EXHIBIT 10.12
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FOURTH AMDENDED AND RESTATED
CREDIT AGREEMENT
LITIGATION RESOURCES OF AMERICA, INC.,
LOONEY & COMPANY, ▇▇▇▇▇, BURY &
ASSOCIATES, INC.
LITIGATION RESOURCES OF AMERICA-
CALIFORNIA, INC.
LITIGATION RESOURCES OF
AMERICA-MIDWEST, INC.
LITIGATION RESOURCES OF AMERICA-
NORTHEAST, INC.
BLOCK COURT REPORTING, INC.,
BLOCK TAPE TRANSCRIPTION SERVICES, INC.,
and
▇▇▇▇▇▇ HOUSE, INC.
BORROWERS
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
BANK
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.............................................. 2
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1.1 Definitions.................................................... 2
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1.2 Other Definitions.............................................. 18
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ARTICLE II REVOLVING CREDIT LOANS AND LETTERS OF CREDIT............. 19
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2.1 Revolving Loan Commitment...................................... 19
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2.2 Letters of Credit.............................................. 19
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2.3 Borrowing Base................................................. 20
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2.4 Borrowing Procedure............................................ 20
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2.5 Use of Proceeds................................................ 21
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2.6 Required Payments.............................................. 21
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ARTICLE III TERM LOANS............................................... 21
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3.1 Term Loans..................................................... 21
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3.2 Borrowing Procedure............................................ 22
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3.3 Use of Proceeds................................................ 22
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3.4 Conditions Precedent........................................... 22
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ARTICLE IV NOTES.................................................... 23
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4.1 Revolving Credit Note.......................................... 23
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4.2 Term Notes..................................................... 23
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4.3 Interest Rate Options.......................................... 23
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4.4 Interest Recapture............................................. 26
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4.5 Maximum Interest............................................... 26
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4.6 Payments on the Notes.......................................... 27
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4.7 Calculation of Interest Rates.................................. 28
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4.8 Prepayments.................................................... 29
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4.9 Manner and Application of Payments............................. 30
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4.10 Renewals of Notes.............................................. 30
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4.11 Taxes.......................................................... 30
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4.12 Facility Fees.................................................. 31
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4.13 Letters of Credit Fees......................................... 31
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ARTICLE V SPECIAL PROVISIONS FOR ADJUSTED LIBOR RATE LOANS......... 32
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5.1 Inadequacy of Libor Pricing.................................... 32
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5.2 Illegality..................................................... 32
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5.3 Increased Costs for Adjusted Libor Rate Loans.................. 33
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5.4 Effect on Interest Options..................................... 33
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5.5 Payments Not At End of Interest Period......................... 34
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ARTICLE VI COLLATERAL FOR LOANS..................................... 34
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6.1 Collateral for Loans........................................... 34
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6.2 Further Assurances............................................. 34
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6.3 Collateral Documents........................................... 35
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6.4 Description of Collateral...................................... 35
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6.5 Other Loans.................................................... 35
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ARTICLE VII CUSTODY, INSPECTION, COLLECTION
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AND MAINTENANCE OF COLLATERAL........................... 35
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7.1 Disposition.................................................... 35
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7.2 Inspection..................................................... 35
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7.3 Authorization.................................................. 35
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7.4 Reports........................................................ 36
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7.5 Compliance with Law............................................ 36
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7.6 Protection..................................................... 36
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7.7 Collection..................................................... 36
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7.8 Creation of Accounts........................................... 36
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7.9 Right to Receive............................................... 36
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ARTICLE VIII COVENANTS................................................ 37
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8.1 Affirmative Covenants.......................................... 37
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8.2 Financial Covenants............................................ 40
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8.3 Other Covenants................................................ 41
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8.4 ERISA Compliance............................................... 42
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8.5 Indemnity...................................................... 43
ARTICLE IX CONDITIONS PRECEDENT..................................... 44
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9.1 Initial Advances............................................... 44
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9.2 Subsequent Advances............................................ 46
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9.3 Conditions Precedent on Acquisitions........................... 46
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ARTICLE X REPRESENTATIONS AND WARRANTIES........................... 47
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10.1 Representations and Warranties Concerning Borrowers........... 47
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10.2 Regulatory Matters............................................ 50
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10.3 Representations Regarding Accounts............................ 51
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10.4 Survival of Representations and Warranties.................... 51
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ARTICLE XI DEFAULTS AND REMEDIES.................................... 52
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11.1 Events of Default............................................. 52
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11.2 Remedies...................................................... 54
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11.3 Material Notices.............................................. 54
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ARTICLE XII MISCELLANEOUS............................................ 55
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12.1 Notices....................................................... 55
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12.2 Severability.................................................. 55
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12.3 Captions...................................................... 55
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12.4 Successors and Assigns........................................ 55
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12.5 Participation................................................ 55
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12.6 Non-liability of Bank........................................ 55
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12.7 Financing Statements......................................... 56
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12.8 List of Exhibits and Schedules............................... 56
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12.9 Modification................................................. 56
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12.10 Waiver....................................................... 56
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12.11 Governing Law................................................ 56
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12.12 Choice of Forum, Service of Process and Jurisdiction......... 56
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12.13 Waiver of Jury Trial......................................... 57
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12.14 Agency....................................................... 57
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12.15 No Third Party Beneficiary................................... 57
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12.16 Payment of Expenses.......................................... 57
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12.17 Conflicts.................................................... 58
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12.18 Deceptive Trade Practices Act................................ 58
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12.19 Entirety..................................................... 58
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12.20 Multiple Counterparts........................................ 58
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FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
This Fourth Amended and Restated Credit Agreement (the "Fourth Restated
Agreement") is made and entered into effective September 17, 1997, by and among:
LITIGATION RESOURCES OF AMERICA, INC. ("LRA"), LOONEY & COMPANY ("Looney"),
▇▇▇▇▇, BURY & ASSOCIATES, INC. ("KBA"), LITIGATION RESOURCES OF AMERICA-
CALIFORNIA, INC. ("LRA-Cal"), LITIGATION RESOURCES OF AMERICA-MIDWEST, INC.,
("LRA-Midwest"), LITIGATION RESOURCES OF AMERICA-NORTHEAST, INC. ("LRA-NE"),
BLOCK COURT REPORTING, INC. ("Block"), BLOCK TAPE TRANSCRIPTION SERVICES,
INC. ("Transcription"), ▇▇▇▇▇▇ HOUSE, INC. ("▇▇▇▇▇▇") and the Consolidated
Subsidiaries of LRA which are, from time to time, made a Borrower party
hereto (sometimes herein collectively called the "Borrowers," and singly
called a "Borrower"); and,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION (the "Bank").
RECITALS
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LRA, Looney, KBA and the Bank entered into a Credit Agreement (the "Prior
Agreement") dated January 10, 1997, pursuant to the terms of which the Bank
agreed to make loans to LRA, Looney and KBA. LRA formed LRA-Cal as a wholly
owned Consolidated Subsidiary. LRA, Looney, KBA, LRA-Cal and the Bank modified
the terms of the Prior Agreement and entered into an Amended and Restated Credit
Agreement dated effective May 14, 1997 (the "Restated Agreement"), and further
amended the Prior Agreement and the Restated Agreement in Second Amended and
Restated Credit Agreement dated August 18, 1997 (the "Second Restated
Agreement"). LRA formed LRA-Midwest as a wholly owned Consolidated Subsidiary.
LRA formed LRA-NE as a wholly owned Consolidated Subsidiary. LRA-NE acquired
Block which owns all of the outstanding and issued shares of Transcription.
LRA, Looney, KBA, LRA-Cal, LRA-Midwest, LRA-NE, Block, Transcription and the
Bank further amended the Prior Agreement, the Restated Agreement and the Second
Restated Agreement in a Third Amended and Restated Credit Agreement (the "Third
Restated Agreement") dated September 4, 1997, which, with the Prior Agreement,
the Restated Agreement and the Second Restated Agreement are sometimes herein
collectively, the "Prior Credit Agreements".
The Borrowers represent to the Bank that LRA-NE has entered into and will,
effective contemporaneous with the execution of this Fourth Restated Agreement,
consummate the EDP Asset Purchase Agreement. The Borrowers represent to the
Bank that LRA-Cal has entered into and will, effective contemporaneous with the
execution of this Fourth Restated Agreement, consummate the ▇▇▇▇▇▇ House Stock
Purchase Agreement.
The Borrowers have requested the Bank to further increase the amount of the
Loans to enable the Borrowers to consummate the EDP Asset Purchase Agreement and
the ▇▇▇▇▇▇ House Stock Purchase Agreement. Conditioned on the terms of this
Fourth Restated Agreement, the Bank is willing to increase the amount of the
Loans and to make the Loans available for the purposes herein set out to the
Borrowers.
In consideration of the premises, for other good, fair and valuable
considerations, the receipt, adequacy and reasonable equivalency of which are
acknowledged, and for other valuable consideration,
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the Borrowers and the Bank amend and restate the provisions of the Prior Credit
Agreements as set out herein, and the parties agree as set out herein.
ARTICLE I
DEFINITIONS
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1.1 Definitions. For the purposes of this Fourth Restated Agreement, unless
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the context requires otherwise, the following terms shall have the respective
meanings ascribed to them in this Article or in the Sections referred to below:
"Accounts," "Chattel Paper," "Contracts," "Contract Rights," "Documents,"
"Equipment," "General Intangibles," "Goods," and "Instruments" shall have the
meanings ascribed to such terms in the UCC, and shall mean the Accounts, Chattel
Paper, Contracts, Contract Rights, Documents, Equipment, General Intangibles,
Goods, and Instruments of the Borrowers in which the Bank is granted security
interests pursuant to the Loan Documents.
"Adjusted Libor Rate Loans" means all, and "Adjusted Libor Rate Loan" means any,
of the Loans, with respect to any Interest Period, which bears interest at a
rate of interest determined by reference to the Libor Rate for such Interest
Period.
"Adjusted Libor Rate" means, with respect to any Loan based on a Libor Rate for
any Interest Period, an interest rate per annum equal to the product of, (i) the
Libor Rate in effect for such Interest Period plus the Applicable Margin, and
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(ii) Statutory Reserves.
"Advances" means all, and "Advance" means any, of the disbursements by the Bank
of the sums loaned to the Borrowers pursuant to this Fourth Restated Agreement.
"Affiliate" of any Person means any other Person which, directly or indirectly,
controls or is controlled by or is under common control with such Person and,
without limiting the generality of the foregoing, includes, (i) any Person which
beneficially owns or holds five per cent or more of any class of Voting Shares
of such Person or five per cent or more of the equity interest in such Person,
(ii) any Person of which such Person beneficially owns or holds five per cent or
more of any class of Voting Shares or in which such Person beneficially owns or
holds five per cent or more of the equity interest in such Person and (iii) any
director, officer, member, manager or employee of such Person. For the purposes
of this definition, the term "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with respect
to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Shares or by contract or otherwise.
"Agreement" means this Fourth Restated Agreement and the Prior Credit
Agreements, as amended and restated herein, and as it may, from time to time, be
further amended and restated.
"Amicus Asset Purchase Agreement" means the Agreement of Purchase and Sale of
Assets among LRA, LRA-NE, Amicus One Legal Support Services, Inc., ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, pursuant to the
terms of which LRA-NE purchased the assets of Amicus One Legal Support Services,
Inc., a New York corporation, as an Approved Asset Purchase Agreement.
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"Applicable Margin" means three-fourths (3/4) of one (1) per cent for Base Rate
Loans and for two (2) and one-half (1/2) per cent for Adjusted Libor Rate Loans.
"Application for Letter of Credit" shall have the meaning ascribed to such term
in Section 2.2.
"Approved Asset Purchase Agreement" means an agreement among LRA or a
Consolidated Subsidiary and one or more Sellers in which LRA or the Consolidated
Subsidiary shall be entitled to purchase substantially all of the Assets of a
Qualified Company, or a combination of the foregoing, and in any event, made
pursuant to an Asset Purchase Agreement submitted to and specifically approved
in writing by the Bank prior to consummation.
"Approved Merger" means any merger of a Qualified Company into LRA or a
Consolidated Subsidiary and in which LRA or the Consolidated Subsidiary shall be
the surviving entity, or a combination of the foregoing, and in any event, made
pursuant to a proposed plan of merger submitted to and specifically approved in
writing by the Bank prior to adoption.
"Approved Preferred Stock" means the, (i) Series A Convertible Preferred Stock
of LRA issued to the Investors pursuant to the Securities Purchase Agreement and
a Certificate of the Powers, Designations, Preferences and Rights, and which
must be issued subject to the Subordination Provisions, (ii) Series B
Convertible Preferred Stock of LRA issued pursuant to a Statement of Designation
of the Series B Convertible Preferred Stock, and which must be issued subject to
the Subordination Provisions and a Seller Debt Subordination Agreement or a
Seller Preferred Stock Subordination Agreement, as applicable, (iii) Series C
Convertible Preferred Stock of LRA issued pursuant to a Statement of Designation
of the Series C Convertible Preferred Stock, and which must be issued subject to
the Subordination Provisions and a Seller Debt Subordination Agreement or a
Seller Preferred Stock Subordination Agreement, as applicable, and (iv) such
other preferred stock issue which, prior to adoption, has been submitted to and
approved in writing by the Bank with regard to subordination and containing
subordination provisions (in form and substance satisfactory to the Bank)
substantially to the effect that the holders of the preferred stock agree that
the preferred stock evidenced by any certificate or security rights, any
exchanges therefor or in respect thereof, shall at all times and in all respects
be subordinate and junior in right of payment, lien, and other rights to the
Obligations.
"Asset Purchase Agreements" means all, and "Asset Purchase Agreement" means any,
of the agreements with one or more Sellers pursuant to the terms of which, (i)
LRA will have the right to purchase Assets of a Qualified Company, (ii) a
Consolidated Subsidiary will have the right to purchase Assets of a Qualified
Company, or (iii) a combination of (i) and (ii), and in any event pursuant to an
Approved Asset Purchase Agreement.
"Assets" means all or substantially all of the assets of a Qualified Company.
"Base Rate Loan" means that portion of any Loan which bears interest at a rate
of interest determined by reference to the Base Rate.
"Base Rate" means the variable rate of interest announced from time to time by
the Bank as the prime rate, and thereafter entered in the minutes of the Bank's
Loan and Discount Committee, and used by the Bank as a general reference rate of
interest, but which rate of interest may not be the lowest rate charged by the
Bank on similar loans. Each change in the Base Rate shall become effective
without prior notice to the Borrowers automatically as of the opening of
business on the date of a change in the
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Base Rate. If the Bank shall, during the term of this Fourth Restated Agreement,
abolish or abandon the practice of announcing or publishing a "prime rate," then
the "prime rate" used during the remaining term of this Fourth Restated
Agreement shall be that interest rate or other general reference rate then in
effect and used by the Bank, which, from time to time, in the judgment of the
Bank, most effectively approximates the initial definition of the "prime rate."
"Block Stock Purchase Agreement" means the Stock Purchase Agreement among LRA,
LRA-NE and ▇▇▇▇▇▇ ▇. Block pursuant to the terms of which LRA-NE purchased all
of the outstanding and issued capital stock of Block, as an Approved Stock
Purchase Agreement.
"Board" means the Board of Governors of the Federal Reserve System of the U.S.
"Borrowers" means all of, and "Borrower" means any of, LRA, Looney, KBA, LRA-
Cal, LRA-Midwest, LRA-NE, Block, Transcription, ▇▇▇▇▇▇ and any other
Consolidated Subsidiary of any of the Borrowers which the Bank may require, at
the time of its acquisition or formation by a Borrower, become a Borrower
hereunder.
"Borrowing Base Certificate" means any of the certificates delivered by the
Borrowers to the Bank calculating the Borrowing Base pursuant to Section 2.3.
"Borrowing Base" means the amount calculated pursuant to Section 2.3 which the
Borrowers shall be entitled to borrow as an Advance.
"Borrowing Date" means the Business Day specified in (i) any Notice of Revolving
Credit Advance, (ii) a Notice of Term Loan Advance, or (iii) the Application for
Letter of Credit, as a date on which the Borrowers request the Bank make an
Advance or issue a Letter of Credit.
"Borrowing" means any amount disbursed by the Bank to or on behalf of any of the
Borrowers under the Loan Documents, whether such amount advanced constitutes an
original disbursement of funds, the continuation of an amount outstanding,
amounts advanced and outstanding under a Letter of Credit (until such payment is
reimbursed in accordance with the applicable Application for Letter of Credit or
the Letter of Credit is returned to the Bank), or a disbursement of funds in
accordance with and to satisfy the Obligations.
"▇▇▇▇▇▇ House Stock Purchase Agreement" means the Stock Purchase Agreement dated
September 17, 1997, among LRA, LRA-Cal, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
pursuant to the terms of which LRA-Cal will have the right to purchase all of
the outstanding and issued capital stock of ▇▇▇▇▇▇, as an Approved Stock
Purchase Agreement.
"Business Day" means a day on which the Bank is open for business, except for
Saturdays, Sundays and holidays recognized by the Bank.
"Capital Expenditure" means any expenditure by a Person for an asset which will
be used in a year or years subsequent to the year in which the expenditure is
made and which asset is properly classifiable in relevant financial statements
of such Person as equipment, real property, improvements, fixed assets, or a
similar type of capitalized asset in accordance with GAAP.
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"Capital Lease" means, as of any date, any lease of property, real or personal,
which would be capitalized on a balance sheet of the lessee prepared as of such
date in accordance with GAAP, together with any other lease by such lessee which
is in substance a financing lease, including, without limitation, any lease
under which, (i) such lessee has or will have an option to purchase the property
subject thereto at a nominal amount or at an amount less than a reasonable
estimate of the fair market value of such property as of the date such lease is
entered into, or (ii) the term of the lease approximates or exceeds the expected
useful life of the property leased thereunder.
"Cash Flow" means, for any period, annualized EBITDA using no less than the
three most current months financial data, actual EBITDA as the annualization
basis, less annualized cash income tax expense based on the latest historical
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income tax payment, unless a quarterly income tax payment for a quarterly period
is unusually high or low, in which event, income tax payments will be estimated
for the Borrower's Fiscal Year.
"Certificate of Compliance" means any of the certificates delivered by the
Borrowers pursuant to Section 8.2.C.
"Change of Control" means if any Person, or group of Persons acting together
shall acquire sufficient stock ownership of any of the Borrowers to permit such
Person or group to elect a majority of the Board of Directors of any Borrower
without the express written consent of the Bank.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Collateral Documents" means all security agreements, guaranty agreements and
any other agreements or documents executed or delivered to secure the repayment
of the Obligations or any part thereof.
"Commitment" means the obligation of the Bank to extend credit to the Borrowers
under this Fourth Restated Agreement in an aggregate principal amount not to
exceed the Total Commitment.
"Consequential Loss" means, with respect to the Borrowers' payment of all or any
portion of an Adjusted Libor Rate Loan on a day other than the last day of the
Interest Period related thereto, any loss, cost or expense incurred by the Bank
as a result of the timing of such payment or in redepositing such principal
amount, including the sum of, (i) the interest which, but for such payment, the
Bank would have earned in respect of such principal amount so paid, for the
remainder of the Interest Period applicable to such sum, reduced, if the Bank is
able to redeposit such principal amount so paid for the balance of such Interest
Period, by the interest earned by the Bank as a result of so redepositing such
principal amount, plus (ii) any expense or penalty incurred by the Bank in
redepositing such principal amount.
"Consolidated Subsidiaries" means Looney, KBA, LRA-Cal, LRA-Midwest, LRA-NE,
Block, Transcription, ▇▇▇▇▇▇ and any other Qualified Company, the capital stock
of which is owned in its entirety by LRA or a wholly owned direct subsidiary of
LRA, and "Consolidated Subsidiary" means any of them.
"Contract Rate" means the applicable rate of interest on the Loans calculated as
set out in Section 4.3.A.(1) or Section 4.3.B.(1).
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"Controlled Group" means, (i) the controlled group of corporations as defined in
(S)1563 of the Code, or (ii) the group of trades or businesses under common
control as defined in (S)414(c) of the Code, of which the Borrowers are or may
become a part.
"Conversion Date" shall have the meaning ascribed to such term in Section
4.3.A.(4) or Section 4.3.B.(4), as applicable.
"Debt Service Expense" means, with respect to any Person for any period, the
aggregate of regularly scheduled principal payments of all long-term
Indebtedness (including, without limitation, Subordinated Indebtedness) made or
to be made by such Person during such period in accordance with GAAP.
"Debtor Laws" means all applicable liquidation, conservatorship, bankruptcy,
moratorium, arrangement, receivership, insolvency, reorganization or similar
laws, from time to time in effect, affecting the rights of creditors generally.
"Default" shall have the meaning ascribed to such term in Section 11.1.
"Dividends" means in respect of any corporation, including tax-option
corporations, (i) cash distributions or any other distributions (or the setting
aside of any amounts for any such purpose) on, or in respect of, any class of
capital stock of such corporation, except for distributions made solely in
shares of stock of the same class, and (ii) any and all funds, cash or other
payments made in respect of the redemption, repurchase or acquisition of such
stock and whether by reduction of capital or otherwise, unless such stock shall
be redeemed or acquired through the exchange of such stock with stock of the
same class.
"Dollars" and the symbol "$" shall refer to currency of the U.S.
"EBITDA" shall mean for any fiscal period of LRA and the Consolidated
Subsidiaries, the sum of the following which would be reflected on the
consolidated income statement of LRA and the Consolidated Subsidiaries prepared
in accordance with GAAP, (i) earnings before income taxes, extraordinary events,
and discontinued operations; plus, (ii) Interest Expense (including non-cash
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interest expense or non-cash amortization expense from discounted debt; plus,
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(iii) non-cash charges in respect of depreciation and amortization; (iv) non-
cash management compensation related to stock options; and plus, (v) non-
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capitalized transaction costs realized in the merger of LRA, Looney and KBA.
"EDP Asset Purchase Agreement" means the Agreement of Purchase and Sale of
Assets dated September 17, 1997, among LRA, LRA-NE, ▇▇▇▇▇▇ ▇. Dine, Inc.
("EDP"), a New York corporation, ▇▇▇▇▇▇ ▇. Dine Temporary Attorneys, L.L.C.
("EDP Temp"), a New York limited liability company, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇, pursuant to the terms of which LRA-NE will have the right to purchase
the assets of EDP and EDP Temp, as an Approved Asset Purchase Agreement.
"Effective Date of the Prior Agreement" shall mean January 10, 1997.
"Effective Date of the Restated Agreement" shall mean May 14, 1997.
"Effective Date of the Second Restated Agreement" shall mean August 18, 1997.
"Effective Date of the Third Restated Agreement" shall mean September 4, 1997.
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"Effective Date of this Fourth Restated Agreement" shall mean September 17,
1997.
"Effective Dates of the Prior Credit Agreements" shall mean, respectively, the
effective dates of the execution and delivery of the Prior Credit Agreements.
"Eligible Accounts" means, at the time of any determination thereof, each
Account of LRA and the Consolidated Subsidiaries as to which the following
requirements have been fulfilled to the satisfaction of the Bank.
A. The Borrowers or a Consolidated Subsidiary have lawful and absolute title
to the Account.
B. The Account is a valid, legally enforceable obligation of a Person (the
"Account Debtor") who is obligated under the Ac count for goods or
services previously delivered or rendered to the Person for which payment
of the Account has not been outstanding for more than one hundred twenty
(120) days from invoice date.
C. There has been excluded from the Account any portion that is subject to
any dispute, set off, counterclaim or other claim or defense on the part
of the Account Debtor or any claim on the part of the Account Debtor
denying liability under the Account.
D. The Borrowers or a Consolidated Subsidiary have the full and unqualified
right to assign and grant a security interest in the Account to the Bank
as security for the Obligations.
E. The Account is evidenced by an invoice rendered to the Account Debtor and
the Account is not evidenced by any chattel paper, promissory note, or
other instrument.
F. The Account is subject to a fully perfected first priority security
interest and Lien in favor of the Bank pursuant to the Loan Documents,
prior to the rights of, and enforceable as such, against any other
Person.
G. The Account is not subject to any Lien in favor of any Person other than
the Lien of the Bank pursuant to the Loan Documents.
H. The Account arose from a transaction in the ordinary course of business
of the Borrowers or a Consolidated Subsidiary.
I. An Eligible Account shall not include Accounts from an Account Debtor to
the extent the Accounts from that Account Debtor exceeds fifteen (15) per
cent or more of the Eligible Accounts.
J. The Bank shall have the right, in its judgment, to exclude as an Eligible
Account any Account from an Account Debtor who is obligated to the
Borrowers or a Consolidated Subsidiary if twenty-five (25) per cent or
more of the Accounts of that Account Debtor has been due and payable for
more than one hundred twenty (120) days from the invoice date.
K. No Account Debtor in respect of the Account is, (i) primarily conducting
business in any jurisdiction located outside the U.S., except those
Accounts secured by letters of credit specifically approved by the Bank,
(ii) an Affiliate of the Borrowers or a Consolidated Subsidiary,
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(iii) any Governmental Authority, domestic or foreign, or (iv) the
subject of a proceeding under any Debtor Laws.
L. An Eligible Account shall not include an Account which arises out of a
transaction in which the Borrowers shall have provided any surety or
guaranty bond to the Account Debtor or other Person.
"Employee Plan" means any, and "Employee Plans" means all, employee benefit or
other plans maintained, in whole or in part, for the employees of LRA, the
Consolidated Subsidiaries and/or any ERISA Affiliate, and covered by Title IV of
ERISA, or subject to the minimum funding standards under (S)412 of the Code.
"ERISA Affiliate" means any Person which, together with LRA or any Consolidated
Subsidiary, would be treated as a single employer under the provisions of Title
I or Title IV of ERISA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
together with all regulations issued pursuant thereto.
"Event of Default" shall have the meaning ascribed to such term in Section 11.1.
"Facility Fees" shall have the meaning ascribed to such term in Section 4.12.
"Financial Officer" means, with respect to any Person, the chief financial
officer of such Person.
"Financial Statements" means all, and "Financial Statement" means each, of the
balance sheets, income statements and statements of cash flow and contingent
liabilities of any of the Borrowers.
"Financing Statement" means each UCC-1 financing statement sufficient for
purposes of perfecting the Bank's security interest in the Collateral pursuant
to the UCC.
"Fiscal Year" means the fiscal year of LRA for accounting purposes ending each
December 31.
"Fixed Charge Coverage Ratio" means Cash Flow divided by Fixed Charges.
"Fixed Charges" means, for any fiscal period of LRA and the Consolidated
Subsidiaries, the sum of the following which would be reflected on the
consolidated income statement prepared in accordance with GAAP of LRA and the
Consolidated Subsidiaries, (i) Interest Expense unless deferred to a subsequent
Fiscal Year of the Borrower or converted to equity pursuant to the Securities
Purchase Agreement, (ii) Capital Lease payments, (iii) scheduled payments of
principal on Indebtedness, (iv) non-financed Capital Expenditures, and (v) cash
Dividends or cash disbursements of equity.
"Free Cash Flow" means, with respect to any Person for any period, the amount,
if any, by which Funds Flow From Operations of such Person and its Subsidiaries
for such period exceeds the sum of (i) non-financed Capital Expenditures, plus
----
(ii) Dividends, plus (iii) the Debt Service Expense of such Persons and its
----
Subsidiaries for such period, plus (iv) Capital Lease payments of such Person
----
during such period, plus (v) changes in working capital.
----
"Funded Debt Ratio" means Funded Debt divided by Cash Flow.
-8-
"Funded Debt" means all interest bearing or discounted Indebtedness other than
accounts payable and other similar obligations incurred in the ordinary course
of business by any of the Borrowers and accruals and deferred income tax
liability.
"Funding Account" means the non-interest bearing account established pursuant to
Section 2.4.
"Funds Flow From Operations" means Net Income plus depreciation and
----
amortization.
"G&G Asset Purchase Agreement" means the Approved Asset Purchase Agreement among
LRA, LRA-Cal, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, pursuant to the terms of
which LRA-Cal purchased the Assets of G&G Court Reporters, a proprietorship of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
"GAAP" means those generally accepted accounting principles and practices which
are recognized as such by the American Institute of Certified Public
Accountants acting through its Accounting Principles Board or by the Financial
Accounting Standards Board ("FASB") or through other appropriate boards or
committees thereof and which are consistently applied for all periods after the
Effective Date of the Prior Agreement so as to properly reflect the financial
condition, and the consolidated results of operations and cash flows, of the
Borrowers, except that any accounting principle or practice required to be
changed by the Accounting Principles Board or FASB (or other appropriate board
or committee of the boards) in order to continue as a generally accepted
accounting principle or practice, may be so changed. In the event of a change in
GAAP, the Bank and the Borrowers will thereafter negotiate in good faith to
revise any covenants of this Fourth Restated Agreement affected thereby in
order to make such covenants consistent with GAAP then in effect. If no
agreement is reached, the financial covenants shall be calculated based on GAAP
before any change in GAAP.
"▇▇▇▇▇ Merger Agreement" means the Plan and Agreement of Reorganization and
Merger among LRA, LRA-Cal, ▇▇▇▇▇ of Newport, Inc. ("▇▇▇▇▇"), a California
corporation, and ▇▇▇▇▇ ▇▇▇▇▇▇▇, pursuant to the terms of which ▇▇▇▇▇ was merged
into LRA-Cal and LRA-Cal is the surviving entity in an Approved Merger.
"Governmental Authority" means any government (or any political sub division or
jurisdiction thereof), court, bureau, agency or other governmental authority
having jurisdiction over any of the Borrowers or their respective business or
property.
"Guaranty" means any contract, agreement or understanding of any Person pursuant
to which such Person guarantees, or in effect guarantees, any Indebtedness of
any other Person (the "Primary Obligor") in any manner, whether directly or
indirectly, including, without limitation, agreements: (i) To purchase such
Indebtedness or any property constituting security therefor; (ii) to advance or
supply funds (a) for the purchase or payment of such Indebtedness, or (b) to
maintain net worth or working capital or other balance sheet conditions, or
otherwise to advance or make available funds for the purchase or payment of such
Indebtedness; (iii) to purchase property, securities or service primarily for
the purpose of assuring the holder of such Indebtedness of the ability of the
Primary Obligor to make payment of the Indebtedness; or, (iv) otherwise to
assure the holder of the Indebtedness of the Primary Obligor against loss in
respect thereof. "Guaranty" shall not include, however, the indorsement of
negotiable instruments or documents for deposit or collection by the Borrowers
in the ordinary course of business.
-9-
"Indebtedness" means, with respect to any Person, all indebtedness, obligations
and liabilities of such Person, including, without limitation: (i) All
liabilities which would be reflected on a balance sheet of such Person prepared
in accordance with GAAP; (ii) all obligations of such Person in respect of any
Guaranty; (iii) all obligations, indebtedness and liabilities secured by any
Lien or any security interest on any property or assets of such Person; and,
(iv) all preferred stock, which is redeemable by the holder of such stock, of
such Person valued at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, unless the Bank specifically
agrees in writing that any such preferred stock is Approved Preferred Stock and
shall not be categorized as Indebtedness.
"Intangible Assets" means those assets of any Person which would be classified
as intangible assets on a balance sheet of such Person prepared in accordance
with GAAP.
"Interest Expense" means for any fiscal period of LRA and the Consolidated
Subsidiaries, the interest charges paid or accrued during such period (including
imputed interest on Capital Lease obligations, but excluding amortization of
debt discount and expense) on the Indebtedness of LRA and the Consolidated
Subsidiaries.
"Interest Option" shall have the meaning assigned to such term in Section 4.3.
"Interest Payment Date" means, (i) as to any Base Rate Loan, the sixth (6th) day
of each month commencing on the first of such days to occur after such Loan is
made, and (ii) as to any Adjusted Libor Rate Loan in respect of which the
Borrowers have selected an Interest Period of 30, 60, 90 or 180 days, the last
day of each month commencing on the first of such days to occur after such Loan
is made.
"Interest Period" means, with respect to any Loan, the period commencing on the
Borrowing Date and ending on the Term Maturity Date, consistent with the
following provisions. The duration of each Interest Period shall be:
A. In the case of a Base Rate Loan, any period up to the Term Maturity Date;
and,
B. With respect to any Adjusted Libor Rate Loan requested by LRA;
(1) Initially, the period commencing on the Borrowing Date or Conversion
Date with respect to such Adjusted Libor Rate Loan and ending 30, 60, 90
or 180 days thereafter as selected by LRA in a Notice of Revolving Credit
Advance as provided in Section 2.1, an Application for Letter of Credit
as provided in Section 2.2, or a Rollover Notice as provided in Section
4.3.A.(3); and,
(2) Thereafter, each period commencing on the last day of the immediately
preceding Interest Period applicable to such Adjusted Libor Rate Loan and
ending 30, 60, 90 or 180 days thereafter, as selected by LRA in a
Rollover Notice.
C. Each Interest Period shall be as selected by LRA, subject to the Bank's
consent, at the Bank's sole discretion. LRA's choice of Interest Period
is also subject to the following limitations:
(1) No Interest Period shall end on a date after the Term Maturity Date;
and,
-10-
(2) If the last day of an Interest Period would be a day other than a
Business Day, the Interest Period shall end on the next succeeding
Business Day (unless the Interest Period relates to an Adjusted Libor
Rate Loan and the next succeeding Business Day is in a different calendar
month than the day on which the Interest Period would otherwise end, in
which case the Interest Period shall end on the next preceding Business
Day).
"Interest Rate Protection Agreement" means the agreement to be entered into
pursuant to Section 8.1.E.
"Inventory" means, as of any date, for LRA and the Consolidated Subsidiaries,
(i) the inventory which would be reflected on the consolidated balance sheet as
of such date prepared in accordance with GAAP, and (ii) the assets held for sale
or lease, or furnished or to be furnished under service contracts, raw materials
and materials used or consumed by the Borrowers in the Borrowers' business, and
(iii) in all instances inventory in which the Bank is granted security interests
pursuant to the Loan Documents.
"Investment" means any investment in any period, whether by means of share
purchase, loan, advance, extension of credit, capital contribution or
otherwise, in or to a Person, the Guaranty of any Indebtedness of such Person,
or the subordination of any claim against such Person to other Indebtedness of
such Person.
"Investor" means any, and "Investors" means all, of the holders of Approved
Preferred Stock and Subordinated Senior Notes, as defined in and issued pursuant
to the terms of the Securities Purchase Agreement, including, but not limited
to, Delaware State Employees Retirement Fund, Declaration of Trust for Defined
Benefit Plan of Zeneca Holdings Inc., and Declaration of Trust for Defined
Benefit Plan of ICI American Holdings, Inc.
"IPO" means the consummation of the sale or issuance in a public offering of any
debt or equity securities of the Borrowers.
"IRS" means the Internal Revenue Service, Department of the U.S. Treasury, an
agency of the U.S. government.
"KBA Stock Purchase Agreement" means the Stock Purchase Agreement among LRA and
▇▇▇▇▇▇▇ ▇▇▇▇▇ pursuant to the terms of which LRA purchased all of the
outstanding and issued capital stock of KBA as an Approved Stock Purchase
Agreement.
"Legal Enterprise Asset Purchase Agreement" means the Agreement of Purchase and
Sale of Assets among LRA, LRA-Cal, Legal Enterprise, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇, pursuant to the terms of which LRA-Cal purchased the Assets of Legal
Enterprise, Inc., a California corporation, as an Approved Asset Purchase
Agreement.
"Letters of Credit" means all, and "Letter of Credit" means any, of the letters
of credit issued by the Bank for the benefit of the Borrowers pursuant to
Section 2.2.
"Libor Rate" means, for each Adjusted Libor Rate Loan, an interest rate per
annum determined by the Bank at or before 10:00 a.m. (Houston, Texas time), or
as soon thereafter as practicable, two Business Days before the first day of
such Interest Period, which determination shall be based upon, (i) the rate per
annum at which deposits of Dollars are offered to the Bank by prime banks in
whatever Eurodollar interbank market may be selected by the Bank in its sole
discretion, at the time of determination and in
-11-
accordance with the usual practice in such market, for delivery on the first day
of such Interest Period in immediately available funds and for a period equal to
such Interest Period and in an amount substantially equal to the amount of the
Adjusted Libor Rate Loan during such Interest Period, and (ii) Statutory
Reserves.
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, conditional sale or title retention arrange ment, or any other
interest in property designed to secure the repayment of Indebtedness, whether
arising by agreement, under any statute or law, or otherwise.
"Loan Documents" means the Prior Credit Agreements, this Fourth Restated
Agreement, the Notes, including any renewals, extensions and modifications
thereof, the Collateral Documents and any agreements or documents executed or
delivered pursuant to the terms of the Prior Credit Agreements or this Fourth
Restated Agreement, and with respect to the Prior Credit Agreements or this
Fourth Restated Agreement, and such other agreements and documents, any
amendments or supplements thereto or modifications thereof.
"Loan Parties" means all of the Borrowers, and "Loan Party" means any of them.
"Loans" means the Revolving Credit Loans and the Term Loans, and the term "Loan"
means any of them.
"Looney Stock Purchase Agreement" means the Stock Purchase Agreement among LRA
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ pursuant to the terms of which LRA purchased all of the
outstanding and issued capital stock of Looney as an Approved Stock Purchase
Agreement.
"Mandatory Prepayment" means an amount equal to seventy-five (75) per cent of
Free Cash Flow, if any, of LRA and the Consolidated Subsidiaries for each Fiscal
Year.
"Material Adverse Effect" means any material adverse effect on, (i) the
validity, performance, or enforceability of any of the Loan Documents, (ii) the
financial condition or business operations of any of the Borrowers, and/or (iii)
the ability of any of the Borrowers to fulfill the Obligations.
"Maximum Rate" and "Maximum Amount" respectively mean the maximum non-usurious
rate and the maximum non-usurious amount of interest permitted by applicable
laws that, at any time or from time to time, may be contracted for, taken,
reserved, charged or received on the Obligations under the laws which are
presently in effect of the U.S. and the State of Texas and applicable to the
holders of the Notes or, to the extent permitted by law, under such applicable
laws of the U.S. and the State of Texas which may hereafter be in effect and
which allow a higher maximum non-usurious interest rate than applicable laws
now allow.
"Medtext Merger Agreement" means the Plan and Agreement of Reorganization and
Merger among LRA, LRA-Cal, Medtext, Inc. ("Medtext"), a California corporation,
and Seaquestor Trust, pursuant to the terms of which Medtext was merged into
LRA-Cal and LRA-Cal is surviving entity in an Approved Merger.
"Net Income" or "Net Loss" means, with respect to any Person for any period, the
aggregate income (or loss) of such Person for such period which shall be an
amount equal to net revenues and other proper items of income for such Person
less the aggregate for such Person of any and all expenses, and
-12-
less Federal, state and local income taxes, but excluding any extraordinary
gains or losses or any gains or losses from the sale or disposition of assets
other than in the ordinary course of business, all of the foregoing being
computed and calculated in accordance with GAAP.
"Notes" means the Revolving Credit Note and the Term Notes, together with any
renewals, extensions or modifications thereof.
"Notice of Revolving Credit Advance" shall have the meaning ascribed to such
term in Section 2.1.
"Notice of Term Loan Advance" shall have the meaning ascribed to such term in
Section 3.1.
"Obligations" mean:
A. All present and future indebtedness, obligations and liabilities of any
of the Loan Parties to the Bank arising pursuant to any of the Loan
Documents, regardless of whether such indebtedness, obligations and
liabilities are direct, indirect, fixed, contingent, joint, several, or
joint and several;
B. All costs incurred by the Bank to obtain, preserve, perfect and enforce
the Liens and security interests securing payment of such indebtedness,
liabilities and obligations, and to maintain, preserve and collect the
property in which the Bank has been granted a Lien to secure payment of
the Loans, or any part thereof, including but not limited to, taxes,
assessments, insurance premiums, repairs, reasonable attorneys' fees and
legal expenses, rent, storage charges, advertising costs, brokerage fees
and expenses of sale; and,
C. All other Indebtedness of whatever kind or character owing, or which may
hereafter become owing, by any of the Loan Parties to the Bank, whether
the Indebtedness is direct or indirect, primary or secondary, fixed or
contingent, or arises out of or is evidenced by note, deed of trust, open
account, overdraft, indorsement, surety agreement, guaranty, or
otherwise, and it is specifically contemplated that the Borrowers may
hereafter become indebted to the Bank in further sum or sums; and,
D. All renewals, extensions and modifications of the Indebtedness referred
to in the foregoing clauses, or any part thereof.
"PBGC" means the Pension Benefit Guaranty Corporation, and any successor to all
or any of the Pension Benefit Guaranty Corporation's functions under ERISA.
"Pecks" means Pecks Management Partners Ltd., investment advisor to the
Investors.
"Pension Plan" means any Employee Plan which is subject to the provisions of
Title IV of ERISA.
"Permitted Liens" means: (i) Liens granted to the Bank to secure the
Obligations; and, (ii) pledges or deposits made to secure pay ment of worker's
compensation insurance (or to participate in any fund in connection with
worker's compensation insurance), unemployment insurance, pensions or social
security programs; and, (iii) Liens imposed by mandatory provisions of law such
as for materialmen's, mechanics', warehousemen's and other like Liens arising in
the ordinary course of business securing Indebtedness the payment for which is
not yet due, or if same is due, it is being contested in good faith
-13-
and as to which a bond has been provided; and, (iv) Liens for taxes, assessments
and governmental charges or levies imposed upon a Person or upon such Person's
income or profits or property, if the same are not yet due and payable or if the
same are being contested in good faith and as to which adequate cash reserves
have been provided; and, (v) Liens arising from good faith deposits in
connection with tenders, leases, real estate bids or con tracts (other than
contracts involving the borrowing of money), pledges or deposits to secure
public or statutory obligations and deposits to secure (or in lieu of) surety,
stay, appearance or customs bonds and deposits to secure the payment of taxes,
assessments, customs duties or other similar charges; and, (vi) encumbrances
consisting of zoning restrictions, easements, or other restrictions on the use
of real property, provided that such items do not impair the use of such
property for the purposes intended, and none of which is violated by existing or
proposed structures or land use.
"Person" shall include an individual, a corporation, non-profit corporation, a
professional association, a joint venture, a general partnership, a limited
partnership, a limited liability company, a limited liability partnership, a
trust, an unincorporated organization or a government or any agency or
political subdivision thereof.
"Qualified Company" means a corporation whose primary business is to provide
support services to the legal profession.
"Rapidtext Merger Agreement" means the Plan and Agreement of Reorganization and
Merger among LRA, LRA-Cal, Rapidtext, Inc. ("Rapidtext"), a California
corporation, Seaquestor Trust and ▇▇▇▇▇ ▇▇▇▇▇▇▇, pursuant to the terms of which
Rapidtext was merged into LRA-Cal and LRA-Cal is the surviving entity in an
Approved Merger.
"Regulation D" means Regulation D of the Board, 12 C.F.R. Part 204, or any
successor or other regulation relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"Regulation G", "Regulation U" and "Regulation X" respectively mean Regulation
G, Regulation U and Regulation X promulgated by the Board, 12 C.F.R., Parts 207,
221, or 224, as applicable or any suc cessor or other regulation hereafter
promulgated by the Board to replace the prior Regulation and having
substantially the same function.
"Regulatory Defects" means the failure by any Loan Party to comply with all
laws, statutes, orders, rules and regulations of any Govern mental Authority,
and such failure to comply has a Material Adverse Effect.
"Reportable Event" shall have the meaning ascribed to such term in Title IV of
ERISA.
"Requirements" means, (i) any and all present and future judicial decisions,
statutes, rulings, rules, regulations, orders, permits, certificates or
ordinances of any Governmental Authority in any manner applicable to any of the
Loan Parties, and (ii) any and all contracts, written or oral, of any nature to
which any of the Loan Parties may be bound.
"Responsible Officer" means, with respect to any Person, the chief executive
officer, the president, the chief financial officer or the controller, of such
Person.
-14-
"Revolving Credit Commitment Period" means the period beginning on the Effective
Date of the Prior Agreement and ending on the earlier of, (i) the Revolving
Credit Commitment Termination Date, or (ii) the date on which the obligations of
the Bank to fund Advances hereunder terminates after the occurrence of an Event
of Default.
"Revolving Credit Commitment Termination Date" means July 10, 1998, or if such
date is not a Business Day, then the Business Day preceding such date.
"Revolving Credit Commitment" means $2,000,000.00.
"Revolving Credit Loans" means the aggregate unpaid principal balance of all
Borrowing made under Section 2.1.
"Revolving Credit Note" shall have the meaning ascribed to such term in Section
4.1.
"Revolving Loan Contract Rate" means the rates of interest on the Loans
calculated as set out in Section 4.3.A.
"Rocca Asset Purchase Agreement" means agreement among LRA-Midwest and ▇▇▇▇▇▇
▇▇▇▇▇ pursuant to the terms of which LRA-Midwest purchased the assets of Rocca
Reporting Service, a proprietorship, as an Approved Asset Purchase Agreement.
"Securities Purchase Agreement" means the agreement dated January 17, 1997,
among LRA and the Investors pursuant to the terms of which LRA issued
$9,000,000.00 of Indebtedness and $1,000,000.00 of Series A Convertible Stock to
the Investors.
"Security Agreement-Pledge" means each the Security Agreement-Pledge Agreements
executed and delivered pursuant to Section 6.1.B of the Prior Agreements and
each of the Security Agreement-Pledge Agreements executed pursuant to Section
6.1.B of this Fourth Restated Agreement.
"Security Agreement" means each first priority Security Agreement executed and
delivered pursuant to Section 6.1.A of the Prior Agreements and first priority
Security Agreement executed and delivered pursuant to Section 6.1.A of this
Fourth Restated Agreement.
"Seller Debt Subordination Agreement" means each Subordination Agreement which
has heretofore been executed and which will be executed in favor of the Bank
pursuant to Section 9.1.E.
"Seller Preferred Stock Subordination Agreement" means each Subordination
Agreement which has heretofore been executed and which will be executed in favor
of the Bank pursuant to Section 9.1.F.
"Seller" means any, and "Sellers" means all, Persons who have sold or will sell
Stock to LRA or a Consolidated Subsidiary pursuant to an Approved Stock Purchase
Agreement or an Approved Merger or who have sold or will sell Assets to LRA or a
Consolidated Subsidiary and are owed any Indebtedness or are issued Approved
Preferred Stock.
"SF Asset Purchase Agreement" means the Approved Asset Purchase Agreement among
LRA, LRA-Cal, San Francisco Reporting Service, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
pursuant to the terms of
-15-
which LRA-Cal purchased the Assets of San Francisco Reporting Service, a general
partnership composed of ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ as an Approved Asset
Purchase Agreement.
"Solvent" means, with respect to any Person on a particular date, that on such
date, (i) the fair value of the property of such Person is greater than the
total amount of liabilities, including, without limitation, contingent
liabilities net of cash reserves, of such Person, (ii) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on the Person's
Indebtedness as they become absolute and matured, (iii) such Person is able to
realize upon the Person's assets and pay the Person's Indebtedness, contingent
obligations and other commitments as they mature in the normal course of
business, (iv) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature, and (v) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
such Person is engaged. In computing the amount of contingent liabilities at
any time, it is intended that such liabilities will be computed at the amount
which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Statutory Reserves" shall, on any day, mean the difference (expressed as a
decimal) of the number one minus the aggregate of the maximum reserve
percentages (including, without limitation, any basic, marginal, special,
emergency, or supplemental reserves) expressed as a decimal established by the
Board (or any successor governmental body) and any other banking authority to
which the Bank is subject, however with respect to the Libor Rate for
Eurocurrency Liabilities, as defined in Regulation D, such reserve percentages
("Eurodollar Reserve Requirement") shall include, without limitation, those
imposed under Regulation D or under any similar or successor regulation with
respect to Eurocurrency Liabilities or Eurocurrency funding. Adjusted Libor
Rate Loans shall be deemed to constitute Eurocurrency Liabilities and as such
shall be deemed to be subject to such reserve requirements without benefit of or
credit for proration, exceptions or set offs which may be available from time to
time to any bank under Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage. Each determination by the Bank of the Eurodollar Reserve Requirement
shall, in the absence of manifest error, be conclusive and binding.
"Stock Purchase Agreements" means all, and "Stock Purchase Agreement" means any,
of the agreements with one or more Sellers pursuant to the terms of which, (i)
LRA will have the right to purchase Stock of a Qualified Company, (ii) LRA or a
Consolidated Subsidiary will have the right to have a Qualified Company merged
into LRA or the Consolidated Subsidiary, or (iii) a combination of (i) and (ii),
and in any event pursuant to an Approved Merger.
"Stock" means all, but not less than all, of the outstanding and issued capital
stock of each Qualified Company acquired by LRA or a Consolidated Subsidiary
pursuant to the terms of an Approved Stock Purchase Agreement.
"Subordinated Indebtedness" means any, (i) (a) Indebtedness which is issued by
LRA to one or more Sellers pursuant to and in connection with a Stock Purchase
Agreement, a Merger Agreement or an Asset Purchase Agreement, or (b) Approved
Preferred Stock issued to a Seller, and in any case, is subject to a Seller Debt
Subordination Agreement or a Seller Preferred Stock Subordination Agreement, and
(ii) (a) Indebtedness issued to an Investor in connection with the Securities
Purchase Agreement, or
-16-
(b) Approved Preferred Stock issued to an Investor in connection with the
Securities Purchase Agreement at such times as Dividends accrue thereon or such
stock is entitled to be redeemed, and in either case, is subject to the
Subordination Provisions.
"Subordination Agreements" means all, and "Subordination Agreement" means any of
the Seller Debt Subordination Agreements or Seller Preferred Stock Subordination
Agreements.
"Subordination Provisions" means the subordination provisions contained in the
Securities Purchase Agreement.
"Term A Committed Sum" means $1,275,000.00.
"Term B Committed Sum" means $475,000.00.
"Term C Committed Sum" means $2,250,000.00.
"Term Commitment Period" means the period beginning on the Effective Date of
this Fourth Restated Agreement and ending on the earlier of, (i) the Term
Commitment Termination Date, or (ii) the date on which the obligations of the
Bank to fund Advances hereunder terminates upon the occurrence of an Event of
Default.
"Term Commitment Termination Date" means July 10, 1998, or, if such date is not
a Business Day, the Business Day preceding such date.
"Term D Committed Sum" means $2,550,000.00.
"Term E Committed Sum" means $7,450,000.00.
"Term Loan Contract Rate" means the rates of interest on the Term Loans
calculated as set out in Section 4.3.B.
"Term Loans" means the aggregate unpaid principal balance of all Borrowing made
under Section 3.1.
"Term Maturity Date" means May 14, 2000.
"Term Note A" shall have the meaning ascribed to such term in Section 4.2.
"Term Note B" shall have the meaning ascribed to such term in Section 4.2.
"Term Note C" shall have the meaning ascribed to such term in Section 4.2.
"Term Note D" shall have the meaning ascribed to such term in Section 4.2.
"Term Note E" shall have the meaning ascribed to such term in Section 4.2.
"Term Notes" means Term Note A, Term Note B, Term Note C, Term Note D and Term
Note E.
-17-
"Title Documents" means any and all warehouse receipts, bills of lading or
similar documents of title relating to goods in which the Borrowers at any time
have an interest, whether now, or at any time or times hereafter, issued to the
Borrowers or the Bank by any Person, and whether covering Inventory or
otherwise.
"Total Commitment" means the sum of the Revolving Credit Commitment, the Term A
Committed Sum, the Term B Committed Sum, the Term C Committed Sum, the Term D
Committed Sum and the Term E Committed Sum.
"Transactions" shall have the meaning ascribed to such term in Section 10.1.J.
"UCC" means the Uniform Commercial Code in effect in the applicable jurisdiction
in which any of the Collateral is located and includes the Texas Business and
Commerce Code Annotated (S)(S)1.101-11.108 (▇▇▇▇▇▇ Supp. 1992), as amended.
"United States" and "U.S." each means the United States of America.
"Voting Shares" of any corporation or limited liability company means shares,
membership certificates or interests of any class or classes, however
designated, having ordinary voting power for the election of at least a majority
of the members of the Board of Directors, or other governing bodies, of such
corporation or limited liability company.
1.2 Other Definitions.
-----------------
A. All terms defined in this Fourth Restated Agreement shall have the above-
defined meanings when used in any of the Loan Documents, certificates,
reports or other documents made or delivered pursuant to this Fourth
Restated Agreement, unless the context therein shall require otherwise.
B. As appropriate, terms used herein and defined in the Prior Credit
Agreements will have the meanings ascribed to them in the Prior Credit
Agreements. To the extent required, references to the Effective Dates of
the Prior Credit Agreements shall be the appropriate dates for performance
of the Transactions. References to Exhibits herein include the Exhibits
to the Prior Credit Agreements.
C. Defined terms used herein in the singular shall import the plural and vice
versa.
D. The words "hereof," "herein," "hereunder" and similar terms when used in
this Fourth Restated Agreement shall refer to this Fourth Restated
Agreement as a whole and not to any particular provision of this Fourth
Restated Agreement.
E. Unless specifically otherwise noted, references to statutes by Popular
Names are reference to the United States Code Annotated, including the
regulations promulgated thereunder, and all amendments thereof.
F. References to any obligations or liabilities of the "Borrowers" or to a
"Borrower" shall refer to the joint and several obligations of such
Persons.
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ARTICLE II
REVOLVING CREDIT LOANS AND LETTERS OF CREDIT
--------------------------------------------
2.1 Revolving Loan Commitment. Subject to the terms and conditions of this
-------------------------
Fourth Restated Agreement, the Bank agrees to lend to the Borrowers on a
revolving basis, in one or more Advances from time to time during the Revolving
Credit Commitment Period, an amount equal to the amounts requested by the
Borrowers in each Notice of Revolving Credit Advance in the form of Exhibit 2.1
to this Fourth Restated Agreement. The Notice of Revolving Credit Advance shall
specify, (i) the aggregate amount of such Borrowing, (ii) the requested
Borrowing Date of such Borrowing, and (iii) the initial Interest Option selected
in accordance with Section 4.3. If the Borrowers shall specify an Adjusted
Libor Rate Loan, the Notice of Revolving Credit Advance shall also specify the
length of the initial Interest Period selected by the Borrowers for such
Borrowing. The Bank shall not be obligated to make Advances, however, (i) in an
amount in excess of the Revolving Credit Commitment, (ii) in an amount of less
than $100,000.00, (iii) and/or if an Event of Default shall exist. Within the
limits of this Article and during the Revolving Credit Commitment Period, the
Borrowers may borrow, repay and re-borrow in accordance with the terms and
conditions of this Fourth Restated Agreement.
2.2 Letters of Credit. Subject to the terms and conditions of this Agreement,
-----------------
the Bank agrees to issue, from time to time, during the Revolving Credit
Commitment Period, Letters of Credit on behalf of KBA in amounts equal to the
amounts requested by LRA in each Application for Letter of Credit. The Bank
shall not be obligated to issue Letters of Credit, however, (i) if the aggregate
amount of outstanding Letters of Credit and the Advances made on the Revolving
Credit Loans are in excess of the lesser of (a) the Borrowing Base, or (b) the
Revolving Credit Commitment, and/or, (ii) if the total amounts of outstanding
Letters of Credit exceed or would exceed $200,000.00.
A. LRA and KBA shall execute and deliver the Bank's then current Application
for Letter of Credit.
B. To induce the Bank to issue and maintain Letters of Credit, the Borrowers
agree to pay or reimburse the Bank on the date when any draft or draw
request is presented under any Letter of Credit, the amount paid or to be
paid by the Bank. If the Borrowers have not reimbursed the Bank for any
drafts or draws paid or to be paid within twenty-four (24) hours following
the Bank's demand for reimbursement, the Bank is irrevocably authorized to
fund the Borrowers' reimbursement obligations as an Advance pursuant to
Section 2.1 if proceeds are available and the proceeds of such Borrowing
shall be in payment of the Borrowers' unpaid reimbursement obligations. If
an Advance cannot be made, then the Borrowers' reimbursement obligation
shall constitute a demand obligation. Borrowers' obligations under this
Section are absolute and unconditional under any and all circumstances and
irrespective of any set off, counterclaim, or defense to payment that the
Borrowers may have at any time against the Bank or any other Person. From
the date that a draw has occurred to the date paid, unpaid reimbursement
amounts shall accrue interest as set out in Section 4.3.A. No Letter of
Credit will be issued with a expiry date beyond the Revolving Credit
Commitment Termination Date, except that one Letter of Credit in an amount
not exceeding $150,000.00 may be issued to KBA's landlord which may be
renewed for two (2) successive one (1) year periods on terms and
conditions acceptable to the Bank.
C. Bank shall notify the Borrowers of the date and amount of any draft or
draw request presented for honor under any Letter of Credit, but failure
to give notice will not affect the Obligations
-19-
of the Borrowers. The Bank shall pay the requested amount upon presentment
of a draft or draw request unless presentment on its face does not comply
with the terms of the applicable Letter of Credit. When making payment,
the Bank may disregard (i) any Default or Event of Default that has
occurred, and (ii) obligations under any other agreement that have or have
not been performed by the beneficiary of the Letter of Credit or any other
Person. The Bank is not responsible for, and the Borrowers' reimbursement
obligations for honored drafts and draws will not be affected by, any
matter or event whatsoever, including, without limitation, the validity or
genuineness of documents or indorsements, even if the documents should in
fact prove to be in any respect invalid, fraudulent, or forged, or any
dispute among Borrowers and the beneficiary of any Letter of Credit, or
any other Person to whom any Letter of Credit may be transferred, or any
claims whatsoever of the Borrowers against any beneficiary of any Letter
of Credit or its transferee.
D. Borrowers acknowledge that each Letter of Credit is deemed issued upon
delivery to the beneficiary or a Borrower. If LRA requests any Letter of
Credit be delivered to the Borrowers rather than the beneficiary, and the
Borrowers subsequently cancel that Letter of Credit, the Borrowers agree
to return the Letter of Credit to the Bank together with the Borrowers'
certification that the Letter of Credit has never been delivered to its
beneficiary. If any Letter of Credit is delivered to its beneficiary under
the Borrowers' instructions, the Borrowers' cancellation shall be
ineffective without the Bank's receipt of the beneficiary's written
consent and the Letter of Credit.
E. Although this Agreement may be referenced in any Letter of Credit, the
terms of an agreement related thereto or other obligation to the
beneficiary of the Letter of Credit, such other agreements or obligations
are not incorporated into this Agreement in any manner.
2.3 Borrowing Base. The aggregate principal amount at any time remaining
--------------
unpaid on the Revolving Credit Loans will not be in excess of the amount arrived
at by the computation provided for in the following borrowing formula (the
"Borrowing Base"), which will be calculated in a Borrowing Base Certificate in
the form of Exhibit 2.3 to this Fourth Restated Agreement. The Borrowing Base
and the computation thereof shall be eighty-five (85) per cent of the aggregate
amount of Eligible Accounts.
2.4 Borrowing Procedure. The Borrowers will maintain a bank account (the
-------------------
"Funding Account") with the Bank into which account all Advances on the
Revolving Credit Loans will be made.
A. Advances on the Revolving Credit Loans shall be made pursuant to a Notice
of Revolving Credit Advance signed by a Responsible Officer of LRA, which
is authorized by all other Borrowers to do so, specifying, (i) the
aggregate amount of the Borrowing, and (ii) the requested date of the
Borrowing. Each Borrowing shall be made on a Business Day not more often
than three (3) times per week and Advances shall be in increments of not
less than $50,000.00. The Bank is entitled to rely and act upon requests
made or purportedly made by a Responsible Officer of LRA. The Borrowers
shall be unconditionally and absolutely estopped from denying, (i) the
authenticity and validity of any such transaction so acted upon by the
Bank once the Bank has made an Advance and has deposited or transferred
such funds as requested in any such Notice of Revolving Credit Advance,
and (ii) the Borrowers' liability and responsibility therefor.
-20-
B. Each Notice of Revolving Credit Advance shall be irrevocable and binding
on the Borrowers. The Borrowers covenant and agree to assume liability for
and to protect, indemnify and save the Bank harmless from any and all
liabilities, obligations, damages, penalties, claims, causes of action,
costs, charges and expenses, including attorneys' fees, which may be
imposed upon, incurred by or asserted against the Bank by reason of any
loss, damage or claim howsoever arising or incurred because of, out of or
in connection with, (i) any action of the Bank pursuant to a Notice of
Revolving Credit Advance or any other request for an Advance under the
Revolving Credit Loans, (ii) the breach of any provisions of this Fourth
Restated Agreement by any Loan Party; or (iii) the transfer of funds
pursuant to (i) and/or (ii) above.
C. If a Notice of Revolving Credit Advance is received by the Bank before
12:00 p.m. (Houston, Texas time) in the manner provided herein, the Bank
will deposit the Advance in immediately available funds in the Funding
Account on the requested Borrowing Date which shall not be earlier than
the Business Day a Borrowing is requested on a Base Rate Loan or the
second Business Day after a Borrowing is requested on an Adjusted Libor
Rate Loan as specified in a Notice of Revolving Credit Advance. If a
Notice of Revolving Credit Advance is received by the Bank after 12:00
p.m. (Houston, Texas time) in the manner provided herein, the Bank will
deposit the Advance in immediately available funds in the Funding Account
on the requested Borrowing Date which shall not be earlier than the first
Business Day after a Borrowing is requested on a Base Rate Loan or the
second Business Day after a Borrowing is requested on an Adjusted Libor
Rate Loan as specified in a Notice of Revolving Credit Advance.
D. If the Bank shall receive an Application for Letter of Credit in the
manner provided herein before 2:00 p.m. (Houston, Texas time) the Bank
shall, on the requested Borrowing Date which shall not be earlier than the
second Business Day after receipt, issue the Letter of Credit as specified
by LRA and deliver same as directed by LRA.
2.5 Use of Proceeds. The proceeds of each Borrowing under the Revolving
---------------
Credit Commitment shall be used for the general corporate purposes (including
those set out in Section 9.3) and working capital of the Borrowers in the
ordinary course of business and for no other purposes.
2.6 Required Payments. If at any time during the term of this Fourth Restated
-----------------
Agreement, the outstanding amount of the Advances made pursuant to Section 2.1
and the amount of Letters of Credit issued pursuant to Section 2.2 shall exceed
the Borrowing Base, the Borrowers will immediately pay to the Bank an amount
equal to the excess, including any unpaid interest on the principal sum paid.
ARTICLE III
TERM LOANS
----------
3.1 Term Loans. The Bank has, as of the respective dates of the Prior
----------
Agreements, advanced to the Borrowers the Term A Committed Sum, the Term B
Committed Sum, the Term C Committed Sum and the Term D Committed Sum. Subject
to the terms and conditions of this Fourth Restated Agreement, the Bank agrees
to lend to the Borrowers, in two (2) Advances during the Term Commitment Period,
up to the Term E Committed Sum as requested by the Borrowers in a Notice of Term
Loan Advance in the form of Exhibit 3.1 to this Fourth Restated Agreement. Each
Notice of Term Loan Advance shall specify, (i) the aggregate amount of such
Borrowing, (ii) the requested Borrowing Date of such Borrowing, and (iii) the
initial Interest Option selected in accordance with Section 4.3. If
the Borrowers shall specify an Adjusted Libor Rate Loan, the Notice of Term Loan
Advance shall also
-21-
specify the length of the initial Interest Period selected by the Borrowers for
such Borrowing. The Bank shall not be obligated to make Term E Loan Advances,
however, (i) in an amount in excess of the Term E Committed Sum, and/or, (ii) if
a Event of Default shall exist.
3.2 Borrowing Procedure. It is contemplated that the Borrowers will request,
-------------------
(i) an Advance of the Term E Committed Sum of up to $6,000,000.00 to pay a
portion of the acquisition price for the Assets being purchased pursuant to the
EDP Asset Purchase Agreement, (ii) an Advance of the Term E Committed Sum of up
to $1,350,000.00 to pay a portion of the acquisition price for the Stock being
acquired pursuant to the ▇▇▇▇▇▇ House Stock Purchase Agreement, and (iii) an
Advance of the Term E Committed Sum of up to $100,000.00 to pay the Facility
Fees due as of the Effective Date of this Fourth Restated Agreement and
transaction costs incurred by the Borrowers in connection with the purchase of
the Assets of EDP, the stock of ▇▇▇▇▇▇ and this Fourth Restated Agreement. Upon
the making of a Term Loan Advance, the Borrowers must perfect in the Bank a
valid first priority lien on all Collateral, including the Assets being acquired
and the Assets of the entities whose stock is being acquired.
A. Advances on the Term Loans shall be made pursuant to a Notice of Term Loan
Advance signed by a Responsible Officer of LRA, which is authorized by all
other Borrowers to do so, specifying, (i) the aggregate amount of the
Borrowing, and (ii) the requested Borrowing Date of the Borrowing. The
Bank is entitled to rely and act upon requests made or purportedly made by
a Responsible Officer of the Borrowers. The Borrowers shall be
unconditionally and absolutely estopped from denying, (i) the authenticity
and validity of any such transaction so acted upon by the Bank once the
Bank has made an Advance and has deposited, transferred or paid such funds
as requested in any such Notice of Term Loan Advance, and (ii) the
Borrowers' liability and responsibility therefor.
B. Each Notice of Term Loan Advance shall be irrevocable and binding on the
Borrowers. The Borrowers covenant and agree to assume liability for and to
protect, indemnify and save the Bank harmless from any and all
liabilities, obligations, damages, penalties, claims, causes of action,
costs, charges and expenses, including attorneys' fees, which may be
imposed upon, incurred by or asserted against the Bank by reason of any
loss, damage or claim howsoever arising or incurred because of, out of or
in connection with, (i) any action of the Bank pursuant to a Notice of
Term Loan Advance, (ii) the breach of any provisions of this Fourth
Restated Agreement by the Borrowers, or (iii) the transfer of funds
pursuant to (i) and/or (ii) above.
3.3 Use of Proceeds. Borrowing under the Term E Committed Sum will be used
---------------
solely in connection with the EDP Asset Purchase Agreement, the ▇▇▇▇▇▇ House
Stock Purchase Agreement, the payment of the Facility Fees to the Bank, for
transactional costs incurred in connection with the foregoing and for no other
purposes. Of the total proceeds of the Borrowing under the Term E Committed
Sum, not more than $6,000,000.00 shall be used to purchase the Assets of EDP and
EDP Temp, and not more than $1,350,000.00 shall be used to pay for the stock of
▇▇▇▇▇▇.
3.4 Conditions Precedent. The Borrowers shall, as conditions precedent to
--------------------
receiving an Advance under the Term Loan provisions hereof, deliver to the Bank,
at the time of any Notice of Term Loan Advance, the following:
A. True and correct final copies of the EDP Asset Purchase Agreement or the
▇▇▇▇▇▇ House Stock Purchase Agreement, as applicable, duly executed by
each party thereto, together with
-22-
true and correct final copies of all documents mentioned or described in
each of such agreements, duly executed by the appropriate parties thereto.
B. Duly executed and filed UCC-1 Financing Statements to perfect the Bank's
first priority security interest in the Assets, and a search of the Office
of the Secretary of States of Texas, New York and California reflecting no
other perfected Liens on the Assets.
C. A landlord's lien waiver on specific Equipment, when same is located on
leased real property and when requested by the Bank, and a waiver of lien
executed by any mortgagee of the real property, both being in form and
content satisfactory to the Bank. The Bank will be provided with such
title information as will be reasonably necessary to determine the status
of title to any such real property.
ARTICLE IV
NOTES
-----
4.1 Revolving Credit Note. The Advances made under Section 2.1 by the Bank
---------------------
shall be evidenced by the Revolving Credit Note executed by the Borrowers, which
(i) is dated the Effective Date of this Fourth Restated Agreement, (ii) is in
the amount of the Revolving Credit Commitment, (iii) is payable to the order of
the Bank at the office of the Bank, (iv) bears interest in accordance with
Section 4.3, and (v) is in the form of Exhibit 4.1 to this Fourth Restated
Agreement. Notwithstanding the principal amount of the Revolving Credit Note as
stated on the face thereof, the amount of principal actually owing thereon, at
any given time, shall be the aggregate of all Advances made to the Borrowers
hereunder, less all payments of principal actually received by the Bank. The
records of the Bank evidencing the date and amount of each Advance, as well as
the amount of each payment made by the Borrowers, shall be rebuttably
presumptive evidence of the amounts owing and unpaid on the Revolving Credit
Note. The Borrowers shall repay, and shall pay interest on, the unpaid
principal amount of the Revolving Credit Loans in accordance with the terms of
the Revolving Credit Note and this Fourth Restated Agreement.
4.2 Term Notes. The Advances of the Term A Committed Sum are evidenced by
----------
Term Note A in the amount of $1,275,000.00, executed by the Borrowers pursuant
to this Fourth Restated Agreement. The Advances of the Term B Committed Sum are
evidenced by Term Note B in the amount of $475,000.00, executed by the Borrowers
pursuant to this Fourth Restated Agreement. Advances of the Term C Committed
Sum are evidenced by Term Note C in the amount of $2,250,000.00, executed by the
Borrowers pursuant to this Fourth Restated Agreement. The Advances of the Term
D Committed Sum are evidenced by Term Note D in the amount of $2,550,000.00,
executed by the Borrowers pursuant to this Fourth Restated Agreement. Advances
of the Term E Committed Sum to be made under Section 3.1 by the Bank shall be
evidenced by the Term Note E executed by the Borrowers pursuant to this Fourth
Restated Agreement. The Term Notes shall be in the forms of Exhibit 4.2-a, as to
Term Note A, Exhibit 4.2-b, as to Term Note B, Exhibit 4.2-c, as to Term Note C,
Exhibit 4.2-d, as to Term Note D, and Exhibit 4.2-e, as to Term Note E. The
Borrowers shall repay, and shall pay interest on, the unpaid principal amount of
the Term Loans in accordance with the terms of the Term Notes and Section 4.6.B.
4.3 Interest Rate Options. Subject to the provisions of this Section, LRA
---------------------
shall for the Borrowers shall elect an option (an "Interest Option") of having
all or any portion of the Loans bear interest at rates determined as follows:
-23-
A. LRA shall for the Borrowers elect to have Revolving Credit Loans bear
interest as a Base Rate Loan or an Adjusted Libor Rate Loan. Each Adjusted
Libor Rate Loan shall, however, be in a minimum amount of $100,000.00, or
an integral multiple of $50,000.00 for amounts in excess thereof. Each
change in an Interest Option made pursuant to this Section shall be deemed
both a payment of the Base Rate Loan or the Adjusted Libor Rate Loan from
which such change was made and a Borrowing (notwithstanding that the
unpaid principal amount of the Loan is not thereby changed) as a Base Rate
Loan or an Adjusted Libor Rate Loan into which such change was made on the
date of such change.
(1) Prior to Default, the unpaid principal of the Revolving Credit Loans
shall bear interest from the date of Advance as follows:
(a) If a Base Rate Loan is chosen, at a rate per annum which shall,
from day to day, be an amount equal to the lesser of: (i) The Base
Rate in effect from day to day, plus the Applicable Margin (a
"Contract Rate"); or, (ii) the Maximum Rate; or,
(b) If an Adjusted Libor Rate Loan is chosen, at a rate per annum
which shall, from day to day, be an amount equal to the lesser of: (i)
The Adjusted Libor Rate in effect from day to day, plus the Applicable
Margin (also a "Contract Rate"); or, (ii) the Maximum Rate.
(2) LRA shall, for the Borrowers, in each Notice of Revolving Credit
Advance in which Borrowers shall choose an Adjusted Libor Rate Loan, give
the Bank notice of the Interest Option selected and the Interest Period
therefor with respect to each Borrowing made hereunder.
(3) Prior to the termination of each Interest Period with respect to each
Adjusted Libor Rate Loan, LRA for the Borrowers shall give notice (a
"Rollover Notice") to the Bank of the Interest Option which shall be
applicable to such portion of the Loan upon the expiration of such
Interest Period. The Rollover Notice shall be given to the Bank at least
one (1) Business Day, in the case of a Base Rate selection, or two (2)
Business Days, in the case of an Adjusted Libor Rate selection, prior to
the termination of the Interest Period. If the Borrowers shall specify an
Adjusted Libor Rate, the Rollover Notice shall also specify the length of
the succeeding Interest Period (subject to the provisions of the
definition of such term), selected by the Borrowers with respect to such
portion of the Loan. Each Rollover Notice shall be irrevocable and
effective upon notification thereof to the Bank. If the required Rollover
Notice shall not have been timely received by the Bank in accordance with
the above provisions of this Section prior to the expiration of the then
relevant Interest Period in effect when such Rollover Notice was required
to be given, the Borrowers shall be deemed to have selected the rate set
forth in Section 4.3.A.(1)(a) to be applicable to such portion of the Loan
upon expiration of such Interest Period and the Borrowers shall be deemed
to have given the Bank notice of such selection.
(4) With respect to a Base Rate Loan, the Borrowers shall have the right,
on any Business Day (a "Conversion Date"), to convert such Base Rate Loan
to an Adjusted Libor Rate Loan by giving the Bank a Rollover Notice of
such election at least two (2) Business Days prior to such Conversion
Date.
-24-
B. The Borrowers shall elect to have Term Loans bear interest as a Base Rate
Loan or an Adjusted Libor Rate Loan. Each change in an Interest Option
made pursuant to this Section shall be deemed both a payment of the Base
Rate Loan or the Adjusted Libor Rate Loan from which such change was made
and a Borrowing (notwithstanding that the unpaid principal amount of the
Loan is not thereby changed) as a Base Rate Loan or an Adjusted Libor Rate
Loan into which such change was made on the date of such change.
(1) Prior to Default, the unpaid principal of the Term Loans shall bear
interest from the date of Advance as follows:
(a) If a Base Rate Loan is chosen, at a rate per annum which shall,
from day to day, be an amount equal to the lesser of: (i) The Base
Rate in effect from day to day, plus the Applicable Margin (a
"Contract Rate"); or, (ii) the Maximum Rate; or,
(b) If an Adjusted Libor Rate Loan is chosen, at a rate per annum
which shall, from day to day, be an amount equal to the lesser of: (i)
The Adjusted Libor Rate in effect from day to day, plus the Applicable
Margin (also a "Contract Rate"); or, (ii) the Maximum Rate.
(2) The Borrowers shall, in each Notice of Term Loan Advance, give the
Bank notice of the initial Interest Option selected and the Interest
Period therefor with respect to each Borrowing made hereunder.
(3) Prior to the termination of each Interest Period with respect to each
Adjusted Libor Rate Loan, the Borrowers shall give notice, also a
"Rollover Notice," to the Bank of the Interest Option which shall be
applicable to such portion of the Loan upon the expiration of such
Interest Period. Such Rollover Notice shall be given to the Bank at least
one (1) Business Day, in the case of a Base Rate selection, or two (2)
Business Days, in the case of an Adjusted Libor Rate Loan selection, prior
to the termination of such Interest Period. If the Borrowers shall specify
an Adjusted Libor Rate Loan, such Rollover Notice shall also specify the
length of the succeeding Interest Period (subject to the provisions of the
definitions of such term), selected by the Borrowers with respect to such
portion of the Loan. Each rollover notice shall be irrevocable and
effective upon notification thereof to the Bank. If the required Rollover
Notice shall not have been timely received by the Bank (in accordance with
the above provisions of this Section) prior to the expiration of the then
relevant Interest Period in effect when such Notice was required to be
given, the Borrowers shall be deemed to have selected the rate set forth
in Section 4.3.B.(1)(a) to be applicable to such portion of the Loan upon
expiration of such Interest Period and the Borrowers shall be deemed to
have given the Bank notice of such selection.
(4) With respect to a Base Rate Loan, the Borrowers shall have the right,
on any Business Day, also a "Conversion Date," to convert such Base Rate
Loan to an Adjusted Libor Rate Loan by giving the Bank a Rollover Notice
of such election at least three (3) Business Days, in the case of an
Adjusted Libor Rate Loan selection, prior to such Conversion Date.
C. Not more than ten (10) Adjusted Libor Rate Loans may be outstanding at any
one time.
-25-
D. The Borrower's right to convert all or any portion of the Loans to any
Interest Option is subject to the following:
(1) Accrued interest on a Loan (or portion thereof) being converted or
continued shall be paid by the Borrowers at the time of conversion or
continuation;
(2) If any Adjusted Libor Rate Loan is converted at any time other than
the end of an Interest Period applicable thereto, the Borrowers shall make
such payments associated therewith as are required pursuant to Section
5.5;
(3) Any portion of a Loan required to be paid on any date occurring less
than thirty (30) days after the end of the then current Interest Period
applicable to such Loan, may not be converted into, or continued as, an
Adjusted Libor Rate Loan and shall be automatically converted at the end
of such Interest Period into a Base Rate Loan; and,
(4) No Base Rate Loan may be converted to an Adjusted Libor Rate Loan and
no Adjusted Libor Rate Loan may be continued as such when any Default or
Event of Default has occurred and is continuing, but each such Loan shall
be automatically converted to a Base Rate Loan on the last day of each
applicable Interest Period.
4.4 Interest Recapture. Notwithstanding the terms of Section 4.3.A.(1) or
------------------
Section 4.3.B.(1), if on any Interest Payment Date, the Bank does not receive
interest on the Loans at the applicable Contract Rate because the applicable
Contract Rate exceeds or has exceeded the Maximum Rate, then the Borrowers
shall, upon the demand of the Bank, pay to the Bank, in addition to interest
otherwise required hereunder, on each Interest Payment Date thereafter,
interest at the Maximum Rate until the cumulative interest received by the Bank
equals the interest which would have been received at the applicable Contract
Rate. However, in no event shall the Borrowers be required to pay, for any
appropriate computation period, interest at a rate exceeding the Maximum Rate
effective during such period.
4.5 Maximum Interest. It is the intention of the parties to comply with all
----------------
applicable usury laws. Accordingly, it is agreed that notwithstanding any
provision apparently to the contrary in the Loan Documents, no such provision
shall require the payment or permit the collection of interest in excess of the
Maximum Amount or the Maximum Rate. If any excess of interest in such respect
is provided for, or shall be adjudicated to be so provided for, in the Loan
Documents, then in such event the provisions of this Section shall govern and
control and, (i) no Loan Party liable for the payment of any sums to become due
under the Loan Documents shall be obligated to pay the amount of such interest
to the extent that it is in excess of the Maximum Amount or the Maximum Rate,
and (ii) any such excess which may have been collected shall be first applied as
a credit against the then unpaid principal amount on any of the Notes and the
excess, if any, refunded to the Borrowers or such other Loan Party and the
effective rate of interest shall be automatically reduced to the Maximum Rate.
Without limitation of the foregoing, all calculations of the rate of interest
contracted for, charged or received under the Loan Documents which are made for
the purpose of determining whether such rate exceeds the Maximum Rate, shall be
made, to the extent permitted by applicable usury laws, by amortizing,
prorating, allocating and spreading in equal parts during the period of the full
stated term of the Loans, all interest at any time contracted for, charged or
received by the holder or holders of any of the Notes in connection with the
Loans. The Bank notifies and discloses to the Borrowers that, for purposes of
TEX. REV. CIV. STAT. ▇▇▇. Art. 5069-1.04 (▇▇▇▇▇▇ 1989), as it may, from time to
time, be amended, the "applicable rate ceiling" shall be the "indicated rate"
ceiling, from time to time, in effect as limited by
-26-
Art. 5069-1.04(b). To the extent provided by applicable law, however, the Bank
reserves the right to change the "applicable rate ceiling," from time to time,
by further notice and disclosure to the Borrowers. The "highest non-usurious
rate of interest permitted by applicable law" for purposes of this Fourth
Restated Agreement and the Notes shall not be limited to the applicable rate
ceiling under Art. 5069-1.04 if federal laws or other state laws now or
hereafter in effect and applicable to this Fourth Restated Agreement and the
Notes (and the interest contracted for, charged and collected hereunder or
thereunder) shall permit a higher rate of interest. The Borrowers and the Bank
agree that, except for (S)15.10(b), the provisions of TEX. REV. CIV. STA. ▇▇▇.
Art. 5069-15.01 et.seq. ▇▇▇▇▇▇ (1987), as amended (regulating certain revolving
-- ---
credit loans and revolving tri-party accounts) shall not apply to the Loan
Documents.
4.6 Payments on the Notes. The Revolving Credit Note and the Term Notes shall
---------------------
be payable as set out below.
A. The unpaid principal amount of the Revolving Credit Note, together with
all accrued but unpaid interest thereon, unpaid Facility Fees and unpaid
Letters of Credit Fees, shall be due and payable on the Revolving Credit
Commitment Termination Date. Interest on the Revolving Credit Note is due
and payable monthly as it accrues, which commenced on the Interest Payment
Date in June, 1997, and continues on each Interest Payment Date
thereafter, and on the Revolving Credit Commitment Termination Date.
B. The unpaid principal amount of the Term Notes shall be due and payable as
follows:
(1) Term Note A is due and payable in lawful money of the U.S. in
consecutive monthly installments. Interest, as it accrues on Term Note A
at the applicable Contract Rate, is due and payable monthly, commencing on
the Interest Payment Date in September 1997, and continuing on each
Interest Payment Date thereafter, and on the Term Maturity Date. The
principal of Term Note A shall be due and payable in monthly installments.
The first of such installments will be in the amount of $21,250.00, and
will commence on the first Interest Payment Date in November 1997, and
will continue on the same day of each consecutive calendar month
thereafter until the Term Maturity Date. One final installment of the
outstanding unpaid principal balance and accrued interest shall be payable
on the Term Maturity Date.
(2) Term Note B is due and payable in lawful money of the U.S. in
consecutive monthly installments. Interest, as it accrues on Term Note B
at the applicable Contract Rate, is due and payable monthly, which
commencing on the Interest Payment Date in September 1997, and continuing
on each Interest Payment Date thereafter, and on the Term Maturity Date.
The principal of Term Note B shall be due and payable in monthly
installments. The first of such principal installments will be in the
amount of $7,916.67, and will commence on the first Interest Payment Date
in December 1997, and will continue on the same day of each consecutive
calendar month thereafter until the Term Maturity Date. One final
installment of the outstanding unpaid principal balance and accrued
interest shall be payable on the Term Maturity Date.
(3) Term Note C is due and payable in lawful money of the U.S. in
consecutive monthly installments. Interest, as it accrues on Term Note C
at the applicable Contract Rate, is due and payable monthly, commencing on
the Interest Payment Date in September 1997, and continuing on each
Interest Payment Date thereafter, and on the Term Maturity Date. The
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principal of Term Note C shall be due and payable in monthly installments.
The first of such principal installments will be in the amount of
$37,500.00, will commence on the first Interest Payment Date in March
1998, and will continue on the same day of each consecutive calendar month
thereafter until the Term Maturity Date. One final installment of the
outstanding unpaid principal balance and accrued interest shall be payable
on the Term Maturity Date.
(4) Term Note D is due and payable in lawful money of the U.S. in
consecutive monthly installments. Interest, as it accrues on Term Note D
at the applicable Contract Rate, is due and payable monthly, commencing on
the Interest Payment Date in October 1997, and continuing on each Interest
Payment Date thereafter, and on the Term Maturity Date. The principal of
Term Note D shall be due and payable in monthly installments. The first of
such principal installments will be in the amount of $42,500.00, will
commence on the first Interest Payment Date in April 1998, and will
continue on the same day of each consecutive calendar month thereafter
until the Term Maturity Date. One final installment of the outstanding
unpaid principal balance and accrued interest shall be payable on the Term
Maturity Date.
(5) Term Note E is due and payable in lawful money of the U.S. in
consecutive monthly installments. Interest, as it accrues on Term Note E
at the applicable Contract Rate, is due and payable monthly, commencing on
the Interest Payment Date in October 1997, and continuing on each Interest
Payment Date thereafter, and on the Term Maturity Date. The principal of
Term Note E shall be due and payable in monthly installments. The first of
such principal installments will be in the amount of $124,166.67, will
commence on the first Interest Payment Date in April 1998, and will
continue on the same day of each consecutive calendar month thereafter
until the Term Maturity Date. One final installment of the outstanding
unpaid principal balance and accrued interest shall be payable on the Term
Maturity Date.
C. On the Revolving Credit Commitment Termination Date or upon the occurrence
of any Event of Default, the Borrowers shall provide to the Bank cash
collateral in an amount equal to the then-existing outstanding amounts of
Letters of Credit. The Bank agrees to return the cash collateral to the
Borrowers upon the subsequent payment in full of all Obligations or the
cure of the applicable Event of Default.
D. The Borrowers shall make the below enumerated prepayments on the Loans:
(1) Within sixty (60) days of the end of each Fiscal Year of LRA,
commencing with the Fiscal Year ending December 31, 1997, the Borrowers
shall make a prepayment of the Term Loans in an amount equal to the
Mandatory Prepayment for the Fiscal Year then ended, such prepayment to be
applied as set forth in Section 4.8.D.
(2) Within three (3) days of the completion of an IPO, the Borrowers shall
make a mandatory prepayment of the Loans in an amount up to one hundred
(100) per cent of the proceeds received or realized (net of taxes due and
expenses incurred to Persons which are not Affiliates) by the Borrowers as
necessary to pay the Obligations in full.
4.7 Calculation of Interest Rates. Interest on the unpaid principal of the
-----------------------------
Notes shall be calculated on the basis of the actual days elapsed in a year
consisting of three hundred sixty (360) days.
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4.8 Prepayments. Except as specified in this Section, the Borrowers shall
-----------
have no right to prepay any Loan. The Borrowers may, upon five (5) days' prior
notice to the Bank, make prepayments on the Notes in whole at any time or in
part, from time to time, however, the following provisions shall be applicable.
A. The Borrowers may, on any Business Day, prepay the outstanding principal
amount of any Base Rate Loan, in whole or in part, without premium or
penalty.
B. Each Contract Rate has been determined, in part, based on the Bank's cost
of funds. Therefore, the Borrowers shall pay a prepayment penalty in an
amount equal to the Consequential Loss if the Borrowers shall, in any
manner, prepay any Adjusted Libor Rate Loan. Additionally, the Borrowers
indemnify and agree to hold the Bank harmless against, and reimburse the
Bank on demand for, any loss, cost or expense incurred or sustained by the
Bank (including without limitation any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by the Bank to fund or maintain an Adjusted Libor Rate Loan) as a
result of: (i) Any payment or prepayment, whether required hereunder or
otherwise, of any Adjusted Libor Rate Loan made after the delivery of a
Notice of Revolving Credit Advance, Application for Letter of Credit or
Notice of Term Loan Advance, as applicable, but before the applicable
Borrowing Date if such payment or prepayment prevents the proposed Loan
from becoming fully effective; or, (ii) the failure of any Adjusted Libor
Rate Loan to be made by the Bank due to any action or inaction of the
Borrowers.
C. A certificate of the Bank setting forth any amount or amounts which the
Bank is entitled to receive pursuant to this Section shall be delivered to
the Borrowers and shall be conclusive, if made in good faith, absent
manifest error. The Borrowers shall pay to the Bank the amount shown as
due on any certificate within five (5) days after the receipt of same.
Notwithstanding the foregoing, in no event shall the Bank be permitted to
receive any compensation hereunder constituting interest in excess of the
Maximum Rate or the Maximum Amount. Without prejudice to the survival of
any other obligations of the Borrowers hereunder, the obligations of the
Borrowers under this Section shall survive the payment of the Loans.
D. If no Default shall have occurred, prepayments shall be applied, (i)
first to the discharge of any expenses for which the Bank may be entitled
to receive reimbursement under any agreement with any of the Borrowers,
(ii) next, to the Consequential Loss, (iii) next, to accrued interest on
the Notes, (iv) next, to the reduction of principal, in the in verse order
of maturity, on the portion of the Term Notes which are Base Rate Loans,
(v) next, to the reduction of installments of principal, in the inverse
order of maturity, on the portion of the Term Notes which are Adjusted
Libor Rate Loans, (vi) next, to the reduction of principal on the
Revolving Credit Loans which are Adjusted Libor Rate Loans, and (vii) the
balance remaining, if any, shall be applied to the reduction of principal
on the portion of the Revolving Credit Loans which are Adjusted Libor Rate
Loans. Prepayments shall be applied to the Adjusted Libor Rate Loans as
the Borrowers shall select; provided, however, the Borrowers shall select
Adjusted Libor Rate Loans to be prepaid in a manner designed to minimize
the Consequential Loss resulting from such prepayments.
E. If, however, the Borrowers shall fail to select the Adjusted Libor Rate
Loan to which such prepayments are to be applied, or an Event of Default
has occurred and is continuing at the
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time of a prepayment, the Bank shall be entitled to apply the prepayment
in any manner the Bank shall deem appropriate.
4.9 Manner and Application of Payments. All payments and prepayments of
----------------------------------
principal of, and interest on, the Notes shall be made by the Borrowers to the
Bank before 2:00 p.m. (Houston, Texas time) in immediately available funds at
the Bank's office. Any payment or prepayment received by the Bank after 2:00
p.m. (Houston, Texas time), shall be deemed to have been received by the Bank on
the next succeeding Business Day.
4.10 Renewals of Notes. All renewals and rearrangements, if any, of any of
-----------------
the Notes shall be deemed to be made pursuant to this Fourth Restated Agreement,
and accordingly, shall be subject to the terms and provisions hereof. Each Loan
Party shall be deemed to have ratified, as of the date of such renewal or
rearrangement, all of the representations, covenants and agreements herein and
in the Loan Documents set forth.
4.11 Taxes.
-----
A. Any and all payments by the Borrowers hereunder or under the Notes shall
be made free and clear of, and without deduction for, any and all present
or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto ("Taxes"), excluding taxes
imposed upon the Bank's income, and franchise taxes imposed upon the Bank
by any Governmental Authority. If the Borrowers shall be re quired by law
to deduct any Taxes for which the Borrowers are responsible under the
preceding sentence from or in respect of any sum payable hereunder or
under any of the Notes, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Bank receives an amount equal to the sum the Bank would have received had
no such deductions been made, (ii) the Borrowers shall make such
deductions, and (iii) the Borrowers shall pay the full amount deducted to
the relevant Governmental Authority or other authority in accordance
with applicable law.
B. The Borrowers shall pay any present or future stamp or documentary
taxes, or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or under the Loan Documents
or from the execution, delivery or registration of, or otherwise with
respect to, this Fourth Restated Agreement or the other Loan Documents
("Other Taxes").
C. Each Loan Party indemnifies and agrees to hold the Bank harmless for the
full amount of Taxes and Other Taxes paid by the Bank or any liability,
including penalties and interest, arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted.
D. Within thirty (30) days after the date of the payment of Taxes, the
Borrowers shall furnish to the Bank the original or a certified copy of a
receipt evidencing payment therefor.
E. Without prejudice to the survival of any other agreement, the agreements
and obligations of the Loan Parties contained in this Section shall
survive the payment in full of the Obligations.
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4.12 Facility Fees. The Borrowers paid to the Bank a fee in the amount of
-------------
$65,500.00, for the granting of the Term A Loans, Term B Loans, Term C Loans and
Term D Loans. The Borrowers also agree to pay to the Bank a fee in the amount
of $74,500.00, for the granting of the Term E Loans which shall be due and
payable on the Effective Date of this Fourth Restated Agreement. If the
Borrowers shall not have completed the IPO and paid the Loans by December 31,
1997, the Borrowers shall pay to the Bank a fee of $40,000.00 which shall be due
and payable on such date. If the Borrowers shall not have completed the IPO and
paid the Loans by June 30, 1998, the Borrowers shall pay to the Bank a fee of
$40,000.00 which shall be due and payable on such date. The Borrowers also
agree to pay to the Bank fees (collectively, with the foregoing fees for the
granting of the Term Loans, "Facility Fees") for the granting of the Revolving
Credit Loans computed at the following rates (each a "Facility Fee Rate") per
annum (based on a 360 day year) on the average daily un-borrowed amount of the
Revolving Credit Commitment in effect during the period for which payment is
made. Commencing as of September 30, 1997, the Facility Fees will be calculated
quarterly, in arrears, on the last day of each March, June, September and
December during the Revolving Credit Commitment Period, and on the Revolving
Credit Commitment Termination Date, and payable within five (5) days of the
Bank's demand therefor on the Borrowers. For the purposes hereof, Facility Fee
Rate means the following margins determined on each March 31, June 30, September
30 and December 31 during the term of the Credit Agreement for the preceding
quarter of the Borrowers commencing on March 31, 1997. Each Facility Fee Rate
is determined as a function of the Funded Debt Ratio of LRA and the Consolidated
Subsidiaries.
Funded Debt Ratio Facility Fee Rate
----------------- -----------------
Less than 3.50:1.00 0.2500 %
Equal to or greater than 3.50:1.00
but less than 4.50:1.00 0.3750 %
Equal to or greater than 4.50:1.00 0.5000 %
Until September 30, 1997, the Facility Fee Rate is .5000 % and on such date and
on each June 30, September 30, December 31 and March 31 thereafter, the Funded
Debt Ratio shall be calculated and the Facility Fee Rate determined for the next
ensuing quarter period. Any change in the Facility Fee Rate shall be effective
upon the latter of each March 31, June 30, September 30 and December 31 and the
delivery of the Financial Statements. Once LRA and the Consolidated Subsidiaries
shall have achieved a Funded Debt Ratio less than 4.50:1.00 or equal or less
than 3.50:1.00, as applicable, LRA and the Consolidated Subsidiaries must
maintain the ratio for the next quarterly period. If LRA and the Consolidated
Subsidiaries shall fail to maintain the achieved Funded Debt Ratio as of a March
31, June 30, September 30 and December 31 for the immediately succeeding three
months, the Facility Fee Rate shall be the higher applicable Facility Fee Rate,
as applicable, calculated for the such quarterly period. If LRA shall fail to
deliver any such Financial Statement within the times specified therefor, the
Funded Debt Ratio shall be deemed to be greater than 4.50:1.00 until LRA
delivers such Financial Statement to the Bank.
4.13 Letters of Credit Fees. At the time a Letter of Credit is issued, the
----------------------
Borrowers agree to pay to the Bank fees for the issuing of Letters of Credit:
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A. In a sum equal to the greater of one (1) per cent per annum of the face
amount of the Letter of Credit, and an annual fee of $350.00 for each year
or part year a Letter of Credit is outstanding.
B. The Borrowers additionally agree to pay promptly upon demand the amount of
any customary fees and expenses the Bank charges for amending letters of
credit, for honoring drafts and draw requests, and taking similar action
in connection with letters of credit.
ARTICLE V
SPECIAL PROVISIONS FOR ADJUSTED LIBOR RATE LOANS
------------------------------------------------
5.1 Inadequacy of Libor Pricing. If with respect to any Interest Period for
---------------------------
any Adjusted Libor Rate Loan:
A. The Bank determines (which determination shall be conclusive) that, by
reason of circumstances affecting the interbank Eurodollar market
generally, deposits in Dollars (in the applicable amounts) are not being
offered to Bank in the interbank Eurodollar market for such Interest
Period; or,
B. The Bank determines in good faith (which determination shall be
conclusive) that, (i) the Adjusted Libor Rate will not adequately and
fairly reflect the cost to the Lender of maintaining or funding such
Adjusted Libor Rate Loan for such Interest Period, or (ii) reasonable
means do not exist for ascertaining the Libor Rate then the Bank shall
give notice thereof to the Borrowers whereupon until the Bank notifies the
Borrowers that the circumstances giving rise to such suspension no longer
exist, (i) the obligation of the Bank to make Adjusted Libor Rate Loans
shall be suspended, and (ii) the Borrowers shall either (a) repay in full
the then outstanding principal amount of the Adjusted Libor Rate Loans,
together with accrued interest thereon on the last day of the then current
Interest Period applicable to such Adjusted Libor Rate Loans, or (b)
convert such Adjusted Libor Rate Loans to Base Rate Loans in accordance
with Section 4.3.A.(3) or Section 4.3.B.(3) on the last day of the then
current Interest Period applicable to each such Adjusted Libor Rate Loan.
5.2 Illegality. If with respect to any Interest Period for any Adjusted
----------
Libor Rate Loan:
A. The Bank determines in good faith (which determination shall be
conclusive) that any change in any applicable law, rule or regulation or
in the interpretation, application or administration thereof makes it
unlawful, or any central bank or other Governmental Authority asserts that
it is unlawful for the Bank to maintain or fund any Loan by means of
Dollar deposits obtained in any Eurodollar interbank market (any of the
above being described as a "Eurodollar Event"), then, at the option of the
Bank, the aggregate principal amount of the Adjusted Libor Rate Loans then
outstanding, which Loans are directly affected by such Eurodollar Event,
shall be prepaid by the Borrowers. Upon the occurrence of any Eurodollar
Event, and at any time thereafter so long as such Eurodollar Event shall
continue, the Bank may exercise the aforesaid option by giving notice
thereof to the Borrowers.
B. Any prepayment of any Adjusted Libor Rate Loan which is required under the
preceding Section shall be made, together with accrued and unpaid interest
and all other amounts payable to the Bank under this Fourth Restated
Agreement with respect to such prepaid Ad-
-32-
justed Libor Rate Loan on the date stated in the notice to the Borrowers
referred to above, which date ("required prepayment date") shall be not
less than fifteen (15) days from the date of such notice. Upon receipt of
such notice, the Borrowers shall either, (i) prepay in full the then
outstanding principal amount of the Adjusted Libor Rate Loan, together
with accrued interest thereon, or (ii) convert the Adjusted Libor Rate
Loan to another Interest Option on either (a) the last day of the then
current Interest Period applicable to each affected Adjusted Libor Rate
Loan, if the Bank may lawfully continue to maintain and fund such Adjusted
Libor Rate Loan to such day, or (b) immediately if the Bank may not
lawfully continue to fund and maintain such Adjusted Libor Rate Loan to
such day.
5.3 Increased Costs for Adjusted Libor Rate Loans.
---------------------------------------------
A. If any Governmental Authority, central bank or other comparable authority,
shall at any time impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board), special deposit
or similar requirement against assets of, deposits with or for the account
of, or credit extended by, the Bank or shall impose on the Bank (or the
interbank Eurodollar market) any other condition affecting the Adjusted
Libor Rate Loans; and, if the result of any of the foregoing is to
increase the cost to the Bank of making or maintaining the Adjusted Libor
Rate Loans, or to reduce the amount of any sum received or receivable by
the Bank under this Fourth Restated Agreement or under the Notes by an
amount deemed by the Bank to be material, then within five (5) days after
demand by the Bank, the Borrowers shall pay to the Bank such additional
amount or amounts as will compensate the Bank for such increased cost or
reduction. A certificate of the Bank claiming compensation under this
Section and setting forth the additional amount or amounts to be paid to
the Bank hereunder shall be conclusive in the absence of manifest error.
If the Bank demands compensation under this Section, then the Borrowers
may at any time, upon at least five (5) Business Days' prior notice to the
Bank, either, (i) repay in full the then outstanding affected Adjusted
Libor Rate Loans, together with accrued interest thereon to the date of
prepayment, or (ii) convert the Adjusted Libor Rate Loans to another
applicable Interest Option in accordance with the provisions of this
Fourth Restated Agreement; provided, however, that the Borrowers shall be
obligated for any Consequential Loss arising pursuant to such actions.
B. If either, (i) the introduction of, or any change in, or in the
interpretation of, any law or regulation, or (ii) compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and the Bank determines that the amount
of such capital is increased by or based upon the existence of the
Advances hereunder or of the Bank's commitment to lend hereunder and other
commitments of this type, then, upon demand by the Bank, the Borrowers
shall pay to the Bank, from time to time as specified by the Bank,
additional amounts sufficient to compensate the Bank in the light of the
circumstances, to the extent that the Bank deter mines such increase in
capital to be allocable to the existence of the Advances hereunder or of
the Bank's agreement to lend hereunder. A certificate as to such amounts
submitted to the Borrowers by the Bank shall be conclusive and binding for
all purposes, absent manifest error.
5.4 Effect on Interest Options. If notice has been given pursuant to Section
--------------------------
5.1 or Section 5.2 requiring a type of Adjusted Libor Rate Loan to be repaid or
converted, then unless and until the Bank
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notifies the Borrowers that the circumstances giving rise to such repayment no
longer apply requiring such repayment or conversion, Adjusted Libor Rate Loans
shall thereafter be Base Rate Loans. If the Bank notifies the Borrowers that the
circumstances giving rise to such repayment no longer apply, the Borrowers may
thereafter select Loans to be the Adjusted Libor Rate Loans in accordance with
Section 4.3.A or Section 4.3.B.
5.5 Payments Not At End of Interest Period. If the Borrowers make any
--------------------------------------
payment of principal with respect to any Adjusted Libor Rate Loan on any day
other than the last day of the Interest Period applicable to such Adjusted Libor
Rate Loan, the Borrowers shall reimburse the Bank on demand the Consequential
Loss incurred by the Bank as a result of the timing of such payment. A
certificate of the Bank setting forth the basis for the determination of the
amount of Consequential Loss shall be delivered to the Borrowers and shall, in
the absence of manifest error, be conclusive and binding. Any conversion of an
Adjusted Libor Rate Loan to a different Interest Option on any day other than
the last day of the Interest Period for such Adjusted Libor Rate Loan shall be
deemed a payment for purposes of this Section.
ARTICLE VI
COLLATERAL FOR LOANS
--------------------
6.1 Collateral for Loans. The Loans shall be secured by the following
--------------------
property (collectively, the "Collateral") and Liens in the Collateral shall be
created by or in the Collateral Documents, including, but not limited to, those
described as follows:
A. A Security Agreement in the form of Exhibit 6.1.A to this Fourth
Restated Agreement, duly executed by each Borrower and each
Consolidated Subsidiary which is subsequently made a Loan Party
creating a first priority lien, mortgage and security interest in and
upon all present and future Accounts, Inventory, Equipment, furniture,
Goods, Fixtures, General Intangibles, Instruments, margin accounts,
tax refunds, Chattel Paper, drafts, acceptances, Contracts and
Contract Rights, Documents, Title Documents, notes, returned and
repossessed Goods and all other personal property or interests in
personal property, together with all accessions to, substitutions for,
and all replacements, products and proceeds of the foregoing
(including, without limitation, proceeds of insurance policies
insuring any of the foregoing), all books and records (including,
without limitation, customer lists, credit files, computer programs,
printouts and other computer materials and records) pertaining to any
of the foregoing, and all insurance policies insuring any of the
foregoing, whether now owned or hereafter acquired, and wherever
located.
B. Security Agreement-Pledge in the form of Exhibit 6.1.B to this Fourth
Restated Agreement, creating a first priority lien, mortgage and
security interest in and upon all of the outstanding and issued
capital stock of Looney, KBA, LRA-Cal, LRA-Midwest, LRA-NE, Block,
Transcription and ▇▇▇▇▇▇.
6.2 Further Assurances. Each Loan Party shall make, execute or endorse,
------------------
and acknowledge and deliver or file or cause the same to be done, all vouchers,
invoices, notices, certifications and additional agreements, undertakings,
conveyances, mortgages, transfers, assignments, Financing Statements or other
assurances, and take any and all such other action, as the Bank may, from time
to time, deem reasonably necessary or proper in connection with any of the Loan
Documents, or for better assuring
-34-
and confirming unto the Bank all or any part of the security for any of the
Obligations, or for granting to the Bank any security for the Obligations which
the Bank reasonably may request from time to time.
6.3 Collateral Documents. Each of the Collateral Documents will be duly
--------------------
executed by the parties thereto. Each document, including, without limitation,
any Financing Statement, required by the Collateral Documents, under law or
requested by the Bank to be filed, registered or recorded in order to create, in
favor of and for the benefit of the Bank, a perfected first Lien on the
Collateral described therein, shall be properly filed, registered or recorded in
each jurisdiction in which the filing, registration or recordation thereof is so
required or requested. The Bank shall receive an acknowledgment copy, or other
evidence satisfactory to the Bank, of each such filing, registration or
recordation and satisfactory evidence of the payment of any necessary fee, tax
or expense relating thereto.
6.4 Description of Collateral. The Collateral Documents will contain a
-------------------------
description of the Collateral sufficient to grant to the Bank for the benefit of
the Bank perfected Liens therein pursuant to applicable law. Upon the filing of
the UCC-1's, the Bank will have, for the benefit of the Bank, perfected first
priority Liens in all Collateral.
6.5 Other Loans. It is agreed that the Collateral given to secure the
-----------
Loans shall secure all Obligations, regardless of how same may arise and all
collateral given to secure any other obligations of any Loan Party shall
additionally secure the Obligations. Any Default shall constitute an event of
default in all Obligations and the Liens securing the payment of same.
ARTICLE VII
CUSTODY, INSPECTION, COLLECTION
-------------------------------
AND MAINTENANCE OF COLLATERAL
-----------------------------
7.1 Disposition. The Borrowers will safeguard and protect all Collateral
-----------
for the Bank's general account and make no disposition thereof except in the
ordinary course of business.
7.2 Inspection. At all reasonable times during business hours, the Bank
----------
shall have full access to, and the right to examine, check, inspect and make
abstracts and copies from the books, records, audits, correspondence and all
other papers relating to the Collateral. The Bank and the Bank's agents may
enter upon any of the premises of the Borrowers at any time during business
hours and from time to time, for the purpose of inspecting the Collateral and
any and all records pertaining thereto. On an annual basis, the Bank may, at
the Borrowers' expense make field examinations of the Borrowers' books, records,
Title Documents and Inventory. The reasonable costs of the field examinations
will be reimbursed to the Bank on receipt of a statement therefor.
7.3 Authorization. The Borrowers irrevocably authorize and direct all
-------------
accountants and auditors employed by the Borrowers to exhibit and deliver to the
Bank, at any time during the term of this Fourth Restated Agreement when an
Event of Default shall have occurred, copies of any of the Financial Statements,
trial balances or other accounting records of any sort in the accountant's or
auditor's possession of the Borrowers, and to disclose to the Bank any
information they may have concerning the financial status and business
operations. The Borrowers authorize all Governmental Authority to furnish to
the Bank copies of reports or examinations relating to the Borrowers, whether
made by the Borrowers or otherwise.
-35-
7.4 Reports. The Borrowers will, immediately upon learning thereof, report
-------
to the Bank all matters affecting the value, enforceability or collectibility
of any of the Collateral such as the reclamation, repossession or return to the
Borrowers of goods and claims or disputes asserted by any customer or Account
Debtor if such matter could have a Material Adverse Effect.
7.5 Compliance with Law. The Borrowers shall comply with all actions,
-------------------
rules, regulations and orders of any Governmental Authority applicable to the
Collateral or any part thereof or to the operation of the business of the
Borrowers. The Borrowers may, however, contest or dispute any actions, rules,
regulations, orders and directions of a Governmental Authority in any reasonable
manner, provided the Bank is satisfied that the contest or dispute does not
affect the Bank's Liens or have a Material Adverse Effect.
7.6 Protection. At any time there shall be an Event of Default, the Bank
----------
may take such steps as the Bank deems necessary to protect the Bank's interest
in and to preserve the Collateral, including the hiring of security guards or
the placing of other security protection measures as the Bank may deem
appropriate. The Bank may elect to employ and maintain at any of the Borrowers'
premises a custodian who shall have full authority to do all acts necessary to
protect the Bank's interest in the Collateral. The Borrowers agree to cooperate
fully with all of the Bank's efforts to preserve the Collateral and will take
such actions to preserve the Collateral as the Bank may direct. All of the
Bank's reasonable expenses of preserving the Collateral, including any expenses
relating to the bonding of a custodian, shall be charged to the Borrowers'
account and added to the Revolving Credit Note.
7.7 Collection. Except in the ordinary course of business, the Borrowers
----------
shall not, without the Bank's consent which the Bank may withhold in the Bank's
reasonable business judgment, compromise or adjust any of the Accounts (or
extend the time for payment thereof) or grant any additional discounts,
allowances or credits thereon. The Bank shall not, under any circumstances or
in any event whatsoever, have any liability for any error, omission or delay of
any kind occurring in the settlement, collection or payment of any of the
Accounts or any instrument received in payment thereof, or for any damage
resulting therefrom. At any time after the occurrence of an Event of Default,
the Bank may, without notice to or consent from the Borrowers ▇▇▇ upon or
otherwise collect, extend the time of payment of, or compromise or settle for
cash, credit or otherwise upon any terms, any of the Accounts or any securities,
instruments or insurance applicable thereto and/or release the Account Debtor
thereon.
7.8 Creation of Accounts. Upon the Bank's reasonable request, the
--------------------
Borrowers will upon the creation of Accounts, or at such intervals as the Bank
may require, provide the Bank with, (i) confirmatory assignment schedules, (ii)
copies of customer's invoices, (iii) evidence of shipment or delivery, and (iv)
such further schedules, documents and/or information regarding the Accounts as
the Bank reasonably may require. The Bank shall have the right to confirm and
verify all Accounts and do whatever the Bank reasonably may deem necessary to
protect the Bank's interests. The items to be provided under this Section are to
be in forms satisfactory to the Bank and executed by the Borrowers and delivered
to the Bank, from time to time, solely for the Bank's convenience in maintaining
records of the Collateral. The failure to deliver any of such items to the Bank
shall not affect, terminate, modify or otherwise limit the Bank's Liens.
7.9 Right to Receive. Upon the occurrence of an Event of Default, the Bank
----------------
shall have the right to receive, endorse, assign and/or deliver in the name of
the Bank and the Borrowers, any and all checks, drafts and other instruments for
the payment of money relating to the Accounts. The Borrow-
-36-
ers waive notice of presentment, protest and of non-payment of any instrument so
endorsed. The Borrowers constitute the Bank or the Bank's designee as the
Borrowers' attorney with power to, (i) endorse the Borrowers' names upon any
notes, acceptances, checks, drafts, money orders or other evidences of payment
or Collateral that may come into the Bank's possession; (ii) send verifications
of Accounts to any customer; (iii) notify the postal authorities to change the
address for delivery of mail addressed to the Borrowers to such address as the
Bank may designate; and, (iv) sign all Financing Statements or any other
documents or instruments deemed necessary or appropriate by the Bank to
preserve, collect, or perfect the Bank's interest in the Collateral and file
same. All acts of the attorney or designee are hereby ratified and approved, and
the attorney or designee shall not be liable for any acts of omission or
commission, or for any error of judgment or mistake of fact or law. This power
is coupled with an interest and is irrevocable while any of the Obligations
remain unpaid.
ARTICLE VIII
COVENANTS
---------
8.1 Affirmative Covenants. Until the fulfillment of all Obligations,
---------------------
unless the Bank shall otherwise consent in writing, each Loan Party will, as
indicated, perform and comply with the following covenants:
A. LRA shall furnish to the Bank:
(1) As soon as possible, but in any event within ninety (90) days
after the end of each Fiscal Year, audited, consolidated Financial
Statements of LRA and the Consolidated Subsidiaries consisting of
statements of income, stockholder's equity and cash flow for such
Fiscal Year and a balance sheet as of the end of such Fiscal Year,
setting forth, in each case, in comparative form, corresponding
figures from the immediately preceding annual audit, accompanied by
supporting schedules required by GAAP, all in reasonable detail and
satisfactory in scope to the Bank, as fairly presenting the financial
position of LRA and the Consolidated Subsidiaries as of the dates
indicated in accordance with GAAP, together with an opinion thereon,
without material qualifications or exceptions certified by independent
certified public accountants selected by LRA and satisfactory to the
Bank, and the consolidating Financial Statements of each Consolidated
Subsidiary;
(2) As soon as possible, but in any event within one hundred twenty
(120) days after the end of each Fiscal Year, the auditors' management
report;
(3) As soon as possible, but in any event within thirty (30) days
after the end of each month, a consolidated aging and listing of all
Accounts, Eligible Accounts and accounts payable for such period
certified as being true and correct by a Financial Officer of LRA;
(4) Within thirty (30) days after the end of each month, consolidated
and consolidating Financial Statements of LRA and the Consolidated
Subsidiaries as of the end of such period and the related statements
of income and stockholders' equity, all in reasonable detail and
setting forth in comparative form the amounts for such period and,
with respect to the statements of income and cash flow, the Fiscal
Year to date, and the amounts for the corresponding periods in the
prior year, prepared in a manner satisfactory to the Bank and
certified by a Financial Officer of LRA as fairly presenting the
consolidated financial position of LRA
-37-
and the Consolidated Subsidiaries as of the dates indicated, subject
to changes resulting from audit and normal year-end adjustment;
(5) On the Effective Date of this Fourth Restated Agreement and
within thirty (30) days after the end of each month, the Borrowers
will provide the Bank with a Borrowing Base Certificate in the form of
Exhibit 2.3 to this Fourth Restated Agreement, signed by a Financial
Officer of LRA cer tifying that no Events of Default have occurred and
LRA and each other Loan Party are in compliance with the covenants set
out in Section 8.2, calculating the Borrowing Base, and (ii) together
with such payment, if any, as may be necessary to reduce the aggregate
principal amount of the Revolving Credit Note to the amount permitted
under the Borrowing Base and this Fourth Restated Agreement;
(6) As soon as possible, a copy of the federal income tax return of
LRA for the current Fiscal Year then ended, certified as being true
and correct by a Financial Officer of LRA; and,
(7) From time to time, such further information regarding the
business, affairs and financial condition of LRA and the Consolidated
Subsidiaries as the Bank reasonably may request.
B. At such time as LRA shall become a publicly traded company, LRA will
furnish to the Bank, within sixty (60) days after the end of the
first, second and third fiscal quarter, a copy of the Form 10Q filed
with the Securities and Exchange Commission, and within ninety (90)
days of the end of each Fiscal Year, a copy of the Form 10K filed with
the Securities and Ex change Commission, each certified by a Financial
Officer of LRA as being true and correct.
C. LRA will furnish to the Bank, promptly when same is avail able, a copy
of each Financial Statement, report, notice or proxy statement sent by
LRA to stockholders generally and of each regular or periodic report,
registration statement or prospectus filed by LRA with any securities
exchange or the Securities and Exchange Commission, and of any order
issued by any Governmental Authority in any proceeding to which LRA is
a party. At such time as LRA shall become a publicly traded company,
LRA will notify the Bank of changes in the ownership of stock of LRA
by any Insider, as defined in the Securities Act of 1934, of any
single change or aggregate change of ownership of five (5) or more per
cent of the outstanding or issued shares of LRA.
D. The Borrowers shall, promptly upon learning thereof: (i) inform the
Bank, in writing, of any material delay in any Borrower's performance
of a Borrower's obligations to any Ac count Debtor if the effect
thereof would materially affect the collectibility of the Account, or
of any assertion of any claims, set offs or counterclaims by any
Account Debtor; and, (ii) furnish to and inform the Bank of all
material adverse information relating to the financial condition of
any Account Debtor.
E. The Borrowers will, on before January 15, 1998, enter into an Interest
Rate Protection Agreement for no less than $7,000,000.00 for a tenure
and at a spread on the Adjusted Libor Rate, on terms and conditions
and within a party acceptable to the Bank.
F. The Borrowers shall comply with all Requirements of any Governmental
Authority.
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G. The Borrowers shall act prudently and in accordance with customary
industry standards in managing or operating the Borrowers' assets,
properties, business and investments. The Borrowers shall keep in good
working order and condition, ordinary wear and tear excepted, all of
the Borrowers' assets and properties which are necessary to the
conduct of the Borrowers' business. The Borrowers shall obtain and
maintain at the Borrowers' expense, all governmental licenses,
authorizations, consents, permits and approvals as may be required to
enable the Borrowers to operate the Borrowers' business and to comply
with the Borrowers' obligations hereunder and under the other Loan
Documents if the failure to do so would have a Material Adverse
Effect.
H. The Borrowers will maintain with financially sound, responsible and
reputable insurance companies, insurance against such risks, and in
such amounts (and with co-insurance and deductibles), as are usually
carried by owners of similar businesses and properties in the same
general areas in which the Borrowers operate, and at least in the
amounts and types presently carried by the Borrowers. The Borrowers
will specifically maintain (i) all insurance required by state
statutes for protection of employees against work-related injuries,
(ii) comprehensive general liability coverage in the aggregate of
$750,000.00, and (iii) all other insurance required by applicable law.
All such policies shall be non-cancelable without ten (10) days prior
written notice to the Bank. The Borrowers shall cause the insurance
policies or proper certificates evidencing the same to be delivered to
the Bank. If the Borrowers shall fail to obtain insurance as herein
provided, or to keep the same in force, the Bank may obtain such
insurance and pay the premiums therefor and charge the Borrowers'
account therefor, and such expenses so paid shall be part of the
Obligations.
I. Each of the Borrowers will continue to be a corporation duly
incorporated and existing in good standing under the laws of the state
of its incorporation, and will continue to be duly licensed or
qualified in all jurisdictions wherein the character of the property
owned or leased by it or the nature of the business transacted by it
makes licensing or qualification necessary, and the failure to do so
would have a Material Adverse Effect.
J. Each Loan Party shall pay and discharge all Taxes, assessments and
governmental charges or levies including, but expressly not limited
to, income, excise and ad valorem Taxes, prior to the date on which
penalties or liens attach thereto and become of public record, except
such Taxes, if any, as are being contested in good faith and as to
which adequate reserves have been provided.
K. Each Loan Party will promptly give notice in writing to the Bank of
(i) any IRS audit of the Loan Party, (ii) the filing or commencement
of any action, suit, or administrative proceeding against the Loan
Party, whether at law or in equity or by or before any Governmental
Authority, (iii) violations of any Requirement, or (iv) any Reportable
Event, any of which events (a) is material and is brought by or on
behalf of any Person, or in which injunctive or other equitable relief
is sought, and (b) it is probable (within the meaning of Statement of
Financial Accounting Standards No. 5 promulgated by FASB) that there
will be an adverse determination and which, if adversely determined,
would materially impair the ability of such Person to perform its
obligations under any of the Loan Documents to which it is a party.
L. Each Loan Party will furnish to the Bank immediately upon be coming
aware of the existence of any condition or event which constitutes a
Default or an Event of Default, or which, with
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notice or lapse of time, would become a Default or an Event of
Default, notice specifying the nature and period of existence thereof
and the action which Loan Party is taking or proposes to take with
respect thereto.
M. Each Loan Party will pay in full all reasonable expenses, including
reasonable legal expenses and attorney's fees, of the Bank which have
been or may be incurred by the Bank in connection with the preparation
of the Loan Documents, the lending hereunder, the collection or
enforcement of the Obligations and the recording and filing and re-
recording and re-filing of any such document.
N. The Borrowers will make full and timely payment of the Obligations
whether now existing or hereafter arising, and duly comply with all
the terms and covenants contained in this Fourth Restated Agreement
(including, without limitation, the Borrowing limitations and
Mandatory Prepayments) and in each of the other Loan Documents, all
at the times and places and in the manner set forth therein.
8.2 Financial Covenants. Until the fulfillment of all Obligations unless
-------------------
the Bank shall otherwise consent in writing, LRA and the Consolidated
Subsidiaries will, on a consolidated basis, maintain the following financial
covenants:
A. Funded Debt Ratio. As of the Effective Date of this Fourth Restated
-----------------
Agreement, LRA and the Consolidated Subsidiaries shall have and shall
maintain for each period consisting of four (4) consecutive fiscal
quarters through June 30, 1998, a Funded Debt Ratio not exceeding
6.20:1.00. Thereafter, LRA and the Consolidated Subsidiaries shall
maintain for each period consisting of four (4) consecutive fiscal
quarters a Funded Debt Ratio not exceeding the amounts set out for
such periods:
Period Ratios
------ ------
July 1, 1998 through September 30, 1998 5.50:1.00
October 1, 1998 through December 31, 1998 5.00:1.00
January 1, 1999 through June 30, 1999 4.50:1.00
After June 30, 1999 4.00:1.00
B. Fixed Charge Coverage Ratio. On the Effective Date of this Fourth
---------------------------
Restated Agreement, and for each period consisting of four (4)
consecutive fiscal quarters through June 30, 1998, a Fixed Charge
Coverage Ratio of at least 1.00:1.00. Thereafter, LRA and the
Consolidated Subsidiaries shall maintain for each period consisting of
four (4) consecutive fiscal quarters a Fixed Charge Coverage Ratio of
at least the following amounts set out for such periods:
Period Ratios
------ ------
July 1, 1998 through December 31, 1998 1.10:1.00
January 1, 1999 through June 30, 1999 1.15:1.00
July 1, 1999 through December 31, 1999 1.20:1.00
After December 31, 1999 1.25:1.00
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C. Certificate of Compliance. On the Effective Date of this Fourth
-------------------------
Restated Agreement and thirty (30) days after the end of each month,
the Borrowers will provide to the Bank a Certificate of Compliance in
the form of Exhibit 8.2.C to this Fourth Restated Agreement, signed by
a Financial Officer of the Borrowers, (i) calculating or stating the
financial covenants set out in Section 8.2.A and Section 8.2.B, (ii)
certifying that no Events of Default have occurred, and (iii) that the
Borrowers and the Consolidated Subsidiaries are in compliance with the
covenants set out in this Section.
8.3 Other Covenants. Until the fulfillment of all Obligations, unless the
---------------
Bank shall otherwise consent in writing, LRA and the Consolidated Subsidiaries,
respectively as indicated, will perform and comply with the following covenants:
A. LRA and the Consolidated Subsidiaries will not create, incur, assume
or suffer to exist Indebtedness, except (i) the Loans; (ii) current
accounts payable and other current obligations (other than for
borrowed money) arising out of transactions in the ordinary course of
business; (iii) subject to Section 8.3.E, Indebtedness incurred in
connection with the acquisi tion of equipment or other assets; (iv)
Subordinated Indebtedness; and, (v) long term deferred taxes.
B. LRA and the Consolidated Subsidiaries will not execute a Guaranty
(except in favor of the Bank and the Investors with respect to the
Subsidiary Guarantee Agreements as defined in and issued pursuant to
the Securities Purchase Agreement), or create, incur, assume or suffer
to exist any Lien, except a Permitted Lien.
C. LRA and the Consolidated Subsidiaries will not assume, guarantee,
endorse or otherwise become liable upon, or agree to purchase or
otherwise furnish funds for the payment of the obligations of any
Person, firm or corporation other than Borrowers hereunder or as
permitted under Section 8.3.B, or agree to complete, or make available
funds for the completion of, any facility not owned by Borrowers,
except endorsements of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business,
except in favor of Bank.
D. Except as permitted herein or in a Subordination Agreement, LRA and
the Consolidated Subsidiaries will not pay any principal or interest
on any Subordinated Indebtedness or pay Dividends on any preferred
stock, including the Approved Preferred Stock. As long as the
Borrowers are in compliance with the Borrowers' covenants set out in
Section 7.2, no Event of Default shall have occurred under any of the
Loan Documents, including any Subordination Agreement and the
Securities Purchase Agreement, and any such payment shall not cause a
Default, LRA will have the right to pay (i) interest as it accrues on
Subordinated Indebtedness, (ii) accrued Dividends on Approved
Preferred Stock, and (iii) accruing installments of principal of
Subordinated Indebtedness due and owing to a Seller. As long as the
Borrowers are in compliance with the Borrowers' covenants set out in
Section 7.2, no Event of Default shall have occurred under any of the
Loan Documents, including any Subordination Agreement and the
Securities Purchase Agreement, and any such payment shall not cause a
Default, the Consolidated Subsidiaries will have the right to pay
Dividends to LRA.
E. Except pursuant to an Approved Asset Purchase Agreement or an Approved
Merger, LRA and the Consolidated Subsidiaries will not expend or enter
into the commitment to expend,
-41-
whether by Capital Lease or Capital Expenditure, an amount in the
aggregate exceeding $300,000.00, on a consolidated basis, in any year
during the term hereof.
F. Except as permitted in Section 8.3.D, LRA and the Consolidated
Subsidiaries will not pay any Dividends, make any distribution on
LRA's or the Consolidated Subsidiaries' capital stock or purchase or
retire any capital stock, dissolve or liquidate. Except pursuant to an
Approved Merger or an Approved Asset Purchase Agreement, LRA and the
Consolidated Subsidiaries will not become a party to any merger or
consolidation, or purchase, lease or otherwise ▇▇ ▇▇▇▇▇ all or
substantially all of the assets or capital stock of any Person. LRA
and the Consolidated Subsidiaries will not sell, transfer, lease or
otherwise dispose of all or any substantial part of LRA's or a
Consolidated Subsidiary's respective properties, assets or business.
G. Neither LRA nor a Consolidated Subsidiary will amend their respective
organizational documents, including but not limited to, Articles or
Certificate of Incorporation and bylaws.
H. Neither LRA nor a Consolidated Subsidiary will change its respective
name, Fiscal Year or method of accounting except as required by GAAP.
A Loan Party may change its name if the Bank has been given sixty (60)
days prior notice of such name change and there shall have been taken
such action as the Bank deems necessary to continue the perfection of
the Liens securing payment of the Obligations.
I. LRA and the Consolidated Subsidiaries will not enter into any
transaction with any Affiliates other than transactions in the
ordinary course of business and upon fair and reasonable terms not
materially less favorable than could be obtained in an arm's-length
transaction with a Person that was not an Affiliate.
J. Neither LRA nor a Consolidated Subsidiary will engage in any other
line of business or business venture other than those presently
engaged or those which are directly related thereto, or change any
method of operation or manner of doing business in any material
respect if any such change any method of operation or manner of doing
business would have a Material Adverse Effect.
K. None of the Borrowers will use proceeds of any Loan to acquire any
security in any transaction which is subject to (S)13 or (S)14 of the
Securities Exchange Act of 1934, including particularly (but without
limitation) (S)13(d) and (S)14(d) thereof.
L. Neither LRA nor a Consolidated Subsidiary will sell, assign, convey,
exchange, lease or otherwise dispose of any of its respective
properties, rights, assets or business, whether now owned or hereafter
acquired, except in the ordinary course of business and for a fair
consideration.
8.4 ERISA Compliance. LRA and the Consolidated Subsidiaries shall, and
----------------
shall cause each ERISA Affiliate to:
A. At all times, make prompt payment of all contributions required under
all Employee Plans and required to meet the minimum funding standard
set forth in ERISA with respect to all Employee Plans;
-42-
B. With respect to any Pension Plan, not permit to exist any material
"accumulated funding deficiency" (within the meaning of (S)302 of
ERISA and (S)412 of the Code), whether or not waived, with respect
thereto;
C. Not engage in any transaction in connection with which LRA or any
ERISA Affiliate could be subject to either a material civil penalty
assessed pursuant to the provisions of (S)502 of ERISA or a material
tax imposed under the provisions of (S)4975 of the Code;
D. Not terminate any Pension Plan in a "distress termination" under
(S)4041 of ERISA, or take any other action which could result in a
material liability of LRA or any ERISA Affiliate to the PBGC;
E. Not adopt an amendment to any Pension Plan requiring the provision of
security under (S)307 of ERISA or (S)40(a)(29) of the Code;
F. Within thirty (30) days after the filing thereof, furnish to the Bank
each annual report/return (Form 5500 Series), as well as all schedules
and attachments required to be filed with the Department of Labor
and/or the IRS pursuant to ERISA, and the regulations promulgated
thereunder, in connection with each Employee Plan for each Employee
Plan year;
G. Notify the Bank immediately of any fact, including, but not limited
to, any Reportable Event arising in connection with any Employee Plan,
which might constitute grounds for termina tion thereof by the PBGC or
for the appointment by the appropriate U.S. District Court of a
trustee to administer an Employee Plan, together with a statement, if
requested by the Bank, as to the reason therefor and the action, if
any, proposed to be taken with respect thereto; and,
H. Furnish to the Bank, upon request, such additional information
concerning any Employee Plan as may be reasonably requested.
8.5 Indemnity. EACH LOAN PARTY, JOINTLY AND SEVERALLY, INDEMNIFY AND SHALL
---------
SAVE, AND HOLD THE BANK AND THE BANK'S DIRECTORS, OFFICERS, ATTORNEYS, AND
EMPLOYEES (INDIVIDUALLY, AN "INDEMNITEE" AND COLLECTIVELY, THE "INDEMNITEES")
HARMLESS FROM AND AGAINST THE FOLLOWING (EACH A "CLAIM"): (I) ANY AND ALL
CLAIMS, DEMANDS, ACTIONS, OR CAUSES OF ACTION THAT ARE ASSERTED AGAINST ANY
INDEMNITEE BY ANY PERSON IF THE CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION
DIRECTLY OR INDIRECTLY RELATES TO A CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION
THAT THE PERSON ASSERTS OR MAY ASSERT AGAINST A LOAN PARTY (II) ANY AND ALL
CLAIMS, DEMANDS, ACTIONS OR CAUSES OF ACTION THAT ARE ASSERTED AGAINST ANY
INDEMNITEE IF THE CLAIM, DEMAND, ACTION OR CAUSE OF ACTION DIRECTLY OR
INDIRECTLY RELATES TO THE COMMITMENT, THE USE OF PROCEEDS OF THE LOANS, OR THE
RELATIONSHIP OF A LOAN PARTY AND THE BANK UNDER THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED PURSUANT TO THIS AGREEMENT; (III) ANY ADMINISTRATIVE OR
INVESTIGATIVE PROCEEDING BY ANY GOVERNMENTAL AUTHORITY DIRECTLY OR INDIRECTLY
RELATED TO A CLAIM, DEMAND, ACTION OR CAUSE OF ACTION DESCRIBED IN CLAUSES (I)
OR (II) ABOVE; AND, (IV) ANY AND ALL LIABILITIES, LOSSES, REASONABLE COSTS OR
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES AND DISBURSEMENTS) THAT ANY
INDEMNITEE SUFFERS OR INCURS AS A RESULT OF ANY OF THE FOREGOING. IF ANY CLAIM
IS ASSERTED AGAINST ANY INDEMNITEE, THE INDEMNITEE SHALL PROMPTLY NOTIFY THE
BORROWERS, BUT THE FAILURE TO SO PROMPTLY NOTIFY THE BORROWERS SHALL NOT AFFECT
THE LOAN PARTIES' OBLIGATIONS UNDER
-43-
THIS SECTION UNLESS SUCH FAILURE MATERIALLY PREJUDICES THE LOAN PARTIES' RIGHT
TO PARTICIPATE IN THE CONTEST OF THE CLAIM. THE OBLIGATIONS AND LIABILITIES OF
THE LOAN PARTIES TO ANY INDEMNITEE UNDER THIS SECTION SHALL SURVIVE THE
EXPIRATION OR TERMINATION OF THIS AGREEMENT AND THE REPAYMENT OF THE
OBLIGATIONS.
ARTICLE IX
CONDITIONS PRECEDENT
--------------------
9.1 Initial Advances. The obligation of the Bank to make initial
----------------
Advances on the Term C Loans and the continuation of the other Loans is subject
to the conditions precedent that, on or before the date of the Advance, the Bank
shall have received the following:
A. As to the Revolving Credit Loans:
(1) The duly executed Revolving Credit Note.
(2) A duly executed Notice of Revolving Credit Advance.
(3) The duly executed Application for Letter of Credit, if the
Advance requested is for a Letter of Credit.
B. As to the Term Loans:
(1) The duly executed Term Notes.
(2) A duly executed Notice of Term Loan Advance.
C. Each of the Collateral Documents duly executed by the parties thereto.
Each document, including, without limitation, any Financing Statement,
required by the Collateral Documents, under law or requested by the
Bank to be filed, registered or recorded in order to create, in favor
of the Bank, a perfected first priority Lien on the Collateral
described therein shall have been properly filed, registered or
recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, the Bank shall have
received an acknowledgment copy, or other evidence satisfactory to the
Bank, of each such filing, registration or recordation and
satisfactory evidence of the payment of any necessary fee, tax or
expense relating thereto. The Bank shall have received the possession
of any Collateral for which possession is required to perfect a Lien.
D. A search of uniform commercial code records of each appropriate
jurisdiction wherein ▇▇▇▇▇▇, EDP or EDP Temp does business, including
searches under all assumed or business names under which any of them
operates, reflecting that there are no financing statements filed of
record.
E. A Seller Debt Subordination Agreement in the form of Exhibit 9.1.E to
the Restated Agreement, duly executed by each Seller who holds
Subordinated Indebtedness.
F. A Seller Preferred Stock Subordination Agreement in the form of
Exhibit 9.1.F to the Restated Agreement, duly executed by each Seller
who holds Approved Preferred Stock.
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G. A Seller Debt Subordination Agreement in the form of Exhibit 9.1.G to
this Fourth Restated Agreement, duly executed by each Seller who holds
Subordinated Indebtedness pursuant to the EDP Asset Purchase
Agreement.
H. A true and correct copy of the final, duly executed copy of the EDP
Asset Purchase Agreement and true and correct copies of all final
documentation with respect thereto, together with evidence
satisfactory to the Agent that LRA-NE shall have successfully
completed the acquisition of all of the assets of EDP and EDP Temp
free and clear of any Liens and that no more than $9,000,000.00 at the
closing thereof was paid therefor, subject to such amount being
adjusted after the closing thereof based on the Additional Tax
Liability and other Earnout provisions contained in the EDP Asset
Purchase Agreement.
I. A true and correct copy of the final, duly executed copy of the ▇▇▇▇▇▇
House Stock Purchase Agreement and true and correct copies of all
final documentation with respect thereto, together with evidence
satisfactory to the Agent that LRA-Cal shall have successfully
completed the purchase of the ▇▇▇▇▇▇ Stock, that no Liens are
outstanding on any of the Assets of ▇▇▇▇▇▇ and that no more than
$2,800,602.07 was paid for the stock of ▇▇▇▇▇▇.
J. An Officers Certificate in the form of Exhibit 9.1.J certified by a
Responsible Officer of each of the Borrowers stating that, (i) no
litigation is pending or threatened which would have a Material
Adverse Effect; (ii) no investigation or proceeding before any
Governmental Authority is continuing or threatened against the
Borrowers, or any officer, director or Affiliate of the Borrowers with
respect to this Fourth Restated Agreement, the Loan Documents or any
of the Transactions which could have a Material Adverse Effect; (iii)
the final copy of the EDP Asset Purchase Agreement and the ▇▇▇▇▇▇
House Stock Purchase Agreement provided to the Bank fully state and
are the final agreements among parties thereto, there being no
unwritten or other agreements among the parties; and, (iv) to the best
knowledge and belief of such Persons, after reasonable and due
investigation and re view of matters pertinent to the subject matter
of such certificate (a) all of the representations and warranties
contained herein and the other Loan Documents are true and correct as
of the date of the Advance, and (b) no event has oc curred and is
continuing, or would result from the Advance which constitutes a
Default or an Event of Default. The Bank shall also receive either a
summary and analysis of all litigation in which any of the Borrowers
is involved or an opinion of counsel, in form and substance acceptable
to the Bank, to the effect that no litigation in which the respective
Borrower is involved would, in the event of an adverse determination,
have a Material Adverse Effect.
K. Resolutions of each of the Borrowers approving the execution, delivery
and performance of this Fourth Restated Agreement, the other Loan
Documents and the transactions contemplated herein and therein, duly
adopted by the respective Borrower's board of directors and
accompanied by a certificate of the secretary of the respective
Borrower stating that the resolutions are true and correct, have not
been altered or repealed and are in full force and effect. Each
resolution shall certify the name of each officer authorized to sign
the Loan Documents to be executed by the respective Borrower and the
other documents or certificates to be delivered pursuant to the Loan
Documents, together with the true signature of each such officer. The
Bank may conclusively rely on the certificates until the Bank receives
a further certificate canceling or amending the prior certificate and
submitting the name and signature of each officer named in such
further certificate.
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L. Evidence satisfactory to the Bank that the insurance policies required
by this Fourth Restated Agreement and the Collateral Documents are in
force and effect, the originals of all such policies, where required,
and receipts showing that the premiums therefor have been paid.
M. Favorable opinions of legal counsel for each Loan Party in form and
substance satisfactory to the Bank.
N. Such other information and documents as reasonably may be required by
the Bank and the Bank's counsel.
9.2 Subsequent Advances. The obligation of the Bank to make any subsequent
-------------------
Advance under this Fourth Restated Agreement shall be subject to the following
additional conditions precedent:
A. As of the date of the making of such Advance, there shall not exist
any Default or Event of Default.
B. Each Loan Party shall have performed and complied with all agreements
and conditions contained herein and in each of the Loan Documents
which are required to be performed or complied with before or on the
date of such Advance.
C. As of the date of making such Advance, no change that would cause a
Material Adverse Effect shall have occurred.
D. In the case of any Borrowing, the Bank shall have received an
appropriate Notice of Revolving Credit Advance, Application for Letter
of Credit or Notice of Term Loan Advance dated as of the date of a
Borrowing signed by LRA.
E. The representations and warranties contained in each of the Loan
Documents shall be true in all respects on the date of making of such
Advance, with the same force and effect as though made on and as of
that date.
9.3 Conditions Precedent on Acquisitions. As conditions precedent to
------------------------------------
receiving an Advance under the provisions hereof for the purposes of acquiring a
Qualified Company, in addition to the provisions of Section 9.2, Borrowers shall
deliver or cause to be delivered to the Bank, the following:
A. With respect to any company proposed to be acquired, financial
statements for three (3) preceding years and the most recent prepared,
current to date tax returns, aging of accounts receivable and accounts
payable, corporate organization information, audits, if available, and
such other documents and information reasonably required by the Bank
in connection with its due diligence reviews;
B. Such other matters as the Bank shall reasonably require in connection
with the making of the Loans and the perfection of Liens in favor of
the Bank; and,
C. A Seller Debt Subordination Agreement in the form of Exhibit 9.1.E to
the Restated Agreement or a Seller Preferred Stock Subordination
Agreement in the form of Exhibit 9.1.F to the Restated Agreement, as
applicable, duly executed by each Seller which is issued Indebtedness
pursuant to and in connection with a Purchase Agreement entered into
subsequent to the Effective Date.
-46-
D. A determination of the Financial Covenants will be made at the time
the Bank approves acquisition of an Approved Company.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
------------------------------
10.1 Representations and Warranties Concerning Borrowers. Each of the Loan
---------------------------------------------------
Parties represents and warrants the following matters concerning the Borrowers.
A. LRA is a corporation duly incorporated and existing in good standing
under the laws of the State of Texas. LRA is duly licensed or
qualified in all jurisdictions wherein the character of the property
owned or leased by LRA or the nature of the business transacted by LRA
makes licensing or qualification necessary by foreign corporations and
where failure to become so licensed or qualified would have a Material
Adverse Effect.
▇. ▇▇▇▇▇▇ is a corporation duly incorporated and existing in good
standing under the laws of the State of Texas. Looney is duly licensed
or qualified in all jurisdictions wherein the character of the
property owned or leased by Looney or the nature of the business
transacted by Looney makes licensing or qualification necessary by
foreign corporations and where failure to become so licensed or
qualified would have a Material Adverse Effect.
C. KBA is a corporation duly incorporated and existing in good standing
under the laws of the State of Florida. KBA is duly licensed or
qualified in all jurisdictions wherein the character of the property
owned or leased by KBA or the nature of the business transacted by KBA
makes licensing or qualification necessary by foreign corporations and
where failure to become so licensed or qualified would have a Material
Adverse Effect.
D. LRA-Cal is a corporation duly incorporated and existing in good
standing under the laws of the State of California. LRA-Cal is duly
licensed or qualified in all jurisdictions wherein the character of
the property owned or leased by LRA-Cal or the nature of the business
transacted by LRA-Cal makes licensing or qualification necessary by
foreign corporations and where failure to become so licensed or
qualified would have a Material Adverse Effect.
E. LRA-Midwest is a corporation duly incorporated and existing in good
standing under the laws of the State of Illinois. LRA-Midwest is duly
licensed or qualified in all jurisdictions wherein the character of
the property owned or leased by LRA-Midwest or the nature of the
business transacted by LRA-Midwest makes licensing or qualification
necessary by foreign corporations and where failure to become so
licensed or qualified would have a Material Adverse Effect.
F. LRA-NE is a corporation duly incorporated and existing in good
standing under the laws of the State of New York. LRA-NE is duly
licensed or qualified in all jurisdictions wherein the character of
the property owned or leased by LRA-NE or the nature of the business
transacted by LRA-NE makes licensing or qualification necessary by
foreign corporations and where failure to become so licensed or
qualified would have a Material Adverse Effect.
G. Block is a corporation duly incorporated and existing in good standing
under the laws of the District of Columbia. Block is duly licensed or
qualified in all jurisdictions wherein the character of the property
owned or leased by Block or the nature of the business transacted
-47-
by Block makes licensing or qualification necessary by foreign
corporations and where failure to become so licensed or qualified
would have a Material Adverse Effect.
H. Transcription is a corporation duly incorporated and existing in good
standing under the laws of the District of Columbia. Transcription is
duly licensed or qualified in all jurisdictions wherein the character
of the property owned or leased by Transcription or the nature of the
business transacted by Transcription makes licensing or qualification
necessary by foreign corporations and where failure to become so
licensed or qualified would have a Material Adverse Effect.
▇. ▇▇▇▇▇▇ is a corporation duly incorporated and existing in good
standing under the laws of the State of California. ▇▇▇▇▇▇ is duly
licensed or qualified in all jurisdictions wherein the character of
the property owned or leased by ▇▇▇▇▇▇ or the nature of the business
transacted by ▇▇▇▇▇▇ makes licensing or qualification necessary by
foreign corporations and where failure to become so licensed or
qualified would have a Material Adverse Effect.
J. The execution of the Loan Documents and the performance of the
Obligations thereunder by the Borrowers (collectively, the
"Transactions") have been duly authorized by all necessary corporate
action. Such actions will not, (i) violate any provision of law, any
Borrower's Articles or Certificate of Incorporation or any Borrower's
bylaws, or (ii) result in the breach of or constitute a default under
any other agreement or instrument to which a Borrower is a party
except as set out in Schedule 10.1.J. No consent of any Borrower's
shareholders or any holder of Indebtedness of a Borrower is required
as a condition to the validity of this Fourth Restated Agreement.
K. The Loan Documents, when duly executed and delivered in ac cordance
with this Fourth Restated Agreement, will constitute legal, valid and
binding obligations of the Borrowers in accordance with their
respective terms.
L. LRA has furnished to the Bank a consolidated balance sheet and
statements of income as of February 28, 1997. Each of the Consolidated
Subsidiaries have furnished to the Bank a current balance sheets, and
current statements of income. Each of the Financial Statements are
true and correct and, for Looney and KBA, have been prepared in
accordance with GAAP throughout the periods involved. There have been
no changes in the condition, financial or otherwise, of any Borrower
since the date of such Financial Statements which would have a
Material Adverse Effect.
M. Except as disclosed in the Financial Statements referenced in Section
10.1.L, none of the Borrowers has any, (i) Investment in any other
Person, or (ii) agreements in effect providing for or relating to
extensions of credit in respect of which the respective Borrower is or
may become directly or contingently obligated.
N. There is no material fact that any of the Borrowers have failed to
disclose to the Bank which could have a Material Adverse Effect.
Neither the Financial Statements referenced in Section 10.1.L, nor any
certificate or statement delivered herewith or heretofore by any of
the Borrowers to the Bank in connection with negotiations of the Loan
Documents, contains any untrue statement of a material fact or omits
to state any material fact necessary to keep the statements contained
herein or therein from being misleading.
-48-
O. Each Borrower has good title to the assets pledged or given as
Collateral to secure the Loans as of the date that such pledge or lien
is created, free and clear of all Liens except the Permitted Liens.
P. Set forth in Schedule 10.1.P hereto is a complete and accurate list
of all shareholders of LRA as of the Effective Date of this Fourth
Restated Agreement and the number of shares of each class of capital
stock owned by each. LRA's authorized capital stock consists of
100,000,000 shares of Common Stock, $0.01 par value, of which there
are 1,697,231 shares issued and outstanding (including treasury
shares) and 10,000,000 shares of preferred stock, $1.00 par value, of
which there are 3,277,917 shares issued and outstanding (including
treasury shares). Except as set out in Schedule 10.1.P, there are no
outstanding warrants or options to purchase any of the capital stock
of LRA. All of the outstanding capital stock of LRA has been validly
issued, is fully paid and non-assessable and is owned by the
shareholders free and clear of all Liens. LRA is the sole shareholder
of Looney, KBA and LRA-Cal. There are no outstanding warrants or
options to purchase any of the capital stock of Looney, KBA or LRA-
Cal. All of the outstanding capital stock of Looney, KBA and LRA-Cal,
respectively, has been validly issued, is fully paid and non-
assessable and is owned by LRA free and clear of all Liens.
Q. Each of the Borrowers is and, after consummation of this Fourth
Restated Agreement and after giving effect to all Indebtedness
incurred and the Liens in connection herewith, will be Solvent.
R. Except as disclosed in writing to the Bank, none of the Borrowers is a
party to a transaction with any Affiliate. All such transactions are
in the ordinary course of business and upon fair and reasonable terms
not materially less favorable than could be obtained in an arm's-
length transaction with a Person that was not an Affiliate.
S. Except as set out in Schedule 10.1.J, none of the Borrowers is in
default in any material respect under any contract, lease, loan
agreement, indenture, mortgage, security agreement or other material
agreement or obligation to which it is a party or by which any of its
property is bound.
T. Neither the business nor the property of any of the Borrowers are
affected by any fire, explosion, accident, strike, lockout or other
labor dispute, drought, storm, hail, earthquake, embargo, act of God
or other casualty (whether or not covered by insurance), which could
have a Material Adverse Effect.
U. The copies of the EDP Asset Purchase Agreement and the ▇▇▇▇▇▇ House
Stock Purchase Agreement provided to the Bank fully state and are the
agreements among the parties thereto, there being no unwritten or
other agreements among the parties.
V. During the preceding five (5) years, none of the Borrowers has been
known as any other name or used any fictitious, assumed or trade
names except as disclosed in writing to the Bank. The principal
office, chief executive office and principal place of business of each
Borrower are at the address set out in Section 12.1. Each Borrower
maintains its principal records and books at such address.
-49-
10.2 Regulatory Matters. Each of the Loan Parties represents and warrants
------------------
that as of the Effective Date of this Fourth Restated Agreement, no Regulatory
Defects exist, and specifically the following matters.
A. The proceeds of the Loans will be used by the Borrowers solely for the
purposes herein set out and for no other purpose whatsoever. None of
such proceeds will be used for the purpose of purchasing or carrying
any "margin stock" as defined in Regulation U, Regulation X, or
Regulation G, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry a
"margin stock" or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of such Regulation
U, Regulation X, or Regulation G. None of the Borrowers is engaged in
the business of extending credit for the purpose of purchasing or
carrying margin stocks. Neither the Borrowers nor any Person acting on
behalf of the Borrowers has taken or will take any action which might
cause the Notes or any of the other Loan Documents, including this
Fourth Restated Agreement, to violate Regulation U, Regulation X, or
Regulation G or any other regulations of the board of governors of the
Federal Reserve System or to violate (S)8 of the Securities Exchange
Act of 1934 or any rule or regulation thereunder, in each case as now
in effect or as the same may hereafter be in effect.
B. None of the Borrowers or any Person having "control" (as that term is
defined in 12 U.S.C. (S)375(b)(5) or in regulations promulgated
pursuant thereto) of any of the Borrowers, is an "executive officer,"
"director," or "principal shareholder" (as those terms are defined in
12 U.S.C. (S)375(b) or in regula tions promulgated pursuant thereto)
of the Bank, of a bank holding company of which the Bank is a
subsidiary, or of any subsidiary of a bank holding company of which
the Bank is a subsidiary, or of any bank at which the Bank maintains a
"correspondent account" (as such term is defined in such statute or
regulations), or of any bank which maintains a correspondent account
with the Bank.
C. There are no suits or proceedings pending, or to the knowledge of any
of the Borrowers, threatened, in any court or before any Governmental
Authority against or affecting any of the Borrowers which, if
adversely determined, would have a Material Adverse Effect.
D. Each Borrower has filed all U.S. tax returns and all state and foreign
tax returns which are required to be filed. The returns properly
reflect the U.S. income tax, foreign tax and/or state taxes of the
respective Borrower for the period covered thereby. Each Borrower has
paid, or made provisions for the payment of, all taxes which have
become due pursuant to the returns or pursuant to any assessment
received by the respective Borrower, except such taxes, if any, as are
being contested in good faith and as to which, adequate reserves have
been provided. No Federal income tax returns of any of the Borrowers
have been audited by the IRS except for the 1989 income tax return of
Looney, the results of which have been disclosed in writing to the
Bank. None of the Borrowers has, as of the Effective Date of this
Fourth Restated Agreement, requested or been granted any extension of
time to file any Federal, state, local or foreign tax return. None of
the Borrowers is a party to or has any obligation under any tax
sharing agreement.
E. (i) No Reportable Event has occurred and is continuing with respect to
any Employee Plan; (ii) PBGC has not instituted proceedings to
terminate any Employee Plan; (iii) neither the Borrowers, any member
of the Controlled Group, nor any duly-appointed administrator of an
Employee Plan have (a) incurred any liability to PBGC with respect to
any Employee Plan
-50-
other than for premiums not yet due or payable, or (b) instituted or
intends to institute proceedings to terminate any Employee Plan under
(S)4041 or (S)4041A of ERISA or withdraw from any Multi-Employer Plan
(as that term is defined in (S)3(37) of ERISA); and, (iv) each
Employee Plan has been maintained and funded in all material respects
in accordance with its terms and with all provisions of ERISA
applicable thereto.
F. None of the Borrowers is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940, the Interstate Commerce Act (as any of
the preceding acts have been amended), or any other law (other than
Regulation X) which regulates the incurring by the Borrowers of
Indebtedness, including but not limited to laws relating to common
contract carriers or the sale of electricity, gas, steam, water, or
other public utility services.
G. The Borrowers have complied with, and will continue to comply with,
the provisions of the Fair Labor Standards Act of 1938, 29 U.S.C.
(S)(S)200 et.seq., as amended from time to time (the "FLSA"),
-- ---
including specifically, but without limitation, 29 U.S.C. (S)215(a).
This representation and warranty, and each reconfirmation thereof,
shall constitute assurance from the Borrowers, given as of the
Effective Date of this Fourth Restated Agreement and as of the date of
each re-confirmation, that the Borrowers have complied with the
requirements of the FLSA, in general, and 29 U.S.C. (S)215(a)(1),
thereof, in particular.
H. None of the Borrowers has been accused of being in violation of Title
IX, of the Organized Crime Control Act of 1970, entitled "Racketeer
Influenced and Corrupt Organizations" (RICO), 18 U.S.C. (S)(S)1961
et.seq.
-- ---
10.3 Representations Regarding Accounts. The Borrowers make the following
----------------------------------
representations and warranties which shall be deemed to be incorporated by
reference in each Notice of Revolving Credit Advance and shall be deemed
repeated and confirmed with respect to each item of Collateral as it is created
or otherwise acquired by the Borrowers.
A. Each Account Debtor named in an Eligible Account or on an invoice, to
the best of the Borrowers' knowledge, is Solvent and will continue to
be fully able to pay in full when due all Accounts on which the
Account Debtor is obligated.
B. Each Eligible Account shall be a good and valid account representing
an undisputed bona fide indebtedness incurred by the Account Debtor
therein named, for a fixed sum as set forth in the invoice relating
thereto with respect to an absolute sale and delivery upon the
satisfied terms of goods sold by the Borrowers, or work, labor and/or
services therefor rendered by a Borrower.
C. No Eligible Account is or shall be subject to any defense, set off,
counterclaim, discount or allowances except as may be stated in the
copy of the invoice delivered to the Bank.
D. No note, trade acceptance, draft or other instrument or chattel paper
has been or will be received with respect to merchandise giving rise
to any Eligible Account unless the same is assigned and delivered to
the Bank.
10.4 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties by the Borrowers shall survive delivery of the Loan Documents. Any
investigation at any time made by or on
-51-
behalf of the Bank shall not diminish the Bank's right to rely on the
representations and warranties made by the Borrowers.
ARTICLE XI
DEFAULTS AND REMEDIES
---------------------
11.1 Events of Default. The Borrowers shall be in Default hereunder if any
-----------------
one of the following shall occur:
A. If any installment of principal or interest on any Note shall not be
paid within five (5) days of when due and payable, or if there shall
occur a failure to pay, when due, any Obligations owed to the Bank.
B. If any representation, statement, warranty or certification made by
any Loan Party in the Loan Documents, or furnished to the Bank in
connection with the Loans, shall prove to have been incorrect in any
material respect at the time of making or issuance thereof.
C. If there shall occur any one of the following events (each an "Event
of Default"), and if the event shall continue uncured after ten (10)
days from the earlier to occur of, (i) the date such event becomes
known to any Financial Officer or Responsible Officer of any of the
Borrowers, or (ii) the date the Bank shall have given notice to LRA
that such event has occurred; provided, however, the Bank shall not be
required to give notice of any such failure or event:
(1) If any of the Borrowers shall fail to comply with any of the
covenants and agreements set forth in Section 8.1 (other than Section
8.1.H); and/or,
(2) Both the following events shall occur: (i) Either (a) process
shall have been instituted to terminate, or a notice of termination
shall have been filed with respect to, any Employee Plan (other than a
Multi-Employer Plan as that term is defined in (S)3(37) of ERISA) by
the Borrowers, any ERISA Affiliate, any subsidiary, any member of the
Controlled Group, PBGC or any representative of any thereof, or any
such Employee Plan shall be terminated in any such case under (S)4041
or (S)4042 of ERISA, or (b) a Reportable Event, the occurrence of
which would cause the imposition of a lien under (S)4068 of ERISA,
shall have occurred with respect to any Employee Plan (other than a
Multi-Employer Plan as that term is defined in (S)3(37) of ERISA) and
be continuing for a period of sixty (60) days; and, (ii) the sum of
the estimated liability to PBGC under (S)4062 of ERISA and the
currently payable obligations of the Borrowers or any ERISA Affiliate
to fund liabilities (in excess of amounts required to be paid to
satisfy the minimum funding standard of (S)412 of the Code) under the
Employee Plan or Employee Plans subject to such event shall exceed ten
(10) per cent of tangible net worth at such time; and/or,
(3) Any or all of the following events shall occur with respect to any
Multi-Employer Plan (as that term is defined in (S)3(37) of ERISA) to
which the Borrowers or any ERISA Affiliate contributes or contributed
on behalf of its employees: (i) the Borrowers or any ERISA Affiliate
incurs a withdrawal liability under (S)4201 of ERISA; (ii) any such
plan is "in reorganization" as that term is defined in (S)4241 of
ERISA; or, (iii) any such Employee Plan is terminated under (S)4041A
of ERISA and the Bank determines in good faith that the aggregate
liability likely to be incurred by the Borrowers or any ERISA
Affiliate, as a result of all or
-52-
any of the events specified in subsections (i), (ii) and (iii) above
occurring, shall have a Material Adverse Effect.
D. If any event shall occur which would constitute a Default under
Section 8.1.H, Section 8.2, Section 8.3 or Section 8.5.
E. If there shall occur any change in the condition of any Loan Party
which, in the reasonable opinion of the Bank, has a Material Adverse
Effect in the aggregate on all of the Borrowers.
F. If the Borrowers shall not complete an IPO by December 31, 1998, from
which the Borrowers derive not less than $35,000,000.00 in gross
proceeds available to the Borrowers.
G. If any of the Loan Documents shall cease to be legal, valid and
binding agreements enforceable against the Loan Party executing same
in accordance with the respective terms thereof or shall in any manner
be terminated or become or be declared ineffective or inoperative or
shall in any manner whatsoever cease to give or provide the Liens,
security interests, rights, titles, interests, remedies, powers or
privileges intended to be created thereby.
H. If there shall occur a failure by any Loan Party in the ▇▇▇▇▇ ▇▇▇▇▇ or
performance of any other provision of the Loan Docu ments. The
provisions of this Fourth Restated Agreement shall control in the
event that any provision of any other Loan Document is in conflict
with the provisions of any other instrument executed pursuant hereto
and all of such provisions in such other instruments shall be deemed
to be cumulative of the provisions hereof to the extent such provi
sions are not inconsistent herewith.
I. If there shall occur a failure beyond any period of grace, if any, by
any Loan Party in the payment, when due, of any Indebtedness owed to
any Person in excess of the aggregate amount of $10,000.00.
J. If, (i) there shall be any change in the ownership of the Voting
Shares of any of the Consolidated Subsidiaries from LRA, (ii) any
other Change of Control of any of the Consolidated Subsidiaries, or
(iii) prior to the shares of LRA being registered to be traded on a
publicly traded stock exchange or publicly traded through the National
Association of Securities Dealers, there shall be any Change of
Control of LRA.
K. If any Loan Party shall:
(1) Apply for, consent to or acquiesce in the appointment of a
receiver, trustee or liquidator of such Person, or of such Person's
property; and/or,
(2) Admit in writing such Person's inability to pay debts as they
mature; and/or,
(3) Make a general assignment for the benefit of creditors; and/or,
(4) Be adjudicated to be bankrupt or insolvent by any court having
jurisdiction; and/or,
(5) File a voluntary petition in bankruptcy or a petition or answer
seeking reorganization, composition, readjustment, an arrangement or
similar relief with creditors under any present or future Debtor Laws
or file an answer admitting the material allegations of a petition
filed
-53-
against such Person in bankruptcy, reorganization or insolvency
proceeding, or corporate action shall be taken for the purpose of
effecting any of the foregoing; and/or,
(6) Have a receiver or trustee or assignee in bankruptcy or insolvency
appointed for such Person or such Person's property without such
Person's application or consent.
L. If an involuntary petition or complaint shall be filed against any
Loan Party seeking bankruptcy or reorganization of such Person or the
appointment of a receiver, custodian, trustee, intervenor or
liquidator of such Person, or of all or substantially all of such
Person's assets, and such petition or complaint shall not have been
dismissed within sixty (60) days of the filing thereof; or, if an
order, order for relief, judgment or decree shall be entered by any
court of competent jurisdiction or other competent authority approving
a petition or complaint seeking reorganization of such Person or
appointing a receiver, custodian, trustee, intervenor or liquidator of
such Person, or of all or substantially all of such Person's assets.
M. If the Bank is served with, or becomes subject to, a court order,
injunction or other process or decree restraining or seeking to
restrain the Bank from paying any amount under any Letter of Credit
and (i) either (a) a drawing has occurred under the Letter of Credit
for which the Borrowers have refused to reimburse the Bank for
payment, or (b) the expiration date of the Letter of Credit has
occurred but the right of any beneficiary thereunder to draw under the
Letter of Credit has been extended past the expiration date in
connection with the pendency of the related court action or
proceeding, and (ii) the Borrowers have failed to deposit with the
Bank cash collateral in an amount equal to the Bank's obligations
under the Letter of Credit.
11.2 Remedies. Upon the occurrence of an Event of Default, and in any such
--------
event, the obligation of the Bank to extend credit to the Borrowers pursuant
hereto shall immediately terminate. If a Default shall occur, the Bank may, at
the Bank's option, without notice to any Loan Party, declare the principal of
and interest accrued on the Obligations to be forthwith due and payable,
whereupon the same shall become due and payable without any presentment, demand,
protest, notice of protest, notice of intent to accelerate the maturity of the
Obligations, notice of acceleration of the maturity of the Obligations or notice
of any kind, all of which are hereby waived, and thereafter, the Bank may
exercise all remedies available to the Bank as provided in any of the Loan
Documents and at law or in equity. None of the provisions contained in any of
the Loan Documents shall, or shall be deemed to, give the Bank the right to
exercise control over the assets, including, without limitation, real property,
affairs, or management of any Loan Party. The rights of the Bank are limited to
the exercise the remedies provided in this Fourth Restated Agreement and the
other Loan Documents.
11.3 Material Notices. Each Loan Party shall promptly notify the Bank of,
----------------
(i) any change in such Person's financial condition or business which would have
a Material Adverse Effect, (ii) any default under any agreement, contract or
other instrument of which such Person is a party or by which any of such
Person's properties are bound, or any acceleration of the maturity of any
Indebtedness, any of which would have a Material Adverse Effect, (iii) any claim
against or affecting the Loan Party or any of the Loan Party's property which
would have a Material Adverse Effect, and (iv) the commencement of, and any
determination in, any litigation with any third party or any proceeding before
any Governmental Authority affecting the Loan Party which would have a Material
Adverse Effect.
-54-
ARTICLE XII
MISCELLANEOUS
-------------
12.1 Notices. Any notice required or permitted to be given hereunder shall
-------
be in writing, shall be addressed to the parties hereto at the respective
addresses set out below, which may be changed by the giving of written notice to
that effect pursuant hereto, and shall be deemed effectively given if, (i)
delivered personally, or (ii) upon being deposited with the U.S. Postal Service,
postage prepaid, certified mail, return receipt requested:
If to any of the Borrowers: LITIGATION RESOURCES OF AMERICA, INC.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to the Bank: TEXAS COMMERCE BANK NATIONAL ASSOCIATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
12.2 Severability. In the event any one or more of the provisions
------------
contained in the Loan Documents should be held to be in valid, illegal or
unenforceable in any respect, the validity, enforceability and legality of the
remaining provisions contained in the Loan Documents shall not in any manner be
affected thereby and shall be enforceable in accordance with their terms.
12.3 Captions. The captions, headings, and arrangements used in this
--------
Fourth Restated Agreement are for convenience only and do not in any manner
affect, limit, amplify, or modify the terms and provisions hereof.
12.4 Successors and Assigns. This Fourth Restated Agreement shall be
----------------------
binding upon the Borrowers, any ERISA Affiliate and the Bank and shall inure to
the benefit of the Borrowers, any ERISA Affiliate and the Bank and the
successors and assigns of the Bank. If the Bank shall assign all or any portion
of any of the Notes and the Loan Documents to any Person, the Bank shall give
written notice thereof to LRA. None of the Borrowers may, without the prior
consent of the Bank, assign any rights, powers, duties or obligations hereunder.
12.5 Participation. The Borrowers recognize and agree that the Bank may,
-------------
from time to time, assign to one or more banks or other entities all or any part
of, or may grant a participation to one or more banks or other entities, in or
to all or any part of, the Loans, the Notes and the Bank's rights in respect of
the Loan Documents. If the Bank shall participate any part of the Obligations,
the Bank shall give written notice thereof to LRA. None of the Borrowers shall
have any obligation for any costs incurred by the Bank in the participation of
the Loans.
12.6 Non-liability of Bank. The relationship among the Borrowers and the
---------------------
Bank is, and shall at all times remain, solely that of debtors and creditor.
The Bank does not undertake or assume any responsibility or duty to any Person
to review, inspect, super vise, pass judgment upon, or inform any Person of any
matter in connection with any phase of such Person's business, operations, or
condition, financial or otherwise. Each Person shall rely entirely upon such
Person's own judgment with respect to such matters. Any review, inspection,
supervision, exercise of judgment, or information supplied to any Person by the
Bank in connection with any such matter is for the protection of the Bank, and
no Person is entitled to rely thereon.
-55-
12.7 Financing Statements. Any carbon, photographic or other reproduction
--------------------
of any Financing Statement signed by any Loan Party is sufficient as a financing
statement for all purposes, including, without limitation, filing in any state
pursuant to the provisions of the UCC.
12.8 List of Exhibits and Schedules. The following Exhibits and Schedules
------------------------------
are attached hereto and made a part hereof for all purposes:
Exhibit 2.1 Notice of Revolving Credit Advance
Exhibit 2.3 Borrowing Base Certificate
Exhibit 3.1 Notice of Term Loan Advance
Exhibit 4.1 Revolving Credit Note
Exhibit 4.2-a Term Note A
Exhibit 4.2-b Term Note B
Exhibit 4.2-c Term Note C
Exhibit 4.2-d Term Note D
Exhibit 4.2-e Term Note E
Exhibit 6.1.A Security Agreement
Exhibit 6.1.B Security Agreement-Pledge
Exhibit 8.2.C Certificate of Compliance
Exhibit 9.1.G Seller Debt Subordination-EDP
Exhibit 9.1.J Officers Certificate
Schedule 10.1.J Agreements in Default
Schedule 10.1.P Shareholders of LRA
12.9 Modification. All modifications, consents, amendments or waivers of
------------
any provision of any Loan Document, or consent to any departure by any of the
Borrowers therefrom, shall be effective only if the same shall be in writing and
agreed to by the Bank and then shall be effective only in the specific instance
and for the purpose for which given.
12.10 Waiver. The acceptance by the Bank of any partial payment on the
------
Obligations shall not be deemed to be a waiver of any Event of Default then
existing. No waiver by the Bank of any Event of Default shall be deemed to be a
waiver of any other then existing or subsequent Event of Default, or Default. No
delay or omission by the Bank in exercising any right under the Loan Documents
shall impair that right or be construed as a waiver thereof or any acquiescence
therein, or shall any single or partial exercise of any right preclude other or
further exercise thereof or the exercise of any other right under the Loan
Documents or otherwise. The rights of the Bank hereunder and under the Loan
Documents shall be in addition to all other rights provided by law.
12.11 Governing Law. THIS AGREEMENT AND THE LOAN DOCUMENTS HAVE BEEN
-------------
PREPARED, ARE BEING EXECUTED AND DELIVERED, AND ARE INTENDED TO BE PERFORMED IN
THE STATE OF TEXAS, AND THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT
GIVING EFFECT TO THE CONFLICTS-OF-LAW RULES AND PRINCIPLES OF THE STATE OF
TEXAS, AND THE APPLICABLE LAWS OF THE U.S. SHALL GOVERN THE VALIDITY,
CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND ALL OF THE
LOAN DOCUMENTS.
12.12 Choice of Forum, Service of Process and Jurisdiction. Any suit,
----------------------------------------------------
action or proceeding against any of the Borrowers with respect to the Loan
Documents, or the enforcement of any judgment entered by any court in respect
thereof, shall be brought in the courts of the ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
-▇▇-
▇▇▇▇▇▇, ▇▇▇▇▇, or in the U.S. courts located in Southern District of Texas as
the Bank, in the Bank's sole discretion, may elect. The Bank and the Borrowers
submit to the non-exclusive jurisdiction of such courts for the purpose of any
such suit, action or proceeding.
A. The Bank and the Borrowers waive, in connection with any such suit,
action or proceeding, any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of forum
non conveniens, which it may now or hereafter have to the bringing of
any such action or proceeding in such respective jurisdictions.
B. The Bank and the Borrowers consent to the service of process of any of
the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage
prepaid, to each such Person, as the case may be, at its address set
forth in Section 12.1.
C. Nothing herein shall affect the right of any party to serve process in
any other manner permitted by law.
12.13 Waiver of Jury Trial. Each party hereto hereby waives any right it
--------------------
may have to a trial by jury in respect of any legal proceeding directly or
indirectly arising out of, under or in connection with or relating to any of the
Loan Documents or the Transactions. Except as prohibited by law, each party
hereto hereby waives any right it may have to claim or recover in any litigation
referred to in this Section any special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages. Each party
hereto, (i) certifies that no representative, agent or attorney of the Bank has
represented, expressly or otherwise, that the Bank would not, in the event of
litigation, seek to enforce the foregoing waivers, and (ii) acknowledges that it
has been induced to enter into this Fourth Restated Agreement and the other Loan
Documents, as applicable, by, among other things, the mutual waivers and
certifications herein.
12.14 Agency. Nothing herein contained shall be construed to constitute
------
any Loan Party as the Bank's agent for any purpose whatsoever.
12.15 No Third Party Beneficiary. The parties do not intend for this
--------------------------
Fourth Restated Agreement to inure to the benefit of any third party, or for
this Fourth Restated Agreement to be construed to make or render the Bank liable
to any mechanic, materialman, supplier, contractor, subcontractor, purchaser or
lessee of any property owned by any Loan Party for debts or claims accruing to
any such Persons against any Loan Party. The Bank does not, by anything herein
or in any of the other Loan Documents, assume any Indebtedness of any Loan Party
under any contract or agreement assigned to the Bank, and the Bank shall not be
responsible in any manner for the performance by any Loan Party of any of the
terms and conditions thereof.
12.16 Payment of Expenses. The Borrowers shall pay all reasonable
-------------------
expenses, charges, costs and fees provided for in this Fourth Restated Agreement
or relating to the Loans or the Collateral, including fees, charges, and taxes
in connection with recording or filing any of the Loan Documents, title
insurance premiums and charges, fees of any consultants, fees and expenses of
the Bank's counsel (which attorneys may be employees of the Bank), fees and
expenses of the Bank's special counsel, which may include fees billed for law
clerks, paralegals and other persons not admitted to the Bar but performing
services under the supervision of an attorney, printing, photocopying and
duplicating expenses, air freight charges, escrow fees, costs of surveys,
premiums of insurance policies and surety bonds and fees for any appraisal,
market or feasibility study required by the Bank. All such expenses, charges,
-57-
costs and fees shall be the Borrowers' obligations regardless of whether or not
the Borrowers have requested and met the conditions for the Loans. This
obligation on the part of the Borrowers shall survive the execution and delivery
of the Loan Documents and the repayment of the Obligations. The Borrowers
authorize the Bank, in its discretion, after notice to the Borrowers and the
expiration of a reasonable period, to pay such expenses, charges, costs and fees
at any time by a disbursement of the Loans.
12.17 Conflicts. If there shall exist any conflict among this Fourth
---------
Restated Agreement and any of the other Loan Documents, the provisions of this
Fourth Restated Agreement shall control.
12.18 Deceptive Trade Practices Act. The Borrowers are each a "business
-----------------------------
consumer" as defined under the Deceptive Trade Practices-Consumer Protection
Act, Subchapter E of Chapter 17 of the Texas Business and Commerce Code, a law
that gives consumers special rights and protections. The Borrowers acknowledge
that the Deceptive Trade Practices-Consumer Protection Act is not applicable to
the Transactions.
12.19 Entirety. The Loan Documents embody the entire agreement among the
--------
parties and, except as expressly set out herein, supersede all prior agreements
and understandings, if any, relating to the subject matter hereof and thereof.
Except as expressly provided herein or the Loan Documents (other than this
Fourth Restated Agreement), nothing in this Fourth Restated Agreement or in the
other Loan Documents, expressed or implied, is intended to confer upon any
party, other than the parties hereto, any rights, remedies, obligations or
liabilities under or by reason of this Fourth Restated Agreement or the other
Loan Documents. Notwithstanding the foregoing provisions, this Fourth Restated
Agreement amends, modifies, supplements and extends the provisions of the prior
Credit Agreement. The Borrowers and the Bank agree that the Loan Documents, as
amended pursuant hereto and hereby, shall continue to be legal, valid, binding
and enforceable in accordance with their respective terms. The Borrowers agree
with the Bank that the extension of the Obligations pursuant to this First
Amendment not constitute a novation or discharge of the prior Obligations
described in the prior Credit Agreement, and all Liens, security interests,
claims, conveyances, rights, and privileges described, granted, or made to or
for the benefit of the Bank by the Borrowers, any of them, shall be carried
forward and shall continue in full force and effect to secure the payment of all
Obligations under the Loan Documents, as amended hereby. Any and all other
agreements to pay, secure or guarantee payment of the Obligations by the
Borrowers, or any of them, shall remain in full force and effect and shall be
carried forward to secure payment of the Obligations, as they have been modified
pursuant hereto.
12.20 Multiple Counterparts. This Fourth Restated Agreement may be
---------------------
executed in any number of counterparts, all of which taken together shall
constitute one and the same agreement, and any of the parties hereto may execute
this Fourth Restated Agreement by signing any such counterpart.
A CREDIT AGREEMENT IN WHICH THE AMOUNT INVOLVED EXCEEDS $50,000 IN VALUE IS NOT
ENFORCEABLE UNLESS THE AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE
BOUND OR BY THAT PARTY'S AUTHORIZED REPRESENTATIVE. THE RIGHTS AND OBLIGATIONS
OF THE LOAN PARTIES AND THE BANK SHALL BE DETERMINED SOLELY FROM WRITTEN
AGREEMENTS, DOCUMENTS, AND INSTRUMENTS. ANY PRIOR ORAL AGREEMENTS AMONG THE
PARTIES ARE SUPERSEDED BY AND MERGED INTO THESE WRITINGS. THIS AGREEMENT AND THE
OTHER WRITTEN LOAN DOCUMENTS (AS SAME MAY, FROM TIME TO TIME, BE AMENDED IN
WRITING) EXECUTED BY THE LOAN PARTIES OR THE BANK REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. THIS PARAGRAPH IS INCLUDED IN THIS
-58-
AGREEMENT UNDER (S)26.02 oF THE TEXAS BUSINESS AND COMMERCE CODE, AS AMENDED
FROM TIME TO TIME.
In witness whereof, the parties have duly executed this Fourth Restated
Agreement on the day and year hereinabove first set forth.
LITIGATION RESOURCES LOONEY & COMPANY
OF AMERICA, INC.
BY:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ BY:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------- -------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇, BURY & ASSOCIATES, INC. LITIGATION RESOURCES OF
AMERICA-CALIFORNIA, INC.
BY:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ BY:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------- -------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
LITIGATION RESOURCES OF LITIGATION RESOURCES OF
AMERICA-MIDWEST, INC. AMERICA-NORTHEAST, INC.
BY:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ BY:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------- -------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
BLOCK COURT REPORTING, INC. BLOCK TAPE TRANSCRIPTION
SERVICES, INC.
BY:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ BY:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------- -------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇▇ HOUSE, INC. TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
BY:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ BY:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------- -------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, JR., VICE PRESIDENT
CHIEF FINANCIAL OFFICER
-59-
Exhibit 2.1
Notice of Revolving Credit Advance
NOTICE OF REVOLVING CREDIT ADVANCE
____________________, 199_
Section 2.1
Texas Commerce Bank National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
RE: Fourth Amended and Restated Credit Agreement (the "Fourth Restated
Agreement") dated September 15, 1997, by and among LITIGATION RESOURCES
OF AMERICA, INC. et. al. (the "Borrowers") and Texas Commerce Bank
-- --
National Association (the "Bank")
Gentlemen:
Pursuant to the terms of the Fourth Restated Agreement, Borrowers give Bank
this Notice of Revolving Credit Advance. The amount of the Borrowing requested
is $_________________________, and the requested date of the Borrowing is
__________________. There is attached to this Notice of Revolving Credit Advance
a Borrowing Base Certificate accurately calculating the amount permissible under
the Borrowing Base.
The Interest Rate Option Selected is:
[_] Base Rate Loan
[_] Adjusted Libor Rate Loan
The requested Interest Rate Period is: _______________________________
The Borrowers have performed or complied with all of the Borrowers'
covenants and agreements required under the Fourth Restated Agreement and under
the Loan Documents, as defined in the Fourth Restated Agreement. To the best of
the undersigned's knowledge, after reasonable investigation, no Default and, no
condition or event which, with the giving of notice or lapse of time, or both,
would become an Event of Default, has occurred or, if occurred, is continuing,
as the terms "Default" and "Event of Default" are defined in the Fourth Restated
Agreement. The representations and warranties contained in the Fourth Restated
Agreement and the Loan Documents are true and correct in all material respects.
The undersigned certifies to the foregoing matters to induce Bank to make
the requested Advance on the Loans.
Sincerely,
LITIGATION RESOURCES OF AMERICA, INC.
BY:__________________________________
NAME:________________________________
TITLE:_______________________________
Exhibit 2.3
Borrowing Base Certificate
BORROWING BASE CERTIFICATE
SECTION 2.2
Period beginning:__________________________ and ending ____________________ (the
"Current Period"). Fourth Amended and Restated Credit Agreement (the "Fourth
Restated Agreement") dated September 17, 1997, by and among LITIGATION RESOURCES
OF AMERICA, INC., ▇▇.▇▇. (collectively, the "Borrowers") and Texas Commerce Bank
National Association (the "Bank").
1. Total Accounts as of the end of the Current Period: $_____________________
2. Less: Ineligible Accounts as of the end of the Current Period
A. Accounts more than 120 days from invoice date (_______________________)
B. Foreign accounts not secured by letter of
credit issued by a bank satisfactory to the Bank (_______________________)
C. Government accounts (_______________________)
D. Affiliate accounts (_______________________)
E. Accounts from Account Debtor to the extent the Accounts from
that Account Debtor exceeds 15% or more of the
Eligible Accounts and are not otherwise approved by Bank (_______________________)
F. Accounts subject to dispute or setoff (_______________________)
G. Accounts subject to other liens (_______________________)
H. Other ineligible Accounts (_______________________)
3. Total Ineligible Accounts for Current Period
(sum of Lines 2.A through and inclusive of Line 2.H) (_______________________)
4. Total Eligible Accounts for Current Period
(Line 1 minus Line 3)
5. Multiplied by Account Advance Factor 85%
6. Total Borrowing Base as of the end of Current Period $_____________________
7. Less:
A. Aggregate principal amount outstanding under the
Revolving Credit Note as of the date hereof (_______________________)
8. Equals total outstanding amounts $_____________________
9. Amount Available for Borrowing subject to the terms of the Fourth Restated Agreement, if positive
or amount to be repaid, if negative (Not to exceed $4,000,000.00) $_____________________
--
-1-
The undersigned hereby certifies that the above information and
computations are true and correct as of the date hereof, and are not misleading.
No Default or Event of Default, which, with the passage of time or otherwise,
would become a Default under the Fourth Restated Agreement, has occurred and is
continuing.
LITIGATION RESOURCES OF AMERICA, INC.
By: ___________________________
Name: ___________________________
Title: ___________________________
Date: ___________________________
-2-
Exhibit 3.1
Notice of Term Loan Advance
NOTICE OF TERM LOAN ADVANCE
___________________, 199_
Texas Commerce Bank National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
RE: Fourth Amended and Restated Credit Agreement (the "Fourth Restated
Agreement") dated September 17, 1997, by and among LITIGATION RESOURCES OF
AMERICA, INC., et. al., (collectively, the "Borrowers") and Texas Commerce
-- --
Bank National Association (the "Bank")
Gentlemen:
Pursuant to Section 3.1 of the Fourth Restated Agreement, the Borrowers
give the Bank this Notice of Term Loan Advance on Term Note E. The requested
Borrowing Date is __________.
The first two below Advances are to be made in accordance with the wire transfer
instructions attached and the last mentioned Advance is to be deposited into the
Funding Account:
[_] In the amount of $_________(not to exceed $1,350,000.00) to ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to purchase the stock of ▇▇▇▇▇▇ House
pursuant to the ▇▇▇▇▇▇ House Stock Purchase Agreement.
[_] In the amount of $________(not to exceed $6,000,000.00) to ▇▇▇▇▇▇ ▇.
Dine, Inc. and ▇▇▇▇▇▇ ▇. Dine Temporary Attorneys, L.L.C. to purchase
the Assets pursuant to the EDP Asset Purchase Agreement.
[_] In the amount of $________(not to exceed $100,000.00) to pay the
Facility Fee and transaction costs.
There is attached to this Notice of Term Loan Advance the following:
1. A true and correct final copy of the [▇▇▇▇▇▇ HOUSE STOCK PURCHASE
AGREEMENT OR THE EDP ASSET PURCHASE AGREEMENT, AS APPLICABLE], duly
--
executed by each party thereto, together with true and correct final
copies of all documents mentioned or described therein, duly executed
by the appropriate party(s) thereto.
2. Duly executed and filed UCC-1 Financing Statements to perfect the
Bank's first priority security interest in the Collateral, and a
search of the Office of the Secretary of State of New York and the
Office of the Secretary of State of California [AND ANY OTHER
APPROPRIATE JURISDICTION, reflecting no other perfected Liens on the
Collateral.
The Interest Rate Option Selected is:
Texas Commerce Bank National Association
______________________
Page 2
[_] Base Rate Loan
[_] Adjusted Libor Rate Loan
The requested Interest Rate Period is: _______________________
Borrowers have performed or complied with all of the Borrower's covenants
and agreements required under the Fourth Restated Agreement and under the Loan
Documents, as defined in the Fourth Restated Agreement. To the best of the
undersigned's knowledge, after reasonable investigation, no Default and, no
condition or event which, with the giving of notice or lapse of time, or both,
would become an Event of Default, has occurred or, if occurred, is continuing,
as the terms "Default" and "Event of Default" are defined in the Fourth Restated
Agreement. The representations and warranties contained in the Fourth Restated
Agreement and the Loan Documents are true and correct in all material respects.
The undersigned certifies to the foregoing matters to induce Bank to make
the requested Advance on the Loans.
Sincerely,
LITIGATION RESOURCES OF AMERICA, INC.
BY:___________________________________
NAME:_________________________________
TITLE:________________________________
Exhibit 4.1
Revolving Credit Note
REVOLVING CREDIT NOTE
$2,000,000.00 September 17, 1997
-1-
This note is the Revolving Credit Note issued pursuant to the terms of a
Fourth Amended and Restated Credit Agreement (the "Fourth Restated Agreement")
of even date herewith by and among Litigation Resources of America, Inc., Looney
& Company, ▇▇▇▇▇, Bury & Associates, Inc., Litigation Resources of America-
California, Inc., Litigation Resources of America-Midwest, Inc., Litigation
Resources of America-Northeast, Inc., Block Court Reporting, Inc., Block Tape
Transcription Services, Inc., and ▇▇▇▇▇▇ House Inc. (collectively, the
"Makers"), and Texas Commerce Bank National Association (the "Payee"). All
capitalized terms used herein shall have the meanings ascribed to them in the
Fourth Restated Agreement unless the context hereof requires otherwise.
For value received, after date, in the manner, on the dates and in the
amounts herein stipulated, the Makers, jointly and severally, promise to pay to
the order of the Payee at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, or at
such other place in Houston, ▇▇▇▇▇▇ County, Texas, designated in writing by the
Payee or other holder hereof:
1. The lesser of the principal amount outstanding hereon or the sum of
Two Million Dollars ($2,000,000.00) in lawful money of the U.S., which
shall be due and payable on the Revolving Commitment Termination Date;
and,
2. Interest from the date hereof on the principal amount outstanding
hereunder from time to time, at the lesser of (a) the Revolving Credit
Contract Rate, or (b) the Maximum Rate; and, interest shall be due and
payable monthly as it accrues on the outstanding balance of principal
from time to time, with the first installment of accrued interest to
be due and payable on September 6, 1997, and like installments of
interest shall become due and payable on the same day of each
consecutive calendar month thereafter, on Base Rate Loans, or the last
day of a month and the last day of an Interest Period during the
Commitment Period, on Adjusted Libor Rate Loans, and on the Commitment
Termination Date, at which time all accrued but unpaid interest shall
be due and payable; and,
3. Notwithstanding the foregoing, if at any time the Contract Rate shall
exceed the Maximum Rate and thereafter, the Contract Rate shall become
less than the Maximum Rate, the rate of interest payable hereunder
shall, at the option of the Payee, be the Maximum Rate until the
cumulative interest received by the Payee or other holder hereof
equals the interest which would have been received at the Contract
Rate; and,
4. All past due principal and interest shall bear interest at the Maximum
Rate from maturity until paid.
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
REVOLVING CREDIT NOTE
$2,000,000.00 September 17, 1997
-2-
5. This note may be prepaid pursuant to the terms of the Fourth Restated
Agreement.
Pursuant to the terms of the Fourth Restated Agreement, the Payee will,
from time to time, make Advances on the note and, from time to time, the Makers
will borrower, repay and reborrow hereunder, provided, however, no more than
$2,000,000.00 of principal shall ever be outstanding at any one time.
THIS NOTE SHALL BE PAYABLE IN FULL ON JULY 10, 1998. ON THE COMMITMENT
TERMINATION DATE, THE MAKERS MUST REPAY THE ENTIRE UNPAID PRINCIPAL BALANCE AND
ALL ACCRUED INTEREST ON THIS NOTE THEN DUE AND PAYABLE. THE PAYEE SHALL BE UNDER
NO OBLIGATION TO REFINANCE THIS NOTE AT THAT TIME. THE MAKERS SHALL THEREFORE BE
REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS THE MAKERS MAY OWN, OR THE MAKERS
SHALL HAVE TO FIND A LENDER WILLING TO LEND THE MAKERS SUCH AMOUNTS AT
PREVAILING MARKET RATES, WHICH MAY BE CONSIDERABLY HIGHER THAN THE INTEREST RATE
ON THIS NOTE.
It is agreed that if there is a Default under the provisions in Fourth
Restated Agreement, then, in any such event, at the option of the holder hereof,
at any time thereafter, without notice, the unpaid principal of this note and,
all accrued interest, shall at once become due and payable and shall bear
interest at the Maximum Rate from the date of such Default or event. Failure to
exercise any of the options shall not constitute a waiver on the part of holder
hereof of the right to exercise the same at any other time.
It is agreed that if this note be placed in the hands of an attorney for
collection, for the purposes of being sued upon or established in any manner in
any court; then in any of such events, the Makers, all endorsers and guarantors
hereof, promise to pay the Payee's or other holder's reasonable attorneys' fees
and costs of collection, which sums shall become a part of the principal hereof.
The Loan Documents are intended to be performed in accordance with, and
only to the extent permitted by, all applicable Requirements. This note is
subject to the provisions set out in the Fourth Restated Agreement relating to
the payment of interest at the Maximum Rate and to payment or collection of
interest in excess of the Maximum Amount, all of which provisions are
incorporated herein for all purposes.
This note and the maximum rate of nonusurious interest applicable to the
loan evidenced hereby shall be governed by the laws of the U.S. and the State of
Texas in effect on the date of the loan evidenced hereby, and, to the extent
allowed by law, as now or as may hereafter be in effect, but in any event Tex.
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
REVOLVING CREDIT NOTE
$2,000,000.00 September 17, 1997
-3-
Rev. Civ. Stat. ▇▇▇. Art. ▇▇▇▇ ▇▇. 15 (which regulates certain revolving credit
loan accounts and revolving triparty accounts) shall not apply to the loan
evidenced hereby.
It is further agreed that any funds at any time in the possession of any
holder hereof which belong to the Makers, any endorser or guarantor hereof, and
any deposits or other sums at any time credited by or due from any holder to any
of such parties shall be held and treated as security for the payment of this
note, and the holder hereof, at the holder's option may, at any time without
notice, and without liability, apply such funds or deposits or any sums credited
by or due from the holder against any sums owing, whether due or not, under this
note and in any manner and in any order of preference which the holder, in the
holder's discretion, chooses.
The Makers, all endorsers and guarantors hereof, and all other persons who
may become liable for all or any part of the obligations represented by this
note, shall be considered as principals as to the making of this note and shall
have joint and several liability. Except as may be set out in the Fourth
Restated Agreement, the Makers, all endorsers and guarantors, severally waive
presentment for payment, protest, notice of protest, and of nonpayment, notices
of intention to accelerate the maturity and notice of acceleration, as to this
note and as to each, every and all installments hereof, and consent to the
renewal or extension of the time of payment hereof and to the release of all or
any part of the security herefor or any person liable hereon upon the terms
deemed by the holder hereof, in the holder's sole discretion, to be adequate.
Any renewal or extension or release of any of such security or person, may be
made without notice to any of such parties and without affecting their
liability.
THE LOAN DOCUMENTS, INCLUDING THIS NOTE, HAVE BEEN PREPARED, ARE BEING
EXECUTED AND DELIVERED, AND ARE INTENDED TO BE PERFORMED IN THE STATE OF TEXAS,
AND THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE
CONFLICTS-OF-LAW RULES AND PRINCIPLES OF THE STATE OF TEXAS, AND THE APPLICABLE
LAWS OF THE U.S. SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THIS NOTE, AND THE LOAN DOCUMENTS.
The payment of this note is secured by the Fourth Restated Agreement and
the other Loan Documents described therein. This note shall become due and
payable, at the option of the holder hereof, on the occurrence of a Default
under the Fourth Restated Agreement or any other Loan Document.
THE WRITTEN CREDIT AGREEMENT, THE LOAN DOCUMENTS DESCRIBED THEREIN AND THIS NOTE
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR,
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
REVOLVING CREDIT NOTE
$2,000,000.00 September 17, 1997
-4-
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
LITIGATION RESOURCES LOONEY & COMPANY
OF AMERICA, INC.
BY:______________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇, BURY & ASSOCIATES, INC. LITIGATION RESOURCES OF
AMERICA-CALIFORNIA, INC.
BY:______________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
LITIGATION RESOURCES OF LITIGATION RESOURCES OF
AMERICA-MIDWEST, INC. AMERICA-NORTHEAST, INC.
BY:______________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
BLOCK COURT REPORTING, INC. BLOCK TAPE TRANSCRIPTION
SERVICES, INC.
BY:______________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇▇ HOUSE, INC.
BY:______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER
Exhibit 4.2-a
Term Note A
TERM NOTE A
$1,275,000.00 September 17, 1997
-1-
This note is the Term Note A issued pursuant to the terms of a Fourth
Amended and Restated Credit Agreement (the "Fourth Restated Agreement") dated of
even date herewith by and among Litigation Resources of America, Inc., Looney &
Company, ▇▇▇▇▇, Bury & Associates, Inc., Litigation Resources of America-
California, Inc., Litigation Resources of America-Midwest, Inc., Litigation
Resources of America-Northeast, Inc., Block Court Reporting, Inc., Block Tape
Transcription Services, Inc., and ▇▇▇▇▇▇ House Inc. (collectively, the
"Makers"), and Texas Commerce Bank National Association (the "Payee"). All
capitalized terms used herein shall have the meanings ascribed to them in the
Fourth Restated Agreement unless the context hereof requires otherwise.
For value received, after date, without grace and in the manner, on the
dates and in the amounts herein stipulated, the Makers, jointly and severally,
promise to pay to the order of the Payee at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, or at such other place in Houston, ▇▇▇▇▇▇ County, Texas,
designated in writing by the Payee or other holder hereof:
1. The principal sum of One Million Two Hundred Seventy-five Thousand and
No/100 ($1,275,000.00) in lawful money of the U.S., which shall be due
and payable monthly in thirty (30) consecutive installments of
$21,250.00, commencing on the first Interest Payment Date in November
1997, and continuing on the same day of each month thereafter, and in
one final installment on the Term Maturity Date, when the balance of
all principal hereon shall be payable in full; and,
2. Interest from the date hereof on the principal amount outstanding
hereunder from time to time, at the lesser of (a) the applicable Term
Loan Contract Rate, or, (b) the Maximum Rate; and, interest shall be
due and payable monthly as it accrues on the outstanding balance of
principal from time to time, with the first installment of accrued
interest to be due and payable on the first Interest Payment Date
after the date hereof and like installments of interest shall become
due and payable on the same day of each consecutive calendar month
thereafter until the Term Maturity Date, at which time all accrued but
unpaid interest shall be due and payable; and,
3. Notwithstanding the foregoing, if at any time the Term Loan Contract
Rate shall exceed the Maximum Rate and thereafter, the Term Loan
Contract Rate shall become less than the Maximum Rate, the rate of
interest payable hereunder shall, at the option of the Payee, be the
Maximum Rate until the cumulative interest received by the Payee or
other holder hereof equals the interest which would have been received
at the Term Loan Contract Rate; and,
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE A
$1,275,000.00 September 17, 1997
-2-
4. All past due principal and interest shall bear interest at the Maximum
Rate from maturity until paid.
5. This note may be prepaid pursuant to the terms of the Fourth Restated
Agreement.
THIS NOTE SHALL BE PAYABLE IN FULL NOT LATER THAN MAY 14, 2000. ON THE TERM
MATURITY DATE, THE MAKERS MUST REPAY THE ENTIRE UNPAID PRINCIPAL BALANCE AND ALL
ACCRUED INTEREST ON THIS NOTE THEN DUE AND PAYABLE. THE PAYEE SHALL BE UNDER NO
OBLIGATION TO REFINANCE THIS NOTE AT THAT TIME. THE MAKERS SHALL THEREFORE BE
REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS THE MAKERS MAY OWN, OR THE MAKERS
SHALL HAVE TO FIND A LENDER WILLING TO LEND THE MAKERS SUCH AMOUNTS AT
PREVAILING MARKET RATES, WHICH MAY BE CONSIDERABLY HIGHER THAN THE INTEREST RATE
ON THIS NOTE.
It is agreed that if there is a Default under the provisions in the Fourth
Restated Agreement, then, in any such event, as the option of the holder hereof,
at any time thereafter, without notice, the unpaid principal of this note and,
all accrued interest, shall at once become due and payable and shall bear
interest at the Maximum Rate from the date of such Default or event. Failure to
exercise any of the options shall not constitute a waiver on the part of holder
hereof of the right to exercise the same at any other time.
It is agreed that if this note be placed in the hands of an attorney for
collection, for the purposes of being sued upon or established in any manner in
any court, then in any of such events, the Makers, all endorsers and guarantors
hereof, promise to pay the Payee's or other holder's reasonable attorneys' fees
and costs of collection, which sums shall become a part of the principal hereof.
The Loan Documents are intended to be performed in accordance with, and
only to the extent permitted by, all applicable Requirements. This note is
subject to the provisions set out in the Fourth Restated Agreement relating to
the payment of interest at the payment of interest at the Maximum Rate and to
payment or collection of interest in excess of the Maximum Amount, all of which
provisions are incorporated herein for all purposes.
This note and the maximum rate of nonusurious interest applicable to the
loan evidenced hereby shall be governed by the laws of the U.S. and the State of
Texas in effect on the date of the loan evidenced hereby, and, to the extent
allowed by law, as now or as may hereafter be in effect, but in any event Tex.
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE A
$1,275,000.00 September 17, 1997
-3-
Rev. Civ. Stat. ▇▇▇. Art. ▇▇▇▇ ▇▇. 15 (which regulates certain revolving credit
loan accounts and revolving triparty accounts) shall not apply to the loan
evidenced hereby.
It is further agreed that any funds at any time in the possession of any
holder hereof which belong to the Makers, any endorser or guarantor hereof, and
any deposits or other sums at any time credited by or due from any holder hereof
to any of such parties shall be held and treated as security for the payment of
this note, and the holder hereof, at the holder's option may, at any time
without notice, and without liability, apply such funds or deposits or any sums
credited by or due from the holder against any sums owing, whether due or not,
under this note and in any manner and in any order of preference which the
holder, in the holder's discretion, chooses.
The Makers, all endorsers and guarantors hereof, and all other persons who
may become liable for all or any part of the obligations represented by this
note, shall be considered as principals as to the making of this note and shall
have joint and several liability. Except as may be set out in the Fourth
Restated Agreement, the Makers, all endorsers and guarantors, severally waive
presentment for payment, protest, notice of protest, and of nonpayment, notices
of intention to accelerate the maturity and notice of acceleration, as to this
note and as to each, every and all installments hereof, and consent to the
renewal or extension of the time of payment hereof and to the release of all or
any part of the security herefor or any person liable hereon upon the terms
deemed by the holder hereof, in the holder's sole discretion, to be adequate.
Any renewal or extension or release of any of such security or person, may be
made without notice to any of such parties and without affecting their
liability.
THE LOAN DOCUMENTS, INCLUDING THIS NOTE, HAVE BEEN PREPARED, ARE BEING
EXECUTED AND DELIVERED, AND ARE INTENDED TO BE PERFORMED IN THE STATE OF TEXAS,
AND THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE
CONFLICTS-OF-LAW RULES AND PRINCIPLES OF THE STATE OF TEXAS, AND THE APPLICABLE
LAWS OF THE U.S. SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THIS NOTE, AND THE LOAN DOCUMENTS.
The payment of this note is secured by the Fourth Restated Agreement and
the other Loan Documents described therein. This note shall become due and
payable, at the option of the holder hereof, on the occurrence of a Default
under the Fourth Restated Agreement or any other Loan Document.
THE WRITTEN CREDIT AGREEMENT, THE LOAN DOCUMENTS DESCRIBED THEREIN AND THIS NOTE
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE A
$1,275,000.00 September 17, 1997
-4-
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
LITIGATION RESOURCES LOONEY & COMPANY
OF AMERICA, INC.
BY: ______________________________ BY: _______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇, BURY & ASSOCIATES, INC. LITIGATION RESOURCES OF
AMERICA-CALIFORNIA, INC.
BY: _______________________________ BY: _______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
LITIGATION RESOURCES OF LITIGATION RESOURCES OF
AMERICA-MIDWEST, INC. AMERICA-NORTHEAST, INC.
BY: _______________________________ BY: _______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
BLOCK COURT REPORTING, INC. BLOCK TAPE TRANSCRIPTION
SERVICES, INC.
BY: _______________________________ BY: _______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇▇ HOUSE, INC.
BY: _______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER
Exhibit 4.2-b
Term Note B
TERM NOTE B
$475,000.00 September 17, 1997
-1-
This note is the Term Note B issued pursuant to the terms of a Fourth
Amended and Restated Credit Agreement (the "Fourth Restated Agreement") dated of
even date herewith by and among Litigation Resources of America, Inc., Looney &
Company, ▇▇▇▇▇, Bury & Associates, Inc., Litigation Resources of
America-California, Inc., Litigation Resources of America-Midwest, Inc.,
Litigation Resources of America-NE, Inc., Block Court Reporting, Inc., Block
Tape Transcription Services, Inc. and ▇▇▇▇▇▇ House Inc. (collectively, the
"Makers"), and Texas Commerce Bank National Association (the "Payee"). All
capitalized terms used herein shall have the meanings ascribed to them in the
Fourth Restated Agreement unless the context hereof requires otherwise.
For value received, after date, without grace and in the manner, on the
dates and in the amounts herein stipulated, the Makers, jointly and severally,
promise to pay to the order of the Payee at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, or at such other place in Houston, ▇▇▇▇▇▇ County, Texas,
designated in writing by the Payee or other holder hereof:
1. The principal sum of Four hundred Seventy-five Thousand and No/100
($475,000.00) in lawful money of the U.S., which shall be due and
payable monthly in consecutive installments of $7,916.67, commencing
on the first Interest Payment Date in December 1997, and continuing on
the same day of each month thereafter, and in one final installment on
the Term Maturity Date, when the balance of all principal hereon shall
be payable in full; and,
2. Interest from the date hereof on the principal amount outstanding
hereunder from time to time, at the lesser of (a) the applicable Term
Loan Contract Rate, or, (b) the Maximum Rate; and, interest shall be
due and payable monthly as it accrues on the outstanding balance of
principal from time to time, with the first installment of accrued
interest to be due and payable on the first Interest Payment Date
after the date hereof and like installments of interest shall become
due and payable on the same day of each consecutive calendar month
thereafter until the Term Maturity Date, at which time all accrued but
unpaid interest shall be due and payable; and,
3. Notwithstanding the foregoing, if at any time the Term Loan Contract
Rate shall exceed the Maximum Rate and thereafter, the Term Loan
Contract Rate shall become less than the Maximum Rate, the rate of
interest payable hereunder shall, at the option of the Payee, be the
Maximum Rate until the cumulative interest received by the Payee or
other holder hereof equals the interest which would have been received
at the Term Loan Contract Rate; and,
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE B
$475,000.00 September 17, 1997
-2-
4. All past due principal and interest shall bear interest at the Maximum
Rate from maturity until paid.
5. This note may be prepaid pursuant to the terms of the Fourth Restated
Agreement.
THIS NOTE SHALL BE PAYABLE IN FULL NOT LATER THAN MAY 14, 2000. ON THE TERM
MATURITY DATE, THE MAKERS MUST REPAY THE ENTIRE UNPAID PRINCIPAL BALANCE AND ALL
ACCRUED INTEREST ON THIS NOTE THEN DUE AND PAYABLE. THE PAYEE SHALL BE UNDER NO
OBLIGATION TO REFINANCE THIS NOTE AT THAT TIME. THE MAKERS SHALL THEREFORE BE
REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS THE MAKERS MAY OWN, OR THE MAKERS
SHALL HAVE TO FIND A LENDER WILLING TO LEND THE MAKERS SUCH AMOUNTS AT
PREVAILING MARKET RATES, WHICH MAY BE CONSIDERABLY HIGHER THAN THE INTEREST RATE
ON THIS NOTE.
It is agreed that if there is a Default under the provisions in the Fourth
Restated Agreement, then, in any such event, at the option of the holder hereof,
at any time thereafter, without notice, the unpaid principal of this note and,
all accrued interest, shall at once become due and payable and shall bear
interest at the Maximum Rate from the date of such Default or event. Failure to
exercise any of the options shall not constitute a waiver on the part of holder
hereof of the right to exercise the same at any other time.
It is agreed that if this note be placed in the hands of an attorney for
collection, for the purposes of being sued upon or established in any manner in
any court, then in any of such events, the Makers, all endorsers and guarantors
hereof, promise to pay the Payee's or other holder's reasonable attorneys' fees
and costs of collection, which sums shall become a part of the principal hereof.
The Loan Documents are intended to be performed in accordance with, and
only to the extent permitted by, all applicable Requirements. This note is
subject to the provisions set out in the Fourth Restated Agreement relating to
the payment of interest at the Maximum Rate and to payment or collection of
interest in excess of the Maximum Amount, all of which provisions are
incorporated herein for all purposes.
This note and the maximum rate of nonusurious interest applicable to the
loan evidenced hereby shall be governed by the laws of the U.S. and the State of
Texas in effect on the date of the loan evidenced hereby, and, to the extent
allowed by law, as now or as may hereafter be in effect, but in any event Tex.
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE B
$475,000.00 September 17, 1997
-3-
Rev. Civ. Stat. ▇▇▇. Art. ▇▇▇▇ ▇▇. 15 (which regulates certain revolving credit
loan accounts and revolving triparty accounts) shall not apply to the loan
evidenced hereby.
It is further agreed that any funds at any time in the possession of any
holder hereof which belong to the Makers, any endorser or guarantor hereof, and
any deposits or other sums at any time credited by or due from any holder hereof
to any of such parties shall be held and treated as security for the payment of
this note, and the holder hereof, at the holder's option may, at any time
without notice, and without liability, apply such funds or deposits or any sums
credited by or due from the holder against any sums owing, whether due or not,
under this note and in any manner and in any order of preference which the
holder, in the holder's discretion, chooses.
The Makers, all endorsers and guarantors hereof, and all other persons who
may become liable for all or any part of the obligations represented by this
note, shall be considered as principals as to the making of this note and shall
have joint and several liability. Except as may be set out in the Fourth
Restated Agreement, the Makers, all endorsers and guarantors, severally waive
presentment for payment, protest, notice of protest, and of nonpayment, notices
of intention to accelerate the maturity and notice of acceleration, as to this
note and as to each, every and all installments hereof, and consent to the
renewal or extension of the time of payment hereof and to the release of all or
any part of the security herefor or any person liable hereon upon the terms
deemed by the holder hereof, in the holder's sole discretion, to be adequate.
Any renewal or extension or release of any of such security or person, may be
made without notice to any of such parties and without affecting their
liability.
THE LOAN DOCUMENTS, INCLUDING THIS NOTE, HAVE BEEN PREPARED, ARE BEING
EXECUTED AND DELIVERED, AND ARE INTENDED TO BE PERFORMED IN THE STATE OF TEXAS,
AND THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE
CONFLICTS-OF-LAW RULES AND PRINCIPLES OF THE STATE OF TEXAS, AND THE APPLICABLE
LAWS OF THE U.S. SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THIS NOTE, AND THE LOAN DOCUMENTS.
The payment of this note is secured by the Fourth Restated Agreement and
the other Loan Documents described therein. This note shall become due and
payable, at the option of the holder hereof, on the occurrence of a Default
under the Fourth Restated Agreement or any other Loan Document.
THE WRITTEN CREDIT AGREEMENT, THE LOAN DOCUMENTS DESCRIBED THEREIN AND THIS NOTE
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE B
$475,000.00 September 17, 1997
-4-
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
LITIGATION RESOURCES LOONEY & COMPANY
OF AMERICA, INC.
BY: ______________________________ BY: _______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇, BURY & ASSOCIATES, INC. LITIGATION RESOURCES OF
AMERICA-CALIFORNIA, INC.
BY: _______________________________ BY: _______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
LITIGATION RESOURCES OF LITIGATION RESOURCES OF
AMERICA-MIDWEST, INC. AMERICA-NORTHEAST, INC.
BY: _______________________________ BY: _______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
BLOCK COURT REPORTING, INC. BLOCK TAPE TRANSCRIPTION
SERVICES, INC.
BY: _______________________________ BY: _______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇▇ HOUSE, INC.
BY: _______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER
Exhibit 4.2-c
Term Note C
TERM NOTE C
$2,250,000.00 September 17, 1997
-1-
This note is the Term Note C issued pursuant to the terms of a Fourth
Amended and Restated Credit Agreement (the "Fourth Restated Agreement") dated of
even date herewith by and among Litigation Resources of America, Inc., Looney &
Company, ▇▇▇▇▇, Bury & Associates, Inc., Litigation Resources of
America-California, Inc., Litigation Resources of America-Midwest, Inc.,
Litigation Resources of America-NE, Inc., Block Court Reporting, Inc., Block
Tape Transcription Services, Inc. and ▇▇▇▇▇▇ House, Inc. (collectively,
the "Makers"), and Texas Commerce Bank National Association (the "Payee"). All
capitalized terms used herein shall have the meanings ascribed to them in the
Fourth Restated Agreement unless the context hereof requires otherwise.
For value received, after date, without grace and in the manner, on the
dates and in the amounts herein stipulated, the Makers, jointly and severally,
promise to pay to the order of the Payee at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, or at such other place in Houston, ▇▇▇▇▇▇ County, Texas,
designated in writing by the Payee or other holder hereof:
1. The principal sum of Two Million Two Hundred Fifty Thousand and No/100
($2,250,000.00) in lawful money of the U.S., which shall be due and
payable monthly in consecutive installments of $37,500.00, commencing
on the first Interest Payment Date in March 1998, and continuing on
the same day of each month thereafter, and in one final installment on
the Term Maturity Date, when the entire unpaid balance of principal of
this note shall be payable in full; and,
2. Interest from the date hereof on the principal amount outstanding
hereunder from time to time, at the lesser of (a) the applicable Term
Loan Contract Rate, or, (b) the Maximum Rate; and, interest shall be
due and payable monthly as it accrues on the outstanding balance of
principal from time to time, with the first installment of accrued
interest to be due and payable on the first Interest Payment Date
after the date hereof and like installments of interest shall become
due and payable on the same day of each consecutive calendar month
thereafter until the Term Maturity Date, at which time all accrued but
unpaid interest shall be due and payable; and,
3. Notwithstanding the foregoing, if at any time the Term Loan Contract
Rate shall exceed the Maximum Rate and thereafter, the Term Loan
Contract Rate shall become less than the Maximum Rate, the rate of
interest payable hereunder shall, at the option of the Payee, be the
Maximum Rate until the cumulative interest received by the Payee or
other holder hereof equals the interest which would have been received
at the Term Loan Contract Rate; and,
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE C
$2,250,000.00 September 17, 1997
-2-
4. All past due principal and interest shall bear interest at the Maximum
Rate from maturity until paid.
5. This note may be prepaid pursuant to the terms of the Fourth Restated
Agreement.
THIS NOTE SHALL BE PAYABLE IN FULL NOT LATER THAN MAY 14, 2000. ON THE TERM
MATURITY DATE, THE MAKERS MUST REPAY THE ENTIRE UNPAID PRINCIPAL BALANCE AND ALL
ACCRUED INTEREST ON THIS NOTE THEN DUE AND PAYABLE. THE PAYEE SHALL BE UNDER NO
OBLIGATION TO REFINANCE THIS NOTE AT THAT TIME. THE MAKERS SHALL THEREFORE BE
REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS THE MAKERS MAY OWN, OR THE MAKERS
SHALL HAVE TO FIND A LENDER WILLING TO LEND THE MAKERS SUCH AMOUNTS AT
PREVAILING MARKET RATES, WHICH MAY BE CONSIDERABLY HIGHER THAN THE INTEREST RATE
ON THIS NOTE.
It is agreed that if there is a Default under the provisions in the Fourth
Restated Agreement, then, in any such event, as the option of the holder hereof,
at any time thereafter, without notice, the unpaid principal of this note and,
all accrued interest, shall at once become due and payable and shall bear
interest at the Maximum Rate from the date of such Default or event. Failure to
exercise any of the options shall not constitute a waiver on the part of holder
hereof of the right to exercise the same at any other time.
It is agreed that if this note be placed in the hands of an attorney for
collection, for the purposes of being sued upon or established in any manner in
any court, then in any of such events, the Makers, all endorsers and guarantors
hereof, promise to pay the Payee's or other holder's reasonable attorneys' fees
and costs of collection, which sums shall become a part of the principal hereof.
The Loan Documents are intended to be performed in accordance with, and
only to the extent permitted by, all applicable Requirements. This note is
subject to the provisions set out in the Fourth Restated Agreement relating to
the payment of interest at the Maximum Rate and to payment or collection of
interest in excess of the Maximum Amount, all of which provisions are
incorporated herein for all purposes.
This note and the maximum rate of nonusurious interest applicable to the
loan evidenced hereby shall be governed by the laws of the U.S. and the State of
Texas in effect on the date of the loan evidenced hereby, and, to the extent
allowed by law, as now or as may hereafter be in effect, but in any event Tex.
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE C
$2,250,000.00 September 17, 1997
-3-
Rev. Civ. Stat. ▇▇▇. Art. ▇▇▇▇ ▇▇. 15 (which regulates certain revolving credit
loan accounts and revolving triparty accounts) shall not apply to the loan
evidenced hereby.
It is further agreed that any funds at any time in the possession of any
holder hereof which belong to the Makers, any endorser or guarantor hereof, and
any deposits or other sums at any time credited by or due from any holder hereof
to any of such parties shall be held and treated as security for the payment of
this note, and the holder hereof, at the holder's option may, at any time
without notice, and without liability, apply such funds or deposits or any sums
credited by or due from the holder against any sums owing, whether due or not,
under this note and in any manner and in any order of preference which the
holder, in the holder's discretion, chooses.
The Makers, all endorsers and guarantors hereof, and all other persons who
may become liable for all or any part of the obligations represented by this
note, shall be considered as principals as to the making of this note and shall
have joint and several liability. Except as may be set out in the Fourth
Restated Agreement, the Makers, all endorsers and guarantors, severally waive
presentment for payment, protest, notice of protest, and of nonpayment, notices
of intention to accelerate the maturity and notice of acceleration, as to this
note and as to each, every and all installments hereof, and consent to the
renewal or extension of the time of payment hereof and to the release of all or
any part of the security herefor or any person liable hereon upon the terms
deemed by the holder hereof, in the holder's sole discretion, to be adequate.
Any renewal or extension or release of any of such security or person, may be
made without notice to any of such parties and without affecting their
liability.
THE LOAN DOCUMENTS, INCLUDING THIS NOTE, HAVE BEEN PREPARED, ARE BEING
EXECUTED AND DELIVERED, AND ARE INTENDED TO BE PERFORMED IN THE STATE OF TEXAS,
AND THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE
CONFLICTS-OF-LAW RULES AND PRINCIPLES OF THE STATE OF TEXAS, AND THE APPLICABLE
LAWS OF THE U.S. SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THIS NOTE, AND THE LOAN DOCUMENTS.
The payment of this note is secured by the Fourth Restated Agreement and
the other Loan Documents described therein. This note shall become due and
payable, at the option of the holder hereof, on the occurrence of a Default
under the Fourth Restated Agreement or any other Loan Document.
THE WRITTEN CREDIT AGREEMENT, THE LOAN DOCUMENTS DESCRIBED THEREIN AND THIS
NOTE REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVI-
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE C
$2,250,000.00 September 17, 1997
-4-
DENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES,
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
LITIGATION RESOURCES LOONEY & COMPANY
OF AMERICA, INC.
BY:_____________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇, BURY & ASSOCIATES, INC. LITIGATION RESOURCES OF
AMERICA-CALIFORNIA, INC.
BY:_____________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
LITIGATION RESOURCES OF LITIGATION RESOURCES OF
AMERICA-MIDWEST, INC. AMERICA-NORTHEAST, INC.
BY:_____________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
BLOCK COURT REPORTING, INC. BLOCK TAPE TRANSCRIPTION
SERVICES, INC.
BY:_____________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇▇ HOUSE, INC.
BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER
Exhibit 4.2-d
Term Note D
TERM NOTE D
$2,550,000.00 September 17, 1997
-1-
This note is the Term Note D issued pursuant to the terms of a Fourth
Amended and Restated Credit Agreement (the "Fourth Restated Agreement") dated of
even date herewith by and among Litigation Resources of America, Inc., Looney &
Company, ▇▇▇▇▇, Bury & Associates, Inc., Litigation Resources of
America-California, Inc., Litigation Resources of America-Midwest, Inc.,
Litigation Resources of America-NE, Inc., Block Court Reporting, Inc., Block
Tape Transcription Services, Inc. and ▇▇▇▇▇▇ House, Inc. (collectively,
the "Makers"), and Texas Commerce Bank National Association (the "Payee"). All
capitalized terms used herein shall have the meanings ascribed to them in the
Fourth Restated Agreement unless the context hereof requires otherwise.
For value received, after date, without grace and in the manner, on the
dates and in the amounts herein stipulated, the Makers, jointly and severally,
promise to pay to the order of the Payee at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, or at such other place in Houston, ▇▇▇▇▇▇ County, Texas,
designated in writing by the Payee or other holder hereof:
1. The principal sum of Two Million Five Hundred Fifty Thousand and
No/100 ($2,550,000.00) in lawful money of the U.S., which shall be due
and payable monthly in consecutive installments of $42,500.00,
commencing on the first Interest Payment Date in April 1998, and
continuing on the same day of each month thereafter, and in one final
installment on the Term Maturity Date, when the entire unpaid balance
of principal of this note shall be payable in full; and,
2. Interest from the date hereof on the principal amount outstanding
hereunder from time to time, at the lesser of (a) the applicable Term
Loan Contract Rate, or, (b) the Maximum Rate; and, interest shall be
due and payable monthly as it accrues on the outstanding balance of
principal from time to time, with the first installment of accrued
interest to be due and payable on the first Interest Payment Date
after the date hereof and like installments of interest shall become
due and payable on the same day of each consecutive calendar month
thereafter until the Term Maturity Date, at which time all accrued but
unpaid interest shall be due and payable; and,
3. Notwithstanding the foregoing, if at any time the Term Loan Contract
Rate shall exceed the Maximum Rate and thereafter, the Term Loan
Contract Rate shall become less than the Maximum Rate, the rate of
interest payable hereunder shall, at the option of the Payee, be the
Maximum Rate until the cumulative interest received by the Payee or
other holder hereof equals the interest which would have been received
at the Term Loan Contract Rate; and,
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE D
$2,550,000.00 September 17, 1997
-2-
4. All past due principal and interest shall bear interest at the Maximum
Rate from maturity until paid.
5. This note may be prepaid pursuant to the terms of the Fourth Restated
Agreement.
THIS NOTE SHALL BE PAYABLE IN FULL NOT LATER THAN MAY 14, 2000. ON THE TERM
MATURITY DATE, THE MAKERS MUST REPAY THE ENTIRE UNPAID PRINCIPAL BALANCE AND ALL
ACCRUED INTEREST ON THIS NOTE THEN DUE AND PAYABLE. THE PAYEE SHALL BE UNDER NO
OBLIGATION TO REFINANCE THIS NOTE AT THAT TIME. THE MAKERS SHALL THEREFORE BE
REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS THE MAKERS MAY OWN, OR THE MAKERS
SHALL HAVE TO FIND A LENDER WILLING TO LEND THE MAKERS SUCH AMOUNTS AT
PREVAILING MARKET RATES, WHICH MAY BE CONSIDERABLY HIGHER THAN THE INTEREST RATE
ON THIS NOTE.
It is agreed that if there is a Default under the provisions in the Fourth
Restated Agreement, then, in any such event, at the option of the holder hereof,
at any time thereafter, without notice, the unpaid principal of this note and,
all accrued interest, shall at once become due and payable and shall bear
interest at the Maximum Rate from the date of such Default or event. Failure to
exercise any of the options shall not constitute a waiver on the part of holder
hereof of the right to exercise the same at any other time.
It is agreed that if this note be placed in the hands of an attorney for
collection, for the purposes of being sued upon or established in any manner in
any court, then in any of such events, the Makers, all endorsers and guarantors
hereof, promise to pay the Payee's or other holder's reasonable attorneys' fees
and costs of collection, which sums shall become a part of the principal hereof.
The Loan Documents are intended to be performed in accordance with, and
only to the extent permitted by, all applicable Requirements. This note is
subject to the provisions set out in the Fourth Restated Agreement relating to
the payment of interest at the Maximum Rate and to payment or collection of
interest in excess of the Maximum Amount, all of which provisions are
incorporated herein for all purposes.
This note and the maximum rate of nonusurious interest applicable to the
loan evidenced hereby shall be governed by the laws of the U.S. and the State of
Texas in effect on the date of the loan evidenced hereby, and, to the extent
allowed by law, as now or as may hereafter be in effect, but in any event Tex.
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE D
$2,550,000.00 September 17, 1997
-3-
Rev. Civ. Stat. ▇▇▇. Art. ▇▇▇▇ ▇▇. 15 (which regulates certain revolving credit
loan accounts and revolving triparty accounts) shall not apply to the loan
evidenced hereby.
It is further agreed that any funds at any time in the possession of any
holder hereof which belong to the Makers, any endorser or guarantor hereof, and
any deposits or other sums at any time credited by or due from any holder hereof
to any of such parties shall be held and treated as security for the payment of
this note, and the holder hereof, at the holder's option may, at any time
without notice, and without liability, apply such funds or deposits or any sums
credited by or due from the holder against any sums owing, whether due or not,
under this note and in any manner and in any order of preference which the
holder, in the holder's discretion, chooses.
The Makers, all endorsers and guarantors hereof, and all other persons who
may become liable for all or any part of the obligations represented by this
note, shall be considered as principals as to the making of this note and shall
have joint and several liability. Except as may be set out in the Fourth
Restated Agreement, the Makers, all endorsers and guarantors, severally waive
presentment for payment, protest, notice of protest, and of nonpayment, notices
of intention to accelerate the maturity and notice of acceleration, as to this
note and as to each, every and all installments hereof, and consent to the
renewal or extension of the time of payment hereof and to the release of all or
any part of the security herefor or any person liable hereon upon the terms
deemed by the holder hereof, in the holder's sole discretion, to be adequate.
Any renewal or extension or release of any of such security or person, may be
made without notice to any of such parties and without affecting their
liability.
THE LOAN DOCUMENTS, INCLUDING THIS NOTE, HAVE BEEN PREPARED, ARE BEING
EXECUTED AND DELIVERED, AND ARE INTENDED TO BE PERFORMED IN THE STATE OF TEXAS,
AND THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE
CONFLICTS-OF-LAW RULES AND PRINCIPLES OF THE STATE OF TEXAS, AND THE APPLICABLE
LAWS OF THE U.S. SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THIS NOTE, AND THE LOAN DOCUMENTS.
The payment of this note is secured by the Fourth Restated Agreement and
the other Loan Documents described therein. This note shall become due and
payable, at the option of the holder hereof, on the occurrence of a Default
under the Fourth Restated Agreement or any other Loan Document.
THE WRITTEN CREDIT AGREEMENT, THE LOAN DOCUMENTS DESCRIBED THEREIN AND THIS
NOTE REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVI-
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE D
$2,550,000.00 September 17, 1997
-4-
DENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES,
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
LITIGATION RESOURCES LOONEY & COMPANY
OF AMERICA, INC.
BY:_____________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇, BURY & ASSOCIATES, INC. LITIGATION RESOURCES OF
AMERICA-CALIFORNIA, INC.
BY:_____________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
LITIGATION RESOURCES OF LITIGATION RESOURCES OF
AMERICA-MIDWEST, INC. AMERICA-NORTHEAST, INC.
BY:_____________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
BLOCK COURT REPORTING, INC. BLOCK TAPE TRANSCRIPTION
SERVICES, INC.
BY:_____________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇▇ HOUSE, INC.
BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER
Exhibit 4.2-e
Term Note E
TERM NOTE E
$7,450,000.00 September 17, 1997
-1-
This note is the Term Note E issued pursuant to the terms of a Fourth
Amended and Restated Credit Agreement (the "Fourth Restated Agreement") dated of
even date herewith by and among Litigation Resources of America, Inc., Looney &
Company, ▇▇▇▇▇, Bury & Associates, Inc., Litigation Resources of America-NE,
Inc., Block Court Reporting, Inc., Block Tape Transcription Services, Inc. and
▇▇▇▇▇▇ House, Inc. (collectively, the "Makers"), and Texas Commerce Bank
National Association (the "Payee"). All capitalized terms used herein shall have
the meanings ascribed to them in the Fourth Restated Agreement unless the
context hereof requires otherwise.
For value received, after date, without grace and in the manner, on the
dates and in the amounts herein stipulated, the Makers, jointly and severally,
promise to pay to the order of the Payee at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, or at such other place in Houston, ▇▇▇▇▇▇ County, Texas,
designated in writing by the Payee or other holder hereof:
1. The principal sum of Seven Million Four Hundred Fifty Thousand and
No/100 ($7,450,000.00) in lawful money of the U.S., which shall be due
and payable monthly in consecutive installments of $124,166.67,
commencing on the first Interest Payment Date in April 1998, and
continuing on the same day of each month thereafter, and in one final
installment on the Term Maturity Date, when the entire unpaid balance
of principal of this note shall be payable in full; and
2. Interest from the date hereof on the principal amount outstanding
hereunder from time to time, at the lesser of (a) the applicable Term
Loan Contract Rate, or, (b) the Maximum Rate; and, interest shall be
due and payable monthly as it accrues on the outstanding balance of
principal from time to time, with the first installment of accrued
interest to be due and payable on the first Interest Payment Date
after the date hereof and like installments of interest shall become
due and payable on the same day of each consecutive calendar month
thereafter until the Term Maturity Date, at which time all accrued but
unpaid interest shall be due and payable; and,
3. Notwithstanding the foregoing, if at any time the Term Loan Contract
Rate shall exceed the Maximum Rate and thereafter, the Term Loan
Contract Rate shall become less than the Maximum Rate, the rate of
interest payable hereunder shall, at the option of the Payee, be the
Maximum Rate until the cumulative interest received by the Payee or
other holder hereof equals the interest which would have been received
at the Term Loan Contract Rate; and,
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE E
$7,450,000.00 September 17, 1997
-2-
4. All past due principal and interest shall bear interest at the Maximum
Rate from maturity until paid.
5. This note may be prepaid pursuant to the terms of the Fourth Restated
Agreement.
THIS NOTE SHALL BE PAYABLE IN FULL NOT LATER THAN MAY 14, 2000. ON THE TERM
MATURITY DATE, THE MAKERS MUST REPAY THE ENTIRE UNPAID PRINCIPAL BALANCE AND ALL
ACCRUED INTEREST ON THIS NOTE THEN DUE AND PAYABLE. THE PAYEE SHALL BE UNDER NO
OBLIGATION TO REFINANCE THIS NOTE AT THAT TIME. THE MAKERS SHALL THEREFORE BE
REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS THE MAKERS MAY OWN, OR THE MAKERS
SHALL HAVE TO FIND A LENDER WILLING TO LEND THE MAKERS SUCH AMOUNTS AT
PREVAILING MARKET RATES, WHICH MAY BE CONSIDERABLY HIGHER THAN THE INTEREST RATE
ON THIS NOTE.
It is agreed that if there is a Default under the provisions in Fourth
Restated Agreement, then, in any such event, at the option of the holder hereof,
at any time thereafter, without notice, the unpaid principal of this note and,
all accrued interest, shall at once become due and payable and shall bear
interest at the Maximum Rate from the date of such Default or event. Failure to
exercise any of the options shall not constitute a waiver on the part of holder
of the right to exercise the same at any other time.
It is agreed that if this note be placed in the hands of an attorney for
collection, for the purposes of being sued upon or established in any manner in
any court, then in any of such events, the Makers, all endorsers and guarantors
hereof, promise to pay the Payee's or other holder's reasonable attorneys' fees
and costs of collection, which sums shall become a part of the principal hereof.
The Loan Documents are intended to be performed in accordance with, and
only to the extent permitted by, all applicable Requirements. This note is
subject to the provisions set out in the Fourth Restated Agreement relating to
the payment of interest at the Maximum Rate and to payment or collection of
interest in excess of the Maximum Amount, all of which provisions are
incorporated herein for all purposes.
This note and the maximum rate of nonusurious interest applicable to the
loan evidenced hereby shall be governed by the laws of the U.S. and the State of
Texas in effect on the date of the loan evidenced hereby, and, to the extent
allowed by law, as now or as may hereafter be in effect, but in any event Tex.
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE E
$7,450,000.00 September 17, 1997
-3-
Rev. Civ. Stat. ▇▇▇. Art. ▇▇▇▇ ▇▇. 15 (which regulates certain revolving credit
loan accounts and revolving triparty accounts) shall not apply to the loan
evidenced hereby.
It is further agreed that any funds at any time in the possession of any
holder hereof which belong to the Makers, any endorser or guarantor hereof, and
any deposits or other sums at any time credited by or due from any holder hereof
to any of such parties shall be held and treated as security for the payment of
this note, and the holder hereof, at the holder's option may, at any time
without notice, and without liability, apply such funds or deposits or any sums
credited by or due from the holder against any sums owing, whether due or not,
under this note and in any manner and in any order of preference which the
holder, in the holder's discretion, chooses.
The Makers, all endorsers and guarantors hereof, and all other persons who
may become liable for all or any part of the obligations represented by this
note, shall be considered as principals as to the making of this note and shall
have joint and several liability. Except as may be set out in the Fourth
Restated Agreement, the Makers, all endorsers and guarantors, severally waive
presentment for payment, protest, notice of protest, and of nonpayment, notices
of intention to accelerate the maturity and notice of acceleration, as to this
note and as to each, every and all installments hereof, and consent to the
renewal or extension of the time of payment hereof and to the release of all or
any part of the security herefor or any person liable hereon upon the terms
deemed by the holder hereof, in the holder's sole discretion, to be adequate.
Any renewal or extension or release of any of such security or person, may be
made without notice to any of such parties and without affecting their
liability.
THE LOAN DOCUMENTS, INCLUDING THIS NOTE, HAVE BEEN PREPARED, ARE BEING
EXECUTED AND DELIVERED, AND ARE INTENDED TO BE PERFORMED IN THE STATE OF TEXAS,
AND THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE
CONFLICTS-OF-LAW RULES AND PRINCIPLES OF THE STATE OF TEXAS, AND THE APPLICABLE
LAWS OF THE U.S. SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THIS NOTE, AND THE LOAN DOCUMENTS.
The payment of this note is secured by the Fourth Restated Agreement and
the other Loan Documents described therein. This note shall become due and
payable, at the option of the holder hereof, on the occurrence of a Default
under the Fourth Restated Agreement or any other Loan Document.
THE WRITTEN CREDIT AGREEMENT, THE LOAN DOCUMENTS DESCRIBED THEREIN AND THIS
NOTE REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
_________________________ _________________________ _________________________
Signed for Identification Signed for Identification Signed for Identification
TERM NOTE E
$7,450,000.00 September 17, 1997
-4-
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO WRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
LITIGATION RESOURCES LOONEY & COMPANY
OF AMERICA, INC.
BY:___________________________ BY:____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇, BURY & ASSOCIATES, INC. LITIGATION RESOURCES OF
AMERICA-CALIFORNIA, INC.
BY:___________________________ BY:___________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
LITIGATION RESOURCES OF LITIGATION RESOURCES OF
AMERICA-MIDWEST, INC. AMERICA-NORTHEAST, INC.
BY:___________________________ BY:___________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
BLOCK COURT REPORTING, INC. BLOCK TAPE TRANSCRIPTION
SERVICES, INC.
BY:___________________________ BY:___________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇▇ HOUSE, INC.
BY:___________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER
Exhibit 6.1.A
Security Agreement
SECURITY AGREEMENT
This Security Agreement (the "Security Agreement") is executed and
delivered effective September 17, 1997, by ▇▇▇▇▇▇ HOUSE, INC. (the "Debtor"),
whose address is ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, in
favor of TEXAS COMMERCE BANK NATIONAL ASSOCIATION (the "Secured Party") whose
address is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, pursuant
to the terms of a Fourth Amended and Restated Credit Agreement (the "Fourth
Restated Agreement"), dated September 17, 1997, by and among LITIGATION
RESOURCES OF AMERICA, INC., LOONEY & COMPANY, ▇▇▇▇▇, BURY & ASSOCIATES, INC.,
LITIGATION RESOURCES OF AMERICA-CALIFORNIA, INC., LITIGATION RESOURCES OF
AMERICA-MIDWEST, INC., LITIGATION RESOURCES OF AMERICA-NORTHEAST, INC., BLOCK
COURT REPORTING, INC., BLOCK TAPE TRANSCRIPTION SERVICES, INC. and the Debtor
(collectively, the "Borrowers") and the Secured Party. Under and pursuant to the
terms of the Third Restated Agreement, the Secured Party has agreed to make
Loans to the Borrowers. All capitalized terms used herein shall have the same
meanings ascribed to them in the Third Restated Agreement unless otherwise
specifically defined in this Security Agreement.
ARTICLE I
SECURITY INTERESTS
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In consideration of the premises, for value received, for other good, fair
and valuable considerations, the receipt, adequacy and reasonable equivalency
of which are acknowledged, and for other valuable consideration, the Debtor
grants to the Secured Party the security interests (the "Security Interests")
herein set forth and agrees with the Secured Party as set out herein. The
Secured Party has and shall continue to have Security Interests in the following
property of the Debtor (collectively, the "Collateral").
1.1 Accounts. All presently existing or hereafter acquired or created
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accounts, accounts receivable, contract rights, notes, drafts, acceptances,
chattel paper, leases and writings evidencing a monetary obligation or a
security interest in or a lease of goods, all rights to receive the payment of
money or other considerations under present or future contracts (including
without limitation, all rights to receive payments under presently existing or
hereafter acquired or created letters of credit) or by virtue of merchandise
sold or leased, services rendered, loans and advances made or other
considerations given, whether or not earned by performance and whether or not
evidenced by or set forth in or arising out of any present or future chattel
paper, note, draft, lease, acceptance, writing, bond, insurance policy,
instrument, document or general intangible, and all extensions and renewals of
any thereof, all rights under or arising out of present or future contracts,
agreements or general intangibles, including all payments under licensing
agreements or arrangements, all right, title and interest in merchandise which
gave rise to any or all of the foregoing, including all goods, all claims or
causes of action now existing or hereafter arising in connection with or under
any agreement or document or, by operation of law or otherwise, all collateral
security of any kind (including real property mortgages) given by any Person
with respect to any of the foregoing, including in any event, all accounts,
instruments and chattel paper within the meaning of the UCC in effect in any
applicable jurisdiction (any and all of the foregoing being the "Accounts").
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1.2 Inventory. All of Debtor's inventory in all of its forms, wherever
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located, now or hereafter existing and whether acquired by purchase, merger or
otherwise and all raw materials and work in process therefor, all finished goods
thereof and all materials used or consumed in the manufacture, packing,
shipping, advertising, selling, leasing or production thereof, including in any
event all inventory within the meaning of the UCC, goods in which the Debtor has
an interest in mass or a joint or other interest or right of any kind and goods
which are returned to or repossessed by the Debtor, and all accessions thereto
and products and proceeds thereof (any and all inventory, accessions and
products being the "Inventory"), and the Debtor warrants, covenants and agrees
that the Debtor owns, free and clear of any liens or encumbrances, all real
property on which Inventory is or be will located, or the Debtor will obtain
subordination agreements from the owners of all such real property.
1.3 Equipment. All equipment, machinery, chattels, tools, parts, machine
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tools, furniture, furnishings, fixtures and supplies of every nature, presently
existing or hereafter acquired or created and wherever located, all accessions,
additions, substitutions and improvements thereto and all replacements, products
and proceeds of the foregoing (including, without limitation, proceeds of
insurance policies insuring any of the foregoing) and all parts and equipment
which may be attached to or which are necessary for the operation and use of the
personal property, whether or not the same shall be deemed to be affixed to real
property, and all rights under or arising out of present or future contracts
relating to the foregoing and in any event, all equipment within the meaning of
the UCC.
1.4 General Intangibles. All general intangibles of every nature, whether
-------------------
presently existing or hereafter acquired or created, including without
limitation all books, correspondence, credit files, records, computer programs,
computer tapes, cards and other papers and documents in the possession or
control of the Debtor, claims (including without limitation all claims for
income tax and other refunds), choses in action, judgment, patents, trademarks,
licensing agreements, royalty payments, copyrights, service names, service
marks, logos, goodwill, all amounts received as an award in or settlement of a
suit in damages, deposit accounts, interests in joint ventures or general or
limited partnerships and in any event, all general intangibles within the
meaning of the UCC.
1.5 Contract Rights. All rights now owned or hereafter acquired or
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created, to payment under contracts not yet earned by performance and not
evidenced by an Account.
1.6 Documents. All documents, instruments and chattel paper of every
---------
nature, whether now existing or hereafter acquired or created, and in any event
all documents within the meaning of the UCC.
1.7 Deposits. Any and all money, property, accounts, securities,
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documents, chattel paper, claims, demands, instruments, items or deposits of the
Debtor, now held or hereafter coming within the Secured Party's custody or
control, including, by way of example and not of limitation, all certificates of
deposit and other depository accounts, whether same have matured or the exercise
of the Secured Party's rights results in loss of interest or other penalty on
the deposits.
1.8 Proceeds. The proceeds, in cash or otherwise, of the Collateral
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described in the foregoing clauses, including, without limitation, the proceeds
of any sale or other disposition of the Collateral and all insurance proceeds of
any kind (whether or not the Secured Party is the loss payee under the
applicable insurance policy) paid at any time in connection with the Collateral,
all liens (whether
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possessory, contractual, statutory or otherwise) with respect to the Collateral,
and all rights, remedies and claims (whether in the nature of indemnities,
warranties, guaranties or otherwise), of the Debtor with respect to the
Collateral, in any case whether now existing or hereafter at any time or from
time to time arising.
1.9 Indebtedness Secured. The Security Interests are granted to secure
--------------------
the Obligations defined in the Third Restated Agreement and the following:
A. All funds hereafter advanced by the Secured Party to or for the
benefit of any of the Borrowers or to or for the benefit of the Debtor
as contemplated by any covenant or provision contained in this
Security Agreement, regardless of whether such indebtedness,
obligations and liabilities are direct, indirect, fixed, contingent,
joint, several, or joint and several; and,
B. All reasonable costs incurred by the Secured Party, including, but
expressly not limited to, attorneys' fees, court costs and other
similar costs, to obtain, preserve, perfect and enforce the Security
Interests, and costs incurred to maintain, preserve, collect and sell
the Collateral, or any part thereof, including but not limited to,
taxes, assessments, insurance premiums, repairs, rent, storage
charges, advertising costs, brokerage fees and expenses of sale; and,
C. All renewals, extensions and modifications of the Obligations, or any
part thereof; and,
D. Any judgment entered by a court of competent jurisdiction enforcing or
requiring payment any of the items described above.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 Owner of Collateral. Except for the Security Interests, the Debtor
-------------------
is, and as to the Collateral acquired after the date hereof which is included
within the Security Interests, the Debtor will be, the owner of the Collateral
free from all adverse claims, security interests and encumbrances except for
Permitted Liens.
2.2 Other Liens. There is no financing statement now on file in any
-----------
public office covering any part of the Collateral, and so long as any amount
remains unpaid on the Obligations, the Debtor will not execute and there will
not be on file in any public office, any financing statement or statements
except the Financing Statements filed or to be filed in respect to the Security
Interests.
2.3 Accuracy of Statements. Subject to any limitation stated therein or
----------------------
in connection therewith, all information furnished to the Secured Party
concerning the Collateral and proceeds thereof, or otherwise for the purpose of
obtaining credit or an extension of credit, is or will be at the time the same
is furnished, accurate and correct in all material respects.
2.4 Use of Collateral. The Collateral will be used by the Debtor for
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business use.
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2.5 Place of Business. The address of the Debtor designated at the
-----------------
beginning of this Security Agreement is Debtor's principal place of business and
chief executive office.
ARTICLE III
PROVISIONS REGARDING ACCOUNTS
-----------------------------
The following provisions shall apply to all Accounts included within the
Collateral:
3.1 Receipt of Accounts. Upon the occurrence of an Event of Default, the
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Secured Party shall have the right in the Secured Party's name or in the name of
the Debtor to demand, collect, receive, receipt for, ▇▇▇ for, compound and give
acquittal for, any and all amounts due or to become due on the Accounts and to
endorse the name of the Debtor on all instruments given in payment or part
payment thereof. The Secured Party may, in the Secured Party's reasonable
business judgment, file any claim or take any other action or proceeding which
the Secured Party deems necessary or appropriate to protect, preserve and
realize upon the Security Interests. In order to assure collection of the
Accounts, the Secured Party may notify the post office authorities to change the
address for delivery of mail addressed to the Debtor to the address as the
Secured Party may designate, and to open and dispose of the mail and receive the
collections of the Accounts included in the Security Interests.
3.2 Further Assurances. The Debtor will, from time to time, execute
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further instruments and do such further acts as the Secured Party may reasonably
require by way of further assurance to the Secured Party including, but not
limited to, an assignment or other form of identification in forms required by
the Secured Party of all Accounts, together with other evidence of the existence
and identity of the Accounts. The Debtor will ▇▇▇▇ Debtor's books and records to
reflect the assignment of the Accounts which are included within the Security
Interests.
ARTICLE IV
COVENANTS
---------
4.1 Location of Collateral. All tangible Collateral will be located at
----------------------
Debtor's principal place of business. Except as herein provided, the Debtor will
not remove the Collateral from above location without the written consent of the
Secured Party. The Debtor agrees to notify the Secured Party promptly of any
change in Debtor's principal place of business and chief executive office.
4.2 Landlord's Lien. The Debtor covenants and agrees that the Debtor
---------------
owns, free and clear of any liens or encumbrances, all real property on which
any tangible Collateral is or be will located or, to the extent the tangible
Collateral is or will be located on real property owned by others, the Debtor
will furnish to the Secured Party a landlord's lien waiver of all liens with
respect to any Collateral covered by this Security Agreement, the landlord's
lien waiver to be in the form acceptable to the Secured Party.
4.3 Financing Statements. The Debtor agrees to execute and deliver all
--------------------
Financing Statements, or amendments thereof or supplements thereto, or other
instruments as the Secured Party may from time to time require in order to
comply with the UCC (or other applicable state law of the jurisdiction where any
of the Collateral is located) and to preserve and protect the Security
Interests. The Debtor authorizes the Secured Party to file, in jurisdictions
where this authorization will be given effect, a
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Financing Statement signed only by the Secured Party covering the Collateral. It
is further stipulated in this regard that the Secured Party may also at any time
or times sign any counterpart of this Security Agreement signed by the Debtor
and file same as a Financing Statement if the Secured Party shall elect to do
so.
4.4 Expenses. The Debtor will pay to the Secured Party, on demand, all
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reasonable expenses and expenditures, including reasonable attorney's fees and
legal expenses, incurred or paid by the Secured Party in exercising or
protecting the Security Interests, and the Secured Party's rights and remedies
under this Security Agreement. The Debtor agrees to pay interest on such amounts
at the Maximum Rate.
4.5 Curing of Default. Upon the occurrence of an Event of Default, the
-----------------
Secured Party may, at the Secured Party's option, but without obligation to the
Debtor, discharge taxes, liens or security interests or other encumbrances at
any time levied or placed upon the Collateral, and may place and pay for
insurance thereon, or pay for the repair, improvement, maintenance and
preservation of the Collateral and pay any filing or recording fees necessary
to preserve and protect the Security Interests. The Debtor agrees to reimburse
the Secured Party on demand for any payment made or any reasonable expense
incurred by the Secured Party pursuant to the foregoing authorization, and the
amount shall constitute additional Obligations which shall be secured by and
entitled to the benefits of this Security Agreement. The Debtor agrees to pay
interest on the amounts at the Maximum Rate from the date same are incurred by
the Secured Party until paid by the Debtor.
ARTICLE V
DEFAULT AND REMEDIES
--------------------
5.1 Default. The Debtor shall be in default under this Security Agreement
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upon the occurrence of any of the events or conditions defined as a Default in
the Third Restated Agreement. The Debtor shall also be in default under this
Security Agreement if the Debtor shall fail to perform any of Debtor's covenants
or agreements set out in this Security Agreement or if there shall occur a
breach of any representation or warranty contained herein.
5.2 Remedies. Upon the occurrence of a Default, and at any time
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thereafter, the Secured Party, may, at the Secured Party's option, without
demand, notice of intention to accelerate, notice of acceleration, notice of
nonpayment, presentment, protest, notice of dishonor, or any other notice
whatsoever to the Debtor, declare the Obligations immediately due and payable.
The Secured Party shall thereupon have the rights and remedies of a secured
party under the UCC, as otherwise granted herein and/or in any other agreement
executed by the Debtor, all of which rights and remedies shall be cumulative,
including, without limitation, the right to sell, lease or otherwise dispose of
any or all of the Collateral and to apply the proceeds thereof toward payment of
any reasonable costs and expenses and attorney's fees and legal expenses thereby
incurred by the Secured Party and toward payment of the Obligations in the order
or manner as the Secured Party may elect. The Secured Party shall have the right
to take immediate possession of the Collateral, with or without process of law,
and for that purpose the Secured Party may enter upon any premises on which the
Collateral or any part thereof may be situated and remove the same therefrom.
The Secured Party may require the Debtor to assemble the Collateral and make the
Collateral available to the Secured Party at a place to be designated by the
Secured Party which is reasonably convenient to both parties. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a
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recognized market, the Secured Party will send the Debtor reasonable notice of
the time and place of any public sale thereof or of the time after which any
private sale or other disposition thereof is to be made. The requirement of
sending a reasonable notice shall be met if the notice is mailed, postage
prepaid, to the Debtor at the address designated at the beginning of this
Security Agreement at least ten (10) days before the time of the sale or
disposition. Costs of legal expenses, plus interest thereon at the Maximum Rate,
shall constitute a part of the Obligations which shall be due on demand and
which shall be secured by and entitled to the benefits of this Security
Agreement. If the proceeds of any sale or other lawful disposition by the
Secured Party of the Collateral following the retaking are insufficient to pay
expenses of retaking, repairing, holding, preparing the Collateral for sale,
selling the Collateral and the like, to satisfy the Obligations, then the Debtor
agrees to pay any deficiency. The Debtor shall be entitled to any surplus if one
results after lawful application of the proceeds.
5.3 Waiver of Default. The Secured Party may remedy any Default and may
-----------------
waive any Default without waiving the Default remedied or without waiving any
other prior or subsequent Event of Default or Default.
5.4 Cumulative Remedies. The remedies of the Secured Party hereunder are
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cumulative, and the exercise of any one or more of the remedies provided herein
shall not be construed as a waiver of any of the other remedies of the Secured
Party.
ARTICLE VI
MISCELLANEOUS
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6.1 Financing Statement. Any carbon, photographic or other reproduction
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of any Financing Statement signed by the Debtor is sufficient as a Financing
Statement for all purposes, including, without limitation, filing in any state
as may be permitted by the provisions of the UCC.
6.2 Dealing with the Collateral. The Secured Party may, at the Secured
---------------------------
Party's option, after any Default, demand, ▇▇▇ for, collect or make any
compromise or settlement the Secured Party deems necessary with reference to the
Collateral. The Secured Party shall not be obligated to take any steps necessary
to preserve any rights in the Collateral against prior parties, all which shall
solely be the responsibility of the Debtor.
6.3 Waiver. No delay or omission on the part of the Secured Party in
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exercising any rights hereunder shall operate as a waiver of any such right or
any other right. A waiver on any one or more occasions shall not be construed as
a bar to or waiver of any right or remedy on any future occasion.
6.4 Compliance With Usury Law. The Loan Documents are intended to be
-------------------------
performed in accordance with, and only to the extent permitted by, all
applicable Requirements. This Security Agreement is subject to the provisions
set out in the Third Restated Agreement relating to the payment of interest at
the Maximum Rate and to payment or collection of interest in excess of the
Maximum Amount, all of which provisions are incorporated herein for all
purposes.
6.5 Binding Effect. All rights of the Secured Party hereunder shall inure
--------------
to the benefit of the Secured Party and the Secured Party's successors and
assigns. All obligations of the Debtor shall bind Debtor's heirs, executors,
administrators, successors and/or assigns.
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6.6 Termination. The Security Interests and all the terms and provisions
-----------
hereof shall be deemed a continuing security agreement and shall continue in
full force and effect, and all the terms and provisions hereof shall remain
effective as between the parties, until the full and final payment of all
Obligations without the right of any Person to set aside or contest the payment
pursuant to any Debtor Laws.
6.7 Prior Agreements. This Security Agreement and the Security Interests
----------------
are in addition to, and not in substitution, novation or discharge of, any and
all prior or contemporaneous security agreements and security interests in favor
of the Secured Party or assigned to the Secured Party by others. All rights,
powers and remedies of the Secured Party in all such security agreements are
cumulative, but in the event of actual conflict in terms and conditions, the
terms and conditions of this Security Agreement shall govern and control.
6.8 Severability. In the event any one or more of the provisions
------------
contained in the Loan Documents, including this Security Agreement, should be
held to be invalid, illegal or unenforceable in any respect, the validity,
enforceability and legality of the remaining provisions contained in the Loan
Documents shall not in any manner be affected thereby and shall be enforceable
in accordance with their terms.
6.9 Applicable Law. THE LOAN DOCUMENTS, INCLUDING THIS SECURITY
--------------
AGREEMENT, HAVE BEEN PREPARED, ARE BEING EXECUTED AND DELIVERED, AND ARE
INTENDED TO BE PERFORMED IN THE STATE OF TEXAS, AND THE SUBSTANTIVE LAWS OF THE
STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE CONFLICTS-OF-LAW RULES AND
PRINCIPLES OF THE STATE OF TEXAS, AND THE APPLICABLE LAWS OF THE U.S. SHALL
GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THIS
SECURITY AGREEMENT AND THE LOAN DOCUMENTS.
6.10 Choice of Forum, Service of Process and Jurisdiction. Any suit, action
----------------------------------------------------
or proceeding against the Debtor with respect to the Loan Documents, or any
judgement entered by any court in respect thereof, shall be brought in the
courts of the State of Texas, County of ▇▇▇▇▇▇, or in the U.S. courts located in
the State of Texas as the Secured Party, in the Secured Party's sole discretion,
may elect and the Debtor submits to the non-exclusive jurisdiction of such
courts for the purpose of any such suit, action or proceeding. The Debtor
irrevocably consents to the service of process in any suit, action or proceeding
in the court by the mailing thereof by the Secured Party by registered or
certified mail, postage prepaid, to the Debtor at the address herein.
6.11 Captions. The captions, headings, and arrangements used in this
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Security Agreement are for convenience only and do not in any manner affect,
limit, amplify, or modify the terms and provisions hereof.
6.12 Modification. All modifications, consents, amendments or waivers of
------------
any provison of this Security Agreement, or consent to any departure by the
Debtor herefrom, shall be effective only if the same shall be in writing and
agreed to by the Secured Party and then shall be effective only in the specific
instance and for the purpose for which given.
6.13 Agency. Nothing herein contained shall be construed to constitute the
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Debtor as the Secured Party's agent for any purpose whatsoever. The Secured
Party shall not be responsible or
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liable for any damage, loss or destruction of any part of the property
encumbered by the Collateral Documents wherever the same may be located and
regardless of the cause thereof.
6.14 Non-liability of Secured Party. The relationship among the Debtor and
------------------------------
the Secured Party is, and shall at all times remain, solely that of debtor and
creditor. The Secured Party does not undertake or assume any responsibility or
duty to the Debtor to review, inspect, supervise, pass judgment upon, or inform
any Person of any matter in connection with any phase of such Person's
business, operations, or condition, financial or otherwise. Each Person shall
rely entirely upon such Person's own judgment with respect to such matters. Any
review, inspection, supervision, exercise of judgment, or information supplied
to any Person by the Secured Party in connection with any such matter is for the
protection of the Secured Party, and neither the Debtor nor any other Person is
entitled to rely thereon.
6.15 Entirety. The Loan Documents embody the entire agreement between the
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parties and supersede all prior agreements and understandings, if any, relating
to the subject matter hereof and thereof.
THE WRITTEN CREDIT AGREEMENT, THE LOAN DOCUMENTS DESCRIBED THEREIN AND THIS
INSTRUMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
Executed effective the day and year first above written.
▇▇▇▇▇▇ HOUSE, INC.
BY:________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER
"DEBTOR"
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Exhibit 6.1.B
Security Agreement-Pledge
SECURITY AGREEMENT-PLEDGE
This Security Agreement-Pledge (the "Security Agreement") is executed and
delivered effective September 15, 1997, by LITIGATION RESOURCES OF
AMERICA-CALIFORNIA, INC. (the "Debtor"), whose address is ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, in favor of TEXAS COMMERCE BANK NATIONAL
ASSOCIATION (the "Secured Party") whose address is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, pursuant to the terms of a Fourth Amended and
Restated Credit Agreement (the "Credit Agreement"), dated September 15, 1997, by
and among LITIGATION RESOURCES OF AMERICA, INC., LOONEY & COMPANY, ▇▇▇▇▇, BURY &
ASSOCIATES, INC., LITIGATION RESOURCES OF AMERICA-CALIFORNIA, INC., LITIGATION
RESOURCES OF AMERICA-MIDWEST, INC., BLOCK COURT REPORTING, INC., BLOCK TAPE
TRANSCRIPTION SERVICES, INC, and BURTION HOUSE, INC. (collectively, the
"Borrowers") and the Secured Party. Under and pursuant to the terms of the
Credit Agreement, the Secured Party has agreed to make Loans to the Borrowers.
All capitalized terms used herein shall have the same meanings ascribed to them
in the Credit Agreement unless otherwise specifically defined in this Security
Agreement.
ARTICLE I
SECURITY INTERESTS
------------------
In consideration of the premises, for value received, for other good, fair
and valuable considerations, the receipt, adequacy and reasonable equivalency of
which are acknowledged, and for other valuable consideration, the Debtor grants
to the Secured Party the security interests (the "Security Interests") herein
set forth and agrees with the Secured Party as set out herein. The Secured Party
has and shall continue to have Security Interests in the following property of
the Debtor (collectively, the "Collateral").
1.1 Stock. _________ shares of ▇▇▇▇▇▇ HOUSE, INC. (the "Stock"), together
-----
with all monies, income, proceeds and benefits attributable or accruing to the
Stock, including, but not limited to, all stock rights, rights to subscribe,
liquidating dividends, stock dividends, dividends paid in stock, security
entitlements, investment properties, new security and other properties or
benefits to which the Debtor is or may hereafter become entitled to receive on
account of the Stock. In the event that the Debtor shall receive any of the
foregoing, the Debtor shall hold same in trust for the Secured Party and will
immediately deliver same to the Secured Party to be held hereunder in the same
manner as the Stock is held hereunder. The Debtor agrees to execute such stock
powers, endorse such instruments, Financing Statements and/or execute such
additional pledge agreements or other documents as may be required by the
Secured Party in order to effectively grant to or perfect in the Secured Party
the Security Interests in the Collateral.
1.2 Deposits. Any and all money, property, accounts, securities,
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documents, chattel paper, claims, demands, instruments, items or deposits of the
Debtor, now held or hereafter coming within the Secured Party's custody or
control, including, by way of example and not of limitation, all certificates of
deposit and other depository accounts, whether same have matured or the exercise
of the Secured Party's rights results in loss of interest or other penalty on
the deposits.
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1.3 Other Collateral. Any and all securities and other properties
----------------
heretofore, now or hereafter delivered to the Secured Party, or in the Secured
Party's possession, shall also secure all Obligations and shall be held and
construed to be a part of the Collateral hereunder to the same extent as fully
described herein.
1.4 Proceeds. The proceeds, in cash or otherwise, of the Collateral
--------
described in the foregoing clauses, including, without limitation, the proceeds
of any sale or other disposition of the Collateral and all insurance proceeds of
any kind (whether or not the Secured Party is the loss payee under the
applicable insurance policy) paid at any time in connection with the Collateral,
all liens (whether possessory, contractual, statutory or otherwise) with respect
to the Collateral, and all rights, remedies and claims (whether in the nature of
indemnities, warranties, guaranties or otherwise), of the Debtor with respect to
the Collateral, in any case whether now existing or hereafter at any time or
from time to time arising.
1.5 Indebtedness Secured. The Security Interests are granted to secure the
--------------------
Obligations defined in the Credit Agreement and the following:
A. All funds hereafter advanced by the Secured Party to or for the
benefit of the Debtor as contemplated by any covenant or provision
contained in this Security Agreement, regardless of whether such
indebtedness, obligations and liabilities are direct, indirect, fixed,
contingent, joint, several, or joint and several; and,
B. All costs incurred by the Secured Party, including, but expressly not
limited to, attorneys' fees, court costs and other similar costs, to
obtain, preserve, perfect and enforce the Security Interests, and
costs incurred to maintain, preserve, collect and sell the Collateral,
or any part thereof, including but not limited to, taxes, assessments,
advertising costs, brokerage fees and expenses of sale; and,
C. All renewals, extensions and modifications of the Obligations, or any
part thereof; and,
D. Any judgment entered by a court of competent jurisdiction enforcing or
requiring payment any of the items described above.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 Ownership. Except for the Security Interests, the Debtor is and as to
---------
the Collateral acquired after the date hereof which is included within the
Security Interests, the Debtor will be, the owner of the Collateral free from
all adverse claims, security interests and encumbrances.
2.2 Other Liens. There is no financing statement now on file in any public
-----------
office covering any part of the Collateral, and so long as any amount remains
unpaid on the Obligations, the Debtor will not execute and there will not be on
file in any public office, any financing statement or statements except the
Financing Statements filed or to be filed in respect to the Security Interests.
2.3 Accuracy of Statements. Subject to any limitation stated therein or in
----------------------
connection therewith, all information furnished to Secured Party concerning the
Collateral and proceeds thereof, or
-2-
otherwise for the purpose of obtaining credit or an extension of credit, is or
will be at the time the same is furnished, accurate and correct in all material
respects.
2.4 Place of Business. The address of the Debtor designated at the
-----------------
beginning of this Security Agreement is Debtor's principal place of business and
chief executive office.
ARTICLE III
COVENANTS
---------
3.1 Financing Statements. The Debtor agrees to execute and deliver all
--------------------
Financing Statements, or amendments thereof or supplements thereto, or other
instruments as the Secured Party may from time to time require in order to
comply with the UCC (or other applicable state law of the jurisdiction where any
of the Collaterial is located) and to preserve and protect the Security
Interests. The Debtor authorizes the Secured Party to file, in jurisdictions
where this authorization will be given effect, a Financing Statement signed only
by the Secured Party covering the Collateral. It is further stipulated in this
regard that the Secured Party may also at any time or times sign any counterpart
of this Security Agreement signed by the Debtor and file same as a Financing
Statement if the Secured Party shall elect to do so.
3.2 Expenses. The Debtor will pay to the Secured Party, on demand, all
--------
expenses and expenditures, including reasonable attorney's fees and legal
expenses, incurred or paid by the Secured Party in exercising or protecting the
Security Interests, and the Secured Party's rights and remedies under this
Security Agreement. The Debtor agrees to pay interest on such amounts at the
Maximum Rate.
3.3 Curing of Default. The Secured Party may, at the Secured Party's
-----------------
option, whether before or after Default, but without obligation to the Debtor,
discharge taxes, liens or security interests or other encumbrances at any time
levied or placed upon the Collateral, and pay any filing or recording fees
necessary to preserve and protect the Security Interests. The Debtor agrees to
reimburse the Secured Party on demand for any payment made or any expense
incurred by the Secured Party pursuant to the foregoing authorization, and the
amount shall constitute additional Obligations which shall be secured by and
entitled to the benefits of this Security Agreement. The Debtor agrees to pay
interest on the amounts at the Maximum Rate from the date same are incurred by
the Secured Party until paid by the Debtor.
3.4 Endorsement. The Secured Party shall have the power to endorse, and is
-----------
hereby appointed the Debtor's agent for the purpose of endorsing in the name of
the Debtor, any instrument or document constituting Collateral or which may be
received in payment of or on account of the Collateral.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
------------------------------
4.1 Events of Default. The Debtor shall be in default under this Security
-----------------
Agreement upon the occurrence of any of the following events or conditions:
-3-
A. The occurrence of any of the events or conditions defined as a Default
in the Credit Agreement; and/or,
B. If the Debtor shall fail to perform any of the Debtor's covenants or
agreements set out in this Security Agreement or if there shall occur
a breach of any representation or warranty contained herein; and/or,
C. There shall occur any deterioration or impairment of the Collateral or
any part thereof, or any decline or depreciation in the market price
thereof (whether actual or reasonably anticipated) which, in the
judgment of the Secured Party, causes the Collateral to become or be
unsatisfactory as to value or character; and/or,
D. There shall occur a levy of any attachment, execution, garnishment or
other process against the Debtor or any of the Collateral in
connection with any tax lien, debt, judgment, garnishment, assessment
or obligation of the Debtor.
4.2 Remedies. Upon the occurrence of an Event of Default, and at any time
--------
thereafter, the Secured Party, may, at the Secured Party's option, without
demand, notice of intention to accelerate, notice of acceleration, notice of
nonpayment, presentment, protest, notice of dishonor, or any other notice
whatsoever to the Debtor, declare the Obligations immediately due and payable.
The Secured Party shall thereupon have the rights and remedies of a secured
party under the UCC, as otherwise granted herein and/or in any other agreement
executed by the Debtor, all of which rights and remedies shall be cumulative,
including, without limitation, the right to sell at public or private sale or
sales, or otherwise dispose of or utilize the Collateral and any part or parts
thereof in any manner authorized or permitted under this Security Agreement or
under the UCC. The Secured Party shall be authorized to apply the proceeds
thereof toward payment of costs, expenses and attorney's fees and legal expenses
thereby incurred by the Secured Party and toward payment of the Obligations in
the order or manner as the Secured Party may elect. The Debtor waives any notice
of sale or other disposition of the Collateral and any other rights or remedies
of the Debtor or formalities prescribed by law relative to sale or disposition
of the Collateral or the exercise of any other right or remedy of the Secured
Party existing after Default. To the extent any such notice is required and
cannot be waived, the Debtor agrees that if such notice is given in the manner
set out in the Credit Agreement at least ten (10) days before the time of the
sale or disposition, such notice shall be deemed reasonable and shall fully
satisfy any requirement for giving of notice. Costs of legal expenses, plus
interest thereon at the Maximum Rate, shall constitute a part of the Obligations
which shall be due on demand and which shall be secured by and entitled to the
benefits of this Security Agreement. If the proceeds of any sale or other lawful
disposition by the Secured Party of the Collateral following the retaking are
insufficient to pay expenses of retaking, repairing, holding, preparing the
Collateral for sale, selling the Collateral and the like, to satisfy the
Obligations, then the Debtor agrees to pay any deficiency. The Debtor shall be
entitled to any surplus if one results after lawful application of the proceeds.
The Secured Party is granted the right, at the Secured Party's option, either
before or after Default, to transfer the Collateral at any time to the Secured
Party or the Secured Party's nominee.
4.3 Waiver of Default. The Secured Party may remedy any Default and may
-----------------
waive any Default without waiving the Default remedied or without waiving any
other prior or subsequent Event of Default or Default.
-4-
4.4 Cumulative Remedies. The rights and remedies of the Secured Party
-------------------
hereunder are cumulative, and the exercise of any one or more of the remedies
provided herein shall not be construed as a waiver of any of the other remedies
of the Secured Party.
ARTICLE V
MISCELLANEOUS
-------------
5.1 Financing Statement. Any carbon, photographic or other reproduction
-------------------
of any Financing Statement signed by the Debtor is sufficient as a Financing
Statement for all purposes, including, without limitation, filing in any state
as may be permitted by the provisions of the UCC.
5.2 Dealing with the Collateral. The Secured Party may, at the Secured
---------------------------
Party's option, whether or not the Obligations are due, demand, ▇▇▇ for, collect
or make any compromise or settlement the Secured Party deems necessary with
reference to the Collateral. The Secured Party shall not be obligated to take
any steps necessary to preserve any rights in the Collateral against prior
parties, all which shall be the responsibility of the Debtor.
5.3 Waiver. No delay or omission on the part of the Secured Party in
------
exercising any rights hereunder shall operate as a waiver of any such right or
any other right. A waiver on any one or more occasions shall not be construed as
a bar to or waiver of any right or remedy on any future occasion. The Security
Interests shall in no manner be affected by any indulgence, extension or change
in the form, evidence, maturity, rate of interest or otherwise of any of the
Obligations. The Security Interests shall in no manner be affected by failure of
presentment, notice, protest, suit or indulgence on any of the Obligations.
Neither the failure to perfect the Security Interests or lien in any Collateral,
nor any release of any Person liable for the payment of any of the Obligations
shall affect or impair this pledge, and the Security Interests shall continue in
full force and effect in accordance with the terms hereof until all of the
Obligations have been fully paid.
5.4 Compliance With Usury Law. The Loan Documents are intended to be
-------------------------
performed in accordance with, and only to the extent permitted by, all
applicable Requirements. This Security Agreement is subject to the provisions
set out in the Credit Agreement relating to the payment of interest at the
Maximum Rate and to payment or collection of interest in excess of the Maximum
Amount, all of which provisions are incorporated herein for all purposes.
5.5 Binding Effect. All rights of the Secured Party hereunder shall
--------------
inure to the benefit of the Secured Party and the Secured Party's successors and
assigns. All obligations of the Debtor shall bind Debtor's heirs, executors,
administrators, successors and/or assigns.
5.6 Termination. The Security Interests and all the terms and provisions
-----------
hereof shall be deemed a continuing security agreement and shall continue in
full force and effect, and all the terms and provisions hereof shall remain
effective as between the parties, until the full and final payment of all
Obligations without any the right of any Person to set aside or contest the
payment pursuant to any Debtor Laws.
5.7 Prior Agreements. This Security Agreement and the Security Interests
----------------
are in addition to, and not in substitution, novation or discharge of, any and
all prior or contemporaneous security agreements and security interests in favor
of the Secured Party or assigned to the Secured Party by others.
-5-
All rights, powers and remedies of the Secured Party in all such security
agreements are cumulative, but in the event of conflict in terms and conditions,
the terms and conditions of this Security Agreement shall govern and control.
5.8 Severability. In the event any one or more of the provisions
------------
contained in the Loan Documents, including this Security Agreement, should be
held to be invalid, illegal or unenforceable in any respect, the validity,
enforceability and legality of the remaining provisions contained in the Loan
Documents or this Security Agreement shall not in any way be affected thereby
and shall be enforceable in accordance with their terms.
5.9 Applicable Law. THE LOAN DOCUMENTS, INCLUDING THIS SECURITY
--------------
AGREEMENT, HAVE BEEN PREPARED, ARE BEING EXECUTED AND DELIVERED, AND ARE
INTENDED TO BE PERFORMED IN THE STATE OF TEXAS, AND THE SUBSTANTIVE LAWS OF THE
STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE CONFLICTS-OF-LAW RULES AND
PRINCIPLES OF THE STATE OF TEXAS, AND THE APPLICABLE LAWS OF THE U.S. SHALL
GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THIS
SECURITY AGREEMENT AND THE LOAN DOCUMENTS.
5.10 Choice of Forum. Service of Process and Jurisdiction. Any suit,
----------------------------------------------------
action or proceeding against the Debtor with respect to the Loan Documents, or
any judgment entered by any court in respect thereof, shall be brought in the
courts of the State of Texas, County of ▇▇▇▇▇▇, or in the United States courts
located in the State of Texas as the Secured Party, in the Secured Party's sole
discretion, may elect and the Debtor submits to the non-exclusive jurisdiction
of such courts for the purpose of any such suit, action or proceeding. The
Debtor irrevocably consents to the service of process in any suit, action or
proceeding in the court by the mailing thereof by the Secured Party by
registered or certified mail, postage prepaid, to the Debtor at the address
herein.
5.11 Captions. The captions, headings, and arrangements used in this
--------
Security Agreement are for convenience only and do not in any manner affect,
limit, amplify, or modify the terms and provisions hereof.
5.12 Modification. All modifications, consents, amendments or waivers of
------------
any provision of this Security Agreement, or consent to any departure by the
Debtor herefrom, shall be effective only if the same shall be in writing and
agreed to by the Secured Party and then shall be effective only in the specific
instance and for the purpose for which given.
5.13 Agency. Nothing herein contained shall be construed to constitute the
------
Debtor as the Secured Party's agent for any purpose whatsoever. The Secured
Party shall not be responsible or liable for any damage, loss or destruction of
any part of the property encumbered by the Collateral Documents wherever the
same may be located and regardless of the cause thereof.
5.14 Non-liability of Secured Party. The relationship among the Debtor and
------------------------------
the Secured Party is, and shall at all times remain, solely that of debtor and
creditor. The Secured Party does not undertake or assume any responsibility or
duty to the Debtor to review, inspect, supervise, pass judgment upon, or inform
any Person of any matter in connection with any phase of such Person's business,
operations, or condition, financial or otherwise. Each Person shall rely
entirely upon such Person's own judgment with respect to such matters. Any
review, inspection, supervision, exercise of judgment, or information supplied
to any Person by the Secured Party in connection with any such
-6-
matter is for the protection of the Secured Party, and neither the Debtor or any
other Person is entitled to rely thereon.
5.15 Entirety. The Loan Documents embody the entire agreement between the
--------
parties and supersede all prior agreements and understandings, if any, relating
to the subject matter hereof and thereof.
THE WRITTEN CREDIT AGREEMENT, THE LOAN DOCUMENTS DESCRIBED THEREIN AND THIS
INSTRUMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
Executed effective the day and year first above written.
LITIGATION RESOURCES OF AMERICA
-CALIFORNIA, INC.
BY:_______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER
"DEBTOR"
-7-
Exhibit 8.2.C
Certificate of Compliance
____________, 199_
Certificate of Compliance
Texas Commerce Bank National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Gentlemen:
This certificate is delivered pursuant to a Fourth Amended and Restated
Credit Agreement (the "Fourth Restated Agreement") dated September 17, 1997, by
and among LITIGATION RESOURCES OF AMERICA, INC., ▇▇.▇▇. (collectively, the
-- --
"Borrowers") and Texas Commerce Bank National Association (the "Bank").
Capitalized terms used herein and not otherwise defined herein shall have the
meaning set forth in the Credit Agreement.
In connection with this Certificate the undersigned certifies that:
1. The attached consolidated Financial Statements of the Borrowers were
prepared in conformity with GAAP and fairly present the financial position of
Borrowers as of the dates thereof and the results of Borrowers' operations for
the period covered thereby.
2. As of the end of the period covered by the Financial Statements,
Borrowers' consolidated:
Requirement
-----------
A. Funded Debt is: $ _________________
B. Cash Flow is: $ _________________
C. Ratio of A to B is: :1.00 ______ :1.00
-----------------
(Section 7.2.A)
D. Fixed Charges are: $ _________________
E. Fixed Charge Coverage
Ratio is: :1.00 ______ :1.00
-----------------
(Section 7.2.B)
F. Capital Expenditures
to date are: $ _________________ No more than
$300,000.00
3. A review of the activities of each Loan Party during the period
covered by the attached Financial Statements has been made under my supervision
and with a view to determining whether,
Texas Commerce Bank National Association
___________________, 199_
Page 2
during such period, each Loan Party has kept, observed, performed and fulfilled
all of its obligations under the Credit Agreement.
4. Check either A or B below, as applicable:
------
[_] A. To the best of the undersigned's knowledge, each Loan Party has kept,
observed, performed and fulfilled each and every material obligation
under the Credit Agreement during the period covered by the attached
Financial Statements.
[_] B. To the best of the undersigned's knowledge, each Loan Party has kept,
observed, performed, and fulfilled each and every one of its
obligations under the Credit Agreement during the period covered by
the attached Financial Statements except for the following matters:
[DESCRIBE ALL SUCH DEFAULTS, SPECIFYING THE NATURE, DURATION AND
STATUS THEREOF AND WHAT ACTION BORROWERS HAVE TAKEN OR PROPOSE TO TAKE
WITH RESPECT THERETO].
5. There is a Borrowing Base report attached to this Certificate
accurately calculating the amounts permissible under the Borrowing Base.
LITIGATION RESOURCES OF AMERICA, INC.
BY:____________________________________
PRINTED NAME:__________________________
TITLE:_________________________________
Exhibit 9.1.G
Seller Debt Subordination Agreement-EDP
SELLER DEBT SUBORDINATION AGREEMENT
This Seller Debt Subordination Agreement (the "Agreement") is made and
entered into September 17, 1997, by and among LITIGATION RESOURCES OF AMERICA,
INC., LOONEY & COMPANY, ▇▇▇▇▇, BURY & ASSOCIATES, INC., LITIGATION RESOURCES OF
AMERICA-CALIFORNIA, INC., LITIGATION RESOURCES OF AMERICA-MIDWEST, INC.,
LITIGATION RESOURCES OF AMERICA-NORTHEAST, INC. ("LRA-NE"), BLOCK COURT
REPORTING, INC., BLOCK TAPE TRANSCRIPTION SERVICES, INC., ▇▇▇▇▇▇ HOUSE, INC.
(sometimes herein collectively called the "Borrowers," and singly called a
"Borrower"), and ▇▇▇▇▇▇ ▇. DINE, INC. ("EPD, INC."), a New York corporation, and
▇▇▇▇▇▇ ▇. DINE TEMPORARY ATTORNEYS, L.L.C. ("EPD, LLC"), a New York limited
liability company, (collectively, the "Subordinate Creditors"), and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION (the "Senior Creditor").
RECITALS
--------
The Borrowers are indebted to the Senior Creditor pursuant to the terms of
a Fourth Amended and Restated Credit Agreement (the "Credit Agreement") dated
September 17, 1997, among the Borrowers and the Senior Creditor, and may become
further indebted to the Senior Creditor. All Indebtedness, liabilities and
obligations of any of the Borrowers under the Credit Agreement or any other
document or instrument evidencing, securing, guaranteeing or in any manner
pertaining to the Loans (collectively, the "Loan Documents"), and all other
Indebtedness owing by any of the Borrowers to the Senior Creditor howsoever
evidenced (such documents evidencing, securing, guaranteeing, or pertaining to
such other Indebtedness are also included within the definition of the "Loan
Documents"), whether now or hereafter existing for principal or interest
(including without limitation interest accruing after the commencement of any
proceeding referred to in Section 3), or for fees, expenses or otherwise, are
herein called the "Senior Debt". All terms used in this Agreement shall, unless
otherwise herein specifically given another meaning, have the meanings ascribed
to them in the Credit Agreement.
LRA, LRA-NE, the Subordinate Creditors, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇
have entered into an Agreement of Purchase and Sale of Assets (the "EDP Asset
Purchase Agreement") dated as of September 17, 1997, for the sale by the
Subordinate Creditors and the purchase by LRA-NE of substantially all of the
assets (the "Assets") which are owned by the Subordinate Creditors. Pursuant to
the terms of the EDP Asset Purchase Agreement, LRA-NE will become indebted to
EPD, INC. as evidenced by a 6.375% subordinated promissory note in the original
principal sum of $1,340,740.00, to be executed by LRA-NE payable to the order of
EPD, INC. and LRA-NE will become indebted to EPD, LLC as evidenced by a 6.375%
subordinated promissory note in the original principal sum of $659,260.00, to be
executed by LRA-NE payable to the order of EPD, LLC (collectively, the foregoing
notes being the "Notes"). One or more of the Borrowers may, from time to time,
become further indebted to the Subordinate Creditors for other or further
Indebtedness, liabilities or obligations. All such Indebtedness now owing, and
all other Indebtedness, liabilities or obligations any of the Borrowers to
either of the Subordinate Creditors hereafter existing, are herein called the
"Subordinated Debt." The foregoing term includes, but is not limited to, all
obligations of any of the Borrowers owing to either of the Subordinate Creditors
whether, (i) created directly or acquired by assignment or otherwise, (ii)
evidenced by a note, open account, application for letter of credit, or
-1-
otherwise, (iii) absolute or contingent, (iv) joint, several or independent, (v)
arising by operation of law, or (vi) otherwise.
LRA-NE has requested that the Senior Creditor consent to the sale and
purchase transaction with the Subordinate Creditors to be evidenced by the EDP
Asset Purchase Agreement. Conditioned on the Subordinate Creditors and the
Borrowers executing and delivering this Agreement to the Senior Creditor and the
acquisition of all of the Assets, the Senior Creditor is willing to consent to
the EDP Asset Purchase Agreement, the sale and purchase transaction to occur
pursuant thereto and to the continuation of the Loans to the Borrowers pursuant
to the Credit Agreement. It is expressly understood and agreed by the parties
that this Agreement relates to and includes all Indebtedness of any of the
Borrowers to either of the Subordinate Creditors, whether presently existing or
to exist in the future.
AGREEMENT
---------
In consideration of the premises, for other good, fair and valuable
considerations, the receipt, adequacy and reasonable equivalency of which are
acknowledged, and as an inducement to the Senior Creditor to consent to the EDP
Asset Purchase Agreement and the sale and purchase transaction to occur pursuant
thereto, and to continue financial accommodations to the Borrowers, it is agreed
among the parties as follows:
1. Subordination. The Borrowers and the Subordinate Creditors agree that
-------------
the payment of or in respect of the Subordinated Debt owing or to become owing
in the future is and shall be expressly subordinated to the prior payment in
full of all Senior Debt to the extent and in the manner hereinafter set forth.
2. Payments on the Subordinated Debt. Except as herein provided, no
---------------------------------
payments shall be made on the Subordinated Debt.
A. (1) Except as permitted in Section 2.B, Section 2.C or Section
3.A.(5), or unless and until all Senior Debt has been paid in full and
no commitment is in existence to advance or create the Senior Debt, no
payment shall be made by any of the Borrowers, directly or indirectly,
in respect of or on the Subordinated Debt, and (2) neither of the
Subordinate Creditors shall ask, demand, ▇▇▇ for, take any action to
enforce, take or receive, directly or indirectly, in cash or other
property, by sale, setoff for in any other manner whatsoever, any
amounts owing in respect of the Subordinated Debt. In the event that
notwithstanding the provisions of the preceding sentence of this
Section, any of the Borrowers shall make any payment on account of or
in respect of the Subordinated Debt in violation of this Agreement,
such payment shall be segregated from other funds and property of the
Subordinate Creditors and held by the Subordinate Creditors in trust
for the benefit of, and shall be promptly paid over and delivered to
the Senior Creditor, with any necessary endorsement, for the payment
of all Senior Debt remaining unpaid to the extent necessary to pay all
Senior Debt or held as collateral in the case of non-cash property for
the payment of the Senior Debt.
B. Notwithstanding anything to the contrary contained in Section 2.A, so
long as there shall not exist a Proceeding, as below defined, LRA-NE
may make, and the Subordinate Creditors may receive and retain for the
Subordinate Creditor's respective account, scheduled accrued
-2-
interest payments, at the interest rate stated above, as and when such
interest payments accrue on the Notes. If there shall occur a
Proceeding, the provisions of Section 3 shall apply and override the
provisions of this Section 2.B and the Subordinate Creditors shall be
entitled to receive and retain accrued interest payments only as set
out in Section 3.
C. Notwithstanding anything to the contrary contained in Section 2.A, so
long as, (a) there shall exist no Event of Default of which the
Subordinate Creditors shall have been given notice (or if notice of an
Event of Default shall have been given to the Subordinate Creditors
and the Borrowers shall have cured the Event of Default without the
Senior Creditor accelerating the Senior Debt), (b) there shall not
have occurred any default under the terms hereof, (c) the Borrowers
are in compliance with the Borrowers' covenants set out in the Credit
Agreement, and (d) any such payment shall not cause a Default, LRA-NE
may make, and the Subordinate Creditors may receive and retain for the
Subordinate Creditor's respective account, the principal instalment
payments, as and when such principal payments are due on the Notes and
pay the entire balance of the Subordinated Debt from the proceeds from
one or more equity offerings, or offerings of Subordinated Debt.
D. The monthly installments to be paid on the Notes shall not exceed
$10,625.00 in the aggregate of accrued interest thereon, without the
Senior Creditor's prior written consent.
E. LRA-NE and the Subordinate Creditors shall maintain records with
respect to such payments and upon the occurrence of a Default or of an
Event of Default of which the Subordinate Creditors shall have been
given notice and, during the continuance of any uncured Event of
Default, no Borrower or any guarantor of the Senior Debt shall have
the right to make, and the Subordinate Creditors shall cease to have
the right to receive and retain, any payments on the Subordinated Debt
and all such payments received by the Subordinate Creditors thereafter
shall be held in trust for the benefit of the Senior Creditor pursuant
to this Agreement.
3. Distributions Pending a Proceeding.
----------------------------------
A. Upon any distribution of all or any of the assets of any of the
Borrowers, (whether in {i} connection with the dissolution, winding
up, liquidation, arrangement, reorganization, adjustment, protection,
relief or composition of any of the Borrowers or the Indebtedness of
any of the Borrowers, {ii} any bankruptcy, insolvency, arrangement,
reorganization, receivership, relief or similar proceedings of any of
the Borrowers {collectively, the foregoing being "Proceedings," or
individually, a "Proceeding"}) the following provisions shall apply:
(1) The Senior Creditor shall first be entitled to receive payment in
full of the principal thereof, premium, if any, and interest,
including post-petition interest due on the Senior Debt, before the
Subordinate Creditors are entitled to receive any payment on account
of or in respect of the Subordinated Debt.
(2) Any payment, Dividend or distribution of assets of any of the
Borrowers of any kind or character, whether in cash, property or
securities to which the Subordinate Creditors would be entitled except
for the provisions of this Agreement, shall be paid by the Person
making
-3-
such payment or distribution, whether a trustee in bankruptcy, a receiver
or liquidating trustee or other trustee or agent, directly to the Senior
Creditor to the extent necessary to make payment in full of all Senior Debt
remaining unpaid.
(3) In any Proceeding, the Senior Creditor is irrevocably authorized and
empowered (in the names of the Subordinate Creditors or otherwise), but
shall not have the obligation, to demand, ▇▇▇ for, collect and receive
every payment or distribution referred to in Section 3.A.(1) and Section
3.A.(2) and give acquittance therefor and to file claims and proofs of
claim and take such other action (including, without limitation, voting the
Subordinated Debt or enforcing any security interest or other Lien securing
payment of the Subordinated Debt) as the Senior Creditor may deem necessary
or advisable for the exercise or enforcement of any of the rights or
interests of the Senior Creditor hereunder.
(4) In any Proceeding, the Subordinate Creditors shall duly and promptly
take such action to the extent, and only to the extent, as the Senior
Creditor may expressly request, (a) to collect the Subordinated Debt for
the account of the Senior Creditor and to file appropriate claims or proofs
of claim in respect of the Subordinated Debt, (b) to execute and deliver to
the Senior Creditor such powers of attorney, assignments, or other
instruments as the Senior Creditor may request in order to enable the
Senior Creditor to enforce any and all claims with respect to, and any
security interests and Liens securing payment of, the Subordinated Debt,
and (c) to collect and receive any and all payments or distributions which
may be payable or deliverable upon or with respect to the Subordinated
Debt.
(5) If, and to the extent, the Senior Creditor shall not elect or shall
fail to take the actions authorized in Section 3.A.(3), the Subordinate
Creditors may demand, ▇▇▇ for, collect and, after the Senior Debt is paid
in full, including, if necessary, the payment over by the Subordinate
Creditors to the Senior Creditor of amounts due on the Senior Debt, receive
every payment or distribution referred to in Section 3.A.(1) and Section
3.A.(2) and give acquittance therefor and to file claims and proofs of
claim and take such other action (including, without limitation, voting the
Subordinated Debt or enforcing any security interest or other Lien securing
payment of the Subordinated Debt) as the Subordinate Creditors may deem
necessary or advisable for the exercise or enforcement of any of the rights
or interests of the Subordinate Creditors.
B. To the fullest extent permitted by law, the Subordinate Creditors
irrevocably agree that neither of the Subordinate Creditors will exercise
and each of the Subordinate Creditors waives, any right of setoff,
including, without limitation, any right of setoff under (S) 553 of the
Bankruptcy Code. If the foregoing waiver is adjudicated unenforceable by a
court, then the Subordinate Creditors agree that, in the event that either
of the Subordinate Creditors exercises any right of setoff in any
Proceeding, the Subordinate Creditors will pay directly to the Senior
Creditor an amount equal to the amount of the Subordinated Debt which was
so setoff for application to the Senior Debt until all Senior Debt shall
have been paid in full.
C. In the event that, notwithstanding the foregoing provisions of this Section
3, any payment or distribution of assets of any of the Borrowers of any
kind or character, whether in cash, property or securities, shall be
received by the Subordinate Creditors in violation of this Agreement on
account of the Subordinated Debt before all Senior Debt is paid in full, or
-4-
effective provision shall have been made for its payment, such payment
or distribution shall be received and held in trust for and shall be
paid over to the Senior Creditor for application to the payment of the
Senior Debt until all Senior Debt shall have been paid in full.
D. The Senior Creditor is authorized to demand specific performance of
this Agreement, whether or not the Borrowers shall have complied with
any of the provisions hereof applicable to any of the Borrowers at any
time when either of the Subordinate Creditors shall have failed to
comply with any of the provisions of this Agreement applicable to the
Subordinate Creditors. The Subordinate Creditors irrevocably waive any
defense based on the adequacy of a remedy at law, which might be
asserted as a bar to such relief of specific performance.
4. Subordination of Liens. The Subordinate Creditors agree that neither
----------------------
of the Subordinate Creditors will hold any Lien or security interest in any real
or personal property as security for any of the Subordinated Debt unless the
Senior Creditor has given the Senior Creditor's prior written consent to the
creation thereof. All such Liens and security interest (including if either of
the Subordinate Creditors shall acquire any Lien or security interest in the
future as security for the Subordinated Debt regardless of whether such Lien or
security interest is permitted or prohibited by this Agreement or the Loan
Documents) will be held by the Subordinate Creditors in accordance with the
terms of this Agreement for the benefit of the Senior Creditor and shall enforce
such Lien or security interest in accordance with the written instructions of
the Senior Creditor. Any cash or other property received in violation of this
Agreement on account of any Lien or security interest securing the Subordinated
Debt shall be delivered to the Senior Creditor and, in the case of cash, applied
to, or, in the case of other property, held as collateral for, the Senior Debt.
To the extent that any Subordinated Debt is now or hereafter secured by a Lien
or security interest (a "Subordinate Lien") against any real or personal
property that is also subject to a Lien or security interest securing the Senior
Debt (a "Senior Lien"), the Subordinate Creditors agree that such Subordinate
Lien shall be second, junior and subordinate to such Senior Lien and such Senior
Lien shall be first and prior to such Subordinate Lien. It is agreed that the
priorities specified in the preceding sentence are applicable irrespective of
the time or order of attachment or perfection of Liens and security interests,
or the time or order of filing of Liens and security interests, or the time or
order of filing of financing statements, or the giving or failure to give notice
of the acquisition or expected acquisition of purchase money or other security
interests.
5. Commencement of Proceedings. The Subordinate Creditors agree that, so
---------------------------
long as any of the Senior Debt shall remain unpaid, neither of the Subordinate
Creditors will commence nor join with any creditor other than the Senior
Creditor in commencing any Proceeding referred to in Section 3.A.
6. Subrogation. The Subordinate Creditors agree that until indefeasible
-----------
payment in full of the Senior Debt shall have occurred without the right of any
Person to set aside or contest the payment thereof and no commitment is in
existence to advance or create Senior Debt, no payment or distribution to the
Senior Creditor pursuant to the provisions of this Agreement shall entitle
either of the Subordinate Creditors to exercise any right of subrogation in
respect thereof and neither of the Subordinate Creditors shall be subrogated to
the rights of the Senior Creditor to receive payments or distributions of assets
of the any of the Borrowers made on the Senior Debt. As among the Borrowers and
all other creditors (other than the Senior Creditor and the Subordinate
Creditors), all payments or distributions made to the Senior Creditor to which
either of the Subordinate Creditors
-5-
would otherwise be entitled except for the terms of this Agreement shall be
deemed to be a payment by the Borrowers to or on account of Subordinated Debt
and not payment with respect to the Senior Debt. It is expressly understood that
this Agreement is intended solely to be for the purposes of defining the rights
among the Senior Creditor and the Subordinate Creditors and shall not affect the
rights of the Subordinate Creditors against any other Person.
7. Subordination Legend: Further Assurances.
----------------------------------------
A. LRA-NE and the Subordinate Creditors will cause each instrument
evidencing Subordinated Debt to be endorsed with the following legend:
"The indebtedness evidenced by this instrument is subordinated to the
Senior Debt (as defined in the Subordination Agreement below referred
to) pursuant to, and to the extent provided in, the Subordination
Agreement dated effective as of September 17, 1997, by the maker
hereof and payee named herein in favor of Texas Commerce Bank National
Association referred to in such Subordination Agreement."
B. The Borrowers and the Subordinate Creditors each will further ▇▇▇▇
their respective books of account in such a manner as shall be
effective to give proper notice of the effect of this Agreement and
will, in the case of any Subordinated Debt which is not evidenced by
any instrument, upon the Senior Creditor's reasonable request, cause
such Subordinated Debt to be evidenced by an appropriate instrument or
instruments endorsed with the above legend. The Borrowers and the
Subordinate Creditors each will, at their respective expense and at
any time and, from time to time, promptly execute and deliver all
further instruments and documents, and take all further actions that
may be necessary or desirable, or that the Senior Creditor may
reasonably request, in order to protect any right or interest granted
or purported to be granted hereby or to enable the Senior Creditor to
exercise and enforce the Senior Creditor's rights and remedies
hereunder.
8. Changes or Dispositions of Subordinated Debt. The Subordinate
--------------------------------------------
Creditors shall not, (a) cancel or otherwise discharge any of the Subordinated
Debt or subordinate any of the Subordinated Debt to any Indebtedness of any of
the Borrowers other than the Senior Debt, (b) sell, assign, pledge, encumber or
otherwise dispose of any of the Subordinated Debt (and any attempted action in
violation of this Section shall be void), or (c) permit the terms of any of the
Subordinated Debt to be changed in such a manner as to have an adverse effect
upon the rights or interests of the Senior Creditor.
9. Agreement by the Borrowers. The Borrowers agree that none of the
--------------------------
Borrowers will make any payment of any of the Subordinated Debt, or take any
other action in contravention of the provisions of this Agreement.
10. Senior Debt Not Affected. All rights and interests of the Senior
------------------------
Creditor hereunder, and all agreements and obligations of the Borrowers and the
Subordinate Creditors under this Agreement, shall remain in full force and
effect irrespective of, (a) any lack of validity or enforceability of all or any
portion of this Agreement, (b) any change in the amount of interest rate
accruing on, time, manner or place of payment of, or in any other term of, all
or any of the Senior Debt, or any amendment or waiver of any consent to
departure from any of the Loan Documents, including, without limitation, changes
in the terms of disbursement of the Loan proceeds or repayment thereof,
-6-
modifications, extensions or renewals of payment dates, changes in interest rate
or the advancement of additional funds by the Senior Creditor in the Senior
Creditor's discretion, (c) any exchange, release or non-perfection of any
collateral or any release or amendment or waiver of or consent to departure from
any guaranty for all or any of the Senior Debt, (d) lack of the reservation of
any rights against the Subordinate Creditors or any other Person (all of which
are waived by the Subordinate Creditors), or (e) any other circumstance in
respect of this Agreement which might otherwise constitute a defense available
to, or a discharge of, any of the Borrowers of or in respect of the Senior Debt
or the Subordinate Creditors.
11. Reinstatement. This Agreement shall continue to be effective or be
-------------
reinstated, as the case may be, if at any time any payment of any of the Senior
Debt is rescinded or must otherwise be returned by the Senior Creditor upon the
insolvency, the bankruptcy or reorganization of any of the Borrowers or
otherwise, all as though such payment had not been made.
12. Waivers. Except as specifically set out herein, each of the
-------
Subordinate Creditors waives promptness, diligence, notice of acceptance, notice
of intention to accelerate, notice of acceleration and any other notice with
respect to any of the Senior Debt and this Agreement and any requirement that
the Senior Creditor protect, secure, perfect or insure any security interest or
Lien or any property subject thereto or exhaust any right or take any action
against any of the Borrowers or any other Person or any Collateral. Except as
specifically set out herein, each of the Subordinate Creditors waives any right
or benefit of any notice of any action, event or circumstance relating to the
Senior Debt, including, but not limited to, the incurring, modification,
default, exercise of remedies, compromise or release of or with respect to the
Senior Debt.
13. Representations and Warranties.
------------------------------
A. LRA-NE and the Subordinate Creditors represent and warrant that the
Subordinated Debt represented by the Notes, (1) bears interest, and at
all times prior to the payment in full of the Senior Debt, will bear
interest at six and three hundred seventy-five thousandths (6.375) per
cent per annum, (2) the principal of the respective Notes is due and
payable on September 15, 2005, and (3) the interest on the Notes is
due and payable monthly as it accrues commencing on October 17, 1997,
and continuing on the fifteen (15) day of each month thereafter.
B. Each of the Borrowers respectively represents and warrants that, (1)
the Subordinated Debt now outstanding, true and complete copies of any
instruments evidencing which have been furnished to the Senior
Creditor, has not been amended or otherwise modified and constitutes
the legal, valid and binding obligation of the Borrowers enforceable
against the Borrowers in accordance with its terms, and (2) there
exists no default in respect of any such Subordinated Debt.
C. Each of the Subordinate Creditors represents and warrants that, (1)
the Subordinate Creditors own the Subordinated Debt now outstanding
free and clear of any Lien, security interest, charge or encumbrance
or any rights of others, (2) the execution, delivery and performance
by the Subordinate Creditors of this Agreement do not and will not
contravene any law or governmental regulation or any contractual
restriction binding on or affecting either of the Subordinate
Creditors or either of the Subordinate Creditors' properties, and do
not and will
-7-
not result in or require the creation of any Lien, security interest
or other charge or encumbrance upon or with respect to either of the
Subordinate Creditors' properties, (3) this Agreement is a legal,
valid and binding obligation of each of the Subordinate Creditors,
enforceable against the Subordinate Creditor in accordance with its
terms, and (4) to the knowledge of the Subordinate Creditors, there
exists no default in respect of any Subordinated Debt.
14. Amendments. No amendment or waiver of any provision of this Agreement
----------
nor consent to any departure by either of the Subordinate Creditors or any of
the Borrowers therefrom shall in any event be effective unless the same shall be
in writing and signed by the Senior Creditor, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
15. Expenses. The Borrowers and the Subordinate Creditors jointly and
--------
severally agree to pay, upon demand, to the Senior Creditor the amount of any
and all reasonable expenses, including the reasonable fees and expenses of the
Senior Creditor's counsel, which the Senior Creditor may incur in connection
with the exercise or enforcement of any of the rights or interests of the
holders of the Senior Debt hereunder.
16. Notices. Any notice required or permitted to be given hereunder shall
-------
be in writing, shall be addressed to the parties hereto at the respective
addresses set out below, which may be changed by the giving of written notice to
that effect pursuant hereto, and shall be deemed effectively given if (i)
delivered personally, or (ii) upon being deposited with the U.S. Postal Service,
postage prepaid, certified mail, return receipt requested;
If to any of the Borrowers: LITIGATION RESOURCES OF AMERICA, INC.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to the Subordinate Creditors: ▇▇▇▇▇▇ ▇. DINE, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. DINE TEMPORARY ATTORNEYS, L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
IF to the Senior Creditor: TEXAS COMMERCE BANK NATIONAL ASSOCIATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
17. No Waiver, Remedies. No failure on the part of the Senior Creditor to
-------------------
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, or shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
-8-
18. Continuing Agreement; Transfer of Notes. All representations,
---------------------------------------
warranties and covenants made by either of the Subordinate Creditors or any of
the Borrowers or on behalf of any of the Borrowers shall be considered to have
been relied upon by the Senior Creditor and shall survive execution and delivery
of the Loan Documents regardless of any investigation by or on behalf of the
Senior Creditor or any discovery of any thereof. This Agreement is a continuing
agreement and shall, (a) remain in full force and effect until the Senior Debt
shall have been paid in full, (b) be binding upon the Subordinate Creditors, the
Borrowers and their respective successors and assigns and any subsequent holder
of Subordinated Debt, and (c) inure to the benefit of and be enforced by the
Senior Creditor and the Senior Creditor's successors, transferees and assigns of
the Senior Debt. Without limiting the generality of the foregoing, the Senior
Creditor may assign or otherwise transfer the evidence of any Senior Debt held
by the Senior Creditor to any other Person, and such other Person shall
thereupon become vested with all the rights in respect thereof granted to the
Senior Creditor herein or otherwise.
19. Governing Law. THIS AGREEMENT HAS BEEN PREPARED, IS BEING EXECUTED AND
-------------
DELIVERED, AND IS INTENDED TO BE PERFORMED IN THE STATE OF TEXAS, AND THE
SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE
CONFLICTS-OF-LAW RULES AND PRINCIPLES OF THE STATE OF TEXAS, AND THE APPLICABLE
LAWS OF THE U.S. SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THIS AGREEMENT.
20. Venue. Any suit, action or proceeding with respect to the
-----
interpretation or enforcement of this Agreement, or the enforcement of any
judgment entered by any court in respect thereof, shall be brought in the courts
of the State of Texas, ▇▇▇▇▇▇ County, Texas, or in the U.S. courts located in
Southern District of Texas as the Senior Creditor, in the Senior Creditor's sole
discretion, may elect. The parties submit to the non-exclusive jurisdiction of
such courts for the purpose of any such suit, action or proceeding.
A. Each of the parties waives, in connection with any such suit, action
or proceeding, any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions.
B. Each of the parties consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to
each such Person, as the case may be, at its address set forth in
Section 16.
C. Nothing herein shall affect the right of any party to serve process in
any other manner permitted by law.
21. Jury Trial. Each party waives any right it may have to a trial by jury
----------
in respect of any legal proceeding directly or indirectly arising out of, under
or in connection with or relating to this Agreement. Except as prohibited by
law, each party hereto waives any right it may have to claim or recover in any
litigation referred to in this Section any special, indirect, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages, whether such claim is based on contract, tort, duty imposed or
implied by law or otherwise. Each party hereto, (a) certifies that no
representative, agent or attorney of the Senior Creditor has represented,
expressly or
-9-
otherwise, that the Senior Creditor would not, in the event of litigation, seek
to enforce the foregoing waivers, and (b) acknowledges and agrees that it has
been induced to enter into this Agreement and the other Loan Documents, as
applicable, by, among other things, the mutual waivers and certificates herein.
22. Separate Agreements. The parties acknowledge and agree that this
-------------------
Agreement is independent and distinct from the Loan Documents, including the
Credit Agreement. The Subordinate Creditors acknowledge that neither of the
Subordinate Creditors is a party to the Credit Agreement and does not and shall
not have any rights or benefits thereunder. The Subordinate Creditors
respectively agree that the terms and provisions hereof shall apply to each of
them and to their individually held Subordinate Debt separately, The Subordinate
Creditors acknowledge that the Subordinate Creditors have been provided copies
of the Loan Documents, that the Subordinate Creditors have had the opportunity
to review the Loan Documents with legal counsel and that this Agreement to be
construed and interpreted as if jointly prepared by the parties.
23. Counterparts. This Agreement may be separately executed in any number
------------
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Agreement.
24. Section Headings. Headings are for convenience only and shall be
----------------
given no substantive meaning or significance in construing this Agreement.
25. Entire Agreement. THIS AGREEMENT EMBODIES THE ENTIRE AGREEMENT AND
----------------
UNDERSTANDING BY AND AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDES ALL PRIOR AGREEMENTS, CONSENTS AND UNDERSTANDINGS RELATING TO
SUCH SUBJECT MATTER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
Executed effective as of the date first above written.
LITIGATION RESOURCES OF LOONEY & COMPANY
AMERICA, INC.
BY:_____________________________ BY:____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇, BURY & ASSOCIATES, INC. LITIGATION RESOURCES OF
AMERICA-CALIFORNIA, INC.
BY:_____________________________ BY:____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
(SIGNATURES TO SELLER DEBT SUBORDINATION AGREEMENT
CONTINUE ON NEXT PAGE)
-10-
(CONTINUED SIGNATURES TO SELLER DEBT SUBORDINATION AGREEMENT)
LITIGATION RESOURCES OF LITIGATION RESOURCES OF
AMERICA-MIDWEST, INC. AMERICA-NORTHEAST, INC.
BY:_____________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
BLOCK COURT REPORTING, INC. BLOCK TAPE TRANSCRIPTION
SERVICES, INC.
BY:_____________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER CHIEF FINANCIAL OFFICER
▇▇▇▇▇▇ HOUSE, INC. ▇▇▇▇▇▇ ▇. DINE, INC.
BY:_____________________________ BY:_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ NAME:___________________________
CHIEF FINANCIAL OFFICER TITLE:__________________________
▇▇▇▇▇▇ ▇. DINE TEXAS-COMMERCE BANK
TEMPORARY ATTORNEYS, L.L.C. NATIONAL ASSOCIATION
________________________________ BY:_____________________________
NAME:___________________________ ▇▇▇▇▇▇ ▇▇▇▇▇▇, JR.
TITLE:__________________________ VICE PRESIDENT
-11-
Exhibit 9.1.J
Officers Certificate
OFFICERS CERTIFICATE
Before me, the undersigned authority, on this day personally appeared ▇▇▇▇
▇▇▇▇▇▇▇▇ who, after being be me duly sworn, upon oath, stated:
"I am the duly elected and serving Chief Financial Officer of LITIGATION
RESOURCES OF AMERICA, INC. ("LRA"), the duly elected and serving Chief Financial
Officer of LOONEY & COMPANY ("Looney"), the duly elected and serving Chief
Financial Officer of ▇▇▇▇▇, Bury & Associates, Inc. ("KBA"), the duly elected
and serving Chief Financial Officer of LITIGATION RESOURCES OF
AMERICA-CALIFORNIA, INC. ("LRA-Cal"), the duly elected and serving Chief
Financial Officer of LITIGATION RESOURCES OF AMERICA-MIDWEST, INC.,
("LRA-Midwest"), the duly elected and serving Chief Financial Officer of
LITIGATION RESOURCES OF AMERICA-NORTHEAST, INC. ("LRA-NE"), the duly elected and
serving Chief Financial Officer of BLOCK COURT REPORTING, INC. ("Block"), and
the duly elected and serving Chief Financial Officer of and BLOCK TAPE
TRANSCRIPTION SERVICES, INC. ("Transcription"), the duly elected and serving
Chief Financial Officer of ▇▇▇▇▇▇ HOUSE, INC. ("▇▇▇▇▇▇") and have personal
knowledge of all facts sworn to in this certificate.
"LRA is a corporation duly organized and existing in good standing under
the laws of the State of Texas, and LRA is duly licensed or qualified as a
foreign corporation in all jurisdictions wherein the character of the property
owned or leased by LRA or the nature of the business transacted by LRA makes
licensing or qualification necessary by foreign corporations.
"Looney is a corporation duly organized and existing in good standing under
the laws of the State of Texas, and Looney is duly licensed or qualified as a
foreign corporation in all jurisdictions wherein the character of the property
owned or leased by Looney or the nature of the business transacted by Looney
makes licensing or qualification necessary by foreign corporations.
"KBA is a corporation duly organized and existing in good standing under
the laws of the State of Florida, and KBA is duly licensed or qualified as a
foreign corporation in all jurisdictions wherein the character of the property
owned or leased by KBA or the nature of the business transacted by KBA makes
licensing or qualification necessary by foreign corporations.
"LRA-Cal is a corporation duly organized and existing in good standing
under the laws of the State of California, and LRA-Cal is duly licensed or
qualified as a foreign corporation in all jurisdictions wherein the character of
the property owned or leased by LRA-Cal or the nature of the business transacted
by LRA-Cal makes licensing or qualification necessary by foreign corporations.
"LRA-Midwest is a corporation duly organized and existing in good standing
under the laws of the State of Illinois, and LRA-Midwest is duly licensed or
qualified as a foreign corporation in all jurisdictions wherein the character of
the property owned or leased by LRA-Midwest or the nature of the business
transacted by LRA-Midwest makes licensing or qualification necessary by foreign
corporations.
-1-
"LRA-NE is a corporation duly organized and existing in good standing under
the laws of the State of New York, and LRA-NE is duly licensed or qualified as a
foreign corporation in all jurisdictions wherein the character of the property
owned or leased by LRA-NE or the nature of the business transacted by LRA-NE
makes licensing or qualification necessary by foreign corporations.
"Block is a corporation duly organized and existing in good standing under
the laws of the District of Columbia, and Block is duly licensed or qualified as
a foreign corporation in all jurisdictions wherein the character of the property
owned or leased by Block or the nature of the business transacted by Block
makes licensing or qualification necessary by foreign corporations.
"Transcription is a corporation duly organized and existing in good
standing under the laws of the District of Columbia, and Transcription is duly
licensed or qualified as a foreign corporation in all jurisdictions wherein the
character of the property owned or leased by Transcription or the nature of the
business transacted by Transcription makes licensing or qualification necessary
by foreign corporations.
"▇▇▇▇▇▇ is a corporation duly organized and existing in good standing under
the laws of the State of California, and ▇▇▇▇▇▇ is duly licensed or qualified
as a foreign corporation in all jurisdictions wherein the character of the
property owned or leased by ▇▇▇▇▇▇ or the nature of the business transacted by
▇▇▇▇▇▇ makes licensing or qualification necessary by foreign corporations.
"The Articles of Incorporation of LRA are in full force and effect and no
proceeding is pending, planned or threatened for LRA's dissolution or annulment.
All license fees, and franchise and income taxes due and payable by LRA have
been paid in full.
"The Articles of Incorporation of Looney are in full force and effect and
no proceeding is pending, planned or threatened for Looney's dissolution or
annulment. All license fees, and franchise and income taxes due and payable by
Looney have been paid in full.
"The Articles of Incorporation of KBA are in full force and effect and no
proceeding is pending, planned or threatened for KBA's dissolution or annulment.
All license fees, and franchise and income taxes due and payable by KBA have
been paid in full.
"The Articles of Incorporation of LRA-Cal are in full force and effect and
no proceeding is pending, planned or threatened for LRA-Cal's dissolution or
annulment. All license fees, and franchise and income taxes due and payable by
LRA-Cal have been paid in full.
"The Articles of Incorporation of LRA-Midwest are in full force and effect
and no proceeding is pending, planned or threatened for LRA-Midwest's
dissolution or annulment. All license fees, and franchise and income taxes due
and payable by LRA-Midwest have been paid in full.
-2-
"The Articles of Incorporation of LRA-NE are in full force and effect and
no proceeding is pending, planned or threatened for LRA-NE's dissolution or
annulment. All license fees, and franchise and income taxes due and payable by
LRA-NE have been paid in full.
"The Articles of Incorporation of Block are in full force and effect and no
proceeding is pending, planned or threatened for Block's dissolution or
annulment. All license fees, and franchise and income taxes due and payable by
Block have been paid in full.
"The Articles of Incorporation of Transcription are in full force and
effect and no proceeding is pending, planned or threatened for Transcription's
dissolution or annulment. All license fees, and franchise and income taxes due
and payable by Transcription have been paid in full.
"The Articles of Incorporation of ▇▇▇▇▇▇ are in full force and effect and
no proceeding is pending, planned or threatened for ▇▇▇▇▇▇'▇ dissolution or
annulment. All license fees, and franchise and income taxes due and payable by
▇▇▇▇▇▇ have been paid in full.
"All of the funds to be derived by LRA, Looney, KBA, LRA-Cal, LRA-Midwest,
LRA-NE, Block, Transcription and ▇▇▇▇▇▇ (collectively, the "Borrowers") from
loans (the "Loans") in the amount of $15,975,000.00 made pursuant to the terms
of a Fourth Amended and Restated Credit Agreement (the "Fourth Restated
Agreement"), dated September 15, 1997, by and among the Borrowers and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION (the "Bank"), are to be used solely for the
purposes set out in the Fourth Restated Agreement and for no other purposes.
"Each of the Borrowers has performed or complied with its covenants and
agreements required under the Fourth Restated Agreement and under the Loan
Documents, as defined in the Fourth Restated Agreement.
"The copies of the EPD Asset Purchase Agreement and the ▇▇▇▇▇▇ House Stock
Purchase Agreement (collectively, the "Purchase Agreements") provided to the
Bank as of the execution date hereof fully state and are the final agreements
among parties thereto and there are no unwritten or other agreements among the
parties. Each of the parties to the Purchase Agreements have performed their
respective obligations thereunder.
"To the knowledge of the undersigned, the borrowing under and pursuant to
the terms of the Fourth Restated Agreement will not contravene any provision of
law or regulation applicable to the Borrowers.
"To the best knowledge and belief of the undersigned, after reasonable and
due investigation and review of the matters pertinent to the subject hereof, (i)
all of the representations and warranties contained herein and the other Loan
Documents are true and correct in all material respects, and (ii) no Event of
Default and no condition or event which, with the giving of notice or lapse of
time, or both, would become an Event of Default, has occurred or, if occurred,
is continuing, as the term "Events of Default" is defined in the Fourth Restated
Agreement.
-3-
"There is not pending or threatened (i) any litigation in which any of the
Borrowers is involved which would, in the event of an adverse determination,
have a Material Adverse Effect, or (ii) any investigation or proceeding before
any Governmental Authority against any of the Borrowers or a Consolidated
Subsidiary of LRA, or any officer, director or Affiliate of any such parties
with respect to the Loan Documents or any of the transactions contemplated
thereby which could have a Material Adverse Effect.
"Each of the Borrowers is solvent with saleable assets of a value that
exceeds the amount of its liabilities, each is currently able, and it is
anticipated that each will continue to be able at all times subsequent, to meet
all debts as they mature, and each has adequate capital to conduct its business
in which it is engaged.
"This certificate is made to induce the Bank to make the Loans to the
Borrowers and to induce any participant lender to participate in the Loans."
_______________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
STATE OF TEXAS
COUNTY OF ▇▇▇▇▇▇
Before me, an officer duly authorized in the State of Texas to take
acknowledgements, on September _____, 1997, personally appeared ▇▇▇▇ ▇▇▇▇▇▇▇▇,
known to me to be the person whose name is subscribed to the foregoing
instrument, and who swore to me that the statements contained therein are true
and correct and who acknowledged to me that the instrument was executed for the
purposes and considerations therein expressed.
Given under my hand and seal of office on September _________, 1997.
_________________________________________
Notary Public in and for
the State of Texas
My commission expires:
_________________________________________
Printed Name of Notary Public
____________________
-4-
Schedule 10.1.J
Agreements in Default
NONE
Schedule 10.1.P
Shareholders of LRA
Schedule 10.1(P)
CAPITALIZATION
LITIGATION RESOURCES OF AMERICA
ANALYSIS OF OUTSTANDING SECURITIES
AS OF SEPTEMBER 17, 1997
COMMON STOCK
------------
NUMBER
SHAREHOLDER OF SHARES(A)
----------- ------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 843,840
GulfStar Group 150,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ 170,600
▇▇▇▇▇ ▇▇▇▇▇▇ 5,000
▇▇▇▇ ▇▇▇▇▇▇ 15,304
▇▇▇ ▇▇▇▇▇▇▇▇ 15,304
Seaquestor Trust 82,982(B)
▇▇▇▇▇ ▇▇▇▇▇▇▇ 59,494
▇▇▇ ▇▇▇▇▇▇▇ 2,941
Amicus One Legal Support Services, Inc. 116,471
▇▇▇▇▇ ▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 158,824
▇▇▇▇▇▇ ▇. Dine, Inc. 51,264
▇▇▇▇▇▇ ▇. Dine Temp, L.L.C. 25,207
---------
1,697,231
=========
(A) Excludes 25,000 shares to be purchased by DWP @ $0.1 per share
(B) Includes 60,866 shares held in escrow, the number of shares to be released
from escrow will depend on the level of MedText earnings for the 12 months
following closing.
1
NOMINAL COST EMPLOYEE STOCK OPTIONS
-----------------------------------
NUMBER OPTION
OPTIONEE OF SHARES (A) PRICE
---------------- ------------- ------
▇▇▇▇▇ ▇▇▇▇ 24,960 $0.01
▇▇▇▇▇ ▇▇▇▇ 18,720 $0.01
▇▇▇▇ ▇▇▇▇▇▇▇▇ 6,240 $0.01
▇▇▇▇ ▇▇▇▇▇ 6,240 $0.01
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 7,000 $0.01
▇▇▇▇▇▇▇ ▇▇▇▇ 17,500 $0.10
▇▇▇▇ ▇▇▇▇ 12,500 $0.10
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 5,000 $0.10
▇▇▇▇▇ ▇▇▇▇▇ 5,000 $0.10
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 11,764 $0.01
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 8,824 $0.01
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 8,824 $0.01
▇▇▇▇▇ ▇. ▇▇▇▇▇ 8,824 $0.01
▇▇▇▇▇▇ ▇▇▇▇▇▇ 2,940 $0.01
-------
144,336
=======
OTHER EMPLOYEE STOCK OPTIONS
----------------------------
NUMBER OPTION
OPTIONEE OF SHARES (B) PRICE
---------------- ------------- ------
▇▇▇▇ ▇▇▇▇▇▇▇ 15,000 $6.41
▇▇▇▇▇ ▇▇▇▇▇▇ 2,500 $7.05
▇▇▇▇▇▇▇ ▇▇▇▇ 12,500 $7.05
▇▇▇▇ ▇▇▇▇ 7,500 $7.05
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 5,000 $7.05
▇▇▇▇▇ ▇▇▇▇▇ 5,000 $7.05
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 3,300 $7.56
▇▇▇▇▇▇ ▇▇▇▇▇ 14,444 $8.50
------
65,244
======
2
(B) Does not include (i) Options for 25,351 to be issued to Looney & Company
Employees @ $6.41 per share, (ii) Options for 50,000 shares to be issued to
DWP (25,000 Shares @ $6.41 and 25,000 shares @ the IPO Price), (iii)
Options for 10,000 shares to be issued to the Corp. Controller @ $________
per share, (iv) Options for 40,000 shares to be issued to Legal Enterprise
Employees @ $10.20 per share, (v) Options for 14,000 shares to be issued to
various "local managers" @ the IPO Price, (vi) additional options to be
issued to certain officers and directors at various prices, nor (vii)
options for 20,000 shares to be issued to ▇▇▇▇▇▇ ▇. Dine Employees at the
IPO price.
3
LITIGATION RESOURCE OF AMERICA, INC.
SCHEDULE OF PREFERRED STOCK
Issue Dividend
Date Description Amount Rate Payment/Conversion Terms
---- ----------- ------ ---- ------------------------
Convertible Preferred Stock
---------------------------
1/17/97 Series A Convertible Preferred Stock 1,000,000 (A) Convertible into 1,560,000
shares of common stock
($0.64 per share), redeemable
at "Market Price" in the
event of a change in control,
or redeemable in three annual
installments at "Market Price"
if no liquid market has devel-
oped for the common stock
by 1/17/2003.
Redeemable Preferred Stock
--------------------------
1/17/97 Series B Convertible Preferred Stock 2,046,667 0% Convertible @93% of IPO
price or redeemable in con-
nection with a "Qualified
Public Offering" or redeem-
able over 20 quarter after
a "Qualified Public Offering"
5/14/97 Series C Convertible Preferred Stock 231,250 6% Quarterly dividend payments
beginning 30 days after
6/30/97, convertible into
Common Stock at IPO price or
redeemable in connection with
a "Qualified Public Offering
at holder's option, or
redeemable over 16 quarters
beginning 6/30/98. Dividend
payments subject to SFRS
achieving adequate aggregate
net income
(A) participates in dividends on an equal basis with the Common Stock.
4
