Business Loan Agreement - Bank of America NA and eLoyalty Corp.
[BANK OF AMERICA LOGO] BUSINESS LOAN AGREEMENT
Bank of America, N.A.
This Agreement dated as of March , 2000, is between BANK OF AMERICA,
N.A. (the "Bank") and eLOYALTY CORPORATION (the "Borrower").
1. LINE OF CREDIT AMOUNT AND TERMS
1.1 LINE OF CREDIT AMOUNT.
(a) During the availability period described below, the Bank will
provide a line of credit to the Borrower. The amount of the line of credit (the
"Commitment") is Ten Million Dollars ($10,000,000).
(b) This is a revolving line of credit providing for cash advances and
letters of credit. During the availability period, the Borrower may repay
principal amounts and reborrow them.
(c) Each advance will be for at least One Hundred Thousand Dollars
($100,000), or for the amount of the remaining available line of credit, if
less.
(d) The Borrower agrees not to permit the outstanding principal balance
of advances under the line of credit plus the outstanding amounts of any letters
of credit, including amounts drawn on letters of credit and not yet reimbursed,
to exceed the Commitment.
1.2 AVAILABILITY PERIOD. The line of credit is available between the date of
this Agreement and December 30, 2000 (the "Expiration Date") unless the Borrower
is in default.
1.3 INTEREST RATE.
(a) Unless the Borrower elects the optional interest rate described
below, the interest rate is a per annum rate equal to the Reference Rate defined
below.
(b) The Reference Rate is the rate of interest publicly announced from
time to time by the Bank in San Francisco, California, as its Reference Rate.
The Reference Rate is set by the Bank based on various factors, including the
Bank's costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans. The Bank may price
loans to its customers at, above, or below the Reference Rate. Any change in the
Reference Rate will take effect at the opening of business on the day specified
in the public announcement of a change in the Bank's Reference Rate.
1.4 OPTIONAL INTEREST RATE. Instead of the interest rate based on the Bank's
Reference Rate, the Borrower may elect the optional interest rate listed below
during interest periods agreed to by the Bank and the Borrower. The optional
interest rate shall be subject to the terms and conditions described later in
this Agreement. Any principal amount bearing interest at an optional rate under
this Agreement is referred to as a "Portion." The following optional interest
rate is available: the IBOR Rate plus 0.75 percentage points.
1.5 REPAYMENT TERMS.
(a) The Borrower will pay interest on April 30, 2000, and then monthly
thereafter until payment in full of any principal outstanding under this line of
credit.
(b) The Borrower will repay in full all principal and any unpaid
interest or other charges outstanding under this line of credit no later than
the Expiration Date.
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1.6 LETTERS OF CREDIT. This line of credit may be used for financing:
(i) standby letters of credit with a maximum maturity not to extend
more than one year beyond the Expiration Date.
(ii) The amount of the letters of credit outstanding at any one time
(including amounts drawn on the letters of credit and not yet reimbursed) may
not exceed Three Million Dollars ($3,000,000) (the "L/C Sublimit").
The Borrower agrees:
(a) any sum drawn under a letter of credit may, at the option of the
Bank, be added to the principal amount outstanding under this Agreement. The
amount will bear interest and be due as described elsewhere in this Agreement.
(b) if there is a default under this Agreement, to immediately prepay
and make the Bank whole for any outstanding letters of credit.
(c) the issuance of any letter of credit and any amendment to a letter
of credit is subject to the Bank's written approval and must be in form and
content satisfactory to the Bank and in favor of a beneficiary acceptable to the
Bank.
(d) to sign the Bank's form Application and Agreement for Standby
Letter of Credit.
(e) to pay any issuance and/or other fees that the Bank notifies the
Borrower will be charged for issuing and processing letters of credit for the
Borrower.
(f) to allow the Bank to automatically charge its checking account for
applicable fees, discounts, and other charges.
2. OPTIONAL INTEREST RATE
2.1 OPTIONAL RATE. The optional interest rate is a rate per year. interest will
be paid on the last day of each interest period, and, if the interest period is
longer than 90 days, then on the last day of each quarter during the interest
period. At the end of any interest period, the interest rate will revert to the
rate based on the Reference Rate, unless the Borrower has designated another
optional interest rate for the Portion. No Portion will be converted to a
different interest rate during the applicable interest period. Upon the
occurrence of an event of default under this Agreement, the Bank may terminate
the availability of optional interest rates for interest periods commencing
after the default occurs.
2.2 IBOR RATE. The election of IBOR Rates shall be subject to the following
terms and requirements:
(a) The interest period during which the IBOR Rate will be in effect
will be no shorter than 30 days and no longer than 180 days. The first day of
the interest period must be a Banking Day on which the Bank is also open for
business in California and dealing in offshore dollars. The last day of the
interest period will be determined by the Bank using the practices of the
offshore dollar inter-bank market.
(b) Each IBOR Rate Portion will be for an amount not less than the
following:
(i) for interest periods of 91 days or longer, Five Hundred
Thousand Dollars ($500,000).
(ii) for interest periods of between 31 and 90 days, One Million
Dollars ($1,000,000).
(c) The Borrower may not elect an IBOR Rate with respect to any
principal amount which is scheduled to be repaid before the last day of the
applicable interest period.
(d) The "IBOR Rate" means the interest rate determined by the following
formula, rounded upward to the nearest 1/100 of one percent. (All amounts in
the calculation will be determined by the Bank as of the first day of the
interest period.)
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IBOR Rate = IBOR Base Rate
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(1.00 - Reserve Percentage)
Where,
(i) "IBOR Base Rate" means the interest rate at which the Bank's
Grand Cayman Branch, Grand Cayman, British West Indies, would offer
U.S. dollar deposits for the applicable interest period to other major
banks in the offshore dollar inter-bank market.
(ii) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency Liabilities, as
defined in Federal Reserve Board Regulation D, rounded upward to the
nearest 1/100 of one percent. The percentage will be expressed as a
decimal, and will include, but not be limited to, marginal, emergency,
supplemental, special, and other reserve percentages.
(e) Each prepayment of an IBOR Rate Portion, whether voluntary, by
reason of acceleration or otherwise, will be accompanied by the amount of
accrued interest on the amount prepaid, and a prepayment fee as described below.
A "prepayment" is a payment of an amount on a date earlier than the scheduled
payment date for such amount as required by this Agreement. The prepayment fee
shall be equal to the amount (if any) by which:
(i) the additional interest which would have been payable during
the interest period on the amount prepaid had it not been prepaid,
exceeds
(ii) the interest which would have been recoverable by the Bank by
placing the amount prepaid on deposit in the domestic certificate of
deposit market, the eurodollar deposit market, or other appropriate
money market selected by the Bank for a period starting on the date on
which it was prepaid and ending on the last day of the interest period
for such Portion (or the scheduled payment date for the amount prepaid,
if earlier).
(f) The Bank will have no obligation to accept an election for an IBOR
Rate Portion if any of the following described events has occurred and is
continuing:
(i) Dollar deposits in the principal amount, and for periods equal
to the interest period, of an IBOR Rate Portion are not available in
the offshore Dollar inter-bank market; or
(ii) the IBOR Rate does not accurately reflect the cost of an IBOR
Rate Portion.
3. FEES AND EXPENSES
3.1 FEES.
(a) LOAN FEE. The Borrower agrees to pay a loan fee in the amount of
Twenty Five Thousand Dollars ($25,000). This fee is due on or before the date of
this Agreement.
(b) UNUSED COMMITMENT FEE. The Borrower agrees to pay a fee on any
difference between the Commitment and the amount of credit it actually uses,
determined by the weighted average credit outstanding during the specified
period. The fee will be calculated at 0.125% per year. The calculation of credit
outstanding will include the undrawn amount of letters of credit. This fee is
due on March 31, 2000 and on the last day of each quarter thereafter until the
expiration of the availability period.
3.2 EXPENSES. The Borrower agrees to reimburse the Bank upon demand, whether or
not any loan is made under this Agreement, for:
(a) filing, recording and search fees, appraisal fees, title report
fees, documentation fees, and other similar fees, costs and expenses incurred by
the Bank.
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(b) any expenses the Bank incurs in the preparation, negotiation and
execution of this Agreement and any agreement or instrument required by this
Agreement. Expenses include, but are not limited to, reasonable attorneys' fees,
including any allocated costs of the Bank's in-house counsel.
(c) any stamp or other taxes which may be payable with respect to the
execution or delivery of this Agreement and any agreement or instrument required
by this Agreement.
4. DISBURSEMENTS, PAYMENTS AND COSTS
4.1 REQUESTS FOR CREDIT. Each request for an extension of credit will be made in
writing in a manner acceptable to the Bank, or by another means acceptable to
the Bank.
4.2 DISBURSEMENTS AND PAYMENTS. Each disbursement by the Bank will be made in
immediately available funds and will be evidenced by records kept by the Bank.
In addition, the Bank may, at its discretion, require the Borrower to sign one
or more promissory notes. Each payment made by the Borrower will be made without
set-off or counterclaim in immediately available funds not later than 2:00 p.m.,
Chicago time, on the date called for under this Agreement at the Bank's office
at 231 South LaSalle Street, Chicago, Illinois 60697. Funds received on any day
after such time will be deemed to have been received on the next Banking Day.
Whenever any payment to be made under this Agreement is stated to be due on a
day which is not a Banking Day, such payment will be made on the next succeeding
Banking Day and such extension of time will be included in the computation of
any interest.
4.3 TELEPHONE AND FACSIMILE AUTHORIZATION.
(a) The Bank may honor telephone or facsimile instructions for advances
or repayments or for the designation of optional interest rates and facsimile
requests for the issuance of letters of credit given by any one of the
individuals authorized to sign loan agreements on behalf of the Borrower, or any
other individual designated by any one of such authorized signers.
(b) Advances will be deposited in and repayments will be withdrawn from
the Borrowers account or such other of the Borrower's accounts with the Bank
as designated in writing by the Borrower.
(c) Upon the Bank's request, the Borrower will provide written
confirmation to the Bank of any telephone or facsimile instructions within 2
days. if there is a discrepancy and the Bank has already acted on the
instructions, the telephone or facsimile instructions will prevail over the
written confirmation.
(d) The Borrower indemnifies and excuses the Bank (including its
officers, employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone or facsimile instructions the
Bank reasonably believes are made by any individual authorized by the Borrower
to give such instructions. This indemnity and excuse will survive this
Agreement.
4.4 DIRECT DEBIT.
(a) The Borrower agrees that interest and any fees will be deducted
automatically on the due date from the Borrower's checking account number
, or such other of the Borrower's accounts with the Bank as designated
in writing by the Borrower.
(b) The Bank will debit the account on the dates the payments become
due. If a due date does not fall on a Banking Day, the Bank will debit the
account on the first Banking Day following the due date.
(c) The Borrower will maintain sufficient funds in the account on the
dates the Bank enters debits authorized by this Agreement. If there are
insufficient funds in the account on the date the Bank enters any debit
authorized by this Agreement, the debit will be reversed.
4.5 BANKING DAYS. Unless otherwise provided in this Agreement, a "Banking Day"
is a day other than a Saturday or a Sunday on which the Bank is open for
business in Chicago, Illinois. All payments and disbursements which would be due
on a day which is not a Banking Day will be due on the next Banking Day.
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All payments received on a day which is not a Banking Day will be applied to the
credit on the next Banking Day.
4.6 ADDITIONAL COSTS. The Borrower will pay the Bank, on demand, for the Bank's
costs or losses arising from any statute or regulation, or any request or
requirement of a regulatory agency which is applicable to all national banks or
a class of all national banks. The costs and losses will be allocated to the
loan in a manner determined by the Bank, using any reasonable method. The costs
include the following:
(a) any reserve or deposit requirements; and
(b) any capital requirements relating to the Bank's assets and
commitments for credit.
4.7 INTEREST CALCULATION. Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360 day year and
the actual number of days elapsed. Installments of principal which are not paid
when due under this Agreement shall continue to bear interest until paid.
4.8 DEFAULT RATE. Upon the occurrence and during the continuation of any default
under this Agreement, principal amounts outstanding under this Agreement will at
the option of the Bank bear interest at a rate which is 2 percentage point(s)
higher than the rate of interest otherwise provided under this Agreement. This
will not constitute a waiver of any default.
5. CONDITIONS
The Bank must receive the following items, in form and content acceptable to the
Bank, before it is required to extend any credit to the Borrower under this
Agreement:
5.1 AUTHORIZATIONS. Evidence that the execution, delivery and performance by the
Borrower (and any guarantor) of this Agreement and any instrument or agreement
required under this Agreement have been duly authorized.
5.2 GOVERNING DOCUMENTS. A copy of the Borrower's articles of incorporation.
5.3 INSURANCE. Evidence of insurance coverage, as required in the "Covenants"
section of this Agreement.
5.4 GUARANTY. A continuing guaranty signed by Technology Solutions Company (the
"Guarantor").
5.5 PAYMENT OF FEES. Payment of all accrued and unpaid expenses incurred by the
Bank as required by the paragraph entitled "Expenses".
5.6 GOOD STANDING. Certificates of good standing for the Borrower and the
Guarantor from their state of formation and from any other state in which they
are required to qualify to conduct their business.
5.7 OTHER ITEMS. Any other items that the Bank reasonably requires.
6. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewed representation.
6.1 ORGANIZATION OF BORROWER. The Borrower is a corporation duly formed and
existing under the laws of the state where organized.
6.2 AUTHORIZATION. This Agreement, and any instrument or agreement required
hereunder, are within the Borrower's powers, have been duly authorized, and do
not conflict with any of its organizational papers.
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6.3 ENFORCEABLE AGREEMENT. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.
6.4 GOOD STANDING. In each state in which the Borrower does business, it is
properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.
6.5 NO CONFLICTS. This Agreement does not conflict with any law, agreement, or
obligation by which the Borrower is bound.
6.6 FINANCIAL INFORMATION. All financial and other information that has been or
will be supplied to the Bank, including the Borrower's financial statement dated
as of September 30, 1999, and the guarantor's financial statement dated as of
September 30, 1999, is:
(a) sufficiently complete to give the Bank accurate knowledge of the
Borrower's (and any guarantor's) financial condition, including all material
contingent liabilities.
(b) in compliance with all government regulations that apply.
Since the date of the financial statement specified above, there has been no
material adverse change in the assets or the financial condition of the
Borrower.
6.7 LAWSUITS. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower, which, if lost, would impair the Borrower's
financial condition or ability to repay the loan, except as have been disclosed
in writing to the Bank.
6.8 PERMITS, FRANCHISES. The Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights and fictitious name rights necessary to enable it to
conduct the business in which it is now engaged.
6.9 OTHER OBLIGATIONS. The Borrower is not in default an any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.
6.10 INCOME TAXES. The Borrower has filed all tax returns required to be filed
and has paid, or made adequate provisions for the payment of, all taxes due and
payable pursuant to such returns and pursuant to any assessments made against it
or any of its property. No tax liens have been filed and no material claims are
being asserted with respect to any such taxes. The reserves on the books of the
Borrower in respect of taxes are adequate. The Borrower is not aware of any
proposed assessment or adjustment for additional taxes (or any basis for any
such assessment) which might be material to the Borrower.
6.11 NO EVENT OF DEFAULT. There is no event which is, or with notice or lapse of
time or both would be, a default under this Agreement.
6.12 INSURANCE. The Borrower has obtained, and maintained in effect, the
insurance coverage required in the "Covenants" section of this Agreement.
6.13 ERISA PLANS.
(a) Each Plan (other than a multiemployer plan) is in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
federal or state law. Each Plan has received a favorable determination letter
from the IRS and to the best knowledge of the Borrower, nothing has occurred
which would cause the loss of such qualification. The Borrower has fulfilled its
obligations, if any, under the minimum funding standards of ERISA and the Code
with respect to each Plan, and has not incurred any liability with respect to
any Plan under Title IV of ERISA.
(b) There are no claims, lawsuits or actions (including by any
governmental authority), and there has been no prohibited transaction or
violation of the fiduciary responsibility rules, with respect to any Plan which
has resulted or could reasonably be expected to result in a material adverse
effect.
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(c) With respect to any Plan subject to Title IV of ERISA:
(i) No reportable event has occurred under Section 4043(c) of
ERISA for which the PBGC requires 30 day notice.
(ii) No action by the Borrower or any ERISA Affiliate to terminate
or withdraw from any Plan has been taken and no notice of intent to
terminate a Plan has been filed under Section 4041 of ERISA.
(iii) No termination proceeding has been commenced with respect to
a Plan under Section 4042 of ERISA, and no event has occurred or
condition exists which might constitute grounds for the commencement of
such a proceeding.
(d) The following terms have the meanings indicated for purposes of
this Agreement:
(i) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(ii) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
(iii) "ERISA Affiliate" means any trade or business (whether or
not incorporated) under common control with the Borrower within the
meaning of Section 414(b) or (c) of the Code.
(iv) "PBGC" means the Pension Benefit Guaranty Corporation.
(v) "Plan" means a pension, profit-sharing, or stock bonus plan
intended to qualify under Section 401(a) of the Code, maintained or
contributed to by the Borrower or any ERISA Affiliate, including any
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA.
6.14 YEAR 2000 COMPLIANCE. The Borrower has conducted a comprehensive review and
assessment of the Borrower's computer applications and made inquiry of the
Borrower's key suppliers, vendors and customers with respect to the "year 2000
problem" (that is, the inability of computers, as well as embedded microchips in
non-computing devices, to be able to properly perform date-sensitive functions
after December 31, 1999) and, based on that review and inquiry, the Borrower
does not believe the year 2000 problem will result in a material adverse change
in the Borrower's business condition (financial or otherwise), operations,
properties or prospects, or ability to repay the credit.
7. COVENANTS
The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:
7.1 USE OF PROCEEDS. To use the proceeds of the credit only for general
corporate purposes and issuing letters of credit (up to the L/C Sublimit).
7.2 FINANCIAL INFORMATION. To provide the following financial information and
statements in form and content acceptable to the Bank, and such additional
information as requested by the Bank from time to time:
(a) Within 90 days of the Borrower's fiscal year end, the Borrower's
annual financial statements. These financial statements must be audited by a
Certified Public Accountant acceptable to the Bank. The statements shall be
prepared on a consolidated basis.
(b) Within 45 days of the period's end, the Borrower's quarterly
financial statements. These financial statements may be Borrower prepared. The
statements shall be prepared on a consolidated basis.
(c) Within the period(s) provided in (a) and (b) above, a compliance
certificate of the Borrower signed by an authorized financial officer of the
Borrower setting forth (1) the information and computations (in sufficient
detail) to establish that the Borrower is in compliance with all financial
covenants at the end of the period
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covered by the financial statements then being furnished and (ii) whether there
existed as of the date of such financial statements and whether there exists as
of the date of the certificate, any default under this Agreement and, if any
such default exists, specifying the nature thereof and the action the Borrower
is taking and proposes to take with respect thereto.
7.3 TANGIBLE NET WORTH. To maintain on a consolidated basis tangible net worth
equal to at least the greater of the following:
(a) Seventy Million Dollars ($70,000,000); or
(b) 75% of closing Tangible Net Worth measured quarterly.
"Tangible Net Worth" means the gross book value of the Borrower's
assets (excluding goodwill, patents, trademarks, trade names, organization
expense, treasury stock, unamortized debt discount and expense, capitalized or
deferred research and development costs, deferred marketing expenses, deferred
receivables, and other like intangibles, and monies due from affiliates,
officers, directors, employees, or shareholders, of the Borrower) plus
liabilities subordinated to the Bank in a manner acceptable to the Bank (using
the Bank's standard form) less total liabilities, including but not limited to
accrued and deferred income taxes, and any reserves against assets.
7.4 OTHER DEBTS. Not to have outstanding or incur any direct or contingent
liabilities or lease obligations (other than those to the Bank), or become
liable for the liabilities of others without the Bank's written consent.
This does not prohibit:
(a) Acquiring goods, supplies, or merchandise on normal trade credit.
(b) Endorsing negotiable instruments received in the usual course of
business.
7.5 OTHER LIENS. Not to create, assume, or allow any security interest or lien
(including judicial liens) on property the Borrower now or later owns, except:
(a) Mortgages, deeds of trust and security agreements in favor of the
Bank.
(b) Liens for taxes not yet due.
7.6 LEASES. Not to permit the aggregate payments due in any fiscal year under
all leases (including capital and operating leases for real or personal
property) to exceed Ten Million Dollars ($10,000,000).
7.7 LOANS AND INVESTMENTS. Not to make any extensions of credit, or make any
investments in, or make any capital contributions or other transfers of assets
to, any individual or entity, except the following:
(a) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business.
(b) investments in any of the following:
(i) U.S. treasury bills and other obligations of the federal
government;
(ii) stock of its subsidiaries.
(c) investments in venture capital funds, with others, created to
invest in companies in loyalty technology, provided, however, such investment
capital must come from the proceeds of a secondary public offering.
7.8 NOTICES TO BANK. To promptly notify the Bank in writing of:
(a) any lawsuit over Ten Million Dollars ($10,000,000) against the
Borrower.
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(b) any substantial dispute between the Borrower and any government
authority.
(c) any event of default under this Agreement, or any event which, with
notice or lapse of time or both, would constitute an event of default.
(d) any material adverse change in the Borrower's business condition
(financial or otherwise), operations, properties or prospects, or ability to
repay the credit.
(e) any change in the Borrower's name, legal structure, place of
business, or chief executive office if the Borrower has more than one place of
business.
(f) any actual contingent liabilities of the Borrower, and any such
contingent liabilities which are reasonably foreseeable, where such liabilities
are in excess of Five Million Dollars ($5,000,000) in the aggregate.
7.9 BOOKS AND RECORDS. To maintain adequate books and records,
7.10 AUDITS. To allow the Bank and its agents to inspect the Borrower's
properties and examine, audit and make copies of books and records at any
reasonable time. If any of the Borrower's properties, books or records are in
the possession of a third party, the Borrower authorizes that third party to
permit the Bank or its agents to have access to perform inspections or audits
and to respond to the Bank's requests for information concerning such
properties, books and records.
7.11 COMPLIANCE WITH LAWS. To comply with the laws (including any fictitious
name statute), regulations, and orders of any government body with authority
over the Borrower's business.
7.12 PRESERVATION OF RIGHTS. To maintain and preserve all rights, privileges,
and franchises the Borrower now has.
7.13 MAINTENANCE OF PROPERTIES. To make any repairs, renewals, or replacements
to keep the Borrower's properties in good working condition.
7.14 PERFECTION OF LIENS. To help the Bank perfect and protect its security
interests and liens, and reimburse it for related costs it incurs to protect its
security interests and liens.
7.15 COOPERATION. To take any action reasonably requested by the Bank to carry
out the intent of this Agreement.
7.16 INSURANCE.
(a) GENERAL BUSINESS INSURANCE. To maintain insurance as is usual for
the business it is in.
(b) EVIDENCE OF INSURANCE. Upon the request of the Bank, to deliver to
the Bank a copy of each insurance policy, or, if permitted by the Bank, a
certificate of insurance listing all insurance in force.
7.17 ADDITIONAL NEGATIVE COVENANTS. Not to, without the Bank's written consent:
(a) engage in any business activities substantially different from the
Borrower's present business.
(b) liquidate or dissolve the Borrower's business.
(c) enter into any consolidation, merger, pool, joint venture,
syndicate, or other combination, or become a partner in a partnership, a member
of a joint venture, or a member of a limited liability company.
(d) sell, assign, lease, transfer or otherwise dispose of any assets
for less than fair market value, or enter into any agreement to do so.
(e) enter into any sale and leaseback agreement covering any of its
fixed or capital assets.
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(f) acquire or purchase a business or its assets.
(g) voluntarily suspend its business for more than 7 days in any 30 day
period.
7.18 BANK AS PRINCIPAL DEPOSITORY. To maintain the Bank as its principal
depository bank, including for the maintenance of business, cash management,
operating and administrative deposit accounts.
7.19 ERISA PLANS. With respect to a Plan subject to Title IV of ERISA, to give
prompt written notice to the Bank of:
(a) The occurrence of any reportable event under Section 4043(c) of
ERISA for which the PBGC requires 30 day notice.
(b) Any action by the Borrower or any ERISA Affiliate to terminate or
withdraw from a Plan or the filing of any notice of intent to terminate under
Section 4041 of ERISA.
(c) The commencement of any proceeding with respect to a Plan under
Section 4042 of ERISA.
8. DEFAULT
If any of the following events occurs, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional credit
available to the Borrower, and require the Borrower to repay its entire debt
immediately and without prior notice. If an event of default occurs under the
paragraph entitled "Bankruptcy" below, with respect to the Borrower, then the
entire debt outstanding under this Agreement will automatically be due
immediately.
8.1 FAILURE TO PAY. The Borrower fails to make a payment under this Agreement
when due.
8.2 FALSE INFORMATION. The Borrower has given the Bank false or misleading
information or representations.
8.3 BANKRUPTCY. The Borrower files a bankruptcy petition, a bankruptcy petition
is filed against the Borrower, or the Borrower makes a general assignment for
the benefit of creditors.
8.4 RECEIVERS; TERMINATION. A receiver or similar official is appointed for the
Borrower's business, or the business is terminated, or any guarantor is
liquidated or dissolved.
8.5 LAWSUITS. Any lawsuit or lawsuits are filed on behalf of one or more trade
creditors against the Borrower in an aggregate amount of Ten Million Dollars
($10,000,000) or more in excess of any insurance coverage.
8.8 JUDGMENTS. Any judgments or arbitration awards are entered against the
Borrower, or the Borrower enters into any settlement agreements with respect to
any litigation or arbitration, in an aggregate amount of Ten Million Dollars
($10,000,000) or more in excess of any insurance coverage.
8.7 GOVERNMENT ACTION. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's financial condition or
ability to repay.
8.8 MATERIAL ADVERSE CHANGE. A material adverse change occurs in the Borrower's
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the credit.
8.9 CROSS-DEFAULT. Any default occurs under any agreement in connection with any
credit the Borrower or any of the Borrower's related entities or affiliates has
obtained from anyone else or which the Borrower or any of the Borrower's related
entities or affiliates has guaranteed if the default consists of failing to make
a payment when due or gives the other lender the right to accelerate the
obligation.
8.10 DEFAULT UNDER RELATED DOCUMENTS. Any guaranty, subordination agreement,
security agreement, mortgage, deed of trust, or other document required by this
Agreement is violated or no longer in effect.
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8.11 OTHER BANK AGREEMENTS. The Borrower fails to meet the conditions of, or
fails to perform any obligation under any other agreement the Borrower has with
the Bank or any affiliate of the Bank, or demand is made by the Bank or any
affiliate of the Bank on any obligation owing to the Bank or such affiliate
under any other agreement the Borrower has with the Bank or any affiliate of the
Bank.
8.12 ERISA PLANS. The occurrence of any one or more of the following events with
respect to a Plan subject to Title IV of ERISA, provided such event or events
could reasonably be expected, in the judgment of the Bank, to subject the
Borrower to any tax, penalty or liability (or any combination of the foregoing)
which, in the aggregate, could have a material adverse effect on the financial
condition of the Borrower:
(a) A reportable event shall occur under Section 4043(c) of ERISA with
respect to a Plan.
(b) Any Plan termination (or commencement of proceedings to terminate a
Plan) or the full or partial withdrawal from a Plan by the Borrower or any ERISA
Affiliate.
8.13 OTHER BREACH UNDER AGREEMENT. The Borrower fails to meet the conditions of,
or fails to perform any obligation under, any term of this Agreement not
specifically referred to in this Article. This includes any failure or
anticipated failure by the Borrower to comply with any financial covenants set
forth in this Agreement, whether such failure is evidenced by financial
statements delivered to the Bank or is otherwise known to the Borrower or the
Bank.
9. ENFORCING THIS AGREEMENT; MISCELLANEOUS
9.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.
9.2 ILLINOIS LAW. THIS AGREEMENT IS GOVERNED BY THE INTERNAL LAWS OF THE STATE
OF ILLINOIS.
9.3 SUCCESSORS AND ASSIGNS. This Agreement is binding on the Borrower's and the
Bank's successors and assignees. The Borrower agrees that it may not assign this
Agreement without the Bank's prior consent. The Bank may sell participations in
or assign this loan, and may exchange financial information about the Borrower
with actual or potential participants or assignees; provided that such actual or
potential participants or assignees agree to treat all financial information
exchanged as confidential.
9.4 SEVERABILITY; WAIVERS. If any part of this Agreement is not enforceable, the
rest of the Agreement may be enforced. The Bank retains all rights, even if it
makes a loan after default. If the Bank waives a default, it may enforce a later
default. Any consent or waiver under this Agreement must be in writing.
9.5 ADMINISTRATION COSTS. The Borrower will pay the Bank for all reasonable
costs incurred by the Bank in connection with administering this Agreement.
9.6 ATTORNEYS' FEES. The Borrower shall reimburse the Bank for any reasonable
costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and in
connection with any amendment, waiver, "workout" or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys' fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator. In the event that any case is commenced by or against the
Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar
or successor statute, the Bank is entitled to recover costs and reasonable
attorneys' fees incurred by the Bank related to the preservation, protection, or
enforcement of any rights of the Bank in such a case. As used in this paragraph,
"attorneys' fees" includes the allocated costs of the Bank's in-house counsel.
9.7 ONE AGREEMENT. This Agreement and any related security or other agreements
required by this Agreement, collectively;
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(a) represent the sum of the understandings and agreements between the
Bank and the Borrower concerning this credit; and
(b) replace any prior oral or written agreements between the Bank and
the Borrower concerning this credit; and
(c) are intended by the Bank and the Borrower as the final, complete
and exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
9.8 INDEMNIFICATION. The Borrower will indemnify and hold the Bank harmless from
any loss, liability, damages, judgments, and costs of any kind relating to or
arising directly or indirectly out of (a) this Agreement or any document
required hereunder, (b) any credit extended or committed by the Bank to the
Borrower hereunder, and (c) any litigation or proceeding related to or arising
out of this Agreement, any such document, or any such credit. This indemnity
includes but is not limited to attorneys' fees (including the allocated cost of
in-house counsel). This indemnity extends to the Bank, its parent, subsidiaries
and all of their directors, officers, employees, agents, successors, attorneys,
and assigns. This indemnity will survive repayment of the Borrower's obligations
to the Bank. All sums due to the Bank hereunder shall be obligations of the
Borrower, due and payable immediately without demand.
9.9 NOTICES. All notices required under this Agreement will be in writing and
will be transmitted by personal delivery, first class mail, overnight courier,
or facsimile to the addresses or facsimile numbers on the signature page of this
Agreement, or to such other addresses or facsimile numbers as the Bank and the
Borrower may specify from time to time in writing.
9.10 HEADINGS. Article and paragraph headings are for reference only and do not
affect the interpretation or meaning of any provisions of this Agreement.
9.11 COUNTERPARTS. This Agreement may be executed in as many counterparts as
necessary or convenient, and by the different parties on separate counterparts
each of which, when so executed, will be deemed an original but all such
counterparts will constitute but one and the same agreement.
9.12 CONSENT TO JURISDICTION. To induce the Bank to accept this Agreement, the
Borrower irrevocably agrees that, subject to the Bank's sole and absolute
election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO
THIS AGREEMENT WILL BE LITIGATED IN COURTS HAVING SITUS IN CHICAGO, ILLINOIS.
THE BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY COURT
LOCATED WITHIN CHICAGO, ILLINOIS, WAIVES PERSONAL SERVICE OF PROCESS UPON THE
BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED
MAIL DIRECTED TO THE BORROWER AT THE ADDRESS STATED ON THE SIGNATURE PAGE HEREOF
AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.
9.13 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK EACH WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a)
UNDER THIS AGREEMENT OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION WITH THIS AGREEMENT OR (b) ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST THE BANK OR ANY
OTHER PERSON INDEMNIFIED UNDER THIS AGREEMENT ON ANY THEORY OF LIABILITY FOR
SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.
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This Agreement is executed as of the date stated at the top of the first page.
BANK OF AMERICA, N.A. eLOYALTY CORPORATION
By: By: Timothy J. Cunningham
---------------------------- ----------------------------
Title: Title:
------------------------- -------------------------
Address and facsimile number Address and facsimile number
where notices to the Bank are where notices to the Borrower
to be sent: are to be sent:
231 South LaSalle Street 205 North Michigan Avenue
Chicago, Illinois 60697 Chicago, Illinois 60601
Attention: Upper MW Strategies II Attention: Timothy Cunningham
FAX: (312) 974-2109 FAX: (312) 228-4501
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