Exhibit 10.2
Revolving Credit and Security Agreement
THIS AGREEMENT (the "Agreement"), dated as of August 25, 1997 between PRA
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International, Inc., a Delaware corporation ("Borrower"), and FIRST UNION
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NATIONAL BANK, a national banking association ("Bank");
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W I T N E S S E T H :
In consideration of the premises and of the mutual covenants herein
contained and to induce Bank to extend credit to Borrower, the parties agree as
follows:
1. Definitions. In addition to terms defined elsewhere in this
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Agreement, the following terms have the meanings indicated:
1.1. Defined Terms.
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"Account" shall mean any account receivable, domestic and
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foreign, presented for payment ("Billed") and not yet presented for payment but
booked and reported as an "unbilled" account receivable ("Unbilled"), including
any rights of payment for goods sold or leased or for services rendered, which
is not evidenced by an instrument or chattel paper, whether or not it has been
earned by performance, and in addition includes all property included in the
definition of "accounts" as used in the Code, together with any guaranties,
letters of credit and other security therefor.
"Account Debtor" shall mean a Person who is obligated under any
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Account, Chattel Paper, General Intangible or instrument (as instrument is
defined in the Code).
"Accounts Payable Report" shall mean reports listing all
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accounts payable of Borrower and Guarantors as of the last day of any month in
reasonable detail and in form acceptable to Bank.
"Accounts Receivable Report" shall mean reports in the forms
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attached as Exhibit A hereto.
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"Advance" shall mean an advance of proceeds of the Loan to
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Borrower pursuant to this Agreement.
"Advance Date" shall mean the date on which an Advance is made.
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"Advance Request" shall mean the written request for an Advance
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under the Loan as identified in Subsection 3.4(b) hereof and shall also include
presentments triggering an automatic Advance, as described in Subsection 3.4(a).
"Affiliate" of a Person shall mean (a) any Person directly or
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indirectly owning 10% or more of the voting stock or rights of such named Person
or of which the named Person owns 10% or more of such voting stock or rights;
(b) any Person controlling, controlled by or under common control with such
named Person; (c) any officer or director of such named Person or any Affiliates
of the named Person; and (d) any family member of the named Person or any
Affiliate of such named Person.
"Associates" means Pharmaceutical Research Associates, Inc.,
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a Virginia corporation.
"Available Balance" shall mean at any time (i) without
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duplication, all funds on deposit in the Special Loan Account at such time which
Bank, in accordance with its standard practices for posting of debits and
credits to demand deposit accounts of a type similar to the Special Loan
Account, deems to be collected funds, including, without limitation, all wire
transfers credited to the Special Loan Account at such time and all other
Federal or other immediately available funds on deposit in or deposited into the
Special Loan Account at such time less (ii) the sum of all interest, fees and
other Indebtedness related to the Loan due and payable at such time.
"Borrowing Base" shall mean at any time the sum of (i) 85% of
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Borrower and Guarantors' Billed Eligible Accounts and (ii) the lesser of a) 60%
of Borrower and Guarantors' Unbilled Eligible Accounts or b) $2,500,000.
"Borrowing Base Certificate" shall mean a certificate executed
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by the chief financial officer or President of Borrower, in the form attached as
Exhibit B hereto, certifying the accuracy and completeness of an Accounts
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Receivable Report, and showing the Borrowing Base at any particular time.
"Business Day" shall mean a weekday on which commercial banks
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are open for business in McLean, Virginia.
"Chattel Paper" shall mean all writing or writings which
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evidence both a monetary obligation and a security interest in or lease of
specific goods and in addition includes all property included in the definition
of "chattel paper" as used in the Code, together with any guaranties, letters of
credit and other security therefor.
"Code" shall mean the Uniform Commercial Code, as in effect in
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the Commonwealth of Virginia from time to time.
"Collateral" shall mean the following property of Borrower and
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Guarantors, wherever located and whether now owned by Borrower and Guarantors or
hereafter acquired: (a) all Inventory; (b) all General Intangibles; (c) all
Accounts and Chattel Paper and any other instrument or intangible representing
payment for goods or services; (d) any other collateral described in Exhibit
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1.1A hereto (if any) or in which Bank may be hereafter granted a security
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interest or Lien; (e) all funds in the Special Loan Account or otherwise on
deposit with or under the control of Bank or its agents or correspondents; and
(f) all parts, replacements, substitutions, profits, products and cash and non-
cash proceeds of any of the foregoing (including insurance proceeds payable by
reason of loss or damage thereto) in any form and wherever located. Collateral
shall include all written or electronically recorded books and records relating
to any such Collateral and other rights relating thereto. Collateral shall not
mean the property of Pharmaceutical Research Associates, GmbH or Pharm Research
Associates (UK) Limited.
"Crucible" shall mean The Crucible Group, Inc., a Georgia
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corporation.
"Debt" shall mean all liabilities of a Person as determined
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under GAAP (as defined in Section 1.2) and all obligations which such Person has
guaranteed or endorsed or is
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otherwise secondarily or jointly liable for, and shall include, without
limitation (a) all obligations for borrowed money or purchased assets, (b)
obligations secured by assets whether or not any personal liability exists, (c)
the capitalized amount of any capital or finance lease obligations, (d) the
unfunded portion of pension or benefit plans or other similar liabilities, (e)
obligations as a general partner, (f) contingent obligations pursuant to
guaranties, endorsements, letters of credit and other secondary liabilities in
respect of the Debt (as that termed is defined herein) of others, and (g)
obligations for deposits.
"Default Rate" shall mean the meaning ascribed to that term in
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the Note.
"Eligible Accounts" shall mean all Accounts of Borrower and
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each Guarantor (valued net of any sales tax, finance charge or late payment
charge included in the invoiced amount, and reduced by the maximum amount of any
discounts or other reductions) the terms for which provide or will provide that
they are to be payable not more than thirty (30) days after the date of invoice
and as to which Bank has a first priority perfected security interest subject
only to Permitted Liens, excluding (a) Accounts outstanding for ninety (90) days
or more from the date of invoice; (b) all Accounts owed by an Account Debtor if
more than 50% of the Accounts owed by such Account Debtor (or any Affiliate) to
Borrower or Guarantor are not deemed Eligible Accounts hereunder; (c) Accounts
owing from any Affiliate of Borrower or Guarantor; (d) Accounts which are the
subject of a good-faith dispute or subject to any good-faith counterclaim,
contra-account or offset; (e) Accounts owing by any Account Debtor which is
generally unable to pay its debts as they become due; (f) Accounts arising from
a sale on a ▇▇▇▇-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or similar basis or which is subject to repurchase, return,
rejection, repossession, loss or damage; (g) Accounts owed by an Account Debtor
that are payable from a location outside the United States, unless the Account
is secured by a letter of credit, or insured by credit insurance, acceptable to
Bank that is assigned to Bank; (h) Accounts owed by the United States of America
or an agency or department thereof in an aggregate amount greater than $250,000
unless Borrower or Guarantor shall have assigned such Account to Bank so as to
comply with the federal Assignment of Claims Act;(i) Accounts owed by an Account
Debtor and its Affiliates for which Bank in its reasonable judgment has
established a credit limit (to the extent the Accounts of such Account Debtor
and its Affiliates exceed such limit); (j) Accounts evidenced by a note or other
instrument, or Chattel Paper or reduced to judgment; (k) With respect to any
Account relating to an individual contract or agreement that exceeds, in dollar
terms, 20% of the total Accounts of Borrower and Guarantors, the excess amount
of such Account; (l) With respect to any Account Debtor or its Affiliates' whose
aggregate Accounts exceed, in dollar terms, 33% of the total Accounts of
Borrower and Guarantors, the excess of such Account Debtor or its Affiliates'
Accounts; (m) Accounts which, by contract, subrogation, mechanics' lien laws or
otherwise, are subject to good faith claims by Borrower or each Guarantor's
creditors or other third parties or which are owed by Account Debtors as to whom
any creditor of Borrower or each Guarantor (including any bonding company) has
lien rights; (n) Accounts owed by an Account Debtor which is located in a state
where Borrower or Guarantor is required to qualify to transact business or to
file reports in order to enforce its rights to collect such accounts, unless
Borrower or Guarantor has so qualified or filed; (o) Accounts owed by an Account
Debtor who disputes its liability therefor in good faith; and (p) Accounts owed
by an Account Debtor that shall take or be the subject of any action or
proceeding of the type described in Section 8.1(d) or (e). No Accounts shall be
Eligible Accounts if any representation, warranty or covenant herein relating
thereto shall be in default.
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"Equipment" shall mean all furniture, fixtures, equipment,
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motor vehicles, rolling stock and other tangible property of every description,
except Inventory, and in addition includes all property included in the
definition of "equipment" as used in the Code.
"Event of Default" shall mean any event specified as such in
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Section 8.1 hereof ("Events of Default"), provided that there shall have been
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satisfied any requirement in connection with such event for the giving of notice
or the lapse of any cure period, or both; "Default" or "default" shall mean
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any of such events, whether or not any such requirement for the giving of notice
or the lapse of time or the happening of any further condition, event or act
shall have been satisfied.
"General Intangibles" shall mean all intangible personal
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property (including things in action) except Accounts, Chattel Paper and
instruments (as defined in the Code), including all contract rights, copyrights,
trademarks, trade names, service marks, patents, patent drawings, designs,
formulas, rights to a Person's name itself, customer lists, franchise rights,
rights to all prepaid expenses, marketing expenses, rights to receive future
contracts, fees, commissions and orders relating in any respect to any business
of a Person, all licenses and permits, all computer programs and other software
owned by a Person or which a Person has the right to use, and all rights for
breach of warranty or other claims for funds to which a Person may be entitled,
and in addition includes all property included in the definition of "general
intangibles" as used in the Code. General Intangibles shall not include
certificated and uncertificated securities.
"Guarantor" shall mean Associates, IMTCI and Crucible and any
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Person now or hereafter guaranteeing, endorsing or otherwise becoming liable for
any Indebtedness. Each Guarantor is a Subsidiary (as hereinafter defined).
"Guaranty Agreement" shall mean any guaranty instrument now or
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hereafter executed and delivered by any Guarantor to Bank, as it may be
modified.
"IMTCI" shall mean International Medical Technical Consultants
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Inc., a Kansas corporation.
"Indebtedness" shall mean all obligations now or hereafter owed
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to Bank by Borrower, whether related or unrelated to the Loan, including,
without limitation, amounts owed or to be owed under the terms of the Loan
Documents, or arising out of the transactions described therein, including,
without limitation, the Loan, sums advanced to pay overdrafts on any account
maintained by Borrower with Bank, reimbursement obligations for outstanding
letters of credit or banker's acceptances issued for the account of Borrower or
its Subsidiaries, amounts paid by Bank under letters of credit or drafts
accepted by Bank for the account of Borrower or its Subsidiaries, together with
all interest accruing thereon, all fees under the Loan Documents, all reasonable
costs of collection, attorneys' fees and expenses of or advances by Bank which
Bank pays or incurs in discharge of obligations of Borrower or to repossess,
protect, preserve, store or dispose of any Collateral, whether such amounts are
now due or hereafter become due, direct or indirect and whether such amounts due
are from time to time reduced or entirely extinguished and thereafter re-
incurred.
"Inventory" shall mean all goods, merchandise and other
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personal property which is held for sale or lease or furnished or to be
furnished under a contract for services or raw materials, and all work in
process and materials used or consumed or to be used or consumed in a
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Person's business, and in addition, includes all property included in the
definition of "inventory" as used in the Code.
"Item" shall mean any "item" as defined in Section 4-104 of
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the Code, and shall also mean and include checks, drafts, money orders or other
media of payment.
"Lien" shall mean any mortgage, pledge, statutory lien or
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other lien arising by operation of law, security interest, trust arrangement,
security deed, financing lease, collateral assignment or other encumbrance,
conditional sale or title retention agreement, or any other interest in property
designed to secure the repayment of Indebtedness, whether arising by agreement
or under any statute or law or otherwise.
"Loan" shall mean the revolving loan identified in Section
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hereof.
"Loan Documents" shall mean this Agreement, any other Security
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Agreement, any Note, any Guaranty Agreement, the Advance Requests, Borrowing
Base Certificates, UCC-1 financing statements and all other documents and
instruments now or hereafter evidencing, describing, guaranteeing or securing
the Indebtedness contemplated hereby or delivered in connection herewith, as
they may be modified.
"Maximum Loan Amount" shall mean $7,500,000.00.
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"Note" shall mean the Revolving Note, as defined in Section 3.2
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and any other promissory note now or hereafter evidencing any Indebtedness, and
all modifications, extensions and renewals thereof.
"Permitted Debt" shall mean (a) the Indebtedness; (b) current
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liabilities of Borrower and its Subsidiaries incurred in the ordinary course of
business not incurred through (i) the borrowing of money, or (ii) the obtaining
of credit except for credit on an open account basis customarily extended and in
fact extended in connection with normal purchases of goods and services; (c)
Debt in respect of taxes, assessments, governmental charges or levies and claims
for labor, materials and supplies to the extent that payment therefor shall not
at the time be required to be made in accordance with the provisions of Section
5.8; (d) endorsements for collection, deposit or negotiation and warranties of
products or services, in each case incurred in the ordinary course of business;
(e) obligations under capitalized leases not exceeding $2,500,000 in aggregate
amount at any time outstanding; (f) Debt for borrowed money of Pharmaceutical
Research Associates, GmbH or Pharm Research Associates (UK) Limited secured
against the assets of Pharmaceutical Research Associates, GmbH or Pharm Research
Associates (UK) Limited, but not the Collateral, provided that the aggregate
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principal amount of such Debt shall not exceed the amount of $2,500,000 at any
one time; (g) Debt for borrowed money of Borrower and its Subsidiaries, provided
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that the aggregate principal amount of such Debt shall not exceed the amount of
$350,000 at any one time; (h) Debt of Borrower and its Subsidiaries existing on
the date of this Agreement, all of which is listed and described on Exhibit
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1.1C, and any extensions, renewals replacements, modifications and refundings of
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such Debt, provided that the aggregate amount of such Debt may not be increased
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from the amount shown as outstanding on such Exhibit;(i) Subordinated Debt in
addition to the Debt listed on Exhibit 1.1C provided the aggregate principal
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amount of such additional Debt shall not exceed $2,000,000 at any one time; (j)
unsecured Debt for internal loans among Borrower and Guarantors; and (k) Debt in
respect of judgments and awards that have been in force for less than the
applicable period for taking an appeal so long as execution is not levied
thereunder or in respect of which Borrower or its applicable
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Subsidiary shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution shall have
been obtained pending such appeal or review.
"Permitted Liens" shall mean (a) Liens securing the
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Indebtedness; (b) Liens on the assets of Pharmaceutical Research Associates,
GmbH or Pharm Research Associates (UK) Limited securing the Permitted
Indebtedness referred to in clause (f) of the definition thereof; (c) Liens to
secure taxes, assessments and other government charges in respect of obligations
not overdue or liens on properties to secure claims for labor, material or
supplies in respect of obligations not overdue; (d) deposits or pledges made in
connection with, or to secure payment of, workmen's compensation, unemployment
insurance, old age pensions or other social security obligations; (e) liens of
carriers, warehousemen, mechanics and materialmen, and other like liens on
properties, in existence less than 120 days from the date of creation thereof in
respect of obligations not overdue; (f) encumbrances consisting of easements,
rights of way, zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or lessor's liens
under leases to which Borrower or a Subsidiary of Borrower is a party, and other
minor liens or encumbrances none of which in the opinion of Borrower interferes
materially with the use of the property affected in the ordinary conduct of the
business of Borrower and its Subsidiaries which defects do not individually or
in the aggregate have a materially adverse effect on the business of Borrower
individually or of Borrower and its Subsidiaries on a consolidated basis; (g)
presently outstanding liens listed on Exhibit 1.1D hereto; and (h) Liens on the
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assets of Borrower or Guarantors securing the Permitted Indebtedness referred to
in clauses (g) and (k) of the definition thereof.
"Person" shall mean any natural person, corporation,
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unincorporated organization, trust, joint-stock company, joint venture,
association, company, limited or general partnership, any government or any
agency or political subdivision of any government, or any other entity or
organization.
"Revolving Credit Period" shall mean the period from and
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including the date of this Agreement to but not including the Termination Date.
"Security Agreement" shall mean this Agreement as it relates to
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a security interest in the Collateral, and any other mortgage, security
agreement or similar instrument now or hereafter executed by Borrower, the
Guarantors, or other Person granting Bank a security interest in any Collateral
to secure the Indebtedness.
"Special Loan Account" shall mean the demand deposit account
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established pursuant to Section 3.3 hereof.
"Subordinated Debt" shall mean Debt of Borrower, each
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Guarantor, or any Subsidiary that is by its terms expressly subordinated and
made junior to the payment and performance in full of the Indebtedness, on the
terms and conditions no less favorable to Bank than the subordination provisions
currently contained in the Permitted Debt listed under the heading "Subordinated
Debt" on Exhibit 1.1C.
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"Subsidiary" shall mean any corporation, partnership or other
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Person in which Borrower, directly or indirectly, owns more than fifty percent
(50%) of the stock, capital or income interests, or other beneficial interests,
or which is effectively controlled by Borrower.
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"Termination Date" shall mean June 30, 1999.
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1.2. Financial Terms. All financial terms used herein shall have the
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meanings assigned to them under generally accepted accounting principles in the
United States ("GAAP") unless another meaning shall be specified.
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2. Representations and Warranties. In order to induce Bank to enter into
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this Agreement and to make the Loan provided for herein, Borrower makes the
following representations and warranties, all of which shall survive the
execution and delivery of the Loan Documents. Unless otherwise specified, such
representations and warranties shall be deemed made as of the date hereof and as
of the Advance Date of any Advance by Bank to Borrower:
2.1. Valid Existence and Power. Borrower, each Guarantor and each
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Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and is duly
qualified or licensed to transact business in all places where the failure to be
so qualified would have a material adverse effect on it. Borrower and each
other Person which is a party to any Loan Document (other than Bank) has the
power to make and perform the Loan Documents executed by it and all such
instruments will constitute the legal, valid and binding obligations of such
Person, enforceable in accordance with their respective terms, subject only to
bankruptcy and similar laws affecting creditors' rights generally.
2.2. Authority. The execution, delivery and performance thereof by
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Borrower and each other Person (other than Bank) executing any Loan Document
have been duly authorized by all necessary action of such Person, and do not and
will not violate any provision of law or regulation, or any writ, order or
decree of any court or governmental or regulatory authority or agency or any
provision of the governing instruments of such Person, and do not and will not,
with the passage of time or the giving of notice, result in a breach of, or
constitute a default or require any consent under, or result in the creation of
any Lien upon any property or assets of such Person pursuant to, any law,
regulation, instrument or agreement to which any such Person is a party or by
which any such Person or its respective properties may be subject, bound or
affected, except as described on Exhibit 2.2 (if any).
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2.3. Financial Condition. Other than as disclosed in financial
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statements delivered on or prior to the date hereof to Bank, neither Borrower
nor any Subsidiary nor any Guarantor has any material direct or contingent
obligations or liabilities (including any guarantees or leases) or any material
unrealized or anticipated losses from any commitments of such Person except as
described on Exhibit (if any). All such financial statements have been
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prepared in accordance with GAAP and fairly present the financial condition of
Borrower, Subsidiary or Guarantor, as the case may be, as of the date thereof.
Borrower is not aware of any material adverse fact (other than facts which are
generally available to the public and not particular to Borrower, such as
general economic or industry trends) concerning the conditions or future
prospects of Borrower or any Subsidiary or any Guarantor which has not been
fully disclosed to Bank, including any adverse change in the operations or
financial condition of such Person since the date of the most recent financial
statements delivered to Bank. Borrower and each Guarantor (other than Crucible)
is solvent, and after consummation of the transactions set forth in this
Agreement and the other Loan Documents, Borrower and each Guarantor (other than
Crucible) will be solvent. Borrower, Guarantors and, Subsidiaries, taken as a
whole, are solvent, and after consummation of the transactions set forth in this
Agreement and the other Loan Documents, Borrower, Guarantor and, Subsidiaries,
taken as a whole, will be solvent.
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2.4. Litigation. Except as disclosed on Exhibit 2.4 (if any), there are
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no suits or proceedings pending, or to the knowledge of Borrower threatened,
before any court or by or before any governmental or regulatory authority,
commission, bureau or agency or public regulatory body against or affecting
Borrower, any Subsidiary or any Guarantor, or their assets, which if adversely
determined would have a material adverse effect on the financial condition or
business of Borrower, such Subsidiary or such Guarantor, taken as a whole.
2.5. Agreements, Etc. Neither Borrower nor any Guarantor nor any
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Subsidiary is a party to any agreement or instrument or subject to any court
order, governmental decree or any charter or other corporate restriction,
materially adversely affecting its business, assets, operations or condition
(financial or otherwise) taken as a whole, nor is any such Person in default in
the performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any agreement or instrument to which it is
a party, or any law, regulation, decree, order or the like.
2.6. Authorizations. All authorizations, consents, approvals and
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licenses required under applicable law or regulation for the ownership or
operation of the property owned or operated by Borrower, any Guarantor, or any
Subsidiary or for the conduct of any business in which it is engaged have been
duly issued and are in full force and effect except where a failure to obtain
same would not have a material adverse effect on such Person, taken as a whole,
and it is not in default, nor has any event occurred which with the passage of
time or the giving of notice, or both, would constitute a default, under any of
the terms or provisions of any part thereof, or under any order, decree, ruling,
regulation, closing agreement or other decision or instrument of any
governmental commission, bureau or other administrative agency or public
regulatory body having jurisdiction over such Person, which default would have a
material adverse effect on such Person. Except as noted herein, no approval,
consent or authorization of, or filing or registration with, any governmental
commission, bureau or other regulatory authority or agency is required with
respect to the execution, delivery or performance of any Loan Document.
2.7. Title. Borrower, each Guarantor, and each Subsidiary has good title
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to all of the assets shown in its financial statements free and clear of all
Liens, except Permitted Liens and except for assets sold or otherwise disposed
of in the ordinary course of business since that date in compliance with the
terms of this Agreement. Borrower and each Guarantor has full ownership rights
in all Collateral.
2.8. Collateral. The security interests granted to Bank herein and
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pursuant to any other Security Agreement (a) constitute and, as to subsequently
acquired property included in the Collateral covered by the Security Agreement,
will constitute, security interests under the Code entitled to all of the
rights, benefits and priorities provided by the Code and (b) are, and as to such
subsequently acquired Collateral will be, fully perfected (except with regard to
property in which a security interest cannot be perfected by the filing of a
financing statement in accordance with the Code), superior and prior to the
rights of all third persons, now existing or hereafter arising, subject only to
Permitted Liens. All of the Collateral is intended for use in Borrower's, each
Guarantor's and each Subsidiary's businesses.
2.9. Location. The chief executive office of Borrower and each Guarantor
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where Borrower's and each Guarantor's business records are located, all of
Borrower's and each Guarantor's other places of business and any other places
where any Collateral is kept, are all located at the addresses indicated on
Exhibit 2.9. The Collateral is located, and shall at all times be kept and
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maintained only, at Borrower's and each Guarantor's location or locations as
described on Exhibit 2.9 herein or as notified in accordance with (S)6.8 hereof.
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No such Collateral is attached or affixed to any real property so as to be
classified as a fixture unless Bank has otherwise agreed in writing.
2.10. Taxes. Borrower, each Guarantor, and each Subsidiary have filed
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all federal and state income and other tax returns which are required to be
filed, and have paid all taxes as shown on said returns and all taxes, including
withholding, FICA and ad valorem taxes, shown on all assessments received by it
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to the extent that such taxes have become due, except those, if any, being
contested in good-faith and by appropriate proceedings. Neither Borrower nor
any Subsidiary is subject to any federal, state or local tax Liens nor has such
Person received any notice of deficiency or other official notice to pay any
taxes, except those, if any, being contested in good-faith and by appropriate
proceedings. Borrower, each Guarantor, and each Subsidiary have paid all sales
and excise taxes payable by it, except those, if any, being contested in good-
faith and by appropriate proceedings. Notwithstanding (and as exception to) the
foregoing (S) 2.10, Guarantors and Subsidiaries, taken as a whole, shall be
entitled to have outstanding taxes in an aggregate amount not to exceed $25,000
at any one time.
2.11. Labor Law Matters. No goods or services, have been or will be
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produced by Borrower, each Guarantor, or any Subsidiary in violation of any
applicable labor laws or regulations or any collective bargaining agreement or
other labor agreements or in violation of any minimum wage, wage-and-hour or
other similar laws or regulations.
2.12. Accounts. Each Account, instrument, Chattel Paper and other
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writing that in each case constitutes any portion of the Collateral (a) is
genuine and enforceable in accordance with its terms except for such limits
thereon arising from bankruptcy and similar laws relating to creditors' rights;
(b) is not subject to any defense, set off, claim or counterclaim of a material
nature against Borrower or each Guarantor except as to which Borrower or each
Guarantor has notified Bank in writing; (c) is not subject to any other
circumstances that would impair the validity, enforceability or amount of such
Collateral except as to which Borrower or each Guarantor has notified Bank in
writing; (d) arises from a bona fide sale of goods or delivery of services in
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the ordinary course and in accordance with the terms and conditions of any
applicable purchase order, contract or agreement; and (e) is for a liquidated
amount maturing as stated in the invoice therefor. As an exception to the
foregoing, Borrower, Guarantors and Subsidiaries, taken as a whole, shall be
entitled to noncompliances to (S) 2.12(a)-(e), the aggregate effect of which
will not to exceed $200,000 (Borrower may seek permission from Bank for
aggregate noncompliances in excess of $200,000, but such permission will be
granted or withheld in Bank's absolute discretion). Notwithstanding this
exception, each Account included in any Advance Request, Borrowing Base
Certificate, report or other document as an Eligible Account meets all the
requirements set forth in (S) 2.12(a)-(e).
2.13. Judgment Liens. Neither Borrower, nor any Guarantor, nor any
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Subsidiary, nor any of their assets, are subject to any unpaid judgments or any
judgment liens (other than Permitted Liens) in any jurisdiction.
2.14. Subsidiaries. The Borrower's Subsidiaries, including the
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Guarantors, are listed on Exhibit 2.14.
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2.15. Hazardous Materials. To the best of Borrower's knowledge,
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Borrower, each Guarantor, and each Subsidiary's property and improvements
thereon have not in the past been used
9
by such Person, are not presently being used, and will not in the future be used
for, nor does Borrower, any Guarantor, or any Subsidiary engage in, the
handling, storage, manufacture, disposition, processing, transportation, use or
disposal of any material amount of hazardous or toxic materials that is not in
material compliance with applicable environmental law except for noncompliances
that would not have a material adverse effect on such Person, taken as a whole.
2.16. ERISA. Borrower and each Guarantor has furnished to Bank true and
-----
complete copies of the latest annual report required to be filed pursuant to
Section 104 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), with respect to each employee benefit plan or other plan maintained
-----
for employees of Borrower, each Guarantor, or any Subsidiary and covered by
Title IV of ERISA (a "Plan"), and no Termination Event (as hereinafter defined)
----
with respect to any Plan has occurred and is continuing. For the purposes of
this Agreement, a "Termination Event" shall mean a "reportable event" as defined
-----------------
in Section 4043(b) of ERISA, or the filing of a notice of intent to terminate
under Section 4041 of ERISA. Neither Borrower nor any Guarantor nor any
Subsidiary has any unfunded liability with respect to any such Plan.
2.17. Investment Company Act. Neither Borrower nor any Guarantor nor any
----------------------
Subsidiary is an "investment company" as defined in the Investment Company Act
of 1940, as amended.
2.18. Additional Representations. Any additional representations or
--------------------------
warranties set forth on Exhibit 2.18 (if any) hereto are true and correct in all
------------
material respects.
2.19. Perfection Questionnaire. All representations, warranties and
------------------------
statements made by Borrower and each Guarantor in the Perfection Questionnaire
executed and delivered by Borrower and each Guarantor to Bank in connection with
the Loan are true and correct as of the date hereof.
3. The Loan.
--------
3.1. Revolving Loan. Bank agrees, on the terms and conditions set forth
--------------
in this Agreement, to make Advances to Borrower from time to time during the
Revolving Credit Period in amounts such that the aggregate principal amount of
Advances at any one time outstanding will not exceed the lesser of (i) the
Maximum Loan Amount and (ii) the Borrowing Base. Within the foregoing limit,
Borrower may borrow, prepay and reborrow Advances at any time during the
Revolving Credit Period.
3.2. Revolving Note. The Loan shall be evidenced by and payable in
--------------
accordance with the terms of a promissory note in the face amount of the Maximum
Loan Amount (the "Revolving Note").
--------------
3.3. Special Loan Accounts. Borrower shall instruct and cause the
---------------------
Guarantors to instruct all Account Debtors and other Persons obligated in
respect of Accounts and other Collateral to make all payments in respect of the
Accounts or other Collateral directly to Bank (by instructing that such payments
be remitted to a post office box which shall be in the name and under the
control of Bank). Except as provided in Section 9.2 of this Agreement, all such
payments made to Bank shall be deposited in Special Loan Accounts. The Special
Loan Accounts shall be created in accordance with the schematic attached as
Exhibit 3.3 hereto. Borrower shall pay Bank's standard fees and charges in
-------
connection with such lock-box arrangements, as such fees and charges may change
from time to
10
time. Borrower further agrees that if the proceeds of any Collateral (including
the payments made in respect of Accounts) shall be received by it or the
Guarantors, Borrower shall deposit and shall cause the Guarantors to deposit,
such proceeds in the Special Loan Accounts as promptly as possible, unless
Section 9.2 of this Agreement shall require otherwise. Until so deposited, all
such proceeds shall be held in trust by Borrower and each Guarantor for and as
the property of Bank and shall not be commingled with any other funds or
property of Borrower or each Guarantor. Borrower, on behalf of itself and each
Guarantor, hereby irrevocably authorizes and empowers Bank, its officers,
employees and authorized agents to endorse and sign its name on all checks,
drafts, money orders or other media of payment so delivered, and such
endorsements or assignments shall, for all purposes, be deemed to have been made
by Borrower or each Guarantor prior to any endorsement or assignment thereof by
Bank.
3.4. Advances.
--------
(a) If on any Business Day Items are presented to Bank for payment against
the Special Loan Account, which Items, in the aggregate, would, if paid in full,
cause the Available Balance in the Special Loan Account on such day to be less
than $0, such presentment shall be deemed to be a request by Borrower for an
Advance on the date of such presentment in an amount equal to the amount
(rounded upward to the nearest multiple of $1,000) required to cause such
Available Balance to equal $0. Bank shall make an Advance by depositing such
amount deemed requested to the Special Loan Account.
(b) Bank shall accept from Borrower a signed written request for an
Advance in form attached as Exhibit 3.4 hereto, which request shall be delivered
-------
to Bank no later than 2.00 p.m. (local time McLean, Virginia) on the date of the
requested Advance, and shall set forth the calculation of the Borrowing Base and
a reconciliation to the previous request or Borrowing Base Certificate, specify
the date (which shall be a Business Day) and the amount of the proposed Advance
and provide such other information as Bank may require. Bank's acceptance of
such a request shall be indicated by its making the Advance requested. Such an
Advance shall be made available to Borrower in immediately available funds at
Bank's address referred to in Section 10.4.
3.5. Fees.
----
(a) Borrower shall pay to Bank a non-refundable facility fee in the amount
of $37,500, of which $18,500 was paid on June 11, 1997, with the remaining
$19,000 payable on the date of this Agreement.
(b) Borrower shall pay to Bank a commitment fee for each day at a rate per
annum equal to the product of (i) one-quarter of one percent (.0025%) multiplied
by (ii) the amount by which the Maximum Loan Amount exceeds the outstanding
amount of the Advances on such day, payable quarterly on the first day of each
calendar quarter with respect to the immediately preceding quarter.
3.6. Repayment of Loan.
-----------------
(a) If on any Business Day, after the payment of Items presented to Bank
for payment against the Special Loan Account, the Available Balance is greater
than $0, Bank shall apply such excess against the outstanding principal balance
of the Note.
11
(b) Borrower may, upon at least one Business Day's notice to Bank, prepay
the principal amount of the Loan, in whole at any time, or from time to time in
part, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment.
(c) The Loan shall mature, and the principal amount thereof and all
interest, fees, expenses and other amounts payable under the Loan Documents
shall be due and payable, on the Termination Date.
(d) Bank may debit the Special Loan Account and/or make Advances to
Borrower (whether or not in excess of the lesser of the Maximum Loan Amount and
the Borrowing Base) and apply such amounts to the payment of interest and
reasonable fees, expenses and other amounts to which Bank may be entitled from
time to time pursuant to the Loan Documents and Bank is hereby irrevocably
authorized to do so without the consent of, but with prompt notice to, Borrower.
(e) Borrower shall make each payment of principal of and interest on the
Loan and fees hereunder not later than 2.00 p.m. (McLean, Virginia) on the date
when due, without set off, counterclaim or other deduction, in immediately
available funds to Bank at its address referred to in Section 10.4. Whenever
any payment of principal of, or interest on, the Loan or of fees shall be due on
a day which is not a Business Day, the date for payment thereof shall be
extended to the next succeeding Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest thereon shall
be payable for such extended time.
3.7. Overdue Amounts. Any payments not made as and when due shall bear
---------------
interest from the date due until paid at the Default Rate.
3.8. Calculation of Interest. All interest under the Note or hereunder
-----------------------
shall be calculated on the basis of the Actual/360 Computation, as defined in
the Note.
3.9. Sales Tax. Borrower shall notify Bank if any Account includes any
---------
sales or other similar tax and Bank may, but shall not be obligated to, remit
any such taxes directly to the taxing authority and make Advances or charge the
Special Loan Account therefor. In no event shall Bank be liable for any such
taxes.
3.10. Letters of Credit; Banker's Acceptances.
---------------------------------------
(a) At its discretion Bank may from time to time issue, extend or
renew letters of credit and banker's acceptances for the account of Borrower or
its Subsidiaries. The availability of Advances under the Loan shall be reduced
by outstanding obligations of Bank under any letters of credit and banker's
acceptances. All payments made by Bank under any such letters of credit or
banker's acceptances (whether or not Borrower is the account party or drawer)
and all fees, commissions, discounts and other amounts owed or to be owed to
Bank in connection therewith, shall be deemed to be Advances under the Note,
shall be secured by the Collateral, and shall be repaid on demand. Borrower
shall complete and sign such applications and supplemental agreements and
provide such other documentation as Bank may require. The form and substance of
all letters of credit and acceptances, including expiration dates, shall be
subject to Bank's approval. Bank may charge a fee or commission for issuance,
renewal or extension of a letter of credit or acceptance. Borrower
unconditionally guarantees all obligations of any Subsidiary with respect to
letters of credit issued by Bank for the account of such Subsidiary and all
acceptances of any Subsidiaries' drafts. Upon an Event
12
of Default, Borrower shall, on demand, deliver to Bank good funds equal to 100%
of Bank's maximum liability under all outstanding letters of credit and banker's
acceptances, to be held as cash collateral for Borrower's reimbursement
obligations and other Indebtedness until such time that such reimbursement
obligations and other Indebtedness have been satisfied in full.
(b) Any letter of credit issued hereunder shall be governed by the
Uniform Customs of Practice for Documentary Credit (1993 Rev.), International
Chamber of Commerce Publication No. 500, as revised from time to time, except to
the extent that the terms of such publication would limit or diminish rights
granted to Bank hereunder or in any other Loan Document.
4. Conditions Precedent to Borrowing. Prior to any Advance, the following
---------------------------------
conditions shall have been satisfied, in the sole opinion of Bank and its
counsel:
4.1. Conditions Precedent to Initial Advance. In addition to any other
---------------------------------------
requirement set forth in this Agreement, Bank will not make the initial Advance
under the Loan unless and until the following conditions shall have been
satisfied:
(a) Loan Documents. Borrower and each other party to any Loan
--------------
Document, as applicable, shall have executed and delivered this Agreement, the
Note, and other required Loan Documents, all in form and substance reasonably
satisfactory to Bank.
(b) Supporting Documents. Borrower shall cause to be delivered to
--------------------
Bank the following documents:
(i) A copy of the governing instruments of Borrower and each
Guarantor, and a good standing certificate of Borrower and each Guarantor,
certified by the appropriate official of its state of incorporation and,
in the case of Borrower only, the Commonwealth of Virginia;
(ii) Incumbency certificate and certified resolutions of the
board of directors (or other appropriate Persons) of Borrower and each
other Person executing any Loan Documents, signed by the Secretary or
another authorized officer of Borrower or such other Person, authorizing
the execution, delivery and performance of the Loan Documents;
(iii) The legal opinion of Borrower's and any Guarantor's
legal counsel addressed to Bank regarding such matters as Bank and its
counsel may reasonably request;
(iv) A Borrowing Base Certificate duly completed by Borrower;
(v) Satisfactory evidence of payment of all fees due and
reimbursement of all costs incurred by Bank which Borrower is required to
pay under this Agreement, and evidence of payment to other parties of all
fees or costs which Borrower is required to pay under this Agreement; and
13
(vi) UCC-1 searches and other Lien searches showing no
existing security interests in or Liens on the Collateral other than the
security interests of Bank and Permitted Liens.
(c) Insurance. Borrower shall have delivered to Bank certificates
---------
of insurance or other satisfactory evidence of insurance meeting the
requirements of Section.
(d) Perfection of Liens. UCC-1 financing statements and, if
-------------------
applicable, certificates of title covering the Collateral executed by Borrower
and each Guarantor shall duly have been recorded or filed in the manner and
places required by law to establish, preserve, protect and perfect the
interests and rights created or intended to be created by the Security
Agreement; and all taxes, fees and other charges in connection with the
execution, delivery and filing of the Security Agreement and the financing
statements shall duly have been paid.
(e) Subordinations and Acknowledgments. Bank shall have received
----------------------------------
subordinations satisfactory to it from (i) all Guarantors and Affiliates as
required by Section 5.9; and (ii) Virginia Capital, L.P. and Sirrom
Investments, Inc. Bank shall have received acknowledgments satisfactory to it
from any Person who provided seller financing for Borrower's acquisitions of
International Medical Technical Consultants, Inc. and The Crucible Group, Inc.
(f) Cash Management Accounts. The Special Loan Account and Cash
------------------------
Proceeds Account shall have been established, as required.
(g) Additional Documents. Borrower shall have delivered to Bank
--------------------
all additional opinions, documents, certificates and other assurances that
Bank or its counsel may reasonably require.
(h) Collateral Examination. Bank shall have received a report
----------------------
satisfactory to it in its sole discretion of an independent examination of the
Collateral.
4.2. Conditions Precedent to Each Advance. The following conditions,
------------------------------------
in addition to any other requirements set forth in this Agreement, shall have
been met or performed by the Advance Date with respect to any Advance Request
and each Advance Request (whether or not a written Advance Request is required)
shall be deemed to be a representation that all such conditions have been
satisfied:
(a) Advance Request. Borrower shall have delivered to Bank an
---------------
Advance Request and other information, as required in Section 3.4(b), unless
the procedures described in Section 3.4(a) are in effect.
(b) No Event of Default. No Event of Default shall have occurred
-------------------
or will occur upon the making of the Advance in question and, if Borrower is
required to deliver a written Advance Request, Borrower shall have delivered
to Bank an officer's certificate to such effect, which may be incorporated in
the Advance Request.
(c) Correctness of Representations. All representations and
------------------------------
warranties made by Borrower and any Guarantor herein or otherwise in writing
in connection herewith
14
shall be true and correct with the same effect as though the representations
and warranties had been made on and as of the proposed Advance Date, and, if
Borrower is required to deliver a written Advance Request, Borrower shall have
delivered to Bank an officer's certificate to such effect, which may be
incorporated in the Advance Request.
(d) No Adverse Change. There shall have been no material adverse
-----------------
change in the condition, taken as a whole, financial or otherwise, of
Borrower, any Subsidiary or any Guarantor from such condition as it existed on
the date of the most recent financial statements delivered prior to date
hereof.
(e) Limitations Not Exceeded. The proposed Advance shall not cause
------------------------
the outstanding principal balance of the Loan to exceed the lesser of the
Maximum Loan Amount and the Borrowing Base. If Borrower is required to deliver
a written Advance Request, Bank shall have received a current monthly Accounts
Receivable Report (as required by Section) sufficient in form and substance to
calculate and verify the Borrowing Base.
(f) Additional Reporting Requirements on a Default. If a Default
----------------------------------------------
shall have occurred (unless such Default is cured prior to the lapse of the
applicable cure period and the time for the Advance to be made), Borrower
shall have delivered a current Borrowing Base Certificate and a current
monthly Accounts Receivable Report (as required by Section ) sufficient in
form and substance to calculate and verify the Borrowing Base.
(g) Further Assurances. Borrower shall have delivered such further
------------------
documentation or assurances as Bank may reasonably require.
5. Affirmative Covenants of Borrower. Borrower covenants and agrees that
---------------------------------
from the date hereof and until payment in full of the Indebtedness and the
formal termination of this Agreement, Borrower, each Guarantor, and each
Subsidiary:
5.1. Use of Loan Proceeds; Payment of Obligations. Shall use the
--------------------------------------------
proceeds of the Loan for working capital to be used in the operation of
Borrower's and its Subsidiaries' businesses, the repayment of (i) Borrower's
current loan from Bank and (ii) IMTCI's current loan from United Missouri Bank
(or its successor) (and furnish Bank all evidence that it may reasonably require
with respect to such use) and for other general corporate purposes. Shall pay
the obligations of the Loan as they become due.
5.2. Maintenance of Business and Properties. Shall at all times
--------------------------------------
maintain, preserve and protect all Collateral and all the remainder of its
material property used or useful in the conduct of its business, and keep the
same in good repair, working order and condition, and from time to time make, or
cause to be made, all material needful and proper repairs, renewals,
replacements, betterments and improvements thereto so that the business carried
on in connection therewith may be conducted properly and in accordance with
standards generally accepted in businesses of a similar type and size at all
times, and maintain and keep in full force and effect all material licenses and
permits reasonably necessary to the proper conduct of its business.
5.3. Insurance. Shall maintain such liability insurance, workers'
---------
compensation insurance, and casualty insurance as may be required by law,
customary and usual for prudent businesses in its industry and shall insure and
keep insured all Collateral and other properties with good and responsible
insurance companies satisfactory to Bank. All hazard insurance covering
Collateral shall be in amounts and shall contain co-insurance and deductible
provisions reasonably approved by Bank, shall name and directly insure Bank as
secured party and loss payee under a long-form New York
15
standard loss payee clause, or its equivalent, and shall not be terminable
except upon 30 days' written notice to Bank.
5.4. Notice of Default. Shall provide to Bank immediate notice of (a)
-----------------
the occurrence of a Default, (b) any material litigation or material changes in
existing litigation or any judgment against it or its assets, (c) any material
damage or loss to property, (d) any notice from taxing authorities as to claimed
deficiencies or any tax lien or any notice relating to alleged ERISA violations,
(e) any Reportable Event, as defined in ERISA, (f) any good-faith rejection,
return, offset, dispute, loss or other circumstance having a material adverse
effect on the Collateral taken as a whole, and (g) any loss or threatened loss
of material licenses or permits.
5.5. Inspections. Shall permit inspections of the Collateral and the
-----------
records of the Borrower or Guarantor pertaining thereto and verification of the
Accounts, at such times during normal business hours and in such manner as may
be reasonably required by Bank and shall further permit such inspection, review
and audits of Borrower's and each Guarantor's other records and its properties
(with such reasonable frequency and at such reasonable times as Bank may desire)
by Bank as Bank may deem necessary or desirable from time to time. The cost of
the first of such field audits, reviews, verifications and inspections per
fiscal year shall be borne by Borrower.
5.6. Financial Information. Shall maintain books and records in
---------------------
accordance with GAAP, and shall furnish to Bank the following periodic financial
information:
(a) Periodic Borrowing Base Reports. Within 25 days of the end of
-------------------------------
each month (or more frequently if required by Bank following a Default,
unless such Default is cured prior to the lapse of the applicable cure period
and the time for the Advance to be made) (i) Accounts Receivable Reports,
(ii) a Borrowing Base Certificate, and (iii) an Accounts Payable Report.
Within 25 days of each second and fourth fiscal quarter, a listing of all
Accounts, referencing each Account Debtor, its address, telephone number, and
contact name;
(b) Quarterly Reports. Within 45 days after the end of each fiscal
-----------------
quarter, on a consolidated and consolidating basis, which may be prepared as
one report, with separate columns for Borrower, each Guarantor, and each
Subsidiary, (i) an income statement and a balance sheet prepared in accordance
with GAAP, which includes separate columns for Borrower and each Guarantor, as
at the end of any such quarter, each certified by the chief financial officer
or president of Borrower and each Guarantor as being true and accurate, (ii)
an officer's certificate that Borrower is in compliance with the covenants of
Sections 5 and 6, and (iii) a contract backlog report;
(c) Annual Reports. Within 90 days after the end of each fiscal
--------------
year, on a consolidated and consolidating basis, which may be prepared as one
report, with separate columns for Borrower, each Guarantor, and each
Subsidiary, an income statement and a reconciliation of surplus statement for
such year, and a balance sheet as of the end of such year, prepared in
accordance with GAAP. Such annual reports for Borrower prepared on a
consolidated basis shall be certified by independent certified public
accountants of nationally recognized standing selected by Borrower. Such
annual reports for each Guarantor and Subsidiary need not be certified;
(d) No Default Certificates. Together with each report required by
-----------------------
Subsection (b) and (c), a certificate of Borrower's president or chief
financial officer that no Default then exists or if a Default exists, the
nature and duration thereof and Borrower's intention with respect thereto, and
in addition, shall cause Borrower's independent auditors (if applicable) to
submit to Bank, together with its audit report, a statement that, in the
course of
16
such audit, it discovered no circumstances which it believes would result
in a Default or if it discovered any such circumstances, the nature and
duration thereof;
(e) Auditor's Management Letters. Promptly upon receipt
----------------------------
thereof, copies of each report submitted to Borrower or each Guarantor by
independent public accountants in connection with any annual, interim or
special audit made by them of the books of Borrower including, without
limitation, each report submitted to Borrower or each Guarantor concerning
its accounting practices and systems and any final comment letter submitted
by such accountants to management in connection with the annual audit of
Borrower or each Guarantor;
(f) Projections. 10 days before the start of each fiscal
-----------
year, that fiscal year's budget and three year projections for Borrower and
each Guarantor. With respect to Borrower, such budgets and projections
shall be prepared on a balance sheet, P&L, and cashflow basis. With respect
to Guarantors, such budgets and projections shall be prepared solely on a
P&L basis.
In addition to the financial statements required herein, Bank reserves the
right to require such other or additional financial or other information
concerning Borrower, its Subsidiaries, the Guarantors and/or the Collateral as
Bank may reasonably request.
5.7. Corporate Existence. Shall maintain its corporate existence,
-------------------
good standing and necessary and material qualifications to do business.
5.8. Payment of Taxes, Etc. Shall pay before delinquent all of its
---------------------
debts and taxes, except those being contested in good faith by appropriate
proceedings (provided that Bank may require bonding or other assurances in the
event such delinquent taxes exceed $100,000 in the aggregate).
5.9. Subordination. Shall cause all debt and other obligations now
-------------
or hereafter owed by Borrower to any Guarantor or Affiliate to be subordinated
in right of payment and security to the Indebtedness in accordance with
subordination terms reasonably satisfactory to Bank.
5.10. Compliance; Hazardous Materials. Shall comply with all laws,
-------------------------------
regulations, ordinances, and other legal requirements, specifically including,
without limitation, ERISA, all securities laws and all laws relating to
hazardous materials and the environment except for such noncompliances that
would not have a material adverse effect on such Person, taken as a whole.
Unless approved in writing by Bank, neither Borrower nor any Subsidiary shall
engage in the storage, manufacture, disposition, processing, handling, use or
transportation of any material amount of hazardous or toxic materials, whether
or not in compliance with applicable laws and regulations.
5.11. Compliance with Assignment Laws. Shall, if Borrower desires to
-------------------------------
include a government contract or contracts in an aggregate amount greater than
$250,000 as Eligible Accounts, comply with the Federal Assignment of Claims Act
and any other applicable law relating to assignment of government contracts.
5.12. Further Assurances. Shall take such further action and provide
------------------
to Bank such further assurances as may be reasonably requested to ensure
compliance with the intent of this Agreement and the other Loan Documents.
5.13. Principal Accounts. Shall maintain its principal accounts,
------------------
including its primary depository and cash management accounts, with Bank.
17
5.14. Authorizations. Shall maintain all material authorizations,
--------------
consents, approvals and licenses required under applicable law or regulation for
the ownership or operation of the property owned or operated by Borrower or any
Subsidiary or for the conduct of any business in which it is engaged except
where the failure to obtain same would not have a material adverse effect on
such Person.
5.15. Financial Covenants. At all times, shall be in compliance with
-------------------
the following financial covenants on a consolidated basis to be tested at the
end of each of Borrower's fiscal quarters:
(a) The effective tangible net worth of Borrower shall not be
less than: (i) $3,000,000 as at December 31, 1997 and until December 30,
1998, (ii) and $4,000,000 as at December 31, 1998 and until the Termination
Date.
(b) The ratio of current assets of Borrower to its current
liabilities, less its current Subordinated Debt, shall be equal to or
greater than 1.0 to 1.0 as at the end of each fiscal quarter;
(c) The ratio of EBITDA of Borrower to its contractual debt
service calculated on a rolling basis, for the most recent past four fiscal
quarters, shall be equal to or greater than 1.15 to 1.0.
For purposes of this Agreement, the term "effective tangible
net worth" shall be defined as the net worth of a Person according to GAAP
less intangible assets plus subordinated debt not to be repaid within
twelve months, plus redeemable preferred stock.
For the purposes of this Agreement, the term "EBITDA" shall be
defined as net income before taxes plus interest expense, depreciation, and
amortization.
For the purposes of this Agreement, the term "contractual debt
service" shall be defined as current maturities of long-term debt,
capitalized leases, and subordinated debt plus associated interest costs
plus taxes due plus cash distributions.
5.16. Leases. Neither Borrower nor any Guarantor nor any Subsidiary
------
shall enter into or permit to exist any leases whereby the aggregate rentals and
other payments payable by Borrower and all Subsidiaries on an aggregate basis
shall exceed $4,750,000 during the current or any future twelve-month period.
6. Negative Covenants of Borrower. Borrower covenants and agrees that
------------------------------
from the date hereof and until payment in full of the Indebtedness and the
formal termination of this Agreement, Borrower, each Guarantor, and each
Subsidiary:
6.1. Debt. Shall not, without the approval of Bank, create or
----
permit to exist any Debt, except Permitted Debt.
6.2. Liens and Guaranties. Shall not, without the approval of Bank,
--------------------
which approval shall not be unreasonably withheld, create or permit any Liens on
Borrower, Guarantors, or Subsidiaries' property, including the Collateral,
except Permitted Liens. Shall not, without the approval of the Bank, which
approval shall not be unreasonably withheld, provide any guaranties, except
guaranties of Permitted Debt.
18
6.3. Dividends. Shall not pay any dividends (other than stock
---------
dividends) or other distribution, or purchase, redeem or otherwise acquire any
of its stock or other equity interests or pay or acquire any of its debt
subordinate to the Indebtedness unless, after giving effect thereto, there shall
be no Default hereunder and such payment or acquisition is specifically
permitted by Exhibit 6.3 hereto (if any); provided, however, that any Subsidiary
-----------
may pay dividends to Borrower or another Subsidiary wholly-owned by Borrower.
6.4. Loans and Other Investments. Shall not make or permit to exist
---------------------------
any advances or loans to, or guarantee or become contingently liable, directly
or indirectly, in connection with the obligations, leases, stock or dividends
of, or own, purchase or make any commitment to purchase any stock, bonds, notes,
debentures or other securities of, or any interest in, or make any capital
contributions to (all of which are sometimes collectively referred to herein as
"Investments") any Person except for (a) purchases of direct obligations of the
-----------
federal government, (b) deposits in commercial banks, (c) commercial paper of
any U.S. corporation having the highest ratings then given by the ▇▇▇▇▇'▇
Investors Services, Inc. or Standard & Poor's Corporation, (d) existing
investments in Subsidiaries and additional investments therein permitted
pursuant to (S) 6.15, (e) endorsement of negotiable instruments for collection
in the ordinary course of business, (f) advances to employees for business
travel and other expenses incurred in the ordinary course of business which do
not at any time exceed $250,000 in the aggregate, and (g) acquisitions of
Persons permitted pursuant to (S) 6.13.
6.5. Change in Business. Shall not enter into any business which is
------------------
substantially different from the business in which it is presently engaged.
6.6. Accounts. (a) Shall not sell, assign or discount any of its
--------
Accounts, Chattel Paper or any promissory notes held by it other than the
discount of such notes in the ordinary course of business for collection; and
(b) to the extent it has knowledge thereof, shall notify Bank promptly in
writing of any material discount, offset or other deductions not shown on the
face of an Account invoice and any material dispute over an Account, and any
information relating to a material adverse change in any Account Debtor's
financial condition or ability to pay its obligations.
6.7. Transactions with Affiliates. Except as set forth on Exhibit
---------------------------- -------
6.7, shall not directly or indirectly purchase, acquire or lease any property
from, or sell, transfer or lease any property to, or otherwise deal with, in the
ordinary course of business or otherwise, any Affiliate (other than a
Subsidiary); provided, however, that any acts or transactions prohibited by this
Section may be performed or engaged in after written notice to Bank if upon
terms not less favorable to Borrower or such Subsidiary than if no such
relationship existed. Any such Affiliate may be a director, officer, employee
of Borrower or any Subsidiary.
6.8. No Change in Name, Offices; Removal of Collateral. Shall not,
-------------------------------------------------
unless it shall have given 30 days' advance written notice thereof to Bank, (a)
change its name or the location of its chief executive office or other office
where books or records are kept or (b) permit any material amount of Inventory
or other tangible Collateral to be located at any location other than as
specified in Section 2.9.
6.9. No Sale, Leaseback. Shall not, without the approval of Bank,
------------------
which approval shall not be unreasonably withheld, enter into any sale-and-
leaseback or similar transaction.
6.10. Margin Stock. Shall not use any proceeds of the Loan to
------------
purchase or carry any margin stock (within the meaning of Regulation U of the
Board of Governors of Federal Reserve System) or extend credit to others for the
purpose of purchasing or carrying any margin stock.
19
6.11. Tangible Collateral. Except as otherwise provided herein, no
-------------------
Inventory or other tangible Collateral shall be commingled with, or become an
accession to or part of, any property of any other Person so long as such
property is Collateral. No tangible Collateral shall be allowed to become a
fixture unless Bank shall have given its prior written authorization.
6.12. Subsidiaries. Shall not acquire (except as approved by Bank
------------
pursuant to (S)6.13), form or dispose of any Subsidiaries or permit any
Subsidiary to issue capital stock except to its parent.
6.13. Merger, Sale, Etc. Borrower, each Guarantor, or each
-----------------
Subsidiary shall not, unless it shall have given thirty (30) days' advance
written notice thereof to Bank, merge (other than the merger of Crucible with
and into IMTCI) or consolidate with any Person or acquire all or substantially
all of the assets of, or 50% or more of any class of equity interest of, any
Person or sell, lease, assign or otherwise dispose of any Collateral or other
assets (other than sales of obsolete or worn-out equipment, sales of Inventory
in the ordinary course of business, and sales of assets less than $250,000), or
sell or otherwise dispose of stock of any Subsidiary (such events shall be
referred to herein, collectively and individually, as an "Event of Merger").
Upon receipt of thirty (30) days' advance written of an Event of Merger, Bank
shall have the option, which will not be unreasonably exercised, to require
payment in full of the Loan and all other Indebtedness simultaneous with the
Event of Merger (or earlier, if acceptable to Borrower).
6.14. Capital Expenditures.. Borrower, Subsidiary or any Guarantor
---------------------
shall not make combined capital expenditures during the fiscal years 1997 and
1998 in excess of $10,000,000 for Borrower, all Subsidiaries, and all
Guarantors.
6.15. Advances. Borrower, Subsidiary or any Guarantor shall not
---------
make, during the portion of the fiscal year 1997 remaining after the Closing
Date and fiscal year 1998, combined net advances to or investments in
Pharmaceutical Research Associates, GmbH and/or Pharm Research Associates (UK)
Limited in excess of $1,500,000. No advances in excess of $200,000 shall be
made to Pharmaceutical Research Associates, GmbH and/or Pharm Research
Associates (UK) Limited without two (2) days prior written notification to
Bank.
7. Other Covenants of Borrower. Borrower covenants and agrees that from
---------------------------
the date hereof and until payment in full of the Indebtedness and the formal
termination of this Agreement, Borrower and each Subsidiary shall comply with
such additional covenants as may be set forth in Exhibit 7 hereto (if any).
-------
8. Default.
-------
8.1. Events of Default. Each of the following shall constitute an
------------------
Event of Default:
(a) There shall occur any default by Borrower in the payment,
when due, of any principal of or interest on the Note, any amounts due
hereunder or under any other Loan Document, or any other Indebtedness,
which default shall not be cured within fifteen (15) days (and if cured
within fifteen (15) days shall occur more than twice in any fiscal year);
or
(b) There shall occur any default by Borrower or any other
Person in the performance of the covenants contained in Section 5.6 of this
Agreement, which default shall not be cured with five (5) Business Days; or
(c) There shall occur any default by Borrower or any other
Person in the performance of the covenants contained in Section 5.15 of
this Agreement, which default shall not be cured with fifteen (15) days; or
20
(d) There shall occur any default by Borrower or any other
Person in the performance of the covenants contained in Section 6 of this
Agreement; or
(e) There shall occur any default, not provided for elsewhere
in this Section 8, by Borrower or any other party to any Loan Document
(other than Bank) in the performance of any agreement, covenant or
obligation contained in this Agreement or such Loan Document, which default
shall continue for a period of fifteen (15) days after the due date of such
performance or Borrower's receipt of notice of non-performance, unless such
default is not capable of being cured within fifteen (15) days despite
Borrower's reasonable efforts, in which event Borrower shall have an
additional period of time, not to exceed sixty (60) days, within which to
cure such default provided that Borrower diligently continues to pursue
such cure; or
(f) Any representation or warranty made by Borrower or any
other party to any Loan Document (other than Bank) herein or therein or in
any certificate or report furnished in connection herewith or therewith
shall prove to have been untrue or incorrect in any material respect when
made; or
(g) Any other obligation now or hereafter owed by Borrower or
any Subsidiary or Guarantor to Bank shall be in default and not cured
within the grace period, if any, provided therein; or any such Person shall
be in default under any obligation in excess of $250,000 owed to any other
obligee (other than Amplicon, Inc.), which default entitles the obligee to
accelerate any such obligations or exercise other remedies with respect
thereto; or any such Person shall be in default under any obligation owed
to Amplicon, Inc., which default shall result in Amplicon, Inc.
accelerating any such obligations or exercising other remedies with respect
thereto; or
(h) Borrower or any Subsidiary or Guarantor shall (i)
voluntarily liquidate or terminate operations or apply for or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of such Person or of all or of a substantial part of
its assets, (ii) admit in writing its inability, or be generally unable, to
pay its debts as the debts become due, (iii) make a general assignment for
the benefit of its creditors, (iv) commence a voluntary case under the
federal Bankruptcy Code (as now or hereafter in effect), (v) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of
debts, (vi) fail to discharge or dismiss, within thirty (30) days of
filing, any petition filed against it in an involuntary case under the
Bankruptcy Code, or (vii) take any corporate action for the purpose of
effecting any of the foregoing; or
(i) Without its application, approval or consent, a proceeding
shall be commenced, in any court of competent jurisdiction, seeking in
respect of Borrower, Subsidiary or any Guarantor any remedy under the
federal Bankruptcy Code, the liquidation, reorganization, dissolution,
winding-up, or composition or readjustment of debt, the appointment of a
trustee, receiver, liquidator or the like of such Person, or of all or any
substantial part of the assets of such Person, or other like relief under
any law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such Person fails to discharge or
dismiss such proceeding within thirty (30) days of its commencement; or
(j) There shall occur any material loss, theft, damage or
destruction of any of the Collateral, which loss is not fully insured (net
of any applicable deductible); or
21
(k) Notwithstanding anything to the contrary in the definition
of Permitted Debt, a judgment in excess of $250,000 shall be rendered
against the Borrower or any Subsidiary or Guarantor and shall remain
undischarged, undismissed and unstayed for more than thirty (30) days
(except judgments validly covered by insurance with a deductible of not
more than $50,000) or there shall occur any levy upon, or attachment,
garnishment or other seizure of, any material portion of the Collateral or
other assets of Borrower, any Subsidiary or any Guarantor by reason of the
issuance of any tax levy, judicial attachment or garnishment or levy of
execution; or
(l) Borrower, any Subsidiary or any Guarantor shall fail to
pay, on demand, any returned or dishonored draft, check, or other item
which has been deposited to the Special Loan Account or otherwise presented
to Bank and for which Borrower has received provisional credit; or
(m) Any Guarantor shall repudiate or revoke any Guaranty
Agreement; or
(n) The Carlyle Group, Inc. shall at any time cease to
control, after giving effect to any equity conversions, at least 50% of its
equity position of Borrower measured as the date hereof.
8.2. Remedies. Upon occurrence of an Event of Default, other than
--------
an Event of Default as defined in (S) 8.1(e), Bank may, without notice to
Borrower, at its option and in its absolute discretion, withhold further
Advances to Borrower. Upon occurrence of an Event of Default as defined in (S)
8.1(e), Bank may, without notice to Borrower, at its option and in its
reasonable discretion, withhold further Advances to Borrower. Notwithstanding
anything to the contrary in this Agreement or any other Loan Document, if any
Event of Default shall have occurred and be continuing, Bank may, at its option
and in its absolute discretion, take any or all of the following actions:
(a) Bank may declare any or all Indebtedness to be immediately due
and payable (if not earlier demanded), terminate its obligation to make
Advances to Borrower, bring suit against Borrower to collect the
Indebtedness, exercise any remedy available to Bank hereunder or at law and
take any action or exercise any remedy provided herein or in any other Loan
Document or under applicable law. No remedy shall be exclusive of other
remedies or impair the right of Bank to exercise any other remedies.
(b) Without waiving any of its other rights hereunder or under any
other Loan Document, Bank shall have all rights and remedies of a secured
party under the Code (and the Uniform Commercial Code of any other
applicable jurisdiction) and such other rights and remedies as may be
available hereunder, under other applicable law or pursuant to contract. If
requested by Bank, Borrower will promptly assemble the Collateral and make
it available to Bank at a place to be designated by Bank. Borrower agrees
that any notice by Bank of the sale or disposition of the Collateral or any
other intended action hereunder, whether required by the Code or otherwise,
shall constitute reasonable notice to Borrower if the notice is mailed to
Borrower by regular or certified mail, postage prepaid, at least five
Business Days before the action to be taken. Borrower shall be liable for
any deficiencies in the event the proceeds of the disposition of the
Collateral do not satisfy the Indebtedness in full.
(c) Bank may demand, collect and ▇▇▇ for all amounts owed pursuant
to Accounts, General Intangibles, Chattel Paper or for proceeds of any
Collateral (either in Borrower's name or Bank's name at the latter's
option), with the right to enforce, compromise, settle or discharge any
such amounts.
22
8.3. Receiver. In addition to any other remedy available to it, if
--------
an Event of Default shall occur and be continuing, Bank shall have the absolute
right to seek and obtain the appointment of a receiver to take possession of and
operate and/or dispose of the business and assets of Borrower and any costs and
expenses incurred by Bank in connection with such receivership shall bear
interest at the Default Rate and shall be secured by all Collateral.
8.4. Deposits; Insurance. If an Event of Default shall occur and be
-------------------
continuing, Borrower authorizes Bank to collect and apply against the
Indebtedness when due any cash or deposit accounts in its possession, and any
refund of insurance premiums or any insurance proceeds payable on account of the
loss or damage to any of the Collateral and irrevocably appoints Bank as its
attorney-in-fact to endorse any check or draft or take other action necessary to
obtain such funds.
9. Security Agreement.
------------------
9.1. Security Interest.
-----------------
(a) As security for the payment and performance of any and all of
the Indebtedness and the performance of all other obligations and covenants
of Borrower hereunder and under the other Loan Documents, certain or
contingent, now existing or hereafter arising, which are now, or may at any
time or times hereafter be owing by Borrower to Bank, Borrower hereby
pledges to Bank and gives Bank a continuing security interest in and
general Lien upon and right of set-off against, all right, title and
interest of Borrower in and to the Collateral, whether now owned or
hereafter acquired by Borrower.
(b) Except as herein or by applicable law otherwise expressly
provided, Bank shall not be obligated to exercise any degree of care in
connection with any Collateral in its possession, to take any steps
necessary to preserve any rights in any of the Collateral or to preserve
any rights therein against prior parties, and Borrower agrees to take such
steps reasonably requested. In any case Bank shall be deemed to have
exercised reasonable care if it shall have taken such steps for the care
and preservation of the Collateral or rights therein as Borrower may have
reasonably requested Bank to take and Bank's omission to take any action
not requested by Borrower shall not be deemed a failure to exercise
reasonable care. No segregation or specific allocation by Bank of specified
items of Collateral against any liability of Borrower shall waive or affect
any security interest in or Lien against other items of Collateral or any
of Bank's options, powers or rights under this Agreement or otherwise
arising.
(c) If an Event of Default shall occur and be continuing, Bank may,
with or without notice to Borrower, (i) transfer into the name of Bank or
the name of Bank's nominee any of the Collateral, (ii) notify any Account
Debtor or other obligor of any Collateral to make payment thereon direct to
Bank of any amounts due or to become due thereon and (iii) receive and
direct the disposition of any proceeds of any Collateral.
9.2. Cash Proceeds Account.
---------------------
(a) There may be established with Bank a cash collateral account
(the "Cash Proceeds Account") in the name of "____________________________
---------------------
- FIRST UNION NATIONAL BANK" and under the exclusive control of Bank into
which there shall be deposited from time to time the cash proceeds of the
Collateral required to be delivered to Bank pursuant to paragraph (b) of
this Section or any other provision of the Loan Documents. Any income
received by Bank with respect to the balance from time to time standing to
the credit of the Cash Proceeds Account, including any interest, shall
remain, or be deposited, in the Cash Proceeds Account. All right, title and
interest in and to the cash amounts on deposit from time
23
to time in the Cash Proceeds Account shall vest in Bank, shall constitute
part of the Collateral and shall not constitute payment of the Indebtedness
until applied thereto as hereinafter provided.
(b) If an Event of Default shall occur and be continuing, all
payments made to Bank which would otherwise be deposited in the Special
Loan Account shall be deposited in the Cash Proceeds Account. In addition
to the foregoing, Borrower agrees that if the proceeds of any Collateral
(including the payments made in respect of Accounts) shall be received by
it, Borrower shall as promptly as possible deposit such proceeds to the
Cash Proceeds Account. Until so deposited, all such proceeds shall be held
in trust by Borrower for and as the property of Bank and shall not be
commingled with any other funds or property of Borrower. Borrower hereby
irrevocably authorizes and empowers Bank, its officers, employees and
authorized agents to endorse and sign its name on all checks, drafts, money
orders or other media of payment so delivered, and such endorsements or
assignments shall, for all purposes, be deemed to have been made by
Borrower prior to any endorsement or assignment thereof by Bank.
(c) Collected funds on deposit in the Cash Proceeds Account shall
be withdrawn by Bank on the Business Day following the day on which Bank
considers the funds deposited therein to be collected funds and applied to
repay the Indebtedness which is then due and payable. All collected funds
remaining on deposit in the Cash Proceeds Account after the application
required by the preceding sentence shall then be deposited in the Special
Loan Account.
9.3. Power of Attorney. Borrower authorizes Bank at Borrower's
-----------------
expense to file any financing statements relating to the Collateral (without
Borrower's signature thereon) which Bank reasonably deems appropriate and
Borrower irrevocably appoints Bank as its attorney-in-fact to execute any such
financing statements in Borrower's name and to perform all other acts which Bank
deems appropriate to perfect and to continue perfection of the security interest
of Bank. Borrower hereby appoints Bank as Borrower's attorney-in-fact to
endorse, present and collect on behalf of Borrower and in Borrower's name any
draft, checks or other documents necessary or desirable, if an Event of Default
shall occur and be continuing, to collect any amounts which Borrower may be
owed. If an Event of Default shall occur and be continuing, Bank is hereby
granted a license or other right to use, without charge, Borrower's labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks and advertising matter, or any Property of a similar nature, as it
pertains to the Collateral, in advertising for sale and selling any Collateral,
and Borrower's rights under all licenses and all franchise agreements shall
inure to Bank's benefit. The proceeds realized from the sale or other
disposition of any Collateral may be applied, after allowing two (2) Business
Days for collection, first to the reasonable costs, expenses and attorneys' fees
and expenses incurred by Bank for collection and for acquisition, completion,
protection, removal, storage, sale and delivering of the Collateral; secondly,
to interest due upon any of the Obligations; and thirdly, to the principal
amount of the Obligations. If any deficiency shall arise, Borrower and each
Guarantor shall remain jointly and severally liable to Bank therefor.
9.4. Entry. Borrower hereby irrevocably consents on its behalf and
-----
on behalf of the Guarantors to any act by Bank or its agents in entering upon
any premises during normal business hours for the purposes of either (i)
inspecting the Collateral following reasonable prior notice, or (ii), at any
time after an Event of Default shall have occurred and be continuing, without
any need to provide prior notice, taking possession of the Collateral. Borrower
hereby waives its right to assert against Bank or its agents any claim based
upon trespass or any similar cause of action for entering upon any premises
where the Collateral may be located.
24
9.5. Other Rights. Borrower authorizes Bank without affecting
------------
Borrower's obligations hereunder or under any other Loan Document from time to
time (a) to take from any party and hold additional Collateral or guaranties for
the payment of the Indebtedness or any part thereof, and to exchange, enforce or
release such collateral or guaranty of payment of the Indebtedness or any part
thereof and to release or substitute any endorser or guarantor or any party who
has given any security interest in any collateral as security for the payment of
the Indebtedness or any part thereof or any party in any way obligated to pay
the Indebtedness or any part thereof; and (b) upon the occurrence of any Event
of Default to direct the manner of the disposition of the Collateral and the
enforcement of any endorsements, guaranties, letters of credit or other security
relating to the Indebtedness or any part thereof as Bank in its sole discretion
may determine.
9.6. Accounts. If an Event of Default shall have occurred and be
--------
continuing, Bank may notify any Account Debtor of Bank's security interest and
may direct such Account Debtor to make payment directly to Bank for application
against the Indebtedness. Any such payments received by or on behalf of
Borrower at any time, whether before or after Default, shall be the property of
Bank, shall be held in trust for Bank and not commingled with any other assets
of any Person (except to the extent they may be commingled with other assets of
Borrower in an account with Bank) and shall be immediately delivered to Bank in
the form received. Bank shall have the right to apply any proceeds of
Collateral to such of the Indebtedness as it may determine.
9.7. Waiver of Marshalling. Borrower hereby waives any right it
---------------------
may have to require marshalling of its assets.
10. Miscellaneous.
-------------
10.1. No Waiver, Remedies Cumulative. No failure on the part of Bank
------------------------------
to exercise, and no delay in exercising, any right hereunder or under any other
Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and are in addition to any other remedies provided by law, any Loan Document or
otherwise.
10.2. Survival of Representations. All representations and
---------------------------
warranties made herein shall survive the making of the Loan hereunder and the
delivery of the Note, and shall continue in full force and effect so long as any
Indebtedness is outstanding, there exists any commitment by Bank to Borrower,
and until this Agreement is formally terminated in writing.
10.3. Expenses. Whether or not the Loan herein provided for shall be
--------
made, Borrower shall pay all reasonable costs and expenses in connection with
the preparation, execution, delivery, amendment and enforcement of this
Agreement and any Loan Document, including the reasonable fees and disbursements
of counsel for Bank in connection therewith, whether suit be brought or not and
whether incurred at trial or on appeal, and all costs of repossession, storage,
disposition, protection and collection of Collateral. If Borrower should fail
to pay any tax or other amount required by this Agreement to be paid or which
may be reasonably necessary to protect or preserve any Collateral or Borrower's
or Bank's interests therein, Bank may make such payment and the amount thereof
shall be payable on demand, shall bear interest at the Default Rate from the
date of demand until paid and shall be deemed to be Indebtedness entitled to the
benefit and security of the Loan Documents. In addition, Borrower agrees to pay
and save Bank harmless against any liability for payment of any state
documentary stamp taxes, intangible taxes or similar taxes (including interest
or penalties, if any) which may now or hereafter be determined to be payable in
respect to the execution, delivery or recording of any Loan Document or the
making of any Advance, whether originally thought to be due or not, and
regardless of any mistake of fact or law on the part of Bank or Borrower with
respect to the applicability of such tax. The provisions of this section shall
survive payment in full of the Loan and
25
termination of this Agreement. Absent extensive negotiations, legal expenses
related to the Agreement and the other Loan Documents shall be limited to
$15,000. Expenses related to the initial collateral examination shall be
limited to $5,000.
10.4. Notices. Any notice or other communication hereunder or under
-------
the Note to any party hereto or thereto shall be by hand delivery, overnight
delivery, facsimile, telegram, telex or registered or certified mail and unless
otherwise provided herein shall be deemed to have been given or made when
delivered, telegraphed, telexed, faxed or three (3) Business Days after having
been deposited in the mails, postage prepaid, addressed to the party at its
address specified below (or at any other address that the party may hereafter
specify to the other parties in writing):
Bank: First Union National Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Portfolio Management
Borrower: PRA International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President
Guarantors: Pharmaceutical Research Associates, Inc.
c/o PRA International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President
International Medical Technical Consultants, Inc.
c/o PRA International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President
The Crucible Group, Inc.
c/o PRA International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President
10.5. Governing Law. This Agreement and the Loan Documents shall be
-------------
deemed contracts made under the laws of the Commonwealth of Virginia and shall
be governed by and construed in accordance with the laws of said Commonwealth
except insofar as the laws of another jurisdiction may, by reason of mandatory
provisions of law, govern the perfection, priority and enforcement of security
interests in the Collateral.
10.6. Successors and Assigns. This Agreement shall be binding upon
----------------------
and shall inure to the benefit of Borrower and Bank, and their respective
successors and assigns; provided, that Borrower may not assign any of its rights
hereunder without the prior written consent of Bank, and any such assignment
made without such consent will be void.
26
10.7. 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 an original and all of
which when taken together shall constitute but one and the same instrument.
10.8. No Usury. Notwithstanding anything contained in this
--------
Agreement, the Note, or in any other Loan Document to the contrary, in no event
will interest or other charges deemed to be interest be chargeable against
Borrower if such amount (combined with any other amounts considered to be in the
nature of interest) would exceed the maximum amount permitted by law from time
to time while any of the Indebtedness is outstanding, and in the event any
amount in excess of the lawful maximum is charged or collected by Bank or paid
by Borrower, Borrower shall be entitled to the reimbursement of such excess
together with interest thereon at the Prime Rate.
10.9. Powers. All powers of attorney granted to Bank are coupled
------
with an interest and are irrevocable.
10.10. Approvals. If this Agreement calls for the approval or consent
----------
of Bank, such approval or consent may be given or withheld in the discretion of
Bank unless otherwise specified herein.
10.11. Jurisdiction, Service of Process.
--------------------------------
(a) Any suit, action or proceeding against Borrower with respect to
this Agreement, the Collateral or any Loan Document or any judgment entered
by any court in respect thereof may be brought in the courts of Fairfax
County, Virginia or in the U.S. District Court for the Eastern District of
Virginia as Bank (in its sole discretion) may elect, and Borrower hereby
accepts the nonexclusive jurisdiction of those courts for the purpose of
any suit, action or proceeding. Service of process in any such case may be
had against Borrower by delivery in accordance with the notice provisions
herein or as otherwise permitted by law, and Borrower agrees that such
service shall be valid in all respects for establishing personal
jurisdiction over it.
(b) In addition, Borrower hereby irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have
to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement, the Loan Documents, the Collateral or any
judgment entered by any court in respect thereof brought in Fairfax County,
Virginia or the U.S. District Court for the Eastern District of Virginia,
as selected by Bank, and hereby further irrevocably waives any claim that
any suit, action or proceedings brought in Fairfax County, Virginia or in
such District Court has been brought in an inconvenient forum.
10.12. Multiple Borrowers. If more than one Person is named herein
------------------
as Borrower, all obligations, representations and covenants herein and in other
Loan Documents to which Borrower is a party shall be joint and several.
10.13. Other Provisions. Any other or additional terms and conditions
----------------
set forth in Exhibit 10.13 (if any) are hereby incorporated herein.
-------
10.14. Waiver of Jury Trial. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
--------------------
BORROWER AND BANK HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE
RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED UPON THIS AGREEMENT OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT AND ANY OTHER LOAN DOCUMENT AND ANY OTHER AGREEMENT CONTEMPLATED TO BE
27
EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.
Borrower and Bank agree that they shall not have a remedy of punitive
or exemplary damages against the other in any dispute and hereby waive any right
or claim to punitive or exemplary damages that they have now or which may arise
in the future in connection with any dispute.
28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal as of the day and year first above written.
FIRST UNION NATIONAL BANK
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
---------------------------------
Its Vice President
PRA INTERNATIONAL, INC.
By /s/ ▇.▇. ▇▇▇▇▇▇▇▇ (SEAL)
---------------------------------
Its Executive Vice President
29
SCHEDULE OF EXHIBITS
Exhibit Section Reference Title
------- ----------------- -----
A Accounts Receivable Report Accounts Receivable Report
B Borrowing Base Certificate Borrowing Base
Certificate
1.1C 1.1 ("Permitted Debt") Permitted Debt
1.1D 1.1 ("Permitted Liens") Permitted Liens
2.3 2.3 ("Financial Condition") Financial Condition
2.4 2.4 ("Litigation") Litigation
2.9 2.9 ("Location") Offices of Borrower
2.11 2.11 ("Labor Law Matters") Labor Law Matters
2.14 2.14 ("Subsidiaries") List of Subsidiaries
3.3 3.3 ("Special Loan Accounts") Special Loan Accounts
3.4 3.4 ("Advances") Advances
6.3 6.3 ("Permitted Dividends and Distributions") Permitted Dividends
6.7 6.7 ("Transactions with Affiliates") Transactions with Affiliates
30
EXHIBIT 1.1C
Permitted Debt
--------------
Pharmaceutical Research Associates, Inc.
----------------------------------------
$2,000,000 Loan from Sirrom Capital to Associates (closed 8/11/95),
including Loan Agreement, as amended, Secured Promissory Note, Security
Agreement (and corresponding financing statements)
Lease between The Royal Bank of Scotland plc, Pharm Research Associates
(UK) Limited and the Company pursuant to which Associates has guaranteed
the obligations of the Lessee thereunder
Undertaking by Overseas Parent Company executed by Associates for the
benefit of the Wales Secretary of State in connection with the grant
provided to Pharm Research Associates (UK) Limited
International Medical Technical Consultants, Inc.
-------------------------------------------------
Promissory Notes between IMTCI and UMB Bank Kansas to be paid in full at
closing
$5,000,000 and $1,000,000 Secured Promissory Notes each subject to
adjustment, dated April 1, 1997 from IMTCI to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D. as
designee
Pharmaceutical Research Associates, GmbH
----------------------------------------
Leases totaling approximately DM1.500.000 pursuant to a facility with
Deutsche Bank
EXHIBIT 1.1D
Permitted Liens
---------------
Subordinated liens securing the Permitted Debt owing to Sirrom referred to
on Exhibit 1.1C
-------- ----
Landlord's lien on furniture, fixtures, personal property and equipment
located at Associates' office located at ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
Liens on equipment leased by Borrower and its Subsidiaries
EXHIBIT 2.3
Financial Condition
-------------------
Guaranties or contingent liabilities of Borrower or any of its Subsidiaries
in respect of liabilities disclosed in financial statements delivered to
Bank on or prior to the date hereof or as otherwise disclosed in Exhibit
1.1C
Guaranty dated May 8, 1997 by Borrower of the payment and performance of
Associates' present and future obligations to Amplicon, Inc.
Real Property Leases
--------------------
Pharmaceutical Research Associates, Inc.
----------------------------------------
Agreement of Lease dated as of October 29, 1992 between County West Limited
Partnership and the Associates (▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇)
Agreement of Lease dated as of April 21, 1996 between Execen Limited
Partnership and the Associates (1030 ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇)
Agreement of Lease commencing on October 1, 1997 between Sunpark Properties
and the Associates (150 Executive Park Boulevard, San Francisco, CA)
Agreement of Lease commencing on November 1, 1976 between Met Life
International Real Estate Equity Shares and the Associates (▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇)
Agreement of Lease commencing on November 15, 1996 between Old Ivy Centre
and Associates (▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇)
Agreement of Lease commencing on April 1, 1997 between Rio West Limited
Partnership and the Associates (▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇)
Associates is also currently negotiating a real property lease for
approximately 80,000 square feet of space in Charlottesville
-2-
International Medical Technical Consultants, Inc.
-------------------------------------------------
Lease Agreement between the Company and Investment Associates, L.L.C. dated
November 1, 1996 (11755 ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇)
Lease Agreement dated as of April 1, 1997 between Dockhorn Properties,
L.L.C. and the Company (16300 and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇. and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.,
▇▇▇▇▇▇, ▇▇)
Lease Agreement dated as of April 1, 1997 between the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Revocable Trust dated January 5, 1984 and the Company (▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇)
The Crucible Group, Inc.
------------------------
Lease Agreement dated on or about June 1, 1997 between North Physicians,
Ltd. and Crucible (Northside Professional Center, Building C, Atlanta, GA)
EXHIBIT 2.4
Litigation
----------
PRA International, Inc. and Pharmaceutical Research Associates, Inc.
--------------------------------------------------------------------
A former employee of Associates filed a complaint against Associates and
Borrower on July 3, 1997 in the United States District Court for the Middle
District of Pennsylvania. Such employee alleges that he is entitled to, under
the terms of his employment contract, commissions on sales in an amount between
$92,737.31 and $130,677.88. Borrower and Associates believe such allegation is
without merit and intend to vigorously defend such charges.
International Medical Technical Consultants, Inc.
-------------------------------------------------
Fall by patient during study at IMTCI. Patient allegedly suffered trauma to
head and Brain resulting in loss of functions in varying severity. It was
determined the incident was drug related, and therefor Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Inc., the Sponsor of the study, has assumed responsibility to defend.
Request for medical records by patient who subsequently tested positive for
Hepatitis C. Medical records indicate the patient tested positive for increased
levels to liver enzymes during pre-screening tests. Such increased levels of
liver enzymes typically indicate Hepatitis C infection, and this indicates that
this positive result was from past exposure. No subsequent contact has been
made since the initial inquiry, nor has any claim been made.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ filed a charge of discrimination with the Kansas Human Rights
Commission and the Equal Employment Opportunity Commission on September 11,
1996. ▇▇. ▇▇▇▇▇▇ alleges that during her employment with IMTCI, she was
discriminated against on the basis of her race. IMTCI denies the allegations
set forth in ▇▇. ▇▇▇▇▇▇'▇ charge of discrimination, and intends to vigorously
defend such charges.
A complaint was filed by United Communications Contractors, Inc. ("▇▇▇▇")
against IMTCI on May 5, 1997 in the District Court of ▇▇▇▇▇▇▇ County, Kansas.
▇▇▇▇ alleges that they are due $12,672.29 for work rendered under a contract
with IMTCI to install a phone network system. IMTCI is contesting the payment
on the grounds that ▇▇▇▇'▇ faulty installation of the phone system caused IMTCI
to suffer substantial damages.
-2-
Pharmaceutical Research Associates, GmbH ("GmbH")
-------------------------------------------------
▇▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Insurance Quality Manager Europe, has alleged in
writing that GmbH is liable to him in connection with a number of employment
related matters, including the improper modification of his employment
agreement, the improper withdrawal of his right to use a company car and the
failure to pay him for overtime to which he is entitled. GmbH believes that
these claims are without merit and intends to vigorously defend such charges.
EXHIBIT 2.9
Offices of Borrower
-------------------
PRA International, Inc.
-----------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Pharmaceutical Research Associates, Inc.
----------------------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, #▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 2nd Floor
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
International Medical Technical Consultants, Inc.
-------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, #▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ College Boulevard ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ 30340
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇-▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The Crucible Group, Inc.
------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, #▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇-▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-2-
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇
EXHIBIT 2.11
Labor Law Matters
-----------------
None
EXHIBIT 2.14
Subsidiaries
------------
Pharmaceutical Research Associates, Inc.
International Medical Technical Consultants, Inc.
The Crucible Group, Inc.
Pharmaceutical Research Associates, GmbH
Pharm Research Associates (UK) Limited
EXHIBIT 6.3
Permitted Dividends and Distributions
-------------------------------------
Dividends accruing on a quarterly basis on the Borrower's Series A
Preferred Stock and related distributions, all as more fully set forth in
the Certificate of Designations of Borrower dated October 10, 1996
EXHIBIT 6.7
Transaction with Affiliates
---------------------------
Stockholders' Agreement dated as of October 11, 1996, as amended, among
International, the Carlyle Stockholders as defined therein and the Company
Stockholders as defined therein
Lease Agreement dated as of April 1, 1997 between Dockhorn Properties,
L.L.C. and IMTCI (16300 and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇. and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.,
▇▇▇▇▇▇, ▇▇)
Lease Agreement dated as of April 1, 1997 between the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Revocable Trust dated January 5, 1984 and IMTCI (5300 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇)
