed, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive
Vice President and CFO
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a courtesy copy to: ProxyMed, Inc. - Legal Department
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General
Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by notice given
in accordance with this Section; provided, however, that no notice, request or
demand to or upon Lender pursuant to SECTIONS 2.3, 3.1.2, 4.1. OR 6.2.2 hereof
shall be effective until received by Lender. Any written notice, request or
demand that is not sent in conformity with the provisions hereof shall
nevertheless be effective on the date that such notice, request or demand is
actually received by the Person to whose attention at the noticed party such
notice, request or demand is required to be sent.
13.10. PERFORMANCE OF BORROWERS' OBLIGATIONS. If any Borrower shall
fail to discharge any covenant, duty or obligation hereunder or under any of the
other Loan Documents, Lender may, in its sole discretion at any time or from
time to time, for Borrowers' account and at
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Borrowers' expense, pay any amount or do any act required of Borrowers hereunder
or under any of the other Loan Documents or otherwise lawfully requested by
Lender to (i) enforce any of the Loan Documents or collect any of the
Obligations, (ii) preserve, protect, insure, maintain or realize upon any of the
Collateral, or (iii) preserve, defend, protect or maintain the validity or
priority of Lender's Liens in any of the Collateral, including the payment of
any judgment against any Borrower, any insurance premium, any warehouse charge,
any finishing or processing charge, any landlord claim, any other Lien upon or
with respect to any of the Collateral (whether or not a Permitted Lien). All
payments that Lender may make under this Section and all out-of-pocket costs and
expenses (including Extraordinary Expenses) that Lender pays or incurs in
connection with any action taken by it hereunder shall be reimbursed to Lender
by Borrowers ON DEMAND with interest from the date such payment is made or such
costs or expenses are incurred to the date of payment thereof at the Default
Rate applicable for Revolver Loans that are Base Rate Loans. Any payment made or
other action taken by Lender under this Section shall be without prejudice to
any right to assert, and without waiver of, an Event of Default hereunder and
without prejudice to Lender's right to proceed thereafter as provided herein or
in any of the other Loan Documents.
13.11. CREDIT INQUIRIES. Each Borrower hereby authorizes and permits
Lender (but Lender shall have no obligation) to respond to usual and customary
credit inquiries from third parties concerning such Borrower or any of its
Subsidiaries by providing any information about such Borrower and its
Subsidiaries or Borrowers' performance hereunder.
13.12. TIME OF ESSENCE. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
13.13. INDULGENCES NOT WAIVERS. Lender's failure at any time or times
hereafter, to require strict performance by Borrowers of any provision of this
Agreement shall not waive, affect or diminish any right of Lender thereafter to
demand strict compliance and performance therewith.
13.14. ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement and the
other Loan Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or with reference
thereto, embody the entire understanding and agreement between the parties
hereto and thereto with respect to the subject matter hereof and thereof and
supersede all prior agreements, understandings and inducements, whether express
or implied, oral or written. Each of the Exhibits and Schedules attached hereto
is incorporated into this Agreement and by this reference made a part hereof.
This Agreement shall be binding upon the parties hereto and their respective
successors and assigns, provided that, as provided in SECTION 13.4 hereof, no
Borrower shall be authorized to assign any interest in any of the Loan
Documents.
13.15. INTERPRETATION. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured,
drafted or dictated such provision.
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13.16. ADVERTISING AND PUBLICITY. With the prior consent of Borrowers'
Agent (which shall not be unreasonably withheld or delayed), Lender may issue
and disseminate to the public (by advertisement or otherwise) information
describing the credit accommodations made available by Lender pursuant to this
Agreement, including the names and addresses of Borrowers, the amount and
security for the credit accommodations and the general nature of Borrowers'
business, provided that detail regarding terms (such as interest rate) may be
provided only to industry publications, such as the "LPC Gold Sheets."
13.17. GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
ATLANTA, GEORGIA. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA: PROVIDED, HOWEVER, THAT IF ANY
OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN GEORGIA, THE
LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF
LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE
LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF
GEORGIA. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF
ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF A BORROWER OR
LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE SUPERIOR COURT OF ▇▇▇▇
COUNTY, GEORGIA, OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF GEORGIA, ATLANTA DIVISION, SHALL HAVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWERS AND LENDER
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
BORROWER HEREBY WAIVES ANY OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWERS AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE U.S. MAILS,
PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
13.18. WAIVERS BY BORROWER. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH
LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF
ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS
OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF
PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE,
SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS,
CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY
TIME HELD BY
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LENDER ON WHICH SUCH BORROWER MAY IN ANY WAY BE LIABLE; (iii) NOTICE PRIOR TO
TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; (v) ANY CLAIM AGAINST LENDER, ON ANY THEORY OF LIABILITY, FOR SPECIAL,
INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL
DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, ANY OF THE LOAN
DOCUMENTS, ANY TRANSACTION THEREUNDER OR THE USE OF THE PROCEEDS OF ANY LOANS;
AND (VI) NOTICE OF ACCEPTANCE HEREOF. EACH BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS
AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWERS. EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
[Signature Pages Follow]
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IN WITNESS WHEREOF, this Agreement has been duly executed under seal in
Atlanta, Georgia, on the day and year specified at the beginning of this
Agreement.
BORROWERS:
PROXYMED, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇
-----------------------------
Title: President and Chief Operating
Officer
-----------------------------
[CORPORATE SEAL]
KEY COMMUNICATIONS SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇
-----------------------------
Title: Chief Executive Officer
-----------------------------
[CORPORATE SEAL]
MEDUNITE INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇
-----------------------------
Title: President
-----------------------------
[CORPORATE SEAL]
[Signatures continue on following page]
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Accepted in Atlanta, Georgia:
WACHOVIA BANK, NATIONAL
ASSOCIATION
("Lender")
By: /s/ ▇▇▇ ▇▇▇
-----------------------------
Name: ▇▇▇ ▇▇▇
-----------------------------
Title: Associate
-----------------------------