<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------------
FORM 8-K
CURRENT REPORT
------------------------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest reported):
October 12, 1999
Commission file number 0-24787
AFFILIATED COMPUTER SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0310342
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2828 NORTH HASKELL
DALLAS, TEXAS 75204
(Address of principal executive offices)
(Zip Code)
214-841-6111
(Registrants telephone number, including area code)
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<PAGE> 2
Item 2. Acquisition or Disposition of Assets
In September 1999, Affiliated Computer Services, Inc. ("ACS"),
through its wholly-owned subsidiary, ACS Enterprise Solutions, Inc.
("Purchaser"), completed the purchase of 100% of the outstanding common shares
of Consultec LLC, ("Consultec"), a subsidiary of General American Life
Insurance Company.
The total amount of funds used by the Purchaser to acquire the
outstanding shares of Consultec was approximately $105 million, and was funded
by a combination of ACS' existing $200 million credit facility and a new $100
million senior unsecured credit facility led by Wells Fargo Bank (Texas), N.A.
The acquisition of Consultec will be accounted for using the purchase method of
accounting.
Consultec is based in Atlanta, Georgia and provides information
technology services to federal and state health care markets including design,
development and operation of decision support, claims administration, and
managed care support systems. Consultec is also the provider of choice for
services and/or systems for over 20 state Medicaid programs.
Item 7. Financial Statements and Exhibits
(C) Exhibits
*2.1 Limited Liability Company Membership Purchase
Agreement dated September 30, 1999 between ACS
Enterprise Solutions, Inc., as Purchaser, ACS, as
Guarantor, Consultec, LLC and General American Life
Insurance Company, as Sole Member and Seller of
Consultec, LLC.
*10.1 Credit Agreement dated September 27, 1999 between
ACS, Wells Fargo Bank (Texas) N.A., Agent and
Arranger and Certain Lenders for $50,000,000
Revolving Credit Facility.
*99.1 Press release dated October 1, 1999.
- -----------
*filed herewith
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Affiliated Computer Services, Inc.
Date: October 12, 1999
By: /s/ MARK A. KING
--------------------------------
Mark A. King
Executive Vice President and
Chief Financial Officer
<PAGE> 4
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
* 2.1 Limited Liability Company Membership Purchase
Agreement dated September 30, 1999 between ACS
Enterprise Solutions, Inc., as Purchaser, ACS, as
Guarantor, Consultec, LLC and General American Life
Insurance Company, as Sole Member and Seller of
Consultec, LLC.
* 10.1 Credit Agreement dated September 27, 1999 between
ACS, Wells Fargo Bank (Texas) N.A., Agent and
Arranger and Certain Lenders for $50,000,000
Revolving Credit Facility.
*99.1 Press release dated October 1, 1999.
</TABLE>
*Filed herewith
<PAGE> 1
EXHIBIT 2.1
EXECUTION COPY
================================================================================
LIMITED LIABILITY COMPANY
MEMBERSHIP PURCHASE AGREEMENT
among
ACS ENTERPRISE SOLUTIONS, INC.,
as Purchaser,
AFFILIATED COMPUTER SERVICES, INC.,
as Guarantor,
CONSULTEC, LLC
and
GENERAL AMERICAN LIFE INSURANCE COMPANY
as Sole Member and Seller of
Consultec, LLC
Dated as of September 30, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Article I. SALE AND TRANSFER OF SELLER'S INTEREST; PURCHASE PRICE; CLOSING AND POST-CLOSING MATTERS.....1
Section 1.01. Sale and Transfer of Seller's Interest......................................................1
Section 1.02. Purchase Price; Method of Payment...........................................................1
Section 1.03. Closing.....................................................................................2
Section 1.04. Assignment of Fiscal Agent Contracts; Post-Closing Purchase Price Adjustment................2
Section 1.05. Treatment of Transaction....................................................................5
Section 1.06. Satisfaction of Inter-Company Obligations...................................................5
Section 1.07. Collection of Accounts Receivable...........................................................5
Section 1.08. Promissory Note.............................................................................6
Section 1.09. Disclosure Schedule; Standard...............................................................7
Article II. REPRESENTATIONS AND WARRANTIES AS TO THE COMPANY.............................................8
Section 2.01. Organization, Qualifications and Power; Subsidiaries........................................8
Section 2.02. Capitalization of the Company...............................................................9
Section 2.03. Financial Statements........................................................................9
Section 2.04. Absence of Undisclosed Liabilities.........................................................10
Section 2.05. Absence of Certain Changes or Events.......................................................10
Section 2.06. Consents and Approvals.....................................................................12
Section 2.07. Title to Properties; Absence of Liens and Encumbrances.....................................12
Section 2.08. Properties, Contracts, and Other Data......................................................12
Section 2.09. Limit on Employee Obligations..............................................................13
Section 2.10. Intangible Rights..........................................................................13
Section 2.11. Software...................................................................................14
Section 2.12. Litigation, Etc............................................................................14
Section 2.13. Taxes......................................................................................15
Section 2.14. Governmental Authorizations and Regulations................................................16
Section 2.15. Labor Matters, Employees...................................................................17
Section 2.16. Insurance..................................................................................17
Section 2.17. Use of Real Property.......................................................................18
Section 2.18. Condition of Assets........................................................................18
Section 2.19. Employee Benefit Plans.....................................................................18
Section 2.20. Related Party Transactions.................................................................19
Section 2.21. Environmental Matters......................................................................19
Section 2.22. System Capacity............................................................................20
Section 2.23. Securities Laws Matters....................................................................20
Section 2.24. Year 2000 Compliance.......................................................................20
Section 2.25. Authorization of Agreements, Etc...........................................................21
Section 2.26. Validity...................................................................................21
Section 2.27. Largest Customers..........................................................................21
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 2.28. Accounts Receivable........................................................................21
Section 2.29. Illegal or Unauthorized Payments, Political Contributions; Antitrust.......................21
Article III. REPRESENTATIONS AND WARRANTIES AS TO THE SELLER.............................................22
Section 3.01. Organization, Qualifications, and Power....................................................22
Section 3.02. Authorization of Agreements, Etc...........................................................22
Section 3.03. Validity...................................................................................22
Section 3.04. Title to Seller's Interest.................................................................22
Section 3.05. Brokers' or Finders' Fees..................................................................23
Article IV. REPRESENTATIONS AND WARRANTIES AS TO THE PURCHASER AND THE GUARANTOR........................23
Section 4.01. Organization, Power, Etc...................................................................23
Section 4.02. Authorization of Agreements, Etc...........................................................23
Section 4.03. Validity...................................................................................23
Section 4.04. Governmental Approvals.....................................................................24
Section 4.05. Litigation Relating to Transaction.........................................................24
Section 4.06. Brokers' or Finders' Fees..................................................................24
Section 4.07. Investment Intention.......................................................................24
Section 4.08. No Material Adverse Change.................................................................24
Section 4.09. Revenue Recognition Policies...............................................................24
Article V. COVENANTS...................................................................................25
Section 5.01. Certain Covenants of the Seller and the Guarantor..........................................25
Section 5.02. Books and Records..........................................................................25
Section 5.03. Allocation of Purchase Price for Tax Purposes..............................................26
Section 5.04. Certain Tax Matters........................................................................27
Section 5.05. Consents and Approvals.....................................................................28
Section 5.06. Retention of Employees; Employee Benefits; Employee Bonuses................................28
Section 5.07. Access to Tax and Other Records............................................................29
Section 5.08. Further Assurances.........................................................................30
Section 5.09. Publicity..................................................................................30
Section 5.10. Compliance with HSR Act....................................................................30
Section 5.11. Guaranty of Obligations....................................................................30
Section 5.12. Treatment of Certain Insurance Claims......................................................31
Section 5.13. [intentionally omitted]....................................................................31
Section 5.14. Treatment of Deferred Compensation Plans...................................................31
Section 5.15. Treatment of Employment Agreement..........................................................32
Section 5.16. Non-Competition............................................................................32
Section 5.17. Release of Fiscal Agent Guaranties.........................................................34
Section 5.18. Customer Visits............................................................................34
Section 5.19. Post-Closing Services......................................................................34
Section 5.20. Employee Benefits Plans....................................................................34
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
Article VI. CONDITIONS PRECEDENT........................................................................35
Section 6.01. Conditions Precedent to the Obligations of the Purchaser...................................35
Section 6.02. Conditions Precedent to the Obligations of the Seller......................................37
Article VII. INDEMNIFICATION.............................................................................39
Section 7.01. Survival of Representations, Warranties and Indemnification................................39
Section 7.02. General Seller Indemnification Obligations.................................................39
Section 7.03. Y2K Seller Indemnification Obligations.....................................................41
Section 7.04. General Purchaser Indemnification Obligations..............................................42
Section 7.05. Indemnification Procedures.................................................................42
Section 7.06. Remedies Limited...........................................................................45
Article VIII. TERMINATION AND ABANDONMENT.................................................................45
Section 8.01. Termination................................................................................45
Section 8.02. Procedure and Effect of Termination........................................................46
Section 8.03. Pre-Closing Breach.........................................................................46
Article IX. MISCELLANEOUS...............................................................................47
Section 9.01. Expenses, Etc..............................................................................47
Section 9.02. Execution in Counterparts..................................................................47
Section 9.03. Notices....................................................................................47
Section 9.04. Waivers....................................................................................48
Section 9.05. Amendments, Supplements, Etc...............................................................48
Section 9.06. Entire Agreement...........................................................................49
Section 9.07. Applicable Law.............................................................................49
Section 9.08. Binding Effect; Benefits...................................................................49
Section 9.09. Assignability..............................................................................49
</TABLE>
(iii)
<PAGE> 5
INDEX TO EXHIBITS AND SCHEDULES
<TABLE>
<CAPTION>
Schedule Description
-------- -----------
<S> <C>
1.04(d) Estimated Lost Revenue
2.01 Organization, Qualifications and Power; Subsidiaries
2.03(a) Financial Statements
2.03(b) Interim Financial Statements
2.04 Undisclosed Liabilities
2.05 Absence of Certain Changes or Events
2.06 Consents and Approvals
2.08 Contracts
2.11 Software
2.12 Litigation, Etc.
2.13 Taxes
2.14 Governmental Authorizations and Regulations
2.15 Labor Matters, Employees
2.16 Insurance
2.17 Use of Real Property
2.18 Condition of Assets
2.19 Employee Benefit Plans
2.24 "Year 2000" Compliance
2.27 Largest Customers
2.28 Accounts Receivable
2.29 Illegal or Unauthorized Payments, Political Contributions; Antitrust
5.03 Allocation of Purchase Price
</TABLE>
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.08 Form of Promissory Note
6.01(g) Form of Opinion of Counsel to the Seller
6.02(h) Form of Opinion of Counsel to the Purchaser and the Guarantor
</TABLE>
The referenced schedules and exhibits, the contents of which are
described in the Purchase Agreement, have been omitted but will be
supplementally provided to the SEC upon request.
(iv)
<PAGE> 6
LIMITED LIABILITY COMPANY MEMBERSHIP PURCHASE AGREEMENT
THIS LIMITED LIABILITY COMPANY MEMBERSHIP PURCHASE AGREEMENT,
dated as of September 30, 1999 (this "Agreement"), among ACS ENTERPRISE
SOLUTIONS, INC., a Delaware corporation (the "Purchaser"), AFFILIATED COMPUTER
SERVICES, INC., a Delaware corporation and the indirect parent of the Purchaser
(the "Guarantor"), CONSULTEC, LLC, a Delaware limited liability company
(together with its predecessor entity, Consultec, Inc., hereinafter collectively
referred to as the "Company"), and GENERAL AMERICAN LIFE INSURANCE COMPANY, a
Missouri corporation (the "Seller"), as sole member of the Company.
WHEREAS, the Seller is, as of the date hereof, and will be on
the Closing Date (as defined in Section 1.03 hereof), the sole member of the
Company with complete ownership interest in the Company (the "Seller's
Interest"); and
WHEREAS, the Seller desires to sell and the Purchaser desires
to purchase the Seller's Interest on the terms and subject to the conditions
hereinafter set forth, including structuring the transaction as an asset sale
and purchase for purposes of federal and state income tax laws; and
WHEREAS, the Guarantor is a party to this Agreement to, among
other things, guarantee the obligations of the Purchaser hereunder.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows.
ARTICLE I.
SALE AND TRANSFER OF SELLER'S INTEREST; PURCHASE PRICE; CLOSING
AND POST-CLOSING MATTERS
SECTION 1.01. SALE AND TRANSFER OF SELLER'S INTEREST. Subject
to the terms and conditions set forth herein, on the Closing Date the Seller
shall sell to the Purchaser, and the Purchaser shall purchase from the Seller,
all of the Seller's Interest in the Company. On the Closing Date, the Seller
shall deliver to the Purchaser a certificate or certificates in definitive form,
registered in the name of the Seller (being the sole member of the Company),
evidencing the Seller's Interest being sold by the Seller hereunder, duly
endorsed for transfer or accompanied by transfer powers duly endorsed in blank,
with all requisite transfer taxes paid and, if applicable, stamps affixed.
SECTION 1.02. PURCHASE PRICE; METHOD OF PAYMENT.
(a) The aggregate consideration to be paid by the Purchaser to
the Seller for the Seller's Interest (the "Purchase Price") shall be (i)
$97,000,000, less (ii) the amount, if any, by which the Short-Term Debt (as
defined below in this Section 1.02(a)) as of the Closing Date is less than
$8,000,000. The term "Short-Term Debt," as used herein, shall mean the
short-term
<PAGE> 7
debt obligations of the Company to the Seller as evidenced by the certain
promissory note dated November 15, 1998. As of the Closing Date, the Short-Term
Debt will be $8,000,000. The Purchase Price shall be subject to adjustment after
the Closing Date as provided in Section 1.04 hereof.
(b) The Purchase Price shall be paid by the Purchaser to the Seller on
the Closing Date in immediately available funds to the account designated by the
Seller no later than the business day immediately prior to the Closing Date.
SECTION 1.03. CLOSING. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Hughes & Luce, L.L.P., Dallas, Texas, within two (2) business days after the
satisfaction or waiver of all conditions to Closing set forth herein, or at such
other place or at such other date and time as the Seller and the Purchaser may
mutually agree (the date of the Closing is herein called the "Closing Date");
provided, however, that the Seller and the Purchaser shall use their respective
best efforts to cause the Closing Date to occur on or before September 30, 1999
but no later than December 31, 1999. In addition to the deliveries referred to
in Section 1.02 hereof, on the Closing Date the Purchaser and the Seller shall
deliver the certificates, documents and other items described in Sections 6.01
and 6.02 hereof.
SECTION 1.04. ASSIGNMENT OF FISCAL AGENT CONTRACTS;
POST-CLOSING PURCHASE PRICE ADJUSTMENT.
(a) The Purchaser and the Guarantor may, in accordance with
Section 5.18 hereof, between the date hereof and the Closing Date, jointly with
the Seller or the Company, contact or otherwise initiate discussions with any of
the counter-parties to those certain Medicaid fiscal agent contracts with the
States of Colorado, Florida, Iowa, Montana, New Mexico, Washington, West
Virginia and Wyoming to which the Company is a party (the "Fiscal Agent
Contracts") regarding any required assignment of such Fiscal Agent Contracts
pursuant to the terms thereof or the consent of such counter-parties to the
change of control of the Company to be effected upon the consummation of the
transactions contemplated hereby (collectively, the "Fiscal Agent Consents").
The obligations of the parties hereto to consummate the transactions
contemplated hereby shall not be conditioned upon the receipt of any required
Fiscal Agent Consents prior to the Closing Date. The sole remedy of the
Purchaser and the Guarantor in the event that a required Fiscal Agent Consent
shall not have been obtained after the Closing Date shall be the Purchase Price
adjustment set forth in this Section 1.04.
(b) The Purchaser shall, no later than 30 days after the
Closing Date, commence discussions with the applicable counter-party to each
Fiscal Agent Contract in each of the Required States (as defined below in this
Section 1.04(b)) in order to obtain the Fiscal Agent Consents from the
counter-party to the Fiscal Agent Contract in each such Required State. Prior to
the Closing Date, such discussions may be conducted only if jointly with the
Seller or the Company and in accordance with Section 5.18 hereof, unless the
Seller shall otherwise agree. The term "Required States," as used herein, shall
mean and include only the States of Colorado,
2
<PAGE> 8
Iowa, West Virginia and Wyoming, and any other State with respect to which the
Purchaser shall have delivered to the Seller, on or prior to the Closing Date,
an opinion of counsel reasonably satisfactory to the Seller to the effect that
the Fiscal Agent Contract with such State expressly requires the affirmative
consent of the counter-party thereto in order remain in full force and effect as
a result of, or following the consummation of, the transactions contemplated by
this Agreement.
(c) The Purchase Price shall be adjusted as provided in this
Section 1.04 in the event that, with respect to any Required State, (i) the
counter-party to the Fiscal Agent Contract in such Required State shall have
refused or failed to execute a Fiscal Agent Consent within 60 days after the
Closing Date, and (ii) the Company (or its successors or assigns) shall have
been terminated or otherwise dismissed as Medicaid fiscal agent under the Fiscal
Agent Contract with such Required State and shall not otherwise be providing
Medicaid fiscal agent services for such Required State on the date which is
twelve months following the Closing Date (or, in the case of Colorado, on the
date which is eighteen months following the Closing Date); provided, however,
that the condition in this clause (ii) shall not be deemed to have been
satisfied if the Purchaser or the Company (or their respective successors or
assigns) shall have terminated or otherwise breached the Fiscal Agent Contract
with such Required State after the Closing Date (other than a breach resulting
solely from the failure to obtain the Fiscal Agent Consent with respect to such
Required State). Any Fiscal Agent Contract with a Required State with respect to
which each of the conditions set forth in clauses (i) and (ii) in the
immediately preceding sentence shall have been satisfied is referred to herein
as a "Terminated Fiscal Agent Contract."
(d) The amount of the Purchase Price adjustment referred to in
Section 1.04(c) hereof shall be equal to the product of "A" multiplied by "B,"
where "A" shall equal $89,000,000, and "B" shall equal a fraction, the numerator
of which shall be equal to an amount equal to the Estimated Lost Revenue (as
defined below in this Section 1.04(d)) attributable to the Terminated Fiscal
Agent Contract, and the denominator of which shall be equal to an amount equal
to the total revenue of the Company for the twelve full months immediately
preceding the Closing Date determined in accordance with the past practices of
the Company consistently applied; provided, however, that in no event shall the
aggregate Purchase Price adjustment pursuant to this Section 1.04 be greater
than $10,000,000. The term "Estimated Lost Revenue," as used herein, shall mean,
with respect to each Required State, the revenue set forth on Schedule 1.04(d)
hereof with respect to such Required State.
(e) The Purchaser shall notify the Seller in writing (within
five days after the date which is the first anniversary of the Closing Date for
all Required States other than Colorado, and within five days after the date
which is the date eighteen months after the Closing Date for Colorado) whether
there are any Terminated Fiscal Agent Contracts and the Required State(s)
involved (each, a "Termination Notice"). If the Seller disputes the existence of
the Terminated Fiscal Agent Contract, then the Seller and the Purchaser shall
resolve the dispute as provided in Sections 1.04(g), (h) and (i) hereof.
3
<PAGE> 9
(f) Within 10 days after its receipt of the Termination
Notice, and provided that the Seller shall not then dispute the existence of the
Terminated Fiscal Agent Contract, the Seller shall notify the Purchaser in
writing of the amount of the Purchase Price adjustment determined in accordance
with Section 1.04(d) hereof (the "Purchase Price Reduction Notice"). If the
Purchaser does not dispute the amount of the Purchase Price reduction referred
to in the Purchase Price Reduction Notice within 10 days after its receipt of
the Purchase Price Reduction Notice, then an amount equal to the amount of the
Purchase Price reduction referred to in the Purchase Price Reduction Notice
shall be paid by the Seller to the Purchaser in immediately available funds no
later than the second (2nd) day after the end of such 10 day period to the
account designated by the Purchaser in full satisfaction of the obligations of
the Seller hereunder with respect to such Terminated Fiscal Agent Contract. If
the Purchaser disputes the amount of the Purchase Price reduction referred to in
the Purchase Price Reduction Notice within the 10 day period referred to in the
immediately preceding sentence, then the Seller and the Purchaser shall resolve
the dispute as provided in Sections 1.04(g), (h) and (i) hereof.
(g) The Seller and the Purchaser shall attempt in good faith
to resolve any disputed matters referred to in Sections 1.02(e) and/or (f)
hereof by negotiation between executives who have the authority to settle and
resolve the disputed matters and who are at a higher level of management than
the persons with direct responsibility for administration of this Agreement. Any
party hereto may give the other party hereto written notice of any dispute not
resolved in the normal course of business. Within 15 days after delivery of the
written notice, the receiving party shall submit to the other party a written
response. The notice and response shall include (i) a statement of each party's
position and a summary of the arguments supporting that position, and (ii) the
name and title of the executive who shall represent that party and of any other
person who shall accompany the executive. Within 15 days after the delivery of
the disputing party's notice, the executives of both parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, to attempt to resolve the disputed matters. All reasonable
requests for information made by one party to the other shall be honored. All
negotiations pursuant to this Section 1.04(g) shall be confidential and shall be
treated as compromise and settlement negotiations for purposes of applicable
rules of evidence.
(h) If the disputed matter shall not have been resolved as
provided in Section 1.04(g) hereof, then the Seller and Purchaser shall attempt
in good faith to resolve any disputed matters referred to in Sections 1.02(e)
and/or (f) hereof by negotiation between the Seller's and the Purchaser's
respective chief financial officer within 7 days after the expiration of the
second 15 day period referenced in Section 1.02(g) hereof. All reasonable
requests for information made by one party's chief financial officer to the
other party's chief financial officer shall be honored. All negotiations
pursuant to this Section 1.02(h) shall be confidential and shall be treated as
compromise and settlement negotiations for purposes of applicable rules of
evidence.
(i) If the disputed matters shall not have been resolved as
provided in Section 1.04(h) hereof, then the Seller and the Purchaser shall
thereafter endeavor to settle such dispute by mediation under the then current
Center for Public Resources ("CPR") Model Procedure for Mediation of Business
Disputes. The neutral third party required by this procedure shall be a
4
<PAGE> 10
lawyer selected by CPR Panels of Neutrals. If the parties encounter difficulty
in agreeing on a neutral third party, they shall seek the assistance of CPR in
the selection process. If such disagreement has not been resolved by negotiation
or mediation within 30 days of the initiation of such procedure, the parties
shall finally settle such dispute by binding arbitration conducted expeditiously
in accordance with the Center for Public Resources Rules for Non-Administered
Arbitration of Business Disputes by a sole arbitrator; provided, however, that
if one party has requested the other to participate in negotiation or mediation
and the other has failed to participate, the requesting party may initiate
arbitration before expiration of the above period. The sole arbitrator shall be
a lawyer selected from the CPR Panels of Neutrals. If the parties encounter
difficulty in agreeing on an arbitrator they shall seek the assistance of CPR in
the selection process. The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. Section 1-16, and judgment upon the award rendered by
the arbitrator may be entered into any court having jurisdiction thereof. The
parties shall conduct any mediation or arbitration proceedings pursuant to this
Section 1.02(h) in St. Louis, Missouri (if brought by the Purchaser) or in
Dallas, Texas (if brought by the Seller), and the arbitrator shall apply the
substantive law of Delaware as applicable to the dispute.
(j) Notwithstanding the foregoing, if the Purchaser or the
Seller, as the case may be, shall have been found by the arbitrator pursuant to
this Section 1.04 to be liable to the other party for an amount in excess of
$1,000,000 (an "Excess Award"), then the party that shall have been found by the
arbitrator to be liable for such Excess Award shall have the right to appeal
such Excess Award in accordance with the law of the State of Delaware applicable
to appeals of judgments by a court of law.
SECTION 1.05. TREATMENT OF TRANSACTION. The parties intend
that, for purposes of state contract law, the transaction contemplated hereby
shall be treated as a sale of the Seller's Interest and, for federal and state
income tax purposes, the transaction contemplated hereby shall be treated as a
sale of certain assets of the Company and the assumption of certain liabilities
of the Company as described in Revenue Ruling 99-5.
SECTION 1.06. SATISFACTION OF INTER-COMPANY OBLIGATIONS. The
Seller shall use a portion of the Purchase Price (i) to satisfy the Short-Term
Debt obligations of the Company to the Seller as of the Closing Date, and (ii)
to satisfy the Long-Term Debt (as defined below in this Section 1.06) of the
Company to the Seller as of the Closing Date. The Seller and the Company shall
not permit the amount of the Short-Term Debt of the Company to exceed $8,000,000
between the date hereof and the Closing Date. The term "Long-Term Debt," as used
herein, shall mean the long-term debt obligations of the Company to the Seller
as evidenced by that certain promissory note dated November 1, 1998. As of the
Closing Date, the Long-Term Debt will be $13,990,000. The Company shall, on or
prior to the Closing Date, pay to the Seller an amount of cash equal to the
accrued and unpaid interest due with respect to the Short-Term Debt and the
Long-Term Debt as of the Closing Date.
SECTION 1.07. COLLECTION OF ACCOUNTS RECEIVABLE. The Seller
shall guaranty the collection of all of the customer accounts receivable
identified on the balance sheet of the
5
<PAGE> 11
Company as of the Closing Date (the "Closing Receivables") as provided in this
Section 1.07. The Seller shall deliver a list of the Closing Receivables to the
Purchaser within ten days after the Closing Date. (The amount of the accounts
receivable of the Company as of August 31, 1999 was $17,548,150.77.). The
Purchaser and the Company shall use commercially reasonable and diligent efforts
from and after the Closing Date to collect the Closing Receivables consistent
with the pre-Closing collection practices of the Company. The Purchaser shall
advise the Seller in writing as to the status of its collection efforts with
respect to the Closing Receivables on the 30th, 60th and 90th days after the
Closing Date and shall confer and consult with the Seller on such dates
regarding appropriate collection efforts. No later than the 130th day after the
Closing Date, the Purchaser shall disclose in writing to the Seller which, if
any, of the Closing Receivables remain uncollected as of the date which is 120
days after the Closing Date together with available supporting detail with
respect to such Closing Receivables (each such uncollected Closing Receivable is
referred to herein as a "Delinquent Receivable"); provided, however, that the
amount of any concessions or set-offs granted by the Purchaser or the Company to
an account debtor under any Closing Receivable shall not be deemed a Delinquent
Account for purposes of the obligations of the Seller under this Section 1.07.
Within 5 days after its receipt of such notice from the Purchaser, the Seller
shall pay to the Purchaser, in immediately available funds to the account
designated by the Purchaser, an amount equal to the aggregate uncollected
balance of such Delinquent Receivables. The Purchaser shall, contemporaneous
with its receipt of the payment from the Seller referred to in the immediately
preceding sentence, transfer and assign to the Seller all of its right, title
and interest in, under and to the Delinquent Receivables, free and clear of any
Liens (as defined in Section 2.02(a) hereof). Thereafter, (i) the Seller shall
have the right to pursue all reasonable collection efforts which the Seller
shall deem appropriate (consistent with the pre-Closing collection practices of
the Company but in no event unduly or unreasonably harassing the obligor on such
Delinquent Receivable) with respect to the Delinquent Receivables; and (ii) if
the Purchaser receives any amounts payable on the Delinquent Receivables (other
than from the Seller in accordance with this Section 1.07), the Purchaser shall
promptly deliver such amounts to the Seller. The rights of the Purchaser under
this Section 1.07 shall be the sole and exclusive remedy of the Purchaser and
the Guarantor with respect to Closing Receivables and the representation and
warranty of the Seller related to accounts receivable (Section 2.28 hereof)
shall not survive the Closing.
SECTION 1.08. PROMISSORY NOTE. On the Closing Date, the
Purchaser and the Guarantor shall deliver to the Seller a Promissory Note in the
original principal amount of $3,976,683 (the "Unadjusted Principal Amount"), in
substantially the form of Exhibit 1.08 attached hereto (the "Note") representing
cash due from the Purchaser to the Seller as of the Closing Date. The Unadjusted
Principal Amount shall be retroactively adjusted after the Closing Date in an
amount which corresponds with the Seller's updates to the amounts set forth in
the August 31 Pro Forma Balance Sheet (as defined in Section 5.03(c) hereof)
under the columns "incentive deferred compensation plan and assets not assumed"
and "federal and state tax liabilities and assets not transferred", all in
accordance with Section 5.03(c) hereof (the "Adjusted Principal Amount").
Interest shall accrue on the Adjusted Principal Amount at the rate specified in
the Note from and after the Closing Date until the Adjusted Principal Amount is
paid in full. Not later than 5 days after the Closing Balance Sheet (as defined
in Section 5.03(c)
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hereof) is finalized pursuant to Section 5.03(c) hereof, the Purchaser and the
Guarantor shall execute and deliver to the Seller an additional promissory note
in the same form and with identical terms as the Note, except that the principal
amount of such additional note shall be equal to the difference between the
Adjusted Principal Amount and the Unadjusted Principal Amount.
SECTION 1.09. DISCLOSURE SCHEDULE; STANDARD.
(a) The Schedules attached hereto set forth, among other
things, items the disclosure of which the Seller and the Company deem necessary
or appropriate either in response to an express disclosure requirement contained
in a provision hereof or as an exception to one or more representations or
warranties contained in Article II hereof; provided, that (i) no such item shall
be required to be set forth in a Schedule as an exception to a representation or
warranty if its absence would not be reasonably likely to result in the related
representation or warranty being deemed untrue or incorrect under the standard
established by Section 1.09(b) hereof, and (ii) the mere inclusion of an item in
a Schedule as an exception to a representation or warranty shall not be deemed
an admission by the Seller that such item represents a material exception or
fact, event or circumstance or that such item is reasonably likely to result in
a Material Adverse Effect (as defined in Section 1.09(b) hereof). The Schedules
attached hereto set forth, among other things, items the disclosure of which the
Purchaser and the Guarantor deem necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Article IV
hereof; provided, that (i) no such item shall be required to be set forth in a
Schedule as an exception to a representation or warranty being deemed untrue or
incorrect under the standard established by Section 1.09(b) hereof, and (ii) the
mere inclusion of an item in a Schedule as an exception to a representation or
warranty shall not be deemed an admission by the Purchaser and the Guarantor
that such item represents a material exception or fact, event or circumstance or
that such item is reasonably likely to result in a Material Adverse Effect.
Items may be disclosed on a Schedule regardless of whether the representation
and warranty to which such Schedule relates refers to the existence of such
Schedule.
(b) No representation or warranty as to the Company or the
Seller contained in Article II or Article III hereof, or the Purchaser and the
Guarantor contained in Article IV hereof, shall be deemed untrue or incorrect,
and neither the Company and the Seller, on the one hand, nor the Purchaser and
the Guarantor, on the other hand, as the case may be, shall be deemed to have
breached a representation or warranty, as a consequence of the existence of any
fact, event or circumstance unless such fact, event or circumstance,
individually or taken together with all other facts, events or circumstances
inconsistent with any representation or warranty contained in Article II or
Article III hereof, in the case of the Company and the Seller, or Article IV
hereof, in the case of the Purchaser and the Guarantor, has had or is reasonably
likely to have a Material Adverse Effect on the Company, in the case of the
representations and warranties made in Article II and Article III hereof, or on
the Purchaser and the Guarantor, in the case of the representations and
warranties made in Article IV hereof. The term "Material Adverse Effect," as
used herein, shall mean, with respect to the Company and the Seller, on the one
hand, and the
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Purchaser and the Guarantor, on the other hand, any effect that (i) is, or is
reasonably expected to be, material and adverse to the financial position,
results of operations, prospects or business of the Company and its subsidiaries
taken as a whole, on the one hand, or the Purchaser and the Guarantor and their
subsidiaries taken as a whole, on the other hand, or (ii) would materially
impair the ability of either the Seller and/or the Company, on the one hand, or
the Purchaser and/or the Guarantor, on the other hand, to perform its
obligations under this Agreement or otherwise materially threaten or materially
impede the consummation of the transactions contemplated hereby; provided,
however, that Material Adverse Effect shall not be deemed to include the impact
of changes in generally accepted accounting principles ("GAAP") or regulatory
accounting requirements applicable to companies such as the Company.
(c) The Seller shall be permitted to update and supplement the
Schedules so as to disclose exceptions to one or more representations or
warranties contained in Article II or Article III hereof which shall have arisen
between the date hereof and the Closing Date; provided, however, that anything
herein to the contrary notwithstanding, the exceptions and other information set
forth on any such updated or supplemented Schedule shall not be taken into
consideration in determining, for purposes of this Agreement, whether any of the
conditions set forth in Section 6.01(a) hereof shall have been satisfied. The
Purchaser and the Guarantor shall be permitted to update and supplement the
Schedules so as to disclose exceptions to one or more representations or
warranties contained in Article IV hereof which shall have arisen between the
date hereof and the Closing Date; provided, however, that anything herein to the
contrary notwithstanding, the exceptions and other information set forth on any
such updated or supplemented Schedule shall not be taken into consideration in
determining, for purposes of this Agreement, whether any of the conditions set
forth in Section 6.02(a) hereof shall have been satisfied.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES AS TO THE COMPANY
The Seller and the Company jointly and severally represent and warrant
to the Purchaser as follows:
SECTION 2.01. ORGANIZATION, QUALIFICATIONS AND POWER;
SUBSIDIARIES.
(a) The Company is a limited liability company duly organized
and validly existing under the laws of the State of Delaware, and, except as set
forth in Schedule 2.01 hereto, is duly licensed or qualified as a foreign
limited liability company in each other jurisdiction in which it owns or leases
any real property, except in those jurisdictions in which the nature of business
transacted by it makes such licensing or qualification unnecessary. The Company
has the power and authority, and the legal right, to own and operate its
properties and to carry on its business as currently conducted.
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(b) The Company does not own of record or beneficially, or
have any right or obligation to acquire, directly or indirectly, (i) any shares
of outstanding capital stock or securities convertible into or exchangeable for
capital stock of any other corporation or (ii) any participating interests in
any partnership, joint venture or other non-corporate business enterprise.
SECTION 2.02. CAPITALIZATION OF THE COMPANY.
(a) As of the date hereof, the Seller is the sole member of
the Company and owns, and as of the Closing Date shall own, all of the Seller's
Interest in the Company. The Seller's Interest constitutes 100% of the total
issued and outstanding membership interests in the Company and is free and clear
of any lien, pledge, security interest or other encumbrance or claim of any
person or entity (each a "Lien"). Upon consummation of the transactions
contemplated in this Agreement and transfer of the Seller's Interest to the
Purchaser, the Purchaser shall acquire the entire legal and beneficial interest
in the Seller's Interest, free and clear of any Liens.
(b) (i) No subscription, warrant, option, convertible security
or other right (contingent or other) to purchase or acquire any membership
interest in the Company are authorized or outstanding, (ii) there is not any
commitment of the Company, or with respect to the Company, commitment of the
Seller, to issue any membership interests, warrants, options, or other such
rights or to distribute to members of any class any evidences of indebtedness or
assets, and (iii) the Company has no obligation (contingent or other) to
purchase, redeem, or otherwise acquire any membership interest in the Company or
to pay any dividend or make any other distribution in respect thereof. At the
Closing, no options nor any right to receive payment of any sort in respect of
any options, will be outstanding.
(c) Effective upon the consummation of the transactions
contemplated hereby, the Seller, by its execution and delivery of this
Agreement, acknowledges satisfaction in full of all distributions payable in
respect of the Seller's Interest through the Closing Date, and forever waives
any claim, right, title, or interest in or to any such distributions not
actually paid as of the Closing Date.
SECTION 2.03. FINANCIAL STATEMENTS.
(a) Attached hereto as Schedule 2.03(a) is the balance sheet
of the Company as of December 31, 1998, and the related statements of
operations, cash flows and shareholders' equity for the twelve months then
ended, including the notes thereto (the "Financial Statements"). The Financial
Statements (i) are complete and correct in all material respects, (ii) were
prepared from the books and records of the Company in conformity with GAAP
applied on a consistent basis, and (iii) fairly present the financial position
and shareholders' or members' equity, as applicable, of the Company as of the
date specified therein, and the income and cash flows for the period then ended.
The Financial Statements do not include any items of a special or non-recurring
nature, except as expressly stated therein.
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(b) Attached hereto as Schedule 2.03(b) is the balance sheet
of the Company as of August 31, 1999, and the related statements of operations
and shareholders' or members' equity, as applicable, for the time period
beginning on January 1, 1999 and ending on such date (the "Interim Financial
Statements"). The Interim Financial Statements (i) are complete and correct in
all material respects, and (ii) were prepared from the books and records of the
Company in conformity with GAAP applied on a consistent basis and fairly present
the financial position and shareholders' or members' equity, as applicable, of
the Company as of the date specified therein, and the income and cash flows for
the period then ended (except as expressly set forth therein and except for the
fact that they do not include normal footnote disclosures and subject to normal
year-end adjustments). The Interim Financial Statements do not include any items
of a special or non-recurring nature, except as expressly stated therein.
SECTION 2.04. ABSENCE OF UNDISCLOSED LIABILITIES. Except (a)
as and to the extent reflected in the Financial Statements and the Interim
Financial Statements, (b) as set forth in Schedule 2.04 hereto, or (c) for
immaterial trade payables and similar operating liabilities incurred since
January 1, 1999 in the ordinary course of business and consistent with past
practice, the Company has no liabilities or obligations of any kind or nature,
whether known or unknown, secured, unsecured, absolute, accrued, contingent, or
otherwise, and whether due or to become due (including without limitation any
tax liabilities due or to become due, or whether incurred in respect of or
measured by the assets, sales, income, or receipts of the Company for any
period), which liabilities or obligations would be required to be reflected as
of the date hereof on a balance sheet of the Company prepared in accordance with
GAAP.
SECTION 2.05. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since
January 1, 1999, except as otherwise set forth in Schedule 2.05 hereto or as
expressly contemplated by this Agreement, the Company has not:
(a) changed or amended its Certificate of Formation or its
Operating Agreement, dated March 25, 1999 (collectively, the "Company
Organization Documents");
(b) incurred any obligation or liability (fixed or
contingent), except normal trade or business obligations incurred in the
ordinary course of business and consistent with past practice, none of which
individually or in the aggregate is materially adverse;
(c) discharged or satisfied any Lien, security interest,
charge, or other encumbrance or paid any obligation or liability (fixed or
contingent), other than in the ordinary course of business and consistent with
past practice or as otherwise expressly permitted hereunder;
(d) mortgaged, pledged, or subjected to any Lien, security
interest, charge, or other encumbrance any of its assets or properties (other
than Permitted Liens as defined in Section 2.07 hereof);
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(e) transferred, leased, or otherwise disposed of any of its
assets or properties, except for fair consideration in the ordinary course of
business and consistent with past practice, or acquired any assets or
properties, except in the ordinary course of business and consistent with past
practice;
(f) declared, set aside, or paid any distribution (whether in
cash, membership interests or property or any combination thereof) in respect of
its membership interests, or redeemed or otherwise acquired any of its
membership interests, or split, combined or otherwise similarly changed its
membership interests, or authorized the creation or issuance of, or issued or
sold any securities or obligations convertible into or exchangeable therefor, or
given any person any right to acquire any membership interest from the Company,
or agreed to take any such action;
(g) made any investment of a capital nature, whether by
purchase of stock or securities, contributions to capital, property transfers,
or otherwise, in any other partnership, corporation, or other entity, or
purchased any material property or assets, where the investment exceeds $250,000
or otherwise is out of the ordinary course of business of the Company;
(h) canceled or compromised any debt or claim, other than in
the ordinary course of business consistent with past practice;
(i) waived or released any rights of value, including without
limitation, any Intangible Rights (as defined in Section 2.08(b) hereof);
(j) transferred or granted any rights under or with respect to
any Intangible Rights, or permitted any license, permit, or other form of
authorization relating to an Intangible Right to lapse;
(k) made or granted any wage or salary increase applicable to
any group or classification of employees generally, entered into any employment
contract with, or made any loan to, or entered into any material transaction of
any other nature with, any manager, officer, or employee of the Company;
(l) suffered any theft, condemnation, eminent domain
proceeding, casualty loss or damage (whether or not such loss or damage shall
have been covered by insurance) which affects in any material respect its
ability to conduct its business;
(m) had a material change in the way it operates its business;
(n) breached or defaulted (or upon notice or with the passage
of time) will have breached or defaulted on any of the terms or provisions of
any material agreement to which the Company is a party or by which the Company
may be bound; or
(o) suffered a material adverse change in the condition
(financial or otherwise), results of operations, business, prospects, assets or
liabilities of the Company.
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SECTION 2.06. CONSENTS AND APPROVALS. Except as provided in
Section 1.04 hereof or on Schedule 2.06 hereto, no order, authorization,
approval, or consent from, or filing with, (a) any federal or state governmental
or public body or other authority having jurisdiction over either the Seller or
the Company (other than the Missouri Department of Insurance and the
requirements under the HSR Act (as defined in Section 5.10 hereof)), or (b) any
third party (including, without limitation, pursuant to any contract to which
the Company is a party), is necessary (i) for the execution, delivery, and
performance by the Seller of its obligations under this Agreement or the
consummation of the transactions contemplated hereby, or (ii) in order that the
business of the Company can be conducted immediately following the Closing Date
substantially in the same manner as heretofore conducted. Any items listed on
Schedule 2.06 shall be settled as provided in Section 5.05 hereof. All orders,
authorizations, approvals or waivers necessary at the time the Company was
reorganized from a corporation to a limited liability company were obtained.
SECTION 2.07. TITLE TO PROPERTIES; ABSENCE OF LIENS AND
ENCUMBRANCES. The Company has, and will have as of the Closing Date, good and
valid title to all its assets and properties, in each case free and clear of all
Liens, charges, security interests, or other encumbrances of any nature
whatsoever, other than (a) Liens for taxes not yet due and Liens securing
obligations reflected on the Financial Statements, the Interim Financial
Statements and Schedule 2.04, (b) mechanic's, materialman's, and similar
statutory Liens arising in the ordinary course of business, or (c) security
interests securing indebtedness not in default for the purchase price of or
lease rental payments on property purchased or leased under capital lease
arrangements in the ordinary course of business (the Liens, charges, security
interests, and other encumbrances described in paragraphs (a), (b) and (c) above
being referred to herein as "Permitted Liens").
SECTION 2.08. PROPERTIES, CONTRACTS, AND OTHER DATA. True and
complete copies of all documents relating to the matters set forth below have
been provided or made available, as requested, to the Purchaser and its counsel:
(a) all leases of real or personal property to which the
Company is a party, either as lessee or lessor, including a description of the
parties to each such lease, the property to which each such lease relates, and
the rental term and monthly (or other) rents payable under each such lease;
(b) (i) all patents, trademarks and trade names, trademark and
trade name registrations, logos, servicemark registrations, copyright
registrations, all applications pending on the date hereof for patent or for
trademark, trade name, servicemark or copyright registrations, and all other
material intellectual property rights (collectively "Intangible Rights") owned
by the Company (specifying the nature of the rights therein), and (ii) all
licenses granted by or to the Company and all other agreements to which the
Company is a party that relate, in whole or in part, to any Intangible Rights
mentioned in (i) above or to other proprietary rights reasonably necessary to
the Company, whether owned by the Seller or the Company or otherwise;
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(c) all collective bargaining agreements, employment and
consulting agreements, independent contractor agreements, executive compensation
plans, bonus plans, deferred compensation agreements, employee profit
sharing/401(k) plans, group life insurance, health insurance, or other similar
plans or arrangements maintained for or providing benefits to employees of, or
independent contractors or other agents for the Company;
(d) all contracts, including without limitation, guarantees,
mortgages, indentures, and loan agreements, to which the Company is a party, or
to which the Company or its assets or properties is subject and which are not
specifically referred to in paragraphs (a), (b), or (c) above; and
(e) all agreements with customers.
All provisions of the aforementioned contracts and agreements
are valid and enforceable obligations of the Company and, to the knowledge of
the Company and the Seller, of the other parties thereto, except to the extent
that enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws of general
application relating to or affecting the enforcement of the rights of creditors
or by equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law. Except as disclosed on Schedule 2.08, neither
the Company nor the Seller has been notified of, or is aware that any basis
exists for, any claim that any contract described above is not valid and
enforceable in accordance with its terms for the periods stated therein, or that
there is under any such contract any existing default or event of default or
event which with notice or lapse of time or both would constitute such a
default.
SECTION 2.09. LIMIT ON EMPLOYEE OBLIGATIONS. After the Closing
Date neither the Company nor the Purchaser shall have any payment, severance,
bonus, or other compensatory obligations of any sort whatsoever arising from or
relating to the employment of any employee of the Company on or prior to the
Closing Date, except for (i) the obligations of the Company listed in the
Employment Agreements (as defined in Section 2.15(c) hereof as provided in
Sections 5.06 and 5.15 hereof), (ii) the obligation to provide credit for past
service in determining eligibility and status in the Purchaser's employee
benefit plans as provided in Section 5.06(b) hereof, (iii) the obligation to pay
salary for the pay period in which the Closing Date takes place, (iv)
reimbursement obligations for business expenses incurred by such employees and
submitted for payment in accordance with the Company's policies now in effect,
and (v) for any other liabilities specifically listed on the Closing Balance
Sheet or the Backup Materials (each as defined in Section 5.03 hereof).
SECTION 2.10. INTANGIBLE RIGHTS. Except as set forth in
Schedule 2.10 hereto, (i) the Company has complied with its contractual
obligations relating to the protection of such of the Intangible Rights used by
it pursuant to licenses or other contracts, (ii) the Company has the right to
use its Intangible Rights to provide, sell, and produce the services provided
and sold by it and to conduct its business as heretofore conducted, and the
consummation of the
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transactions contemplated hereby will not alter or impair any such Intangible
Rights, (iii) all such Intangible Rights are valid, enforceable, and in good
standing, and no claims have been asserted with respect to the use by the
Company of any of the Intangible Rights or otherwise for patent, copyright, or
trademark infringement, and (iv) to the knowledge of the Company and the Seller,
no person is infringing on or violating the Intangible Rights or know-how used
by the Company.
SECTION 2.11. SOFTWARE.
(a) Except as set forth on Schedule 2.11, the Company owns
outright or holds valid licenses to all copies of the operating and applications
computer software programs and databases used by the Company in the conduct of
its business (other than programs and databases that are generally commercially
available for a per unit license fee of less than $3,000) (collectively, the
"Software"). None of the Software used by the Company, and no use by the Company
thereof, infringes upon or violates any patent, copyright, trade secret, or
other proprietary right of any other person and, to the knowledge of the Company
and the Seller, no claim with respect to any such infringement or violation is
threatened. The Company has taken all steps reasonably necessary to protect its
right, title, and interest in and to the Software owned by the Company,
including, without limitation, the use of written agreements containing
appropriate confidentiality provisions with all third parties having access to
the source code relating to the Software.
(b) The Company possesses or has access to the original and
all copies of all documentation, including, without limitation, all source code
for all Software owned by it. Upon consummation of the transactions contemplated
by this Agreement, except as set forth in Schedule 2.11, the Company will
continue to own all the Software owned by it, free and clear of all claims,
Liens, encumbrances, obligations, and liabilities, and, with respect to all
agreements for the lease or license of Software which require consents or other
actions as a result of the consummation of the transactions contemplated by this
Agreement in order for the Company to continue to use and operate such Software
after the Closing Date, the Company will have obtained such consents or taken
such other actions so required.
(c) Any programs, modifications, enhancements or other
inventions, improvements, discoveries, methods, or works of authorship included
in the Software that were created by employees of the Company were made in the
regular course of such employees' employment with the Company using the
Company's facilities and resources and, as such, constitute "works made for
hire."
SECTION 2.12. LITIGATION, ETC. Schedule 2.12 hereto sets forth
a complete list and an accurate description of all claims, actions, suits,
proceedings, and investigations pending or, to the knowledge of the Company and
the Seller, threatened, by or against the Company or any of its properties,
assets, rights, or businesses. There are no actions, suits, proceedings, or
claims pending before or by any court, arbitrator, regulatory authority, or
government agency against or affecting the Seller or the Company that might
enjoin or prevent the consummation of the transactions contemplated by this
Agreement. Except as set forth in Schedule 2.12, neither the
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Company nor any of its assets are subject to or bound by any currently existing
judgment, order, writ, injunction or decree.
SECTION 2.13. TAXES.
(a) Except as set forth in Schedule 2.13 hereto, the Company
has (i) duly and timely filed all returns, declarations, reports, estimates,
information returns, and statements ("Returns") required to be filed by it in
respect of any Taxes (as defined in this Section 2.13(a)), all of which Returns
(including all informational Returns) were correct in all respects as filed (or
as subsequently amended) and correctly reflect the facts regarding the income,
business, assets, operations, activities, and status of the Company as well as
any Taxes required to be paid or collected by the Company, (ii) timely paid or
withheld all Taxes that are due and payable with respect to the Returns referred
to in paragraph (i), (iii) established, consistent with past practice, an
adequate reserve, if any, on its books and records for the payment of all Taxes
with respect to any taxable period (or portion thereof) ending on or prior to
the Closing Date, and (iv) complied in all respects with all applicable laws,
rules and regulations relating to the payment and withholding of Taxes and has
timely withheld from employee wages and paid over to the proper governmental
authorities when due all amounts required to be so withheld and paid over. For
purposes of this Agreement, the term "Taxes" shall mean (A) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, value added, transfer, franchise, profits, license, withholding on
amounts paid or received, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental or windfall profit taxes, custom
duties or other taxes, governmental fees or other like assessments or charges of
any kind whatsoever, together with any interest or any penalty, addition to tax
or additional amount imposed on the Company by any governmental authority
responsible for the imposition of any such taxes (domestic or foreign) ("Taxing
Authorities"), (B) liability for the payment of any amounts of the type
described in paragraph (A) as a result of being a member of an affiliated,
consolidated, combined or unitary group, or being a party to any agreement or
arrangement whereby liability for payments of such amounts was determined or
taken into account with reference to the liability of any other person for any
period prior to the Closing Date, and (C) liability with respect to the payment
of any amounts described in paragraph (A) as a result of any express or implied
obligation to indemnify any other person.
(b) Except as set forth in Schedule 2.13 hereto, no Federal,
state, or local income Tax Returns of the Company are being examined or have
been examined by any Taxing Authority during any year for which the applicable
statute of limitations period remains open.
(c) Except as set forth in Schedule 2.13 hereto, the Company
has never (i) requested or received a Tax ruling (other than a determination
with respect to a qualified employee benefit plan) or entered into a legally
binding agreement (such as a closing agreement) with any Taxing Authority, which
ruling or agreement could have an effect on the Taxes of the Company on or after
the Closing Date, or (ii) filed any election or caused any deemed election under
Section 338 of the Internal Revenue Code of 1986, as amended (the "Code"), or
any similar state or local provision.
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(d) Except as set forth in Schedule 2.13 hereto, (i) no
extensions of time have been granted to the Company to file any Return, which
Return has not been filed in the time period permitted by any such extension,
(ii) no deficiency or adjustment for any Taxes has been proposed, asserted or
assessed against the Company, which deficiency or adjustment has not been paid
in full, and no Federal, state, local or foreign audits or other administrative
proceedings or court proceedings are currently in progress or pending against
the Company with respect to any Taxes owed by the Company, and (iii) no waiver
or consent extending any statute of limitations for the assessment or collection
of any Taxes owed by the Company, which waiver or consent remains in effect, has
been executed by the Company or on behalf of the Company, nor are any requests
for such waivers or consents pending.
(e) Except as set forth in Schedule 2.13 hereto, the Company
has never (i) been a member of any consolidated, combined or unitary group for
Federal, state, local or foreign Tax law purposes or (ii) been a party to any
Tax-sharing or allocation agreement. Any Tax-sharing or allocation agreement
shall be terminated as of the Closing Date and will have no further impact for
any taxable year beginning after the Closing Date.
(f) Except for the Employment Agreements (as defined in
Section 2.15(c) hereof), the Company is not a party to any agreement, contract
or arrangement that would result, by reason of the consummation of any of the
transactions contemplated herein, separately or in the aggregate, in the payment
of any "excess parachute payment" within the meaning of Section 280G of the
Code. The Company is included in an affiliated group as defined under Section
1504 of the Code and the fair market value of the assets of the Company is less
than 33% of the fair market value of the affiliated group.
(g) No sales or use taxes will be incurred upon consummation
of the transactions contemplated by this Agreement.
(h) All persons characterized as independent contractors, and
not as employees, were, to the best of the Company's knowledge, properly so
characterized for all purposes under applicable laws (including without
limitation, characterized as independent contractors for income and employment
tax withholdings and payments).
SECTION 2.14. GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS.
(a) Except as set forth in Schedule 2.14 hereto, the Company
has all governmental licenses, franchises, and permits ("Governmental Permits")
required under applicable law for the conduct of its business as currently
conducted.
(b) The business of the Company is being conducted in material
compliance with all applicable laws, ordinances, rules and regulations of all
governmental authorities relating to its properties or applicable to its
business, including without limitation the terms of all Governmental Permits and
federal securities laws. Neither the Company nor the Seller has received any
notice of any alleged violation of any of the foregoing.
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(c) Neither the Company nor any of its properties, operations,
or businesses is subject to any court or administrative order, judgment,
injunction, or decree. To the knowledge of the Company and the Seller, no action
has been taken or recommended by any governmental or regulatory official, body
or authority, either to revoke, withdraw, or suspend any license used in the
operations of the Company.
SECTION 2.15. LABOR MATTERS, EMPLOYEES.
(a) No collective bargaining agreement is applicable to any
employees of the Company. There are not any material disputes between the
Company and any of its employees. To the knowledge of the Company and the
Seller, there are no organizational efforts presently being made or threatened
involving any of such employees. Neither the Company nor the Seller has received
notice of any claim that the Company has failed to comply with any laws relating
to employment, including any provisions thereof relating to wages, hours,
collective bargaining, the payment of social security and other payroll or
similar taxes, equal employment opportunity, employment discrimination, and
employment safety, or that the Company is liable for any arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing.
(b) There are no proceedings pending or, to the knowledge of
the Company and the Seller, threatened before the National Labor Relations Board
with respect to any employees of the Company. There are no discrimination
charges (relating to sex, age, religion, race, national origin, ethnicity,
handicap, or veteran status) against the Company pending before any federal or
state agency or authority.
(c) The Company has entered into (i) an Employment Agreement
with certain employees as set forth on Schedule 2.15 hereto (collectively, the
"Employment Agreements"), and (ii) an Executive Deferred Compensation Joinder
Agreement related to the Company's Executive Deferred Compensation Plan
(effective January 1, 1986) with certain employees as set forth on Schedule 2.15
hereto (collectively, the "Deferred Compensation Agreements").
(d) True and complete copies of all payroll files have been
provided or made available, as requested, to the Purchaser and its counsel
relating to all current employees and independent contractors of the Company.
SECTION 2.16. INSURANCE. All policies of fire, liability,
workers' compensation and other forms of insurance providing insurance coverage
to or for the Company are listed in Schedule 2.16 hereto and, except as set
forth in said Schedule 2.16, (i) the Company is a named insured under such
policies, (ii) all premiums with respect thereto covering all periods up to and
including the Closing Date have been paid, and (iii) no notice of cancellation
or termination has been received with respect to any such policy. All such
policies are in full force and effect and will remain in full force and effect
to and including the Closing Date.
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SECTION 2.17. USE OF REAL PROPERTY. The leased real properties
listed in Schedule 2.17 hereto are used and operated by the Company in
compliance and conformity with all applicable leases. Neither the Company nor
the Seller has received notice of any violation of any applicable zoning or
building regulation, ordinance, or other law, order, regulation, or requirement
relating to the respective real estate operations or assets of the Company and,
to the knowledge of the Company and the Seller, there are no such violations.
SECTION 2.18. CONDITION OF ASSETS. Except as set forth in
Schedule 2.18 hereto, all tangible personal property, fixtures, and equipment
comprising the assets of the Company are in a good state of repair (ordinary
wear and tear excepted) and operating condition, and are sufficient and adequate
to permit the Company to conduct its business as of the Closing Date.
SECTION 2.19. EMPLOYEE BENEFIT PLANS.
(a) Schedule 2.19 attached hereto lists each employee benefit
plan within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA") maintained by the Company or to which the Company
contributes or is required to contribute or in which any employee of the Company
participates (a "Plan"). The Company has complied and currently is in compliance
in all material respects, both as to form and operation, with the provisions of
ERISA and the Code applicable to each Plan.
(b) Except as set forth in Schedule 2.19 hereto, each of the
Plans which is intended to qualify under Section 401(a) of the Code does so
qualify and is exempt from taxation pursuant to Section 501(a) of the Code, and
the Company has received favorable and unrevoked determination letters from the
Internal Revenue Service to that effect.
(c) The Company has not maintained, contributed to, or been
required to contribute to, and the employees of the Company do not participate
in, a "multiemployer plan" (as defined in Section 3(37) of ERISA) or a "defined
benefit plan" (as defined in Section 3(35) of ERISA). No amount is due or owing
from the Company on account of a multiemployer plan or on account of any
withdrawal therefrom.
(d) Except as set forth in Schedule 2.19 hereto,
notwithstanding anything else set forth herein, neither the Company nor the
Seller has incurred any material liability with respect to any Plan under ERISA
(including, without limitation, Title I or Title IV of ERISA), the Code or other
applicable law, which has not been satisfied in full or which is not reflected
on the Financial Statements, the Interim Financial Statements or the Closing
Balance Sheet, and no event has occurred, and there exists no condition or set
of circumstances which could result in the imposition of any material liability
under ERISA (including, without limitation, Title I or Title IV of ERISA), the
Code or other applicable law with respect to any of the Plans.
(e) No Plan, other than a Plan which is an employee pension
benefit plan (within the meaning of Section 3(2)(A) of ERISA), provides
benefits, including without limitation, death, health, or medical benefits
(whether or not insured), with respect to current or
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former employees of the Company beyond their retirement or other termination of
service with the Company (other than (i) coverage mandated by applicable law,
(ii) deferred compensation benefits accrued as liabilities on the books of the
Company or (iii) benefits the full cost of which is borne by the current or
former employee (or his beneficiary)).
(f) Except as otherwise set forth in Schedule 2.19 or in
Schedule 2.15 hereto, the consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or officer of the
Company to severance pay, unemployment compensation, or any other payment, or
(ii) accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer.
(g) The Company has provided or made available, as requested,
to the Purchaser true and complete copies of the following, to the extent each
is applicable, for each Plan: (i) the Plan; (ii) summary plan description of the
Plan; (iii) the trust agreement, insurance policy, or other instrument relating
to the funding of the Plan; (iv) the most recent Annual Report (Form 5500
series) and accompanying schedule filed with the Internal Revenue Service or
United States Department of Labor with respect to the Plan; (v) the most recent
audited financial statement for the Plan; (vi) the most recent actuarial report
of the Plan; (vii) the policy of fiduciary liability insurance (and agreements
related thereto) maintained in connection with the Plan; and (viii) the most
recent determination letter issued by the Internal Revenue Service with respect
to each of the Plans that is intended to qualify under Section 401(a) of the
Code.
SECTION 2.20. RELATED PARTY TRANSACTIONS. Except as
contemplated by this Agreement, there are no existing material arrangements or
proposed material transactions between the Company or its subsidiaries and (i)
any member, manager, or officer of the Company or its subsidiaries or any member
of the immediate family of any of the foregoing persons (such members, managers,
officers and family members being hereinafter individually referred to as a
"Related Party"), (ii) any business (corporate or otherwise) which a Related
Party owns, directly or indirectly, or in which a Related Party has an ownership
interest, or (iii) between any Related Party and any business (corporate or
otherwise) with which the Company or its subsidiaries regularly does business.
SECTION 2.21. ENVIRONMENTAL MATTERS.
(a) The Company, its business, operations, properties, and
assets comply in all respects with all existing Environmental Laws (as defined
in Section 2.21(c) hereof). The Company has not received notice of violations of
any existing Environmental Law relating to the Company, its business, or
operations or any of its assets or properties.
(b) The Company has not buried, dumped, spilled, released,
stored or disposed of any Hazardous Material (as defined in Section 2.21(c)
hereof) on or at any of the real properties owned or leased by the Company in
violation of any Environmental Law. Neither the Company nor the Seller has
received notice that any Hazardous Material releases have or may have occurred
or that Hazardous Material conditions might exist at, on or beneath any part of
any of the real properties owned or leased by the Company.
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(c) For purposes of this Agreement, the term "Environmental
Laws" shall mean any law, statute, regulation, rule, order, ordinance, consent
decree, settlement agreement, or governmental requirement of any governmental
authority, as in effect on the date of this Agreement, which relates to or
otherwise imposes liability or standards of conduct concerning the protection or
pollution of the environment, community health and safety, including, without
limitation, relating to releases, discharges, emissions or disposals to air,
water, land or ground water, the withdrawal or use of ground water, the use,
handling or disposal of polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde, the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, and exposure to
toxic, hazardous or other controlled, prohibited or regulated substances. The
term "Environmental Laws" shall include but not be limited to the Comprehensive
Environmental Response Compensation and Liability Act, as amended, the Federal
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act and the Hazardous and Solid Waste Amendments, the Federal Clean Air Act, the
Federal Clean Water Act, the Federal Toxic Substance and Control Act, the
Federal Safe Drinking Water Act, and any similar or analogous statute,
regulation, decisional law, legally binding conditions, standards, prohibitions,
requirements, or judgments or any governmental authority, as now exist. For
purposes of this Agreement, the term "Hazardous Material" shall mean any
material which is defined as a "hazardous waste" or "hazardous substance" under
any Environmental Law.
SECTION 2.22. SYSTEM CAPACITY. The computer hardware, Software
and communications equipment now being used by the Company are sufficient in all
material respects to accommodate the electronic data interchange and transaction
processing currently performed by the Company.
SECTION 2.23. SECURITIES LAWS MATTERS. Neither the Company
nor, to the knowledge of the Company and the Seller, any person authorized by
the Company or the Seller as agent, broker, dealer, or otherwise in connection
with the offering or sale of the Seller's Interest, or any similar securities
has taken or will take any action (including without limitation any offer or
sale of any securities under circumstances which would require the integration
of such securities with the membership interest being transferred by the Seller
hereunder under the Securities Act, or the rules and regulations of the
Securities and Exchange Commission (the "SEC") thereunder), which would subject
such transfer to the registration provisions of the Securities Act.
SECTION 2.24. "YEAR 2000" COMPLIANCE. Except as set forth in
Schedule 2.24 hereto, the Company's equipment, computer software, hardware and
other assets are "Year 2000" compliant and there are no Y2K Deficiencies (as
defined in Section 7.03(a)) in connection with computer software code used by
the Company or related to any services or products provided by the Company to
its customers. The Seller and the Company have provided or made available to the
Purchaser any and all reports, studies and audits relating to the Year 2000 or
Year 2000 compliance of the Company's equipment, software, hardware and other
assets.
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SECTION 2.25. AUTHORIZATION OF AGREEMENTS, ETC. The execution
and delivery by the Company of this Agreement, and the performance by the
Company of its obligations hereunder, have been duly authorized by all requisite
action and will not (a) violate any provision of law, any order of any court, or
other agency of government, the Company Organization Documents, or any judgment,
award, or decree to which the Company is a party, or by which the Company or any
of the Company's properties or assets is bound or affected, or (b) result in the
creation or imposition of any Lien, charge, or encumbrance of any nature
whatsoever upon any of the Seller's Interest.
SECTION 2.26. VALIDITY. This Agreement has been duly executed
and delivered by the Company and constitutes the legal, valid, and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, or similar laws of general application relating to or affecting the
enforcement of the rights of creditors or by equitable principles, regardless of
whether enforcement is sought in a proceeding in equity or at law.
SECTION 2.27. LARGEST CUSTOMERS. The Company has made
available to the Purchaser the 20 largest customers by dollar volume of the
Company (the "Largest Customers"), with the amount of revenues attributable to
each such customer, for each fiscal years ending December 31, 1997 and 1998.
Except as previously disclosed, none of the Largest Customers has terminated or
materially adversely altered its relationship with the Company since January 1,
1998 or, to the Company's knowledge, threatened to do so or otherwise notified
the Company of its intention to do so, and, except as set forth in Schedule 2.27
hereto, there has been no material dispute with any of the Largest Customers
since January 1, 1998.
SECTION 2.28. ACCOUNTS RECEIVABLE. Schedule 2.28 hereto sets
forth the accounts receivable of the Company, and the payments and rights to
receive payments related thereto, as of August 31, 1999. The amount of all
accounts receivable, unbilled invoices and other debts due or recorded in the
records and books of account of the Company as being due to the Company as of
August 31, 1999 (less the amount of any provision or reserve therefor made in
the respective records and books of account of the Company, which provision or
reserve has been computed in accordance with past practice and is reasonably
believed to be adequate) constitute valid claims against third parties not
affiliated with the Company arising in bona fide transactions in the ordinary
course of the business of the Company.
SECTION 2.29. ILLEGAL OR UNAUTHORIZED PAYMENTS, POLITICAL
CONTRIBUTIONS; ANTITRUST.
(a) Except as set forth in Schedule 2.29 hereto, neither the
Seller, the Company nor any of their respective officers, directors, employees,
agent or other representatives of any other business entity or enterprise with
which the Company is or has been affiliated or
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associated with, or has, directly or indirectly, made or authorized on behalf of
the Company any payment, contribution or gift of money, property or services,
whether or not in contravention of applicable law, (i) as a kickback or bribe to
any person or entity or (ii) to any political organization, or the holder of or
any aspirant to any elective or appointive public office, except for personal
political contributions not involving the direct or indirect use of funds of the
Company.
(b) The Company has not violated any federal or state
antitrust statutes, rules or regulations, including without limitation those
relating to unfair competition, price fixing or collusion.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES AS TO THE SELLER
The Seller represents and warrants to the Purchaser as follows:
SECTION 3.01. ORGANIZATION, QUALIFICATIONS, AND POWER. The
Seller has been duly organized and is in good standing under the laws of its
jurisdiction of organization. The Seller has all requisite power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
SECTION 3.02. AUTHORIZATION OF AGREEMENTS, ETC. The execution
and delivery by the Seller of this Agreement and the performance by the Seller
of its obligations hereunder have been duly authorized by all requisite action
and will not (a) violate any provision of law, any order of any court, or other
agency of government, the Articles of Incorporation or Bylaws of the Seller, or
any judgment, award, or decree to which the Seller is a party, or by which the
Seller or any of the Seller's properties or assets is bound or affected or (b)
result in the creation or imposition of any Lien, charge, or encumbrance of any
nature whatsoever upon any of the Seller's Interest.
SECTION 3.03. VALIDITY. This Agreement has been duly executed
and delivered by the Seller and constitutes the legal, valid, and binding
obligation of the Seller, enforceable against the Seller in accordance with its
terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, or similar laws of general application relating to or affecting the
enforcement of the rights of creditors or by equitable principles, regardless of
whether enforcement is sought in a proceeding in equity or at law.
SECTION 3.04. TITLE TO SELLER'S INTEREST. The Seller is the
lawful holder of record and beneficial owner of the Seller's Interest free and
clear of any and all Liens. The delivery by the Seller of certificates or
instruments and agreements evidencing the Seller's Interest, duly endorsed for
transfer or accompanied by transfer powers duly endorsed in blank, to the
Purchaser pursuant to Section 1.01 hereof, in exchange for the Purchase Price,
will transfer valid title to said Seller's Interest to the Purchaser, free and
clear of any and all Liens.
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SECTION 3.05. BROKERS' OR FINDERS' FEES. All negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried out directly with the Purchaser or through the Seller's agent,
Donaldson, Lufkin & Jenrette (whose fees and expenses shall be borne solely by
the Seller), without the intervention of any person on behalf of the Company or
the Seller in such manner as to give rise to any claim by any person against the
Purchaser for a finder's fee, brokerage commission or similar payment.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES AS TO
THE PURCHASER AND THE GUARANTOR
The Purchaser and the Guarantor represent and warrant to the Seller as
follows:
SECTION 4.01. ORGANIZATION, POWER, ETC. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Purchaser has full corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The Guarantor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Guarantor has full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder.
SECTION 4.02. AUTHORIZATION OF AGREEMENTS, ETC. The execution
and delivery by the Purchaser and the Guarantor of this Agreement and the
performance by the Purchaser and the Guarantor of their respective obligations
hereunder have been duly authorized by all requisite corporate action on the
part of the Purchaser and the Guarantor and will not (a) violate any provision
of law, any order of any court, or other agency of government, the Certificate
of Incorporation or Bylaws of the Purchaser or the Guarantor, any judgment,
award or decree or any indenture, agreement, or other instrument to which the
Purchaser or the Guarantor is a party, or by which they or any of their
properties or assets are bound or affected; (b) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement, or other instrument (including, without
limitation, any other registration rights agreement to which the Guarantor may
be a party); or (c) result in the creation or imposition of any Lien, charge, or
encumbrance of any nature whatsoever upon any of the properties or assets of the
Purchaser or the Guarantor.
SECTION 4.03. VALIDITY. This Agreement has been duly executed
and delivered by the Purchaser and the Guarantor and constitutes the legal valid
and binding obligations of the Purchaser and the Guarantor, enforceable against
the Purchaser and the Guarantor in accordance with its terms, except to the
extent that enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, or similar laws
of general application relating to or affecting the enforcement of the rights of
creditors or by
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equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.
SECTION 4.04. GOVERNMENTAL APPROVALS. No order, authorization,
approval, or consent from, or filing with, any federal or state governmental or
public body or other authority having jurisdiction over the Purchaser and the
Guarantor is necessary for the execution, delivery, and performance by the
Purchaser and the Guarantor of its obligations under this Agreement, except for
the filing and approval under the HSR Act.
SECTION 4.05. LITIGATION RELATING TO TRANSACTION. There are no
actions, suits, proceedings, or claims pending before any court, arbitrator or
government agency against or affecting the Purchaser or the Guarantor which
might enjoin or prevent the consummation of the transactions contemplated by
this Agreement.
SECTION 4.06. BROKERS' OR FINDERS' FEES. All negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried out by the Purchaser directly with the Seller, without the intervention
of any person on behalf of the Purchaser in such manner as to give rise to any
claim by any person against the Seller for a finder's fee, brokerage commission,
or similar payment.
SECTION 4.07. INVESTMENT INTENTION. The Purchaser is acquiring
the Seller's Interest for its own account, for investment purposes only and not
with a view to the distribution (as such terms are used in Section 2(11) of the
Securities Act). The Purchaser understands that the Seller's Interest has not
been registered under the Securities Act and cannot be sold unless subsequently
registered under the Securities Act or an exemption from such registration is
available.
SECTION 4.08. NO MATERIAL ADVERSE CHANGE. Since June 30, 1998,
there has not occurred any material adverse change (i) in the condition
(financial or otherwise), results of operations, business, prospects, assets or
liabilities of the Purchaser or the Guarantor, or (ii) in the capacity of the
Purchaser or the Guarantor to conduct their businesses in a manner consistent
with past practice.
SECTION 4.09. REVENUE RECOGNITION POLICIES. The Purchaser and
the Guarantor have received to their satisfaction sufficient information from
the Company and the Seller relating to the discussions between the Company and
KPMG LLP, the Company's independent accountant, regarding the Company's revenue
recognition policies.
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ARTICLE V.
COVENANTS
SECTION 5.01. CERTAIN COVENANTS OF THE SELLER AND THE
GUARANTOR.
(a) During the period from the date of this Agreement to the
Closing Date, the Seller will cause the Company to conduct its business and
operations according to its ordinary course of business consistent with past
practice and use its best efforts (i) to preserve its relationships with
business partners, employees, and customers, (ii) subject to the provisions of
Section 5.05 hereof, to maintain the contracts with customers in full force and
effect in accordance with their terms, and (iii) to ensure that the Company will
continue to provide its services to such customers. Without limiting the
generality of the foregoing, and except as otherwise expressly contemplated by
this Agreement, the Seller will not allow the Company to do any of the things
listed in paragraphs (a) through (o) of Section 2.05 hereof prior to the Closing
Date without the prior written consent of the Purchaser.
(b) Upon reasonable prior notice and at reasonable times,
between the date hereof and the Closing Date, the Seller shall, and shall cause
the Company to, provide access to representatives of the Purchaser to the
financial, accounting, and legal records of the Company, and to key employees of
the Company designated by the Purchaser, and, in connection therewith, shall
permit representatives of the Purchaser to visit the premises of the Company.
Such activities shall be performed, so far as is reasonably possible, in such a
manner as to avoid disruption of normal operations.
(c) Between the date hereof and the Closing Date and except as
required by consistently applied accounting methods, the Seller shall cause the
Company not to (i) utilize accounting principles different from those used in
the preparation of the Financial Statements, (ii) change in any manner its
method of maintaining its books of account and records from such methods as in
effect on December 31, 1998, or (iii) accelerate booking of revenues or the
deferral of expenses, other than as shall be consistent with past practice and
in the ordinary course of business.
(d) Between the date hereof and the Closing Date, the Seller
shall not, and shall cause the Company not to, enter into any transaction, make
any agreement or commitment, or take any action which would result in any of the
representations, warranties, or covenants of the Seller contained in this
Agreement not being true and correct at and as of the time immediately after the
occurrence of such transaction, event, or action.
SECTION 5.02. BOOKS AND RECORDS. Promptly after the Closing
Date, the Seller shall deliver to the Purchaser or the Company all books and
records used in the operation of the business of the Company and all files,
documents, papers, agreements, books of account, and other records pertaining to
the business of the Company, to the extent that such books, records, files and
other materials are not located at the offices of the Company.
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SECTION 5.03. ALLOCATION OF PURCHASE PRICE FOR TAX PURPOSES.
(a) After the Closing and at the sole cost and expense of the
Purchaser, the Seller shall provide the Company's auditors with all financial
information, other than information held by the Company, and data reasonably
necessary to enable its independent accountants to prepare and review an audited
consolidated balance sheet of the Company as of December 31, 1999, and the
related statements of income, shareholders' or members' equity, as the case may
be, and cash flows for the year then ended; provided, however, that the Seller
will not charge the Company or the Purchaser for the provision of information
and data that is readily available to the Seller.
(b) The Seller agrees that, if requested by the Company as
being necessary to prepare the audited financial statements as contemplated by
Section 5.03(a) hereof, the Seller shall provide to the Company's auditors a
management representation letter in a form reasonably acceptable to such
auditors covering the period from January 1, 1999 to the Closing Date.
(c) Attached as Schedule 5.03 hereto is a schedule which sets
forth (i) the balance sheet of the Company as of August 31, 1999, (ii) a summary
of the assets and liabilities of the Company that shall not be transferred to or
assumed by the Purchaser as part of the transactions contemplated hereby (which
shall include the amounts that the Company owes to the Seller for federal and
state income Taxes, the Short-Term Debt and the Long-Term Debt and accrued
interest thereon as of the Closing Date, the EDCP and the DICP (both as defined
in Section 5.14 hereof) and related assets and liabilities), and (iii) the Code
Section 1060 allocation of the Purchase Price (collectively, the "August 31 Pro
Forma Balance Sheet"). The August 31 Pro Forma Balance Sheet shall be updated by
the Seller as of the Closing Date as promptly as practicable following the
Closing Date (but in no event later than 30 days after the Closing Date) and
shall be prepared in a manner consistent with the preparation of the August 31
Pro Forma Balance Sheet (the "Closing Balance Sheet"). The updates to the August
31 Pro Forma Balance Sheet by the Seller shall include, without limitation,
updates to the amounts under the columns "incentive deferred compensation plan
and assets not assumed" and "federal and state tax liabilities and assets not
transferred". As promptly as practicable following the receipt of the Closing
Balance Sheet (but in no event later than 60 days after the Closing Date), the
Purchaser shall review the Closing Balance Sheet and deliver any adjustments,
changes or objections to the Seller in writing. In the event the Seller does not
provide any adjustments, changes or objections within 75 days after the Closing
Date (provided that the Seller has timely delivered the Closing Balance Sheet),
the Closing Balance Sheet shall be deemed final and binding for purposes of this
Section 5.03(c). In the event that the Seller and the Purchaser have any
disputes regarding the Closing Balance Sheet, within 60 days after the
expiration of the 75 day period referred to in this Section 5.03(c), the Seller
and the Purchaser shall attempt in good faith to resolve any such disputed
matters by negotiation between executives who have the authority to settle and
resolve such matters and who are at a higher level of management than the person
with direct responsibility for administration of this Agreement. If the disputed
matters shall not have been resolved as provided in the immediately preceding
sentence, then the Seller and the Purchaser shall attempt in good faith to
resolve any disputed matters referred to in this Section 5.03(c) by
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negotiation between the Seller's and the Purchaser's respective chief financial
officer within 7 days after the expiration of the 60 day period referenced in
the immediately preceding sentence. If the disputed matters shall not have been
resolved by the Seller's and the Purchaser's respective chief financial officer
as provided in the immediately preceding sentence, the Seller and the Purchaser
shall select, by lot, one of the "Big 5" national accounting firms (which shall
not include the firm currently used by the Purchaser or the Seller unless the
other party shall agree) and shall give such firm the authority to resolve the
dispute in its sole discretion.
(d) The parties hereto shall make available to the Purchaser
and the Seller such books, records and other information, including work papers
(collectively, the "Backup Materials") as any of the foregoing may reasonably
request to prepare or review the Closing Balance Sheet.
SECTION 5.04. CERTAIN TAX MATTERS.
(a) Transfer Taxes. All Taxes imposed upon or incurred by any
of the parties hereto in connection with the transfer of the Seller's Interest
to the Purchaser under this Agreement, and any legal and other expenses relating
thereto, shall be borne by the Seller. The Seller shall, at its own expense,
prepare and file all necessary Tax Returns and other documents with respect to
all such Taxes.
(b) Tax Returns. The Seller shall prepare and file all Tax
Returns of the Company for Tax periods ending on or prior to the Closing Date
consistent with prior practices, and the Seller shall provide the Purchaser with
a copy of the Tax Returns as soon as practicable after they are filed. For all
Tax Returns relating both to periods before and after the Closing Date, all
reasonable fees and expenses relating to the preparation of such returns shall
be apportioned between the Seller, on the one hand, and the Company and the
Purchaser, on the other hand, on the basis set forth in Section 5.04(c) hereof.
The Purchaser shall prepare and file all Tax Returns of the Company for any
period including the day following the Closing Date (a "Straddle Period").
Before filing any Tax Return relating in whole or in part to a Straddle Period,
the Purchaser shall deliver a copy of such Tax Return to the Seller for its
review and approval (which will not be unreasonably withheld or delayed). The
Purchaser shall make any changes requested by the Seller and reasonably
acceptable to the Purchaser. Each party shall provide the other with all
reasonable assistance required to prepare and file such Tax Returns. The Seller
shall be responsible for, and shall pay all Taxes (or any portion thereof) shown
on such Tax Returns that relate to any Tax period (or any portion thereof)
ending on or before the close of business on the Closing Date (a "Prior Tax
Period"), including any Taxes related to the transfer of the Seller's Interest
to the Purchaser under this Agreement, provided, that the Seller shall not be
responsible for any Taxes with respect to which a reserve has been established
on the Closing Balance Sheet. The Purchaser shall be responsible for, and shall
pay, any such Taxes for which the Seller is not responsible.
(c) Straddle Period. Subject to Section 5.04(b) hereof, with
respect to any Straddle Period, (i) the portion of any Tax based on income,
profits or revenue that is attributable
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to a Prior Tax Period shall be determined based on a closing of the Company's
books as of the close of business on the Closing Date, and (ii) the portion of
any other Tax attributable to a Prior Tax Period will be determined by
multiplying the amount of such Tax by a fraction, the numerator of which shall
equal the number of days in such Prior Tax Period up to and including the
Closing Date and the denominator of which shall equal the total number of days
in such Tax period.
(d) Tax Disputes. In the event the Seller disputes its
responsibility to pay any Tax under this Section 5.04, the Seller shall not be
relieved of its obligation to pay, in the first instance, the amount of such
Tax. If, within 15 days of Seller's payment of the disputed Tax, the Seller, on
the one hand, and the Purchaser, on the other, are unable to resolve the dispute
among themselves, they shall select, by lot, one of the "Big 5" national
accounting firms (which shall not include the firm currently used by the
Purchaser or the Seller unless the other party shall agree) and shall give such
firm the authority to resolve the dispute in its sole discretion.
(e) Tax Reporting. For federal income tax purposes, the
Seller and the Purchaser agree that the Company shall be disregarded as a
separate entity, to treat the transactions contemplated hereby as a sale by the
Seller and a purchase by the Purchaser of the assets of the Company, and to
report the transaction to the Internal Revenue Service on IRS Form 8594. The
Purchaser and the Seller shall be bound by and shall follow the allocation of
the Purchase Price set forth in the Closing Balance Sheet for the preparation
and filing of IRS Form 8594.
SECTION 5.05. CONSENTS AND APPROVALS. The Seller and the
Company shall use their reasonable efforts to obtain all necessary consents and
approvals with respect to all interests of the Company in any material leases,
licenses, contracts, instruments and rights which shall require the express
consent or approval of another person or entity as a result of the consummation
of the transactions contemplated hereby; provided, however, that the receipt of
approvals and consents required with respect to the Fiscal Agent Contracts shall
be subject to Section 1.04(a) hereof and not this Section 5.05.
SECTION 5.06. RETENTION OF EMPLOYEES; EMPLOYEE BENEFITS;
EMPLOYEE BONUSES.
(a) Effective as of the Closing Date, the Purchaser will cause
the Company to continue the employment of all employees of the Company employed
by the Company immediately prior to the Closing (the "Retained Employees").
(b) In addition to any benefits and payments to be made under
the Employment Agreements after the Closing (which shall include all benefits
and payments required thereunder except for the One-Time Bonus Obligations and
the Arnau Severance Reimbursement Obligation (both as defined in Section 5.15
hereof) which shall be the responsibility of the Seller), from and after January
1, 2000, the Purchaser shall provide to the Retained Employees of the Company
the employee benefits listed in Item #1 on Schedule 2.19 to
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this Agreement to the extent that the Purchaser and its subsidiaries provide
such benefits to their similarly situated employees, subject to the age and
eligibility requirements of such benefits. For purposes of all such benefits,
each Retained Employee's last continuous Period of Service (as defined in this
Section 5.06(b)) immediately prior to the Closing (determined under the rules of
the applicable Purchaser plan) shall count for eligibility and vesting (but not
for benefit amounts). For purposes of severance benefits, such Period of Service
shall count for eligibility, vesting and benefit amounts. For purposes of this
Section 5.06, the term "Period of Service" means service with the Company and
with predecessor employers. From and after the Closing Date and continuing to at
least January 1, 2000, the Purchaser shall cause the Company to adopt an
employee welfare benefit plan which provides medical, dental, group life,
long-term disability and education reimbursement identical to the coverage
provided under the Seller's employee welfare benefit plan on the date hereof;
provided, however, that the Purchaser's obligation hereunder shall be subject to
the Seller making such an employee welfare benefit plan available to the
Purchaser under the same costing method, structure and terms applicable to the
Company on the date hereof. In no event shall a preexisting condition limit be
applied to the Retained Employees upon such Retained Employees' coverage under
the Purchaser's or the Company's benefit plans.
(c) After the Closing, subject to Sections 5.14 and 5.15
hereof, the Purchaser shall, or shall cause the Company to, provide for and pay
all benefits and amounts due under the Employment Agreements in the amounts and
at the times set forth therein (which shall include all benefits and payments
required thereunder except for the One-Time Bonus Obligations and the Arnau
Severance Reimbursement Obligation (both as defined in Section 5.15), which
shall be the responsibility of the Seller).
SECTION 5.07. ACCESS TO TAX AND OTHER RECORDS.
(a) After the Closing Date, if and only to the extent that the
Purchaser has asserted a claim for Losses under Article VII hereof, or if any
other party has asserted a claim against either the Company or the Seller with
respect to any act or omission by the Company alleged to have occurred on or
prior to the Closing Date, then upon the request of the Seller, the Purchaser
shall (i) grant to the Seller and its representatives the right, during normal
business hours, to inspect and copy the books, records and other documents of
the Company, and (ii) use commercially reasonable efforts to cause the Company's
auditors to permit the Seller and its representatives to inspect and copy
worksheets and other information pertaining to the Company and its financial
statements, in each case as reasonably required by the Seller to defend the
Seller against any such claim. The Seller shall reimburse the Purchaser's, the
Company's or the Company's auditors' reasonable out-of-pocket expenses, if any,
incurred in connection with such inspection.
(b) After the Closing Date, in connection with any claim or
investigation by the Internal Revenue Service or any state or local taxing
authority with respect to (i) the Company, for any periods ending on or prior to
the Closing Date, or (ii) the transactions contemplated by this Agreement, the
Purchaser shall cause the Company to make available to the
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Seller access to appropriate employees, agents, and representatives of the
Company, in each case as reasonably required by the Seller to defend itself
against any such claim or to represent itself in any such investigation. Any
out-of-pocket expenses reasonably and actually incurred by the Purchaser or the
Company in complying with the provisions of this Section 5.07(b) shall be borne
by the Seller.
(c) The Purchaser shall, and shall cause the Company to, keep
and maintain all tax books, records and other tax information pertaining to the
Company for all Tax periods ending on or prior to the Closing Date for a period
of six years after the Closing Date.
(d) To the extent that the Seller requests information
pursuant to this Section 5.07, the Seller shall keep such information
confidential; provided, however, that the Seller may use such information for
its own benefit in connection with the claim, investigation, or proceeding
giving rise to the Seller's request for information.
(e) The Purchaser shall cooperate with the Seller after the
Closing Date in order to assist the Seller in preparing and filing its Tax
returns related to the Company and shall make available to the Seller such
books, records and other information as the Seller may reasonably request to
prepare such Tax returns.
SECTION 5.08. FURTHER ASSURANCES. At or after the Closing and
without further consideration, the Seller and the Company shall execute and
deliver to the Purchaser such further instruments of conveyance and transfer and
such other documents as the Purchaser may reasonably request in order to more
effectively convey and transfer the Seller's Interest (including all Intangible
Rights owned by the Company) to the Purchaser and to place the Purchaser in
operational control of the Company and its assets.
SECTION 5.09. PUBLICITY. The Seller, the Company, the
Purchaser and the Guarantor shall cooperate with each other in the development
and distribution of all news releases and other public disclosures relating to
the transactions contemplated by this Agreement.
SECTION 5.10. COMPLIANCE WITH HSR ACT. The Seller and the
Purchaser shall make all necessary filings and any required submissions with
respect to this Agreement and the transactions contemplated hereunder, as
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the applicable regulations enacted thereunder (collectively, the
"HSR Act") and other applicable law. The Seller and the Purchaser shall
cooperate with each other in connection with such filings, including providing
copies of such documents to the non-filing party and its advisors prior to any
filings and, if requested, shall accept all reasonable additions, deletions or
changes suggested in connection therewith. The Seller and the Purchaser shall
request early termination of the waiting period required by the HSR Act.
SECTION 5.11. GUARANTY OF OBLIGATIONS. The Guarantor hereby
absolutely, irrevocably and unconditionally guarantees, as primary obligor and
not as surety, without set-off
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or deduction, to the Seller (a) the due punctual and full payment by the
Purchaser (or, after the Closing, by the Company) of all payment obligations of
the Purchaser and the Company under this Agreement, including without limitation
the Purchase Price, all payment obligations reflected in the Closing Balance
Sheet and all payment obligations of the Purchaser under the Note, and (b) the
performance of each and every other covenant, agreement and obligation to be
performed or observed by the Purchaser (or, after the Closing, by the Company)
under this Agreement (collectively, the "Obligations"). The Guarantor hereby
agrees that, in the event that the Purchaser fails to pay any Obligation for any
reason on the date on which such Obligation is required to be paid, the
Guarantor will pay or cause to be paid such Obligation at the time specified in
this Agreement. The Guarantor hereby agrees that, in the event that the
Purchaser fails to perform any Obligation for any reason on the date on which
such Obligation is required to be performed, the Guarantor will pay or cause to
be performed such Obligation at the time specified in this Agreement. For
purposes of Seller's enforcement of this Section 5.11, any defense available to
the Purchaser in connection with any failure by the Purchaser to pay any
Obligation shall be available to the Guarantor to the same extent such defense
is available to the Purchaser.
SECTION 5.12. TREATMENT OF CERTAIN INSURANCE CLAIMS.
(a) Prior to the Closing Date, the Company has or shall have
paid to the Seller all reserved amounts relating to any workers' compensation
claims filed prior to the Closing. Neither the Company, the Purchaser nor the
Guarantor shall have any further liability with respect to such claims after the
Closing.
(b) The deductible amount applicable to claims for workers'
compensation which are filed after the Closing but which relate to injuries
allegedly occurring prior to the Closing and which are covered by the Seller's
workers' compensation insurance shall be paid pro rata by the Seller and the
Company as follows: the Seller's share of such deductible amount shall be
calculated by multiplying such deductible amount by a fraction, the numerator of
which shall be the actual number of days elapsed from the date the person filing
such claim was originally hired (the "Hiring Date") to and including the Closing
Date, and the denominator of which shall be the actual number of days elapsed
from the Hiring Date to and including the date such claim was filed. The
Company's share of such deductible shall be calculated by subtracting the
Seller's pro rata share calculated as described above from the deductible
amount.
SECTION 5.13. [intentionally omitted] .
SECTION 5.14. TREATMENT OF DEFERRED COMPENSATION PLANS. On or
prior to the Closing Date, the Company shall transfer to the Seller, or an
affiliate of the Seller, as needed, the Company's Executive Deferred
Compensation Plan, as listed in Item #1 of Schedule 2.19 (the "EDCP") and all of
the assets and liabilities of the Company related to the EDCP, including without
limitation, the cash surrender value of life insurance policies and the note
payable relating thereto, and the other assets and liabilities shown on the
Closing Balance Sheet. The Company shall release any and all interest and claim
to the insurance policies referred to in the
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immediately preceding sentence that it has as of the Closing Date. On or prior
to the Closing Date, the Company shall transfer: (a) to the "Consultec, LLC
Deferred Compensation Plan" (the "DICP"), as needed, all amounts of accrued
executive incentive compensation (as elected to be deferred by the eligible
officers under the Officers Incentive Compensation Plan listed as Item #1(c) in
Schedule 2.19 hereto) as shown on the August 31 Pro Forma Balance Sheet (as
updated after the Closing Date in accordance with Section 5.03(c)); and (b) to
the Seller, as needed, the DICP and all of the assets and liabilities of the
Company related to the DICP; provided, however, that immediately prior to the
Closing on the Closing Date, all amounts of accrued executive incentive
compensation payable to Kenneth Myatt shall be paid by the Company to Kenneth
Myatt and 50% of accrued executive incentive compensation payable to Jefferson
Dishongh shall be paid by the Company to Jefferson Dishongh. The Seller shall be
responsible for all payments and obligations under the EDCP and the DICP from
and after the Closing.
SECTION 5.15. TREATMENT OF EMPLOYMENT AGREEMENTS. Within 30
days after the Closing Date, the Seller shall pay all amounts owed under Section
5(e) of each of the Employment Agreements (the "One-Time Bonus Obligations").
Except for the One-Time Bonus Obligations and subject to Section 5.14 hereof,
the Purchaser shall assume all obligations and liabilities of the Seller and
General American Holding Company ("GAHC") under each of the Employment
Agreements (collectively, the "Assumed Employment Agreements"); provided,
however, that the Seller shall reimburse the Purchaser for 100% of amounts paid
under Section 6 of Francis M. Arnau IV's Employment Agreement (the "Arnau
Severance Reimbursement Obligation"). Effective as of the Closing Date, except
with respect to the One-Time Bonus Obligations and the Arnau Severance
Reimbursement Obligation, the Purchaser and the Company shall release the Seller
and GAHC from any and all obligations and liabilities under the Assumed
Employment Agreements and shall indemnify the Seller and GAHC from and against
any and all claims thereunder.
SECTION 5.16. NON-COMPETITION.
(a) Acknowledgement. As an inducement to the Purchaser to
purchase the Seller's Interest as provided under this Agreement and in
consideration of the payments to be made by the Purchaser to the Seller, the
parties agree to be bound by the provisions of this Section 5.16.
(b) Certain Definitions. For purposes of this Section 5.16,
the following capitalized terms have the following meanings:
(i) "Business" means the business of providing Medicaid
related administrative management and information technology services to
government health and human services.
(ii) "Term" means the three year period beginning with
the Closing Date and ending on the first anniversary of the Closing Date.
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(iii) "Territory" means the United States.
(c) Restrictions on Competition. Subject to the terms of this
Section 5.16, Seller hereby agrees that, during the Term, it shall not, directly
or indirectly through its subsidiaries, anywhere in the Territory: (i) engage in
the Business; (ii) invest in any person or entity which is engaged in the
Business; (iii) provide consulting services to any person or entity engaged in
the Business; (iv) employ or solicit to hire, or otherwise receive the services
of, any individual who was employed by the Company as of the Closing Date at or
above an annual salary of $25,000 (excluding for purposes of this Section 5.16,
any individual employed or solicited for employment by the Seller or its
subsidiaries through general newspaper and similar employment solicitations for
clerical, administrative or similar positions); or (v) solicit or attempt to
solicit or otherwise accept for its own benefit or for the benefit of any other
person or entity any client or customer of the Company or its successors or
assigns.
(d) Permitted Investments. The parties agree that an
investment by the Seller in publicly traded stock of an entity which is engaged
in the Business shall not violate Section 5.16(c) hereof provided that Seller
owns, in the aggregate, 2% or less of all the issued and outstanding stock or
other equity interest of such entity.
(e) Restrictions Reasonable. The parties agree that the
provisions of this Section 5.16 are reasonable.
(f) Judicial Review. In the event this Section 5.16 is held to
be in any respect an unreasonable restriction upon the Seller by a court of
competent jurisdiction, the court so holding may reduce the Territory to which
this Section 5.16 applies or the Term for which it operates, or effect any other
change to the extent necessary to render this Section 5.16 enforceable by such
court. As so modified, this Section 5.16 will continue in full force and effect.
Such decision by a court of competent jurisdiction will not invalidate this
Agreement, but this Agreement will be interpreted, construed and enforced as not
containing such invalidated provision.
(g) Specific Performance and Injunctive Relief. The Seller
recognizes that, if it fails to perform, observe or discharge any of its
obligations under this Agreement, no remedy at law will provide adequate relief
to the Purchaser. Therefore, in addition to any other rights or remedies or
damages the Purchaser may otherwise be entitled to under law or equity, the
Purchaser is hereby authorized to demand specific performance of this Agreement,
and is entitled to temporary and permanent injunctive relief, in a court of
competent jurisdiction at any time when the Seller fails to comply with any of
the provisions of this Agreement. To the extent permitted under applicable law,
the Seller hereby irrevocably waives any defense that it might have based on the
adequacy of a remedy at law which might be asserted as a bar to such remedy of
specific performance or injunctive relief.
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SECTION 5.17. RELEASE OF FISCAL AGENT GUARANTIES. The
Purchaser shall, on or prior to the Closing Date, take all action reasonably
necessary to release the Seller from any and all obligations that it may have
under any performance bonds, guaranties or similar arrangements that it may have
with respect to the obligations of the Company under any Fiscal Agent Contracts
(the "Fiscal Agent Guaranties"); provided, however, that the Purchaser and the
Guarantor shall indemnify the Seller and its affiliates from and against any
liabilities or obligations that any of them may suffer or incur in connection
with, resulting from or related to the Fiscal Agent Guaranties with respect to
matters occurring or arising after the Closing Date. In the event that, on or
before October 31, 1999, the Seller shall not have received evidence reasonably
satisfactory to it demonstrating that the Seller has been released from all
obligations under the Fiscal Agent Guaranties, then the Purchaser and the
Guarantor shall cause the Company to take all actions necessary to effect such
release, including, without limitation, the cancellation of any and all bonds
securing the performance of the Company under such Fiscal Agent Contracts.
SECTION 5.18. CUSTOMER VISITS. Neither the Purchaser nor its
affiliates shall, without the prior specific written consent of the Seller,
visit or otherwise have discussions with any of the States or counter-parties
with which the Company has a Fiscal Agent Contract unless an authorized
representative of the Company shall be present during such visit or discussion
and the subject matter or agenda for such visit or discussion shall have been
approved in advance by the Company.
SECTION 5.19. POST-CLOSING SERVICES. From and after the
Closing Date, until the later to occur of, (a) the date that the Seller is
relieved of indemnification of the surety companies under the Fiscal Agent
Guaranties, and (b) the date that is eighteen months after the Closing Date, the
Purchaser shall cause the Company to provide the same quality and timeliness of
services to its clients and customers that the Company provided to its clients
prior to the Closing Date.
SECTION 5.20. EMPLOYEE BENEFITS PLANS.
(a) Retiree Medical Plan. As soon as practicable after the
Closing Date, the Purchaser shall cause the Company to amend, clarify or
otherwise modify the Company's medical benefits plan for retirees (the "Retiree
Medical Plan"), effective as of the Closing Date, as follows (the "Retiree
Medical Plan Modifications"): (i) the definition of "retiree" for purposes of
determining eligibility for participation in the Retiree Medical Plan includes
only those persons who are at least 55 years of age and who have at least 10
years of service with the Company immediately preceding the Closing Date; (ii)
clarify that each eligible participant in the Retiree Medical Plan is
responsible for 100% of the actual costs (as actuarilly determined) of his or
her coverage under the Retiree Medical Plan; and (iii) clarify that eligibility
for participation in the Retiree Medical Plan shall be limited to those persons
who meet the definition of "retiree" as modified in clause (i) above as of the
Closing Date. The Purchaser shall cause the Company to provide all notices and
take all other actions required by the Retiree Medical Plan and under applicable
laws in connection with the Retiree Medical Plan Modifications. The Seller shall
indemnify and hold harmless the Company and the Purchaser with respect to any
claims asserted
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by present or past employees of the Company relating to or in connection with
the Retiree Plan Modifications; provided, however, that no claim for
indemnification under this Section 5.20(a) may be made by the Company or the
Purchaser to the extent that the Purchaser has not satisfied in all material
respects its obligations set forth in the immediately preceding sentence.
(b) Runoff Claims for Medical and Dental Claims;
Administration of Medical and Dental Plans. Seller shall be liable for all
claims for medical and dental benefits that are covered and eligible for payment
under the terms of the Company's benefits plans applicable to such claims and
which are incurred prior to the Closing Date, but which are either not paid or
not reported, or both, prior to the Closing Date. The Seller shall not be liable
for any claims for medical or dental benefits that are incurred from and after
the Closing Date. The Company shall be liable for all claims for medical and
dental benefits that are incurred from and after the Closing Date. With respect
to the Seller's obligations in the first sentence of this Section 5.20(b), the
Seller shall administer the Company's medical and dental benefits plans from and
after the Closing Date in a manner and within the administrative and vendor fee
structure consistent with the Seller's administration of such plans for the
Company immediately prior to the Closing Date.
(c) COBRA Liabilities. The Company, and not the Seller, shall
be liable for, and shall duly and timely pay, perform and discharge all COBRA
Liabilities (as defined below in this Section 5.20(c)) to any person
participating in COBRA through the Company as of the Closing Date. The term
"COBRA Liabilities," as used herein, shall mean all liabilities and obligations
with respect to medical claims incurred from and after the Closing Date with
respect to the health care continuation of coverage requirements under Section
4980B of the Code and Sections 601-609 of ERISA.
(d) 401K/Profit Sharing Plan Contract. In connection with the
merger of the Company's 401K/Profit Sharing Plan ("Company's 401K Plan") into
the Purchaser's counterpart to such Plan ("Purchaser's 401K Plan"), the Seller
shall recognize the assignment by Southtrust State and Trust Company of Georgia,
N.A., trustee of the "Consultec, Inc. Profit Sharing Plan" (the "Trustee") of
the Fund Accumulator Participating Group Deposit Administration Contract dated
September 14, 1988 between the Company and the Trustee to the applicable trustee
of the Purchaser's 401K Plan at any time from and after the Closing Date.
ARTICLE VI.
CONDITIONS PRECEDENT
SECTION 6.01. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PURCHASER. The obligation of the Purchaser to consummate the transactions
contemplated by this Agreement is subject, at the option of the Purchaser, to
the satisfaction on or prior to the Closing Date of each of the following
conditions:
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(a) Accuracy of Representations and Warranties. The
representations and warranties of the Seller and the Company contained in this
Agreement or in any certificate or document delivered to the Purchaser pursuant
hereto shall be true and correct (subject to the standard set forth in Section
1.09 hereof) on and as of the Closing Date as though made on and as of that
date.
(b) Compliance with Covenants. The Seller and the Company
shall have performed and complied in all material respects with all terms,
agreements, covenants, and conditions of this Agreement to be performed or
complied with by them at or prior to the Closing Date.
(c) All Proceedings To Be Satisfactory. All proceedings to be
taken by the Company and the Seller in connection with the transactions
contemplated hereby, and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Purchaser and its counsel, and the
Purchaser and said counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
(d) No Material Adverse Change. There shall not have occurred
since January 1, 1999 any material adverse change (i) in the Company's condition
(financial or otherwise), results of operations, business, prospects, assets or
liabilities, or (ii) in the capacity of the Company to conduct such business in
a manner consistent with past practice.
(e) Legal Actions or Proceedings. No legal action or
proceeding shall have been instituted by any party or threatened by any
governmental department, agency, or authority, in either case seeking to
restrain, prohibit, invalidate, or otherwise affect the consummation of the
transactions contemplated hereby or which would, if adversely decided, have a
Material Adverse Effect on the Company.
(f) Supporting Documents. On or prior to the Closing Date, the
Seller shall have provided or caused to be provided to the Purchaser and its
counsel copies of the following supporting documents:
(A) (I) the charter documents of the Company and the Seller
certified as of a recent date by the Secretary of State of such entity's
jurisdiction of organization or incorporation, as applicable, and (II) a
certificate of the applicable Secretary of State as to the due organization or
incorporation and good standing of the Company and the Seller, as the case may
be;
(B) a certificate of the Secretary or an Assistant Secretary
of the Company and the Seller, dated the Closing Date and certifying (I) that
attached thereto is a true and complete copy of the Operating Agreement of the
Company or the Bylaws of the Seller, as the case may be, as in effect on the
date of such certification; (II) that the Certificate of Formation of the
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Company or Articles of Incorporation of the Seller, as the case may be, have not
been amended since the date of the last amendment contained in the certified
charter documents delivered pursuant to clause (A)(I) above; (III) that attached
thereto is a true and complete copy of the resolutions adopted by the Board of
Managers of the Company or the Board of Directors of the Seller, as the case may
be, authorizing the execution, delivery, and performance of this Agreement; and
(IV) as to the incumbency and signature of each member, manager, or officer of
the Company or the Seller that has executed or is executing this Agreement or
any certificate or other document delivered in connection with the Closing; and
(C) such additional supporting documents as the Purchaser or
its counsel may reasonably request.
All such documents shall be satisfactory in form and substance to the Purchaser
and its counsel.
(g) Opinion of Seller's Counsel. The Purchaser shall have
received an opinion of Seller's counsel opining with respect to the matters set
forth on Exhibit 6.01(g) attached hereto and which shall be satisfactory in form
and substance to the Purchaser and its counsel.
(h) Waiting Period Pursuant to HSR Act. The waiting period
required by the HSR Act shall have expired or an early termination shall have
been granted on or prior to the Closing Date.
SECTION 6.02. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
SELLER. The obligation of the Seller to consummate the transactions contemplated
by this Agreement is subject, at the option of the Seller, to the satisfaction
on or prior to the Closing Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of the Purchaser and the Guarantor contained in
this Agreement or in any certificate or document delivered to the Seller
pursuant hereto shall be true and correct (subject to the standard set forth in
Section 1.09 hereof) on and as of the Closing Date as though made on and as of
that date.
(b) Compliance with Covenants. The Purchaser and the Guarantor
shall have performed and complied in all material respects with all terms,
agreements, covenants, and conditions of this Agreement to be performed or
complied with by them on or prior to the Closing Date.
(c) All Proceedings to Be Satisfactory. All proceedings to be
taken by the Purchaser and the Guarantor, all transactions contemplated hereby,
and all documents incident hereto shall be reasonably satisfactory in form and
substance to the Seller and its counsel, and the Seller and said counsel shall
have received all such counterpart originals or certified or other copies of
such documents as they may reasonably request.
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(d) Legal Actions or Proceedings. No legal action or
proceeding shall have been instituted by any party or threatened by any
governmental department, agency, or authority, in either case seeking to
restrain, prohibit, invalidate, or otherwise affect the consummation of the
transactions contemplated hereby.
(e) No Material Adverse Change. There shall not have occurred
since the date of this Agreement any material adverse change (i) in the
condition (financial or otherwise), results of operations, business, prospects,
assets or liabilities of the Purchaser or the Guarantor, or (ii) in the capacity
of the Purchaser or the Guarantor to conduct such business in a manner
consistent with past practice.
(f) Waiting Period Pursuant to HSR Act. The waiting period
required by the HSR Act shall have expired or an early termination shall have
been granted on or prior to the Closing Date.
(g) Supporting Documents. On or prior to the Closing Date, the
Purchaser and the Guarantor shall have provided or caused to be provided to the
Seller and its counsel copies of the following supporting documents:
(A) (I) the charter documents of the Purchaser and the
Guarantor certified as of a recent date by the Secretary of State of each such
entity's jurisdiction of incorporation, and (II) a certificate of the applicable
Secretary of State as to the due incorporation and good standing of the
Purchaser and the Guarantor, as the case may be;
(B) a certificate of the Secretary or an Assistant Secretary
of the Purchaser and the Guarantor, dated the Closing Date and certifying (I)
that attached thereto is a true and complete copy of the Bylaws of the Purchaser
and the Guarantor, as applicable, as in effect on the date of such
certification; (II) that the Certificate of Incorporation of the Purchaser and
the Guarantor, as applicable, have not been amended since the date of the last
amendment referred to in the certificate delivered pursuant to clause (A)(II)
above; (III) that attached thereto is a true and complete copy of the
resolutions adopted by the Board of Directors of the Purchaser and adopted by an
authorized committee of the Board of Directors of the Guarantor, as applicable,
authorizing the execution, delivery, and performance of this Agreement; and (IV)
as to the incumbency and signature of each officer of the Purchaser or the
Guarantor that has executed or is executing this Agreement or any certificate or
other document delivered in connection with the Closing; and
(C) such additional supporting documents as the Seller or its
counsel may reasonably request.
All such documents shall be satisfactory in form and substance to the Seller and
its counsel.
(h) Opinion of Counsel to Purchaser and Guarantor. The Seller
shall have received an opinion of counsel to the Purchaser and the Guarantor
opining with respect to the
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matters set forth on Exhibit 6.02(h) attached hereto and which shall be
satisfactory in form and substance to the Seller and its counsel.
(i) Promissory Note. The Seller shall have received the Note,
executed by the Purchaser and the Guarantor.
(j) Approval of Missouri Department of Insurance. The Seller
shall have received all consents and approvals of the Missouri Department of
Insurance as are required in connection with the consummation of the
transactions contemplated by this Agreement, and the same shall be in form and
substance satisfactory to the Seller in its reasonable opinion.
ARTICLE VII.
INDEMNIFICATION
SECTION 7.01. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
INDEMNIFICATION. Except as set forth in this Section 7.01, each of the
representations and warranties made by the parties hereto in or pursuant to this
Agreement shall survive the Closing Date hereunder and continue in full force
and effect for a period of eighteen months thereafter. Notwithstanding the
foregoing, (i) the representations and warranties of the Seller and the Company
set forth in Section 2.24 (captioned "Year 2000 Compliance"), Section 2.27
(captioned "Largest Customers"), and Section 2.28 (captioned "Accounts
Receivable") shall not survive the Closing Date, and (ii) the representations
and warranties of the Seller and the Company set forth in Section 2.02
(captioned "Capitalization of the Company"), Section 2.13 (captioned "Taxes")
and Section 3.04 (captioned "Title to Seller's Interest") shall survive the
Closing Date and continue in full force and effect until the expiration of the
applicable statute of limitations.
SECTION 7.02. GENERAL SELLER INDEMNIFICATION OBLIGATIONS.
(a) The Seller shall indemnify, defend and hold harmless the
Purchaser and the Company (and their respective officers, directors,
shareholders, managers, members, employees, agents, and affiliates) from,
against and in respect of any and all losses, liabilities, deficiencies,
penalties, fines, costs, damages and expenses (including without limitation,
reasonable professional fees and costs of investigation, litigation, settlement,
and judgment and interest awarded) (collectively, "Losses") that may be suffered
or incurred by any of them arising from or by reason of:
(i) any breach (which shall be determined without regard
and without giving any effect to the Material Adverse Effect standard set forth
in Section 1.09 hereof) of any representation, warranty, covenant or agreement
made by the Seller in or pursuant to this Agreement (other than the
representations and warranties made in Section 2.24 (captioned "Year 2000
Compliance"), Section 2.27 (captioned "Largest Customers"), and Section 2.28
(captioned "Accounts Receivable"));
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(ii) any Taxes incurred by, imposed upon or attributable
to the Company, including reasonable legal fees and expenses incurred by the
Company, for any Prior Tax Period that are not otherwise reserved for in the
Closing Balance Sheet, including without limitation any amount due for sales and
use Taxes payable as a result of an audit conducted by state or local
governmental authorities (for purposes of this Section 7.02(a)(ii), any
interest, penalty or additional charge included in Taxes shall be deemed to be a
Tax for the period to which the item or event giving rise to such interest,
penalty or additional charge is attributable, and not a Tax for the period
during which such interest, penalty or additional charge accrues);
(iii) the Company's litigation with The Medstat Group,
Inc. as described in Item #2 of Schedule 2.12 hereto (the "Medstat Litigation")
only to the extent that Losses incurred in connection with the Medstat
Litigation exceed $250,000; provided, however, that, notwithstanding any
provisions to the contrary set forth in this Section 7, the Seller shall have
full control of the defense and proceedings of the Medstat Litigation, including
without limitation, the compromise and settlement thereof; and
(iv) any license fees (the "Retroactive License Fees")
applicable to any period prior to the Closing Date and not paid prior to the
date hereof by the Company which shall have been paid by the Company to SAS
Institute Inc. ("SAS") after the Closing Date in connection with that certain
Program Products License Agreement dated March 22, 1983 between SAS and the
Seller and to which the Company was made a party by Supplement Number 3 dated
May 14, 1985 between SAS and the Company (the "SAS Agreement"); provided,
however: (I) any negotiations or agreements among SAS and any of the Company,
the Purchaser, the Guarantor or any of their respective affiliates with respect
to any such Retroactive License Fees shall be based solely upon the pre-Closing
relationship of the Seller, the Company and SAS and shall not take into account
any existing or proposed relationships between the Company, the Purchaser, the
Guarantor or their respective affiliates with SAS; (II) the Company, the
Purchaser and the Guarantor (on behalf of themselves and their respective
affiliates) shall confer and consult with the Seller regarding any such
negotiations with respect to the Retroactive License Fees; and (III) the
Seller's obligations under this Section 7.02(a)(iv) shall not exceed the lesser
of 50% of the amount of the Retroactive License Fees and $150,000.
(b) No claim for indemnification under this Section 7.02 may
be made by the Purchaser against the Seller (i) to the extent of any proceeds
received by the Purchaser or the Company from any insurance with respect to any
claimed Loss, (ii) unless or until the aggregate amount for all Losses claimed
or asserted by the Purchaser or the Company against the Seller pursuant to this
Section 7.02 exceeds $500,000 (the "Section 7.02 Basket Amount") and, if the
aggregate amount of all such claims exceeds the Section 7.02 Basket Amount, then
the Seller shall be obligated to indemnify the Purchaser and the Company from
and against all Losses over and above the Section 7.02 Basket Amount; provided,
however, that any Losses with respect to the Medstat Litigation and the
Retroactive License Fees shall not be subject to the Section 7.02 Basket Amount
and, subject to the other provisions of this Section 7.02(c), shall be payable
from "dollar one", (iii) more than eighteen months after the Closing Date
(provided that any such claim made during such eighteen month period may
continue to be prosecuted in accordance
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with this Agreement after such eighteen month period) (except for (1) Losses
related to breaches of the representations and warranties of the Seller and the
Company set forth in Section 2.02 (captioned "Capitalization of the Company"),
Section 2.13 (captioned "Taxes"), Section 3.04 (captioned "Title to Seller's
Interest"), and Losses related to Tax matters set forth in Section 7.02(a)(ii)
hereof, each of which shall survive for the applicable statute of limitations
period, and (2) obligations of the Seller under Section 7.02(a)(iii) (the
MedStat Litigation) and Section 7.02(a)(iv) (the Retroactive License Fees), each
of which shall survive until such matters are finally resolved). The aggregate
indemnification liability and obligation of the Seller under this Section 7.02
shall not exceed $10,000,000. Notwithstanding anything herein to the contrary,
the limitations and restrictions set forth in this Section 7.02(b) shall not
apply to Losses that shall result from breaches of agreements or covenants made
by the Seller in or pursuant to this Agreement or that result from breaches of
the representation and warranty set forth in Section 2.13 hereof (captioned
"Taxes").
SECTION 7.03. Y2K SELLER INDEMNIFICATION OBLIGATIONS.
(a) The Seller shall indemnify, defend and hold harmless the
Purchaser and the Company (and their respective officers, directors,
shareholders, managers, members, employees, agents, and affiliates) from,
against and in respect of any and all actual out-of-pocket Losses resulting from
Third Party Claims (as defined in Section 7.05(a) hereof) suffered or incurred
by either of them directly caused by Y2K Deficiencies (as defined below in this
Section 7.03(a)) of the Company in connection with: (i) computer software code
developed by the Company prior to the Closing Date, or (ii) any other service or
product used by the Company or provided by the Company to its customers which
service or product is unchanged (other than changes in the ordinary course of
business that do not affect the Company's Year 2000 compliance) from that
provided by the Company prior to the Closing Date. The term "Y2K Deficiencies,"
as used herein, shall mean any malfunction, cessation of functioning, generation
of incorrect data, or production of incorrect results when processing, providing
or receiving (i) date-related data from, into and between the twentieth and the
twenty-first centuries, or (ii) date-related data in connection with any valid
date in the twentieth and twenty-first centuries.
(b) No claim for indemnification under this Section 7.03 may
be made by the Purchaser against the Seller (i) to the extent of any proceeds
received by the Purchaser or the Company from any insurance with respect to any
claimed Loss, (ii) unless or until the aggregate amount for all Losses claimed
or asserted by the Purchaser or the Company against the Seller pursuant to this
Section 7.03 exceeds $500,000 (the "Section 7.03 Basket Amount") and, if the
aggregate amount of all such claims exceeds the Section 7.03 Basket Amount, then
the Seller shall be obligated to indemnify the Purchaser and the Company from
and against all Losses over and above the Section 7.03 Basket Amount, and (iii)
more than twelve months after the Closing Date (provided that any such claim
made during such twelve month period may continue to be prosecuted in accordance
with this Agreement after such twelve month period). The aggregate
indemnification liability and obligation of the Seller under this Section 7.03
shall not exceed $10,000,000.
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(c) Any Losses suffered or incurred by the Seller or the
Company that relate to, result from or are in connection with Y2K Deficiencies
shall be subject to the terms, conditions, restrictions and limitations of this
Section 7.03 and neither the Seller, the Company nor any other person entitled
to indemnification under this Agreement shall be entitled to recover any such
Losses under Section 7.02 hereof, notwithstanding the fact that such Losses may
also constitute a breach by the Seller or the Company of a representation or
warranty made by either or both of them in or pursuant to this Agreement that,
absent this Section 7.03, would otherwise be covered by Section 7.02 hereof.
SECTION 7.04. GENERAL PURCHASER INDEMNIFICATION OBLIGATIONS.
(a) The Purchaser and the Guarantor shall indemnify, defend
and hold harmless the Seller (and its officers, directors, shareholders,
employees, agents, and affiliates) from, against and in respect of any and all
Losses that may be suffered or incurred by any of them arising from or by reason
of any:
(i) breach (which shall be determined without regard and
without giving any effect to the Material Adverse Effect standard set forth in
Section 1.09 hereof) of any representation, warranty, covenant or agreement made
by the Purchaser or the Guarantor in or pursuant to this Agreement; and
(ii) liabilities or obligations of the Company included
in the Closing Balance Sheet or the Back-up Materials or the Fiscal Agent
Guaranties.
(b) No claim for indemnification under this Section 7.04 may
be made by the Seller against the Purchaser or the Guarantor (i) to the extent
of any proceeds received by the Seller from any insurance with respect to any
claimed Loss, (ii) unless or until the aggregate amount for all Losses claimed
or asserted by the Seller against the Purchaser pursuant to this Section 7.04
exceeds $500,000 (the "Section 7.04 Basket Amount") and, if the aggregate amount
of all such claims exceeds the Section 7.04 Basket Amount, then the Purchaser
shall be obligated to indemnify the Seller from and against all Losses over and
above the Section 7.04 Basket Amount, (iii) more than eighteen months after the
Closing Date (provided that any such claim made during such eighteen month
period may continue to be prosecuted in accordance with this Agreement after
such eighteen month period). The aggregate indemnification liability and
obligation of the Purchaser under this Section 7.04 shall not exceed
$10,000,000. Notwithstanding anything herein to the contrary, the limitations
and restrictions set forth in this Section 7.04(b) shall not apply to Losses
that shall result from breaches of agreements or covenants made by the Purchaser
or the Guarantor in or pursuant to this Agreement.
SECTION 7.05. INDEMNIFICATION PROCEDURES. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
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(a) A party claiming indemnification under this Article VII
(an "Indemnified Party") shall promptly (i) notify the party from whom
indemnification is sought (the "Indemnifying Party") of any third-party claim (a
"Third Party Claim") asserted against the Indemnified Party by an unrelated
third party which could give rise to a right of indemnification under this
Article VII, and (ii) transmit to the Indemnifying Party a written notice (a
"Claim Notice") describing in reasonable detail the nature of the Third Party
Claim, a copy of all papers served with respect to such Third Party Claim (if
any), an estimate of the amount of Losses attributable to the Third Party Claim,
if reasonably possible, and the basis of the Indemnified Party's request for
indemnification under this Agreement.
(b) Within 30 days after receipt of any Claim Notice (the
"Election Period"), the Indemnifying Party shall notify the Indemnified Party
(i) whether the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article VII with respect to such Third Party Claim,
and (ii) whether the Indemnifying Party desires, at the sole cost and expense of
the Indemnifying Party, to defend the Indemnified Party against such Third Party
Claim.
(c) If the Indemnifying Party notifies the Indemnified Party
within the Election Period that the Indemnifying Party does not dispute its
potential liability to the Indemnified Party under this Article VII and that the
Indemnifying Party elects to assume the defense of the Third Party Claim, then
the Indemnifying Party shall have the right to defend, at its sole cost and
expense, such Third Party Claim by all appropriate proceedings, which
proceedings shall be prosecuted diligently by the Indemnifying Party to a final
conclusion or settled at the discretion of the Indemnifying Party. The
Indemnifying Party shall have full control of such defense and proceedings
including any compromise or settlement thereof; provided that any non-monetary
aspect of any settlement shall require the consent of the Indemnified Party,
which consent shall not be unreasonably withheld or delayed. The Indemnified
Party is hereby authorized, at the sole cost and expense of the Indemnifying
Party (but only if the Indemnified Party is actually entitled to indemnification
hereunder or if the Indemnifying Party assumes the defense with respect to the
Third Party Claim), to file, during the Election Period, any motion, answer or
other pleadings which the Indemnified Party shall deem necessary or appropriate
to protect its interests or those of the Indemnifying Party. If requested by the
Indemnifying Party, the Indemnified Party shall, at the sole cost and expense of
the Indemnifying Party, cooperate with the Indemnifying Party and its counsel in
contesting any Third Party Claim which the Indemnifying Party elects to contest.
The Indemnified Party may participate in, but not control, any defense or
settlement of any Third Party Claim controlled by the Indemnifying Party
pursuant to this Section 7.05 and, except as permitted above, shall bear its own
costs and expenses with respect to such participation.
(d) If the Indemnifying Party fails to notify the Indemnified
Party within the Election Period that the Indemnifying Party elects to defend
the Indemnified Party pursuant to this Section 7.05, then the Indemnified Party
shall have the right to defend, at the sole cost and expense of the Indemnifying
Party, the Third Party Claim by all appropriate proceedings. The Indemnified
Party shall have full control of such defense and proceedings; provided,
however,
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that the Indemnified Party may not enter into, without the Indemnifying Party's
consent (which shall not be unreasonably withheld or delayed) any compromise or
settlement of such Third Party Claim. The Indemnifying Party may participate in,
but not control, any defense or settlement controlled by the Indemnified Party
pursuant to this Section 7.05, and the Indemnifying Party shall bear its own
costs and expenses with respect to such participation.
(e) In the event an Indemnified Party shall have a claim
against an Indemnifying Party hereunder which does not involve a Third Party
Claim, the Indemnified Party shall transmit to the Indemnifying Party a written
notice (the "Indemnity Notice") describing in reasonable detail the nature of
the claim, an estimate of the amount of damages attributable to such claim and
the basis of the Indemnified Party's request for indemnification under this
Agreement. If the Indemnifying Party does not dispute the Indemnity Notice, then
the Indemnifying party shall indemnify the Indemnified Party for the total
amount of the Losses suffered or incurred by the Indemnified Party, subject to
the applicable terms, conditions and limitations set forth in this Article VII.
(f) In the event that the Purchaser or the Seller, as the case
may be, disputes (i) its potential liability to, or the amount of the potential
liability, the other party with respect to a Third Party Claim under this
Article VII, or (ii) its potential liability to, or the amount of the potential
liability, the other party with respect to a claim that is not a Third Party
Claim, then the Seller and the Purchaser shall attempt in good faith to resolve
any disputed matters by negotiation between executives who have the authority to
settle and resolve the disputed matters and who are at a higher level of
management than the persons with direct responsibility for administration of
this Agreement. Any party hereto may give the other party hereto written notice
of any dispute not resolved in the normal course of business. Within 30 days
after delivery of the written notice, the receiving party shall submit to the
other party a written response. The notice and response shall include (i) a
statement of each party's position and a summary of the arguments supporting
that position, and (ii) the name and title of the executive who shall represent
that party and of any other person who shall accompany the executive. Within 30
days after the delivery of the disputing party's notice, the executives of both
parties shall meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to attempt to resolve the disputed
matters. All reasonable requests for information made by one party to the other
shall be honored. All negotiations pursuant to this Section 7.05(f) shall be
confidential and shall be treated as compromise and settlement negotiations for
purposes of applicable rules of evidence. If the disputed matters shall not have
been resolved as provided above in this Section 7.05(f) hereof, then the Seller
and the Purchaser shall thereafter endeavor to settle such dispute by mediation
under the then current Center for Public Resources ("CPR") Model Procedure for
Mediation of Business Disputes. The neutral third party required by this
procedure shall be a lawyer selected by CPR Panels of Neutrals. If the parties
encounter difficulty in agreeing on a neutral third party, they shall seek the
assistance of CPR in the selection process. If such disagreement has not been
resolved by negotiation or mediation within 30 days of the initiation of such
procedure, the parties shall finally settle such dispute by binding arbitration
conducted expeditiously in accordance with the Center for Public Resources Rules
for Non-Administered Arbitration of Business Disputes by a sole arbitrator;
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provided, however, that if one party has requested the other to participate in
negotiation or mediation and the other has failed to participate, the requesting
party may initiate arbitration before expiration of the above period. The sole
arbitrator shall be a lawyer selected from the CPR Panels of Neutrals. If the
parties encounter difficulty in agreeing on an arbitrator they shall seek the
assistance of CPR in the selection process. The arbitration shall be governed by
the United States Arbitration Act, 9 U.S.C. Sections 1-16, and judgment upon the
award rendered by the arbitrator may be entered into any court having
jurisdiction thereof. The parties shall conduct any mediation or arbitration
proceedings pursuant to this Section 7.05(f) in St. Louis, Missouri (if brought
by the Purchaser) or in Dallas, Texas (if brought by the Seller), and the
arbitrator shall apply the substantive law of Delaware as applicable to the
dispute.
(g) Notwithstanding the foregoing, if the Purchaser or the
Seller, as the case may be, shall have been found by the arbitrator pursuant to
this Section 7.05 to be liable to the other party for an amount in excess of
$1,000,000 (an "Excess Award"), then the party that shall have been found by the
arbitrator to be liable for such Excess Award shall have the right to appeal
such Excess Award in accordance with the law of the State of Delaware applicable
to appeals of judgments by a court of law.
(h) The failure to provide notice as provided in this Section
7.05 shall not excuse any party from its continuing obligations hereunder;
however, any claim shall be reduced by the damages resulting from such party's
delay or failure to provide notice as provided in this Section 7.05.
SECTION 7.06. REMEDIES LIMITED. From and after the Closing
Date, the indemnification provisions of this Article VII shall be the sole and
exclusive remedy of the parties hereto with respect to any breach of this
Agreement; provided, however, that the foregoing shall not prohibit any claim
for injunctive or non-monetary equitable relief.
ARTICLE VIII.
TERMINATION AND ABANDONMENT
SECTION 8.01. TERMINATION. This Agreement may be terminated at
any time prior to the Closing:
(a) by the mutual consent of the Seller and the Purchaser;
(b) by a "Breaching Party" (as defined in Section 8.03
hereof), subject to the terms (including the payment obligations) of Section
8.03; or
(c) by the Purchaser, on the one hand, or the Seller, on the
other hand, if the Closing shall not have occurred on or before December 31,
1999 or such later date as may be agreed upon by the parties hereto; provided,
however, that the right to terminate this Agreement under this Section 8.01(c)
shall not be available to any party (a "Defaulting Party") whose failure
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to fulfill any obligation under this Agreement has been the cause of or resulted
in the failure of the Closing to occur on or before such date.
SECTION 8.02. PROCEDURE AND EFFECT OF TERMINATION. In the
event of the termination of this Agreement and the abandonment of the
transactions contemplated hereby by any or all of the parties pursuant to
Section 8.01 hereof, written notice thereof shall promptly be given to the other
parties to this Agreement and this Agreement (except for this Section and
Sections 8.01 and 9.01, which shall continue) shall terminate and the
transactions contemplated hereby shall be abandoned, without further action by
any of the parties hereto. If this Agreement is terminated as provided in this
Agreement:
(a) the parties hereto will promptly redeliver all documents,
work papers and other material of any other party relating to the transactions
contemplated hereby, whether obtained before or after the execution hereof, to
the party furnishing the same; and
(b) no party shall have any liability or further obligation to
any other party to this Agreement pursuant to this Agreement except as provided
in this Article VIII.
SECTION 8.03. PRE-CLOSING BREACH.
(a) Between the date hereof and the Closing Date, if as a
result of any investigation by any party or any information disclosed to or
discovered by such party prior to the Closing Date (other than matters disclosed
in the Schedules to this Agreement), such party determines that any
representation or warranty of another party hereunder is not true, or that any
covenant of another party (in either case, the "Breaching Party") is
impracticable or impossible of performance (a "Pre-Closing Breach"), the party
making such determination shall use reasonable efforts to communicate the
existence of a possible Pre-Closing Breach to the Breaching Party. Promptly
after learning of any Pre-Closing Breach, the Breaching Party shall use its best
efforts to remedy or cure the same; provided that, in the event the Breaching
Party determines that the cost of remedying such Pre-Closing Breach is greater
than $100,000 or that such Pre-Closing Breach cannot be remedied prior to the
Closing Date, the Breaching Party may terminate this Agreement and all of its
obligations hereunder to the other parties hereto by paying all fees, expenses
and internal allocated costs of each other party hereto relating to the
negotiation, execution or implementation of the acquisition contemplated hereby.
Any party entitled to reimbursement for fees, expenses and costs (whether
arising before or after the date hereof) shall submit reasonably detailed
supporting documentation to the Breaching Party. Except as provided in this
Section 8.03, the Breaching Party shall have no obligation to the other parties
hereto as a result of the Breaching Party's breach of this Agreement.
(b) Nothing in Section 8.03(a) hereof shall restrict the
requirement that the Breaching Party either satisfy or obtain a waiver of all
conditions precedent set forth in Sections 6.01 or 6.02 hereof, as the case may
be, in order to cause the Purchaser or the Seller, as the case may be, to be
obligated to consummate the transactions contemplated hereby.
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(c) Notwithstanding anything to the contrary set forth in this
Agreement, no investigation or acquisition of information (whether actual,
alleged, or imputed) by any party hereto shall in any way operate as a waiver of
the representations, warranties and covenants made to or for the benefit of such
party in this Agreement. In addition to and without limiting the generality of
the foregoing, after the Closing Date any actual or alleged failure by any party
hereto to disclose a Pre-Closing Breach shall in no way restrict such party from
seeking indemnification or any other available remedy hereunder for such
Pre-Closing Breach.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01. EXPENSES, ETC.
(a) Subject to Section 9.10 hereof, all costs and expenses,
including fees and disbursements of counsel, advisors, accountants, and
consultants, incurred in connection with the negotiation, preparation,
execution, and delivery of this Agreement and the closing of the transactions
contemplated hereby (collectively, the "Expenses), shall be paid by the party
incurring such Expenses; provided, however, that the Expenses of the Company
shall be borne by the Seller. All transfer, documentary, stamp, and other
similar taxes, if any, in connection with the transfer of the Seller's Interest
as provided herein shall be borne by the Seller. The Seller and the Purchaser
shall divide equally the $45,000 notice application filing fee incurred by the
Guarantor in connection with compliance with the HSR Act.
(b) The Seller, on the one hand, and the Purchaser, on the
other hand, will indemnify the other and hold the other harmless from and
against any claims for finders' fees or brokerage commissions in relation to or
in connection with such transactions as a result of any agreement or
understanding between such indemnifying party and any third party.
SECTION 9.02. EXECUTION IN COUNTERPARTS. For the convenience
of the parties, this Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 9.03. NOTICES. All notices which are required or maybe
given pursuant to the terms of this Agreement shall be in writing and shall be
sufficient and deemed to be received if (i) delivered personally, (ii) mailed by
registered or certified mail, return receipt requested and postage prepaid, or
(iii) sent via a nationally recognized overnight courier service, in each case
as follows:
if to the Purchaser, to:
ACS Enterprise Solutions, Inc.
2828 North Haskell
Dallas, Texas 75204
Attention: John Rexford
(copy to David Black)
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if to the Guarantor, to:
Affiliated Computer Services, Inc.
2828 North Haskell
Dallas, Texas 75204
Attention: General Counsel
if to the Seller, to:
General American Life Insurance Company
700 Market Street, Mail Code H6-2
St. Louis, Missouri 63101
Attention: David J. Stevens, Counsel
if to the Company, to:
Consultec, LLC
9040 Roswell Road, Suite 700
Atlanta, Georgia 30350
Attention: Chief Executive Officer
or such other address or addresses as the parties hereto shall have designated
by notice in writing to the others.
SECTION 9.04. WAIVERS. Either the Seller or the Purchaser may,
by written notice to the other, (i) extend the time for the performance of any
of the obligations or other actions of the other under this Agreement, (ii)
waive any inaccuracies in the representations or warranties of the other
contained in this Agreement or in any document delivered pursuant to this
Agreement, (iii) waive compliance with any of the conditions or covenants of the
other contained in this Agreement, or (iv) waive performance of any of the
obligations of the other under this Agreement. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
SECTION 9.05. AMENDMENTS, SUPPLEMENTS, ETC. At any time this
Agreement may be amended or supplemented by such additional agreements,
articles, or certificates, as may be determined by the parties hereto to be
necessary, desirable, or expedient to further the purposes of this Agreement; or
to clarify the intention of the parties hereto; or to add to or modify the
covenants, terms, or conditions hereof; or to effect or facilitate any
governmental approval or acceptance of this Agreement; or to effect or
facilitate the filing or recording of this Agreement or the consummation of any
of the transactions contemplated hereby. Any such instrument must be in writing
and signed by all parties hereto.
48
<PAGE> 54
SECTION 9.06. ENTIRE AGREEMENT. This Agreement, its Exhibits
and Schedules and the documents executed on the Closing Date in connection
herewith, constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof.
SECTION 9.07. APPLICABLE LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware, exclusive
of the conflicts of laws provisions thereof.
SECTION 9.08. BINDING EFFECT; BENEFITS. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Notwithstanding anything contained
in this Agreement to the contrary, nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto or
their respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
SECTION 9.09. ASSIGNABILITY. Neither this Agreement nor any of
the parties' rights hereunder shall be assignable by any party hereto without
the prior written consent of the other parties hereto.
THIS AGREEMENT CONTAINS BINDING ARBITRATION PROVISIONS WHICH MAY BE
ENFORCED BY THE PARTIES.
49
<PAGE> 55
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties hereto as of the day and year first above written.
ACS ENTERPRISE SOLUTIONS, INC.
as Purchaser
By:
------------------------------------
Name:
Title:
AFFILIATED COMPUTER SERVICES, INC.
as Guarantor
By:
------------------------------------
Name:
Title:
GENERAL AMERICAN LIFE INSURANCE COMPANY
as Seller
By:
------------------------------------
Name:
Title:
CONSULTEC, LLC
By:
------------------------------------
Name:
Title:
50
<PAGE> 56
EXHIBIT 1.08
Form of Promissory Note
PROMISSORY NOTE
$3,976,683 September 30, 1999
Reference is hereby made to that certain Limited Liability Company
Membership Purchase Agreement dated as of the date hereof (the "Purchase
Agreement") among ACS ENTERPRISE SOLUTIONS, INC., a Delaware corporation
("Buyer"), AFFILIATED COMPUTER SERVICES, INC., a Delaware corporation
("Parent"), CONSULTEC, LLC, a Delaware limited liability company ("Consultec")
and GENERAL AMERICAN LIFE INSURANCE COMPANY, a Missouri corporation ("Seller").
Terms used but not otherwise defined herein have the meanings ascribed to them
in the Purchase Agreement.
This Promissory Note (the "Note") is delivered pursuant to Section 1.08
of the Purchase Agreement.
FOR VALUE RECEIVED, Buyer hereby promises to pay to the order of Seller
the principal sum of $3,976,683, together with interest thereon from the date
hereof until payment in full at the rate of 7% per annum payable by Buyer to
Seller in full upon the earlier to occur of the following (the "Maturity Date"):
(a) 120 days after the Closing Date; or (b) 3 business days following the date
on which all of the following Closing Receivables have been collected in full by
Consultec: (i) State of Colorado systems - $3,800,000, (ii) State of Florida
implementation - $2,000,000, and (iii) State of Georgia - $2,000,000. Buyer
shall notify Seller in writing promptly upon Buyer's collection of each of the
Closing Receivables set forth in the immediately preceding sentence.
The payment of the principal sum and interest under this Note shall be
made by Buyer to Seller in lawful currency of the United States by wire transfer
in accordance with the same wire transfer instructions provided by Seller to
Buyer in connection with Buyer's payment of the Purchase Price, unless Seller
provides Buyer with other written instructions no later than 2 business days
prior to the Maturity Date.
Buyer shall be privileged to prepay at any time, all or any portion of
the unpaid principal amount of this Note, with accrued interest on such prepaid
amount, but without penalty or premium. All principal prepayments shall be
applied to reduce the unpaid principal amount owed under this Note until all of
such amount has been paid, and a partial prepayment of principal shall not
extend or postpone the due date or change the amount of Buyer's payment due
hereunder. The acceptance by Seller of any partial prepayment of principal or
interest shall not be held to waive any rights of Seller to enforce prompt
payment of any other amounts due under this Note.
<PAGE> 57
The failure by Buyer to make the payment of principal and interest due
hereunder on or prior to the Maturity Date shall constitute a default of Buyer
under this Note. In the event of such a default by Buyer, in addition to any
other rights and remedies available to Seller under applicable law, Seller is
authorized and shall have the right to setoff and apply any amounts due Seller
under this Note against any and all amounts that Seller is otherwise obligated
to pay Buyer under the Purchase Agreement.
In the event of a default by Seller under the Purchase Agreement, in
addition to any other rights and remedies available to Buyer under the Purchase
Agreement, Buyer is authorized and shall have the right to set-off any amounts
due Seller under this Note against any and all amounts that Seller is otherwise
obligated to pay Buyer under the Purchase Agreement.
To the full extent permitted by law, Buyer and all endorsers, sureties,
guarantors and other persons who may become liable for the payment hereof
severally waive demand, presentment, protest, notice of dishonor or nonpayment,
notice of protest, and any and all lack of diligence in the enforcement or
collection hereof and hereby consent to any renewals, extensions, or other
indulgences, and releases of any of them all without notice to any of them.
In the event that the payment of principal or interest due hereunder
shall not be paid on or prior to the Maturity Date, and this Note is placed in
the hands of an attorney or attorneys for collection, Buyer promises to pay, in
addition to all other amounts otherwise due hereon, the costs and expenses of
such collection including without limitation, attorneys' fees and expenses,
whether or not arbitration or litigation shall be commenced in aid thereof. The
arbitration provisions set forth in Article VII of the Purchase Agreement also
shall apply to the resolution of disputes under this Note.
All provisions of this Note shall bind any permitted successors or
assigns of Buyer and shall inure to the benefit of the permitted successors or
assigns of Seller. Seller may only assign this Note to an affiliate of Seller
and any such assignee shall take this Note subject to Buyer's right of off-set
described in the seventh paragraph hereof.
<PAGE> 58
This Note shall be governed by and construed in accordance with the
laws of the State of Delaware.
ACS ENTERPRISE SOLUTIONS, INC.
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
Parent hereby acknowledges Buyer's execution and delivery of this Note and
Parent's obligations under Section 5.11 of the Purchase Agreement with respect
to Parent's guaranty of Buyer's obligations under this Note:
AFFILIATED COMPUTER SERVICES, INC.
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
<PAGE> 59
EXHIBIT 6.01(g)
Form of Opinion of Counsel to the Seller
[date]
RE:
Ladies and Gentlemen:
We have acted as counsel to General American Life Insurance Company, a
Missouri corporation (the "Seller") in connection with the execution and
delivery of the Limited Liability Company Membership Purchase Agreement dated as
of September 30, 1999 (the "Purchase Agreement") among ACS Enterprise Solutions,
Inc., a Delaware corporation (the "Purchaser"), Affiliated Computer Services,
Inc., a Delaware corporation (the "Guarantor"), Consultec, LLC, a Delaware
limited liability company (the "Company") and the Seller. This opinion is
delivered to you pursuant to Section 6.01(g) of the Purchase Agreement.
[INSERT QUALIFICATIONS]
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
1. The Seller is a corporation, duly incorporated, validly existing and
in good standing under the laws of the State of Missouri.
2. The Company is a limited liability company, duly organized, validly
existing and in good standing under the laws of the State of Delaware.
3. The Purchase Agreement has been duly authorized, executed and
delivered by and is the legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms.
4. Neither the execution, delivery nor performance of the Purchase
Agreement by the Seller will violate the Seller's articles of incorporation or
any provision of the Seller's bylaws.
5. The Seller has all requisite power and authority to enter into the
Purchase Agreement, to perform all of its obligations thereunder and to
consummate the transactions contemplated thereby.
6. The Seller's Interest (as such term is defined in the Purchase
Agreement) will transfer to the Purchaser upon the consummation of the
transactions contemplated by the Purchase Agreement.
Our opinion is rendered solely for your benefit and may not be
delivered to, or relied
<PAGE> 60
upon by, any other person. Our opinion is based upon a state of facts and the
law existing and in effect on the date hereof, and we assume no obligation to
revise, supplement or update this opinion in any respect at any time subsequent
to the date hereof.
Sincerely,
Lewis, Rice & Fingersh, L.C.
<PAGE> 61
EXHIBIT 6.02(h)
Form of Opinion of Counsel to the Purchaser and the Guarantor
[date]
RE:
Ladies and Gentlemen:
We have acted as counsel to ACS Enterprise Solutions, Inc., a Delaware
corporation (the "Purchaser") and Affiliated Computer Services, Inc., a Delaware
corporation (the "Guarantor") in connection with the execution and delivery of
the Limited Liability Company Membership Purchase Agreement dated as of
September 30, 1999 (the "Purchase Agreement") among the Purchaser, the
Guarantor, Consultec, LLC, a Delaware limited liability company (the "Company")
and General American Life Insurance Company, a Missouri corporation (the
"Seller"). This opinion is delivered to you pursuant to Section 6.02(h) of the
Purchase Agreement.
[INSERT QUALIFICATIONS]
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
1. Each of the Purchaser and the Guarantor is a corporation, duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.
2. Each of the Purchaser and the Guarantor has all requisite power and
authority to own or lease its properties and to carry on its business as now
being conducted.
3. The Purchase Agreement has been duly authorized, executed and
delivered by and is the legal, valid and binding obligation of the Purchaser and
the Guarantor, enforceable against the Purchaser and the Guarantor in accordance
with its terms.
4. Neither the execution, delivery nor performance of the Purchase
Agreement by the Purchaser will violate the Purchaser's certificate of
incorporation or any provision of the Purchaser's bylaws.
5. Neither the execution, delivery nor performance of the Purchase
Agreement by the Guarantor will violate the Guarantor's certificate of
incorporation or any provision of the Guarantor's bylaws.
6. Each of the Purchaser and the Guarantor has all requisite power and
authority to enter into the Purchase Agreement, to perform all of its
obligations thereunder and to consummate the transactions contemplated thereby.
<PAGE> 62
Our opinion is rendered solely for your benefit and may not be
delivered to, or relied upon by, any other person. Our opinion is based upon a
state of facts and the law existing and in effect on the date hereof, and we
assume no obligation to revise, supplement or update this opinion in any respect
at any time subsequent to the date hereof.
Sincerely,
Hughes & Luce, L.L.P.
<PAGE> 1
EXHIBIT 10.1
CREDIT AGREEMENT
between
AFFILIATED COMPUTER SERVICES, INC.,
Borrower
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION,
Agent and Arranger
and
CERTAIN LENDERS
$50,000,000 REVOLVING FACILITY
SEPTEMBER 27, 1999
CREDIT AGREEMENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1 DEFINITIONS AND TERMS...........................................................................1
1.1 Definitions.....................................................................................1
1.2 Time References................................................................................13
1.3 Other References...............................................................................13
1.4 Accounting Principles..........................................................................13
SECTION 2 COMMITMENT.....................................................................................13
2.1 Revolving Facility.............................................................................13
2.2 Borrowing Procedure............................................................................14
2.3 Letters of Credit..............................................................................15
2.5 Borrowing Notices and LC Requests..............................................................19
2.6 Termination....................................................................................19
2.7 Lenders........................................................................................19
SECTION 3 TERMS OF PAYMENT...............................................................................20
3.1 Notes and Payments.............................................................................20
3.2 Interest and Principal Payments................................................................20
3.3 Interest Options...............................................................................21
3.4 Quotation of Rates.............................................................................21
3.5 Default Rate...................................................................................21
3.6 Interest Recapture.............................................................................21
3.7 Interest Calculations..........................................................................21
3.8 Maximum Rate...................................................................................21
3.9 Interest Periods...............................................................................22
3.10 Conversions....................................................................................22
3.11 Order of Application...........................................................................22
3.12 Sharing of Payments, Etc.......................................................................23
3.13 Offset.........................................................................................23
3.14 Booking Borrowings.............................................................................23
3.15 Basis Unavailable or Inadequate for LIBOR......................................................23
3.16 Additional Costs...............................................................................24
3.17 Change in Laws.................................................................................25
3.18 Funding Loss...................................................................................26
3.19 Foreign Lenders, Participants, and Assignees...................................................26
SECTION 4 FEES...........................................................................................26
4.1 Treatment of Fees..............................................................................26
4.2 Agent's Fees...................................................................................26
4.3 LC Fees........................................................................................26
4.4 Committment of Fees............................................................................27
SECTION 5 SECURITY.......................................................................................28
5.1 Guaranty.......................................................................................28
5.2 Collateral.....................................................................................28
5.3 Additional Security and Guaranties.............................................................28
5.4 Further Assurances.............................................................................28
5.5 Release of Collateral..........................................................................28
SECTION 6 CONDITIONS PRECEDENT...........................................................................29
SECTION 7 REPRESENTATIONS AND WARRANTIES.................................................................29
7.1 Purpose and Regulation U.......................................................................29
7.2 Corporate Existence, Good Standing, and Authority..............................................30
7.3 Subsidiaries and Names.........................................................................30
</TABLE>
CREDIT AGREEMENT
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
7.4 Authorization and Contravention................................................................30
7.5 Binding Effect.................................................................................30
7.6 Financials and Existing Debt...................................................................31
7.7 Solvency.......................................................................................31
7.8 Litigation.....................................................................................31
7.9 Taxes..........................................................................................31
7.10 Environmental Matters..........................................................................31
7.11 Employee Plans.................................................................................31
7.12 Properties; Liens..............................................................................32
7.13 Government Regulations.........................................................................32
7.14 Transactions with Affiliates...................................................................32
7.15 Debt...........................................................................................32
7.16 Leases.........................................................................................32
7.17 Labor Matters..................................................................................32
7.18 Intellectual Property..........................................................................33
7.19 Insurance......................................................................................33
7.20 Full Disclosure................................................................................33
SECTION 8 AFFIRMATIVE COVENANTS..........................................................................33
8.1 Certain Items Furnished........................................................................33
8.2 Use of Credit..................................................................................34
8.3 Books and Records..............................................................................34
8.4 Inspections....................................................................................34
8.5 Taxes..........................................................................................35
8.6 Payment of Obligation..........................................................................35
8.7 Expenses.......................................................................................35
8.8 Maintenance of Existence, Assets, and Business.................................................35
8.9 Insurance......................................................................................35
8.10 Environmental Matters..........................................................................35
8.11 INDEMNIFICATION................................................................................36
8.12 Chief Executive Office; Material Agreements....................................................37
8.13 Environmental Laws.............................................................................37
8.14 Subsidiaries...................................................................................37
SECTION 9 NEGATIVE COVENANTS.............................................................................37
9.1 Payroll Taxes..................................................................................37
9.2 Debt...........................................................................................37
9.3 Loans, Advances, Acquisitions and Investments..................................................37
9.4 Liens..........................................................................................38
9.5 Employee Plans.................................................................................39
9.6 Transactions with Affiliates...................................................................39
9.7 Compliance with Laws and Documents.............................................................39
9.8 Issuance of Securities.........................................................................39
9.9 Distributions..................................................................................40
9.10 Disposition of Assets..........................................................................40
9.11 Mergers, Consolidations, and Dissolutions......................................................40
9.12 Assignment.....................................................................................40
9.13 Fiscal Year and Accounting Methods.............................................................40
9.14 New Businesses.................................................................................40
9.15 Government Regulations.........................................................................41
9.16 Strict Compliance..............................................................................41
9.17 Deposit of Borrowings..........................................................................41
9.18 Prepayments of Subordinated Notes..............................................................41
9.19 Changes Relating to Subordinated Notes.........................................................41
</TABLE>
CREDIT AGREEMENT
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 10 FINANCIAL COVENANTS............................................................................41
10.1 Net Worth......................................................................................41
10.2 Funded Debt/EBITDA Ratio.......................................................................41
10.3 Fixed-Charge Coverage..........................................................................42
SECTION 11 DEFAULT........................................................................................42
11.1 Payment of Obligation..........................................................................42
11.2 Covenants......................................................................................42
11.3 Debtor Relief..................................................................................42
11.4 Attachment.....................................................................................42
11.5 Payment of Judgments...........................................................................43
11.6 Government Action..............................................................................43
11.7 Misrepresentation..............................................................................43
11.8 Ownership of Companies.........................................................................43
11.9 Change of Control of Borrower..................................................................43
11.10 Other Funded Debt..............................................................................44
11.11 SEC Reporting Requirements.....................................................................44
11.12 Validity and Enforceability....................................................................44
11.13 LCs............................................................................................44
11.14 Material Agreements............................................................................45
11.15 Impairment of Collateral or Ability to Pay.....................................................45
11.16 Subordinated Notes.............................................................................45
SECTION 12 RIGHTS AND REMEDIES............................................................................45
12.1 Remedies Upon Default..........................................................................45
12.2 Company Waivers. .............................................................................46
12.3 Performance by Agent...........................................................................46
12.4 Not in Control.................................................................................46
12.5 Course of Dealing..............................................................................46
12.6 Cumulative Rights..............................................................................46
12.7 Application of Proceeds........................................................................47
12.8 Certain Proceedings............................................................................47
12.9 Expenditures by Lenders........................................................................47
12.10 Diminution in Value of Collateral..............................................................47
SECTION 13 AGENT AND LENDERS..............................................................................47
13.1 Agent..........................................................................................47
13.2 Expenses.......................................................................................49
13.3 Proportionate Absorption of Losses.............................................................49
13.4 Delegation of Duties; Reliance.................................................................49
13.5 Limitation of Agent's Liability................................................................49
13.6 Default........................................................................................50
13.7 Collateral Matters.............................................................................50
13.8 Limitation of Liability........................................................................51
13.9 Relationship of Lenders........................................................................51
13.10 Benefits of Agreement..........................................................................51
SECTION 14 MISCELLANEOUS..................................................................................51
14.1 Nonbusiness Days...............................................................................51
14.2 Communications.................................................................................51
14.3 Form and Number of Documents...................................................................52
14.4 Exceptions to Covenants........................................................................52
14.5 Survival.......................................................................................52
14.6 Governing Law..................................................................................52
14.7 Invalid Provisions.............................................................................52
</TABLE>
CREDIT AGREEMENT
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C>
14.8 Amendments, Consents, Conflicts, and Waivers...................................................52
14.9 Multiple Counterparts..........................................................................53
14.10 Parties........................................................................................53
14.11 Venue, Service of Process, and Jury Trial......................................................55
14.12 Confidentiality Obligations....................................................................55
14.13 Entirety.......................................................................................56
</TABLE>
CREDIT AGREEMENT
(iv)
<PAGE> 6
SCHEDULES AND EXHIBITS
Schedule 1 - Lenders and Commitments
Schedule 3.2 - Commitment Reduction Schedule
Schedule 6 - Closing Documents
Schedule 7.3 - Companies and Names
Schedule 7.7 - Company Solvency Schedule
Schedule 7.8 - Litigation
Schedule 7.10 - Environmental Matters
Schedule 7.11 - Employee-Plan Matters
Schedule 7.14 - Affiliate Transactions
Schedule 7.18 - Intellectual Property
Schedule 9.2 - Permitted Debt
Schedule 9.5 - Permitted Liens
Schedule 12.1(c) - MoneyMaker Network ATM Settlement Aggregation Accounts
Exhibit A-1 - Revolving Note
Exhibit A-2 - Swing-Line Note
Exhibit B - Guaranty
Exhibit C-1 - Borrowing Request
Exhibit C-2 - Conversion Notice
Exhibit C-3 - LC Request
Exhibit C-4 - Compliance Certificate
Exhibit D - Opinion of General Counsel to Companies
Exhibit F - Assignment and Assumption Agreement
The referenced schedules and exhibits, the contents of which are described in
the Loan Agreement, have been omitted but will be supplementally provided to the
SEC upon request.
CREDIT AGREEMENT
(v)
<PAGE> 7
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of September 27, 1999, between AFFILIATED
COMPUTER SERVICES, INC., a Delaware corporation ("BORROWER"), Lenders (defined
below), and WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as Agent for
Lenders.
1. Borrower has requested that Lenders extend to Borrower a
revolving credit facility not to exceed the principal amount of $50,000,000
(subject to increase pursuant to SECTION 2.7) at any time (with certain
subfacilities for letters of credit and swing-line advances) (the "REVOLVING
FACILITY").
2. Lenders are willing to extend the requested credit on the
terms and subject to the conditions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1 DEFINITIONS AND TERMS.
1.1 Definitions. As used in the Loan Documents:
AFFILIATE of a Person means any other individual or entity who directly or
indirectly controls, is controlled by, or is under common control with that
Person. For purposes of this definition (a) "control," "controlled by," and
"under common control with" mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of voting securities or other interests, by contract, or otherwise),
and (b) any individual or entity who beneficially owns, directly or indirectly,
10% or more (in number of votes) of the securities having ordinary voting power
for the election of directors (or individuals performing similar functions) of
another Person and any individual who is an officer or director of another
Person is conclusively presumed to control that Person.
AGENT means, at any time, Wells Fargo Bank (Texas), National Association -- or
its successor or assigns appointed under SECTION 13 -- acting as Agent for
Lenders under the Loan Documents.
APPLICABLE MARGIN means, for any day, the margin of interest over LIBOR that is
applicable when LIBOR is determined under this agreement. The Applicable Margin
is subject to adjustment (upwards or downwards, as appropriate) based on the
Funded Debt/EBITDA Ratio as stated in the table below:
<TABLE>
<CAPTION>
================================================================================
FUNDED DEBT/ APPLICABLE MARGIN FOR
EBITDA RATIO LIBOR BORROWINGS
================================================================================
<S> <C>
Greater than or equal to 2.50 to 1.00 1.250%
- --------------------------------------------------------------------------------
Less than 2.50 to 1.00, but greater than or equal 1.000%
to 2.00 to 1.00
- --------------------------------------------------------------------------------
Less than 2.00 to 1.00, but greater than or equal 0.875%
to 1.50 to 1.00
- --------------------------------------------------------------------------------
Less than 1.50 to 1.00, but greater than or equal 0.75%
to 1.00 to 1.00
- --------------------------------------------------------------------------------
Less than 1.00 to 1.00 0.650%
=============================================== =================================
</TABLE>
CREDIT AGREEMENT
1
<PAGE> 8
The Funded Debt/EBITDA Ratio shall be calculated quarterly on a consolidated
basis for the Companies on the last day of each March, June, September and
December, commencing December 31, 1999, based upon the most recently furnished
Financials under SECTION 8.1 and any related Compliance Certificate, and shall
apply to all Interest Periods commencing after the delivery of such Financials,
until recalculated in accordance with this paragraph. If Borrower fails to
furnish to Agent any such Financials and any related Compliance Certificate when
required to pursuant to SECTION 8.1, then the maximum Applicable Margin shall
apply to all Interest Periods commencing after the date upon which such
Financials were due until Borrower furnishes the required Financials and any
related Compliance Certificate to Agent and shall apply from and as of each date
of calculation until the following date of calculation. From the Closing Date
until December 31, 1999, the Applicable Margin shall not be less than 1.00%.
APPLICABLE PERCENTAGE means, for any day, a commitment-fee percentage applicable
under SECTION 4.4, subject to adjustment (upwards or downwards, as appropriate),
based on the Funded Debt/ EBITDA Ratio, as follows:
<TABLE>
<CAPTION>
=======================================================================================
FUNDED DEBT/EBITDA RATIO APPLICABLE PERCENTAGE
=======================================================================================
<S> <C>
Greater than or equal to 2.50 to 1.00 0.350%
- ---------------------------------------------------------------------------------------
Less than 2.50 to 1.00, but greater than or equal to 2.00 to 1.00 0.300%
- ---------------------------------------------------------------------------------------
Less than 2.00 to 1.00, but greater than or equal to 1.50 to 1.00 0.250%
- ---------------------------------------------------------------------------------------
Less than 1.50 to 1.00, but greater than or equal to 1.00 to 1.00 0.200%
- ---------------------------------------------------------------------------------------
Less than 1.00 to 1.00 0.200%
=======================================================================================
</TABLE>
The Funded Debt/EBITDA Ratio is determined as described in the definition of
APPLICABLE MARGIN and shall apply from and as of the date of calculation until
the following date of calculation. From the Closing Date until December 31,
1999, the Applicable Percentage shall not be less than 0.300%.
ASSIGNEE is defined in SECTION 14.10(c).
ASSIGNMENT is defined in SECTION 14.10(c).
ATM means any automated teller machine which Borrower (a) operates for its own
account or (b) owns, either directly or beneficially.
ATM CREDIT AGREEMENT means that certain letter agreement (as amended) dated as
of December 15, 1995, executed between Borrower and Bank One, Texas, N.A.
ATM FACILITY means the $11,000,000 credit facility extended to Borrower by Bank
One, Texas, N.A. under the terms of the ATM Credit Agreement.
CREDIT AGREEMENT
2
<PAGE> 9
BASE RATE means, for any day, the greater of either (a) the annual interest rate
most recently announced by Wells Fargo Bank, National Association at its
principal office in San Francisco, California, as its prime rate, with the
understanding that such prime rate is one of its base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference to the prime rate, and is evidenced by the recording of such
prime rate after its announcement in such internal publication or publications
as Wells Fargo Bank, National Association may designate, automatically
fluctuating upward and downward without special notice to Borrower or any other
Person, or (b) the sum of the Federal-Funds Rate plus 0.5%.
BASE-RATE BORROWING means a Borrowing bearing interest at the Base Rate.
BORROWER is defined in the preamble to this agreement.
BORROWING means any amount disbursed under the Loan Documents by one or more
Lenders to or on behalf of Borrower under the Loan Documents, including any
Swing-Line Borrowing, either as an original disbursement of funds, a renewal,
extension, or continuation of an amount outstanding, or a payment under an LC.
BORROWING DATE means the date on which funds are requested by Borrower in a
Borrowing Request.
BORROWING REQUEST means a request, subject to SECTION 2.2(a), substantially in
the form of EXHIBIT C-1.
BRC ACQUISITION means Borrower's acquisition of BRC Holdings, Inc., a Delaware
corporation, pursuant to that certain Stock Tender Agreement dated as of October
19, 1998, by and between Borrower, and each of the stockholders of BRC Holdings,
Inc., a Delaware corporation.
BUSINESS DAY means (a) for purposes of any LIBOR Borrowing, a day when
commercial banks are open for international business in London, England, and (b)
for all other purposes, any day other than Saturday, Sunday, and any other day
that commercial banks are authorized by Law to be closed in Texas.
CAPITAL EXPENDITURES means expenditures for the acquisition, construction,
improvement or replacement of land, buildings, equipment or other fixed or
capital assets or leaseholds (including, without limitation, investments in
customer's securities or purchases of software or other customer assets under
outsourcing contracts entered into after the Closing Date and payments under
Capital Leases, but excluding expenditures properly chargeable to repairs or
maintenance).
CAPITAL LEASE means any capital lease or sublease that is required by GAAP to be
capitalized on a balance sheet.
CARA ACQUISITION means Borrower's acquisition of CARA Holdings, Inc., a Delaware
corporation, and parent of CARA Corporation, an Illinois corporation, pursuant
to that certain Stock Purchase Agreement dated as of December 5, 1997, by and
between Borrower, William Blair Capital Partners V, L.P., a Delaware limited
partnership, and each of the other stockholders of CARA Holdings, Inc., a
Delaware corporation; with the rights, liabilities and
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obligations of Borrower under that Stock Purchase Agreement having been assigned
to Technical Directions, Inc. by that certain Assignment dated as of December
24, 1997.
CERCLA means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Sections 9601 et seq.
CLOSING DATE means the date agreed to by Borrower and Agent for the initial
Borrowing, which must be a Business Day occurring no later than September 30,
1999.
CODE means the Internal Revenue Code of 1986 as amended from time to time.
COMMITMENT means, at any time and for any Lender, the product of (a) that
Lender's Commitment Percentage multiplied by (b) the Total Commitment then in
effect, which Commitment is subject to cancellation as provided in SECTION 2.6.
COMMITMENT PERCENTAGE means, for any Lender, the percentage stated beside that
Lender's name on the most-recently amended SCHEDULE 1.
COMMITMENT USAGE means, at any time, the sum of (a) the Principal Debt (which
includes, without limitation, that Principal Debt under the Swing-Line
Subfacility) plus (b) the LC Exposure.
COMPANIES means, at any time, Borrower and each of its Subsidiaries.
COMPLIANCE CERTIFICATE means a certificate substantially in the form of EXHIBIT
C-4 as signed by a Responsible Officer.
CONVERSION NOTICE means a request, subject to SECTION 3.10, substantially in the
form of EXHIBIT C-2.
CURRENT DATE means any date within 30 days prior to the Closing Date.
CURRENT FINANCIALS, unless otherwise specified: means either (a) the Companies'
consolidated Financials for the fiscal year ended June 30, 1999, or (b) at any
time after annual Financials are first delivered under SECTION 8.1, the
Companies' annual Financials then most recently delivered to Lenders under
SECTION 8.1(A), together with the Companies' quarterly Financials then most
recently delivered to Lenders under SECTION 8.1(b).
CURRENT MATURITIES OF LONG-TERM DEBT means, as of any date, the aggregate amount
of all regularly scheduled principal payments and capitalized lease payments on
all long-term Debt of the Companies that are due and payable within 12 months of
such date.
DEBT means -- of any Person, at any time, and without duplication -- all
obligations, contingent or otherwise, which in accordance with GAAP should be
classified upon such Person's balance sheet as liabilities, but in any event
including the sum of the following: (a) all obligations for borrowed money; (b)
all obligations evidenced by bonds, debentures, notes, or similar instruments;
(c) all obligations to pay the deferred purchase price of property or services
except trade accounts payable arising in the ordinary course of business; (d)
all direct or contingent obligations in respect of letters of credit; (e)
liabilities secured (or for which the holder of the Debt has an existing Right,
contingent or otherwise to
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be so secured) by any Lien existing on property owned or acquired by that
Person; (f) lease obligations that have been (or under GAAP should be)
capitalized for financial reporting purposes; plus (g) all guaranties,
endorsements, and other contingent obligations for Debt of others.
DEBTOR LAWS means the Bankruptcy Code of the United States of America and all
other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension of payments,
or similar Laws affecting creditors' Rights.
DEFAULT is defined in SECTION 11.
DEFAULT RATE means, for any day, an annual interest rate equal from day to day
to the lesser of either (a) the then-existing Base Rate plus 3% or (b) the
Maximum Rate.
DETERMINING LENDERS means, at any time, any combination of Lenders holding
(directly or indirectly) at least either (a) 66-2/3% of the Total Commitment
while there is no Commitment Usage or (b) 66-2/3% of the Principal Debt
(excluding Principal Debt under the Swing-Line Subfacility) plus the LC Exposure
while there is any Commitment Usage.
DISTRIBUTION means, with respect to any shares of any capital stock or other
equity securities issued by a Person (a) the retirement, redemption, purchase,
or other acquisition for value of those securities, (b) the declaration or
payment of any dividend on or with respect to those securities, (c) any loan or
advance by that Person to, or other investment by that Person in, the holder of
any of those securities, and (d) any other payment by that Person with respect
to those securities.
DIVESTITURE SUBSIDIARY means, at any time, any Subsidiary that (a) has assets
representing less than 5% of the Companies' consolidated total assets (measured
as of the date of consummation of any issuance, sale, or disposition of such
Subsidiary's securities described in SECTION 9.8(B)), and (b) contributed less
than 5% to the Companies' consolidated EBITDA for the most recent reporting
period of Borrower.
DOLLAR-EQUIVALENT, at any time, means, (a) any amount denominated in Dollars,
and (b) for any amount denominated in a Foreign Currency, an amount of Dollars
into which Agent determines that it could convert the relevant amount of that
Foreign Currency by using the applicable-quoted-spot rate reported on the
appropriate page of the Reuters Screen at 11:00 a.m. (London time) three (3)
Business Days before the day on which the calculation is made.
DOLLARS and the symbol $ means lawful money of the United States of America.
EBIT means -- EBITDA minus depreciation and amortization expense to the extent
deducted from "Operating Income from Continuing Operations" and included within
the calculation of EBITDA.
EBITDA means -- for any period, on a consolidated basis, and without duplication
- -- the sum of (a) the amount of "Operating Income from Continuing Operations"
(calculated in the same manner as such line item in Borrower's income statement
contained in Borrower's 1998 Annual Report for the fiscal year ended June 30,
1998) for the period (whether positive or negative), plus (b) depreciation and
amortization expense deducted in calculating the amount of such Operating Income
from Continuing Operations, plus or minus, as the case may be, (c) any
extraordinary items included within "Operating Income from Continuing
Operations." Except as otherwise specifically stated in this agreement, EBITDA
shall be calculated for the four consecutive quarters then ended.
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EFT LIABILITIES means liabilities related to "electronic funds transfer" funds
owed to MoneyMaker Network members that have been collected by Borrower, but not
paid
EMPLOYEE PLAN means any employee-pension-benefit plan (a) covered by Title IV of
ERISA and established or maintained by Borrower or any ERISA Affiliate (other
than a Multiemployer Plan) and (b) established or maintained by Borrower or any
ERISA Affiliate, or to which Borrower or any ERISA Affiliate contributes, under
the Laws of any foreign country.
ENVIRONMENTAL INVESTIGATION means any environmental site assessment,
investigation, audit, compliance audit, or compliance review conducted at any
time or from time to time -- whether at the request of Agent or any Lender, upon
the order or request of any Tribunal, or at the voluntary instigation of any
Company -- concerning any Real Property or the business operations or activities
of any Company, including, without limitation (a) air, soil, groundwater, or
surface-water sampling and monitoring, and (b) preparation and implementation of
any closure or remedial plans.
ENVIRONMENTAL LAW means any applicable Law that relates to protection of the
environment or to the regulation of any Hazardous Substances, including, without
limitation, CERCLA, the Hazardous Materials Transportation Act (49 U.S.C.
Section 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C. Section 2601 et seq.), the Federal Insecticide, Fungicide, anD
Rodenticide Act (7 U.S.C. Section 136 et seq.), the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. Section 11001 et seq.), the Safe Drinking
Water Act (42 U.S.C. Section 201 and Section 300 et seq.), the Rivers and
Harbors Act (33 U.S.C. Section 401 et seq.), the Oil Pollution Act (33 U.S.C.
Section 2701 et seq.), analogous state an local Laws, and any analogous future
enacted or adopted Law.
ENVIRONMENTAL LIABILITY means any liability, loss, fine, penalty, charge, lien,
damage, cost, or expense of any kind to the extent that it results (a) from the
violation of any Environmental Law, (b) from the Release or threatened Release
of any Hazardous Substance, or (c) from actual or threatened damages to natural
resources.
ENVIRONMENTAL PERMIT means any permit, or license, from any Person defined in
CLAUSE (A) of the definition of Tribunal that is required under any
Environmental Law for the lawful conduct of any business, process, or other
activity.
ERISA means the Employee Retirement Income Security Act of 1974, as amended, and
rules and regulations promulgated thereunder.
ERISA AFFILIATE means any Person that, for purposes of Title IV of ERISA, is a
member of Borrower's controlled group or is under common control with Borrower
within the meaning of Section 414 of the Code (which provisions are deemed by
this agreement to apply to Foreign Persons).
FEDERAL-FUNDS RATE means, for any day, the annual rate (rounded upwards, if
necessary, to the nearest 0.01%) determined (which determination is conclusive
and binding, absent manifest error) by Agent to be equal to (a) the weighted
average of the rates on overnight federal-funds transactions with member banks
of the Federal Reserve System arranged by federal-funds brokers on that day, as
published by the Federal Reserve Bank of New York on the next Business Day, or
(b) if those rates are not published for
CREDIT AGREEMENT
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any day, the average of the quotations at approximately 10:00 a.m. received by
Agent from three federal-funds brokers of recognized standing selected by Agent
in its sole discretion.
FINANCIALS of a Person means balance sheets, profit and loss statements,
reconciliations of capital and surplus, and statements of cash flow prepared (a)
according to GAAP (subject to year end audit adjustments with respect to interim
Financials) and (b) except as stated in SECTION 1.4, in comparative form to
prior year-end figures or corresponding periods of the preceding fiscal year or
other relevant period, as applicable.
FIXED-CHARGE COVERAGE RATIO means -- for any period, on a consolidated basis,
and without duplication -- the ratio of (a) the sum of (i) EBITDA, minus (ii)
Capital Expenditures (excluding payments under Capital Leases) minus (iii) Taxes
actually paid in cash (each of the foregoing items (i), (ii) and (iii)
calculated for the twelve month period then ending) to (b) the sum of (i)
Interest Expense plus (ii) payments under Capital Leases, plus (iii) cash
dividends paid (each of the foregoing items (i), (ii) and (iii) calculated for
the twelve month period then ending) plus (iv) Current Maturities of Long-Term
Debt.
FOREIGN means, in respect of any Person, organized under the Laws of a
jurisdiction other than -- or domiciled outside of -- the United States of
America or one of its states.
FOREIGN CURRENCY means any freely-convertible lawful currency acceptable to
Agent, so long as (a) such currency is dealt with in the London interbank
deposit market, (b) such currency is freely transferable and convertible into
Dollars in the London foreign exchange market, and (c) no central bank or other
governmental authorization in the country of issue of such currency is required
to permit use of such currency by Agent for issuing LCs or honoring drafts
presented under LCs in such currency; provided that if, after the issuance of an
LC in a Foreign Currency, the Foreign Currency denominated in such LC ceases to
be lawful currency freely-convertible into Dollars and is replaced by a European
single or common currency (the "EURO"), then thereafter the Foreign Currency for
purposes of such LC shall be the Euro.
FUNDED DEBT means -- at any time, on a consolidated basis, and without
duplication -- the sum of: (a) all obligations for borrowed money (whether as a
direct obligor on a promissory note, bond, debenture or other similar
instrument, as a contingent obligation for undrawn and uncancelled letters of
credit or similar instruments, as a reimbursement obligor for a drawing under a
letter of credit or similar instrument, or as any other type of obligor), plus
(b) all Capital Lease obligations (other than the interest component of such
obligations) of any Company minus (c) the total-principal amount outstanding
under the ATM Facility.
FUNDED DEBT/EBITDA RATIO means -- for any date of determination -- the ratio of
Funded Debt at the end of the most recently completed fiscal quarter to EBITDA
for the most recently completed four fiscal quarters.
FUNDING LOSS means any loss, expense, or reduction in yield (but not any
Applicable Margin) that any Lender reasonably incurs because (a) Borrower fails
or refuses (for any reason whatsoever other than a default by Agent or that
Lender claiming that loss, expense, or reduction in yield) to take any Borrowing
that it has requested under this agreement, or (b) Borrower prepays or pays any
Borrowing or converts any Borrowing to a Borrowing of another Type, in each
case, other than on the last day of the applicable Interest Period.
CREDIT AGREEMENT
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GAAP means generally accepted accounting principles of the Accounting Principles
Board of the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board that are applicable from time to time.
GUARANTY means a guaranty substantially in the form of the attached EXHIBIT B.
HAZARDOUS SUBSTANCE means any substance that is designated, defined, classified,
or regulated as a hazardous waste, hazardous material, pollutant, contaminant,
explosive, corrosive, flammable, infectious, carcinogenic, mutagenic,
radioactive, or toxic or hazardous substance under any Environmental Law,
including, without limitation, any hazardous substance within the meaning of
Section 101(14) of CERCLA.
INTEREST EXPENSE means, for any period, the aggregate total interest expense of
the Companies paid on a consolidated basis for such period, including, without
limitation, to the extent included in interest expense, the interest component
of capital leases, all commissions, discounts and other fees and charges owed
with respect to letters of credit, commitment fees and net costs under interest
rate protection agreements, all as determined in conformity with GAAP. Solely
for purposes of SECTION 10, Interest Expense shall not include any non-cash
interest expense.
INTEREST PERIOD is determined under SECTION 3.9.
ISSUING LENDER means Wells Fargo Bank (Texas), National Association or any of
its Affiliates, that issues an LC under this agreement.
LAWS means all applicable statutes, laws, treaties, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions, and
interpretations of any Tribunal.
LC means a standby or commercial letter of credit issued for the account of
Borrower by Issuing Lender under this agreement and under an LC Agreement.
LC AGREEMENT means a letter of credit application and agreement (in form and
substance satisfactory to Agent) submitted and executed by a Company to Issuing
Lender for an LC for the account of Borrower.
LC EXPOSURE means, at any time and without duplication, the sum of (a) the
Dollar Equivalent of the aggregate undrawn portion of all uncanceled and
unexpired LCs, plus (b) the Dollar Equivalent of the aggregate unpaid
reimbursement obligations of Borrower in respect of drawings of drafts under any
LC.
LC REQUEST means a request substantially in the form of EXHIBIT C-3.
LC SUBFACILITY means a subfacility of the Revolving Facility for the issuance of
LCs, as described in SECTION 2.3, under which the LC Exposure may never (a)
collectively exceed $30,000,000 (or, in the case of an LC denominated in a
Foreign Currency, the Dollar Equivalent of $30,000,000) and (b) together with
Principal Debt may never exceed the Total Commitment.
LENDER LIEN means any present or future Lien (subject only to any applicable
Permitted Lien) securing the Obligation and assigned, conveyed, or granted to or
created in favor of Agent for the benefit of Lenders.
LENDERS means the financial institutions -- including, without limitation, Agent
(possibly acting through
CREDIT AGREEMENT
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one or more of its Affiliates for LCs) in respect of their respective shares of
Borrowings (including Swing-Line Borrowings) and LCs -- named on SCHEDULE 1 or
on the most-recently-amended SCHEDULE 1, if any, delivered by Agent under this
agreement, and, subject to this agreement, their respective successors and
permitted assigns (but not any Participant who is not otherwise a party to this
agreement).
LIBOR means, for a LIBOR Borrowing and for the relevant Interest Period, the
annual interest rate (rounded upward, if necessary, to the nearest 0.01%) equal
to the quotient obtained by dividing (a) the rate that deposits in United States
dollars are offered to Agent in the London interbank market at approximately
11:00 a.m. London time two Business Days before the first day of that Interest
Period in an amount comparable to that LIBOR Borrowing and having a maturity
approximately equal to that Interest Period, by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to the relevant Interest Period.
LIBOR BORROWING means a Borrowing bearing interest at the sum of LIBOR plus the
Applicable Margin.
LIEN means any lien, mortgage, security interest, pledge, assignment, charge,
title retention agreement, or encumbrance of any kind and any other arrangement
for a creditor's claim to be satisfied from assets or proceeds prior to the
claims of other creditors or the owners (other than title of the lessor under an
operating lease).
LITIGATION means any action by or before any Tribunal.
LOAN DOCUMENTS means (a) this agreement, certificates and reports delivered
under this agreement, and exhibits and schedules to this agreement, (b) all
agreements, documents, and instruments in favor of Agent or Lenders (or Agent on
behalf of Lenders) ever delivered under this agreement or otherwise delivered in
connection with all or any part of the Obligation (other than Assignments), (c)
all LCs and LC Agreements, (d) the letter agreement described in SECTION 4.2,
and (e) all renewals, extensions, and restatements of, and amendments and
supplements to, any of the foregoing.
MAJORITY LENDERS means, at any time, any combination of Lenders holding
(directly or indirectly) at least either (a) 51% of the Total Commitment while
there is no Commitment Usage or (b) 51% of the Principal Debt (excluding
Principal Debt under the Swing-Line Subfacility) plus the LC Exposure while
there is any Commitment Usage.
MATERIAL ADVERSE EVENT means any circumstance or event that, individually or
collectively, is reasonably expected to result (at any time before the
Commitments are fully canceled or terminated and the Obligation is fully paid
and performed) in any (a) material impairment of (i) the ability of Borrower to
perform any of its payment or other material obligations under any Loan
Document, (ii) the ability of Agent or any Lender to enforce any of those
obligations or any of their respective Rights under the Loan Documents, (b)
material and adverse effect on the financial condition of the Borrower
individually, or the Companies as a whole, as represented to Lenders in the
Current Financials most recently delivered before the date of this agreement,
(c) impairment in the ability of any Company to fulfill its obligations under
the terms and conditions of Loan Documents, or (d) Default or Potential Default.
MATERIAL AGREEMENT means any written or oral agreement, contract, commitment or
understanding under which any Company is obligated to make payments in excess of
$10,000,000 in any fiscal year or is entitled to receive revenues in any fiscal
year in excess of 5% of Borrower's consolidated annual
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revenues for such year.
MATURITY DATE means September 30, 2000.
MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for a Lender, the maximum
non-usurious amount and the maximum non-usurious rate of interest that, under
applicable Law, such Lender is permitted to contract for, charge, take, reserve,
or receive on the Obligation.
MEMBER BANKS means banks, financial institutions, or other entities that are
members of the MoneyMaker Network, which include the banks, financial
institutions and other entities listed on SCHEDULE 2.2 to the ATM Credit
Agreement, as such schedule is amended, modified, or replaced from time to time.
MONEYMAKER NETWORK means a proprietary electronic funds transfer network owned
and operated by Borrower that (a) provides authorization for cardholders of
Member Banks to access ATMs, automated teller machines owned or operated by
Member Banks, and automated teller machines owned or operated by regional,
national and international electronic funds transfer networks, and (b) obtains
authorization from regional, national and international electronic funds
transfer networks for their cardholders to access ATMs and automated teller
machines owned or operated by Member Banks.
MOODY'S is defined in SECTION 9.3(b).
MULTIEMPLOYER PLAN means a multiemployer plan as defined in Sections 3(37) or
4001(a)(3) of ERISA or Section 414(f) of the Code (or any similar type of plan
established or regulated under the Laws of any foreign country) to which
Borrower or any ERISA Affiliate is making, or has made, or is accruing, or has
accrued, an obligation to make contributions.
NET INCOME of any Person means that Person's profit or loss after deducting its
Tax expense.
NET WORTH means -- at any time and for any Person -- its stockholders' equity
(less the par value of any treasury stock) under GAAP.
1933 ACT means the Securities Act of 1933, as amended.
1934 ACT means the Securities and Exchange Act of 1934, as amended.
NOTES means all of the Revolving Notes and the Swing-Line Note.
OBLIGATION means all present and future (a) Debts, liabilities, and obligations
of any Company to Agent, any Lender, Issuing Lender and related to any Loan
Document, whether principal, interest, fees, costs, attorneys' fees, or
otherwise, and (b) renewals, extensions, and modifications of any of the
foregoing.
OSHA means the Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651
et seq.
PARTICIPANT is defined in SECTION 14.10(b).
PBGC means the Pension Benefit Guaranty Corporation.
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PERMITTED DEBT means Debt described on SCHEDULE 9.2.
PERMITTED LIENS means the Liens described on SCHEDULE 9.4.
PERSON means any individual, entity, or Tribunal.
POTENTIAL DEFAULT means any event's occurrence or any circumstance's existence
that would -- upon any required notice, time lapse, or both -- become a Default.
PRINCIPAL DEBT means, at any time, the unpaid principal balance of all
Borrowings.
PRO RATA and PRO RATA PART mean, at any time when determined for any Lender, (a)
if there is no Commitment Usage, the proportion (stated as a percentage) that
its Commitment bears to the Total Commitment, or (b) if there is any Commitment
Usage, the proportion that the total Commitment Usage owed to that Lender bears
to the total Commitment Usage owed to all Lenders.
REAL PROPERTY means any land, buildings, fixtures, and other improvements to
land now or in the future directly or indirectly owned by any Company, leased to
or otherwise operated by any Company, or subleased by any Company to any other
Person.
RELEASE means any "release" as defined under any Environmental Law.
REPRESENTATIVES means representatives, officers, directors, employees,
accountants, attorneys, and agents.
RESERVE REQUIREMENT means, for any LIBOR Borrowing and for the relevant Interest
Period, the total reserve requirements (including all basic, supplemental,
emergency, special, marginal, and other reserves required by applicable Law)
actually applicable to Agent's eurocurrency fundings or liabilities as of the
first day of that Interest Period.
RESPONSIBLE OFFICER means Borrower's chairman, president, chief executive
officer, chief financial officer, or treasurer.
RESTATED CREDIT AGREEMENT means that certain Restated Credit Agreement (as
amended) dated June 20, 1996, by and between Borrower, Agent, Bank One, Texas,
N.A. as Co-Agent, and the Lenders defined therein.
REVOLVING FACILITY is defined in the recitals to this agreement and includes the
LC Subfacility and the Swing-Line Subfacility.
REVOLVING NOTE means a promissory note substantially in the form of the attached
EXHIBIT A-1, as renewed, extended, amended, and restated.
RIGHTS means rights, remedies, powers, privileges, and benefits.
S&P is defined in SECTION 9.3(b).
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SEC means the Securities and Exchange Commission
SECURITY DOCUMENTS means, collectively, any security agreement, pledge
agreement, mortgage, deed of trust or other agreement or document, together with
all related financing statements and stock powers, in form and substance
satisfactory to Agent and its legal counsel, executed and delivered by any
Person in connection with this agreement to create a Lender Lien on any of its
real or personal property, as amended, supplemented or restated.
SETTLEMENT AGGREGATION ACCOUNTS means any automated teller machine network ("ATM
NETWORK") transaction settlement deposit accounts maintained by Borrower for the
sole purpose of aggregating settlement transactions received from ATM Networks,
including without limitation the ATM Network transaction settlement deposit
accounts described on SCHEDULE 12.1(c).
SOLVENT means, as to any Person, that (a) the aggregate fair market value of its
assets exceeds its liabilities, (b) it has sufficient cash flow to enable it to
pay its Debts as they mature, and (c) it does not have unreasonably small
capital to conduct its businesses.
SUBORDINATED NOTES means Borrower's 4% Convertible Subordinated Notes Due March
15, 2005, in the principal amount of $230,000,000, and any notes given by
Borrower in exchange for those notes if the notes so given are subject to the
same terms as the original Subordinated Notes.
SUBSIDIARY of any Person means any entity of which more than 50% (in number of
votes) of the stock (or equivalent interests) is owned of record or
beneficially, directly or indirectly, by that Person. Unless otherwise specified
or the context otherwise requires, "Subsidiary" refers to a Subsidiary of
Borrower.
SUBJECT SECURITIES ISSUANCE means any issuance by Borrower of its debt or equity
securities.
SWING-LINE BORROWING means any Borrowing under the Swing-Line Subfacility.
SWING-LINE NOTE means a promissory note substantially in the form of the
attached EXHIBIT A-2, as renewed, extended, amended, and restated.
SWING-LINE SUBFACILITY means the facility under the Revolving Facility described
in SECTION 2.4.
TAXES means, for any Person, taxes, assessments, or other governmental charges
or levies imposed upon it, its income, or any of its properties, franchises, or
assets.
TERMINATION DATE means the earlier of either (a) the Maturity Date or (b) the
effective date that Lenders' Commitments are fully canceled or terminated.
TOTAL COMMITMENT means, at any time, the maximum Commitment Usage allowed under
the Revolving Facility, which amount shall initially be $50,000,000, as such
amount may be reduced from time to time pursuant to SECTION 2.6.
TRIBUNAL means any (a) local, state, territorial, federal, or foreign judicial,
executive, regulatory, administrative, legislative, or governmental agency,
board, bureau, commission, department, or other
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instrumentality, (b) private arbitration board or panel, or (c) central bank.
TYPE means any type of Borrowing determined with respect to the applicable
interest option.
UCC means the Uniform Commercial Code in effect in any jurisdiction, the Law of
which affects the Collateral or any Lender Lien.
WHOLLY-OWNED SUBSIDIARY means any Company, other than Borrower, with respect to
which 100% of the issued and outstanding shares of capital stock (excluding
shares of capital stock held under employee stock option plans) of such Company
is owned by another Company. Wholly-Owned Subsidiary shall not include, however,
the Companies listed on SCHEDULE 7.7.
1.2 Time References. Unless otherwise specified, in the Loan
Documents (a) time references (e.g., 10:00 a.m.) are to time in Dallas, Texas,
and (b) in calculating a period from one date to another, the word "from" means
"from and including" and the word "to" or "until" means "to but excluding."
1.3 Other References. Unless otherwise specified, in the Loan
Documents (a) where appropriate, the singular includes the plural and vice
versa, and words of any gender include each other gender, (b) heading and
caption references may not be construed in interpreting provisions, (c) monetary
references are to currency of the United States of America, (d) section,
paragraph, annex, schedule, exhibit, and similar references are to the
particular Loan Document in which they are used, (e) references to "telecopy,"
"facsimile," "fax," or similar terms are to facsimile or telecopy transmissions,
(f) references to "including" mean including without limiting the generality of
any description preceding that word, (g) the rule of construction that
references to general items that follow references to specific items are limited
to the same type or character of those specific items is not applicable in the
Loan Documents, (h) references to any Person include that Person's heirs,
personal representatives, successors, trustees, receivers, and permitted
assigns, (i) references to any Law include every amendment or supplement to it,
rule and regulation adopted under it, and successor or replacement for it, and
(j) references to any Loan Document or other document include every renewal and
extension of it, amendment and supplement to it, and replacement or substitution
for it.
1.4 Accounting Principles. Unless otherwise specified, in the Loan
Documents (a) GAAP determines all accounting and financial terms and compliance
with financial covenants, (b) GAAP in effect on the date of this agreement
determines compliance with financial covenants, (c) otherwise, all accounting
principles applied in a current period must be comparable in all material
respects to those applied during the preceding comparable period, and (d) while
Borrower has any consolidated Subsidiaries (i) all accounting and financial
terms and compliance with reporting covenants must be on a consolidated basis,
as applicable, and (ii) compliance with financial covenants must be on a
consolidated basis.
SECTION 2 COMMITMENT. Subject to the provisions in the Loan Documents,
each Lender severally but not jointly agrees to extend credit to Borrower in
accordance with the following provisions.
2.1 Revolving Facility. Each Lender severally but not jointly
agrees to lend to
CREDIT AGREEMENT
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Borrower its Commitment Percentage of one or more Borrowings (other than
Swing-Line Borrowings) under the Revolving Facility which Borrower may borrow,
repay, and reborrow under this agreement subject to the following conditions:
(a) Each Borrowing may only be $100,000 or a greater integral
multiple of $100,000 if a Base-Rate Borrowing or $1,000,000 or a greater
integral multiple of $100,000 if a LIBOR Borrowing;
(b) Each Borrowing may only occur on a Business Day on or
after the Closing Date and before the Termination Date;
(c) Borrower may advance all or part of the proceeds of any
Borrowing to only those Subsidiaries that have executed a Guaranty, provided
that Borrower may advance proceeds from any Borrowing or LC to any Person
(whether or not such Person is a Subsidiary that has executed a Guaranty) so
long as the aggregate amount of such advances may never exceed $5,000,000
(or, in the case of an LC denominated in a Foreign Currency, the Dollar
Equivalent of $5,000,000) at anytime outstanding; and
(d) The Commitment Usage (whether direct or participated),
calculated at the then-current Dollar-Equivalent of such amount, owed to any
Lender may never exceed that Lender's Commitment.
2.2 Borrowing Procedure. The following procedures apply to
Borrowings other than Swing-Line Borrowings (see SECTION 2.4).
(a) Borrowing Request. Borrower may request a Borrowing by
making or delivering a Borrowing Request (that may be telephonic, however,
confirmed immediately in writing, using EXHIBIT C-1) to Agent, which is
irrevocable and binding on Borrower. Each Borrowing Request shall state the
Type, amount, and Interest Period for each Borrowing and which must be
received by Agent no later than (i) (if applicable)12:00 p.m. noon on the
third Business Day before the Borrowing Date for any LIBOR Borrowing, or (ii)
12:00 p.m. noon on the Business Day immediately preceding the Borrowing Date
for any Base-Rate Borrowing.
(b) Funding. Each Lender shall remit its Commitment Percentage
of each requested Borrowing to Agent's principal office in Dallas, Texas (or
such other office designated by Agent), in funds that are available for
immediate use by Agent by 2:00 p.m. on the applicable Borrowing Date. Subject
to receipt of those funds, Agent shall (unless to its actual knowledge any of
the applicable conditions precedent have not been satisfied by Borrower or
waived by the requisite Lenders under SECTION 14.8) make those funds
available to Borrower by (at Borrower's option) (i) wiring the funds to or
for the account of Borrower at the direction of Borrower or (ii) depositing
the funds in Borrower's account (other than a Settlement Aggregation Account)
with Agent.
(c) Funding Assumed. Absent contrary written notice from a
Lender, Agent may assume that each Lender has made its Commitment Percentage
of the requested Borrowing available to Agent on the applicable Borrowing
Date, and Agent may, in reliance upon such assumption (but shall not be
required to), make available to Borrower a corresponding amount. If a Lender
fails to make its Commitment Percentage of any requested Borrowing available
to Agent on the
CREDIT AGREEMENT
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applicable Borrowing Date, Agent may recover the applicable amount on demand,
(i) from that Lender together with interest, commencing on the Borrowing Date
and ending on (but excluding) the date Agent recovers the amount from that
Lender, at an annual interest rate equal to the Federal-Funds Rate, or (ii)
if that Lender fails to pay its amount upon demand, then from Borrower. No
Lender is responsible for the failure of any other Lender to make its
Commitment Percentage of any Borrowing available as required by SECTION
2.2(b); however, failure of any Lender to make its Commitment Percentage of
any Borrowing so available does not excuse any other Lender from making its
Commitment Percentage of any Borrowing so available.
2.3 Letters of Credit.
(a) Conditions. Issuing Lender agrees to issue LCs for the
account of any Company (denominated in Dollars or, upon Borrower's request
and subject to this SECTION 2.3, in a Foreign Currency) upon Borrower's
making or delivering an LC Request and delivering an LC Agreement, both of
which must be received by Agent and Issuing Lender no later than the second
Business Day before the Business Day on which the requested LC is to be
issued, so long as (i) each LC shall expire within 12 months of its date of
issue (provided, however, that an LC may, at Borrower's request, provide that
it is self-extending upon expiration for a period up to 12 months unless
Agent has given the beneficiary thereunder at least 30 days' but no more than
120 days' prior written notice to the contrary), (ii) no LC may expire after
the Termination Date, (iii) the LC Exposure (calculated at the then-current
Dollar-Equivalent of such amount) does not exceed the limitations in the
definition of LC Subfacility, and (iv) the limitations in SECTION 2.1 are not
exceeded. The amount of any payment by Agent of a draft drawn under an LC
shall be included as part of the Obligation.
(b) Participation. Immediately upon Issuing Lender's issuance
of any LC, Issuing Lender shall be deemed to have sold and transferred to
each other Lender, and each other Lender shall be deemed irrevocably and
unconditionally to have purchased and received from Issuing Lender, without
recourse or warranty, an undivided interest and participation to the extent
of such Lender's Commitment Percentage in the LC (calculated from time to
time at the Dollar-Equivalent of such LC) and all applicable Rights of
Issuing Lender in the LC -- other than Rights to receive certain fees
provided in SECTION 4.3 to be for Issuing Lender's sole account.
(c) Reimbursement Obligation of the Companies. To induce
Issuing Lender to issue and maintain LCs, and to induce Lenders to
participate in issued LCs, Borrower agrees to pay or reimburse Issuing Lender
(or cause another Company to pay or reimburse Issuing Lender) (i) on the
first Business Day after Issuing Lender notifies Agent and Borrower that it
has made payment under a LC, the amount in Dollars (calculated at the
then-current Dollar-Equivalent of such amount) paid by Issuing Lender and
(ii) on demand, the amount of any additional fees Issuing Lender customarily
charges for amending LC Agreements, for honoring drafts under LCs, and for
taking similar action in connection with letters of credit. If Borrower or
another Company has not reimbursed Issuing Lender for any drafts paid by the
date on which reimbursement is required under this section, then Agent is
irrevocably authorized to fund Borrower's reimbursement obligations in
Dollars (calculated at the then-current Dollar-Equivalent of such amount) as
a Base-Rate Borrowing if proceeds are available under the Revolving Facility
and if the conditions in this agreement for such a Borrowing (other than any
notice requirements or minimum funding amounts) have, to Agent's knowledge,
been satisfied. The proceeds of that Borrowing shall be advanced directly to
Issuing Lender to pay Borrower's unpaid reimbursement obligations. If funds
cannot be advanced under the Revolving Facility, then
CREDIT AGREEMENT
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Borrower's reimbursement obligation shall constitute a demand obligation.
Borrower's obligations under this section are absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim,
or defense to payment that Borrower may have at any time against Issuing
Lender or any other Person. From the date that Issuing Lender pays a draft
under a LC until Borrower or another Company either reimburses or is
obligated to reimburse Issuing Lender for that draft under this section, the
amount of that draft bears interest payable to Issuing Lender at the rate
then applicable to Base-Rate Borrowings. From the due date of the respective
amounts due under this section, to the date paid (including any payment from
proceeds of a Base-Rate Borrowing), unpaid reimbursement amounts accrue
interest that is payable on demand at the Default Rate.
(d) General. Issuing Lender shall promptly notify Agent and
Borrower of the date and amount (calculated at the then-current
Dollar-Equivalent of such amount) of any draft presented for honor under any
LC (but failure to give notice will not affect Borrower's obligations under
this agreement). Issuing Lender shall pay the requested amount upon
presentment of a draft unless presentment on its face does not comply with
the terms of the applicable LC. When making payment, Issuing Lender may
disregard (i) any default or potential default that exists under any other
agreement and (ii) obligations under any other agreement that have or have
not been performed by the beneficiary or any other Person (and Issuing Lender
is not liable for any of those obligations). The Companies' reimbursement
obligations to Issuing Lender and Lenders, and each Lender's obligations to
Issuing Lender, under this section are absolute and unconditional
irrespective of, and Issuing Lender is not responsible for, (i) the validity,
enforceability, sufficiency, accuracy, or genuineness of documents or
endorsements (even if they are in any respect invalid, unenforceable,
insufficient, inaccurate, fraudulent, or forged), (ii) any dispute by any
Company with or any Company's claims, setoffs, defenses, counterclaims, or
other Rights against Issuing Lender, any Lender, or any other Person, or
(iii) the occurrence of any Potential Default or Default. However, nothing in
this agreement constitutes a waiver of Borrower's Rights to assert any claim
or defense based upon the gross negligence or willful misconduct of Lender.
Issuing Lender shall promptly pay to Agent for Agent to promptly distribute
reimbursement payments received from Borrower to all Lenders according to
their Pro Rata Part of the Revolving Facility.
(e) Obligation of Lenders. If a Company fails to reimburse
Issuing Lender as provided in SECTION 2.3(c) by the date on which
reimbursement is due under that section, and funds cannot be advanced under
the Revolving Facility to satisfy the reimbursement obligations, then Agent
shall promptly notify each Lender of such Company's failure, of the date and
amount paid (calculated at the then-current Dollar-Equivalent of such
amount), and of each Lender's Commitment Percentage (calculated at the
then-current Dollar-Equivalent of such amount) of the unreimbursed amount.
Each Lender shall promptly and unconditionally make available to Agent in
immediately available funds its Commitment Percentage of the unpaid
reimbursement obligation, subject to the limitations of SECTION 2.1. Funds
are due and payable to Agent before the close of business on the Business Day
when Agent gives notice to each Lender of such Company's reimbursement
failure (if notice is given before 1:00 p.m.) or on the next succeeding
Business Day (if notice is given after 1:00 p.m.). All amounts payable by any
Lender accrue interest after the due date at the Federal-Funds Rate from the
day the applicable draft or draw is paid by Agent to (but not including) the
date the amount is paid by the Lender to Agent. Upon receipt of those funds,
Agent shall make them available to Issuing Lender.
CREDIT AGREEMENT
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(f) Duties of Issuing Lender. Issuing Lender agrees with each
Lender that it will exercise and give the same care and attention to each LC
as it gives to its other letters of credit. Each Lender and Borrower agree
that, in paying any draft under any LC, Issuing Lender has no responsibility
to obtain any document (other than any documents expressly required by the
respective LC) or to ascertain or inquire as to any document's validity,
enforceability, sufficiency, accuracy, or genuineness or the authority of any
Person delivering it. Neither Issuing Lender nor its Representatives will be
liable to any Lender or any Company for any LC's use or for any beneficiary's
acts or omissions. Any action, inaction, error, delay, or omission taken or
suffered by Issuing Lender or any of its Representatives in connection with
any LC, applicable drafts or documents, or the transmission, dispatch, or
delivery of any related message or advice, if in good faith and in conformity
with applicable Laws and in accordance with the standards of care specified
in the Uniform Customs and Practices for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 (as amended or
modified), is binding upon the Companies and Lenders and, except as provided
in SECTION 2.3(e), does not place Issuing Lender or any of its
Representatives under any resulting liability to any Company or any Lender.
Agent is not liable to any Company or any Lender for any action taken or
omitted, in the absence of gross negligence or willful misconduct, by Issuing
Lender or its Representative in connection with any LC.
(g) Cash Collateral. On the Termination Date and if requested
by Determining Lenders while a Default exists, Borrower shall provide Agent,
for the benefit of Lenders, cash collateral in an amount to equal the
then-existing LC Exposure (calculated at the then-current Dollar-Equivalent
of such amount).
(h) INDEMNIFICATION. BORROWER SHALL PROTECT, INDEMNIFY, PAY,
AND SAVE AGENT, ISSUING LENDER, AND EACH OTHER LENDER, AND THEIR RESPECTIVE
REPRESENTATIVES HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS,
LIABILITIES, DAMAGES, COSTS, CHARGES, AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) WHICH ANY OF THEM MAY INCUR OR BE SUBJECT TO AS A
CONSEQUENCE OF THE ISSUANCE OF ANY LC, ANY DISPUTE ABOUT IT, OR THE FAILURE
OF ISSUING LENDER TO HONOR A DRAW REQUEST UNDER ANY LC AS A RESULT OF ANY ACT
OR OMISSION (WHETHER RIGHT OR WRONG) OF ANY PRESENT OR FUTURE TRIBUNAL.
HOWEVER, NO PERSON IS ENTITLED TO INDEMNITY UNDER THE FOREGOING FOR ITS OWN
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(i) LC Agreements. Although referenced in any LC, terms of any
particular agreement or other obligation to the beneficiary are not
incorporated into this agreement in any manner. The fees and other amounts
payable with respect to each LC are as provided in this agreement, drafts
under each LC are part of the Obligation, only the events specified in this
agreement as a Default shall constitute a default under any LC, and the terms
of this agreement control any conflict between the terms of this agreement
and any LC Agreement.
(j) Delivery of Letters of Credit. Borrower acknowledges that
each LC will be deemed issued upon delivery to its beneficiary or Borrower.
In the event that Borrower requests any LC be delivered to Borrower rather
than the beneficiary, and Borrower or any other Company subsequently cancels
such LC, Borrower agrees to return it (or cause it to be returned by another
Company) to Agent together with Borrower's written certification that it has
never been delivered to such beneficiary. In the event any LC is delivered to
its beneficiary pursuant to Borrower's instructions, no cancellation thereof
by Borrower or any other Company shall be effective without written consent
of such beneficiary to Agent and return of such LC to Agent.
CREDIT AGREEMENT
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2.4 Swing-Line Subfacility.
(a) Conditions. For the convenience of the parties, Agent,
solely for its own account, may make any requested Borrowing (which request
must be made before 1:00 p.m. on the Business Day the Borrowing is to be made
and may be telephonic if confirmed in writing within two Business Days) of
$100,000 (or a greater integral multiple of $10,000) directly to Borrower as
a Swing-Line Borrowing without requiring each other Lender to fund its
Commitment Percentage thereof unless and until SECTION 2.4(b) is applicable.
Swing-Line Borrowings are subject to the following conditions:
(i) Each Swing-Line Borrowing must occur on
a Business Day before the Termination Date;
(ii) The total Principal Debt for Swing-Line
Borrowings may not exceed $10,000,000, and the Commitment
Usage may not exceed the Total Commitment (as that amount is
reduced and canceled in accordance with this agreement);
(iii) To the extent that a Swing-Line
Borrowing remains outstanding, the first Borrowing Request
after Borrower has received that Swing-Line Borrowing, which
Borrowing Request shall be made no later than 30 Business Days
after that Swing-Line Borrowing, shall be for an amount at
least equal to that Swing-Line Borrowing, and the proceeds of
the requested Borrowing shall be used to reduce the Principal
Debt for Swing-Line Borrowings to zero;
(iv) Each Swing-Line Borrowing is a
Base-Rate Borrowing; and
(v) Each Borrowing under the Swing-Line
Subfacility may be prepaid on same-day telephonic notice from
Borrower to Agent, if notice is received by 2:00 p.m.
(b) If Borrower fails to repay any Swing-Line Borrowing within
two Business Days after demand by Agent (or upon the Termination Date), Agent
shall promptly notify each Lender of Borrower's failure and the unpaid amount.
No later than the close of business on the date Agent gives notice (if notice is
given before 12:00 noon on any Business Day, or, if made at any other time, on
the next Business Day following the date of notice), each Lender shall
irrevocably and unconditionally purchase and receive from Agent a ratable
participation in such Swing-Line Borrowing and shall make available to Agent in
immediately available funds its Commitment Percentage of such unpaid amount,
together with interest from the date when its payment was due to, but not
including, the date of payment, at the Default Rate. If a Lender does not
promptly pay its amount upon Agent's demand, and until Lender makes the required
payment, Agent is deemed to continue to have outstanding a Swing-Line Borrowing
in the amount of the Lender's unpaid obligation. Borrower shall make each
payment of all or any part of any Swing-Line Borrowing to Agent for the ratable
benefit of Agent and those Lenders who have funded their participations in
Swing-Line Borrowings under this section (but all interest accruing on
Swing-Line Borrowings before the funding date of any participation is payable
solely to Agent for its own account).
CREDIT AGREEMENT
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2.5 Borrowing Notices and LC Requests. Each Borrowing Request
(whether telephonic or written), LC Request, and borrowing request under the
Swing-Line Subfacility, constitutes a representation and warranty by Borrower
that as of the Borrowing Date or the date of issuance of the requested LC, as
the case may be, all of the conditions precedent in SECTION 6 have been
satisfied.
2.6 Termination. Borrower may -- upon giving at least two Business
Days prior written and irrevocable notice to Agent -- terminate all or part of
the Revolving Facility as follows:
(a) Each partial termination of the Revolving Facility must be
in an amount of not less than $5,000,000 or a greater integral multiple of
$1,000,000.
(b) Each partial termination of the Revolving Facility must be
ratable in accordance with each Lender's Commitment Percentage. At the time
of any such termination, Borrower shall pay to Agent, for the account of each
Lender, as applicable, all accrued and unpaid fees under this agreement, the
interest attributable to the amount of that termination, and any related
Funding Loss. Any part of the Commitments that are terminated may not be
reinstated.
2.7 Lenders.
(a) The Lenders on the Closing Date shall be the Lenders set
forth on SCHEDULE 1 on the Closing Date.
(b) At the request of Borrower not more than one time prior to
the Termination Date, Agent may increase the Total Commitment by (x) admitting
additional Lenders hereunder (each a "SUBSEQUENT LENDER"), or (y) increasing the
Commitment of any Lender (each an "INCREASING LENDER"), subject to the following
conditions:
(i) Each Subsequent Lender is a commercial bank and/or a
financial institution approved by Agent (such approval not to be unreasonably
withheld);
(ii) Borrower executes (A) new Notes payable to the order of a
Subsequent Lender, or (B) replacement Notes payable to the order of an
Increasing Lender;
(iii) Borrower pays to Agent, for the account of Lenders and
for distribution to the applicable Subsequent Lender or Increasing Lender as
Agent shall determine, all fees with respect to an increase in the Total
Commitment payable pursuant to any fee letter between Borrower and Agent;
(iv) Each Subsequent Lender executes a signature page to this
Agreement;
(v) After giving effect to the admission of any Subsequent
Lender or the increase in the Commitment of any Increasing Lender, the aggregate
face amount of the Total Commitment does not exceed $100,000,000;
(vi) The increase in the Total Commitment shall be in the
minimum amount of $20,000,000.00 or a greater integral multiple of
$5,000,000.00;
CREDIT AGREEMENT
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(vii) No admission of any Subsequent Lender shall increase the
Commitment of any existing Lender without the consent of such Lender; and
(viii) Agent shall have approved the admission of each
Subsequent Lender and the increase of an Increasing Lender, such consent to be
on terms and conditions acceptable to Agent in its sole discretion.
After the admission of any Subsequent Lender or the increase in the Commitment
of any Increasing Lender, Agent shall provide to each Lender a new SCHEDULE 1 to
this Agreement.
SECTION 3 TERMS OF PAYMENT.
3.1 Notes and Payments.
(a) Notes. Principal Debt under the Revolving Facility (other
than Principal Debt under the Swing-Line Subfacility) is evidenced by the
Revolving Notes, one payable to each Lender in the stated amount of its
initial Commitment. Principal Debt under the Swing-Line Facility shall be
evidenced by a Swing-Line Note payable to Agent in the stated principal
amount of $10,000,000.
(b) Payment. Borrower must make each payment and prepayment on
the Obligation to Agent's principal office in Dallas, Texas (or such other
office designated by Agent) in immediately available funds by 1:00 p.m. on
the day due; otherwise, but subject to SECTION 3.8, those funds continue to
accrue interest as if they were received on the next Business Day. Agent
shall promptly pay to each Lender the part of any payment or prepayment to
which that Lender is entitled under this agreement on the same day Agent
receives the funds from Borrower.
(c) Payment Assumed. Unless Agent has received notice from
Borrower prior to the date on which any payment is due under this agreement
that Borrower will not make that payment in full, Agent may assume that
Borrower has made the full payment due and Agent may, in reliance upon that
assumption, cause to be distributed to each Lender on that date the amount
then due to each Lender. If and to the extent Borrower does not make the full
payment due to Agent, each Lender shall repay to Agent on demand the amount
distributed to that Lender by Agent together with interest for each day from
the date that Lender received payment from Agent until the date that Lender
repays Agent (unless such repayment is made on the same day as such
distribution), at an interest rate equal to the Federal-Funds Rate.
3.2 Interest and Principal Payments.
(a) Interest. Accrued interest on each LIBOR Borrowing is due
and payable on the last day of its respective Interest Period. If any
Interest Period for a LIBOR Borrowing is greater than three months, then
accrued interest is also due and payable on the date three months after the
commencement of the Interest Period. Until converted to a LIBOR Borrowing
under SECTION 3.10(b), accrued interest on each Base-Rate Borrowing
(including Swing-Line Borrowings) is due and payable on the last day of each
March, June, September, and December -- commencing on the first of those
dates that follows the Closing Date and on the Termination Date.
CREDIT AGREEMENT
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(b) Principal. The Principal Debt is due and payable on the
Termination Date. Before the occurrence of the Termination Date, Borrower may
prepay, without penalty and in whole or in part, the Principal Debt, so long
as (i) each voluntary partial prepayment must be in a principal amount not
less than $1,000,000 or a greater integral multiple of $100,000, (ii)
Borrower shall give prior written and irrevocable notice to Agent (A) at
least two Business Days before any prepayment of a LIBOR Borrowing or (B) at
least one Business Day before any prepayment of a Base-Rate Borrowing, and
(iii) Borrower shall pay any related Funding Loss upon demand. Conversions
under SECTION 3.10 are not prepayments.
3.3 Interest Options. Borrowings under the Revolving Facility
(excluding Swing-Line Borrowings) shall bear interest at an annual rate equal to
the lesser of either (i) the Base Rate or LIBOR plus the Applicable Margin (in
each case as designated or deemed designated by Borrower), as the case may be,
or (ii) the Maximum Rate. Each change in the Base Rate and Maximum Rate is
effective, without notice to Borrower or any other Person, upon the effective
date of change.
3.4 Quotation of Rates. Borrower may call Agent before delivering
a Borrowing Request to receive an indication of the interest rates then in
effect, but the indicated rates do not bind Agent or Lenders or affect the
interest rate that is actually in effect when Borrower makes a Borrowing Request
or on the Borrowing Date.
3.5 Default Rate. If permitted by Law, all past-due Principal
Debt, Borrower's past-due payment and reimbursement obligations in connection
with LCs, and past-due interest accruing on any of the foregoing bears interest
from the date due (stated or by acceleration) at the Default Rate until paid,
regardless whether payment is made before or after entry of a judgment.
3.6 Interest Recapture. If the designated interest rate applicable
to any Borrowing exceeds the Maximum Rate, the interest rate on that Borrowing
is limited to the Maximum Rate, but any subsequent reductions in the designated
rate shall not reduce the interest rate thereon below the Maximum Rate until the
total amount of accrued interest equals the amount of interest that would have
accrued if that designated rate had always been in effect. If at maturity
(stated or by acceleration), or at final payment of the Notes, the total
interest paid or accrued is less than the interest that would have accrued if
the designated rates had always been in effect, then, at that time and to the
extent permitted by Law, Borrower shall pay an amount equal to the difference
between (a) the lesser of the amount of interest that would have accrued if the
designated rates had always been in effect and the amount of interest that would
have accrued if the Maximum Rate had always been in effect, and (b) the amount
of interest actually paid or accrued on the Notes.
3.7 Interest Calculations. Interest will be calculated on the
basis of actual number of days (including the first day but excluding the last
day) elapsed but computed as if each calendar year consisted of 360 days (unless
the calculation would result in an interest rate greater than the Maximum Rate,
or in the case of interest on Base-Rate Borrowings in which event interest will
be calculated on the basis of a year of 365 or 366 days, as the case may be).
All interest rate determinations and calculations by Agent are conclusive and
binding absent manifest error.
3.8 Maximum Rate. Regardless of any provision contained in any
Loan Document, no Lender is entitled to contract for, charge, take, reserve,
receive, or apply, as interest on all or any part of the Obligation, any amount
in excess of the Maximum Rate, and, if Lenders ever do so, then any excess shall
be treated as a partial prepayment of principal and any remaining excess shall
be refunded to
CREDIT AGREEMENT
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Borrower. In determining if the interest paid or payable exceeds the Maximum
Rate, Borrower and Lenders shall, to the maximum extent permitted under
applicable Law, (a) treat all Borrowings as but a single extension of credit
(and Lenders and Borrower agree that is the case and that provision in this
agreement for multiple Borrowings is for convenience only), (b) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest, (c)
exclude voluntary prepayments and their effects, and (d) amortize, prorate,
allocate, and spread the total amount of interest throughout the entire
contemplated term of the Obligation. However, if the Obligation is paid in full
before the end of its full contemplated term, and if the interest received for
its actual period of existence exceeds the Maximum Amount, Lenders shall refund
any excess (and Lenders may not, to the extent permitted by Law, be subject to
any penalties provided by any Laws for contracting for, charging, taking,
reserving, or receiving interest in excess of the Maximum Amount). If the Laws
of the State of Texas are applicable for purposes of determining the "Maximum
Rate" or the "Maximum Amount," then those terms mean the "weekly ceiling" from
time to time in effect under Texas Finance Code Section 303.305. Borrower agrees
that Chapter 346 of the Texas Finance Code, as amended (which regulates certain
revolving credit loan accounts and revolving tri-party accounts), does not apply
to the Obligation.
3.9 Interest Periods. When Borrower requests any LIBOR Borrowing,
Borrower may elect the applicable interest period (each an "INTEREST PERIOD"),
which may be, at Borrower's option, one, two, three, or six months for LIBOR
Borrowings, subject to SECTION 14.1 and the following conditions: (a) the
initial Interest Period for a LIBOR Borrowing commences on the applicable
Borrowing Date or conversion date, and each subsequent Interest Period
applicable to any Borrowing commences on the day when the next preceding
applicable Interest Period expires; (b) if any Interest Period for a LIBOR
Borrowing begins on a day for which no numerically corresponding Business Day in
the calendar month at the end of the Interest Period exists, then the Interest
Period ends on the last Business Day of that calendar month; (c) if Borrower is
required to pay any portion of a LIBOR Borrowing before the end of its Interest
Period in order to comply with the payment provisions of the Loan Documents,
Borrower shall also pay any related Funding Loss; and (d) no more than ten
Interest Periods may be in effect at one time.
3.10 Conversions. Subject to the dollar limits of SECTION 2.1(a)
and provided that Borrower may not convert to or select a new Interest Period
for a LIBOR Borrowing at any time when a Default or Potential Default exists,
Borrower may (a) convert a LIBOR Borrowing on the last day of the applicable
Interest Period to a Base-Rate Borrowing, (b) convert a Base-Rate Borrowing at
any time to a LIBOR Borrowing, and (c) elect a new Interest Period for a LIBOR
Borrowing. That election may be made by telephonic request to Agent no later
than 12:00 p.m. noon on the third Business Day before the conversion date or the
last day of the Interest Period, as the case may be (for conversion to a LIBOR
Borrowing or election of a new Interest Period), and no later than 12:00 p.m.
noon on the last day of the Interest Period (for conversion to a Base-Rate
Borrowing). Borrower shall provide a Conversion Notice to Agent no later than
two days after the date of the conversion or election. Absent Borrower's
telephonic request for conversion or election of a new Interest Period or if a
Default or Potential Default exists, then, a LIBOR Borrowing shall be deemed
converted to a Base-Rate Borrowing effective when the applicable Interest Period
expires.
3.11 Order of Application.
(a) No Default. If no Default or Potential Default
exists, any payment shall be applied to the Obligation -- except as otherwise
specifically provided in the Loan Documents -- in the order and manner as
Borrower directs.
CREDIT AGREEMENT
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(b) Default. If a Default or Potential Default exists or
if Borrower fails to give direction, any payment (including proceeds from the
exercise of any Rights) shall be applied in the following order: (i) to all fees
and expenses for which Agent or Lenders have not been paid or reimbursed in
accordance with the Loan Documents (and if such payment is less than all unpaid
or unreimbursed fees and expenses, then the payment shall be paid against unpaid
and unreimbursed fees and expenses in the order of incurrence or due date); (ii)
to accrued interest on the Principal Debt; (iii) to the Principal Debt
outstanding under the Swing-Line Facility; (iv) to any LC reimbursement
obligations that are due and payable and that remain unfunded by any Borrowing;
(v) to the remaining Principal Debt in the order as Determining Lenders may
elect (but Determining Lenders agree to apply proceeds in an order that will
minimize any Funding Loss); (vi) to the remaining Obligation in the order and
manner Determining Lenders deem appropriate; and (vii) as a deposit with Agent,
for the benefit of Lenders, as security for and payment of any subsequent LC
reimbursement obligations.
(c) Pro Rata. Each payment or prepayment shall be
distributed to each Lender in accordance with its Pro Rata Part of that payment
or prepayment.
3.12 Sharing of Payments, Etc. If any Lender obtains any payment or
prepayment with respect to the Obligation (whether voluntary, involuntary, or
otherwise, including, without limitation, as a result of exercising its Rights
under SECTION 3.13) that exceeds the part of that payment or prepayment that it
is then entitled to receive under the Loan Documents, then that Lender shall
purchase from the other Lenders participations that will cause the purchasing
Lender to share the excess payment or prepayment ratably with each other Lender.
If all or any portion of any excess payment or prepayment is subsequently
recovered from the purchasing Lender, then the purchase shall be rescinded and
the purchase price restored to the extent of the recovery. Borrower agrees that
any Lender purchasing a participation from another Lender under this section
may, to the fullest extent permitted by Law, exercise all of its Rights of
payment (including the Right of offset) with respect to that participation as
fully as if that Lender were the direct creditor of Borrower in the amount of
that participation.
3.13 Offset. If a Default exists, each Lender is entitled to
exercise (for the benefit of all Lenders in accordance with SECTION 3.12) the
Rights of offset and banker's lien against each and every account (excluding
Settlement Aggregation Accounts) and other property, or any interest therein,
that any Company may now or hereafter have with, or which is now or hereafter in
the possession of, that Lender to the extent of the full amount of the
Obligation owed (directly or participated) to it.
3.14 Booking Borrowings. To the extent permitted by Law, any Lender
may make, carry, or transfer its Borrowings at, to, or for the account of any of
its branch offices or the office or branch of any of its Affiliates. However, no
Affiliate or branch is entitled to receive any greater payment under SECTION
3.16 than the transferor Lender would have been entitled to receive with respect
to those Borrowings, and a transfer may not be made if, as a direct result of
it, SECTION 3.15 or 3.17 would apply to any of the Obligation. If any of the
conditions of SECTIONS 3.16 or 3.17 ever apply to a Lender, that Lender shall,
to the extent possible, carry or transfer its Borrowings at, to, or for the
account of any of its branch offices or the office or branch of any of its
Affiliates so long as the transfer is consistent with the other provisions of
this section, does not create any burden or adverse circumstance for that Lender
that would not otherwise exist, and eliminates or ameliorates the conditions of
SECTIONS 3.16 or 3.17 as applicable.
CREDIT AGREEMENT
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3.15 Basis Unavailable or Inadequate for LIBOR. If, on or before any
date when LIBOR is to be determined for a Borrowing, Agent reasonably determines
that the basis for determining the applicable rate is not available or any
Lender reasonably determines that the resulting rate does not accurately reflect
the cost to that Lender of making or converting Borrowings at that rate for the
applicable Interest Period, then Agent shall promptly notify Borrower and
Lenders of that determination (which is conclusive and binding on Borrower
absent manifest error) and the applicable Borrowing shall bear interest at the
Base Rate. Until Agent notifies Borrower that those circumstances no longer
exist, Lenders' commitments under this agreement to make, or to convert to,
LIBOR Borrowings, as the case may be, are suspended.
3.16 Additional Costs. Each Lender severally and not jointly agrees
to notify Agent, the other Lenders, and Borrower within 180 days after it has
actual knowledge that any circumstances exist that would give rise to any
payment obligation by Borrower under clauses (a) through (c) below. Although no
Lender shall have any liability to Agent, any other Lender, or any Company for
its failure to give that notice, Borrower is not obligated to pay any amounts
under those clauses that arise, accrue, or are imposed more than 180 days before
that notice to the extent it is applicable to those amounts. Any Lender
demanding payment of any additional costs under this section must generally be
making similar demand for similar additional costs under credit agreements to
which it is party that contain similar provisions to this section.
(a) Reserves. With respect to any LIBOR Borrowing (i) if
any change in any present Law, any change in the interpretation or
application of any present Law, or any future Law imposes, modifies, or deems
applicable (or if compliance by any Lender with any requirement of any
Tribunal results in) any requirement that any reserves (including, without
limitation, any marginal, emergency, supplemental, or special reserves) be
maintained (other than any reserve included in the Reserve Requirement), and
if (ii) those reserves reduce any sums receivable by that Lender under this
agreement or increase the costs incurred by that Lender in advancing or
maintaining any portion of any LIBOR Borrowing, then (iii) that Lender
(through Agent) shall deliver to Borrower a certificate setting forth in
reasonable detail the calculation of the amount necessary to compensate it
for its reduction or increase (which certificate is conclusive and binding
absent manifest error), and (iv) Borrower shall pay that amount to that
Lender within five Business Days after demand. The provisions of and
undertakings and indemnification in this CLAUSE (a) survive the satisfaction
and payment of the Obligation and termination of this agreement.
(b) Capital Adequacy. With respect to any Borrowing or
LC, if any change in any present Law, any change in the interpretation or
application of any present Law, or any future Law regarding capital adequacy,
or if compliance by Issuing Lender or any Lender with any request, directive,
or requirement imposed in the future by any Tribunal regarding capital
adequacy, or if any change in its written policies or in the risk category of
this transaction, in any of the foregoing events or circumstances, reduces
the rate of return on its capital as a consequence of its obligations under
this agreement to a level below that which it otherwise could have achieved
(taking into consideration its policies with respect to capital adequacy) by
an amount deemed by it to be material (and it may, in determining the amount,
utilize reasonable assumptions and allocations of costs and expenses and use
any reasonable averaging or attribution method), then (unless the effect is
already reflected in the rate of interest then applicable under this
agreement) Agent or that Lender (through Agent) shall notify Borrower and
deliver to Borrower a certificate setting forth in reasonable detail the
calculation of the amount necessary to compensate it (which certificate is
conclusive and binding absent manifest error), and Borrower shall pay that
amount to Agent or that Lender within five Business Days after demand.
Notwithstanding the foregoing sentence, Borrower shall not be obligated to
pay such amount unless
CREDIT AGREEMENT
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notice thereof is given within 90 Business Days after any such Lender
actually incurs such reduction in its return. Lenders are not aware of any
event which would so reduce their rate of return as of the date hereof. If
any such event giving rights to a demand by any Lender for compensation under
this SECTION 3.16(b) occurs specifically with respect to such Lender, and
generally with respect to national banks similarly situated for loans of the
same classification, Borrower may elect to prepay the Obligation in full
within 120 days after receipt of the above-described certificate from Agent
by giving written notice to Agent or that Lender through Agent) of such
election not more than five Business Days after receipt of such certificate
from Agent; provided, however, that if Borrower does not prepay the
Obligation within such 120-day period despite having given such notice, this
agreement shall remain in full force and effect as if such notice was never
given. The provisions of and undertakings and indemnification in this CLAUSE
(b) shall survive the satisfaction and payment of the Obligation and
termination of this agreement.
(c) HLT. Neither Borrower nor any Lender is aware of any
circumstances which would result in classifying this transaction as a "highly
leveraged transaction" as of the Closing Date under "HLT" guidelines
promulgated by any Tribunal (including, without limitation, the Office of the
Comptroller of the Currency). If any Tribunal or any Lender (as it interprets
"HLT guidelines" promulgated by any Tribunal) classifies this transaction as
a "highly leveraged transaction," such Lender (through Agent) shall promptly
notify Borrower of such classification and the applicable interest rate
margin in all contexts shall be increased by 1% as of the date of such
notice.
(d) Taxes. Subject to SECTION 3.19, any Taxes payable by
Agent or any Lender or ruled (by a Tribunal) payable by Agent or any Lender
in respect of this agreement or any other Loan Document shall, if permitted
by Law, be paid by Borrower, together with interest and penalties, if any,
except for Taxes payable on or measured by the overall net income of Agent or
that Lender (or Agent or that Lender, as the case may be, together with any
other Person with whom Agent or that Lender files a consolidated, combined,
unitary, or similar Tax return) and except for interest and penalties
incurred as a result of the gross negligence or willful misconduct of Agent
or any Lender. Agent or that Lender (through Agent) shall notify Borrower and
deliver to Borrower a certificate setting forth in reasonable detail the
calculation of the amount of payable Taxes, which certificate is conclusive
and binding (absent manifest error), and Borrower shall pay that amount to
Agent for its account or the account of that Lender, as the case may be
within five Business Days after demand. If Agent or that Lender subsequently
receives a refund of the Taxes paid to it by Borrower, then the recipient
shall promptly pay the refund to Borrower.
3.17 Change in Laws. If any Law makes it unlawful for any Lender to
make or maintain LIBOR Borrowings, then that Lender shall promptly notify
Borrower and Agent, and (a) as to undisbursed funds, that requested Borrowing
shall be made as a Base-Rate Borrowing, and (b) as to any outstanding Borrowing
(i) if maintaining the Borrowing until the last day of the applicable Interest
Period is unlawful, the Borrowing shall be converted to a Base-Rate Borrowing as
of the date of notice, in which event Borrower will be required to pay any
related Funding Loss, or (ii) if not prohibited by Law, the Borrowing shall be
converted to a Base-Rate Borrowing as of the last day of the applicable Interest
Period, or (iii) if any conversion will not resolve the unlawfulness, Borrower
shall promptly prepay the Borrowing, without penalty but with related Funding
Loss.
CREDIT AGREEMENT
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3.18 FUNDING LOSS. BORROWER SHALL INDEMNIFY EACH LENDER AGAINST,
AND PAY TO IT UPON DEMAND, ANY FUNDING LOSS OF THAT LENDER. WHEN ANY LENDER
DEMANDS THAT BORROWER PAY ANY FUNDING LOSS, THAT LENDER SHALL DELIVER TO
BORROWER AND AGENT A CERTIFICATE SETTING FORTH IN REASONABLE DETAIL THE BASIS
FOR IMPOSING THE FUNDING LOSS AND THE CALCULATION OF THE AMOUNT, WHICH
CALCULATION IS CONCLUSIVE AND BINDING ABSENT MANIFEST ERROR. THE PROVISIONS OF
AND UNDERTAKINGS AND INDEMNIFICATION IN THIS SECTION SURVIVE THE SATISFACTION
AND PAYMENT OF THE OBLIGATION AND TERMINATION OF THIS AGREEMENT.
3.19 Foreign Lenders, Participants, and Assignees. Each Lender,
Participant (by accepting a participation interest under this agreement), and
Assignee (by executing an Assignment) that is not organized under the Laws of
the United States of America or one of its states (a) represents to Agent and
Borrower that (i) no Taxes are required to be withheld by Agent or Borrower with
respect to any payments to be made to it in respect of the Obligation and (ii)
it has furnished to Agent and Borrower two duly completed copies of either U.S.
Internal Revenue Service Form 4224, Form 1001, Form W-8, or any other form
acceptable to Agent and Borrower that entitles it to a complete exemption from
U.S. federal withholding Tax on all interest or fee payments under the Loan
Documents, and (b) covenants to (i) provide Agent and Borrower a new Form 4224,
Form 1001, Form W-8, or other form acceptable to Agent and Borrower upon the
expiration or obsolescence according to Law of any previously delivered form,
duly executed and completed by it, entitling it to a complete exemption from
U.S. federal withholding Tax on all interest and fee payments under the Loan
Documents, and (ii) comply from time to time with all Laws with regard to the
withholding Tax exemption. If any of the foregoing is not true at any time or
the applicable forms are not provided, then Borrower and Agent (without
duplication) may deduct and withhold from interest and fee payments under the
Loan Documents any Tax at the maximum rate under the Code or other applicable
Law, and amounts so deducted and withheld shall be treated as paid to that
Lender, Participant, or assignee, as the case may be, for all purposes under the
Loan Documents.
SECTION 4 FEES.
4.1 Treatment of Fees. The fees described in this SECTION 4
represent compensation for services rendered and to be rendered separate and
apart from the lending of money or the provision of credit, and (a) are not
compensation for the use, detention, or forbearance of money, (b) are in
addition to, and not in lieu of, interest and expenses otherwise described in
this agreement, (c) are payable in accordance with SECTION 3.1, (d) are
non-refundable, (e) to the fullest extent permitted by Law, bear interest, if
not paid when due, at the Default Rate and (f) are calculated on the basis of a
year of 360 days.
4.2 Agent's Fees. Borrower shall pay to Agent, solely for its own
account, the arrangement fee described in the letter agreement (as it may be
renewed, extended, or modified) dated as of September 24, 1999, between Borrower
and Agent.
4.3 LC Fees. As an inducement for the issuance (including, without
limitation, the extension) of each LC, Borrower agrees to pay to Agent:
(a) For the account of each Lender, according to each
Lender's Commitment Percentage on the day the fee is payable, an issuance
fee, payable quarterly in arrears, equal to a percentage of the undrawn
amount of that LC at the end of each applicable quarterly period, which
percentage is equal to 100% of the Applicable Margin in effect for LIBOR
Borrowings on the first day of the quarterly period for which a payment is
payable;
CREDIT AGREEMENT
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(b) For the account of Issuing Lender, payable on the
date of issuance, a fronting fee of $300.00; and
(c) For the account of Issuing Lender, amendment,
transfer, negotiation, and other fees as determined and payable in accordance
with Agent's then current fee policy.
4.4 Commitment Fees.
(a) From and after the Closing Date, Borrower shall pay
to Agent a commitment fee for Lenders according to each Lender's Commitment
Percentage. The fee is payable as it accrues on the last day of each March,
June, September, and December -- commencing on September 30, 1999 -- and on
the Termination Date. Each payment of the fee is equal to the following,
determined for the calendar quarter (or portion of a calendar quarter
commencing on the date of this agreement or ending on such later Termination
Date) preceding and including the date it is due: from the Closing Date until
the Termination Date, the product of (i) the Applicable Percentage, times
(ii) the amount by which the average-daily Total Commitment exceed the sum of
the average-daily Commitment Usage, times (iii) a fraction with the number of
days in the applicable quarter or portion of it as the numerator and 360 as
the denominator.
(b) From and after the Closing Date, Agent agrees to pay
a commitment fee to each Lender (other than Agent) according to each Lender's
Commitment Percentage, as it accrues on the last day of each March, June,
September, and December -- commencing on September 30, 1999 -- and on the
Termination Date. Each payment of such fee is equal to the following,
determined for the calendar quarter (or portion of a calendar quarter
commencing on the date of this agreement or ending on such later Termination
Date) preceding and including the date it is due; from the Closing Date until
the Termination Date, the product of the (i) Applicable Percentage, times
(ii) such Lender's Commitment Percentage, times (iii) the aggregate principal
amount of all Swing-Line Borrowings advanced by Agent to Borrower during the
applicable quarter or portion of it, times (iv) a fraction with the number of
days in the applicable quarter or portion of it on which there was Principal
Debt under the Swing-Line Subfacility as the numerator and 360 as the
denominator.
CREDIT AGREEMENT
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SECTION 5 SECURITY.
5.1 Guaranty. In consideration of the LCs which may be issued by
Issuing Lender under this agreement on behalf of each Company, and in
consideration of the intercompany advances which may be made by Borrower to its
Subsidiaries, and by Borrower's direct Subsidiaries to Borrower's indirect
Subsidiaries, in accordance with SECTION 2.1(c), Borrower shall cause all of its
present and future direct and indirect Subsidiaries (other than GuaranTec,
L.L.P., a Florida limited partnership), whether now existing or in the future
formed or acquired, to unconditionally guarantee the full payment and
performance of the Obligation by execution of a Guaranty.
5.2 Collateral. If the Funded Debt/EBITDA Ratio is ever greater
than 2.50 to 1.00, upon 10 days earlier notice, Borrower shall cause the full
payment and performance of the Obligation to be secured by Lender Liens on such
items and types of property then owned or thereafter acquired by any Company, or
any of their present or future Subsidiaries, as may be requested by Agent or
Determining Lenders, in their sole discretion.
5.3 Additional Security and Guaranties. Lender may, without notice
or demand and without affecting any Company's (or any other Person's)
obligations under the Loan Documents, from time to time (a) receive from any
Person and hold collateral for the payment of all or any part of the Obligation
and exchange, enforce, or release such collateral or any part thereof and (b)
accept and hold any endorsement or guaranty of payment of all or any part of the
Obligation and release such endorser or guarantor, or any Person who has given
any other security for the payment of all or any part of the Obligation, or any
other Person in any way obligated to pay all or any part of the Obligation.
5.4 Further Assurances. Borrower covenants and agrees that the
Lender Liens, when required as described in SECTION 5.2, must be created and
perfected as a condition to funding any Borrowings or issuance of any LC.
Furthermore, Borrower shall -- and shall cause each other appropriate Company to
- -- perform the acts, duly authorize, execute, acknowledge, deliver, file, and
record any additional writings, and pay all filings fees and costs as Agent or
Determining Lenders may reasonably deem appropriate or necessary to perfect and
maintain the Lender Liens and preserve and protect the Rights of Agent and
Lenders under any Loan Document.
5.5 Release of Collateral. Agent shall, upon Borrower's written
request and at Borrower's cost and expense, cause the Lender Liens on all
Collateral to be released:
(a) If the conditions described in SECTION 5.2 have
occurred, and after such occurrence Borrower has maintained the Funded
Debt/EBITDA Ratio to be less than 2.00 to 1.00 for two consecutive fiscal
quarters, provided that no Potential Default or Default has occurred; or
(b) Whenever no Lender has any commitment to extend
credit under any Loan Document, the Obligation has been fully paid and
performed, and all uncancelled and undrawn LCs have been either fully cash
secured or backed by letters of credit acceptable in the sole discretion of
Issuing Lender.
CREDIT AGREEMENT
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SECTION 6 CONDITIONS PRECEDENT. No Lender is obligated to fund the
initial Borrowing or issue any LC unless (a) Agent has received all of the items
described on SCHEDULE 6; (b) Agent and its counsel have completed due diligence
satisfactory to each, including without limitation, a review of financial
projections of Borrower, including statements of income, balance sheets, and
cash flow statements; (c) Agent has received and reviewed to its satisfaction
unaudited financial statements of Borrower for the quarter ended March 31, 1999,
certified by a senior financial officer of Borrower; (d) the acquisition by
Borrower of all of the issued and outstanding capital stock of Consultec, Inc.
for a purchase price not to exceed $105,000,000.00 pursuant to that certain
purchase agreement dated __________, 1999 has been completed; (e) Agent has
received a true and correct copy of the purchase agreement referenced in CLAUSE
(d) above; (f) any required approvals or consents (including those related to
the acquisition referenced above) shall have been obtained and remain in effect;
and (g) such other agreements, documents, instruments, opinions, certificates,
and evidences as Agent may reasonably require. In addition, no Lender is
obligated to fund (as opposed to continue or convert) any Borrowing or issue any
LC, and Agent will not be obligated to issue any LC or fund any Swing-Line
Borrowing, as the case may be, unless on the applicable Borrowing Date or issue
date (and after giving effect to the requested Borrowing or LC), as the case may
be: (u) Agent (and Issuing Lender, if applicable) timely receives a Borrowing
Request or LC Request (together with the applicable LC Agreement), as the case
may be; (v) Issuing Lender receives any applicable LC fee then due and payable;
(w) all of the representations and warranties of the Companies in the Loan
Documents are true and correct in all material respects (unless they speak to a
specific date or are based on facts which have changed by transactions
contemplated or expressly permitted by this agreement); (x) no Material Adverse
Event, Default, or Potential Default exists; (y) none of the matters disclosed
in any amendments to SCHEDULES 7.8, 7.10, or 7.18 are objected to by Determining
Lenders; and (z) no limitation in SECTION 2.1 or 2.3 is exceeded. Each Borrowing
Request and LC Request, however delivered, constitutes Borrower's representation
and warranty that the conditions in CLAUSES (w) through (z) above are satisfied.
Upon either Agent's or any Lender's reasonable request, Borrower shall deliver
to that Agent or that Lender evidence substantiating any of the matters in the
Loan Documents that are necessary to enable Borrower to qualify for the
Borrowing or LC, as the case may be. Each condition precedent in this agreement
(including, without limitation, those on SCHEDULE 6) is material to the
transactions contemplated by this agreement, and time is of the essence with
respect to each condition precedent.
SECTION 7 REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Agent and Lenders as follows:
7.1 Purpose and Regulation U.
(a) Borrower will use the proceeds of the Revolving
Facility (including the LC Subfacility and the Swing-Line Subfacility) for,
(i) the working capital and general corporate purposes of itself and any
Company that has executed a Guaranty, and (ii) acquisitions that are
permitted under SECTION 9.
(b) No Company is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any "margin stock" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as amended. No part
of the proceeds of any LC draft or drawing or Borrowing will be used,
directly or indirectly, for a purpose that violates any Law, including,
without limitation, Regulation U.
CREDIT AGREEMENT
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7.2 Corporate Existence, Good Standing, and Authority. Each
Company is duly organized, validly existing, and in good standing under the Laws
of its jurisdiction of incorporation. Except where not a Material Adverse Event,
each Company is duly qualified to transact business and is in good standing as a
foreign corporation in each jurisdiction where the nature and extent of its
business and properties require due qualification and good standing (each of
which jurisdictions is identified on SCHEDULE 7.3, as supplemented from time to
time by an amendment to that schedule that is dated, executed, and delivered by
Borrower to Agent and Lenders to reflect changes in that schedule as a result of
transactions permitted by the Loan Documents). Each Company possesses all
requisite authority and power to conduct its business as is now being conducted
and as proposed under the Loan Documents to be conducted and to own and operate
its assets as now owned and operated and as proposed to be owned and operated
under the Loan Documents.
7.3 Subsidiaries and Names. SCHEDULE 7.3 -- as supplemented from
time to time by an amendment to that schedule that is dated, executed, and
delivered by Borrower to Agent and Lenders to reflect changes in that schedule
as a result of transactions permitted by the Loan Documents -- describes (a) all
of Borrower's direct and indirect Subsidiaries, (b) all Companies, (c) every
name or trade name used by each Company during the five-year period before the
date of this agreement, (d) every change of each Company's name during the
four-month period before the date of this agreement, (e) the chief executive
office of each Company, (f) the percentage of shares of outstanding capital
stock (or similar voting interests) of each Subsidiary held by Company, and (g)
the Company holding such stock (or similar voting interests). All of the
outstanding shares of capital stock (or similar voting interests) of Borrower's
Subsidiaries are (a) duly authorized, validly issued, fully paid, and
nonassessable, (b) owned of record and beneficially as described in that
schedule or those writings, free and clear of any Liens, except Permitted Liens,
and (c) not subject to (i) with respect to each Subsidiary (other than The LAN
Company) existing as of July 30, 1997, any warrants, options, or other
acquisition Rights of any Person that could result in the holders of such
warrants, options, or other acquisition Rights owning, in the aggregate, at
least 5% of the outstanding shares of capital stock of the applicable
Subsidiary, (ii) with respect to The LAN Company and any Subsidiary formed or
acquired after July 30, 1997, any warrants, options, or other acquisition Rights
of any Person that could result in the holders of such warrants, options, or
other acquisition Rights owning, in the aggregate, at least 10% of the
outstanding shares of capital stock or (iii) any transfer restriction except
restrictions imposed by securities Laws and general corporate Laws.
7.4 Authorization and Contravention. The execution and delivery by
each Company of each Loan Document to which it is a party and the performance by
it of its obligations under those Loan Documents (a) are within its corporate
power, (b) have been duly authorized by all necessary corporate action, (c)
require no action by or filing with any Tribunal (except any action or filing
that has been taken or made on or before the Closing Date), (d) do not violate
any provision of its charter or bylaws, and (e) do not violate any provision of
Law applicable to it or any material agreement to which it is a party except
violations that individually or collectively are not a Material Adverse Event.
7.5 Binding Effect. Upon execution and delivery by all parties to
it, each Loan Document will constitute a legal and binding obligation of each
Company party to it, enforceable against it in accordance with that Loan
Document's terms except as that enforceability may be limited by Debtor Laws and
general principles of equity.
CREDIT AGREEMENT
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7.6 Financials and Existing Debt. The Current Financials were
prepared in accordance with GAAP and present fairly, in all material respects,
the Companies' consolidated financial condition, results of operations, and cash
flows as of, and for the portion of the fiscal year ending on their dates
(subject only to normal year-end adjustments for interim statements). Except for
transactions directly related to, specifically contemplated by, or expressly
permitted by the Loan Documents or as disclosed in the reports filed by Borrower
pursuant to the Securities and Exchange Act of 1934 and delivered to Agent and
Lenders after the date of the Current Financials, no material adverse changes
have occurred in the Companies' consolidated financial condition from that shown
in the Current Financials.
7.7 Solvency. Except as disclosed on SCHEDULE 7.7, on each
Borrowing Date and the date any LC is issued, each Company, is -- and after
giving effect to the requested Borrowing or LC will be -- Solvent. As of the
Closing Date, the Companies disclosed on SCHEDULE 7.7 are immaterial to
Borrower's consolidated balance sheet.
7.8 Litigation. Except as disclosed on SCHEDULE 7.8 -- as
supplemented from time to time by an amendment to that schedule that is dated,
executed, and delivered by Borrower to Agent and Lenders to reflect changes in
that schedule -- and matters covered (subject to reasonable and customary
deductible and retention) by insurance or indemnification agreements (a) no
Company is subject to, or aware of the threat of, any Litigation that is
reasonably likely to be determined adversely to any Company and, if so adversely
determined, is a Material Adverse Event, and (b) no outstanding and unpaid
judgments against any Company exist that would be a Material Adverse Event.
7.9 Taxes. Except as disclosed on SCHEDULE 7.8, (a) all Tax
returns of each Company required to be filed have been filed (or extensions have
been granted) before delinquency, and (b) all Taxes imposed upon each Company
that are due and payable have been paid before delinquency except as being
contested as permitted by SECTION 8.5.
7.10 Environmental Matters. Except as disclosed on SCHEDULE 7.10 --
as supplemented from time to time by an amendment to that schedule that is
dated, executed, and delivered by Borrower to Agent and Lenders to reflect
changes in that schedule:
(a) No Company's ownership of its assets violates any
applicable Environmental Law, other than such violations which would not
constitute a Material Adverse Event.
(b) No Company has received notice from any Tribunal that
it has actual or potential Environmental Liability and no Company has
knowledge that it has any Environmental Liability, which actual or potential
Environmental Liability in either case constitutes a Material Adverse Event.
(c) No Company has received notice from any Tribunal that
any Real Property is affected by, and no Company has knowledge that any Real
Property is affected by, any Release of any Hazardous Substance which
constitutes a Material Adverse Event.
7.11 Employee Plans. Except as disclosed on SCHEDULE 7.11, (a) no
Employee Plan subject to ERISA has incurred an "accumulated funding deficiency"
(as defined in Section 302 of ERISA or Section 512 of the Code), (b) neither
Borrower nor any ERISA Affiliate has incurred liability -- except for
liabilities for premiums that have been paid or that are not past due -- under
ERISA to the
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<PAGE> 38
PBGC in connection with any Employee Plan, (c) neither Borrower nor any ERISA
Affiliate has withdrawn in whole or in part from participation in a
Multiemployer Plan in a manner that has given rise to a withdrawal liability
under Title IV of ERISA, (d) neither Borrower nor any ERISA Affiliate has
engaged in any "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code), (e) no "reportable event" (as defined in Section 4043
of ERISA) has occurred excluding events for which the notice requirement is
waived under applicable PBGC regulations, (f) neither Borrower nor any ERISA
Affiliate has any liability, or is subject to any Lien, under ERISA or the Code
to or on account of any Employee Plan, (g) each Employee Plan subject to ERISA
and the Code complies in all material respects, both in form and operation, with
ERISA and the Code, and (h) no Multiemployer Plan subject to the Code is in
reorganization within the meaning of Section 418 of the Code.
7.12 Properties; Liens. Each Company has good and marketable title
to all its property reflected on the Current Financials as being owned by it
except for property that is obsolete or that has been disposed of in the
ordinary course of business between the date of the Current Financials and the
date of this agreement or, after the date of this agreement, as permitted by
SECTION 9.10 or SECTION 9.11. No Lien exists on any property of any Company
except Permitted Liens. No Company is party or subject to any agreement,
instrument, or order which in any way restricts any Company's ability to allow
Liens to exist upon any of its assets except relating to Permitted Liens.
7.13 Government Regulations. No Company is subject to regulation
under (a) the Public Utility Holding Company Act 1935, the Federal Power Act,
the Investment Company Act of 1940, the Interstate Commerce Act (as any of the
preceding acts have been amended), or any other Law (other than Regulation X of
the Board Governors of the Federal Reserve System) which regulates the
incurrence of Debt, or (b) a "utility" as defined in Chapter 35 of the Texas
Business and Commerce Code, as amended.
7.14 Transactions with Affiliates. Except for transactions with
other Companies and as otherwise disclosed on SCHEDULE 7.14 or permitted by
SECTION 9.6, no Company is a party to a material transaction with any of its
Affiliates. For purposes of this SECTION 7.14, such transactions are "material"
if they, individually or in the aggregate, require any Company to pay more than
$1,000,000.00 over the course of such transactions.
7.15 Debt. No Company has any Debt except Permitted Debt.
7.16 Leases. Except as disclosed on SCHEDULE 7.8, (a) each Company
enjoys peaceful and undisturbed possession under all leases necessary for the
operation of its properties and assets, and (b) all material leases under which
any Company is a lessee are in full force and effect.
7.17 Labor Matters. (a) No actual or threatened strikes, labor
disputes, slow downs, walkouts, work stoppages, or other concerted interruptions
of operations that involve employees of any Company as of the date hereof (and,
with respect to each repetition of this representation under Section 6, there
are no such interruptions which could constitute a Material Adverse Event), (b)
hours worked by and payment made to the employees of any Company or any
predecessor of such Company have not been in material violation of the Fair
Labor Standards Act or any other applicable Laws pertaining to labor matters,
(c) all material payments due from any Company for employee health and
CREDIT AGREEMENT
32
<PAGE> 39
welfare insurance, including, without limitation, workers compensation
insurance, have been paid or accrued as a liability on its books, (d) the
business activities and operations of each Company are materially in compliance
with OSHA and other applicable health and safety Laws.
7.18 Intellectual Property. To the best of Borrower's knowledge,
after exercise of due diligence, and except as disclosed on SCHEDULE 7.18, (a)
Each Company owns or has the right to use all material licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications and
trade names necessary to continue to conduct its businesses as presently
conducted by it and proposed to be conducted by it immediately after the date of
this agreement, (b) each Company is conducting its business without infringement
or claim of infringement of any license, patent, copyright, service mark,
trademark, trade name, trade secret or other intellectual property right of
others, and (c) no infringement or claim of infringement by others of any
material license, patent, copyright, service mark, trademark, trade name, trade
secret or other intellectual property of any Company exists.
7.19 Insurance. Each Company maintains with financially sound,
responsible, and reputable insurance companies or associations (or, as to
workers' compensation or similar insurance, with an insurance fund or by
self-insurance authorized by the jurisdictions in which it operates) insurance
concerning its properties and businesses against such casualties and
contingencies and in such types and in such amounts (and with co-insurance and
deductibles) as is customary in the case of same or similar businesses.
7.20 Full Disclosure. Each material fact or condition relating to
the Loan Documents or the financial condition or prospects, business, or
property of the Companies that is a Material Adverse Event has been disclosed in
writing to Agent and Lenders. All information previously furnished to Agent or
any Lender in connection with the Loan Documents was -- and all information
furnished in the future by any Company to Agent or any Lender will be -- true
and accurate in all material respects or based on reasonable estimates on the
date the information is stated or certified.
SECTION 8 AFFIRMATIVE COVENANTS. For so long as any Lender is committed
to lend or issue LCs under this agreement and until the Obligation has been
fully paid and performed, Borrower covenants and agrees with Agent and Lenders
that, without first obtaining Agent's written notice of Determining Lenders'
consent to the contrary:
8.1 Certain Items Furnished. Borrower shall furnish the following
to each Lender:
(a) Annual Financials, Etc. Promptly after preparation
but no later than 90 days after the last day of each fiscal year of Borrower,
Financials showing the Companies' consolidated financial condition and
results of operations as of, and for the year ended on, that last day,
accompanied by (i) the opinion, without material qualification, of Price
Waterhouse LLP or other firm of nationally-recognized independent certified
public accountants reasonably acceptable to Determining Lenders, based on an
audit using generally accepted auditing standards, that the consolidated
portion of those Financials were prepared in accordance with GAAP and present
fairly, in all material respects, the Companies' consolidated financial
condition and results of operations, and (ii) a Compliance Certificate.
(b) Quarterly Financials, Etc. Promptly after preparation
but no later than 60 days after the last day of each of the first three
fiscal quarters of Borrower each year, Financials
CREDIT AGREEMENT
33
<PAGE> 40
showing the Companies' consolidated financial condition and results of
operations for that fiscal quarter and for the period from the beginning of
the current fiscal year to the last day of that fiscal quarter, accompanied
by a Compliance Certificate.
(c) Other Reports. Promptly after preparation thereof,
true copies of all reports, statements, documents, plans and other written
communications furnished by or on behalf of Borrower to its stockholders, the
Securities and Exchange Commission, or the PBGC, and, if requested by Agent,
any other Tribunal.
(d) Employee Plans. As soon as possible and within 30
days after Borrower knows that any event which would constitute a reportable
event under Section 4043(b) of Title IV of ERISA with respect to any Employee
Plan subject to ERISA has occurred, or that the PBGC has instituted or will
institute proceedings under ERISA to terminate that plan, deliver a
certificate of a Responsible Officer of Borrower setting forth details as to
that reportable event and the action which Borrower or an ERISA Affiliate, as
the case may be, proposes to take with respect to it, together with a copy of
any notice of that reportable event which may be required to be filed with
the PBGC, or any notice delivered by the PBGC evidencing its intent to
institute those proceedings or any notice to the PBGC that the plan is to be
terminated, as the case may be. For all purposes of this section, Borrower is
deemed to have all knowledge of all facts attributable to the plan
administrator under ERISA.
(e) Other Notices. Notice -- promptly after Borrower
knows -- of (i) the existence and, if requested by Agent, status of any
Litigation that, if determined adversely to any Company, would be a Material
Adverse Event, (ii) any change in any material fact or circumstance
represented or warranted by any Company in any Loan Document, or (iii) a
Default or Potential Default, specifying the nature thereof and what action
the Companies have taken, are taking, or propose to take.
(f) Other Information. Promptly when reasonably requested
by Agent or any Lender, such information (not otherwise required to be
furnished under this agreement) about any Company's business affairs, assets,
and liabilities, and any opinions, certifications, and documents, in addition
to those mentioned herein.
8.2 Use of Credit. Borrower shall, and shall cause the Companies
to, use LCs and the proceeds of Borrowings only for the purposes represented in
this agreement, provided that notwithstanding anything herein to the contrary,
Borrower may also use the proceeds of the Revolving Facility (including the
Swing- Line Subfacility but excluding the LC Subfacility) for the purpose of
performing its payment obligations in connection with ITEMS 7 and 13 on SCHEDULE
9.2.
8.3 Books and Records. Each Company shall maintain books, records,
and accounts necessary to prepare Financials in accordance with GAAP.
8.4 Inspections. Each Company shall allow Agent or any Lender (or
their respective Representatives) to inspect any of its properties, to review
reports, files, and other records and to make and take away copies, to conduct
tests or investigations, and to discuss any of its affairs, conditions, and
finances with its other creditors, directors, officers, employees, or
representatives from time to time, during reasonable business hours, or, after
notice to Borrower, with any creditor of any Company.
CREDIT AGREEMENT
34
<PAGE> 41
8.5 Taxes. Each Company shall promptly pay when due any and all
Taxes except Taxes that are being contested in good faith by lawful proceedings
diligently conducted, against which reserve or other provision required by GAAP
has been made, and in respect of which levy and execution of any Lien sufficient
to be enforced has been and continues to be stayed.
8.6 Payment of Obligation. Each Company shall promptly pay (or
renew and extend) all of its Debt as it becomes due (other than Debt owed to any
Person other than Lenders, the validity or amount of which is being contested in
good faith by appropriate proceedings diligently conducted and a reserve or
other provision required by GAAP has been made).
8.7 Expenses. Promptly after demand accompanied by an invoice
describing the costs, fees, and expenses in reasonable detail, Borrower shall
pay (a) all costs, fees, and expenses paid or incurred by Agent incident to any
Loan Document (including, without limitation, the reasonable fees and expenses
of Agent's counsel in connection with the negotiation, preparation, delivery,
and execution of the Loan Documents and any related amendment, waiver, or
consent) and (b) all reasonable costs and expenses incurred by Agent or any
Lender in connection with the enforcement of the obligations of any Company
under the Loan Documents or the exercise of any Rights under the Loan Documents
(including, without limitation, reasonable allocated costs of in-house counsel,
other reasonable attorneys' fees, and court costs), all of which are part of the
Obligation, bearing interest, (if not paid within ten Business Days after demand
accompanied by an invoice describing the costs, fees, and expenses in reasonable
detail) at the Default Rate until paid.
8.8 Maintenance of Existence, Assets, and Business. Each Company
shall (a) maintain its corporate existence and good standing in its state of
incorporation, (b) except where not a Material Adverse Event (i) maintain its
authority to transact business and good standing in all other states, (ii)
maintain all licenses, permits, and franchises (including, without limitation,
Environmental Permits) necessary for its business, (iii) keep all of its
material assets that are useful in and necessary to its business in good working
order and condition (ordinary wear and tear excepted) and make all necessary
repairs and replacements.
8.9 Insurance. Each Company shall, at its cost and expense,
maintain with financially sound, responsible, and reputable insurance companies
or associations -- or, as to workers' compensation or similar insurance, with an
insurance fund or by self-insurance authorized by the jurisdictions in which it
operates -- insurance concerning its properties and businesses against
casualties and contingencies and of types and in amounts (and with co-insurance
and deductibles) as shall be reasonably satisfactory to Agent, with loss payable
to Agent as its interest may appear, and provide Agent with evidence of such
insurance within 30 days after the Closing Date.
8.10 Environmental Matters. Each Company shall (a) operate and
manage its businesses and otherwise conduct its affairs in compliance with all
Environmental Laws and Environmental Permits except to the extent noncompliance
does not constitute a Material Adverse Event, (b) promptly deliver to Agent a
copy of any notice received from any Tribunal alleging that any Company is not
in compliance with any Environmental Law or Environmental Permit if the
allegation constitutes a Material Adverse Event, and (c) promptly deliver to
Agent a copy of any notice received from any Tribunal alleging that any Company
has any potential Environmental Liability if the allegation constitutes a
Material Adverse Event.
CREDIT AGREEMENT
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<PAGE> 42
8.11 INDEMNIFICATION.
(a) AS USED IN THIS SECTION: (i) "INDEMNITOR" MEANS
BORROWER AND (PURSUANT TO ITS GUARANTY) EACH OTHER COMPANY; (ii) "INDEMNITEE"
MEANS AGENT, EACH LENDER, EACH PRESENT AND FUTURE AFFILIATE OF AGENT OR ANY
LENDER, EACH PRESENT AND FUTURE REPRESENTATIVE OF AGENT, ANY LENDER, OR ANY
OF THOSE AFFILIATES, AND EACH PRESENT AND FUTURE SUCCESSOR AND ASSIGN OF
AGENT, ANY LENDER, OR ANY OF THOSE AFFILIATES OR REPRESENTATIVES; AND (iii)
"INDEMNIFIED LIABILITIES" MEANS ALL PRESENT AND FUTURE, KNOWN AND UNKNOWN,
FIXED AND CONTINGENT, ADMINISTRATIVE, INVESTIGATIVE, JUDICIAL, AND OTHER
CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, INVESTIGATIONS, SUITS,
PROCEEDINGS, AMOUNTS PAID IN SETTLEMENT, DAMAGES, JUDGMENTS, PENALTIES, COURT
COSTS, LIABILITIES, AND OBLIGATIONS -- AND ALL PRESENT AND FUTURE COSTS,
EXPENSES, AND DISBURSEMENTS (INCLUDING, WITHOUT LIMITATION, ALL REASONABLE
ATTORNEYS' FEES AND EXPENSES WHETHER OR NOT SUIT OR OTHER PROCEEDING EXISTS
OR ANY INDEMNITEE IS PARTY TO ANY SUIT OR OTHER PROCEEDING) IN ANY WAY
RELATED TO ANY OF THE FOREGOING -- THAT MAY AT ANY TIME BE IMPOSED ON,
INCURRED BY, OR ASSERTED AGAINST ANY INDEMNITEE AND IN ANY WAY RELATING TO OR
ARISING OUT OF ANY (A) LOAN DOCUMENT, TRANSACTION CONTEMPLATED BY ANY LOAN
DOCUMENT, COLLATERAL, OR REAL PROPERTY, (B) ENVIRONMENTAL LIABILITY IN ANY
WAY RELATED TO ANY COMPANY, PREDECESSOR, COLLATERAL, REAL PROPERTY, OR ACT,
OMISSION, STATUS, OWNERSHIP, OR OTHER RELATIONSHIP, CONDITION, OR
CIRCUMSTANCE CONTEMPLATED BY, CREATED UNDER, OR ARISING PURSUANT TO OR IN
CONNECTION WITH ANY LOAN DOCUMENT, OR (C) INDEMNITEE'S SOLE OR CONCURRENT
ORDINARY NEGLIGENCE.
(b) EACH INDEMNITOR SHALL JOINTLY AND SEVERALLY INDEMNIFY
EACH INDEMNITEE FROM AND AGAINST, PROTECT AND DEFEND EACH INDEMNITEE FROM AND
AGAINST, HOLD EACH INDEMNITEE HARMLESS FROM AND AGAINST, AND ON DEMAND PAY OR
REIMBURSE EACH INDEMNITEE FOR, ALL INDEMNIFIED LIABILITIES.
(c) THE FOREGOING PROVISIONS (i) ARE NOT LIMITED IN
AMOUNT EVEN IF THAT AMOUNT EXCEEDS THE OBLIGATION, (ii) INCLUDE, WITHOUT
LIMITATION, REASONABLE FEES AND EXPENSES OF ATTORNEYS AND OTHER COSTS AND
EXPENSES OF LITIGATION OR PREPARING FOR LITIGATION AND DAMAGES OR INJURY TO
PERSONS, PROPERTY, OR NATURAL RESOURCES ARISING UNDER ANY STATUTORY OR COMMON
LAW, PUNITIVE DAMAGES, FINES, AND OTHER PENALTIES, AND (iii) ARE NOT AFFECTED
BY THE SOURCE OR ORIGIN OF ANY HAZARDOUS SUBSTANCE, AND (iv) ARE NOT AFFECTED
BY ANY INDEMNITEE'S INVESTIGATION, ACTUAL OR CONSTRUCTIVE KNOWLEDGE, COURSE
OF DEALING, OR WAIVER.
(d) EACH INDEMNITEE IS ENTITLED TO BE INDEMNIFIED UNDER
THE LOAN DOCUMENTS FOR ITS OWN NEGLIGENCE. HOWEVER, NO INDEMNITEE IS ENTITLED
TO BE INDEMNIFIED UNDER THE LOAN DOCUMENTS FOR ITS OWN FRAUD, GROSS
NEGLIGENCE, OR WILFUL MISCONDUCT.
(e) THE PROVISIONS OF AND INDEMNIFICATION AND OTHER
UNDERTAKINGS UNDER THIS SECTION SURVIVE THE FORECLOSURE OF ANY LENDER LIEN OR
ANY TRANSFER IN LIEU OF THAT FORECLOSURE, THE SALE OR OTHER TRANSFER OF ANY
COLLATERAL OR REAL PROPERTY TO ANY PERSON, THE SATISFACTION OF THE
OBLIGATION, THE TERMINATION OF THE LOAN DOCUMENTS, AND THE RELEASE OF ANY OR
ALL LENDER LIENS.
CREDIT AGREEMENT
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8.12 Chief Executive Office; Material Agreements. Each Company
shall (a) not relocate its chief executive office or place where its books and
records are kept (except for the relocation of its books and records to
Borrower's chief executive offices) unless prior thereto it gives Agent 30 days
prior written notice of such proposed location (including, without limitation,
the name of the county or parish and state), (b) do or cause to be done all
things necessary or appropriate to keep each Material Agreement in full force
and effect during its stated term (unless the other party thereto has defaulted
thereunder) and keep the Rights of the Companies and Agent and Lenders
thereunder unimpaired, (c) notify Agent of the occurrence of any default under
any Material Agreement, and (d) exercise each and every option, if any, to renew
and extend the term of each Material Agreement prior to the termination thereof
(unless the other party thereto has defaulted thereunder or such Company
determines in good faith that the renewal or extension of such agreement is
economically unsound). In addition, no Company will amend, modify, surrender,
impair, forfeit, cancel, or terminate, or permit the amendment, modification,
surrender, impairment, forfeiture, cancellation, or termination of, any Material
Agreement (other than amendments or modifications which could not, individually
or collectively, have a Material Adverse Effect, and cancellations or
terminations of contracts when the other party thereto has defaulted
thereunder).
8.13 Environmental Laws. Each Company shall conduct its business so
as to comply with all applicable Environmental Laws and shall promptly take
corrective action to remedy any non-compliance with any Environmental Law,
except where failure to so comply or take such action would not reasonably be
expected to have a Material Adverse Effect. Each Company shall maintain a system
which, in its reasonable business judgment, will assure its continued compliance
with Environmental Laws.
8.14 Subsidiaries. Borrower shall cause any new Subsidiary to
execute and deliver a Guaranty to Agent for the benefit of Lenders.
SECTION 9 NEGATIVE COVENANTS. For so long as any Lender is committed to
lend or issue LCs under this agreement and until the Obligation has been fully
paid and performed, Borrower covenants and agrees with Agent and Lenders that,
without first obtaining Agent's written notice of Determining Lenders' consent
to the contrary:
9.1 Payroll Taxes. No Company may use any proceeds of any
Borrowing to pay the wages of employees unless a timely payment to or deposit
with the United States of America of all amounts of Tax required to be deducted
and withheld with respect to such wages is also made.
9.2 Debt. No Company may have any Debt except Permitted Debt.
9.3 Loans, Advances, Acquisitions and Investments.
(a) Loans and Advances. No Company may, directly or
indirectly, make any loan, advance or extension of credit to, or purchase or
commit to purchase any evidences of Debt of, any other Person, other than (i)
advances by Borrower to a Subsidiary who has executed a Guaranty; (ii)
advances by Borrower to other Persons, subject to the dollar limitation in
SECTION 2.1(c); (iii) advances by Borrower to a Subsidiary from its own
funds, provided that such funds are not proceeds of Borrowings, (iv) advances
by a direct Subsidiary of Borrower to its Subsidiaries from its own funds,
provided that such funds are not proceeds of Borrowings, (v) advances to
Borrower by a
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<PAGE> 44
Subsidiary who has executed a Guaranty, and (vi) current trade and customer
accounts receivable which are for goods furnished or services rendered in the
ordinary course of business and are payable in accordance with customary
trade terms.
(b) Acquisitions and Investments. No Company may,
directly or indirectly, make any investment in, or purchase or commit to
purchase any stock or other securities of, or interests in, or assets of any
other Person (including, but not limited to, any new Subsidiary of any of the
Companies), or merge or consolidate with any Person, other than (i)
marketable direct obligations issued or unconditionally guaranteed by the
United States Government or issued by an agency thereof and backed by the
full faith and credit of the United States of America; (ii) marketable direct
obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
and, at the time of acquisition, having an investment grade rating obtainable
from either Standard & Poor's Corporation ("S&P") or Moody's Investors
Service, Inc. ("MOODY'S"), and not listed in Credit Watch published by S&P;
(iii) commercial paper, other than commercial paper issued by a Company,
maturing no more than 90 days after the date of creation thereof and, at the
time of acquisition, having an investment grade rating from either S&P or
Moody's; (iv) investment grade domestic and eurodollar certificates of
deposit or time deposits or bankers' acceptances maturing within one year
after the date of acquisition thereof issued by any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia having combined capital and surplus of not less than
$250,000,000; (v) common stock, preferred stock, partnership interests, or
any Debt instrument acquired in conjunction with outsourcing contracts for
consideration which does not exceed an amount equal to 7.5% of the book value
of the consolidated assets of the Companies immediately prior thereto; (vi)
common stock for which there is a public market; (vii) variable rate
preferred stock, auction market preferred stock, remarketed preferred stock,
and preferred stock funds having an investment grade rating from either
Moody's or S&P; (viii) variable rate demand notes or variable rate demand
bonds having an investment grade rating from either Moody's or S&P; (ix)
repurchase agreements collateralized with instruments or securities described
in clauses (i) through (viii) of this SECTION 9.3(b); (x) other instruments
having an investment grade rating from either Moody's or S&P; (xi) money
market funds, mutual funds or other funds that invest in instruments or
securities described in clauses (i) through (x) of this SECTION 9.3(b); (xii)
any other acquisition in which the consideration is paid with Borrower's
common stock; (xiii) any merger or consolidation of a Subsidiary into another
Subsidiary or into Borrower; and (xiv) the CARA Acquisition, the BRC
Acquisition, and any other acquisitions of stock, interests or assets, (or
creation of new Subsidiaries), so long as the aggregate amount of
consideration paid (or capital contributed) by the Companies during each
fiscal year set forth in the table below for such stock, other interests or
assets does not exceed the Maximum Amount for such fiscal year. For purposes
of this SECTION 9.3(b)(xiv), "MAXIMUM AMOUNT" means the "Maximum Amount" set
forth in the table below plus any portion of the previous fiscal year's
Maximum Amount not utilized during that previous fiscal year.
<TABLE>
<CAPTION>
=========================================
FISCAL YEAR END MAXIMUM AMOUNT
-----------------------------------------
<S> <C>
6/30/97 $ 65,000,000
6/30/98 $ 75,000,000
6/30/99 and thereafter $120,000,000
=========================================
</TABLE>
9.4 Liens. No Company may (a) create, incur, or suffer or permit
to be created or incurred or to exist any Lien upon any of its assets except
Permitted Liens or (b) enter into or permit to
CREDIT AGREEMENT
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<PAGE> 45
exist any arrangement or agreement that directly or indirectly prohibits any
Company from creating or incurring any Lien on any of its assets (i) except the
Loan Documents, (ii) any lease that places a Lien prohibition on only the
property subject to that lease, and (iii) arrangements and agreements that apply
only to property subject to Permitted Liens.
9.5 Employee Plans. Except as disclosed on SCHEDULE 7.11 or where
not a Material Adverse Event, no Company may permit any of the events or
circumstances described in SECTION 7.11 to exist or occur.
9.6 Transactions with Affiliates. Except as disclosed on SCHEDULE
7.14, no Company may, directly or indirectly, enter into any material
transaction (including, without limitation, the sale or exchange of property or
the rendering of service) with any of its Affiliates, other than (a)
transactions in the ordinary course of business and upon fair and reasonable
terms no less favorable than could be obtained in an arm's-length transaction
with a Person that was not its Affiliate, (b) transfers of assets to Borrower by
any Subsidiary, and (c) transfers of assets by Borrower or any other Subsidiary
to any Subsidiary party to a Guaranty. For purposes of this SECTION 9.6, such
transactions are "material" if they, individually or in the aggregate, require
any Company to pay more than $1,000,000 over the course of such transactions.
9.7 Compliance with Laws and Documents. No Company may (a) violate
the provisions of any Laws (including, without limitation, OSHA and
Environmental Laws) applicable to it or of any material agreement to which it is
a party if that violation alone, or when aggregated with all other violations,
would be a Material Adverse Event, (b) violate in any material respect any
provision of its charter or bylaws, or (c) repeal, replace, or amend any
provision of its charter or bylaws if that action would be a Material Adverse
Event.
9.8 Issuance of Securities.
(a) Borrower may not permit any Subsidiary to, directly or
indirectly, issue, sell, or otherwise dispose of any carrying Rights, warrants,
options or other Rights to subscribe for or purchase any such shares, other than
(i) Rights under existing employee stock option plans of any Subsidiary or such
Subsidiary employee stock option plans which are hereafter created in the
ordinary course of business, (ii) with respect to each Subsidiary (other than
The LAN Company) existing as of July 30, 1997, any warrants, options, or other
acquisition Rights of any Person that could not result in the holders of such
warrants, options, or other acquisition Rights owning, in the aggregate, at
least 5% of the outstanding shares of capital stock of the applicable
Subsidiary, and (iii) with respect to The LAN Company and any Subsidiary formed
or acquired after July 30, 1997, any warrants, options, or other acquisition
Rights of any Person that could not result in the holders of such warrants,
options, or other acquisition Rights owning, in the aggregate, at least 10% of
the outstanding shares of capital stock.
(b) Borrower may not permit any Subsidiary to, directly or
indirectly, issue, sell, or otherwise dispose of any of its shares of capital
stock or other investment securities of any class, or any securities convertible
into or exchangeable for any such shares, unless (i) such Subsidiary is party to
a Guaranty, and, after giving effect to such issuance, sale, or disposition,
such Subsidiary will continue to be a Subsidiary of Borrower, or (ii) such
Subsidiary is a Divestiture Subsidiary and the aggregate amount of assets owned
by all Divestiture Subsidiaries consummating a transaction permitted under this
SECTION 9.8(b)(ii) as of the date of such issuance, sale, or disposition does
not exceed 5% of the Companies' consolidated assets.
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9.9 Distributions. No Company may declare, make, or pay any
Distribution except that (a) Borrower may declare or pay any dividend on or with
respect to any of its capital stock or equity securities during any fiscal year,
(i) if no Default has occurred prior to such declaration or payment, (ii) such
dividend is payable in the form of capital stock of the Borrower, and (iii) if
such dividend is payable in cash, such payment or dividend when aggregated with
all other payments and dividends made during such fiscal year would not exceed
an amount equal to 50% of Borrower's net income for the preceding fiscal year;
and (b) Borrower shall insure that each of its Subsidiaries declares dividends
(subject to applicable Law), or makes cash advances to Borrower from time to
time in aggregate amounts sufficient to permit Borrower to pay the Obligation as
it becomes due and payable.
9.10 Disposition of Assets. No Company may, directly or indirectly,
sell, lease, or otherwise dispose of all or any substantial or material assets,
other than (a) sales of inventory in the ordinary course of business, (b) sales
of equipment for a fair and adequate consideration, provided that if any such
equipment is sold, and a replacement is necessary for the proper operation of
the business of such Company, such Company will replace such equipment, (c)
transfers of assets permitted under SECTION 9.6, and (d) other dispositions of
assets which do not in the aggregate exceed $10,000,000 during any fiscal year
of Borrower.
9.11 Mergers, Consolidations, and Dissolutions. Except as may be
permitted under SECTION 9.3, no Company may liquidate, wind up, or dissolve or
merge or consolidate with any other Person.
9.12 Assignment. No Company may assign or transfer any of its
Rights, duties, or obligations under any of the Loan Documents.
9.13 Fiscal Year and Accounting Methods. No Company may change its
fiscal year more than once during the term of this agreement (except that a
Subsidiary may change its fiscal year at any time to match Borrower's fiscal
year), and then only after giving written notice of its intent to make such
change to Agent.
9.14 New Businesses. No Company may, directly or indirectly, engage
in any business other than the businesses in which it is presently engaged, and
each Company shall continue to conduct the businesses in which it is presently
engaged in substantially the same fashion (including, without limitation, its
contracts for compute cycles), other than the engagement of a Company in a new
business (through an acquisition of an existing business otherwise permitted
under the terms of this agreement or the formation of a de novo business
otherwise permitted under the terms of this agreement) which does not require an
expenditure or investment by the Companies in excess of an amount equal to 7.5%
of the value of the consolidated assets of the Companies immediately prior
thereto and which does not involve a business which in the immediately preceding
12 calendar months had gross revenues in excess of an amount equal to 20% of the
consolidated gross revenues of the Companies during such period.
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9.15 Government Regulations. No Company may conduct its business in
such a way that it will become (a) subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Investment
Company Act of 1940, the Interstate Commerce Act (as any of the preceding acts
have been amended), or any other Law (other than Regulation X of the Board of
Governors of the Federal Reserve System) which regulates the incurrence of Debt,
or (b) a "utility" as defined in Chapter 35 of the Texas Business and Commerce
Code, as amended.
9.16 Strict Compliance. No Company may indirectly do anything that
it may not directly do under any covenant in any Loan Document.
9.17 Deposit of Borrowings. Borrower may not deposit proceeds of
Borrowings in any Settlement Aggregation Account.
9.18 Prepayments of Subordinated Notes. Borrower may not prepay or
cause to be prepaid any principal of, or any interest on, any of the
Subordinated Notes except (a) exchanges of Subordinated Notes for other
Subordinated Notes, (b) conversions of Debt under the Subordinated Notes to
equity of Borrower that is not mandatorily redeemable, and (c) cash redemptions
of Subordinated Notes the aggregate amount of which never exceeds $3,000,000.
9.19 Changes Relating to Subordinated Notes. Borrower may not agree
to any change or amendment to the terms of the Subordinated Notes (or any
indenture or agreement in connection therewith) if the effect of such change or
amendment is to: (a) increase the interest rate on the Subordinated Notes, (b)
change the dates upon which payments of principal or interest are due on the
Subordinated Notes other than to extend such dates, (c) change any default or
event of default or covenant other than to delete or make less restrictive any
default or covenant provision therein, or add any covenant with respect to the
Subordinated Notes, (d) change the redemption or prepayment provisions of such
the Subordinated Notes other than to extend the dates therefor or to reduce the
premiums payable in connection therewith, (e) grant any security, collateral or
guaranty to secure payment of the Subordinated Notes, or (f) change or amend any
other term if such change or amendment would materially increase the obligations
of the obligor or confer additional material rights to the holder of the
Subordinated Notes in a manner adverse to Borrower, Agent, or any Lender.
SECTION 10 FINANCIAL COVENANTS. For so long as any Lender is committed to
lend or issue LCs under this agreement and until the Obligation has been fully
paid and performed, Borrower covenants and agrees with Agent and Lenders that,
without first obtaining Agent's written notice of Determining Lenders' consent
to the contrary, it may not directly or indirectly permit:
10.1 Net Worth. The Companies' Net Worth -- determined as of the
last day of each fiscal quarter of Borrower -- to be less than the sum of (a)
$185,000,000.00, plus (b) 50% of the Companies' cumulative net income (without
deduction for losses) after March 31, 1996 (commencing with the quarter ending
June 30, 1996), plus (c) the gross proceeds of any Subject Securities Issuance
occurring following the Closing Date.
10.2 Funded Debt/EBITDA Ratio. The Funded Debt/EBITDA Ratio to ever
be more than 3.00 to 1.00.
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10.3 Fixed-Charge Coverage. The Fixed-Charge Coverage Ratio for the
most recently completed four fiscal quarters of Borrower as of the last day of
each fiscal quarter of Borrower to ever be less than 1.25 to 1.00.
SECTION 11 DEFAULT. The term "DEFAULT" means the occurrence of any one or
more of the following:
11.1 Payment of Obligation. The failure or refusal of Borrower to
pay any portion of the Obligation, as the same becomes due in accordance with
the terms of the Loan Documents.
11.2 Covenants. Any Company's failure or refusal to punctually and
properly perform, observe, and comply with any covenant (other than covenants to
pay the Obligation) applicable to it:
(a) In SECTIONS 8.1 through 8.4, 8.6 through 8.13, 9.1, 9.3(b),
9.6, 9.8 through 9.13, and 9.15 through 9.19; or
(b) In SECTIONS 10.1, through 10.3 and that failure or refusal
continues for twenty Business Days after any Company has knowledge thereof (or
for a period of twenty days after knowledge of such failure or refusal would
normally have come to the attention of the chief financial officer of such
Company in the ordinary course of business); or
(c) In SECTIONS 8.5, 8.14, 9.3(a), 9.4, 9.5, 9.7, 9.14, or, if
such Debt has been assumed in connection with an acquisition, SECTION 9.2, and
that failure or refusal continues for thirty days after any Company has
knowledge thereof (or for a period of thirty days after knowledge of such
failure or refusal would normally have come to the attention of the chief
financial officer of such Company in the ordinary course of business); or
(d) The failure or refusal of Borrower (and, if applicable, any
other Company) to punctually and properly perform, observe, and comply with any
other covenant, agreement, or condition contained in any of the Loan Documents
to which such Company is a party, other than covenants listed in CLAUSES (a) -
(c) preceding, and such failure or refusal continues for a period of ten days
after any Company has knowledge thereof (or for a period of ten days after
knowledge of such failure or refusal would normally have come to the attention
of the chief financial officer of such Company in the ordinary course of
business).
11.3 Debtor Relief. Borrower or any other Company (other than those
Companies disclosed on SCHEDULE 7.7) shall not be Solvent, or any Company (a)
fails to pay its Debts generally as they become due, (b) voluntarily seeks,
consents to, or acquiesces in the benefit of any Debtor Relief Law, or (c)
becomes a party to or is made the subject of any proceeding provided for by any
Debtor Relief Law, other than as a creditor or claimant, that could suspend or
otherwise adversely affect the Rights of Agent or any Lender granted in the Loan
Documents (unless, in the event such proceeding is involuntary, the petition
instituting same is dismissed within 60 days after its filing).
11.4 Attachment. The failure of any Company to have discharged
within 30 days after commencement any attachment, sequestration, or similar
proceeding against any material asset of any Company.
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11.5 Payment of Judgments. Any Company fails to pay any judgment or
order for the payment of money in excess of $10,000,000 rendered against it or
any of its assets and enforcement proceedings shall have been commenced by any
creditor upon any such judgment or order and remain unstayed. Notwithstanding
the foregoing sentence, it shall not be a Default if the validity or amount of
such judgment or order is being contested in good faith by lawful proceedings
diligently conducted and a reserve or other provision required by GAAP has been
made.
11.6 Government Action. Where it is a Material Adverse Event --
from and after the Closing Date and individually or collectively for all of the
Companies -- (a) a final non-appealable order is issued by any Tribunal
(including, but not limited to, the United States Justice Department) seeking to
cause any Company to divest a significant portion of its assets under any
antitrust, restraint of trade, unfair competition, industry regulation, or
similar Laws, or (b) any Tribunal condemning, seizing, or otherwise
appropriating, or taking custody or control of all or any substantial portion of
any Company's assets.
11.7 Misrepresentation. Any material representation or warranty
made by any Company in any Loan Document at any time proves to have been
materially incorrect when made.
11.8 Ownership of Companies.
(a) One or more Companies fail to own,
beneficially and of record, with power to vote, 100% of the
issued and outstanding shares of capital stock (or similar
voting interests) of the Wholly-Owned Subsidiaries, other than
Divestiture Subsidiaries.
(b) For Borrower's Subsidiaries that are not
Wholly-Owned Subsidiaries, (i) with respect to Subsidiaries
that are not Divestiture Subsidiaries, one or more Companies
fail to own, beneficially and of record, with power to vote,
more than 50% (or at least the percentage reflected on
SCHEDULE 7.3) of the issued and outstanding shares of capital
stock (or similar voting interests) of such Subsidiaries
sufficient to constitute control of such Subsidiary, or (ii)
such Subsidiaries incur Debt to any Person other than
Permitted Debt.
11.9 Change of Control of Borrower. The individuals who, as of the
date of this agreement, constitute the members of Borrower's board of directors
(for purposes of this SECTION 11.9, the "INCUMBENT BOARD") do not constitute or
cease for any reason to constitute at least 66 2/3% of:
(a) Borrower's board of directors; or
(b) The surviving corporation's board of
directors in the event of any merger or consolidation (if permitted by
SECTION 9.3(b)) involving Borrower; or
(c) The controlling entity's board of directors,
the comparable body if there is no board of directors, or voting control if
there is no comparable body, in the event that the surviving corporation
under CLAUSE (b) above is directly or indirectly controlled by that entity.
For purposes of this SECTION 11.9, any individual who becomes a member of the
board of directors or comparable body or who obtains a voting interest, as
applicable under CLAUSES (a), (b), or (c) above, after
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the date of this agreement and whose appointment to the board, or nomination for
election, was approved or ratified by a vote of the individuals comprising at
least 50% of the then incumbent board shall thereafter be deemed to be a member
of the incumbent board.
11.10 Other Funded Debt. In respect of any Debt (other than the
Obligation and the Debt evidenced by the Subordinated Notes) individually or
collectively of at least $3,000,000 (a) any default or other event or condition
occurs or exists (other than a mandatory prepayment as a result of disposition
of assets if permitted by the Loan Documents) beyond the applicable grace or
cure period (and solely with respect to the Debt set forth in ITEM 7 of SCHEDULE
9.2, such default or other event or condition continues for twenty Business Days
beyond such grace or cure period) the effect of which is to cause or to permit
any holder of that Funded Debt to cause, whether or not it elects to cause, any
of that Funded Debt to become due before its stated maturity or regularly
scheduled payment dates, or (b) any of that Debt is declared to be due and
payable or required to be prepaid by any Company before its stated maturity (and
solely with respect to the Debt set forth in ITEM 7 of SCHEDULE 9.2, such
prepayment is not made by Borrower within twenty Business Days after such
guaranty is called). Notwithstanding the foregoing sentence, it shall not be a
Default if (y) either (i) the validity or amount of such accelerated Debt is
being contested in good faith by lawful proceedings diligently conducted, or
(ii) a nonappealable judgment has been entered against any Company with respect
to such Debt, and such judgment is satisfied within ninety days after it is
entered, and (z) a reserve or other provision required by GAAP has been made.
11.11 SEC Reporting Requirements. Borrower fails to comply with any
applicable reporting requirements of the Securities Exchange Act of 1934, for
which the failure to report would constitute a Material Adverse Event.
11.12 Validity and Enforceability. Once executed, this agreement,
any Note, any LC Agreement, any Guaranty, or any Security Document ceases to be
in full force and effect in any material respect or is declared to be null and
void or its validity or enforceability is contested in writing by any Company
party to it or any Company party to it denies in writing that it has any further
liability or obligations under it except in accordance with that document's
express provisions or as the appropriate parties under SECTION 14.8 below may
otherwise agree in writing.
11.13 LCs. The validity or enforceability of any LC or any provision
of this agreement relating to the LC or the LC Exposure shall be contested by
any Company, or a proceeding shall be commenced by any Tribunal seeking to
establish the invalidity or unenforceability thereof, or Borrower shall deny
that it or any other Company has any or further liability or obligation under
this agreement relating to any Letters of Credit and any LC Exposure, or Agent
is served with or otherwise subject to a court order, injunction, or other
process or decree restraining or seeking to restrain it from paying any amount
under any LC and either (a) a drawing has occurred under the LC, and Borrower
has refused to reimburse Issuing Lender for payment, or (b) the expiration date
of the LC has occurred, but the Right of the beneficiary to draw under the LC
has been extended past the Revolving Maturity Date in connection with the
pendency of the related court action or proceeding, and Borrower has failed to
deposit with Agent cash collateral in an amount equal to Issuing Lender's
maximum exposure under the LC.
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11.14 Material Agreements.
(a) The occurrence of a default under the ATM Credit
Agreement.
(b) The occurrence of a default under the Restated Credit
Agreement and the expiration of any period of grace or notice.
(c) The occurrence of a default under any other Material
Agreement (other than any Material Agreement described in SECTION 11.16)
which results in the acceleration of payment of any amounts payable by any
Company in excess of $10,000,000. Notwithstanding the foregoing sentence, it
shall not be a default if (y) either (i) the validity or amount of such
accelerated payment is being contested in good faith by lawful proceedings
diligently conducted, or (ii) a nonappealable judgment has been entered
against any Company with respect to such Debt, and such judgment is satisfied
within ninety days after it is entered, and (z) a reserve or other provision
required by GAAP has been made.
11.15 Impairment of Collateral or Ability to Pay. The discovery by
any Lender of information that the prospect of payment or performance of the
Obligation is materially impaired, or that the value of the Collateral has or
will be materially decreased, and the situation giving rise thereto is not
corrected to the satisfaction of Agent and Lenders within 20 days after notice
thereof from Agent to Borrower.
11.16 Subordinated Notes. The occurrence of a default or event of
default or Borrower's receipt of notice of a default or event of default under
any of the Subordinated Notes or any Indenture or other agreement, document, or
instrument executed and delivered in connection with the issuance of the
Subordinated Notes.
SECTION 12 RIGHTS AND REMEDIES.
12.1 Remedies Upon Default.
(a) Debtor Relief. If a Default exists under SECTION
11.3, the commitment to extend credit under this agreement automatically
terminates, and the entire unpaid balance of the Obligation automatically
becomes due and payable without any action of any kind whatsoever.
(b) Other Defaults. If any Default exists, subject to
the terms of SECTION 13.5(b), Agent may (with the consent of, and must, upon
the request of, Determining Lenders), do any one or more of the following:
(i) if the maturity of the Obligation has not already been accelerated under
SECTION 12.1(a), declare the entire unpaid balance of all or any part of the
Obligation immediately due and payable, whereupon it is due and payable; (ii)
terminate the commitments of Lenders to extend credit under this agreement;
(iii) reduce any claim to judgment; (iv) demand payment of an amount equal to
the LC Exposure then existing and retain as collateral for the LC Exposure
any amounts received from any Company, from any property of any Company,
through offset, or otherwise; and (v) exercise any and all other legal or
equitable Rights afforded by the Loan Documents, by applicable Laws, or in
equity.
(c) Offset. If a Default exists, to the extent permitted
by applicable Law, each Lender may exercise the Rights of offset and banker's
lien against each and every account
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(excluding Settlement Aggregation Accounts) and other property, or any
interest therein, which any Company may now or hereafter have with, or which
is now or hereafter in the possession of, that Lender to the extent of the
full amount of the Obligation owed to that Lender.
12.2 Company Waivers. To the extent permitted by Law, Borrower and
(pursuant to its Guaranty) each other Company waives presentment and demand for
payment, protest, notice of intention to accelerate, notice of acceleration, and
notice of protest and nonpayment, and agrees that its liability with respect to
all or any part of the Obligation is not affected by any renewal or extension in
the time of payment of all or any part of the Obligation, by any indulgence, or
by any release or change in any security for the payment of all or any part of
the Obligation.
12.3 Performance by Agent. If any Company's covenant, duty, or
agreement is not performed in accordance with the terms of the Loan Documents,
Agent may, while a Default exists, at its option (but subject to the approval of
Determining Lenders), perform or attempt to perform that covenant, duty, or
agreement on behalf of that Company (and any amount expended by Agent in its
performance or attempted performance is payable by the Companies, jointly and
severally, to Agent on demand, becomes part of the Obligation, and bears
interest at the Default Rate from the date of Agent's expenditure until paid).
However, Agent does not assume and shall never have, except by its express
written consent, any liability or responsibility for the performance of any
Company's covenants, duties, or agreements.
12.4 Not in Control. Nothing in any Loan Documents gives or may be
deemed to give to Agent or any Lender the Right to exercise control over any
Company's Real Property, other assets, affairs, or management or to preclude or
interfere with any Company's compliance with any Law or require any act or
omission by any Company that may be harmful to Persons or property. Any
"Material Adverse Event" or other materiality or substantiality qualifier of any
representation, warranty, covenant, agreement, or other provision of any Loan
Document is included for credit documentation purposes only and does not imply
or be deemed to mean that Agent or any Lender acquiesces in any non-compliance
by any Company with any Law, document, or otherwise or does not expect the
Companies to promptly, diligently, and continuously carry out all appropriate
removal, remediation, compliance, closure, or other activities required or
appropriate in accordance with all Environmental Laws. Agent's and Lenders'
power is limited to the Rights provided in the Loan Documents. All of those
Rights exist solely -- and may be exercised in any manner calculated by Agent or
Lenders in their respective good faith business judgment -- to preserve and
protect the Collateral and to assure payment and performance of the Obligation.
12.5 Course of Dealing. The acceptance by Agent or Lenders of any
partial payment on the Obligation is not a waiver of any Default then existing.
No waiver by Agent, Determining Lenders, or Lenders of any Default is a waiver
of any other then-existing or subsequent Default. No delay or omission by Agent,
Determining Lenders, or Lenders in exercising any Right under the Loan Documents
impairs that Right or is a waiver thereof or any acquiescence therein, nor will
any single or partial exercise of any Right preclude other or further exercise
thereof or the exercise of any other Right under the Loan Documents or
otherwise.
12.6 Cumulative Rights. All Rights available to Agent, Determining
Lenders, and Lenders under the Loan Documents are cumulative of and in addition
to all other Rights granted to Agent, Determining Lenders, and Lenders at law or
in equity, whether or not the Obligation is due and
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payable and whether or not Agent, Determining Lenders, or Lenders have
instituted any suit for collection, foreclosure, or other action in connection
with the Loan Documents.
12.7 Application of Proceeds. Any and all proceeds ever received by
Agent or Lenders from the exercise of any Rights pertaining to the Obligation
shall be applied to the Obligation according to Section 3.
12.8 Certain Proceedings. Borrower shall promptly execute and
deliver, or cause the execution and delivery of, all applications, certificates,
instruments, registration statements, and all other documents and papers Agent
or Determining Lenders reasonably request in connection with the obtaining of
any consent, approval, registration (other than securities Law registrations),
qualification, permit, license, or authorization of any Tribunal or other Person
necessary or appropriate for the effective exercise of any Rights under the Loan
Documents. Because Borrower agrees that Agent's and Determining Lenders'
remedies at Law for failure of Borrower to comply with the provisions of this
section would be inadequate and that failure would not be adequately compensable
in damages, Borrower agrees that the covenants of this section may be
specifically enforced.
12.9 Expenditures by Lenders. Any sums spent by Agent or any Lender
in the exercise of any Right under any Loan Document is payable by the Companies
to Agent within five Business Days after demand, becomes part of the Obligation,
and bears interest at the Default Rate from the date spent until the date
repaid.
12.10 Diminution in Value of Collateral. Neither Agent nor any
Lender has any liability or responsibility whatsoever for any diminution in or
loss of value of any collateral now or in the future securing payment or
performance of any of the Obligation (other than diminution in or loss of value
caused by their or its own gross negligence or willful misconduct).
SECTION 13 AGENT AND LENDERS.
13.1 Agent.
(a) Appointment. Each Lender appoints Agent (including,
without limitation, each successor to the Agent in accordance with this
SECTION 13) as its nominee and agent to act in its name and on its behalf
(and Agent and each such successor accepts that appointment): (i) to act as
its nominee and on its behalf in and under all Loan Documents; (ii) to
arrange the means whereby its funds are to be made available to Borrower
under the Loan Documents; (iii) to take any action that it properly requests
under the Loan Documents (subject to the concurrence of other Lenders as may
be required under the Loan Documents); (iv) to receive all documents and
items to be furnished to it under the Loan Documents; (v) to be the secured
party, mortgagee, beneficiary, recipient, and similar party in respect of any
collateral for the benefit of Lenders; (vi) to promptly distribute to it all
material information, requests, documents, and items received from Borrower
under the Loan Documents; (vii) to promptly distribute to it its ratable part
of each payment or prepayment (whether voluntary, as proceeds of collateral
upon or after foreclosure, as proceeds of insurance thereon, or otherwise) in
accordance with the terms of the Loan Documents; and (viii) to deliver to the
appropriate Persons requests, demands, approvals, and consents received from
it. However, Agent is not required to take any action that exposes Agent to
personal liability or that is contrary to any Loan Document or applicable
Law.
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(b) Successor. Agent may assign all of its Rights and
obligations as Agent under the Loan Documents to any of its Affiliates, which
Affiliate shall then be the successor Agent under the Loan Documents. Agent
may also voluntarily resign and shall resign upon the request of Determining
Lenders for cause (i.e., Agent is continuing to fail to perform its
responsibilities under the Loan Documents). If the initial, or any successor
to, Agent ever ceases to be a party to this agreement or if either of the
initial, or any successor to, Agent ever resigns (whether voluntarily or at
the request of Determining Lenders), then Determining Lenders shall appoint a
successor to Agent from among Lenders (other than the resigning Agent). If
Determining Lenders fail to appoint a successor to such Agent within 30 days
after the resigning Agent has given notice of resignation or Determining
Lenders have removed the resigning Agent, then the resigning Agent may, on
behalf of Lenders, appoint a successor Agent, that (i) must be a commercial
bank having a combined capital and surplus of at least $1,000,000,000 (as
shown on its most recently published statement of condition), and (ii) must
be consented to by Borrower, which consent shall not be unreasonably delayed
or withheld. Upon its acceptance of appointment as successor Agent, the
successor Agent succeeds to and becomes vested with all of the Rights of the
prior Agent, and the prior Agent is discharged from its duties and
obligations as Agent under the Loan Documents, and each Lender shall execute
the documents that any Lender, the resigning or removed Agent, or the
successor Agent reasonably request to reflect the change. After Agent's
resignation or removal as Agent under the Loan Documents, the provisions of
this section inure to its benefit as to any actions taken or not taken by it
while it was Agent under the Loan Documents.
(c) Rights as Lender. Agent, in its capacity as a Lender,
has the same Rights under the Loan Documents as any other Lender and may
exercise those Rights as if it were not acting as Agent. The term "Lender",
unless the context otherwise indicates, includes each Agent. Agent's
resignation or removal does not impair or otherwise affect any Rights that it
has or may have in its capacity as an individual Lender. Each Lender and
Borrower agree that Agent is not a fiduciary for Lenders or for Borrower, but
Agent is simply acting in the capacity described in this agreement to
alleviate administrative burdens for Borrower and Lenders, that Agent has any
duties or responsibilities to Lenders or Borrower except those expressly set
forth in the Loan Documents, and that Agent in its capacity as a Lender has
the same Rights as any other Lender.
(d) Other Activities. Agent or any Lender may now or in
the future be engaged in one or more loan, letter of credit, leasing, or
other financing transactions with Borrower, act as trustee or depositary for
Borrower, or otherwise be engaged in other transactions with Borrower
(collectively, the "other activities") not the subject of the Loan Documents.
Without limiting the Rights of Lenders specifically set forth in the Loan
Documents, neither Agent nor any Lender is responsible to account to the
other Lenders for those other activities, and no Lender shall have any
interest in any other Lender's activities, any present or future guaranties
by or for the account of Borrower that are not contemplated by or included in
the Loan Documents, any present or future offset exercised by Agent or any
Lender in respect of those other activities, any present or future property
taken as security for any of those other activities, or any property now or
hereafter in Agent's or any other Lender's possession or control that may be
or become security for the obligations of Borrower arising under the Loan
Documents by reason of the general description of indebtedness secured or of
property contained in any other agreements, documents, or instruments related
to any of those other activities (but, if any payments in respect of those
guaranties or that property or the proceeds thereof is applied by Agent or
any Lender to reduce the Obligation, then each Lender is entitled to share
ratably in the application as provided in the Loan Documents).
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13.2 Expenses. Each Lender shall pay its Pro Rata Part of any
reasonable expenses (including, without limitation, court costs, reasonable
attorneys' fees and other costs of collection) incurred by Agent or Issuing
Lender (while acting in such capacity) in connection with any of the Loan
Documents if Agent or such Issuing Lender is not reimbursed from other sources
within 30 days after incurrence. Each Lender is entitled to receive its Pro Rata
Part of any reimbursement that it makes to Agent or Issuing Lender if Agent or
such Issuing Lender is subsequently reimbursed from other sources.
13.3 Proportionate Absorption of Losses. Except as otherwise
provided in the Loan Documents, nothing in the Loan Documents gives any Lender
any advantage over any other Lender insofar as the Obligation is concerned or
relieves any Lender from ratably absorbing any losses sustained with respect to
the Obligation (except to the extent unilateral actions or inactions by any
Lender result in Borrower or any other obligor on the Obligation having any
credit, allowance, set off, defense, or counterclaim solely with respect to all
or any part of that Lender's Pro Rata Part of the Obligation).
13.4 Delegation of Duties; Reliance. Lenders may perform any of
their duties or exercise any of their Rights under the Loan Documents by or
through Agent, and Lenders and Agent may perform any of their duties or exercise
any of their Rights under the Loan Documents by or through their respective
Representatives. Agent, Lenders, and their respective Representatives (a) are
entitled to rely upon (and shall be protected in relying upon) any written or
oral statement believed by them to be genuine and correct and to have been
signed or made by the proper Person and, with respect to legal matters, upon
opinion of counsel selected by Agent or that Lender (but nothing in this CLAUSE
(a) permits Agent to rely on (i) oral statements if a writing is required by
this agreement or (ii) any other writing if a specific writing is required by
this agreement), (b) are entitled to deem and treat each Lender as the owner and
holder of its portion of the Obligation for all purposes until, written notice
of the assignment or transfer is given to and received by Agent (and any
request, authorization, consent, or approval of any Lender is conclusive and
binding on each subsequent holder, assignee, or transferee of or Participant in
that Lender's portion of the Obligation until that notice is given and
received), (c) are not deemed to have notice of the occurrence of a Default
unless a responsible officer of Agent, who handles matters associated with the
Loan Documents and transactions thereunder, has actual knowledge or Agent has
been notified by a Lender or Borrower, and (d) are entitled to consult with
legal counsel (including counsel for Borrower), independent accountants, and
other experts selected by Agent and are not liable for any action taken or not
taken in good faith by it in accordance with the advice of counsel, accountants,
or experts.
13.5 Limitation of Agent's Liability.
(a) Exculpation. Neither Agent nor any of its respective
Affiliates or Representatives will be liable for any action taken or omitted
to be taken by it or them under the Loan Documents in good faith and believed
by them to be within the discretion or power conferred upon them by the Loan
Documents or be responsible for the consequences of any error of judgment
(except for fraud, gross negligence, or willful misconduct), and neither
Agent nor any of its Affiliates or Representatives has a fiduciary
relationship with any Lender by virtue of the Loan Documents (but nothing in
this agreement negates the obligation of Agent to account for funds received
by them for the account of any Lender).
CREDIT AGREEMENT
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(b) Indemnity. Unless indemnified to its satisfaction
against loss, cost, liability, and expense, Agent is not compelled to do any
act under the Loan Documents or to take any action toward the execution or
enforcement of the powers thereby created or to prosecute or defend any suit
in respect of the Loan Documents. If Agent requests instructions from
Lenders, or Determining Lenders, as the case may be, with respect to any act
or action in connection with any Loan Document, Agent is entitled to refrain
(without incurring any liability to any Person by so refraining) from that
act or action unless and until it has received instructions. In no event,
however, may Agent or any of its Representatives be required to take any
action that it or they determine could incur for it or them criminal or
onerous civil liability. Without limiting the generality of the foregoing, no
Lender has any right of action against Agent as a result of Agent's acting or
refraining from acting under this agreement in accordance with instructions
of Determining Lenders.
(c) Reliance. Agent is not responsible to any Lender or
any Participant for, and each Lender represents and warrants that it has not
relied upon Agent in respect of, (i) the creditworthiness of any Company and
the risks involved to that Lender, (ii) the effectiveness, enforceability,
genuineness, validity, or the due execution of any Loan Document (except by
Agent), (iii) any representation, warranty, document, certificate, report, or
statement made therein (except by Agent) or furnished thereunder or in
connection therewith, (iv) the adequacy of any collateral now or hereafter
securing the Obligation or the existence, priority, or perfection of any Lien
now or hereafter granted or purported to be granted on the collateral under
any Loan Document, or (v) observation of or compliance with any of the terms,
covenants, or conditions of any Loan Document on the part of any Company.
EACH LENDER AGREES TO INDEMNIFY AGENT AND ITS REPRESENTATIVES AND HOLD THEM
HARMLESS FROM AND AGAINST (BUT LIMITED TO SUCH LENDER'S COMMITMENT PERCENTAGE
OF) ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE EXPENSES, AND REASONABLE
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER THAT MAY BE IMPOSED ON,
ASSERTED AGAINST, OR INCURRED BY THEM IN ANY WAY RELATING TO OR ARISING OUT
OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THEM UNDER THE LOAN
DOCUMENTS IF AGENT OR ITS REPRESENTATIVES ARE NOT REIMBURSED FOR SUCH AMOUNTS
BY ANY COMPANY. ALTHOUGH AGENT AND ITS REPRESENTATIVES HAVE THE RIGHT TO BE
INDEMNIFIED UNDER THIS AGREEMENT FOR THEIR OWN ORDINARY NEGLIGENCE, NEITHER
AGENT NOR ITS RESPECTIVE REPRESENTATIVES HAVE THE RIGHT TO BE INDEMNIFIED
UNDER THIS AGREEMENT FOR THEIR OWN FRAUD, GROSS NEGLIGENCE, OR WILLFUL
MISCONDUCT.
13.6 Default. While a Default exists, Lenders agree to promptly
confer in order that Determining Lenders or Lenders, as the case may be, may
agree upon a course of action for the enforcement of the Rights of Lenders.
Agent is entitled to act or refrain from taking any action (without incurring
any liability to any Person for so acting or refraining) unless and until it has
received instructions from Determining Lenders. In actions with respect to any
Company's property, Agent is acting for the ratable benefit of each Lender.
13.7 Collateral Matters.
(a) Each Lender authorizes and directs Agent to enter
into the Loan Documents for the Lender Liens and agrees that any action taken
by Agent concerning any Collateral (with the consent or at the request of
Determining Lenders) in accordance with any Loan Document, that Agent's
exercise (with the consent or at the request of Determining Lenders) of
powers concerning the Collateral in any Loan Document, and that all other
reasonably incidental powers are authorized and binding upon all Lenders.
CREDIT AGREEMENT
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(b) Agent is authorized on behalf of all Lenders, without
the necessity of any notice to or further consent from any Lender, from time
to time before a Default or Potential Default, to take any action with
respect to any Collateral or Loan Documents related to Collateral that may be
necessary to perfect and maintain perfected the Lender Liens upon the
Collateral.
(c) Agent has no obligation whatsoever to any Lender or
to any other Person to assure that the Collateral exists or is owned by any
Company or is cared for, protected, or insured or has been encumbered or that
the Lender Liens have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are entitled to any particular priority.
(d) Agent shall exercise the same care and prudent
judgment with respect to the Collateral and the Loan Documents as it normally
and customarily exercises in respect of similar collateral and security
documents.
(e) Lenders irrevocably authorize Agent, at its option
and in its discretion, to release any Lender Lien upon any Collateral (i)
constituting property being disposed of as permitted under any Loan Document,
(ii) constituting property in which no Company owned any interest at the time
the Lender Lien was granted or at any time after that, (iii) constituting
property leased to any Company under a lease that has expired or been
terminated in a transaction permitted under the Loan Documents or is about to
expire and that has not been, and is not intended by that Company to be,
renewed, (iv) consisting of an instrument evidencing Debt pledged to Agent
(for the benefit of Lenders), if the underlying Debt has been paid in full,
or (v) if approved, authorized, or ratified in writing by Lenders. Upon
request by Agent at any time, Lenders shall confirm in writing Agent's
authority to release particular types or items of Collateral under this
CLAUSE (e).
13.8 Limitation of Liability. No Lender or any Participant will
incur any liability to any other Lender or Participant except for acts or
omissions in bad faith, and neither Agent nor any Lender or Participant will
incur any liability to any other Person for any act or omission of any other
Lender or any Participant.
13.9 Relationship of Lenders. The Loan Documents do not create a
partnership or joint venture among Agent and Lenders or among Lenders.
13.10 Benefits of Agreement. None of the provisions of this section
inure to the benefit of any Company or any other Person except Agent and
Lenders. Therefore, no Company or any other Person is responsible or liable for,
entitled to rely upon, or entitled to raise as a defense -- in any manner
whatsoever -- the failure of a Agent or any Lender to comply with these
provisions.
SECTION 14 MISCELLANEOUS.
14.1 Nonbusiness Days. Any payment or action that is due under any
Loan Document on a non-Business Day may be delayed until the next-succeeding
Business Day (but interest shall continue to accrue on any applicable payment
until payment is in fact made) unless the payment concerns a LIBOR Borrowing, in
which case if the next-succeeding Business Day is in the next calendar month,
then such payment shall be made on the next-preceding Business Day.
14.2 Communications. Unless otherwise specifically provided,
whenever any Loan Document requires or permits any consent, approval, notice,
request, or demand from one party to
CREDIT AGREEMENT
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another, communication must be in writing (which may be by telex or fax) to be
effective and shall be deemed to have been given (a) if by telex, when
transmitted to the appropriate telex number and the appropriate answer back is
received, (b) if by fax, when transmitted to the appropriate fax number (and all
communications sent by fax must be confirmed promptly thereafter by telephone;
but any requirement in this parenthetical shall not affect the date when the fax
shall be deemed to have been delivered), (c) if by mail, on the third Business
Day after it is enclosed in an envelope and properly addressed, stamped, sealed,
and deposited in the appropriate official postal service, or (d) if by any other
means, when actually delivered. Until changed by notice pursuant to this
agreement, the address (and fax number) for Borrower and Agent are stated beside
their respective signatures to this agreement and for each Lender is stated
beside its name on SCHEDULE 1.
14.3 Form and Number of Documents. The form, substance, and number
of counterparts of each writing to be furnished under this agreement must be
satisfactory to Agent and its counsel.
14.4 Exceptions to Covenants. No Company may take or fail to take
any action that is permitted as an exception to any of the covenants contained
in any Loan Document if that action or omission would result in the breach of
any other covenant contained in any Loan Document.
14.5 Survival. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Documents survive all
closings under the Loan Documents and, except as otherwise indicated, are not
affected by any investigation made by any party.
14.6 Governing Law. Unless otherwise stated in any Loan Document,
the Laws of the State of Texas and of the United States of America govern the
Rights and duties of the parties to the Loan Documents and the validity,
construction, enforcement, and interpretation of the Loan Documents.
14.7 Invalid Provisions. Any provision in any Loan Document held to
be illegal, invalid, or unenforceable is fully severable; the appropriate Loan
Document shall be construed and enforced as if that provision had never been
included; and the remaining provisions shall remain in full force and effect and
shall not be affected by the severed provision. Agent, Lenders, and each Company
party to the affected Loan Document agree to negotiate, in good faith, the terms
of a replacement provision as similar to the severed provision as may be
possible and be legal, valid, and enforceable.
14.8 Amendments, Consents, Conflicts, and Waivers.
(a) Determining Lenders. Unless otherwise specifically
provided (i) the provisions of this agreement may be amended, modified, or
waived, only by an instrument in writing executed by Borrower, Agent, and
Determining Lenders (except amendments or modifications to the limitations
set forth in SECTION 9.3(b)(xiv), which may be made by an instrument in
writing executed by Borrower, Agent, and Majority Lenders) and supplemented
only by documents delivered or to be delivered in accordance with the express
terms of this agreement, and (ii) the other Loan Documents may only be the
subject of an amendment, modification, or waiver that has been approved by
Determining Lenders and Borrower.
(b) All Lenders. Except as specifically otherwise
provided in this SECTION 14.8, any amendment to or consent or waiver under
this agreement or any Loan Document that purports to accomplish any of the
following must be by an instrument in writing executed by Borrower
CREDIT AGREEMENT
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and Agent and executed (or approved, as the case may be) by each Lender: (i)
extends the due date or decreases the amount of any scheduled payment or
amortization of the Obligation beyond the date specified in the Loan
Documents; (ii) decreases any rate or amount of interest, fees, or other sums
payable to Agent or Lenders under this agreement (except such reductions as
are contemplated by this agreement); (iii) changes the definition of
"COMMITMENT," "COMMITMENT PERCENTAGE," "DETERMINING LENDERS," "PRO RATA PART"
or "TOTAL COMMITMENT;"; (iv) increases any one or more Lenders' Commitment
(except as provided in SECTION 2.7); (v) waives compliance with, amends, or
fully or partially releases -- except as expressly provided by SECTION 5.5 or
any other Loan Documents -- any Guaranty or Collateral; or (vi) changes this
CLAUSE (b) or any other matter specifically requiring the consent of all
Lenders under this agreement.
(c) Fees to Agent. Any amendment or consent or waiver
with respect to fees payable solely to Agent under a separate letter
agreement must be executed in writing only by Agent and Borrower.
(d) LCs. Any LC may be renewed, extended, amended,
replaced, or canceled consistent with the terms of this agreement by writing
executed by the Issuing Lender and Borrower that is first approved by Agent.
(e) Conflicts. Any conflict or ambiguity between the
terms and provisions of this agreement and terms and provisions in any other
Loan Document is controlled by the terms and provisions of this agreement.
(f) Waivers. No course of dealing or any failure or delay
by Agent, any Lender, or any of their respective Representatives with respect
to exercising any Right of Agent or any Lender under this agreement operates
as a waiver thereof. A waiver must be in writing and signed by Agent and
Lenders (or Determining Lenders, if permitted under this agreement) to be
effective, and a waiver will be effective only in the specific instance and
for the specific purpose for which it is given.
14.9 Multiple Counterparts. Any Loan Document may be executed in a
number of identical counterparts (including, at Agent's discretion, counterparts
or signature pages executed and transmitted by fax) with the same effect as if
all signatories had signed the same document. All counterparts must be construed
together to constitute one and the same instrument.
14.10 Parties.
(a) Parties Bound. Each Loan Document binds and inures to
the parties to it, any intended beneficiary of it, and each of their
respective successors and permitted assigns. No Company may assign or
transfer any Rights or obligations under any Loan Document without first
obtaining all Lenders' consent, and any purported assignment or transfer
without Lenders' consent is void. No Lender may transfer, pledge, assign,
sell any participation in, or otherwise encumber its portion of the
Obligation except as permitted by CLAUSES (b) or (c) below.
(b) Participations. Any Lender may (subject to the
provisions of this section, in accordance with applicable Law, in the
ordinary course of its business, and at any time) sell to one or more Persons
(each a "PARTICIPANT") participating interests in its portion of the
Obligation. The selling Lender remains a "Lender" under the Loan Documents,
the Participant does not become a
CREDIT AGREEMENT
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"Lender" under the Loan Documents, and the selling Lender's obligations under
the Loan Documents remain unchanged. The selling Lender remains solely
responsible for the performance of its obligations and remains the holder of
its share of the Principal Debt for all purposes under the Loan Documents.
Borrower and Agent shall continue to deal solely and directly with the
selling Lender in connection with that Lender's Rights and obligations under
the Loan Documents, and each Lender must retain the sole right and
responsibility to enforce due obligations of the Companies. Participants have
no Rights under the Loan Documents except as provided below. Subject to the
following, each Lender may obtain (on behalf of its Participants) the
benefits of SECTION 3 with respect to all participations in its part of the
Obligation outstanding from time to time so long as Borrower is not obligated
to pay any amount in excess of the amount that would be due to that Lender
under SECTION 3 calculated as though no participations have been made. No
Lender may sell any participating interest under which the Participant has
any Rights to approve any amendment, modification, or waiver of any Loan
Document except as to matters in SECTION 14.8(b)(i) and (ii).
(c) Assignments. Each Lender may make assignments to the
Federal Reserve Bank. Each Lender may also assign to one or more assignees
(each an "ASSIGNEE") all or any part of its Rights and obligations under the
Loan Documents so long as (i) the assignor Lender and Assignee execute and
deliver to Agent and Borrower for their consent and acceptance (that may not
be unreasonably withheld in any instance and is not required if the Assignee
is an Affiliate of the assigning Lender) an assignment and assumption
agreement in substantially the form of EXHIBIT F (an "ASSIGNMENT") and pay to
Agent a processing fee of $2,500, (ii) the assignment is for an identical
percentage of the assignor Lender's Rights and obligations under the
Revolving Facility, (iii) the assignment must be for a minimum total
Commitment of $5,000,000 and, if the assigning Lender retains any Commitment,
it must be a minimum total Commitment of $5,000,000, and (iv) the conditions
for that assignment set forth in the applicable Assignment are satisfied. The
Effective Date in each Assignment must (unless a shorter period is agreeable
to Borrower and Agent) be at least five Business Days after it is executed
and delivered by the assignor Lender and the Assignee to Agent and Borrower
for acceptance. Once that Assignment is accepted by Agent and Borrower, and
subject to all of the following occurring, then, on and after the Effective
Date stated in it (i) the Assignee automatically becomes a party to this
agreement and, to the extent provided in that Assignment, has the Rights and
obligations of a Lender under the Loan Documents, (ii) the assignor Lender,
to the extent provided in that Assignment, is released from its obligations
to fund Borrowings under this agreement and its reimbursement obligations
under this agreement and, in the case of an Assignment covering all of the
remaining portion of the assignor Lender's Rights and obligations under the
Loan Documents, that Lender ceases to be a party to the Loan Documents, (iii)
Borrower shall execute and deliver to the assignor Lender and the Assignee
the appropriate Notes in accordance with this agreement following the
transfer, (iv) upon delivery of the Notes under CLAUSE (iii) preceding, the
assignor Lender shall return to Borrower all Notes previously delivered to
that Lender under this agreement, and (v) SCHEDULE 1 is automatically deemed
to be amended to reflect the name, address, telecopy number, and Commitment
of the Assignee and the remaining Commitment (if any) of the assignor Lender,
and Agent shall prepare and circulate to Borrower and Lenders an amended
SCHEDULE 1 reflecting those changes. Notwithstanding the foregoing, no
Assignee may be recognized as a party to the Loan Documents (and the
assigning Lender shall continue to be treated for all purposes as the party
to the Loan Documents) with respect to the Rights and obligations assigned to
that Assignee until the actions
CREDIT AGREEMENT
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described in CLAUSES (iii) and (iv) have occurred. The Obligation is
registered on the books of Borrower as to both principal and any stated
interest, and transfers of (as opposed to participations in) principal and
interest of the Obligation may only be made in accordance with this SECTION
14.10.
14.11 Venue, Service of Process, and Jury Trial. BORROWER AND
(PURSUANT TO ITS GUARANTY) EACH COMPANY, IN EACH CASE FOR ITSELF AND ITS
SUCCESSORS AND ASSIGNS, IRREVOCABLY (a) SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE STATE AND FEDERAL COURTS IN TEXAS, (b) WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR IN THE FUTURE HAVE TO THE
LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH ANY LOAN
DOCUMENT AND THE OBLIGATION BROUGHT IN THE DISTRICT COURTS OF DALLAS COUNTY,
TEXAS, OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
TEXAS, DALLAS DIVISION, (c) WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY
OF THE FOREGOING COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (d) CONSENTS
TO THE SERVICE OF PROCESS OUT OF ANY OF THOSE COURTS IN ANY LITIGATION BY THE
MAILING OF COPIES OF THAT PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
POSTAGE PREPAID, BY HAND DELIVERY, OR BY DELIVERY BY A NATIONALLY-RECOGNIZED
COURIER SERVICE, AND SERVICE SHALL BE DEEMED COMPLETE UPON DELIVERY OF THE LEGAL
PROCESS AT ITS ADDRESS FOR PURPOSES OF THIS AGREEMENT, (e) AGREES THAT ANY LEGAL
PROCEEDING AGAINST ANY PARTY TO ANY LOAN DOCUMENT ARISING OUT OF OR IN
CONNECTION WITH THE LOAN DOCUMENTS OR THE OBLIGATION MAY BE BROUGHT IN ONE OF
THE FOREGOING COURTS, AND (f) WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY LOAN DOCUMENT. The scope of each of the foregoing waivers is
intended to be all encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including,
without limitation, contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. BORROWER AND (PURSUANT TO ITS GUARANTY)
EACH OTHER COMPANY ACKNOWLEDGES THAT THESE WAIVERS ARE A MATERIAL INDUCEMENT TO
AGENT'S AND EACH LENDER'S AGREEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
AGENT AND EACH LENDER HAS ALREADY RELIED ON THESE WAIVERS IN ENTERING INTO THIS
AGREEMENT, AND THAT AGENT AND EACH LENDER WILL CONTINUE TO RELY ON EACH OF THESE
WAIVERS IN RELATED FUTURE DEALINGS. BORROWER AND (PURSUANT TO ITS GUARANTY) EACH
OTHER COMPANY FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THESE WAIVERS
WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY AGREES TO EACH
WAIVER FOLLOWING CONSULTATION WITH LEGAL COUNSEL. The waivers in this section
are irrevocable, meaning that they may not be modified either orally or in
writing, and these waivers apply to any future renewals, extensions, amendments,
modifications, or replacements in respect of the applicable Loan Document. In
connection with any Litigation, this agreement may be filed as a written consent
to a trial by the court.
14.12 Confidentiality Obligations. All nonpublic information
furnished by any Company to Agent or Lenders pursuant to this Agreement (that is
designated by such Company to Agent and Lenders as nonpublic information) will
be treated as confidential, but nothing herein contained shall limit or impair
any Agent's or Lender's Rights (and Agent or Lender shall be entitled) (a) to
disclose the same to any Tribunal, if required to do so, or to any prospective
or actual Assignee or Participant (provided that such prospective or actual
Assignee or Participant agrees to comply with this SECTION 14.12), or to the
respective affiliates, directors, officers, employees, attorneys, and agents of
Agent or Lender or any prospective or actual Assignee or Participant, (b) to use
such information to the extent pertinent to an evaluation of the Obligation, (c)
to enforce compliance for the terms and conditions of the Loan Documents, or (d)
to take any action which Agent or Lender deems necessary to protect its
interests if a Default has occurred and is continuing.
CREDIT AGREEMENT
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14.13 Entirety. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN BORROWER, LENDERS, AND AGENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE FOLLOWS.
CREDIT AGREEMENT
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EXECUTED as of the date first stated above.
2828 North Haskell AFFILIATED COMPUTER SERVICES, INC.,
Dallas TX 75204 as Borrower
Attn: Ms. Nancy Vineyard
Treasurer
Fax: 214-824-2565
By
---------------------------------
Nancy Vineyard
Treasurer
1445 Ross Avenue, Suite 300 WELLS FARGO BANK (TEXAS), NATIONAL
Dallas, TX 75202 ASSOCIATION, as Agent and a Lender
Attn: Mr. Kyle G. Hranicky
Vice President
Fax: 214-740-1543
By
---------------------------------
Kyle G. Hranicky
Vice President
CREDIT AGREEMENT
<PAGE> 1
EXHIBIT 99.1
ACS ACQUIRES CONSULTEC, A LEADING PROVIDER OF IT SERVICES FOR STATE MEDICAID
PROGRAMS
DALLAS, Oct. 1 /PRNewswire/ -- ACS (NYSE: ACS) announced today the
acquisition of Consultec LLC, a subsidiary of General American Life Insurance
Company. Consultec will be a wholly-owned subsidiary of ACS Enterprise
Solutions, Inc. and operate as an independent business unit focused on
providing information technology (IT) services for state Medicaid and Welfare
benefit programs. Consultec, with nearly 30 years of experience in the federal
and state health care markets, is an expert in the design, development and
operation of decision support, claims administration, and managed care support
systems, and is the IT provider of choice for services and/or systems for over
20 state Medicaid programs.
Consultec generated revenues of approximately $107 million for the 12
months ended July 31, 1999. The all cash transaction is valued at approximately
$105 million, and will be funded by a combination of the Company's existing
credit facility and a new $100 million senior unsecured credit facility led by
Wells Fargo Bank (Texas), N.A.
As a part of ACS, Consultec will now have access to the resources of one of
the largest information technology outsourcing companies in the world. Jeff
Rich, Chief Executive Officer of ACS, said "We are thrilled to have the
Consultec team join ACS. This acquisition significantly expands the services
and solutions ACS offers to state and local governments. Consultec's highly
satisfied client base, along with its unparalleled track record over the past 5
years in the Medicaid market, make a perfect business fit with ACS."
Gray Arnold, President of Consultec, had this to say about the acquisition:
"This is a great combination of two organizations, and I'm excited about the
future prospects for both our employees as well as our clients. Together we are
best positioned in the industry to deliver the greatest customer value to the
state and local government market."
Consultec, based in Atlanta, Georgia, comes to ACS with a very experienced
team of employees dedicated to customer service and innovative thinking towards
healthcare technology. These attributes closely align with ACS' approach to
delivering effective, high quality business process and infrastructure
outsourcing solutions, systems integration, Internet, and other professional
services to clients around the world.
ACS (Affiliated Computer Services, Inc.) is a Fortune 1000 company based in
Dallas, Texas, with operations within North America, Central America, South
America, Europe, United Kingdom and the Middle East. ACS is an integrated,
future-focused company with a rich history of innovative work and long-term
relationships. ACS has proven customer retention, broad and vertical expertise,
personalized attention and flexibility. ACS provides the full range of
information technology services including business process outsourcing,
electronic commerce, technology outsourcing, professional services and systems
integration. The company's Class A common stock trades on the New York Stock
Exchange under the symbol "ACS." Visit ACS on the Internet at
http://www.acs-inc.com.
The statements in this news release that do not directly relate to
historical facts constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are
subject to numerous risks and uncertainties, many of which are outside the
Company's control. As such, no assurance can be given that the actual events
and results will not be materially different than the anticipated results
described in the forward-looking statements. Factors could cause actual results
to differ materially from such forward-looking statements. For a description of
these factors, see the Company's prior filings with the Securities and Exchange
Commission, including the most recent Form 10-K. ACS disclaims any intention or
obligation to revise any forward-looking statements, whether as a result of new
information, future event, or otherwise.
SOURCE Affiliated Computer Services, Inc.
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Web site: http://www.acs-inc.com
CONTACT: Mark A. King, EVP and Chief Financial Officer of
Affiliated Computer Services, Inc., 214-841-8007
2 of 2
