Exhibit 10.14
CREDIT AGREEMENT
BY AND BETWEEN
LASALLE BANK NATIONAL ASSOCIATION
AND
SELECTQUOTE INSURANCE SERVICES
FEBRUARY 8, 2000
CREDIT AGREEMENT
This Credit Agreement is made as of February 8, 2000 by and between
LASALLE BANK NATIONAL ASSOCIATION, a national banking association with its
principal offices located in Chicago, Illinois, ("LENDER"), and SELECTQUOTE
INSURANCE SERVICES, a California corporation with its principal offices located
in San Francisco, California ("BORROWER").
WITNESSETH:
WHEREAS, the Borrower desires to borrow from the Lender certain amounts
for the purposes set forth in Section 8.A.8 below;
WHEREAS, the Lender is agreeable to extending said credit facility
provided that said credit facility is secured and is on the terms and conditions
provided herein;
WHEREAS, certain financial covenants of the Borrower hereinafter set
forth relate to the financial condition and results of Borrower, and the
financial condition and results of Borrower are a material inducement to the
Lender's willingness to enter into this Credit Agreement and extend the
financial accommodations referred to herein;
WHEREAS, as a condition for extending such financial accommodations,
the Lender requires that Borrower enter into this Credit Agreement establishing
the terms and conditions thereof;
NOW THEREFORE, for and in consideration of the foregoing premises and
the mutual agreements contained herein, the parties hereto, intending to be
legally bound, do hereby agree as follows:
SECTION 1. DEFINITIONS.
Section 1.A. In addition to the terms that are elsewhere defined
herein, when used herein, the following terms have the meanings as set forth
below:
"ACCOUNTS," "ACCOUNT DEBTOR," "CHATTEL PAPER," "DOCUMENTS,"
"EQUIPMENT," "FIXTURES," "GENERAL Intangibles," "GOODS," "INSTRUMENTS,"
"INVENTORY", "SECURITIES", "SECURITIES ENTITLEMENTS", "SECURITIES ACCOUNTS" and
"FINANCIAL ASSETS" shall have the meanings assigned to the respective terms in
the Security Agreement.
"ACT" or "ACTS" means, collectively, the Laws of any state or
governmental subdivision thereof which apply to the conduct of business by the
Borrower.
"APPLICABLE LIBOR MARGIN," for purposes of determining the interest
rate on a LIBOR Loan, means initially 2.75%.
"ADJUSTED LIBOR" is defined in Section 3.A hereof.
"AFFILIATE" of any Person means any other Person that directly or
indirectly, through one or more intermediaries, controls or is controlled by or
is under common control with such Person and includes, without limitation, each
shareholder, director and any Subsidiaries of such Person. For purposes of this
definition, "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
For purposes of this Agreement, all Subsidiaries of Borrower are Affiliates of
Borrower.
"AGREEMENT" means, collectively, this Credit Agreement, together with
any and all exhibits, appendices, schedules and amendments hereto and
modifications, renewals, extensions, restatements and substitutions thereof and
therefor.
"AUTHORIZED OFFICER" means one or more officers of the Borrower duly
authorized (and so certified to the Lender by the corporate Secretary of the
Borrower involved pursuant to a certificate of authority and incumbency from
time to time satisfactory to the Lender ), acting alone, to request Loans
hereunder and execute and deliver documents, instruments, agreements, reports,
statements and certificates in connection herewith.
"BORROWING" means the total of Loans made by Lender to the Borrower on
a single date and for a single Interest Period.
"BORROWING BASE" means an amount which is equal to 70% of Eligible
Accounts (less all discounts, allowances and credits granted by the Borrower to
the applicable Account Debtors, and less all contra accounts).
"BORROWING BASE CERTIFICATE" means a certificate (in form satisfactory
to the Lender) of the treasurer or authorized chief financial officer of
Borrower as to the Borrowing Base as of the date of such certificate and
certifying and representing that all Accounts of the Borrower identified thereon
as being Eligible Accounts meet all of the requirements and standards therefor.
"BORROWING NOTICE" means the request of the Borrower for Loans as
further described in Section 3.C hereof.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which banks are authorized or required to be closed in Chicago, Illinois, and
with respect to LIBOR Loans, a day on which dealings in United States Dollars
may be carried on by the Lender or the Reference Bank in the London interbank
eurodollar market.
"CAPITAL EXPENDITURES" means all payments, expenditures and the
obligations incurred by a Person for the purchase, creation, improvement,
replacement, substitution, addition, renovation or lease of a fixed or capital
asset with a useful life of more than one year and which are required to be
classified or accounted for as a capital asset or capital lease on the balance
sheet or statement of cash flow of such Person, as determined in accordance with
GAAP, including
equipment which is purchased simultaneously with the trade-in of existing
equipment owned by such Person to the extent of the gross amount of the purchase
price of such purchased equipment less the book value of the equipment being
traded in at such time, but excluding (a) expenditures made in connection with
the replacement or restoration of assets, to the extent such replacement or
restoration is financed out of (i) insurance proceeds paid on account of the
loss of or damage to the assets so replaced or restored or (ii) awards or
compensation arising from the taking by condemnation or eminent domain of the
assets so replaced, (b) any portion of capital lease obligations that is not
required to be capitalized on such Person's balance sheet, and (c) interest
capitalized during construction.
"CLOSING DATE" means the later of the date hereof or the date on which
all of the conditions precedent to the Loans set forth in Section 6 hereof have
been fully satisfied.
"COLLATERAL" means all "Collateral" (or other property which is
subjected to a Lien in the relevant operative document) as defined in the
Security Agreement, the Stock Pledge Agreement, the Intellectual Property
Assignment, the Subordination Agreements (all as amended or supplemented), and
shall also include any and all other property, tangible and intangible, on or in
which a Lien has been granted to the Lender, pursuant to any other Loan
Documents.
"COMMITMENT" means the Revolving Commitment.
"CONSOLIDATED" means the consolidation of accounts in accordance with
GAAP, including principles of consolidation.
"CONTINGENT LIABILITY" or "CONTINGENT LIABILITIES" means any agreement,
undertaking or arrangement by which any Person (i) guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to supply
funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor
against loss) the debt, obligation or other liability of any other Person (other
than by endorsement of instruments G18 in the course of collection), or (ii)
guarantees the payment of dividends or other distributions upon the shares of
any other Person, or (iii) undertakes or agrees (contingently or otherwise) (a)
to purchase, repurchase, or otherwise acquire any Debt, obligation or liability
or any security therefor, or (b) to provide funds for the payment or discharge
thereof (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or (c) to maintain solvency, assets, level of
income or other financial condition, or (d) to make payment other than for
values received. The amount of any Person's obligation under any Contingent
Liability shall (subject to any limitation set forth herein) be deemed to be the
outstanding principal amount (or maximum permitted principal amount, if larger)
of the debt, obligation or other liability guaranteed or supported thereby.
"DEBT" of any Person means all items of indebtedness, obligation or
liability of any kind or nature, whether matured or unmatured, liquidated or
unliquidated, direct or contingent, joint or several, of such Person, including
without limitation and without duplication: Contingent Liabilities of such
Person; any indebtedness secured by a Lien on or payable out of the proceeds
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or production from any property of such Person regardless of whether such
indebtedness has been assumed by such Person; obligations representing the
deferred purchase price of property; obligations which are evidenced by notes,
acceptances, or other instruments; capitalized lease obligations; and
obligations in respect of letters of credit.
"DEFAULT" means any event which, with the giving of notice or the
passage of time or both, would constitute, become or mature into an Event of
Default.
"DEFAULT RATE" is as defined at Section 3.G hereof.
"EBITDA" means, for any period, on a Consolidated basis for the
Borrower, the sum for such period of (a) Net Income, PLUS (b) depreciation and
amortization expense deducted in the determination of such Net Income, PLUS (c)
Interest Expense deducted in the determination of such Net Income, PLUS (d)
federal and state income taxes as determined in accordance with GAAP and
deducted in the determination of such Net Income, and MINUS (e) any items of
gain which are extraordinary items as defined in GAAP to the extent reflected in
the determination of such Net Income.
"ELIGIBLE ACCOUNTS" are Accounts of the Borrower which meet all of the
following requirements, as determined by the Lender in its absolute discretion:
(a) such Accounts represent completed and bona fide transactions which arise
from arm's length transactions between unrelated parties who are not Affiliates
in the ordinary course of the Borrower's business; (b) such Accounts shall not
(i) be unpaid more than 90 days from the billing date of the original invoice or
(ii) be payable by an Account Debtor more than 25% of whose Accounts are
otherwise ineligible; (c) the services which gave rise to such Accounts were
fully rendered by a Borrower to the Account Debtor on the Borrower's customary
basis, with no part of such services or the fee therefor being disputed; (d)
such Accounts are not evidenced in whole or in part by a judgment, Chattel Paper
or Instrument; (e) Account Debtors with respect to such Accounts have not made
an assignment for the benefit of creditors and are not insolvent or the subject
of any bankruptcy, reorganization, liquidation or insolvency proceedings of any
kind or of any other proceeding or action, threatened or pending, which might
have a material adverse affect on the assets or business of such Account Debtor;
(f) Account Debtors with respect to such Accounts are not the governments of the
United States of America or any agency, department or instrumentality thereof,
are not located outside of the United States of America and are not officers,
directors, employees, a Subsidiary or Affiliate of the Borrower; (g) such
Accounts are valid, legally enforceable obligations of the applicable Account
Debtors and are not subject to any offset or counterclaim based on any then
existing or asserted claim or other existing or asserted defense or dispute on
the part of such Account Debtors; (h) such Accounts are evidenced by an invoice
or other documentation in form acceptable to the Lender; (i) such Accounts are
assignable and subject to a valid and first perfected security interest in favor
of the Lender, free of any and all other security interests, liens, claims or
encumbrances; and (j) such Accounts are not determined by the Lender to be
ineligible for any other reason generally accepted in the banking business as a
reason for ineligibility. No Accounts of SelectTech prior to its merger into
Borrower or Accounts arising out of the sale of software or software services by
Borrower are includable in Eligible Accounts.
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"EMPLOYEE PLAN" means any pension, retirement, disability, medical,
dental or other health plan, life insurance or other death benefit plan, profit
sharing, deferred compensation, stock option, bonus or other incentive plan,
vacation benefit plan, severance plan, or other employee benefit plan or
arrangement, including, without limitation, those pension, profit-sharing and
retirement plans of the Borrower described from time to time in the Financial
Statements and any pension plan, welfare plan, Defined Benefit Pension Plans (as
defined in ERISA) or any multi-employer plan, maintained or administered by the
Borrower or any Affiliate of the Borrower, to which the Borrower or any
Affiliate of the Borrower is a party or may have any liability or by which the
Borrower or any Affiliate is bound.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations issued
thereunder or in connection therewith.
"EURODOLLAR RESERVE PERCENTAGE" is defined in Section 3.A hereof.
"EVENT OF DEFAULT" means an event or occurrence described in Section 9
of this Agreement.
"EXPIRATION DATE" is defined at Section 2.A.1 hereof.
"FINANCIAL ASSURANCE" means the financial assurance (whether in the
form of a bond, letter of credit, cash or otherwise) required pursuant to any
Act.
"FINANCIAL STATEMENTS" means all of the balance sheets, statements of
operations, statements of cash flow and statements of changes in shareholders'
equity of the Borrower for each Fiscal Year or each month or quarter thereof
which have been delivered to the Lender on or prior to the date hereof and which
are to be delivered to the Lender pursuant to Section 8.A.2 of this Agreement.
"FISCAL YEAR" means the fiscal year of Borrower ending on June 30 for
each year.
"FUNDED DEBT" means Debt for or with respect to borrowed money with an
ultimate maturity greater than one (1) year from the date of determination,
provided in any event that for all purposes hereof all Loans and Letter of
Credit Utilization shall be considered as and included in Funded Debt.
"GAAP" means generally accepted accounting principles, applied on a
basis consistent with prior periods; provided, however, that GAAP with respect
to any interim financial statements or reports shall be deemed subject to
year-end adjustments and footnotes made in accordance with GAAP.
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"GUARANTOR" means, individually, each of the following individuals:
Charan Singh, David Paulsen, Steven Gerber and Michael Feroah. "GUARANTORS"
means, collectively, the four (4) Guarantors.
"GUARANTY" means a guaranty delivered by a Guarantor guaranteeing the
interest on the Loans with the amount of the Guaranty not to exceed $50,000 for
any Guarantor. "GUARANTEES" means, collectively, the four (4) separate
Guarantees delivered by the four (4) Guarantors.
"INTELLECTUAL PROPERTY ASSIGNMENT" mean the Collateral Assignment of
Intellectual Property dated the date hereof between the Borrower and the Lender.
"INTELLECTUAL PROPERTY RIGHTS" means all patents and patent
applications, trademarks, copyrights, trade names, trade dress, trade secrets,
design rights, service marks, trademarks and service mark registrations and
applications, registrations and renewals thereof, confidential research,
development and commercial information, know-how and other proprietary
information, together with any licenses of (whether as licensor or licensee) and
license agreements pertaining to any of the foregoing and all license fees and
royalties arising from the use thereof, all rights corresponding to the
foregoing and all other rights of any kind whatsoever accruing thereunder or
pertaining thereto (including without limitation, all claims for damages by way
of past, present and future infringement of any of the rights included above,
with the right, but not the obligation, to sue for and collect such damages for
said use or infringement of the rights included above), together in each case
with the goodwill of the business connected with the use of and symbolized by
each such trademark and service mark.
"INTEREST EXPENSE" means, with respect to any Person, for any period,
the aggregate interest expense, net of interest income, for such period
(including, without duplication, all commissions, discounts, and other fees and
charges owed with respect to letters of credit, the portion of any capitalized
lease obligations allocable to interest expense, and capitalized interest)
determined in accordance with GAAP (but in any event excluding interest on tax
assessments to the extent such interest is included in deferred taxes).
"INTEREST PERIOD" is defined at Section 3.D hereof.
"INTEREST RATE CONTRACT" means interest rate protection, swap, or
collar agreements, and other similar agreements or arrangements (if any)
designed to provide protection against fluctuations in interest rates, pursuant
to which the Borrower has obligations to Lender that may require payment in the
future by the Borrower.
"LAWS" means all ordinances, statutes, rules, regulations, codes,
orders, injunctions, writs or decrees of any government, whether federal, state,
municipal, local or foreign, of any political subdivision or agency thereof, or
of any court, board or similar entity established by any of the foregoing.
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"LEASEHOLDS" means all of the right, title and interest of the Borrower
in, to and under any leases, sub-leases, licenses or other agreements, granting
rights to the Borrower to enter, occupy or use real property.
"LEVERAGE RATIO" means, as determined for the Borrower as of the end of
each quarter of Borrower's Fiscal Year for the then applicable Measurement
Period, the ratio of Funded Debt to Total Capitalization.
"LIBOR" is defined in Section 3.A hereof.
"LIBOR LOAN" means a Loan bearing interest at the rate specified in
Section 3.A(b) hereof.
"LIEN" means any security interest, mortgage, pledge, hypothecation,
collateral assignment, lien (statutory or otherwise), charge or encumbrance of
any kind or nature whatsoever, any deposit or preferential arrangement of any
kind or nature whatsoever, including, without limitation, any conditional sale
or other title retention agreement, or any financing lease involving
substantially the same economic effect as any of the foregoing.
"LOAN" means a Revolving Loan and "LOANS" means the Revolving Loans,
collectively and in the aggregate.
"LOAN DOCUMENTS" means, collectively, any Interest Rate Contract
hereafter entered into, and all of those documents set forth and described in
Section 6 hereof, as amended, modified, supplemented or restated from time to
time, and any facilities or agreements in replacement thereof.
"MARGIN STOCK" means "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System.
"MATERIALLY ADVERSE EFFECT" means, relative to any occurrence, event,
condition or circumstance, or any change therein, of whatever nature (including
any adverse determination in any litigation, arbitration, or governmental
investigation or proceeding), a materially adverse effect on: (i) the assets of
or the business, revenues, financial condition, operations of the Borrower; or
(ii) the ability of the Borrower to timely or fully perform any of the payment
or other material obligations involving any of its Debt.
"MEASUREMENT PERIOD" means with respect to each quarter then ending,
beginning with the quarter ending December 31, 1999 and thereafter, the rolling
period of the four fiscal quarters then ending.
"MONIES" means (i) all cash at any time on deposit with or held by the
Lender or any other bank or institution for the account of the Borrower, (ii)
all accounts of the Borrower with the Lender or any other bank or institution,
(iii) all investments and reinvestments of amounts from time to time credited to
such accounts, and (iv) all interest, dividends, distributions and
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other proceeds payable on or with respect to such investments and reinvestments
and such accounts.
"NET CASH PROCEEDS" means, in each case as set forth in a statement in
reasonable detail delivered to the Lender: (a) with respect to the disposition
of any asset by any Person, the excess, if any, of (i) the cash received in
connection with such disposition over (ii) the sum of (A) the principal amount
of any Debt (other than Debt under this Agreement) which is secured by such
asset and which is required to be repaid in connection with the disposition
thereof, PLUS (B) the reasonable out-of-pocket expenses incurred by such Person
in connection with such disposition, PLUS, (C) provision for taxes, including
income taxes, attributable to the disposition of such asset; (b) with respect to
the issuance by any Person of any equity securities or Debt, the gross proceeds
received by such Person from such issuance less all legal expenses, discounts
and commission and other fees and expenses incurred or to be incurred and all
federal, state, local and foreign taxes assessed or to be assessed in connection
therewith; and (c) with respect to the receipt by any Person or the Lender of
any payment under any insurance policy or pursuant to any condemnation award,
the aggregate amount of any such payment made to such Person or the Lender less
any income tax liability of such Person reasonably estimated by such Person to
relate to such payment and all legal expenses incurred in connection with the
recovery or collection thereof.
" NET INCOME" means, for any period, the net income of Borrower for
such period, before the payment of dividends on all capital stock, determined in
accordance with GAAP.
"NOTE" means the Revolving Note.
"OBLIGATIONS" means each and every promise, agreement, covenant, debt
and all other liabilities, obligations and indebtedness of the Borrower, its
successors or assigns, to the Lender, whether primary, secondary, contingent,
direct, or indirect, howsoever incurred, created, arising or evidenced, whether
presently or hereafter existing, evidenced, arising or becoming due, which such
promise, agreement, covenant, debt, liabilities, obligations or indebtedness
arises from or in connection with the Loans or under this Agreement, the Note,
any Interest Rate Contract or any other Loan Documents, or any refinancings,
substitutions, extensions, renewals, replacements and modifications for or of
the foregoing, or the enforcement by the Lender of its rights and remedies under
any or all of the foregoing (including all costs, expenses and reasonable
attorneys' and paralegals' fees and expenses incurred by the Lender), including
any of the foregoing that arises after the filing of a petition by or against
the Borrower under any insolvency or related proceeding, even if the obligations
do not accrue because of the automatic stay under bankruptcy laws or otherwise.
"PARENT" means SelectQuote, Inc, a Delaware corporation which owns all
the capital stock of Borrower.
"PERMITTED INVESTMENTS" means (i) cash, (ii) readily marketable
securities issued or guaranteed by the government of the United States of
America or any agency thereof having a maturity at the time of issuance of not
exceeding one year, (iii) commercial paper rated at least
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A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc.,
having a maturity at the time of issuance not exceeding one year, and money
market funds invested in short-term securities rated at least as provided in the
preceding clause, (iv) certificates of deposit of or demand or time deposits
with or repurchase agreements of any commercial bank which is organized under
the laws of the United States of America or any state thereof and has capital
and surplus of in excess of $100,000,000, and demand deposits or local operating
accounts with the Lender or any other financial institutions acceptable to the
Lender, (v) property used in the ordinary course of business, the purchase of
which does not otherwise violate or cause or result in a violation of any
provision hereof, (vi) current assets arising from the sale of goods and
services in the ordinary course of business, (vii) loans or advances to
employees in the ordinary course of business, and loans to officers not in
excess of $5,000 at any time outstanding, (viii) existing investments in
existing Subsidiaries or Affiliates of Borrower, and (ix) existing investments
and the acquisitions permitted under Section 8.B.3 hereof.
"PERMITTED LIENS" means any Liens (i) provided for hereunder or under
the Loan Documents in favor of the Lender; (ii) for taxes or assessments not yet
due and payable; (iii) of vendors incurred in the ordinary course of business,
payment with respect to which is not then due and payable; (iv) which arise out
of pledges or deposits under any Laws relating to workers' compensation,
unemployment insurance, old age pensions or other social security or retirement
benefits; (v) which are being contested in good faith by appropriate and lawful
proceedings, so long as levy and execution thereon have been and continue to be
stayed and which do not materially impair or adversely affect the value or use
of the assets and properties of the Borrower or the operation or condition of
the business of the Borrower; (vi) which are existing on Equipment, Fixtures
and/or real property of the Borrower and are set forth on SCHEDULE 7.G hereto,
PROVIDED, HOWEVER, that the Debt secured by existing Liens on Equipment,
Fixtures and/or real property shall not be increased and such Debt shall not be
secured by any Equipment, Fixtures and/or real property other than that securing
such Debt as of the date hereof; (vii) which are purchase money security
interests on Equipment and/or Fixtures (exclusive of any such Liens referred to
in subparagraph (vi) above) securing the deferred purchase price thereof within
the limitations of and as may be permitted under Section 8.B.2(viii)
hereinafter; PROVIDED, HOWEVER, that any such Lien shall attach only to the
Equipment and/or Fixture financed by the holder of such Lien; (viii) which are
currently existing on Accounts of the Borrower and are set forth on SCHEDULE 7.G
hereto; or (ix) with respect to the property (other than Accounts) of any new
Subsidiary of the Borrower which becomes a Subsidiary after the date hereof, so
long as such Liens are either incurred in connection with an acquisition by the
Borrower permitted under Section 8.B.3 hereof or were in existence prior to such
acquisition, and, if incurred in connection with such an acquisition, are
subordinated to the Liens in favor of the Lender.
"PERSON" means any individual, sole proprietorship, joint venture,
partnership, association, unincorporated organization, joint-stock company or
association, limited liability company, trust, corporation, entity, institution
or government body (or agency or political subdivision thereof).
"PLEDGED SHARES" means the shares of common and preferred stock of
Parent or the Borrower (or any shares issued in exchange or substitution
therefor, whether by merger or
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otherwise) owned directly or indirectly by Michael Feroah, Steven Gerber,
David Paulsen and Charan Singh (each, a "PLEDGOR" and collectively, the
"PLEDGORS"), members of senior management of Borrower, all of which are
pledged to the Lender pursuant to the Stock Pledge and Security Agreement of
even date herewith among the Lender and the Pledgors (the "STOCK PLEDGE
AGREEMENT").
"PRIME RATE" means the rate of interest announced or referred to by the
Lender from time to time as its prime or reference rate for interest rate
determinations, with each change in such Prime Rate to take effect on the same
day such change is announced by the Lender. The use of the term "Prime Rate"
herein or in the Note is not intended nor does it imply that said rate of
interest is a preferred rate of interest or one which is offered by the Lender
to its most creditworthy customers.
"PRIME RATE LOAN" means a Loan bearing interest at the rate specified
in Section 3.A(a) hereof.
"REFERENCE BANK" means ABN/AMRO Bank.
"REFUNDING BORROWING" is defined in Section 3.C.(c) hereof.
"RESTRICTED PAYMENTS" means (i) any dividend payment or other
distribution, direct or indirect, of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of capital stock
of the Borrower which is not a wholly-owned Subsidiary of Borrower, or (ii) any
exchange, conversion, repurchase, purchase, redemption, retirement, sinking fund
or other similar acquisition for value, direct or indirect, of any shares of any
class of capital stock of the Borrower or any warrants, rights or options to
acquire any such shares, now or hereafter outstanding, or (iii) any payment or
repayment of principal of, premium (if any), or interest on any Subordinated
Debt, and any redemption, purchase, retirement, defeasance, sinking fund or
similar payment with respect to any Subordinated Debt, unless permitted by the
terms of the document or instrument pursuant to which said Subordinated Debt is
created and which have been approved by the Lender, or (iv) any earn-out under
any acquisition agreement, unless permitted by the terms thereunder and approved
by Lender.
"REVOLVING COMMITMENT" is defined in Section 2.A.1 hereof.
"REVOLVING LOANS" is defined in Section 2.A.1 hereof.
"REVOLVING NOTE" means the promissory note of the Borrower evidencing
the Revolving Loans.
"REVOLVING LIBOR LOAN" means a Revolving Loan which is also a LIBOR
Loan.
"REVOLVING PRIME RATE LOAN" means a Revolving Loan which is also a
Prime Rate Loan.
"SEC" means the Securities and Exchange Commission.
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"SECURITY AGREEMENT" means that certain Security Agreement of the
Borrower in favor of the Lender, of even date herewith, as the same may be
amended or supplemented.
"SELECTQUOTE" is defined in the Preamble hereof.
"SELECTTECH" means SelectTech, a Nevada corporation, which was merged
into the Borrower on December 27, 1999.
"STOCK PLEDGE AGREEMENT" is as defined and included in the definition
of Pledged Shares.
"STOCKHOLDERS' EQUITY" means the sum of the capital stock, additional
paid-in-capital and retained earnings (after deducting treasury stock) as
determined in accordance with GAAP.
"SUBORDINATED DEBT" means Debt for money borrowed by the Borrower if,
but only to the extent that, the payment and, if permitted hereunder, any
collateral therefor is and remains at all times subordinated to the Obligations
and the collateral and other security therefor, on terms and conditions
satisfactory to the Lender.
"SUBORDINATION AGREEMENTS" means the Subordination Agreement of even
date herewith between the Lender and each of Security Connecticut Life Insurance
Company and North American Company for Life and Health Insurance.
"SUBSIDIARY" with respect to any Person means any corporation or other
business entity of which more than fifty percent (50%) of the outstanding common
stock or other ownership interests is owned, directly or indirectly, by such
Person.
"TANGIBLE NET WORTH" means Stockholders' Equity PLUS Subordinated Debt
LESS all intangible assets (treated as such in accordance with GAAP), including:
all investments in unconsolidated subsidiaries; unamortized debt discount and
deferred charges; refundable taxes; prepaid assets or expenses; goodwill;
patents, trade names, trademarks, copyrights, franchises; customer lists;
unamortized restrictive covenants, unamortized organization expenses and
administrative costs; deposits; loans and advances to Affiliates, stockholders,
directors, officers, employees or relatives of the foregoing; land options; and
the excess of cost of shares acquired over book value of related assets.
"TERMINATION DATE" means December 15, 2000.
"TOTAL CAPITALIZATION" means the sum of (i) the aggregate amount of
Debt for borrowed money and (ii) Stockholders Equity.
"UCC" means the version of the Uniform Commercial Code as enacted in
Illinois, as amended from time to time.
Section 1.B. Any accounting terms used but not otherwise defined herein
shall have their customary meanings as defined in, pursuant to, or in accordance
with GAAP. All other
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terms used but not otherwise defined herein shall have the meanings provided by
the UCC to the extent said terms are used or defined therein.
Section 1.C. Unless otherwise defined or the context otherwise
requires, terms for which meanings are provided in this Agreement shall have
such meanings when used in the other Loan Documents.
Section 1.D. In this Agreement and each other Loan Document, unless a
clear contrary intention appears: (i) the singular number includes the plural
number, and VICE VERSA; (ii) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and assigns
are permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually; (iii)
reference to any gender includes each other gender; (iv) references to any
agreement (including this Agreement and the SCHEDULES, APPENDICES AND EXHIBITS
hereto), document or instrument means such agreement, document or instrument as
amended or modified and in effect from time to time in accordance with the terms
thereof and, if applicable, the terms hereof and reference to any promissory
note includes any promissory note which is an extension or renewal thereof or a
substitute or replacement therefor; (v) unless the context indicates otherwise,
reference to any Article, Section, Appendix, Schedule or Exhibit means such
Article or Section hereof or Schedule, Appendix or Exhibit hereto; (vi)
"hereunder," "hereof," "hereto" and words of similar import shall be deemed
references to this Agreement as a whole and not to any particular Article,
Section or other provision hereof; (vii) "including" (and with correlative
meaning "include") means including without limiting the generality of any
description preceding such term; and (viii) relative to the determination of any
period of time, "from" means "from and including" and "to" and "through" means
"to but excluding."
Section 1.E. If, after the date of this Agreement, there shall occur
any change in GAAP from those used in the preparation of the Borrower's audited
financial statements for the Fiscal Year ending June 30, 1999, and such change
shall result in a change in the method of calculation of any financial covenant,
standard or term found in this Agreement, either Borrower or the Lender may by
notice to the other require that the Lender and the Borrower negotiate in good
faith to amend such covenant, standard or term so as equitably to reflect such
change in GAAP, with the desired result being that the criteria for evaluating
the financial condition of the Borrower shall be the same as if such change had
not been made.
SECTION 2. CREDIT FACILITY.
Section 2.A. REVOLVING LOANS AND REVOLVING NOTE. Subject to the terms
and conditions of this Agreement, the Lender agrees to lend to the Borrower the
Revolving Loans as provided in this Section.
2.A.1. REVOLVING LOANS. Subject to the terms and conditions of this
Agreement, the Lender agrees to lend to the Borrower from time to time until the
earlier of the Termination Date or the occurrence of either a Default or an
Event of Default hereunder (the earlier of such date being hereinafter referred
to as the "EXPIRATION DATE"), such sums, in a minimum amount(s) as
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set forth in Section 3.B hereof, as Borrower may request from time to time by a
Borrowing Notice pursuant to Section 3.C hereof; provided, however, that the
aggregate principal amount of all loans outstanding under this Section 2.A.1
(individually, a "REVOLVING LOAN" or "LOAN" or, collectively, the "REVOLVING
LOANS" or "LOANS") at any one time shall not exceed the lesser of (i) Three
Million Dollars ($3,000,000) or (ii) the Borrowing Base (such lesser amount
hereinafter referred to as the "REVOLVING COMMITMENT"). Subject to the terms and
conditions hereof, the Borrower may borrow or repay and reborrow hereunder, from
the date hereof until the Expiration Date, either the full amount of the
Revolving Commitment or any lesser sum in the minimum amounts referred to
herein. If, at any time, the Revolving Loans exceed the Revolving Commitment,
the Borrower shall immediately notify the Lender of the existence of and pay to
the Lender the amount of such excess. For all purposes of this Agreement, where
a determination of the unused or available amount of the Revolving Commitment is
necessary, the Revolving Loans shall be deemed to utilize the Revolving
Commitment.
2.A.2. REVOLVING NOTE. In order to evidence the Revolving Loans, at the
time of the making of the initial Revolving Loan, the Borrower will execute and
deliver a promissory note, substantially in the form of EXHIBIT A hereto
(together with any and all amendments, modifications, supplements,
substitutions, renewals, extensions and restatements, thereof and therefor, the
"REVOLVING NOTE"). The Revolving Loans shall bear and pay interest and mature on
the date as set forth therein and herein.
SECTION 3. GENERAL PROVISIONS APPLICABLE TO ALL LOANS.
Section 3.A. APPLICABLE INTEREST RATES. The Borrower may elect that
each Borrowing of each Loan be made by means of a Prime Rate Loan or a LIBOR
Loan; provided, however, that there shall not be more than five Borrowings of
LIBOR Loans outstanding at any time.
(a) PRIME RATE LOANS. Each Prime Rate Loan by the Lender shall bear
interest (computed on the basis of a year of 360 days and actual days elapsed)
on the unpaid principal amount thereof from the date such Loan is made until
maturity (whether by acceleration or otherwise) at a rate per annum equal to the
Prime Rate from time to time in effect. Interest on all Prime Rate Loans is
payable on the last day of each calendar month and at maturity (whether by
acceleration or otherwise), commencing February 29, 2000.
(b) LIBOR LOANS. Each LIBOR Loan made by the Lender shall bear interest
(computed on the basis of a year of 360 days and actual days elapsed) on the
unpaid principal amount thereof from the date such Loan is made until maturity
(whether by acceleration or otherwise) at a rate per annum equal to the sum of
the Applicable LIBOR Margin plus the Adjusted LIBOR, payable on the last day of
the applicable Interest Period and at maturity (whether by acceleration or
otherwise), and, if the applicable Interest Period is longer than three months,
on each day occurring every three months after the date such Loan is made.
"ADJUSTED LIBOR" means, for any Borrowing of LIBOR Loans, a rate per
annum determined in accordance with the following formula:
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LIBOR
--------------------
Adjusted LIBOR= 100% - Eurodollar Reserve Percentage
"LIBOR" means, for an Interest Period for a Borrowing of LIBOR Loans,
the rate of interest per annum (rounded upwards, if necessary, to nearest 1/100
of 1%) at which deposits in U.S. dollars in immediately available funds are
offered by the Lender or the Reference Bank at approximately 11:00 a.m. (London,
England time) two (2) Business Days before the beginning of such Interest Period
by prime banks in the interbank eurodollar market for a period equal to such
Interest Period and in an amount equal or comparable to the principal amount of
the LIBOR Loan scheduled to be made by the Lender as part of such borrowing.
"EURODOLLAR RESERVE PERCENTAGE" means, for any Borrowing of LIBOR
Loans, the daily average for the applicable Interest Period of the maximum rate
at which reserves (including, without limitation, any supplemental, marginal and
emergency reserves) are imposed during such Interest Period by the Board of
Governors of the Federal Reserve System (or any successor) under Regulation D on
"eurocurrency liabilities", as defined in such Board's Regulation D, (or in
respect of any other category of liabilities that includes deposits by reference
to which the interest rate on LIBOR Loans is determined or any category of
extension of credit or other assets that include loans by non-United States
offices of Lender to United States residents) subject to any amendments of such
reserve requirement by such Board or its successor, taking into account any
transitional adjustments thereto. For purposes of this definition, the LIBOR
Loans shall be deemed to be "eurocurrency liabilities" as defined in Regulation
D.
(c) MARGIN, RATE AND FEE DETERMINATIONS. The Lender shall determine
each interest rate applicable to the Loans hereunder and its determination
thereof shall be conclusive and binding except in the case of manifest error.
Section 3.B. MINIMUM AND MAXIMUM BORROWING AMOUNTS. Each Borrowing of
Prime Rate Loans shall be in an amount not less than $50,000 or any larger
amount that is an integral multiple of $25,000. Each Borrowing of LIBOR Loans
shall be in an amount not less than $200,000, or any larger amount that is an
integral multiple of $100,000.
Section 3.C. BORROWING PROCEDURES.
(a) NOTICE TO THE LENDER. The Borrower shall give telephonic or
telecopy notice to the Lender in the form attached hereto as EXHIBIT B (the
"BORROWING NOTICE") (which notice shall be irrevocable once given and, if by
telephone, shall be promptly confirmed in writing) by no later than 12:00 noon
(Chicago time) (i) on the date at least three (3) Business Days prior to the
date of each requested Borrowing of LIBOR Loans and (ii) on the date of any
requested Borrowing of Prime Rate Loans. Each such notice shall specify the date
of the requested Borrowing (which shall be a Business Day), the amount of the
requested Borrowing, the type of Loans to comprise such Borrowing (if no
election as to type of Borrowing is specified in any such notice, then the
requested Borrowing shall be of Prime Rate Loans) and, if such Borrowing is to
be comprised of LIBOR Loans, the Interest Period applicable thereto. The
Borrower agrees that the Lender may rely on any such telephonic or telecopy
notice given by any person the
15
Lender in good faith believes is an Authorized Officer without the necessity of
independent investigation and in the event any notice by such means conflicts
with the written confirmation, such notice shall govern if the Lender has acted
in reliance thereon.
(b) BORROWER'S FAILURE TO NOTIFY. In the event the Borrower fails to
give notice pursuant to Section 3.C.(a) above of the reborrowing of the
principal amount of any maturing Borrowing and has not notified the Lender by
12:00 noon (Chicago time) on the day such Borrowing matures that it intends to
repay such Borrowing with funds not borrowed hereunder, the Borrower shall be
deemed to have requested a Borrowing of Prime Rate Loans on such day in the
amount of the maturing Borrowing then due, in each case subject to Section 6.C
hereof, which new Borrowing shall be applied to pay, as the case may be, the
maturing Borrowing then due.
(c) DISBURSEMENT OF LOANS. Not later than 2:00 p.m. (Chicago time) on
the date of any Borrowing (a "FUNDING DATE") of LIBOR Loans or Prime Rate Loans,
Lender shall make available its Loan in funds immediately available in Chicago,
Illinois, except to the extent such Borrowing is either a reborrowing, in whole
or in part, of the principal amount of a maturing Borrowing of Loans (a
"REFUNDING BORROWING") in which case Lender shall record the Loan made by it as
a part of such Refunding Borrowing on its books or records or on a schedule to
the appropriate Note, as provided in Section 3.H.(b) hereof, and shall effect
the repayment, in whole or in part, as appropriate, of its maturing Loan through
the proceeds of such new Loan. Subject to Section 6 hereof, the Lender shall
make the proceeds of each Borrowing available to the Borrower at the Lender's
principal office in Chicago, Illinois.
Section 3.D. INTEREST PERIODS. As provided in Section 3.C hereof, at
the time of each request for the Borrowing of LIBOR Loans hereunder the Borrower
shall select an Interest Period applicable to such Loans from among the
available options. The term "INTEREST PERIOD" means the period commencing on the
date a Borrowing of LIBOR Loans is made and ending on the date, as the Borrower
may select, 1, 2, 3 or 6 months thereafter; PROVIDED, HOWEVER, that:
(a) the Borrower may not select an Interest Period that extends beyond
the Termination Date;
(b) whenever the last day of any Interest Period would otherwise be a
day that is not a Business Day, the last day of such Interest Period shall be
extended to the next succeeding Business Day, provided that, if such extension
would cause the last day of such Interest Period to occur in the following
calendar month, the last day of such Interest Period shall be the immediately
preceding Business Day; and
(c) for purposes of determining the Interest Period for a Borrowing of
LIBOR Loans, a month means a period starting on one day in a calendar month and
ending on the numerically corresponding day in the next calendar month;
PROVIDED, HOWEVER, that if there is no numerically corresponding day in the
month in which such an Interest Period is to end or if such an Interest Period
begins on the last Business Day of a calendar month, then such Interest Period
shall end on the last Business Day of the calendar month in which such Interest
Period is to end.
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Section 3.E. MATURITY OF LIBOR LOANS. Each LIBOR Loan shall mature and
become due and payable by the Borrower on the last day of the Interest Period
applicable thereto.
Section 3.F. PREPAYMENTS.
(a) GENERALLY. The Borrower shall have the privilege of prepaying
without premium or penalty and in whole or in part (but, if in part, then: (i)
in an amount not less than $50,000 or any larger amount that is an integral
multiple of $25,000 in the case of Prime Rate Loans, and in an amount not less
than $200,000 or any larger amount that is an integral multiple of $100,000 in
the case of LIBOR Loans and (ii) in an amount such that the minimum amount
required for a Borrowing pursuant to Section 3.B hereof remains outstanding) on
any Business Day upon prior notice to the Lender which must be received by the
Lender by no later than 12:00 noon (Chicago time) on the date of such prepayment
in the case of Prime Rate Loans and by no later than 12:00 noon (Chicago time)
on the date three Business Days in advance of the date of such prepayment in the
case of LIBOR Loans, such prepayment to be made by the payment of the principal
amount to be prepaid and accrued interest thereon and, in the case of LIBOR
Loans, any compensation required by Section 3.J hereof. Partial prepayments of
any outstanding type of Loan shall be applied to the various Borrowings and
various installments of principal thereof in the inverse order of their
maturity.
(b) REBORROWINGS. Any amount paid or prepaid on the Revolving Loans
before the Expiration Date may, subject to the terms and conditions of this
Agreement, be borrowed, repaid and borrowed again.
(c) MANDATORY PREPAYMENTS. Notwithstanding that no Default or Event of
Default has occurred and is continuing, the Borrower shall pay to the Lender, as
prepayments on the Loans, (i) within ten (10) days after receipt thereof, 100%
of the Net Cash Proceeds with respect to the sale of any assets permitted under
Section 8.B.8(iii) and (ii) upon completion of any initial public offering or a
private placement (to the extent such private placement exceeds $20,000,000 in
aggregate proceeds of the stock or debt of the Borrower or its successors), 100%
of all amounts owed to the Lender hereunder. Prepayments under this section
shall be applied to the Revolving Loan, in each case in prepayment of
installments thereof in the inverse order of maturity. If any amounts required
to be prepaid under this section are applied to the Revolving Loan pursuant
hereto, then those amounts may not be reborrowed and the amount of the Revolving
Commitment shall thereupon be permanently reduced by a corresponding amount.
Section 3.G. DEFAULT RATE. If any Event of Default has occurred and is
continuing, then each Loan or other monetary Obligation shall bear interest,
after as well as before judgment (computed on the basis of a year of 360 days
and actual days elapsed) from the date of such Event of Default until such Loan
or other monetary Obligation is paid in full, payable on demand, at a rate per
annum (the "DEFAULT RATE") equal to:
(a) with respect to any Prime Rate Loan, the sum of three percent (3%)
PLUS the Prime Rate from time to time in effect; and
17
(b) with respect to any LIBOR Loan, the sum of three percent (3%) PLUS
the rate of interest in effect thereon at the time of such default until the end
of the Interest Period applicable thereto and, thereafter, at a rate per annum
equal to the sum of three percent (3%) PLUS the Prime Rate from time to time in
effect; and
(c) with respect to other monetary Obligations for which a Default Rate
is not otherwise specified, the sum of three percent (3%) PLUS the Prime Rate
from time to time in effect.
Section 3.H. NOTE.
(a) The Loan made to the Borrower by Lender shall be evidenced by a
promissory note of the Borrower, dated the date hereof, payable to the order of
Lender in the principal amount of the Commitment, and otherwise be in the form
of EXHIBIT A hereto.
(b) Lender shall record on its books or records or on a schedule to the
appropriate Note the amount of each Loan made by it to the Borrower, the
Interest Period thereof (if applicable), all payments of principal and interest
and the principal balance from time to time outstanding thereon, the interest
rate applicable thereto, and, in respect of any Loan, the type of such Loan;
provided that prior to the transfer of the Note all such amounts shall be
recorded on a schedule to the Note. The record thereof, whether shown on such
books or records of Lender or on a schedule to the Note, shall be PRIMA FACIE
evidence as to all such amounts; PROVIDED, HOWEVER, that the failure of Lender
to record any of the foregoing or any error in any such record shall not limit
or otherwise affect the obligation of the Borrower to repay all Loans made
hereunder together with accrued interest thereon. At the request of Lender and
upon Lender tendering to the Borrower the Note to be replaced, the Borrower
shall furnish a new Note to Lender to replace any outstanding Note and at such
time the first notation appearing on a schedule on the reverse side of, or
attached to, the Note shall set forth the aggregate unpaid principal amount of
all Loans, if any, then outstanding thereon.
Section 3.I. REVOLVING COMMITMENT TERMINATIONS. The Borrower shall have
the right at any time and from time to time, upon prior written notice to the
Lender, to terminate without premium or penalty, in whole or in part, any
Revolving Commitment, each such termination (whether in whole or in part) to be
effective as of the close of the calendar quarter specified in such notice
(provided such effective date occurs no earlier than thirty (30) Business Days
after such notice) and each partial termination to be in an amount not less than
$500,000 or any larger amount that is an integral multiple of $250,000; provided
that the Revolving Commitments may not be reduced to an amount less than the
aggregate principal amount of the utilization then outstanding thereunder. Any
termination of Commitments pursuant to this Section 3.I may not be reinstated.
Section 3.J. FUNDING INDEMNITY. In the event Lender shall incur any
loss, cost or expense (including, without limitation, any loss of profit, and
any loss, cost or expense incurred by reason of the liquidation or re-employment
of deposits or other funds acquired by Lender to
18
fund or maintain any LIBOR Loan or the relending or reinvesting of such deposits
or amounts paid or prepaid to Lender) as a result of:
(a) any payment (including prepayment) of a LIBOR Loan on a date other
than the last day of its Interest Period for any reason, whether before or after
default, and whether or not such payment is required by any provisions of this
Agreement, or
(b) any failure (because of a failure to meet the conditions of Section
6 or otherwise) by the Borrower to borrow a LIBOR Loan on the date specified in
a notice given pursuant to Section 3.C hereof,
then, upon the demand of Lender, the Borrower shall pay to Lender such amount as
will reimburse Lender for such loss, cost or expense. If Lender makes such a
claim for compensation, it shall provide to the Borrower a certificate executed
by an officer of Lender setting forth the amount of such loss, cost or expense
in reasonable detail (including an explanation of the basis for and the
computation of such loss, cost or expense) and the amounts shown on such
certificate shall be deemed rebuttably presumptive evidence of the correctness
thereof.
Section 3.K. CHANGE IN CIRCUMSTANCES, ETC.
(a) CHANGE OF LAW. Notwithstanding any other provisions of this
Agreement or the Note, if at any time after the date hereof any change in
applicable Law or in the interpretation thereof makes it unlawful for Lender to
make or continue to maintain LIBOR Loans or to give effect to its obligations as
contemplated hereby, Lender shall promptly give notice thereof to the Borrower,
and Lender's obligations to make or maintain LIBOR Loans under this Agreement
shall terminate until it is no longer unlawful for Lender to make or maintain
LIBOR Loans. The Borrower shall prepay on demand the outstanding principal
amount of any such affected LIBOR Loans, together with all interest accrued
thereon and all other amounts then due and payable to Lender under this
Agreement; provided, however, subject to all of the terms and conditions of this
Agreement, the Borrower may then elect to borrow the principal amount of the
affected LIBOR Loan from Lender by means of a Prime Rate Loan from Lender.
(b) UNAVAILABILITY OF DEPOSITS OR INABILITY TO ASCERTAIN, OR INADEQUACY
OF, LIBOR. If on or prior to the first day of any Interest Period for any
Borrowing of LIBOR Loans:
(i) the Lender advises the Borrower that deposits in United
States Dollars (in the applicable amounts) are not being offered to it or the
Reference Bank in the interbank eurodollar market, for such Interest Period, or
(ii) Lender advises the Borrower that LIBOR as determined by
the Lender will not adequately and fairly reflect the cost to Lender of funding
LIBOR Loans for such Interest Period,
19
then, until the Lender notifies the Borrower that the circumstances giving rise
to such suspension no longer exist, the obligation of the Lender to make LIBOR
Loans shall be suspended.
(c) INCREASED COST AND REDUCED RETURN.
(1) If on or after the date hereof, the adoption of any
applicable Law, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Lender with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency:
(i) shall subject Lender to any tax, duty or other
charge with respect to the Loans, the Note or its obligation
to make Loans, or shall change the basis of taxation of
payments to Lender of the principal of or interest on the
Loans or any other amounts due under this Agreement in respect
of its Loans or its obligation to make Loans (except for
changes in the rate of tax on the overall net income of Lender
imposed by the jurisdiction in which Lender's principal
executive office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposition or similar requirement (including,
without limitation, any such requirement imposed by the Board
of Governors of the Federal Reserve System, but excluding with
respect to any LIBOR Loans any such requirement included in an
applicable Eurodollar Reserve Percentage) against assets of,
deposits with or for the account of, or credit extended by,
Lender or shall impose on Lender or on the interbank market
any other condition affecting the Loans, the Note or Lender's
obligation to make Loans;
and the result of any of the foregoing is to increase the cost to Lender of
making or maintaining any Loan, or to reduce the amount of any sum received or
receivable by Lender under this Agreement or under the Note with respect
thereto, by an amount deemed by Lender to be material, then, within fifteen (15)
days after demand by Lender, the Borrower shall be obligated to pay Lender such
additional amount or amounts as will compensate Lender for such increased cost
or reduction (computed commencing on the effective date of any event mentioned
herein). Lender agrees to use its best efforts to give the Borrower notice of
the occurrence of any event mentioned herein.
(2) If Lender shall determine that the adoption after the date hereof
of any applicable Law regarding capital adequacy, or any change in any existing
Law, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender (or any of its
branches or any corporation controlling Lender (or any of its branches or any
corporation controlling Lender) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on Lender's or such corporation's capital, as the case may be, as a
consequence of Lender's obligations hereunder or
20
for the credit which is the subject matter hereof to a level below that which
Lender or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration Lender's or such corporation's policies
with respect to liquidity and capital adequacy) by an amount deemed by Lender to
be material, then from time to time, within fifteen (15) days after demand by
Lender, the Borrower shall pay to the Lender such additional amount or amounts
reasonably determined by Lender as will compensate Lender for the reduction.
(d) DISCRETION OF LENDER AS TO MANNER OF FUNDING. Notwithstanding any
other provision of this Agreement, Lender shall be entitled to fund and maintain
its funding of all or any part of the Loans in any manner it sees fit, it being
understood, however, that for the purposes of this Agreement all determinations
hereunder shall be made as if Lender had actually funded and maintained each
LIBOR Loan through the purchase of deposits in the relevant market having a
maturity corresponding to such Loan's Interest Period and bearing an interest
rate equal to LIBOR, for such Interest Period.
(e) IMPLEMENTATION OF EUROPEAN ECONOMIC AND MONETARY UNION ("EMU").
This Agreement (including, without limitation, the definition of LIBOR and
related definitions) will be amended to the extent determined by the Lender
(acting reasonably and in consultation with the Borrower) to be necessary to
reflect implementation of the EMU and change in currency and to put the Lender
and the Borrower in the same position, so far as possible, that they would have
been in if such implementation and change in currency had not occurred.
SECTION 4. FEES.
Section 4.A. REVOLVING COMMITMENT FEES. The Borrower shall pay to the
Lender such fees as set forth in the letter agreement dated the date hereof
between Borrower and Lender with respect to the Revolving Commitment
("COMMITMENT FEES").
SECTION 5. PLACE AND APPLICATION OF PAYMENTS.
Section 5.A. PLACE AND APPLICATION OF PAYMENTS. All payments of
principal of and interest on the Loans and all payments of fees and all other
amounts payable under this Agreement shall be made to the Lender no later than
12:00 Noon (Chicago time) at the principal office of the Lender in Chicago,
Illinois (or such other location in the State of Illinois as the Lender may
designate to the Borrower). Any payments received after such time shall be
deemed to have been received by the Lender on the next Business Day. All such
payments shall be made in lawful money of the United States of America, in
immediately available funds at the place of payment, without setoff or
counterclaim. Alternatively, at its sole discretion, the Lender may charge
against or debit any deposit account or other Monies of the Borrower on deposit
with or in possession of the Lender, all or any part of any amount due hereunder
or under the Note. The Lender's right from time to time after the occurrence or
happening of an Event of Default hereunder (which has not been cured or waived
in a writing signed by the Lender) to set off indebtedness owing by Borrower to
the Lender against the Borrower's Monies, deposits, credits, accounts or other
property now or at any time in the possession or control of the Lender, except
as provided herein, is hereby acknowledged and agreed to by the Borrower.
21
SECTION 6. CONDITIONS PRECEDENT AND SUBSEQUENT.
Notwithstanding any other provisions of this Agreement, the Lender, at
its sole option and in its sole discretion, need not make any Loans to the
Borrower for the account of the Borrower, unless the conditions precedent
described below are fulfilled:
Section 6.A. DELIVERY OF DOCUMENTS AS CONDITIONS PRECEDENT. The
delivery of each of the following documents, each of which shall be satisfactory
to the Lender in substance and form, by or on behalf of the Borrower to the
Lender shall constitute separate and distinct conditions precedent to the
effectiveness of this Agreement and the making of any Loans:
6.A.1. AGREEMENT. A copy of this Agreement duly executed by Borrower.
6.A.2. NOTE. The Revolving Note dated as of the Closing Date duly
executed by the Borrower and payable to the Lender.
6.A.3. STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement duly executed
by Parent, the Borrower and the Pledgors, together with the stock certificates
for the Pledged Shares and duly executed stock powers or assignments endorsed in
blank, and appropriate UCC-1 financing statements from the respective Pledgors
for filing with the appropriate Secretary of State. The Pledged Shares shall
constitute at least 35.06% of the total issued and outstanding shares of Parent.
6.A.4. [Intentionally Omitted]
6.A.5. SECURITY AGREEMENT, INTELLECTUAL PROPERTY ASSIGNMENTS, AND
SUBORDINATION AGREEMENTS. The Security Agreement duly executed by the Borrower,
the Intellectual Property Assignment, and the Subordination Agreements.
6.A.6. FINANCING STATEMENTS. UCC-1 financing statements executed by the
Borrower for filing with the offices indicated on SCHEDULE 6.A.6 hereto, and
such other financing statements or fixture filings as the Lender may request
from the Borrower from time to time.
6.A.7. UCC AND OTHER SEARCH RESULTS. Satisfactory UCC financing
statement, judgment and tax lien search results of the Borrower from or of the
offices indicated on SCHEDULE 6.A.7 hereto, and from such other offices or
governmental agencies or bodies as the Lender, in its sole discretion, may
request from time to time, indicating that any financing statements to be filed
by the Lender or described above, after being duly and properly filed and
recorded, will give the Lender first priority perfected liens and security
interests on and in the Collateral of the Borrower, except by reason of
Permitted Liens, and that there are no other lienors or creditors claiming any
interest in the Collateral of the Borrower, except holders of Permitted Liens.
6.A.8. EVIDENCE OF INSURANCE. Evidence that the Borrower has insurance
as required by Section 8.A.16, including property, casualty and liability
insurance satisfactory to the Lender, together with: (i) loss payable/mortgagee
endorsements naming the Lender as loss payee and
22
mortgagee with respect to property and casualty insurance covering Collateral;
and (ii) certificate(s) of insurance(s) and binder(s) naming the Lender as
additional insured with respect to liability insurance.
6.A.9. ARTICLES OF INCORPORATION. Articles of Incorporation, and each
and every amendment thereto, of the Borrower, certified of recent date by the
Secretary of State or appropriate government official in the State in which the
Borrower is incorporated.
6.A.10. GOOD STANDING. Certificate of the appropriate Secretary of
State or government official of recent date, as to the good standing of the
Borrower in the State of its incorporation and where it is qualified to do
business.
6.A.11. SECRETARY'S CERTIFICATE. Certificate of Secretary of the
Borrower as to (i) resolutions authorizing entry into, execution, delivery and
performance of its obligations under this Agreement and related Loan Documents
to which it is a party, (ii) the incumbency and signatures of the officers
authorized to execute on its behalf the Loan Documents to which it is a party,
(iii) its Articles of Incorporation, and (iv) its bylaws.
6.A.12. SOLVENCY CERTIFICATE. Certificate of Solvency duly executed by
the Borrower, with pro forma balance sheet and cash flow projections provided
for thereunder.
6.A.13. OPINION. The satisfactory opinion letter of Stephen Tennis,
counsel for Parent, the Borrower and the Guarantors dated as of the Closing Date
and addressed to the Lender as to the matters referred to in Sections 7.A.,
7.B., 7.C., 7.D., 7.E., 7.F. (as far as litigation is concerned), 7.J., 7.S of
this Agreement, the perfection of the Lender's Liens in the Collateral and the
enforceability of the Stock Pledge Agreement and Guaranties on Parent, the
Borrower, the Pledgors and Guarantors.
6.A.14. ENVIRONMENTAL DATA. All environmental data, information and
reports concerning any real estate or any other property which the Lender may
request.
6.A.15. OFFICER'S CERTIFICATE. A certificate of the President of
Borrower certifying: (i) that the conditions herein insofar as they relate to
the Borrower have been satisfied, (ii) as to the truth of the representations
and warranties herein contained, and (iii) that no Materially Adverse Effect has
occurred since June 30, 1999.
6.A.16. GUARANTEES. Each of the four (4) Guarantees dated as of the
Closing Date duly executed by the respective Guarantor in favor of the Lender.
6.A.17. PERSONAL FINANCIAL STATEMENTS OF GUARANTORS. Personal Financial
Statements for each of the Guarantors.
6.A.18. RECEIVABLES AUDIT. Prior to the first draw and thereafter in
accordance with Section 8.A.(vi) hereof, an audit of the accounts receivables
position of the Borrower by a third party acceptable to the Lender.
23
6.A.19. OTHER DOCUMENTS. In form and substance satisfactory to the
Lender the initial Borrowing Base Certificate and any other documents which the
Lender may reasonably request from or to be delivered by the Borrower from time
to time to effect the intent of this Agreement and the Loan Documents.
Section 6.B. FEES. All fees referred to in Section 4 hereof which are
then due shall have been paid to the Lender on the Closing Date.
Section 6.C. CONDITIONS PRECEDENT. The following conditions are
conditions precedent to the obligation of the Lender to make or disburse any
Loan hereunder at any time requested by the Borrower, and each request by the
Borrower for a Loan hereunder shall be deemed to constitute the Borrower's
representation and warranty to the Lender that, as of the dates of such request
and on which such Loan is disbursed, these conditions have been satisfied:
6.C.1. MATERIALLY ADVERSE EFFECT. No Materially Adverse Effect shall
have occurred, as determined by the Lender in its sole and complete discretion,
since the date hereof.
6.C.2. REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in Section 7 hereof and in each Loan Document to which the
Borrower is a party shall be true and correct in all material respects.
6.C.3. COVENANTS. The affirmative and negative covenants set forth
herein (including, without limitation, those covenants set forth in Section 8
hereof) and in any other Loan Documents to which the Borrower is a party, are
not being breached and are inviolate in all material respects.
6.C.4. EVENT OF DEFAULT. No Default or Event of Default shall have
occurred and then be continuing or would occur as a result of making such Loan.
6.C.5. REVOLVING COMMITMENTS. After giving effect to the Loan (if it is
a Revolving Loan), the aggregate principal amount of all such Loans outstanding
hereunder shall not exceed the applicable Revolving Commitment.
6.C.6. NO VIOLATIONS. Such Loan shall not violate any order, judgment
or decree of any court or other authority or any provision of Law applicable to
Lender (including, without limitation, Regulation U of the Board of Governors of
the Federal Reserve System) as then in effect.
6.C.7. NOTE; NOTICE OF BORROWING. The Lender shall have received the
Note of the Borrower and the notice required by Section 3.C hereof.
6.C.8. SATISFACTORY COMPLETION OF DUE DILIGENCE. In the case of the
initial draw only, the Lender shall have satisfactorily completed its due
diligence examination of the Borrower and any related parties, their respective
operations and properties, including its audit/review of the Collateral,
historical and pro forma financial information, and projections and business
plans.
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6.C.9. ADDITIONAL FEES. For any Loans on or after January 31, 2000,
such Fees referred to in the letter referred to in Section 4.A. hereof shall
have been paid to the Lender.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
As further inducement to the Lender to enter into this Agreement and
make the Loans hereunder, the Borrower represents and warrants, as of the date
hereof, and as of the date of each disbursement of each of the Loans, the
following, which shall survive the execution and delivery of this Agreement, the
Note and the Loan Documents and until all of the Obligations have been paid,
satisfied or discharged in full, regardless of any investigation by the Lender
of the Borrower's financial condition or assets:
Section 7.A. CORPORATE EXISTENCE AND RELATED MATTERS. The Borrower is a
corporation duly organized, validly existing and in good standing under the Laws
of the State or country of its incorporation and is duly qualified to do and
transact business and is in good standing as a foreign corporation in each and
every state or country in which the conduct of its business or the location of
its properties requires such qualification and the failure to so qualify would
have a Materially Adverse Effect. As of the date hereof, the only Subsidiaries
or Affiliates of Borrower are designated in SCHEDULE 7.A hereto. SCHEDULE 7.A
hereto correctly sets forth, as to each such Subsidiary or Affiliate, whether or
not it is a Consolidated Subsidiary, the jurisdiction of its incorporation, the
percentage of issued and outstanding shares of each class of its capital stock
owned by Borrower and the Subsidiaries and, if such percentage is not 100%, a
description of each class of its authorized capital stock and the number of
shares of each class issued and outstanding. All of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and outstanding
and fully paid and nonassessable and all such shares indicated in SCHEDULE 7.A
as owned by Borrower or a Subsidiary are owned, beneficially and of record, by
Borrower or such Subsidiary, free of any Lien. SCHEDULE 7.A contains all assumed
or business names utilized by the Borrower or Affiliate, the jurisdiction of
incorporation of the Borrower, and all jurisdictions where the Borrower is
qualified to do business. The information in SCHEDULE 7.A hereto is true and
complete.
Section 7.B. CORPORATE AUTHORITY. The Borrower has all corporate power
and authority to own its property and assets and to carry on and engage in its
business as it is presently being conducted, and has all licenses, permits,
franchises, consents, approvals and authorizations required in connection with
the foregoing, including without limitation all of the foregoing required under
applicable Laws. The execution, issuance, delivery, and performance of all
documents in connection with this Agreement, the Note and the Loan and other
Loan Documents to which the Borrower is a party or signatory and the incurrence
and performance of the Obligations hereunder and thereunder (i) are within the
corporate power and authority of the Borrower, (ii) have been duly and properly
authorized by all necessary corporate, director, shareholder and any other
action of the Borrower, and (iii) have not resulted in and will not result in:
(a) the creation or imposition of any Lien of any nature whatsoever
(except in favor of the Lender) upon the Borrower's property or assets; or
25
(b) the violation or contravention of, the occurrence of a default,
event of default or event, which with the passage of time or giving of notice or
both, would constitute, mature into or become a default or event of default
under, (1) any term or provision of the Borrower's Articles of Incorporation or
bylaws, (2) any licenses, permits, franchises, consents, approvals or
authorizations referred to above, (3) any certificates of authority to do or
transact business, (4) any applicable order of any court or government or
administrative agency, or (5) any material contract, agreement (including any
loan or credit agreement or agreement with the holders of the Borrower's
preferred stock or any Subordinated Debt), mortgage, indenture, instrument,
judgment or Laws to which the Borrower is a party or signatory or by which it or
its properties or assets are, or may be, bound.
Section 7.C. CONSENTS, APPROVALS, ETC. Except for the filing of UCC
financing statements, the filing of appropriate documents with the United States
Patent and Trademark Office to perfect Lender's Liens in registered trademarks
and patents of the Borrower, and the notation of Lender's Liens against vehicles
of Borrower on the certificates of title for such vehicles, no consent, approval
or authorization or order of, or filing, registration or qualification with, any
Person (governmental, regulatory, or otherwise) is required to be obtained or
effected by the Borrower in connection with the execution, issuance, delivery
and performance of all documents in connection with this Agreement, the Note and
the Loan and other Loan Documents to which the Borrower is a party or signatory
or the incurrence or performance of the Obligations or, if so required, has been
duly obtained or effected before the date hereof and are indicated on SCHEDULE
7.C hereto.
Section 7.D. BINDING EFFECT AND ENFORCEABILITY. Upon delivery hereof
and thereof, this Agreement, the Note and the Loan and other Loan Documents to
which the Borrower is a party or signatory will be its respective legal, valid
and binding obligations enforceable in accordance with their respective terms
and provisions (except as limited by bankruptcy, insolvency or other laws or
equitable principles of general application relating to the enforcement of
creditors' rights generally) and, on the date of said delivery, the Borrower
will not be in violation or contravention of, and no Default or Event of Default
will exist under, any of the foregoing.
Section 7.E. DEFAULT OF DEBT, LICENSES, PERMITS, ORDERS AND OTHER
AGREEMENTS. The Borrower is not in breach or default of (in any material
respect), and no event of default or event, which with the passage of time or
giving of notice or both, would constitute, mature into or become a default or
event of default, has occurred and is continuing with respect to (i) any Debt of
any kind or nature, (ii) any license, permit, franchise, approval, consent or
authorization referred to in Section 7.B above, (iii) any order of any court or
governmental or administrative agency, or (iv) any agreement to which it is a
party, which breach or default might have a Materially Adverse Effect.
Section 7.F. FINANCIAL CONDITION AND LITIGATION. The Financial
Statements of the Borrower delivered to the Lender (including, without
limitation, the audited financial statements of Borrower as at/of June 30, 1999,
and the unaudited financial statements of Borrower for the period ended
September 30,1999, have been prepared in accordance with GAAP, are true and
26
correct in all material respects and fairly present the financial condition of
the Borrower as at the dates thereof and results of operations for the periods
covered thereby. Since the ending date of the period covered by the most recent
Financial Statements dated September 30, 1999, delivered to the Lender and
received thereby, no Materially Adverse Effect has occurred and no dividends on
or redemptions of the Borrower's common or preferred stock have been made.
Except as disclosed to the Lender on said most recent Financial Statements: (i)
the Borrower has no Debt, except as permitted hereunder, or liabilities,
contingent or otherwise; and (ii) except as disclosed on SCHEDULE 7.F, no
proceedings, suits, orders, claims, investigations, or other actions are pending
before any court or governmental authority or, to the best knowledge of
Borrower, threatened against the Borrower that are not fully covered by
insurance. With respect to any representation and warranty which is deemed to be
made after the date hereof by the Borrower, the Financial Statements which as of
such date shall most recently have been furnished by the Borrower to the Lender
for purposes of or in connection with this Agreement shall have been prepared in
accordance with GAAP, shall be true and correct in all material respects, and
shall fairly present the financial condition of the Borrower as of the dates
thereof and results of operations for the periods covered thereby.
Section 7.G. TITLE AND LIENS. The Borrower has good and marketable
title to all of its property and assets, including all such property and assets
listed on the most recent Financial Statements and the other Collateral (except
as thereafter disposed of in accordance with and as permitted by the Security
Agreement) and, except as set forth on SCHEDULE 7.G, the Collateral is not
subject to any liens, claims, security interests, mortgages, pledges, charges or
other encumbrance of any Person, except the Lender and holders of the Permitted
Liens. The Borrower has obtained such waivers or consents from holders of
Permitted Liens on certain Equipment as are necessary and are satisfactory to
the Lender in order to grant to the Lender a second lien on such Equipment
without violating, breaching or defaulting the security agreement or any terms
of the Debt secured by the Permitted Lien on such Equipment.
Section 7.H. EMPLOYEE PLANS. All of the Borrower's Employee Plans are
listed on SCHEDULE 7.H hereto and are in material compliance with all provisions
of ERISA and meet the minimum funding standards of Section 302 of ERISA where
applicable. No withdrawal liability has been incurred under any such Employee
Plans. No Prohibited Transaction or Reportable Event, as defined in ERISA, has
occurred with respect to any such Employee Plans. No proceedings have been
instituted to terminate or appoint a trustee to administer any such Employee
Plans.
Section 7.I. TAXES. Except as listed on SCHEDULE 7.I. hereto, the
Borrower has filed all federal, state and local tax returns and reports required
by Law, have paid all taxes, assessments, penalties, interest and any other
governmental charges which are or were due and payable, have made adequate
provision for the payment of all taxes, assessments, penalties, interest and
other governmental charges which are accruing but are not yet due and payable,
and have no knowledge and are not aware of any deficiency or additional
assessment which may have or has arisen in connection of the foregoing.
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Section 7.J. COMPLIANCE WITH LAWS. To the best knowledge of the
Borrower, the Borrower has complied in all material respects with all Laws
applicable to it or to the conduct of its business, noncompliance with which
could have a Materially Adverse Effect, and the Borrower has not received any
notice of any kind from any Person claiming or alleging, directly or indirectly,
a violation of any Law, noncompliance with which could have a Materially Adverse
Effect.
Section 7.K. CORPORATE STRUCTURE AND AFFILIATES. Borrower has no
Subsidiaries and no Affiliates, except as identified on SCHEDULE 7.A hereto,
which shall include the directors and shareholders of the Borrower. Borrower's
authorized and outstanding capital stock is as set forth in SCHEDULE 7.A hereto.
Section 7.L. CORPORATE NAMES. The Borrower has no assumed corporate
names and is not doing business under any corporate name, other than as
identified on SCHEDULE 7.A hereto.
Section 7.M. SOLVENCY. The Borrower (i) is solvent and will not be
rendered insolvent by the incurrence of the Obligations, by the execution of
this Agreement, the Note, and any other Loan or other Loan Documents to which it
is a party or signatory, or by any transactions contemplated hereunder or
thereunder, (ii) is able to pay its debts as they come due and does not intend
to incur, or believe that it will incur, debts beyond its ability to pay such
debts as they mature or come due, (iii) has capital sufficient to carry on its
business and any business in which it intends or is about to engage, and (iv)
owns property and assets having a value in excess of its liabilities and debts.
Section 7.N. MARGIN REGULATIONS. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System). No part of the proceeds of any of the Loans made
hereunder will be used to purchase or carry any Margin Stock, to reduce or
retire any indebtedness originally incurred to purchase or carry any Margin
Stock, to extend credit to others for the purpose of purchasing or carrying any
such Margin Stock, or for any other purpose which might cause any of the Loans
to be considered purpose credit within the meaning of Regulation G, T, U or X of
the Board of Governors of the Federal Reserve Board.
Section 7.O. INDEBTEDNESS TO AFFILIATES. Except as set forth on
SCHEDULE 7.O hereto, there are no outstanding loans from any Affiliate to the
Borrower, or from the Borrower to any Affiliate.
Section 7.P. ACTS OF GOD. Neither the business nor properties of the
Borrower are presently affected by any fire, explosion, accident, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or of
political unrest, or potential expropriation, or other casualty (whether or not
covered by insurance) which could have a Materially Adverse Effect.
Section 7.Q. LABOR CONTROVERSIES; UNION CONTRACTS, ETC. There are no
labor controversies pending or, to the knowledge of the Borrower, threatened
against the Borrower,
28
which if adversely determined could have a Materially Adverse Effect. There are
no pending or, to the Borrower's knowledge, threatened or anticipated (i)
employment discrimination charges or complaints against or involving the
Borrower before any governmental Person, (ii) unfair labor practice charges or
complaints, disputes or grievances or arbitration proceedings or controversies
affecting the Borrower, (iii) union representation petitions respecting the
employees of the Borrower, or (v) strikes, slowdowns, work stoppages, or
lockouts or threats thereof affecting the Borrower. There are no collective
bargaining agreements covering any of the employees of the Borrower. The
Borrower has not breached or otherwise failed to comply with any provision of
any collective bargaining agreement or other labor union contract applicable to
any of its employees.
Section 7.R. COLLATERAL, ETC. The Borrower does not own any real
property, or leases any real property as lessee, or otherwise uses any real
property in connection with its operations, except as set forth in SCHEDULE 7.R
hereto, which contains a complete and accurate description, by owner/lessor and
location (by street address) of all such owned, leased and/or used properties.
With respect to each Leasehold:
(i) The Borrower has a valid and indefeasible leasehold
interest in the Leasehold, or other rights to use the Leasehold, free and clear
of all Liens except Permitted Liens; and
(ii) Each Lease is a valid and subsisting lease in full force
and effect in accordance with the terms thereof, the Borrower is in possession
of the Leasehold, and no material default by the Borrower exists under any
Lease.
The Borrower is the record and/or beneficial owner of all
presently existing Collateral, in each case free and clear of all Liens except
Permitted Liens. The provisions of the Loan Documents are effective to create,
in favor of the Lender, legal, valid and enforceable Liens in all right, title
and interest of the Borrower in any and all of the Collateral described therein,
securing the Obligations from time to time outstanding, and upon all filings and
recordings being duly made in the locations referred to in the applicable Loan
Documents or the taking of possession of the Collateral by the Lender in
accordance with the provisions of such Loan Documents, each of such Loan
Documents shall constitute, as of and after the Closing Date, a fully perfected
first priority Lien in all right, title and interest of the Borrower in such
Collateral superior in right to any Liens, existing or future, which the
Borrower or any creditors thereof or purchasers (other than purchasers of
inventory in the ordinary course of business and purchasers of assets the sale
of which is permitted hereunder or under the applicable Loan Document)
therefrom, or any other Person, may have against such Collateral or interests
therein, except to the extent, if any, otherwise resulting from a Permitted
Lien.
Section 7.S. INTELLECTUAL PROPERTY. The Borrower has the legal right to
all Intellectual Property Rights that are necessary for the conduct of its
business. All Intellectual Property Rights (other than trade secrets,
confidential research development and commercial information and know-how) of
the Borrower are set forth on SCHEDULE 7.S hereto. With respect to all
Intellectual Property Rights: (i) the Borrower is the sole and exclusive owner
of the entire and
29
unencumbered right, title and interest in and to thereof; (ii) the Borrower has
no knowledge of the existence of any Intellectual Property Rights held by any
other Person that would preclude the Borrower from using its Intellectual
Property Rights in the conduct of its business; (iii) no claim has been made,
and the Borrower has no knowledge of any claim that is likely to be made, that
the use by the Borrower of any of its Intellectual Property Rights does or may
violate the rights of any Person; and (iv) each Intellectual Property Right of
the Borrower has not been adjudged invalid or unenforceable and is valid and
enforceable, and there are no prior or other uses thereof which to the
Borrower's best knowledge could lead to any such Intellectual Property Right
becoming invalid or unenforceable.
Section 7.T. SURETY OBLIGATIONS; FINANCIAL ASSURANCES. The Borrower is
not obligated as surety or indemnitor under any surety or similar bond or other
contract, or issued or entered into any agreement to assure payment, performance
or completion of performance of any undertaking or obligation of any Person. The
Borrower has not posted or placed any Financial Assurance except as indicated in
SCHEDULE 7.T hereto.
Section 7.U. BUSINESS RELATIONS. There exists no actual or threatened
termination, cancellation, or adverse limitation of, or any adverse modification
or change in, the contractual and/or business relationship between the Borrower
and any owner/lessor of any facility utilized in the Borrower's business,
municipality, customer and/or supplier, and there exists no present condition or
state of facts or circumstances in such relations, which in each case would have
a Materially Adverse Effect.
Section 7.V. ACCURACY OF INFORMATION. All factual information
heretofore, or contemporaneously furnished by or on behalf of the Borrower in
writing to the Lender for purposes of or in connection with this Agreement or
any transaction contemplated hereby, and all other such factual information
hereafter furnished by or on behalf of the Borrower to the Lender will be, true
and accurate in every material respect on the date as of which such information
is dated, or certified, and to the best knowledge of Borrower such information
is not, or shall not be, as the case may be, incomplete by omitting to state any
material fact necessary to make such information not misleading. To the best
knowledge of the Borrower there is no fact which has a Materially Adverse Effect
or in the future may (so far as the Borrower may now foresee), have a Materially
Adverse Effect, which has not been set forth herein or in written materials,
certificates or statements furnished to the Lender prior to the date hereof.
Section 7.W. YEAR 2000. The Borrower has reviewed the areas within its
businesses and operations which could be adversely affected by, and have
developed or are developing a program to address on a timely basis, the "Year
2000 Problem" (that is, the risk that computer applications used by the Borrower
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date on or after December 31, 1999),
and have made related appropriate inquiry of material suppliers, vendors and
customers. Based on such review and program, the Borrower believes that the
"Year 2000 Problem" will not have a Materially Adverse Effect. From time to
time, at the request of the Lender, the Borrower shall provide to the Lender
such updated information or documentation as is requested regarding the status
of its efforts to address the Year 2000 Problems.
30
Section 7.X. HAZARDOUS MATERIALS. Borrower has not caused or permitted
any Hazardous Material to be disposed of or incorporated into, either on or
under real property legally or beneficially owned or operated by Borrower, and
no such real property has ever been used as a dump site or long-term storage
site for any Hazardous Materials which would be reasonably likely to (a) give
rise to present or future legal liability, and (b) have a material adverse
effect on the business or financial condition of Borrower. The failure, if any,
of Borrower in connection with the operation of their business, to obtain or be
in compliance with any permit, certificate, license, approval and other
authorization, or to file any notification or report relating to chemical
substances, air emissions, effluent discharges and Hazardous Material storage,
treatment, transport and disposal has not had, nor will it have, a Materially
Adverse Effect, and no facts or circumstances exist which could give rise to
liabilities with respect to Hazardous Materials on the business or financial
condition of Borrower which would be reasonably likely to have a Materially
Adverse Effect.
"Hazardous Materials" means and includes (a) any friable asbestos (or
asbestos which becomes friable), PCBs or dioxins or insulation or other material
composed of or containing friable asbestos (or asbestos which becomes friable),
PCBs or dioxins and (b) any petroleum or any fraction thereof and any hazardous
or toxic waster, substance or material defined as such in (or for purposes of)
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, any applicable so-called "superfund" or "superlien" law, or any other
applicable law regulating or pertaining to any such waste, substance or
material, as now or at any time hereafter in effect.
SECTION 8. COVENANTS.
The Borrower hereby covenants and agrees with the Lender that, until
the Obligations have been satisfied and discharged in full, the Borrower will
comply and/or cause compliance with the following covenants, unless the Lender
shall give its prior written consent to the contrary:
Section 8.A. AFFIRMATIVE COVENANTS.
8.A.1. FINANCIAL COVENANTS. The Borrower shall maintain compliance with
the following financial covenants during the periods indicated below:
(a) TANGIBLE NET WORTH. The Borrower's Tangible Net Worth shall not at
any time be less than $1,000,000.
(b) LEVERAGE. The Borrower's Leverage Ratio shall not at any time
exceed 0.45 :1.00.
8.A.2. FINANCIAL INFORMATION AND REPORTING. The Borrower shall keep and
cause to be kept proper books and records in which full and true entries will be
made, in accordance with
31
GAAP, of all dealings or transactions relating to its business and affairs, and
the Borrower shall cause to be furnished to the Lender:
(i) As soon as practicable and, in any event, within fifty
(50) days after the end of each quarter of each Fiscal Year, all of the
Borrower's statements of income and retained earnings and of cash flows
through the quarter then ended and a balance sheet of the Borrower as
of the end of such quarter, all in reasonable detail and certified by
Borrower's president or chief financial officer as fairly presenting
the financial condition and operations of the Borrower as of and for
the period then ending and being accurate in all material respects and
having been prepared in accordance with GAAP;
(ii) As soon as practicable and, in any event, within one
hundred twenty (120) days after the end of each Fiscal Year, all of the
Borrower's audited and unaudited statements of income and retained
earnings and of cash flows through the Fiscal Year then ended and a
balance sheet of the Borrower as of the end of such Fiscal Year, in
each case with comparable information at the close of and for the prior
Fiscal Year, all in reasonable detail, containing no qualifications
unacceptable to the Lender and audited by an independent certified
public accountant selected by the Borrower and acceptable to the Lender
and prepared in accordance with GAAP;
(iii) Together with the Financial Statements for each quarter
of each Fiscal Year, (a) a certificate executed by the chief financial
officer of Borrower in the form of EXHIBIT C hereto certifying to the
Lender that the Borrower is in compliance with each of the financial
covenants set forth in Section 8.A.1 hereof and setting forth in detail
satisfactory to the Lender the calculations and computations showing
such compliance, and (b) a certificate executed by the president or
chief financial officer of Borrower stating whether any Default or
Event of Default currently exists and is continuing and what action, if
any, the Borrower is taking or proposes to take with respect thereto;
(iv) A Borrowing Base Certificate on and as of the date
hereof, on and as of the date of any borrowing of a Loan, and within
forty-five (45) days after the end of each month certified as of the
last day of such month;
(v) When and as so furnished, such other financial information
concerning the Borrower, its business, financial condition or assets as
may be furnished to the holders of the Borrower's common or preferred
stock (including all financial statements, reports and proxy
statements), or as the Lender may reasonably request from time to time;
and, promptly upon the filing thereof, all registration statements and
annual, quarterly, monthly or other regular reports which the Borrower
files with the SEC;
(vi) When requested by Lender, but in no event less than
annually, permit a third party acceptable to Lender to conduct an audit
of account receivables;
(vii) Promptly upon discovery thereof, notice of any action,
suit, arbitration, investigation, administrative or other proceeding
instituted, commenced or threatened
32
against or affecting the Borrower which may reasonably be expected to
cause the Borrower to incur or be liable for claims, damages and/or
costs of any kind (including, without limitation, attorneys' fees,
expert witness fees and court, judgment, settlement and compliance or
remedial costs), aggregating in excess of $100,000;
(viii) Promptly upon the Borrower's becoming aware thereof,
notice of any proposed Laws, or amendments thereto, which would
regulate, restrict or prohibit the Borrower in such a way as might have
a Materially Adverse Effect;
(ix) Notice of the occurrence or existence of any Default or
Event of Default immediately upon the Borrower's becoming aware
thereof; and promptly upon discovery thereof, notice of any
development, financial or otherwise, which might have a Materially
Adverse Effect;
(x) Upon request of the Lender from time to time, any
information concerning the Borrower's compliance with any and all Laws;
(xi) Promptly upon the Borrower becoming aware thereof, notice
of any claim of violation of any Law, and notice of any violation or
breach by the Borrower of the terms of, or any revocation or suspension
or threatened revocation or suspension of, any license or permit of the
Borrower;
(xii) Notice of the cancellation or expiration of any bond,
letter of credit or similar instrument issued as Financial Assurance
and the terms of any replacement or renewal bond, letter of credit or
similar instrument if not issued by the Lender;
(xiii) Within forty-five (45) days after the end of each
six-month period, regardless of whether any New Subsidiary has been
acquired during such period, a New Subsidiary Certificate substantially
in the form of EXHIBIT D hereto;
(xiv) Within sixty (60) days of the end of each Fiscal Year,
updated annual budgets, financial projections (rolling three years) and
business plans for the ensuing Fiscal Year; and
(xv) Within thirty (30) days after the end of each month, a
receivables aging report as at the end of such month.
8.A.3. CORPORATE EXISTENCE AND CONDUCT OF BUSINESS. The Borrower will
maintain and preserve its corporate existence, good standing, certificates of
authority, licenses, permits, franchises, patents, trademarks, trade names,
service marks, copyrights, leases and all other contracts and rights necessary
or desirable to continue its operations and business on a profitable basis and
will generally continue the same line of business as that being presently
conducted.
8.A.4. TAXES AND LAWS. The Borrower will pay when due, all taxes,
assessments, charges and levies imposed on the Borrower or any of its property
or assets or which it is
33
required to withhold and pay out and will comply in all material respects with
all applicable present and future Laws applicable to the Borrower or any of its
property or assets, unless the Borrower is contesting in good faith, by an
appropriate proceeding, the validity, amount, imposition or applicability of the
above while maintaining reserves therefor which are appropriate and adequate as
determined in accordance with GAAP, and such contest does not have or cause a
Materially Adverse Effect.
8.A.5. INSPECTION. Upon the Lender's request, the Borrower will allow
the Lender, and any of its officers, employees or agents, to visit, during
normal business hours, for inspection and review, the Borrower's premises and
will make available and furnish to the Lender the Borrower's books and records
and such financial information concerning the Borrower's property or assets,
business, affairs, operations or financial condition as reasonably requested by
the Lender.
8.A.6. LENDER COSTS. The Borrower shall pay upon demand, all reasonable
out-of-pocket fees, costs and expenses (including those of outside counsel,
auditors, appraisers, accountants, insurance and environmental advisors, title
companies, surveyors, and other consultants and agents) incurred or paid by the
Lender in connection with the preparation, negotiation, documentation,
administration (including periodic field and collateral audits and site visits),
amendment, modification, waiver, interpretation, collection or enforcement of
this Agreement, the Note, or any other Loan Documents and the credit and
security therefor. In addition, the Borrower shall pay upon demand all such
costs and expenses of the Lender in connection with any Default or Event of
Default by the Borrower hereunder, or in connection with the collection or
enforcement of any of the terms hereof or of the other Loan Documents and the
credit and security therefor, or any "work-out," refinancing or restructuring of
the credit arrangement set forth herein. Any attorneys' fees due hereunder are
to be calculated at the attorneys' customary hourly rates, and not as a
percentage of the indebtedness or of the amount recovered. The Borrower agrees
to indemnify the Lender, its successors and assigns, and its respective
officers, directors and employees, from and hold each of them harmless against
(i) any transfer taxes, documentary taxes and any other taxes, penalties,
assessments or charges made by any governmental authority by reason of the
execution, delivery and performance of the Loan Documents and any security
therefor, and (ii) any and all losses, claims, damages, liabilities and
expenses, including all expenses of litigation or preparation therefor, which
any of them may incur or which may be asserted against any of them in connection
with or arising out of the direct or indirect application of the proceeds of
Loans. The obligations under this Section 8.A.6 shall survive repayment of the
Loans and the assignment of any rights hereunder.
8.A.7. EMPLOYEE PLANS. The Borrower shall (i) keep in full force and
effect any and all Employee Plans which are presently in existence or may, from
time to time, come into existence under ERISA, and not withdraw from any such
Employee Plans, unless such withdrawal can be effected or such Employee Plans
can be terminated without material liability to the Borrower; (ii) make
contributions to all of such Employee Plans in a timely manner and in a
sufficient amount to comply with the requirements of ERISA, including the
minimum funding standards of Section 302 of ERISA; (iii) comply with all
material requirements of ERISA which relate to such Employee Plans; (iv) notify
the Lender immediately upon receipt of any notice concerning the
34
imposition of any withdrawal liability or of the institution of any proceeding
or other action which may result in the termination of any such Employee Plans
or the appointment of a trustee to administer such Employee Plans; and (v)
promptly advise the Lender of the occurrence of any Reportable Event or
Prohibited Transaction, as defined in ERISA, with respect to any such Employee
Plans.
8.A.8. USE OF PROCEEDS OF LOANS. The Borrower shall use the proceeds of
the Loans for working capital purposes.
8.A.9. FINANCIAL ASSURANCE. The Borrower shall timely comply or cause
compliance with the requirements of any Act or any other Law concerning
Financial Assurance. If any funds are drawn on any Financial Assurance at any
time, the Borrower shall promptly notify the Lender in writing of the amount of
and the reason for the draw. The Borrower shall not maintain more in Financial
Assurance than is required pursuant to any Act or any Law at any time. At the
earliest available opportunity under any Act or other Law, the Borrower shall
request that the amount of Financial Assurance be reduced if and as permitted
under the Act, or such other Law.
8.A.10. OPERATING AND INVESTMENT ACCOUNT(S). The Borrower shall
maintain its principal investment accounts with the Lender. If the average
amount of demand deposit balances on deposit in the Borrower's investment
accounts over any calendar quarter is not sufficient to cover the costs of
non-credit services provided by the Lender in servicing such accounts (as
determined and priced in accordance with the Lender's standard rate schedule of
non-credit bank services as then in effect), the Borrower shall pay to the
Lender, on demand, a deficient balances fee on the amount of the deficiency
based on the Lender's earnings credit rate then in effect in accordance with the
Lender's standard practice.
8.A.11. [Intentionally Omitted].
8.A.12. COMPLIANCE WITH LAWS. Borrower shall comply or cause compliance
with all applicable building codes, zoning ordinances, environmental protection,
health and safety laws and regulations and other laws and regulations governing
it.
8.A.13. COLLATERAL AGREEMENTS; NEW SUBSIDIARIES AND FUTURE
ACQUISITIONS. The Borrower shall, with reasonable promptness and diligence (i)
pledge or cause to be pledged to the Lender, through execution of the Addendum
attached to the Stock Pledge and Security Agreement and delivery of the stock
certificates and other matters referred to therein, 100% of the stock (or other
ownership interest) of any Person (a "NEW SUBSIDIARY") hereafter acquired/formed
by the Borrower; and (ii) cause each said party listed in (i) above to execute
an agreement of joinder and assumption (a "JOINDER AGREEMENT(S)") in the form of
EXHIBIT E hereto pursuant to which it will become a Borrower under this
Agreement and the Note and a Debtor under the Security Agreement and a party to
other relevant Loan Documents, and to execute such other documents and take such
other action as may be necessary or appropriate to grant to the Lender a first
priority perfected security interest in the Collateral covered by such Loan
Documents. In addition, any such New Subsidiary shall deliver to the Lender: an
executed Officer's Certificate substantially in the form attached as EXHIBIT F
hereto; organizational
35
documents as specified in Section 6.A.9 and 6.A.10; an executed secretary's
certificate as described in Section 6.A.11; executed financing statements for
each state in which Collateral owned by a New Subsidiary is located; and such
other documents, instruments or agreements as the Lender may reasonably request.
In addition, if the Borrower hereafter acquires or leases any real property the
Borrower shall, prior to or contemporaneously therewith, furnish to the Lender
all documentation of the type reasonably requested by the Lender to acquire a
security interest in reference to the Leaseholds or the owned properties
involved.
8.A.14. INTEREST RATE CONTRACTS. The Borrower shall execute all
documents and take such other action as may be necessary and appropriate to
include all of its obligations to the Lender under any Interest Rate Contract as
obligations which are secured by the Collateral. Nothing herein shall obligate
the Agent or Borrower to enter into any Interest Rate Contract.
8.A.15. [Intentionally Deleted.]
8.A.16. MAINTENANCE OF INSURANCE. The Borrower shall maintain insurance
with financially sound and respectable insurance companies or associations in
such companies or associations in such amounts and covering such casualties and
risks as are customary in accordance with prudent business practice in the case
of companies engaged in the same or a similar business and similarly situated,
which insurance may provide for reasonable deductibility from coverage thereof.
The Borrower will, upon request, furnish to the Lender at reasonable intervals a
certificate of an Authorized Officer setting forth the nature and extent of all
insurance maintained by the Borrower. The Borrower shall retain all incidents of
ownership of the insurance maintained pursuant hereto and shall not borrow upon
or otherwise impair its rights to receive the proceeds of such insurance.
8.A.17. USE OF PROCEEDS OF INITIAL PUBLIC OFFERING OR PRIVATE
PLACEMENT. The Borrower shall apply the proceeds from any initial public
offering or private placement of the capital stock or debt of Borrower or its
successors (to the extent such private placement exceeds $20,000,000) to the
payment of any outstanding amounts owed under the Loan Documents.
Section 8.B. NEGATIVE COVENANTS.
8.B.1. LIENS. The Borrower shall not create, grant, pledge, permit or
suffer to exist, any Lien upon any of the Collateral or any other property or
assets of the Borrower, except Permitted Liens.
8.B.2. DEBT.
The Borrower shall not, directly or indirectly, create, assume, incur,
suffer to exist, guarantee, become or be liable for or with respect to any
manner of obligations, liabilities, indebtedness or other Debt whatsoever to any
Person, except with respect to: (i) the Obligations hereunder; (ii) unsecured
Subordinated Debt; (iii) existing Debt indicated on SCHEDULE 8.B.2 hereto (to
the extent such existing Debt is repaid, additional Debt may not be incurred);
(iv) current liabilities and accounts payable arising or accruing in the
ordinary course of business (other than a guaranty or indebtedness for borrowed
money, an extension of credit or deferred
36
purchase price of property not otherwise permitted hereunder); (v) contingent
Debt for any draws at any time made on outstanding instruments as Financial
Assurance; (vi) contingent Debt with respect to any Interest Rate Contracts with
the Lender; (vii) Debt assumed or incurred in or in connection with any merger
or acquisition permitted under Section 8.B.3; and (viii) purchase money Debt
incurred in connection with liens described in clause (vii) of the definition of
Permitted Liens, PROVIDED, HOWEVER, that such purchase money Debt shall not
exceed $50,000 in the aggregate during any one Fiscal Year (it being understood
that the amount of any such Debt permitted to be incurred during any one Fiscal
Year, but not so incurred, shall not carry over to subsequent Fiscal Years).
8.B.3. FISCAL YEAR, NAME CHANGES, MERGERS AND ACQUISITIONS. The
Borrower shall not (i) change its Fiscal Year or its corporate name or without
prior written notice to Lender and only after all necessary or desirable
Financing Statements have been duly and properly filed and recorded maintaining
Lender's first priority perfected liens and security interests on and in the
Collateral, adopt an assumed corporate name, (ii) consolidate or merge with any
Person, (iii) acquire any stock in, or acquire all or substantially all of the
assets or properties of, or make any investment in, any Person, except that the
existing investments listed on SCHEDULE 8.B.3 are permitted hereunder, or (iv)
create any Subsidiaries.
8.B.4. REDEMPTIONS, DIVIDENDS AND PAYMENTS UNDER SUBORDINATED DEBT. The
Borrower shall not declare or make any Restricted Payments.
8.B.5. TRANSACTIONS WITH AFFILIATES. Except as set forth in SCHEDULE
8.B.5, the Borrower shall not enter into any transaction with its Affiliates or
any of its or its Affiliates' shareholders, directors, officers or employees,
except in the ordinary course of business and upon fair and reasonable terms
which are no less favorable to said Borrower than those that would be available
at the time of such transaction in a comparable arm's length transaction with a
Person not an Affiliate. The Borrower shall not pay any management fee to any
Affiliate other than Borrower.
8.B.6. CAPITAL STRUCTURE. The Borrower shall not have outstanding or
issue any shares of preferred stock. The Borrower shall not make any changes in
its capital structure (including the terms of its outstanding stock), amend its
articles of incorporation, certificate of designation, or bylaws, or make any
changes in any of its business objectives, purposes or operations if such change
has a reasonable likelihood of having a Materially Adverse Effect. The Borrower
shall not be permitted to issue any stock.
8.B.7. CHANGE IN NATURE OF BUSINESS. The Borrower shall not engage in
any business unrelated to, or make any material change in the nature of, its
business as carried on at the date hereof.
8.B.8. TRANSFER OF ASSETS. The Borrower shall not sell, assign,
transfer, lease or otherwise dispose any of its property or assets, except as
may be permitted under the Security Agreement or other Loan Documents. Provided
in any event that the following are permitted: (i) sales of inventory in the
ordinary course of business; (ii) sales of worn out or obsolete tools, machinery
or equipment no longer used or useful in the operation of business for fair
value, so long as the proceeds of any such sale does not exceed $50,000; (iii)
sales of other assets for cash
37
and for fair value in an aggregate amount not to exceed $25,000 in any Fiscal
Year, provided that the Net Cash Proceeds resulting therefrom is applied in
prepayment of the Loans in the order set forth in Section 3.F(c) hereof.
8.B.9. PREPAYMENT OR MODIFICATION OF DEBT. The Borrower will not (i)
prepay any Subordinated Debt or any Funded Debt owing to, or any indebtedness
for money borrowed by the Borrower from a Person other than the Lender, or any
Debt secured by any of its assets, except Debt to the Lender or to any holder of
Permitted Liens, and except for prepayment of Debt secured by an asset if a
replacement asset of equal or greater value is purchased in connection
therewith, or (ii) enter into or modify any agreement as a result of which the
terms of payment of any of the foregoing Debt are amended or modified, except
Subordinated Debt so long as such amendment or modification does not, and will
not result in any, increase in the amount of, interest rate on, or collateral
for, or any earlier payment or maturity of, the Subordinated Debt, or conflict
with or breach the terms of this Agreement or any Loan Documents hereunder or
the applicable subordination agreement with the Lender therefor.
8.B.10. FALSE STATEMENTS. The Borrower will not furnish the Lender any
certificate or other document that knowingly contains any untrue statement of
material fact or that omits to state a material fact necessary to make it not
misleading in light of the circumstances under which it was furnished.
8.B.11. INCONSISTENT OR RESTRICTIVE AGREEMENTS. The Borrower shall not
enter into any agreement which would violate or cause a breach of or under this
Agreement or any Loan Documents or the performance by the Borrower of any
obligation hereunder or thereunder or which prohibits or would prohibit the
creation, incurrence or assumption of any Lien upon the Borrower's property or
assets, whether now owned or hereafter acquired.
8.B.12. INVESTMENTS. The Borrower shall not make any loan or advance to
any Person, or purchase or otherwise acquire any capital stock, assets,
obligations, or other securities of, make any capital contribution to, or
otherwise invest in or acquire any interest in any Person, or participate as a
partner or joint venturer with any other Person, except for Permitted
Investments.
SECTION 9. EVENTS OF DEFAULT.
The following events shall constitute and be deemed Events of Default
hereunder:
Section 9.A. OBLIGATIONS. Failure by the Borrower (i) to make any
payment of principal on any Loan or Note on the date such payment Obligation is
due, or (ii) to make any payment of interest on any Loan or Note or any payment
of any fee due hereunder within 3 Business Days after such payment Obligation is
due.
Section 9.B. BREACH OR DEFAULT UNDER LOAN DOCUMENTS. (i) failure or
neglect of the Borrower to perform, keep or observe any of the covenants at
Sections 8.A.1, 8.A.2, 8.A.7, 8.A.8, 8.A.10, 8.A.17 or 8.B hereof; or (ii)
failure or neglect of the Borrower to perform, keep or observe any of its
respective other covenants, conditions, promises or agreements contained
38
herein or in any other Loan Document to which it is a party or signatory and the
Borrower fails to cure the foregoing within thirty (30) days after notice from
the Lender to the Borrower thereof; or (iii) an Event of Default occurs under
any other Loan Document; or (iv) at any time any notice is given by the Borrower
of the discontinuance, invalidity or unenforceability of or the Borrower's
obligations thereunder.
Section 9.C. REPRESENTATION AND WARRANTIES. Any warranty or
representation now or hereafter made by the Borrower hereunder or under any Loan
Document, is untrue or incorrect in any material respect or fails to state a
material fact necessary to make such warranty or representation not misleading
in light of the circumstances in which it was made, or any schedule,
certificate, statement, report, financial data, notice or writing furnished to
the Lender at any time by the Borrower is untrue or incorrect in any material
respect or fails to state a material fact needed to make the foregoing not
misleading in light of the circumstances in which the foregoing were furnished,
in each case on the date as of which the facts set forth therein are stated or
certified and the Borrower fails to cure any of the foregoing within thirty (30)
days after the Borrower should have become aware of the same.
Section 9.D. JUDGMENTS. A final and non-appealable judgment or order,
or an aggregate of final and non-appealable outstanding judgments or orders,
requiring payment in excess of $100,000, either not fully covered by insurance
or the insurance for which is disputed or contested, shall have been entered
against the Borrower, and such judgments or order(s) shall remain unsatisfied or
undischarged and in effect for thirty (30) consecutive days without a stay of
enforcement or execution thereof.
Section 9.E. INSOLVENCY AND RELATED PROCEEDINGS. If the Borrower (i) if
a natural Person, dies or, if not a natural Person, is dissolved; (ii)
authorizes or makes an assignment for the benefit of creditors; (iii) generally
shall not pay its debts as they become due; (iv) shall admit in writing its
inability to pay its debts generally; or (v) shall authorize or commence
(whether by the entry of an order for relief or the appointment of a receiver,
trustee, examiner, custodian or other similar official therefor or for any
substantial part of its property) any proceeding or voluntary case under any
bankruptcy, reorganization, insolvency, dissolution, liquidation, adjustment or
arrangement of debt, receivership or similar Laws or if such proceedings are
commenced or instituted, or an order for relief or approving any petition
commencing such proceedings is entered against the Borrower and such party, by
any action or failure to act, authorize, approve, acquiesce, or consent to the
commencement or institution of such proceedings, or such proceedings are not
dismissed within sixty (60) days after the date of filing, commencement or
institution.
Section 9.F. OTHER MATERIAL AGREEMENTS. If the Borrower defaults or a
default or an event of default occurs under or in the performance of its
obligations under (i) any other agreement with the Lender, or (ii) under any
other material (exceeding $100,000) agreement, document or instruments for
borrowed money, and such default, breach, or event of default continues beyond
any applicable grace period thereunder and the effect of which shall be to allow
the holder of such agreement, document or instrument to terminate the foregoing,
or the Person to whom such obligation is owed to cause such obligation to become
due prior to its
39
stated maturity or otherwise accelerated, or (iii) under any other material
agreement, document or instrument (not for borrowed money), and such default,
breach, or event of default continues beyond any applicable grace period
thereunder and the effect of which shall be to allow the holder of such
agreement, document or instrument to terminate the foregoing or to accelerate
obligations exceeding $100,000 owed to it thereunder.
Section 9.G. STATE ACTION. If any proceeding is instituted or commenced
by the State or country of incorporation of the Borrower, seeking a forfeiture
of the [Certificate] of Incorporation of the Borrower and any order entered in
such proceeding shall fail to be vacated within thirty (30) days.
Section 9.H. ERISA MATTERS. If any of the following events shall have
occurred with respect to any Employee Plan and the resultant or potential
liability of the Borrower therefor exceeds $100,000: (i) a Reportable Event or
Prohibited Transaction, as such terms are defined in ERISA, shall have occurred;
(ii) a trustee is appointed by any governmental body or agency or any court to
administer any Employee Plan; (iii) any Employee Plan is involuntarily
terminated, or circumstances exist which constitute grounds entitling the
Pension Benefit Guaranty Corporation to institute proceedings to terminate any
Employee Plan; or (iv) any withdrawal liability is incurred in connection with
any termination of an Employee Plan.
Section 9.I. TAX LIENS. If a notice of lien, levy or assessment is
filed or recorded with respect to all or a material part of the assets or the
Collateral owned by the Borrower by the United States, or any department, agency
or instrumentality thereof, or by any state, county, municipality or other
governmental agency, or any taxes or debts owing at any time or times hereafter
to any one or more of the foregoing become a lien upon a material part of the
Collateral, unless such notice or lien is a Permitted Lien or is removed within
ninety (90) days after filing or recording of such notice or becoming such lien.
Section 9.J. FAILURE OF LIEN. If any Loan Document shall at any time
after its execution and delivery and for any reason (other than as a result of
any action or inaction by the Lender) cease (i) to create a valid and perfected
first priority Lien (except for Permitted Liens) in and to the Collateral
covered thereby; or (ii) to be in full force and effect or shall be declared
null and void, or the validity or enforceability thereof shall be contested or
the Borrower shall deny it has any further liability or obligation under any
Loan Document, or the Borrower shall fail to perform any of its obligations
under any Loan Document beyond any applicable grace period.
Section 9.K. [Intentionally Omitted].
Section 9.L. ENVIRONMENTAL OR OTHER REMEDIATION COSTS. If the Borrower
or Affiliate becomes aware of, any environmental contamination or similar site
deficiency which may reasonably be expected to cause the Borrower or Affiliate
to incur or be liable for costs of any kind aggregating in excess of a cost of
$100,000.
Section 9.M. OPERATING PERMITS AND LICENSES. If the Borrower fails to
maintain any permits or licenses which are necessary and required for the
ownership, use, occupancy or
40
operation of its business, if such deficiency would have a Materially Adverse
Effect and is not cured within 30 days.
Section 9.N. MATERIAL ADVERSE CHANGE. If since June 30, 1999, there
shall have occurred any condition or event which the Lender determines has or
might be reasonably expected to have a Materially Adverse Effect.
Section 9.0. CHANGE IN CONTROL. If a Change in Control shall occur.
"CHANGE IN CONTROL" means (i) the direct or indirect sale, lease, exchange or
other transfer of all or substantially all of the assets of Borrower to any
Person or Group, as defined in Rule 13d-5 under the Exchange Act ("Group"),
other than an Affiliate of Borrower, (ii) the merger or consolidation of
Borrower with or into another entity with the effect that the then existing
shareholders of Borrower, collectively, hold less than 50.1% of the combined
voting power of the then outstanding securities of the surviving entity of such
merger or the corporation resulting from such consolidation ordinarily (and
apart from rights arising under special circumstances) having the right to vote
in the election of directors, (iii) during any two-year period, the replacement
of a majority of the Board of Directors of Borrower from the directors who
constituted the Board of Directors at the beginning of such period, and such
replacement shall not have been approved by a vote of at least a majority of the
Board of Directors of Borrower then still in office who were either members of
the Board of Directors at the beginning of such period or whose election as a
member of the Board of Directors was previously so approved, (iv) a Person or
Group (other than existing shareholders of Borrower, and/or any executive
officer of Borrower or its Subsidiaries, or its successors) shall, as a result
of a tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, have become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of securities of Borrower representing 50% or
more of the combined voting power of the then outstanding securities of Borrower
ordinarily (and apart from rights arising under special circumstances) having
the right to vote in the election of directors or shall have acquired the right
to designate a majority of the Board of Directors of Borrower, (v) any Person or
Group (other than existing shareholders of Borrower, or its executive officers)
shall acquire the right, by contract or otherwise, to elect, appoint or
otherwise designate a majority of the Board of Directors of Borrower, whether or
not such right is exercised, or (vi) the occurrence of any event specified in
Section 9.E. with respect to Borrower or any of its Subsidiaries.
SECTION 10. RIGHTS AND REMEDIES.
Section 10.A. TERMINATION OF COMMITMENT AND ACCELERATION. Upon the
happening or occurrence of an Event of Default described in Section 9.E. above,
the Lender's Commitments shall immediately terminate, and upon the happening or
occurrence of any other Event of Default set forth in Section 9, such Event of
Default not having been previously cured or waived in writing by the Lender, the
Lender may declare the Commitments terminated, if they have not yet been
terminated. Following the termination of the Commitments, the Lender may
accelerate the Obligations by declaring that the Obligations are then due and
payable and, thereupon, the Note shall be and become forthwith, due and payable
without any presentment, demand, protest, notice of any of the foregoing or
other notice of any kind, all of which are hereby expressly
41
waived notwithstanding anything contained herein or in the Note to the contrary,
and the Lender shall have all rights and remedies now or hereafter provided by
applicable Laws and without limiting the generality of the foregoing may, at its
option, also appropriate and apply toward the payment of the Note, any
indebtedness of the Lender to the Borrower, howsoever created or arising, and
may also exercise any and all rights and remedies hereunder, under the Loan
Documents or in and to the Collateral referred to in the Security Agreement and
Stock Pledge Agreement.
Section 10.B. RIGHTS OF SECURED CREDITOR. Lender shall have, in
addition to the rights and remedies given to it under this Agreement, the Note
and the other Loan Documents, all of the rights and remedies of a secured party
under the Uniform Commercial Code as enacted in any jurisdiction in which any of
the Collateral may be located and all rights and remedies allowed by all
applicable Laws, all of which rights and remedies shall be cumulative and
non-exclusive, to the extent permitted by said Laws. In addition to all such
rights and remedies, the sale, lease or other disposition of the Collateral, or
any part thereof, by Lender after an Event of Default may be for cash, credit or
any combination thereof, and Lender may purchase all or any part of the
Collateral at public or, if permitted by Law, private sale, and in lieu of
actual payment of such purchase price, may set-off the amount of such purchase
price against the Obligations then owing. Any sale of the Collateral may be
adjourned from time to time with or without notice. Lender may, in its sole
discretion, cause any Collateral to remain on the Borrower's premises, at the
Borrower's expense, pending sale or other disposition of such Collateral. Lender
shall have the right to conduct such sales on the Borrower's premises, at
Borrower's expense, or elsewhere on such occasion or occasions as Lender may see
fit.
Section 10.C. ENTRY UPON PREMISES AND ACCESS TO INFORMATION. If an
Event of Default then exists, without notice, demand or legal process of any
kind, Lender may take possession of any or all of the Collateral, wherever it
might be found and for that purpose, Lender shall have the right, without
breaching the peace, to enter upon the premises of the Borrower where the
Collateral is located (or is believed to be located) without any obligation to
pay rent to the Borrower, or any other place or places under the control of the
Borrower where the Collateral is believed to be located and kept, and remove the
Collateral therefrom to the premises of Lender or any agent of Lender, for such
time as Lender may desire, in order to effectively collect or liquidate the
Collateral, and/or Lender may require the Borrower to assemble the Collateral
and make it available to Lender at a place or places to be designated by Lender.
If an Event of Default then exists, Lender shall have the right to obtain access
to the Borrower's data processing equipment, computer hardware and software
relating to the Collateral and to use all of the foregoing and the information
contained therein in any manner Lender deems appropriate which is related to the
preservation or disposition of the Collateral or to the collection of the
Obligations.
Section 10.D. SALE OR OTHER DISPOSITION OF COLLATERAL BY LENDER. Any
notice required to be given by Lender of a sale, lease or other disposition or
other intended action by Lender with respect to any of the Collateral which is
deposited in the United States mails, postage prepaid and duly addressed to
Borrower at the address specified in Section 11.I, at least ten (10) Business
Days prior to such proposed action, shall constitute fair and reasonable notice
to Borrower of any
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such action. The net proceeds realized by the Lender upon any such sale or other
disposition, after deduction for the reasonable expenses of retaking, holding,
preparing for sale, selling or the like and the reasonable attorneys' fees and
legal expenses incurred by Lender in connection therewith, shall be applied as
provided herein toward satisfaction of the Obligations. The Lender shall account
to Borrower for any surplus realized upon any such sale or other disposition,
and Borrower shall remain liable for any deficiency. The commencement of any
action, legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect Lender's Lien on the Collateral until the
Obligations are fully paid. Borrower agrees that Lender has no obligation to
preserve rights to the Collateral against any other parties. To the extent
Borrower has the power, without violating the terms of any agreement existing as
of the Closing Date, to grant such a license, Lender is hereby granted a license
or other right to use, without charge, the Borrower's labels, patents,
production certificates, type certificates, supplemental certificates,
copyrights, rights of use of any name, trade secrets, trade names, tradestyles,
trademarks, service marks and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in completing production of,
advertising for sale and selling any Collateral.
Section 10.E. COLLECTION OF RECEIVABLES. After an Event of Default
occurs and is continuing, Lender is authorized and empowered (which
authorization and power, being coupled with an interest, is irrevocable until
the last to occur of termination of this Agreement and payment and performance
in full of all of the Obligations) in its sole and absolute discretion:
(i) To endorse in the Borrower's name and to collect any
chattel paper, checks, notes, drafts, instruments or other items of
payment tendered to or received by Lender in payment of any receivable
included in the Collateral;
(ii) To notify, either in Lender's name or the Borrower's
name, and/or to require the Borrower to notify, any account debtor or
any other Person obligated under or in respect of any receivable
included in the Collateral, of the fact of Lender's Lien thereon and of
the collateral assignment thereof to Lender;
(iii) To direct, either in Lender's name or the Borrower's
name, and/or to require the Borrower to direct, any account debtor or
other Person obligated under or in respect of any receivable to make
payment directly to Lender of any amounts due or to become due
thereunder or with respect thereto; and
(iv) To demand, collect, surrender, release or exchange all or
part of any receivable or any amounts due thereunder or with respect
thereto, or compromise or extend or renew for any period (whether or
not longer than the initial period) any and all sums which are now or
may hereafter become due or owing upon or with respect to any
receivable included in the Collateral, or enforce, by suit or
otherwise, payment or performance of any receivable either in Lender's
own name or in the name of the Borrower.
Under no circumstances shall Lender be under any duty to act in regard to any of
the foregoing matters. The costs relating to any of the foregoing matters,
including reasonable attorneys' fees
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and out-of-pocket expenses, shall be borne solely by Borrower whether the same
are incurred by Lender or Borrower.
Section 10.F. RESCISSION. If at any time after acceleration of the
maturity of the Loans, Borrower shall pay all arrears of interest and all
payments on account of principal of the Loans which shall have become due
otherwise than by acceleration (with interest on principal and, to the extent
permitted by laws, on overdue interest, at the rates specified in this
Agreement) and all Events of Default and Defaults (other than nonpayment of
principal of and accrued interest of the Loans due and payable solely by virtue
or acceleration) shall be remedied or waived pursuant to this Agreement, then by
written notice to Borrower, the Lender may elect, in its sole discretion, to
rescind and annul the acceleration and its consequences; but such action shall
not affect any subsequent Event of Default or Default or impair any right or
remedy consequent thereon. The provisions of the preceding sentence do not give
Borrower the right to require Lenders to rescind or annul any acceleration
hereunder, even if the conditions set forth herein are met.
Section 10.G. APPLICATION OF PAYMENTS. All monies received by the
Lender from the exercise of any rights or remedies shall, unless otherwise
required by applicable Law, be applied as follows:
A. First, to the payment of all reasonable expenses (to the extent not
paid by Borrower) actually incurred by the Lender in connection with the
exercise of such rights or remedies, including all out-of-pocket costs and
expenses of collection, reasonable attorneys' fees and court costs, all costs
incurred by the Lender directly or indirectly in carrying out the terms,
covenants and agreements contained in any Loan Document, together with interest
thereon as provided therein, and all other costs and expenses described in
Section 8.A.6;
B. Next, to the payment of any outstanding fees due hereunder;
C. Next, to the payment of interest then accrued and unpaid on the
Note;
D. Next, to the payment of principal then owing on the Note;
E. Next, to all of the other Obligations;
F. Surplus, if any, unless a court of competent jurisdiction decrees
otherwise, to the holder(s) of any junior liens as may be required by the
provision of any applicable agreement governing Subordinated Debt and to the
Borrower, as appropriate.
SECTION 11. MISCELLANEOUS.
Section 11.A. ASSIGNMENTS AND PARTICIPATIONS. Lender, without the
consent of the Borrower, may assign or sell participation, to one or more banks
or other financial institutions all or a portion of its rights and obligations
under this Agreement (including without limitation all or a portion of its
Commitments and the Loans owing to it.
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Section 11.B. WITHHOLDING TAXES. Except as otherwise required by Law,
each payment by the Borrower under this Agreement or the Note shall be made
without setoff or counterclaim and without withholding for or on account of any
present or future taxes imposed by or within the jurisdiction in which the
Borrower is domiciled, any jurisdiction from which the Borrower makes any
payment hereunder, or (in each case) any political subdivision or taxing
authority thereof or therein (excluding any such tax imposed on the overall net
income of Lender). If any such withholding is so required, the Borrower shall
make the withholding, pay the amount withheld to the appropriate governmental
authority before penalties attach thereto or interest accrues thereon and
forthwith pay such additional amount as may be necessary to ensure that the net
amount actually received by Lender free and clear of such taxes (including such
taxes on such additional amount) is equal to the amount which Lender would have
received had such withholding not been made. If the Lender pays any amount in
respect of any such taxes, penalties or interest, the Borrower shall reimburse
the Lender for that payment on demand in the currency in which such payment was
made. If a Borrower pays any such taxes, penalties or interest, it shall deliver
official tax receipts evidencing that payment or certified copies thereof to the
Lender on or before the thirtieth day after payment.
Section 11.C. AMENDMENT AND WAIVERS. No amendment or modification of
any provision of this Agreement shall be effective without the written agreement
of Lender and Borrower. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given. No notice
to or demand on Borrower in any case shall entitle Borrower to any further
notice or demand in similar or other circumstances.
Section 11.D. MERGER AND INTEGRATION CLAUSE. This Agreement and the
Loan Documents contain the entire agreement between the parties hereto with
respect to the subject matter hereof and specifically supersedes in its entirety
the proposal letter of the Lender to Borrower dated October 12, 1999, and any
prior drafts thereof or proposals or letters from the Lender with respect to the
terms of credit facility hereunder or any other matter which is the subject
matter of this Agreement or any of the Loan Documents.
Section 11.E. APPLICABLE LAW. This Agreement, the Note and the other
Loan Documents have been executed, issued, delivered and accepted in and shall
be deemed to have been made under and shall be governed by and construed in
accordance with the Laws of the State of Illinois.
Section 11.F. SEVERABILITY. This Agreement, the Note and the other Loan
Documents shall be construed and interpreted in such manner as to be effective,
enforceable and valid under all applicable Laws. If any provision of this
Agreement, the Note or the other Loan Documents shall be held invalid,
prohibited or unenforceable under any applicable Laws of any applicable
jurisdiction, such invalidity, prohibition or unenforceability shall be limited
to such provision and shall not affect or invalidate the other provisions hereof
or thereof or affect the validity or enforceability of such provision in any
other jurisdiction, and to that extent, the provisions hereof and thereof are
severable.
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Section 11.G. SECTION HEADINGS. Section headings used in this Agreement
are for convenience only and shall not effect the construction or interpretation
of this Agreement.
Section 11.H. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Lender and the Borrower, and their respective
successors and assigns; provided, however, that the Borrower has no right to
assign any of its rights or its obligations hereunder without the prior written
consent of Lender.
Section 11.I. NOTICES. Any notices, requests or consents required or
permitted by this Agreement shall be (i) in writing, and (ii) delivered in
person, telexed, telecopied or sent by certified or registered mail, postage
prepaid, return receipt requested, or by overnight mail or express delivery
service to the addresses of the parties hereto set forth below, unless such
address, telex number or telecopier number is changed by written notice
hereunder. Each such notice, request, consent or other communication shall be
effective (i) if given by telecopier, when such telecopy is transmitted to the
telecopier number specified on the signature page hereof and a confirmation of
such telecopy has been received by the sender, (ii) if given by telex, when such
telex is transmitted to the telex number specified on the signature page hereof
and the answerback is received by sender, (iii) if given by mail, five (5) days
after such communication is deposited in the mail, certified or registered with
return receipt requested, addressed as aforesaid or (iv) if given by any other
means, when delivered at the addresses specified on the signature page hereof;
PROVIDED THAT any notice given pursuant to Sections 2 and 3 hereof shall be
effective only upon receipt.
Section 11.J. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and by the different parties on different counterparts,
each of which when executed shall be deemed an original but all such
counterparts taken together shall constitute one and the same instrument.
Section 11.K. INDEMNIFICATION. The Borrower hereby indemnifies,
exonerates and holds free and harmless the Lender, each of its Affiliates and
each of their officers, directors, employees, agents-and attorneys
(collectively, the "INDEMNIFIED PARTIES" or, individually, an "INDEMNIFIED
PARTY"), from and against any and all actions, causes of action, suits,
proceedings, investigations, losses, costs, liabilities, damages, punitive
damages, penalties and expenses, including reasonable attorneys' and paralegals'
fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to (irrespective of whether such Indemnified Party is a party to the
action for which indemnification hereunder is sought):
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan;
(b) the entering into and performance under this Agreement or
any other Loan Document or by any party thereto; or
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(c) any investigation, litigation, or proceeding related to
any acquisition or proposed acquisition by the Borrower of all or any
portion of the stock or all or substantially all the assets of any
Person or merger or proposed merger of the Borrower with any other
Person, whether or not the Lender is party thereto and whether or not
the proceeds of any Loans are used or to be used in connection
therewith; except for any such Indemnified Liabilities arising by
reason of an Indemnified Party's gross negligence or wilful misconduct.
In addition, if the Borrower institutes any action, suit or proceeding
against any of the Indemnified Parties and such action, suit or
proceeding is unsuccessful, the Borrower shall indemnify and hold
harmless the Indemnified Parties from and against all Indemnified
Liabilities arising in connection with or relating to such action, suit
or proceeding. The Borrower shall pay or reimburse the Indemnified
Parties for any Indemnified Liabilities from time to time within thirty
(30) days after demand. This Section and the agreements of the Borrower
set forth herein shall survive the termination of this Agreement and
any or all of the Loan Documents and repayment of all of the
Obligations hereunder and thereunder. If and to the extent that the
undertaking described in this Section 11.K. is held or determined by
any court of competent jurisdiction to be unenforceable for any reason,
the Borrower hereby agree to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which
is permissible under applicable Laws.
Section 11.L. INDEPENDENCE OF COVENANTS. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of an Event of Default or Default if such action is
taken or condition exists, and if a particular action or condition is expressly
permitted under any covenant, unless expressly limited to such covenant, the
fact that it would not be permitted under the general provisions of another
covenant shall not constitute an Event of Default or Default if such action is
taken or condition exists.
Section 11.M. MARSHALLING; RECOURSE TO SECURITY; PAYMENTS SET ASIDE.
Lender shall not be under any obligation to marshall any assets in favor of
Borrower or any other party or against or in payment of any or all of the
Obligations. Recourse to security shall not be required at any time. To the
extent that Borrower makes a payment or payments to the Lender or the Lender
enforces its Liens or exercises its rights of setoff, and such payment or
payments or the proceeds of such enforcement of setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or another party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
Section 11.N. LIMITATION OF LIABILITY. To the extent permitted by
applicable Law, no claim may be made by Borrower or any other Person against
Lender, or its Affiliates, directors, officers, employees, attorneys or agents,
for special, indirect, consequential or punitive damages in respect of any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement, or any act, omission
or event
47
occurring in connection therewith; and Borrower hereby waives, releases and
agrees not to sue upon any claim for any such damages, whether or not accrued
and whether or not known or suspected to exist in its favor.
Section 11.O. CONSENT TO JURISDICTION AND WAIVER OF JURY TRIAL AND
PERSONAL SERVICE. THE BORROWER EXPRESSLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN COOK COUNTY, ILLINOIS
IN ANY ACTION, SUIT OR PROCEEDING (WHETHER IN CONTRACT OR TORT, AT LAW OR IN
EQUITY) COMMENCED THEREIN IN CONNECTION WITH OR WITH RESPECT TO THE OBLIGATIONS,
THIS AGREEMENT, THE NOTE OR ANY OTHER LOAN DOCUMENTS (INCLUDING, WITHOUT
LIMITATION, ANY DEFENSES OR COUNTER CLAIMS THEREIN), AND THE BORROWER AND THE
LENDER EACH WAIVE ANY RIGHT TO JURY TRIAL THAT THEY MAY NOW OR HEREAFTER HAVE
UNDER ANY LAWS AND ANY OBJECTION TO VENUE IN CONNECTION THEREWITH. THE BORROWER
HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS OR PAPERS ISSUED OR SERVED
IN CONNECTION WITH THE FOREGOING AND AGREES THAT SERVICE OF SUCH PROCESS OR
PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN
RECEIPT REQUESTED, DIRECTED TO THE BORROWER AS SET FORTH IN SECTION 11.I. ABOVE
AND THE BORROWER'S REGISTERED AGENT, IN WHICH CASE SUCH PROCESS OR PAPERS SHALL
BE DEEMED RECEIVED FIVE (5) DAYS THEREAFTER, OR BY OVERNIGHT MAIL OR EXPRESS
DELIVERY SERVICE, IN WHICH CASE SUCH PROCESS OR PAPERS SHALL BE DEEMED RECEIVED
ONE (1) DAY THEREAFTER.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
SELECTQUOTE INSURANCE SERVICES
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Address: 595 Market Street, 6th Floor
San Francisco, CA 94105
Telephone: (415) 543-7338
Telecopy: (800) 436-7000
LENDER:
LASALLE BANK NATIONAL ASSOCIATION
By:
-------------------------------------
Name: Janet R. Gates
Title: Senior Vice President
Address: 135 South LaSalle Street
Chicago, IL 60603
Telephone: (312) 904-4617
Telecopy: (312) 904-6189
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