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CREDIT AGREEMENT
Dated as of
March 31, 2003
among
MEMBERWORKS INCORPORATED,
THE LENDERS PARTIES HERETO,
XXXXX BROTHERS XXXXXXXX & CO.,
as Administrative Agent
and
XXXXX BROTHERS XXXXXXXX & CO.,
and
LASALLE BANK NATIONAL ASSOCIATION,
as Co-Agents
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TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS..................................................1
1.1 Defined Terms.........................................................1
1.2 Other Definitional Provisions........................................10
1.3 Accounting Principles................................................10
SECTION 2. CREDIT FACILITY.............................................11
2.1 Loans and Letters of Credit..........................................11
2.2 Manner of Borrowing..................................................13
2.3 Disbursement of Loans................................................13
2.4 Notes................................................................13
2.5 Repayment of Principal; Optional Prepayments.........................14
2.6 Payment of Interest..................................................15
2.7 Conversion or Continuation of Loans..................................15
2.8 Reserved.............................................................16
2.9 Computation of Interest and Fees.....................................16
2.10 Capital Adequacy..................................................16
2.11 Increased Costs...................................................17
2.12 Illegality........................................................18
SECTION 3. FEES; PAYMENTS..............................................18
3.1 Fees.................................................................18
3.2 Pro Rata Treatment and Payments......................................19
3.3 Taxes................................................................19
3.4 Assumed Payments.....................................................20
SECTION 4. CONDITIONS PRECEDENT........................................20
4.1 Conditions to Effectiveness..........................................20
4.2 Conditions to Each Extension of Credit...............................22
SECTION 5. REPRESENTATIONS AND WARRANTIES..............................22
5.1 Financial Condition..................................................22
5.2 No Change............................................................23
5.3 Corporate Existence..................................................23
5.4 Corporate Power; Authorization.......................................23
5.5 Binding Effect.......................................................24
5.6 Consents; Non-Contravention..........................................24
5.7 No Material Litigation...............................................24
5.8 No Default...........................................................24
5.9 Ownership of Property; Liens.........................................25
5.10 No Burdensome Restrictions........................................25
5.11 Taxes.............................................................25
5.12 Margin Regulations................................................25
5.13 Investment Company Act............................................26
i
5.14 Compliance with ERISA.............................................26
5.15 Environmental Matters.............................................26
5.16 Disclosure........................................................27
5.17 Collateral........................................................27
5.18 Employment Related Agreements.....................................27
5.19 Dividends.........................................................27
5.20 Reserved..........................................................27
5.21 Use of Proceeds...................................................27
SECTION 6. AFFIRMATIVE COVENANTS.......................................28
6.1 Financial Statements.................................................28
6.2 Certificates; Other Information......................................28
6.3 Compliance with Laws.................................................29
6.4 Conduct of Business and Maintenance of Existence.....................29
6.5 Maintenance of Property; Insurance...................................30
6.6 Inspection of Property; Books and Records; Discussions...............30
6.7 Notice of Certain Events.............................................31
6.8 Payment of Taxes and Claims..........................................32
6.9 Security.............................................................32
6.10 Use of Proceeds...................................................32
6.11 Further Assurances................................................32
6.12 Determination of Significant Subsidiary...........................33
6.13 Maintenance of Operating Accounts.................................33
6.14 Post-Closing Items................................................33
SECTION 7. NEGATIVE COVENANTS..........................................34
7.1 Negative Pledge......................................................34
7.2 Merger...............................................................34
7.3 Sale of Assets.......................................................35
7.4 Loans and Investments................................................35
7.5 Restricted Payments..................................................35
7.6 Acquisitions.........................................................35
7.7 Stock Buyback........................................................35
7.8 Transactions with Affiliates.........................................36
7.9 Indebtedness.........................................................36
7.10 Operating Leases..................................................36
7.11 Debt Coverage Ratio...............................................36
7.12 Fixed Charge Coverage Ratio.......................................36
7.13 Cash Flow.........................................................36
7.14 ERISA.............................................................36
7.15 Fiscal Year.......................................................37
7.16 Amendment of Certain Documents....................................37
7.17 Clean-Up Period...................................................37
SECTION 8. EVENTS OF DEFAULT...........................................37
8.1 Events of Default....................................................37
8.2 Remedies.............................................................39
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8.3 Set-Off..............................................................39
8.4 Default Interest.....................................................40
SECTION 9. THE AGENT AND THE COLLATERAL AGENT..........................40
9.1 Appointment..........................................................40
9.2 Delegation of Duties.................................................40
9.3 Exculpatory Provisions...............................................40
9.4 Reliance by Agent and Collateral Agent...............................41
9.5 Notice of Failure to Perform.........................................41
9.6 Credit Decision......................................................42
9.7 Indemnification......................................................42
9.8 Individual Capacity..................................................43
9.9 Successor Agents.....................................................43
SECTION 10. GENERAL PROVISIONS..........................................43
10.1 Amendments and Waivers............................................43
10.2 Notices...........................................................44
10.3 No Waiver; Cumulative Remedies....................................45
10.4 Survival of Representations and Warranties........................45
10.5 Payment of Expenses and Taxes.....................................45
10.6 Benefit of Agreement; Participations; Assignments.................46
10.7 Sharing of Payments...............................................47
10.8 Counterparts......................................................47
10.9 Headings..........................................................47
10.10 Obligations Several...............................................47
10.11 Governing Law.....................................................48
10.12 Submission to Jurisdiction........................................48
10.13 Waiver of Jury Trial..............................................48
10.14 Severability......................................................48
SCHEDULES
Schedule 1 - List of Lending Offices
Schedule 5.3 - Foreign Qualifications
Schedule 5.7 - Material Litigation
Schedule 5.9 - Liens
Schedule 5.18 - List of Employment Agreements
Schedule 5.19 - List of Dividends Paid
Schedule 6.14 - List of Leased Premises
EXHIBITS
A - Form of Note
B-1 - Form of Notice of Borrowing
B-2 - Form of Notice of Continuation or Conversion
C - Form of Security Agreement
D - Form of Subsidiary Guaranty
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E - Form of Subsidiary Security Agreement
F - Form of Assignment and Assumption Agreement
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CREDIT AGREEMENT dated as of March 31, 2003 among MEMBERWORKS INCORPORATED,
a Delaware corporation (the "Company"), the lenders parties hereto (each a
"Lender") and, collectively, the "Lenders"), XXXXX BROTHERS XXXXXXXX & CO., as
administrative agent for the Lenders (in such capacity, the "Agent") and Xxxxx
Brothers Xxxxxxxx & Co., and LaSalle Bank National Association as co-agents.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company has requested that the Lenders extend it a revolving
credit facility for working capital and general corporate purposes; and
WHEREAS, the Lenders are willing to provide such financing on the terms and
conditions specified herein;
NOW, THEREFORE, in consideration of the premises and agreements herein
contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"Affiliate" shall mean as to any Person, (a) any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person or (b) any Person who is a director or officer of (i)
such Person or (ii) any Person described in clause (a) above.
"Agreement" shall mean this Credit Agreement, as amended, restated,
supplemented or otherwise modified from time to time.
"Applicable Interest Rate" means for any Loan, the Base Rate or Eurodollar
Rate for such Loan, plus in each case the Applicable Margin.
"Applicable Margin" means:
(a) with respect to Base Rate Loans, zero percent per annum;
(b) with respect to Eurodollar Rate Loans, 2.50% per annum.
"Assessment Rate" means, at any time, the average of the rates (rounded
upwards, if necessary, to the nearest 1/100 of 1%) then charged by the Federal
Deposit Insurance Corporation (or any successor) to any Lender for deposit
insurance for Dollar time deposits with such Lender as determined by the Lender.
"Average Total Indebtedness" means, for any Test Period, the arithmetic
average of the daily principal or face amount of all Indebtedness.
"Base Rate" shall mean, on any day, the higher of (i) the rate of interest
established by Xxxxx Brothers Xxxxxxxx & Co. as its base commercial lending rate
for such day and (ii) the Federal Funds Rate for such day plus 0.5% per annum.
The interest rate of each Base Rate Loan shall change on the date of any change
in the Base Rate.
"Base Rate Loan" shall mean a Loan which bears interest at the Base Rate,
plus the Applicable Margin.
"Borrowing" shall mean a borrowing hereunder consisting of Loans made at
the same time by the Lenders to the Company pursuant to Section 2.
"Business Day" shall mean a day on which commercial banks in New York, New
York are not authorized or required by law or executive order to remain closed
except that, with respect to Borrowings, notices, determinations and payments
with respect to Eurodollar Rate Loans, such day shall be a "Business Day" only
if it is also a day for trading by and between banks in the London interbank
Eurodollar market.
"Capitalized Lease" shall mean, as to any Person, (a) any lease of
property, real or personal, if the then present value of the minimum rental
commitment thereunder should, in accordance with GAAP, be capitalized on a
balance sheet of such Person and (b) any other such lease the obligations under
which are capitalized on the balance sheet of such Person.
"CERCLA" shall have the meaning given to such term in Subsection 5.15.
"Closing Date" shall mean March 31, 2003.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" shall mean any property in which the Collateral Agent, for the
benefit of the Agent and the Lenders, has been granted a security interest
pursuant to the Security Agreement or a Subsidiary Security Agreement.
"Collateral Agent" shall mean Xxxxx Brothers Xxxxxxxx & Co., in its
capacity as collateral agent.
"Commitment" shall mean, as to each Lender, the obligation of such Lender
to make Loans in an aggregate principal amount at any one time outstanding up to
but not exceeding the amount set forth opposite such Lender's name on the
signature pages hereof under the heading "Commitment" or in an assignment
agreement executed and delivered by such Lender pursuant to Subsection 10.6 (as
the same may be increased or reduced pursuant to the terms hereof).
"Commitment Percentage" shall mean, as to each Lender, the percentage set
forth opposite such Lender's name on the signature pages hereof under the
heading "Commitment Percentage" or in an assignment agreement executed and
delivered by such Lender pursuant to Section 10.6.
"Continue", "Continuation", and "Continued" shall refer to the continuation
pursuant to Subsection 2.7 hereof of a Eurodollar Rate Loan from one Interest
Period to the next Interest Period.
2
"control" shall mean, with respect to any Person, the power, direct or
indirect, to vote 5% or more of the securities having ordinary voting power for
the election of directors (or persons performing similar functions) of such
Person or to direct or cause the direction of the management and policies of
such Person whether through ownership of voting securities, by contract or
otherwise.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Subsection 2.7 hereof of Base Rate Loans into Eurodollar Rate Loans
or of Eurodollar Rate Loans into Base Rate Loans.
"Xxxxxxxxx" shall mean Xxxxxxxxx & Company, Inc., a company organized under
the laws of Georgia.
"Default" shall mean any Event of Default or any event which with the
giving of notice, the lapse of time, or both, would become an Event of Default.
"Dollars" and "$" shall mean lawful currency of the United States of
America.
"Eligible Securities" shall mean (a) direct obligations of the U.S.
Treasury including Treasury bills, notes, and bonds having a maturity of three
years or less; (b) Federal Agency Securities having a maturity of three years or
less; (c) Repurchase and Reverse Repurchase Agreements collateralized by U.S.
Treasury and Federal Agency Securities having a maturity of one month or less;
(d) U.S. Dollar-denominated Certificates of Deposit, Time Deposits, and Banker's
Acceptances having a maturity of one year or less (three months or less in the
case of Time Deposits and six months or less in the case of Bankers Acceptances)
and issued by U.S. or foreign banks having a short term debt rating of A1/P1 or
higher and an investment grade long-term debt rating, or a rating of A from
Thomson BankWatch; (e) U.S. Dollar-denominated corporate obligations including
commercial paper, corporate bonds, medium notes and euronotes, and asset-backed
securities having a maturity of three years or less (nine months or less in the
case of commercial paper) and issued by U.S. or foreign entities having a short
term debt rating of A1/P1 or higher and an investment grade long-term debt
rating; and (f) money market funds which maintain a constant net asset value and
provide daily liquidity.
"Environmental Laws" shall mean any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Group" shall mean the Company and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company, are treated as a single
employer under Section 4001 of ERISA or Section 414(b), (c), (m), (n) or (o) of
the Code.
3
"Eurodollar Rate" shall mean, for any Interest Period applicable to a
Eurodollar Rate Loan, the rate per annum (rounded upward, if necessary, to the
nearest 1/32 of one percent) as determined on the basis of the offered rates for
deposits in Dollars, for a period of time comparable to such Interest Period
which appears on the Bloomberg system as of 11:00 a.m. London time on the day
that is two London Banking Days preceding the first day of such Interest Period;
provided however, if the rate described above does not appear on the Bloomberg
system on any applicable interest determination date, the Eurodollar Rate shall
be the rate (rounded upwards as described above, if necessary) which appears on
the Telerate page 3750, British Bankers Association Interest Settlement Rates as
of 11:00 a.m. London time on the day that is two London Banking Days preceding
the first day of such Interest Period; provided further however, if the rate
described above does not appear on the Telerate System on any applicable
interest determination date, the Eurodollar Rate shall be the rate (rounded
upwards as described above, if necessary) for deposits in dollars for a period
substantially equal to the Interest Period on the Reuters Page "LIBO" (or such
other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time), on the day that is two
(2) London Banking Days prior to the beginning of such Interest Period. "Banking
Day" shall mean, in respect of any city, any date on which commercial banks are
open for business in that city
If the Bloomberg, Telerate and Reuters systems are unavailable, then the
rate for that date will be determined on the basis of the offered rates for
deposits in U.S. dollars for a period of time comparable to such Interest Period
which are offered by four major banks in the London interbank market at
approximately 11:00 a.m. London time, on the day that is two (2) London Banking
Days preceding the first day of such Interest Period as selected by the Agent.
The principal London office of no fewer than two major London banks will be
requested to provide a quotation of its U.S. dollar deposit offered rate. If at
least two such quotations are provided, the rate for that date will be
arithmetic mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that date will be determined on the basis of the basis
of the rates quoted for loans in U.S. dollars to leading European banks for a
period of time comparable to such Interest Period offered by major banks in New
York City at approximately 11:00 a.m. New York City time, on the day that its
two London Banking Days preceding the first day of such Interest Period. In the
event that the Agent is unable to obtain any such quotation as provided above,
it will be deemed that the Eurodollar Rate pursuant to a Eurodollar Rate Loan
cannot be determined and in such event the Eurodollar Rate shall be the Base
Rate pursuant to the terms and conditions of a Base Rate Loan.
In the event that the Board of Governors of the Federal Reserve System
shall impose a Reserve Requirement with respect to Eurodollar Rate deposits,
then for any period during which such Reserve Requirement shall apply, the
Eurodollar Rate shall be equal to the amount determined above divided by an
amount equal to one (1) minus the Reserve Requirement.
"Eurodollar Rate Loan" means a Loan which bears interest at the Eurodollar
Rate, plus the Applicable Margin.
"Event of Default" shall mean any of the events specified in Subsection
8.1.
4
"Federal Funds Rate" shall mean, for any day or any other period, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it.
"Final Maturity Date" shall mean March 29, 2004.
"Fixed Charge Coverage Ratio" shall mean, for the Company for any period,
the ratio of (a) the sum of (i) Net Cash Provided by Operating Activities Before
Changes in Working Capital for such period plus (ii) any amount deducted in the
calculation thereof for interest and rent expense to (b) the sum of (i) the
aggregate interest and rent expense of the Company and its Subsidiaries,
determined on a consolidated basis, for such period, plus (ii) required
principal payments of Indebtedness of the Company and its Subsidiaries for such
period.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranty" by any Person shall mean any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
or other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term Guaranty shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guaranty" used as a verb has a corresponding meaning.
"Indebtedness" shall mean, for any Person (without duplication), (i) all
indebtedness or other obligations (other than those obligations which are backed
by a Letter of Credit up to the amount of such Letter of Credit and travel bonds
or similar bonds in an aggregate amount not to exceed $400,000) of such Person
for borrowed money and all indebtedness of such Person with respect to any other
items (including, without limitation, obligations evidenced by bonds,
debentures, notes or other similar instruments but excluding accounts payable in
the ordinary course of business, deferred revenue and accrued expenses) which
would, in accordance with GAAP, be classified as a liability on the balance
sheet of such Person, (ii) all obligations of such Person to pay the deferred
purchase price of property or services (including indebtedness created under or
arising out of any conditional sale or other title retention agreement), (iii)
all obligations of such Person (contingent or otherwise) under reimbursement or
similar agreements with respect to the issuance of letters of credit, (iv) all
indebtedness or other obligations of such Person under or with respect to any
swap or other financial hedging arrangement, (v) all obligations of such Person
under any Capitalized Lease, (vi) all indebtedness or other obligations of any
other Person (other than a wholly owned Subsidiary) of the type specified in
clause (i), (ii), (iii), (iv) or (v) above, the payment or collection of which
such Person has Guaranteed and (vii) all indebtedness or other obligations of
any other Person of the type specified in clause (i), (ii), (iii), (iv), (v) or
(vi) above secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, accounts and contract rights) owned by
such Person, whether or not such Person has assumed or becomes liable for the
payment of such indebtedness or obligations.
5
"Interest Period" means (a) for each Eurodollar Rate Loan comprising part
of the same Borrowing, the period commencing on the date of such Eurodollar Rate
Loan or on the last day of the preceding Interest Period, as the case may be,
and ending on the numerically corresponding day of the last month of the period
selected by the Company pursuant to the following provisions: the duration of
each Eurodollar Rate Loan Interest Period shall be one (1) or three (3) months,
in each case as the Company may select, upon notice received by the Agent not
later than 11:00 a.m. (New York time) on the third Business Day prior to the
first day of such Interest Period and (b) for each Base Rate Loan comprising
part of the same Borrowing, the period commencing on the date of such Base Rate
Loan or on the last day of the preceding Interest Period, as the case may be,
pursuant to notice received by the Agent not later than 11:00 a.m. (New York
time) on any Business Day selected by the Company as the first day of such
Interest Period, and ending on the last day of each calendar month after the
date of such Base Rate Loan; provided, however, that:
(i) all Eurodollar Rate Loans comprising part of the same Borrowing shall
be of the same duration;
(ii) whenever the last day of any Interest Period would otherwise occur on
a day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day; provided that, if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day;
(iii) each Interest Period that commences on the last Business Day of a
calendar month (or on any day for which there is no numerically corresponding
day in the applicable subsequent calendar month) shall end on the last Business
Day of the applicable subsequent month; and
(iv) no Interest Period for any Loan shall extend beyond the Final Maturity
Date.
"Investment Property" shall mean "investment property", as such term is
defined in the UCC.
"Issuing Lender" shall mean Xxxxx Brothers Xxxxxxxx & Co., in its capacity
as a Lender hereunder.
6
"Lending Office" shall mean, with respect to each Lender the office
specified opposite such Lender's name on Schedule I or such other office as such
Lender may designate in writing from time to time to the Company and the Agent.
"Letter of Credit" shall mean an irrevocable standby letter of credit for
the account of the Company, issued by the Issuing Lender pursuant to Section
2.1(b) and shall include the Westchester Fire Insurance Company Letter of
Credit.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, security interest, lien (statutory or other) or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any Capitalized Lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction in respect of any of the foregoing).
"Loan" shall mean a loan by a Lender pursuant to Subsection 2.1(a). Each
Loan shall be a Base Rate Loan or a Eurodollar Rate Loan.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Provided by Operating Activities Before Changes in Working
Capital" shall mean, for any period, the net cash provided by operating
activities before changes in working capital, calculated as follows: (i) the net
income (loss) plus (minus) (ii) the cumulative effect of any change in
accounting principles minus (iii) membership solicitation and other deferred
costs plus (iv) the amortization of membership solicitation and other deferred
costs plus (minus) (v) the increase (decrease) in deferred membership fees plus
(vi) depreciation, amortization and other non-cash items; in each case,
calculated for the Company and its Subsidiaries in the same manner as calculated
and reported in the Company's consolidated financial statements included in the
Company's annual 10-K filing with the Securities and Exchange Commission.
"Note" shall mean a promissory note of the Company payable to the order of
a Lender, evidencing the Loans made by such Lender as provided for herein,
substantially in the form of Exhibit A, and any promissory note or notes of the
Company issued in substitution thereof.
"Notice of Borrowing" shall mean an irrevocable notice from the Company to
the Agent, substantially in the form of Exhibit B-1, pursuant to which the
Company requests a Borrowing.
"Notice of Continuation or Conversion" means the certificate, in the form
of Exhibit B-2, to be delivered by the Company to the Agent pursuant to
Subsection 2.7.
"Obligations" shall mean any and all of the debts, obligations and
liabilities of the Company to the Lenders or the Agent provided for or arising
under (i) the Westchester Fire Insurance Company Letter of Credit or (ii) this
Agreement or the Related Documents to which the Company is a party (including,
without limitation, the obligation to repay all Loans and to pay interest
thereon or fees related thereto, the obligation to reimburse the Lenders for the
amount of any draft presented under any Letter of Credit and paid by the Issuing
Lender and to pay interest thereon or fees related thereto and the obligation to
pay all costs of collection, including the fees and disbursements of counsel),
whether now existing or hereafter arising, voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred.
7
"Operating Lease" shall mean any lease of real or personal property other
than a Capitalized Lease.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor thereto.
"Percentage of Total Commitment" shall mean, with respect to any Lender,
the percentage of the Total Commitment represented by such Lender's Commitment
to make Loans to the Company.
"Person" shall mean an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" shall mean any employee benefit plan which is covered by Title IV of
ERISA or is subject to the funding requirements under Section 412 of the Code
(or the corresponding provisions of ERISA) and in respect of which the Company
or any member of the ERISA Group is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Quarterly Payment Dates" shall mean the first day of each April, July,
October and January of each year, commencing July 1, 2003.
"RCRA" shall have the meaning given to such term in Subsection 5.15.
"Regulatory Change" means any change after the date of this Agreement in
United States federal, state or foreign laws or regulations (including
Regulation D and the laws or regulations which designate any assessment rate
relating to certificates of deposit or otherwise (including the "Assessment
Rate" if applicable to any Loan)) or the adoption or making after such date of
any orders, rulings, interpretations, directives, guidelines or requests
applying to a class of banks including the Lenders, of or under any United
States federal, state, or foreign laws or regulations (whether or not having the
force of law) by any court or governmental or monetary authority charged with
the interpretation or administration thereof.
"Related Documents" shall mean each Note, the Security Agreement, each
Subsidiary Guaranty and each Subsidiary Security Agreement.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA.
"Required Lenders" shall mean, at any time, Lenders holding seventy-five
percent (75%) of the aggregate amount of the Commitments, or, if the Commitments
have been terminated, Banks holding seventy-five percent (75%) of the aggregate
principal amount of the Loans outstanding.
"Reserve Requirement" means for any Eurodollar Rate Loans for any
quarterly period (or, as the case may be, shorter period) as to which interest
is payable hereunder, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such period under Regulation D by member banks of the Federal Reserve
System in Boston, Massachusetts with deposits exceeding one billion Dollars
against "Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against: (i) any category of liabilities which
includes deposits by references to which the Eurodollar Rate for Eurodollar Rate
Loans is to be determined as provided in the definition of "Eurodollar Rate" in
this Article 1, or (ii) any category of extensions of credit or other assets
which include Eurodollar Rate Loans.
8
"Revenues" shall mean the total revenues of the Company and its
Subsidiaries calculated in the same manner as calculated and reported in the
Company's consolidated financial statements included in the Company's annual
10-K filing with the Securities and Exchange Commission.
"Security Agreement" shall mean the Security Agreement in substantially the
form of Exhibit C between the Company and the Collateral Agent, as the same may
be amended, restated, supplemented or otherwise modified from time to time.
"Single Employer Plan" shall mean any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Significant Subsidiary" shall mean as to the Company at any time, (i)
Xxxxxxxxx, (ii) each other Subsidiary which either (a) contributed 5% or more of
the Revenues of the Company and its Subsidiaries on a consolidated basis for the
most recently completed fiscal year (or other 12 month period as referred to in
Subsection 6.12) or (b) owned 5% or more of the total tangible assets of the
Company and its Subsidiaries on a consolidated basis as of the end of the most
recently completed fiscal year (or other determination date referred to in
Subsection 6.12) and (iii) each Subsidiary if, in the aggregate, Subsidiaries
which are not Significant Subsidiaries pursuant to romanettes (i) and (ii) above
(a) contributed 10% or more of the Revenues of the Company and its Subsidiaries
on a consolidated basis for the most recently completed fiscal year (or other 12
month period as referred to in Subsection 6.12) or (b) owned 10% or more of the
total tangible assets of the Company and its Subsidiaries on a consolidated
basis as of the end of the most recently completed fiscal year (or other
determination date referred to in Subsection 6.12).
"Subsidiary" shall mean as to any Person, a corporation or other business
entity of which shares of stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other managers of
such corporation or other business entity are at the time owned, directly or
indirectly through one or more intermediaries, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Company.
"Subsidiary Guaranty" shall mean a Guaranty in substantially the form of
Exhibit D executed by a Subsidiary of the Company guaranteeing payment of the
Obligations.
9
"Subsidiary Security Agreement" shall mean a Security Agreement in
substantially the form of Exhibit E between a Subsidiary of the Company and the
Collateral Agent securing such Subsidiary's obligations under a Subsidiary
Guaranty.
"Test Period" shall mean, at any date, the period consisting of the
most-recent four consecutive fiscal quarters of the Company ending on or prior
to such date.
"Total Commitment" shall mean $28,000,000.
"UCC" shall mean the Uniform Commercial Code as in effect on the date
hereof in the State of New York, as amended from time to time.
"Westchester Fire Insurance Company Letter of Credit" shall mean the Letter
of Credit issued on March 26, 2003, as amended from time to time, in favor of
Westchester Fire Insurance Company with a face value of $5,458,744 issued
pursuant to a prior credit arrangement among the Company, Xxxxx Brothers
Xxxxxxxx & Co. and LaSalle Bank National Association.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
the Related Documents or any certificate or other document made or delivered
pursuant hereto or thereto.
(a) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, Subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(b) Defined terms in this Agreement shall include in the singular number,
the plural and in the plural number, the singular. The correlative of any term
defined in this Agreement shall, unless the context otherwise requires, have the
same meaning as such defined term.
(c) Unless the context otherwise requires, any pronoun shall include the
corresponding masculine, feminine and neuter forms.
(d) References in this Agreement to any other agreement, document or
instrument shall, unless the context otherwise requires, include such other
agreement, document or instrument as the same may be from time to amended,
restated, supplemented or otherwise modified.
1.3 Accounting Principles. (a) As used herein and in the Related Documents
and in any other certificate or ocument made or delivered pursuant hereto or
thereto, accounting terms relating to the Company not defined in Subsection 1.1
shall have the respective meanings given to them under GAAP.
(a) Unless (i) otherwise required under applicable accounting rules, (ii)
required in the case of a filing of a registration statement with the Securities
and Exchange Commission in connection with an initial public offering of
securities by the Company or (iii) the Company and its firm of independent
accountants of nationally recognized standing acceptable to the Lenders deem a
change to be appropriate, the Company shall not make any change in the
accounting treatment utilized by the Company under GAAP without the consent of
the Lenders; provided, that if any of clause (i), (ii) or (iii) is applicable,
the Company will notify the Lenders prior thereto and advise the Lenders of the
effect, if any, such change will have on the presentation of the Company's
financial statements and the financial computations required hereunder.
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SECTION 2. CREDIT FACILITY
2.1 Loans and Letters of Credit. (a) Each Lender severally agrees, on the terms
and subject to the conditions of this Agreement, from time to time during the
period from the Closing Date to but not including the Final Maturity Date, to
make Loans to the Company in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount of its Commitment; provided that
(i) to the extent any Letters of Credit have been issued by the Issuing Lender
and remain outstanding, the Commitment of each Lender shall be reduced by such
Lender's Commitment Percentage of the aggregate principal amount of such
outstanding Letters of Credit and (ii) the sum of all outstanding Loans and
Letters of Credit immediately after the making of each Loan shall not exceed the
Total Commitment. Within such limit, the Company may borrow, prepay, repay and
reborrow pursuant to this Subsection 2.1(a).
(b) The Issuing Lender agrees, upon the request of the Company and on such
terms and conditions as the Lenders, the Agent and the Company may from time to
time agree, during the period from the Closing Date to the date which is 180
days prior to the Final Maturity Date, to issue Letters of Credit in an
aggregate principal amount at any one time outstanding up to but not exceeding
the amount of the Total Commitment, provided that (i) no Letter of Credit shall
be issued if immediately following such issuance, with respect to any Lender,
such Lender's Commitment Percentage of the aggregate principal balance of all
outstanding Letters of Credit, when added to the aggregate principal balance of
all outstanding Loans made by such Lender, exceeds such Lender's Commitment;
(ii) the sum of all outstanding Loans and Letters of Credit immediately after
the issuance of each Letter of Credit shall not exceed the Total Commitment;
(iii) the sum of the face value of all outstanding Letters of Credit immediately
after the issuance of each Letter of Credit shall not exceed $15,000,000; and
(iv) the expiration date of any such Letter of Credit shall not extend beyond
the Final Maturity Date.
(c) If any draft shall be presented for payment under any Letter of Credit,
the Issuing Lender shall promptly notify the Company and the other Lenders of
the date and amount thereof. The Company agrees to reimburse the Issuing Lender
on each date on which the Issuing Lender notifies the Company in writing of the
date and amount of a draft presented under any Letter of Credit and paid by the
Issuing Lender for the amount of (a) such draft so paid and (b) any taxes (other
than income taxes), fees, charges or other costs and expenses incurred by the
Issuing Lender in connection with such payment. Each such payment shall be made
to the Issuing Lender at its Lending Office specified herein and in Dollars and
in immediately available funds. Each drawing under any Letter of Credit shall
constitute a request by the Company to the Agent for the borrowing of Loans in
the amount of such drawing and any reimbursement made by a Lender pursuant to
Subsection 2.1(e) shall constitute a Loan pursuant to Section 2.1(a) subject to
the repayment obligations set forth in this subsection 2.1(c). Interest shall be
payable on any and all amounts remaining unpaid by the Company under this
subsection from the date of the draw on the Letter of Credit until payment in
full at a rate equal to the sum of the Base Rate plus 2% per annum, such rate to
change as and when the Base Rate changes. The Company agrees that its
reimbursement obligations hereunder (collectively, the "Reimbursement
Obligations") shall be payable irrespective of any claim, set-off, defense or
other right which the Company or any Subsidiary may have at any time against the
Issuing Lender, any other Lender, or any other Person, under all circumstances.
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(d) (1) As among the Company, the Issuing Lender and the other Lenders, the
Company assumes all risks of the acts and omissions of, or misuse of the Letters
of Credit by, the respective beneficiaries of the Letters of Credit. In
furtherance and not in limitation of the foregoing, the Issuing Lender, the
Agent and the other Lenders shall not be responsible for (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or part, which may prove to be invalid or ineffective for any reason;
(iii) failure of the beneficiary of a Letter of Credit to comply fully with
conditions required in order to draw upon such Letter of Credit, (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise; (v) errors in interpretation of
technical terms; (vi) misapplication by the beneficiary of a Letter of Credit of
the proceeds of any drawing under such Letter of Credit; (vii) any consequences
arising from causes beyond the control of the Issuing Lender and to the extent
not avoidable by the Issuing Lender by the observance of reasonable commercial
standards prevailing in the geographic area where such Issuing Lender is
located; (viii) the existence of any claim, setoff, defense or other right which
the Company or any Subsidiary may have at any time against a beneficiary named
in a Letter of Credit or any transferee of any Letter of Credit (or any Person
for whom any such transferee may be acting), the Issuing Lender, any other
Lender, or any other Person, whether in connection with this Agreement, any of
the Related Documents, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying transactions
between the Company or any Subsidiary and the beneficiary named in any Letter of
Credit); (ix) any draft, certificate or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
and (x) the surrender or impairment of any security for the performance or
observance of any of the terms of any of this Agreement or the Related
Documents. Notwithstanding the foregoing, nothing contained herein shall be
deemed to relieve the Issuing Lender from responsibility for any of the
foregoing consequences to the extent arising from the Issuing Lender's willful
or intentional breach of the terms hereof or its gross negligence.
(2) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Lender, the Agent or any other Lender under or in connection with any Letter of
Credit or any related certificates, if taken or omitted in good faith, shall not
put the Issuing Lender, the Agent or such other Lender under any resulting
liability to the Company or relieve the Company of any of its obligations
hereunder to the Issuing Lender, the Agent or any other Lender.
(e) Each Lender (other than the Issuing Lender) unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Company in accordance with the terms of this Agreement, such Lender shall pay to
the Issuing Lender upon demand at the Issuing Lender's Lending Office as
specified herein an amount equal to such Lender's Commitment Percentage of the
amount of such draft, or any part thereof, which is not reimbursed. In
furtherance of the foregoing, the Issuing Lender irrevocably agrees to grant and
hereby grants to each other Lender, and, to induce the Issuing Lender to issue
Letters of Credit hereunder, each Lender (other than the Issuing Lender)
irrevocably agrees to accept and purchase and hereby accepts and purchases from
the Issuing Lender, for such Lender's own account and risk, an undivided
interest equal to such Lender's Commitment Percentage in the Issuing Lender's
obligations and rights under each Letter of Credit issued hereunder and the
amount of each draft paid by the Issuing Lender hereunder.
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(f) Whenever, at any time after the Issuing Lender has made payment under
any Letter of Credit and has received from any other Lender its share of such
payment in accordance with Subsection 2.1(e), the Issuing Lender receives any
payment related to such Letter of Credit (whether directly from the Company or
otherwise, including proceeds of collateral applied thereto by the Agent), or
any payment of interest on account thereof, the Issuing Lender will distribute
to such other Lender at such other Lender's Lending Office as provided herein
its share thereof (provided, the amount of interest the Issuing Lender is to
share with any other Lender from any interest received by the Issuing Lender
shall be calculated from the date the Issuing Lender actually received from such
other Lender its share of any payment); provided, however, that in the event
that any such payment received by the Issuing Lender shall be required to be
returned by the Issuing Lender, such other Lender shall return to the Issuing
Lender the portion thereof previously distributed by the Issuing Lender to it.
2.2 Manner of Borrowing. The Company shall give the Agent a duly completed
Notice of Borrowing not later than 3:00 p.m., New York City time, on the date of
Borrowing of any Base Rate Loan and at least two Business Days prior to the date
of Borrowing of any Eurodollar Rate Loan. Each such Notice of Borrowing shall be
irrevocable and shall specify: (i) the amount of such Borrowing, which in the
case of a Base Rate Loan shall be in the principal amount of not less than
$100,000 or any greater amount which is an integral multiple thereof and in the
case of a Eurodollar Rate Loan shall be in the principal amount of not less than
$250,000 or any greater amount which is an integral multiple thereof; (ii) the
date of such Borrowing, which shall be a Business Day; and (iii) whether the
Loan comprising such Borrowing is to be a Base Rate Loan or a Eurodollar Rate
Loan; and if a Eurodollar Rate Loan, the initial Interest Period with respect to
such Borrowing. Each Borrowing shall be made ratably from the Lenders in
proportion to each Lender's Percentage of the Total Commitment. Upon receipt by
the Agent of a Notice of Borrowing as aforesaid, the Agent shall promptly advise
each Lender of the details thereof. There shall be no more than three Interest
Periods relating to Eurodollar Rate Loans.
2.3 Disbursement of Loans. Upon notification from the Agent that a
Borrowing has been requested by the Company pursuant to Subsection 2.2, each
Lender shall make the Loans to be made by it available by transferring the
amount thereof in Dollars to the Agent not later than 12:00 noon, New York City
time, on the relevant borrowing date. The Agent shall make the amounts received
from the Lenders immediately available to the Company by crediting the amount
thereof on the date of borrowing to the Company's account with the Agent.
2.4 Notes. The Loans made by each Lender shall be evidenced by a Note. Each
Lender will note on its internal records the date and amount of each Loan made
by such Lender, the date and amount of each repayment of principal thereof and
will, prior to any transfer of its Note, endorse on the reverse side thereof the
outstanding principal amount of the Loans evidenced thereby. Failure to so
record any such information shall not alter the obligations of the Company under
this Agreement or such Note.
13
2.5 Repayment of Principal; Optional Prepayments.
(a) The Company shall repay to the Agent for the account of the Lenders the
outstanding principal amount of each Lender's Loans on the Final Maturity Date.
In addition, if at any time the aggregate outstanding principal amount of all
Loans exceeds the Total Commitment, then the Company shall immediately pay to
the Agent for the account of the Lenders the amount equal to such excess,
together with accrued interest thereon.
(b) Anything herein to the contrary notwithstanding, the Company may at any
time and from time to time prepay the then outstanding Base Rate Loans
comprising any Borrowing, in whole or in part, without premium or penalty, upon
not less than one (1) Business Day's irrevocable notice to the Agent, specifying
the date and amount of prepayment and, if more than one such Borrowing is
outstanding, which Borrowing is to be prepaid. Upon receipt of any such notice,
the Agent shall promptly notify each Lender thereof. Any notice of prepayment
given by the Company shall obligate the Company to make the prepayment specified
in such notice on the date specified therein. Accrued interest on any amount
prepaid in accordance with the terms hereof shall, in accordance with Subsection
2.6, be payable on the date such prepayment is required to be made as provided
herein. Any partial prepayment of a Borrowing comprised of Base Rate Loans shall
be in an aggregate principal amount of $100,000 or whole multiples of $100,000
in excess thereof, and shall not result in the remaining amount of such
Borrowing being less than $100,000.
(c) Anything herein to the contrary notwithstanding, the Company may at any
time and from time to time prepay the then outstanding Eurodollar Rate Loans
comprising any Borrowing, in whole or in part, without premium or penalty, upon
not less than three (3) Business Days' irrevocable notice to the Agent,
specifying the date and amount of prepayment and, if more than one such
Borrowing is outstanding, which Borrowing is to be prepaid. Upon receipt of any
such notice, the Agent shall promptly notify each Lender thereof. Any notice of
prepayment given by the Company shall obligate the Company to make the
prepayment specified in such notice on the date specified therein. Accrued
interest on any amount prepaid in accordance with the terms hereof shall, in
accordance with Subsection 2.6, be payable on the date such prepayment is
required to be made as provided herein. If such prepayment occurs on a date that
is not the last day of the Interest Period applicable to such Eurodollar Rate
Loan, the Company shall pay any amounts as shall be sufficient (in the
reasonable opinion of each Lender) to compensate such Lender for any reasonable
losses, costs or expenses (excluding any losses of anticipated profit), as
certified by such Lender (such certification setting forth the basis for such
compensation), which such Lender may reasonably incur as a result of such
prepayment, including without limitation, any loss, cost or expense incurred by
reason of funds liquidation or reemployment of deposits or other funds acquired
by such Lender to fund or maintain such Eurodollar Rate Loan and any
administrative costs, expenses or charges of the Lender as a result thereof. Any
partial prepayment of a Borrowing comprised of a Eurodollar Rate Loan shall be
in an aggregate principal amount of $250,000 or whole multiples of $250,000 in
excess thereof, and shall not result in the remaining amount of such Borrowing
being less than $250,000.
14
Without limiting the effect of the preceding paragraph, compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
that otherwise would have accrued on the principal amount so prepaid for the
period from the date of such prepayment to the last day of the then current
Interest Period for such Eurodollar Rate Loan at the applicable rate of interest
for such Eurodollar Rate Loan provided for herein over (ii) the amount of
interest that otherwise would have accrued on such principal amount at a rate
per annum equal to the interest component of the amount the Lender would have
bid in the London interbank market for Dollar deposits of leading banks in
amounts comparable to such principal amount and with maturities comparable to
such period (as reasonably determined by the Lender), if the Lender has
match-funded such Eurodollar Rate Loan, or the Lender's cost of funds, if the
Lender has not match-funded. Such Lender will furnish to the Company a
certificate setting forth the basis and amount of each request by the Lender for
compensation under this Subsection 2.5.
2.6 Payment of Interest.
(a) The Company shall pay interest on the unpaid principal amount of each
Base Rate Loan from and including the date of such Base Rate Loan to but not
including the date on which such Loan is paid in full at a fluctuating rate per
annum equal to the Base Rate in effect from time to time plus the Applicable
Margin. Such interest shall be due and payable on the last day of the Interest
Period applicable thereto.
(b) The Company shall pay interest on the unpaid principal amount of each
Eurodollar Rate Loan from and including the date of such Loan to but not
including the date on which such Loan is paid in full at a rate per annum equal
to the Eurodollar Rate in effect for the relevant Interest Period plus the
Applicable Margin. Such interest shall be due and payable on the last day of the
Interest Period applicable thereto.
(c) Notwithstanding the foregoing subparagraphs (a) and (b), if the Company
shall fail to pay any installment of principal of or interest on any Loan when
due, or if any other Event of Default shall occur, then the Company shall pay
interest as provided in Subsection 8.4.
2.7 Conversion or Continuation of Loans. The Company shall have the right
to Convert Loans of one type into Loans of another type or to Continue
Eurodollar Rate Loans, at any time or from time to time, provided that: (a) the
Company shall give the Agent a Notice of Continuation or Conversion in the form
of Exhibit B-2, as applicable, prior to 11:00 a.m. (New York time) on the date
at least (i) two (2) Business Days prior to the last day of the Interest Period
of any Loan to be Converted into or Continued as a Eurodollar Rate Loan and (ii)
one (1) Business Day prior to the last day of the Interest Period of any Loan to
be Converted into a Base Rate Loan; (b) Eurodollar Rate Loans may be Converted
or Continued only on the last day of an Interest Period for such Loans; (c) each
Conversion or Continuation of a Eurodollar Rate Loan shall be in an amount at
least equal to $250,000 or in any greater amount which is an integral multiple
thereof; (d) no Event of Default shall have occurred and be continuing at the
time of any Conversion or Continuation of any such Loan into a subsequent
Interest Period; (e) accrued interest on the Loan (or portion thereof) being
Converted or Continued shall be paid by the Company at the time of Continuation
or Conversion; and (f) each request for a Continuation as or Conversion to a
Eurodollar Rate Loan which fails to state an applicable Interest Period shall be
deemed to be a request for an Interest Period of one (1) month.
15
Notwithstanding anything to the contrary herein contained, if, upon the
expiration of any Interest Period applicable to any Eurodollar Rate Loan, the
Company shall fail to give a Notice of Continuation or Conversion as set forth
in this Subsection 2.7, the Company shall be deemed to have given a Notice of
Continuation of such Eurodollar Rate Loan in principal amount equal to the
outstanding principal amount of such Eurodollar Rate Loan and having an Interest
Period of one (1) month.
2.8 Reserved.
2.9 Computation of Interest and Fees. All interest and fees shall be
calculated on the basis of a 360-day year and paid for the actual days elapsed.
Any change in the interest rate on a Loan resulting from a change in the Base
Rate shall become effective as of the opening of business on the day on which
such change is announced. In computing the amount of interest or fees payable in
respect of any period, the first day of such period shall be included and the
last day of such period shall be excluded. All computations of interest and like
payments hereunder on the Loans shall, in the absence of clearly demonstrable
error, be considered correct and binding on the Company and each Lender, unless
within thirty (30) Business Days after receipt of any notice by the Agent of
such outstanding amount, the Company or any Lender notifies the Agent to the
contrary.
2.10 Capital Adequacy.
(a) In the event that any Lender shall have determined that the adoption or
implementation of, or any change in, any law, rule, regulation or guideline
regarding capital adequacy, capital maintenance or similar requirement or any
change in the interpretation or application thereof or compliance by any Lender
or any corporation controlling any Lender with any request, guideline, policy or
directive regarding capital adequacy (whether or not having the force of law)
from any central bank or other Governmental Authority, has or would have the
effect of reducing the rate of return on such Lender's or such Lender's
controlling corporation's capital as a consequence of its obligations hereunder
or its Loans to a level below that which such Lender or such Lender's
controlling corporation could have achieved but for such adoption,
implementation, change or compliance (taking into consideration such Lender's or
such Lender's controlling corporation's policies with respect to capital
adequacy), then from time to time, upon demand by such Lender to the Company
(with a copy to the Agent), the Company shall pay to such Lender such additional
amount or amounts as will compensate such Lender for such reduction.
(b) Any such Lender will promptly notify the Company and the Agent upon
becoming aware of any event which will cause it to demand payment of any
additional amount pursuant to paragraph (a) above and shall furnish to the
Company a certificate containing a determination made in good faith of such
additional amount and the justification therefor and showing in reasonable
detail the computation thereof. Determinations and allocations by any Lender of
any additional amounts payable by the Company pursuant to paragraph (a) of this
Subsection 2.10 shall be conclusive absent manifest error.
(c) If any additional amount becomes or will in the future become payable
for the account of any Lender under paragraph (a) of this Subsection 2.10, then
such Lender will (if so requested by the Company, but without prejudice to the
provisions of this Subsection 2.10 ) consult with the Company and the Agent with
a view to agreeing upon a mutually acceptable alternative arrangement (including
the transfer of such Lender's Lending Office to another jurisdiction, if, in its
sole discretion, such transfer is not in any way disadvantageous to it or
contrary to its policies) which will avoid or minimize the payment of such
additional amount in the future and which is not prejudicial to it.
16
(d) The agreements contained in this Subsection 2.10 shall survive for a
period of one year following repayment of the Obligations.
2.11 Increased Costs.
(a) If after the date hereof, due to either (i) the introduction of or any
change in or in the interpretation or enforcement of, any law, regulation,
order, ruling, directive, guideline or request, or (ii) the compliance with any
order, ruling, directive, guideline or request from any central bank or other
governmental authority (whether or not having the force of law) issued,
announced, published, promulgated or made after the date hereof, there shall be
any increase in the cost to any Lender of agreeing to make or making, funding or
maintaining Eurodollar Rate Loans, then the Company shall be liable for, and
shall from time to time, within thirty (30) days following a demand by the
Lender, pay to the Agent for the account of the Lender additional amounts
sufficient to compensate such Lender for such increased cost; provided, however,
that before making any such demand, the Lender agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
designate a different Lending Office if the making of such a designation would
allow the Lender or its Lending Office to continue to perform its obligations to
make Eurodollar Rate Loans or to continue to fund or maintain Eurodollar Rate
Loans and would not, in the reasonable judgment of the Lender, be otherwise
disadvantageous to the Lender. A certificate substantiating the amount of such
increased cost, submitted to the Company by the Lender, shall be conclusive,
absent demonstrable error.
(b) Any such Lender will promptly notify the Company and the Agent upon
becoming aware of any event which will cause it to demand payment of any
additional amount pursuant to paragraph (a) above and shall furnish to the
Company a certificate containing a determination made in good faith of such
additional amount and the justification therefor and showing in reasonable
detail the computation thereof. Determinations and allocations by any Lender of
any additional amounts payable by the Company pursuant to paragraph (a) of this
Subsection 2.11 shall be conclusive absent manifest error.
(c) If any additional amount becomes or will in the future become payable
for the account of any Lender under paragraph (a) of this Subsection 2.11, then
such Lender will (if so requested by the Company, but without prejudice to the
provisions of this Subsection 2.11) consult with the Company and the Agent with
a view to agreeing upon a mutually acceptable alternative arrangement (including
the transfer of such Lender's Lending Office to another jurisdiction, if, in its
sole discretion, such transfer is not in any way disadvantageous to it or
contrary to its policies) which will avoid or minimize the payment of such
additional amount in the future and which is not prejudicial to it.
(d) The agreements contained in this Subsection 2.11 shall survive for a
period of one year following repayment of the Obligations.
17
2.12 Illegality. Notwithstanding any other provision of this Agreement, if
after the date hereof the introduction of, or any change in or in the
interpretation or enforcement of, any law, regulation, order, ruling, directive,
guideline or request shall make it unlawful, or any central bank or other
governmental authority shall assert that it is unlawful, for any Lender or its
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Loans or to continue to fund or maintain Eurodollar Rate Loans hereunder, then,
on notice thereof by such Lender to the Company, (i) the obligation of the
Lender to make Eurodollar Rate Loans shall terminate (and the Lender shall make
all of its Loans as Base Rate Loans notwithstanding any election by the Company
to have the Lender make Eurodollar Rate Loans) and (ii) if legally permissible,
at the end of the current Interest Period for such Eurodollar Rate Loans,
otherwise five Business Days after such notice and demand, all Eurodollar Rate
Loans of the Lender then outstanding will automatically convert into Base Rate
Loans; provided, however, that before making any such demand, the Lender agrees
to use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Lending Office if the making
of such a designation would allow the Lender or its Lending Office to continue
to perform its obligations to make Eurodollar Rate Loans and would not, in the
judgment of the Lender, be otherwise disadvantageous to the Lender. A
certificate describing such introduction or change in or in the interpretation
or enforcement of such law, regulation, order, ruling, directive, guideline or
request, submitted to the Company by such Lender, shall be conclusive evidence
of such introduction, change, interpretation or enforcement, absent demonstrable
error. The Lender and the Company agree to negotiate in good faith in order to
agree upon a mutually acceptable mechanism to provide that Eurodollar Rate Loans
made by the Lender as to which the foregoing conditions occur shall convert into
Base Rate Loans.
SECTION 3. FEES; PAYMENTS
3.1 Fees.
(a) Closing Fee. The Company shall pay to the Agent, for the account of the
Lenders, on the Closing Date a closing fee equal to $105,000 (.375% of Total
Commitment).
(b) Agent Fee. The Company shall pay to the Agent, for its own account, a
fee equal to $28,000 (.1% of Total Commitment) per annum. Such fee shall be due
and payable on or prior to the Closing Date and on or before each anniversary
thereof until the Final Maturity Date. In addition, the Company shall pay to the
Agent, for its own account, a fee equal to .1% per annum of any increase to the
Total Commitment on the effective date of such increase.
(c) Facility Fee. The Company shall pay to the Agent, for the account of
each Lender, a facility fee from and including the Closing Date to and including
the Final Maturity Date, computed at the rate of .375% per annum on the average
daily unused portion of each Lender's Commitment with respect to the Loans. Such
fee shall be payable quarterly in arrears on the Quarterly Payment Date.
(d) Letter of Credit Fee. For the issuance of a Letter of Credit, the
Company shall pay (i) a fronting fee to the Issuing Lender in an amount equal to
..25% of the face value of the Letter of Credit; (ii) to the Agent, for the
account of each Lender, a commission as shall be agreed upon by the Company and
the Lenders prior to the issuance of a Letter of Credit; and (iii)
notwithstanding the foregoing romanettes (i) and (ii), the fees payable in
connection with the Westchester Fire Insurance Company Letter of Credit shall be
set in accordance with its original terms.
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3.2 Pro Rata Treatment and Payments. Each Borrowing by the Company from the
Lenders and each payment by the Company on account of any fee (other than fees
for the account of the Agent) shall be made pro rata according to each Lender's
Percentage of the Total Commitment, except as otherwise expressly provided
herein. Each payment by the Company on account of principal of and interest on
the Loans shall be made pro rata according to the respective outstanding
principal amounts of such Loans held by each Lender. All payments to be made by
the Company on account of principal, interest and fees shall be made without
set-off or counterclaim and shall be made to the Agent, for the account of the
Lenders (except for fees for the account of the Agent), at the Agent's office
designated for such purpose, in Dollars and in immediately available funds not
later than 12:00 noon, New York City time, on the date on which such payment
shall become due. Any payment received after such time on any Business Day shall
be deemed to have been received on the next Business Day. The Agent shall
distribute such payments to the Lenders in like funds on the day of receipt or
deemed receipt of such payments. If any payment hereunder becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.
3.3 Taxes.
(a) All payments made by the Company under this Agreement and the Notes
shall be made free and clear of, and without reduction for or on account of, any
present or future taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding, in the case of the Agent and each
Lender, net income and franchise taxes imposed on it by the jurisdiction under
the laws of which it is organized or in which it has its principal office or its
Lending Office or any political subdivision or taxing authority thereof or
therein (such non-excluded taxes being called "Taxes") . If any Taxes are
required to be withheld from any amounts payable to the Agent or any Lender
hereunder or under the Notes, the amounts so payable shall be increased to the
extent necessary to yield to the Agent or such Lender (after payment of all
Taxes) interest or any such other amounts payable hereunder or under the Notes
at the rates or in the amounts specified in this Agreement and the Notes.
Whenever any Taxes are payable by the Company, as promptly as possible
thereafter, the Company shall send to the Agent for its own account or for the
account of each Lender, as the case may be, a certified copy of an original
official receipt showing payment thereof. If the Company fails to pay Taxes when
due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the Company shall
indemnify and hold harmless the Agent and the Lenders against, and reimburse the
Agent and the Lenders upon demand for, any incremental taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure.
(b) Each Lender will promptly notify the Company and the Agent upon
becoming aware of any event which will cause the Company to pay any additional
amount pursuant to paragraph (a) above.
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3.4 Assumed Payments. Unless the Agent shall have been notified by a Lender
or the Company prior to the date on which such Lender or the Company is
scheduled to make payment to the Agent of (in the case of a Lender) the proceeds
of a Loan to be made by it hereunder or (in the case of the Company) a payment
to the Agent for account of one or more of the Lenders hereunder (such payment
being herein called the "Required Payment"), which notice shall be effective
upon receipt, that it does not intend to make the Required Payment to the Agent,
the Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to) , make the amount
thereof available to the intended recipient(s) on such date and, if such Lender
or the Company (as the case may be) has not in fact made the Required Payment to
the Agent, the recipient(s) of such payment shall, on demand, repay to the Agent
the amount so made available. In addition, the party that failed to make the
Required Payment shall, on demand, pay interest to the Agent for its own account
in respect of each day during the period commencing on the date such amount was
so made available by the Agent until the date the Agent recovers such amount at
a rate equal to the sum of the Base Rate plus 2% per annum; provided, however,
that if the party that failed to make the Required Payment is a Lender, such
interest shall accrue at the Federal Funds Rate for the first three Business
Days such amount is unpaid and thereafter at the Base Rate plus 2% per annum.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Effectiveness. This Agreement shall be effective upon the
satisfaction of each of the following conditions precedent:
(a) This Agreement. The Agent shall have received, with copies for each
Lender, a counterpart hereof duly executed by the Company;
(b) Notes. The Agent shall have received duly executed Notes payable to
each Lender;
(c) Related Documents. The Agent shall have received, with copies for each
Lender, the Security Agreement duly executed by the Company and a Subsidiary
Guaranty and a Subsidiary Security Agreement duly executed by each Significant
Subsidiary;
(d) Legal Opinions of Counsel to the Company. The Agent shall have
received, with copies for each Lender, an executed legal opinion dated the
Closing Date and addressed to the Agent and the Lenders, of Xxxxxxx Xxxxxx
X'Xxxxxx & Xxxxxxxxxxx LLP, counsel to the Company and the Significant
Subsidiaries, in a form reasonably satisfactory to the Agent, the Lenders and
each of their special counsel;
(e) Corporate Proceedings. The Agent shall have received, with a copy for
each Lender, a copy of resolutions, in form and substance reasonably
satisfactory to the Agent, of the Board of Directors of the Company and each
Significant Subsidiary authorizing the execution, delivery and performance by it
of this Agreement, the Notes and the Related Documents (as applicable) certified
by the Secretary or an Assistant Secretary of the Company or such Significant
Subsidiary, which certificate shall state that the resolutions thereby certified
are in full force and effect and have not been amended, modified, revoked or
rescinded as of the Closing Date;
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(f) Good Standing Certificates. The Agent shall have received, with a copy
for each Lender, a certificate of recent date from the Secretary of State, or
other appropriate authority, evidencing the good standing of the Company and
each Significant Subsidiary in its jurisdiction of incorporation and, if
different, its principal place of business;
(g) Tax Good Standing. The Agent shall have received, with a copy for each
Lender, a certificate of recent date or similar instrument from the appropriate
tax authority in its jurisdiction of incorporation and, if different, its
principal place of business, as to the payment by the Company of all taxes owed;
(h) Corporate Documents. The Agent shall have received, with a copy for
each Lender, a copy of (i) the charter of the Company and each Significant
Subsidiary and all amendments thereto, certified as of a recent date by the
Secretary of State, or other appropriate authority, of the jurisdiction of its
incorporation, and (ii) the by-laws of the Company and each Significant
Subsidiary, certified as of the Closing Date by its Secretary or an Assistant
Secretary;
(i) Incumbency Certificate. The Agent shall have received, with an executed
counterpart for each Lender, a certificate dated the Closing Date of the
Secretary or an Assistant Secretary of the Company and each Significant
Subsidiary certifying as to the incumbency and signatures of its officers
executing this Agreement, the Notes and the Related Documents (as applicable)
and any certificate or other document to be delivered by it pursuant hereto and
thereto, together with evidence of the incumbency of such Secretary or Assistant
Secretary;
(j) Officer's Certificate. The Agent shall have received, with a copy for
each Lender, a certificate dated the Closing Date from an appropriate officer of
the Company certifying that (i) the representations and warranties contained in
Section 5 and in the Related Documents are accurate and complete and (ii) no
Default has occurred and is continuing or will occur as a result of the initial
Loans;
(k) Fees and Expenses. The Agent shall have received all compensation and
other amounts payable to it, including, without limitation, all amounts payable
under Subsections 3.1(a), 3.1(b) and 10.5(a), on or prior to the date of the
initial Loan;
(l) Collateral. The Collateral Agent shall have received evidence that all
filings and other action necessary to perfect the Collateral Agent's security
interest in the Collateral or any other filings or recordings necessary, on
behalf of the Agent and the Lenders, have been made and the Lien perfected by
any such filings has priority over any other Liens except as otherwise provided
herein;
(m) Supporting Documents. The Agent shall have received, with copies for
each Lender, such other documents, certificates, opinions or financial or other
information as the Agent or any of the Lenders may reasonably request; and
(n) Other. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement and the Related Documents, shall be reasonably
satisfactory in form and substance to the Agent and its counsel.
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4.2 Conditions to Each Extension of Credit. The obligation of each Lender
to make any Loan (including, without limitation, its initial Loan) is subject to
the satisfaction of the following conditions precedent as of the date such Loan
is made:
(a) Representations and Warranties. Each of the representations and
warranties made by the Company pursuant to this Agreement and the Related
Documents, and each of the representations and warranties contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement or any of the Related Documents,
shall be true and complete on and as of such date as if made on and as of such
date, except to the extent that such representations and warranties expressly
relate to particular date; and
(b) No Default. No Default shall have occurred and be continuing on such
date or after giving effect to the Loans requested to be made on such date.
(c) No Material Adverse Change. There shall have been no material adverse
change in the financial condition, operations, properties, business or prospects
of the Company and its Subsidiaries, if any, taken as a whole, since the date of
the last Borrowing under this Agreement (or if no Borrowing has occurred, since
the date of this Agreement); and
(d) Notice. The Agent shall have received a Notice of Borrowing in the form
of Exhibit B-1.
Each Borrowing hereunder shall constitute a representation and warranty by
the Company as of the date of such Borrowing that the conditions contained in
this Subsection 4.2 have been satisfied.
SECTION 5. REPRESENTATIONS AND WARRANTIES
The Company hereby makes the following representations and warranties to
the Agent and to each Lender.
5.1 Financial Condition.
(a) The consolidated balance sheets of the Company as at June 30, 2000 and
2001 and 2002 and the related consolidated statements of income, stockholders'
investment and cash flows for the fiscal year ended on each such date, audited
by PricewaterhouseCoopers, copies of which have heretofore been furnished to the
Agent and to each Lender, are complete and correct and present fairly the
consolidated financial condition of the Company as at each such date, and the
consolidated results of its operations and cash flows for the fiscal years then
ended. All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
officer, as the case may be, and as disclosed therein).
(b) As of the date hereof, the Company does not have any material liability
or obligation of any nature, absolute, accrued, contingent or otherwise, or any
material judgment or long term lease or unusual forward or long term commitment,
which is not reflected in the financial statements referred to in Subsection
5.1(a), or the notes accompanying such financial statements, or otherwise set
forth on Schedule 4.1 other than liabilities and obligations incurred under this
Agreement.
22
(c) The Company is not entering into the arrangements contemplated hereby
and by the Related Documents nor does it intend to make any transfer or incur
any obligations hereunder or thereunder with actual intent to hinder, delay or
defraud either present or future creditors. On and as of the Closing Date, on a
pro forma basis after giving effect to the transactions, contemplated hereby (x)
the Company will not have incurred nor does the Company intend or believe that
it will incur debts beyond its ability to pay such debts as such debts mature
(taking into account the timing and amounts of cash to be received from any
source and amounts payable on or in respect of any of its debts); (y) the
Company, after taking into account all other anticipated uses of its cash,
anticipates being able to pay all amounts on or in respect of its debts when
such amounts are required to be paid; and (z) the Company has sufficient capital
with which to conduct its present and proposed business and its property does
not constitute unreasonably small capital with which to conduct its present or
proposed business. For purposes of this Subsection 5.1(c), "debt" means any
liability on a claim, and a "claim" means a (i) right to payment whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured; or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured. On the date of each Borrowing (and after
giving effect to all Borrowings as of such date), the representations set forth
in this Subsection 5.1(c) shall be true and correct with respect to the Company
on such date.
5.2 No Change. Since December 31, 2002, there has been no material adverse
change in the business, operations, prospects, or financial condition of the
Company or any of its Subsidiaries or in any of the Collateral or the ability of
the Company to perform its obligations under this Agreement, the Notes or any
other Related Document to which it is a party.
5.3 Corporate Existence. The Company and each of its Subsidiaries (a) is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has the corporate power and authority to own
and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) has obtained all
licenses (governmental or otherwise), authorizations and consents necessary to
own and operate its properties and transact its business and (d) is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction in which a failure so to qualify could reasonably be expected to
have a material adverse effect on its business, operations, prospects or
financial condition. The Company and each of its Subsidiaries is duly qualified
as a foreign corporation in each of the respective jurisdictions identified on
Schedule 5.3. As of the Closing Date, the Company has no Significant Subsidiary
other than Xxxxxxxxx.
5.4 Corporate Power; Authorization. The Company has the corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and the Related Documents to which it is a party and to consummate the
transactions contemplated herein and therein and has taken all necessary
corporate action to authorize the execution and delivery of this Agreement and
the Related Documents to which it is a party and the consummation of the
transactions contemplated herein and therein. Each Significant Subsidiary has
the corporate power and authority to execute, deliver and perform its
obligations under the Related Documents to which it is a party and to consummate
the transactions contemplated therein and has taken all necessary corporate
action to authorize the execution, delivery and performance of the Related
Documents to which it is a party and the consummation of the transactions
contemplated therein.
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5.5 Binding Effect. This Agreement and the Related Documents to which the
Company is a party have been duly executed and delivered by the Company and
constitute its legal, valid and binding obligations enforceable against it in
accordance with their respective terms except as enforcement of such terms may
be limited by bankruptcy, insolvency or other similar laws affecting the rights
of creditors generally. The Related Documents to which each Significant
Subsidiary is a party have been duly executed and delivered by such Significant
Subsidiary and constitute its legal, valid and binding obligations enforceable
against it in accordance with their terms except as enforcement of such terms
may be limited by bankruptcy, insolvency or other similar laws affecting the
rights of creditors generally.
5.6 Consents; Non-Contravention. No consent or authorization of, filing
with or other act by or in respect of any Governmental Authority or any other
Person is required in connection with the execution, delivery or performance by
the Company or any Subsidiary of this Agreement and the Related Documents or the
consummation of the transactions contemplated herein and therein, except such as
have been obtained or made and are in full force and effect. The execution and
delivery of this Agreement and the Related Documents and the consummation of the
transactions contemplated hereby and thereby, will not (a) violate any law, rule
or regulation applicable to the Company or its Subsidiaries or any provision of
the charter or by-laws of the Company or any of its Subsidiaries, (b) conflict
with, result in a breach or termination of, or constitute a default under, any
provision of any indenture, mortgage, lease (capital or operating) or other
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of their
respective assets is bound, or any license, judgment, order or decree of any
Governmental Authority having jurisdiction over the Company or any of its
Subsidiaries or any of their respective activities or properties or (c) result
in, or require the creation or imposition of, any Lien upon or with respect to
any properties now or hereafter owned by the Company or any of its Subsidiaries
other than the Liens created under the Security Agreement and any Subsidiary
Security Agreement.
5.7 No Material Litigation. Except as set forth on Schedule 5.7, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority required to be disclosed by the Company pursuant to 17
CFR 229.103 is pending or, to the knowledge of the Company, threatened by or
against the Company or any of its Subsidiaries or against any of their
respective properties or revenues (a) which if adversely determined may have a
material adverse effect on the business, operations, prospects or financial
condition of the Company and its Subsidiaries, taken as a whole, or on the
ability of the Company to perform its obligations under this Agreement and the
Related Documents to which it is a party or (b) which questions or would
question the validity or enforceability of this Agreement or the Related
Documents.
5.8 No Default. Neither the Company nor any of its Subsidiaries is in
violation of or in default under any term or provision of any (a) charter or
by-law or (b) mortgage, indenture, lease, agreement, instrument, law, rule,
regulation, judgment, decree, order, writ or injunction applicable to it, except
in the case of this clause (b) for such violations or defaults that would not
have a material adverse effect on the business, operations, prospects or
financial condition of the Company and its Subsidiaries, taken as a whole, or on
the ability of the Company or any Subsidiary to perform its obligations under
this Agreement and the Related Documents to which it is a party. No Default has
occurred and is continuing.
24
5.9 Ownership of Property; Liens.
(a) The Company and each of its Significant Subsidiaries has good and valid
title to, or valid leasehold interests in, all its real property and other
property, subject in each case only to encumbrances that do not materially
adversely affect its ability to use such property for the purposes for which it
is currently being used, and none of such property is subject to any Lien,
except as set forth in Schedule 5.9 hereof and any Lien previously granted in
favor of the Collateral Agent.
(b) The Company and each of its Subsidiaries possesses sufficient permits,
licenses, patents, patent rights, trademarks, trademark rights, trade names,
trade name rights, service marks, service xxxx rights and copyrights necessary
for the conduct of the business of the Company and each of its Subsidiaries.
5.10 No Burdensome Restrictions. Neither the Company nor any of its
Subsidiaries is party to any agreement or instrument or subject to any
legislative or charter or other corporate restriction or any judgment, order,
writ, injunction, decree, or to the best of its knowledge, any rule or
regulation, which could reasonably be expected to materially and adversely
affect its business, operations, prospects or financial condition; provided
however, it is understood by the parties hereto that (i) any such restrictions
and regulations in existence on the Closing Date which do not prohibit the
Company or any of its Subsidiaries and (ii) any future legislative enactments
and regulations which do not prohibit the Company or any of its Subsidiaries,
taken as a whole, from conducting its business as presently conducted shall not
be deemed to materially and adversely affect its business, operations, prospects
or financial condition.
5.11 Taxes. The Company and each of its Subsidiaries have filed or caused
to be filed all tax returns that are required to be filed and have paid all
taxes shown to be due and payable on said returns or on any assessment relating
to such tax returns made against it or any of its properties and all other
taxes, assessments, fees or other charges imposed on it or any of its properties
by any Governmental Authority or agency which are not yet delinquent, except for
any taxes, assessments, fees or other charges which are being contested in good
faith by appropriate proceedings and for which adequate reserves, to the extent
required by GAAP, have been established; no tax liens have been filed other than
Liens for taxes on property not yet delinquent, and, to the knowledge of the
Company, no material claims are being asserted with respect to any such taxes,
fees or other charges, except for any claims which are being contested in good
faith by appropriate proceedings and for which adequate reserves, to the extent
required by GAAP, have been established.
5.12 Margin Regulations. Neither the Company nor any of its Subsidiaries 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 respective meanings of each of the quoted terms under
Regulations U and T of the Board of Governors of the Federal Reserve System. No
part of the proceeds of any Loans hereunder will be used directly or indirectly
for "purchasing" or "carrying" any "margin stock" within the respective meanings
of each of the quoted terms under Regulations U and T of the Board of Governors
of the Federal Reserve System or for any purpose which violates, or which would
be inconsistent with, the provisions of the regulations of such Board of
Governors. Without limiting the foregoing, the Company may use the proceeds of
any Loan hereunder for the purchase of the Company's common stock for the
purposes of immediately retiring such stock in accordance with Regulations U and
T of the Board of Governors of the Federal Reserve System. Such retired shares
shall resume the status of authorized and unissued shares of the Company and may
be reissued by the Company from time to time in accordance with applicable law.
25
5.13 Investment Company Act. Neither the Company nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
5.14 Compliance with ERISA. Each member of the ERISA Group has fulfilled
its obligations under the minimum funding standards of ERISA and the Code with
respect to each Single Employer Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and the Code with
respect to each Single Employer Plan. No member of the ERISA Group has (i)
sought a waiver of the minimum funding standard under Section 412 of the Code in
respect of any Single Employer Plan, (ii) failed to make any contribution or
payment to any Single Employer Plan or Multiemployer Plan, or made any amendment
to any Single Employer Plan, which has resulted in, or could result in, the
imposition of a Lien or the posting of a bond or other security under ERISA or
the Code, (iii) incurred any liability under Title IV of ERISA with respect to
any Plan which has not been paid in full, other than a liability to the PBGC for
premiums under Section 4007 of ERISA, (iv) taken any steps to terminate any
Single Employer Plan or to appoint a receiver to administer any such Plan, or to
withdraw from any Multiemployer Plan or initiated steps to do so or (v) adopted
any amendment to a Plan with respect to which security is required pursuant to
Section 401 (a) (29) of the Code or initiated any steps to do so. No Reportable
Event or non-exempt "prohibited transaction" (as defined in Section 4975 of the
Code or Section 406 of ERISA) has occurred with respect to any Single Employer
Plan or, to the best of its knowledge, any Multiemployer Plan. No condition
exists under which any member of the ERISA Group could have liability under
Section 4069 or 4212 of ERISA.
5.15 Environmental Matters. (a) To the best of the Company's knowledge, the
Company and each of its Subsidiaries has complied and is currently in compliance
with all Environmental Laws; (b) to the best of the Company's knowledge, no
solid or hazardous or toxic wastes or hazardous substances (as defined in the
Comprehensive Environmental Response, Compensation and Liability Act, as amended
("CERCLA"), or the Resources Conservation and Recovery Act, as amended ("RCRA"),
or under any successor or similar law or any applicable state or local law) are
processed, discharged, stored, treated, disposed of, or managed at any facility
owned, leased or operated by the Company or any of its Subsidiaries or, at the
request or behest of the Company or any of its Subsidiaries, at any adjoining
site, so as to require a license, permit or authorization of any type from any
Governmental Authority other than licenses, permits or authorizations which have
been obtained or applied for or where the failure to obtain such licenses,
permits or authorizations could not have a material adverse effect on the
Company or any of its Subsidiaries; and (c) no claim has been made against the
Company or any of its Subsidiaries or, to the best of its knowledge, against any
predecessor in respect of any "facility" owned, leased or operated by it under
CERCLA, or under a federal, state, local or municipal statute, ordinance or
regulation in respect of the environment, or by the Environmental Protection
Agency or by any federal, state, local or municipal enforcement agency having
jurisdiction over the protection of the environment, or by any private Person
bringing an action in respect of or under any law designed to protect the
environment. To the best of the Company's knowledge, the Company and each of its
Subsidiaries is in compliance with all applicable zoning and land use and
building codes, laws, rules, regulations and ordinances.
26
5.16 Disclosure. No representation or warranty made by the Company in this
Agreement, or by the Company or any Significant Subsidiary in the Related
Documents to which it is a party or in any other document furnished from time to
time in connection herewith or therewith, contains any misrepresentation of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to the
Company which materially adversely affects, or which reasonably could be
expected in the future to materially adversely affect, the business, operations,
prospects or financial condition of the Company or any of its Subsidiaries or
the ability of the Company and its Subsidiaries to perform their respective
obligations under this Agreement and the Related Documents.
5.17 Collateral. The Security Agreement and each Subsidiary Security
Agreement creates or will create a valid security interest in favor of the
Collateral Agent, acting on behalf of the Agent and the Lenders, in the
Collateral described therein securing the payment of the obligations secured
thereby. All action necessary to perfect the security interest of the Collateral
Agent, for the benefit of the Agent and the Lender, in such Collateral has been,
or will be, taken, and such security interest has, or will have, priority over
all other Liens except any perfected Liens arising in connection with any
Capitalized Lease entered into by the Company.
5.18 Employment Related Agreements. Set forth on Schedule 5.18 is a
complete list of agreements between the Company or any of its Subsidiaries and
all current directors and "named executive officers" as defined in 17 CFR
229.402 including, but not limited to the president, CEO and CFO of the Company
providing for employment, severance, deferred or bonus payments, stock options
or similar payments or arrangements for the benefit of any such directors and
named executive officers of the Company or any of its Subsidiaries. A true,
correct and complete copy of each agreement or other document listed on Schedule
5.18 has been provided to the Agent which shall provide copies to each of the
Lenders.
5.19 Dividends. Since June 30, 1994, the Company has not declared or paid
any dividends (other than dividends declared but not paid on the Series E
Preferred Stock and the Series F Preferred Stock of the Company) or made any
other distributions in respect of its capital stock or redeemed, retired,
purchased or otherwise acquired for value any shares of its capital stock other
than with respect to the Series G Preferred Stock and as set forth in Schedule
5.19.
5.20 Reserved.
5.21 Use of Proceeds. The Company shall use the proceeds of each Loan
(other than Loans resulting from a draw under a Letter of Credit) for working
capital and general corporate purposes.
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SECTION 6. AFFIRMATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments remain in
effect, and until the payment and performance in full of all Obligations:
6.1 Financial Statements. The Company will furnish to the Agent and each
Lender:
(a) as soon as available, but in any event within 90 days after the end of
each fiscal year of the Company, a copy of (i) the audited consolidated balance
sheet of the Company as at the end of such year and the related audited
consolidated statements of income, stockholders' equity and cash flows for such
year, setting forth in each case in comparative form the figures as of the end
of and for the previous year, all in reasonable detail, certified, without
qualification, by a firm of independent accountants of nationally recognized
standing acceptable to the Lenders; provided however, that the firm
PricewaterhouseCoopers LLP shall be acceptable to the Lenders; and
(b) as soon as available, but in any event not later than 45 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Company, a copy of the unaudited consolidated balance sheet of the Company as at
the end of each such fiscal quarter and the related unaudited consolidated
statements of income, stockholders' investment and cash flows of the Company for
such quarter and the portion of the fiscal year through such date, all in
reasonable detail and setting forth in comparative form the figures as of the
end of and for the corresponding period of the previous year, certified as to
fairness of presentation by the chief financial officer, treasurer or controller
of the Company;
all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
(except, in the case of interim financial statements, that such financial
statements need not contain footnotes and shall be prepared substantially in
accordance with GAAP) applied consistently throughout the periods reflected
therein (except as approved by the Company's independent accountants and
disclosed therein). In addition to the financial statements required to be
delivered pursuant to (a) and (b) above, the Company agrees to deliver
consolidating financial statements (including a balance sheet and statements of
income, stockholders' investment and cash flows) at the same time it delivers
its consolidated financial statements if the Company begins preparing
consolidating financial statements in the ordinary course of its business or
otherwise for filing with the Securities and Exchange Commission.
6.2 Certificates; Other Information. The Company will furnish to the Agent
and each Lender:
(a) concurrently with the delivery of the financial statements referred to
in Subsection 6.1(a) (or on such later date as received by the Company), (i) a
certificate of the independent accountants reporting on such financial
information stating that in the course of performing its audit of the Company's
financial statements, no knowledge was obtained of any Default, except as
specified in such certificate and (ii) a copy of the management letter delivered
to the Company by its independent accountants in connection with such financial
statements or, if there is no management letter, a letter from such independent
accountants that no material weakness in internal control came to the attention
of such accountants during such examinations other than weaknesses that have
been corrected;
28
(b) concurrently with the delivery of the financial statements referred to
in Subsections 6.1(a) and (b), a certificate signed by the chief financial
officer of the Company setting forth computations in reasonable detail
demonstrating compliance with the financial covenants set forth in Section 7,
including compliance with Section 7.17, together with a statement that, to the
best of such officer's knowledge, the Company during the relevant period has
observed or performed all of its covenants and other agreements hereunder, and
satisfied every condition contained in this Agreement to be observed, performed
or satisfied by it, and that such officer has obtained no knowledge of any
Default except as described in such certificate (any such description to be in
reasonable detail and to include a description of any action to be taken with
respect to such Default);
(c) promptly, copies of any regular and periodic financial information, and
any other information and reports, which the Company shall send or make
generally available to its security holders;
(d) within 45 days after the end of each fiscal year of the Company, a
report in form and substance reasonably satisfactory to the Agent outlining any
changes in the Company's insurance coverage during such year and any changes
planned in the subsequent fiscal year which materially affect such insurance
coverage and evidence of its insurance coverage for casualty losses and
professional liability;
(e) at least once during any 90 day period, a certificate of recent date
from the Secretary of State, or other appropriate authority, evidencing the good
standing of the Company and each Significant Subsidiary in its jurisdiction of
incorporation and, if different, its principal place of business; and
(f) promptly, such additional financial and other information as the Agent
or any Lender (acting through the Agent) may from time to time reasonably
request.
It is understood that the foregoing certificates may be made by officers of
the Company in reliance on information provided by other officers, employees or
agents of the Company and its Subsidiaries. As long as any of the foregoing
certificates is provided in good faith and without actual knowledge that such
certificate contains any inaccuracy or material omission, the officer signing
such certificate shall not be personally liable to the Agent or any Lender for
omissions or inaccuracies contained in any such certificate.
6.3 Compliance with Laws. The Company will comply, and cause each of its
Subsidiaries to comply, with all laws, rules and regulations applicable to it
(including, without limitation, all Environmental Laws) , non-compliance with
which could, singly or in the aggregate, materially adversely affect its
business, operations, prospects or financial condition or which could impair the
ability of the Company or any Subsidiary to perform its obligations under this
Agreement, the Notes or any of the other Related Documents to which it is a
party.
6.4 Conduct of Business and Maintenance of Existence. The Company will
continue, and cause each of its Subsidiaries to continue, to engage in business
of the same general type as now conducted by it and reasonable extensions
thereof and preserve, renew and keep in full force and effect its corporate
existence and take all reasonable action to maintain, and cause each of its
Subsidiaries to maintain, all rights, privileges, contracts, copyrights,
patents, trademarks, trade names and franchises necessary or desirable in the
normal conduct of its business.
29
6.5 Maintenance of Property; Insurance. The Company will keep, and cause
each of its Subsidiaries to keep, all property useful and necessary in its
business in good working order and condition; maintain, and cause each of its
Subsidiaries to maintain, with financially sound and reputable insurance
companies insurance on all its and its Subsidiaries' property in at least such
amounts and against at least such risks (but including, in any event, public
liability and product liability insurance if available) as are usually insured
against in the same general area by companies engaged in the same or a similar
business and furnish to the Agent on behalf of the Lenders, upon written
request, full information as to all insurance carried. All insurance policies
required by this Subsection 6.5 shall be in form and substance and issued by
companies reasonably satisfactory to the Agent and the Lenders. The Company may
maintain the coverages required by this Subsection 6.5 under blanket policies
covering the premises and other locations owned or operated by the Company or
any of its Subsidiaries if the terms of such blanket policies otherwise comply
with the provisions of this Subsection 6.5. Each policy of insurance required
under this Subsection 6.5 shall provide that it may not be canceled or otherwise
terminated without at least 30 days' prior written notice (or such other period
as the Lenders may agree) to the Collateral Agent and shall permit (but not
require or obligate) the Collateral Agent to pay any premium therefor within 10
days after receipt of any notice stating that such premium has not been paid
when due. Settlement of any claim under any of the insurance policies referred
to in this Subsection 6.5 involving a loss of $250,000 or more (in the
reasonable judgment of the Agent) shall require the prior written approval of
the Agent and all the Lenders. At least 30 days prior to the expiration of any
insurance policy (or such other period as the Lenders may agree), a policy or
policies renewing or extending such expiring policy or renewal or extension
certificates shall be delivered to the Collateral Agent, together with a receipt
showing payment of the premium therefor. The Company shall not purchase separate
insurance policies concurrent in form or contributing in the event of loss with
those policies required to be maintained under this Subsection 6.5 unless the
policy evidencing such insurance otherwise complies with the requirements of
this Subsection 6.5. The Company shall immediately notify the Agent whenever any
such separate insurance policy is obtained and shall promptly deliver to the
Collateral Agent the policy or certificate evidencing such insurance. The
Company shall, immediately upon receipt of any written notice of any failure by
the Company to pay any insurance premium in respect of any insurance required to
be maintained under this Subsection 6.5, furnish a copy of such notice to the
Agent and the Collateral Agent. Upon the occurrence of an Event of Default
hereunder, all insurance policies shall name the Collateral Agent, for the
benefit of the Agent and the Lenders, as sole loss payee and as an additional
insured under all such policies and thereafter the Collateral Agent shall
continue to be named as sole loss payee and as an additional named insured
whether or not an Event of Default shall be continuing.
6.6 Inspection of Property; Books and Records; Discussions. (a) The Company
will keep, and cause each of its Subsidiaries to keep, proper books and records
and accounts in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all dealings and transactions in relation
to its business and activities; and (b) permit, and cause its Subsidiaries to
permit, representatives and agents of the Agent or any Lender to visit and
inspect any of its properties and examine and make abstracts from any of its
books and records upon reasonable notice at any reasonable time and as often as
may reasonably be desired, and to discuss its business, operations, properties
and financial and other condition with its officers, employees and independent
accountants.
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6.7 Notice of Certain Events. The Company will furnish to the Agent (which
shall provide copies to each Lender):
(a) promptly, and in any event within two Business Days of obtaining
knowledge thereof, written notice of the occurrence of any Default, which notice
shall be accompanied by a reasonably detailed description of such Default and of
any action to be taken with respect thereto;
(b) promptly, and in any event within five Business Days of obtaining
knowledge thereof, notice of any (i) litigation, investigation or proceeding
which may exist at any time between the Company or any of its Subsidiaries and
any Governmental Authority or other Person, which if adversely determined would
have a material adverse effect on the business, operations, prospects or
financial condition of the Company or any of its Subsidiaries or on the ability
of the Company to perform its obligations under this Agreement, the Notes or any
of the other Related Documents to which it is a party, (ii) any litigation,
investigation or proceeding which questions the validity or enforceability of
this Agreement or any of the Related Documents, (iii) any litigation or
proceeding potentially adversely affecting the Company or any of its
Subsidiaries (A) if the amount involved among all such litigations or
proceedings in the aggregate is $5,000,000 or more or (B) in which injunctive or
similar relief is sought, or (iv) any judgment or decree entered against the
Company or any of its Subsidiaries (A) involving a liability of $1,000,000 or
more (singly or in the aggregate) to the extent not paid or fully covered by
insurance for which the insurer has accepted liability in writing or (B) in
which injunctive or similar relief is granted;
(c) if and when the Company knows that any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any Reportable Event with
respect to any Single Employer Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Single Employer Plan has given or is required to give
notice of any such Reportable Event, a copy of the notice of such Reportable
Event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA with respect to
any Multiemployer Plan or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such notice;
(iii) receives notice from the PBGC under Title IV of ERISA of an intent to
terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer, any Single Employer
Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding
standard under Section 412 of the Code, a copy of such application; (v) gives
notice of intent to terminate any Single Employer Plan under Section 4041(c) of
ERISA, a copy of such notice and other information filed with the PBGC; (vi)
gives notice of withdrawal from any Single Employer Plan pursuant to Section
4063 of ERISA, a copy of such notice; or (vii) fails to make any material
payment or contribution to any Single Employer Plan or Multiemployer Plan or
makes any amendment to any Single Employer Plan which has resulted or could
result in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer of the Company setting forth details
as to such occurrence;
31
(d) promptly, and in any event, within five Business Days of obtaining
knowledge thereof, notice of any occurrence or development which causes the
representation contained in Subsection 5.15 to be incorrect in any material
respect;
(e) promptly, and in any event at least five Business Days prior to the
filing thereof with any Governmental Authority, copies of any amendment or
supplement to its charter;
(f) promptly, and in any event within five Business Days after obtaining
knowledge thereof, notice of any change or proposed change in any law, statute,
rule or regulation applicable to the Company or any of its Subsidiaries,
including, without limitation, any law, statute, rule or regulation governing
automatic renewals of membership or contract terms, that has or may reasonably
be expected to have a material adverse effect on the business, operations,
prospects or financial condition of the Company or any of its Subsidiaries;
(g) promptly, and in any event, within five Business Days of obtaining
knowledge thereof, notice of any material adverse change in the business,
operations, prospects or financial condition of the Company or any of its
Subsidiaries; and
(h) promptly, and in any event, within one Business Day of obtaining
knowledge thereof, written notice of non-compliance with Section 7.17 hereof.
Each notice pursuant to this Subsection 6.7 shall be accompanied by a
statement of an appropriate officer of the Company setting forth details of the
occurrence referred to therein and stating what action the Company or, if
applicable, the member of the ERISA Group proposes to take with respect thereto.
6.8 Payment of Taxes and Claims. The Company will pay and discharge, and
cause each of its Subsidiaries to pay and discharge, promptly all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or upon any of its properties, as well as all lawful claims
for labor, materials and supplies which, if unpaid, will by law become a Lien
upon any of its properties; provided that the payment of any such tax,
assessment, charge, levy or claim shall not be required so long as the amount,
applicability or validity thereof shall be contested in good faith by
appropriate proceedings and adequate reserves are established with respect
thereto in accordance with GAAP.
6.9 Security. The Company will cause any Subsidiary which becomes a
Significant Subsidiary after the Closing Date to duly execute and deliver to the
Agent a Subsidiary Security Agreement and Subsidiary Guaranty along with any
opinions, corporate documents, certificates and other documents reasonably
requested by the Agent and its special counsel in form and substance
satisfactory to the Agent and its special counsel within 30 days of such
Subsidiary becoming a Significant Subsidiary; provided however, if a Person
shall be deemed a Significant Subsidiary prior to the acquisition of such Person
by the Company, the Company shall cause such documents to be delivered to the
Agent within 30 days of the closing of such acquisition.
6.10 Use of Proceeds. The proceeds of the Loans (other than Loans resulting
from a draw under a Letter of Credit) shall be used for working capital and
general corporate purposes.
6.11 Further Assurances. The Company will take all such further actions and
execute and file or record, at its own cost and expense, all such further
documents and instruments as the Agent or any Lender may at any time reasonably
determine may be necessary or advisable; and shall do, execute, acknowledge,
deliver, record, register and re-register any and all such further acts, deeds,
conveyances, estoppel certificates, transfers, certificates, assurances and
other instruments as the Agent or any Lender may reasonably require from time to
time in order to carry out more effectively the purposes of this Agreement and
the other Related Documents.
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6.12 Determination of Significant Subsidiary. For purposes of determining
whether a Subsidiary is a Significant Subsidiary for purposes of this Agreement,
the Company shall make such a determination (i) within 60 days of the end of
each fiscal year of the Company by conducting a review of each of its
Subsidiaries as of the end of such fiscal year, and (ii) prior to the
acquisition of a Person which shall become a Subsidiary of the Company upon such
acquisition as of the end of the then most recently completed 12-month period.
The Company shall promptly, and in any case within 5 days, notify the Agent of
its determination. Once a Subsidiary becomes a Significant Subsidiary, it shall
thereafter remain a Significant Subsidiary until the Company and each Lender
agree that such Subsidiary shall no longer be a Significant Subsidiary for
purposes of this Agreement.
6.13 Maintenance of Operating Accounts. The Company shall at all times
maintain its principal cash management and operating bank accounts, including
without limitation, all lockbox, sweep, controlled disbursement and related
accounts with a Lender.
6.14 Post-Closing Items. (a) To the extent Collateral is maintained on any
of the leased premises listed on Schedule 6.14, the Company shall provide to the
Agent within 90 days of the Closing Date, an agreement, in form and substance
satisfactory to the Agent and the Lenders, from the landlord of the premises
located in Stamford, Connecticut, Omaha, Nebraska and Houston, Texas confirming
that such landlord has subordinated its landlord lien in the Company's personal
property to the security interest of the Collateral Agent, for the benefit of
the Agent and the Lenders, and that such landlord will provide the Collateral
Agent with reasonable access to such facility to exercise, to the extent
permitted by law, the Collateral Agent's remedies. Within 90 days of the Closing
Date, the Company shall use its diligent efforts to obtain an agreement, in form
and substance satisfactory to the Agent and the Lenders, from the landlord of
the premises located in Montreal, Canada listed on Schedule 6.14 confirming that
such landlord has subordinated its landlord lien in the Company's personal
property to the security interest of the Collateral Agent, for the benefit of
the Agent and the Lenders, and that such landlord will provide the Collateral
Agent with reasonable access to such facility to exercise, to the extent
permitted by law, the Collateral Agent's remedies.
(b) Within 90 days of the Closing Date, the Company shall provide to the
Agent evidence of the good standing of each Significant Subsidiary as a foreign
corporation in each of the jurisdictions listed in Schedule 5.3 with respect to
such Significant Subsidiary.
(c) Within 90 days of the Closing Date, the Company shall provide to the
Agent, a certificate of a recent date or similar instrument from the appropriate
tax authority in its jurisdiction of incorporation and in each of the
jurisidictions listed in Schedule 5.3 with respect to the Company, as to the
payment by the Company of all taxes owed.
(d) Within the 90 days of the Closing Date, the Company shall provide to
the Agent evidence of the discharge and release of the Lien described in Section
7.1(a)(vii).
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SECTION 7. NEGATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments remain in
effect, and until the payment and performance in full of all Obligations:
7.1 Negative Pledge. (a) The Company will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired,
except for:
(i) Liens created pursuant to the Related Documents;
(ii) Liens arising under any Capitalized Lease permitted under Subsection
7.9;
(iii) Liens constituting purchase money security interests that secure
Indebtedness in an amount not to exceed in the aggregate $1,000,000 at any time;
provided that each such lien covers only the particular equipment or property
purchased with such Indebtedness;
(iv) Liens for taxes, assessments or governmental charges or claims not yet
delinquent or Liens for taxes, assessments or governmental charges or claims
being contested in good faith and by appropriate proceedings for which adequate
reserves, as may be required by GAAP, have been established;
(v) Deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the ordinary
course of business (exclusive of obligations in respect of the payment for
borrowed money or the equivalent);
(vi) Liens for secured Indebtedness (other than arising in connection with
this Agreement and the Related Documents) not exceeding in the aggregate
$5,000,000 at any time; and
(vii) The Lien created pursuant to a Security Agreement dated June 30, 1999
in favor of First Union National Bank; provided such Lien covers only the
collateral described in such Security Agreement as of the date hereof.
(b) The Company will not, and will not permit any of its Subsidiaries to,
enter into any agreement prohibiting the creation or assumption of any Liens
upon its property or assets whether now owned or hereafter acquired, other than
this Agreement and the Related Documents.
7.2 Merger. The Company will not, and will not permit any of its
Subsidiaries to, liquidate or dissolve or merge with or into or consolidate with
any other Person, or agree to do any of the foregoing. For purposes of this
Subsection 7.2, the term "merge" includes but is not limited to a sale of all or
substantially all assets, or substantially all operating assets, to another
Person or to Persons under common control.
34
7.3 Sale of Assets. The Company will not, and will not permit any of its
Subsidiaries to, sell, lease, assign, transfer, or otherwise dispose of any of
its now owned or hereafter acquired assets (including, without limitation,
shares of stock of other Persons owned by it and leasehold interests and the
ownership or control of its financial interest in memberships sold by the
Company or any of its Subsidiaries and contracts evidencing such memberships),
except for:
(i) inventory disposed of in the ordinary course of business,
(ii) old or outdated equipment to be replaced by new equipment,
(iii) assets no longer used or useful in the conduct of its business.
Notwithstanding the foregoing, it is understood that in no event shall the
Company or any of its Subsidiaries sell, lease, assign, transfer, or otherwise
dispose of any of its now or hereafter acquired assets, cash or Eligible
Securities to an Affiliate pursuant to subsection (iii) above.
7.4 Loans and Investments. The Company will not, and will not permit any of
its Subsidiaries to, at any time make or suffer to remain outstanding any loan
or advance to, or purchase, acquire or own any stock, bonds, notes or securities
of, or any partnership interest (whether general or limited) in, or acquire all
or substantially all of the business or assets of or any other interest in, or
make any capital contribution to, any other Person, or agree, become or remain
liable to do any of the foregoing, except that the Company shall be permitted to
make investments in Eligible Securities and except as permitted pursuant to
Subsection 7.6 hereof.
7.5 Restricted Payments. The Company will not, and will not permit any of
its Subsidiaries to, declare any dividend on, or make any payment on account of,
any shares of any class of stock of the Company or any option or warrant
thereon, whether now or hereafter outstanding, or make any other distribution in
respect thereof or on any option or warrant thereon, either directly or
indirectly, whether in cash or property or in obligations of the Company or such
Subsidiary.
7.6 Acquisitions. Without the consent of each Lender the Company will not,
and will not permit its Subsidiaries to, acquire all or substantially all of the
assets or capital stock of another Person (as used in this Section 7.6, an
"acquisition") if (i) the total consideration for such acquisition when combined
with the total consideration of all acquisitions completed since the Closing
Date is greater than 10% of the consolidated Revenues of the Company and its
Subsidiaries as of the most recently completed 12-month period and/or (ii) the
total consideration paid in the form of cash or its equivalent for such
acquisition when combined with the total consideration paid in the form of cash
or its equivalents for all acquisitions completed since the Closing Date is
greater than 5% of the consolidated Revenues of the Company and its Subsidiaries
as of the most recently completed 12-month period.
7.7 Stock Buyback. During any two consecutive fiscal quarters, measured as
of the end of such period, the Company will not, and will not permit any of its
Subsidiaries to, purchase, redeem, defease, retire or otherwise acquire any
shares of any class of stock of the Company or any option or warrant thereon,
whether now or hereafter outstanding (herein called "Stock Buybacks"), either
directly or indirectly, for total consideration in an amount in excess of the
sum of (i) its Net Cash Provided by Operating Activities Before Changes in
Working Capital during such two consecutive fiscal quarters plus (ii) the
aggregate net proceeds from sales of capital stock of the Company or the
exercise of options of the Company during such two consecutive fiscal quarters
plus (iii) until September 30, 2003, from the receipt of proceeds from a legal
settlement with Homestore, Inc., up to $19,200,000 of proceeds arising from such
settlement.
35
7.8 Transactions with Affiliates. The Company will not, and will not permit
any of its Subsidiaries to, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any Affiliate unless such transactions are otherwise
permitted under this Agreement, are in the ordinary course of its business and
are upon fair and reasonable terms no less favorable to it than it would obtain
in a comparable arm's-length transaction with a Person not an Affiliate.
7.9 Indebtedness. The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume, Guaranty, suffer
to exist, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness except:
(a) the Obligations;
(b) Capitalized Leases to which the Company or any Subsidiary is a party
which, in the aggregate, are less than or equal to $5,000,000;
(c) Indebtedness (other than Indebtedness permitted pursuant to subsection
(a) above) not exceeding in the aggregate $1,000,000 at any time;
(d) Indebtedness secured by the purchase money security interests permitted
pursuant to Subsection 7.1(iii) not to exceed in the aggregate $1,000,000 at any
time.
7.10 Operating Leases. The Company will not, and will not permit any of its
Subsidiaries to, enter into, incur or assume (whether directly or contingently)
obligations under Operating Leases if the minimum rental commitment under
non-cancelable Operating Leases of the Company and its Subsidiaries for any
fiscal year would exceed $10,000,000.
7.11 Debt Coverage Ratio. For any Test Period, the Company will not permit
the ratio of (a) Average Total Indebtedness of the Company and its Subsidiaries,
determined on a consolidated basis, to (b) Net Cash Provided by Operating
Activities Before Changes in Working Capital to be greater than 2.0 to 1.0 as of
the end of such Test Period.
7.12 Fixed Charge Coverage Ratio. The Company will not permit its Fixed
Charge Coverage Ratio for any Test Period to be less than 4.0 to 1.0 as of the
end of such Test Period.
7.13 Cash Flow. The Company will not permit its Net Cash Provided by
Operating Activities Before Changes in Working Capital to be less than or equal
to zero for any fiscal quarter; provided however, that the Company shall not be
deemed to be in violation of this Section 7.13 so long as the Company holds at
least $28,000,000 in cash or cash equivalents in accordance with GAAP as of the
end of such fiscal quarter.
7.14 ERISA. The Company will not, and will not permit its Subsidiaries or
any other member of the ERISA Group to, adopt, maintain or sponsor or agree to
contribute to, or otherwise have any liability with respect to, any Plan other
than (a) as heretofore been disclosed to the Agent and the Lenders, unless each
of the Lenders provides prior written consent to such act, and (b) the
maintenance of and the making of contributions to the Memberworks Incorporated
401(k) plan.
36
7.15 Fiscal Year. The Company will not change its fiscal year.
7.16 Amendment of Certain Documents. The Company will not, and will not
permit any of its Significant Subsidiaries to amend, modify or change its
charter (including, without limitation, by the filing of any certificate of
designation) or by-laws, or any agreement with respect to its capital stock
(including, without limitation, any shareholders or other similar agreement), or
enter into any new agreement with respect to its capital stock.
7.17 Clean-Up Period. On any date, the Company shall not have any
Borrowings outstanding if during the most recently completed 365 consecutive
days the Company fails to have at least two 30 consecutive day periods during
which time there are no outstanding Borrowings. The Company shall provide
written notice of non-compliance with the provisions of this Section 7.17 in
accordance with Section 6.7 hereof.
SECTION 8. EVENTS OF DEFAULT
8.1 Events of Default. Each of the following events shall constitute an
Event of Default:
(a) The Company shall fail to pay (i) any principal of any Note or any Loan
when due (whether at stated maturity or otherwise) in accordance with the terms
thereof or hereof, (ii) any interest on any Note or any Loan within three
Business Days after the date on which such amount becomes due in accordance with
the terms hereof or thereof, or (iii) any other amount payable hereunder within
three Business Days after the date on which any such amount becomes due in
accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by the Company
herein, or by the Company in any Related Document to which it is a party or in
any certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement or any of the Related Documents to
which it is a party, shall prove to have been incorrect in any material respect
on or as of the date made or deemed made; or
(c) The Company shall default in the observance or performance of any
covenant contained in Subsections 6.4, 6.5, 6.8 or 6.10 or Section 7 hereof or
in the Security Agreement and such default shall continue unremedied for a
period of 15 days; or
(d) The Company shall default in the observance or performance of any other
agreement or covenant contained in this Agreement or in any Related Document to
which it is a party, and such default shall continue unremedied for a period of
30 days after notice thereof to the Company by the Agent or any Lender; or
(e)(i) The Company or any or its Subsidiaries shall, with respect to any
Indebtedness (other than the Notes) having an outstanding aggregate principal
amount in excess of $200,000, (A) default in any payment of principal of or
premium or interest on any such Indebtedness, beyond the grace period (not to
exceed 30 days), if any, provided in the instrument or agreement under which
such Indebtedness was incurred, or (B) default in the observance or performance
of any other agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or any other condition shall exist, the
effect of which default or other event or condition is to cause, or to permit
the holder or holders of such Indebtedness (or a trustee or agent on behalf of
such holder or holders) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity, or (ii) any such
Indebtedness shall be declared to be due and payable, or required to be prepaid,
redeemed, purchased or deceased (other than by a regularly scheduled required
prepayment, redemption, purchase or defeasance) prior to the stated maturity
thereof; or
37
(f) (i) The Company or any of its Subsidiaries shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or the Company or any
of its Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Company or any of its
Subsidiaries any case, proceeding or other action of a nature referred to in
clause (i) above which results in the entry of an order for relief or any such
adjudication or appointment; or (iii) the Company or any of its Subsidiaries
shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i) or (ii) above;
or (iv) the Company or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(g) (i) Any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Single Employer
Plan, (ii) a notice is provided or application is made with respect to a
"distress termination" of a Single Employer Plan under Section 4041 of ERISA,
(iii) the PBGC has initiated proceedings to terminate a Single Employer Plan or
cause a trustee to be appointed to administer a Single Employer Plan, (iv) any
Lien is imposed on the assets of the Company or any member of the ERISA Group
relating to any termination of a Single Employer Plan or failure to make a
contribution to a Single Employer Plan, (v) the Company or any member of the
ERISA Group shall incur any liability in connection with a withdrawal from, or
the insolvency or reorganization of, a Multiemployer Plan, (vi) any Reportable
Event or termination or other similar event or condition shall occur or exist
with respect to a Single Employer Plan or (vii) there shall occur any
"prohibited transaction" (as defined in Section 4975 of the Code) involving any
Single Employer Plan which results in a material liability of the Company for an
excise tax or civil penalty in connection therewith; or
(h) One or more judgments or decrees shall be entered against the Company
or any of its Subsidiaries involving in the aggregate a liability (to the extent
not paid or covered by insurance and for which the insurer has accepted
liability in writing) of $350,000 or more and all such judgments or decrees
shall not have been vacated, discharged, stayed or bonded (if required in order
to effect an appeal) pending appeal within 30 days from the entry thereof; or
38
(i) Any change in any law, statute, rule or regulation shall occur that
has, or reasonably could be expected to (A) have, a material adverse effect on
the business, operations, prospects or financial condition of the Company and
its Subsidiaries taken as a whole, (B) prohibit or render invalid the extension
of the Final Maturity Date pursuant to Subsection 2.8, or (C) prohibit or render
invalid the practice of the automatic renewals of memberships or contract terms;
provided such law, statute, rule or regulation could reasonably be expected to
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole); or
(j) The Collateral Agent, on behalf of the Agent and the Lenders, does not
have or ceases to have a valid and perfected first priority security interest in
the Collateral; or any of the Security Agreement, any Subsidiary Guaranty or any
Subsidiary Security Agreement shall cease to be in full force and effect; or any
Person shall assert that any of the Security Agreement, any Subsidiary Guaranty
or any Subsidiary Security Agreement is not valid and enforceable in accordance
with its terms; or
(k) Any representation or warranty made by any Subsidiary in any Related
Document to which it is a party or in any certificate, document or financial or
other statement furnished to the Agent or any Lender in connection therewith
shall prove to be incorrect in any material respect on or as of the date made or
deemed made or shall be breached; or
(l) Any Subsidiary shall default in the observance or performance of any
covenant or agreement contained in any Related Document to which it is a party,
and such default shall continue unremedied for a period of 30 days after notice
thereof by the Agent or any Lender.
8.2 Remedies. If any Event of Default shall occur and be continuing, then,
and in any such event, (a) if such event is an Event of Default specified in
Subsection 8.1(f), automatically the Commitments shall immediately terminate and
the Obligations shall immediately become due and payable, and (b) if such event
is any other Event of Default, either or both of the following actions may be
taken: (i) the Agent, or upon the request of the Required Lenders, shall, by
notice to the Company, declare the Commitments to be terminated forthwith,
whereupon the Commitments shall immediately terminate; and (ii) the Agent, upon
the request of the Required Lenders, shall, by notice of default to the Company,
declare the Obligations to be due and payable forthwith, whereupon the same
shall immediately become due and payable. In the event of a declaration by the
Agent pursuant to clause (b) (ii) above, the Agent, at the request of the
Required Lenders, shall enforce its rights and remedies hereunder and under any
other document or instrument delivered in connection herewith, including
directing the Collateral Agent to enforce any or all of its rights and remedies
under the Security Agreement, any Subsidiary Guaranty and any Subsidiary
Security Agreement. Except as expressly provided above in this Subsection 8.2,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
8.3 Set-Off. In addition to any rights and remedies of the Agent or the
Lenders provided by law, the Agent and each Lender shall have the right, without
prior notice to the Company, any such notice being expressly waived by the
Company to the extent permitted by applicable law, upon the occurrence of any
Event of Default, to set off and apply against any indebtedness, whether matured
or unmatured, of the Company to the Agent or such Lender, any amount owing from
the Agent or such Lender at any of its branches or offices or from a corporation
controlling the Agent or such Lender to the Company at, or at any time after,
the occurrence of such Event of Default. The Agent and each Lender agrees
promptly to notify the Company and the Agent after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application.
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8.4 Default Interest. Notwithstanding any other provision of this Agreement
to the contrary, (a) if the Company shall fail to pay any amount owing to the
Agent or any Lender under this Agreement when due (whether at stated due date,
on acceleration or otherwise), then the Company will pay interest (before, as
well as after, judgment) on demand to the Agent or such Lender, as the case may
be, on the amount in default from the date such payment became due until payment
in full at a rate equal to the sum of the Base Rate plus 2% per annum, such rate
to change as and when the Base Rate changes and (b) if any Event of Default
shall occur, then during the period such Event of Default shall be continuing,
the rate of interest payable hereunder shall be the rate as provided in clause
(a) above.
SECTION 9. THE AGENT AND THE COLLATERAL AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and appoints
each of the Agent and the Collateral Agent as the agents of such Lender under
this Agreement and the Related Documents, and each Lender irrevocably authorizes
the Agent and the Collateral Agent to take such action on its behalf under the
provisions of this Agreement and the Related Documents and to exercise such
powers and perform such duties as are delegated to the Agent or the Collateral
Agent, as the case may be, by the terms hereof or thereof, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary elsewhere in this Agreement, neither the Agent nor the
Collateral Agent shall have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any Related Document or
otherwise exist against the Agent or the Collateral Agent.
9.2 Delegation of Duties. The Agent and the Collateral Agent may execute
any of their duties under this Agreement and the Related Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Neither the Agent nor the
Collateral Agent shall be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by them with reasonable care except to the
extent otherwise required by Subsection 9.3.
9.3 Exculpatory Provisions. Neither the Agent nor the Collateral Agent nor
any of their respective partners, officers, directors, employees, attorneys,
agents, attorneys-in-fact or Affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any Related Document (except for its or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties made by the Company or any of its Affiliates or any officer thereof
contained in this Agreement or any Related Document or in any certificate,
report, statement or other document referred to or provided for in or received
by the Agent or the Collateral Agent under or in connection with this Agreement
or any Related Document or for the value, validity, effectiveness (except its
own due execution hereof), genuineness, enforceability or sufficiency of this
Agreement or any Related Document or for any failure of the Company to perform
its obligations hereunder or thereunder. Except as otherwise provided herein,
neither the Agent nor the Collateral Agent shall be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any Related
Document, or to inspect the properties, books or records of the Company or any
of its Affiliates. Neither the Agent nor the Collateral Agent shall be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Related
Document or for any representations, warranties, recitals or statements made
herein or therein or made in any written or oral statement or any financial or
other statements, instruments, reports, certificates or any other documents in
connection herewith or therewith furnished, or made in reliance on information
furnished by or on behalf of the Company, by the Agent or the Collateral Agent
to the Lenders or by or on behalf of the Company to the Agent, the Collateral
Agent or any Lender.
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9.4 Reliance by Agent and Collateral Agent. The Agent and the Collateral
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any Note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Company), independent accountants and other experts selected by the Agent and
the Collateral Agent. The Agent and the Collateral Agent may deem and treat the
payee of any Note as the owner thereof for all purposes unless a written notice
of assignment, negotiation or transfer thereof shall have been filed with the
Agent or the Collateral Agent. The Agent and the Collateral Agent shall each be
fully justified in failing or refusing to take any action under this Agreement
or any Related Document unless it shall first receive such advice or concurrence
of the Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense (other
than any liability or expense resulting from the Agent's or the Collateral
Agent's gross negligence or willful misconduct) which may be incurred by it by
reason of taking or continuing to take any such action. The Agent and the
Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any Related Document in
accordance with a request of the Lenders, and such request and any action taken
or failure to act pursuant thereto shall be binding upon all future holders of
the Notes.
9.5 Notice of Failure to Perform. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or of the failure of the
Company to satisfy any condition to borrowing hereunder unless the Agent has
received written notice from a Lender or the Company referring to this
Agreement, describing such Default or failure and stating that such notice is a
"notice of failure to perform its obligations". In the event that the Agent
receives such a notice, the Agent shall promptly provide copies of such notice
to the Lenders. In the case of any Default, the Agent shall take such action
with respect to such Default as shall be reasonably directed by the Lenders,
provided, however, that unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action for
the protection and preservation of the Collateral as it shall deem advisable in
the best interests of the Lenders. Each Lender agrees that it shall not make any
demand for repayment of any amounts payable to such Lender hereunder unless each
Lender agrees to make a demand for repayment of all amounts payable to such
Lender. Prior to taking any such actions, the Lenders shall consult with each
other and the Agent to determine the general plan of action and the steps to be
taken in connection with such action, and they shall continue to consult with
one another with respect thereto.
41
9.6 Credit Decision. Each Lender expressly acknowledges that neither the
Agent nor the Collateral Agent nor any of their respective partners, officers,
directors, employees, attorneys, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by the Agent or the
Collateral Agent hereafter taken, including any review of the affairs of the
Company, shall be deemed to constitute any representation or warranty by the
Agent or the Collateral Agent to any Lender. Each Lender represents to the Agent
and the Collateral Agent that it has, independently and without reliance upon
the Agent, the Collateral Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Company and made its own decision to make
its Loans hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Agent, the Collateral
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent hereunder or are
furnished to the Agent pursuant to the terms hereof in sufficient copies or
counterparts for or for the account of the Lenders, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, financial and other
condition or creditworthiness of the Company or any of its Affiliates which may
come into the possession of the Agent or any of its partners, officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify the Agent and the
Collateral Agent and any partner, member, director, officer, official, employee,
counsel, consultant and agent of the Agent or the Collateral Agent (to the
extent not reimbursed by the Company and without limiting the obligation of the
Company to do so), ratably according to their respective Percentages of Total
Commitment, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Notes) be imposed on, incurred by or
asserted against the Agent or the Collateral Agent in any way relating to or
arising out of this Agreement or the Related Documents, or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent or
the Collateral Agent under or in connection with any of the foregoing; provided,
however, that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Agent's or the
Collateral Agent's gross negligence or willful misconduct, and provided further
that the Lenders shall not be responsible for the Agent's or the Collateral
Agent's administrative costs (excluding legal fees and damages) incurred in
connection with its ordinary duties under this Agreement and the Related
Documents. The agreements in this Subsection 9.7 shall survive the repayment of
the Obligations.
42
9.8 Individual Capacity. The Agent, the Collateral Agent and their
respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Company and any of its Subsidiaries as
though it were not the Agent or the Collateral Agent. With respect to its Loans
made or renewed by it and any Note issued to it, the Agent and the Collateral
Agent shall have the same rights and powers under this Agreement and the Related
Documents as any Lender and may exercise the same as though it were not the
Agent or the Collateral Agent, and the terms "Lender" and "Lenders" shall
include the Agent and the Collateral Agent in their individual capacities.
9.9 Successor Agents. Subject to the last sentence of this Subsection 9.9,
the Agent and the Collateral Agent may resign as Agent or Collateral Agent, as
the case may be, at any time by giving written notice thereof to the Lenders and
the Company and may be removed at any time with or without cause by the Required
Lenders, provided that no such resignation or removal shall become effective
until a successor Agent or Collateral Agent, as the case may be, shall have been
appointed and shall have accepted such appointment as provided in this
Subsection 9.9. Upon any such resignation or removal, the Required Lenders shall
have the right to appoint a successor Agent or Collateral Agent, as the case may
be. If no successor Agent or Collateral Agent shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent's or Collateral Agent's giving of notice of resignation
or the Required Lenders' removal of the retiring Agent or Collateral Agent,
then, upon five Business Days' notice to the Company and the Lenders, the
retiring Agent or Collateral Agent may, on behalf of the Lenders, appoint a
successor Agent or Collateral Agent, as the case may be, which shall be a bank
which maintains an office in the United States, or a commercial bank organized
under the laws of the United States of America or of any State thereof, or any
Affiliate of such a bank, having a combined capital and surplus of at least
$100,000,000. Upon the acceptance of any appointment as Agent or Collateral
Agent hereunder by a successor Agent or Collateral Agent, such successor Agent
or Collateral Agent, as the case may be, shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent
or Collateral Agent, as the case may be, and the retiring Agent or Collateral
Agent shall be discharged from its duties and obligations under this Agreement.
After the retiring Agent's or Collateral Agent's resignation or removal
hereunder as such agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was such
agent under this Agreement. Anything in this Subsection 9.9 to the contrary
notwithstanding, so long as the Company has not failed to perform its
obligations under this Agreement or under any Related Document and so long as
Xxxxx Brothers Xxxxxxxx & Co. is a Lender, Xxxxx Brothers Xxxxxxxx & Co. agrees
not to resign as Agent or Collateral Agent or to take any action in its capacity
as a Lender to remove itself as Agent or Collateral Agent.
SECTION 10. GENERAL PROVISIONS
10.1 Amendments and Waivers. Neither this Agreement, any Note, any other
Related Document, nor any terms hereof or thereof may be amended, supplemented
or modified except in accordance with the provisions of this Section 10.1. With
the written consent of the Required Lenders and the Agent or the Collateral
Agent, as applicable, the Company may, from time to time enter into written
amendments, supplements or modifications hereto and to the Notes and the other
Related Documents, changing in any manner the rights of the Lenders or of the
Company hereunder or thereunder or waiving, on such terms and conditions as the
Required Lenders and the Agent or Collateral Agent, as applicable, may specify
in such instrument, any of the requirements of this Agreement, the Notes or the
other Related Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall reduce the amount or extend the maturity of any Note, or
reduce the rate or extend the time of payment of interest thereon, or reduce any
fee payable to any Lender hereunder, or change the amount of any Lender's
Percentage of Total Commitment, or amend, modify or waive any provision of this
Section 10.1, or release any Guaranty or any of the Collateral, in each case
without the written consent of the Agent and all of the Lenders. Any such waiver
and any such amendment, supplement or modification shall apply equally to each
of the Lenders and shall be binding upon the Company, the Lenders, the Agent and
all present and future holders of the Notes.
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10.2 Notices. Except as expressly otherwise provided herein, all notices,
requests and demands to or upon the respective parties hereto shall be in
writing (including by telecopy or telex) and shall be effective when actually
received at the following address in the case of the Company, the Agent and the
Collateral Agent, and at the address set forth in Schedule I in the case of the
other parties hereto, or in each case at such other address as may be hereafter
notified by the respective parties hereto and any future holders of the Notes:
The Company:
MemberWorks Incorporated
000 Xxxxxxxxxx Xxxx. - Xxxxx 0000
Xxxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with copies to:
Xxxxxx X.X. Xxxxxx, Esq.
MemberWorks Incorporated
000 Xxxxxxxxxx Xxxx. - Xxxxx 0000
Xxxxxxxx, XX 00000 and
Xxxxxxx X. Xxxxxx III, Esq.
Xxxxxxx Xxxxxx X'Xxxxxx & Xxxxxxxxxxx LLP
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
The Agent:
Xxxxx Brothers Xxxxxxxx & Co.
000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
The Collateral Agent:
Xxxxx Brothers Xxxxxxxx & Co.
000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Any notice, request or demand received on a day which is not a Business Day
shall be deemed to have been received on the next following Business Day.
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10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Agent or any Lender, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided at law, in equity or otherwise.
10.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in any Related Document and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the Related
Documents for a period of three (3) years after the repayment of the
Obligations.
10.5 Payment of Expenses and Taxes. The Company agrees (a) to pay or
reimburse each Lender and the Agent for all its out-of-pocket costs and expenses
incurred in connection with the preparation, execution and delivery of, and any
amendment, restatement, supplement or modification to, this Agreement and the
Related Documents, and the consummation of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Agent and such Lenders, (b) to pay or reimburse
each Lender and the Agent for all their out-of-pocket costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement or the Related Documents, including, without limitation,
reasonable fees and disbursements of counsel to the Agent and to each Lender,
(c) to pay, and indemnify and hold harmless each Lender, the Agent and the
Collateral Agent from and against, any and all recording and filing fees and any
and all liabilities with respect to, or resulting from any delay in paying,
documentary, stamp, excise and other taxes (other than income taxes), if any,
which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement or the Related Documents, and
(d) to pay, and indemnify and hold harmless each Lender, the Agent and the
Collateral Agent from and against, any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, reasonable fees and disbursements of counsel) or
disbursements of any kind or nature whatsoever incurred with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement and the Related Documents (all the foregoing, collectively, the
"indemnified liabilities"), provided that the Company shall have no obligation
hereunder to the Agent, the Collateral Agent or any Lender with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of the Agent, the Collateral Agent or any such Lender. The agreements in this
Subsection 10.5 shall survive the repayment of the Obligations.
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10.6 Benefit of Agreement; Participations; Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Company, the Lenders, the Agent, the Collateral Agent and their respective
successors and assigns, except that (i) the Company may not assign or transfer
any of its rights or obligations under this Agreement without the prior written
consent of each Lender and (ii) the Lenders may assign or transfer their
respective rights or obligations under this Agreement only as provided in
paragraphs (b) and (c) of this Subsection 10.6. Any Lender may from time to time
change the office, branch or agency of such Lender at which the Loans are made
or carried; provided that if at the time of any change from one office, branch
or agency to another the effect thereof would be to increase any amount payable
by the Company under this Agreement then such change shall not be made without
the prior written consent of the Company.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Note held by such Lender, or any other rights and
obligations of such Lender hereunder. In the event of any such sale by a Lender
of participating interests to a Participant, such Lender's rights and
obligations under this Agreement to the other parties under this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note for
all purposes under this Agreement, and the Company and the Agent shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. The Company agrees that each
Participant shall be entitled to the benefits of Subsection 3.4 with respect to
its participation in the Loans outstanding from time to time; provided that no
Participant shall be entitled to receive any greater amount pursuant to such
Subsection than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred. No Participant shall have the
right to consent to any amendment to, or waiver of, any provision of this
Agreement, except any such amendment or waiver which would require the consent
of all of the Lenders pursuant to Subsection 9.1.
(c) Subject to the last sentence of this paragraph (c), any Lender may, in
the ordinary course of its commercial banking business and in accordance with
applicable law, at any time sell to any Lender or to one or more additional
banks or financial institutions (each an "Assignee") all or any part of its
rights and obligations under this Agreement and the Notes pursuant to an
assignment agreement between such Assignee and such transferor Lender,
substantially in the form of Exhibit F, with the consent of the Company (which
consent shall not be unreasonably withheld). Such assignment agreement shall be
executed by such Assignee and such transferor Lender and shall be delivered to
the Agent for acceptance by the Agent not less than five Business Days before
the proposed effective date of such assignment, together with the payment of a
$2,000 assignment fee for the Agent. Upon such execution, delivery, acceptance
and payment, from and after the effective date specified in such assignment
agreement, (x) the Assignee thereunder shall be a party hereto and, to the
extent of the portion of the rights and obligations of the transferor Lender
purchased by it, have the rights and obligations of a Lender hereunder and under
the Related Documents and (y) the transferor Lender thereunder shall, to the
extent of the portion of its rights and obligations so sold, be released from
its obligations under this Agreement (and, in the case of an assignment
agreement covering all or the remaining portion of a transferor Lender's rights
and obligations under this Agreement, such transferor Lender shall cease to be a
party hereto) . On or after the effective date specified in such assignment
agreement, upon request of the transferor Lender or the Assignee, the Company
shall issue a new Note to the transferor Lender and/or the Assignee. Anything in
this paragraph (c) notwithstanding, no transfer shall be made pursuant to this
paragraph (c) if (i) such transfer by any one transferor Lender to any one
Assignee which is not a Lender is in respect of less than $1,000,000 of the
rights and obligations of such transferor Lender, or (ii) when less than all of
the rights and obligations of such transferor Lender is transferred, the amount
held by any transferor Lender would be less than $1,000,000 after giving effect
to such transfer.
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(d) Notwithstanding anything to the contrary contained in this Agreement,
any Lender may pledge, hypothecate or otherwise grant a security interest in all
or any part of its rights hereunder or under its Note to any Federal Reserve
Bank; provided that no such pledge, hypothecation or grant shall relieve such
Lender of any of its obligations under this Agreement.
10.7 Sharing of Payments. If any Lender (a "benefitted Lender") shall at
any time receive any payment of all or part of its Loans, or interest thereon,
or receive any Collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, or otherwise) in a greater proportion than any such
payment to and Collateral received by any other Lender, if any, in respect of
such other Lender's Loans, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders such portion of each such other
Lender's Loans, or shall provide such other Lenders with the benefits of any
such Collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such Collateral or
proceeds ratably with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. The
Company agrees, to the extent it may do so under applicable law, that each
Lender so purchasing a portion of another Lender's Loans may exercise all rights
of payment (including, without limitation, rights of set-off) with respect to
such portion as fully as if such Lender were the direct holder of such portion.
10.8 Counterparts. This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, all
of which counterparts taken together shall be deemed to constitute one and the
same instrument.
10.9 Headings. The Section and Subsection headings in this Agreement are
for convenience of reference only and shall not affect the interpretation
hereof.
10.10 Obligations Several. The rights and obligations of each Lender
hereunder is several, and no Lender shall be responsible for the obligations of
any other Lender hereunder. The amounts payable by the Company at any time
hereunder or under any Note to each Lender shall be a separate and independent
debt and each Lender shall be entitled to protect and enforce its rights arising
hereunder and thereunder and it shall not be necessary for any other Lender or
the Agent to consent to, or be joined as an additional party in, any proceedings
for such purpose. Nothing contained in this Agreement and no action taken by
Lenders pursuant hereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity.
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10.11 Governing Law. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.
10.12 Submission to Jurisdiction. The Company hereby irrevocably and
unconditionally: (i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any Related Document, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof; (ii) consents that any such action or
proceeding may be brought in such courts, and waives any objection that it may
now or hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient forum and
agrees not to plead or claim the same; (iii) agrees that service of process in
any such action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to the Company at its address set forth in or designated
pursuant to Subsection 9.2; and (iv) agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law or shall
limit the right to xxx in any other jurisdiction.
10.13 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT
IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY
ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.14 Severability. Any provision of this Agreement (or any Related
Document) that is illegal, invalid or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such illegality,
invalidity or unenforceability without invalidating the remaining provisions
hereof (or thereof) or affecting the legality, validity or enforceability of
such provision in any other jurisdiction. The parties hereto agree to negotiate
in good faith to replace any illegal, invalid or unenforceable provision of this
Agreement (or such Related Document) with a legal, valid and enforceable
provision that, to the extent possible, will preserve the economic bargain of
this Agreement (or such Related Document), or to otherwise amend this Agreement
(or such Related Document) to achieve such result.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
MEMBERWORKS INCORPORATED
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: CFO and XX
XXXXX BROTHERS XXXXXXXX & CO., as Agent
By: /s/ Xxxx X. Xxxx
-----------------------------
Name: Xxxx X. Xxxx
Title: Senior VP
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Commitment Percentage Commitment Lenders
--------------------- ------------ -------
46.42857% $ 13,000,000 XXXXX BROTHERS XXXXXXXX & CO., as Lender
By: /s/ Xxxx X. Xxxx
-----------------------------
Name: Xxxx X. Xxxx
Title: Senior VP
53.57143% $ 15,000,000 LASALLE BANK NATIONAL
ASSOCIATION, as Lender
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Assistant VP
50
