EXHIBIT 10.1
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December 31, 2002
Among
NEXTERA ENTERPRISES, INC., as Company
FLEET NATIONAL BANK, as Administrative Agent,
And
FLEET NATIONAL BANK and
BANK OF AMERICA, N.A., each as Lender
TABLE OF CONTENTS
Page
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1. Definitions; Certain Rules of Construction.............................................................. 1
2. The Credits............................................................................................. 17
2.1. Revolving Credit.................................................................................. 17
2.2. Term Loan......................................................................................... 18
2.3. Intentionally Omitted............................................................................. 19
2.4. Application of Proceeds........................................................................... 19
3. Interest; Fees.......................................................................................... 19
3.1. Interest.......................................................................................... 19
3.2. Commitment Fees................................................................................... 19
3.3. Changes in Circumstances; Yield Protection........................................................ 20
3.4. Computations of Interest and Fees................................................................. 22
4. Payment................................................................................................. 22
4.1. Loans............................................................................................. 22
4.2. Contingent Required Prepayments................................................................... 23
4.3. Voluntary Prepayments............................................................................. 24
4.4. Intentionally Omitted............................................................................. 24
4.5. Reborrowing; Application of Payments, etc......................................................... 24
5. Financial Consultant; Strategic Plans................................................................... 25
5.1. Financial Consultant.............................................................................. 25
5.2. Business Plan..................................................................................... 25
5.3. Investment Banking Firm........................................................................... 25
6. Lexecon Employee Extension ............................................................................. 39
7. Matters Relating to Junior Secured Indebtedness......................................................... 26
7.1. Principal Amount.................................................................................. 27
8. Bonus Matters........................................................................................... 28
8.1. Bonus Obligations................................................................................. 28
8.2. Bonus Accounts.................................................................................... 29
8.3. Bonus Schedule Confidentiality.................................................................... 29
9. Conditions to Extending Credit.......................................................................... 29
9.1. Conditions on Initial Closing Date................................................................ 29
9.2. Conditions to Each Extension of Credit............................................................ 32
10. General Covenants....................................................................................... 33
10.1. Taxes and Other Charges: Accounts Payable......................................................... 33
10.2. Conduct of Business, etc.......................................................................... 33
10.3. Insurance......................................................................................... 34
10.4. Financial Statements and Reports.................................................................. 35
10.5. Certain Financial Tests........................................................................... 39
10.6. Indebtedness...................................................................................... 41
10.7. Guarantees; Letters of Credit..................................................................... 42
10.8. Liens............................................................................................. 42
10.9. Investments and Acquisitions...................................................................... 43
10.10. Distributions; Warrants; Issuance of Stock of the Company...................................... 43
10.11. Issuance of Stock of Company................................................................... 44
10.12. Asset Dispositions and Mergers................................................................. 45
10.13. Issuance of Stock by Subsidiaries; Subsidiary Distributions.................................... 46
10.14. Voluntary Prepayments of Other Indebtedness.................................................... 46
10.15. Derivative Contracts........................................................................... 46
10.16. Negative Pledge Clauses........................................................................ 46
10.17. ERISA, etc..................................................................................... 47
10.18. Transactions with Affiliates................................................................... 47
10.19. Restricted Operations of Cranberry Hill Capital................................................ 47
11. Representations and Warranties.......................................................................... 47
11.1. Organization and Business...................................................................... 48
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110.2. Material Agreements............................................................................ 49
11.3. Agreements Relating to Financing Debt, Investments, etc........................................ 49
11.4. Changes in Condition........................................................................... 49
11.5. Title to Assets................................................................................ 49
11.6. Operations in Conformity With Law, etc......................................................... 50
11.7. Litigation..................................................................................... 50
11.8. Authorization and Enforceability............................................................... 50
11.9. No Legal Obstacle to Agreements................................................................ 50
11.10. Defaults....................................................................................... 51
11.11. Licenses, etc.................................................................................. 51
11.12. Tax Returns.................................................................................... 51
11.13. Certain Business Representations............................................................... 51
11.14. Pension Plans.................................................................................. 52
11.15. Environmental Regulations...................................................................... 52
11.16. Government Regulation; Margin Stock............................................................ 52
11.17. Disclosure..................................................................................... 53
12. Defaults................................................................................................ 53
12.1. Events of Default.............................................................................. 53
12.2. Certain Actions Following an Event of Default.................................................. 56
12.3. Annulment of Defaults.......................................................................... 57
12.4. Waivers........................................................................................ 57
13. Expenses; Indemnity; Release of Claims.................................................................. 57
13.1. Expenses....................................................................................... 57
13.2. General Indemnity.............................................................................. 58
13.3. Release of Claims.............................................................................. 58
14. Operations; Agent....................................................................................... 58
14.1. Interests in Credits........................................................................... 58
14.2. Agent's Authority to Act, etc.................................................................. 59
14.3. Company to Pay Agent, etc...................................................................... 59
14.4. Lender Operations for Advances, etc............................................................ 59
14.5. Sharing of Payments, etc....................................................................... 60
14.6. Agent's Resignation............................................................................ 60
14.7. Concerning the Agent........................................................................... 61
14.8. Rights as a Lender............................................................................. 62
14.9. Independent Credit Decision.................................................................... 62
14.10. Indemnification................................................................................ 62
15. Successors and Assigns; Lender Assignments and Participations........................................... 63
15.1. Assignments by Lenders......................................................................... 63
15.2. Credit Participants............................................................................ 65
15.3. Replacement of Lender.......................................................................... 66
16. Confidentiality......................................................................................... 66
17. Foreign Lenders......................................................................................... 67
18. Notices................................................................................................. 67
19. Amendments, Consents, Waivers, etc...................................................................... 68
19.1. Lender Consents for Amendments................................................................. 68
20. General Provisions...................................................................................... 69
20.1. Defeasance..................................................................................... 69
20.2. No Strict Construction......................................................................... 69
20.3. Certain Obligor Acknowledgments................................................................ 70
20.4. Venue; Service of Process; Certain Waivers..................................................... 70
20.5. WAIVER OF JURY TRIAL........................................................................... 70
20.6. Interpretation; Governing Law; etc............................................................. 71
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EXHIBITS
2.1.4 - Second Amended and Restated Revolving Note
2.2.3 - Second Amended and Restated Term Note
6(a) - Lexecon Employment Agreement (▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
6(b) - Lexecon Employment Agreement (▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
7.1.1 - Letter of Credit (Amendment)
8.1 - Bonus Obligations
9.1.4(a) - Form of Second Amended and Restated Subsidiary Guarantee
9.1.4(b) - Form of Second Amended and Restated Knowledge Universe Guaranty
9.1.6 - Form of Second Amended and Restated Subordination Agreement
9.1.7 - Form of Junior Credit Participation Agreement
9.2.1 - Form of Second Amended and Restated Officer's Certificate
10.4 - Form of Second Amended and Restated Compliance Certificate
10.10.2(a) - Form of Second Amended and Restated Amended and Restated Warrant
10.10.2(b) - Amendment to New Warrant
11.1 - Company and its Subsidiaries
11.2 - Material Agreements
11.3 - Financing Debt, Certain Investments, etc.
11.7 - Litigation
11.12 - Tax Matters
11.13 - Earnouts and Compensation
11.14 - Multi-employer and Defined Benefit Plans
11.15 - Hazardous Material Sites
11.16.2 - Margin Stock
14.1 - Commitments; Percentage Interests
15.1.1 - Form of Second Amended and Restated Assignment and Acceptance
SCHEDULES
A. New Bonus Schedule
iii
B. Schedule of Investments
iv
NEXTERA ENTERPRISES, INC.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This Agreement, dated as of December 31, 2002, is among Nextera
Enterprises, Inc., a Delaware corporation (the "Company"), its subsidiaries from
time to time party hereto (the "Subsidiaries"), the lenders from time to time
party hereto (the "Lenders") and Fleet National Bank, both in its capacity as a
Lender and in its capacity as administrative agent for the Lenders (the
"Agent").
RECITALS
WHEREAS, the parties hereto entered into a Credit Agreement dated March
29, 2002 (the "Prior Credit Agreement"), pursuant to which the Lenders extended
certain credit facilities to the Company, and the parties desire that the Prior
Credit Agreement be amended and restated in its entirety as set forth in this
Agreement, provided that all other Credit Documents (as defined in the Prior
Credit Agreement) shall remain valid and binding except as otherwise provided
hereunder;
WHEREAS, the Company has requested that Lenders enter into certain
financing arrangements with the Company pursuant to which the Lenders may make
loans and provide other financial accommodations to the Company; and
WHEREAS, the Lenders are willing to make such loans and provide such
financial accommodations on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Definitions; Certain Rules of Construction. Certain capitalized terms are
used in this Agreement and in the other Credit Documents with the specific
meanings defined below in this Section 1 or as defined elsewhere in this
Agreement. Except as otherwise explicitly specified to the contrary or unless
the context clearly requires otherwise, (a) the capitalized term "Section"
refers to Sections of this Agreement, (b) the capitalized term "Exhibit" refers
to exhibits to this Agreement, (c) references to a particular Section include
all subsections thereof, (d) the word "including" shall be construed as
"including without limitation", (e) accounting terms not otherwise defined
herein have the meaning provided under GAAP, (f) references to a particular
statute or regulation include all rules and regulations thereunder and any
successor statute, regulation or rules, in each case as from time to time in
effect, (g) references to a particular Person include such Person's successors
and assigns to the extent not prohibited by this Agreement and the other Credit
Documents and (h) references to "Dollars" or "$" mean United States Funds.
References to "the date hereof" mean the date first set forth above.
"Accumulated Benefit Obligations" means the actuarial present value of the
accumulated benefit obligations under any Plan, calculated in accordance with
Statement No. 87 of the Financial Accounting Standards Board.
"Accrued Interest Waiver Conditions" means
(a) the satisfaction of all Conditions On Initial Closing Date set forth
Section 9.1 of this Agreement;
(b) the Company shall not become the subject of any proceeding under the
Bankruptcy Code or any other insolvency, reorganization, liquidation,
dissolution or similar proceeding at any time prior to Payment In Full of the
Credit Obligations; and
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(c) the Payment In Full of the Credit Obligations on or before the
Maturity Date.
"Affected Lender" is defined in Section 15.3.
"Affiliate" means, with respect to the Company (or any other specified
Person), any other Person directly or indirectly controlling, controlled by or
under direct or indirect common control with the Company (or such specified
Person), and shall include (a) any officer or director or general partner of the
Company (or such specified Person), (b) any Person of which the Company (or such
specified Person) or any Affiliate (as defined in clause (a) above) of the
Company (or such specified Person) shall, directly or indirectly, beneficially
own either (i) at least ten percent (10%) of the outstanding equity securities
having the general power to vote or (ii) at least ten percent (10%) of all
equity interests or (c) any Person directly or indirectly controlling the
Company (or such specified Person) through a management agreement, voting
agreement or other contract.
"Agency Fee" is defined in Section 3.2.3.
"Agent" means Fleet National Bank in its capacity as administrative agent
for the Lenders hereunder, as well as its successors and assigns in such
capacity appointed pursuant to Section 14.6.
"Agreed Percentage" is defined in Section 8.2.
"Agreement" means this Amended and Restated Credit Agreement as from time
to time amended, modified and in effect.
"Applicable Rate" means the sum of
(a) the Base Rate plus two percent (2%) per annum (provided, however, that
the foregoing amount shall become the Base Rate plus one and one-half
percent (1.5%) per annum if, and effective on the day of delivery, the
Agent receives written evidence satisfactory to Agent in its discretion
that all of the following conditions have occurred and are continuing: (i)
one or more Transactions have closed resulting in net equity proceeds to
the Company of at least $20,000,000; (ii) the Company has paid $1,600,000
to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to the terms and conditions
set forth in the Lexecon Employment Agreements; (iii) the Company has paid
$3,400,000 to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to the terms and
conditions set forth in the Lexecon Employment Agreements; and (iv) so
long as immediately before and after giving effect thereto no Default or
Event of Default exists under the Credit Agreement or any Credit
Document);
plus
(b) an additional two percent (2%) per annum effective upon the occurrence
of any Event of Default and continuing until the earlier of such time as
(i) such Event of Default is no longer continuing or (ii) such Event of
Default is deemed no longer to exist, in each case pursuant to Section
12.3.
Notwithstanding the foregoing, the Applicable Rate shall be reduced by one-half
of one percent (0.5%) per annum effective on the Banking Day on which the Agent
receives the Company's audited financial statements for its fiscal year ended
December 31, 2002 demonstrating compliance with all financial and other
covenants and provisions to be performed or observed by the Company under this
Agreement; provided, however, that such reduction shall be permanently
eliminated effective on the day on which any Default or Event of Default occurs
under this Agreement.
"Assignee" is defined in Section 15.1.1.
"Assignment and Acceptance" is defined in Section 15.1.1.
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"Banking Day" means any day other than Saturday, Sunday or a day on which
banks in Boston, Massachusetts are authorized or required by law or other
governmental action to close.
"Bankruptcy Code" means Title 11 of the United States Code.
"Bankruptcy Default" means an Event of Default referred to in Section
12.1.12.
"Base Rate" means, on any date, the greater of (a) the rate of interest
announced by Fleet at the Boston Office as its Base Rate or (b) the sum of
one-half percent (1/2 %) per annum plus the Federal Funds Rate.
"Bonus Schedule" means the Bonus Schedule of the Company dated December
__, 2002 and delivered to the Lenders on December 30, 2002.
"Boston Office" means the principal banking office of Fleet in Boston,
Massachusetts.
"By-laws" means all written by-laws, rules, regulations and all other
documents relating to the management, governance or internal regulation of any
Person other than an individual, all as from time to time in effect.
"Cambridge Acquisition Note" means the promissory note dated January 10,
2000 of the Company in favor of Cambridge Economics, Inc. in the original
principal amount of $2,100,000.
"Capital Expenditures" means, for any period, amounts added or required to
be added to the property, plant and equipment or other fixed assets account on
the Consolidated balance sheet of the Company and its Subsidiaries, prepared in
accordance with GAAP, including expenditures in respect of (a) the acquisition,
construction, improvement or replacement of land, buildings, machinery,
equipment, leaseholds and any other real or personal property, (b) to the extent
not included in clause (a) above, materials, contract labor and direct labor
relating thereto (excluding amounts properly expensed as repairs and maintenance
in accordance with GAAP) and (c) software development costs to the extent not
expensed; provided, however, that Capital Expenditures shall not include
expenditures made with the proceeds of condemnation awards or insurance claims.
"Capitalized Lease" means any lease which is required to be capitalized on
the balance sheet of the lessee in accordance with GAAP, including Statement
Nos. 13 and 98 of the Financial Accounting Standards Board.
"Capitalized Lease Obligations" means the amount of the liability
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in accordance with GAAP, including Statement Nos.
13 and 98 of the Financial Accounting Standards Board.
"Cash Equivalents" means:
(a) negotiable certificates of deposit, time deposits (including
sweep accounts), demand deposits and bankers' acceptances having a
maturity of nine months or less and issued by any United States financial
institution having capital and surplus and undivided profits aggregating
at least $100,000,000 and rated at least Prime-1 by ▇▇▇▇▇'▇ or A-1 by S&P
or issued by any Lender;
(b) corporate obligations having a maturity of nine months or less
and rated at least Prime-1 by ▇▇▇▇▇'▇ or A-1 by S&P or issued by any
Lender;
(c) any direct obligation of the United States of America or any
agency or instrumentality thereof, or of any state or municipality
thereof, (i) which has a remaining maturity at the time of purchase of not
more than one year or which is subject to a repurchase agreement
3
with any Lender (or any other financial institution referred to in clause
(a) above) exercisable within one year from the time of purchase and (ii)
which, in the case of obligations of any state or municipality, is rated
at least AAA by ▇▇▇▇▇'▇ or AAA by S&P;
(d) any mutual fund or other pooled investment vehicle rated at
least AA by ▇▇▇▇▇'▇ or AA by S&P which invests principally in obligations
described above; and
(e) any Investment by a Foreign Subsidiary in its local jurisdiction
comparable to the items described above.
"Cash Management Agreement" means any cash management master agreement
entered into between the Agent and the Company from time to time, as from time
to time in effect, including all schedules and addenda thereto, relating to cash
management, sweep account and other similar services provided by the Agent to
the Company.
"CERCLA" means the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
"Charter" means the articles of organization, certificate of
incorporation, statute, constitution, joint venture agreement, partnership
agreement, trust indenture, limited liability company agreement or other charter
document of any Person other than an individual, each as from time to time in
effect.
"Class A Common Stock" means the Company's Class A common stock $0.001 par
value per share.
"Closing Date" means the Initial Closing Date and each other date on which
any extension of credit is made pursuant to Sections 2.1, 2.2 or 2.3.
"Code" means the federal Internal Revenue Code of 1986.
"Commitment" means, with respect to any Lender, such Lender's obligations
to extend the respective credits contemplated by Section 2 and its interests in
such credits at any time outstanding. The original Commitments are set forth in
Exhibit 14.1 and the subsequent Commitments are recorded from time to time in
the Register.
"Commitment Fee Rate" means, at any date, the sum of (a) the rate per
annum equal to one-half of one percent (.50%) plus (b) an additional two percent
(2%) per annum effective on the day the Agent provides written notice to the
Company that the interest rates hereunder are increasing as a result of the
occurrence and continuance of an Event of Default until the earlier of such time
as (i) such Event of Default is no longer continuing or (ii) such Event of
Default is deemed no longer to exist, in each case pursuant to Section 12.3.
"Company" means Nextera Enterprises, Inc., a Delaware corporation.
"Computation Covenants" means Sections 10.5, 10.6.7 and 10.10.1(c).
"Consolidated" and "Consolidating", when used with reference to any term,
mean that term as applied to the accounts of the Company (or other specified
Person) and all of its Subsidiaries (or other specified group of Persons), or
such of its Subsidiaries as may be specified, consolidated (or combined) or
consolidating (or combining), as the case may be, in accordance with GAAP and
with appropriate deductions for minority interests in Subsidiaries.
"Consolidated Current Assets" means, at any date, all amounts carried as
current assets on the balance sheet of the Company and its Subsidiaries at such
date determined in accordance with GAAP on a Consolidated basis but shall not
include: (a) any prepaid expenses, including but not limited to rent,
4
insurance, advertising, commissions, royalties, interest, or taxes; (b) any
deferred tax asset included therein; and (c) the single-sum amount of the net
assets of discontinued operations being held for sale reduced by the current
assets of the said discontinued businesses.
"Consolidated Current Liabilities" means, at any date, all amounts that
are or should be carried as current liabilities on the balance sheet of the
Company and its Subsidiaries determined in accordance with GAAP on a
Consolidated basis, including the current portion of all long-term Financing
Debt.
"Consolidated EBITDA" means, for any period, the total of:
(a) Consolidated Net Income;
plus
(b) all amounts deducted in computing such Consolidated Net Income
in respect of:
(i) depreciation and amortization and other non-recurring
non-cash charges (excluding special compensation and
other charges from time to time incurred by the Company
and/or its Subsidiaries in connection with the Lexecon
Employee Agreements),
(ii) interest expense, and
(iii) taxes based upon or measured by net income,
minus (c) all cash payments (excluding $2,675,000 for the Company's fiscal
year ended December 31, 2002 and $720,000 for the Company's fiscal year ended
December 31, 2003) made during such period on account of real estate
restructuring transactions, reductions in force and facilities, and unfavorable
equipment leases from discontinued operations;
minus (d) all amounts included in Consolidated Net Income in respect of
deferred income tax benefits and other non-cash income items.
"Consolidated Net Income" means, for any period, the net income (or loss)
of the Company and its Subsidiaries, determined in accordance with GAAP on a
Consolidated basis; provided, however, that Consolidated Net Income shall not
include:
(a) the income (or loss) of any Person accrued prior to the date
such Person becomes a Subsidiary or is merged into or consolidated with
the Company or any of its Subsidiaries;
(b) the income (or loss) of any Person (other than a Subsidiary) in
which the Company or any of its Subsidiaries has an ownership interest;
provided, however, that (i) Consolidated Net Income shall include amounts
in respect of the income of such Person when actually received in cash by
the Company or such Subsidiary in the form of dividends or similar
Distributions (except for subsections (d) and (e) of the term Distribution
as defined herein) and (ii) Consolidated Net Income shall be reduced by
the aggregate amount of all Investments, regardless of the form thereof,
made by the Company or any of its Subsidiaries in such Person for the
purpose of funding any deficit or loss of such Person;
(c) all amounts included in computing such net income (or loss) in
respect of (i) the write-up of any asset on or after December 31, 2001 or
(ii) the retirement of any Indebtedness or equity at less than face value
after December 31, 2001;
(d) extraordinary and nonrecurring gains;
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(e) the income of any Subsidiary to the extent the payment of such
income in the form of a Distribution or repayment of Indebtedness to the
Company or a Wholly Owned Subsidiary is not permitted, whether on account
of any Charter or By-law restriction, any agreement, instrument, deed or
lease or any law, statute, judgment, decree or governmental order, rule or
regulation applicable to such Subsidiary; and
(f) any after-tax gains attributable to returned surplus assets of
any Plan.
"Consolidated Total Debt Service" means, for any period, the sum of all
mandatory scheduled payments and prepayments with respect to Financing Debt of
the Company and its Subsidiaries on a Consolidated basis.
"Consolidated Total Senior Debt" means, at any date, all of the Credit
Obligations owing by the Company and its Subsidiaries on a Consolidated basis.
"Cranberry Hill Capital" means Cranberry Hill Capital, LLC, a Delaware
limited liability company of which Nextera Business Performance Solutions, Inc.
is the sole member.
"Credit Documents" means:
(a) this Agreement, the Notes, the Guarantee and Security Agreement,
any Cash Management Agreement from time to time in effect, the
Subordination Agreement, and any Hedge Agreement from time to time in
effect provided by a Lender (or an Affiliate of a Lender) to the Company
or any of its Subsidiaries, each as from time to time in effect; and
(b) any other present or future agreement or instrument from time to
time entered into among the Company, any of its Subsidiaries or any other
Obligor, on one hand, and the Agent, all the Lenders, on the other hand,
relating to, amending or modifying this Agreement or any other Credit
Document referred to above or which is stated to be a Credit Document,
each as from time to time in effect.
"Credit Obligations" means all present and future liabilities, obligations
and Indebtedness of the Company, any of its Subsidiaries or any other Obligor
owing to the Agent or any Lender (or any Affiliate of a Lender) under or in
connection with this Agreement or any other Credit Document, including
obligations in respect of principal, interest, reimbursement obligations under
any Hedge Agreement from time to time in effect provided by a Lender (or an
Affiliate of a Lender), commitment fees, amounts provided for in Sections 3.4
and 9 and other fees, charges, indemnities and expenses from time to time owing
hereunder or under any other Credit Document (all whether accruing before or
after a Bankruptcy Default and regardless of whether allowed as a claim in
bankruptcy or similar proceedings).
"Credit Participant" is defined in Section 15.2.
"Credit Security" means all assets now or from time to time hereafter
subjected to a security interest, mortgage or charge (or intended or required so
to be subjected pursuant to the Guarantee and Security Agreement or any other
Credit Document) to secure the payment or performance of any of the Credit
Obligations on a pari passu basis, including the assets described in Section 3.1
of the Guarantee and Security Agreement.
"Currency Exchange Agreement" means any currency swap, foreign exchange
contract or similar arrangement providing for protection against fluctuations in
currency exchange rates, either generally or under specific contingencies.
"Debentures" means the various debentures owed by the Company to certain
affiliates of Knowledge Universe or its respective successors or assigns, and
consisting of principal and accrued interest in an aggregate amount of
$47,748,591.99 as of December 31, 2002, all as amended and
6
modified through the date hereof and previously furnished to the Agent, with
such subsequent amendments and modifications as are entered into in accordance
with Section 10.2.4.
"Default" means any Event of Default and any event or condition which with
the passage of time or giving of notice, or both, would become an Event of
Default, including the filing against the Company, any of its Subsidiaries or
any other Obligor of a petition commencing an involuntary case under the
Bankruptcy Code.
"Delinquency Period" is defined in Section 14.4.4.
"Delinquent Payment" is defined in Section 14.4.4.
"Distribution" means, with respect to the Company (or other specified
Person):
(a) the declaration or payment of any dividend or distribution on or
in respect of any shares of any class of capital stock of or other equity
interests in the Company (or such specified Person);
(b) the purchase, redemption or other retirement for value of any
shares of any class of capital stock of or other equity interest in the
Company (or such specified Person) or any of its Subsidiaries, or of
options, warrants or other rights for the purchase of such shares,
directly, indirectly through a Subsidiary or corporate parent or
otherwise;
(c) any other distribution on or in respect of any shares of any
class of capital stock of or equity or other beneficial interest in the
Company (or such specified Person);
(d) any payment of principal or interest with respect to, or any
purchase, redemption or defeasance of, any Financing Debt of the Company
(or such specified Person) or any of its Subsidiaries which by its terms
or the terms of any agreement is subordinated to the payment of the Credit
Obligations; and
(e) any payment, loan or advance by the Company (or such specified
Person) to, or any other Investment by the Company (or such specified
Person) in, the holder of any shares of any class of capital stock of or
equity interest in the Company (or such specified Person) or any of its
Subsidiaries, or any Affiliate of such holder (including the payment of
management and transaction fees and expenses);
provided, however, that the term "Distribution" shall not include (i) dividends
payable in perpetual common stock of or other similar equity interests in the
Company (or such specified Person) or (ii) payments in the ordinary course of
business in respect of (A) reasonable compensation paid to employees, officers
and directors, (B) advances and reimbursements to employees for travel expenses,
drawing accounts, relocation costs and similar expenditures or (C) payments or
accounts payable, in each case for services rendered or goods sold by,
non-Affiliates that own capital stock of or other equity interests in the
Company (or such specified Person) or any of its Subsidiaries.
"Domestic Subsidiary" means any Subsidiary that is not a Foreign
Subsidiary.
"Eligible Assignee" means (a) a Lender, (b) an Affiliate of a Lender, (c)
a Related Fund and (d) subject to the prior approval of the Agent, such approval
by the Agent not to be unreasonably withheld or delayed:
(i) a commercial bank organized under the laws of the United States
of America, or any state thereof, and having total assets in excess of
$1,000,000,000;
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(ii) a savings and loan association or savings bank organized under
the laws of the United States of America, or any state thereof, and having
total assets in excess of $1,000,000,000;
(iii) a commercial bank organized under the laws of any other
country that is a member of the Organization for Economic Cooperation and
Development or has concluded special lending arrangements with the
International Monetary Fund associated with its General Arrangements to
Borrow or of the Cayman Islands, or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, so long as
such bank is acting through a branch or agency located in the United
States of America;
(iv) the central bank of any country that is a member of the
Organization for Economic Cooperation and Development; and
(v) a finance company, insurance company or other financial
institution or fund (whether a corporation, partnership, trust or other
entity) that is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business and having total
assets in excess of $500,000,000;
provided, however, that no Obligor or Affiliate of an Obligor shall qualify as
an Eligible Assignee under any circumstances.
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment, including the federal Occupational Health and
Safety Act.
"ERISA" means the federal Employee Retirement Income Security Act of 1974.
"ERISA Group Person" means the Company, any of its Subsidiaries and any
Person which is a member of the controlled group or under common control with
the Company or any of its Subsidiaries within the meaning of Section 414 of the
Code or Section 4001(a)(14) of ERISA.
"Event of Default" is defined in Section 12.1.
"Exchange Act" means the federal Securities Exchange Act of 1934.
"Facility Fee" is defined in Section 3.2.2.
"Federal Funds Rate" means, for any day, the rate equal to the weighted
average (rounded upward to the nearest one-sixteenth of one percent (1/16%)) of
(a) the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as such weighted
average is published for such day (or, if such day is not a Banking Day, for the
immediately preceding Banking Day) by the Federal Reserve Bank of New York or
(b) if such rate is not so published for such Banking Day, quotations received
by the Agent from three federal funds brokers of recognized standing selected by
the Agent. Each determination by the Agent of the Federal Funds Rate shall, in
the absence of manifest error, be conclusive.
"Financial Consultant" is defined in Section 5.
"Financial Officer" of the Company (or other specified Person) means its
chief executive officer, chief financial officer, chief operating officer,
chairman, president, treasurer, controller or any of its vice presidents whose
primary responsibility is for its financial affairs, in each case whose
incumbency and
8
signatures have been certified to the Agent by the secretary or other
appropriate attesting officer of the Company (or such specified Person).
"Financing Debt" means each of the items described in clauses (a) through
(f) of the definition of the term "Indebtedness" and, without duplication, any
Guarantees of such items.
"Fleet" means Fleet National Bank.
"Foreign Subsidiary" means each Subsidiary that is organized under the
laws of, and conducting its business primarily in a jurisdiction outside of, the
United States of America and that is not domesticated or dually incorporated
under the laws of the United States of America or the states thereof.
"GAAP" means generally accepted accounting principles as from time to time
in effect, including the statements and interpretations of the United States
Financial Accounting Standards Board; provided, however, that (a) for purposes
of compliance with Section 10 (other than Section 10.4) and the related
definitions, "GAAP" means such principles as in effect on December 31, 2001 as
applied by the Company and its Subsidiaries in the preparation of the most
recent annual statements referred to in Section 10.4.1, and consistently
followed, without giving effect to any subsequent changes thereto and (b) in the
event of a change in generally accepted accounting principles after such date,
either the Company or the Required Lenders may request a change in the
definition of "GAAP", in which case the parties hereto shall negotiate in good
faith with respect to an amendment of this Agreement implementing such change.
"Guarantee" means, with respect to the Company (or other specified
Person):
(a) any guarantee by the Company (or such specified Person) of the
payment or performance of, or any contingent obligation by the Company (or
such specified Person) in respect of, any Indebtedness or other obligation
of any primary obligor;
(b) any other arrangement whereby credit is extended to a primary
obligor on the basis of any promise or undertaking of the Company (or such
specified Person), including any binding "comfort letter" or "keep well
agreement" written by the Company (or such specified Person), to a
creditor or prospective creditor of such primary obligor, to (i) pay the
Indebtedness of such primary obligor, (ii) purchase an obligation owed by
such primary obligor, (iii) pay for the purchase or lease of assets or
services regardless of the actual delivery thereof or (iv) maintain the
capital, working capital, solvency or general financial condition of such
primary obligor;
(c) any liability of the Company (or such specified Person), as a
general partner of a partnership in respect of Indebtedness or other
obligations of such partnership;
(d) any liability of the Company (or such specified Person) as a
joint venturer of a joint venture in respect of Indebtedness or other
obligations of such joint venture;
(e) any liability of the Company (or such specified Person) with
respect to the tax liability of others as a member of a group (other than
a group consisting solely of the Company and its Subsidiaries) that is
consolidated for tax purposes; and
(f) reimbursement obligations, whether contingent or matured, of the
Company (or such specified Person) with respect to letters of credit,
bankers acceptances, surety bonds, other financial guarantees and any
Hedge Agreement from time to time in effect,
in each case whether or not any of the foregoing are reflected on the balance
sheet of the Company (or such specified Person) or in a footnote thereto;
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Guarantee and the amount of Indebtedness resulting from such Guarantee shall be
the maximum amount
9
that the guarantor may become obligated to pay in respect of the obligations
(whether or not such obligations are outstanding at the time of computation).
"Guarantee and Security Agreement" means each of the Subsidiary Guarantee
and the Knowledge Universe Guaranty.
"Guarantor" means (a) each of the Company's Domestic Subsidiaries, (b)
Knowledge Universe and (c) each Person which shall have executed and delivered
or become a party to a Guarantee and Security Agreement hereunder.
"Hazardous Material" means any pollutant, toxic or hazardous material or
waste, including any "hazardous substance" or "pollutant" or "contaminant" as
defined in Section 101(14) of CERCLA or any other Environmental Law or regulated
as toxic or hazardous under RCRA or any other Environmental Law.
"Hedge Agreements" means, collectively, Currency Exchange Agreements and
Interest Rate Protection Agreements.
"Immaterial Subsidiary" means any Subsidiary whose assets (at fair market
value) do not exceed $100,000 and in which the net Investment of the Company and
its Subsidiaries is less than $100,000.
"Indebtedness" means all obligations, contingent or otherwise, which in
accordance with GAAP are required to be classified upon the balance sheet of the
Company (or other specified Person) as liabilities, but in any event including
(without duplication):
(a) borrowed money;
(b) indebtedness evidenced by notes, debentures or similar
instruments;
(c) Capitalized Lease Obligations;
(d) the deferred cash purchase price of assets, services or
securities, including related noncompetition, consulting and stock
repurchase obligations (other than ordinary trade accounts payable within
six months after the incurrence thereof in the ordinary course of
business);
(e) mandatory redemption or dividend rights on capital stock (or
other equity);
(f) reimbursement obligations, whether contingent or matured, with
respect to letters of credit, bankers acceptances, surety bonds, other
financial guarantees and any Hedge Agreement from time to time in effect
(without duplication of other Indebtedness supported or guaranteed
thereby);
(g) unfunded pension liabilities;
(h) obligations that are immediately and directly due and payable
out of the proceeds of or production from property;
(i) liabilities secured by any Lien existing on property owned or
acquired by the Company (or such specified Person), whether or not the
liability secured thereby shall have been assumed; and
(j) all Guarantees in respect of Indebtedness of others.
"Indemnified Party" is defined in Section 13.2.
10
"Initial Closing Date" means December 31, 2002.
"Initial Sibson Proceeds" is defined in Section 4.2.6.
"Initial Term Loan Amount" means $29,200,320.68.
"Interest Payment Date" means (a) the first Banking Day of each calendar
month beginning on the first such date after the date hereof and (b) the
Maturity Date.
"Interest Rate Protection Agreement" means any interest rate swap,
interest rate cap, interest rate hedge or other contractual arrangement that
converts variable interest rates into fixed interest rates, fixed interest rates
into variable interest rates or other similar arrangements.
"Investment" means, with respect to the Company (or other specified
Person):
(a) any share of capital stock, partnership or other equity
interest, evidence of Indebtedness or other security issued by any other
Person;
(b) any loan, advance or extension of credit to, or contribution to
the capital of, any other Person;
(c) any Guarantee of the obligations of any other Person;
(d) any acquisition of all, or any division or similar operating
unit of, the business of any other Person or the assets comprising such
business, division or unit; and
(e) any other similar investment.
The investments described in the foregoing clauses (a) through (e) shall
be included in the term "Investment" whether they are made or acquired by
purchase, exchange, issuance of stock or other securities, merger,
reorganization or any other method; provided, however, that the term
"Investment" shall not include (i) trade and customer accounts receivable for
property leased, goods furnished or services rendered in the ordinary course of
business and payable within one year in accordance with customary trade terms,
(ii) deposits, advances or prepayments to suppliers for property leased or
licensed, goods furnished and services rendered in the ordinary course of
business, (iii) advances to employees for relocation and travel expenses,
drawing accounts and similar expenditures, (iv) stock or other securities
acquired in connection with the satisfaction or enforcement of Indebtedness or
claims or accounts receivable due to the Company (or such specified Person) or
as security for any such Indebtedness or claim or (v) demand deposits in banks
or similar financial institutions.
In determining the amount of outstanding Investments:
(A) the amount of any Investment shall be the cost thereof minus any
returns of capital in cash on such Investment (determined in accordance
with GAAP without regard to amounts realized as income on such
Investment);
(B) the amount of any Investment in respect of a purchase described
in clause (d) above shall include the amount of any Financing Debt assumed
in connection with such purchase or secured by any asset acquired in such
purchase (whether or not any Financing Debt is assumed) or for which any
Person that becomes a Subsidiary is liable on the date on which the
securities of such Person are acquired; and
11
(C) no Investment shall be increased as the result of an increase in
the undistributed retained earnings of the Person in which the Investment
was made or decreased as a result of an equity interest in the losses of
such Person.
"ISP" is defined in Section 2.3.6.
"Junior Credit Participation Agreement" means the Junior Credit
Participation Agreement dated December 31, 2002 among New Lender, Agent and
Lenders.
"Junior Secured Indebtedness" means (a) the principal and interest on any
and all Debentures and all other Indebtedness of the Company and its
Subsidiaries to Knowledge Universe and (b) all other obligations of the Company
and its Subsidiaries to Knowledge Universe with respect to the items in clause
(a), whether now existing or hereafter arising, including intercompany advances
and any claim against the Company and its Subsidiaries in respect of rescission,
indemnification, expenses, damages or otherwise.
"Knowledge Universe" means each of Knowledge Universe Capital Co. LLC,
Knowledge Universe, Inc. and their respective successors and assigns.
"Knowledge Universe Guaranty" means the Second Amended and Restated
Limited Guaranty Agreement dated December 31, 2002 of Knowledge Universe in
favor of the Lenders.
"Late Fee" is defined in Section 3.2.4.
"Legal Requirement" means any present or future requirement imposed upon
any of the Lenders or the Company and its Subsidiaries by any law, statute,
rule, regulation, directive, order, decree or guideline (or any interpretation
thereof by courts or of administrative bodies) of the United States of America,
or any state or political subdivision of any of the foregoing, or by any board,
governmental or administrative agency, central bank or monetary authority of the
United States of America, any jurisdiction where the Company or any of its
Subsidiaries owns property or conducts its business, or any political
subdivision of any of the foregoing. Any such law, statute, rule, regulation,
directive, order, decree, guideline or interpretation imposed on any of the
Lenders not having the force of law shall be deemed to be a Legal Requirement
for purposes of Section 3 if such Lender reasonably believes that compliance
therewith is customary commercial practice.
"Lender" means each of the Persons listed as lenders on the signature page
hereto, including Fleet and Bank of America, N.A., each in its capacity as a
Lender and such other Persons who may from time to time own a Percentage
Interest in the Credit Obligations, but the term "Lender" shall not include any
Credit Participant.
"Lending Officer" means such individuals whom the Agent may designate by
notice to the Company from time to time as an officer or employee who may
receive telephone requests for extensions of credit under Sections 2.1.3 and
2.3.2.
"Leverage Ratio" is defined in Section 10.5.1.
"Lexecon" means Lexecon, Inc., an Illinois corporation and a Subsidiary of
the Company.
"Lexecon Employment Agreements" is defined in Section 6.
"Lien" means, with respect to the Company (or any other specified Person):
(a) any lien, encumbrance, mortgage, pledge, charge or security
interest of any kind upon any property or assets of the Company (or such
specified Person), whether now owned or hereafter acquired, or upon the
income or profits therefrom;
12
(b) the acquisition of, or the agreement to acquire, any property or
asset upon conditional sale or subject to any other title retention
agreement, device or arrangement (including a Capitalized Lease);
(c) the sale, assignment, pledge or transfer for security of any
accounts, general intangibles or chattel paper of the Company (or such
specified Person), with or without recourse;
(d) the transfer of any tangible property or assets for the purpose
of subjecting such items to the payment of previously outstanding
Indebtedness in priority to payment of the general creditors of the
Company (or such specified Person); and
(e) the existence for a period of more than one hundred and twenty
(120) consecutive days of any Indebtedness against the Company (or such
specified Person) which if unpaid would by law or upon a Bankruptcy
Default be given any priority over general creditors.
"Loan" means, collectively, the Revolving Loan and the Term Loan.
"Margin Stock" means "margin stock" within the meaning of Regulations T, U
or X of the Board of Governors of the Federal Reserve System.
"Material Adverse Change" means, since any specified date or from the
circumstances existing immediately prior to the happening of any specified
event, a material adverse change in (a) the business, assets, financial
condition, income or prospects of the Company and its Subsidiaries (on a
Consolidated basis), whether as a result of (i) general economic conditions
affecting the business consulting industry, (ii) fire, flood or other natural
calamities, (iii) regulatory changes, judicial decisions, war or other
governmental action or (iv) any other event or development, whether or not
related to those enumerated above or (b) the ability of the Obligors to perform
their obligations under the Credit Documents or (c) the rights and remedies of
the Agent and the Lenders under the Credit Documents.
"Material Agreements" is defined in Section 11.2.
"Material Financing Debt" means any Financing Debt (other than the Credit
Obligations and, so long as the Subordination Agreement is in full force and
effect, the Debentures) outstanding in an aggregate amount of principal (whether
or not due) and accrued interest exceeding $500,000.
"Maturity Date" means January 1, 2005.
"Maximum Amount of Term Credit" is defined in Section 2.2.2.
"Maximum Amount of Revolving Credit" is defined in Section 2.1.2.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA.
"Net Asset Sale Proceeds" means the cash proceeds of the sale or
disposition of assets (including by way of merger), and the cash proceeds of any
insurance payments on account of the destruction or loss of property, by the
Company or any of its Subsidiaries after the Initial Closing Date, net of (a)
any Indebtedness permitted by Section 10.6.7 (purchase money Indebtedness and
Capitalized Leases) secured by assets being sold in such transaction required to
be paid from such proceeds, (b) income taxes that, as estimated by the Company
in good faith, shall be required to be paid by the Company or any of its
Subsidiaries in cash as a result of, and within 16 months after, such sale or
disposition, (c) reasonable reserves for liabilities, indemnities, escrows and
purchase price adjustments resulting from the sale of assets and (d) all
reasonable expenses of the Company or any of its
13
Subsidiaries payable in connection with the sale or disposition; provided,
however, that "Net Asset Sale Proceeds" shall not include cash proceeds:
(i) of asset sales permitted by Section 10.12.1,
(ii) to the extent not covered in clause (i) above, of mergers
permitted by Section 10.12.2,
(iii) that shall be used to acquire replacement or other assets
within one hundred and eighty (180) days after such sale, disposition,
destruction or loss; provided, however, that if any amount in this clause
(iii) is not actually used to acquire replacement or other assets within
such 180-day period, such amount shall become Net Asset Sale Proceeds,
(iv) of licensing or leasing of assets permitted by Section 10.12.3,
or
(v) of the liquidation or other disposition of Cranberry Hill
Capital.
"Net Debt Proceeds" means cash proceeds (net of reasonable out-of-pocket
transaction fees and expenses) from the incurrence by the Company or any of its
Subsidiaries after the Initial Closing Date of Financing Debt other than
Financing Debt permitted by Sections 10.6.1 (the Loan) and 10.6.7 (purchase
money Indebtedness and Capitalized Leases).
"Net Equity Proceeds" means the cash proceeds (net of reasonable
out-of-pocket fees and expenses) received by the Company or any of its
Subsidiaries in connection with any issuance by the Company or any of its
Subsidiaries after the Initial Closing Date of any shares of its capital stock,
other equity interests or options, warrants or other purchase rights to acquire
such capital stock or other equity interests to, or receipt of a capital
contribution from, any Person (other than any Obligors or their officers,
employees and directors); provided, however, that Net Equity Proceeds shall
exclude all cash proceeds derived from any exercises under the Company's stock
option plans and employee stock purchase plans.
"New Bonus Schedule" means the bonus schedule of the Company dated
December 30, 2002 and delivered to the Lenders on December 30, 2002.
"New Lender" is Knowledge Universe, Inc.
"New Shares" is defined in Section 10.11.
"Nextera & Company" means Nextera & Company, LLC f/k/a Sibson & Company
LLC, a Delaware limited liability company and a Subsidiary of the Company.
"Nonperforming Lender" is defined in Section 14.4.4.
"Notes" means, collectively, the Revolving Notes and the Term Notes.
"Obligor" means the Company, each Guarantor and each other Person
guaranteeing or providing collateral for the Credit Obligations.
"Overdue Reimbursement Rate" means, at any date, the highest Applicable
Rate then in effect.
"Paid in Full" or "Payment In Full" means the indefeasible payment in full
to the Lenders of any and all Credit Obligations in cash or immediately
available funds (other than Refinancing Proceeds) and termination of all lending
commitments and, in the case of Credit Obligations consisting of contingent
obligations in respect of letters of credit, bankers' acceptances or other
reimbursement or payment type guaranties under this Agreement or any of the
Credit Documents, the setting apart of cash sufficient to discharge such portion
of the Credit Obligations (other than Refinancing Proceeds) in an account for
the
14
exclusive benefit of the holders thereof, in which such holders shall be granted
a first priority perfected security interest acceptable to such holders of the
Credit Obligations, which payment or security interest shall have been retained
by the holders of the Credit Obligations, in each case, for a period of time in
excess of all applicable preference or other similar periods under the
Bankruptcy Code and other applicable insolvency laws, state or federal.
"Paradigm and ▇▇▇▇▇▇ Proceeds" is defined in Section 4.2.8.
"Payment Date" means (a) the last Banking Day of each March, June,
September and December, beginning on the first such date after the date hereof
and (b) the Maturity Date.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
entity.
"Percentage Interest" means, with respect to any Lender, the Commitment of
such Lender with respect to the respective portions of the Loan. For purposes of
determining votes or consents by the Lenders, the Percentage Interest of any
Lender shall be computed as follows: (a) at all times when no Event of Default
under Section 12.1.1 and no Bankruptcy Default exists, the ratio that the
respective Commitments of such Lender bears to the total Commitments of all
Lenders as from time to time in effect and reflected in the Register, and (b) at
all other times, the ratio that the respective amounts of the outstanding Loan
owing to such Lender bear to the total outstanding Loan owing to all Lenders.
"Performing Lender" is defined in Section 14.4.4.
"Person" means any present or future natural person or any corporation,
association, partnership, joint venture, limited liability, joint stock or other
company, business trust, trust, organization, business or government or any
governmental agency or political subdivision thereof.
"Persumma APA" means the Purchase and Sale Agreement dated as of December
31, 2001 by and among Persumma Financial LLC, Massachusetts Mutual Life
Insurance Company, NetNext, Inc. and KUI LLC.
"Persumma Proceeds" is defined in Section 4.2.7.
"Persumma Schedule" is defined in Section 9.1.11.
"PIK Interest" means any accrued interest payments on Financing Debt that
are postponed or made through the issuance of "payment-in-kind" notes or other
similar securities (including book-entry accrual with respect to such postponed
interest payments), all in accordance with the terms of such Financing Debt;
provided, however, that in no event shall PIK Interest include payments made
with cash or Cash Equivalents.
"Plan" means, at any date, any pension benefit plan subject to Title IV of
ERISA maintained, or to which contributions have been made or are required to be
made, by any ERISA Group Person within six years prior to such date.
"Prior Credit Agreement" means the Credit Agreement dated as of March 29,
2002, as from time to time in effect, among the Company, its Domestic
Subsidiaries and the Lenders.
"RCRA" means the Federal Resource Conservation and Recovery Act, 42 U.S.C.
Section 690, et seq.
"Refinancing Proceeds" means the payment or repayment of any of the Credit
Obligations with the proceeds of loans provided by one or more of the Lenders in
connection with any refinancing transaction or transactions.
15
"Register" is defined in Section 15.1.3.
"Related Fund" means, with respect to any Lender that is a fund that
invests in senior bank loans, any other fund that invests in senior bank loans
and is managed by the same investment advisor as such Lender or by an Affiliate
of such investment advisor.
"Remaining Sibson Proceeds" is defined in Section 4.2.6.
"Replacement Lender" is defined in Section 15.3.
"Required Lenders" means, with respect to any approval, consent,
modification, waiver or other action to be taken by the Agent or the Lenders
under the Credit Documents which require action by the Required Lenders, such
Lenders as own at least a majority of the Percentage Interests; provided,
however, that with respect to any matters referred to in the proviso to Section
19.1, Required Lenders means such Lenders as own at least the respective
portions of the Percentage Interests required by Section 19.1.
"Revolving Loan" is defined in Section 2.1.4.
"Revolving Notes" is defined in Section 2.1.4.
"S&P" means Standard & Poor's, a division of The McGraw Hill Companies,
Inc.
"Securities Act" means the federal Securities Act of 1933.
"Settlement" means the making or receiving of payments, in immediately
available funds, by the Lenders to the extent necessary to cause each Lender's
actual share of the Revolving Loan to be equal to such Lender's Percentage
Interest with respect to the Revolving Loan, in the event that, prior to such
making or receiving of payments, the actual share is not so equal.
"Sibson APA" means the Asset Purchase Agreement dated as of January 30,
2002 by and among The ▇▇▇▇▇ Group, Inc., as buyer and the Company and Sibson &
Company, LLC, as Sellers.
"Sibson Canada" means Sibson Canada Co., a corporation formed under the
laws of Canada.
"Sibson Proceeds Assignment Agreement" means the Assignment Agreement
dated as of January 30, 2002 by and among the Company and Nextera & Company, as
Assignors and the Principals Trust established pursuant to that certain
Principals' Trust Agreement dated as of January 30, 2002, as Assignee.
"Subordination Agreement" is defined in Section 9.1.6.
"Subsidiary" means any Person of which the Company (or other specified
Person) shall at the time, directly or indirectly through one or more of its
Subsidiaries, (a) own at least fifty percent (50%) of the outstanding capital
stock (or other shares of beneficial interest) entitled to vote generally, (b)
hold at least fifty percent (50%) of the partnership, joint venture or similar
interests or (c) be a general partner or joint venturer and hold at least fifty
percent (50%) of the general partner or joint venturer interests, as the case
may be.
"Subsidiary Guarantee" is defined in Section 9.1.4(a).
"Tax" means any present or future tax, levy, duty, impost, deduction,
withholding or other charges of whatever nature at any time required by any
Legal Requirement (a) to be paid by any Lender or (b) to be withheld or deducted
from any payment otherwise required hereby to be made to any Lender, in each
case on or with respect to its obligations hereunder, from the Loan, any payment
in respect of the Credit
16
Obligations or any Funding Liability not included in the foregoing; provided,
however, that the term "Tax" shall not include taxes imposed upon or measured by
the net income of such Lender or franchise taxes that are imposed in lieu of net
income taxes; provided, further, however, that the term "Tax" shall include
withholding taxes in any event.
"Term Loan" is defined in Section 2.2.3.
"Term Notes" is defined in Section 2.2.3.
"UCP" is defined in Section 2.3.6.
"United States Funds" means such coin or currency of the United States of
America as at the time shall be legal tender therein for the payment of public
and private debts.
"Wholly Owned Subsidiary" means any Subsidiary of which all of the
outstanding capital stock (or other shares of beneficial interest) entitled to
vote generally (other than directors' qualifying shares and, in the case of
Foreign Subsidiaries, shares required by Legal Requirements to be held by
foreign nationals) is owned by the Company (or other specified Person) directly,
or indirectly through one or more Wholly Owned Subsidiaries; provided, however,
that Sibson Canada shall be considered a "Wholly Owned Subsidiary" so long as
the Company owns at least ninety-nine percent (99%) of the outstanding equity of
Sibson Canada.
2. The Credits.
2.1. Revolving Credit.
2.1.1. Revolving Loan. Subject to all the terms and conditions
of this Agreement and so long as no Default exists, from time to
time on and after the Initial Closing Date and prior to the Maturity
Date the Lenders shall, severally in accordance with their
respective Commitments in the Revolving Loan, make loans to the
Company in such amounts as may be requested by the Company in
accordance with Section 2.1.3. The sum of the aggregate principal
amount of loans made under this Section 2.1.1 at any one time
outstanding (including loans made in accordance with any Cash
Management Agreement from time to time in effect) shall in no event
exceed the Maximum Amount of Revolving Credit. In no event shall the
principal amount of loans at any one time outstanding made by any
Lender pursuant to this Section 2.1, exceed such Lender's Commitment
with respect to the Revolving Loan.
2.1.2. Maximum Amount of Revolving Credit. The term "Maximum
Amount of Revolving Credit" means the lesser of:
(a) the total of (i) $3,000,000, minus (ii) any Net Asset Sale
Proceeds described in Section 4.2.2 and Net Debt Proceeds described in
Section 4.2.3, in each case to the extent allocable to the Revolving Loan
in accordance with Section 4.5.2, or
(b) the amount to which the then applicable amount set forth in
clause (a) hereof shall have been irrevocably reduced from time to time by
seven (7) Banking Days notice from the Company to the Agent (the minimum
aggregate amount of which reduction shall be $ 500,000 and integral
multiples of $100,000 in excess thereof).
2.1.3. Borrowing Requests. The Company may from time to time
request a loan under Section 2.1.1 by providing to the Agent a
notice (which may be given by a telephone call received by a Lending
Officer if promptly confirmed in writing). Such notice must be not
later than noon (Boston time) on the first Banking Day prior to the
requested Closing Date for such loan. The notice must specify (a)
the
17
amount of the requested loan (which shall be not less than $500,000
and an integral multiple of $100,000, except as otherwise provided
in any Cash Management Agreement from time to time in effect) and
(b) the requested Closing Date therefor, which shall be a Banking
Day. Upon receipt of such notice, the Agent shall promptly inform
each other Lender (by telephone or otherwise). Each such loan shall
be made at the Boston Office by depositing the amount thereof to the
general account of the Company with the Agent. In connection with
each such loan, the Company shall furnish to the Agent a certificate
certifying that the Company is in compliance with all financial
covenants and other covenants and provisions to be performed or
observed by it under this Agreement (together with calculations
demonstrating such compliance where applicable), and which
certificate shall be in substantially the form of Exhibit 9.2.1.
2.1.4. Revolving Notes. The aggregate principal amount of the
loans outstanding from time to time under this Section 2.1
(including loans made in accordance with any Cash Management
Agreement from time to time in effect) is referred to as the
"Revolving Loan". The Agent shall keep a record of the Revolving
Loan and the respective interests of the Lenders therein as part of
the Register, which shall evidence the Revolving Loan. The Revolving
Loan shall be deemed owed to each Lender having a Commitment therein
severally in accordance with such Lender's Percentage Interest
therein, and all payments thereon shall be for the account of each
Lender in accordance with its Percentage Interest therein. Upon
written request of any Lender, the Company's obligations to pay such
Lender's Percentage Interest in the Revolving Loan shall be further
evidenced by a separate note of the Company in substantially the
form of Exhibit 2.1.4 (the "Revolving Notes"), payable to such
Lender in accordance with such Lender's Percentage Interest in the
Revolving Loan.
2.2. Term Loan.
2.2.1. Term Loan. Subject to all the terms and conditions of
this Agreement and so long as no Default exists, the Lenders shall,
severally in accordance with their respective Commitments in the
Term Loan, make a single loan to the Company on the Initial Closing
Date in the Initial Term Loan Amount. The sum of the aggregate
principal amount of loans made under this Section 2.2.1 at any one
time outstanding shall in no event exceed the Maximum Amount of Term
Credit. In no event shall the principal amount of loans at any one
time outstanding made by any Lender pursuant to this Section 2.2
exceed such Lender's Commitment with respect to the Term Loan.
Amounts which are borrowed under this Section 2.2 and repaid or
prepaid may not be reborrowed.
2.2.2. Maximum Amount of Term Credit. The term "Maximum Amount
of Term Credit" means the lesser of:
(a) the total of (i) $29,200,320.68, minus (ii) any Net Asset Sale
Proceeds described in Section 4.2.2 and Net Debt Proceeds described in
Section 4.2.3, in each case to the extent allocable to the Term Loan in
accordance with Section 4.5.2, or
(b) the amount to which the then applicable amount set forth in
clause (a) hereof shall have been irrevocably prepaid from time to time by
seven (7) Banking Days notice from the Company to the Agent (the minimum
aggregate amount of which reduction shall be $500,000 and integral
multiples of $100,000 thereof).
2.2.3. Term Notes. The aggregate principal amount of the loan
outstanding from time to time under this Section 2.2 is referred to
as the "Term Loan." The Agent shall keep a record of the Term Loan
and the interests of the respective
18
Lenders therein as part of the Register, which shall evidence the
Term Loan. The Term Loan shall be deemed owed to each Lender having
a Commitment therein severally in accordance with such Lender's
Percentage Interest therein, and all payments thereon shall be for
the account of each Lender in accordance with its Percentage
Interest therein. Upon request of any Lender, the Company's
obligations to pay such Lender's Percentage Interest in the Term
Loan shall be evidenced by a separate note of the Company in
substantially the form of Exhibit 2.2.3 (the "Term Notes"), payable
to such Lender in accordance with such Lender's Percentage Interest
in the Term Loan.
2.3. Intentionally Omitted.
2.4. Application of Proceeds.
2.4.1. Revolving Loan. Subject to Section 2.4.4, the Company
shall apply the proceeds of the Revolving Loan for repayment of its
prior obligations to the Lenders, working capital, capital
expenditures and other lawful corporate purposes of the Company and
its Subsidiaries.
2.4.2. Term Loan. The Company shall apply the proceeds of the
Term Loan for repayment of its prior obligations to the Lenders,
working capital, capital expenditures and other lawful corporate
purposes of the Company and its Subsidiaries.
2.4.3. Intentionally Omitted.
2.4.4. Specifically Prohibited Applications. The Company shall
not, directly or indirectly, apply any part of the proceeds of any
extension of credit made pursuant to the Credit Documents to
purchase or to carry Margin Stock or to any transaction prohibited
by the Credit Documents or by Legal Requirements applicable to the
Lenders.
3. Interest; Fees.
3.1. Interest. The Loan shall accrue and bear interest at a rate per annum
which shall at all times equal the Applicable Rate. Prior to any stated or
accelerated maturity of the Loan, the Company shall, on each Interest Payment
Date, pay the accrued and unpaid interest on the portion of the Loan. On the
stated or any accelerated maturity of the Loan, the Company shall pay all
accrued and unpaid interest on the Loan. Upon the occurrence and during the
continuance of an Event of Default, the Lenders may require accrued interest to
be payable on demand or at regular intervals more frequent than each Interest
Payment Date. All payments of interest hereunder shall be made to the Agent for
the account of each Lender in accordance with such Lender's Percentage Interest
therein. In addition, any and all interest that has previously accrued as a
result of Events of Default which occurred under the original Credit Agreement
dated December 30, 1999 (and aggregating approximately $723,400) shall be paid
to the Agent for the account of the Lenders in cash on the Maturity Date unless
waived and such waiver shall be granted only if the Accrued Interest Waiver
Conditions are satisfied at all times prior to the Payment in Full of all Credit
Obligations.
3.2. Commitment Fees.
19
3.2.1. Revolving Credit Commitment Fee. In consideration of
the Lenders' commitments to make the extensions of credit provided
for in Section 2.1, while such commitments are outstanding, the
Company shall pay to the Agent for the account of the Lenders in
accordance with the Lenders' respective Commitments in the Revolving
Loan, on each Payment Date, an amount equal to interest computed at
the Commitment Fee Rate as of such Payment Date on the amount by
which (a) the daily Maximum Amount of Revolving Credit during the
three-month period or portion thereof ending on such Payment Date
exceeded (b) the daily Revolving Loan during such period or portion
thereof.
3.2.2. Facility Fee. In consideration of the Lenders'
commitments to make the extensions of credit provided for in this
Agreement, and while such commitments are outstanding, the Company
shall pay to the Agent for the account of the Lenders in accordance
with the Lenders' respective Commitments in the Loans, a facility
fee equal to $700,000, which fee shall be fully earned on the date
hereof and payable as follows (the "Facility Fee"):
PAYMENT DATE FEE
------------ ---
First day of each calendar month $20,000
Maturity Date $240,000
Notwithstanding the foregoing, the Company's obligation to pay any then unpaid
and not yet due installment of the $700,000 Facility Fee shall be forgiven to
the extent that such fees are not yet due pursuant to the scheduled payment
dates set forth in this Section 3.2.2 if the Credit Obligations are Paid in Full
on or before the respective scheduled payment dates set forth in this Section
3.2.2.
3.2.3. Agency Fee. The Company shall pay to the Agent a fee
equal to $100,000 per annum (the "Agency Fee"). The Agency Fee shall
be fully earned on the date hereof and payable as follows:
PAYMENT DATE FEE
------------ ---
First day of each calendar month $8,333.33
Notwithstanding the foregoing, the Company's obligation to pay any then unpaid
and not yet due installment of the $100,000 Agency Fee shall be forgiven to the
extent such fees are not yet due pursuant to the scheduled payment dates set
forth in this Section 3.2.3 if the Credit Obligations are Paid In Full on or
before the respective scheduled payment dates set forth in this Section 3.2.3.
3.2.4. Late Fee. With respect to any principal, interest, fee
or any other amount payable to the Agent or Lenders hereunder which
is not paid within ten (10) days of its due date (whether at the
stated maturity, by acceleration or otherwise), the Company shall
pay to the Agent a fee on such unpaid amount equal to five percent
(5%) of the amount of such late payment (the "Late Fee").
3.3. Changes in Circumstances; Yield Protection.
3.3.1. Intentionally Omitted.
20
3.3.2. Taxes. All payments of the Credit Obligations shall be
made without set-off or counterclaim and free and clear of any
deductions, including deductions for Taxes, unless the Company is
required by law to make such deductions. If (a) any Lender shall be
subject to any Tax with respect to any payment of the Credit
Obligations or its obligations hereunder or (b) the Company shall be
required to withhold or deduct any Tax on any payment on the Credit
Obligations, then such Lender may claim compensation from the
Company under Section 3.4.5 to the extent such Lender is then in
compliance with any applicable requirements of Section 17. Whenever
Taxes must be withheld by the Company with respect to any payments
of the Credit Obligations, the Company shall promptly furnish to the
Agent for the account of the applicable Lender official receipts (to
the extent that the relevant governmental authority delivers such
receipts) evidencing payment of any such Taxes so withheld. If the
Company fails to pay any such Taxes when due or fails to remit to
the Agent for the account of the applicable Lender the required
receipts evidencing payment of any such Taxes so withheld or
deducted, the Company shall indemnify the affected Lender for any
incremental Taxes and interest or penalties that may become payable
by such Lender as a result of any such failure. In the event any
Lender receives a refund of any Taxes for which it has received
payment from the Company under this Section 3.4.2, such Lender shall
promptly pay the amount of such refund to the Company, together with
any interest thereon actually earned by such Lender.
3.3.3. Capital Adequacy. If any Lender shall determine that
compliance by such Lender with any Legal Requirement regarding
capital adequacy of banks or bank holding companies has or would
have the effect of reducing the rate of return on the capital of
such Lender and its Affiliates as a consequence of such Lender's
commitment to make the extensions of credit contemplated hereby, or
such Lender's maintenance of the extensions of credit contemplated
hereby, to a level below that which such Lender could have achieved
but for such compliance (taking into consideration the policies of
such Lender and its Affiliates with respect to capital adequacy
immediately before such compliance and assuming that the capital of
such Lender and its Affiliates was fully utilized prior to such
compliance) by an amount deemed by such Lender to be material, then
such Lender may claim compensation from the Company under Section
3.4.5.
3.3.4. Regulatory Changes. If any Lender shall determine that
(a) any change in any Legal Requirement (including any new Legal
Requirement) after the date hereof shall directly or indirectly (i)
reduce the amount of any sum received or receivable by such Lender
with respect to the Loan or the return to be earned by such Lender
on the Loan, (ii) impose a cost on such Lender or any Affiliate of
such Lender that is attributable to the making or maintaining of, or
such Lender's commitment to make, its portion of the Loan, or (iii)
require such Lender or any Affiliate of such Lender to make any
payment on, or calculated by reference to, the gross amount of any
amount received by such Lender under any Credit Document (other than
Taxes or income or franchise taxes), and (b) such reduction,
increased cost or payment shall not be fully compensated for by an
adjustment in the Applicable Rate, then such Lender may claim
compensation from the Company under Section 3.4.5.
3.3.5. Compensation Claims. Within fifteen (15) days after the
receipt by the Company of a certificate from any Lender setting
forth why it is claiming compensation under this Section 3.4 and
computations (in reasonable detail) of the amount thereof, the
Company shall pay to such Lender such additional amounts as such
Lender sets forth in such certificate as sufficient fully to
compensate it on account of the foregoing provisions of this Section
3.4, together with interest on such amount from the 15th day after
receipt of such certificate until payment in full thereof at the
Overdue Reimbursement Rate. The determination by such Lender of the
21
amount to be paid to it and the basis for computation thereof
hereunder shall be conclusive so long as (a) such determination is
made in good faith, (b) no manifest error appears therein and (c)
the Lender uses reasonable averaging and attribution methods. The
Company shall be entitled to replace any such Lender in accordance
with Section 15.3.
3.3.6. Mitigation. Each Lender shall take such commercially
reasonable steps as it may determine are not materially
disadvantageous to it, including changing lending offices to the
extent feasible, in order to reduce amounts otherwise payable by the
Company to such Lender pursuant to Section 3.4. In addition, the
Company shall not be responsible for costs under Section 3.4 arising
more than ninety (90) days prior to receipt by the Company of the
certificate from the affected Lender pursuant to such Section 3.4.
3.4. Computations of Interest and Fees. For purposes of this Agreement,
interest, commitment fees (and any other amount expressed as interest or such
fees) shall be computed on the basis of a 365/60-day year. If any payment
required by this Agreement becomes due on any day that is not a Banking Day,
such payment shall be made on the next succeeding Banking Day. If the due date
for any payment of principal is extended as a result of the immediately
preceding sentence, interest shall be payable for the time during which payment
is extended at the Applicable Rate.
4. Payment.
4.1. Loans.
(a) Revolving Loan. On the Maturity Date or any accelerated maturity of
the Revolving Loan, the Company shall pay to the Agent an amount equal to the
Revolving Loan then due, together with all accrued and unpaid interest and fees
with respect thereto and all other Credit Obligations then outstanding.
(b) Term Loan.
(i) Deferred Amortization. The Company acknowledges and agrees
that the Lenders have deferred an aggregate amount of approximately
$2,300,000 (as of December 31, 2002) in payments against the
outstanding principal balance of the Term Loan which were due and
payable under the Prior Credit Agreement ("Deferred Amounts"). The
Company further acknowledges that the cash previously paid to the
Agent on account of the Deferred Amounts has not been applied to the
Obligations (and the Deferred Amounts accordingly have not been
paid) but that such cash amounts shall be deposited into the New
Bonus Account on the Initial Closing Date, and that such Deferred
Amounts shall now be due and payable to the Lenders in full in cash
on the earlier of (a) the Maturity Date (whether as scheduled, by
acceleration or otherwise); and (b) upon the closing of a
Transaction described more fully in Section 5.3.
(ii) Amortization Schedule. From and after the Initial Closing
Date, the Company shall make payments against the outstanding
principal balance of the Term Loan in the amounts and on the dates
set forth in the amortization schedule set forth below (the "Term
Loan Amortization Schedule"):
DATE PRINCIPAL PAYMENT AMOUNT
---- ------------------------
March 31, 2003 $473,529
April 30, 2003 $473,529
May 30, 2003 $473,529
June 30, 2003 $473,529
22
July 31, 2003 $473,529
August 29, 2003 $473,529
September 30, 2003 $473,529
October 31, 2003 $473,529
November 28, 2003 $473,529
December 31, 2003 $473,529
March 31, 2004 $473,529
April 30, 2004 $473,529
May 31, 2004 $473,529
June 30, 2004 $473,529
July 30, 2004 $473,529
August 31, 2004 $473,529
September 30, 2004 $473,529
October 29, 2004 $473,529
November 30, 2004 $473,529
December 31, 2004 $473,529
provided, however, that the final installment shall be payable on the Maturity
Date in an amount equal to the aggregate principal amount of the Term Loan
outstanding on such date, together with all accrued and unpaid interest and fees
thereon. In addition, in the event that the Company at any time makes any
prepayment of the Term Loan under this Agreement, such prepayment shall not
reduce the required monthly payments set forth in the Term Loan Amortization
Schedule, but rather shall be applied in the inverse order to reduce amounts
payable on the Maturity Date.
4.2. Contingent Required Prepayments.
4.2.1. Excess Credit Exposure. If at any time the Revolving
Loan exceeds the limits set forth in Section 2.1 or the Term Loan
exceeds the limits set forth in Section 2.2, the Company shall
within one Banking Day after actual knowledge by a Financial Officer
or notice from the Agent pay the amount of such excess to the Agent
as a prepayment of the Revolving Loan or the Term Loan, as the case
may be.
4.2.2. Net Asset Sale Proceeds. Upon receipt by the Company or
any of its Subsidiaries of Net Asset Sale Proceeds, the Company
shall within one Banking Day pay to the Agent as a prepayment of the
Loan to be applied as provided in Section 4.5.2 the lesser of (a)
the amount of such Net Asset Sale Proceeds or (b) the amount of the
Loan.
4.2.3. Net Debt Proceeds. Upon receipt of Net Debt Proceeds by
the Company or any of its Subsidiaries, the Company shall within one
Banking Day pay to the Agent as a prepayment of the Loan to be
applied as provided in Section 4.5.2 the lesser of (a) the amount of
such Net Debt Proceeds or (b) the amount of the Loan.
4.2.4. Net Equity Proceeds. Upon receipt of Net Equity
Proceeds by the Company or any of its Subsidiaries, the Company
shall within one Banking Day pay to the Agent as a prepayment of the
Loan to be applied as provided in Section 4.5.2 the lesser of (a)
the amount of such Net Equity Proceeds or (b) the amount of the
Loan.
23
4.2.5. Cash Management Agreement. At the times and in the
amounts required by any Cash Management Agreement from time to time
in effect, the Company shall pay to the Agent for the account of the
Lenders prepayments of the Revolving Loan.
4.2.6. Sibson Proceeds. The Company and its Subsidiaries
hereby acknowledge and agree that any and all remaining gross cash
payments, earnouts and other consideration received by the Company
or any of its Domestic Subsidiaries under the Sibson APA without
respect to amendments thereto (the "Remaining Sibson Proceeds")
shall immediately be delivered to the Agent for the account of the
Lenders and applied as a mandatory permanent prepayment of the
Revolving Loan.
4.2.7. Persumma Proceeds. The Company and its Subsidiaries
hereby acknowledge and agree that the entire gross cash and other
consideration remaining to be paid to the Company or any of its
Domestic Subsidiaries in connection with the Persumma APA shall be
delivered to the Agent for the account of the Lenders and applied as
a mandatory permanent prepayment of the Revolving Loan; provided,
however that notwithstanding the foregoing, any and all proceeds
arising from the re-sale of software under the Persumma APA net of
any option price incurred in connection with such re-sale (the
"Persumma Proceeds") shall be applied as follows: (a) fifty percent
(50%) to the Agent for the account of the Lenders and applied as a
mandatory permanent prepayment of the Revolving Loan; and (b) fifty
percent (50%) to the Company for working capital purposes subject to
the prior written consent of the Agent and Lenders which may be
granted or withheld by Agent and Lenders in their discretion;
4.2.8. Paradigm and ▇▇▇▇▇▇ Proceeds. The Company and its
Subsidiaries hereby acknowledge and agree that the entire gross cash
and other consideration remaining to be paid to the Company or any
of its Domestic Subsidiaries in connection with their respective
investments in Paradigm, Inc. or ▇▇▇▇▇▇, Inc. (the "Paradigm and
▇▇▇▇▇▇ Proceeds") shall be delivered to the Agent for the account of
the Lenders and applied as a mandatory permanent prepayment of the
Revolving Loan.
4.3. Voluntary Prepayments. In addition to the prepayments required by Section
4.2, the Company may from time to time prepay all or any portion of the
Revolving Loan or the Term Loan (in a minimum amount of $500,000 and an integral
multiple of $100,000, or such lesser amount as is then outstanding), without
premium or penalty of any type. The Company shall give the Agent at least one
Banking Day prior notice of its intention to prepay the Loan under this Section
4.3, specifying the date of payment and the total amount of the Revolving Loan
or the Term Loan to be paid on such date.
4.4. Intentionally Omitted.
4.5. Reborrowing; Application of Payments, etc.
4.5.1. Reborrowing. The amounts of the Revolving Loan prepaid
pursuant to Sections 4.2.1, 4.2.4, 4.2.5 or 4.3 may be reborrowed
from time to time prior to the Maturity Date in accordance with
Section 2.1, subject to the limits set forth therein.
24
4.5.2. Order of Application. In the absence of notice to the
contrary by the Company, any prepayment of the Loan pursuant to
Sections 4.2.2, 4.2.3, 4.2.4 or 4.3 shall be applied first to the
Term Loan, with any balance to the Revolving Loan.
4.5.3. Payments for Lenders. All payments of principal
hereunder shall be made to the Agent for the account of the Lenders
in accordance with the Lenders' respective Percentage Interests in
the Credit Obligations so repaid.
5. Financial Consultant; Strategic Plans.
5.1. Financial Consultant. The Company hereby acknowledges and agrees that the
Lenders have elected in their discretion to retain, at the Company's expense, a
financial consultant (the "Financial Consultant") to assess the status of the
business operations of the Company and to analyze the Company's current and
future plans with respect to its continued business operations and the Company's
fulfillment of its obligations under the Credit Documents. The Company shall pay
the outstanding fees of the Financial Consultant on the date hereof, and
thereafter the Company shall reimburse the Lenders, or their counsel, as the
case may be, as invoiced, for all reasonable fees and expenses of the Financial
Consultant. Company agrees to cooperate with the Financial Consultant in
conducting its work, to include, without limitation, access to the Company's
facilities and books and records, and the opportunity to interview officers and
key agents and employees of the Company, including the Company's outside
auditors. The Financial Consultant may conduct any such activity without any
prior notice to the Company, provided that, unless there exists a Default or
Event of Default under this Agreement or any Credit Document, the Agent shall
provide the Company with reasonable prior notice of the first time that the
Financial Consultant expects to enter the Company's facilities.
5.2. Business Plan. The Company shall, in good faith and as expeditiously as
possible, develop, and deliver to the Lenders on or before March 31, 2003, a
comprehensive strategic and financial plan through calendar year 2005 addressing
items including the measures taken and to be taken (together with implementation
dates) with respect to the Company's business strategies and plans by business
unit, together with (a) a month-to-month Profit & Loss statement of the Company
and its Subsidiaries; and (b) cash flow projections and pro forma balance sheets
of the Company and its Subsidiaries on a Consolidated and Consolidating basis.
5.3. Investment Banking Firm. The Company shall retain an investment banking
firm to undertake the effectuation of one or more transactions (each, a
"Transaction") that will generate liquidity for the Company and its Subsidiaries
sufficient to timely satisfy all of the Credit Obligations owed to the Agent and
Lenders by the Company and its Subsidiaries. In connection with the foregoing,
the Company shall deliver to the Agent and Lenders the following items on or
before the following dates, each in form and substance satisfactory to the Agent
and Lenders:
(a) On or before January 31, 2003, a fully executed engagement
letter between the Company and such investment banking firm;
(b) On or before April 30, 2003, a final offering memorandum for
soliciting Transactions and a detailed written plan as to the
Company's efforts to effectuate one or more Transactions sufficient
to satisfy the Company's liquidity needs; and
(c) On or before the date that is one week prior to each regularly
schedule payment date under the Term Loan Amortization Schedule, a
detailed written status report on the Company's efforts and progress
towards effectuating one or more Transactions.
25
The foregoing items (a) through (c) shall hereafter be collectively referred as
the "Investment Banking Firm Benchmarks". Agent and Lenders shall distribute
from the net proceeds received on account of any one or more Transactions to the
extent available in the following order and to the following persons:
(i) First: An aggregate amount of $20,000,000 allocated
$10,000,000 to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
$10,000,000 to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in payment of
compensation owed to them by the Company and
its Subsidiaries.
(ii) Second: An aggregate amount of $1,500,000 to the
Company and its Subsidiaries (and to be used
solely for working capital purposes).
(iii) Third: An aggregate amount of $1,000,000, paid to
the Agent for Agent's distribution in turn
(upon receipt of good funds) to the New
Lender in payment of a portion of the unpaid
principal balance on its $5,000,000 junior
credit participation in the Term Loan
evidenced by the Junior Credit Participation
Agreement (and applied in the inverse order
of maturity to principal installments due to
the New Lender).
(iv) Fourth: To the Agent for Agent's distribution in
turn (upon receipt of good funds) to the
Lenders and New Lender on a pro rata basis
in payment of their respective shares of the
unpaid principal balance on the Lenders'
then-outstanding $6,300,000 of principal
deferrals and the New Lender's
then-outstanding $4,000,000 of principal
owing under the Junior Credit Participation
Agreement (and applied in the inverse order
of maturity to principal installments due to
the Lenders and/or New Lender, as
applicable).
(v) Fifth: To the Agent for Agent's distribution in
turn (upon receipt of good funds) to the
Lenders in payment of their respective
shares in the unpaid principal balance on
the then-outstanding Loans and any
then-outstanding Credit Obligations, unless
the Agent and Lenders agree (in writing in
their sole and absolute discretion) to
permit the Company to use such funds for
other lawful purposes in accordance with a
written business or strategic plan which has
also been approved by the Agent and Lenders
(in writing in their sole and absolute
discretion).
Distributions shall be made completely in each level of priority before any
distribution is made in any lower level. To the extent that funds are
insufficient to completely satisfy each level of distribution, they shall be
made pro rata in that level to the persons entitled to such distribution.
6. Lexecon Employee Agreements. On or before the Initial Closing Date, the
Company shall enter an employment agreement and covenants-not-to-compete through
December 31, 2008 with each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in
substantially the form of the agreements attached as Exhibits 6(a) and 6(b)
hereto (the "Lexecon Employment Agreements"). The Company's failure to timely
satisfy any of its obligations under the Lexecon Employment Agreements shall
constitute an Event of Default hereunder (as described more fully in Section
12.1.3 hereof).
7. Matters Relating to Junior Secured Indebtedness.
26
7.1. Principal and Accrued Interest. The principal and accrued
interest owed to Knowledge Universe, on account of the Junior Secured
Indebtedness, as of December 31, 2002, is $47,748,591.99. Knowledge
Universe shall not at any time extend credit to the Company or any
Subsidiary in an aggregate principal amount in excess of such amount;
provided, however, Knowledge Universe may extend credit to the Company or
any of its Subsidiaries in the form of PIK Interest.
7.1.1. Reaffirmation of Guaranty and Related Letter of Credit.
Knowledge Universe hereby acknowledges and reaffirms its liability
for all payment and performance obligations of the Company and its
Subsidiaries to the Agent and the Lenders, now existing or hereafter
arising, pursuant to the terms of the Knowledge Universe Guaranty as
amended hereby. In addition, Knowledge Universe also acknowledges
and reaffirms its supporting Irrevocable Letter of Credit dated
April 16, 2001, as amended through the date of this Agreement, a
true and accurate copy of which is attached as Exhibit 7.1.1.
7.1.2. Knowledge Universe Subordination. Knowledge Universe
acknowledges and agrees that the Junior Secured Indebtedness, and
the rights of Knowledge Universe against the Company and the
Guarantors, and any obligation owed to Knowledge Universe arising
out of or in connection with the Junior Secured Indebtedness or any
document executed or delivered in connection therewith, shall be and
hereby is subordinated to the prior Payment In Full of all Credit
Obligations. Except as set forth in Section 10.10.2 hereof,
Knowledge Universe agrees that neither the Company nor any Guarantor
shall, directly or indirectly, by payment, distribution, set-off,
recoupment or otherwise, pay or distribute any cash, securities or
other property on account of the Junior Secured Indebtedness until
the later of (i) the Maturity Date (whether as scheduled, by
acceleration or otherwise); and (ii) the date upon which the Credit
Obligations owed to the Agent and the Lenders have been Paid In Full
in cash. The Junior Secured Indebtedness is subordinate to liens and
rights of payment on the same terms as set forth herein and in the
Credit Documents to any replacement or successor Senior Lender, such
as in connection with or refinancing of all or a portion of the
Credit Obligations, without fee, delay or other concessions.
7.1.3. Turnover of Distributions. If, notwithstanding the
preceding Section 7.1.2 and subject to Section 10.10.2 below,
Knowledge Universe shall receive any Distributions in respect of
Junior Secured Indebtedness before all Credit Obligations have been
Paid In Full, Knowledge Universe shall hold the same in trust and
promptly transfer and turnover all such Distributions to the Agent
for application to the payment or satisfaction of the Credit
Obligations as provided in this Agreement.
7.1.4. Conversion of Preferred Stock. Knowledge Universe may
restructure, exchange or convert its (a) existing preferred stock in
the Company into any equity or debt securities of the Company, or
(b) its existing Debentures into any preferred stock of the Company;
provided that in either case (a) and (b) the Company shall not,
directly or indirectly, by payment, distribution, set-off,
recoupment or otherwise, pay or distribute any cash, securities or
other property on account of any of such indebtedness owing by
Company to Knowledge Universe (except for Distributions of PIK
Interest), until the later of (x) the Maturity Date (whether as
scheduled, by acceleration or otherwise); and (y) the date upon
which the Credit Obligations owed to the Agent and the Lenders have
been Paid In Full in cash; and, provided further, that any and all
of such indebtedness shall be deemed to be Junior Secured
Indebtedness, which is subordinated in priority and payment to the
Loans, as evidenced by documentation satisfactory to the Agent and
Lenders in their sole and absolute discretion. In addition, any and
all indebtedness owing by the Company to Knowledge Universe shall
not at any time exceed $60,000,000 (exclusive of the
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$5,000,000 loaned pursuant to the Junior Credit Participation
Agreement) in the aggregate (exclusive of PIK Interest and accrued
Interest).
8. Bonus Matters.
8.1. Bonus Obligations. Company and its Subsidiaries have no employment
agreements other than those described in the table attached hereto as Exhibit
8.1, and which Exhibit 8.1 specifies (a) the name of each employee, (b) the
name, date and maturity date of such employee's respective employment agreement,
and (c) the expected bonus compensation owing to such employee during the term
of this Agreement. During the term of this Agreement, neither the Company nor
its Subsidiaries shall extend or modify any of the employment agreements
described on Exhibit 8.1 without the prior written consent of Agent and Lenders
which may be granted or withheld by them in their discretion. In addition,
during the term of this Agreement, neither the Company nor its Subsidiaries
shall make any payments, including but not limited to regularly scheduled
payments of principal, interest or other charges, on account of any subordinated
debt, management fees to affiliates, dividends, bonus compensation to officers,
including but not limited to special incentive bonuses, retention or other
programs or charges, and whether or not such programs, bonuses or charges were
previously announced (the "Bonus Obligations"), except for the following:
(a) In Calendar Year 2003 (For Services Performed In Calendar Year
2002):
(i) Lexecon Employees. The Company may pay bonus
compensation and profit sharing contributions owing to employees of
Lexecon, set forth on Company's New Bonus Schedule (totaling in the
aggregate approximately $6,400,000) from its cash flow; and
(ii) Headquarters. The Company may pay bonus compensation
owing to employees of the Company's "Headquarters" set forth on
Company's New Bonus Schedule (totaling in the aggregate
approximately $475,000) on or after January 31, 2003 from its cash
flow; and
(b) In Calendar Year 2004 (For Services Performed In Calendar Year
2003):
the Company may pay bonus compensation and profit
sharing contributions owing to employees of Lexecon and/or
"Headquarters", which are first approved by the Lenders in writing
in their discretion on or before the respective dates of such
payments.
The Company and its Subsidiaries agree that they shall not pay Bonus
Obligations in excess of the amounts set forth on its New Bonus Schedule unless
the Agent and the Lenders have issued their prior written consent, which consent
may be granted or withheld by the Agent and the Lenders in their discretion. The
Company and its Subsidiaries further acknowledge and agree that all Bonus
Obligations shall be and are expressly subordinate and junior in right of
payment and exercise of remedies to the Credit Obligations owing to the Agent
and the Lenders.
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8.2. Bonus Accounts.
(a) Existing Bonus Account. On the Initial Closing Date the Agent and
Lenders shall release an aggregate amount of $4,200,682 currently held in the
Bonus Account established pursuant to Section 8.2 of the Prior Credit Agreement
for distribution to the following parties designated by the Company:
(i) $100,000 to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ for legal fees and expenses in
connection with its representation of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in respect of the
negotiation and documentation of his Employment Agreement dated the date
hereof and attached hereto as Exhibit 6(a);
(ii) $100,000 to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ for legal fees and expenses
incurred in connection with its representation of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in
respect of the negotiation and documentation of his Employment Agreement
dated the date hereof and attached hereto as Exhibit 6(b); and
(iii) $1,031,175.79 to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in respect of his pro rata
share of the Company's bonus accruals for its fiscal year 2002;
(iv) $1,051,179.20 to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in respect of his pro rata
share of the Company's bonus accruals for its fiscal year 2002;
(v) $1,918,327.01 or such other amount agreed to by Company and
Lenders to the Company's operating account number 275-05843.
(b) New Bonus Account. On or before the Initial Closing Date, the Company
shall establish with the Agent a segregated account subject to Lenders' liens,
and which shall thereafter be funded by the Company in cash in an amount equal
to the Agreed Percentage (as defined below) of all employee bonuses which are
earned but unpaid in 2003 (except any accrued bonuses not subject to this
Section 8.2, as designated in their discretion by the Agent and the Lenders in
writing) ("New Bonus Account"), which New Bonus Account shall disbursed by the
Company only to fund such bonuses, and thereafter the Company shall deposit
additional cash into the New Bonus Account if additional bonuses are earned
and/or accrued and not immediately paid. The Agreed Percentage referred to in
this Section 8.2 shall mean an amount equal to the dollar amount of all such
accrued and unpaid bonuses, plus in each calendar month an additional amount
equal to the then applicable percentage of such accrued and unpaid bonuses set
forth in the row titled "Escrow Earned and Unpaid Bonus Percentage" in Company's
forecasts dated December 30, 2002 and delivered to the Agent and the Lenders by
e-mail on December 30, 2002. Notwithstanding the foregoing, the Company shall be
permitted to use the funds held in the New Bonus Account for its immediate cash
needs on account of payroll and payroll taxes up to four (4) times prior to the
Maturity Date; provided, however, that the Company shall replenish any and all
New Bonus Account funds used for such purpose in full in cash within thirty (30)
days of each such occurrence. The Company's failure to replenish the New Bonus
Account funds in full in cash within the time period set forth in the preceding
sentence shall constitute an Event of Default hereunder (as described more fully
in Section 12.1.3 hereof).
8.3. Bonus Schedule Confidentiality. The Agent and the Lenders acknowledge and
agree that the Bonus Schedule is subject to Section 16 of this Agreement
(Confidentiality).
9. Conditions to Extending Credit.
9.1. Conditions on Initial Closing Date. The obligations of the Lenders to make
the initial extension of credit pursuant to Section 2 shall be subject to the
satisfaction, on or before the Initial Closing Date, of the
29
conditions set forth in this Section 9.1 as well as the further conditions in
Section 9.2. If the conditions set forth in this Section 9.1 are not met on or
prior to the Initial Closing Date, the Lenders shall have no obligation to make
any extensions of credit hereunder.
9.1.1. Notes. The Company shall have duly executed and
delivered to the Agent a Revolving Note and a Term Note for each
Lender having a Commitment with respect thereto who has requested
delivery of a Note prior to the Initial Closing Date.
9.1.2. Payment of Fees.
(a) Facility Fee. The Company shall have paid to the Agent for the
account of the Lenders the first installment of the Facility Fee described
in Section 3.2.2 of this Agreement;
(b) Accrued Fees. On or before the Initial Closing Date, the Company
shall deliver a retainer to Agent in cash in an aggregate amount of
$50,000 for application towards Agent's legal fees and expenses and other
expenses (including, without limitation, any and all fees and expenses
incurred on account of the Financial Consultant) incurred in connection
with the negotiation and documentation of this Agreement and the
transactions contemplated herein ("Retainer"); provided, however, that any
unused portion of such Retainer shall be refunded to the Company promptly
after the Initial Closing Date.
9.1.3. Schedule of Investments. On or before the Initial
Closing date, the Agent and Lenders shall have received an updated
schedule of all certificated equity holdings and/or investments
taken in lieu of fees.
9.1.4. Legal Opinions. On the Initial Closing Date, the
Lenders shall have received from Maron & Sandler, special counsel
for the Company and its Subsidiaries, its opinion with respect to
the transactions contemplated by the Credit Documents, which opinion
shall be in form and substance reasonably satisfactory to the
Required Lenders. The Company authorizes and directs its special
counsel to furnish the foregoing opinion.
9.1.5. Guarantee and Security Agreements.
(a) Subsidiary Guarantee. Each of the Company and its Domestic
Subsidiaries (other than Cranberry Hill Capital) shall have duly
authorized, executed and delivered to the Agent an Amended and Restated
Guarantee and Security Agreement in substantially the form of Exhibit
9.1.4(a) (the "Subsidiary Guarantee").
(b) Knowledge Universe Guaranty. Knowledge Universe Capital Co. LLC
shall have duly authorized, executed and delivered to the Agent an Amended
and Restated Limited Guaranty in substantially the form of Exhibit
9.1.4(b) (the "Knowledge Universe Guaranty").
9.1.6. Perfection of Security. Each Obligor shall have duly
authorized, executed, acknowledged, delivered, filed, registered and
recorded such security agreements, notices, financing statements,
memoranda of intellectual property security interests and other
instruments as the Agent may have reasonably requested in order to
perfect the Liens purported or required pursuant to the Credit
Documents to be created in the Credit Security and shall have paid
all filing or recording fees or taxes required to be paid in
connection therewith, including any recording, mortgage,
documentary, transfer or intangible taxes.
30
9.1.7. Subordination Agreement. Each of Knowledge Universe
Capital Co. LLC and the Company shall have duly authorized, executed
and delivered to the Agent a Second Amended and Restated
Subordination Agreement in substantially the form of Exhibit 9.1.6
(the "Subordination Agreement").
9.1.8. Junior Credit Participation Agreement. Each of New
Lender, Agent and Lenders shall have duly authorized, executed and
delivered a junior, last out participation by New Lender in the Term
Loan in an amount of not less than $5,000,000 (as described more
fully in Section 15.2) in substantially the form of Exhibit 9.1.7,
and New Lender shall have purchased and fully paid for such
participation.
9.1.9. Insurance Policies. The Company shall have delivered to
the Agent copies of any and all insurance policies described in
Sections 10.3.1 through 10.3.3, and as soon as available (but in any
event no later than February 28, 2003) copies of any and all
policies described in Section 10.3.4.
9.1.10. Amended and Restated Warrants. The Company shall have
delivered to the Lenders the warrants described in Section 10.10.
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9.1.11. Solvency.
(a) After giving effect to the incurrence of the Credit Obligations, the
Company and its Domestic Subsidiaries, taken as a whole:
(i) shall be solvent;
(ii) shall have assets having a fair saleable value in excess of the
amount required to pay their probable liability on their existing debts as
such debts become absolute and mature;
(iii) shall have access to adequate capital for the conduct of their
business; and
(iv) shall have the ability to pay their debts from time to time
incurred as such debts mature.
9.1.12. Termination of Prior Credit Agreement.
Contemporaneously with the initial advances hereunder, the Company
and its Subsidiaries shall have paid in full all principal, interest
and other accrued and outstanding amounts under the Prior Credit
Agreement, all Liens securing amounts owing under the Prior Credit
Agreement shall have been released or assigned to the Agent and the
Prior Credit Agreement shall have become terminated and of no
further force or effect (except for indemnity provisions that by
their terms survive the termination of the Prior Credit Agreement).
9.1.13. Proper Proceedings. This Agreement, each other Credit
Document and the transactions contemplated hereby and thereby shall
have been authorized by all necessary corporate or other
proceedings. All necessary consents, approvals and authorizations of
any governmental or administrative agency or any other Person of any
of the transactions contemplated hereby or by any other Credit
Document shall have been obtained and shall be in full force and
effect.
9.1.14. General. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement
shall be reasonably satisfactory in form and substance to the Agent
and the Agent shall have received copies of all documents, including
certified copies of the Charter and By-Laws of the Company and the
other Obligors, records of corporate proceedings, certificates as to
signatures and incumbency of officers and opinions of counsel, which
the Agent may have reasonably requested in connection therewith,
such documents where appropriate to be certified by proper corporate
or governmental authorities.
9.2. Conditions to Each Extension of Credit. The obligations of the Lenders to
make any extension of credit pursuant to Section 2 shall be subject to the
satisfaction, on or before the Closing Date for such extension of credit, of the
following conditions:
9.2.1. Officer's Certificate. The representations and
warranties contained in Section 11 shall be true and correct on and
as of such Closing Date with the same force and effect as though
made on and as of such date (except as to any representation or
warranty which refers to a specific earlier date); no Default shall
exist on such Closing Date prior to or immediately after giving
effect to the requested extension of credit; no Material Adverse
Change shall have occurred; and the Company shall have furnished to
the Agent in connection with the requested
32
extension of credit a certificate to these effects, in substantially
the form of Exhibit 9.2.1, signed by a Financial Officer.
9.2.2. Legality, etc. The making of the requested extension of
credit shall not (a) subject any Lender to any penalty or special
tax (other than a Tax for which the Company is required to reimburse
the Lenders under Section 3.4), (b) be prohibited by any Legal
Requirement or (c) violate any credit restraint program of the
executive branch of the government of the United States of America,
the Board of Governors of the Federal Reserve System or any other
governmental or administrative agency so long as any Lender
reasonably believes that compliance therewith is customary
commercial practice.
10. General Covenants. Each of the Company and the other Guarantors covenants
that, until all of the Credit Obligations shall have been paid in full and until
the Lenders' commitments to extend credit under this Agreement and any other
Credit Document shall have been irrevocably terminated, the Company and its
Subsidiaries shall comply with the following provisions:
10.1. Taxes and Other Charges: Accounts Payable.
10.1.1. Taxes and Other Charges. Each of the Company and its
Subsidiaries shall duly pay and discharge, or cause to be paid and
discharged, before the same becomes in arrears, all taxes,
assessments and other governmental charges imposed upon such Person
and its properties, sales or activities, or upon the income or
profits therefrom, as well as all claims for labor, materials or
supplies which if unpaid might by law become a Lien upon any of its
property; provided, however, that any such tax, assessment, charge
or claim need not be paid if the validity or amount thereof shall at
the time be contested in good faith by appropriate proceedings and
if such Person shall, in accordance with GAAP, have set aside on its
books adequate reserves with respect thereto; and provided, further,
that each of the Company and its Subsidiaries shall pay or bond, or
cause to be paid or bonded, all such taxes, assessments, charges or
other governmental claims immediately upon the commencement of
proceedings to foreclose any Lien which may have attached as
security therefor (except to the extent such proceedings have been
dismissed or stayed).
10.1.2. Accounts Payable. Each of the Company and its
Subsidiaries shall promptly pay when due, or in conformity with
customary trade terms, all accounts payable incident to the
operations of such Person not referred to in Section 10.1.1;
provided, however, that any such accounts payable need not be paid
if the validity or amount thereof shall at the time be contested in
good faith and if such Person shall, in accordance with GAAP, have
set aside on its books adequate reserves with respect thereto.
10.2. Conduct of Business, etc.
10.2.1. Types of Business. The Company and its Subsidiaries
shall engage only in the business of (a) business consulting, (b)
minority investments in and cooperative ventures with Internet,
intellectual property and other service-oriented businesses and (c)
other activities related thereto.
10.2.2. Maintenance of Properties. Each of the Company and its
Subsidiaries:
33
(a) shall keep its properties in such repair, working order and condition,
and shall from time to time make such repairs, replacements, additions and
improvements thereto, as are necessary for the efficient operation of its
businesses and shall comply at all times in all material respects with all
material franchises, licenses and leases to which it is party so as to prevent
any loss or forfeiture thereof or thereunder, except where (i) compliance is at
the time being contested in good faith by appropriate proceedings and (ii)
failure to comply with the provisions being contested has not resulted, and does
not create a material risk of resulting, in the aggregate in any Material
Adverse Change; and
(b) shall do all things necessary to preserve, renew and keep in full
force and effect and in good standing its legal existence and authority
necessary to continue its business; provided, however, that this Section
10.2.2(b) shall not prevent the merger, consolidation or liquidation of
Subsidiaries permitted by Section 10.12.
10.2.3. Statutory Compliance. Each of the Company and its
Subsidiaries shall comply in all material respects with all valid
Legal Requirements applicable to it, except where (a) compliance
therewith shall at the time be contested in good faith by
appropriate proceedings and (b) failure so to comply with the
provisions being contested has not resulted, and does not create a
material risk of resulting, in the aggregate in any Material Adverse
Change.
10.2.4. Compliance with Material Agreements. Each of the
Company and its Subsidiaries shall comply in all material respects
with the Material Agreements (to the extent not in violation of the
other provisions of this Agreement or any other Credit Document).
Without the prior written consent of the Required Lenders, no
Material Agreement shall be amended, modified, waived or terminated
in any manner that would have in any material respect an adverse
effect on the interests of the Lenders.
10.3. Insurance.
10.3.1. Business Interruption Insurance. Each of the Company
and its Subsidiaries shall maintain with financially sound and
reputable insurers insurance related to interruption of business,
either for loss of revenues or for extra expense, in the manner
customary for businesses of similar size engaged in similar
activities.
10.3.2. Property Insurance. Each of the Company and its
Subsidiaries shall keep its assets which are of an insurable
character insured by financially sound and reputable insurers
against theft and fraud and against loss or damage by fire,
explosion and hazards insured against by extended coverage to the
extent, in amounts and with deductibles at least as favorable as
those generally maintained by businesses of similar size engaged in
similar activities.
10.3.3. Liability Insurance. Each of the Company and its
Subsidiaries shall maintain with financially sound and reputable
insurers insurance against liability for hazards, risks and
liability to persons and property to the extent, in amounts and with
deductibles at least as favorable as those generally maintained by
businesses of similar size engaged in similar activities; provided,
however, that it may effect workers' compensation insurance or
similar coverage with respect to operations in any particular state
or other jurisdiction through an insurance fund operated by such
state or jurisdiction or by meeting the self-insurance requirements
of such state or jurisdiction.
10.3.4. Key Man Life Insurance.
34
On or before February 28, 2003, the Company and its Subsidiaries shall obtain,
and thereafter maintain, key man life insurance in an amount equal to
$30,000,000 or another amount agreed to by Company and Lenders, which shall be
sufficient to satisfy the Company's obligations under the Lexecon Employment
Agreements and shall be satisfactory to the Agent and Lenders in their sole and
absolute discretion. In addition, on or before February 28, 2003, the Company
and its Subsidiaries shall deliver to the Agent and Lenders written evidence
that duly executed assignments in favor of the Agent and Lenders, each in form
and substance satisfactory to Agent and Lenders in their sole and absolute
discretion, of $10,000,000 of additional life insurance policies (which shall be
in addition to and not in lieu of the $30,000,000 of key man life insurance
described in the preceding sentence, such that the total key man life insurance
policies taken out by the Company pursuant to this Section 10.3.4 shall be in an
amount equal to $40,000,000 or another amount agreed to by Company and Lenders)
on the lives of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, in the respective dollar
amounts of $5,000,000 on the life of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and $5,000,000 on the life
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, are held by the Company and its Subsidiaries and duly
recorded on the books and records of the insurance companies that issued such
policies.
10.4. Financial Statements and Reports. Each of the Company and its Subsidiaries
shall maintain a system of accounting in which correct entries shall be made of
all transactions in relation to their business and affairs in accordance with
generally accepted accounting practice. The fiscal year of the Company and its
Subsidiaries shall end on December 31 in each year and the fiscal quarters of
the Company and its Subsidiaries shall end on March 31, June 30, September 30
and December 31 in each year.
10.4.1. Annual Reports. The Company shall furnish to the Agent
(with copies for each Lender) within ninety two (92) days after the
end of each fiscal year, the Consolidated and Consolidating balance
sheets of the Company and its Subsidiaries as at the end of such
fiscal year, the Consolidated and Consolidating statements of income
and Consolidated statements of changes in shareholders' equity and
of cash flows of the Company and its Subsidiaries for such fiscal
year (all in reasonable detail) and, in the case of Consolidated
financial statements, comparative figures for the immediately
preceding fiscal year, all accompanied by:
(a) Reports of independent certified public accountants of
recognized national standing reasonably satisfactory to the Required
Lenders, containing no material qualification, to the effect that they
have audited the foregoing Consolidated financial statements in accordance
with generally accepted auditing standards and that such Consolidated
financial statements present fairly, in all material respects, the
financial position of the Company and its Subsidiaries covered thereby at
the dates thereof and the results of their operations for the periods
covered thereby in conformity with GAAP.
(b) The statement of such accountants that they have caused this
Agreement to be reviewed and that in the course of their audit of the
Company and its Subsidiaries no facts have come to their attention that
cause them to believe that any Default exists and in particular that they
have no knowledge of any Default under the Computation Covenants or, if
such is not the case, specifying such Default and the nature thereof. This
statement is furnished by such accountants with the understanding that the
examination of such accountants cannot be relied upon to give such
accountants knowledge of any such Default except as it relates to
accounting or auditing matters within the scope of their audit.
(c) A certificate of the Company signed by a Financial Officer to
the effect that such officer has caused this Agreement to be reviewed and
has no knowledge of any Default, or if such officer has such knowledge,
specifying such Default and the nature thereof, and what action the
Company has taken, is taking or proposes to take with respect thereto.
35
(d) Computations by the Company comparing the financial statements
referred to above with the most recent budget for such fiscal year
furnished to the Agent in accordance with Section 10.4.4.
(e) Beginning in the Company's fiscal year ended December 31, 2003,
Computations by the Company in substantially the form of Exhibit 10.4
demonstrating, as of the end of such fiscal year, compliance with the
Computation Covenants, signed by a Financial Officer.
(f) Calculations, as at the end of such fiscal year, of (i) the
Accumulated Benefit Obligations for each Plan (other than Multiemployer
Plans) having Accumulated Benefit Obligations in excess of $1,000,000 and
(ii) the fair market value of the assets of such Plan allocable to such
benefits.
(g) Supplements to Exhibits 11.1, 11.3, 11.14 and 11.15 showing any
changes in the information set forth in such exhibits not previously
furnished to the Agent in writing, as well as any changes in the Charter,
Bylaws or incumbency of officers of the Obligors from those previously
certified to the Agent.
(h) In the event of a change in GAAP after December 31, 2001,
computations by the Company, signed by a Financial Officer, reconciling
the financial statements referred to above with financial statements
prepared in accordance with GAAP as applied to the other covenants in
Section 10.5 and related definitions.
(i) In reasonable detail, management's discussion and analysis of
the results of operations and the financial condition of the Company and
its Subsidiaries as at the end of and for the year covered by such
financial statements.
10.4.2. Quarterly Reports. The Company shall furnish to the
Agent (with copies for each Lender) within forty seven (47) days
after the end of each of the first three fiscal quarters of the
Company, the internally prepared Consolidated and Consolidating
balance sheets of the Company and its Subsidiaries as of the end of
such fiscal quarter, the Consolidated and Consolidating statements
of income and the Consolidated statements of changes in
shareholders' equity and of cash flows of the Company and its
Subsidiaries for such fiscal quarter and for the portion of the
fiscal year then ended (all in reasonable detail) and comparative
figures for the same period in the preceding fiscal year, all
accompanied by:
(a) A certificate of the Company signed by a Financial Officer to
the effect that such financial statements have been prepared in accordance
with GAAP and present fairly, in all material respects, the financial
position of the Company and its Subsidiaries covered thereby at the dates
thereof and the results of their operations for the periods covered
thereby, subject only to normal year-end audit adjustments and the
addition of footnotes.
(b) A certificate of the Company signed by a Financial Officer to
the effect that such officer has caused this Agreement to be reviewed and
has no knowledge of any Default, or if such officer has such knowledge,
specifying such Default and the nature thereof and what action the Company
has taken, is taking or proposes to take with respect thereto.
(c) Computations by the Company comparing the financial statements
referred to above with the most recent budget for the period covered
thereby furnished to the Agent in accordance with Section 10.4.4.
36
(d) Computations by the Company in substantially the form of Exhibit
10.4 demonstrating, as of the end of such quarter, compliance with the
Computation Covenants, signed by a Financial Officer.
(e) Supplements to Exhibits 11.1, 11.3, 11.14 and 11.15 showing any
changes in the information set forth in such exhibits not previously
furnished to the Agent in writing, as well as any changes in the Charter,
Bylaws or incumbency of officers of the Obligors from those previously
certified to the Agent.
(f) In reasonable detail, management's discussion and analysis of
the results of operations and financial condition of the Company and its
Subsidiaries as at the end of and for the fiscal period covered by the
financial statements referred to above.
(g) An updated schedule of all intellectual property owned or used
by the Company.
10.4.3. Monthly Reports.
(a) Rolling Thirteen-Week Cash Flow Forecast Report. The Company
shall furnish to Agent (with copies for each Lender) as soon as available
and, in any event, within ten (10) days after the end of each calendar
month: (i) an updated thirteen-week cash flow projection whereby the first
calendar month shall be deleted and updated with the calendar month
immediately succeeding the last calendar month included in the previous
report; (ii) a detailed reconciliation analysis of actual results compared
to projected results for the prior month; and (iii) a written explanation
of all material variances.
(b) Payable and Receivable Agings and Other Reports. The Company
shall furnish to the Agent (with copies to each Lender) as soon as
available and, in any event, within twenty five (25) days after the end of
each calendar month, an updated comprehensive and operational report for
the prior month containing such items as payable and receivable agings, an
internally prepared Consolidated balance sheet of the Company and its
Subsidiaries, and Consolidated Statements of income and cash flows of the
Company and its Subsidiaries, together with other financial reporting
items in substantially the form of the Company's internal reports.
(c) Balance Sheets, Statements of Income and Internal Reports. The
Company shall furnish to the Agent (with copies to each Lender) as soon as
available and, in any event, within twenty five (25) days after the end of
each month (other than months that coincide with the end of a fiscal
quarter of the Company, the internally prepared Consolidated balance sheet
of the Company and its Subsidiaries as at the end of such month and the
Consolidated statements of income of the Company and its Subsidiaries for
such month (all in reasonable detail), together with written detail as to
all material variances from the Company's budget and such other financial
reporting items in substantially the form of the Company's internal
monthly reports, all accompanied by a certificate of the Company signed by
a Financial Officer to the effect that such financial statements were
prepared in accordance with GAAP and present fairly, in all material
respects, the financial position of the Persons covered thereby at the
dates thereof and the results of their operations for the periods covered
thereby, subject only to normal year-end audit adjustments and the
addition of footnotes.
(d) Financial Covenants. The Company shall furnish to the Agent
(with copies to each Lender) as soon as available and, in any event,
within forty five (45) days after the end of each calendar quarter (March,
June, September and December), a report that demonstrates the Company's
compliance (or non-compliance) with the Certain Financial Tests set forth
in Section 10.5 and within twenty five (25) days after the end of each
calendar month, a report that demonstrates compliance (or non-compliance)
with the requirements of the New Bonus Account set forth at Section 8.2 of
this Agreement.
37
10.4.4. Other Reports. The Company shall promptly furnish to
the Agent (with copies to each Lender):
(a) As soon as prepared and in any event before the beginning of
each fiscal year, an annual budget and operating projections for such
fiscal year of the Company and its Subsidiaries.
(b) Any material updates of such budget and projections.
(c) Any management letters furnished to the Company or any of its
Subsidiaries by the Company's auditors.
(d) All budgets, projections, statements of operations and other
reports furnished generally to the shareholders of the Company.
(e) Such registration statements, proxy statements and reports,
including Forms S-l, ▇-▇, ▇-▇, ▇-▇, 10-K, 10-Q and 8-K, as may be filed by
the Company or any of its Subsidiaries with the Securities and Exchange
Commission.
(f) Any 90-day letter or 30-day letter from the federal Internal
Revenue Service (or the equivalent notice received from state or other
taxing authorities) asserting tax deficiencies against the Company or any
of its Subsidiaries.
10.4.5. Notice of Litigation, Defaults, etc. The Company shall
promptly furnish to the Agent notice of any litigation or any
administrative or arbitration proceeding (a) which creates a
material risk of resulting, after giving effect to any applicable
insurance, in the payment by the Company and its Subsidiaries of
more than $250,000 or (b) which results, or creates a material risk
of resulting, in a Material Adverse Change. Promptly upon acquiring
knowledge thereof, the Company shall notify the Agent of the
existence of any Default or Material Adverse Change, specifying the
nature thereof and what action the Company or any of its
Subsidiaries has taken, is taking or proposes to take with respect
thereto.
10.4.6. ERISA Reports. The Company shall furnish to the Agent
(with copies for each Lender) as soon as available the following
items with respect to any Plan:
(a) any request for a waiver of the funding standards or an
extension of the amortization period,
(b) notice of any reportable event (as defined in Section 4043 of
ERISA), unless the notice requirement with respect thereto has been waived
by regulation,
(c) any notice received by any ERISA Group Person that the PBGC has
instituted or intends to institute proceedings to terminate any Plan, or
that any Multiemployer Plan is insolvent or in reorganization,
(d) notice of the possibility of the termination of any Plan by its
administrator pursuant to Section 4041 of ERISA, and
(e) notice of the intention of any ERISA Group Person to withdraw,
in whole or in part, from any Multiemployer Plan.
10.4.7. Other Information. Subject to Section 16, from time to
time at reasonable intervals upon request of the Agent, each of the
Company and its
38
Subsidiaries shall furnish to the Agent such other information
regarding the business, assets, financial condition, income or
prospects of the Company and its Subsidiaries as such officer may
reasonably request, including copies of all tax returns, licenses,
agreements, leases and instruments to which any of the Company or
its Subsidiaries is party. Each Lender's authorized officers and
representatives shall have the right during normal business hours
upon reasonable notice and at reasonable intervals to examine the
books and records of the Company and its Subsidiaries, to make
copies and notes therefrom for the purpose of ascertaining
compliance with or obtaining enforcement of this Agreement or any
other Credit Document; provided, however, that the Agent shall
coordinate the exercise of such Lenders' rights to the extent
practicable.
10.5. Certain Financial Tests.
10.5.1. Leverage Ratio. The Company shall not permit for any
period set forth below (measured as of the last day of each fiscal
quarter of the Company), the ratio of (a) Consolidated Total Senior
Debt (measured as of the last day of each fiscal quarter of the
Company) to (b) Consolidated EBITDA to be more than the ratio
corresponding to such period in the table set forth below. For
purposes of the Leverage Ratio, the calculation of Consolidated
EBITDA shall be based on Consolidated EBITDA for the immediately
preceding twelve (12) months ended as of the last day of such
quarter.
39
PERIOD ENDING LEVERAGE RATIO
------------- --------------
December 31, 2002 2.7:1.00
March 31, 2003 3.15:1.00
June 30, 2003 3.75:1.00
September 30, 2003 4.7:1.00
December 31, 2003 5.6:1.00
March 31, 2004 4.5:1.00
June 30, 2004 3.5:1.00
September 30, 2004 2.8:1.00
10.5.2. Current Ratio. The ratio of Consolidated Current
Assets to Consolidated Current Liabilities (measured on the last day
of each fiscal quarter of the Company) shall not at any time be less
than the ratio corresponding to such period in the table set forth
below:
FISCAL QUARTER ENDED RATIO
-------------------- -----
December 31, 2002 1.2:1.00
March 31, 2003 1.3:1.00
June 30, 2003 1.3: 1.00
September 30, 2003 1.2:1.00
December 31, 2003 1.2:1.00
March 31, 2004 .25:1.00*
June 30, 2004 .25:1.00*
September 30, 2004 .25:1.00*
*The ratios set forth for the periods ending March 31, 2004, June 30, 2004
and September 30, 2004 assume that the Credit Obligations owing to the Lenders
are carried as current liabilities on the balance sheet of the Company and its
Subsidiaries at such date determined in accordance with GAAP on a Consolidated
basis. In the event that the foregoing ratios are not carried as current
liabilities on the balance sheet of the Company and its Subsidiaries at such
date determined in accordance with GAAP on a Consolidated basis, then the ratios
for such periods shall be adjusted accordingly.
10.5.3. Total Debt Service Ratio. The ratio of (a)
Consolidated EBITDA minus actual cash payments made or accrued on
account of taxes and Capital Expenditures (measured on the last day
of each fiscal quarter of the Company) to (b) Consolidated Total
Debt Service (excluding the Cambridge Acquisition Note) shall not at
any time be less than the ratios corresponding to such period in the
table set forth below:
40
FOUR CONSECUTIVE FISCAL QUARTERS ENDED TOTAL DEBT SERVICE RATIO
-------------------------------------- ------------------------
December 31, 2002 1.4:1.00
March 31, 2003 1.15:1.00
June 30, 2003 1.00:1.00
September 30, 2003 .75:1.00
December 31, 2003 .5:1.00
March 31, 2004 .7:1.00
June 30, 2004 .9:1.00
September 30, 2004 1.05:1.00
10.5.4. Maximum Capital Expenditures. The Company shall not
make, or permit any of its Subsidiaries to make, any Capital
Expenditures that would cause the aggregate of all such Capital
Expenditures made by the Company and its Subsidiaries to exceed
$1,500,000 in the Company's fiscal year ended 2003 and $1,500,000 in
the Company's fiscal year ended 2004 in the aggregate at any time.
10.6. Indebtedness. Neither the Company nor any of its Subsidiaries shall
create, incur, assume or otherwise become or remain liable with respect to any
Indebtedness (or become contractually committed to do so), except the following:
10.6.1. Indebtedness in respect of the Credit Obligations.
10.6.2. Guarantees permitted by Section 10.7.
10.6.3. Current liabilities, other than Financing Debt,
incurred in the ordinary course of business.
10.6.4. To the extent that payment thereof shall not at the
time be required by Section 10.1, Indebtedness in respect of taxes,
assessments, governmental charges and claims for labor, materials
and supplies.
10.6.5. Indebtedness secured by Liens of carriers, warehouses,
mechanics, landlords and other Persons permitted by Sections 10.8.5
and 10.8.6.
10.6.6. Indebtedness in respect of judgments or awards (a)
which have been in force for less than the applicable appeal period
or (b) in respect of which the Company or any Subsidiary shall at
the time in good faith be prosecuting an appeal or proceedings for
review and, in the case of each of clauses (a) and (b), the Company
or such Subsidiary shall have taken appropriate reserves therefor in
accordance with GAAP and execution of such judgment or award shall
not be levied.
10.6.7. To the extent permitted by Section 10.8.7,
Indebtedness in respect of Capitalized Lease Obligations or secured
by purchase money security interests; provided, however, that the
aggregate principal amount of all Indebtedness permitted by this
Section 10.6.7 at any one time outstanding shall not exceed
$2,500,000.
10.6.8. Indebtedness in respect of deferred taxes arising in
the ordinary course of business.
41
10.6.9. Unfunded pension liabilities and obligations with
respect to Plans so long as the Company and all other ERISA Group
Persons are in compliance with Section 10.16.
10.6.10. Indebtedness outstanding on the date hereof and
described in Exhibit 11.3 and (except with respect to the Prior
Credit Agreement, which shall be terminated on the Initial Closing
Date) all renewals, refinancings and extensions thereof not in
excess of the amount thereof outstanding immediately prior to such
renewal or extension (without reducing Indebtedness permitted under
the other provisions of this Section 10.6).
10.7. Guarantees; Letters of Credit. Neither the Company nor any of its
Subsidiaries shall become or remain liable with respect to any Guarantee,
including reimbursement obligations, whether contingent or matured, under
letters of credit or other financial guarantees by third parties (or become
contractually committed do to so), except the following:
10.7.1. Letters of credit and Guarantees of the Credit
Obligations.
10.7.2. Guarantees by the Company or its Subsidiaries of
Indebtedness and other obligations incurred by the Company or its
Subsidiaries and permitted by Section 10.6.
10.8. Liens. Neither the Company nor any of its Subsidiaries shall create, incur
or enter into, or suffer to be created or incurred or to exist, any Lien (or
become contractually committed to do so), except the following:
10.8.1. Liens on the Credit Security that secure the Credit
Obligations.
10.8.2. Liens to secure taxes, assessments and other
governmental charges, to the extent that payment thereof shall not
at the time be required by Section 10.1.
10.8.3. Deposits or pledges made (a) in connection with, or to
secure payment of, workers' compensation, unemployment insurance,
old age pensions or other social security, (b) in connection with
casualty insurance maintained in accordance with Section 10.3, (c)
to secure the performance of bids, tenders, contracts (other than
contracts relating to Financing Debt) or leases, (d) to secure
statutory obligations or surety or appeal bonds, (e) to secure
indemnity, performance or other similar bonds in the ordinary course
of business or (f) in connection with contested amounts to the
extent that payment thereof shall not at that time be required by
Section 10.1.
10.8.4. Liens in respect of judgments or awards, to the extent
that such judgments or awards are permitted by Section 10.6.6 but
only to the extent that such Liens are junior to the Liens on the
Credit Security granted to secure the Credit Obligations.
10.8.5. Liens of carriers, warehouses, mechanics and similar
Liens, in each case (a) in existence less than ninety (90) days from
the date of creation thereof or (b) being contested in good faith by
the Company or any Subsidiary in appropriate proceedings (so long as
the Company or such Subsidiary shall, in accordance with GAAP, have
set aside on its books adequate reserves with respect thereto).
42
10.8.6. Encumbrances in the nature of (a) zoning restrictions,
(b) easements, (c) restrictions of record on the use of real
property, (d) landlords' and lessors' Liens on rented premises and
(e) restrictions on transfers or assignment of leases, which in each
case do not materially detract from the value of the encumbered
property or impair the use thereof in the business of the Company or
any Subsidiary.
10.8.7. Liens in an aggregate amount not to exceed $2,500,000
during the term of this Agreement, on account of (a) purchase money
security interests (including mortgages, conditional sales,
Capitalized Leases and any other title retention or deferred
purchase devices), interests in leases or tangible personal property
(other than inventory) existing or created on the date on which such
property is acquired or within sixty (60) days thereafter, and (b)
the renewal, extension or refunding of any security interest
referred to in the foregoing clause (a) in an amount not to exceed
the amount thereof remaining unpaid immediately prior to such
renewal, extension or refunding; provided, however, that (i) each
such security interest shall attach solely to the particular item of
property so acquired, and the principal amount of Indebtedness
(including Indebtedness in respect of Capitalized Lease Obligations)
secured thereby shall not exceed the cost (including all such
Indebtedness secured thereby, whether or not assumed) of such item
of property; and (ii) the aggregate principal amount of all
Indebtedness secured by Liens permitted by this Section 10.8.7 shall
not exceed the amount permitted by Section 10.6.7.
10.8.8. Restrictions under federal and state securities laws
on the transfer of securities.
10.8.9. The sale of doubtful accounts receivable for
collection in the ordinary course of business.
10.8.10. Liens as in effect on the date hereof described in
Exhibit 11.3 (and renewals and replacements thereof) and securing
Indebtedness permitted by Section 10.6.10 (without reducing Liens
permitted under the other provisions of this Section 10.8).
10.8.11. Liens arising from Uniform Commercial Code financing
statements and similar documents filed on a precautionary basis in
respect of operating leases intended by the parties to be true
leases.
10.9. Investments and Acquisitions. Neither the Company nor any of its
Subsidiaries shall have outstanding, acquire or hold any Investment (or become
contractually committed to do so), except the following:
10.9.1. Investments in Cash Equivalents
10.9.2. Guarantees permitted by Section 10.7.
10.9.3. Investments outstanding on the date hereof and
described in Exhibit 11.3 (without reducing Investments permitted
under the other provisions of this Section 10.9).
10.10. Distributions; Warrants; Issuance of Stock of the Company.
43
10.10.1. Distributions. Neither the Company nor any of its
Subsidiaries shall make any Distribution (or become contractually
committed to do so), except the following:
(a) So long as immediately before and after giving effect thereto no
Default exists, Subsidiaries of the Company may make Distributions to the
Company or any Wholly Owned Subsidiary of the Company and the Company and
its Subsidiaries may make Investments permitted by Section 10.9;
(b) The Company may make Distributions of PIK Interest on the
Debentures in accordance with their terms; and
(c) So long as immediately before and after giving effect thereto no
Default exists, the Company may repurchase Company stock, options to
acquire such stock and Debentures in an aggregate amount not exceeding
$200,000 in any year in cash, as well as any non-cash repurchases of the
Debentures consummated by offsetting corresponding amounts owing to the
Company by such employees, and any repurchases made from the cash proceeds
of exercises under the Company's stock option plans and employee stock
purchase plans.
10.10.2. On or before the Initial Closing Date, the Company
shall issue the following Amended and Restated Warrants in favor of
the Lenders as to (a) Warrant Nos. 6 and 7 to purchase an aggregate
of 1,418,351 shares of the Company's Class A Common Stock at an
exercise price of $0.86 per share, as amended and restated
substantially in the form of Exhibit 10.10.2(a); and (b) Warrant
Nos. 8 and 9 to purchase an aggregate of 400,000 shares of the
Company's Common Stock at an exercise price of $0.60 per share,
substantially in the form of Exhibit 10.10.2(b).
10.11. Issuance of Stock of Company.
10.11.1. Participation in Future Offerings. Except as provided
in paragraph 10.11.1(b) the Company shall offer (the "New Offer") to
each Lender the opportunity to acquire any capital stock which may
be offered by the Company from time to time after the date of this
Agreement (any such shares being herein referred to as "New
Shares"), all pursuant to the terms and conditions of this Section
10.11.
The rights of the Lenders under this Section 10.11 shall not apply
to:
(a) capital stock of any class or series issued as a stock dividend
exclusively to holders of stock of the same class or series or upon any
subdivision or combination of shares of that class or series; or
(b) capital stock of any class or series issued upon exercise of all
options, warrants, preferred stock and other rights to acquire securities
of the Company outstanding as of the date hereof; or
(c) shares issued under an employee stock purchase plan or pursuant
to options exercisable for shares of Common Stock (such number subject to
equitable adjustment in the event of any stock dividend, stock split,
combination, reorganization, recapitalization, reclassification or other
similar event), issued after the date of this Agreement to directors,
officers, employees or consultants of the Company and any Subsidiary
pursuant to any qualified or non-qualified stock option plan or other
equity incentive plan approved by the Board of
44
Directors of the Company, equal to the first 30% of the outstanding stock
of the Company, calculated on fully-diluted basis.
10.11.2. Notice of Issuance. The Company shall deliver written
notice to each Lender of the terms and conditions of each
transaction pursuant to which the Company intends to issue New
Shares. Such notice shall be delivered to each Lender not later than
the Banking Day thirty (30) days prior to the day upon which any
such transaction is scheduled to be consummated. By such notice, the
Company shall offer to sell to each Lender the applicable amount of
securities calculated pursuant to Section 10.11.4.
10.11.3. Acceptance of Shares. Each Lender may accept any such
offer made pursuant to this Section 10.11 in whole or in part by
delivering to the Company a written agreement to make such purchase,
specifying the amount of the securities to be purchased by such
Lender, no later than the Banking Date ten (10) Banking Days
following the day of receipt by such Lender of notice from the
Company under Section 10.11.2 above. The terms and conditions,
price, timing of closing and other provisions of such agreement by
the Lenders shall be not less favorable to the Company than those of
the other agreement to purchase such New Shares.
10.11.4. Percentage Interest. The amount of New Shares to be
offered to each Lender for purchase pursuant to this Section 10.11
shall, with respect to each transaction subject hereto, be allocated
among the Lenders pro rata according to their respective Percentage
Interests in the Loans, calculated by multiplying (a) the aggregate
number of New Shares to be offered, times (b) each Lender's
ownership interest in the Company immediately prior to the purchase
of the New Shares; provided, however, that in the event either
Lender does not wish to purchase its respective pro rata share of
the New Shares offered by the Company, then the other Lender shall
have the right to purchase any New Shares not purchased. The
remaining Lender shall indicate in such remaining Lender's response
to the New Offer whether and to what extent it desires to purchase
more than such Lender's pro rata share, and act upon the New Offer
as soon as practicable after receipt from the Company of notice that
certain of the New Shares are available for oversubscription, and in
all events within twenty (20) Banking Days after receipt of the New
Offer.
10.11.5. No Accumulation. Each transaction or proposed
issuance under this Section 10.11 is a separate transaction. The
failure of either Lender to exercise in whole or in part any prior
offer shall not increase its rights with respect to any future
transaction subject hereto and the rights of either Lender under
this Section 10.11 with respect to any transaction are reduced pro
rata to the extent that such Lender acquires securities of the
Company by participating directly in such transaction.
10.12. Asset Dispositions and Mergers. Neither the Company nor any of its
Subsidiaries shall merge or enter into a consolidation or sell, lease, exchange,
sell and lease back, sublease or otherwise dispose of any of its assets (or
become contractually committed to do so), except the following:
10.12.1. The Company and any of its Subsidiaries may sell or
otherwise dispose of (a) inventory and Cash Equivalents in the
ordinary course of business, (b) assets (i) that shall be replaced
in the ordinary course of business within 12 months by other assets
of equal or greater value or (ii) that are no longer used or useful
in the business of the Company or such Subsidiary, provided, however
that the aggregate fair market value (book value, if greater) of all
assets sold under this clause (b) in any fiscal year shall not be
material, (c) doubtful accounts receivable for collection purposes
in the ordinary course of business and (d) Immaterial Subsidiaries.
45
10.12.2. Any Wholly Owned Subsidiary of the Company may merge,
consolidate or be liquidated into the Company or any other Wholly
Owned Subsidiary of the Company so long as after giving effect to
any such merger to which the Company is a party the Company shall be
the surviving or resulting Person.
10.12.3. Licensing or leasing of assets for fair value in the
ordinary course of business.
10.12.4. Nextera Business Performance Solutions Group, Inc.
may liquidate or otherwise dispose of all its interest in Cranberry
Hill Capital.
10.12.5. Mergers or consolidations in connection with
acquisitions permitted by Section 10.9.
10.12.6. Transactions constituting the offset of Indebtedness
permitted by Section 10.10.
10.13. Issuance of Stock by Subsidiaries; Subsidiary Distributions.
10.13.1. Issuance of Stock by Subsidiaries. No Subsidiary
shall issue or sell any shares of its capital stock or other
evidence of beneficial ownership to any Person other than (a) the
Company or any Wholly Owned Subsidiary of the Company, which shares
shall have been pledged to the Agent as part of the Credit Security
to the extent required by the Guarantee and Security Agreement, (b)
directors of Subsidiaries as qualifying shares to the extent
required by Legal Requirements and, in the case of Foreign
Subsidiaries, shares required by Legal Requirements to be held by
foreign nationals and (c) pro rata Distributions to shareholders of
non-Wholly Owned Subsidiaries.
10.13.2. No Restrictions on Subsidiary Distributions. Except
for this Agreement and the Credit Documents, neither the Company nor
any Subsidiary shall enter into or be bound by any agreement
(including covenants requiring the maintenance of specified amounts
of net worth or working capital) restricting the right of any
Subsidiary to make Distributions or extensions of credit to the
Company (directly or indirectly through another Subsidiary).
10.14. Voluntary Prepayments of Other Indebtedness. Neither the Company nor any
of its Subsidiaries shall make any voluntary prepayment of principal of or
interest on any Financing Debt (other than the Credit Obligations) or make any
voluntary redemptions or repurchases of Financing Debt (other than the Credit
Obligations), in each case except in order to facilitate a refinancing of
Indebtedness permitted by Sections 10.6 or 10.10.
10.15. Derivative Contracts. Neither the Company nor any of its Subsidiaries
shall enter into any Hedge Agreement or other financial or commodity derivative
contracts except to provide hedge protection for an underlying economic
transaction in the ordinary course of business.
10.16. Negative Pledge Clauses. Neither the Company nor any of its Subsidiaries
shall enter into any agreement, instrument, deed or lease which prohibits or
limits the ability of the Company or any of its Subsidiaries to create, incur,
assume or suffer to exist any Lien upon any of their respective properties,
assets or revenues, whether now owned or hereafter acquired, or which requires
the grant of any collateral for such obligation if collateral is granted for
another obligation, except the following:
46
10.16.1. This Agreement and the other Credit Documents.
10.16.2. Covenants in documents creating, or that could
create, Liens permitted by Section 10.8 prohibiting further or any,
as the case may be, Liens on the assets encumbered thereby.
10.17. ERISA, etc. Each of the Company and its Subsidiaries shall comply, and
shall cause all ERISA Group Persons to comply, in all material respects, with
the provisions of ERISA and the Code applicable to each Plan. Each of the
Company and its Subsidiaries shall meet, and shall cause all ERISA Group Persons
to meet, all minimum funding requirements applicable to them with respect to any
Plan pursuant to Section 302 of ERISA or Section 412 of the Code, without giving
effect to any waivers of such requirements or extensions of the related
amortization periods which may be granted. At no time shall the Accumulated
Benefit Obligations under any Plan that is not a Multiemployer Plan exceed the
fair market value of the assets of such Plan allocable to such benefits by more
than $500,000. The Company and its Subsidiaries shall not withdraw, and shall
cause all other ERISA Group Persons not to withdraw, in whole or in part, from
any Multiemployer Plan so as to give rise to withdrawal liability exceeding
$500,000 in the aggregate. At no time shall the actuarial present value of
unfunded liabilities for post-employment health care benefits (other than COBRA
continuation coverage benefits), whether or not provided under a Plan,
calculated in a manner consistent with Statement No. 106 of the Financial
Accounting Standards Board, exceed $500,000.
10.18. Transactions with Affiliates. Neither the Company nor any of its
Subsidiaries shall effect any transaction with any of their respective
Affiliates (except for the Company and its Subsidiaries) on a basis less
favorable to the Company and its Subsidiaries than would be the case if such
transaction had been effected with a non-Affiliate.
10.19. Restricted Operations of Cranberry Hill Capital. Cranberry Hill Capital
shall conduct no operations other than owning Investments in former customers of
Symmetrix, Inc. (now known as Nextera Business Performance Solutions, Inc.) for
the benefit of present and former employees of Symmetrix, Inc. and activities
incidental thereto. Cranberry Hill Capital shall own no material assets other
than such Investments and cash expected to be spent or distributed within ninety
(90) days.
11. Representations and Warranties. In order to induce the Lenders to extend
credit to the Company hereunder, each of the Company and the other Guarantors
jointly and severally represents and warrants as follows:
47
11.1. Organization and Business.
11.1.1. The Company. The Company is a duly organized and
validly existing corporation, in good standing under the laws of
Delaware, with all power and authority, corporate or otherwise,
necessary to (a) enter into and perform this Agreement and each
other Credit Document to which it is party, (b) incur the Credit
Obligations, (c) grant the Agent for the benefit of the Lenders the
security interests in the Credit Security owned by it to secure the
Credit Obligations and (d) own its properties and carry on the
business now conducted or proposed to be conducted by it. Certified
copies of the Charter and By-laws of the Company have been
previously delivered to the Agent and are correct and complete.
Exhibit 11.1, as from time to time hereafter supplemented in
accordance with Sections 10.4.1 and 11.1.2, sets forth, as of the
later of the date hereof or the end of the most recent fiscal
quarter for which financial statements are required to be furnished
in accordance with such Sections, (i) the jurisdiction of
incorporation of the Company, (ii) the address of the Company's
principal executive office and chief place of business, (iii) each
name, including any trade name, under which the Company conducts its
business and (iv) the jurisdictions in which the Company owns
material real or tangible personal property.
11.1.2. Subsidiaries. Each Subsidiary of the Company is duly
organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized, with all power and
authority, corporate or otherwise, necessary to (a) enter into and
perform this Agreement and each other Credit Document to which it is
party, (b) guarantee the Credit Obligations, (c) grant the Agent for
the benefit of the Lenders the security interest in the Credit
Security owned by such Subsidiary to secure the Credit Obligations
and (d) own its properties and carry on the business now conducted
or proposed to be conducted by it. Certified copies of the Charter
and By-laws of each Subsidiary of the Company have been previously
delivered to the Agent and are correct and complete. Exhibit -------
11.1, as from time to time hereafter supplemented in accordance with
Sections 10.4.1 and 10.4.2, sets forth, as of the later of the date
hereof or the end of the most recent fiscal quarter for which
financial statements are required to be furnished in accordance with
such Sections, (i) the name and jurisdiction of organization of each
Subsidiary of the Company, (ii) the address of the chief executive
office and principal place of business of each such Subsidiary,
(iii) each name under which each such Subsidiary conducts its
business, (iv) each jurisdiction in which each such Subsidiary owns
material real or tangible personal property, and (v) the number of
authorized and issued shares and ownership of each such Subsidiary.
11.1.3. Qualification. Each of the Company and its
Subsidiaries is duly and legally qualified to do business as a
foreign corporation or other entity and is in good standing in each
state or jurisdiction in which such qualification is required and is
duly authorized, qualified and licensed under all laws, regulations,
ordinances or orders of public authorities, or otherwise, to carry
on its business in the places and in the manner in which it is
conducted, except for failures to be so qualified, authorized or
licensed which would not in the aggregate result, or create a
material risk of resulting, in any Material Adverse Change.
11.1.4. Capitalization. Except as set forth in Exhibit 11.1,
as from time to time hereafter supplemented in accordance with
Sections 10.4.1 and 10.4.2, no
48
options, warrants, conversion rights, preemptive rights or other
statutory or contractual rights to purchase shares of capital stock
or other securities of any Subsidiary now exist, nor has any
Subsidiary authorized any such right, nor is any Subsidiary
obligated in any other manner to issue shares of its capital stock
or other securities.
11.2. Material Agreements. The Company has previously furnished to the Agent
correct and complete copies, including all exhibits, schedules and amendments
thereto, of the agreements and instruments, each as in effect on the date
hereof, listed in Exhibit 11.2, which constitute all agreements and instruments
material to the Company and its Subsidiaries on a Consolidated basis (the
"Material Agreements").
11.3. Agreements Relating to Financing Debt, Investments, etc. Exhibit 11.3, as
from time to time hereafter supplemented in accordance with Sections 10.4.1 and
10.4.2, sets forth:
11.3.1. The amounts (as of the dates indicated in Exhibit
11.3, as so supplemented) of all Financing Debt of the Company and
its Subsidiaries and all agreements which relate to such Financing
Debt.
Any and all amounts owing by the Company or its Subsidiaries to Knowledge
Universe are listed on Exhibit 11.3 (and all of such amounts are currently
owed to Knowledge Universe Capital Co. LLC).
11.3.2. All Liens and Guarantees with respect to such
Financing Debt.
11.3.3. Certain material Investments outstanding as of the
date hereof and all agreements which directly or indirectly require
the Company or any Subsidiary to make any Investment.
11.3.4. All trademarks, tradenames, service marks, service
names and patents owned by the Company and its Subsidiaries that are
registered with the federal Patent and Trademark Office (or with
respect to which applications for such registration have been
filed).
11.3.5. All copyrights owned by the Company and its
Subsidiaries that are registered with the federal Copyright Office.
11.3.6. All lock box accounts, depository accounts and Cash
Management Accounts owned by the Company and its Subsidiaries (and
the Company and its Subsidiaries shall have no lock box accounts,
depository accounts or Cash Management Accounts other than those
described at Exhibit 11.3).
The Company has furnished the Agent correct and complete copies of any
agreements described above in this Section 11.3 requested by the Agent. In
addition, the Company has previously furnished to the Agent written evidence
satisfactory to the Agent in its discretion that the Company's obligations with
respect to the Cambridge Acquisition Note have been fully satisfied.
11.4. Changes in Condition. Between January 1, 2001 and the date hereof, no
Material Adverse Change has occurred and between January 1, 2001 and the date
hereof, neither the Company nor any Subsidiary of the Company has entered into
any material transaction outside the ordinary course of business except for the
transactions contemplated by this Agreement and the Material Agreements and as
otherwise disclosed in writing to the Agent.
11.5. Title to Assets. The Company and its Subsidiaries have good and marketable
title to all material assets necessary for or used in the operations of their
business as now conducted by them and reflected
49
in the most recent balance sheet referred to in Section 10.4 (or the balance
sheet most recently furnished to the Agent pursuant to Sections 10.4.1 or
10.4.2), and to all assets acquired subsequent to the date of such balance
sheet, subject to no Liens except for Liens permitted by Section 10.8 and except
for assets disposed of as permitted by Section 10.12.
11.6. Operations in Conformity With Law, etc. The operations of the Company and
its Subsidiaries as now conducted or proposed to be conducted are not in
violation of, nor is the Company or its Subsidiaries in default under, any Legal
Requirement presently in effect, except for such violations and defaults as do
not and shall not, in the aggregate, result, or create a material risk of
resulting, in any Material Adverse Change. The Company has received no notice of
any such violation or default and has no knowledge of any basis on which the
operations of the Company or its Subsidiaries, as now conducted and as currently
proposed to be conducted after the date hereof, would be held so as to violate
or to give rise to any such violation or default.
11.7. Litigation. Except as set forth on Exhibit 11.7, no litigation, at law or
in equity, or any proceeding before any court, board or other governmental or
administrative agency or any arbitrator is pending or, to the knowledge of the
Company or any Guarantor, threatened which involves any material risk of any
final judgment, order or liability which, after giving effect to any applicable
insurance, has resulted, or creates a material risk of resulting, in any
Material Adverse Change or which seeks to enjoin the consummation, or which
questions the validity, of any of the transactions contemplated by this
Agreement or any other Credit Document. Except as set forth on Exhibit 11.7, no
judgment, decree or order of any court, board or other governmental or
administrative agency or any arbitrator has been issued against or binds the
Company or any of its Subsidiaries which has resulted, or creates a material
risk of resulting, in any Material Adverse Change.
11.8. Authorization and Enforceability. Each of the Company and each other
Obligor has taken all corporate action required to execute, deliver and perform
this Agreement and each other Credit Document to which it is party. No consent
of stockholders of the Company is necessary in order to authorize the execution,
delivery or performance of this Agreement or any other Credit Document to which
the Company is party. Each of this Agreement and each other Credit Document
constitutes the legal, valid and binding obligation of each Obligor party
thereto and is enforceable against such Obligor in accordance with its terms
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally.
11.9. No Legal Obstacle to Agreements. Neither the execution and delivery of
this Agreement or any other Credit Document, nor the making of any borrowings
hereunder, nor the guaranteeing of the Credit Obligations, nor the securing of
the Credit Obligations with the Credit Security, nor the consummation of any
transaction referred to in or contemplated by this Agreement or any other Credit
Document, nor the fulfillment of the terms hereof or thereof or of any other
agreement, instrument, deed or lease contemplated by this Agreement or any other
Credit Document has constituted or resulted in or shall constitute or result in:
(a) any breach or termination of the provisions of any agreement,
instrument, deed or lease which is material to the Company and its
Subsidiaries, taken as a whole, or which would have a material adverse
effect on the rights of the Lenders under the Credit Documents, to which
the Company, any of its Subsidiaries or any other Obligor is a party or by
which it is bound, or of the Charter or By-laws of the Company, any of its
Subsidiaries or any other Obligor;
(b) the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Company, any of
its Subsidiaries or any other Obligor;
(c) the creation under any agreement, instrument, deed or lease of
any Lien (other than Liens on the Credit Security which secure the Credit
Obligations) upon any of the assets of the Company, any of its
Subsidiaries or any other Obligor; or
50
(d) any redemption, retirement or other repurchase obligation of the
Company, any of its Subsidiaries or any other Obligor under any Charter,
By-law, agreement, instrument, deed or lease.
No approval, authorization or other action by, or declaration to or filing with,
any governmental or administrative authority or any other Person is required to
be obtained or made by the Company, any of its Subsidiaries or any other Obligor
in connection with the execution, delivery and performance of this Agreement or
any other Credit Document, the transactions contemplated hereby or thereby, the
making of any borrowing hereunder, the guaranteeing of the Credit Obligations or
the securing of the Credit Obligations with the Credit Security (other than
filings necessary to perfect the Agent's security interest in the Credit
Security).
11.10. Defaults. Except as provided in this Agreement, neither the Company nor
any of its Subsidiaries is in default under any provision of its Charter or
By-laws or of this Agreement or any other Credit Document. Neither the Company
nor any of its Subsidiaries is in default under any provision of any agreement,
instrument, deed or lease to which it is party or by which it or its property is
bound so as to result, or create a material risk of resulting, in any Material
Adverse Change.
11.11. Licenses, etc. The Company and its Subsidiaries have all patents, patent
applications, patent licenses, patent rights, trademarks, trademark rights,
trade names, trade name rights, copyrights, licenses, franchises, permits,
authorizations and other rights as are reasonably necessary for the conduct of
the business of the Company and its Subsidiaries as now conducted by them. All
of the foregoing are in full force and effect in all material respects, and each
of the Company and its Subsidiaries is in substantial compliance with the
foregoing without any known conflict with the valid rights of others which has
resulted, or creates a material risk of resulting, in any Material Adverse
Change. No event has occurred which permits, or after notice or lapse of time or
both would permit, the revocation or termination of any such license, franchise
or other right or which affects the rights of any of the Company and its
Subsidiaries thereunder so as to result, or to create a material risk of
resulting, in any Material Adverse Change.
11.12. Tax Returns. Except as set forth on Exhibit 11.12, each of the Company
and its Subsidiaries has filed all material tax and information returns which
are required to be filed by it and has paid, or made adequate provision for the
payment of, all taxes which have or may become due pursuant to such returns or
to any assessment received by it, other than taxes and assessments being
contested by the Company and its Subsidiaries in good faith by appropriate
proceedings and for which adequate reserves have been taken in accordance with
GAAP. Except as set forth on Exhibit 11.12, neither the Company nor any of its
Subsidiaries knows of any material additional assessments or any basis therefor.
The Company reasonably believes that the charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of taxes or other
governmental charges are adequate.
11.13. Earnouts and Other Compensation. Except as set forth on Exhibit 11.13,
each of the Company and its Subsidiaries has made any and all earnout payments
and other compensation owing by them to any Person in connection with the Sibson
APA, Persumma APA and/or in connection with their respective investments in
Paradigm and Hoovers, Inc.
11.14. Certain Business Representations.
11.14.1. Labor Relations. No dispute or controversy between
the Company or any of its Subsidiaries and any of their respective
employees has resulted, or is reasonably likely to result, in any
Material Adverse Change, and neither the Company nor any of its
Subsidiaries anticipates that its relationships with its unions or
employees shall result, or are reasonably likely to result, in any
Material Adverse Change. The Company and each of its Subsidiaries is
in compliance in all material respects with all federal and state
laws with respect to (a) non-discrimination in employment with which
the failure to comply, in the aggregate, has resulted, or
51
creates a material risk of resulting, in a Material Adverse Change
and (b) the payment of wages.
11.14.2. Antitrust. Each of the Company and its Subsidiaries
is in compliance in all material respects with all federal and state
antitrust laws relating to its business and the geographic
concentration of its business.
11.14.3. Intentionally Omitted.
11.14.4. Future Expenditures. Neither the Company nor any of
its Subsidiaries anticipate that the future expenditures, if any, by
the Company and its Subsidiaries needed to meet the provisions of
any federal, state or foreign governmental statutes, orders, rules
or regulations shall be so burdensome as to result, or create a
material risk of resulting, in any Material Adverse Change.
11.15. Pension Plans. Each Plan (other than a Multiemployer Plan) and, to the
knowledge of the Company and its Subsidiaries, each Multiemployer Plan is in
material compliance with the applicable provisions of ERISA and the Code. Each
Multiemployer Plan and each Plan that constitutes a "defined benefit plan" (as
defined in ERISA) are set forth in Exhibit 11.14 (as from time to time hereafter
supplemented in accordance with Sections 10.4.1 and 10.4.2). Each ERISA Group
Person has met all of the material funding standards applicable to all Plans
that are not Multiemployer Plans, and no condition exists which would permit the
institution of proceedings to terminate any Plan that is not a Multiemployer
Plan under Section 4042 of ERISA. To the knowledge of the Company and each
Subsidiary, no Plan that is a Multiemployer Plan is currently insolvent or in
reorganization or has been terminated within the meaning of ERISA.
11.16. Environmental Regulations.
11.16.1. Environmental Compliance. Each of the Company and its
Subsidiaries is in compliance in all material respects with the
Clean Air Act, the Federal Water Pollution Control Act, the Marine
Protection Research and Sanctuaries Act, RCRA, CERCLA and any other
Environmental Law in effect in any jurisdiction in which any
properties of the Company or any of its Subsidiaries are located or
where any of them conducts its business, and with all applicable
published rules and regulations (and applicable standards and
requirements) of the federal Environmental Protection Agency and of
any similar agencies in states or foreign countries in which the
Company or its Subsidiaries conducts its business other than those
which in the aggregate have not resulted, and do not create a
material risk of resulting, in a Material Adverse Change.
11.16.2. Environmental Condition of Properties. To the
knowledge of the Company, none of the properties owned or leased by
the Company or any of its Subsidiaries has been used as a treatment,
storage or disposal site for Hazardous Material, other than as
disclosed in Exhibit 11.15 (as from time to time hereafter
supplemented in accordance with Sections 10.4.1 and 10.4.2). To the
knowledge of the Company, no Hazardous Material is present in any
real property currently or formerly owned or operated by the Company
or any of its Subsidiaries except that which has not resulted, and
does not create a material risk of resulting, in a Material Adverse
Change.
11.17. Government Regulation; Margin Stock.
11.17.1. Government Regulation. Neither the Company nor any of
its Subsidiaries, nor any Person controlling the Company or any of
its Subsidiaries or
52
under common control with the Company or any of its Subsidiaries, is
subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Investment Company Act, the
Interstate Commerce Act or any statute or regulation which regulates
the incurring by the Company or any of its Subsidiaries of Financing
Debt as contemplated by this Agreement and the other Credit
Documents.
11.17.2. Margin Stock. Except as set forth on Exhibit 11.16.2,
neither the Company nor any of its Subsidiaries owns any Margin
Stock; provided, however, that the value of all such Margin Stock
owned by the Company and its Subsidiaries does not exceed twenty
five percent (25%) of the book value of the total assets of the
Company and its Subsidiaries.
11.18. Disclosure. Neither this Agreement nor any other Credit Document nor any
financial statement, report, notice, mortgage, assignment or certificate, taken
as a whole, furnished or to be furnished to the Lenders or the Agent by or on
behalf of the Company or any of its Subsidiaries in connection with the
transactions contemplated hereby or by such Credit Document contains any untrue
statement of material fact or omits to state a material fact necessary in order
to make the statements contained herein or therein not misleading in light of
the circumstances under which they were made.
12. Defaults.
12.1. Events of Default. The following events are referred to as "Events of
Default":
12.1.1. Payment. The Company shall fail to make any payment in
respect of: (a) interest or any fee on or in respect of any of the
Credit Obligations owed by it as the same shall become due and
payable, and such failure shall continue for a period of three (3)
Banking Days, or (b) principal of any of the Credit Obligations owed
by it as the same shall become due, whether at maturity or by
acceleration or otherwise.
12.1.2. Specified Covenants. The Company or any of its
Subsidiaries shall fail to perform or observe any of the provisions
of Section 10.4.5 or Sections 10.5 through 10.17; provided, however,
that the Lenders shall not declare an Event of Default under Section
10.5 of this Agreement if such Event of Default arises solely from
the Lenders having exercised their respective "Put Rights" under the
warrants described at Section 10.10.2 of this Agreement.
12.1.3. Employee Matters.
(a) Lexecon Employees. The Company shall fail to timely satisfy any
of its obligations under the Lexecon Employment Agreements.
(b) New Bonus Account. The Company shall fail to replenish the New
Bonus Account in accordance with Section 8.2.
12.1.4. New Lender. The Company shall fail to timely satisfy
any of its obligations to New Lender under the Junior Credit
Participation Agreement.
12.1.5. Other Covenants. The Company, any of its Subsidiaries
or any other Obligor shall fail to perform or observe any other
covenant, agreement or provision to be performed or observed by it
under this Agreement or any other Credit Document, and such failure
shall not be rectified or cured to the written satisfaction of
53
the Required Lenders within thirty (30) days after the earlier of
(a) notice thereof by the Agent to the Company or (b) a Financial
Officer shall have actual knowledge thereof.
12.1.6. Representations and Warranties. Any representation or
warranty of or with respect to the Company, any of its Subsidiaries
or any other Obligor made to the Lenders or the Agent in, pursuant
to or in connection with this Agreement or any other Credit
Document, or in any financial statement, report, notice, mortgage,
assignment or certificate delivered to the Agent or any of the
Lenders by the Company, any of its Subsidiaries or any other Obligor
in connection herewith or therewith, shall be false in any material
respect on the date as of which it was made.
12.1.7. Material Financing Debt Cross Default, etc.
(a) The Company or any of its Subsidiaries shall fail to make any
payment when due (after giving effect to any applicable grace periods) in
respect of any Material Financing Debt;
(b) the Company or any of its Subsidiaries shall fail to perform or
observe the terms of any agreement or instrument relating to any Material
Financing Debt, and such failure shall continue, without having been duly
cured, waived or consented to, beyond the period of grace, if any,
specified in such agreement or instrument, and such failure shall permit
the acceleration of such Material Financing Debt;
(c) all or any part of any Material Financing Debt of the Company or
any of its Subsidiaries shall be accelerated or shall become due or
payable prior to its stated maturity (except with respect to voluntary
prepayments thereof) for any reason whatsoever;
(d) any Lien on any property of the Company or any of its
Subsidiaries securing any Material Financing Debt shall be enforced by
foreclosure or similar action; or
(e) any holder of any Material Financing Debt shall exercise any
right of rescission with respect to the issuance thereof or put, mandatory
prepayment or repurchase rights against any Obligor with respect to such
Material Financing Debt (other than any such rights that may be satisfied
with "payment in kind" notes or other similar securities).
12.1.8. Ownership; Liquidation; etc. Except as permitted by
Section 10.12:
(a) the Company shall cease to own, directly or indirectly, all the
capital stock of its Subsidiaries, except (i) to the extent permitted by
Section 10.12.1, (ii) shares of Sibson Canada owned by third parties as of
the date hereof and (iii) as permitted pursuant to Section 10.9; or
(b) Knowledge Enterprises and its Affiliates shall cease to own
voting stock necessary to elect a majority of the members of the Company's
board of directors, other than as a result of stock issuances by the
Company; or
(c) a majority of the board of directors of the Company shall be
neither (i) nominated or approved in advance by the board of directors of
the Company nor (ii) appointed or approved in advance by directors so
nominated or approved; or
(d) any Person, together with "affiliates" and "associates" of such
Person within the meaning of Rule 12b-2 of the Exchange Act, or any
"group" including such Person under Sections 13(d) and 14(d) of the
Exchange Act, other than the Persons described in paragraph (b) above,
shall acquire after the date hereof (i) beneficial ownership within the
meaning of Rule 13d-3 of the Exchange Act of thirty three percent (33%) or
more of either the voting stock or total equity capital
54
of the Company or (ii) direct or indirect control of the Company through a
shareholder, voting or similar agreement or arrangement; or
(e) except for Immaterial Subsidiaries, the Company or any of its
Subsidiaries or any other Obligor shall initiate any action to dissolve,
liquidate or otherwise terminate its existence.
12.1.9. Enforceability, etc. Any Credit Document shall cease
for any reason (other than the scheduled termination thereof in
accordance with its terms) to be enforceable in accordance with its
terms or in full force and effect; or any party to any Credit
Document shall so assert in a judicial or similar proceeding; or the
security interests created by this Agreement or any other Credit
Documents shall cease to be enforceable and of the same effect and
priority purported to be created hereby, except to the extent that
any such loss of perfection or priority results (a) from the failure
of the Agent to maintain possession of certificates representing
securities pledged under the Credit Documents or (b) from any gross
negligence or willful misconduct of the Agent.
12.1.10. Judgments. A final judgment (a) which, with other
outstanding final judgments against the Company and its
Subsidiaries, exceeds an aggregate of $500,000 in excess of
applicable insurance coverage shall be rendered against the Company
or any of its Subsidiaries, or (b) which grants injunctive relief
that results, or creates a material risk of resulting, in a Material
Adverse Change and in either case if (i) within forty five (45) days
after entry thereof, such judgment shall not have been discharged or
execution thereof stayed pending appeal or (ii) within forty five
(45) days after the expiration of any such stay, such judgment shall
not have been discharged.
12.1.11. ERISA. Any "reportable event" (as defined in Section
4043 of ERISA) shall have occurred that reasonably could be expected
to result in termination of a Plan or the appointment by the
appropriate United States District Court of a trustee to administer
any Plan or the imposition of a Lien in favor of a Plan; or any
ERISA Group Person shall fail to pay when due amounts aggregating in
excess of $500,000 which it shall have become liable to pay to the
PBGC or to a Plan under Title IV of ERISA; or notice of intent to
terminate a Plan shall be filed under Title IV of ERISA by any ERISA
Group Person or administrator; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Plan or a proceeding shall
be instituted by a fiduciary of any Plan against any ERISA Group
Person to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within forty five (45) days
thereafter; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Plan must
be terminated.
12.1.12. Bankruptcy, etc. The Company, any of its Subsidiaries
or any other Obligor shall:
(a) commence a voluntary case under the Bankruptcy Code or
authorize, by appropriate proceedings of its board of directors or other
governing body, the commencement of such a voluntary case;
(b) (i) have tided against it a petition commencing an involuntary
case under the Bankruptcy Code that shall not have been dismissed within
sixty (60) days after the date on which such petition is filed, or (ii)
file an answer or other pleading within such 60-day period admitting or
failing to deny the material allegations of such a petition or seeking,
consenting to or acquiescing in the relief therein provided, or (iii) have
entered against it an order for relief in any involuntary case commenced
under the Bankruptcy Code;
55
(c) seek relief as a debtor under any applicable law, other than the
Bankruptcy Code, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the
rights of creditors, or consent to or acquiesce in such relief;
(d) have entered against it an order by a court of competent
jurisdiction (i) finding it to be bankrupt or insolvent, (ii) ordering or
approving its liquidation or reorganization as a debtor or any
modification or alteration of the rights of its creditors or (iii)
assuming custody of, or appointing a receiver or other custodian for, all
or a substantial portion of its property; or
(e) make an assignment for the benefit of, or enter into a
composition with, its creditors, or appoint, or consent to the appointment
of, or suffer to exist a receiver or other custodian for, all or a
substantial portion of its property.
12.2. Certain Actions Following an Event of Default. If any one or more Events
of Default shall occur and be continuing, then in each and every such case:
12.2.1. Terminate Obligation to Extend Credit. Upon written
request of the Required Lenders, the Agent shall terminate the
obligations of the Lenders to make any further extensions of credit
under the Credit Documents by furnishing notice of such termination
to the Company; provided, however, that if a Bankruptcy Default
shall have occurred, the obligations of the Lenders to make any
further extensions of credit under the Credit Documents shall
automatically terminate.
12.2.2. Specific Performance; Exercise of Rights. Upon written
request of the Required Lenders, the Agent shall proceed to protect
and enforce the Lenders' rights by suit in equity, action at law
and/or other appropriate proceeding, either for specific performance
of any covenant or condition contained in this Agreement or any
other Credit Document (other than Hedge Agreements from time to time
in effect) or in any instrument or assignment delivered to the
Lenders pursuant to this Agreement or any other Credit Document
(other than Hedge Agreements from time to time in effect), or in aid
of the exercise of any power granted in this Agreement or any other
Credit Document (other than Hedge Agreements from time to time in
effect) or any such instrument or assignment.
12.2.3. Acceleration. Upon written request of the Required
Lenders, the Agent shall by notice in writing to the Company declare
all or any part of the unpaid balance of the Credit Obligations
(other than amounts under Hedge Agreements from time to time in
effect) then outstanding to be immediately due and payable;
provided, however, that if a Bankruptcy Default shall have occurred,
the unpaid balance of the Credit Obligations (other than amounts
under Hedge Agreements from time to time in effect) shall
automatically become immediately due and payable.
12.2.4. Enforcement of Payment; Credit Security; Setoff. Upon
written request of the Required Lenders, the Agent shall proceed to
enforce payment of the Credit Obligations in such manner as it may
elect, and to realize upon any and all rights in the Credit
Security. The Lenders may offset and apply toward the payment of the
Credit Obligations (and/or toward the curing of any Event of
Default) any Indebtedness from the Lenders to the respective
Obligors, including any Indebtedness represented by deposits in any
account maintained with the Lenders, regardless of the adequacy of
any security for the Credit Obligations. The Lenders shall have no
duty to determine the adequacy of any such security in connection
with any such offset.
56
12.2.5. Cumulative Remedies. To the extent not prohibited by
applicable law which cannot be waived, all of the Lenders' rights
hereunder and under each other Credit Document shall be cumulative.
12.3. Annulment of Defaults. Once an Event of Default has occurred, such Event
of Default shall be deemed to exist and be continuing for all purposes of the
Credit Documents (other than Hedge Agreements from time to time in effect) until
the Required Lenders or the Agent (with the consent of the Required Lenders)
shall have waived such Event of Default in writing, stated in writing that the
same has been cured to such Lenders' reasonable satisfaction or entered into an
amendment to this Agreement which by its express terms cures such Event of
Default, at which time such Event of Default shall no longer be deemed to exist
or to have continued. No such action by the Lenders or the Agent shall extend to
or affect any subsequent Event of Default or impair any rights of the Lenders
upon the occurrence thereof. The making of any extension of credit during the
existence of any Default or Event of Default shall not constitute a waiver
thereof.
12.4. Waivers. To the extent that such waiver is not prohibited by the
provisions of applicable law that cannot be waived, each of the Company and the
other Obligors waives:
(a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by this Agreement or any
other Credit Document), protests, notices of protest and notices of
dishonor;
(b) any requirement of diligence or promptness on the part of the
Agent or any Lender in the enforcement of its rights under this Agreement
or any other Credit Document;
(c) any and all notices of every kind and description which may be
required to be given by any statute or rule of law; and
(d) any defense (other than indefeasible payment in full) which it
may now or hereafter have with respect to its liability under this
Agreement or any other Credit Document or with respect to the Credit
Obligations.
13. Expenses; Indemnity; Release of Claims.
13.1. Expenses. Whether or not the transactions contemplated hereby shall be
consummated, the Company shall pay:
(a) all reasonable expenses of the Agent and the Syndication Agent
(including the out-of-pocket expenses related to forming the group of
Lenders and reasonable fees and disbursements of the counsel to the Agent
and the Syndication Agent) in connection with the negotiation, preparation
and duplication of this Agreement and each other Credit Document,
examinations by, and reports of, the Agent's commercial financial
examiners, fixed asset appraisers and environmental consultants, the
transactions contemplated hereby and thereby and amendments, waivers,
consents and other operations hereunder and thereunder;
(b) all recording and filing fees and transfer and documentary stamp
and similar taxes at any time payable in respect of this Agreement, any
other Credit Document, any Credit Security or the incurrence of the Credit
Obligations; and
(c) all other reasonable expenses incurred by the Agent, the Lenders
or the holder of any Credit Obligation in connection with the enforcement
of any rights hereunder or under any other Credit Document or any work-out
negotiations relating to the Credit Obligations, including
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costs of collection and reasonable attorneys' fees (including a reasonable
allowance for the hourly cost of attorneys employed by the Lenders on a
salaried basis) and expenses.
13.2. General Indemnity. The Company and each Guarantor hereby each indemnifies
the Lenders and the Agent and holds them harmless from any liability, loss or
damage resulting from the violation by the Company of Section 2.4. In addition,
the Company hereby indemnifies each Lender, the Agent, the Syndication Agent,
each of the Lenders' or the Agent's or the Syndication Agent's directors,
officers, employees, agents, attorneys, accountants, consultants and each
Person, if any, who controls any Lender or the Agent (each Lender, the Agent and
each of such directors, officers, employees, agents, attorneys, accountants,
consultants and control Persons is referred to as an "Indemnified Party") and
holds each of them harmless from and against any and all claims, damages,
liabilities and reasonable expenses (including reasonable fees and disbursements
of counsel with whom any Indemnified Party may consult in connection therewith
and all reasonable expenses of litigation or preparation therefor) which any
Indemnified Party may incur or which may be asserted against any Indemnified
Party relating to, arising out of or by reason of this Agreement or any other
Credit Document in connection with (a) the Indemnified Party's compliance with
or contest of any subpoena or other process issued against it in any proceeding
involving the Company or any of its Subsidiaries or their Affiliates, (b) any
litigation or investigation involving the Company, any of its Subsidiaries or
their Affiliates, or any officer, director or employee thereof, (c) the
existence or exercise of any security rights with respect to the Credit Security
in accordance with the Credit Documents, or (d) this Agreement, any other Credit
Document or any transaction contemplated hereby or thereby; provided, however,
that the foregoing indemnity shall not apply (i) to litigation commenced by the
Company against the Lenders or the Agent or the Syndication Agent which seeks
enforcement of any of the rights of the Company hereunder or under any other
Credit Document and is determined adversely to the Lenders or the Agent or the
Syndication Agent in a final nonappealable judgment or (ii) to the extent such
claims, damages, liabilities and expenses result from the Indemnified Party's
own gross negligence or willful misconduct. THE COMPANY EXPRESSLY ACKNOWLEDGES
THAT IT MAY BE REQUIRED TO INDEMNIFY PERSONS AGAINST THEIR OWN NEGLIGENCE.
13.3. Intentionally Omitted.
13.4. Release of Claims. The Company and each Guarantor hereby each releases,
waives and forever relinquishes all claims, demands, obligations, liabilities
and causes of action of whatever kind or nature, whether known or unknown, which
it has, may have, or might assert now or in the future against the Agent or the
Lenders and/or their respective, parents, affiliates, participants, affiliates,
officers, directors, employees, agents, attorneys, accountants, consultants,
successors and assigns, directly or indirectly, arising out of, based upon, or
in any manner connected with (i) any transaction, event, circumstance, action,
failure to act or occurrence of any sort or type, whether known or unknown,
which occurred, existed, was taken, permitted or begun prior to the execution of
this Agreement with respect to the Credit Obligations, the Credit Documents
and/or the administration thereof or the obligations created thereby; (ii) any
discussions, commitments, negotiations, conversations or communications with
respect to the refinancing, restructuring or collection of any Credit
Obligations; or (iii) any thing or matter related to any of the foregoing. The
inclusion of this paragraph in this Agreement, and the execution of this
Agreement by the Agent or the Lenders, does not constitute an acknowledgment or
admission by the Agent or any Lender of liability for any matter, or a precedent
upon which liability may be asserted.
14. Operations; Agent.
14.1. Interests in Credits. The Percentage Interest of each Lender in the
respective portions of the Loan, and the related Commitments, shall be computed
based on the maximum principal amount for each Lender as set forth in the
Register, as from time to time in effect. The current Percentage Interests are
set forth in Exhibit 14.1, which may be updated by the Agent from time to time
to conform to the Register.
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14.2. Agent's Authority to Act, etc. Each of the Lenders appoints and authorizes
Fleet to act for the Lenders as the Lenders' Agent in connection with the
transactions contemplated by this Agreement and the other Credit Documents
(other than Hedge Agreements from time to time in effect) on the terms set forth
herein. All action in connection with the enforcement of, or the exercise of any
remedies (other than the Lenders' rights of set-off as provided in Section
12.2.4 or in any Credit Document) in respect of the Credit Obligations and
Credit Documents shall be taken by the Agent.
14.3. Company to Pay Agent, etc. The Company and each Guarantor shall be fully
protected in making all payments in respect of the Credit Obligations (other
than payments under Hedge Agreements from time to time in effect) to the Agent,
in relying upon consents, modifications and amendments executed by the Agent
purportedly on the Lenders' behalf, and in dealing with the Agent as herein
provided. The Agent may charge the accounts of the Company, on the dates when
the amounts thereof become due and payable, with the amounts of the principal of
and interest on the Loan, commitment fees and all other fees and amounts owing
under any Credit Document (other than Hedge Agreements from time to time in
effect).
14.4. Lender Operations for Advances, etc.
14.4.1. Advances. On each Closing Date, each Lender shall
advance to the Agent in immediately available funds such Lender's
Percentage Interest in the portion of the Loan advanced on such
Closing Date prior to 12:00 noon (Boston time). If such funds are
not received at such time, but all applicable conditions set forth
in Section 9 have been satisfied, each Lender authorizes and
requests the Agent to advance for the Lender's account, pursuant to
the terms hereof, the Lender's respective Percentage Interest in
such portion of the Loan and agrees to reimburse the Agent in
immediately available funds for the amount thereof prior to 2:00
p.m. (Boston time) on the day any portion of the Loan is advanced
hereunder; provided, however, that the Agent is not authorized to
make any such advance for the account of any Lender who has
previously notified the Agent in writing that such Lender shall not
be performing its obligations to make further advances hereunder;
and provided, further, that the Agent shall be under no obligation
to make any such advance.
14.4.2. Intentionally Omitted.
14.4.3. Agent to Allocate Payments, etc. All payments of
principal and interest in respect of the extensions of credit made
pursuant to this Agreement, commitment fees and other fees under
this Agreement shall, as a matter of convenience, be made by the
Company and the Guarantors to the Agent in immediately available
funds by noon (Boston time) on any Banking Day. The share of each
Lender shall be credited to such Lender by the Agent in immediately
available funds by 2:00 p.m. (Boston time) on such Banking Day in
such manner that the principal amount of the Credit Obligations to
be paid shall be paid proportionately in accordance with the
Lenders' respective Percentage Interests in such Credit Obligations,
except as otherwise provided in this Agreement. Under no
circumstances shall any Lender be required to produce or present its
Notes as evidence of its interests in the Credit Obligations in any
action or proceeding relating to the Credit Obligations.
14.4.4. Nonperforming Lenders. In the event that any Lender
fails to reimburse the Agent pursuant to Sections 14.4.1 or 14.4.2
for the Percentage Interest of such lender (a "Nonperforming
Lender") in any credit advanced by the Agent pursuant hereto,
overdue amounts (the "Delinquent Payment") due from the
Nonperforming Lender to the Agent shall bear interest, payable by
the Nonperforming Lender on demand, at a per annum rate equal to (a)
the Federal Funds Rate for the
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first three (3) days overdue and (b) the sum of two percent (2%)
plus the Federal Funds Rate for any longer period. Such interest
shall be payable to the Agent for its own account for the period
commencing on the date of the Delinquent Payment and ending on the
date the Nonperforming Lender reimburses the Agent on account of the
Delinquent Payment (to the extent not paid by any Obligor as
provided below) and the accrued interest thereon (the "Delinquency
Period"), whether pursuant to the assignments referred to below or
otherwise. Upon notice by the Agent, the Company shall pay to the
Agent the principal (but not the interest) portion of the Delinquent
Payment; provided that such Delinquent Payment has been outstanding
for no fewer than three (3) days. During the Delinquency Period, in
order to make reimbursements for the Delinquent Payment and accrued
interest thereon, the Nonperforming Lender shall be deemed to have
assigned to the Agent all interest, commitment fees and other
payments made by the Company under Section 3 that would have
thereafter otherwise been payable under the Credit Documents to the
Nonperforming Lender. During any period in which any Nonperforming
Lender is not performing its obligations to extend credit under
Section 2, the Nonperforming Lender shall be deemed to have assigned
to each Lender that is not a Nonperforming Lender (a "Performing
Lender") all principal and other payments made by the Company under
Section 4 that would have thereafter otherwise been payable under
the Credit Documents to the Nonperforming Lender. The Agent shall
credit a portion of such payments to each Performing Lender in an
amount equal to the Percentage Interest of such Performing Lender in
an amount equal to the Percentage Interest of such Performing Lender
divided by one minus the Percentage Interest of the Nonperforming
Lender until the respective portions of the Loan owed to all the
Lenders are the same as the Percentage Interests of the Lenders
immediately prior to the failure of the Nonperforming Lender to
perform its obligations under Section 2. The foregoing provisions
shall be in addition to any other remedies the Agent, the Performing
Lenders or the Company may have under law or equity against the
Nonperforming Lender as a result of the Delinquent Payment as a
result of its failure to perform its obligations under Section 2.
14.5. Sharing of Payments, etc. Each Lender agrees that (a) if by exercising any
right of set-off or counterclaim or otherwise, it shall receive payment of (i) a
proportion of the aggregate amount due with respect to its Percentage Interest
in the Loan and which is greater than (ii) the proportion received by any other
Lender in respect of the aggregate amount due with respect to such other
Lender's Percentage Interest in the Loan and (b) if such inequality shall
continue for more than ten (10) days, the Lender receiving such proportionately
greater payment shall purchase participations in the Percentage Interests in the
Loan held by the other Lenders, and such other adjustments shall be made from
time to time (including rescission of such purchases of participations in the
event the unequal payment originally received is recovered from such Lender
through bankruptcy proceedings or otherwise), as may be required so that all
such payments of principal and interest with respect to the Loan held by the
Lenders shall be shared by the Lenders pro rata in accordance with their
respective Percentage Interests; provided, however, that this Section 14.5 shall
not impair the right of any Lender to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of Indebtedness of any Obligor other than such Obligor's Indebtedness
with respect to the Loan. Each Lender that grants a participation in the Credit
Obligations to a Credit Participant shall require as a condition to the granting
of such participation that such Credit Participant agree to share payments
received in respect of the Credit Obligations as provided in this Section 14.5.
The provisions of this Section 14.5 are for the sole and exclusive benefit of
the Lenders and no failure of any Lender to comply with the terms hereof shall
be available to any Obligor as a defense to the payment of the Credit
Obligations.
14.6. Agent's Resignation. The Agent may resign at any time by giving at least
sixty (60) days' prior written notice of its intention to do so to each of the
Lenders and the Company and upon the appointment by the Required Lenders of a
successor Agent; provided, however, that Bank of America, N.A. shall have
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the right of first refusal with respect to such appointment. If no successor
Agent shall have been so appointed and shall have accepted such appointment
within forty five (45) days after the retiring Agent's giving of such notice of
resignation, then the retiring Agent may appoint a successor Agent which shall
be a bank or a trust company organized under the laws of the United States of
America or any state thereof and having a combined capital, surplus and
undivided profit of at least $100,000,000; provided, however, that any successor
Agent appointed under this sentence may be removed upon the written request of
the Required Lenders, which request shall also appoint a successor Agent. Upon
the appointment of a new Agent hereunder, the term "Agent" shall for all
purposes of this Agreement thereafter mean such successor. After any retiring
Agent's resignation hereunder as Agent, or the removal hereunder of any
successor Agent, the provisions of this Agreement shall continue to inure to the
benefit of such retiring or removed Agent as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement.
14.7. Concerning the Agent.
14.7.1. Action in Good Faith, etc. The Agent and its officers,
directors, employees and agents shall be under no liability to any
of the Lenders or to any future holder of any interest in the Credit
Obligations for any action or failure to act taken or suffered in
good faith, and any action or failure to act in accordance with an
opinion of its counsel shall conclusively be deemed to be in good
faith. The Agent shall in all cases be entitled to rely, and shall
be fully protected in relying, on instructions given to the Agent by
the Required Lenders.
14.7.2. No Implied Duties, etc. The Agent shall have and may
exercise such powers as are specifically delegated to the Agent
under this Agreement or any other Credit Document together with all
other powers incidental thereto. The Agent shall have no implied
duties to any Person or any obligation to take any action under this
Agreement or any other Credit Document except for action
specifically provided for in this Agreement or any other Credit
Document to be taken by the Agent.
14.7.3. Validity, etc. The Agent shall not be responsible to
any Lender or any future holder of any interest in the Credit
Obligations (a) for the legality, Validity, enforceability or
effectiveness of this Agreement or any other Credit Document, (b)
for any recitals, reports, representations, warranties or statements
contained in or made in connection with this Agreement or any other
Credit Document, (c) for the existence or value of any assets
included in any security for the Credit Obligations, (d) for the
effectiveness of any Lien purported to be included in the Credit
Security, (e) for the specification or failure to specify any
particular assets to be included in the Credit Security, or (f)
unless the Agent shall have failed to comply with Section 14.7.1,
for the perfection of the security interests in the Credit Security.
14.7.4. Compliance. The Agent shall not be obligated to
ascertain or inquire as to the performance or observance of any of
the terms of this Agreement or any other Credit Document; and in
connection with any extension of credit under this Agreement or any
other Credit Document, the Agent shall be fully protected in relying
on a certificate of the Company as to the fulfillment by the Company
of any conditions to such extension of credit.
14.7.5. Employment of Agents and Counsel. The Agent may
execute any of its duties as Agent under this Agreement or any other
Credit Document by or through employees, agents and
attorneys-in-fact and shall not be responsible to any of the
Lenders, the Company or any other Obligor for the default or
misconduct of any such agents or attorneys-in-fact selected by the
Agent acting in good faith. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby
created and its duties hereunder or under any other Credit Document.
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14.7.6. Reliance on Documents and Counsel. The Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
affidavit, certificate, cablegram, consent, instrument, letter,
notice, order, document, statement, telecopy, telegram, telex or
teletype message or writing reasonably believed in good faith by the
Agent to be genuine and correct and to have been signed, sent or
made by the Person in question, including any telephonic or oral
statement made by such Person, and, with respect to legal matters,
upon an opinion or the advice of counsel selected by the Agent.
14.7.7. Agent's Reimbursement. Each of the Lenders severally
agrees to reimburse the Agent, pro rata in accordance with such
Lender's Percentage Interest, for any reasonable expenses not
reimbursed by the Company or the Guarantors (without limiting the
obligation of the Company or the Guarantors to make such
reimbursement): (a) for which the Agent is entitled to reimbursement
by the Company or the Guarantors under this Agreement or any other
Credit Document, and (b) after the occurrence and during the
continuance of a Default, for any other reasonable expenses incurred
by the Agent on the Lenders' behalf in connection with the
enforcement of the Lenders' rights under this Agreement or any other
Credit Document; provided, however, that the Agent shall not be
reimbursed for any such expenses arising as a result of its gross
negligence or willful misconduct.
14.8. Rights as a Lender. With respect to any credit extended by it hereunder,
Fleet shall have the same rights, obligations and powers hereunder as any other
Lender and may exercise such rights and powers as though it were not the Agent,
and unless the context otherwise specifies, Fleet shall be treated in its
individual capacity as though it were not the Agent hereunder. Without limiting
the generality of the foregoing, the Percentage Interest of Fleet shall be
included in any computations of Percentage Interests. Fleet and its Affiliates
may accept deposits from, lend money to, act as trustee for and generally engage
in any kind of banking or trust business with the Company, any of its
Subsidiaries or any Affiliate of any of them and any Person who may do business
with or own an equity interest in the Company, any of its Subsidiaries or any
Affiliate of any of them, all as if Fleet were not the Agent and without any
duty to account therefor to the other Lenders.
14.9. Independent Credit Decision. Each of the Lenders acknowledges that it has
independently and without reliance upon the Agent, based on the financial
statements and other documents referred to in Section 11.2, on the other
representations and warranties contained herein and on such other information
with respect to the Company and its Subsidiaries as such Lender deemed
appropriate, made such Lender's own credit analysis and decision to enter into
this Agreement and to make the extensions of credit provided for hereunder. Each
Lender represents to the Agent that such Lender shall continue to make its own
independent credit and other decisions in taking or not taking action under this
Agreement or any other Credit Document. Each Lender expressly acknowledges that
neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to
such Lender, and no act by the Agent taken under this Agreement or any other
Credit Document, including any review of the affairs of the Company and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent. Except for notices, reports and other documents expressly required to
be furnished to each Lender by the Agent under this Agreement or any other
Credit Document, the Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, property, condition, financial or otherwise, or creditworthiness of
the Company or any Subsidiary which may come into the possession of the Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
14.10. Indemnification. The Lenders shall severally indemnify the Agent and its
officers, directors, employees, agents, attorneys, accountants, consultants and
controlling Persons (to the extent not reimbursed by the Obligors and without
limiting the obligation of any of the Obligors to do so), pro rata in accordance
with their respective Percentage Interests, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind
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whatsoever which may at any time be imposed on, incurred by or asserted against
the Agent or such Persons relating to or arising out of this Agreement, any
other Credit Document, the transactions contemplated hereby or thereby, or any
action taken or omitted by the Agent in connection with any of the foregoing;
provided, however, that the foregoing shall not extend to actions or omissions
which are taken by the Agent with gross negligence or willful misconduct.
15. Successors and Assigns; Lender Assignments and Participations. Any reference
in this Agreement or any other Credit Document to any of the parties hereto
shall be deemed to include the successors and assigns of such party, and all
covenants and agreements by or on behalf of the Company, the other Obligors, the
Agent or the Lenders that are contained in this Agreement or any other Credit
Document shall bind and inure to the benefit of their respective successors and
assigns; provided, however, that (a) the Company and its Subsidiaries may not
assign their rights or obligations under this Agreement or any other Credit
Document except for mergers or liquidations permitted by Section 10.12, and (b)
the Lenders shall be not entitled to assign their respective Percentage
Interests in the credits extended hereunder or their Commitments except as set
forth below in this Section 15 (provided, however, that this Section 15 shall be
solely for the benefit of the Lenders and shall confer no rights in or benefits
upon the Company).
15.1. Assignments by Lenders.
15.1.1. Assignees and Assignment Procedures. Each Lender may,
in compliance with applicable laws in connection with such
assignment, but without the consent of the Company, assign to one or
more Eligible Assignees (each, an "Assignee") all or a portion of
its interests, rights and obligations under this Agreement and the
other Credit Documents, including all or a portion, which must be
pro rata between the Revolving Loan and the Term Loan, of its
Commitment, the portions of the Loan at the time owing to it and any
Notes held by it; provided, however, that:
(i) the aggregate amount of the Commitment of the assigning
Lender subject to each such assignment to any Assignee other than
another Lender, a Related Fund or an Affiliate of a Lender
(determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Agent) shall be not
less than $5,000,000 and in increments of $1,000,000 (or, if less,
the entire remaining amount of the assigning Lender's Commitment);
and
(ii) the parties to each such assignment shall execute and
deliver to the Agent an Assignment and Acceptance (the "Assignment
and Acceptance") substantially in the form of Exhibit 15.1.1,
together with the Note subject to such assignment and, except in the
event of a transfer pursuant to Section 15.3, a processing and
recordation fee of $2,500 payable to the Agent by the assigning
Lender (or as the assigning Lender and the Assignee may otherwise
agree between themselves).
Upon acceptance and recording pursuant to Section 15.1.4, from and after
the effective date specified in each Assignment and Acceptance (which
effective date shall be at least five (5) Banking Days after the execution
thereof unless waived by the Agent):
(A) the Assignee shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights
and obligations of a Lender under this Agreement and
(B) the assigning Lender shall, to the extent provided in such
assignment, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall
cease to be a party hereto but shall continue to be entitled
to the benefits of Sections 3.4
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and 13, as well as to any fees accrued for its account
hereunder and not yet paid).
15.1.2. Terms of Assignment and Acceptance. By executing and
delivering an Assignment and Acceptance, the assigning Lender and
the Assignee shall be deemed to confirm to and agree with each other
and the other parties hereto as follows:
(a) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement
or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Credit Document or any
other instrument or document furnished pursuant hereto;
(b) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Company and its Subsidiaries or the performance or observance by the
Company or any of its Subsidiaries of any of its obligations under this
Agreement, any other Credit Document or any other instrument or document
furnished pursuant hereto;
(c) such Assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 11.2 or Section 10.4 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;
(d) such Assignee shall independently and without reliance upon the
Agent, such assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement;
(e) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and
(f) such Assignee agrees that it shall perform in accordance with
the terms of this Agreement all the obligations which are required to be
performed by it as a Lender.
15.1.3. Register. The Agent shall maintain at the Boston
Office (for this limited purpose, also as agent for the Company) a
register (the "Register") for the recordation of (a) the names and
addresses of the Lenders and the Assignees which assume rights and
obligations pursuant to an assignment under Section 15.1.1, (b) the
Percentage Interest of each such Lender as set forth in Exhibit 14.1
and (c) the amount of the Loan owing to each Lender from time to
time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Company, the Agent and the
Lenders may treat each Person whose name is registered therein for
all purposes as a party to this Agreement. The Register shall be
available for inspection by the Company or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
15.1.4. Acceptance of Assignment and Assumption. Upon its
receipt of a completed Assignment and Acceptance executed by an
assigning Lender and an Assignee (and any necessary consent of the
Agent and the Company) together with the processing and recordation
fee referred to in Section 15.1.1 and, to the extent necessary, the
Note being assigned, the Agent shall (a) accept such Assignment and
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Acceptance, (b) record the information contained therein in the
Register and (c) give prompt notice thereof to the Company. Within
five (5) Banking Days after receipt of notice, the Company, at its
own expense, shall execute and deliver to the Agent (in exchange for
the surrendered Note if such Note must be surrendered or reissued as
a result of such assignment) a new Note to the order of such
Assignee in a principal amount equal to the applicable Commitment
and Loan assumed by it pursuant to such Assignment and Acceptance.
If the assigning Lender has retained a Commitment and Loan, its Note
shall be deemed to be then outstanding in a principal amount equal
to the applicable Commitment and Loan retained by it.
15.1.5. Federal Reserve Bank. Notwithstanding the foregoing
provisions of this Section 11 (without the consent of or notice to
the Agent or the Company), any Lender may at any time pledge all or
any portion of such Lender's rights under this Agreement and the
other Credit Documents to a Federal Reserve Bank or, in the case of
any Lender that is a fund, to the trustee of such fund to support
the fund's obligations to such trustee; provided, however, that no
such pledge or assignment shall release such Lender from such
Lender's obligations hereunder or under any other Credit Document.
15.1.6. Further Assurances. The Company and its Subsidiaries
shall sign such documents and take such other actions from time to
time reasonably requested by an Assignee to enable it to share in
the benefits of the rights created by the Credit Documents.
15.2. Credit Participants.
(a) Consent to Junior Credit Participation Agreement. Each of the
Company and its Subsidiaries acknowledges that (i) on or before the
Initial Closing Date the Lenders shall sell a junior credit participation
in the Term Loan to New Lender in an aggregate amount of $5,000,000; (ii)
Company's and its Subsidiaries' consent to the sale of a junior credit
participation is not required under the Credit Agreement; and (iii) the
Lenders' sale of the junior credit participation in the Term Loan shall
not affect their obligations for repayment of the entire unpaid balance of
the Credit Obligations (including, but not limited to, any portion thereof
in respect to which the junior credit participation has been issued) in
accordance with the terms of this Agreement or any Credit Document and
that the respective priorities, rights, obligations and privileges of the
Lenders and New Lender vis-a-vis each other shall be governed by the
Junior Credit Participation Agreement.
(b) Each Lender may, on or after the Initial Closing Date, without
the consent of the Company or the Agent, in compliance with applicable
laws in connection with such participation, sell to one or more commercial
banks, other financial institutions or funds in the business of making or
purchasing loans similar to the Credit Obligations (each a "Credit
Participant") participations in all or a portion of its interests, rights
and obligations under this Agreement and the other Credit Documents
(including all or a portion of its Commitment and the Loan owing to it and
the Notes held by it); provided, however, that:
(c) such Lender's obligations under this Agreement shall remain
unchanged;
(d) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations;
(e) the Credit Participant shall be entitled to the benefit of the
cost protection provisions contained in Sections 3.4 and 13, but shall not
be entitled to receive any greater payment thereunder than the selling
Lender would have been entitled to receive with respect to the interest so
sold if such interest had not been sold; and
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(f) the Company, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and, under any agreements
between such Lender and such Credit Participant, such Lender shall retain
the sole right as one of the Lenders to vote (and to determine how to
vote) with respect to the enforcement of the obligations of the Obligors
relating to the Loan and the approval of any amendment, modification or
waiver of any provision of this Agreement (other than amendments,
modifications, consents or waivers described in clause (b) of the proviso
to Section 19.1, with respect to which the Credit Participant may
determine how to vote).
Each Obligor agrees, to the fullest extent permitted by applicable law, that any
Credit Participant and any Lender purchasing a participation from another Lender
pursuant to Section 14.5 may exercise all rights of payment (including the right
of set-off), with respect to its participation as fully as if such Credit
Participant or such Lender were the direct creditor of the Obligors and a Lender
hereunder in the amount of such participation; provided, however, that such
Credit Participant may only exercise its rights of payment if the Company has
been notified that such Person is a Credit Participant.
15.3. Replacement of Lender. In the event that any Lender or, to the extent
applicable, any Credit Participant (the "Affected Lender"):
(a) fails to perform its obligations to fund any portion of the Loan
on any Closing Date when required to do so by the terms of the Credit
Documents;
(b) demands payment under the provisions of Section 3.4 in an amount
materially in excess of the amounts with respect thereto demanded by the
other Lenders; or
(c) refuses to consent to a proposed amendment, modification, waiver
or other action requiring consent of the holders of one hundred percent
(100%) of the Percentage Interests under Section 19.1 that is consented to
by Lenders owning at least eighty percent (80%) of the Percentage
Interests;
then, so long as no Event of Default exists, the Company shall have the right to
seek a replacement lender which is reasonably satisfactory to the Agent (the
"Replacement Lender"). The Replacement Lender shall purchase the interests of
the Affected Lender in the Loan, and its Commitment and shall assume the
obligations of the Affected Lender hereunder and under the other Credit
Documents upon execution by the Replacement Lender of an Assignment and
Acceptance and the tender by it to the Affected Lender of a purchase price
agreed between it and the Affected Lender (or, if they are unable to agree, a
purchase price in the amount of the Affected Lender's Percentage Interest in the
Loan, or appropriate credit support for contingent amounts included therein, and
all other outstanding Credit Obligations then owed to the Affected Lender). No
assignment fee pursuant to Section 15.1.1(ii) shall be required in connection
with such assignment. Upon consummation of such assignment, the Replacement
Lender shall become party to this Agreement as a signatory hereto and shall have
all the rights and obligations of the Affected Lender under this Agreement and
the other Credit Documents with a Percentage Interest equal to the Percentage
Interest of the Affected Lender, the Affected Lender shall be released from its
obligations hereunder and under the other Credit Documents, and no further
consent or action by any party shall be required. Upon the consummation of such
assignment, the Company, the Agent and the Affected Lender shall make
appropriate arrangements so that a new Note is issued to the Replacement Lender
if it has acquired a portion of the Loan. The Company and the Guarantors shall
sign such documents and take such other actions reasonably requested by the
Replacement Lender to enable it to share in the benefits of the rights created
by the Credit Documents. Until the consummation of an assignment in accordance
with the foregoing provisions of this Section 15.3, the Company shall continue
to pay to the Affected Lender any Credit Obligations as they become due and
payable.
16. Confidentiality. Each Lender shall make no disclosure of confidential
information furnished to it by the Company or any of its Subsidiaries unless
such information shall have become public (unless such information has become
public as a result of a violation of this Section 16), except:
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(a) in connection with operations under or the enforcement of this
Agreement or any other Credit Document to Persons who have a reasonable
need to be furnished such confidential information in connection with the
administration or other actions related to this Agreement and who agree,
in a commercially customary manner, to comply with the restrictions
contained in this Section 16 with respect to such information;
(b) pursuant to any statutory or regulatory requirement or any
mandatory court order, subpoena or other legal process;
(c) to any parent or corporate Affiliate of such Lender or to any
Credit Participant, proposed Credit Participant or proposed Assignee in
connection with the administration or other actions related to this
Agreement; provided, however, that any such Person shall agree, in a
commercially customary manner, to comply with the restrictions set forth
in this Section 16 with respect to such information;
(d) to its independent counsel, auditors and other professional
advisors in connection with the administration or other actions related to
this Agreement with instruction to such Person to keep such information
confidential; and
(e) with the prior written consent of the Company, to any other
Person.
17. Foreign Lenders. If any Lender is not created or organized in, or under the
laws of, the United States of America or any state thereof, such Lender shall
deliver to the Company and the Agent the forms described in one of the following
two clauses:
(a) Two fully completed and duly executed United States Internal
Revenue Service Form 1001 or 4224 or any successor form, as the case may
be, certifying that such Lender is entitled to receive payments of the
Credit Obligations payable to it without deduction or withholding of any
United States federal income taxes; or
(b) A statement, executed by such Lender under penalty of perjury,
certifying that such Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and two fully completed and duly executed United
States Internal Revenue Service Forms W-8 or any successor form,
certifying that such Lender is not a "United States person" within the
meaning of Section 7701(a)(30) of the Code.
Each Lender that delivers any form or statement pursuant to this Section 17
further undertakes to renew such forms and statements by delivering to the
Company and the Agent any updated form, successor form or other certification,
as the case may be, on or before the date that any form or statement previously
delivered pursuant to this Section 17 expires or becomes obsolete or after the
occurrence of any event requiring a change in such most recent form or
statement. If at any time the Company and the Agent have not received all forms
and statements (including any renewals thereof) required to be provided by any
Lender pursuant to this Section 17, Section 3.4 shall not apply with respect to
any amount of United States federal income taxes required to be withheld from
payments of the Credit Obligations to such Lender.
18. Notices. Except as otherwise specified in this Agreement or any other Credit
Document, any notice required to be given pursuant to this Agreement or any
other Credit Document shall be given in writing. Any notice, consent, approval,
demand or other communication in connection with this Agreement or any other
Credit Document shall be deemed to be given if given in writing (including
telex, telecopy or similar teletransmission) addressed as provided below (or to
the addressee at such other address as the addressee shall have specified by
notice actually received by the addressor), and if either (a) actually delivered
in fully legible form to such address (evidenced in the case of a telex by
receipt of the correct answerback) or (b) in the case of a letter, unless actual
receipt of the notice is required by any
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Credit Document five (5) days shall have elapsed after the same shall have been
deposited in the United States mails, with first class postage prepaid and
registered or certified.
If to the Company or any of its Subsidiaries, to it at its address set
forth in Exhibit 11.1 (as supplemented pursuant to Sections 10.4.1 and 10.4.2),
to the attention of the chief financial officer.
If to any Lender or the Agent, to it at its address set forth on the
signature pages of this Agreement or in the Register, with a copy to the Agent.
19. Amendments, Consents, Waivers, etc.
19.1. Lender Consents for Amendments. Except as otherwise set forth herein, the
Agent may (and upon the written request of the Required Lenders the Agent shall)
take or refrain from taking any action under this Agreement or any other Credit
Document, including giving its written consent to any modification of or
amendment to and waiving in writing compliance with any covenant or condition in
this Agreement or any other Credit Document (other than any Hedge Agreements
from time to time in effect) or any Default or Event of Default, all of which
actions shall be binding upon all of the Lenders; provided, however, that:
(a) Except as provided below, without the written consent of the
Lenders owning at least a majority of the Percentage Interests
(disregarding the Percentage Interest of any Nonperforming Lender so long
as such Lender is treated equally with the other Lenders with respect to
any actions enumerated below), no written modification of, amendment to,
consent with respect to, waiver of compliance with or waiver of a Default
under, any of the Credit Documents (other than any Hedge Agreements from
time to time in effect) shall be made.
(b) Without the written consent of such Lenders as own one hundred
percent (100%) of the Percentage Interests (disregarding the Percentage
Interest of any Nonperforming Lender so long as such Lender is treated
equally with the other Lenders with respect to any actions enumerated
below):
(i) None of the conditions specified in Section 9 shall be
amended, waived or modified.
(ii) No release of all or substantially all of the Credit
Security or release of the Company or any material Guarantor shall
be made (in any event, without the written consent of the Lenders,
the Agent may release particular items of Credit Security or
particular Guarantors in dispositions permitted by Section 10.12, as
modified by amendments thereto approved by the Required Lenders, and
may release all Credit Security pursuant to Section 20.1 upon
payment in full of the Credit Obligations and termination of the
Commitments).
(iii) No incurrence or existence of any Lien on all or
substantially all of the Credit Security shall be permitted (other
than Liens securing the Credit Obligations).
(iv) No alteration shall be made of the Lenders' rights of
set-off contained in Section 12.2.4.
(v) No amendment to or modification of this Section 19.1 or
the definition of "Required Lenders" shall be made.
(c) Without the written consent of each Lender that is directly
affected thereby, as well as such Lenders as own at least a majority of
the Percentage Interests (disregarding the Percentage Interest of any
Nonperforming Lender so long as such Lender is treated equally with the
other Lenders with respect to any actions enumerated below):
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(i) No reduction shall be made in (A) the amount of principal
of the Loan owing to such Lender or participated to such Lender, (B)
the interest rate on the portion of the Loan owing to such Lender or
(C) the commitment fees owing to such Lender with respect to the
credit facility provided herein (other than amendments and waivers
approved by the Required Lenders that modify defined terms used in
calculating the Applicable Rate or that waive an increase in the
Applicable Rate as a result of an Event of Default).
(ii) No change shall be made in the stated, scheduled time of
payment of any portion of the Loan owing to such Lender or interest
thereon or fees relating to any of the foregoing payable to such
Lender and no waiver shall be made of any Default under Section
12.1.1 with respect to such Lender (other than amendments and
waivers approved by the Required Lenders that modify defined terms
used in calculating the Applicable Rate).
(iii) No increase shall be made in the amount, or extension of
the term, of the stated Commitments of such Lender beyond that
provided for under Section 2.
(d) Without the written consent of the Agent, no amendment or
modification of any Credit Document shall affect the rights or duties of
the Agent under the Credit Documents.
19.1.2. Course of Dealing; No Implied Waivers. No course of
dealing between any Lender or the Agent, on one hand, and the
Company or any other Obligor, on the other hand, shall operate as a
waiver of any of the Lenders' or the Agent's rights under this
Agreement or any other Credit Document or with respect to the Credit
Obligations. In particular, no delay or omission on the part of any
Lender or the Agent in exercising any right under this Agreement or
any other Credit Document or with respect to the Credit Obligations
shall operate as a waiver of such right or any other right hereunder
or thereunder. A waiver on any one occasion shall not be construed
as a bar to or waiver of any right or remedy on any future occasion.
No waiver, consent or amendment with respect to this Agreement or
any other Credit Document shall be binding unless it is in writing
and signed by the Agent or the Required Lenders.
20. General Provisions.
20.1. Defeasance. When all Credit Obligations have been paid, performed and
reasonably determined by the Agent to have been indefeasibly discharged in full,
and if at the time no Lender continues to be committed to extend any credit to
the Company hereunder or under any other Credit Document, this Agreement and the
other Credit Documents shall terminate and, at the Company's written request,
accompanied by such certificates and other items as the Agent shall reasonably
deem necessary, the Credit Security shall revert to the Obligors and the right,
title and interest of the Agent and the Lenders therein shall terminate.
Thereupon, on the Obligors' demand and at their cost and expense, the Agent
shall execute proper instruments, acknowledging satisfaction of and discharging
this Agreement and the other Credit Documents, and shall redeliver to the
Obligors any Credit Security then in its possession; provided, however, that
Sections 3.4 (for ninety (90) days after termination of this Agreement), 13,
14.7.7, 14.10, 12 and 20 shall survive the termination of this Agreement.
20.2. No Strict Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement and the other Credit Documents with
counsel sophisticated in financing transactions. In the event an ambiguity or
question of intent or interpretation arises, this Agreement and the other Credit
Documents shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement and the other
Credit Documents.
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20.3. Certain Obligor Acknowledgments. Each of the Company and the other
Obligors acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Credit Documents;
(b) neither the Agent nor any Lender has any fiduciary relationship
with or duty to the Obligors arising out of or in connection with this
Agreement or any other Credit Document, and the relationship between the
Agent and Lenders, on one hand, and the Obligors, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions contemplated
hereby or thereby among the Obligors and the Lenders.
20.4. Venue; Service of Process; Certain Waivers. Each of the Company, the other
Obligors, the Agent and the Lenders:
(a) Irrevocably submits to the nonexclusive jurisdiction of the
state courts of The Commonwealth of Massachusetts and to the nonexclusive
jurisdiction of the United States District Court for the District of
Massachusetts for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement or any other Credit Document
or the subject matter hereof or thereof;
(b) Waives to the extent not prohibited by applicable law that
cannot be waived, and agrees not to assert, by way of motion, as a defense
or otherwise, in any such proceeding brought in any of the above-named
courts, any claim that it is not subject personally to the jurisdiction of
such court, that its property is exempt or immune from attachment or
execution, that such proceeding is brought in an inconvenient forum, that
the venue of such proceeding is improper, or that this Agreement or any
other Credit Document, or the subject matter hereof or thereof, may not be
enforced in or by such court;
(c) Consents to service of process in any such proceeding in any
manner at the time permitted by Chapter 223A of the General Laws of The
Commonwealth of Massachusetts and agrees that service of process by
registered or certified mail, return receipt requested, at its address
specified in or pursuant to Section 18 is reasonably calculated to give
actual notice; and
(d) Waives to the extent not prohibited by applicable law that
cannot be waived any right it may have to claim or recover in any such
proceeding any special, exemplary, punitive or consequential damages.
20.5. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT
CANNOT BE WAIVED, EACH OF THE COMPANY, THE OTHER OBLIGORS, THE AGENT AND THE
LENDERS WAIVES, AND COVENANTS THAT IT SHALL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY CREDIT OBLIGATION OR IN
ANY WAY CONNECTED WITH THE DEALINGS OF THE LENDERS, THE AGENT, THE COMPANY OR
ANY OTHER OBLIGOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE. Each
of the Company and the other Obligors acknowledges that it has been informed by
the Agent that the foregoing sentence constitutes a material inducement upon
which each of the Lenders has relied and will rely in entering into this
Agreement and any other Credit Document. Any Lender, the Agent, the Company or
any other Obligor may file an original counterpart or a copy of this
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Agreement with any court as written evidence of the consent of the Company, the
other Obligors, the Agent and the Lenders to the waiver of their rights to trial
by jury.
20.6. Interpretation; Governing Law; etc. Time is (and shall be) of the essence
in this Agreement and the other Credit Documents. All covenants, agreements,
representations and warranties made in this Agreement or any other Credit
Document or in certificates delivered pursuant hereto or thereto shall be deemed
to have been relied on by each Lender, notwithstanding any investigation made by
any Lender on its behalf, and shall survive the execution and delivery to the
Lenders hereof and thereof. The invalidity or unenforceability of any provision
hereof shall not affect the validity or enforceability of any other provision
hereof, and any invalid or unenforceable provision shall be modified so as to be
enforced to the maximum extent of its validity or enforceability. The headings
in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement and the other Credit
Documents constitute the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersede all prior and contemporaneous
understandings and agreements, whether written or oral. This Agreement may be
executed in any number of counterparts which together shall constitute one
instrument. This Agreement shall be governed by and construed in accordance with
the laws (other than the conflict of laws rules) of The Commonwealth of
Massachusetts.
[THE REST OF THIS PAGE IS INTENTIONALLY BLANK.]
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Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
NEXTERA ENTERPRISES, INC.
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: CFO
CE ACQUISITION CORP.
ERG ACQUISITION CORP.
LEXECON INC.
NETNEXT, INC.
NEXTERA BUSINESS PERFORMANCE SOLUTIONS
GROUP, INC.
NEXTERA INTERACTIVE, INC.
SCANADA, INC.
NEXTERA & COMPANY, LLC
NEXTERA INTERNATIONAL, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Officer
As an authorized officer of each of
the foregoing corporations or limited
liability companies
FLEET NATIONAL BANK
By: ▇.▇. ▇'▇▇▇▇▇
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Name:
Title:
FLEET NATIONAL BANK
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ DE 1006A
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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BANK OF AMERICA , N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name:
Title:
BANK OF AMERICA, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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