EXECUTION COPY
Exhibit 10
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
VITALWORKS INC.
AS BORROWER,
AND
▇▇▇▇▇ FARGO FOOTHILL, INC.
(FORMERLY KNOWN AS FOOTHILL CAPITAL CORPORATION)
AS LENDER
DATED AS OF MARCH 8, 2002
AND AMENDED AND RESTATED AS OF
AUGUST 20, 2003
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1. DEFINITIONS AND CONSTRUCTION........................................................................... 1
1.1 Definitions................................................................................... 1
1.2 Accounting Terms.............................................................................. 17
1.3 Code.......................................................................................... 17
1.4 Construction.................................................................................. 17
1.5 Schedules and Exhibits........................................................................ 18
2.1 Term Loan A................................................................................... 18
2.2 Acquisition Line Advances..................................................................... 19
2.3 Acquisition Line Advance Procedures........................................................... 20
2.4 Payments...................................................................................... 20
2.5 Payments in Dollars........................................................................... 22
2.6 Interest Rates: Rates, Payments, and Calculations............................................. 22
2.7 Account Control Agreements.................................................................... 23
2.8 Crediting Payments............................................................................ 23
2.9 Designated Account............................................................................ 24
2.10 Maintenance of Loan Account; Statements of Obligations........................................ 24
2.11 Fees.......................................................................................... 24
2.12 [Intentionally Omitted]....................................................................... 25
2.13 [Intentionally Omitted]....................................................................... 25
2.14 Capital Requirements.......................................................................... 25
3. CONDITIONS; TERM OF AGREEMENT.......................................................................... 26
3.1 Conditions Precedent to the Initial Extension of Credit....................................... 26
3.3 Conditions Precedent to all Extensions of Credit.............................................. 27
3.4 Term.......................................................................................... 28
3.5 Effect of Termination......................................................................... 29
3.6 Early Termination............................................................................. 29
4. CREATION OF SECURITY INTEREST.......................................................................... 29
4.1 Grant of Security Interest.................................................................... 29
4.2 Negotiable Collateral......................................................................... 30
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral........................ 30
4.4 Delivery of Additional Documentation Required................................................. 30
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4.5 Power of Attorney............................................................................. 31
4.6 Right to Inspect.............................................................................. 31
4.7 Securities Account Agreements................................................................. 31
5. REPRESENTATIONS AND WARRANTIES......................................................................... 31
5.1 No Encumbrances............................................................................... 32
5.2 NDC Agreements................................................................................ 32
5.4 Equipment..................................................................................... 32
5.5 Location of Inventory and Equipment........................................................... 32
5.6 Inventory Records............................................................................. 32
5.7 Location of Chief Executive Office; FEIN...................................................... 32
5.8 Due Organization and Qualification; Subsidiaries.............................................. 32
5.9 Due Authorization; No Conflict................................................................ 33
5.10 Litigation.................................................................................... 33
5.11 No Material Adverse Change.................................................................... 34
5.12 Fraudulent Transfer........................................................................... 34
5.13 Employee Benefits............................................................................. 34
5.14 Environmental Condition....................................................................... 34
5.15 Brokerage Fees................................................................................ 34
5.17 Leases........................................................................................ 36
5.18 DDAs.......................................................................................... 36
5.19 Complete Disclosure........................................................................... 36
5.20 Indebtedness.................................................................................. 36
6. AFFIRMATIVE COVENANTS.................................................................................. 36
6.1 Accounting System............................................................................. 36
6.2 Collateral Reporting.......................................................................... 37
6.3 Financial Statements, Reports, Certificates................................................... 37
6.5 Return........................................................................................ 39
6.6 Maintenance of Properties..................................................................... 40
6.7 Taxes......................................................................................... 40
6.8 Insurance..................................................................................... 40
6.9 Location of Inventory and Equipment........................................................... 41
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6.10 Compliance with Laws.......................................................................... 41
6.11 Leases........................................................................................ 41
6.12 Brokerage Commissions......................................................................... 41
6.13 Existence..................................................................................... 41
6.14 Environmental................................................................................. 42
6.15 Disclosure Updates............................................................................ 42
6.16 Intellectual Property Rights.................................................................. 42
6.17 Collateral Access Agreements.................................................................. 44
7. NEGATIVE COVENANTS..................................................................................... 44
7.1 Indebtedness.................................................................................. 44
7.2 Liens......................................................................................... 44
7.3 Restrictions on Fundamental Changes........................................................... 45
7.4 Disposal of Assets............................................................................ 45
7.5 Change Name................................................................................... 45
7.6 Guarantee..................................................................................... 45
7.7 Nature of Business............................................................................ 45
7.8 Prepayments and Amendments.................................................................... 45
7.9 [Intentionally Omitted]....................................................................... 45
7.10 Consignments.................................................................................. 46
7.11 Distributions................................................................................. 46
7.12 Accounting Methods............................................................................ 46
7.13 Investments................................................................................... 46
7.14 Transactions with Affiliates.................................................................. 46
7.15 Suspension.................................................................................... 46
7.16 [Intentionally Omitted]....................................................................... 46
7.17 Use of Proceeds............................................................................... 46
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees............ 47
7.19 Securities Accounts........................................................................... 47
7.20 Financial Covenants........................................................................... 47
8. EVENTS OF DEFAULT...................................................................................... 47
9. LENDER'S RIGHTS AND REMEDIES........................................................................... 49
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9.1 Rights and Remedies........................................................................... 49
9.2 Remedies Cumulative........................................................................... 51
10. TAXES AND EXPENSES..................................................................................... 51
11. WAIVERS; INDEMNIFICATION............................................................................... 52
11.1 Demand; Protest............................................................................... 52
11.2 Lender's Liability for Collateral............................................................. 52
11.3 Indemnification............................................................................... 52
12. NOTICES................................................................................................ 53
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER............................................................. 54
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS............................................................. 55
14.1 Assignments and Participations................................................................ 55
14.2 Successors.................................................................................... 57
15. AMENDMENTS; WAIVERS.................................................................................... 57
15.1 Amendments and Waivers........................................................................ 57
15.2 No Waivers; Cumulative Remedies............................................................... 57
16. GENERAL PROVISIONS..................................................................................... 57
16.1 Effectiveness................................................................................. 57
16.2 Section Headings.............................................................................. 57
16.3 Interpretation................................................................................ 57
16.4 Severability of Provisions.................................................................... 58
16.5 Withholding Taxes............................................................................. 58
16.6 Amendments in Writing......................................................................... 58
16.7 Counterparts; Telefacsimile Execution......................................................... 58
16.8 Revival and Reinstatement of Obligations...................................................... 58
16.9 Integration................................................................................... 59
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EXHIBITS AND SCHEDULES
Exhibit C-1 Form of Compliance Certificate
Schedule D-1 Designated Account
Schedule D-2 Other Designated Accounts
Schedule L-1 Lender's Account
Schedule P-1 Permitted Liens
Schedule 2.7(a) AC Accounts
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrower
Schedule 5.8(c) Capitalization of Borrower's Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16(a) Intellectual Property
Schedule 5.16(b) Source Code Licenses
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 7.14 Transactions with Affiliates
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this
"Agreement"), is entered into as of August 20, 2003, between ▇▇▇▇▇ FARGO
FOOTHILL, INC., a California corporation (formerly known as Foothill Capital
Corporation) ("Lender"), and VITALWORKS INC., a Delaware corporation
("Borrower").
WHEREAS, Borrower and Lender are parties to a Loan and
Security Agreement dated as of March 8, 2002 (the "Original Loan Agreement");
and
WHEREAS, the parties hereto desire to amend, restate and
modify, but not extinguish, the Original Loan Agreement in its entirety as
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms
shall have the following definitions:
"Account Control Bank" has the meaning set forth in Section
2.7(a).
"AC Accounts" has the meaning set forth in Section 2.7(a).
"Account Control Agreements" means those certain account
control service agreements, in form and substance satisfactory to Lender, each
of which is among Borrower, Lender, and one of the Account Control Banks.
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"Accounts" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"Acquisition Line Advance" has the meaning set forth in
Section 2.2.
"Additional Documents" has the meaning set forth in Section
4.4.
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to
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direct the management and policies of a Person, whether through the ownership of
Stock, by contract, or otherwise; provided, however, that, for purposes of
Section 7.14 hereof: (a) any Person which owns directly or indirectly 10% or
more of the securities having ordinary voting power for the election of
directors or other members of the governing body of a Person or 10% or more of
the partnership or other ownership interests of a Person (other than as a
limited partner of such Person) shall be deemed to control such Person, (b) each
director (or comparable manager) of a Person shall be deemed to be an Affiliate
of such Person, and (c) each partnership or joint venture in which a Person is a
partner or joint venturer shall be deemed to be an Affiliate of such Person.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Prepayment Premium" means, in addition to any fee
due pursuant to Section 2.11(d), as of any date of determination, an amount
equal to (i) with respect to the Term Loan A, (a) during the period of time from
and after the date of the execution and delivery of this Agreement up to the
date that is the first anniversary of the Original Closing Date, 3% times the
outstanding principal balance of the Term Loan A on the date immediately prior
to the date of determination, (b) during the period of time from and including
the date that is the first anniversary of the Original Closing Date up to the
date that is the second anniversary of the Original Closing Date, 2% times the
outstanding principal balance of the Term Loan A on the date immediately prior
to the date of determination, or (c) during the period of time from and
including the date that is the second anniversary of the Original Closing Date
up to the third anniversary of the Original Closing Date, subject to Section
2.1, 1% times the outstanding principal balance of the Term Loan A on the date
immediately prior to the date of determination; provided, however, that if this
Agreement is terminated as a result of the sale or transfer of more than 50% of
the Stock or assets of Borrower prior to the Maturity Date, then the Applicable
Prepayment Premium shall be deemed to be 50% of the amount that would otherwise
be due hereunder; and (ii) with respect to any payment of Acquisition Line
Advances, zero (0).
"Assignee" has the meaning set forth in Section 14.1(a).
"Authorized Person" means any executive officer of Borrower.
"Available Acquisition Line" has the meaning set forth in
Section 2.2 (a).
"Bankruptcy Code" means the United States Bankruptcy Code, as
in effect from time to time.
"Base Rate" means, the rate of interest announced within ▇▇▇▇▇
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is publicly available and is one of ▇▇▇▇▇
Fargo's base rates (not necessarily the lowest of such rates) and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto and is evidenced by the recording thereof after its
announcement in such internal publication or publications as ▇▇▇▇▇ Fargo may
designate.
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"Base Rate Loan" means each portion of Term Loan A or an
Acquisition Line Advance that bears interest at a rate determined by reference
to the Base Rate.
"Base Rate Acquisition Line Advance Margin" means 0.75
percentage points.
"Base Rate Term Loan A Margin" means 0.50 percentage points;
provided, however, that commencing on the first day next following the receipt
of the applicable Section 6.3 financial statements, "Base Rate Term Loan A
Margin" shall be reduced by the following amounts: if EBITDA for the fiscal year
ended December 31, 2003 shall equal or exceed $19,000,000, the then-applicable
Base Rate Term Loan A Margin shall be reduced by 25 basis points; provided,
further, that adjustments (if any) pursuant to the immediately preceding proviso
shall be deemed to take effect as of January 1st of the year in which the
applicable financial statements are received by Lender, and Borrower shall
receive a credit for any interest payment made by Borrower in such year which
did not take into account this retroactive effect (such credit to be implemented
by reducing the interest payment owed by Borrower in the month next following
the receipt by Lender of the applicable Section 6.3 financial statements by an
amount equal to such credit). The determination of EBITDA for purposes of this
definition shall be based upon the fiscal year end audited financial statements
delivered to Lender pursuant to Section 6.3, as applicable. Notwithstanding the
foregoing, if Borrower fails to deliver to Lender the financial statements
required under Section 6.3 in a timely manner, then the "Base Rate Term Loan A
Margin" shall mean 0.50 percentage points for the period beginning on the day
after the date such financial statements were due and not received by Lender and
ending on the day Lender receives financial statements complying with the
requirements of Section 6.3, and thereafter the "Base Rate Term Loan A Margin"
shall be determined as set forth above using the applicable Base Rate Term Loan
A Margin in effect immediately prior to the date such financial statements were
due and not yet received.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate
of Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"Board of Directors" means the board of directors (or
comparable managers) of Borrower or any committee thereof duly authorized to act
on behalf of the board.
"Books" means Borrower's and its Subsidiaries' now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of Borrower's or its Subsidiaries' Records relating to its or their business
operations or financial condition, and all of its or their goods or General
Intangibles related to such information).
"Borrower" has the meaning set forth in the preamble to this
Agreement.
"Borrowing" means a borrowing hereunder of the Term Loan A or
an Acquisition Line Advance.
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"Borrower Intellectual Property Right" means any Intellectual
Property Right owned, held, licensed, used or held for use by Borrower.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which national banks are authorized or required to close.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness
represented by obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within one (1) year from the date of acquisition thereof and, at the
time of acquisition, having the highest rating obtainable from either S&P or
▇▇▇▇▇'▇, (c) commercial paper maturing no more than 270 days from the date of
acquisition thereof and, at the time of acquisition, having a rating of A-1 or
P-1, or better, from S&P or ▇▇▇▇▇'▇, and (d) certificates of deposit or bankers'
acceptances maturing within one (1) year from the date of acquisition thereof
either (i) issued by any bank organized under the laws of the United States or
any state thereof which bank has a rating of A or A2, or better, from S&P or
▇▇▇▇▇'▇, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
"Change of Control" means (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act), becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 35%, or more, of the Stock of Borrower having the right to vote
for the election of members of the Board of Directors, or (b) a majority of the
members of the Board of Directors do not constitute Continuing Directors, or (c)
Borrower ceases to directly own and control 100% of the outstanding capital
Stock of each of its Subsidiaries extant as of the Closing Date.
"Closing Date" means the date on which Lender sends Borrower a
written notice that each of the conditions precedent set forth in Section 3.1
either have been satisfied or have been waived.
"Code" means the New York Uniform Commercial Code, as in
effect from time to time.
"Collateral" means all of Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) Accounts,
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(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) money or other assets of Borrower that now
or hereafter come into the possession, custody, or control of Lender, and
(j) the proceeds and products, whether tangible
or intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance satisfactory to Lender.
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrower.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C-1 delivered by the chief financial officer of Borrower to
Lender.
"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Borrower on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Borrower (as such terms are used in Rule 14a-11 under
the Exchange Act) and whose initial assumption of office resulted from such
contest or the settlement thereof.
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"Copyright Security Agreement" means a copyright security
agreement executed and delivered by Borrower and Lender, the form and substance
of which is satisfactory to Lender.
"Copyrights" means all unregistered and registered copyrights
owned or licensed by Borrower in any and all schematics, technology, know-how,
computer software programs or applications (in both source code and object form
code), documents, items, materials and all other works that are protectable
under copyright law, and all registrations, applications for registrations,
renewals and extensions thereof, whether now existing or acquired in the future.
"Daily Balance" means, with respect to each day during the
term of this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account
maintained by Borrower.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Designated Account" means that certain DDA of Borrower
identified on Schedule D-1 or, if Borrower notifies Lender in writing after the
date hereof, one of the DDAs of Borrower identified on Schedule D-2 or such
other DDA (located within the United States) as Borrower shall hereafter
designate as such in writing to Lender.
"Designated Account Bank" means The Bank of New York, whose
office is located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and whose
ABA number is ▇▇▇▇▇▇▇▇▇.
"Disbursement Letter" means an instructional letter executed
and delivered by Borrower to Lender regarding the extensions of credit to be
made on the Closing Date, the form and substance of which is satisfactory to
Lender.
"Dollars" or "$" means United States dollars.
"Due Diligence Letter" means the due diligence letter sent by
Lender's counsel to Borrower, together with Borrower's completed responses to
the inquiries set forth therein, the form and substance of such responses to be
satisfactory to Lender.
"EBITDA" means, with respect to any fiscal period, Borrower's
and its Subsidiaries consolidated net income (or loss), excluding extraordinary
items, plus interest expense, income taxes, depreciation, amortization and
non-recurring charges (including, but not limited to, restructuring charges,
unusual or infrequent charges, discontinued operations, and changes in
accounting principle or changes in accounting estimate) for such period, as
determined in accordance with GAAP.
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"EBITDA Projections" means, with respect to any fiscal period,
Borrower's forecasted EBITDA, as set forth in the Projections delivered to
Lender pursuant to Section 6.3(c)(i).
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy, or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Borrower, relating to the environment, employee health and safety, or Hazardous
Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33
USC Section 1251 et seq; the Toxic Substances Control Act, 15 USC, Section 2601
et seq; the Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water
Act, 42 USC. Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC.
Section 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act
of 1986, 42 USC. Section 11001 et seq.; the Hazardous Material Transportation
Act, 49 USC Section 1801 et seq.; and the Occupational Safety and Health Act, 29
USC. Section 651 et seq. (to the extent it regulates occupational exposure to
Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles), tools, parts, goods (other than consumer goods, farm products,
or Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with Borrower and whose employees are aggregated with the employees of Borrower
under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as
in effect from time to time.
"Fee Letter" means that certain fee letter, dated as of even
date herewith, between Borrower and Lender, in form and substance satisfactory
to Lender.
"FEIN" means Federal Employer Identification Number.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal,
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administrative hearing body, arbitration panel, commission, or other similar
dispute-resolving panel or body.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all transactions, agreements,
or documents now existing or hereafter entered into between Borrower or its
Subsidiaries and ▇▇▇▇▇ Fargo or its Affiliates, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging Borrower's or its Subsidiaries' exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.
"Indebtedness" means (a) all obligations for borrowed money,
(b) all obligations evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations under Capital Leases, (d) all obligations or liabilities of
others secured by a Lien on any asset of Borrower or its Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations for the deferred purchase price of assets, and (f) any obligation
guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation
of any other Person. Indebtedness shall not include (i) trade debt and
associated letters of credit and bonds and/or (ii) customer and vendor payments,
advances and deposits, in each case only to the extent such amounts are incurred
in the ordinary course of business and repayable in accordance with customary
trade practices. In addition, for the avoidance of doubt, it is understood and
agreed that the amount which represents the balance as of the date hereof of
unearned discounts to be recognized as an offset to the cost of maintenance and
services revenues as minimum volume commitments are fulfilled under the NDC
Agreements (which amount was $12,948,035 as of February 28, 2002 and which
amount for purposes of this Agreement shall in no event exceed $12,948,035)
shall not constitute "Indebtedness" for purposes of this Agreement.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section
11.3.
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"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
"Intellectual Property Right" means any trademark, copyright,
service ▇▇▇▇, trade name, patent (including any registrations or applications
for registration of any of the foregoing), license, or trade secret including,
but not limited to, any such legal rights included in any schematics,
technology, know-how, computer software programs or applications (in both source
code and object code form) or in other tangible or intangible information or
material.
"Inventory" means all Borrower's now owned or hereafter
acquired right, title, and interest with respect to inventory, including goods
held for sale or lease or to be furnished under a contract of service, goods
that are leased by Borrower as lessor, goods that are furnished by Borrower
under a contract of service, and raw materials, work in process, or materials
used or consumed in Borrower's business.
"Investment" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Investment Property" means all of Borrower's now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
"Lender" has the meaning set forth in the preamble to this
Agreement.
"Lender Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by Borrower under any of the
Loan Documents that are paid or incurred by Lender, (b) fees or charges paid or
incurred by Lender in connection with Lender's transactions with Borrower,
including fees or charges for public record searches (including tax lien,
litigation, and UCC searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, and publication, and reasonable fees or charges for
photocopying, notarization, couriers and messengers, telecommunication,
appraisal (including periodic Collateral appraisals or business valuations to
the extent of the fees and charges (and up to the amount of any limitation)
- 10 -
contained in this Agreement), real estate surveys, real estate title policies
and endorsements, and environmental audits, (c) reasonable costs and expenses
incurred by Lender in the disbursement of funds to Borrower (by wire transfer or
otherwise), (d) charges paid or incurred by Lender resulting from the dishonor
of checks, (e) reasonable costs and expenses paid or incurred by Lender to
correct any default or enforce any provision of the Loan Documents, or in
gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated, (f) reasonable
audit fees and expenses of Lender related to audit examinations of the Books to
the extent of the fees and charges (and up to the amount of any limitation)
contained in this Agreement, (g) reasonable costs and expenses of third party
claims or any other suit paid or incurred by Lender in enforcing or defending
the Loan Documents or in connection with the transactions contemplated by the
Loan Documents or Lender's relationship with Borrower or any guarantor of the
Obligations, (h) Lender's reasonable third-party fees and expenses (including
attorneys fees) incurred in advising, structuring, drafting, reviewing,
administering, or amending the Loan Documents, and (i) Lender's reasonable
third-party fees and expenses (including attorneys fees) incurred in
terminating, enforcing (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means Lender, Lender's Affiliates, and
the officers, directors, employees, and agents of Lender.
"Lender's Account" means the account identified on Schedule
L-1.
"Lender's Liens" means the Liens granted by Borrower to Lender
under this Agreement or the other Loan Documents.
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Account Control
Agreements, the Copyright Security Agreement, the Disbursement Letter, the Due
Diligence Letter, the Fee Letter, the Mortgages, the Officers' Certificate, the
Patent Security Agreement, the Securities
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Account Agreements, the Trademark Security Agreement, any note or notes executed
by Borrower in connection with this Agreement and payable to Lender, and any
other agreement entered into, now or in the future, by Borrower and Lender in
connection with this Agreement.
"Material Adverse Change" means (a) a material adverse change
in the business, operations, or financial condition of Borrower, (b) a material
impairment of Borrower's ability to perform its obligations under the Loan
Documents to which it is a party or of Lender's ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of the Lender's Liens with respect to a material
portion of the Collateral as a result of an action or failure to act on the part
of Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Amount" means $50,000,000.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, duly executed and delivered
by Borrower in favor of Lender, in recordable form and in form and substance
satisfactory to Lender, that encumber the Real Property Collateral and the
related improvements thereto.
"NDC Agreements" means, collectively, the Patient Statement
Services Agreement dated as of October 3, 2001, as amended on April 16, 2002 and
April 1, 2003, between Borrower and National Data Corporation ("NDC"); the
Agreement dated as of October 3, 2001, between Borrower and NDC relating to
Borrower's consent to the assignment of certain agreements from NDC to MedUnite,
Inc.; the Asset Purchase Agreement dated as of October 3, 2001, between Borrower
and NDC, relating to the sale of certain property from Borrower to NDC; the
Patient Statement Services Agreement dated as of August 1, 2000, between
InfoCure Systems, Inc. and NDC; the Marketing Agreement dated August 1, 2000,
between InfoCure Corporation and NDC; and the Asset Purchase Agreement dated as
of August 1, 2000, among Thoroughbred Acquisition, Inc., Infocure Systems, Inc.,
Infocure Corporation and NDC; in each case as in effect on the date hereof.
"Negotiable Collateral" means all of Borrower's now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Obligations" means all loans (including Term Loan A),
Acquisition Line Advances, debts, principal, interest (including any interest
that, but for the provisions of the Bankruptcy Code, would have accrued),
premiums, liabilities (including all amounts charged to Borrower's Loan Account
pursuant hereto), obligations, fees (including the fees provided for in the Fee
Letter), charges, costs, Lender Expenses (including any fees or expenses that,
but for the provisions of the Bankruptcy Code, would have accrued), lease
payments, guaranties, covenants, and duties of any kind and description owing by
Borrower to Lender pursuant to or evidenced by the Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and
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including all interest not paid when due and all Lender Expenses that Borrower
is required to pay or reimburse by the Loan Documents, by law, or otherwise. Any
reference in this Agreement or in the Loan Documents to the Obligations shall
include all amendments, changes, extensions, modifications, renewals
replacements, substitutions, and supplements, thereto and thereof, as
applicable, both prior and subsequent to any Insolvency Proceeding.
"Officers' Certificate" means the representations and
warranties of officers form submitted by Lender to Borrower, together with
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Lender.
"Original Closing Date" means March 11, 2002.
"Original Closing Date Business Plan" means the set of
Projections of Borrower for calendar year 2002, on a quarterly basis, previously
submitted to Lender.
"Original Loan Agreement" has the meaning set forth in the
preamble to this Agreement.
"Original Term Loan A" means "Term Loan A" made pursuant to
and as defined in the Original Loan Agreement.
"Participant" has the meaning set forth in Section 14.1(d).
"Patent Security Agreement" means a patent security agreement
executed and delivered by Borrower and Lender, the form and substance of which
is satisfactory to Lender.
"Permitted Acquisition" means an acquisition by Borrower of
any of the assets or Stock of any Person which is consented to (in advance of
the consummation of the proposed acquisition) in writing by Lender in its sole
discretion; provided, that Borrower updates the schedules hereto and to each of
the other Loan Documents, as applicable; and provided, further, that in no event
may any schedule be updated in a manner that would reflect or evidence a Default
or Event of Default.
"Permitted Discretion" means a determination made in good
faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) (i) sales or other
dispositions by Borrower or its Subsidiaries of Equipment that is substantially
worn, damaged, or obsolete in the ordinary course of business, (ii) the sale or
disposition of all or any portion of Borrower's current 12.5% interest in the
Cessna Citation V Ultra Aircraft, and (iii) any other sales or dispositions of
Equipment (x) to the extent the aggregate value of such Equipment sold or
disposed of in any calendar year does not exceed $150,000 and (y) to the extent
the aggregate value of such Equipment sold or disposed of in any calendar year
exceeds $150,000 upon the prior written consent of Lender (such consent not to
be unreasonably withheld), (b) sales by Borrower or its Subsidiaries of
Inventory to buyers in the ordinary course of business, (c) the use or transfer
of money or Cash Equivalents by Borrower or its Subsidiaries in a manner that is
not prohibited by
- 13 -
the terms of this Agreement or the other Loan Documents, (d) the licensing by
Borrower or its Subsidiaries, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of
business, and (e) subject to Borrower's compliance with the last three sentences
of Section 2.2(b), the Atlanta Property.
"Permitted Investments" means (a) investments in Cash
Equivalents, (b) investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) the stock repurchase plan previously adopted by Borrower
and (e) Permitted Acquisitions.
"Permitted Liens" means (a) Liens held by Lender, (b) Liens
for unpaid taxes that either (i) are not yet delinquent or (ii) do not
constitute an Event of Default hereunder and are the subject of Permitted
Protests, (c) Liens set forth on Schedule P-1, (d) the interests of lessors
under operating leases, (e) purchase money Liens or the interests of lessors
under Capital Leases to the extent that such Liens or interests secure Permitted
Purchase Money Indebtedness and so long as such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, (f) Liens arising by operation
of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of business and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests, (g) Liens
arising from deposits made in connection with obtaining worker's compensation or
other unemployment insurance, (h) Liens or deposits to secure performance of
bids, tenders, or leases incurred in the ordinary course of business and not in
connection with the borrowing of money, (i) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business, (j) Liens resulting from any judgment or award that is not an Event
of Default hereunder and (k) with respect to any Real Property that is not part
of the Real Property Collateral, easements, rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof.
"Permitted Protest" means the right of Borrower or any of its
Subsidiaries, as applicable, to protest any Lien (other than any such Lien that
secures the Obligations), taxes (other than payroll taxes or taxes that are the
subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on the Books in
such amount as is required under GAAP, (b) any such protest is instituted
promptly and prosecuted diligently by Borrower or any of its Subsidiaries, as
applicable, in good faith, and (c) Lender is reasonably satisfied that, while
any such protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of the Lender's Liens.
"Permitted Purchase Money Indebtedness" means (i) Purchase
Money Indebtedness incurred after the Original Closing Date during any calendar
year not in excess of $2,000,000 in the aggregate per year and (ii) all Purchase
Money Indebtedness acquired or assumed from a Permitted Acquisition.
"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts,
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business trusts, or other organizations, irrespective of whether they are legal
entities, and governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than
Real Property.
"Prepay" has the meaning set forth in Section 2.1.
"Projections" means Borrower's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations other than
Capitalized Lease Obligations existing as of the date hereof, provided that such
currently existing Capitalized Lease Obligations do not exceed $1,800,000),
incurred at the time of, or within 20 days after, the acquisition of any fixed
assets (including software and other intangible assets, provided that such
software and other intangible assets do not give rise to Accounts) for the
purpose of financing all or any part of the acquisition cost thereof.
"Real Property" means any estates or interests in real
property now owned or hereafter acquired by Borrower and the improvements
thereto.
"Real Property Collateral" means any Real Property hereafter
acquired by Borrower.
"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Recurring Service & Maintenance Revenues" means, with respect
to any period, the total revenues of Borrower for such period that are derived
from ongoing hardware and software support, EDI services, business management
services and subscription services, as reflected on Borrower's financial
statements in accordance with its historical practices.
"Remedial Action" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Required Availability" means unrestricted cash and Cash
Equivalents minus the aggregate amount, if any, of all trade payables of
Borrower aged in excess of historical levels with respect thereto and all book
overdrafts in excess of historical practices with respect thereto,
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in each case as determined by Lender in its Permitted Discretion, in an amount
of not less than $5,000,000.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"Securities Account" means a "securities account" as that term
is defined in the Code.
"Securities Account Agreement" means a control agreement, in
form and substance satisfactory to Lender, executed and delivered by Borrower,
Lender and the applicable securities intermediary with respect to a Securities
Account or bank with respect to a deposit account.
"Solvent" means, with respect to any Person on a particular
date, that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Stock" means shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
"Target Entity" means the Person whose Stock or assets are to
be acquired with the proceeds of an Acquisition Line Advance.
"Taxes" has the meaning set forth in Section 16.5.
"Term Loan A" has the meaning set forth in Section 2.1.
"Term Loan A Deficiency" has the meaning set forth in Section
2.1.
"Term Loan A Amount" means $[17,000,000].
"Trademark Security Agreement" means a trademark security
agreement executed and delivered by Borrower and Lender, the form and substance
of which is satisfactory to Lender.
"Voidable Transfer" has the meaning set forth in Section 16.8.
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"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association.
1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein, the
term "financial statements" shall include the notes and schedules thereto.
Whenever the term "Borrower" is used in respect of a financial covenant or a
related definition, it shall be understood to mean Borrower and its Subsidiaries
on a consolidated basis unless the context clearly requires otherwise.
1.3 CODE . Any terms used in this Agreement that are defined in
the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any
other Loan Document clearly requires otherwise, references to the plural include
the singular, references to the singular include the plural, the term
"including" is not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to any Person
shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein or in the other Loan Documents shall
be satisfied by the transmission of a Record and any Record transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 TERM LOAN A. Subject to the terms and conditions of the
Original Loan Agreement, on the Original Closing Date, Lender made a term loan
(the "Term Loan A") to Borrower in an amount equal to $22,000,000, of which the
aggregate outstanding principal amount on the Closing Date is the Term Loan A
Amount. Subject to the terms and conditions hereof and in reliance upon the
representations and warranties set forth herein, on the Closing Date, Original
Term Loan A shall automatically, and without any action on the part of any
Person, be deemed to be converted into and a part of Term Loan A under this
Agreement. The Term Loan A shall be repaid on the following dates and in the
following amounts:
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------------------------------------------------------
Date Installment Amount
------------------------------------------------------
October 1, 2003 $ 1,250,000
------------------------------------------------------
January 1, 2004 $ 1,250,000
------------------------------------------------------
April 1, 2004 $ 1,250,000
------------------------------------------------------
Maturity Date $12,000,000
------------------------------------------------------
In addition, if, at any time or for any reason, the aggregate amount of
Borrower's Collections with respect to the Accounts for the preceding
105-Business Day period is less than the outstanding principal amount of the
Term Loan A at such time (such difference, the "Term Loan A Deficiency"), then
Borrower shall immediately pay to Lender, in cash, the amount of such Term Loan
A Deficiency, which amount shall be used by Lender to reduce the principal
amount of the Term Loan A. The outstanding unpaid principal balance and all
accrued and unpaid interest under the Term Loan A shall be due and payable on
the date of termination of this Agreement, whether by its terms, by prepayment,
or by acceleration. All amounts outstanding under the Term Loan A shall
constitute Obligations. Notwithstanding anything to the contrary contained in
this Agreement or any other Loan Document, Borrower shall not, and shall not
cause any other Person to, voluntarily prepay, retire, redeem, purchase, repay,
defease or exchange, or make any deposits or segregation of funds in respect of
(collectively, "Prepay"), any principal in respect of the Term Loan A, subject
to Section 3.6 and except as set forth in the amortization table above and as
follows: (i) during the period from and including the Original Closing Date up
to the one-year anniversary of the Original Closing Date (such period, "Year
1"), Borrower shall be required to pay the principal in respect of the Term Loan
A in the amount scheduled to be amortized during such period as set forth in the
table above, and Borrower shall be permitted to Prepay an additional amount (the
"Year 1 Prepayment Limit") not to exceed $3,000,000; (ii) during the period from
and including the one-year anniversary of the Original Closing Date up to the
two-year anniversary of the Original Closing Date (such period, "Year 2"),
Borrower shall be required to pay the principal in respect of the Term Loan A in
the amount scheduled to be amortized during such period as set forth in the
table above, and Borrower shall be permitted to Prepay an additional amount (the
"Year 2 Prepayment Limit") not to exceed $6,000,000 minus the amount of the
principal in respect of the Term Loan A actually Prepayed (i.e., in excess of
the amount scheduled to be amortized) by Borrower during Year 1; (iii) during
the period from and including the two-year anniversary of the Original Closing
Date up to the three-year anniversary of the Original Closing Date, Borrower
shall be required to pay the principal in respect of the Term Loan A in the
amount scheduled to be amortized during such period as set forth in the table
above, and Borrower shall be permitted to Prepay an additional amount (the "Year
3 Prepayment Limit") not to exceed $8,000,000 minus the sum of the amount of the
principal in respect of the Term Loan A actually Prepayed (i.e., in excess of
the amount scheduled to be amortized) by Borrower during Year 1 and Year 2;
provided, that Borrower may elect to exceed the Year 3 Prepayment Limit, but in
such event Borrower shall pay a prepayment premium in an amount equal to the
greater of (I) $120,000 or (II) the Applicable Prepayment Premium otherwise due
hereunder; and (iv) during the period from and including the three-year
- 18 -
anniversary of the Original Closing Date to the Maturity Date, there shall be no
restrictions on the amount of principal in respect of the Term Loan A that
Borrower may Prepay.
2.2 ACQUISITION LINE ADVANCES.
(a) Subject to Section 3.3(e) and the other
terms and conditions of this Agreement, and during the term of this Agreement,
Lender agrees to make advances ("Acquisition Line Advances") to Borrower for
Permitted Acquisitions in an aggregate amount at any one time outstanding not to
exceed the Maximum Amount less the principal amount of Term Loan A then
outstanding (from time to time, the "Available Acquisition Line").
(b) Lender shall not be obligated to make
Acquisition Line Advances in a Dollar amount less than $5,000,000 pursuant to
this Section 2.2 during the term of this Agreement, subject to the limitation
set forth in clause (d) below.
(c) The amortization schedule for each
Acquisition Line Advance shall be equal quarterly payments over the shorter of
48 months from the applicable Funding Date or the remaining term of this
Agreement; provided, however, that the amortization schedule for any Acquisition
Line Advance relating to a Permitted Acquisition in which the business of the
Target Entity is similar in all material respects or complementary to that of
Borrower shall be 48 months from the applicable Funding Date. All Acquisition
Line Advances shall constitute Obligations.
(d) Lender shall have no obligation to make
additional Acquisition Line Advances hereunder to the extent such additional
Acquisition Line Advances would cause the outstanding amount of Acquisition Line
Advances to exceed the Available Acquisition Line.
2.3 ACQUISITION LINE ADVANCE PROCEDURES.
(a) PROCEDURE FOR ACQUISITION LINE ADVANCE. Each
Acquisition Line Advance shall be made by a written request by an Authorized
Person delivered to Lender (which notice must be received by Lender no later
than 10:00 a.m. (California time) on the Business Day that is 20 Business Days
prior to the requested Funding Date) specifying (i) the amount of such
Acquisition Line Advance, and (ii) the requested Funding Date, which shall be a
Business Day. At Lender's election, in lieu of delivering the above-described
request in writing, any Authorized Person may give Lender telephonic notice of
such request by the required time, with such telephonic notice to be confirmed
in writing within 24 hours of the giving of such notice.
(b) MAKING OF ADVANCES. If Lender has received a
timely request for an Acquisition Line Advance in accordance with the provisions
hereof (including Section 3.3), and subject to the satisfaction of the
applicable terms and conditions set forth herein, and Borrower has agreed to any
amendments proposed in accordance with Section 3.3(e)(ii), Lender shall make the
proceeds of such Acquisition Line Advance available to Borrower on the
applicable Funding Date by transferring available funds equal to such proceeds
to the Designated Account.
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2.4 PAYMENTS.
(a) PAYMENTS BY BORROWER.
(i) Except as otherwise expressly
provided herein, all payments by Borrower shall be made to Lender's Account and
shall be made in immediately available funds, no later than 11:00 a.m.
(California time) on the date specified herein. Any payment received by Lender
later than 11:00 a.m. (California time) shall be deemed to have been received on
the following Business Day and any applicable interest or fee shall continue to
accrue until such following Business Day. In the event this Agreement requires a
payment be made on a non-Business Day, Borrower shall be permitted to make such
payment no later than 11:00 a.m. (California time) on the following Business
Day.
(b) APPLICATION AND REVERSAL OF PAYMENTS.
(i) All payments shall be remitted to
Lender and all such payments (other than payments received while no Default or
Event of Default has occurred and is continuing and which relate to the payment
of principal or interest of specific Obligations or which relate to the payment
of specific fees), and all proceeds of Accounts or other Collateral received by
Lender, shall be applied as follows:
(A) first, to pay any Lender
Expenses then due to Lender under the Loan Documents, until
paid in full,
(B) second, to pay any fees
then due to Lender under the Loan Documents until paid in
full,
(C) third, ratably to pay
interest due in respect of Term Loan A and Acquisition Line
Advances until paid in full,
(D) fourth, ratably to pay all
principal amounts then due and payable (other than as a result
of an acceleration thereof) with respect to Term Loan A and
Acquisition Line Advances until paid in full,
(E) fifth, if an Event of
Default has occurred and is continuing, to pay the outstanding
principal balance of Term Loan A (in the inverse order of the
maturity of the installments due thereunder) and Acquisition
Line Advances until Term Loan A and the Acquisition Line
Advances are paid in full,
(F) sixth, to pay any other
Obligations until paid in full, and
(G) seventh, to Borrower (to
be wired to the Designated Account) or such other Person
entitled thereto under applicable law.
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(ii) In each instance, so long as no
Default or Event of Default has occurred and is continuing, Section 2.4(b) shall
not be deemed to apply to any payment by Borrower specified by Borrower to be
for the payment of specific Obligations then due and payable (or prepayable)
under any provision of this Agreement.
(iii) For purposes of the foregoing,
"paid in full" means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service fees, professional
fees, interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest on
interest, and expense reimbursements, whether or not the same would be or is
allowed or disallowed in whole or in part in any Insolvency Proceeding.
(iv) In the event of a direct conflict
between the priority provisions of this Section 2.4 and other provisions
contained in any other Loan Document, it is the intention of the parties hereto
that such priority provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each other. In
the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.4 shall control and
govern.
2.5 PAYMENTS IN DOLLARS. Borrower hereby promises to pay the
Obligations (including principal, interest, fees, costs, and expenses) in
Dollars in full to Lender as and when due and payable under the terms of this
Agreement and the other Loan Documents.
2.6 INTEREST RATES: RATES, PAYMENTS, AND CALCULATIONS
(a) INTEREST RATES. Except as provided in clause
(c) below, all Obligations that have been charged to the Loan Account pursuant
to the terms hereof shall bear interest on the Daily Balance thereof as follows:
(i) if the relevant Obligation is the Term Loan A, at a per annum rate equal to
the Base Rate plus the Base Rate Term Loan A Margin; (ii) if the relevant
Obligation is an Acquisition Line Advance, at a per annum rate equal to the Base
Rate plus the Base Rate Acquisition Line Advance Margin; and (iii) otherwise, at
a per annum rate equal to the Base Rate plus the Base Rate Term Loan A Margin.
(b) [Intentionally Omitted]
(c) DEFAULT RATE. Upon the occurrence and during
the continuation of an Event of Default, all Obligations that have been charged
to the Loan Account pursuant to the terms hereof shall bear interest on the
Daily Balance thereof at a per annum rate equal to two (2) percentage points
above the per annum rate otherwise applicable hereunder.
(d) PAYMENT. Interest and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations or obligation to extend credit hereunder are
outstanding. Borrower hereby authorizes Lender, from time to time without prior
notice to Borrower, to charge such interest and fees, all Lender Expenses (as
and when incurred), the fees and costs provided for in Section 2.11 (as and when
accrued or incurred), and all other payments as and when due and payable under
any Loan
- 21 -
Document (including the installments due and payable with respect to Term Loan A
or any Acquisition Line Advance) to Borrower's Loan Account, which amounts
thereafter shall constitute Obligations hereunder and shall accrue interest at
the rate then applicable to the Term Loan A or Acquisition Line Advance, as the
case may be. Any interest not paid when due shall be compounded by being charged
to Borrower's Loan Account and shall thereafter constitute Obligations hereunder
and shall accrue interest at the rate then applicable to the Term Loan A or
Acquisition Line Advance, as the case may be.
(e) COMPUTATION. All interest and fees
chargeable under the Loan Documents shall be computed on the basis of a 360 day
year for the actual number of days elapsed. In the event the Base Rate is
changed from time to time hereafter, the rates of interest hereunder based upon
the Base Rate automatically and immediately shall be increased or decreased by
an amount equal to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL
RATE. In no event shall the interest rate or rates payable under this Agreement,
plus any other amounts paid in connection herewith, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable. Borrower and Lender, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto, as of the date of this Agreement, Borrower is and shall
be liable only for the payment of such maximum as allowed by law, and payment
received from Borrower in excess of such legal maximum, whenever received, shall
be applied to reduce the principal balance of the Obligations to the extent of
such excess.
2.7 ACCOUNT CONTROL AGREEMENTS. Borrower shall enter into Account
Control Agreements with each of Bank of America, N.A. and The Bank of New York
(each, an "Account Control Bank") and Lender with respect to the accounts of
Borrower specified on Schedule 2.7(a) hereto (the "AC Accounts"). Each such
Account Control Agreement shall be satisfactory in form and substance to Lender,
and shall provide, among other things, that (i) each Account Control Bank will
comply with all notifications it receives directing it to transfer, redeem or
permit the withdrawal of any property in the AC Accounts originated by Lender
without further consent by Borrower and (ii) the Account Control Bank has no
rights of setoff or recoupment or any other claim against the applicable AC
Account other than for payment of normal bank charges and fees for such AC
Account. Lender agrees that it will not provide any notification to an Account
Control Bank under an Account Control Agreement directing it to transfer, redeem
or permit the withdrawal of any property in the AC Account except upon the
occurrence and continuance of an Event of Default.
(b) Borrower shall close any of its AC Accounts
(and establish replacement AC Accounts in accordance with the next sentence)
promptly and in any event within 30 days of notice from Lender that the
creditworthiness of any Account Control Bank is no longer acceptable in Lender's
reasonable judgment, or as promptly as practicable and in any event within 60
days of notice from Lender that the operating performance, funds transfer, or
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availability procedures or performance of the Account Control Bank with respect
to AC Accounts or Lender's liability under any Account Control Agreement with
such Account Control Bank is no longer acceptable in Lender's reasonable
judgment. Prior to the time of opening any replacement AC Account in accordance
with the preceding sentence, (i) the prospective replacement Account Control
Bank must be satisfactory to Lender and Lender shall have consented in writing
in advance to the opening of such AC Account (such consent not to be
unreasonably withheld) and (ii) Borrower, Lender and such prospective
replacement Account Control Bank shall have executed an Account Control
Agreement satisfactory in form and substance to Lender.
(c) The AC Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Borrower is hereby deemed to
have granted a Lien to Lender.
2.8 CREDITING PAYMENTS. The receipt of any payment item by Lender
(whether from transfers to Lender by the Account Control Banks pursuant to the
Account Control Agreements or otherwise) shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to the Lender's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrower shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Lender only if it is received into the Lender's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Lender's Account on a non-Business Day or after 11:00 a.m. (California time) on
a Business Day, it shall be deemed to have been received by Lender as of the
opening of business on the immediately following Business Day.
2.9 DESIGNATED ACCOUNT. Lender is authorized to make Term Loan A
and Acquisition Line Advances under this Agreement into the Designated Account
based upon the written instructions received from an Authorized Person. Borrower
agrees to establish and maintain the Designated Account with the Designated
Account Bank for the purpose of receiving the proceeds of the Acquisition Line
Advances requested by Borrower and made by Lender hereunder. So long as no
Default or Event of Default has occurred and is continuing, Borrower may add or
replace the Designated Account Bank or the Designated Account on 30 days prior
written notice to Lender; provided, however, that (i) such prospective
Designated Account Bank shall be satisfactory to Lender and Lender shall have
consented in writing in advance to the opening of such Designated Account with
the prospective Designated Account Bank and such prospective Designated Account
Bank shall have executed and delivered to Lender a Securities Account Agreement.
Unless otherwise agreed in writing by Lender and Borrower, any Acquisition Line
Advance requested by Borrower and made by Lender hereunder shall be made to the
Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Lender
shall maintain an account on its books in the name of Borrower (the "Loan
Account") on which Borrower will be charged with Term Loan A, all Acquisition
Line Advances and with all other
- 23 -
payment Obligations hereunder or under the other Loan Documents, including,
accrued interest, fees and expenses, and Lender Expenses. In accordance with
Section 2.8, the Loan Account will be credited with all payments received by
Lender from Borrower or for Borrower's account, including all amounts received
in the Lender's Account from any Account Control Bank. Lender shall render
statements regarding the Loan Account to Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Expenses owing, and such statements shall be conclusively
presumed to be correct and accurate and constitute an account stated between
Borrower and Lender unless, within 30 days after receipt thereof by Borrower,
Borrower shall deliver to Lender written objection thereto describing the error
or errors contained in any such statements.
2.11 FEES. Borrower shall pay to Lender the following fees and
charges, which fees and charges shall be non-refundable when paid (irrespective
of whether this Agreement is terminated thereafter):
(a) FEE LETTER FEES. As and when due and payable
under the terms of the Fee Letter, Borrower shall pay to Lender the fees set
forth in the Fee Letter, and
(b) AUDIT, APPRAISAL, AND VALUATION CHARGES.
Audit, appraisal, and valuation fees and charges as follows (i) a fee of $850
per day, per auditor, plus out-of-pocket expenses for each financial audit of
Borrower performed by personnel employed by Lender, (ii) the actual charges paid
or incurred by Lender for each appraisal of the Collateral performed by
personnel employed by Lender (such appraisals not to exceed one per calendar
year unless an Event of Default has occurred and is continuing, in which case
there shall be no such limit), and (iii) the actual charges paid or incurred by
Lender if it elects to employ the services of one or more third Persons to
perform financial audits of Borrower, to appraise the Collateral, or any portion
thereof, or to assess Borrower's business valuation. The aggregate amount of all
of the fees and charges in this Section 2.11(b) shall not exceed $45,000 per
calendar year unless an Event of Default has occurred, in which case there shall
be no such limit.
(c) [Intentionally Omitted]
(d) PREPAYMENT FEE. In the event that Borrower
determines to prepay all Obligations then due and owing hereunder during the
period commencing on the date one year prior to the Maturity Date and ending on
the date one day prior to the Maturity Date, Borrower shall pay a prepayment fee
to the Lender in an amount equal to 0.50% times the Maximum Amount.
2.12 [Intentionally Omitted]
2.13 [Intentionally Omitted]
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by
- 24 -
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of reducing the return on Lender's or such holding
company's capital as a consequence of Lender's obligations hereunder to a level
below that which Lender or such holding company could have achieved but for such
adoption, change, or compliance (taking into consideration Lender's or such
holding company's then existing policies with respect to capital adequacy and
assuming the full utilization of such entity's capital) by any amount deemed by
Lender to be material, then Lender may notify Borrower thereof. Following
receipt of such notice, Borrower agrees to pay Lender on demand the amount of
such reduction of return of capital as and when such reduction is determined,
payable within 90 days after presentation by Lender of a statement in the amount
and setting forth in reasonable detail Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount,
Lender may use any reasonable averaging and attribution methods.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of Lender to extend any credit provided for hereunder is subject to
the fulfillment, to the satisfaction of Lender, of each of the conditions
precedent set forth below:
(a) the Closing Date shall occur on or before
August 20, 2003;
(b) Lender shall have received all financing
statements required by Lender, duly executed by Borrower, and Lender shall have
received searches reflecting the filing of all such financing statements;
(c) Lender shall have received the Fee Letter,
in form and substance satisfactory to Lender, duly executed, and in full force
and effect;
(d) Lender shall have received a certificate
from the Secretary of Borrower (i) attesting to the resolutions of Borrower's
Board of Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which Borrower is a party and
authorizing officers of Borrower to execute the same and (ii) certifying the
names and the signatures of the officers of Borrower authorized to sign the Loan
Documents;
(e) Lender shall have received copies of
Borrower's Governing Documents, if amended, modified, or supplemented subsequent
to the Original Closing Date, certified by the Secretary of Borrower or a
written representation by the Secretary of Borrower that there have been no
changes to Borrower's Governing Documents;
(f) [Intentionally Omitted];
(g) [Intentionally Omitted];
- 25 -
(h) Lender shall have received an opinion of
Borrower's counsel in form and substance satisfactory to Lender;
(i) Borrower shall have the Required
Availability;
(j) no Default or Event of Default shall have
occurred and be continuing under the Original Loan Agreement;
(k) Borrower shall pay all Lender Expenses
incurred in connection with the transactions evidenced by this Agreement;
(l) no injunction, writ, restraining order, or
other order of any nature prohibiting, directly or indirectly, the extending of
such credit shall have been issued and remain in force by any Governmental
Authority against Borrower, Lender, or any of their Affiliates;
(m) Borrower shall have received all licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by Borrower of this Agreement or any
other Loan Document or with the consummation of the transactions contemplated
hereby and thereby;
(n) Lender shall have received from Borrower all
schedules required by this Agreement updated through and including the Closing
Date;
(o) Lender shall have received all fees due and
payable under the Fee Letter on the Closing Date; and
(p) all other documents and legal matters in
connection with the transactions contemplated by this Agreement shall have been
delivered, executed, or recorded and shall be in form and substance satisfactory
to Lender.
3.2 [INTENTIONALLY OMITTED]
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The
obligation of Lender to make any Acquisition Line Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:
(a) Borrower shall provide to Lender a
certificate, dated the date of such Acquisition Line Advance, of the type
described in Section 6.3(a)(ii) of this Agreement;
(b) [Intentionally Omitted];
(c) no injunction, writ, restraining order, or
other order of any nature prohibiting, directly or indirectly, the extending of
such credit shall have been issued and remain in force by any Governmental
Authority against Borrower, Lender, or any of their Affiliates;
- 26 -
(d) no Material Adverse Change shall have
occurred since the Closing Date; and
(e) with respect to each Acquisition Line
Advance:
(i) Lender shall otherwise be
satisfied, in its sole discretion, with the terms and conditions of such
Permitted Acquisition, such Acquisition Line Advance and the impact such
Acquisition Line Advance would have on the creditworthiness of Borrower; and
(ii) This Agreement (including, without
limitation, all financial covenants and all other affirmative and negative
covenants) shall have been amended as Lender requires in its sole discretion to
reflect the Permitted Acquisition and the Acquisition Line Advance and their
impact on Borrower's business, assets, financial condition and prospects.
3.4 TERM. This Agreement shall become effective upon the execution
and delivery hereof by Borrower and Lender and shall continue in full force and
effect for a term ending on the fourth anniversary of the Closing Date (the
"Maturity Date"). The foregoing notwithstanding, Lender shall have the right to
terminate its obligations under this Agreement immediately and without notice
upon the occurrence and during the continuation of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations immediately shall become due and payable without
notice or demand. No termination of this Agreement, however, shall relieve or
discharge Borrower of its duties, Obligations, or covenants hereunder and the
Lender's Liens in the Collateral shall remain in effect until all Obligations
have been fully and finally discharged and Lender's obligations to provide
additional credit hereunder have been terminated. When this Agreement has been
terminated and all of the Obligations have been fully and finally discharged and
Lender's obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Lender will, at Borrower's sole expense, execute
and deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Lender's Liens and all
notices of security interests and liens previously filed by Lender with respect
to the Obligations.
3.6 EARLY TERMINATION. Borrower has the option, at any time upon
30 days prior written notice to Lender, to terminate this Agreement by paying to
Lender, in cash, the Obligations, in full, together with the Applicable
Prepayment Premium. If Borrower has sent a notice of termination pursuant to the
provisions of this Section, then Lender's obligations to extend credit hereunder
shall terminate and Borrower shall be obligated to repay the Obligations, in
full, together with the Applicable Prepayment Premium, on the date set forth as
the date of termination of this Agreement in such notice. In the event of the
termination of this Agreement and repayment of the Obligations in full at any
time prior to the Maturity Date, for any other reason, including (a) termination
upon the election of Lender to terminate after the occurrence of an Event of
Default, (b) foreclosure and sale of Collateral, (c) sale of the Collateral in
any
- 27 -
Insolvency Proceeding, or (d) restructuring, reorganization or compromise of the
Obligations by the confirmation of a plan of reorganization or any other plan of
compromise, restructure, or arrangement in any Insolvency Proceeding, then, in
view of the impracticability and extreme difficulty of ascertaining the actual
amount of damages to Lender or profits lost by Lender as a result of such early
termination, and by mutual agreement of the parties as to a reasonable
estimation and calculation of the lost profits or damages of Lender, Borrower
shall pay the Applicable Prepayment Premium to Lender, measured as of the date
of such termination. For purposes of this Agreement, it is understood and agreed
that the occurrence of a Change of Control in and of itself will not trigger the
payment by Borrower of a prepayment premium or the Applicable Prepayment
Premium.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower hereby ratifies and
confirms that Lender has a continuing security interest in, and hereby grants to
Lender a continuing security interest in all of its right, title, and interest
in all currently existing and hereafter acquired or arising Personal Property
Collateral in order to secure prompt repayment of any and all of the Obligations
in accordance with the terms and conditions of the Loan Documents and in order
to secure prompt performance by Borrower of each of its covenants and duties
under the Loan Documents. The Lender's Liens in and to the Personal Property
Collateral shall attach to all Personal Property Collateral without further act
on the part of Lender or Borrower. Anything contained in this Agreement or any
other Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, Borrower has no authority, express or implied, to dispose of any
item or portion of the Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that perfection of priority of Lender's security interest is
dependent on or enhanced by possession, Borrower, immediately upon the request
of Lender, shall endorse and deliver physical possession of such Negotiable
Collateral to Lender.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, (a) Lender or Lender's designee may (i) notify Account Debtors
of Borrower that the Accounts, chattel paper, or General Intangibles have been
assigned to Lender or that Lender has a security interest therein, or (ii)
collect the Accounts, chattel paper, or General Intangibles directly and charge
the collection costs and expenses to the Loan Account; and (b) Borrower agrees
that it will hold in trust for Lender, as Lender's trustee, any Collections that
it receives and immediately will deliver said Collections to Lender in their
original form as received by Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time
upon the request of Lender, Borrower shall execute and deliver to Lender, any
and all financing statements, original financing statements in lieu of
continuation statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title, and all other documents (the
"Additional Documents") that Lender may request in its Permitted Discretion, in
form and
- 28 -
substance satisfactory to Lender, to perfect and continue perfected or better
perfect the Lender's Liens in the Collateral (whether now owned or hereafter
arising or acquired), to create and perfect Liens in favor of Lender in any Real
Property acquired after the Closing Date, and in order to fully consummate all
of the transactions contemplated hereby and under the other Loan Documents. To
the maximum extent permitted by applicable law, Borrower authorizes Lender to
execute any such Additional Documents in Borrower's name and authorizes Lender
to file such executed Additional Documents in any appropriate filing office. In
addition, on such periodic basis as Lender shall require (but no more than
quarterly so long as no Event of Default shall have occurred and be continuing,
in which case there shall be no such limit), Borrower shall (a) provide Lender
with a report of all new patentable, copyrightable, or trademarkable materials
acquired or generated by Borrower during the prior period, (b) cause all
patents, copyrights, and trademarks acquired or generated by Borrower that are
not already the subject of a registration with the appropriate filing office (or
an application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of Borrower's ownership thereof, and (c) cause to be prepared, executed, and
delivered to Lender supplemental schedules to the applicable Loan Documents to
identify such patents, copyrights, and trademarks as being subject to the
security interests created thereunder.
4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes,
constitutes, and appoints Lender (and any of Lender's officers, employees, or
agents designated by Lender) as Borrower's true and lawful attorney, with power
to (a) if Borrower refuses to, or fails timely to execute and deliver any of the
documents described in Section 4.4, sign the name of Borrower on any of the
documents described in Section 4.4, (b) at any time that an Event of Default has
occurred and is continuing, sign Borrower's name on any invoice or ▇▇▇▇ of
lading relating to the Collateral, drafts against Account Debtors, or notices to
Account Debtors, (c) send requests for verification of Accounts, (d) endorse
Borrower's name on any Collection item that may come into Lender's possession,
(e) at any time that an Event of Default has occurred and is continuing, make,
settle, and adjust all claims under Borrower's policies of insurance and make
all determinations and decisions with respect to such policies of insurance, and
(f) at any time that an Event of Default has occurred and is continuing, settle
and adjust disputes and claims respecting the Accounts, chattel paper, or
General Intangibles directly with Account Debtors, for amounts and upon terms
that Lender determines to be reasonable, and Lender may cause to be executed and
delivered any documents and releases that Lender determines to be necessary. The
appointment of Lender as Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and Lender's
obligations to extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Lender and its officers, employees, or
agents shall have the right, from time to time hereafter to inspect the Books
and to check, test, and appraise the Collateral in order to verify Borrower's
financial condition or the amount, quality, value, condition of, or any other
matter relating to, the Collateral in its Permitted Discretion.
4.7 SECURITIES ACCOUNT AGREEMENTS. Borrower agrees that it will
not transfer assets out of any Securities Accounts other than as permitted under
Section 7.19 and, if to another securities intermediary, unless each of
Borrower, Lender, and the substitute securities
- 29 -
intermediary have entered into a Securities Account Agreement. No arrangement
contemplated hereby or by any Securities Account Agreement in respect of any
Securities Accounts or other Investment Property shall be modified by Borrower
without the prior written consent of Lender. Upon the occurrence and during the
continuance of an Event of Default, Lender may notify any securities
intermediary to liquidate the applicable Securities Account or any related
Investment Property maintained or held thereby and remit the proceeds thereof to
the Lender's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement,
Borrower makes the following representations and warranties to Lender which
shall be true, correct, and complete, in all material respects, as of the date
hereof, and shall be true, correct, and complete, in all material respects, as
of the Closing Date and at and as of the date of the making of each Acquisition
Line Advance (or other extension of credit) made thereafter, as though made on
and as of the date of such Acquisition Line Advance (or other extension of
credit) (except to the extent that such representations and warranties relate
solely to an earlier date), and such representations and warranties shall
survive the execution and delivery of this Agreement:
5.1 NO ENCUMBRANCES. Borrower has good and indefeasible title to
the Collateral, free and clear of Liens except for Permitted Liens.
5.2 NDC AGREEMENTS. Borrower has delivered to Lender true and
complete copies of each of the NDC Agreements and such agreements have not been
amended since the dates thereof.
5.3 [INTENTIONALLY OMITTED]
5.4 EQUIPMENT. All of the Equipment is used or held for use in
Borrower's business and is fit for such purposes.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and
Equipment are not stored with a bailee, warehouseman, or similar party and are
located only at the locations identified on Schedule 5.5.
5.6 INVENTORY RECORDS. Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive
office of Borrower is located at the address indicated in Schedule 5.7 and
Borrower's FEIN is identified in Schedule 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Borrower is duly organized and existing and
in good standing under the laws of the jurisdiction of its organization and
qualified to do business in any state
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where the failure to be so qualified reasonably could be expected to have a
Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete
and accurate description of the authorized capital Stock of Borrower, by class,
and, as of the Closing Date, a description of the number of shares of each such
class that are issued and outstanding. Other than as described on Schedule
5.8(b), there are no subscriptions, options, warrants, or calls relating to any
shares of Borrower's capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. Borrower is not
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital Stock or any security convertible
into or exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete
and accurate list of Borrower's direct and indirect Subsidiaries, showing: (i)
the jurisdiction of their organization, (ii) the number of shares of each class
of common and preferred Stock authorized for each of such Subsidiaries, and
(iii) the number and the percentage of the outstanding shares of each such class
owned directly or indirectly by Borrower. All of the outstanding capital Stock
of each such Subsidiary has been validly issued and is fully paid and
non-assessable.
(d) Except as set forth on Schedule 5.8(c),
there are no subscriptions, options, warrants, or calls relating to any shares
of Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. Neither Borrower
nor any of its Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of Borrowers'
Subsidiaries' capital Stock or any security convertible into or exchangeable for
any such capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) The execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which it is a party have
been duly authorized by all necessary action on the part of Borrower.
(b) The execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which it is a party do not
and will not (i) violate any provision of federal, state, or local law or
regulation applicable to Borrower, the Governing Documents of Borrower, or any
order, judgment, or decree of any court or other Governmental Authority binding
on Borrower, (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material contractual
obligation of Borrower, (iii) result in or require the creation or imposition of
any Lien of any nature whatsoever upon any properties or assets of Borrower,
other than Permitted Liens, or (iv) require any approval of Borrower's
interestholders or any approval or consent of any Person under any material
contractual obligation of Borrower.
(c) Other than the filing of financing
statements, fixture filings and the Mortgages, the execution, delivery, and
performance by Borrower of this Agreement and the Loan Documents to which
Borrower is a party do not and will not require any registration with,
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consent, or approval of, or notice to, or other action with or by, any
Governmental Authority or other Person.
(d) This Agreement and the other Loan Documents
to which Borrower is a party, and all other documents contemplated hereby and
thereby, when executed and delivered by Borrower will be the legally valid and
binding obligations of Borrower, enforceable against Borrower in accordance with
their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors' rights generally.
(e) The Lender's Liens are validly created,
perfected, and first priority Liens, subject only to Permitted Liens.
5.10 LITIGATION. Other than those matters disclosed on Schedule
5.10, there are no actions, suits, or proceedings pending or, to the best
knowledge of Borrower, threatened against Borrower, or any of its Subsidiaries,
as applicable, except for (a) matters that are fully covered by insurance
(subject to customary deductibles), and (b) matters that, if decided adversely
to Borrower, or any of its Subsidiaries, as applicable, reasonably could not be
expected to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating
to Borrower that have been delivered by Borrower to Lender have been prepared in
accordance with GAAP (except, in the case of unaudited financial statements, for
the lack of footnotes and being subject to year-end audit adjustments) and
present fairly in all material respects, Borrower's financial condition as of
the date thereof and results of operations for the period then ended. There has
not been a Material Adverse Change with respect to Borrower since the date of
the latest financial statements submitted to Lender on or before the Closing
Date.
5.12 FRAUDULENT TRANSFER.
(a) Borrower is Solvent.
(b) No transfer of property is being made by
Borrower and no obligation is being incurred by Borrower in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of
Borrower.
5.13 EMPLOYEE BENEFITS. None of Borrower, any of its Subsidiaries,
or any of their ERISA Affiliates has maintained or contributed, or currently
maintains or contributes, to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14,
(a) to Borrower's knowledge, none of Borrower's assets has ever been used by
Borrower or by previous owners or operators in the disposal of, or to produce,
store, handle, treat, release, or transport, any Hazardous Materials, where such
production, storage, handling, treatment, release or transport was in violation,
in any material respect, of applicable Environmental Law, (b) to
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Borrower's knowledge, none of Borrower's properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) Borrower has not received
notice that a Lien arising under any Environmental Law has attached to any
revenues or to any Real Property owned or operated by Borrower, and (d) Borrower
has not received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by Borrower resulting in the releasing
or disposing of Hazardous Materials into the environment.
5.15 BROKERAGE FEES. Borrower has not utilized the services of any
broker or finder in connection with Borrower's obtaining financing from Lender
under this Agreement and no brokerage commission or finders fee is payable by
Borrower in connection herewith.
5.16 INTELLECTUAL PROPERTY
(a) Borrower owns, or holds licenses in, all
Intellectual Property Rights that are necessary to the conduct of its business
as currently conducted. Attached hereto as Schedule 5.16(a) is a true, correct,
and complete listing of all material patents, patent applications, trademarks,
trademark applications and copyrights (including copyright registrations and
applications) as to which Borrower is the owner or is an exclusive licensee.
(b) Borrower represents and warrants that it has
taken all actions reasonably necessary to protect Borrower Intellectual Property
Rights, including, without limitation, (i) protecting the secrecy and
confidentiality of Borrower's confidential information and trade secrets by
having and enforcing a policy requiring all current and former employees,
consultants, licensees, vendors and contractors to execute appropriate
confidentiality and invention assignment agreements; (ii) taking all actions
reasonably necessary to ensure that no trade secret of Borrower falls or has
fallen into the public domain; and (iii) protecting the secrecy and
confidentiality of the source code of all computer software programs and
applications of which Borrower is the owner or licensee by having and enforcing
a policy requiring any licensees of such source code to enter into license
agreements with appropriate use and non-disclosure restrictions. Borrower has
only entered into such source code licenses as set forth in Schedule 5.16(b).
(c) No past or present employee or contractor of
Borrower has any ownership interest, license, permission or other Intellectual
Property Right in or to any material Borrower Intellectual Property Rights
(including, without limitation, Borrower's top ten (10) Intellectual Property
Rights measured by annual revenue generated therefrom and all other Intellectual
Property Rights which generate or are reasonably expected to generate at least
$2,000,000 in annual revenue). All such employees and contractors have assigned
to Borrower, in a valid, enforceable and irrevocable inventions assignment
agreement or similar agreement, all of their rights, including, without
limitation, all Intellectual Property Rights, in and to all ideas, inventions,
processes, works of authorship and other work products that relate to the
business of Borrower and were conceived, created, authored or developed during
the term of such employees' or contractors' employment or engagement by
Borrower, or, with regard to works
- 33 -
protected by copyright, if no such assignment agreement was or has been executed
by a former or present employee only, all such works by the employee were
conceived, created, authored or developed within the scope of his/her
employment, and as such constitutes a "work made for hire".
(d) Borrower has made all necessary payments,
filings and recordations to protect and maintain its interest in material
Borrower Intellectual Property Rights (including, without limitation, Borrower's
top ten (10) Intellectual Property Rights measured by annual revenue generated
therefrom and all other Intellectual Property Rights which generate or are
reasonably expected to generate at least $2,000,000 in annual revenue) in the
United States or any other jurisdiction, including, without limitation, (i)
making all necessary registration, maintenance, and renewal fee payments; and
(ii) filing all necessary documents, including, without limitation, all
applications for registration of copyrights, trademarks, and patents.
(e) No claim has been made and is continuing or
threatened that the use by Borrower of any item of General Intangibles is
invalid or unenforceable or that the use by Borrower of any General Intangibles
does or may violate the rights of any person, other than any such claim which
would not cause a Material Adverse Change. To the best of Borrower's knowledge,
there is currently no infringement or unauthorized use of any item of
Intellectual Property Rights contained on Schedule 5.16(a).
(f) Borrower has filed applications and taken
any and all other actions reasonably necessary to register all material
Copyrights (including, without limitation, Borrower's top ten (10) Copyrights
measured by annual revenue generated therefrom and all other Copyrights which
generate or are reasonably expected to generate at least $2,000,000 in annual
revenue), in good faith in accordance with the procedures and regulations of the
U.S. Copyright Office.
5.17 LEASES. Borrower enjoys peaceful and undisturbed possession
under all leases material to the business of Borrower and to which it is a party
or under which it is operating. All of such leases are valid and subsisting and
no material default by Borrower exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of Borrower's DDAs,
including, with respect to each depository (i) the name and address of such
depository, and (ii) the account numbers of the accounts maintained with such
depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a
whole) furnished by or on behalf of Borrower in writing to Lender (including all
information contained in the Schedules hereto or in the other Loan Documents)
for purposes of or in connection with this Agreement, the other Loan Documents,
or any transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Borrower
in writing to Lender will be, true and accurate, in all material respects, on
the date as of which such information is dated or certified and not incomplete
by omitting to state any fact necessary to make such information (taken as a
whole) not misleading in any material respect at such time in
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light of the circumstances under which such information was provided. Any and
all Projections delivered by Borrower from time to time hereunder represent
Borrower's good faith best estimate of its future performance for the periods
covered thereby.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and
complete list of all Indebtedness of Borrower outstanding immediately prior to
the Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, Borrower
shall and shall cause each of its Subsidiaries to do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that
enables Borrower to produce financial statements in accordance with GAAP and
maintain records pertaining to the Collateral that contain information as from
time to time reasonably may be requested by Lender. Borrower also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2 COLLATERAL REPORTING. Provide Lender with the following
documents at the following times in form satisfactory to Lender:
Monthly (not later than (a) a detailed aging, by total, of the Accounts,
the 10th day of each
month) (b) a summary aging, by vendor, of Borrower's accounts payable and any book overdraft,
(c) a Collections journal, by daily totals,
(d) at Lender's request, a statement showing the balance in all DDAs no later than 30
days after the end of the applicable month,
---------------------------------------------------------------------------------------------------------------------
Quarterly (not later (e) a report regarding Borrower's accrued, but unpaid, ad valorem taxes,
than 45 days after
the end of each fiscal (f) a report providing the components of Recurring Service & Maintenance Revenues,
quarter)
(g) a report providing a detailed calculation of EBITDA,
---------------------------------------------------------------------------------------------------------------------
Upon request by Lender (h) copies of invoices in connection with the Accounts, credit memos, remittance advices,
in its Permitted deposit slips, shipping and delivery documents in connection with the Accounts and, for
Discretion Inventory and Equipment acquired
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by Borrower, purchase orders and invoices, and
(i) such other reports as to the Collateral, or the financial condition of Borrower, as
Lender may request.
---------------------------------------------------------------------------------------------------------------------
In addition, Borrower agrees to provide electronic reporting
of each of the items set forth above except for items (d), (g) and (h).
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to
Lender:
(a) as soon as available, but in any event
within 30 days (45 days in the case of a month that is the end of one of the
first 3 fiscal quarters in a fiscal year and 90 days in the case of a month that
is the end of a fiscal year) after the end of each month during each of
Borrower's fiscal years,
(i) a company prepared consolidated
balance sheet, income statement, and a calendar quarter end statement of cash
flow covering Borrower's and its Subsidiaries' operations during such period,
(ii) a certificate signed by the chief
financial officer of Borrower to the effect that, to the best of his or her
knowledge or belief: (x) the representations and warranties of Borrower
contained in Section 5 of this Agreement and in the other Loan Documents are
true and correct in all material respects on and as of the date of such
certificate, as though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier date); and (y)
there does not exist any condition or event that constitutes a Default or Event
of Default (or, to the extent of any non-compliance, describing such
non-compliance as to which he or she may have knowledge and what action Borrower
has taken, is taking, or proposes to take with respect thereto), and
(iii) for each month that is the date on
which a financial covenant in Section 7.20 is to be tested, a Compliance
Certificate demonstrating, in reasonable detail, compliance at the end of such
period with the applicable financial covenants contained in Section 7.20;
(b) as soon as available, but in any event
within 90 days after the end of each of Borrower's fiscal years,
(i) financial statements of Borrower
and its Subsidiaries for each such fiscal year, audited by independent certified
public accountants reasonably acceptable to Lender and certified, without any
qualifications, by such accountants to have been prepared in accordance with
GAAP (such audited financial statements to include a balance sheet, income
statement, and statement of cash flow and, if prepared, such accountants'
management letter regarding internal accounting controls to the audit committee
of Borrower's board of directors), and
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(ii) a certificate of such accountants
addressed to Lender stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under Section 7.20;
(c) as soon as available, but in any event
within 30 days prior to the start of each of Borrower's fiscal years, copies of
Borrower's Projections, substantially similar in form to the form of the
Original Closing Date Business Plan and satisfactory in substance to Lender, in
its Permitted Discretion, for the forthcoming fiscal year, on a quarterly basis,
certified by the chief financial officer of Borrower as being Borrower's good
faith best estimate of the financial performance of Borrower during the period
covered thereby;
(d) if and when filed by Borrower,
(i) Form 10-Q quarterly reports, Form
10-K annual reports, and Form 8-K current reports,
(ii) any other filings made by Borrower
with the SEC,
(iii) copies of Borrower's federal income
tax returns, and any amendments thereto, filed with the Internal Revenue
Service, and
(iv) any other information that is
provided by Borrower to its shareholders generally;
(e) as soon as available, but in any event
within 45 days after the end of each fiscal quarter during each of Borrower's
fiscal years, a certificate signed by the chief financial officer of Borrower to
the effect that, to the best of his or her knowledge, the quarterly financial
statements delivered hereunder have been prepared in accordance with GAAP
(except for the lack of footnotes and being subject to year-end audit
adjustments) and fairly present in all material respects the financial condition
of Borrower and its Subsidiaries;
(f) if and when filed by Borrower and as
requested by Lender, satisfactory evidence of payment of all applicable excise
taxes (to the extent such taxes exceed $500,000 in the aggregate) in each
jurisdiction in which (i) Borrower is required to pay any such excise tax, (ii)
where Borrower's failure to pay any such applicable excise tax would result in a
Lien on the properties or assets of Borrower, or (iii) where Borrower's failure
to pay any such applicable excise tax reasonably could be expected to result in
a Material Adverse Change;
(g) as soon as Borrower has knowledge of any
event or condition that constitutes a Default or an Event of Default, notice
thereof and a statement of the curative action that Borrower proposes to take
with respect thereto; and
(h) upon the request of Lender, in its Permitted
Discretion, any other report relating to the financial condition of Borrower.
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In addition to the financial statements referred to above,
Borrower agrees to deliver financial statements prepared on both a consolidated
(including, without limitation, a calendar quarter end statement of cash flows)
and consolidating (excluding statement of cash flows) basis and agrees that no
Subsidiary of Borrower will have a fiscal year different from that of Borrower.
Borrower agrees that its independent certified public accountants are authorized
to communicate with Lender and to release to Lender whatever financial
information concerning Borrower Lender reasonably may request. Borrower waives
the right to assert a confidential relationship, if any, it may have with any
accounting firm or service bureau in connection with any reasonable information
requested by Lender pursuant to or in accordance with this Agreement, and agrees
that Lender may contact directly any such accounting firm or service bureau in
order to obtain such information. Borrower agrees that the financial statements
referred to in this Section will be prepared in a manner consistent with the
financial statements prepared by Borrower and delivered to Lender prior to the
Closing Date.
6.4 REQUIRED AVAILABILITY. Maintain the Required Availability at
all times.
6.5 RETURN. Cause returns and allowances, as between Borrower and
its Account Debtors, to be on the same basis and in accordance with the usual
customary practices or policies of Borrower, as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of Default
has occurred and is continuing, any Account Debtor returns any Inventory to
Borrower, Borrower promptly shall determine the reason for such return and, if
Borrower accepts such return, issue a credit memorandum in the appropriate
amount to such Account Debtor. If, at a time when an Event of Default has
occurred and is continuing, any Account Debtor returns any Inventory to
Borrower, Borrower promptly shall determine the reason for such return and, if
Lender consents (which consent shall not be unreasonably withheld), issue a
credit memorandum (with a copy to be sent to Lender) in the appropriate amount
to such Account Debtor.
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its
properties which are necessary or useful in the proper conduct to its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee
so as to prevent any material loss or forfeiture thereof or thereunder.
6.7 TAXES. Cause all assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or assessed
against Borrower or any of its assets to be paid in full, before delinquency or
before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Lien.
Borrower will make timely payment or deposit of all tax payments and withholding
taxes required of it by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and federal income
taxes, and will, upon request, furnish Lender with proof satisfactory to Lender
indicating that Borrower has made such payments or deposits, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Lien. Upon request by Lender, Borrower shall deliver satisfactory
evidence of payment of all applicable excise taxes in each jurisdiction in which
Borrower is required to pay any such excise tax, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Lien.
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6.8 INSURANCE.
(a) At Borrower's expense, maintain insurance
respecting its assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Borrower also shall
maintain business interruption, public liability, and product liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall be in such amounts and
with such insurance companies as are reasonably satisfactory to Lender. Borrower
shall deliver copies of all such policies to Lender with a satisfactory lender's
loss payable endorsement naming Lender as sole loss payee or additional insured,
as appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Lender in the event of cancellation of the policy for any reason whatsoever.
(b) Borrower shall give Lender prompt notice of
any loss covered by such insurance. Lender shall have the exclusive right to
adjust any losses payable under any such insurance policies in excess of
$250,000, without any liability to Borrower whatsoever in respect of such
adjustments. Any monies received as payment for any loss under any insurance
policy mentioned above (other than liability insurance policies) or as payment
of any award or compensation for condemnation or taking by eminent domain, shall
be paid over to Lender to be applied at the option of Lender either to the
prepayment of the Obligations or shall be disbursed to Borrower under staged
payment terms reasonably satisfactory to Lender for application to the cost of
repairs, replacements, or restorations. Any such repairs, replacements, or
restorations shall be effected with reasonable promptness and shall be of a
value at least equal to the value of the items of property destroyed prior to
such damage or destruction.
(c) Borrower will not take out separate
insurance concurrent in form or contributing in the event of loss with that
required to be maintained under this Section 6.8, unless Lender is included
thereon as named insured with the loss payable to Lender under a lender's loss
payable endorsement or its equivalent. Borrower immediately shall notify Lender
whenever such separate insurance is taken out, specifying the insurer thereunder
and full particulars as to the policies evidencing the same, and copies of such
policies promptly shall be provided to Lender.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory and
Equipment, in all material respects, only at the locations identified on
Schedule 5.5; provided, however, that Borrower may amend Schedule 5.5 so long as
such amendment occurs by written notice to Lender not less than 30 days prior to
the date on which Inventory or Equipment is moved to such new location, so long
as such new location is within the continental United States, and so long as, at
the time of such written notification, Borrower provides any financing
statements or fixture filings necessary to perfect and continue perfected the
Lender's Liens on such assets and also provides to Lender a Collateral Access
Agreement.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards
- 39 -
Act and the Americans With Disabilities Act, other than laws, rules,
regulations, and orders the non-compliance with which, individually or in the
aggregate, would not result in and reasonably could not be expected to result in
a Material Adverse Change.
6.11 LEASES. Pay when due (taking into account any applicable grace
periods) all rents and other amounts payable under any leases to which Borrower
is a party or by which Borrower's properties and assets are bound (provided that
the aggregate amount of such lease payment obligations exceeds $100,000), unless
such payments are the subject of a Permitted Protest.
6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrower's obtaining
financing from Lender under this Agreement. Borrower agrees and acknowledges
that payment of all such brokerage commissions or finders fees shall be the sole
responsibility of Borrower, and Borrower agrees to indemnify, defend, and hold
Lender harmless from and against any claim of any broker or finder arising out
of Borrower's obtaining financing from Lender under this Agreement.
6.13 EXISTENCE. Preserve and keep in full force and effect
Borrower's valid existence and good standing and any rights and franchises
material to Borrower's businesses.
6.14 ENVIRONMENTAL.
(a) Keep any property either owned or operated
by Borrower free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Lender documentation of such compliance which Lender
reasonably requests, (c) promptly notify Lender of any release of a Hazardous
Material in any reportable quantity from or onto property owned or operated by
Borrower and take any Remedial Actions required to ▇▇▇▇▇ said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly provide Lender with written notice within 10 days of the receipt of any
of the following: (i) notice that an Environmental Lien has been filed against
any of the real or personal property of Borrower, (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against Borrower, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.
6.15 DISCLOSURE UPDATES. Promptly and in no event later than 10
Business Days after obtaining knowledge thereof, (a) notify Lender if any
written information, exhibit, or report furnished to Lender contained any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.16 INTELLECTUAL PROPERTY RIGHTS.
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(a) Borrower agrees that, should it obtain an
ownership interest in any Intellectual Property Right which is not now a part of
the Collateral, (i) any such Intellectual Property Right shall automatically
become Collateral and (ii) with respect to any ownership interest in any
Intellectual Property Right that Borrower should obtain, it shall give prompt
written notice thereof to Lender in accordance with Section 12 hereof. Borrower
authorizes Lender to modify this Agreement by amending Schedule 5.16(a) (and
will cooperate reasonably with Lender in effecting any such amendment) to
include any Intellectual Property Right which becomes part of the Collateral
under this Section.
(b) With respect to material Borrower
Intellectual Property Rights (including, without limitation, Borrower's top ten
(10) Intellectual Property Rights measured by annual revenue generated therefrom
and all other Intellectual Property Rights which generate or are reasonably
expected to generate at least $2,000,000 in annual revenue), Borrower agrees,
subject to the last sentence of this subsection, to take all necessary steps,
including, without limitation, making all necessary payments and filings in
connection with registration, maintenance, and renewal of copyrights,
trademarks, and patents in the U.S. Copyright Office, the U.S. Patent and
Trademark Office, any other appropriate government agencies in foreign
jurisdictions or in any court, to maintain each such Borrower Intellectual
Property Right. Borrower agrees to take corresponding steps with respect to each
new or acquired material Intellectual Property Right (including, without
limitation, Borrower's top ten (10) Intellectual Property Rights measured by
annual revenue generated therefrom and all other Intellectual Property Rights
which generate or are reasonably expected to generate at least $2,000,000 in
annual revenue) to which it is now or later becomes entitled. Any expenses
incurred in connection with such activities shall be borne solely by Borrower.
Borrower shall not discontinue use of or otherwise abandon any Intellectual
Property Right without the written consent of Lender, unless Borrower shall have
previously determined that such use or the pursuit or maintenance of such
registration is no longer desirable in the conduct of Borrower's business and
that the loss thereof will not cause a Material Adverse Change, in which case,
Borrower will give notice of any such abandonment to Lender pursuant to the
terms of Section 12 hereof.
(c) Borrower will continue to take all actions
reasonably necessary to protect Borrower's Intellectual Property Rights,
including, without limitation, such steps as are set forth in Sections 5.16(a)
and (b) above. Borrower further agrees to give Lender prompt written notice in
accordance with Section 12 hereof if Borrower enters into any agreements after
the Closing Date pursuant to which it grants any right to a third party to use
or access the source code of any computer software programs or applications of
which Borrower is the owner or licensee; provided that Borrower shall not be
required to provide such notice with respect to source code escrow agreements on
more than a quarterly basis (unless an Event of Default has occurred, in which
case there shall be no such limit). Borrower authorizes Lender to modify this
Agreement by amending Schedule 5.16(b) (and will cooperate reasonably with
Lender in effecting any such amendment) to include any such additional license
grant(s).
(d) Regarding any item of the Borrower
Intellectual Property Rights, Borrower agrees to notify Lender promptly and in
writing if (i) it learns (x) that any item of the Intellectual Property Rights
contained on Schedule 5.16(a) may be determined to have become
- 41 -
abandoned or dedicated or (y) of any adverse determination or the institution of
any proceeding (including, without limitation, the institution of any proceeding
in the U.S. Copyright Office, U.S. Patent and Trademark Office and any other
appropriate government agencies in foreign jurisdictions, or any court) and (ii)
such event would cause a Material Adverse Change.
(e) In the event that Borrower becomes aware
that any item of the General Intangibles is infringed or misappropriated by a
third party, Borrower shall promptly notify Lender and shall take such actions
as Borrower or Lender deems appropriate under the circumstances to protect such
General Intangibles, including, without limitation, suing for infringement or
misappropriation and for an injunction against such infringement or
misappropriation, unless any such infringement or misappropriation would not
cause a Material Adverse Change. Any expense incurred in connection with such
activities shall be borne solely by Borrower.
(f) Borrower agrees that, should it obtain an
ownership interest in, or license of, material Copyrights (including, without
limitation, Borrower's top ten (10) Copyrights measured by annual revenue
generated therefrom and all other Copyrights which generate or are reasonably
expected to generate at least $2,000,000 in annual revenue) after the Original
Closing Date, it shall, promptly after such acquisition, file applications and
take any and all other actions reasonably necessary to register all such
Copyrights in good faith in accordance with the procedures and regulations of
the U.S. Copyright Office.
6.17 COLLATERAL ACCESS AGREEMENTS. Within 30 days after the
Original Closing Date, Borrower shall have delivered to Lender Collateral Access
Agreements with respect to the following locations: (1) Nimbus Corporate Center,
Building 15, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇; (2) ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇; and (3) ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇▇, ▇▇.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower will not and will not permit any of its Subsidiaries to do
any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and
the other Loan Documents, together with Indebtedness owed to Underlying Issuers
with respect to Underlying Letters of Credit,
(b) Indebtedness set forth on Schedule 5.20,
(c) Permitted Purchase Money Indebtedness, and
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(d) refinancings, renewals, or extensions of
Indebtedness permitted under clauses (b) and (c) of this Section 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings, renewals, or extensions do
not, in Lender's reasonable judgment, materially impair the prospects of
repayment of the Obligations by Borrower or materially impair Borrower's
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of, or interest rate with respect to, the
Indebtedness so refinanced, renewed, or extended, (iii) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are materially more burdensome or
restrictive to Borrower, and (iv) if the Indebtedness that is refinanced,
renewed, or extended was subordinated in right of payment to the Obligations,
then the terms and conditions of the refinancing, renewal, or extension
Indebtedness must include subordination terms and conditions that are at least
as favorable to Lender as those that were applicable to the refinanced, renewed,
or extended Indebtedness; and
(e) Indebtedness composing Permitted
Investments.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or
suffer any liquidation or dissolution).
(c) Convey, sell, lease, license, assign,
transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of all its assets.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of
Borrower's assets.
7.5 CHANGE NAME. Change Borrower's name, FEIN, corporate
structure, or identity, or add any new fictitious name; provided, however, that
Borrower may change its name or FEIN upon at least 30 days prior written notice
to Lender of such change and so long as, at the time of such written
notification, Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected the Lender's Liens.
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7.6 GUARANTEE. Guarantee or otherwise become in any way liable
with respect to the obligations of any third Person (other than with respect to
guaranteed obligations which, in the aggregate, do not exceed $500,000) except
by endorsement of instruments or items of payment for deposit to the account of
Borrower or which are transmitted or turned over to Lender.
7.7 NATURE OF BUSINESS. Make any material change in the principal
nature of its business.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing
permitted by Section 7.1(d), prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of Borrower, other than the Obligations in accordance
with this Agreement, and
(b) Except in connection with a refinancing
permitted by Section 7.1(d), directly or indirectly, amend, modify, alter,
increase, or change any of the material terms or conditions of any agreement,
instrument, document, indenture, or other writing evidencing or concerning
Indebtedness permitted under Sections 7.1(b) or (c).
7.9 [INTENTIONALLY OMITTED]
7.10 CONSIGNMENTS. Consign any Inventory or sell any Inventory on
▇▇▇▇ and hold, sale or return, sale on approval, or other conditional terms of
sale that would be material to Borrower's business, operations or financial
condition.
7.11 DISTRIBUTIONS. Make any distribution or declare or pay any
dividends (in cash or other property, other than common Stock) on, or purchase,
acquire, redeem, or retire any of Borrower's Stock, of any class, whether now or
hereafter outstanding; provided, however, the shareholders rights plan and stock
repurchase plan previously adopted by Borrower shall be permitted.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau (not including, for
this purpose, payroll, stock transfer, stock option and application service
providers) for the preparation or storage of Borrower's accounting records
without said accounting firm or service bureau agreeing to provide Lender
information regarding the Collateral or Borrower's financial condition.
7.13 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Borrower and its Subsidiaries shall not have Permitted Investments
(other than in the AC Accounts) in deposit accounts or Securities Accounts in
excess of $100,000 outstanding at any one time unless Borrower or its
Subsidiary, as applicable, and the applicable securities intermediary or bank
have entered into Securities Account Agreements governing such Permitted
Investments, as Lender shall determine in its
- 44 -
Permitted Discretion, to perfect (and further establish) the Lender's Liens in
such Permitted Investments.
7.14 TRANSACTIONS WITH AFFILIATES. Except for any transaction that
was entered into by Borrower prior to the Closing Date (as disclosed on Schedule
7.14), directly or indirectly enter into or permit to exist any transaction with
any Affiliate of Borrower except for transactions that are in the ordinary
course of Borrower's business, upon fair and reasonable terms, that are fully
disclosed to Lender, and that are no less favorable to Borrower than would be
obtained in an arm's length transaction with a non-Affiliate.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.16 [INTENTIONALLY OMITTED].
7.17 USE OF PROCEEDS
(a) Use the proceeds of the Term Loan A or any
Acquisition Line Advance for any purpose other than (i) on the Closing Date, to
pay transactional fees, costs, and expenses incurred in connection with this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and thereby, and (ii) thereafter, consistent with the terms and conditions
hereof, for its lawful and permitted purposes.
(b) Use the proceeds of the Acquisition Line
Advances for any purpose other than to finance a Permitted Acquisition and to
pay transactional fees, costs and expenses incurred in connection therewith.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without providing 30 days prior written notification thereof to Lender and so
long as, at the time of such written notification, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Lender's Liens and also provides to Lender a Collateral Access
Agreement with respect to such new location. The Inventory and Equipment (other
than old and used Inventory and Equipment that, as of the Closing Date, is
properly not recorded on Borrower's balance sheet in accordance with GAAP) shall
not at any time now or hereafter be stored with a bailee, warehouseman, or
similar party without Lender's prior written consent.
7.19 SECURITIES ACCOUNTS. Establish or maintain any Securities
Account, except the Securities Accounts established with respect to the stock
repurchase plan previously adopted by Borrower and approved by Lender, unless
Lender shall have received a Securities Account Agreement in respect of such
Securities Account. Borrower shall not transfer assets out of any Securities
Account; provided, however, that, so long as no Event of Default has occurred
and is continuing or would result therefrom, Borrower may use such assets (and
the proceeds thereof) to the extent not prohibited by this Agreement.
7.20 FINANCIAL COVENANTS.
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(a) Fail to maintain:
(i) MINIMUM EBITDA. EBITDA, measured on
a fiscal quarter-end basis, of not less than $15,000,000 for the applicable
twelve-month period ending on such date.
(ii) MINIMUM RECURRING SERVICE &
MAINTENANCE REVENUES. Recurring Service & Maintenance Revenues, measured on a
fiscal quarter-end basis, of not less than $63,370,000 for the applicable
twelve-month period ending on such date.
(b) Make:
(i) CAPITAL EXPENDITURES. Capital
expenditures in any fiscal year, commencing with the fiscal year ended December
31, 2003, in excess of $24,679,945; provided that such limitation shall be
increased for each fiscal year after the fiscal year ended December 31, 2003 by
an amount equal to the amount, if any, by which Borrower's EBITDA for each
12-month period (beginning with the 12-month period ended December 31, 2003)
exceeded the amount of Minimum EBITDA set forth in Section 7.20(a)(i) for the
corresponding period.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
8.1 If Borrower fails to pay when due and payable, or when
declared due and payable, all or any portion of the Obligations (whether of
principal, interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due
Lender, reimbursement of Lender Expenses, or other amounts constituting
Obligations);
8.2 If Borrower fails to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in this Agreement or in
any of the other Loan Documents;
8.3 If any material portion of the consolidated assets of Borrower
and its Subsidiaries is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by Borrower or any of
its Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against Borrower, or
any of its Subsidiaries, and any of the following events occur: (a) Borrower or
the Subsidiary consents to the institution of such Insolvency Proceeding against
it, (b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 45 calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, Lender shall be relieved of
its obligations to
- 46 -
extend credit hereunder, (d) an interim trustee is appointed to take possession
of all or any substantial portion of the properties or assets of, or to operate
all or any substantial portion of the business of, Borrower or any of its
Subsidiaries, or (e) an order for relief shall have been entered therein;
8.6 If Borrower or any of its Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record
with respect to any of the consolidated assets of Borrower and its Subsidiaries
by the United States, or any department, agency, or instrumentality thereof, or
by any state, county, municipal, or governmental agency, or if any taxes or
debts owing at any time hereafter to any one or more of such entities becomes a
Lien, whether ▇▇▇▇▇▇ or otherwise, upon any of the consolidated assets of
Borrower and its Subsidiaries and the same is not paid before such payment is
delinquent; provided that this Section 8.7 shall not apply to Liens which are
Permitted Liens;
8.8 If a judgment or other claim becomes a Lien or encumbrance
upon any material portion of the consolidated assets of Borrower and its
Subsidiaries;
8.9 If there is a default in any material agreement to which
Borrower or any of its Subsidiaries is a party and such default (a) occurs at
the final maturity of the obligations thereunder, or (b) results in a right by
the other party thereto, irrespective of whether exercised, to accelerate the
maturity of Borrower's or its Subsidiaries' obligations thereunder, to terminate
such agreement, or to refuse to renew such agreement pursuant to an automatic
renewal right therein; provided that the aggregate amount of all obligations in
respect of such agreement equals or exceeds $1,000,000 at such time;
8.10 If Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11 If any material misstatement or misrepresentation exists now
or hereafter in any warranty, representation, statement, or Record made to
Lender by Borrower, its Subsidiaries, or any officer, employee, agent, or
director of Borrower or any of its Subsidiaries;
8.12 If Borrower or any of its Subsidiaries shall cause, permit, or
suffer, directly or indirectly, any Change of Control;
8.13 If (a) this Agreement or any other Loan Document that purports
to create a Lien shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby and such failure or cessation would result in a Material Adverse Change
or (b) this Agreement or any other Loan Document that purports to create a Lien
shall, for any reason, fail or cease to create a valid and perfected and, except
to the extent
- 47 -
permitted by the terms hereof or thereof, first priority Lien on or security
interest in the Collateral covered hereby or thereby and, if such failure or
cessation would not result in a Material Adverse Change, such failure or
cessation continues for a period of five (5) days after the date on which such
failure or cessation occurs; or
8.14 Any provision of any Loan Document shall at any time for any
reason be declared by a court of competent jurisdiction to be null and void, or
the validity or enforceability thereof shall be contested by Borrower, or a
proceeding shall be commenced by Borrower, or by any Governmental Authority
having jurisdiction over Borrower, seeking to establish the invalidity or
unenforceability thereof, or Borrower shall deny that Borrower has any liability
or obligation purported to be created under any Loan Document.
9. LENDER'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, Lender (at its election but without notice
of its election and without demand) may do any one or more of the following, all
of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced
by this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) Cease advancing money or extending credit to
or for the benefit of Borrower under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrower and Lender;
(c) Terminate this Agreement and any of the
other Loan Documents as to any future liability or obligation of Lender, but
without affecting any of the Lender's Liens in the Collateral and without
affecting the Obligations;
(d) Settle or adjust disputes and claims
directly with Account Debtors for amounts and upon terms which Lender considers
advisable, and in such cases, Lender will credit Borrower's Loan Account with
only the net amounts received by Lender in payment of such disputed Accounts
after deducting all Lender Expenses incurred or expended in connection
therewith;
(e) Cause Borrower to hold all returned
Inventory in trust for Lender, segregate all returned Inventory from all other
assets of Borrower or in Borrower's possession and conspicuously label said
returned Inventory as the property of Lender;
(f) Without notice to or demand upon Borrower,
make such payments and do such acts as Lender considers necessary or reasonable
to protect its security interests in the Collateral. Borrower agrees to assemble
the Personal Property Collateral if Lender so requires, and to make the Personal
Property Collateral available to Lender at a place that Lender may designate
which is reasonably convenient to both parties. Borrower authorizes Lender to
enter the premises where the Personal Property Collateral is located, to take
and maintain possession of the Personal Property Collateral, or any part of it,
and to pay, purchase, contest, or
- 48 -
compromise any Lien that in Lender's determination appears to conflict with the
Lender's Liens and to pay all expenses incurred in connection therewith and to
charge Borrower's Loan Account therefor. With respect to any of Borrower's owned
or leased premises, Borrower hereby grants Lender a license to enter into
possession of such premises and to occupy the same, without charge, in order to
exercise any of Lender's rights or remedies provided herein, at law, in equity,
or otherwise;
(g) Without notice to Borrower (such notice
being expressly waived), and without constituting a retention of any collateral
in satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of Borrower held
by Lender (including any amounts received in the AC Accounts), or (ii)
Indebtedness at any time owing to or for the credit or the account of Borrower
held by Lender;
(h) Hold, as cash collateral, any and all
balances and deposits of Borrower held by Lender, and any amounts received in
the AC Accounts, to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell (in the manner
provided for herein) the Personal Property Collateral. Borrower hereby grants to
Lender a license or other right to use, without charge, Borrower's labels,
patents, copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Personal Property Collateral, in completing production of, advertising for sale,
and selling any Personal Property Collateral and Borrower's rights under all
licenses and all franchise agreements shall inure to Lender's benefit;
(j) Sell the Personal Property Collateral at
either a public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
Borrower's premises) as Lender determines is commercially reasonable. It is not
necessary that the Personal Property Collateral be present at any such sale;
(k) Lender shall give notice of the disposition
of the Personal Property Collateral as follows:
(i) Lender shall give Borrower a notice
in writing of the time and place of public sale, or, if the sale is a private
sale or some other disposition other than a public sale is to be made of the
Personal Property Collateral, then the time on or after which the private sale
or other disposition is to be made; and
(ii) The notice shall be personally
delivered or mailed, postage prepaid, to Borrower as provided in Section 12, at
least 10 days before the earliest time of disposition set forth in the notice;
no notice needs to be given prior to the disposition of any portion of the
Personal Property Collateral that is perishable or threatens to decline speedily
in value or that is of a type customarily sold on a recognized market;
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(l) Lender may credit bid and purchase at any
public sale; and
(m) Lender may seek the appointment of a
receiver or keeper to take possession of all or any portion of the Collateral or
to operate same and, to the maximum extent permitted by law, may seek the
appointment of such a receiver without the requirement of prior notice or a
hearing;
(n) Lender shall have all other rights and
remedies available at law or in equity or pursuant to any other Loan Document;
and
(o) Any deficiency that exists after disposition
of the Personal Property Collateral as provided above will be paid immediately
by Borrower. Any excess will be promptly returned, without interest and subject
to the rights of third Persons, by Lender to Borrower.
9.2 REMEDIES CUMULATIVE. The rights and remedies of Lender under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default shall be deemed a continuing waiver. No delay by Lender
shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
After the occurrence and continuance of a Default, if Borrower
fails to pay any monies (whether taxes, assessments, insurance premiums, or, in
the case of leased properties or assets, rents or other amounts payable under
such leases) due to third Persons, or fails to make any deposits or furnish any
required proof of payment or deposit, all as required under the terms of this
Agreement, then, Lender, in its sole discretion and without prior notice to
Borrower, may do any or all of the following: (a) make payment of the same or
any part thereof, (b) set up such reserves in Borrower's Loan Account as Lender
deems necessary to protect Lender from the exposure created by such failure, or
(c) in the case of the failure to comply with Section 6.8 hereof, obtain and
maintain insurance policies of the type described in Section 6.8 and take any
action with respect to such policies as Lender deems prudent. Any such amounts
paid by Lender shall constitute Lender Expenses and any such payments shall not
constitute an agreement by Lender to make similar payments in the future or a
waiver by Lender of any Event of Default under this Agreement. Lender need not
inquire as to, or contest the validity of, any such expense, tax, or Lien and
the receipt of the usual official notice for the payment thereof shall be
conclusive evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by
Lender on which Borrower may in any way be liable.
- 50 -
11.2 LENDER'S LIABILITY FOR COLLATERAL. Borrower hereby agrees
that: (a) so long as Lender complies with its obligations, if any, under the
Code, Lender shall not in any way or manner be liable or responsible for: (i)
the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or
arising in any manner or fashion from any cause, (iii) any diminution in the
value thereof, or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person, and (b) all risk of loss, damage, or
destruction of the Collateral shall be borne by Borrower.
11.3 INDEMNIFICATION. Borrower shall pay, indemnify, defend, and
hold the Lender-Related Persons, each Participant, and each of their respective
officers, directors, employees, agents, and attorneys-in-fact (each, an
"Indemnified Person") harmless (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution, delivery, enforcement,
performance, or administration of this Agreement, any of the other Loan
Documents, or the transactions contemplated hereby or thereby, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, Borrower shall have no obligation to
any Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any payment to any
other Indemnified Person with respect to an Indemnified Liability as to which
Borrower was required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrower with respect thereto. WITHOUT LIMITATION,
THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES. Unless otherwise provided in this Agreement, all notices or
demands by Borrower or Lender to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Borrower or Lender, as applicable, may designate to
each other in accordance herewith), or telefacsimile to Borrower or Lender, as
the case may be, at its address set forth below:
If to Borrower: VITALWORKS INC.
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▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, CFO
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
with copies to: CADWALADER, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
If to Lender: ▇▇▇▇▇ FARGO FOOTHILL, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Business Finance Division Manager
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇ FARGO FOOTHILL, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Business Finance Division Manager
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
Lender and Borrower may change the address at which they are
to receive notices hereunder, by notice in writing in the foregoing manner given
to the other party. All notices or demands sent in accordance with this Section
12, other than notices by Lender in connection with enforcement rights against
the Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Borrower acknowledges and agrees that notices sent by
Lender in connection with the exercise of enforcement rights against Collateral
under the provisions of the Code shall be deemed sent when deposited in the mail
or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
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13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN
DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT LENDER'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE LENDER
ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. BORROWER AND LENDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW,
ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 13(b).
(c) BORROWER AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND LENDER REPRESENT THAT EACH
HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Lender may assign and delegate to one or
more assignees (each an "Assignee") all, or any ratable part of all, of the
Obligations and the other rights and obligations of Lender hereunder and under
the other Loan Documents in increments of not less than $5,000,000 per assignee;
provided, however, that Borrower may continue to deal solely and directly with
Lender in connection with the interest so assigned to an Assignee until (i)
written
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notice of such assignment, together with payment instructions, addresses, and
related information with respect to the Assignee, have been given to Borrower by
Lender and the Assignee, and (ii) Lender and its Assignee have delivered to
Borrower an appropriate assignment and acceptance agreement.
(b) From and after the date that Lender provides
Borrower with such written notice and executed assignment and acceptance
agreement, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such assignment and acceptance agreement, shall have the assigned and
delegated rights and obligations of Lender under the Loan Documents, and (ii)
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned and delegated by it pursuant to such
assignment and acceptance agreement, relinquish its rights (except with respect
to Section 11.3 hereof) and be released from its obligations under this
Agreement (and in the case of an assignment and acceptance covering all or the
remaining portion of Lender's rights and obligations under this Agreement and
the other Loan Documents, Lender shall cease to be a party hereto and thereto),
and such assignment shall affect a novation between Borrower and the Assignee.
(c) Immediately upon Borrower's receipt of such
fully executed assignment and acceptance agreement, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the rights and
duties of Lender arising therefrom.
(d) Lender may at any time sell to one or more
commercial banks, financial institutions, or other Persons not Affiliates of
such Lender (a "Participant") participating interests in the Obligations and the
other rights and interests of Lender hereunder and under the other Loan
Documents; provided, however, that (i) Lender shall remain the "Lender" for all
purposes of this Agreement and the other Loan Documents and the Participant
receiving the participating interest in the Obligations and the other rights and
interests of Lender shall not constitute a "Lender" hereunder or under the other
Loan Documents and Lender's obligations under this Agreement shall remain
unchanged, (ii) Lender shall remain solely responsible for the performance of
such obligations, (iii) Borrower and Lender shall continue to deal solely and
directly with each other in connection with Lender's rights and obligations
under this Agreement and the other Loan Documents, (iv) Lender shall not
transfer or grant any participating interest under which the Participant has the
right to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, except to the extent such amendment
to, or consent or waiver with respect to this Agreement or of any other Loan
Document would (A) extend the final maturity date of the Obligations hereunder
in which such Participant is participating, (B) reduce the interest rate
applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or a material portion of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through Lender, or (E) change the
amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Borrower hereunder shall be
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determined as if Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as
Lender under this Agreement. The rights of any Participant only shall be
derivative through Lender and no Participant shall have any rights under this
Agreement or the other Loan Documents or any direct rights as to Borrower, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by Lender.
(e) In connection with any such assignment or
participation or proposed assignment or participation, a Lender may disclose all
documents and information which it now or hereafter may have relating to
Borrower or Borrower's business.
(f) Any other provision in this Agreement
notwithstanding, Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Bank or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of each of the parties; provided,
however, that Borrower may not assign this Agreement or any rights or duties
hereunder without Lender's prior written consent and any prohibited assignment
shall be absolutely void ab initio. No consent to assignment by Lender shall
release Borrower from its Obligations. Lender may assign this Agreement and the
other Loan Documents and its rights and duties hereunder and thereunder pursuant
to Section 14.1 hereof and, except as expressly required pursuant to Section
14.1 hereof, no consent or approval by Borrower is required in connection with
any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by Borrower therefrom, shall be effective unless the
same shall be in writing and signed by Lender and Borrower and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
15.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Lender in exercising the same, will operate as a waiver
thereof. No waiver by Lender will be effective unless it is in writing, and then
only to the extent specifically stated. No waiver by Lender on any occasion
shall affect or diminish Lender's rights thereafter to require strict
performance by Borrower of any provision of this Agreement. Lender's rights
under this Agreement and the
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other Loan Documents will be cumulative and not exclusive of any other right or
remedy that Lender may have.
16. GENERAL PROVISIONS.
16.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrower and Lender.
16.2 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
16.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against Lender or Borrower, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.
16.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
16.5 WITHHOLDING TAXES. All payments made by Borrower hereunder or
under any note will be made without setoff, counterclaim, or other defense,
except as required by applicable law other than for Taxes (as defined below).
All such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of Lender, or (ii) to the extent
that such tax results from a change in the circumstances of Lender, including a
change in the residence, place of organization, or principal place of business
of Lender, or a change in the branch or lending office of Lender participating
in the transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, Borrower agrees to pay the full
amount of such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this Section 16.5 after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; provided, however, that Borrower shall not be required to
increase any such amounts payable to Lender if the increase in such amount
payable results from Lender's own willful misconduct or gross negligence.
Borrower will furnish to Lender as promptly as possible after the date the
payment of any Taxes is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by Borrower.
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16.6 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing signed by Lender and Borrower.
16.7 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
16.8 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by Borrower or the transfer to Lender of any property
should for any reason subsequently be declared to be void or voidable under any
state or federal law relating to creditors' rights, including provisions of the
Bankruptcy Code relating to fraudulent conveyances, preferences, or other
voidable or recoverable payments of money or transfers of property
(collectively, a "Voidable Transfer"), and if Lender is required to repay or
restore, in whole or in part, any such Voidable Transfer, or elects to do so
upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Lender is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of Lender
related thereto, the liability of Borrower automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.
16.9 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
VITALWORKS INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------
Title: Vice President and General Counsel
▇▇▇▇▇ FARGO FOOTHILL, INC.
a California corporation
(formerly known as Foothill Capital Corporation)
By: /s/ Authorized Signatory
------------------------
Title:
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