EXHIBIT 10.17
STERLING COMMERCE, INC.
REVOLVING CREDIT AND TERM LOAN AGREEMENT
DATED AS OF OCTOBER 1, 1996
AMONG
STERLING COMMERCE, INC.,
AND
THE FIRST NATIONAL BANK OF BOSTON,
AS AGENT,
------
AND
THE BANKS
LISTED ON SCHEDULE 1.1 HERETO
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STERLING COMMERCE, INC.
REVOLVING CREDIT AND TERM LOAN AGREEMENT
TABLE OF CONTENTS
Section Page
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SECTION 1. DEFINITIONS AND RULES OF
INTERPRETATION.............................................. 1
1.1. Definitions................................................. 1
1.2. Accounting Terms and Determinations......................... 14
1.3. Rules of Interpretation..................................... 14
SECTION 2. THE CREDIT.................................................. 15
2.1. Loans....................................................... 15
2.2. Reduction of Total Commitment............................... 15
2.3. The Notes................................................... 16
2.4. Interest.................................................... 16
2.5. Interest on Overdue Amounts................................. 17
2.6. Interest Rate Elections; Requests
for Loans.................................................. 17
2.7. Conversion Options.......................................... 17
2.8. Funds for Loans............................................. 18
2.9. Maturity of the Loans,
Repayment in Installments.................................. 19
2.10. Mandatory Repayments........................................ 20
2.11. Optional Prepayment of Principal............................ 20
2.12. Commitment Fee.............................................. 20
2.13. Agent's Fee................................................. 21
2.14. Closing Fee................................................. 21
SECTION 2A. LETTERS OF CREDIT......................................... 21
2A.1. Letter of Credit Commitments................................ 21
2A.2. Reimbursement Obligation of the Company..................... 22
2A.3. Letter of Credit Payments................................... 23
2A.4. Obligations Absolute........................................ 24
2A.5. Reliance By Issuer.......................................... 24
2A.6. Letter of Credit Fee........................................ 25
SECTION 3. CERTAIN GENERAL PROVISIONS.................................. 25
3.1. Funds for Payments......................................... 25
3.2. Computations................................................ 26
3.3. Additional Costs, Etc....................................... 26
ii
3.4. Indemnification for Losses.................................. 27
3.5. Capital Adequacy............................................ 28
3.6. Bank Certificate............................................ 29
3.7. Inability to Determine Eurodollar Rate...................... 29
3.8 Illegality.................................................. 30
SECTION 4. GUARANTY.................................................... 30
SECTION 5. REPRESENTATIONS AND WARRANTIES.............................. 30
5.1. Corporate Existence......................................... 30
5.2. Subsidiaries; Shares Owned By The Commerce Companies........ 31
5.3. Corporate Authority, Etc.................................... 31
5.4. Binding Effect of Documents, Etc............................ 32
5.5. No Defaults or Events of Default............................ 32
5.6. Chief Executive Offices; Mailing Addresses.................. 33
5.7. Financial Statements and Projections........................ 33
5.8. No Material Changes, Etc.................................... 33
5.9. Mortgages and Liens......................................... 34
5.10. Indebtedness................................................ 34
5.11. Litigation.................................................. 34
5.12. No Default.................................................. 34
5.13. Taxes....................................................... 35
5.14. True Copies of Charter and Other Documents.................. 35
5.15. Employee Benefit Plans...................................... 36
5.16. Other Representations....................................... 37
5.17. Disclosure.................................................. 37
5.18. Holding Company and Investment Company Acts................. 37
5.19. Regulations U and X......................................... 37
5.20. Franchises, Patents, Copyrights, Etc........................ 38
5.21 Non-Guarantor Subsidiaries.................................. 38
5.22. Environmental Compliance.................................... 38
5.23. Solvency.................................................... 39
SECTION 6. CONDITIONS TO THE FIRST LENDING............................. 39
6.1. Loan Documents, Etc......................................... 39
6.2. Legality of Transactions, Etc............................... 40
6.3. Representations and Warranties.............................. 40
6.4. Performance, Etc............................................ 40
6.5. Certified Copies of Charter Documents....................... 40
6.6. Proof of Corporate Action................................... 40
6.7. Incumbency Certificate...................................... 41
6.8. Proceedings and Documents................................... 41
6.9. Legal Opinions.............................................. 41
6.10. UCC Search Results.......................................... 41
6.11. Completion of Spin-Off...................................... 41
6.12. Insurance Certificates...................................... 41
6.13. Payment of Fees............................................. 42
iii
SECTION 7. CONDITIONS TO SUBSEQUENT LOANS.............................. 42
7.1. Legality of Transactions.................................... 42
7.2. Representations and Warranties
No Default or Event of Default............................. 42
7.3. Performance, Etc............................................ 43
7.4. Proceedings and Documents................................... 43
7.5. Continued Compliance with Certain Regulations............... 43
7.6. Governmental Regulation..................................... 43
SECTION 8. AFFIRMATIVE COVENANTS OF THE COMPANY........................ 43
8.1 Punctual Payment............................................ 43
8.2. Legal Existence, Etc........................................ 44
8.3. Use of Loan Proceeds........................................ 44
8.4. Financial Statements........................................ 44
8.5. Notice of Litigation and Judgment and Environmental Events.. 45
8.6. Notice of Default........................................... 46
8.7. Books and Records........................................... 46
8.8. Insurance................................................... 46
8.9. Taxes....................................................... 47
8.10. Conduct of Business......................................... 47
8.11. Compliance with Law, Contracts, Licenses and Permits........ 48
8.12. Access to Properties and Books; Commercial
Finance Examinations; Confidentiality..................... 48
8.13. Allowances.................................................. 49
8.14. Change of Corporate Name; Maintenance of Office............. 50
8.15. Employee Benefit Plan....................................... 50
8.16. Corporate Existence; Maintenance of Properties.............. 50
8.17. Activation of Non-Guarantor Subsidiaries.................... 51
8.18. Deactivation of Commerce Subsidiaries....................... 52
8.19. New Subsidiaries............................................ 52
8.20. Further Assurances.......................................... 52
SECTION 9. NEGATIVE COVENANTS OF THE COMPANY........................... 53
9.1. Indebtedness................................................ 53
9.2. Security Interests and Liens................................ 55
9.3. Restrictions on Investments................................. 56
9.4. Merger and Consolidation.................................... 56
9.5. Acquisitions................................................ 56
9.6. Capital Expenditures........................................ 58
9.7. Asset Dispositions.......................................... 58
9.8. Change of Location.......................................... 59
9.9. Employee Benefit Plans...................................... 59
9.10. Additional Shares........................................... 60
9.11. Negative Pledges............................................ 61
9.12. Compliance with Environmental Laws.......................... 61
iv
9.13 Distributions............................................... 61
SECTION 10. FINANCIAL COVENANTS......................................... 61
10.1. Profitability............................................... 62
10.2. Operating Cash Flow to Interest Charges..................... 62
10.3. Current Ratio............................................... 62
10.4. Consolidated Tangible Net Worth............................. 62
10.5. Liabilities to Net Worth Ratio.............................. 62
10.6. Total Debt To Operating Cash Flow Ratio..................... 62
SECTION 11. EVENTS OF DEFAULT; ACCELERATION............................. 62
SECTION 12. SETOFF...................................................... 66
SECTION 13. THE AGENT................................................... 67
13.1. Authorization............................................... 67
13.2. Employees and Agents........................................ 67
13.3. No Liability................................................ 67
13.4. No Representations.......................................... 68
13.5. Payments.................................................... 68
13.6. Holders of Notes............................................ 69
13.7. Indemnity................................................... 69
13.8. Agent As Bank............................................... 69
13.9. Resignation................................................. 69
13.10. Notification of Defaults and Events of Default.............. 70
SECTION 14. EXPENSES.................................................... 70
SECTION 15. INDEMNIFICATION............................................. 71
SECTION 16. SURVIVAL OF COVENANTS, ETC.................................. 71
SECTION 17. ASSIGNMENT AND PARTICIPATION................................ 72
17.1. Conditions to Assignment by Banks........................... 72
17.2. Certain Representations and Warranties;
Limitations; Covenants..................................... 72
17.3. Register.................................................... 73
17.4. New Note.................................................... 73
17.5. Participations.............................................. 74
17.6. Disclosure.................................................. 74
17.7. Assignee or Participant Affiliated with the
Commerce Companies......................................... 74
17.8. Miscellaneous Assignment Provisions......................... 75
17.9. Assignment by the Company................................... 75
v
SECTION 18. NOTICES, ETC....................... 75
SECTION 19. GOVERNING LAW...................... 76
SECTION 20. HEADINGS........................... 76
SECTION 21. COUNTERPARTS....................... 76
SECTION 22. ENTIRE AGREEMENT, ETC.............. 77
SECTION 23. CONSENTS, AMENDMENTS, WAIVERS, ETC. 77
SECTION 24. USURY PROVISION.................... 77
SECTION 25. WAIVER OF JURY TRIAL............... 78
SECTION 26. SEVERABILITY....................... 79
SECTION 27. DELIVERY IN MASSACHUSETTS.......... 78
vi
LIST OF SCHEDULES AND EXHIBITS
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SCHEDULES
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SCHEDULE 1.1 - Banks
SCHEDULE 1.2 - Commerce Accounts Receivable Agreements
SCHEDULE 1.3 - Commerce Accounts Receivable Guaranties
SCHEDULE 1.4 - Commerce Subsidiaries
SCHEDULE 1.5 - Non-Guarantor Subsidiaries
SCHEDULE 5.2 - Subsidiaries; Shares owned by the Commerce
Companies
SCHEDULE 5.6 - Chief Executive Offices and Mailing Addresses
of the Company and each of the Commerce
Subsidiaries
SCHEDULE 5.9 - Locations of Commerce Companies
SCHEDULE 5.11 - Litigation
SCHEDULE 5.12 - Defaults
SCHEDULE 5.13 - Taxes
SCHEDULE 5.20 - Intellectual Property
SCHEDULE 5.22 - Environmental Matters
SCHEDULE 8.22 - Post-Closing UCC Search Jurisdictions
SCHEDULE 9.1 - Capitalized Leases; Indebtedness
SCHEDULE 9.2(a) - Existing Liens
EXHIBITS
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EXHIBIT A - Note
EXHIBIT B - Loan Request
EXHIBIT C - Opinion of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
EXHIBIT D - Compliance Certificate
EXHIBIT E - Assignment and Acceptance
EXHIBIT F - Guaranty
REVOLVING CREDIT AND TERM LOAN AGREEMENT
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This REVOLVING CREDIT AND TERM LOAN AGREEMENT is made as of the 30th day
of September, 1996, by and among STERLING COMMERCE, INC., a Delaware corporation
(the "Company"), THE FIRST NATIONAL BANK OF BOSTON, a national banking
association ("FNBB) and the other lending institutions listed on Schedule 1.1
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hereto, and THE FIRST NATIONAL BANK OF BOSTON, as agent for itself and such
other lending institutions (the "Agent").
(S)1. DEFINITIONS AND RULES OF INTERPRETATION.
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(S)1.1. DEFINITIONS. The following terms shall have the meanings set
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forth in this (S)1.1 or elsewhere in the provisions of this Agreement referred
to below:
Accounts Receivable. All rights of the Company and its Subsidiaries to
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payment for goods sold, leased or otherwise marketed in the ordinary course of
business and all rights of the Company and its Subsidiaries to payment for
services rendered in the ordinary course of business and all sums of money or
other proceeds due or to become due thereon pursuant to transactions with
Persons, recorded on books of account in accordance with generally accepted
accounting principles, excluding, however, from the foregoing definition of
Accounts Receivable, all intercompany accounts receivable and deducting from the
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foregoing definition of Accounts Receivable the aggregate amount of all
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allowances therefor on the books of the Company and its Subsidiaries in
accordance with generally accepted accounting principles.
Affiliate. Any Person that would be considered to be an affiliate
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Company under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the date hereof, if the Company were
issuing securities.
Agent. The First National Bank of Boston, acting as agent for the Banks.
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Agent's Fee. See (S)2.13.
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Agent's Special Counsel. ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP of Boston,
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Massachusetts, or such other counsel as may be approved by the Agent.
Agreement. This Revolving Credit and Term Loan Agreement, including the
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Exhibits and Schedules hereto.
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Assignment and Acceptance. See (S)17.1.
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Authorized Officer. Any corporate officer of the Company.
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Balance Sheet Date. September 30, 1995, as specified in the Company's
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pro forma balance sheet set forth in the S-1 Registration Statement of the
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Company filed with the Securities and Exchange Commission and originally dated
December 20, 1995.
Banks. FNBB and the other lending institutions listed on Schedule 1.1
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hereto and any other Person who becomes an assignee of any rights and
obligations of a Bank pursuant to (S)17.
Base Rate. The greater of (i) the annual rate of interest announced from
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time to time by FNBB at its head office in Boston, Massachusetts as its "base
rate" (computed on the basis of a year of 360 days) and (ii) the annual rate of
interest equal to the sum of (A) the Federal Funds Effective Rate for overnight
funds in effect from time to time plus (B) one-half percent (1/2%). For the
purposes of this definition, "Federal Funds Effective Rate" shall mean for any
day, the rate per annum equal to the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York and reported in The Wall Street Journal or other publication of
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national circulation selected by the Agent, or, if such rate is not so published
and reported for any day that is a Business Day, the average of the quotations
for such day on such transactions received by the Agent from three funds brokers
of recognized standing selected by the Agent.
Base Rate Loan(s). Loans bearing interest calculated by reference to the
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Base Rate.
Business Day. Any day on which commercial banking institutions in
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Boston, Massachusetts and Dallas, Texas are open for the transaction of banking
business and, when dealing in the Eurodollar Interbank Market as contemplated
hereunder, also a day which is a Eurodollar Business Day.
Capital Assets. Fixed assets, tangible (such as land, building,
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fixtures, machinery and equipment) and intangible (such as intangible assets
included in Capitalized Computer Software Costs and marketing rights), provided
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that Capital Assets shall not include goodwill, non-compete agreements or
customer base lists; and provided further that Capital Assets shall not include
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any item customarily charged directly to expense or depreciated over a useful
life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or indebtedness incurred by the
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Company or any of its Subsidiaries in connection with the purchase or lease by
the Company or such Subsidiary of Capital Assets that would be required to be
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capitalized and shown on the balance sheet of such Person in accordance with
generally accepted accounting principles; provided, however, that amounts paid
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or indebtedness incurred by the Company or any of its Subsidiaries in connection
with the purchase or lease by the Company or such Subsidiary of Capital Assets
pursuant to contracts or agreements with the United States government or any
agency thereof shall not be included in the foregoing definition of Capital
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Expenditures for so long as such amounts paid or indebtedness incurred is
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promptly reimbursed by the United States government or the applicable agency
thereof to the Company or such Subsidiary.
Capitalized Computer Software Costs. For any fiscal period of the
-----------------------------------
Company, the production costs for the development of computer software to be
sold, leased or otherwise marketed which have been capitalized in accordance
with generally accepted accounting principles and which otherwise would have
been an expense in determining Consolidated Earnings Before Interest and Taxes.
Closing Date. The day on which all conditions set forth in (S)(S)6 and 7
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hereof have been satisfied and any Loans may be made or any Letter of Credit may
be issued hereunder.
Code. The Internal Revenue Code of 1986, as amended and in effect from
----
time to time.
Commerce Accounts Receivable. Amounts receivable for products licensed
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or leased, or for product support and services provided, by any of the Commerce
Companies.
Commerce Accounts Receivable Agreement Party(ies). Those entities (other
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than any of the Commerce Companies) which are party to the Commerce Accounts
Receivable Agreements.
Commerce Accounts Receivable Agreements. Those agreements set forth on
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Schedule 1.2 hereto, together with any agreement between any Commerce Subsidiary
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and another entity pursuant to which such entity agrees to purchase Commerce
Accounts Receivable of such Commerce Subsidiary.
Commerce Accounts Receivable Guaranties. The guaranty agreements issued
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in connection with the Commerce Accounts Receivable Agreements and set forth on
Schedule 1.3 hereto, together with any guaranty issued by the Company in favor
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of a Commerce Accounts Receivable Agreement Party pursuant to which the Company
guaranties the obligations of any of the Commerce Subsidiaries under any of the
Commerce Receivable Agreements.
Commerce Companies. Collectively, the Company, the Commerce Subsidiaries
------------------
and the Non-Guarantor Subsidiaries.
Commerce Subsidiaries. Collectively, those Subsidiaries of the Company
---------------------
or any of the Company's Subsidiaries listed on Schedule 1.4 hereto, and any
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other
-4-
Subsidiary of the Company or any of its Subsidiaries which (i) is acquired or
created subsequent to the date hereof, (ii) is organized under the laws of the
District of Columbia or of any state of the United States, (iii) has its
principal place of business in the United States, (iv) does not do business
exclusively outside the United States; and (v) is a party to and guarantor under
the Guaranty.
Commitment. With respect to each Bank, that amount equal to the product
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of (i) the Total Commitment multiplied by (ii) such Bank's Commitment
Percentage, in each case as the same may be in effect from time to time; or if
such Commitment is terminated pursuant to the provisions hereof, zero.
Commitment Fee. See (S)2.12.
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Commitment Percentage. With respect to each Bank, the percentage
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referred to on Schedule 1.1 hereto as such Bank's percentage of the aggregate
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Commitments of the Banks to make Loans to the Company and to participate in the
issuance, extension and renewal of Letters of Credit for the account of the
Company and the Commerce Subsidiaries.
Company. Sterling Commerce, Inc., a Delaware corporation.
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Compliance Certificate. See (S)8.4(c).
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Consolidated or consolidated. With reference to any term defined herein,
------------ -- ------------
shall mean that term as applied to the financial statements of the Company and
all of its Subsidiaries, consolidated in accordance with generally accepted
accounting principles.
Consolidated Current Assets. All assets of the Company and its
---------------------------
Subsidiaries on a consolidated basis that, in accordance with generally accepted
accounting principles, are properly classified as current assets, provided that
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(a) notes and accounts receivable shall be included (i) only if good and
collectible as determined by the Company in accordance with established practice
consistently applied and, (ii) with respect to such notes, only if payable on
demand or within one (1) year from the date as of which Consolidated Current
Assets are to be determined and if not directly or indirectly renewable or
extendible at the option of the debtors, by their terms, or by the terms of any
instrument or agreement relating thereto, beyond such year, and (iii) with
respect to such accounts receivable, only if payable within one (1) year after
the date of shipment of goods or other transaction out of which any such
accounts receivable arose and only if not past due more than ninety (90) days;
and such notes and accounts receivable shall be taken at their face value less
reserves determined to be sufficient in accordance with generally accepted
accounting principles; and (b) inventory shall be included only if and to the
extent that the same shall consist of saleable finished goods ready and
available for shipment to purchasers thereof.
-5-
Consolidated Current Liabilities. All liabilities of the Company and its
------------ ------- -----------
Subsidiaries on a consolidated basis which may properly be classified as current
liabilities in accordance with generally accepted accounting principles.
Consolidated Earnings Before Interest and Taxes. For any particular
------------ -------- ------ -------- --- -----
fiscal period, the consolidated income (or loss) of the Company and its
Subsidiaries before restructuring charges, extraordinary items and other non-
operating acquisition-related charges, interest expense and income taxes,
determined in accordance with generally accepted accounting principles.
Consolidated Net Income. With respect to any particular fiscal period,
------------ --- ------
the consolidated net income (or net loss) of the Company and its Subsidiaries
for such period, determined in accordance with generally accepted accounting
principles.
Consolidated Net Worth. The excess of Consolidated Total Assets of the
------------ --- -----
Company and its Subsidiaries over Consolidated Total Liabilities of the Company
and its Subsidiaries, in each case determined in accordance with generally
accepted accounting principles.
Consolidated Operating Income. Consolidated Net Income before income
------------ --------- ------
taxes, extraordinary items of gain or loss, the cumulative effect of a change in
generally accepted accounting principles and the effect of discontinued
operations, determined in accordance with generally accepted accounting
principles.
Consolidated Tangible Net Worth. The excess of Consolidated Total Assets
-------------------------------
of the Company and its Subsidiaries over Consolidated Total Liabilities of the
Company and its Subsidiaries, in each case determined in accordance with
generally accepted accounting principles, and less the sum of:
(a) The total book value of all assets of the Company and its
Subsidiaries properly classified as intangible assets under generally accepted
accounting principles, other than intangible assets included in Capitalized
Computer Software Costs, but otherwise including such items as good will, the
purchase price of acquired assets in excess of the fair market value thereof,
trademarks, trade names, service marks, brand names, copyrights, patents and
licenses, and rights with respect to the foregoing; plus
----
(b) all amounts representing any write-ups in the book value of any
assets of the Company or its Subsidiaries resulting from a revaluation thereof
subsequent to the Balance Sheet Date; plus
----
(c) to the extent otherwise includable in the computation of Consolidated
Tangible Net Worth, any stock subscriptions receivable.
Consolidated Total Assets. The consolidated assets of the Company and
------------ ----- ------
its Subsidiaries, as determined in accordance with generally accepted accounting
principles.
-6-
Consolidated Total Liabilities. The consolidated liabilities of the
------------ ----- -----------
Company and its Subsidiaries, determined in accordance with generally accepted
accounting principles.
Conversion Date. October 1, 1998.
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Conversion Request. A notice given by the Company to the Agent of the
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Company's election to convert or continue a Loan in accordance with (S)2.7.
Default. Any event which, but for the giving of notice or the lapse of
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time, or both, would constitute an Event of Default.
Distribution. The declaration or payment of any dividend on or in
------------
respect of any shares of any class of capital stock of any Person, other than
dividends payable solely in shares of common stock of such Person; or the
repurchase, redemption, or other retirement of any class of capital stock of any
Person, directly or indirectly through a Subsidiary or otherwise; the return of
capital by any Person to its shareholders as such; or any other distribution on
or in respect of any shares of any class of capital stock of any Person.
Dollar or $. Dollars in lawful currency of the United States of America.
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Drawdown Date. The date on which any Loan is made or is to be made or
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any Letter of Credit is issued, extended or renewed or is to be issued, extended
or renewed and the date on which any Loan is converted or continued in
accordance with (S)2.7.
Eligible Assignee. Any of (a) a commercial bank or finance company
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organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (b) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, determined in accordance with generally
accepted accounting principles; (c) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, provided that such
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bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (d) the central
bank of any country which is a member of the OECD; and (e) if, but only if, any
Event of Default has occurred and is continuing, any other bank, insurance
company, commercial finance company or other financial institution or other
Person approved by the Agent, such approval not to be unreasonably withheld.
Employee Benefit Plan. Any employee benefit plan within the meaning of
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(S)3(3) of ERISA maintained or contributed to by the Company or any ERISA
Affiliate, other than a Multiemployer Plan.
-7-
Environmental Laws. The Resource Conservation and Recovery Act, the
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Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Superfund Amendments and Reauthorization Act of 1986, the Federal
Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or
any state or local statute, regulation, ordinance, order or decree relating to
health, safety or the environment.
EPA. The United States Environmental Protection Agency.
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ERISA. The Employee Retirement Income Security Act of 1974.
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ERISA Affiliate. Any Person which is treated as a single employer with
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the Company under (S)414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
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Pension Plan within the meaning of (S)4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar Rate
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Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any Business Day on which commercial banks are
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open for international business (including dealings in dollar deposits) in
London or such other Eurodollar Interbank Market as may be selected by the Agent
in its sole discretion acting in good faith.
Eurodollar Interbank Market. Any lawful recognized market in which
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deposits of United States dollars are offered by international banking units of
United States banking institutions and by foreign banking institutions to each
other, and where the eurodollar and foreign currency and exchange operations of
the Agent are customarily conducted.
Eurodollar Lending Office. Initially, the office of each Bank designated
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as such in Schedule 1.1 hereto; thereafter, such other office of such Bank, if
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any, that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
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Rate Loan, the rate of interest equal to (i) the rate per annum (rounded upwards
to the nearest 1/100 of one percent) at which FNBB's Eurodollar Lending Office
is offered Dollar deposits two (2) Eurodollar Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market where the
eurodollar and
-8-
foreign currency and exchange operations of such Eurodollar Lending Office are
customarily conducted, for delivery on the first day of such Interest Period for
the number of days comprised therein and in an amount comparable to the amount
of the Eurodollar Rate Loan to which such Interest Period applies, divided by
(ii) a number equal to 1.00 minus the Eurocurrency Reserve Rate, if applicable.
Eurodollar Rate Loan(s). Loans bearing interest calculated by reference
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to the Eurodollar Rate.
Event of Default. See (S)11.
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Final Maturity. October 1, 1999.
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FNBB. The First National Bank of Boston, a national banking association,
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in its individual capacity.
Foreign Obligations. All Indebtedness, obligations and liabilities of the
-------------------
Company to any of the Banks or any affiliate of any of the Banks in respect of
guaranties by, and other contingent obligations of, the Company, existing on the
Closing Date or arising thereafter, direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
secured or unsecured, in respect of Indebtedness of any Subsidiary of the
Company or of its Subsidiaries which is not organized under the laws of any
jurisdiction of the United States of America and which does not have its
principal place of business in the United States of America.
Generally Accepted Accounting Principles or generally accepted accounting
--------- -------- ---------- ---------- --------- -------- ----------
principles. Except as provided in (S)1.2, principles which are (A) consistent
----------
with the principles promulgated or adopted by the Financial Accounting Standards
Board, the American Institute of Certified Public Accountants and the Securities
and Exchange Commission and their predecessors (or successor organizations), as
in effect from time to time and (B) consistently applied with past financial
statements of the Company and its Subsidiaries adopting the same principles
where required by generally accepted accounting principles, provided that in
--------
each case referred to in this definition of "generally accepted accounting
principles", a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied for any fiscal period end being reported.
Guaranteed Pension Plan. Any employee pension benefit plan within the
---------- ------- ----
meaning of (S)3.2(a) of ERISA maintained by the Company or any ERISA Affiliate,
or to which the Company or any ERISA Affiliate contributes, the benefits of
which are guaranteed on termination in full or in part by the PBGC pursuant to
Title IV of ERISA, other than a Multiemployer Plan required to pay plan
termination insurance premiums to the PBGC.
-9-
Guaranty. The unlimited joint and several guaranty of the Commerce
-------
Subsidiaries, substantially in the form of Exhibit F hereto.
------- -
Hazardous Substances. Any toxic substances, oil or hazardous materials
--------- ----------
or other chemicals or substances regulated by any Environmental Laws.
Indebtedness. All obligations, contingent and otherwise, which in
------------
accordance with generally accepted accounting principles should be and are
classified upon the obligor's balance sheet as liabilities, or to which
reference should be and is made by footnotes thereto, including, in any event
and whether or not so classified: (a) all debt and similar monetary
obligations, whether direct or indirect; (b) all liabilities secured by any
mortgage, pledge, security interest, lien, charge, or other encumbrance existing
on property owned or acquired subject thereto, whether or not the liability
secured thereby shall have been assumed; (c) all rental obligations under
capitalized leases, and (d) all guaranties, endorsements and other contingent
obligations which are probable and estimable, whether direct or indirect, in
respect of Indebtedness of others, and any obligation to supply funds to or in
any manner to invest in, directly or indirectly, the debtor, to purchase
Indebtedness, or to assure the owner of Indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the Indebtedness held by such owner or otherwise,
and the obligations to reimburse the issuer of any letters of credit.
Indemnification Agreement. The Indemnification Agreement dated as of
-------------------------
March 4, 1996 among Sterling Software, Inc., the Company and one or more of
their Subsidiaries, as in effect on the Closing Date.
Intercompany Indebtedness. The aggregate amount of all Indebtedness of
------------ ------------
any Commerce Subsidiary to any other Commerce Subsidiary or to the Company, and
of the Company to any Subsidiary.
Interest Charges. For any period, the expenses of the Company and its
----------------
Subsidiaries for such period for interest on Indebtedness (including all finance
charges and accrued interest expense, in the case of any Indebtedness on which
interest is payable less frequently than quarterly, and the interest portion of
capitalized lease payments but excluding the interest portion of operating lease
payments and Intercompany Indebtedness), to the extent paid in cash or due and
payable in cash in such period (whether or not such payment is due but is
prohibited from being made pursuant to the terms of such Indebtedness).
Interest Payment Date. (i) As to any Base Rate Loan, the last day of the
-------- ------- ----
calendar quarter which includes the Drawdown Date thereof; and (ii) as to any
Eurodollar Rate Loan in respect of which the Interest Period is (A) 30, 60 or 90
days or less, the last day of such Interest Period and (B) more than 90 days,
the date that is 90 days from the first day of such Interest Period and, in
addition, the last day of such Interest Period.
-10-
Interest Period. With respect to each Loan, (i) initially, the period
---------------
commencing on the Drawdown Date of such Loan and ending on the last day of one
of the periods set forth below, as selected by the Company in a Loan Request (A)
for any Base Rate Loan, the last day of the calendar quarter; and (B) for any
Eurodollar Rate Loan, 30, 60, 90 or 180 days; and (ii) thereafter, each period
commencing after the last day of the next preceding Interest Period applicable
to such Loan and ending on the last day of one of the periods set forth above,
as selected by the Company in a Conversion Request; provided that all of the
--------
foregoing provisions relating to Interest Periods are subject to the following:
(a) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business Day, that
Interest Period shall be extended to the next succeeding Eurodollar Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end on the
immediately preceding Eurodollar Business Day;
(b) if any Interest Period with respect to a Base Rate Loan would end
on a day that is not a Business Day, that Interest Period shall end on the next
succeeding Business Day;
(c) if the Company shall fail to give notice as provided in (S)2.7,
the Company shall be deemed to have requested a conversion of the affected
Eurodollar Rate Loan to a Base Rate Loan and the continuance of all Base Rate
Loans as Base Rate Loans on the last day of the then current Interest Period
with respect thereto;
(d) any Interest Period relating to any Eurodollar Rate Loan that
begins on the last Eurodollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Eurodollar Business Day of a
calendar month;
(e) any Interest Period relating to any Loan that would otherwise
extend beyond the Final Maturity shall end on the Final Maturity; and
(f) no Interest Period may be selected by the Company if the
aggregate principal amount of all Loans subject to an Interest Period which ends
after any Repayment Date would be in excess of the aggregate principal amount of
the Loans permitted to be outstanding on such date (after giving effect to any
repayment of the principal of the Loans which may be required on such Repayment
Date).
Investments. All expenditures made and all liabilities incurred
-----------
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person, which expenditures, liabilities,
loans, advances, capital
-11-
contributions, transfers of property, guaranties or obligations, in accordance
with generally accepted accounting principles, should be and are classified upon
such Person's balance sheet as an asset. In determining the aggregate amount of
Investments outstanding at any particular time: (i) the amount of any Investment
represented by a guaranty shall be taken at not less than the principal amount
of the obligations guaranteed and still outstanding; (ii) there shall be
included as an Investment all interest accrued with respect to Indebtedness
constituting an Investment unless and until such interest is paid; and (iii)
there shall be deducted in respect of each such Investment any amount received
as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution).
Letter of Credit. See (S)2A.1(a).
------ -- ------
Letter of Credit Application. See (S)2A.1(a).
------ -- ------ -----------
Letter of Credit Fee. See (S)2A.6.
------ -- ------ ---
Letter of Credit Participation. See (S)2A.1(d).
------ -- ------ -------------
Loan Documents. Collectively, this Agreement, the Notes, the Guaranty,
---- ---------
the Letter of Credit Applications, the Letters of Credit and any other
instruments or documents delivered or to be delivered pursuant to this
Agreement.
Loan Request. See (S)2.6.
---- -------
Loans. Loans made or to be made by the Banks to the Company pursuant to
-----
(S)2.
Majority Banks. As of any date, Banks holding at least 66.67% of the
-------- -----
outstanding principal amount of the Notes on such date; and if no principal is
outstanding, Banks whose aggregate Commitments constitute at least 66.67% of the
Total Commitment.
Maximum Drawing Amount. The maximum aggregate amount from time to time
------- ------- ------
that the beneficiaries may draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
Multiemployer Plan. Any multiemployer plan within the meaning of
------------- ----
(S)3(37) of ERISA maintained or contributed to by the Company or any ERISA
Affiliate.
Non-Guarantor Subsidiaries. As of the date hereof, the Commerce
------------- ------------
Companies listed on Schedule 1.5 hereto and identified as Non-Guarantor
-------- ---
Subsidiaries, as such schedule may be modified from time to time pursuant to the
provisions of (S)8.17.
Notes. See (S)2.3.
-----
-12-
Obligations. All Indebtedness, obligations and liabilities of the
-----------
Company to any of the Banks and the Agent, individually or collectively,
existing on the date of this Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising or incurred by
contract, operation of law, or otherwise, arising or incurred under this
Agreement or any of the other Loan Documents or in respect of Loans made,
Reimbursement Obligations incurred or any Note, Letter of Credit Application,
Letter of Credit or other instruments at any time evidencing any of the
foregoing.
Operating Cash Flow. For any fiscal period, Consolidated Earnings Before
--------- ---- ----
Interest and Taxes less Capitalized Computer Software Costs, less cash taxes,
---- ----
plus depreciation and amortization, less Capital Expenditures, calculated with
---- ----
respect to the Company and its Subsidiaries on a consolidated basis.
Outstanding or outstanding. With respect to the Loans, the unpaid
----------- -- -----------
principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by (S)4002 of
----
ERISA and any successor entities having similar responsibilities.
Permitted Acquisitions. Asset or stock acquisitions permitted by (S)9.5.
----------------------
Permitted Investments. Investments permitted by (S)9.3.
---------------------
Permitted Liens. Liens, security interests and other encumbrances
---------------
permitted by (S)9.2.
Person. Any individual, corporation, association, partnership, trust,
------
unincorporated association, business, or other legal entity, and any government
or any governmental agency or political subdivision thereof.
Real Estate. All real property (1) owned or leased (as lessee or
---- ------
sublessee) by the Company or any of its Subsidiaries and (2) located within the
United States of America.
Record. The grid attached to a Note, or the continuation of such grid,
------
or any other similar record, including computer records, maintained by any Bank
with respect to any Loan referred to in such Note.
Reimbursement Obligation. The Company's obligation to reimburse the
------------- ----------
Agent and the Banks on account of any drawing under any Letter of Credit as
provided in (S)2A.2.
Repayment Date. As defined in (S)2.9.
--------------
-13-
Subsidiary. Any corporation, association, trust, or other business
----------
entity, of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
Tax Allocation Agreement. The Tax Allocation Agreement dated as of March
------------------------
4, 1996 among Sterling Software, Inc., the Company and one or more of their
Subsidiaries, as in effect on the Closing Date.
Total Commitment. The sum of the Commitments of the Banks, as in effect
----- ----------
from time to time.
Total Debt. At any time of determination, the sum of (a) the sum of (i)
----- ----
all Loans Outstanding (after giving effect to all amounts requested) plus (ii)
-----
the Maximum Drawing Amount plus (iii) all Unpaid Reimbursement Obligations, plus
----- ----
(b) the amount of any Foreign Obligations then outstanding, plus (c) any
----
Indebtedness of the Company or any of its Subsidiaries under any of the Commerce
Accounts Receivable Agreements or the Commerce Accounts Receivable Guaranties,
which Indebtedness is on a full or partial recourse basis.
Total Repurchase Event. The occurrence of any event or circumstance
----- ---------- -----
which would permit any Commerce Accounts Receivable Agreement Party to require
the Commerce Subsidiary party to the applicable Commerce Accounts Receivable
Agreement to repurchase all Commerce Accounts Receivable previously purchased by
such Commerce Accounts Receivable Agreement Party under the applicable Commerce
Accounts Receivables Agreement.
Type. As to any Loan, its nature as a Base Rate Loan or a Eurodollar
----
Rate Loan.
Uniform Customs. With respect to any Letter of Credit, the Uniform
------- -------
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 or any successor version thereto adopted
by the Agent in the ordinary course of its business as a letter of credit issuer
and in effect at the time of issuance of such Letter of Credit.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which
------ ------------- ----------
the Company does not reimburse the Agent and the Banks on the date specified in,
and in accordance with, the provisions of (S)2A.2.
Voting Stock. Stock or similar interests, of any class or classes
------ -----
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
-14-
10-K Report. The report of the Company and its Subsidiaries filed
---- -----
annually on Form 10-K with the Securities and Exchange Commission.
10-Q Report. The report of the Company and its Subsidiaries filed
---- -----
quarterly on Form 10-Q with the Securities and Exchange Commission.
(S)1.2. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified
---------- ----- --- --------------
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with generally accepted
accounting principles as in effect from time to time, applied on a basis
consistent (except for changes concurred in by the Company's independent public
accountants) with the most recent audited consolidated financial statements of
the Company and its Subsidiaries; provided, however, that, if any change in
-------- -------
generally accepted accounting principles occurring after the Balance Sheet Date
in itself materially affects Capitalized Computer Software Costs, Capital
Expenditures, Consolidated Current Assets, Consolidated Earnings Before Interest
and Taxes, Consolidated Net Income, Consolidated Net Worth, Consolidated
Operating Income, Consolidated Total Assets, Consolidated Total Liabilities and
Operating Cash Flow, the Company may by notice to the Agent, or the Agent (on
its own or at the request of the Majority Banks) may by notice to the Company,
require that Capitalized Computer Software Costs, Capital Expenditures,
Consolidated Current Assets, Consolidated Earnings Before Interest and Taxes,
Consolidated Net Income, Consolidated Net Worth, Consolidated Operating Income,
Consolidated Total Assets, Consolidated Total Liabilities or Operating Cash
Flow, as the case may be, thereafter be calculated in accordance with generally
accepted accounting principles as in effect and applied by the Company
immediately before such change in generally accepted accounting principles
occurs. If such notice is given, the Compliance Certificates delivered pursuant
to (S)8.4(c) after such change occurs shall be accompanied by reconciliations of
the difference between the calculation set forth therein and a calculation made
in accordance with generally accepted accounting principles as in effect from
time to time after such change occurs.
(S)1.3. RULES OF INTERPRETATION.
----- -- --------------
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented and in effect from
time to time in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or modification
to such law.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
-15-
(e) Subject to (S)1.2 hereof, accounting terms not otherwise
defined herein have the meanings assigned to them by generally accepted
accounting principles applied on a consistent basis by the accounting entity to
which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have the
meanings assigned to them therein.
(h) Reference to a particular "(S)", "Section" or "section"
refers to that section of this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
(S)2. THE CREDIT.
--- ------
(S)2.1. LOANS. Subject to the terms and conditions set forth in this
-----
Agreement, each of the Banks severally agrees to lend to the Company, and the
Company may borrow, repay, and reborrow from time to time between the Closing
Date and the Conversion Date, upon notice by the Company to the Agent given in
accordance with (S)2.6, such sums as may be requested by the Company for the
purposes set forth in (S)8.3 hereof, provided, however, that the maximum
-------- -------
aggregate principal amount of any Bank's Loans Outstanding (after giving effect
to all amounts requested) at any one time shall not exceed the amount of such
Bank's Commitment minus such Bank's Commitment Percentage of the sum of the
-----
Maximum Drawing Amount and all unpaid Reimbursement Obligations, and provided,
--------
further, that the maximum aggregate principal amount of the Loans of all of the
-------
Banks Outstanding (after giving effect to all amounts requested) at any one time
plus the Maximum Drawing Amount and all Unpaid Reimbursement Obligations shall
----
not at any time exceed the Total Commitment. The Loans shall be made pro rata
--- ----
in accordance with each Bank's Commitment Percentage. Each request for a Loan
hereunder shall constitute a representation by the Company that the conditions
set forth in (S)(S)6 and 7 hereof, in the case of the initial Loans to be made
on the Closing Date and (S)7, in the case of all other Loans, have been
satisfied on and as of the date of such request.
(S)2.2. REDUCTION OF TOTAL COMMITMENT.
--------- -- ----- ----------
(a) The Company shall have the right at any time and from time to
time, upon five Business Days' written notice to each of the Banks, to reduce by
$1,000,000 or integral multiples of $1,000,000, or terminate entirely, the
unutilized portion of the Total Commitment.
-16-
(b) Upon the receipt by the Company or any of its Subsidiaries of
any net proceeds of any disposition described in (S)9.7(b)(i) and the payment
thereof to the Agent as contemplated by such section, the Total Commitment
shall, at the option of the Agent or at the request of the Majority Banks, be
reduced by the amount of such net proceeds.
(c) In the event of a reduction of the Total Commitment pursuant
to subparagraph (a) or (b) of this section, the Commitments of the Banks shall
be reduced pro rata in accordance with their respective Commitment Percentages
--- ----
by the amount specified in such notice or paid over to the Agent or, as the case
may be, terminated. Upon the effective date of any such reduction or termination
pursuant to this (S)2.2, the Company shall pay to the Agent, for the respective
accounts of the Banks, the full amount of any Commitment Fee then accrued on the
amount of the reduction. No reduction of the Commitments of the Banks may be
reinstated.
(S)2.3. THE NOTES. The obligation of the Company to repay to the Banks
--- -----
the principal amount of the Loans and interest accrued thereon shall be
evidenced by separate promissory notes of the Company, each in substantially the
form of Exhibit A hereto (the "Notes"), dated as of the Closing Date and
------- -
completed with appropriate insertions, one Note being payable to the order of
each Bank in a principal amount equal to such Bank's Commitment and representing
the obligation of the Company to pay to such Bank the amount of the Commitment
or, if less, the aggregate unpaid principal amount of all Loans made by such
Bank hereunder, plus interest accrued thereon as set forth below. The Company
hereby irrevocably authorizes each Bank to make or cause to be made, at or about
the time of the Drawdown Date of any Loan or at the time of receipt of any
payment of principal on such Bank's Note, an appropriate notation on such Bank's
Record reflecting the making of such Loan or (as the case may be) the receipt of
such payment. The aggregate unpaid amount of Loans made by such Bank set forth
on such Bank's Record, shall be prima facie evidence of the principal amount
----- -----
thereof owing and unpaid to such Bank, but the failure to record, or any error
in so recording, any such amount on such Bank's Record, shall not limit or
otherwise affect the obligations of the Company hereunder or under the Note to
make payments of principal of or interest on the Note when due.
(S)2.4. INTEREST. Except as otherwise provided in (S)2.5, the unpaid
--------
principal amount of the Loans outstanding from time to time shall bear interest
from the Drawdown Date thereof until Final Maturity at the annual rate which at
all times shall be determined in accordance with the following provisions:
(a) Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at a rate equal to the Base Rate in effect
from time to time.
-17-
(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate of one and three-quarters
percent (1-3/4%) per annum above the Eurodollar Rate determined for such
Interest Period.
(c) The Company hereby promises to pay interest on each Loan in
arrears on each Interest Payment Date with respect thereto.
(S)2.5 INTEREST ON OVERDUE AMOUNTS. Overdue principal and (to the
-------- -- ------- -------
extent permitted by applicable law) interest on the Loans and all other overdue
amounts payable hereunder shall bear interest compounded monthly and payable on
demand at a rate per annum equal to four percent (4%) above the Base Rate, until
such amount shall be paid in full (after as well as before judgment).
(S)2.6. INTEREST RATE ELECTIONS; REQUESTS FOR LOANS. At the option of
-------- ---- --------- -------- --- -----
the Company, so long as no Default or Event of Default has occurred and is
continuing, the Company may elect from time to time to have a portion of the
unpaid principal amount of the Loans outstanding from time to time bear interest
during any particular Interest Period calculated by reference to the Eurodollar
Rate. The Company shall give to the Agent written or telegraphic notice (or
telephonic notice promptly confirmed in writing) of each Loan requested
hereunder (a "Loan Request") not later than 10:00 a.m. (Boston time) on the
proposed Drawdown Date thereof, in the case of Base Rate Loans or not later than
10:00 a.m. (Boston time) three Eurodollar Business Days prior to the proposed
Drawdown Date thereof in the case of Eurodollar Rate Loans from Base Rate Loans.
Each such Loan Request shall be substantially in the form of Exhibit B attached
------- -
hereto and shall specify (A) the principal amount of the Loan Requested, (B) the
proposed Drawdown Date of such Loan, (C) the Interest Period for such Loan, (D)
the Type of such Loan, and (E) the bank account of the Company with the Agent's
head office to which the proceeds of the requested Loan are to be credited.
Each Loan Request shall be irrevocable and binding on the Company and shall
obligate the Company to accept the Loans requested from the Banks on the
proposed Drawdown Date thereof. Any election of a Eurodollar Rate Loan shall
lapse at the end of the expiring Interest Period unless extended by a further
Loan Request as hereinabove provided. The Agent shall forthwith, upon
determination of any Eurodollar Rate, provide notice thereof to each Bank and to
the Company. Each such notice shall, absent manifest error, be binding upon
each Bank and the Company.
(S)2.7. CONVERSION OPTIONS.
---------- -------
(A) CONVERSION TO DIFFERENT TYPE OF LOAN. The Company may elect
---------- -- --------- ---- -- ----
from time to time to convert any outstanding Loan to a Loan of another Type,
provided that (i) with respect to any such conversion of a Loan to a Base Rate
--------
Loan, the Company shall give the Agent at least one (1) Business Day prior
written notice of such election; (ii) with respect to any such conversion of a
Base Rate Loan to a Eurodollar Rate Loan, the Company shall give the Agent at
least three (3) Eurodollar Business Days prior written notice of such election;
(iii) with respect to
-18-
any such conversion of a Eurodollar Rate Loan into a Base Rate Loan, such
conversion shall only be made on the last day of the Interest Period with
respect thereto and (iv) no Loan may be converted into a Eurodollar Rate Loan
when any Default or Event of Default has occurred and is continuing. On the date
on which such conversion is being made, each Bank shall take such action as is
necessary to transfer its Commitment Percentage of such Loans to its Domestic
Lending Office or its Eurodollar Lending Office, as the case may be. All or any
part of outstanding Loans of any Type may be converted into a Loan of another
Type as provided herein, provided that any partial conversion shall be in an
--------
aggregate principal amount of $1,000,000 or a whole multiple thereof. Each
Conversion Request relating to the conversion of a Loan to a Eurodollar Rate
Loan shall be irrevocable by the Company.
(C) CONTINUATION OF TYPE OF LOAN. Any Loan of any Type may be
------------ -- ---- -- ----
continued as a Loan of the same Type upon the expiration of an Interest Period
with respect thereto by compliance by the Company with the notice provisions
contained in (S)2.7(a); provided that no Eurodollar Rate Loan may be continued
--------
as such when any Default or Event of Default has occurred and is continuing, but
shall be automatically converted to a Base Rate Loan on the last day of the
first Interest Period relating thereto ending during the continuance of any
Default or Event of Default of which officers of the Agent active upon the
Company's account have actual knowledge. In the event that the Company fails to
provide any such notice with respect to the continuation of any Eurodollar Rate
Loan as such, then such Eurodollar Rate Loan shall be automatically converted to
a Base Rate Loan on the last day of the first Interest Period relating thereto.
The Agent shall notify the Banks promptly when any such automatic conversion
contemplated by this (S)2.7 is scheduled to occur.
(D) EURODOLLAR RATE LOANS. Any conversion to or from Eurodollar Rate
---------- ---- -----
Loans shall be in such amounts and be made pursuant to such elections so that,
after giving effect thereto, the aggregate principal amount of all Eurodollar
Rate Loans having the same Interest Period shall not be less than $1,000,000 or
a whole multiple of $500,000 in excess thereof.
(S)2.8. FUNDS FOR LOANS.
----- --- -----
(A) FUNDING PROCEDURES. Not later than 1:00 p.m. (Boston time)
------- ----------
on the proposed Drawdown Date of any Loans, each of the Banks will make
available to the Agent, at its head office, in immediately available funds, the
amount of such Bank's Commitment Percentage of the amount of the requested
Loans. Upon receipt from each Bank of the amount of its Loan, and upon receipt
of the documents required by (S)(S)6 and 7 hereof to be delivered on or prior to
such Drawdown Date, to the extent applicable, the Agent will make the aggregate
amount of such Loans available to the Company by crediting the Company's account
with the Agent's head office specified in the applicable Loan Request. The
failure or refusal of any Bank to make available to the Agent at the aforesaid
time on any Drawdown Date the amount of its Commitment Percentage of the
requested Loans shall not relieve any other Bank from its several obligation
hereunder to
-19-
make its respective Commitment Percentage of any requested Loans available to
the Agent.
(B) ADVANCES BY AGENT. The Agent may (unless notified to the contrary
-------- -- -----
by a Bank prior to a Drawdown Date) assume that each Bank has made available to
the Agent on such Drawdown Date such Bank's Commitment Percentage of the Loans
to be made on such Drawdown Date, and the Agent may (but it shall not be
required to), in reliance upon such assumption, make available to the Company a
corresponding amount. The Agent shall notify the Company by telephone or
telecopy to the treasurer or another duly authorized financial officer of the
Company of the failure of any Bank to make available to the Agent its Commitment
Percentage on such Drawdown Date promptly after the account officer of the Agent
with responsibility for the Company's account obtains actual knowledge of such
failure. If any Bank makes available to the Agent such amount on a date after
such Drawdown Date, such Bank shall pay to the Agent on demand an amount equal
to the product of (i) the average computed for the period referred to in clause
(iii) below, of the weighted average interest rate paid by the Agent for federal
funds acquired by the Agent during each day included in such period, times (ii)
-----
the amount of such Bank's Commitment Percentage of such Loans, times (iii) a
-----
fraction, the numerator of which is the number of days that elapse from and
including such Drawdown Date to the date on which the amount of such Bank's
Commitment Percentage of such Loans shall become immediately available to the
Agent, and the denominator of which is 360. A statement of the Agent submitted
to such Bank with respect to any amounts owing under this paragraph shall be
prima facie evidence of the amount due and owing to the Agent by such Bank. If
----- -----
such Bank shall fail to make its Commitment Percentage of such Loans available
to the Agent, the Company agrees to pay to the Agent within three (3) Business
Days after demand, an amount equal to such corresponding amount, together with
interest thereon at the rate per annum applicable to the Loans made on such
Drawdown Date for each day from the date the Agent shall make such amount
available to the Company until the date such amount is paid or repaid to the
Agent, provided, however, that until and unless such payment has been made in
-------- -------
full by the Company, such Bank shall remain liable to the Agent for the full
amount of such payment, including interest as set forth above. Subject to
(S)2.1, the Company shall, unless the Company notifies the Agent otherwise, on
the first day of such three-day period, be deemed to have submitted a new Loan
Request to the Agent pursuant to (S)2.6 for a Base Rate Loan covering the amount
set forth in the Agent's demand for payment.
(S)2.9. MATURITY OF THE LOANS, REPAYMENT IN INSTALLMENTS. All Loans
-------- -- --- ------ --------- -- ------------
Outstanding at the close of business on the Conversion Date shall be payable in
four (4) equal (as nearly as may be) consecutive quarterly installments due on
the last day of each calendar quarter ending thereafter (or, if the last day of
any calendar quarter ends on a day which is not a Business Day, then on the next
succeeding Business Day), with a final payment at Final Maturity (each such date
being referred herein to as a "Repayment Date"), which final payment shall in
any event be in an amount sufficient to repay in full the remaining principal
balance of
-20-
the Loans then outstanding, together with any Reimbursement Obligations
outstanding.
(S)2.10. MANDATORY REPAYMENTS. If, at any time prior to the Conversion
--------- ----------
Date, the sum of the Outstanding amount of the Loans, the Maximum Drawing Amount
and all Unpaid Reimbursement Obligations exceeds the Total Commitment, then the
Company shall immediately pay the amount of such excess to the Agent for the
respective accounts of the Banks for application: first, to any Unpaid
Reimbursement Obligations; second, to the Loans; and third, to provide to the
Agent cash collateral for Reimbursement Obligations as contemplated by
(S)2A.2(b) and (c). Each payment of any Unpaid Reimbursement Obligations or
prepayment of Loans shall be allocated among the Banks, in proportion, as nearly
as practicable, to each Reimbursement Obligation or (as the case may be) the
respective unpaid principal amount of each Bank's Note, with adjustments to the
extent practicable to equalize any prior payments or repayments not exactly in
proportion.
(S)2.11. OPTIONAL PREPAYMENT OF PRINCIPAL. The Company shall have the
-------- ---------- -- ---------
right at any time to prepay the outstanding principal amount of the Loans, as a
whole or in part, without premium or penalty, upon not less than one Business
Day's (with respect to Base Rate Loans) and three (3) Eurodollar Business Days'
(with respect to Eurodollar Rate Loans) written, telegraphic or telephonic
notice to the Agent; provided that (i) each partial prepayment shall be in the
--------
aggregate principal amount of (a) $1,000,000 or an integral multiple thereof
with respect to Eurodollar Rate Loans or (b) $500,000 or some greater integral
multiple of $100,000 with respect to Base Rate Loans, shall be accompanied by
the payment of accrued interest on the principal prepaid to the date of
prepayment and, if made after the Conversion Date, shall be applied to the then
maturing installment or installments of principal of the Notes in the inverse
order of maturity and, whether made before or after the Conversion Date, shall
be applied, in the absence of instruction by the Company, first to the principal
of Base Rate Loans and then to the principal of Eurodollar Rate Loans; (ii) each
partial prepayment shall be allocated by the Agent among all of the Banks, in
proportion, as nearly as practicable, to the respective unpaid principal amount
of each Bank's Note, with adjustments to the extent practical to equalize any
prior prepayments not exactly in proportion; (iii) prepayments on any Eurodollar
Rate Loan may be made only on the last day of the Interest Period applicable to
such Eurodollar Rate Loan; and (iv) no amount prepaid after the Conversion Date
may be reborrowed hereunder.
(S)2.12. COMMITMENT FEE. The Company agrees to pay to the Agent, for
---------- ---
the respective accounts of the Banks, in accordance with their respective
Commitment Percentages, a fee (the "Commitment Fee") calculated at the rate of
three-eighths of one percent (3/8%) per annum on the average daily amount during
each calendar quarter or portion thereof from the date hereof to the day
immediately preceding the Conversion Date by which the Total Commitment exceeds
the aggregate outstanding principal amount of Loans plus the Maximum Drawing
----
Amount and all Unpaid Reimbursement Obligations during such calendar quarter.
The Commitment Fee shall be payable quarterly in arrears on the tenth Business
Day
-21-
of each calendar quarter for the immediately preceding calendar quarter,
commencing on the first such date following the date hereof, with a final
payment on the Conversion Date.
(S)2.13. AGENT'S FEE. So long as there are any Obligations or
------- ---
Commitments Outstanding, the Company shall pay to the Agent, annually in
advance, on the Closing Date and on each anniversary of the Closing Date, an
annual Agent's Fee in the amount of $25,000.
(S)2.14. CLOSING FEE. The Company agrees to pay to the Agent, for the
-----------
pro rata accounts of the Banks, on the Closing Date a closing fee in the amount
--- ----
of $50,000.
(S)2A. LETTERS OF CREDIT.
------- -- ------
(S)2A.1. LETTER OF CREDIT COMMITMENTS.
------ -- ------ -----------
(A) COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the terms
---------- -- ----- ------- -- ------
and conditions hereof and the execution and delivery by the Company of a letter
of credit application on the Agent's customary form (a "Letter of Credit
Application") by the Company, or any Commerce Subsidiary, the Agent on behalf of
the Banks and in reliance upon the agreement of the Banks set forth in
(S)2A.1(d) and upon the representations and warranties of the Company contained
herein, agrees, in its individual capacity, to issue, extend and renew for the
account of the Company, between the Closing Date and the Conversion Date, one or
more standby or documentary letters of credit (individually, a "Letter of
Credit"), in such form as may be requested from time to time by the Company and
agreed to by the Agent; provided, however, that, after giving effect to such
-------- -------
request, (i) the sum of the aggregate Maximum Drawing Amount and all Unpaid
Reimbursement Obligations shall not exceed $5,000,000 at any one time and (ii)
the sum of (A) the Maximum Drawing Amount on all Letters of Credit, (B) all
Unpaid Reimbursement Obligations, and (C) the amount of all Loans outstanding
shall not exceed the Total Commitment.
(B) LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
------ -- ------ ------------
Application shall be completed to the satisfaction of the Agent. In the event
that any provision of any Letter of Credit Application shall be inconsistent
with any provision of this Loan Agreement, then the provisions of this Loan
Agreement shall, to the extent of any such inconsistency, govern, and each
Letter of Credit Application shall so indicate.
(C) TERMS OF LETTERS OF CREDIT. Each Letter of Credit issued,
----- -- ------- -- ------
extended or renewed hereunder shall, among other things, (i) provide for the
payment of sight drafts for honor thereunder when presented in accordance with
the terms thereof and when accompanied by the documents described therein, and
(ii) have an expiry date no later than the date which is fourteen (14) days (or,
if the Letter of Credit is confirmed or otherwise provides for one or more
nominated
-22-
persons, forty-five (45) days) prior to the Conversion Date. Each Letter of
Credit so issued, extended or renewed shall be subject to the Uniform Customs.
(D) REIMBURSEMENT OBLIGATIONS OF BANKS. Each Bank severally agrees
------------- ----------- -- -----
that it shall be absolutely liable, without regard to the occurrence of any
Default or Event of Default or any other condition precedent whatsoever, to the
extent of such Bank's Commitment Percentage, to reimburse the Agent on demand
for the amount of each draft paid by the Agent under each Letter of Credit to
the extent that such amount is not reimbursed by the Company or the relevant
Commerce Subsidiary pursuant to (S)2A.2 (such agreement for a Bank being called
herein the "Letter of Credit Participation" of such Bank).
(E) PARTICIPATIONS OF BANKS. Each such payment made by a Bank shall
-------------- -- -----
be treated as the purchase by such Bank of a participating interest in the
Company's Reimbursement Obligation under (S)2A.2 in an amount equal to such
payment. Each Bank shall share in accordance with its participating interest in
any interest which accrues pursuant to (S)2A.2.
(S)2A.2. REIMBURSEMENT OBLIGATION OF THE COMPANY. In order to induce
------------- ---------- -- --- -------
the Agent to issue, extend and renew each Letter of Credit and the Banks to
participate therein, the Company hereby agrees to reimburse or pay to the Agent,
for the account of the Agent or (as the case may be) the Banks, with respect to
each Letter of Credit issued, extended or renewed by the Agent hereunder,
whether for the account of the Company or for the account of any Commerce
Subsidiary:
(a) except as otherwise expressly provided in (S)2A.2(b) and (c),
within one Business Day following each date that any draft presented under such
Letter of Credit is honored by the Agent and the Agent has provided to the
Company notice pursuant to (S)2A.3, or within one Business Day following any
date on which the Agent notifies the Company that it has otherwise made a
payment with respect thereto, (i) the amount paid by the Agent under or with
respect to such Letter of Credit, and (ii) the amount of any taxes, fees,
charges or other costs and expenses whatsoever incurred by the Agent or any Bank
in connection with any payment made by the Agent or any Bank under, or with
respect to, such Letter of Credit; provided, that if such reimbursement or
--------
payment is not otherwise made by the Company within one Business Day following
the honoring of any draft hereunder by the Agent, (x) the Company hereby
authorizes the Agent to debit its Account No. ▇▇▇▇▇▇▇▇ maintained with the Agent
for the amount of such reimbursement or payment, and (y) in the event that, at
any time prior to the Conversion Date, such account does not contain sufficient
funds to cover such reimbursement or payment, the aggregate amount payable by
the Company pursuant to clauses (i) and (ii) above shall be deemed, for all
purposes of this Agreement and to the extent that the sum of such amount plus
----
the maximum aggregate principal amount of the Loans Outstanding (after giving
effect to all amounts requested) plus the Maximum Drawing Amount and all Unpaid
----
Reimbursement Obligations does not exceed the Total Commitment, a Base Rate Loan
made by the Banks to the Company on the date the Agent honored the relevant
draft; and
-23-
(b) upon the termination of the Total Commitment, or the acceleration
of the Reimbursement Obligations with respect to all Letters of Credit in
accordance with (S)11, an amount equal to the then Maximum Drawing Amount on all
Letters of Credit, which amount shall be held by the Agent for the benefit of
the Banks and the Agent as cash collateral for all Reimbursement Obligations.
Upon the termination of the Total Commitment pursuant to (S)2.2 or at the
Conversion Date, the Agent agrees, so long as no Default or Event of Default has
occurred and is continuing, to hold such cash collateral in an interest-bearing
account in the name of the Company, to pay current interest on such cash
collateral to the Company and upon the payment by the Company of any
Reimbursement Obligations or the reduction of the Maximum Drawing Amount upon
the cancellation of any Letter of Credit, the Agent agrees to return to the
Company an amount equal to such payment or reduction together with unpaid
interest accrued thereon through the date of such return; and
(c) upon the reduction (but not termination) of the Total Commitment
to an amount less than the Maximum Drawing Amount, an amount equal to such
difference, which amount shall be held by the Agent for the benefit of the Banks
and the Agent as cash collateral for all Reimbursement Obligations.
Each such payment shall be made to the Agent at the Agent's head office in
immediately available funds. Interest on any and all amounts remaining unpaid
by the Company under this (S)2A.2 after application, in the case of amounts due
under clause (a) hereof, of the provisions contained in the proviso thereof, at
any time from the date such amounts become due and payable (whether so stated in
(S)2A.2, by acceleration or otherwise) until payment in full (whether before or
after judgment) shall be payable to the Agent on demand at the rate specified in
(S)2.5 for overdue principal on the Loans.
(S)2A.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or
------ -- ------ --------
other demand for payment shall be made under any Letter of Credit, the Agent
shall, promptly following its receipt thereof, notify the Company of the date
and amount of the draft presented or demand for payment and of the date and time
when it expects to pay such draft or honor such demand for payment. If the
Company fails to reimburse the Agent as provided in (S)2A.2 no later than one
Business Day following the date that such reimbursement is to be made, the Agent
may at any time thereafter notify the Banks of the amount of any such Unpaid
Reimbursement Obligation. No later than 3:00 p.m. (Boston time) on the Business
Day next following the receipt of such notice, each Bank shall make available to
the Agent, at its Head Office, in immediately available funds, such Bank's
Commitment Percentage of such Unpaid Reimbursement Obligation, together with an
amount equal to the product of (a) the average, computed for the period referred
to in clause (c) below, of the weighted average interest rate paid by the Agent
for federal funds acquired by the Agent during each day included in such period,
times (b) the amount equal to such Bank's Commitment Percentage of such Unpaid
-----
Reimbursement Obligation, times (c) a fraction, the numerator of which is the
-----
number of days that elapse from and including the date the Agent paid the draft
-24-
presented for honor or otherwise made payment to the date on which such Bank's
Commitment Percentage of such Unpaid Reimbursement Obligation shall become
immediately available to the Agent, and the denominator of which is 360. The
responsibility of the Agent to the Company, the Commerce Subsidiaries for the
respective accounts of which Letters of Credit are issued and the Banks shall be
only to determine that the documents (including each draft) delivered under each
Letter of Credit in connection with such presentment shall be in conformity in
all material respects with such Letter of Credit.
(S)2A.4. OBLIGATIONS ABSOLUTE. Subject to the provisions of (S)2A.5,
----------- --------
the Agent agrees with the Company that it will exercise and give the same care
and attention to each Letter of Credit as it gives to its other letters of
credit. Subject to the provisions of (S)2A.5, the Company agrees with the Agent
and the Banks that the Agent and the Banks shall not be responsible for, and the
Company's and the Commerce Subsidiaries' Reimbursement Obligations under (S)2A.2
are absolute and unconditional and shall not be affected by, among other things,
(a) the validity or genuineness of documents supplied or of any endorsements
thereon, even if such documents should in fact prove to be in any or all
respects invalid, fraudulent or forged, (b) any dispute between or among the
Company or the Commerce Subsidiary for whose account the relevant Letter of
Credit was issued, the beneficiary of any Letter of Credit or any financial
institution or other party to which any Letter of Credit may be transferred, (c)
any setoff, claims or defenses whatsoever of the Company or the Commerce
Subsidiary for the account of which such Letter of Credit was issued against the
Agent, any Bank or any beneficiary of any Letter of Credit or any such
transferee, or (d) the occurrence of any Default or Event of Default. The Agent
and the Banks shall not be liable for any error, omission, interruption or delay
in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. The Company agrees that
any action taken or omitted by the Agent or any Bank under or in connection with
each Letter of Credit and the related drafts and documents, if done in good
faith, shall be binding upon the Company and shall not result in any liability
on the part of the Agent or any Bank to the Company or any Commerce Subsidiary.
(S)2A.5. RELIANCE BY ISSUER. To the extent not inconsistent with
-------- -- ------
(S)2A.4 (except the first two sentences thereof), the Agent shall be entitled to
rely, and shall be fully protected in relying upon, any Letter of Credit, draft,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons and upon advice and statements of legal
counsel, independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement unless it shall first have received such advice or concurrence of
the Majority Banks as it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under
-25-
this Agreement in accordance with a request of the Majority Banks, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon the Banks and all future holders of the Notes or of a Letter of Credit
Participation.
(S)2A.6. LETTER OF CREDIT FEE. The Company agrees to pay, on the date
------ -- ------ ---
of issuance or any extension or renewal of any Letter of Credit and at such
other time or times as such charges are customarily made by the Agent, a fee (in
each case, a "Letter of Credit Fee") to the Agent in respect of such Letter of
Credit equal to (i) three quarters of one percent (3/4%) per annum of the face
amount of such Letter of Credit, to be for the accounts of the Banks in
accordance with their respective Commitment Percentages, plus (ii) the Agent's
----
customary issuance or amendment fee, as the case may be, in the amount of one
quarter of one percent (1/4%) of the face amount of such standby Letter of
Credit, to be for the Agent's own account, plus (iii) the Agent's customary
----
negotiation fee as determined by the Agent, to be for the Agent's own account.
(S)3. CERTAIN GENERAL PROVISIONS.
------- ------- ----------
(S)3.1. FUNDS FOR PAYMENTS.
------------------
(A) PAYMENTS TO AGENT. All payments of principal of and interest
------------------
on the Loans, Reimbursement Obligations, the Agent's Fee, the Commitment Fees
and any other amounts due hereunder shall be made by the Company in United
States Dollars to the Agent for the respective accounts of the Banks, or (in the
case of the Agent's Fee), the Agent, in immediately available funds at the
Agent's head office at the address set forth therefor in Schedule 1.1 hereto or
-------- ---
at such other location in the Boston, Massachusetts area that the Agent may from
time to time designate.
(B) NO OFFSET, ETC. All payments by the Company and the Commerce
---------------
Subsidiaries hereunder and under any of the other Loan Documents shall be made
without setoff or counterclaim and free and clear of and without deduction for
any taxes, levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any jurisdiction or any political subdivision thereof or
taxing or other authority therein unless the Company or such Subsidiary is
compelled by law to make such deduction or withholding. If any such obligation
is imposed upon the Company or the Commerce Subsidiaries with respect to any
amount payable by them hereunder or under any of the other Loan Documents, the
Company will pay to the Agent, for the account of the Banks or (as the case may
be) the Agent, on the date on which such amount is due and payable hereunder or
under such other Loan Document, such additional amount in Dollars as shall be
necessary to enable the Banks or the Agent to receive the same net amount which
the Banks or the Agent would have received on such due date had no such
obligation been imposed upon the Company or such Commerce Subsidiary. The
Company will deliver promptly to the Agent certificates or other valid vouchers
for all taxes or other charges deducted from or paid with respect to payments
made by
-26-
the Company or such Commerce Subsidiary hereunder or under such other Loan
Document. Nothing contained in this (S)3.1(b) shall be deemed to impose upon the
Company any obligation to pay taxes based upon the income or profits of the
Agent or any Bank.
(S)3.2. COMPUTATIONS. All computations of interest on the Loans and of
------------
Commitment Fees, Letter of Credit Fees or other fees shall be based on a 360-day
year and paid for the actual number of days elapsed. Except as otherwise
provided in the definition of the term "Interest Period" with respect to
Eurodollar Rate Loans, whenever a payment hereunder or under the Notes becomes
due on a day which is not a Business Day, the due date for such payment shall be
(a) in the case of Base Rate Loans, the next succeeding Business Day, and (b) in
the case of Eurodollar Rate Loans, the Business Day next succeeding the day on
which such payment would otherwise have become due, such Business Day to be
selected (such selection to be made by the Agent two Business Days prior to the
Drawdown Date and notice thereof shall be given to the Company and the Banks not
later than five Business Days after the Drawdown Date or upon request by the
Company, provided, that any failure by the Agent to give such notice shall not
--------
in any way affect the obligation of the Company to make such payment when due)
by the Agent in accordance with the then current banking practice in any
Eurodollar Interbank Market selected by the Agent in its sole discretion acting
in good faith, as the case may be, and interest and commitment fees hereunder
shall be adjusted accordingly. The outstanding amount of the Loans as reflected
on the Records from time to time shall be considered correct and binding on the
Company unless within five (5) Business Days after receipt of any notice by the
Agent or any of the Banks of such outstanding amount, the Agent or such Bank
shall notify the Company to the contrary.
(S)3.3. ADDITIONAL COSTS, ETC. If any present or future applicable law,
---------- ----- ---
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Bank or the Agent by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law), shall in
the case of any Loans, any Letters of Credit or any Commitment:
(a) subject any Bank or the Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, such Bank's Commitment or the Loans or
Letters of Credit (other than taxes based upon or measured by the income or
profits of such Bank or the Agent), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the principal of or the
interest on any Loans, any Reimbursement Obligations or any other amounts
-27-
payable to any Bank or the Agent under this Agreement or any of the other Loan
Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held by, or
deposits in or for the account of, or loans or letters of credit by, or
commitments of, any office of any Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Agreement, the other Loan Documents, the
Loans, any Letters of Credit, such Bank's Commitment, or any class of
commitments, letters of credit or loans of which any of the Loans, any Letters
of Credit or such Bank's Commitment forms a part,
and the result of any of the foregoing is
(i) to increase the cost to any Bank of making, funding,
issuing, renewing, extending or maintaining any of the Loans or such Bank's
Commitment or any Letter of Credit, or
(ii) to reduce the amount of principal, interest, fees,
Reimbursement Obligations or other amount payable to such Bank or the Agent
hereunder on account of such Bank's Commitment, any Letter of Credit or any
of the Loans, or
(iii) to require such Bank or the Agent to make any payment or
to forego any interest, principal, Reimbursement Obligation or other sum
payable hereunder, the amount of which payment or foregone interest or
Reimbursement Obligation, principal or other sum is calculated by reference
to the gross amount of any sum receivable or deemed received by such Bank
or the Agent from the Company hereunder,
then, and in each such case, the Company will, within five (5) days following
demand made by such Bank (through the Agent) or, as the case may be, the Agent
at any time and from time to time and as often as the occasion therefor may
arise, pay to the Agent for the respective accounts of the Banks or for the
Agent's own account such additional amounts as will be sufficient to compensate
such Bank or the Agent for such additional cost, reduction, payment or foregone
interest, principal or other sum. Each Bank or, as the case may be, the Agent
shall give the Company prompt notice of any event causing such additional cost,
reduction, payment or foregone interest, Reimbursement Obligation or other sum.
(S)3.4. INDEMNIFICATION FOR LOSSES. Without prejudice to any of the
--------------- --- ------
foregoing provisions of this Agreement, the Company will, on demand by any Bank
(through the Agent), at any time and from time to time and as often as the
occasion therefor may arise, indemnify such Bank against any losses, costs or
expenses
-28-
which such Bank may at any time or from time to time sustain or incur with
respect to any Eurodollar Rate Loans as a consequence of
(a) the failure by the Company to borrow any Eurodollar Rate Loan on
the date of borrowing designated by the Company,
(b) the failure by the Company to pay, punctually on the due date
thereof, any amount payable by the Company under this Agreement,
(c) the accelerated payment of any of the Company's obligations under
this Agreement as a result of an Event of Default, or
(d) any voluntary or mandatory prepayment made with respect to any
Eurodollar Rate Loan other than on the last day of an Interest Period.
Such losses, costs or expenses, including interest or fees payable by such Bank
to lenders of funds obtained by it in order to maintain any such Loans, will be
determined by such Bank on a commercially reasonable basis and will include in
the case of any such accelerated payment, but not be limited to, the amount by
which:
(i) the total amount of interest which would have accrued on the
principal so repaid or prepaid during the period (in this (S)3.4 called the
"Reemployment Period") beginning on the date of such repayment or
prepayment and ending on the last day of the Interest Period relating to
the principal so repaid or prepaid, such total amount of interest to be
calculated on the basis of the Eurodollar Rate applicable to such Interest
Period:
exceeds
(ii) the total amount of interest which would accrue and become
payable to such Bank during the Reemployment Period on the principal repaid
or prepaid if such Bank, following such repayment or prepayment, were to
use its best efforts to reemploy as soon as possible the principal so
repaid or prepaid by (A) placing with a prime bank in the Eurodollar
Interbank Market selected by such Bank deposits of dollars in amounts equal
(as nearly as may be) to the principal so repaid or prepaid and for the
number of days equal (as nearly as may be) to the Reemployment Period, or
(as such Bank may elect) (B) buying at face value from a prime bank a
negotiable certificate of deposit issued by such prime bank in an amount
equal (as nearly as may be) to the principal so repaid or prepaid and
having a maturity comparable to the Reemployment Period.
(S)3.5. CAPITAL ADEQUACY. If any present or future law, governmental
------- --------
rule, regulation, policy, guideline or directive (whether or not having the
force of law) or the interpretation thereof by a court or governmental authority
with appropriate jurisdiction affects the amount of capital required or expected
to be maintained by any Bank or the Agent, or any corporation controlling such
Bank or the Agent and
-29-
such Bank or the Agent determines that the amount of capital required to be
maintained by it is increased by or based upon the existence of such Bank's or
the Agent's commitment with respect to the credit facility established hereunder
or the Loans, Letter of Credit Participations or Letters of Credit made, issued,
maintained, extended or renewed pursuant hereto, then such Bank or the Agent may
notify the Company of such fact. To the extent that the costs of such increased
capital requirements are not reflected in the Base Rate or Eurodollar Rate, or
in amounts paid or payable by the Company pursuant to (S)(S)3.3 or 3.4 hereof,
the Company and such Bank or (as the case may be) the Agent shall thereafter
attempt to negotiate in good faith, within thirty (30) days of the day on which
the Company receives such notice, an adjustment payable hereunder which will
adequately compensate such Bank or the Agent in light of these circumstances. If
the Company and such Bank or the Agent are unable to agree to such adjustment
within thirty (30) days of the date on which the Company receives such notice,
then commencing on the date of such notice (but not earlier than the effective
date of any such increased capital requirement), the fees payable hereunder
shall increase by an amount that will, in such Bank's or the Agent's reasonable
determination, provide adequate compensation. Each Bank and the Agent shall
allocate such cost increases among its customers in good faith and on an
equitable basis. For the purposes of (S)3.3 and this (S)3.5, any costs
reimbursed to FNBB as a Bank shall not be reimbursable to FNBB as Agent, and to
the extent that costs attributable to any Bank's Loans, any Letter of Credit
Participation or Commitment are reimbursed by such Bank to the Agent, such costs
shall not be reimbursable by the Company to the Agent and any costs reimbursed
to the Agent which are attributable to the Commitment, Letter of Credit
Participations or Loans of any Bank shall not be reimbursed to such Bank.
(S)3.6. BANK CERTIFICATE. A certificate signed by an officer of any Bank,
---- -----------
setting forth any additional amount required to be paid by the Company to such
Bank under (S)(S)3.3, 3.4 or 3.5 hereof and the computations made by such Bank
to determine such additional amount, shall be submitted by such Bank to the
Company in connection with each demand made at any time by such Bank upon the
Company under (S)(S)3.3, 3.4 or 3.5. Without limiting the negotiation
requirements of (S)3.5 (with respect to certificates issued on account of
additional amounts required to be paid pursuant to (S)3.5), such certificate
shall constitute prima facie evidence as to the additional amount owed.
----- -----
(S)3.7. INABILITY TO DETERMINE EURODOLLAR RATE. In the event that, prior
--------- -- --------- ---------- ----
to the commencement of any Interest Period relating to any Eurodollar Rate Loan,
the Agent shall determine that adequate and reasonable methods do not exist for
ascertaining the Eurodollar Rate that would otherwise determine the rate of
interest to be applicable to any Eurodollar Rate Loan during any Interest
Period, the Agent shall forthwith give notice of such determination (which shall
be conclusive and binding on the Company and the Banks) to the Company and the
Banks. In such event (a) any Loan Request or Conversion Request with respect to
Eurodollar Rate Loans shall be deemed a request for Base Rate Loans, (b) each
Eurodollar Rate Loan will automatically, on the last day of the then current
Interest Period relating thereto, become a Base Rate Loan, unless the Agent has
-30-
received timely notice of the Company's intent to prepay such Eurodollar Rate
Loan or any portion thereof pursuant to (S)2.9, and (c) the obligations of the
Banks to make Eurodollar Rate Loans shall be suspended until the Agent
determines that the circumstances giving rise to such suspension no longer
exist, whereupon the Agent shall so notify the Company and the Banks. Neither
the Agent nor any Bank shall in any event be responsible to the Company in any
way if it is not able for any reason beyond its control to quote a Eurodollar
Rate with respect to any proposed Interest Period.
(S)3.8. ILLEGALITY. Notwithstanding any other provisions herein, if any
----------
present or future law, regulation, treaty or directive or in the interpretation
or application thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Company and the other Banks and thereupon (a) the
commitment of such Bank to make Eurodollar Rate Loans or convert Base Rate Loans
to Eurodollar Rate Loans shall forthwith be suspended and (b) such Bank's Loans
then outstanding as Eurodollar Rate Loans, if any, shall be converted
automatically to Base Rate Loans on the last day of each Interest Period
applicable to such Eurodollar Rate Loans, unless the Agent has received timely
notice of the Company's intention to prepay such Eurodollar Rate Loan or any
portion thereof pursuant to (S)2.11, or within such earlier period as may be
required by law. The Company hereby agrees promptly to pay the Agent for the
account of such Bank, upon demand by such Bank, any additional amounts necessary
to compensate such Bank for any costs incurred by such Bank in making any
conversion in accordance with this (S)3.9, including any interest or fees
payable by such Bank to lenders of funds obtained by it in order to make or
maintain its Eurodollar Loans hereunder.
(S)4. GUARANTY.
--------
The Obligations shall be guaranteed by each of the Commerce Subsidiaries
pursuant to the terms of the Guaranty.
(S)5. REPRESENTATIONS AND WARRANTIES. The Company, for itself and on
--------------- --- ----------
behalf of its Subsidiaries, hereby represents and warrants to the Banks and the
Agent as follows:
(S)5.1. CORPORATE EXISTENCE.
--------- ---------
(A) ORGANIZATION; CORPORATE POWER AND AUTHORITY. Each of the
-------------------------------------------
Commerce Companies (i) is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation, and (ii) has
adequate corporate power and authority and full legal right to own or to hold
under lease its properties and to carry on the business in which it is presently
engaged and will be engaged upon consummation of the transactions contemplated
hereby.
(B) FOREIGN QUALIFICATION. Each of the Commerce Companies is
---------------------
qualified and in good standing as a foreign corporation and is licensed,
admitted or approved to do business as a foreign corporation in each
jurisdiction wherein the
-31-
character of the properties owned or held under lease by it, or the nature of
the business conducted by it, makes such qualification necessary, except where
(i) such failure to qualify would not have a material adverse effect on such
Commerce Company or on the enforceability against such Commerce Company of any
of the Loan Documents or (ii) (A) such Commerce Company is a Subsidiary which
was acquired pursuant to (S)9.5 within thirty (30) days prior to the date on and
as of which this representation and warranty is being made or repeated and (B)
the Company and such Subsidiary are using all reasonable efforts to obtain the
appropriate license, admission or qualification.
(c) Each of the Commerce Companies has adequate corporate power and
authority and has full legal right to enter into each of the Loan Documents to
which it is or is to become a party, to perform, observe and comply with all of
its agreements and obligations under each of such documents, and, with respect
to the Company, to make all of the borrowings contemplated by this Agreement.
(S)5.2. SUBSIDIARIES; SHARES OWNED BY THE COMMERCE COMPANIES. Schedule
---------------------------------------------------- --------
5.2 attached hereto sets forth all entities in which one or more of the Commerce
---
Companies (a) owns or holds of record and/or beneficially (whether directly or
indirectly) five percent (5%) or more of any class of the capital stock thereof,
(b) the aggregate purchase price of all capital stock owned or held of record
and/or beneficially (whether directly or indirectly) by such Commerce Company or
Commerce Companies in any one such entity equals or exceeds $200,000 or (c) the
aggregate purchase price of all capital stock owned or held of record and/or
beneficially (whether directly or indirectly) by such Commerce Company or
Commerce Companies in all such entities equals or exceeds $1,000,000. Schedule
--------
5.2 contains a complete description of all shares described in the preceding
---
sentence together with a complete list of all Subsidiaries of the Company and
sets forth the authorized capital of all classes of the capital stock of each
Commerce Subsidiary on the date hereof, together with the ownership on the date
hereof of all of the issued and outstanding shares of each such class. Other
than Subsidiaries of the Commerce Companies organized under the laws of
jurisdictions located outside the United States, none of the Commerce Companies
has any Subsidiaries which are not Commerce Subsidiaries or Non-Guarantor
Subsidiaries. On the Closing Date, Sterling Software, Inc. and its Subsidiaries
do not own in the aggregate, legally or beneficially, in excess of one percent
(1%) of all of the outstanding shares of the capital stock of the Company.
(S)5.3. CORPORATE AUTHORITY, ETC. The execution and delivery by each of
--------- --------- ---
the Commerce Companies of each of the Loan Documents to which it is or is to
become a party, the performance by each of the Commerce Companies of all of its
agreements and obligations under each of such documents, and the transactions
contemplated hereby and thereby, including the making by the Company of all of
the borrowings contemplated by this Agreement, have been duly authorized as of
the date hereof (except that in the case of a Commerce Subsidiary acquired
pursuant to (S)9.5, such execution, delivery and authorization shall have been
completed no later than the later to occur of (a) the date of such acquisition,
and
-32-
(b) five Business Days following receipt by the Company or such Commerce
Subsidiary of forms of the Loan Documents, or amendments thereto, as
appropriate, to which such Commerce Subsidiary is to become a party), by all
necessary corporate action on the part of each Commerce Company and its
respective shareholders and are within the corporate authority of such Person,
and do not and will not (i) contravene or conflict with any provision of its
charter or by-laws (each as from time to time in effect), (ii) conflict with, or
result in a breach of any material term, condition or provision of, or
constitute a default under or result in the creation of any mortgage, lien,
pledge, charge, security interest or other encumbrance upon any of the property
of any of the Commerce Companies (other than the liens created under any of the
Loan Documents) under any agreement, trust deed, indenture, mortgage or other
instrument to which any of the Commerce Companies is or may become a party or by
which any of the Commerce Companies or any of the property of any of the
Commerce Companies is or may become bound or affected, the consequences of which
would reasonably be expected to have a material adverse effect on the Commerce
Companies taken as a whole or would have an effect in any material respect on
the enforceability of any of the Loan Documents, (iii) violate or contravene any
provision of any law, regulation, order, ruling or interpretation thereunder or
any decree, order or judgment of any court or governmental or regulatory
authority, bureau, agency or official (all as from time to time in effect and
applicable to any of the Commerce Companies), except where such violation or
contravention would not materially adversely affect the Commerce Companies taken
as a whole and would not have any effect in any material respect on the
enforceability of the Loan Documents, (iv) require any waivers, consents or
approvals by any of the creditors of any of the Commerce Companies which have
not been obtained, (v) require any consents or approvals by any shareholders of
any of the Commerce Companies, or (vi) require any approval, consent, order,
authorization or license by, or giving notice to, or taking any other action
with respect to, any governmental or regulatory authority or agency under any
provision of any applicable law, except those actions which have been taken or
will be taken prior to the Closing Date or where the failure to do so would not
result in a material adverse effect on the Commerce Companies taken as a whole
and would not have any effect in any material respect on the enforceability of
the Loan Documents.
(S)5.4. BINDING EFFECT OF DOCUMENTS, ETC. Each of the Commerce Companies
------- ------ -- --------- ---
has duly executed and delivered each of the Loan Documents to which it is a
party and each of such documents is in full force and effect. The agreements
and obligations of each of the Commerce Companies contained in each of the Loan
Documents to which it is a party constitute legal, valid and binding obligations
enforceable against it in accordance with their respective terms, except as
enforceability is limited by bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting generally the enforcement of creditors'
rights and except to the extent that the availability of the remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought.
-33-
(S)5.5. NO DEFAULTS OR EVENTS OF DEFAULT. No Default or Event of Default
-- ------------------ -- -------
has occurred and is continuing.
(S)5.6. CHIEF EXECUTIVE OFFICES; MAILING ADDRESSES. Until the Agent
----- --------- --------------------------
receives written notice of a change, the chief executive offices of the Company
and the offices where all material records and books of account of the Company
are kept, shall be located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, and the Company's mailing address shall be as provided in (S)18
hereof, and the chief executive offices of each of the Commerce Subsidiaries,
the offices where all material records and books of account of each of the
Commerce Subsidiaries are kept, and the mailing addresses of each of the
Commerce Subsidiaries, shall be as set forth in Schedule 5.6 hereto.
-------- ---
(S)5.7. FINANCIAL STATEMENTS AND PROJECTIONS.
--------- --------------------------
(A) FINANCIAL STATEMENTS. The Company has furnished to each of the
--------------------
Banks a consolidated balance sheet of the Company and its Subsidiaries as at the
Balance Sheet Date, and consolidated statements of operations and income and
stockholders' equity of the Company and its Subsidiaries for the fiscal year
then ended, certified by Ernst & Young, LLP, and an unaudited consolidated
balance sheet of the Company and its Subsidiaries at June 30, 1996, and
unaudited consolidated statements of operations and retained earnings of the
Company and its Subsidiaries for the fiscal period then ended. Such financial
statements were prepared in accordance with generally accepted accounting
principles and fairly present the financial condition of the Company and its
Subsidiaries (on a pro forma basis with respect to the Balance Sheet Date) as at
--- ----
the close of business on the dates thereof and the results of operations for the
fiscal period then ended. There are no contingent liabilities of the Company and
its Subsidiaries as of either of such dates involving material amounts not
disclosed in such financial statements and the related notes thereto.
(B) PROJECTIONS. Copies of the most recently prepared projections
-----------
of the annual and quarterly operating budgets of the Company and its
Subsidiaries on a consolidated basis, balance sheets and cash flow statements
for the fiscal quarter of the Company and its Subsidiaries ending September 30,
1996 have been delivered to each Bank. To the knowledge of the Company or any of
its Subsidiaries, no facts exist that (individually or in the aggregate) would
result in any material change in any of such projections. The projections are
based upon reasonable estimates and assumptions and reflect the reasonable
estimates of the Company and its Subsidiaries of the results of operations and
other information projected therein.
(S)5.8. NO MATERIAL CHANGES, ETC. Except as disclosed in the Forms 10-Q
-- -------- ------- ---
and Forms 8-K of the Company and its Subsidiaries filed by Sterling Software,
Inc. and its Subsidiaries with the Securities and Exchange Commission and
previously delivered to the Agent and the Banks, since the Balance Sheet Date,
there has occurred no materially adverse change in the financial condition,
business or prospects of the Company and its Subsidiaries taken as a whole as
shown on or
-34-
reflected in the consolidated balance sheet of the Company and its Subsidiaries
as at the Balance Sheet Date, or the consolidated statements of operations for
the fiscal year then ended. None of the Commerce Subsidiaries has made any
Distribution since the Balance Sheet Date, except to the Company or another
Commerce Subsidiary.
(S)5.9. MORTGAGES AND LIENS. None of the property, assets, income or
--------- --- -----
revenues of any character, or any rights relating thereto, of any of the
Commerce Companies is subject to any mortgage, lien, pledge, charge, security
interest or other encumbrance of any kind, other than Permitted Liens. Set
forth on Schedule 5.9 hereto is a true and correct list of each office or other
------------
location maintained by any of the Commerce Companies in the United States of
America. In all jurisdictions set forth on Schedule 5.9, and, to the best
------------
knowledge of the Company (without having conducted UCC searches), in all other
jurisdictions located in the United States of America, any state thereof or the
District of Columbia, no financing statement which names any of the Commerce
Companies as a debtor has been filed pursuant to Article 9 of the Uniform
Commercial Code of any state of the United States or the District of Columbia,
and none of the Commerce Companies has signed any financing statement or
security agreement or authorized any Person to file any such financing statement
in any such jurisdiction, except (a) for notice filings by lessors of personal
property or equipment under leases, or (b) with respect to Permitted Liens.
(S)5.10. INDEBTEDNESS. Neither the Company nor any of its Subsidiaries
------------
has any Indebtedness other than Indebtedness expressly permitted by the
provisions contained in (S)9.1 of this Agreement.
(S)5.11. LITIGATION. Except as set forth on Schedule 5.11 hereto as of
---------- -------- ----
the date hereof, or as previously disclosed to the Agent in writing (with the
Agent disclosing such information to the Banks promptly following receipt
thereof), there is no pending or, to the best of the knowledge of any of the
Company's officers and directors, threatened action, suit, proceeding or
investigation before any court, tribunal, governmental or regulatory authority,
agency, commission, or board of arbitration against the Company or any of its
Subsidiaries which seeks or demands damages in excess of $1,500,000 or which
would otherwise reasonably be expected materially adversely to affect the
transactions contemplated hereby or the operations or the financial condition of
the Company and its Subsidiaries taken as a whole or to materially impair the
right of the Company and its Subsidiaries, considered as a whole, to carry on
business substantially as now conducted by them, or to result in any material
liability not adequately covered by insurance or for which adequate reserves are
not maintained on the consolidated balance sheet of the Company and its
Subsidiaries, or which questions the validity of this Agreement or any of the
other Loan Documents or any action taken or to be taken pursuant hereto or
thereto, nor does the Company or any of its Subsidiaries know of any reasonable
basis for any such litigation to exist. Set forth on Schedule 5.11 hereto are
-------------
descriptions of all escrow arrangements to which the Company or any of its
Subsidiaries is a party with respect to pending litigation against the Company
or any of its Subsidiaries which must be disclosed pursuant to this (S)5.11.
-35-
(S)5.12. NO DEFAULT. Except for alleged defaults relating to the matters
-- -------
set forth on Schedules 5.11 and 5.12 hereof as of the date hereof, or as
--------- ---- ----
previously disclosed to the Agent in writing, no material default under any
contract, agreement or instrument to which any Commerce Company is a party or by
which it or any of its property is bound, has occurred and is continuing beyond
the grace period specified therefore in such contract, instrument or agreement,
the consequence of which default would reasonably be expected materially
adversely to affect the financial condition, assets, or operations of any of the
Company and its Subsidiaries taken as a whole. The Agent shall disclose
information disclosed to it in writing pursuant to the preceding sentence to the
Banks promptly following receipt thereof. Notwithstanding the foregoing, the
information set forth on Schedules 5.11 and 5.12 is for disclosure purposes
--------- ---- ----
only, and nothing contained in Schedules 5.11 or 5.12 shall be deemed an
--------- ---- ----
admission by the Company or any Subsidiary that any default exists under any
contract, agreement or instrument to which such Commerce Company is a party or
by which such Commerce Company or any of its property is bound.
(S)5.13. TAXES. Except as set forth on Schedule 5.13, as of the date
----- -------- ----
hereof, the Company, for itself and on behalf of its Subsidiaries, has filed all
United States federal tax returns required to be filed by it, and each of the
Company and, to the best knowledge of the Company, its Subsidiaries has filed
all state and other tax returns required to be filed by it other than (i) those
returns relating to taxes (A) with respect to which the Company or any such
Subsidiary, as the case may be, in good faith and using due diligence and all
deliberate speed, is investigating or ascertaining the extent of its liability,
if any, and (B) with respect to which (1) no lien or notice has been filed in
any public recording office, and (2) neither the Company nor such Subsidiary has
received notice of a lien or the threat or initiation of an enforcement
proceeding or has reason to believe that such a lien or enforcement proceeding
is likely to occur or is specifically contemplated by appropriate authorities,
or (ii) those returns as to which the failure to so file would not, in the
opinion of the Company, create an outstanding liability for taxes due or
interest and penalties thereon in excess of $1,000,000 in the aggregate for the
Company and its Subsidiaries. As of the date hereof, each of the Company and
its Subsidiaries has paid, or has made reasonable provision for payment of, all
material taxes (if any) which have or may become due and payable with respect to
any past or present taxation period pursuant to any of the said returns or
pursuant to any matters raised by audits or for other reasons known to it, other
than those taxes referenced in subparagraphs (i) and (ii) above and taxes the
amount, applicability, or validity of which are currently being contested by it
in good faith by appropriate proceedings and with respect to which it has set
aside on its books reserves (to the extent required by generally accepted
accounting principles and practices) reasonably deemed by it to be adequate with
respect thereto. Neither the Company nor any of its Subsidiaries has consented
to be treated as a "consenting corporation" as defined in Section 341(f) of the
Code.
(S)5.14. TRUE COPIES OF CHARTER AND OTHER DOCUMENTS. Each of the Commerce
---- ------ -- ------- --- ----- ---------
Companies has furnished or caused to be furnished, except any
-36-
Commerce Subsidiary acquired as permitted by (S)9.5 which Subsidiary shall,
within 30 days of such acquisition, have furnished or caused to be furnished, to
each of the Banks true and complete copies of (a) all of the charter and other
incorporation or association documents of each of the Commerce Companies
(together with any and all amendments thereto) and (b) the by-laws of each of
the Commerce Companies (together with any and all amendments thereto).
(S)5.15. EMPLOYEE BENEFIT PLANS.
-------- ------- -----
(a) IN GENERAL. Each Employee Benefit Plan has been maintained
-- -------
and operated in compliance in all material respects with the provisions of ERISA
and, to the extent applicable, the Code, including but not limited to the
provisions thereunder respecting prohibited transactions. The Company has
heretofore delivered to the Agent the most recently completed annual report,
Form 5500, with all required attachments, and actuarial statement required to be
submitted under (S)103(d) of ERISA, with respect to each Guaranteed Pension
Plan, if any.
(b) TERMINABILITY OF WELFARE PLANS. Under each Employee Benefit
------------- -- ------- -----
Plan which is an employee welfare benefit plan within the meaning of (S)3(1) or
(S)3(2)(B) of ERISA, no benefits are due unless the event giving rise to the
benefit entitlement occurs prior to plan termination (except as required by
Title I, Part 6 of ERISA). Subject to applicable legal requirements, the Company
or an ERISA Affiliate, as appropriate, may terminate each such Plan at any time
(or at any time subsequent to the expiration of any applicable bargaining
agreement) in the discretion of the Company or such ERISA Affiliate without
liability to any Person.
(c) GUARANTEED PENSION PLANS. Each contribution required to be
---------- ------- -----
made to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien provisions
of (S)302(f) of ERISA, or otherwise, has been timely made. No waiver of an
accumulated funding deficiency or extension of amortization periods has been
received with respect to any Guaranteed Pension Plan. No liability to the PBGC
(other than required insurance premiums, all of which have been paid) has been
incurred by the Company or any ERISA Affiliate with respect to any Guaranteed
Pension Plan and there has not been any ERISA Reportable Event, or any other
event or condition which presents a material risk of termination of any
Guaranteed Pension Plan by the PBGC. Based on the latest valuation of each
Guaranteed Pension Plan (which in each case occurred within twelve months prior
to the date of this representation), and on the actuarial methods and
assumptions employed for that valuation, the aggregate benefit liabilities of
all such Guaranteed Pension Plans within the meaning of (S)4001 of ERISA did not
exceed the aggregate value of the assets of all such Guaranteed Pension Plans by
a material amount, disregarding for this purpose the benefit liabilities and
assets of any Guaranteed Pension Plan with assets in excess of benefit
liabilities, except as otherwise permitted by (S)9.11(d).
-37-
(d) MULTIEMPLOYER PLANS. Neither the Company nor any ERISA Affiliate
------------- -----
has incurred any material liability (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under (S)4201 of ERISA or as a result of a sale of assets
described in (S)4204 of ERISA. Neither the Company nor any ERISA Affiliate has
been notified that any Multiemployer Plan is in reorganization or insolvent
under and within the meaning of (S)4241 or (S)4245 of ERISA or that any
Multiemployer Plan intends to terminate or has been terminated under (S)4041A of
ERISA.
(S)5.16. OTHER REPRESENTATIONS. Each of the representations and
----- ---------------
warranties made by each of the Commerce Companies in any of the Loan Documents
(to the extent that any such documents are in effect on any particular Drawdown
Date) was true and correct in all material respects when made and continues to
be true and correct in all material respects on the Closing Date, except to the
extent that, by the express terms thereof, any of such representations and
warranties relates solely to or is made as of a date falling prior to the
Closing Date, or except to the extent that any of such representations and
warranties may have been affected by the consummation of the transactions
contemplated and permitted or required by the Loan Documents.
(S)5.17. DISCLOSURE. No representation or warranty made by any of the
----------
Commerce Companies in this Agreement or in any agreement, instrument, document,
certificate, statement or letter furnished to the Agent by or on behalf of any
of the Commerce Companies in connection with any of the transactions
contemplated by any of the Loan Documents contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances in
which they are made. Except as disclosed in writing to the Agent, there is no
fact known to the Company or, to the best of the Company's knowledge, any of the
Commerce Subsidiaries which could reasonably be expected materially adversely to
affect, or which would reasonably be expected materially adversely to affect in
the future the condition, assets or operations of the Commerce Companies (other
than Non-Guarantor Subsidiaries) taken as a whole.
(S)5.18. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. None of the
------- ------- --- ---------- ------- ----
Commerce Companies is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it a
"registered investment company", or an "affiliated company" (other than solely
by reason of the ownership of 5% or more of the Company's outstanding voting
securities by a "registered investment company") or a "principal underwriter" of
a "registered investment company", as such terms are defined in the Investment
Company Act of 1940, as amended.
(S)5.19. REGULATIONS U AND X. The proceeds of the Loans shall be used,
----------- - --- -
and the Letters of Credit shall be obtained solely for financing Permitted
Acquisitions and for working capital and general corporate purposes. No portion
of any Loan or Letter of Credit is to be used, for the purpose of purchasing or
carrying any
-38-
"margin security" or "margin stock" as such terms are used in Regulations U and
X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221
and 224, nor is any portion of any Loan or Letter of Credit to be used in any
manner which, whether after giving effect to (S)8.17 or (S)8.19 or otherwise,
would be in violation of such Regulations U or X.
(S)5.20. FRANCHISES, PATENTS, COPYRIGHTS, ETC, Except as set forth on
---------- ------- ---------- ---
Schedule 5.20 hereto, each of the Commerce Companies possesses all franchises,
-------- ----
patents, copyrights, trademarks, trade names, licenses and permits, and rights
in respect of the foregoing, adequate for the conduct of its business
substantially as now conducted and has not received notice of any conflict
(which conflict has not been resolved prior to the Closing Date) with any rights
of others. Attached hereto as Schedule 5.20 is a true, correct, and complete
-------- ----
list of all patents, patent applications, federally registered copyrights,
trademarks, trademark applications, trade names and other intellectual property
owned by any of the Commerce Companies as of the Closing Date.
(S)5.21. NON-GUARANTOR SUBSIDIARIES. No Non-Guarantor Subsidiary (a) is
--------------------------
presently engaged in business of any kind or nature (except that such Non-
Guarantor Subsidiary may have qualified to do business in a foreign
jurisdiction), (b) has a net worth in excess of $1,000,000 or, in the case of
Sterling Commerce Leasing, Inc., in excess of $5,000,000 for any period of
thirty-five (35) or more consecutive days or (c) has issued any capital stock to
any Person other than the Company or a Commerce Subsidiary. The Non-Guarantor
Subsidiaries, taken as a whole, do not have assets as a result of which such
Non-Guarantor Subsidiaries' net worth, in the aggregate, equals or exceeds
$6,000,000.
(S)5.22. ENVIRONMENTAL COMPLIANCE.
------------- ----------
(a) To the best of the Company's knowledge, none of the Commerce
Companies, nor any of their operations, is in violation or alleged violation of
any judgment, decree, order, law, license, rule and regulation pertaining to
environmental matters, including those arising under any Environmental Law,
except where the failure so to comply would not have a material adverse effect
on the business, assets or financial condition of the Commerce Companies taken
as a whole.
(b) None of the Commerce Companies has received notice from any
third party including, without limitation: any federal, state or local
governmental authority, (i) that any one of them has been identified by the EPA
as a potentially responsible party under the Comprehensive Environmental
Responser, Compensation and Liability Act of 1980, as amended, with respect to a
site listed on the National Priorities List, 40 C.F.R. Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇; (ii)
that any hazardous waste, as defined by 42 U.S.C. (S)6903(5), any hazardous
substances as defined by 42 U.S.C. (S)9601(14), any pollutant or contaminant as
defined by 42 U.S.C. (S)9601(33) and any Hazardous Substances which any one of
them has generated, transported or disposed of has been found at any site at
which a federal, state or local agency or other third party has conducted or has
ordered that any of
-39-
the Commerce Companies conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law; or (iii) that it is or shall
be a named party to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise) arising out of
any third party's incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the release of Hazardous Substances.
(c) Except as set forth on Schedule 5.22 attached hereto and to
-------- ----
the Company's knowledge: (i) no portion of the Real Estate has been used by any
of the Commerce Companies for the handling, processing, storage or disposal of
Hazardous Substances except in accordance with applicable Environmental Laws;
(ii) in the course of any activities conducted by the Commerce Companies, no
Hazardous Substances have been generated or are being used on the Real Estate
except in accordance with applicable Environmental Laws.
(d) None of the Commerce Companies, or, to the Company's
knowledge, any of the Real Estate is subject to any applicable Environmental Law
requiring the performance of Hazardous Substances site assessments, or the
removal or remediation of Hazardous Substances, or the giving of notice to any
governmental agency or the recording or delivery to other Persons of an
environmental disclosure document or statement by virtue of the transactions set
forth herein and contemplated hereby, or as a condition to the effectiveness of
any other transactions contemplated hereby.
(S)5.23. SOLVENCY. Each of the Commerce Companies other than Sterling
--------
Commerce Leasing, Inc., on an individual basis as of the Closing Date, each
Subsidiary which becomes a Commerce Subsidiary and a guarantor under the
Guaranty in accordance with the requirements of (S)8.17 or (S)8.19, on an
individual basis as of any Drawdown Date following the date on which such
Subsidiary becomes a Commerce Subsidiary and a guarantor under the Guaranty in
accordance with the requirements of (S)8.17 or (S)8.19, and the Commerce
Companies on a consolidated basis as of the Closing Date and each Drawdown Date
occurring thereafter, both before and after giving effect to the transactions
contemplated hereby, (a) is solvent, (b) has assets having a fair salable value
in excess of the amount required to pay its probable liabilities as such
liabilities become absolute and mature, and (c) has access to adequate capital
for the conduct of its business and the ability to pay its respective debts from
time to time incurred in connection therewith as such debts mature in the
reasonably foreseeable future.
(S)6. CONDITIONS TO THE FIRST LENDING. The obligations of the Banks to
---------- -- --- ----- -------
make the first Loan hereunder and of the Agent to issue any initial Letters of
Credit shall be subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions precedent:
(S)6.1. LOAN DOCUMENTS, ETC.
---- --------- ---
(a) Each of the Loan Documents shall have been duly and properly
authorized, executed and delivered by the respective party or parties thereto,
shall
-40-
be in full force and effect on and as of the Closing Date, and shall be in form
and substance satisfactory to each of the Banks.
(b) Executed original counterparts of each of the Loan Documents
shall have been furnished to each of the Banks.
(S)6.2. LEGALITY OF TRANSACTIONS, ETC. No change in applicable law shall
-------- -- ------------ ---
have occurred as a consequence of which it shall have become and continue to be
unlawful (a) for any of the Banks to perform any of its agreements or
obligations under any of the Loan Documents to which it is a party on the
Closing Date or (b) for any of the Commerce Companies to perform any of its
agreements or obligations under any of the Loan Documents to which it is a party
on the Closing Date. The Banks shall have received such statements, including
applicable Forms U-1, in substance and form reasonably satisfactory to the Agent
as the Banks shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of the
Federal Reserve Systems.
(S)6.3. REPRESENTATIONS AND WARRANTIES. Each of the representations and
--------------- --- ----------
warranties made by or on behalf of the Commerce Companies to the Banks or the
Agent in this Agreement or the other Loan Documents shall be true and correct in
all material respects when made, shall, for all purposes of this Agreement, be
repeated on and as of the Closing Date, and shall be true and correct in all
material respects on and as of such date except, in each case, as affected by
the consummation of the transactions contemplated by the Loan Documents and to
the extent that such representation or warranty may relate by its terms solely
to a prior date.
(S)6.4. PERFORMANCE, ETC. Each of the Commerce Companies shall have duly
----------- ---
and properly performed, complied with and observed in all material respects each
of its covenants, agreements and obligations contained in any of the Loan
Documents to which it is a party or by which it is bound which are required to
be performed on the Closing Date. No event shall have occurred on or prior to
the Closing Date and be continuing on the Closing Date, and no condition shall
exist on the Closing Date, which constitutes a Default or an Event of Default or
which would constitute a Default or an Event of Default after giving effect to
the Loan or Loans being made on the Closing Date.
(S)6.5. CERTIFIED COPIES OF CHARTER DOCUMENTS. The Agent shall have
--------- ------ -- ------- ---------
received from each of the Commerce Subsidiaries copies, in sufficient quantity
for delivery to each Bank, certified by a duly authorized officer of each of the
Commerce Companies to be true and complete on the Closing Date, of each of (a)
its charter or other incorporation or association documents as in effect on such
date of certification, and (b) its by-laws as in effect on such date.
(S)6.6. PROOF OF CORPORATE ACTION. The Agent shall have received from
----- -- --------- ------
each of the Commerce Subsidiaries copies, in sufficient quantity for delivery to
each Bank, certified by a duly authorized officer of each of the Commerce
-41-
Subsidiaries to be true and complete on the Closing Date, of the records of all
corporate and shareholder action taken by each of the Commerce Subsidiaries to
authorize (a) its execution and delivery of each of the Loan Documents to which
it is or is to become a party, (b) its performance of all of its agreements and
obligations under each of such documents, and (c) the borrowings and other
transactions contemplated by this Agreement.
(S)6.7. INCUMBENCY CERTIFICATE. The Agent shall have received from each
---------- -----------
of the Commerce Subsidiaries incumbency certificates in sufficient quantity for
delivery to each Bank, dated the Closing Date, signed by a duly authorized
officer of each of the Commerce Subsidiaries, and giving the name and bearing a
specimen signature of each individual who shall be authorized: (i) to sign, in
the name and on behalf of each of the Commerce Subsidiaries, each of the Loan
Documents to which it is or is to become a party; (ii) in the case of the
Company, to make Loan Requests and Conversion Requests, and to apply for Letters
of Credit; and (iii) to give notices and to take other action on its behalf
under the Loan Documents.
(S)6.8. PROCEEDINGS AND DOCUMENTS. All corporate, governmental and other
----------- --- ---------
proceedings in connection with the transactions contemplated by the Loan
Documents and all instruments and documents incidental thereto, shall be in form
and substance reasonably satisfactory to the Agent, and the Agent shall have
received all such counterpart originals or certified or other copies of all such
instruments and documents as the Agent shall have reasonably requested.
(S)6.9. LEGAL OPINIONS. Each of the Agent and the Banks shall have
----- --------
received a written opinion, addressed to the Agent and each Bank, dated the
Closing Date, from ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Company and the
Commerce Subsidiaries, in substantially the form of Exhibit C hereto.
------- -
(S)6.10. UCC SEARCH RESULTS. The Agent shall have received the results of
------------------
recent UCC searches with respect to the assets of the Company and the Commerce
Companies in the jurisdictions listed on Schedule 5.9, indicating no liens other
------------
than Permitted Liens and otherwise in form and substance satisfactory to the
Agent.
(S)6.11. COMPLETION OF SPIN-OFF. The Company and Sterling Software, Inc.
----------------------
shall have taken all actions necessary or appropriate to complete the sale of
certain shares of the Company to the public and the distribution, on a tax-free
basis, to shareholders of Sterling Software, Inc. all shares of the capital
stock of the Company not so sold to the public so that neither Sterling
Software, Inc. nor any of its Subsidiaries or other Affiliates shall legally or
beneficially own in the aggregate in excess of one percent (1%) of all of the
outstanding shares of the capital stock of the Company. The Agent shall have
received from the Company, copies, in sufficient quantity for delivery to each
Bank, certified by a duly authorized officer of the Company to be true and
complete on the Closing Date, of the Tax Allocation Agreement and the
Indemnification Agreement.
-42-
(S)6.12. INSURANCE CERTIFICATES. The Agent shall have received (a)
--------- ------------
certificates of insurance from independent insurance brokers dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of (S)8.8.
(S)6.13. PAYMENT OF FEES. The Company shall have paid to the Agent, for
---------------
the pro rata accounts of the Banks, the closing fee pursuant to (S)2.14, and
--------
shall have paid to the Agent, for its own account, the Agent's fee pursuant to
(S)2.13.
(S)7. CONDITIONS TO SUBSEQUENT LOANS. The obligation of the Banks to make
---------- -- ---------- -----
any Loans subsequent to the initial Loan or of the Agent to issue, extend or
renew any Letter of Credit after the Closing Date shall be subject to the
satisfaction of the following conditions precedent:
(S)7.1. LEGALITY OF TRANSACTIONS. It shall not be unlawful (a) for any
-------- -- ------------
of the Banks or the Agent to perform any of its agreements or obligations under
any of the Loan Documents to which the Banks or the Agent are a party on the
Drawdown Date of such Loan or such Letter of Credit, or (b) for any of the
Commerce Companies to perform any of its material agreements or obligations
under any of the Loan Documents to which such Commerce Company is a party on
such date.
(S)7.2. REPRESENTATIONS AND WARRANTIES; NO DEFAULT OR EVENT OF DEFAULT.
--------------- --- ------------------------------------------
Each of the representations and warranties made by or on behalf of any of the
Commerce Companies to the Banks or the Agent in this Agreement or any other Loan
Document or in any other document or instrument delivered pursuant to or in
connection with this Agreement shall be true and correct in all material
respects when made and shall, for all purposes of this Agreement, be deemed to
be repeated on and as of the date of the Company's notice of borrowing for such
Loan or the date of the Letter of Credit Application for such Letter of Credit
and on and as of the Drawdown Date of such Loan or such Letter of Credit and
shall be true and correct in all material respects on and as of each of such
dates, except, in each case, as affected by the consummation of the transactions
contemplated by the Loan Documents and to the extent that such representation or
warranty may relate by its terms solely to a prior date, and except that, within
the 30 day period following each acquisition consummated pursuant to (S)9.5,
Schedules 5.2, 5.6, 5.11 (but only to the extent that the Company would not be
--------- --- --- ----
required to report the litigation to be included in Schedule 5.11 within 30 days
-------- ----
pursuant to (S)8.5), 5.12, 5.13 (but only to the extent that any changes to
---- ----
Schedule 5.13 arise solely from failure by the newly acquired Subsidiary to file
-------- ----
state or local tax returns or pay state or local taxes and in no event arise as
a result of any failure to pay any federal taxes or failure to file any federal
tax returns or as a result of existence of any tax lien on any assets of such
newly acquired Subsidiary), and 5.20 may not be complete and accurate as a
----
result of such acquisition as set forth in (S)9.5(b), provided, that the Company
--------
shall, during such thirty (30) day period, take any and all necessary action to
bring such newly acquired Subsidiary into full compliance with each
representation and warranty set forth in (S)5 hereof, and provided,
--------
-43-
further, that no change resulting from any acquisition would have a material
-------
adverse affect on the Commerce Companies taken as a whole. No Default or Event
of Default shall have occurred and be continuing.
(S)7.3. PERFORMANCE, ETC. Each of the Commerce Companies shall have duly
----------- ---
and properly performed, complied with and observed in all material respects each
of its covenants, agreements and obligations contained in (S)(S)8, 9 and 10
hereof, and shall have duly and properly performed, complied with and observed
in all material respects its covenants, agreements and obligations in all other
sections of this Agreement and any of the other Loan Documents to which it is a
party or by which it is bound on the Drawdown Date for such Loan or such Letter
of Credit. No event shall have occurred on or prior to such date and be
continuing on such date, and no condition shall exist on such date, which
constitutes a Default or an Event of Default.
(S)7.4. PROCEEDINGS AND DOCUMENTS. All corporate, governmental and other
----------- --- ---------
proceedings in connection with the transactions contemplated by the Loan
Documents and all instruments and documents incidental thereto shall be in form
and substance reasonably satisfactory to the Agent and the Agent shall have
received all such counterpart originals or certified or other copies of all such
instruments and documents as the Agent shall have reasonably requested.
(S)7.5. CONTINUED COMPLIANCE WITH CERTAIN REGULATIONS. Without limiting
--------- ---------- ---- ------- -----------
the generality of (S)7.2, each of the Commerce Companies shall certify to the
Agent, in substantially the form of Exhibit D hereto, that such Commerce Company
------- -
is in full compliance with Regulations U and X of the Board of Governors of the
Federal Reserve System and shall, upon request of the Agent, attach to such
certificate all appropriate forms, including Form U-1, which evidence such
compliance. Notwithstanding the foregoing, the Banks shall not be required to
make Loans, and the Agent shall not be obligated to issue any Letters of Credit,
on any Drawdown Date if the Agent or any Bank independently, in its sole
judgment and having given due regard to the certificate delivered pursuant to
this paragraph, determines or reasonably believes that any Commerce Company is
not in compliance with Regulation U or X as of such Drawdown Date.
(S)7.6. GOVERNMENTAL REGULATION. Each Bank shall have received such
------------ ----------
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
(S)8. AFFIRMATIVE COVENANTS OF THE COMPANY. The Company covenants and
----------- --------- -- --- -------
agrees that, so long as any Loan, Unpaid Reimbursement Obligation, Letter of
Credit or Note is outstanding or the Banks have any obligation to make Loans, or
the Agent has any obligation to issue, extend or renew any Letters of Credit
hereunder, unless the Majority Banks otherwise agree in writing:
-44-
(S)8.1. PUNCTUAL PAYMENT. The Company will duly and punctually pay or
-------- -------
cause to be paid the principal and interest on the Loans, the Reimbursement
Obligations, the Letter of Credit Fees, the Commitment Fees, the Agent's Fee and
all other amounts provided for in this Agreement and the other Loan Documents to
which the Company or any of its Subsidiaries is a party, all in accordance with
the terms of this Agreement and such other Loan Documents.
(S)8.2. LEGAL EXISTENCE, ETC. Except for any Commerce Company which is
----- --------- ---
then a Non-Guarantor Subsidiary, which has been merged into another Subsidiary
or the Company in compliance with (S)9.4, or which has been disposed of in
compliance with the provisions of (S)9.9, the Company will, and will cause each
of the other Commerce Companies to, maintain its legal existence and good
standing under the laws of its jurisdiction of incorporation, maintain its
qualification to do business in each state in which the failure to do so would
have a material adverse effect on the condition, financial or other, of the
Company or any of the Commerce Subsidiaries and maintain all of its rights and
franchises reasonably necessary to the conduct of its business.
(S)8.3. USE OF LOAN PROCEEDS. The Company shall use the proceeds of the
--- -- ---- --------
Loans and will obtain Letters of Credit solely (a) to make Permitted
Acquisitions and (b) for general corporate and working capital purposes, and not
in violation of Regulations U or X of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Parts 221 and 224.
(S)8.4. FINANCIAL STATEMENTS. The Company will furnish financial
--------- ----------
statements and other reports to each of the Banks as follows:
(a) promptly upon the filing of the Company's annual 10-K Report
with the Securities and Exchange Commission, the consolidated balance sheets and
the related consolidated statements of operations, stockholders' equity and cash
flows (the "consolidated financial statements") of the Company and its
Subsidiaries, as at the end of such fiscal year, in reasonable detail, each
setting forth in comparative form the corresponding figures for the preceding
year, prepared in accordance with generally accepted accounting principles
consistently applied, and accompanied by a report and unqualified opinion of a
nationally recognized firm of independent certified public accountants selected
by the Company and reasonably satisfactory to the Agent (except that a
qualification for a change in accounting principles with which such firm of
independent certified public accountants concurs shall be permitted);
(b) promptly upon the filing of the Company's quarterly 10-Q
Report with the Securities and Exchange Commission, unaudited consolidated
financial statements of the Company and its Subsidiaries for which a 10-Q Report
is required, prepared in accordance with generally accepted accounting
principles, together with a certification by an Authorized Officer of the
Company that the information contained in such financial statements fairly
presents the financial position of the Company and its Subsidiaries on the date
thereof (subject only to year-end adjustments);
-45-
(c) contemporaneously with the delivery of the financial
statements referred to in subparagraphs (a) and (b) above but in no event later
than one hundred twenty (120) days after the close of the fiscal year of the
Company and seventy-five days after the end of each fiscal quarter of the
Company, a statement, substantially in the form of Exhibit D hereto, showing
------- -
compliance by the Company with the covenants set forth in (S)(S)9 and 10 hereof
and setting forth in reasonable detail computations evidencing such compliance
and (if applicable) reconciliations to reflect changes in generally accepted
accounting principles since the Balance Sheet Date, certified by an Authorized
Officer of the Company ("Compliance Certificate");
(d) at the time of delivery of each quarterly and annual
statement referred to in clauses (a) and (b) above, a certificate, executed by
an Authorized Officer, (i) stating that such officer has caused this Agreement
to be reviewed and has no knowledge of any default by the Company in the
performance or observance of any of the provisions of this Agreement, during
such quarter or at the end of such year, or, if such officer has such knowledge,
specifying each default and the nature thereof, and (ii) setting forth (A) each
pending or threatened action or suit of which the Company is aware affecting the
Company or any of its Subsidiaries or to which the Company or any of its
Subsidiaries is a party, involving an uninsured claim against any such Person
which is in excess of $1,500,000 or which could otherwise reasonably be expected
to have a material adverse effect on the Company and its Subsidiaries taken as a
whole and which was not previously reported pursuant to (S)8.5, or the last
quarterly certificate and (B) any Commerce Subsidiary deactivated in accordance
with (S)8.18 since the date of the last certificate delivered pursuant to this
clause (d);
(e) as soon as practicable but, in any event, within twenty (20)
Business Days after the issuance thereof, copies of all other financial
statements and reports as the Company or the Company shall send to its
stockholders as such, and copies of all regular and periodic reports which any
of the Commerce Companies may be required to file pursuant to federal securities
laws or regulations with the Securities and Exchange Commission or any similar
or corresponding federal or state governmental commission, department or agency
substituted therefor;
(f) (i) with reasonable promptness following the delivery of the
financial statements referred to in subsection (a) above, annual projections of
the Company and its Subsidiaries on a consolidated basis in the form previously
delivered pursuant to (S)5.7(b) for the fiscal year most recently commenced; and
(ii) upon completion thereof, any forecasts updating such annual projections
prepared by the Company; and
(g) with reasonable promptness, such other data as the Agent or
any of the Banks may reasonably request.
-46-
(S)8.5. NOTICE OF LITIGATION AND JUDGMENT AND ENVIRONMENTAL EVENTS.
------ -- ---------- --- -------- --- ------------- ------
(A) LITIGATION AND JUDGMENTS. The Company will, for itself and
------------------------
on behalf of its Subsidiaries, give notice to the Agent in writing within thirty
(30) days of becoming aware of any pending or threatened action or suit
affecting the Company or any of its Subsidiaries or to which the Company or any
of its Subsidiaries is or becomes a party involving an uninsured claim against
the Company or any of its Subsidiaries which seeks or demands damages in excess
of $1,500,000, and stating the nature and status of such litigation or
proceedings. The Company will, for itself and on behalf of its Subsidiaries,
give notice to the Agent on behalf of the Banks, in writing, in form and detail
satisfactory to the Agent, within ten (10) days of any judgment not covered by
insurance, final or otherwise, against the Company or any of its Subsidiaries in
an amount in excess of $1,000,000.
(B) ENVIRONMENTAL EVENTS. The Company will promptly give notice
--------------------
to the Agent upon becoming aware of (i) of any violation of any Environmental
Law that any of the Commerce Companies reports in writing or is reportable by
such Person in writing (or for which any written report supplemental to any oral
report is made) to any federal, state or local environmental agency and (ii)
upon becoming aware thereof, of any inquiry, proceeding, investigation, or other
action, including a notice from any agency of potential environmental liability,
or any federal, state or local environmental agency or board, that has the
potential to materially affect the assets, liabilities, financial conditions or
operations of the Commerce Companies taken as a whole.
(S)8.6. NOTICE OF DEFAULT. The Company, on behalf of itself and its
------ -- -------
Subsidiaries, will promptly notify the Agent in writing upon becoming aware of
the occurrence of any Default or Event of Default. If any Person shall give any
notice or take any other action in respect of a claimed default (whether or not
constituting a Default or Event of Default) under this Agreement, the other Loan
Documents, or any note, evidence of indebtedness, indenture or other obligation
to which or with respect to which the Company or any of the Commerce
Subsidiaries is a party or obligor, whether as principal, guarantor, surety or
otherwise, such Company or the Commerce Subsidiary, as the case may be, shall
forthwith, upon becoming aware thereof, give written notice thereof to the
Agent, describing the notice or action and the nature of the claimed default.
(S)8.7. BOOKS AND RECORDS. The Company will, and will cause each of the
----- --- -------
Commerce Subsidiaries to, keep true and accurate records and books of account in
which full, true and correct entries, together with all financial statements
provided for herein, shall, to the extent generally accepted accounting
principles are applicable thereto, be made in accordance with generally accepted
accounting principles consistently applied.
-47-
(S)8.8. INSURANCE. The Company will, for itself and on behalf of the
---------
Commerce Subsidiaries, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas (which may
include reasonable self insurance) and in amounts, containing such terms, in
such forms and for such periods as may be reasonably satisfactory to the Agent.
Without limiting the foregoing, the Company will, for itself and on behalf of
the Commerce Subsidiaries, (i) keep all of its physical property insured against
fire and extended coverage risks in amounts and with deductibles equal to those
generally maintained by businesses engaged in similar activities in similar
geographic areas, (ii) maintain all such workers' compensation or similar
insurance as may be required by law, except in instances involving immaterial
operations of any Commerce Subsidiary and where the failure to maintain such
insurance would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole, and (iii) maintain, in amounts and with
deductibles equal to those generally maintained by businesses engaged in similar
activities in similar geographic areas, general public liability insurance
against claims for bodily injury, death or property damage occurring on, in or
about the properties of the Company and the Commerce Subsidiaries (other than
Non-Guarantor Subsidiaries), and business interruption insurance. All such
policies of insurance shall provide for ten days' prior written minimum
cancellation notice to the Agent. In the event of failure to provide and
maintain insurance as herein provided, the Agent may, at its option, after
giving notice to the Company, provide such insurance and charge the amount
thereof to the Company. The Company shall furnish to the Agent promptly
following receipt of same certificates or other evidence satisfactory to the
Agent of compliance with the foregoing insurance provision, and shall, upon the
request of the Agent, provide certified copies of all policies evidencing such
insurance signed by the insurer or an agent authorized to bind the insurer.
(S)8.9. TAXES. The Company, for itself and on behalf of its
-----
Subsidiaries, will pay or cause to be paid all taxes or other assessments or
governmental charges or levies imposed upon it or upon its income or profits or
upon property belonging to it prior to the time when any penalties or interest
(except interest during extensions of time for filing of returns not in excess
of seven (7) months for taxes owed to United States taxing authorities and
twelve (12) months for taxes owed to taxing authorities located outside of the
United States) accrue with respect thereto, unless (a) in any such case, the
same is being contested in good faith by appropriate proceedings and an
appropriate reserve therefor has been established and is maintained in
accordance with generally accepted accounting principles, (b) in any such case,
the Company or any such Subsidiary, as the case may be, is in good faith and
using due diligence and all deliberate speed, investigating or ascertaining the
extent of the liability for such unpaid taxes, if any, and (i) no lien or notice
thereof has been filed in any public recording office with respect to such
unpaid taxes, and (ii) neither the Company nor any such Subsidiary has received
notice of a lien or the initiation of an enforcement proceeding with respect to
such unpaid taxes or has reason to believe that such a lien or enforcement
proceeding is
-48-
likely to occur or is specifically contemplated by appropriate authorities or
(c) the failure to so pay would not have a material adverse effect on any of the
Commerce Companies individually, or on the Company and its Subsidiaries taken as
a whole.
(S)8.10. CONDUCT OF BUSINESS. The Company will, and will cause each of
------- -- --------
the other Commerce Companies to, continue to engage in the businesses engaged in
by such Commerce Companies on the Closing Date (except in the case of
dispositions permitted under (S)9.9); and will, and will cause each of the
Commerce Companies to, comply in all material respects with all federal, state
and local laws, regulations, rules and ordinances applicable to it or its
properties, noncompliance with which could reasonably be expected to materially
adversely affect its financial condition, assets or operations, but, except as
otherwise provided in (S)8.9 with respect to payment of taxes, other assessments
or governmental charges or levies, it shall not be a breach of this (S)8.10 if
any Commerce Company fails to comply with such laws, rules and regulations
during any period in which such Commerce Company is in good faith diligently
contesting the validity thereof by appropriate proceedings.
(S)8.11. COMPLIANCE WITH LAW, CONTRACTS, LICENSES AND PERMITS. The
---------- ---- ------------------------------------
Company will, and will cause each of the Commerce Companies to, (i) comply (A)
with all laws (including Environmental Laws), rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject,
noncompliance with which could reasonably be expected to have a material adverse
effect on its business, operations or financial condition or the ability of any
of the Commerce Companies to fulfill its obligations under the Agreement or the
other Loan Documents; (B) the provisions of its charter documents and by-laws,
(C) all agreements and instruments by which it or any of its properties may be
bound (including, without limitation, any of the escrow arrangements set forth
on Schedule 5.11 hereto), non-compliance with which would reasonably be expected
-------------
to have a materially adverse effect on the business, operations or financial
conditions of the Commerce Companies taken as a whole or on the ability of any
of the Commerce Companies to fulfill its obligations under this Agreement or the
other Loan Documents; and (D) all applicable decrees, orders and judgments, non-
compliance with which would reasonably be expected to have a materially adverse
effect on the business, operations or financial condition of the Commerce
Companies taken as a whole or the ability of any of the Commerce Companies to
fulfill its obligations under this Agreement or the other Loan Documents; and
(ii) promptly obtain, maintain, apply for renewal, and not allow to lapse, any
authorization, consent, approval, license or order, and accomplish any filing or
registration with any court or judicial, administrative or governmental
authority which may be or may become necessary in order that it perform in all
material respects all of its obligations under this Agreement or the other Loan
Documents and in order that the same may be valid and binding and effective in
accordance with their terms and in order that the Banks may be able freely to
exercise and enforce any and all of their rights under this Agreement or the
other Loan Documents.
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(S)8.12. ACCESS TO PROPERTIES AND BOOKS; COMMERCIAL FINANCE EXAMINATIONS;
------ -- ---------- --- ----- ---------- ------- -------------
CONFIDENTIALITY.
---------------
(a) Subject to all applicable federal laws and regulations
relating to the need for appropriate security clearance, the Company will, and
will cause each of the other Commerce Companies to, permit the Agent and each of
the Banks, by its representatives and agents, to inspect any of the properties,
including corporate books, computer files and tapes and financial records of
each Commerce Company, to examine and make copies of the books of accounts and
other financial records of each Commerce Company, and to discuss the affairs,
finances and accounts of each Commerce Company with, and to be advised as to the
same by, their respective officers at such reasonable times and intervals as the
Banks may designate. The Banks and the Agent agree that they will treat in
confidence all financial and proprietary information with respect to the
Commerce Companies, including financial projections delivered pursuant to
(S)5.7(b) and (S)8.4(f), and all other information obtained during such
inspection which is designated by the Company, either in advance (which may be
in the form of a master list of confidential information provided to the Agent)
or at such inspection as confidential and will not, without the consent of the
Company, disclose such information to any third party other than its attorneys
and auditors (who agree to be bound by the provisions of this (S)8.12) or at any
judicial or administrative proceeding and, if any representative or agent of the
Banks or the Agent shall not be an employee of one of the Banks or the Agent or
any affiliate of the Banks or the Agent, such designee shall be reputable and of
recognized standing and shall agree in writing to treat in confidence the
information obtained during any such inspection and, without the prior written
consent of the Company, not to disclose such information to any third party or
make use of such information for personal gain. For purposes of this Section,
the Agent and the Banks agree that all software licensed by the Company or its
Subsidiaries shall be deemed to be proprietary information. Notwithstanding the
foregoing, the Company hereby authorizes each of the Agent and Banks to disclose
information obtained pursuant to this Agreement to banks or other financial
institutions authorized in writing by the Company under (S)17 who are
participants or potential participants in the Loans made or to be made or
Letters of Credit issued or to be issued hereunder and who agree to be bound by
the provisions of this (S)8.12 together with their respective attorneys and
auditors (who agree to be bound by the provisions of this (S)8.12) and where
required or requested by governmental or regulatory authorities or in or as part
of any judicial or administrative proceeding.
(b) Subject to the confidentiality and security clearance
restrictions set forth in paragraph (a) of this (S)8.12, the Company will, and
will cause each of its Subsidiaries to, permit the Agent, the Banks or any of
their respective representatives, upon reasonable notice to the Company, to
conduct commercial finance examinations from time to time at the Company's
expense.
(S)8.13. ALLOWANCES. The Company will, and will cause each of its
----------
Subsidiaries (other than Non-Guarantor Subsidiaries) to, maintain, on the
respective books and records of each such Subsidiary, or cause to be maintained
on
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behalf of each such Subsidiary, (a) appropriate allowances for depreciation,
depletion, obsolescence, amortization and bad debts and (b) adequate accrued
liabilities for taxes on income and other liabilities as required in accordance
with generally accepted accounting principles.
(S)8.14. CHANGE OF CORPORATE NAME; MAINTENANCE OF OFFICE. The Company
------ -- --------- ---------------------------
shall notify the Agent within thirty days of any change in its corporate name or
in the corporate names of any of the Commerce Companies. Until the Agent
receives notice of a change (i) the Company will maintain its chief executive
office and the offices where all of its material records and books of account
are kept, at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and
(ii) each of the Commerce Subsidiaries shall maintain its chief executive office
(which office shall also be the office where all of its material records and
books of account are kept), at the offices set forth in Schedule 5.6 hereto.
-------- ---
(S)8.15. EMPLOYEE BENEFIT PLAN. The Company will (i) promptly upon filing
---------------------
the same with the Department of Labor or Internal Revenue Service, furnish to
the Agent a copy of the most recent actuarial statement required to be submitted
under (S)103(d) of ERISA and Annual Report, Form 5500, with all required
attachments, in respect of each Guaranteed Pension Plan and (ii) promptly upon
receipt or dispatch, furnish to the Agent any notice, report or demand sent or
received in respect of a Guaranteed Pension Plan under (S)(S)302, 4041, 4042,
4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan,
under (S)(S)4041A, 4202, 4219, 4242, or 4245 of ERISA.
(S)8.16. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES.
-----------------------------------------------
(A) CORPORATE EXISTENCE. Except for any Commerce Company which
-------------------
is then a Non-Guarantor Subsidiary, which has been merged into the Company or a
Commerce Subsidiary in compliance with (S)9.4, or which has been disposed of in
compliance with the provisions of (S)9.9, the Company will, and will cause each
of the other Commerce Companies to, maintain its legal existence and good
standing under the laws of its jurisdiction of incorporation, maintain its
qualification to do business in each state in which the failure to do so would
have a material adverse effect on the condition, financial or otherwise, of the
Commerce Companies, taken as a whole, and to maintain all of its rights and
franchises reasonably necessary to the conduct of its business.
(B) MAINTENANCE OF PROPERTIES. The Company will, and will cause
-------------------------
each of the other Commerce Companies to, (i) cause all of its properties
necessary or appropriate in the conduct of its business to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment, unless failure to do so would not have a materially adverse effect on
the financial condition, business or operations of the Company and its
Subsidiaries taken as a whole, (ii) cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of such Commerce Company may be necessary so that the business carried
on in connection therewith may be advantageously conducted at all times, unless
failure
-51-
to do so would not have a materially adverse effect on the financial condition,
business or operations of the Company and its Subsidiaries taken as a whole,
(iii) comply in all material respects with all federal, state and local laws,
regulations, rules and ordinances applicable to it or its properties,
noncompliance with which would reasonably be expected to materially adversely
affect its financial condition, assets or operations, provided that it shall not
--------
be a breach of this (S)8.16(b) if any Commerce Company fails to comply with such
laws, rules and regulations during any period in which such Commerce Company is
in good faith diligently contesting the validity thereof by appropriate
proceedings, and (iv) continue to engage primarily in the businesses now
conducted by it (except in the case of dispositions permitted under (S)9.9) and
in related businesses; provided that nothing in this (S)8.16(b) shall prevent
-------- ----
any of the Commerce Companies from discontinuing the operation and maintenance
of any of its properties if such discontinuance is, in the judgment of such
Commerce Company, desirable in the conduct of its business and that do not in
the aggregate materially adversely affect the business of the Company and its
Subsidiaries on a consolidated basis.
(S)8.17. ACTIVATION OF NON-GUARANTOR SUBSIDIARIES. On any date upon which
---------- -- ------------- ------------
(a) any one or more of the Non-Guarantor Subsidiaries (i) commences to engage in
business of any kind or nature or (ii) acquires or otherwise receives assets as
a result of which such Non-Guarantor Subsidiary's net worth equals or exceeds
(A) $1,000,000, or (B) in the case of Sterling Commerce Leasing, Inc., in excess
of $5,000,000 for any period of thirty-five (35) or more consecutive days, or
(b) the Non-Guarantor Subsidiaries, taken as a whole, have or receive assets as
a result of which such Non-Guarantor Subsidiaries' net worth, in the aggregate,
equals or exceeds $6,000,000, the Company shall provide written notice thereof
to the Agent, and such Subsidiary or Subsidiaries shall, in accordance with the
provisions of this (S)8.17, be activated and shall be required to become a
Commerce Subsidiary and a guarantor under the Guaranty, except that in the case
of those Non-Guarantor Subsidiaries whose net worth is less than $1,000,000
individually (or, in the case of Sterling Commerce Leasing, Inc., less than
$5,000,000 for any period of thirty-five (35) or less consecutive days) but in
the aggregate is greater than $6,000,000, only such of the Non-Guarantor
Subsidiaries as shall reduce the aggregate net worth of all remaining Non-
Guarantor Subsidiaries to an amount less than $6,000,000 shall be required to
become guarantors under the Guaranty. As soon as practicable following receipt
of any such notice, the Agent or the Agent's Special Counsel shall provide such
activated Subsidiary or Subsidiaries with forms of the Loan Documents (including
the Guaranty) to which such activated Subsidiary is or such activated
Subsidiaries are to be a party, or appropriate amendments thereto, as well as
forms of acceptable legal opinions and other documents necessary to demonstrate
the due authorization, execution and delivery by such activated Subsidiary or
Subsidiaries of such Loan Documents or amendments thereto and the enforceability
thereof. The Company shall cause such activated Non-Guarantor Subsidiary or
Subsidiaries, as the case may be, to deliver executed copies of such Loan
Documents, amendments, legal opinions and other documents to the Agent within
fifteen (15) days following its or their receipt of the forms thereof from the
Agent or the Agent's Special Counsel. Upon the later to occur of (i) the date
of activation of such Non-Guarantor Subsidiary or (ii) the
-52-
delivery of such executed counterparts of such Loan Documents, amendments, legal
opinions and other documents to the Agent, (A) each such Subsidiary shall cease
to be a Non-Guarantor Subsidiary for purposes of this Agreement and shall become
a Commerce Subsidiary and a guarantor under the Guaranty hereunder and shall
comply with and be bound by all of the terms and conditions of the Loan
Documents (including the Guaranty) to which it becomes a party, and (B) the
Company shall cause such activated Subsidiary or Subsidiaries to take all
actions which it or they would have been required to make or take had it not
been a Non-Guarantor Subsidiary or Non-Guarantor Subsidiaries on the Closing
Date including, without limitation, making all representations and warranties as
a Commerce Subsidiary under each of the Loan Documents as of the date such
representations and warranties are made.
(S)8.18. DEACTIVATION OF COMMERCE SUBSIDIARIES. Effective immediately
-------------------------------------
upon any Commerce Subsidiary ceasing to do business and ceasing to have a net
worth of $1,000,000 or more (or, in the case of Sterling Commerce Leasing, Inc.,
ceasing to have a net worth of $5,000,000 or more after any period of thirty-
five (35) or more consecutive days), such Commerce Subsidiary shall become a
Non-Guarantor Subsidiary for purposes of this Agreement, provided, that such
--------
Commerce Subsidiary may thereafter be activated again pursuant to (S)8.17
hereto. The Company shall notify the Agent of the deactivation of any Commerce
Subsidiary in accordance with (S)8.4(d) hereof.
(S)8.19. NEW SUBSIDIARIES. Contemporaneously with the creation or
--- ------------
acquisition (in accordance with the provisions of (S)9.5) of any new domestic
Subsidiary of the Company, other than a Non-Guarantor Subsidiary, the Company
will notify the Agent of such Subsidiary's name and the address of its chief
executive offices. No later than fifteen (15) Business Days following the later
to occur of (a) the creation of such new Subsidiary or (b) receipt by the
Company or such new Subsidiary from the Agent or the Agent's Special Counsel of
forms of the Loan Documents (including the Guaranty) to which such new domestic
Subsidiary is to be a party, or appropriate amendments thereto, as well as forms
of acceptable legal opinions and other documents necessary to demonstrate the
due authorization, execution and delivery by such new domestic Subsidiary of
such Loan Documents or amendments thereto, the Company shall cause such new
domestic Subsidiary to deliver executed counterparts of such Loan Documents,
amendments, legal opinions and other documents to the Agent. Upon delivery of
such executed counterparts of such Loan Documents, amendments, legal opinions
and other documents to the Agent, (y) such new domestic Subsidiary shall become
a Commerce Subsidiary and a party to the Guaranty and shall comply with and be
bound by all of the terms and conditions of the Loan Documents as a Commerce
Subsidiary thereunder, and (z) the Company shall cause such new domestic
Subsidiary to take all actions, which it would have been required to make or
take had it been a Commerce Subsidiary and a party to the Guaranty on the
Closing Date including, without limitation, making all representations and
warranties as a Commerce Subsidiary under each of the Loan Documents to which it
is a party as of the date such representations and warranties are made.
-53-
(S)8.20. FURTHER ASSURANCES. The Company shall, and shall cause all
------- ----------
applicable Commerce Subsidiaries to, at any time or from time to time, execute
and deliver such further instruments and take such further action as may
reasonably be requested by the Agent, in each case further and more perfectly to
effect the purposes of this Agreement and the other Loan Documents.
(S)9. NEGATIVE COVENANTS OF THE COMPANY. The Company covenants and agrees
-------- --------- -- --- -------
that, so long as any Loan, Letter of Credit, Unpaid Reimbursement Obligation, or
Note is outstanding or any Bank has any obligations to make Loans, or the Agent
has any obligation to issue, extend or renew Letters of Credit hereunder, unless
the Majority Banks otherwise agree in writing:
(S)9.1. INDEBTEDNESS. The Company will not, and will not permit any of
------------
its Subsidiaries to, incur or permit to exist or remain outstanding any
Indebtedness to any Person, provided, however, that the Company and its
-------- -------
Subsidiaries may incur or permit to exist or remain outstanding:
(a) Indebtedness of the Commerce Companies arising under this
Agreement or the other Loan Documents;
(b) Indebtedness in respect of (i) operating leases, (ii) capitalized
leases existing as of the date hereof and listed on Schedule 9.1 and (iii) other
-------- ---
capitalized leases entered into in compliance with the provisions of (S)9.8;
(c) Indebtedness in respect of taxes, assessments, governmental
charges, and claims for labor, materials, services or supplies and liabilities
under employee benefit plans, including pension plans, to the extent that
payment thereof is not yet due, or to the extent that the amount, applicability,
or validity thereof is actively contested by the Company or its Subsidiaries in
good faith by appropriate proceedings and with respect to which, to the extent
required by generally accepted accounting principles, reserves have been set
aside on the books of the Company or its Subsidiaries (segregated to the extent
required by generally accepted accounting principles and practices) reasonably
deemed by the Company or its Subsidiaries to be adequate with respect thereto;
(d) Indebtedness in respect of the Guaranty;
(e) Intercompany Indebtedness;
(f) Indebtedness of the Company and its Subsidiaries under (i) the Tax
Allocation Agreement with respect to obligations incurred by the Company or any
of its Subsidiaries while the Company was a Subsidiary of Sterling Software,
Inc. and (ii) the Indemnification Agreement;
(g) Indebtedness up to $5,000,000 in the aggregate in respect of any
conditional sales agreements, security agreements, equipment leases intended as
security or otherwise in the nature of title retention agreements or security
agreements or other similar title retention agreements (not otherwise expressly
-54-
permitted by any of the other terms of this Section 9.1) entered into in the
ordinary course of business on, prior to or after the date of this Agreement in
order to secure the payment of the purchase price of any equipment purchased,
leased or otherwise acquired by any Commerce Company for use in the ordinary
course of its business; provided, however, that (A) no such agreement or lease
-------- -------
shall extend to or cover any property other than the property, the payment of
the purchase price of which is secured by such agreement or lease and (B) the
aggregate principal amount of all of the Indebtedness secured by any such
agreement or lease shall not exceed one hundred percent (100%) of the purchase
price or fair market value at the time of purchase or lease, whichever shall be
lower, of the property covered by such agreement or lease, and (iii) performance
bonds and other similar indebtedness incurred in the ordinary course of
business;
(h) up to $10,000,000 in the aggregate of Foreign Obligations
(including the Indebtedness of Subsidiaries of the Company in respect of which
such Foreign Obligations have been incurred;
(i) Indebtedness and other liabilities incurred in the ordinary course
of business not incurred through the borrowing of money or the obtaining of
credit except for credit on an open account basis customarily extended to the
Company or its Subsidiaries in connection with normal purchases of goods and
services;
(j) Indebtedness consisting of contingent liabilities to which
reference is or should be made by a footnote to the consolidated balance sheets
of the Company and its Subsidiaries in accordance with generally accepted
accounting principles to the extent that such contingent liabilities are not
quantifiable and were not voluntarily incurred;
(k) Indebtedness not otherwise permitted by subparagraph (m) of this
(S)9.1 and not to exceed $2,000,000 in aggregate amount consisting of
Investments in any Person which is in a line of business the same or similar to
that of the Company or its Subsidiaries;
(l) Indebtedness existing on the date hereof and set forth on Schedule
--------
9.1;
---
(m) Indebtedness constituting the purchase price of acquisitions
permitted by (S)9.5(a)(i)(B), to the extent that such Indebtedness is payable to
any Person to whom the purchase price or any portion thereof is, at the time of
reference thereto, scheduled to become due and owing at a future date; and
-55-
(n) So long as no Default or Event of Default has occurred and is
continuing or would occur after giving effect thereto, Indebtedness incurred by
the Company or any of its Subsidiaries in connection with the purchase by any of
the Commerce Accounts Receivable Agreement Parties of Commerce Accounts
Receivable in an aggregate amount outstanding at any time not to exceed
$20,000,000 for all Commerce Accounts Receivable Agreements.
Guaranties by the Company of the obligations of its Subsidiaries shall not
constitute Indebtedness to the extent that such obligations do not constitute
Indebtedness or are permitted in accordance with the above limitations.
(S)9.2. SECURITY INTERESTS AND LIENS. The Company will not, and will not
-------- --------- --- -----
permit any of its Subsidiaries to, (i) create or permit to exist any mortgage,
pledge, security interest or other lien or encumbrance on any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (ii) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (iii) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (iv) suffer to
exist for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; or (v) sell, assign, pledge or otherwise
transfer any accounts, contract rights, general intangibles or chattel paper
with or without recourse, except for the existence or creation of:
(a) existing liens, but, with respect to the Commerce Companies, only
to the extent described on Schedule 9.2(a) hereto;
-------- ------
(b) liens securing Indebtedness permitted by (S)9.1(n);
(c) liens arising from attachments or similar proceedings, pending
litigation, judgments or taxes or assessments in any such event whose validity
or amount is being contested in good faith by appropriate proceedings
satisfactory to the Agent and for which appropriate reserves have been
established and are maintained in accordance with generally accepted accounting
principles, or taxes and assessments which are not due and payable and which do
not have a material adverse effect on any of the Commerce Companies
individually, or against the Company and its Subsidiaries taken as a whole;
(d) liens of carriers, warehousemen, mechanics and materialmen and
other like liens;
(e) pledges or deposits made in connection with workmen's
compensation, unemployment or other insurance, old age pensions, or other Social
-56-
Security benefits, and good faith deposits in connection with tenders, contracts
or leases to which it is a party or deposits to secure, or in lieu of, surety,
penalty or appeal bonds, performance bonds and other similar obligations;
(f) such minor defects, irregularities, encumbrances, easements,
rights of way, and clouds on title as normally exist with respect to similar
properties which do not materially impair the property affected thereby for the
purpose for which it was acquired;
(g) landlords' liens arising by statute or common law in respect of
real estate leases;
(h) liens in respect of Indebtedness described in (S)(S)9.1(g) hereof,
provided, in the case of Indebtedness described in (S)9.1(g), that no such lien
--------
or security interest shall extend to or cover any property other than the
property the purchase of which is financed with such Indebtedness and the
aggregate principal amount of the Indebtedness secured by such liens, security
interests or mortgages shall not exceed the original fair market value of such
property;
(i) existing liens being assumed pursuant to or in connection with
acquisitions permitted pursuant to (S)9.5 and which do not extend to any assets
other than those specifically acquired and which were not created in
anticipation of such acquisition;
(j) liens on the authorized shares of the capital stock of the Company
held by the Company as treasury stock; and
(k) such other liens as are expressly permitted or otherwise consented
to by the Banks in writing.
(S)9.3. RESTRICTIONS ON INVESTMENTS. The Company may make Investments of
---------------------------
any kind or nature, except as otherwise limited by this Agreement, and provided
--------
that any Investment which is in the nature of a joint venture or general
partnership or similar investment vehicle shall be made with respect to a Person
in a similar line of business (or natural extensions thereof) as the Company and
its Subsidiaries.
(S)9.4. MERGER AND CONSOLIDATION. The Company will not at any time, and
------ --- -------------
will not cause or permit any of its Subsidiaries at any time to, become a party
to any merger or consolidation other than a disposition permitted pursuant to
(S)9.9, except that a Subsidiary (including a Subsidiary acquired or created
pursuant to permitted acquisitions under (S)9.5) may be merged or consolidated
with the Company if the Company shall be the continuing or surviving corporation
or with any one or more other Subsidiaries if the successor formed or resulting
from such consolidation or merger shall be a wholly-owned Subsidiary (except,
in the case of a Subsidiary not organized under the laws of the District of
Columbia or any state of the United States, for such third-party ownership as
may be permitted pursuant to (S)9.10) and, in each case, if no Default or Event
of Default shall have occurred
-57-
and be continuing or would occur upon consummation of such merger or
consolidation.
(S)9.5. ACQUISITIONS.
------------
(a) The Company will not at any time, and will not cause or permit any
of its Subsidiaries at any time to, agree to affect any asset acquisition (other
than an acquisition of inventory in the ordinary course of business or which is
a permitted capital expenditure pursuant to (S)9.8) or stock acquisition
representing a controlling interest in the issuer thereof, without the prior
consent of the Banks, except that, if no Default or Event of Default has
occurred and is continuing, or would occur immediately after giving affect
thereto:
(i) subject to the requirements of clause (b) hereof, the Company
may effect friendly acquisitions if (A) the total consideration for all
such acquisitions, including the sum of the cash, stock (as valued for the
purposes of such acquisitions) and other consideration comprising the
deferred (whether represented by promissory notes or otherwise) portion of
the purchase price, does not exceed, in the aggregate for all such
acquisitions made, $60,000,000 plus such additional amounts to which the
----
Agent and the Banks may from time to time agree, and (B) the amount of cash
or other deferred (whether represented by promissory notes or otherwise)
consideration constituting part or all of the purchase price of such
acquisitions does not exceed, in the aggregate for all such acquisitions
made, $20,000,000 plus such additional amounts to which the Agent and the
----
Banks may from time to time agree in writing; and
(ii) the Company or any of its Subsidiaries may acquire Commerce
Accounts Receivable to the extent required or permitted by any of the
Commerce Accounts Receivable Agreements (to the extent Indebtedness in
respect thereof is permitted by (S)9.1).
(b) All businesses acquired or commenced through any acquisition
referred to in paragraph (a) of this (S)9.5 shall be in the same or similar
lines of business (or natural extensions thereof) as current lines of business
of the Company and its Subsidiaries (provided that such businesses may include
--------
Subsidiaries or divisions which are not in such same lines of business, to the
extent that the preponderance of the assets acquired in connection with such
acquired business relate to, and the preponderance of the revenues historically
generated by such acquired business relate to, the same or similar lines of
business as currently engaged in by the Company and its Subsidiaries or natural
extensions thereof). No later than five (5) Business Days following the later
to occur of (a) any such Permitted Acquisition or (b) the receipt by the Company
or any newly acquired domestic Subsidiary from the Agent or the Agent's Special
Counsel of forms of the Loan Documents (including the Guaranty) to which such
newly acquired domestic Subsidiary is to be a party, or appropriate amendments
thereto, together with forms of acceptable legal opinions and other documents
necessary to demonstrate the due authorization, execution and delivery by such
newly acquired
-58-
domestic Subsidiary of such Loan Documents or amendments thereto, such newly
acquired domestic Subsidiary shall deliver executed counterparts of such Loan
Documents, amendment, legal opinions and other documents to the Agent in
accordance with the requirements of (S)8.18. Upon such delivery of such executed
counterparts of such Loan Documents, amendments, legal opinions and other
documents to the Agent, such newly acquired domestic Subsidiary shall be a party
to the Guaranty and a Commerce Subsidiary and shall comply with and be bound by
all of the terms and conditions of the Loan Documents to which it is a party. To
the extent that any such acquisition alters the accuracy or completeness of any
of Schedules 5.2, 5.6, 5.11 (but only to the extent that the Company would not
--------- --- --- ----
be required to report the litigation to be included in Schedule 5.11 within 30
-------- ----
days pursuant to (S)8.5), 5.13 (but only to the extent that any alteration to
----
Schedule 5.13 results solely from the failure of the newly acquired domestic
-------- ----
Subsidiary to file state or local tax returns, or the failure to pay state or
local taxes, and in no event arises from any failure to file any federal tax
returns or pay any federal taxes, or from the existence of any tax lien on any
assets of such newly acquired domestic Subsidiary), or 5.20, the Company shall
----
deliver to the Agent within 30 days of such acquisition, revised schedules
reflecting changes resulting from such acquisition, and during the 30 day period
immediately following such acquisition, the inaccuracy or incompleteness of the
representations and warranties relating to such schedules resulting from such
acquisition shall not constitute a Default or Event of Default, provided, that
--------
the Company shall, during such 30 day period, take any and all necessary action
to bring such newly acquired domestic Subsidiary into full compliance with each
representation and warranty set forth in (S)5 hereof, and provided, further,
-------- -------
that no change resulting from any acquisition would have a material adverse
affect on the Commerce Companies taken as a whole.
(S)9.6. CAPITAL EXPENDITURES. Capital Expenditures unrelated to
------- ------------
acquisitions permitted under (S)9.5 hereof shall not exceed, during any fiscal
period set forth in the table below, the amount set forth opposite such period
in the table below:
MAXIMUM
-------
PERIOD PERMISSIBLE AMOUNT
------ ------------------
October 1, 1995-- September 30, 1996 $35,000,000
October 1, 1996-- September 30, 1997 $46,000,000
October 1, 1997-- September 30, 1998 $60,000,000
October 1, 1998-- Final Maturity $75,000,000
(S)9.7. ASSET DISPOSITIONS. The Company will not at any time, and will
----- ------------
not cause or permit any of its Subsidiaries at any time to, become a party to
any disposition of assets without the consent of the Banks, except for:
(a) Dispositions of inventory and obsolescent equipment and
fixtures in the ordinary course of business;
-59-
(b) Sales or other dispositions of Subsidiaries, divisions or
product lines, provided, that:
--------
(i) (A) Contemporaneously with the signing of any binding letter of
intent with respect to such sale or other disposition, the Company (I)
notifies the Agent of such proposed sale or other disposition and (II)
provides preliminary financial information with respect to such proposed
sale or other disposition to the Agent and (B) the Company demonstrates to
the satisfaction of the Agent at least five (5) days in advance of the
consummation of such proposed sale or other disposition that, on a pro
---
forma basis (evidenced by projections and historical financial statements
-----
certified by the treasurer or another duly authorized financial officer of
the Company), it will continue to be in compliance with each of its
covenants set forth in (S)10 hereof following such disposition and that no
Default or Event of Default has occurred, is then existing, or would occur
as a result of or after giving effect to such disposition, and (C) if the
Subsidiary being disposed of is any of the Commerce Subsidiaries, all net
proceeds of such sale shall be paid over to the Agent for the respective
accounts of the Banks and the Agent as and when received by the Company or
any of its Subsidiaries to the extent of Outstanding Loans for application
against such Loans under this Agreement (with a reduction, at the option of
the Agent or upon the request of the Majority Banks, of the Total
Commitment in the amount of such proceeds); and
(ii) the aggregate annual revenues attributable to any such Subsidiary,
division or line (measured by the twelve full consecutive calendar months
most recently past as of the date of any such disposition) disposed of
shall not exceed $2,500,000;
(c) Sales or other dispositions of Investments which are Permitted
Investments;
(d) Sales of Commerce Accounts Receivable pursuant to the Commerce
Accounts Receivable Agreements in an aggregate amount outstanding at any time
not to exceed $20,000,000;
(e) Sales or other dispositions of assets by any of the Commerce
Companies (i) in an amount not to exceed $1,500,000 in any individual case or
(ii) $10,000,000 in the aggregate; and
(f) Sales or other dispositions of assets by the Company to any of the
Commerce Subsidiaries or by any of the Commerce Subsidiaries to the Company or
any other Commerce Subsidiary.
(S)9.8. CHANGE OF LOCATION. The Company will not at any time, and will
------ -- --------
not cause or permit any of the Commerce Subsidiaries at any time to, (a) change
the location of its chief executive offices, or (b) change the locations where
its records or books of account are kept without (in each case) giving at least
10 days'
-60-
prior written notice to the Agent specifying the new location of such office or
location.
(S)9.9. EMPLOYEE BENEFIT PLANS. Neither any Commerce Company nor any
-------- ------- -----
ERISA Affiliate will:
(a) engage in any "prohibited transaction" within the meaning of
(S)406 of ERISA or (S)4975 of the Code which could result in a material
liability for the Commerce Companies, which is not covered by a prohibited
transaction exemption granted by the Department of Labor; or
(b) (i) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency" (as such term is defined in (S)302 of ERISA), in excess of
$1,000,000, whether or not such deficiency is or may be waived; or (ii) in the
case of any Person acquired pursuant to (S)9.5, with a Guaranteed Pension Plan
subject to an "accumulated funding deficiency" in excess of $1,000,000, permit
such "accumulated funding deficiency" to exist for a period of more than twelve
months from the date of such acquisition, provided, that the Company shall, in
--------
any such case, deliver to the Agent (A) a certificate evidencing the amount of
such "accumulated funding deficiency", (B) evidence satisfactory to the Agent
that, on a pro-forma basis, the Company will continue to be in compliance with
each of the covenants set forth in (S)10 hereof after such acquisition and that
no Default or Event of Default shall occur after giving effect to such
acquisition, and (C) evidence satisfactory to the Agent that such "accumulated
funding deficiency" could be cured through merger with another Guaranteed
Pension Plan or otherwise; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could result
in the imposition of a lien or encumbrance on the assets of the Company pursuant
to (S)302(f) or (S)4068 of ERISA; or
(d) permit or take any action which would result in the aggregate
benefit liabilities (within the meaning of (S)4001 of ERISA) of all Guaranteed
Pension Plans exceeding the value of the aggregate assets of such Plans by a
material amount, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities, provided,
--------
that if merger of the affected Guaranteed Pension Plan would be permitted under
(S)414(l) of ERISA and would, if consummated, result in such Guaranteed Pension
Plan's aggregate assets equaling or exceeding in value such Guaranteed Pension
Plan's benefit liabilities, such Guaranteed Pension Plan's benefit liabilities
may exceed in value its aggregate assets for a period not to exceed twelve
months.
The Company will (i) promptly upon filing the same with the Department of
Labor or Internal Revenue Service and, upon request of the Agent, furnish to the
Agent a copy of the most recent actuarial statement required to be submitted
under (S)103(d) of ERISA and Annual Report, Form 5500, with all required
attachments, in respect of each Guaranteed Pension Plan and (ii) promptly upon
receipt or dispatch, furnish to the Agent any notice, report or demand sent or
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received in respect of a Guaranteed Pension Plan under (S)(S)302, 4041, 4042,
4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan,
under (S)(S)4041A, 4202, 4219, 4242, or 4245 of ERISA.
(S)9.10. ADDITIONAL SHARES. The Company will not at any time cause or
---------- ------
permit any of its Subsidiaries at any time, to issue any shares of any class of
capital stock of any Subsidiary without the prior written consent of the
Majority Banks, other than shares issued in connection with acquisitions
permitted by (S)9.5 or issued to the Company or to any directly or indirectly
wholly-owned Subsidiary of the Company; provided, however, that the shares of
-------- -------
any such Subsidiary not organized under the laws of the District of Columbia or
any of the states of the United States may be issued to third parties (i) which,
in the aggregate own not more than two percent of the shares of the capital
stock of such Subsidiary, or (ii) to the extent mandated by the laws of the
jurisdiction in which such Subsidiary is organized.
(S)9.11. NEGATIVE PLEDGES. Except as provided for herein, the Company
-------- -------
will not at any time, and will not cause or permit any of the Commerce
Subsidiaries at any time to, enter into any agreement or covenant with any
Person prohibiting the Company or such Commerce Subsidiary from mortgaging,
pledging, or subjecting to, or suffering to arise, any lien, charge or any other
encumbrance of, or against, any of its assets, tangible or intangible, real or
personal.
(S)9.12. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company will not, and
---------- ---- ------------- ----
will not permit any of its Subsidiaries to, (i) use any of the Real Estate or
any portion thereof for the handling, processing, storage or disposal of
Hazardous Substances, (ii) cause to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Hazardous
Substances, (iii) generate any Hazardous Substances on any of the Real Estate,
(iv) conduct any activity at any Real Estate or use any Real Estate in any
manner so as to cause a release (i.e. releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping) or threatened release of Hazardous Substances on, upon or
into the Real Estate or (v) otherwise conduct any activity at any Real Estate or
use any Real Estate in any manner that would violate any Environmental Law or
bring such Real Estate in violation of any Environmental Law.
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(S)9.13. DISTRIBUTIONS. The Company will not, and will not permit any of
-------------
its Subsidiaries to, make any Distributions, other than Distributions by any
Commerce Subsidiary to the Company or by any Subsidiary of a Commerce Subsidiary
to such Commerce Subsidiary; provided, however, that the Company may make
-------- -------
Distributions in respect of its preferred stock in an aggregate amount not to
exceed $500,000 in any fiscal year of the Company; and provided further that, so
----------------
long as no Default or Event of Default shall have occurred and be continuing,
the Company may repurchase shares of its own issued and outstanding capital
stock.
(S)10. FINANCIAL COVENANTS. The Company (which, for purposes of this
--------- ---------
(S)10, shall mean the Company and its Subsidiaries on a consolidated basis)
covenants and agrees that, so long as any Loan, Letter of Credit, Unpaid
Reimbursement Obligation or Note is outstanding or the Banks have any
obligations to make Loans, or the Agent has any obligation to issue, extend or
renew Letters of Credit, hereunder, unless the Majority Banks otherwise agree in
writing:
(S)10.1. PROFITABILITY. The Company shall not cause or permit
-------------
Consolidated Net Income or Consolidated Operating Income for any fiscal quarter
of the Company to be less than $1.00.
(S)10.2. OPERATING CASH FLOW TO INTEREST CHARGES. The Company shall not
---------------------------------------
cause or permit the ratio of Operating Cash Flow to Interest Charges for any
fiscal quarter of the Company to be less than 3.0:1.0.
(S)10.3. CURRENT RATIO. The Company shall not cause or permit the ratio
-------------
of Consolidated Current Assets to the sum of Consolidated Current Liabilities
plus Loans outstanding at the end of any fiscal quarter of the Company (a) from
----
October 1, 1995 through September 30, 1996 to be less than 1.0:1.0, (b) from
October 1, 1996 through September 30, 1997 to be less than 1.5:1.0 and (c) from
October 1, 1997 through Final Maturity, to be less than 2.0:1.0.
(S)10.4. CONSOLIDATED TANGIBLE NET WORTH. The Company shall not cause or
---------------------- --- -----
permit Consolidated Tangible Net Worth at the end of any fiscal quarter of the
Company to be less than the sum of (a) $75,000,000 plus (b) on a cumulative
----
basis, commencing with the fiscal quarter ending June 30, 1996, seventy-five
percent (75%) of the Consolidated Net Income for each fiscal quarter (calculated
without deduction for any net losses) through the fiscal quarter then ended,
after preferred stock dividends actually paid by the Company since June 30, 1996
(to the extent permitted by (S)9.13), and as adjusted from time to time to
reflect stock splits, distributions (other than repurchases by the Company of
its issued and outstanding capital stock, as permitted by (S)9.13), or
recapitalizations or reclassifications, plus (c) 100% of the net proceeds
received by the Company of any new equity (not including shares of the capital
stock of the Company reissued by the Company following the Company's repurchase
thereof as permitted by (S)9.13) issued by the Company since June 30, 1996.
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(S)10.5. LIABILITIES TO NET WORTH RATIO. The Company shall not cause or
------------------------------
permit the ratio of Consolidated Total Liabilities to Consolidated Net Worth at
the end of any fiscal quarter of the Company to equal or exceed 1.0:1.0.
(S)10.6. TOTAL DEBT TO OPERATING CASH FLOW RATIO. The Company shall not
---------------------------------------
permit the ratio of Total Debt as of the end of any fiscal quarter to Operating
Cash Flow for the four consecutive fiscal quarter period ending on such fiscal
quarter to be greater than 1.0:1.0.
(S)11. EVENTS OF DEFAULT; ACCELERATION. If any of the following events
------ -- ------- ------------
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice and/or lapse of time, "Defaults") shall
occur:
(a) if the Company shall fail to pay any principal of the Loans, or
the Company or any Commerce Subsidiary shall fail to pay any Reimbursement
Obligation owing by such Person, in each case within one (1) day following the
date on which the same becomes due and payable hereunder, whether at the stated
date of maturity or any accelerated date of maturity or at any other date fixed
for payment;
(b) if the Company shall fail to pay any interest on the Loans, any
Commitment Fee, any Agent's Fee, any Letter of Credit Fee, or any other sums, in
each case within two (2) days following the date on which the same becomes due
and payable hereunder, whether at the stated date of maturity or any accelerated
date of maturity or at any other date fixed for payment;
(c) if any of the Commerce Companies shall fail to comply with any of
its covenants contained in (S)(S)8 (excluding (S)8.12), 9 and 10 hereof;
(d) if any of the Commerce Companies shall fail to perform any term,
covenant or agreement contained herein or in any of the Loan Documents (other
than those specified elsewhere in this (S)11) for fifteen (15) days after
written notice of such failure has been given to the Company by the Agent or any
Bank;
(e) if any representation or warranty of any of the Commerce Companies
in this Agreement or in any of the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with this Agreement or the
Loan Documents shall prove to have been false in any material respect upon the
date when made;
(f) if any of the Commerce Companies shall fail to pay when due and
payable, or within any applicable period of grace, any obligations for borrowed
money or in respect of capitalized leases, which obligations exceed $1,000,000
in the aggregate, or fail to observe or perform in any material respect any
term, covenant or agreement contained in any material agreement by which it is
bound, evidencing or securing borrowed money for such period of time as would
permit
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(assuming the giving of appropriate notice if required) the holder or holders
thereof or of any obligations issued thereunder to accelerate the maturity
thereof;
(g) if any of the Company or its Subsidiaries makes an assignment for
the benefit of creditors, or admits in writing its inability to pay or generally
fails to pay its debts as they mature or become due, or petitions or applies for
the appointment of a trustee or other custodian, liquidator or receiver of any
of the Company or its Subsidiaries or of any substantial part of the assets of
any of the Company or its Subsidiaries or commences any case or other proceeding
relating to any of the Company or its Subsidiaries under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in effect, or
takes any action to authorize or in furtherance of any of the foregoing, or if
any such petition or application is filed or any such case or other proceeding
is commenced against any of the Company or its Subsidiaries and any of the
Company or its Subsidiaries indicates its approval thereof, consent thereto or
acquiescence therein;
(h) if a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any of the Company or its
Subsidiaries bankrupt or insolvent, or approving a petition in any such case or
other proceeding, or a decree or order for relief is entered in respect of the
Company or any Subsidiary of the Company in an involuntary case under Federal
bankruptcy laws as now or hereafter constituted;
(i) if there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any final
judgment against any of the Commerce Companies which, with other outstanding
final judgments, undischarged, against the Commerce Companies exceeds in the
aggregate $1,000,000;
(j) any of the Commerce Companies shall fail to comply with the
covenant contained in (S)8.12 hereof for one Business Day (in the case of the
Company) or for two Business Days (in the case of any of the Commerce
Subsidiaries), after written notice of such failure has been given to the
Company by the Agent or any Bank;
(k) with respect to any Guaranteed Pension Plan, an ERISA Reportable
Event shall have occurred (or in the event that a Subsidiary shall have been
acquired with an Employee Benefit Plan subject to an "accumulated funding
deficiency" and such "accumulated funding deficiency" shall not have been cured
within any grace period specified therefore in (S)9.11(b)) and the Majority
Banks shall have determined in their reasonable discretion that such event
reasonably could be expected to result in liability of the Company or any ERISA
Affiliate to the PBGC or such Guaranteed Pension Plan in an aggregate amount
exceeding the amount provided in (S)9.11(b)(i) or (ii), as applicable, and such
event in the circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the appointment
by the appropriate United States District Court of a trustee to administer such
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Guaranteed Pension Plan; or a trustee shall have been appointed by the United
States District Court to administer such Guaranteed Pension Plan; or the PBGC
shall have instituted proceedings to terminate such Guaranteed Pension Plan;
(l) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded otherwise than in accordance with the terms thereof or with
the express prior written agreement, consent or approval of the Banks, or any
action at law, suit or in equity or other legal proceeding to cancel, revoke or
rescind any of the Loan Documents shall be commenced by or on behalf of any of
the Commerce Companies party thereto or any of their respective stockholders, or
any court or any other governmental or regulatory authority or agency of
competent jurisdiction shall make a determination that, or issue a judgment,
order, decree or ruling to the effect that, any one or more of the Loan
Documents is illegal, invalid or unenforceable in accordance with the terms
thereof;
(m) (i) any of the Commerce Companies shall be enjoined, restrained or
in any way prevented by the order of any court or any administrative or
regulatory agency from conducting any material part of its business and such
order shall continue in effect for more than thirty (30) days and such inability
to conduct its business shall have a material adverse effect on the business or
financial condition of the Commerce Companies taken as a whole, or (ii) there
shall occur any strike, lockout, labor dispute, embargo, condemnation, act of
God or public enemy or other casualty, which, in any such case, causes, for more
than fifteen (15) consecutive days, the cessation or substantial curtailment of
revenue producing activities at any facility of any of the Company or its
Subsidiaries and which has a material adverse effect or the business or
financial condition of the Commerce Companies taken as a whole;
(n) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by any of
the Commerce Companies if such loss, suspension, revocation or failure to renew
would have a material adverse effect on the business or financial condition of
such Commerce Company;
(o) any of the Commerce Companies shall be indicted for a state or
federal crime, or any civil or criminal action shall otherwise have been brought
or threatened against any of the Commerce Companies, a punishment for which in
any such case could include the forfeiture of any assets of the such Commerce
Company having a fair market value in excess of $1,000,000;
(p) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 20% or more of the
outstanding shares of common stock of the Company; or, during any period of
twelve consecutive calendar months, individuals who were directors of the
Company on the first day of such period shall cease to constitute a majority of
the board of directors of the Company; or the Company or one of the Commerce
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Subsidiaries shall, except as a result of dispositions permitted by (S)9.9(c),
cease to own 100% of the capital stock of each of the Commerce Subsidiaries; or
(q) (i) the Company or any of its Subsidiaries is obligated to
repurchase Commerce Accounts Receivable arising under the Commerce Accounts
Receivable Agreement with Sanwa Business Credit Corporation in an aggregate
amount equal to or greater than fifty percent (50%) of the amount of Commerce
Accounts Receivable outstanding under such agreement at any time, or (ii) a
Total Repurchase Event with respect to Commerce Accounts Receivable other than
those specified in clause (i) hereof in an aggregate amount equal to or greater
than $1,000,000 shall have occurred under one or more of the Commerce Accounts
Receivable Agreements;
then, and in any such event, unless the same shall be cured or waived, the Agent
may, and, upon the request of the Majority Banks, shall, by notice in writing to
the Company, declare all amounts owing with respect to this Agreement and the
Notes or the other Loan Documents, and all Reimbursement Obligations to be, and
they shall thereupon forthwith become, immediately due and payable without
presentment, demand, notice of intent to accelerate, protest or other notice of
any kind, all of which are hereby expressly waived by the Company; provided that
--------
in the event of any Event of Default specified in (S)(S)11(g) and 11(h) hereof,
all such amounts shall become immediately due and payable automatically and
without any requirement of notice from either of the Agent or any Bank;
provided, however, that any amounts representing Reimbursement Obligations shall
-------- -------
be held by the Agent as cash collateral pursuant to (S)2A.2(a). In case any one
or more of the Events of Default shall have occurred and shall not have been
cured or waived, and whether or not the Banks shall have accelerated the
maturity of the Loans and Reimbursement Obligations pursuant to the foregoing,
any Bank, if such Bank is owed any amount with respect to the Loans or
Reimbursement Obligations, may, with the consent of the Majority Banks but not
otherwise, proceed to protect and enforce its rights by suit in equity, action
at law and/or other appropriate proceeding, whether for the specific performance
of any covenant or agreement contained in this Agreement, any of the other Loan
Documents or any instrument pursuant to which the obligations of the Company or
any of its Subsidiaries to such Bank hereunder are evidenced, including as
permitted by applicable law the obtaining of the ex parte appointment of a
-- -----
receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of such Bank. No remedy herein conferred upon any Bank or
holder of the Notes is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or any other provision of law.
If any one or more of the Events of Default specified in (S)(S)11(g) and
(h) shall occur, any unused portion of the Total Commitment shall forthwith
terminate and each of the Banks shall be relieved of all further obligations to
make Loans, and the Agent shall be relieved of all further Obligations to issue,
extend or renew Letters of Credit; if any one or more of the Events of Default
specified in this (S)11
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(other than those specified in (S)(S)11(g) and (h)) shall occur, then the Agent,
upon the request of the Majority Banks, shall, by notice to the Company,
terminate the unused portion of the Total Commitment, and upon such notice being
given such unused portion of the Total Commitment shall terminate immediately
and each of the Banks shall be relieved of all further obligations to make
Loans, and the Agent shall be relieved of all further Obligations to issue,
extend or renew Letters of Credit hereunder. If any such notice is given to the
Company, the Agent will forthwith furnish a copy thereof to each of the Banks.
No termination of the Total Commitment hereunder shall relieve the Company of
any of its existing Obligations to the Banks hereunder or elsewhere.
(S)12. SETOFF. Regardless of the adequacy of any collateral, during the
------
continuance of an Event of Default, any deposits or other sums credited by or
due from any of the Banks to the Company (but excluding accounts held by the
investment group of FNBB or any affiliate of FNBB, for investment services
provided to the Company) and any securities or other property of the Company in
the possession of such Bank may be applied to or set off against the payment of
obligations of the Company hereunder, or under the Notes and any and all other
liabilities, direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, of the Company to such Bank. Each Bank
agrees with the other Banks that (i) if an amount to be set off is to be applied
to Indebtedness of the Company to a Bank, other than Indebtedness evidenced by
the Notes held by all of the Banks, such amount shall be applied ratably to such
other Indebtedness and to the Indebtedness evidenced by all such Notes, and (ii)
if a Bank shall receive from the Company, whether by voluntary payment, exercise
of the right of set-off, counterclaim, cross action, enforcement of the claim
evidenced by the Notes held by a Bank by proceedings against the Company at law
or in equity or by proof thereof in bankruptcy, reorganization, liquidation,
receivership or similar proceedings, or otherwise, and shall retain and apply to
the payment of the Note held by a Bank any amount in excess of its ratable
portion of the payments received by all of the Banks, such Bank will make such
disposition and arrangements with the other Banks with respect to such excess,
either by way of distribution, pro tanto assignment of claims, subrogation or
--- -----
otherwise as shall result in each Bank receiving, in respect of the Notes held
by it, its proportionate payment as contemplated by this Agreement; provided,
---------
however, that if all or any part of such excess payment is thereafter recovered
-------
from such Bank, such disposition and arrangements shall be rescinded and the
amount restored to the extent of such recovery, but without interest.
(S)13. THE AGENT.
--- -----
(S)13.1. AUTHORIZATION. The Agent is authorized to take such action on
-------------
behalf of each of the Banks and to exercise all such powers as are hereunder and
in related documents delegated to the Agent, together with such powers as are
reasonably incident thereto, provided that no duties or responsibilities not
--------
expressly assumed herein or therein shall be implied to have been assumed by the
Agent. The relationship between the Agent and the Banks is and shall be that of
agent and principal only, and nothing contained in this Agreement or any of the
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other Loan Documents shall be construed to constitute the Agent as a trustee for
any Bank.
(S)13.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and
--------- --- ------
execute its duties hereunder by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel concerning all matters
pertaining to its rights and duties under this Agreement and the Notes. The
Agent may utilize the services of such Persons as the Agent in its sole
discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Company.
(S)13.3. NO LIABILITY. Neither the Agent nor any of its shareholders,
-- ---------
directors, officers or employees nor any other Person assisting it in its duties
nor any agent or employee thereof, shall be liable for any waiver, consent or
approval given or any action taken, or omitted to be taken, in good faith by
them hereunder under the Notes or in connection herewith or therewith, or be
responsible for the consequences of any oversight or error of judgment
whatsoever, except that the Agent or such other Person, as the case may be, may
be liable for losses due to its willful misconduct or gross negligence.
(S)13.4. NO REPRESENTATIONS. The Agent shall not be responsible for the
-- ---------------
execution or validity or enforceability of this Agreement, the Notes or any
instrument at any time constituting, or intended to constitute, collateral
security for the Notes or for the value of any such collateral security or for
the validity, enforceability or collectibility of any such amounts owing with
respect to the Notes or for any recitals or statements, warranties or
representations herein or made in any certificate or instrument hereafter
furnished to either of them by or on behalf of the Company, or be bound to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements herein or in any instrument at any time
constituting, or intended to constitute, collateral security for the Notes. The
Agent shall not be bound to ascertain whether any notice, consent, waiver or
request delivered to it by the Company or any holder of any of the Notes shall
have been duly authorized or is true, accurate and complete. The Agent has not
made nor does it now make any representations or warranties, express or implied,
nor does it assume any liability to the Banks with respect to the
creditworthiness or financial condition of any Commerce Company. Each Bank
acknowledges that it has, independently and without reliance upon the Agent or
any other Bank, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.
(S)13.5. PAYMENTS.
--------
(A) PAYMENTS TO AGENT. A payment by the Commerce Companies to
-------- -- ------
the Agent hereunder or under any of the other Loan Documents for the account of
any Bank shall constitute a payment to such Bank. The Agent agrees promptly to
distribute to each Bank such Bank's pro rata share of payments received by the
--- ----
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Agent for the account of the Banks except as otherwise expressly provided herein
or in any of the other Loan Documents.
(B) DISTRIBUTIONS BY AGENT. If in the opinion of the Agent the
------------- -- ------
distribution of any amount received by it in such capacity hereunder, under the
Notes or under any of the other Loan Documents might involve it in liability, it
may refrain from making distribution until its right to make distribution shall
have been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and distributed by
the Agent is to be repaid, each Person to whom any such distribution shall have
been made shall either repay to the Agent its proportionate share of the amount
so adjudged to be repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such court.
(C) DELINQUENT BANKS. Notwithstanding anything to the contrary
---------- ------
contained in this Agreement or any of the other Loan Documents, any Bank that
fails (i) to make available to the Agent its pro rata share of any Loan or to
--- ----
purchase any Letter of Credit Participation when the conditions precedent to the
making of such Loan or the issuance, extension or renewal of such Letter of
Credit have been satisfied or (ii) to comply with the provisions of (S)12 with
respect to making dispositions and arrangements with the other Banks, where such
Bank's share of any payment received, whether by setoff or otherwise, is in
excess of its pro rata share of such payments due and payable to all of the
--- ----
Banks, in each case as, when and to the full extent required by the provisions
of this Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall be
deemed a Delinquent Bank until such time as such delinquency is satisfied. A
Delinquent Bank shall be deemed to have assigned any and all payments due to it
from the Company, whether on account of outstanding Loans, Unpaid Reimbursement
Obligations, interest, fees or otherwise, to the remaining nondelinquent Banks
for application to, and reduction of, their respective pro rata shares of all
--- ----
outstanding Loans and Unpaid Reimbursement Obligations. The Delinquent Bank
hereby authorizes the Agent to distribute such payments to the nondelinquent
Banks in proportion to their respective pro rata shares of all outstanding Loans
--- ----
and Unpaid Reimbursement Obligations. A Delinquent Bank shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of the
assigned payments to all outstanding Loans and Unpaid Reimbursement Obligations
of the nondelinquent Banks, the Banks' respective pro rata shares of all
--- ----
outstanding Loans and Unpaid Reimbursement Obligations have returned to those in
effect immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
(S)13.6. HOLDERS OF NOTES. The Agent may deem and treat the payee of any
------- -- -----
Note as the absolute owner or purchaser thereof for all purposes hereof until it
shall have been furnished in writing with a different name by such payee or
obligor or by a subsequent holder, assignee or transferee.
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(S)13.7. INDEMNITY. The Banks ratably agree hereby to indemnify and hold
---------
harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agent has not been reimbursed by the Company as
required by (S)(S)14 and 15 hereof), and liabilities of every nature and
character arising out of or related to this Agreement, the Notes, or the
transactions contemplated or evidenced hereby or thereby, or the Agent's actions
taken hereunder or thereunder, except to the extent that any of the same shall
be directly caused by the Agent's willful misconduct or gross negligence.
(S)13.8. AGENT AS BANK. FNBB shall have the same obligations and the same
----- -- ----
rights, powers and privileges in respect to its Commitment and the Loans made by
it and as the holder of any of the Notes and as the purchaser of any Letter of
Credit Participations, as it would have were it not also the Agent.
(S)13.9. RESIGNATION. The Agent may resign at any time by giving sixty
-----------
(60) days' prior written notice thereof to the Banks and the Company. Upon any
such resignation, the Banks shall have the right to appoint a successor Agent
from among the Banks. Unless a Default or Event of Default shall have occurred
and be continuing, such successor shall be reasonably acceptable to the Company.
If no successor Agent shall have been so appointed by the Banks and shall have
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be any Bank or any other financial
institution reasonably satisfactory to the Banks and having a rating of not less
than B or its equivalent by Standard & Poor's Ratings Group or its successor.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation, the provisions of this Agreement shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Agent. In the event of a material breach of its
duties hereunder, the Agent may be removed by the Majority Banks for cause and
the provisions of this (S)13 shall apply to the appointment of a successor.
(S)13.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank
------------ -- -------- --- ------ -- -------
hereby agrees that, upon any employee of such Bank active upon the Company's
account learning of the existence of a Default or an Event of Default, it shall
promptly notify the Agent thereof. The Agent hereby agrees that upon receipt of
any notice of the existence of any Default or Event of Default, it shall
promptly notify the other Banks of the existence of such Default or Event of
Default.
(S)14. EXPENSES. Whether or not the transactions contemplated hereby
--------
shall be consummated, the Company will pay (a) the reasonable cost of (i)
producing and reproducing this Agreement, the other Loan Documents and the other
instruments or agreements mentioned herein, (ii) any taxes (including any
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interest and penalties in respect thereof) or filing fees payable by the Agent
or any of the Banks (other than taxes based upon the Agent's or any Bank's net
income) on or with respect to the transactions contemplated by this Agreement
(the Company hereby agreeing to indemnify the Agent and each Bank with respect
thereto); (b) the reasonable fees, expenses and disbursements of the Agent and
the Agent's Special Counsel and counsel for each Bank incurred in connection
with the preparation, administration or interpretation of this Agreement or the
other Loan Documents and other instruments mentioned herein, any prior
discussions between the Company and the Agent relating to proposed extensions of
credit to the Commerce Companies, each closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, including the
cost of Uniform Commercial Code and similar searches conducted with respect to
the Commerce Companies and the cost of commercial finance examinations as
provided in (S)8.12(b); (c) all reasonable out-of-pocket expenses (including
reasonable attorneys' fees and costs, which attorneys may be employees of the
Agent or any Bank) incurred by the Agent or any Bank in connection with (i) the
enforcement of or preservation of rights under this Agreement or any of the
other Loan Documents against the Company or any Subsidiary or the administration
thereof after the occurrence of a Default or Event of Default and (ii) any
litigation, proceeding or dispute whether arising hereunder or otherwise, in any
way related to the Agent's or the Banks' relationship with the Company or any of
its Subsidiaries hereunder. The covenants of this (S)14 shall survive payment
or satisfaction of payment of amounts owing with respect to the Notes.
(S)15. INDEMNIFICATION. The Company agrees to indemnify and hold harmless
---------------
the Agent and the Banks and their respective shareholders, directors, agents,
officers, subsidiaries and affiliates from and against any and all claims,
actions, causes of action and suits whether groundless or otherwise, and from
and against any and all liabilities, losses, damages, settlement payments,
obligations and expenses of every nature and character incurred, suffered,
sustained or required to be paid by reason of, resulting from or otherwise
arising out of this Agreement or any of the other Loan Documents or the
transactions contemplated hereby including (a) any actual or proposed use by the
Company or any of its Subsidiaries of the proceeds of any of the Loans or
Letters of Credit, (b) any actual or alleged infringement of any patent,
copyright, trademark, service ▇▇▇▇ or similar right of the Company or any of its
Subsidiaries, (c) the Company or any of its Subsidiaries entering into or
performing this Credit Agreement or any of the other Loan Documents or (d) with
respect to the Company and its Subsidiaries and their respective properties and
assets, the violation of any Environmental Law, or any action, suit, proceeding
or investigation brought or threatened with respect to any Hazardous Substances
(including claims with respect to wrongful death, personal injury or damage to
property), in each case including the reasonable fees and disbursements of
counsel and allocated costs of internal counsel incurred in connection with any
such investigation, litigation or other proceeding, in each case including,
without limitation, the reasonable fees and disbursements of counsel and
allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding except to the extent that such
claims, actions, suits, liabilities, losses or damages arise solely as a result
of the Agent's or
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any Bank's gross negligence or willful misconduct; provided, however, that the
-------- -------
gross negligence or willful misconduct of any Bank or the Agent shall not
impair, infringe on or limit the rights under this (S)15 of any other Bank or,
as the case may be, the Agent which has not committed any gross negligence or
willful misconduct. In litigation, or the preparation therefor, the Banks and
the Agent shall be entitled to select their own counsel and, in addition to the
foregoing indemnity, the Company agrees to pay promptly the reasonable fees and
expenses of such counsel as well as any related investment banking, appraisal
and other similar professional service fees and expenses. If, and to the extent
that the obligations of the Company under this (S)15 are unenforceable for any
reason, the Company hereby agrees to make the maximum contribution to the
payment in satisfaction of such obligations which is permissible under
applicable law. The covenants in this (S)15 shall survive payment in full of all
other Obligations.
(S)16. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
-------- -- --------- ---
representations and warranties made herein, in the Notes or in any documents or
other papers delivered by or on behalf of the Company pursuant hereto shall be
deemed to have been relied upon by each of the Agent and the Banks,
notwithstanding any investigation heretofore or hereafter made by it, and shall
survive the making by the Banks of the Loans, and the issuance, extension and
renewal by the Agent of the Letters of Credit, as herein contemplated, and shall
continue in full force and effect so long as any amount due under this Agreement
or the Notes or any Reimbursement Obligations remains outstanding and unpaid or
any Bank has any obligation to make any Loans, or the Agent has any obligation
to issue, extend or renew any Letters of Credit, hereunder and for such further
time as may be otherwise expressly specified in this Agreement. All statements
contained in any certificate or other paper delivered to the Agent or any Bank
at any time by or on behalf of the Company pursuant hereto or in connection with
the transactions contemplated hereby shall constitute representations and
warranties by the Company hereunder.
(S)17. ASSIGNMENT AND PARTICIPATION.
---------- --- -------------
(S)17.1. CONDITIONS TO ASSIGNMENT BY BANKS.
---------- -- ---------- -- -----
(a) Except as otherwise provided herein, each Bank may assign to
one or more Eligible Assignees all or a portion of its interests, rights and
obligations under this Agreement (including all or a portion of its Commitment
Percentage and Commitment and the same portion of the Loans at the time owing to
it, and the Note held by it and the Letter of Credit Participations purchased by
it); provided that (i) each of the Agent and the Company shall have given its
--------
prior written consent to such assignment, which consent in the case of the
Company will not be unreasonably withheld, (ii) each such assignment shall be of
a constant, and not a varying, percentage of all the assigning Bank's rights and
obligations under this Agreement, (iii) each assignment shall be in an amount
that is at least $5,000,000 and (iv) the parties to such assignment shall
execute and deliver to the Agent, for recording in the Register (as hereinafter
defined), an Assignment and
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Acceptance, substantially in the form of Exhibit E hereto (an "Assignment and
------- -
Acceptance"), together with any Note subject to such assignment.
(b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
which effective date shall be at least five (5) Business Days after the
execution thereof, (i) the assignee thereunder shall be a party hereto and, to
the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder and (ii) the assigning Bank shall, to the extent
provided in such assignment and upon payment to the Agent of the negotiation fee
referred to in (S)17.3, be released from its obligations under this Agreement
and the other Loan Documents.
(S)17.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS.
------- --------------- --- ---------- ----------- ---------
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows: (a) other than the representation and warranty that it is
the legal and beneficial owner of the interest being assigned thereby free and
clear of any adverse claim, the assigning Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, the other Loan Documents or any other instrument or
document furnished pursuant hereto; (b) the assigning Bank makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Company or any other Person primarily or secondarily
liable in respect of any of the Obligations, or the performance or observance by
the Company or any other Person primarily or secondarily liable in respect of
any of the Obligations of any of their obligations under this Agreement or any
of the other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto; (c) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements referred to in (S)5.7 and (S)8 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (d) such assignee will,
independently and without reliance upon any assigning Bank, the Agent or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (e) such assignee represents and
warrants that it is an Eligible Assignee; (f) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; (g) such assignee agrees that it will perform in
accordance with its terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Bank; (h) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; and (i) such assignee acknowledges that it has made
arrangements with the assigning Bank satisfactory to such assignee with respect
to its pro rata share of Letter of Credit Fees in respect of outstanding Letters
--------
of Credit.
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(S)17.3. REGISTER. The Agent shall maintain a copy of each Assignment and
--------
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentages of, and principal amount of the Loans owing to, and the Letter of
Credit Participations purchased by the Banks from time to time. The entries in
the Register shall be conclusive, in the absence of manifest error, and the
Company, the Agent and the Banks may treat each Person whose name is recorded in
the Register as a Bank hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Company and the Banks at any
reasonable time and from time to time upon prior notice. Upon each such
recordation, the assigning Bank agrees to pay or cause the assignee to pay to
the Agent a registration fee in the sum of $2,500.
(S)17.4. NEW NOTE. Upon its receipt of an Assignment and Acceptance
--- ----
executed by the parties to such Assignment and Acceptance, together with the
Note subject to such Assignment and Acceptance, the Agent shall (a) record the
information contained therein in the Register, and (b) give prompt notice
thereof to the Company and the Banks (other than the assigning Bank). Within
five (5) Business Days after receipt of such notice, the Company shall execute
and deliver to the Agent, in exchange for its surrendered Note, a new Note to
the order of such Eligible Assignee, in an amount equal to the amount assumed by
such Eligible Assignee pursuant to such Assignment and Acceptance, and, if the
assigning Bank has retained some portion of its obligations hereunder, a new
Note to the order of such assigning Bank in an amount equal to the amount
retained by it hereunder. Such new Note shall provide that it is in replacement
of the surrendered Note, shall be in an aggregate principal amount equal to the
aggregate principal amount of the surrendered Note, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in substantially
the form of Exhibit A hereto. Contemporaneously with the issuance of any new
------- -
Note pursuant to this (S)17.4, the Company shall deliver, at its own expense, an
opinion of counsel, addressed to the Banks and the Agent, relating to the due
authorization, execution and delivery of such new Note and the legality,
validity and binding effect thereof, in form and substance satisfactory to the
Banks. The surrendered Note shall be canceled and returned to the Company.
(S)17.5. PARTICIPATIONS. Each Bank may sell participations to one or more
--------------
banks or other entities in all or a portion of such Bank's rights and
obligations under this Agreement and the other Loan Documents; provided that (a)
--------
each such participation shall be in an amount of not less than $5,000,000, (b)
any such sale or participation shall not affect the rights and duties of the
selling Bank hereunder to the Company and (c) the only rights granted to the
participant pursuant to such participation arrangements with respect to waivers,
amendments or modifications of this Agreement or the other Loan Documents shall
be the rights to approve waivers, amendments or modifications that would reduce
the principal of or the interest rate on any Loans, or alter any Letter of
Credit Fees, extend the term or increase the amount of the Commitment of such
Bank as it relates to such participant, reduce the amount of any Commitment Fees
or other fees to which
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such participant is entitled, or extend any regularly scheduled payment date for
principal or interest, provided, that the Banks may sell participations
--------
hereunder to their respective affiliates without restriction or limitation.
(S)17.6. DISCLOSURE. The Company agrees that any Bank may disclose
----------
information obtained by such Bank pursuant to this Agreement to assignees,
potential assignees, participants and potential participants hereunder, with the
prior written consent of the Company; provided that such assignees, potential
--------
assignees, participants or potential participants shall agree (a) to treat in
confidence such information unless such information otherwise becomes public
knowledge, (b) not to disclose such information to a third party and (c) not to
make use of such information for purposes of transactions unrelated to such
contemplated assignment.
(S)17.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE COMMERCE COMPANIES.
-------- -- ----------- ---------- ---- --- -------- ---------
If any assignee Bank is an Affiliate of any of the Commerce Companies, then any
such assignee Bank shall have no right to vote as a Bank hereunder or under any
of the other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or other modifications to any of the Loan
Documents or for purposes of making requests to the Agent pursuant to (S)12.1 or
(S)12.2, and the determination of the Majority Banks shall for all purposes of
this Agreement and the other Loan Documents be made without regard to such
assignee Bank's interest in any of the Loans. If any Bank sells a participating
interest in any of the Loans or Reimbursement Obligations to a participant, and
such participant is any of the Commerce Companies or an Affiliate of any of the
Commerce Companies, then such transferor Bank shall promptly notify the Agent of
the sale of such participation. A transferor Bank shall have no right to vote
as a Bank hereunder or under any of the other Loan Documents for purposes of
granting consents or waivers or for purposes of agreeing to amendments or
modifications to any of the Loan Documents or for purposes of making requests to
the Agent pursuant to (S)12.1 or (S)12.2 to the extent that such participation
is beneficially owned by any of the Commerce Companies or any Affiliate of any
of the Commerce Companies, and the determination of the Majority Banks shall for
all purposes of this Agreement and the other Loan Documents be made without
regard to the interest of such transferor Bank in the Loans to the extent of
such participation information to a third party and (c) not to make use of such
information for purposes of transactions unrelated to such contemplated
assignment.
(S)17.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall
------------- ---------- ----------
retain its rights to be indemnified pursuant to (S)15 and to be reimbursed under
(S)14 with respect to any claims or actions arising prior to the date of such
assignments. If any assignee Bank is not incorporated under the laws of the
United States of America or any state thereof, it shall, prior to the date on
which any interest or fees are payable hereunder or under any of the other Loan
Documents for its account, deliver to the Company and the Agent certification as
to its exemption from deduction or withholding of any United States federal
income taxes. Anything contained in this (S)17 to the contrary notwithstanding,
any Bank may at
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any time pledge all or any portion of its interest and rights under this
Agreement (including all or any portion of its Note) to any of the twelve
Federal Reserve Banks organized under (S)4 of the Federal Reserve Act, 12 U.S.C.
(S)341. No such pledge or the enforcement thereof shall release the pledgor Bank
from its obligations hereunder or under any of the other Loan Documents.
(S)17.9. ASSIGNMENT BY THE COMPANY. The Company shall not assign or
---------- -- --- -------
transfer any of its respective rights or obligations under this Agreement or any
of the other Loan Documents without the prior written consent of each of the
Banks.
(S)18. NOTICES, ETC. Except as otherwise expressly provided in this
------- ---
Agreement, all notices and other communications made or required to be given
pursuant to this Agreement or the Notes shall be in writing and shall be
delivered in hand, mailed by United States first-class mail, postage prepaid,
sent by overnight express courier, or sent by telecopier and confirmed by
letter, addressed:
(a) if to the Company, at
Sterling Commerce, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
and at
Sterling Commerce, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
or
(b) if to the Agent or any Bank, at the address set forth for such
Person on Schedule 1.1 hereto.
-------- ---
Any such notice or demand shall be deemed to have been duly given or made and to
have become effective if delivered by hand or telecopied or otherwise
telecommunicated, to a responsible officer of the party to which it is directed,
at the time of the receipt thereof by such officer, or if sent by registered or
certified first-class mail, postage prepaid, three days after the date when
mailed, or if sent by overnight mail or overnight courier service to such a
responsible officer, when received by such officer.
(S)19. GOVERNING LAW. THIS AGREEMENT AND, EXCEPT AS OTHERWISE
--------- ---
SPECIFICALLY PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS
UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE COMPANY
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AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS
OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE
UPON THE COMPANY BY HAND AT THE ADDRESS SPECIFIED IN (S)18. THE COMPANY HEREBY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
The parties hereto acknowledge that the foregoing shall not be construed to
impose the laws of the Commonwealth of Massachusetts on environmental disputes
arising solely under the environmental laws of any other jurisdiction.
(S)20. HEADINGS. The captions in this Agreement are for convenience of
--------
reference only and shall not define or limit the provisions hereof.
(S)21. COUNTERPARTS. This Agreement and any amendment hereof may be
------------
executed in several counterparts and by each party on a separate counterpart,
each of which when so executed and delivered shall be an original, and all of
which together shall constitute one instrument. In proving this Agreement it
shall not be necessary to produce or account for more than one such counterpart
signed by the party against whom enforcement is sought.
(S)22. ENTIRE AGREEMENT, ETC. THIS AGREEMENT, TOGETHER WITH THE NOTES,
------ --------- ---
THE OTHER LOAN DOCUMENTS AND ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH
OR THEREWITH REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
(S)23. CONSENTS, AMENDMENTS, WAIVERS, ETC. Neither this Agreement nor any
-------- ---------- ------- ---
term hereof may be changed, waived, discharged or terminated, except as provided
in this (S)23. Except as otherwise expressly provided in this Agreement, any
consent or approval required or permitted by this Agreement to be given by the
Banks may be given, and any term of this Agreement or of any other instrument
related hereto or mentioned herein may be amended, and the performance or
observance by the Company of any terms of this Agreement or such other
instrument or the continuance of any Default or Event of Default may be waived
(either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Company and the
written consent of the Majority Banks. Notwithstanding the foregoing, the rate
of interest on the Notes (other than interest accruing pursuant to (S)2.5(b)
following the effective date of any waiver by the Majority Banks of the Default
or Event of Default relating thereto), the term of the Notes, the amount of the
Commitments of the Banks, the scheduled amortization of the Loans, and the
amount of Commitment Fees or Letter of Credit Fees hereunder may not be changed,
without
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the written consent of all of the Banks; except for the deactivation of Commerce
Subsidiaries pursuant to (S)8.18 hereof and the sale of Subsidiaries permitted
by (S)9.7 hereof, no Commerce Subsidiary shall be released from its obligations
under the Guaranty without the written consent of all of the Banks; the
definitions of Conversion Date, Final Maturity and Majority Banks and the
provisions of this sentence may not be amended without the written consent of
all of the Banks; a Default or Event of Default under (S)(S)9.1 (but only to the
extent of Indebtedness in excess of $500,000), 9.6, 9.8 and 10 may not be
waived, and such sections may not be amended without the written consent of all
of the Banks; and (S)(S)2.13 and 13 and any Letter of Credit Fees payable to the
Agent hereof may not be amended without the written consent of the Agent. No
waiver shall extend to or affect any obligation not expressly waived or impair
any right consequent thereon. No course of dealing or delay or omission on the
part of the Agent or any Bank in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto. No notice to or demand upon the
Company shall entitle the Company to other or further notice or demand in
similar or other circumstances.
(S)24. USURY PROVISION. It is not the intention of any parties to this
----- ---------
Agreement to make an agreement in violation of the laws of any applicable
jurisdiction relating to usury. Regardless of any provision of this Agreement,
neither the Agent nor any Bank shall ever be entitled to receive, collect or
apply, as interest on the Loans, any amount in excess of the maximum amount
permitted by applicable law. If under the laws of any applicable jurisdiction
there is no legal limitation on the rate of interest that may be charged with
respect to an Obligation owing to any Bank or the Agent (including the
outstanding principal amount of the Loans, unpaid interest with respect to any
Loan, or any other Obligations due and payable under any Loan Document), there
shall be no maximum amount applicable to such Obligation, notwithstanding any
reference thereto herein or in any of the Loan Documents. The existence of a
maximum amount for Obligations owing to any one Bank or the Agent shall not
cause such maximum amount to apply to the Obligations owing to any other Bank or
the Agent, the maximum amount being independently determined with respect to
each Bank or the Agent. If at any time the rate at which interest is payable to
any Bank or the Agent on any Loan exceeds the maximum amount, such Loan shall
bear interest at the maximum amount only but shall continue to bear interest at
the maximum amount until such time as the total amount of interest accrued on
such Loan equals (but does not exceed) the total amount of interest which would
have accrued thereon had there been no maximum amount applicable thereto. If at
the maturity or final payment of such Loan (whether at stated maturity, by
acceleration or prepayment or otherwise) the total amount of interest which has
then accrued or been paid thereon as provided above (the "Collected Interest")
is less than the total amount of interest which would have accrued thereon had
there been no maximum amount applicable thereto (the "Unrestricted Interest"),
then the Company shall in addition to the Collected Interest pay to each Bank or
(as the case may be) the Agent an amount equal to (a) the lesser of the
Unrestricted Interest owed or accrued for the benefit of such Bank or (as the
case may be) the Agent or the total amount of interest which would have accrued
thereon for the benefit of each Bank and the Agent had such Loan at all times
borne interest at the maximum amount, minus (b) the
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Collected Interest paid for the account of each Bank and the Agent). This
Section 24 shall control every other provision of all agreements pertaining to
the transactions contemplated by or contained in this Agreement and the other
Loan Documents.
(S)25. WAIVER OF JURY TRIAL. The Company hereby waives its right to a
------ -- ---- -----
jury trial with respect to any action or claim arising out of any dispute in
connection with this Agreement, the Notes or any of the other Loan Documents,
any rights or obligations hereunder or thereunder or the performance of such
rights and obligations. The Company (a) certifies that neither any
representative, agent or attorney of any Bank has represented, expressly or
otherwise, that such Bank would not, in the event of litigation, seek to enforce
the foregoing waivers and (b) acknowledges that it has been induced to enter
into this Agreement and the other Loan Documents to which it is a party by,
among other things, the mutual waivers and certifications herein.
(S)26. SEVERABILITY. The provisions of this Agreement are severable and
------------
if any one clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction, and shall not in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
(S)27. DELIVERY IN MASSACHUSETTS. This Agreement will not take effect
-------- -- -------------
until it has been duly executed by all parties and delivered, whether in one
fully executed document or in counterparts which together comprise one fully
executed document, to the Agent at its head office in Boston, Massachusetts.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement under
seal as of the date first set forth above.
STERLING COMMERCE, INC.
By: ______________________________
Title:
THE FIRST NATIONAL BANK
OF BOSTON, individually and
as Agent
By: ______________________________
Title:
BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By: ______________________________
Title: