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$25,000,000
CREDIT AGREEMENT
between
XXXXX INC.
as Borrower,
and
FLEET NATIONAL BANK,
as Lender
Dated as of March 6, 2003
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; ACCOUNTING TERMS......................................1
Section 1.01 Definitions..................................................1
Section 1.02 Accounting Terms............................................18
ARTICLE II THE CREDIT.......................................................18
Section 2.01 Loans.......................................................18
Section 2.02 The Note....................................................19
Section 2.03 Purpose.....................................................19
Section 2.04 Borrowing Procedures........................................19
Section 2.05 Optional Prepayments, Conversions and Revolving Credit
Commitment Reductions.....................................19
Section 2.06 Mandatory Prepayments.......................................19
Section 2.07 Interest Periods; Renewals..................................19
Section 2.08 Certain Notices.............................................20
Section 2.09 Minimum Amounts.............................................20
Section 2.10 Interest....................................................21
Section 2.11 Fees........................................................21
Section 2.12 Payments Generally..........................................22
ARTICLE III LETTERS OF CREDIT...............................................23
Section 3.01 L/C Commitment..............................................23
Section 3.02 Procedure for Issuance of Letters of Credit.................23
Section 3.03 Reimbursement; Obligations of Borrower......................24
Section 3.04 Obligations Absolute........................................25
Section 3.05 Conflict....................................................25
Section 3.06 Documents...................................................25
Section 3.07 Partial Shipments...........................................26
Section 3.08 Extensions, Increases and Other Modifications to
Letters of Credit.........................................26
Section 3.09 Limitations of Liability....................................26
Section 3.10 Compliance with Regulations; Licenses; Insurance............27
Section 3.11 Violations of Law...........................................27
Section 3.12 Law and Regulations; Additional Payments....................27
Section 3.13 Compliance with Letters of Credit...........................28
ARTICLE IV YIELD PROTECTION; ILLEGALITY; ETC................................28
Section 4.01 Additional Costs............................................28
Section 4.02 Limitation on Libor Rate Loans..............................30
Section 4.03 Illegality..................................................31
Section 4.04 Certain Conversions Pursuant to Sections 4.01
and Section 4.03..........................................31
Section 4.05 Certain Compensation........................................31
Section 4.06 Lending Office Designations.................................32
i
ARTICLE V CONDITIONS PRECEDENT..............................................32
Section 5.01 Conditions Precedent to All Loans and Letters of Credit.....32
Section 5.02 Documentary Conditions Precedent to Initial Loans
and Initial Letters of Credit.............................33
Section 5.03 Additional Conditions Precedent.............................35
Section 5.04 Deemed Representations......................................36
ARTICLE VI REPRESENTATIONS AND WARRANTIES...................................36
Section 6.01 Incorporation, Good Standing and Due Qualification..........36
Section 6.02 Subsidiaries and Affiliates; Immaterial Subsidiaries........37
Section 6.03 Capitalization..............................................37
Section 6.04 Owned Real Property.........................................37
Section 6.05 Leased Real Property........................................37
Section 6.06 Material Contracts..........................................37
Section 6.07 Corporate Power and Authority...............................37
Section 6.08 Legally Enforceable Agreements..............................38
Section 6.09 No Violation................................................38
Section 6.10 Licenses, Approvals, etc....................................38
Section 6.11 Litigation..................................................38
Section 6.12 Financial Statements........................................39
Section 6.13 Taxes.......................................................39
Section 6.14 ERISA.......................................................40
Section 6.15 Environmental Matters.......................................40
Section 6.16 Labor Disputes..............................................40
Section 6.17 Investment Company Act of 1940; etc.........................40
Section 6.18 No Forfeiture...............................................40
Section 6.19 Solvency....................................................40
Section 6.20 Patents, Trademarks, etc....................................40
Section 6.21 Offer of Notes..............................................41
Section 6.22 Use of Proceeds.............................................41
Section 6.23 Disclosure; No Material Adverse Effect......................41
Section 6.24 Location of Books and Records...............................41
Section 6.25 Fiscal Year.................................................41
Section 6.26 Exchange Act Filings........................................41
ARTICLE VII AFFIRMATIVE COVENANTS...........................................42
Section 7.01 Maintenance of Existence; Preservation of Rights,
Licenses etc..............................................42
Section 7.02 Conduct of Business.........................................42
Section 7.03 Maintenance of Properties...................................42
Section 7.04 Maintenance of Records......................................42
Section 7.05 Maintenance of Insurance....................................42
Section 7.06 Compliance with Laws........................................43
Section 7.07 Right of Inspection; Field Examinations.....................43
Section 7.08 Reporting Requirements......................................43
Section 7.09 Additional Subsidiaries.....................................46
Section 7.10 Payment of Taxes and Claims.................................47
Section 7.11 Bank Accounts...............................................47
ii
Section 7.12 Material Contracts..........................................47
ARTICLE VIII NEGATIVE COVENANTS.............................................47
Section 8.01 Debt........................................................47
Section 8.02 Guaranties..................................................48
Section 8.03 Liens.......................................................49
Section 8.04 Leases......................................................49
Section 8.05 Investments.................................................49
Section 8.06 Distributions...............................................50
Section 8.07 Sale of Assets..............................................51
Section 8.08 Transactions with Affiliates................................51
Section 8.09 Mergers; Organization of New Subsidiaries...................52
Section 8.10 Subsidiaries' Stock and Debt................................53
Section 8.11 Acquisitions................................................53
Section 8.12 Fiscal Year.................................................54
Section 8.13 Restrictions................................................54
Section 8.14 Sale-Leaseback Transactions.................................54
Section 8.15 Accounting Change...........................................54
Section 8.16 Charter Amendments..........................................54
Section 8.17 Amendment, Modification and Termination of
Material Contracts........................................54
Section 8.18 Immaterial and Foreign Subsidiaries.........................54
ARTICLE IX FINANCIAL COVENANTS..............................................55
Section 9.01 Leverage Ratio..............................................55
Section 9.02 Total Liabilities to Consolidated Net Worth Ratio...........56
Section 9.03 Quarterly Net Income........................................56
Section 9.04 Minimum EBITDA..............................................56
Section 9.05 Domestic Assets.............................................56
ARTICLE X EVENTS OF DEFAULT.................................................56
Section 10.01 Events of Default..........................................56
Section 10.02 Remedies...................................................58
Section 10.03 Remedies Cumulative........................................59
Section 10.04 Application of Proceeds....................................59
ARTICLE XI INTENTIONALLY OMMITTED...........................................59
ARTICLE XII MISCELLANEOUS...................................................60
Section 12.01 Amendments and Waivers; Remedies Cumulative................60
Section 12.02 Usury......................................................60
Section 12.03 Costs; Expenses; Taxes; Indemnification....................60
Section 12.04 Survival...................................................61
Section 12.05 Assignment; Participations.................................61
Section 12.06 Notices....................................................63
Section 12.07 Setoff.....................................................64
Section 12.08 JURISDICTION; IMMUNITIES...................................65
Section 12.09 Table of Contents; Headings................................66
iii
Section 12.10 Severability...............................................66
Section 12.11 Entire Agreement...........................................66
Section 12.12 GOVERNING LAW..............................................66
Section 12.13 Confidentiality............................................66
Section 12.14 Replacement Notes, Etc.....................................67
Section 12.15 Treatment of Certain Information...........................67
Section 12.16 Counterparts...............................................67
iv
EXHIBITS:
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Guaranty Agreement
Exhibit C Form of Pledge Agreement
Exhibit D Form of Security Agreement
Exhibit E Form of Trademark Security Agreement
Exhibit F Form of Deposit Account Control Agreement
Exhibit G Form of Compliance Certificate
SCHEDULES:
Schedule 1.01A Definition of Business
Schedule 1.01B Consolidated EBITDA
Schedule 1.01C Certain Permitted Liens
Schedule 6.02 Subsidiaries; Immaterial Subsidiaries; Guarantors
Schedule 6.03 Capitalization
Schedule 6.04 Owned Real Properties
Schedule 6.05 Leased Real Properties
Schedule 6.06 Material Contracts
Schedule 6.11 Litigation
Schedule 6.15 Environmental Matters
Schedule 6.19 Solvency
Schedule 6.20 Patents, Trademarks, etc.
Schedule 6.23 Material Adverse Effect
Schedule 6.24 Location of Books and Records
Schedule 8.01(e) Existing Debt
Schedule 8.05(f) Existing Investments
v
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of March 6, 2003 between KROLL INC., a
corporation organized under the laws of Delaware (together with its successors
and permitted assigns, the "Borrower"), and FLEET NATIONAL BANK, a national
banking association organized under the laws of the United States (together with
its successors and assigns, the "Lender") (as amended, supplemented or otherwise
modified from time to time, this "Agreement").
WHEREAS, the Borrower has requested the Lender to extend credit to it in
order to enable it to borrow under a revolving loan facility on and after the
date hereof and at any time and from time to time prior to the Revolving Credit
Termination Date a principal amount not in excess of an aggregate of $25,000,000
at any time outstanding;
WHEREAS, the proceeds of such borrowings are to be used to repay
outstanding indebtedness under an existing revolving credit facility (if any)
and thereafter finance ongoing working capital requirements and other general
corporate expenditures incurred in the ordinary course of business; and
WHEREAS, the Lender is willing to make such revolving loan facility
available to the Borrower and to issue Standby Letters of Credit and documentary
Letters of Credit, on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; ACCOUNTING TERMS
Section 1.01 Definitions. As used in this Agreement the following terms have the
following meanings (terms defined in the singular to have a correlative meaning
when used in the plural and vice versa):
"Acquisition" means any transaction pursuant to which Borrower or any of
its Subsidiaries (a) purchases or otherwise acquires a majority of the equity
securities (or warrants, options or other rights to acquire such a majority of
equity securities, or securities convertible or exchangeable into such warrants,
options or other rights) of a Subsidiary or any other Person such that such
Person becomes a Subsidiary of Borrower or any of its Subsidiaries (other than
equity securities or other ownership interests of a Person organized and formed
by Borrower and/or one of its Subsidiaries as a new Wholly-Owned Subsidiary),
(b) causes or permits any Person to be merged into Borrower or any of its
Subsidiaries, in any case pursuant to a merger, purchase of assets or any
reorganization providing for the delivery or issuance to the holders of such
Person's then outstanding securities, in exchange for such securities, of cash,
assets or securities of the Borrower or any of its Subsidiaries, or a
combination thereof, (c) purchases all or substantially all of the business or
assets of any Person, or (d) makes investments in joint ventures, provided that
no transaction solely between Borrower and any Subsidiary or solely
between a Subsidiary and any other Subsidiary shall be deemed to be an
"Acquisition" if the surviving entity of such transaction is either the Borrower
or a Domestic Subsidiary.
"Additional Costs" has the meaning assigned to such term in Section
4.01(a).
"Affiliate" means any Person which (a) directly or indirectly Controls, or
is Controlled by, or is under common Control with, Borrower or any of its
Subsidiaries, (b) directly or indirectly beneficially owns or holds 10% or more
of any class of equity securities of the Borrower or any of its Subsidiaries
having ordinary voting power for the election of directors of Borrower or any of
its Subsidiaries, (c) 10% more of any class of equity securities of which is
directly or indirectly beneficially owned or held by Borrower or any of its
Subsidiaries having ordinary voting power for the election of directors of such
Person; (d) is a partnership in which Borrower or any of its Subsidiaries is a
general partner; or (e) is a limited liability company in which Borrower or any
of its Subsidiaries is a manager or a managing member.
"Agreement" has the meaning assigned to such term in the introductory
paragraph hereof. References to Articles, Sections, Exhibits, Schedules and the
like refer to the Articles, Sections, Exhibits, Schedules and the like of this
Agreement unless otherwise indicated.
"Application" means an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to issue a Letter of
Credit.
"Applicable Margin" means a percentage equal to 0.00% with respect to
Revolving Credit Loans that are Prime Rate Loans, 2.00% with respect to
Revolving Credit Loans that are Libor Rate Loans and .375% with respect to the
Commitment Fee.
"Availability" means the aggregate of the amount, computed on a daily
basis, by which the Revolving Credit Commitment exceeds the sum of (i) the
aggregate principal amount of the Revolving Credit Loans outstanding, (ii) the
aggregate amount available to be drawn on the outstanding Letters of Credit and
(iii) any amounts drawn under Letters of Credit but not yet either reimbursed or
converted to Loans as provided herein.
"Bankruptcy Code" has the meaning assigned to such term in Section
10.01(e).
"Borrower" has the meaning assigned to such term in the introductory
paragraph hereof.
"Business" means the business as described on Schedule 1.01A hereto.
"Business Day" means any day (other than a day which is a Saturday, Sunday
or legal holiday in the State of New York) on which banks are open for business
in New York City and to the extent used in connection with calculations
regarding the administration of Libor Rate Loans, banks are open for dealings in
dollar deposits in the London interbank market.
"Capital Expenditure" means, with respect to any Person, any expenditure
made or obligation incurred by such Person to purchase, acquire or construct
fixed assets, plant, equipment or intangibles subject to amortization (including
renewals, improvements, replacements and incurrence of obligations under Capital
Leases) and database capitalization.
2
"Capital Lease" means any lease which has been or should be capitalized on
the balance sheet of the lessee thereunder in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation),
including, without limitation, partnership interests and membership interests,
and any and all warrants, rights or options to purchase or other arrangements or
rights to acquire any of the foregoing.
"Cash Equivalents" means (a) direct obligations of the United States of
America or any agency or instrumentality thereof with maturities of one year or
less from the date of acquisition; (b) marketable securities (i) issued directly
or unconditionally guarantied as to interest and principal by the United States
Government or (ii) issued by any agency of the United States the obligations of
which are backed by the full faith and credit of the United States, in each case
maturing within one year after such date; (c) certificates of deposit and other
time deposits with maturities of one year or less from the date of acquisition
issued by any commercial bank operating within the United States of America and
having a combined capital and surplus in excess of $500,000,000; (d) commercial
paper, maturing not more than one year after the date of acquisition thereof,
issued by a corporation (other than an Affiliate) organized and existing under
the laws of the United States of America or any State thereof with a rating, at
the time as of which any investment therein is made, of "P-1" (or higher)
according to Xxxxx'x Investors Service, Inc., or "A-1" (or higher) according to
Standard & Poor's Rating Services; (e) repurchase obligations with a term of not
more than 30 days for underlying securities of the types described in clause (a)
above entered into with any financial institution; and (f) nationally-recognized
money market or mutual funds whose sole investments are comprised of investments
permitted under the foregoing clauses (a) through (e).
"Change of Control" means the occurrence of either of the following events
after the date of this Agreement: (a) any Person or "group" (within the meaning
of Rules 13d-3 and 13d-5 promulgated under the Exchange Act) of Persons (other
than any Person or group of Persons who, as of the date hereof, beneficially own
at least 20% of the aggregate Voting Power of Borrower) (i) shall have acquired
beneficial ownership (as defined in Rule 13d-3 promulgated under the Exchange
Act or any successor provision thereto) of more than 20% of the aggregate Voting
Power and/or economic interest in the Capital Stock of Borrower, or (ii) shall
have obtained the power (whether or not exercised) to elect a majority of the
members of the Board of Directors (or similar governing body) of Borrower; or
(b) during any period of 12-consecutive months, (i) individuals who at the
beginning of such period were members of the Board of Directors of Borrower,
together with (ii) individuals who during such period became members of such
Board of Directors and were either elected by such Board of Directors or whose
nomination for election was approved by a majority of the members of such Board
of Directors who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board of Directors of Borrower then in
office.
"Closing Date" means the date upon which the initial borrowing hereunder
occurs.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
3
"Collateral" means all of any Obligor's right, title and interest in and
to Property in which such Obligor has granted a Lien to the Lender under any
Facility Document.
"Commitment Fee" has the meaning assigned to such term in Section 2.11(b).
"Compliance Certificate" means a compliance certificate substantially in
the form of Exhibit G hereto to be executed and delivered by Borrower under the
terms of this Agreement.
"Consolidated Debt" means, at any date of determination thereof, the
aggregate stated balance sheet amount of Debt of the Consolidated Entities, as
determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" means, with respect to any fiscal period, the sum of
(a) Consolidated Net Income for such period; (b) the aggregate amount of (i)
income taxes and (ii) Consolidated Interest Expense (to the extent that any such
amounts were deducted in the computation of Consolidated Net Income for such
period); (c) the aggregate amount of amortization; (d) the aggregate amount of
depreciation; (e) the sum of: (i) the aggregate amount of non-cash items
reducing Consolidated Net Income for such period (excluding any such non-cash
item to the extent that it represents an accrual or reserve for potential cash
items in any future period or amortization of a prepaid cash item that was paid
in a prior period) minus (ii) the aggregate amount of non-cash items increasing
Consolidated Net Income for such period (excluding any such non-cash item to the
extent that it represents an accrual or reserve for potential cash items in any
future period or amortization of a prepaid cash item that was paid in a prior
period), all as determined on a consolidated basis in accordance with GAAP; and
(f) in the event that an Acquisition permitted by Section 8.11 is consummated
during such fiscal period, the EBITDA of the entity that is the subject of the
Acquisition for the period beginning on the first day of such fiscal measurement
period and ending on the date of such Acquisition as determined in accordance
with GAAP; provided, that with respect to any period or portion thereof
occurring prior to the Closing Date, Consolidated EBITDA shall be as set forth
on Schedule 1.01B.
"Consolidated Entities" means, collectively, the Borrower and each of its
Subsidiaries whose accounts are or are required to be consolidated or included
with the accounts of the Borrower in accordance with GAAP.
"Consolidated Funded Debt" means, at any date of determination thereof,
the aggregate amount of Funded Debt of the Consolidated Entities on such date,
as determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, interest expense on
all Consolidated Debt for such period whether paid or accrued, and including,
without limitation, (a) interest expense in respect of Consolidated Debt
resulting from the Loans, (b) the interest component of all obligations under
Capital Leases, (c) commissions, discounts and other fees and charges payable in
connection with Standby Letters of Credit, which are the equivalent of interest,
(d) the net payments, if any, payable in connection with Interest Rate
Protection Agreements and (e) all fees paid by Borrower pursuant to Section
2.11(b) (other than non-cash amortization related thereto), and all finance
charges, premiums and other fees, charges and
4
expenses accrued with respect to Consolidated Debt during such period which are
the equivalent of interest (including, without duplication (i) any up-front
costs and similar costs or fees associated with the execution of this Agreement
and (ii) the amount of any original issue discount derived from the Senior
Subordinated Notes), all as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Net Income" means, with respect to any fiscal period, Net
Income of the Consolidated Entities for such period, as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Worth" means, at a particular date, an amount equal to
(a) the book value (net of related depreciation, obsolescence, amortization, and
other proper reserves) at which the assets of the Consolidated Entities would be
shown on a balance sheet of such Consolidated Entities at such date in
accordance with GAAP, less (b) the amount at which liabilities of the
Consolidated Entities (other than capital stock and surplus and retained
earnings) would be shown on a balance sheet of such Consolidated Entities in
accordance with GAAP, and including as liabilities all reserves for
contingencies and other potential liabilities required to be accrued in
accordance with GAAP, which would be included under shareholders' equity on a
consolidated balance sheet of the Consolidated Entities prepared in accordance
with GAAP, less amounts due from Affiliates.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, and
"Controlling" and "Controlled" shall have meanings correlative thereto.
"Customer" means the account debtor with respect to any of the Receivables
or the purchaser of goods, services or both with respect to any contract or
contract right, or any Person who enters into any contract or other arrangement
with Borrower or any Subsidiary, pursuant to which Borrower or any Subsidiary is
to deliver any personal Property or perform any services.
"Debt" means, with respect to any Person (without duplication): (a)
indebtedness of such Person for borrowed money; (b) indebtedness for the
deferred purchase price of Property or services constituting Capital
Expenditures; (c) Unfunded Benefit Liabilities of such Person; (d) the face
amount of any outstanding letter of credit issued for the account or upon the
Application of such Person (including any Standby Letters of Credit) issued to
secure or support performance by Borrower and/or its Subsidiaries under
operating leases (including operating real estate leases); (e) obligations
arising under banker's acceptance facilities; (f) Guaranties of such Person; (g)
obligations of other Persons secured by any Lien on Property of such Person; (h)
obligations of such Person as lessee under Capital Leases; (i) the net
obligations of such Person in respect of Interest Rate Protection Agreements;
and (j) all capital stock of such Person subject to repurchase or redemption
during the term of this Agreement, other than at the sole option of such Person.
"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.
5
"Default Rate" means, with respect to the principal of any Loan and, to
the extent permitted by law, any other amount (other than interest) payable by
any Obligor under this Agreement or any other Facility Document, that is not
paid when due (whether at stated maturity, by acceleration or otherwise), a rate
per annum during the period from and including the due date, to, but excluding
the date on which such amount is paid in full equal to two percent (2.0%) per
annum above the interest rate for such Loan as provided in Section 2.10 (or, if
not a Loan, at two percent (2.0%) per annum above the Prime Rate); provided,
however, with respect to Libor Rate Loans, the "Default Rate" of two percent
(2.0%) above the applicable Libor Rate plus the Applicable Margin shall be
applied through the day before the last day of the Interest Period, and
thereafter, the rate provided for above in this definition.
"Deposit Account Control Agreement" means the Deposit Account Control
Agreement substantially in the form of Exhibit F hereto to be executed by
Borrower and Lender and accepted and agreed to by the relevant deposit account
bank.
"Distribution" means, with respect to any Person, the declaration or
payment of any dividends by such Person, or the purchase, redemption, retirement
or other acquisition for value of any of its capital stock now or hereafter
outstanding, or the making of any distribution of assets to its stockholders as
such whether in cash, assets or obligations of such Person, or the allocation or
other setting apart of any sum for the payment of any dividend or distribution
on, or for the purchase, redemption, retirement or other acquisition of any
shares of its capital stock, or the making of any other distribution by
reduction of capital or otherwise in respect of any shares of its capital stock.
"Dollars" and the sign "$"mean lawful money of the United States of
America.
"Domestic Subsidiary" means any Subsidiary that is organized and existing
under the laws of the United States of America, any state or commonwealth
thereof or the District of Columbia.
"EBITDA" means, with respect to any fiscal period of any Person, the sum
of (a) Net Income for such period; (b) the aggregate amount of (i) income taxes
and (ii) interest expense (to the extent that any such amounts were deducted in
the computation of Net Income for such period) calculated for such Person
according to the method specified in the definition of Consolidated Interest
Expense; (c) the aggregate amount of amortization; (d) the aggregate amount of
depreciation; and (e) the sum of (i) the aggregate amount of non-cash
extraordinary losses for such period minus (ii) the aggregate amount of non-cash
extraordinary gains for such period, all as determined in accordance with GAAP.
"Environmental Laws" means any and all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, licenses, agreements or other governmental restrictions
relating to the environment or to the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, emission, release, threatened release, discharge, spillage,
seepage, or filtration of pollutants, contaminants, chemicals, or industrial,
toxic or other Hazardous Materials 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,
6
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes, including petroleum and
petroleum distillates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of any group of organizations (i) described in Section 414 (b) or (c) of
the Code of which Borrower or any of its Subsidiaries is a member, or (ii)
solely for purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Code and the lien created under Section 302 (f) of
ERISA and Section 412 (n) of the Code, described in Section 414 (m) or (o) of
the Code of which Borrower or any Subsidiary is a member.
"Event of Default" has the meaning assigned to such term in Section 10.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Facility Documents" means this Agreement, the Note, the Security
Documents, the Letters of Credit, and the Interest Rate Protection Agreement
entered into with Lender or an Affiliate of Lender, as each may be amended,
supplemented or otherwise modified from time to time.
"Financial Statements" has the meaning assigned to such term in Section
6.12(a).
"First-Tier Foreign Subsidiary" means any Foreign Subsidiary that is a
Subsidiary of the Borrower or any Domestic Subsidiary.
"Fiscal Quarter" means a fiscal quarter of the Borrower ending on March
31, June 30, September 30 or December 31.
"Fiscal Year" means a fiscal year of the Borrower.
"Foreign Subsidiary" means any Subsidiary, which is not a Domestic
Subsidiary.
"Forfeiture Proceeding" means any action or proceeding affecting Borrower
or any of its Subsidiaries (other than Immaterial Subsidiaries) before any
Governmental Authority which could reasonably be expected to result in the
seizure or forfeiture of any of their respective Properties that are used or
useful in the Business.
"Funded Debt" means with respect to any Person, at the date of
determination, (without duplication): (a) indebtedness for borrowed money; (b)
indebtedness for the deferred purchase price of Property or services
constituting Capital Expenditures; (c) obligations arising under banker's
acceptance facilities; (d) Guaranties of such Person, if the primary obligor is
in default of the underlying obligation; and (e) obligations of such Person as
lessee under Capital Leases.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time.
7
"Xxxxxxx Xxxxx Credit Facility" means Credit and Guaranty Agreement, dated
as of September 5, 2002, among the Borrower, as borrower, certain Subsidiaries
of the Borrower, as guarantors, the Lenders party thereto from time to time,
Xxxxxxx Sachs Credit Partners L.P., as sole lead arranger, sole book runner,
syndication agent, administrative agent and as collateral agent, Bear Xxxxxxx
Corporate Lending Inc., as co-documentation agent, and Credit Suisse First
Boston, Cayman Islands Branch, as co-documentation agent, together with all
other loan documents executed in connection therewith.
"Governmental Authority" means 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.
"Guarantors" means each of the Domestic Subsidiaries designated as such on
Schedule 6.02 hereto and each other Person that has otherwise provided a
Guaranty of any of the Obligations.
"Guaranty Agreement" means the Guaranty Agreement substantially in the
form of Exhibit B hereto to be delivered by the Guarantors under the terms of
this Agreement, as amended, supplemented or otherwise modified from time to
time.
"Guaranty" means, with respect to any Person, any guaranty, endorsement
(other than for collection in the ordinary course of business) or other
contingent obligation of such Person with respect to the Debt obligations of any
other Person (including, but not limited to, an agreement to purchase any
obligation or stock, assets, goods or services or to supply or advance any
funds, assets, goods or services, or an agreement to maintain or cause such
Person to maintain a minimum working capital or net worth or otherwise to assure
the creditors of any such other Person against loss with respect to the Debt
obligations of any such other Person).
"Hazardous Materials" means any material, substance, compound, solid,
liquid or gas, or any radiation, emission or release of energy in any form,
whether naturally occurring, man made or the product of any process, (a) which
is toxic, harmful, or hazardous to public health, public safety, or the
environment, (b) which is or hereafter shall be defined or regulated as a
"hazardous waste", "hazardous substance", "toxic substance", pollutant or
contaminant under any Environmental Law, (c) the use, handling, management,
release, treatment, storage, transportation or disposal of which is or hereafter
shall be regulated under any Environmental Law, or (d) the removal, remediation
or abatement of which is required under any Environmental Law. Hazardous
Materials include, but are not limited to, asbestos, polychlorinated biphenlys,
mercury, lead, petroleum and petroleum distillates, urea formaldehyde foam
insulation, and radon and other radioactive materials.
"Immaterial Subsidiary" means (a) each direct or indirect Subsidiary of
Borrower identified on Schedule 6.02 hereto as an Immaterial Subsidiary and (b)
any direct or indirect Subsidiary of Borrower organized and/or acquired after
the date of this Agreement which has been identified in writing to Lender as an
Immaterial Subsidiary; provided that (x) the aggregate annual revenues of all
such Immaterial Subsidiaries under both clause (a) and clause (b) above shall
not at any time exceed 12% of revenues of the Consolidated Entities during the
preceding Fiscal Year and (y) the aggregate book value of the assets of all such
Immaterial Subsidiaries under both clause (a) and clause (b) above shall not at
any time exceed 7.5% of the aggregate book value of the assets of the
Consolidated Entities; Schedule 6.02 sets forth the aggregate revenues and the
aggregate book value of the assets of all Immaterial Subsidiaries
8
under both clause (a) and (b) above stated as a percentage of the aggregate
revenues of, and the aggregate book value of the assets of, respectively, the
Consolidated Entities.
"Interest Period" means, with respect to any Libor Rate Loan, the period
commencing on the date such Loan is made, converted from a Prime Rate Loan or
renewed, as the case may be, and ending, as Borrower may select pursuant to
Section 2.07, on the numerically corresponding day in the first, second, third,
sixth or twelfth calendar month thereafter; provided in each case that if an
Interest Period would end on a day which is not a Business Day, such Interest
Period shall be extended to the next Business Day, unless such Business Day
would fall in the next calendar month in which event such Interest Period shall
end on the immediately preceding Business Day; and provided further that each
such Interest Period which commences on the last Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate calendar month.
"Interest Rate Protection Agreement" means, with respect to any Person, an
interest rate swap, cap or collar agreement or similar arrangement between one
or more financial institutions (including, without limitation, the Lender) and
such Person providing for the transfer or mitigation of interest risks either
generally or under specific contingencies.
"Interest Rate Protection Agreement Counterparty" means Lender or any of
its affiliates, together with its successors and assigns, in its capacity as the
counterparty to any Interest Rate Protection Agreement with the Borrower or any
of its Subsidiaries.
"Investment" means any loan or advance to any Person (other than the
extension of trade credit in the ordinary course of business) or any purchase or
other acquisition of any capital stock, obligations or other securities of any
Person, or any capital contribution to, investment in, or other acquisition of
any equity interest in, any Person, provided that any transaction which
constitutes an Acquisition shall not be included in this definition of
Investment.
"Issuing Lender" means Fleet National Bank, in its capacity as issuer of
any Letters of Credit.
"Knowledge" means, with respect to any Person, after reasonable inquiry
(except that such inquiry need not be made in the case of Immaterial
Subsidiaries), no information has come to the attention of such Person, which
information has given or should reasonably have given such Person knowledge of
facts contrary to the existence of or absence of such facts indicated, and
includes the actual knowledge of (a) such Person (if such Person is an
individual) or (b) a responsible officer of such Person (if such Person is an
organization).
"Law" means, with respect to any Person, any statute, law, rule,
regulation, ordinance, order, permit, license, writ, judgment, injunction,
decree, determination, award or other restriction or requirement of any
Governmental Authority applicable to such Person or its Property.
9
"L/C Cash Collateral Account" has the meaning assigned to such term in the
Security Agreement.
"L/C Obligations" means, at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit, and (b) the aggregate amount of drawings under Letters of Credit
which have not been reimbursed (including reimbursement through the making of a
Revolving Credit Loan) as provided in Section 3.03 or Section 3.04(a).
"Lender" has the meaning assigned to such term in the introductory
paragraph hereof, and all references to the rights and benefits (but not the
obligations) of a "Lender" contained in any Facility Document shall be deemed to
include the Issuing Lender and all Interest Rate Protection Agreement
Counterparties.
"Lending Office" means, for Lender and for each Type of Loan, the lending
office of Lender (or of an affiliate of Lender) designated as such for such Type
of Loan on its signature page hereof or such other office of Lender (or of an
affiliate of Lender) as Lender may from time to time specify to the Borrower as
the office at which Loans of such type are to be made and maintained.
"Letters of Credit" means all Standby Letters of Credit and all
documentary Letters of Credit.
"Leverage Ratio" means, at any date of determination thereof, the ratio of
(a) Consolidated Funded Debt at such date (after giving effect to any
amortization payment made on such date) to (b) Consolidated EBITDA for the
immediately preceding four Fiscal Quarter period.
"Libor Rate" means, as applicable to any Libor Rate Loan, the rate per
annum as determined on the basis of the offered rates for deposits in U.S.
Dollars, for a period of time comparable to the Interest Period for such Libor
Rate Loan which appears on the Telerate page 3750 as of 11:00 a.m., London time,
on the day that is two (2) Business Days preceding the first day of such Libor
Rate Loan; provided, however, if the rate described above does not appear on the
Telerate System on any applicable interest determination date, the Libor Rate
shall be the rate (rounded upward, if necessary, to the nearest one
hundred-thousandth of a percentage point), determined on the basis of the
offered rates for deposits in U.S. dollars for a period of time comparable to
the Interest Period for such Libor Rate Loan 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) Business Days preceding the first day of such
Interest Period as selected by Lender. The principal London office of each of
the four 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 the 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 rates quoted for loans in U.S. dollars to leading
European banks for a period of time comparable to the Interest Period for such
Libor Rate Loan offered by major banks in New York City at approximately 11:00
a.m., New York City time, on the day that is two Business Days preceding the
first day of such Interest Period. In the event that Lender is unable to obtain
any such
10
quotation as provided above, it will be deemed that a Libor Rate cannot be
determined. In the event that the Board of Governors of the Federal Reserve
System shall impose a Reserve Percentage with respect to Libor Rate deposits of
the Lender, then for any period during which such Reserve Percentage shall
apply, the applicable Libor Rate shall be equal to the amount determined above
divided by an amount equal to 1 minus the Reserve Percentage. "Reserve
Percentage" shall mean the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed on member
banks of the Federal Reserve System against "Euro-currency Liabilities" as
defined in Regulation D.
"Libor Rate Loan" means any Loan when and to the extent the interest rate
therefor is determined in relation to the Libor Rate.
"Lien" means any lien (statutory or other), security interest, mortgage,
deed of trust, priority, pledge, charge, conditional sale, title retention
agreement, financing lease or other encumbrance or similar right of others, or
any agreement to give any of the foregoing.
"Loan" means any loan made by Lender pursuant to Section 2.01.
"Material Adverse Effect" means any event, condition, action or
circumstance which has or could reasonably be expected to have a material
adverse effect on (a) the business, profits, Properties or financial condition
of Borrower and its Subsidiaries, taken as a whole, (b) the ability of the
Obligors to perform any of their material Obligations under any of the Facility
Documents taken as a whole, (c) the binding nature, validity or enforceability
against the Obligors of any of the Facility Documents, or (d) the validity,
perfection, priority or enforceability of the Liens in favor of the Lender
securing the obligations hereunder.
"Material Contract" means each contract, agreement or other understanding
to which the Borrower or any of its Subsidiaries is a party (other than the
Facility Documents) the breach, termination or expiration of which could
reasonably be expected to have a Material Adverse Effect.
"Multiemployer Plan" means, at a particular time, an employee benefit plan
(a) which is a "multiemployer plan" as defined in Section 3(37) of ERISA and
which is contributed to by the Borrower or any of its Subsidiaries or any ERISA
Affiliate or (b) with respect to which the Borrower or its Subsidiaries or any
ERISA Affiliate would have liability under Section 4212(c) of ERISA in the event
of a withdrawal or plan termination at such time.
"Net Income" means, with respect to any fiscal period, the net income of
an entity for such period as determined in accordance with GAAP.
"Note" means the Revolving Credit Note.
"Obligations" means the unpaid principal of and interest on (including
without limitation interest accruing on or after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to any Obligor, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding, even if obligations do not
accrue because of an automatic stay under Bankruptcy Code ss.362 or otherwise)
the Note and all other obligations and liabilities of any Obligor to the Lender,
the Issuing Lender or any Interest
11
Rate Protection Agreement Counterparty, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, this Agreement, the Note, any
other Facility Document and any other document or instrument made, delivered or
given in connection therewith or herewith, and any exposure pursuant to any cash
management agreement between any Obligor and the Lender (including as a result
of an automatic clearing house arrangement), whether on account of principal,
interest, guaranties, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all reasonable fees and disbursements
of counsel to the Lender, any Interest Rate Protection Agreement Counterparty or
the Issuing Lender) or otherwise, provided that costs and expenses referred to
herein shall be documented.
"Obligor Agreement" means any indenture, loan or credit agreement, or any
other financing or debt agreement, Capital Lease or instrument, to which the
Borrower, any Subsidiary or any other Obligor is a party or by which any of the
Borrower, any Subsidiary or any other Obligor or their respective Properties may
be bound or affected providing for financing or indebtedness of $500,000 or
more.
"Obligors" means the Borrower and each Guarantor.
"Other Foreign Subsidiary" means any Foreign Subsidiary that is not a
First-Tier Foreign Subsidiary.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means the following Liens:
(a) Liens created by, under or in connection with this Agreement or
the Facility Documents in favor of the Lender;
(b) Liens to secure Interest Rate Protection Agreements for the
benefit of the Interest Rate Protection Agreement Counterparty;
(c) Liens for taxes or assessments or other government charges or
levies not yet due and payable or if due and payable, Liens for taxes or
assessments or other government charges or levies being contested by the
Borrower in good faith by appropriate proceedings, diligently prosecuted,
provided that, at the time of the commencement and during the pendency of such
proceedings (i) adequate reserves have been established on the Borrower's books
in accordance with GAAP (including reserves for any penalty for late payment),
(ii) such contest operates to suspend collection of the contested taxes and
(iii) neither the Property subject to such Lien nor any interest therein would
be in any danger of being sold, forfeited or lost if the Borrower pays the
amount and satisfies the condition being contested, and Borrower would have the
opportunity to so pay such amount or satisfy such condition before the Property
is subject to foreclosure, sale or loss on account thereof if Borrower
ultimately fails to prevail in such contest;
(d) Liens in respect of Property imposed by law arising in the
ordinary course of business such as materialmen's, mechanics', warehousemen's
and other like Liens, provided that such Liens secure (i) only amounts not yet
due and payable or (ii) amounts being contested
12
in good faith by appropriate proceedings, diligently prosecuted, provided that
adequate reserves have been established on the Borrower's books in accordance
with GAAP;
(e) Liens under worker's compensation, unemployment insurance,
social security or similar legislation (other than Liens in excess of $150,000
under ERISA or the related provisions of the Code);
(f) Liens described on Schedule 1.01C hereto provided that such
Liens shall secure only those obligations which they secure on the date hereof
and/or restatements, refinancings or replacements thereof, so long as such
restatements refinancings, or replacements do not increase the principal amount
outstanding on such obligations;
(g) cash security securing letters of credit (not including any
Letters of Credit issued under this Agreement) either (i) listed on Schedule
8.01(e) hereto, (ii) provided in connection with an Acquisition permitted under
Section 8.11 or (iii) existing in an acquired entity upon consummation of an
Acquisition permitted under Section 8.11;
(h) Purchase Money Liens; provided that:
(i) the Lien on any Property subject to such a Purchase Money
Lien is created contemporaneously with, or assumed in connection with,
such acquisition;
(ii) the obligation secured by any Lien so created, assumed or
existing shall not exceed 100% of the lesser of the cost or fair market
value as of the time of acquisition of the Property covered thereby to
the Borrower or the Subsidiary acquiring the same; provided that if one
or more items of Property are acquired in one or a series of related
transactions (including pursuant to a master lease arrangement), such
Liens may also secure up to 100% of the lesser of cost or fair market
value of all other such related Property;
(iii) each such Lien shall attach only to the Property so
acquired (including, in appropriate cases under clause (ii), cross
collateralization of related Property) and fixed improvements thereon;
and
(iv) the obligations secured by such Liens are permitted by
Section 8.01(d);
(i) with respect to real estate, easements, rights of way,
restrictions, encroachments and other minor defects or irregularities in title,
in each case which do not and will not interfere in any material respect with
the ordinary conduct of the business of the Borrower or any of its Domestic
Subsidiaries;
(j) Liens solely on any xxxx xxxxxxx money deposits made by the
Borrower or any of its Subsidiaries in connection with any letter of intent or
purchase agreement for an Acquisition permitted hereunder;
13
(k) purported Liens evidenced by the filing of precautionary UCC
financing statements relating solely to operating leases of personal property
entered into in the ordinary course of business;
(l) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payments of customs duties in connection with the
importation of goods;
(m) any zoning or similar law or right reserved to or vested in any
Governmental Authority to control or regulate the use of any real property;
(n) licenses of patents, trademarks and other intellectual property
rights granted by the Borrower or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of the Borrower or any such Subsidiary;
(o) Liens that are replacements of Liens permitted under the other
clauses of this definition "Permitted Liens" to the extent that the original
Debt is extended, renewed, refinanced or replaced in accordance with and under
Section 8.01 and so long as the replacement Liens only encumber those assets
that secured the extended, renewed, refinanced or replaced Debt;
(p) Liens securing Capital Lease obligations permitted pursuant to
Section 8.04(b); and
(q) other Liens on assets and other property securing Debt in an
aggregate principal amount not to exceed $6,000,000 at any time outstanding.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan" means, at a particular time, any employee benefit plan (other than
a Multiemployer Plan) (i) which is covered by Title IV of ERISA and which is
maintained or contributed to by the Borrower or any Subsidiary or any ERISA
Affiliate or (ii) with respect to which the Borrower or any Subsidiary or any
ERISA Affiliate would have any liability under Section 4069 of ERISA if such
plan were terminated at such time.
"Pledge Agreement" means the Pledge Agreement substantially in the form of
Exhibit C hereto, to be executed and delivered by the Obligors (other than
Immaterial Subsidiaries) which own Capital Stock of any Domestic Subsidiary or
First-Tier Foreign Subsidiary (other than Immaterial Subsidiaries) under the
terms of this Agreement in respect of (i) 65% of the Capital Stock of all
First-Tier Foreign Subsidiaries (other than Immaterial Subsidiaries) owned by
the Obligors (other than Immaterial Subsidiaries), (ii) 100% of the Capital
Stock of all Domestic Subsidiaries owned by the Obligors (other than Immaterial
Subsidiaries), (iii) certain Debt among Obligors and (iv) certain Investments of
the Obligors, as amended, supplemented or otherwise modified from time to time.
14
"Possession Collateral" means all Collateral where physical possession is
necessary for the perfection of a security interest.
"Prime Rate" means the variable per annum rate of interest so designated
from time to time by the Reference Lender as its prime rate. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
charged to any customer.
"Prime Rate Loan" means any Loan when and to the extent the interest rate
for such Loan is determined in relation to the Prime Rate.
"Principal Office" means the principal office of the Lender, presently
located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Pro Forma Adjustment" has the meaning assigned to such term in Section
9.01.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
"Purchase Money Debt" means any Debt, including Capital Leases, incurred
in connection with the purchase of Property, specifically including any such
Debt secured by a Purchase Money Lien.
"Purchase Money Lien" means a Lien on any Property acquired by the
Borrower or any Subsidiary (including Property acquired pursuant to an
Acquisition permitted in accordance with Section 8.11 hereof, as and to the
extent that such Purchase Money Lien exists at the time of such Acquisition) or
placed on any Property in order to finance the acquisition of such Property, or
the assumption of any Lien on Property existing at the time of the acquisition
of such Property or of the Person holding such Property or a Lien in connection
with any conditional sale or other title retention agreement or a Capital Lease.
"Receivables" means all of the Borrower's and all of its Domestic
Subsidiaries' (other than Immaterial Subsidiaries) accounts, contract rights,
instruments, documents, chattel paper, general intangibles relating to accounts,
drafts and acceptances, and all other forms of obligations owing to the Borrower
or any such Domestic Subsidiary arising out of or in connection with the sale or
lease of goods or for services rendered, all guaranties and other security
thereof, whether secured or unsecured, now existing or hereafter created, and
whether or not specifically transferred or assigned to the Lender under the
Security Agreement or under any other Facility Document.
"Recently Acquired Companies" means Ontrack Data International Inc., a
Minnesota corporation, Zolfo Xxxxxx LLC, a New Jersey limited liability company,
and Zolfo Xxxxxx Holdings, Inc., a New Jersey corporation, and, in each case,
all Subsidiaries thereof acquired in connection with the acquisition of such
company by the Borrower.
"Reference Lender" means the Lender (or, with respect to Libor Rate Loans,
if the Lender no longer quotes on the London interbank market, such successor
leading bank in the London interbank market which shall be reasonably appointed
by the Lender and shall be reasonably acceptable to the Borrower).
15
"Regulation A" means Regulation A of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulation T" means Regulation T of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulation X" means Regulation X of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulatory Change" means any change after the date of this Agreement in
United States federal, state, municipal or foreign Laws (including without
limitation Regulation D) or the adoption or making after such date of any
written interpretations, directives or requests applying to a class of banks of
which Lender is a member, of or under any United States, federal, state,
municipal or foreign Laws (whether or not having the force of law) by any
Government Authority charged with the interpretation or administration thereof.
"Revolving Credit Commitment" means the obligation of Lender to make
Revolving Credit Loans under this Agreement in the aggregate principal amount of
$25,000,000, as such amount may be reduced or modified from time to time.
"Revolving Credit Loans" has the meaning assigned to such term in Section
2.01(a).
"Revolving Credit Note" means the promissory note issued by the Borrower
substantially in the form of Exhibit A hereto, dated the Closing Date,
evidencing the Revolving Credit Loan made by the Lender hereunder and all
promissory notes delivered in substitution or exchange therefor, as amended or
supplemented or otherwise modified from time to time.
"Revolving Credit Termination Date" means March 6, 2006.
"Security Agreement" means the Security Agreement substantially in the
form of Exhibit D hereto, to be executed and delivered by the Borrower and each
of its Domestic Subsidiaries (other than Immaterial Subsidiaries) under the
terms of this Agreement, as amended, supplemented or otherwise modified from
time to time.
"Security Documents" means the Guaranty Agreement, the Pledge Agreement,
the Security Agreement, the Trademark Security Agreement and each other guaranty
or security document that may from time to time be delivered to the Lender by an
Obligor in connection herewith or therewith. Each of the Security Documents
shall be cross defaulted and cross-collateralized with this Agreement and the
other Security Documents, without the requirement of further action.
16
"Senior Subordinated Notes" means the Borrower's unsecured 6% Convertible
Notes payable to Palisade Concentrated Equity Partnership, L.P. and Pegasus
Partners II, L.P. or their permitted successors, assigns or transferees, due
November 14, 2006.
"Standby Letters of Credit" means all standby letters of credit issued
hereunder to support obligations of the Borrower and the Subsidiaries,
contingent or otherwise, not prohibited hereunder.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by such Person.
"Termination Date" means the later of (i) the Revolving Credit Termination
Date and (ii) the date on which all Obligations have been indefeasibly paid in
full.
"Total Liabilities" means, at a particular date, the amount of liabilities
of the Consolidated Entities (other than capital stock and surplus and retained
earnings) as shown on a balance sheet of such Consolidated Entities in
accordance with GAAP as of such date, and including as liabilities all reserves
for contingencies and other potential liabilities required to be accrued in
accordance with GAAP, which would be included under shareholders' equity on a
consolidated balance sheet of the Consolidated Entities prepared in accordance
with GAAP, less amounts due from Affiliates.
"Trademark Security Agreement" means the Trademark Security Agreement
substantially in the form of Exhibit E, to be executed by Borrower and each
Domestic Subsidiary (other than Immaterial Subsidiaries), as amended,
supplemented or otherwise modified from time to time.
"Transferor Lender" has the meaning assigned to such term in Section
12.05(c).
"Type of Loan" has the meaning assigned to such term in Section 2.01(d).
"UCC" means the Uniform Commercial Code (as amended from time to time) of
any state which is applicable to the granting, attachment, perfection, priority
or enforcement of a security interest in, and the rights of a secured party to,
the Collateral or any portion thereof.
"Unfunded Benefit Liabilities" means, with respect to any Plan, the amount
(if any) by which the present value of all benefit liabilities (within the
meaning of Section 4001(a)(16) of ERISA) under such Plan exceeds the fair market
value of all Plan assets allocable to such benefit liabilities, as determined on
the most recent valuation date of such Plan and in accordance with the
provisions of ERISA for calculating the potential liability of the Borrower or
any Subsidiary or any ERISA Affiliate under Title IV of ERISA.
"Uniform Customs" means the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended from time to time.
17
"Voting Power" means, with respect to any Person, the power ordinarily
(without the occurrence of a contingency) to elect the members of the board of
directors (or persons performing similar functions) of such Person.
"Wholly-Owned Subsidiary" means, with respect to any Person, any
corporation or other entity of which all of the securities or other ownership
interests thereof are owned, directly or indirectly, by such Person.
Section 1.02 Accounting Terms. All accounting terms not specifically defined
herein shall be defined in accordance with GAAP, and all financial data required
to be delivered hereunder shall, to the extent GAAP is applicable, be prepared
in accordance with GAAP, except that all financial covenants shall be determined
in accordance with GAAP in effect as of the date hereof, unless the Borrower and
Lender agree to an adjustment of such financial covenants to take into account
any changes in GAAP.
ARTICLE II
THE CREDIT
Section 2.01 Loans.
(a) Revolving Credit Loans. Subject to the terms and conditions of
this Agreement, the Lender agrees to make revolving credit loans (the "Revolving
Credit Loans") to the Borrower at any time and from time to time from and
including the Closing Date to but excluding the Revolving Credit Termination
Date, in such amount that the aggregate principal amount of the Revolving Credit
Loans at any one time outstanding does not exceed the amount of the Revolving
Credit Commitment. The Revolving Credit Loans shall be repaid on the Revolving
Credit Termination Date.
(b) Letters of Credit. Subject to the terms and conditions of this
Agreement, the Lender agrees to issue Letters of Credit pursuant to Article 3,
at any time and from time to time from and including the Closing Date to but
excluding the Revolving Credit Termination Date. Notwithstanding the foregoing,
no Letter of Credit shall be issued if immediately thereafter (i) the principal
amount of the Revolving Credit Loans outstanding plus the L/C Obligations shall
exceed the amount of the Revolving Credit Commitment at such time or (ii) the
L/C Obligations shall exceed $5,000,000. Each Standby Letter of Credit shall
expire no later than the earlier of (x) the Revolving Credit Termination Date,
or (y) 365 days after the issue date of such Standby Letter of Credit. Each
documentary Letter of Credit shall expire no late than the earlier of (x) the
Revolving Credit Termination Date, or (y) 180 days after the issue date of such
documentary Letter of Credit. All L/C Obligations shall be paid on or prior to
the Revolving Credit Termination Date.
(c) Commitments. Notwithstanding anything contained in this
Agreement to the contrary, at no time shall the sum of the principal amount of
all Loans outstanding and all L/C Obligations exceed the amount of the Revolving
Credit Commitment.
18
(d) Types of Loans. The Loans may be outstanding as Prime Rate
Loans or Libor Rate Loans (each a "Type of Loan"). Each Type of Loan of Lender
shall be made and maintained at Lender's Lending Office for such Type of Loan.
Section 2.02 The Note. The Revolving Credit Loans of Lender shall be evidenced
by a single Revolving Credit Note in favor of Lender.
Section 2.03 Purpose. The Borrower shall use the proceeds of the Revolving
Credit Loans solely for (a) repayment of all outstanding indebtedness under the
Xxxxxxx Xxxxx Credit Facility other than the letters of credit set forth on
Schedule 8.01(e), (b) general corporate purposes including working capital and
to issue letters of credit as provided hereunder and (c) for other general
corporate expenditures incurred in the ordinary course of business. Such
proceeds shall not be used for the purpose, whether direct, indirect, immediate,
incidental or ultimate, of (i) prepayment of the principal amount, in whole or
in part, of the Senior Subordinated Notes or (ii) buying or carrying "margin
stock" within the meaning of Regulation U, or extending credit to others for the
purpose of purchasing or carrying any margin stock.
Section 2.04 Borrowing Procedures. Borrower shall give Lender notice of each
borrowing to be made, and each Letter of Credit to be issued, hereunder as
provided in Section 2.08.
Section 2.05 Optional Prepayments, Conversions and Revolving Credit Commitment
Reductions. The Borrower shall have the right to make prepayments of principal
without penalty or premium (other than amounts payable in accordance with
Article IV (if any)), or to convert one Type of Loan into another Type of Loan,
or to reduce the amount of the Revolving Credit Commitment, at any time or from
time to time; provided that (a) Borrower shall give Lender notice of each such
prepayment, conversion or reduction as provided in Section 2.08; (b) Libor Rate
Loans may be prepaid or converted only on the last day of an Interest Period for
such Loans unless the Borrower agrees to provide to Lender compensation in
accordance with Section 4.05; and (c) any reduction of the Revolving Credit
Commitment shall be permanent, shall be in multiples of $1,000,000 and shall be
subject to Section 2.01(c).
Section 2.06 Mandatory Prepayments. Commitments Exceeded. If at any time the
aggregate principal amount of all Revolving Credit Loans outstanding plus the
L/C Obligations shall exceed the Revolving Credit Commitment at such time, the
Borrower shall repay the Lender forthwith such amounts as may be necessary to
eliminate such excess (and if prepayment on such date would cause Borrower to
incur costs pursuant to Section 4.05, the Borrower shall deposit with the
Lender, until such prepayment can be made or such additional costs avoided,
sufficient cash collateral (which cash collateral shall be held by the Lender
for the benefit of the Borrower in an interest bearing account) to cover such
excess which shall be withdrawn by the Lender upon the expiration of the
applicable Interest Period to eliminate such excess and any remaining funds on
deposit in the cash collateral account shall be paid to the Borrower, it being
understood that so long as any such funds are on deposit, interest shall
continue to accrue on the outstanding Loans), and the failure of the Borrower to
make such payment shall constitute an Event of Default.
Section 2.07 Interest Periods; Renewals.
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(a) In the case of each Libor Rate Loan, Borrower shall select an
Interest Period of any duration in accordance with the definition of Interest
Period in Section 1.01, subject to the following limitations: (i) no Interest
Period may extend beyond the Revolving Credit Termination Date; (ii)
notwithstanding clause (i) above, no Interest Period shall have a duration of
less than one month, and if any such proposed Interest Period would otherwise be
for a shorter period, such Interest Period shall not be available; and (iii) no
more than eight Interest Periods for Loans of Lender may be outstanding at any
one time.
(b) Upon notice to the Lender as provided in Section 2.08, Borrower
may renew any Libor Rate Loan on the last day of the Interest Period therefor as
the same Type of Loan with an Interest Period of the same or different duration
in accordance with the limitations provided above. If Borrower shall fail to
give notice to the Lender of such a renewal, such Libor Rate Loan shall
automatically become a Prime Rate Loan on the last day of the current Interest
Period for such Libor Rate Loan.
Section 2.08 Certain Notices. Notices by Borrower to Lender of each borrowing
pursuant to Section 2.04, each prepayment, conversion or Revolving Credit
Commitment reduction pursuant to Section 2.05 and each renewal pursuant to
Section 2.07(b): (a) shall be irrevocable; (b) in the case of borrowings and
prepayments of, conversions into and renewals of Prime Rate Loans and reductions
of the Revolving Credit Commitment, shall be effective only if received by
Lender not later than 12:00 noon New York, New York time on the same Business
Day; (c) in the case of borrowings and prepayments of, conversions into and (in
the case of Libor Rate Loans) renewals of Libor Rate Loans, shall be effective
only if received by Lender not later than 12:00 noon New York, New York time
three Business Days prior to such borrowing, prepayment, conversion or renewal.
Each such notice shall specify the type of the Loans to be borrowed, prepaid,
converted or renewed and the amount thereof (subject to Section 2.09) (and, in
the case of a conversion, the Type of Loan to result from such conversion, and,
in the case of a Libor Rate Loan, the Interest Period therefor), the date of the
borrowing or prepayment, or conversion or renewal (which shall be a Business
Day).
In order to request the issuance of a Letter of Credit, Borrower shall
deliver to Lender a completed and duly executed Application. The procedure with
respect to any Letter of Credit issued or requested to be issued hereunder shall
otherwise be as set forth in Article 3.
Section 2.09 Minimum Amounts. Except for borrowings which exhaust the full
remaining amount of the Revolving Credit Commitment, or prepayments or
conversions which result in the prepayment or conversion of all Loans of a
particular type or conversions made pursuant to Section 4.04, each borrowing,
prepayment, conversion and renewal of principal of Loans of a particular type
shall be in an amount not less than (i) $100,000 in the aggregate in the case of
Prime Rate Loans and (ii) $750,000 in the aggregate (plus increments of $100,000
in excess thereof) in the case of Libor Rate Loans unless such minimum amount is
waived by the Lender (borrowings, prepayments, conversions or renewals of or
into different Types of Loans or, in the case of Libor Rate Loans having
different Interest Periods at the same time hereunder to be deemed separate
borrowings, prepayments, conversions and renewals for the purposes of the
foregoing, one for each Type of Loan and one for each Interest Period). Anything
in this Agreement to the contrary notwithstanding, the aggregate principal
amount of Libor Rate Loans having concurrent Interest Periods shall be at least
equal to $750,000.
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Section 2.10 Interest.
(a) Subject to the other terms and conditions of this Agreement,
interest on each Loan shall be calculated, at Borrower's option, in one or more
of the following manners: (A) a variable interest rate equal to the Prime Rate
plus the Applicable Margin, and (B) subject to availability, at Borrower's
request with respect to Libor Rate Loans, the Libor Rate plus the Applicable
Margin.
(b) Interest shall accrue on the outstanding and unpaid principal
amount of each Loan for the period from and including the date of such Loan to
but excluding the date such Loan is due. While an Event of Default is
continuing, interest shall accrue at the Default Rate on the outstanding
principal amount of any Loan and any other amount payable by the Borrower
hereunder (to the extent such amount is past due), under the Note or under any
other Facility Document (including the amount of any interest due thereon) to
the fullest extent permitted by law from and including such due date to but
excluding the date such amount is paid in full or such Event of Default is cured
or waived.
(c) Changes in the rate of interest resulting from changes in the
Prime Rate shall take place immediately without notice or demand of any kind.
Interest on each Loan shall be calculated on the basis of a year of 360 days for
the actual number of days elapsed. Promptly after the determination of any
interest rate provided for herein or any change therein, Lender shall notify
Borrower in writing of such determination.
(d) All accrued interest shall be paid in arrears (i) for each
Prime Rate Loan on the last Business Day of each Fiscal Quarter commencing on
the first such date after such Loan was made; and (ii) for each Libor Rate Loan,
on the last day of the Interest Period with respect thereto and, in the case of
an Interest Period greater than three months, at three-month intervals after the
first day of such Interest Period; provided that interest accruing at the
Default Rate shall be due and payable from time to time on demand of Lender. In
addition, at the time of conversion of any Loan, all accrued and unpaid interest
shall be due and payable. Notwithstanding anything to the contrary contained
herein, all accrued and unpaid interest shall become due and payable upon the
maturity (whether as scheduled or as accelerated or otherwise) of the Loans.
Section 2.11 Fees.
(a) Up Front Fee. The Borrower shall pay to Lender an up front fee
equal to $312,500, of which $100,000 has heretofore been paid and $212,500 shall
be due and payable on the date of execution of this Agreement.
(b) Commitment Fee. The Borrower shall pay to Lender a commitment
fee on the daily average of the Availability, for the period from and including
the Closing Date to the earlier of the date the Revolving Credit Commitment is
terminated or the Revolving Credit Termination Date at the Applicable Margin (as
indicated in the definition of "Applicable Margin"), calculated on the basis of
a year of 360 days for the actual number of days elapsed ("Commitment Fee"). The
accrued Commitment Fee shall be due and payable in arrears on the last Business
Day of each Fiscal Quarter, commencing on the first such date after the Closing
21
Date. Notwithstanding anything to the contrary, Lender shall not be entitled to
receive any Commitment Fee for any day that Lender fails or refuses (or has
failed or refused) to make a Revolving Credit Loan as required by this
Agreement, regardless of whether Lender subsequently makes such Revolving Credit
Loan, and the Commitment Fee payable by Borrower shall be calculated
accordingly.
(c) Standby Letter of Credit Fees. The Borrower shall pay to Lender
Letter of Credit fees equal to the Applicable Margin for Libor Rate Loans
multiplied by the face amount of each Standby Letter of Credit issued hereunder
and outstanding, collected on the basis of a year of 360 days for the actual
number of days elapsed, such fees to be payable in four (4) calendar quarterly
payments based on the face amount of such Letter of Credit on the first day of
each such calendar quarter, the first payment to be made upon issuance of each
such Letter of Credit.
(d) Letter of Credit Processing Fees. In addition to the fees set
forth in Section 2.11(c), the Borrower agrees to pay, upon demand, the customary
fees, charges and expenses of the Issuing Lender in connection with the issuance
and processing of Letters of Credit, including documentary Letters of Credit.
(e) Late Payment Fees. If any payment due and payable under this
Agreement, the Note or any other Facility Document is not paid in full within
ten (10) days after the same is due and payable, Borrower shall pay a fee to
Lender equal to the product of (x) the amount of such payment that was due and
payable by (y) two percent (2%).
Section 2.12 Payments Generally. All payments under this Agreement, the Note and
the other Facility Documents shall be made by the Borrower to Lender at 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, or such other place as Lender may
from time to time specify in writing in lawful currency of the United States of
America in immediately available funds, without counterclaim or set off and free
and clear of, and without deduction or withholding for, any taxes or other
payments, not later than 12:00 noon New York, New York time on the relevant
dates specified herein (each such payment made after such time on such due date
to be deemed to have been made on the next succeeding Business Day) by, unless
Lender agrees to accept payment by other means, the debiting by Lender for the
account of the applicable Lending Office of Lender, of the amount of any such
payment from any ordinary deposit account of the Borrower with Lender. Borrower
shall, at the time of making each optional prepayment under this Agreement, the
Note or any other Facility Document, and in addition to any notice required by
Section 2.08, specify to Lender the principal or other amount payable by the
Borrower under this Agreement, the Note or such other Facility Document to which
such payment is to be applied (and in the event that it fails to so specify, or
if a Default or Event of Default has occurred and is continuing, Lender may
apply such payment as provided in Section 10.04). If the due date of any payment
under this Agreement, the Note or any other Facility Document would otherwise
fall on a day which is not a Business Day, such date shall be extended to the
next succeeding Business Day (unless, in the case of a Libor Rate Loan, such
extension would carry such due date into another calendar month, in which event
such payment shall be due on the immediately preceding Business Day) and
interest shall be payable for any principal so extended for the period of such
extension. Each payment received by Lender hereunder, under the Note or under
any other
22
Facility Document shall be paid promptly, in immediately available funds, for
the account of Lender's Lending Office.
All payments shall be applied first to the payment of all fees,
expenses and other amounts due the Lender (excluding principal and interest),
then to accrued and unpaid interest, and the balance on account of outstanding
principal; provided, however, that after the occurrence and during the
continuance of an Event of Default, payments will be applied as set forth in
Section 10.04.
ARTICLE III
LETTERS OF CREDIT
Section 3.01 L/C Commitment.
(a) Subject to the terms and conditions hereof, the Issuing Lender,
in reliance on the agreements of the Borrower contained herein, agrees to issue
Letters of Credit for the account of the Borrower or any Subsidiary on any
Business Day during the term of the Revolving Credit Commitment in such form as
may be approved from time to time by the Issuing Lender; provided that the
Issuing Lender shall not issue any Letter of Credit if, after giving effect to
such issuance, the conditions of Section 2.01(b) and (c) would not be satisfied;
and provided, further, that no Letter of Credit shall be issued in a face amount
of less than $75,000.
(b) Each Letter of Credit shall (i) be denominated in Dollars; and
(ii) expire no later than (x) with respect to Standby Letters of Credit, the
earlier of (A) the Revolving Credit Termination Date and (B) 365 days after the
issue date of such Standby Letter of Credit, and (y) with respect to documentary
Letters of Credit, the earlier of (A) the Revolving Credit Termination Date and
(B) 180 days after the issue date of such documentary Letter of Credit.
(c) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York, without giving effect to the conflicts of laws principles thereof.
(d) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender to exceed any limits imposed by, any applicable Law.
(e) The responsibility of the Issuing Lender to the Borrower in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit and otherwise comply with the
Uniform Customs.
Section 3.02 Procedure for Issuance of Letters of Credit. Borrower may from time
to time request that the Issuing Lender issue a Letter of Credit by delivering
to the Issuing Lender at its address for notices specified herein an Application
therefor, completed to the satisfaction of the
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Issuing Lender, and such other certificates, documents and other papers and
information as the Issuing Lender may request. Upon receipt of any Application,
the Issuing Lender shall process such Application and the certificates,
documents and other papers and information delivered to it in connection
therewith in accordance with its customary procedures and shall promptly issue
the Letter of Credit requested thereby (but in no event shall the Issuing Lender
be required to issue any Letter of Credit earlier than three Business Days after
its receipt of the Application therefor and all such other certificates,
documents and other papers and information relating thereto) by issuing the
original of such Letter of Credit to the beneficiary thereof or as otherwise may
be agreed by the Issuing Lender and Borrower. The Issuing Lender shall furnish a
copy of such Letter of Credit to the Borrower promptly following the issuance
thereof.
Section 3.03 Reimbursement; Obligations of Borrower. (a) The Borrower agrees to
reimburse the Issuing Lender on each date on which the Issuing Lender notifies
the Borrower of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender for the amount of (i) such draft so paid
and (ii) any taxes, fees, charges or other documented out-of-pocket costs or
expenses incurred by the Issuing Lender in connection with such payment
(exclusive and without duplication of any such fees, charges and expenses paid
under Section 2.11(d)). Unless such amounts are paid by the Borrower on the date
of such notice and provided that a Revolving Credit Loan in such amount may be
made pursuant to this Agreement, each drawing honored by the Issuing Lender, to
the extent of the Availability, shall constitute a request to the Lender for a
Revolving Credit Loan in such amount, bearing interest at the Prime Rate
pursuant to Sections 2.07 and 2.10. If a Revolving Credit Loan in such amount
may not be made pursuant to this Agreement, such amount is to be paid by the
Borrower on the date of such notice.
The Borrower hereby agrees at all times to protect, indemnify and
save harmless, and reimburse upon demand, the Issuing Lender and the Issuing
Lender's correspondents and Lender from and against any and all claims, actions,
suits and other legal proceedings, and from and against any and all losses,
claims, demands, liabilities, damages, costs, charges, reasonable counsel fees
and other documented expenses which the Issuing Lender or the Issuing Lender's
correspondents or Lenders may, at any time, sustain or incur by reason of or in
consequence of or arising out of the issuance of the Letters of Credit, it being
the intention of the parties that this Agreement shall be construed and applied
to protect and indemnify the Issuing Lender and the Issuing Lender's
correspondents and Lender against any and all risks involved in the issuance of
the Letters of Credit, all of which risks are hereby assumed by the Borrower,
including without limitation, any and all risks of the acts of omissions whether
rightful or wrongful, of any present or future de jure or de facto government or
Governmental Authority (all such acts and omissions, herein called the
"Government Acts"). The Issuing Lender shall not, in any way, be liable for any
failure by the Issuing Lender or anyone else to pay any draft under any Letter
of Credit as a result of any Government Acts any other cause beyond the Issuing
Lender's control or the control of the Issuing Lender's correspondents or
Lender, or, if the Issuing Lender, in the Issuing Lender's sole judgment,
determines such payment would violate any applicable Law. Notwithstanding
anything to the contrary contained in this Agreement, the Borrower shall not be
required to indemnify the Issuing Lender, its correspondents or Lender under the
terms of this paragraph to the extent any otherwise covered losses, claims,
demands, liabilities, damages, costs, charges, fees and other expenses arise
from the gross negligence or willful misconduct of any such indemnified party.
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(b) Interest shall be payable at the Prime Rate, plus the
Applicable Margin for Prime Rate Loans (or, if any Event of Default shall have
occurred and be continuing, at the Default Rate) on any amount remaining unpaid
by the Borrower under Section 3.03(a) from the date such amount becomes payable
until the earlier of (i) the date of payment in full by the Borrower of such
amount, or (ii) the date any Revolving Credit Loan is made with respect to such
amount.
(c) Each payment made pursuant to this Article III shall be made to
the Issuing Lender at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, or such
other address as the Issuing Lender may indicate in writing for such purpose, in
Dollars and in immediately available funds.
Section 3.04 Obligations Absolute. (a) The Borrower's obligations under this
Article III shall be absolute and unconditional under any and all circumstances
and irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender or any beneficiary of a
Letter of Credit.
(b) Borrower agrees with the Issuing Lender that the Issuing Lender
shall not be responsible for, and the Borrower's reimbursement obligations under
this Article III shall not be affected by, among other things, (i) the validity
or genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or (ii) any
dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred, or
(iii) any claims whatsoever of the Borrower against any beneficiary of such
Letter of Credit or any such transferee, or (iv) any inability or failure of
Lender to make a Revolving Credit Loan.
(c) Notwithstanding anything to the contrary contained in this
Section 3.04 or otherwise in this Agreement, but subject to the specific
provisions of subsection (b) above, the Borrower's obligations under this
Article III shall be subject to, and the Borrower shall have no liability for,
any losses, claims, damages, costs, fees or expenses of Issuing Lender or any of
its correspondents or Lender to the extent any such losses, claims, damages,
costs, fees or expenses that arise from, the gross negligence or willful
misconduct of Issuing Lender, its correspondents or Lender.
Section 3.05 Conflict. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Article III, the provisions of this Article III shall apply.
Section 3.06 Documents. Except insofar as instructions to the contrary have been
previously given by Borrower in writing to the Issuing Lender, the Issuing
Lender and any of its correspondents or Lender may receive and accept as "Bills
of Lading" under any Letter of Credit any documents issued or purporting to be
issued by or on behalf of any carrier which acknowledges receipt of property for
transportation, whatever the specific provisions of such documents, and the date
of each such document shall be deemed the date of shipment of the property
mentioned therein; and the Issuing Lender may receive and accept as documents of
insurance either insurance policies or insurance certificates. Commercial
invoices presented under any Letter of Credit may be referred to for the
description of the goods; unless otherwise
25
specified in the related Application, wherever the goods are described in other
documents, description in general terms is acceptable.
Section 3.07 Partial Shipments. Except insofar as instructions to the contrary
have been previously given by a Borrower in writing to the Issuing Lender, the
Borrower agrees that partial shipments may be made under any documentary Letter
of Credit and the Issuing Lender may honor the related drafts; and if any
documentary Letter of Credit specifies shipments in installments within stated
periods, and the shipper fails to ship in any designated period, such
documentary Letter of Credit shall cease to be available for that or any
subsequent installment at the Issuing Lender's discretion.
Section 3.08 Extensions, Increases and Other Modifications to Letters of Credit.
The Borrower agrees that in the event of (i) any extension of the maturity or
time for presentation of drafts, acceptances or documents, (ii) any increase in
the amount of any Letter of Credit or (iii) any other modification of the terms
of any Letter of Credit, in each case at the request of Borrower and whether
with or without notification to any other Person, this Agreement shall be
binding upon the Borrower with regard to the Letter of Credit so extended,
increased or otherwise modified, to drafts, documents and property covered
thereby, and to any action taken or omitted to be taken by the Issuing Lender or
any of the Issuing Lender's correspondents or Lender in accordance with such
extension, increase or other modification. Any such extension, increase or other
modification shall, for purposes of this Agreement, be deemed issuance of a new
Letter of Credit.
Section 3.09 Limitations of Liability. The Borrower assumes all risks of the
acts and omissions of the users or beneficiaries of each Letter of Credit and
all risks of misuse of each Letter of Credit.
Neither the Issuing Lender nor the Issuing Lender's correspondents
or Lender shall be responsible for, and the Borrower's reimbursement obligations
under this Article III shall not be affected by, among other things, (a) the
existence, character, quality, quantity, condition, packing, value or delivery
of the property purporting to be represented by documents; (b) for any
difference in character, quality, quantity, condition, packing or value of the
property from that expressed in documents; (c) for the time, place, manner or
order in which shipment is made; (d) for partial or incomplete shipment or
failure or omission to ship any or all of the property referred to in any Letter
of Credit; (e) for the character, adequacy, validity, or genuineness of any
insurance; (f) for the solvency or responsibility of any insurer, or for any
other risk connected with insurance; (g) for any deviation from instructions,
delay, default or fraud by the shipper or anyone else in connection with the
property or the shipping thereof; (h) for the solvency, responsibility or
relationship to the property of any party issuing any documents in connection
with the property; (i) for delay in arrival or failure to arrive of either the
property or any of the documents relating thereto; (j) for delay in giving or
failure to give notice of arrival or any other notice; (k) for any breach of
contract between the shippers or vendors and the Borrower; (l) for any Laws
which may be effective in jurisdictions of negotiation and/or payment of any
Letter of Credit; (m) for failure of any draft to bear any reference or adequate
reference to any Letter of Credit, or failure of documents to accompany any
draft at negotiation, or failure of any Person to note the amount of any draft
on the reverse of any Letter of Credit or to surrender or take up any Letter of
Credit (unless specifically required on the face and by the
26
terms of the Letter of Credit) or to send forward documents apart from drafts as
required by the terms of the Letter of Credit; (n) for errors, omissions,
interruptions or delays in transmission, or delivery of any messages, by mail,
cable, telegraph, wireless or otherwise, whether or not they be in cipher; (o)
any error, neglect or default of any of the Borrower's correspondents or
lenders; or (p) the validity, accuracy or genuineness of drafts, documents or
required statements, even if such drafts, documents or statements should in fact
prove to be in any or all respects invalid, inaccurate, fraudulent or forged and
notwithstanding that Borrower shall have notified the Issuing Lender thereof.
If any Letter of Credit provides that payment is to be made by the
Issuing Lender's correspondent, neither the Issuing Lender nor such
correspondent shall be responsible for the failure of any of the documents
specified in such Letter of Credit to come into the Issuing Lender's hands or
for any delay in connection therewith, and the Borrower's obligations shall not
be affected by such failure or delay in the receipt by the Issuing Lender of any
such documents. In furtherance and extension and not in limitation of the
specified provisions hereinbefore set forth, the Borrower agrees that any action
taken or omission to act by the Issuing Lender or by any correspondent of the
Issuing Lender under or in connection with any Letter of Credit or the relative
drafts, documents or property, if taken or done without gross negligence or
willful misconduct, shall be binding on the Borrower and shall not put the
Issuing Lender or the Issuing Lender's correspondents or Lender under any
resulting liability to the Borrower.
Section 3.10 Compliance with Regulations; Licenses; Insurance. Borrower agrees
to procure promptly any necessary import and export or other licenses for the
import or export or shipping of any property relating to any Letter of Credit
and to comply in all material respects with all applicable Laws in regard to the
shipment of the property or the financing thereof, and to furnish such
certificates in that respect as the Issuing Lender may at any time reasonably
require, and to keep the property adequately covered by insurance reasonably
satisfactory to the Issuing Lender, and to assign the policies or certificates
of insurance to the Issuing Lender, or to make the loss or adjustment, if any,
payable to the Issuing Lender, at the option of the Issuing Lender; and to
furnish to the Issuing Lender upon demand evidence of acceptance by the insurers
of such assignment. Should the insurance upon such property for any reason be
unsatisfactory to the Issuing Lender, the Issuing Lender may, at the Borrower's
expense, obtain insurance on such property reasonably satisfactory to the
Issuing Lender.
Section 3.11 Violations of Law. In the event that any action taken under or in
connection with any Letter of Credit could, in the Issuing Lender's sole
judgment, have the effect of violating any applicable Law, the Issuing Lender
may take or refuse to take any action as it deems necessary, including
dishonoring any draft or acceptance presented hereunder, and the Issuing Lender
shall be indemnified and held harmless by the Borrower from any claim arising
out of such action or inaction on the part of the Issuing Lender, other than any
claim arising from the gross negligence or willful misconduct of the Issuing
Lender.
Section 3.12 Law and Regulations; Additional Payments. If any future Law or the
future interpretation of any existing or future Law by any Governmental
Authority, or compliance by the Issuing Lender with any future request or
directive (whether or not having the force of law) of any such Governmental
Authority, or the Issuing Lender's reasonable action in anticipation thereof to
enable the Issuing Lender to comply therewith, either (i) imposes, modifies or
deems
27
applicable or results in the application of, any reserve, special deposit,
capital maintenance, capital ratio or similar requirement against Letters of
Credit (or participations therein) or (ii) imposes on the Issuing Lender any
other condition regarding this Agreement or the Letters of Credit, and the
result thereof is to increase the cost to the Issuing Lender of issuing or
maintaining, or to impose upon the Issuing Lender or increase any capital
requirement applicable as a result of the issue or maintenance of, any Letters
of Credit (or participations therein) or the reimbursement obligations of the
Borrower hereunder, or to reduce the amounts receivable by the Issuing Lender
hereunder (which increase in cost or increase in or imposition of capital
requirements or reduction in amounts receivable may be determined by the Issuing
Lender's reasonable allocation of the aggregate of such costs increases, capital
increases or impositions or reductions in amounts receivable) then, provided
that the Issuing Lender demands similar increased costs with respect to all
other similarly affected letters of credit across the portfolio of such Issuing
Lender, upon demand by the Issuing Lender, the Borrower shall immediately pay to
the Issuing Lender (for itself) from time to time as specified by the Issuing
Lender, additional commissions which shall be sufficient to compensate the
Issuing Lender for such increased cost or increase in (or imposition of) capital
requirements or reduction in amounts receivable by the Issuing Lender together
with interest on each such amount from the date demanded until payment in full
thereof at the Prime Rate, plus the Prime Rate Applicable Margin (or, if any
Event of Default shall have occurred and be continuing, at the Default Rate).
Notwithstanding anything to the contrary contained in this Agreement, the
Borrower shall have no liability for any increased costs otherwise accruing more
than 90 days prior to the receipt by the Borrower of written notice from the
Issuing Lender concerning such increased costs. The Borrower shall pay such
increased costs within five (5) Business Days of receipt of such a written
notice. A certificate setting forth in reasonable detail the increased cost,
reduction in all amounts receivable or amounts necessary to compensate the
Issuing Lender as a result of an increase in (or imposition of) capital
requirements submitted by the Issuing Lender or such L/C Participant to Borrower
shall be conclusive, absent manifest error, as to the amount thereof.
Notwithstanding anything to the contrary contained in this Agreement, (a)
nothing in this Section 3.12 shall require the Borrower to compensate the
Issuing Lender for any changes in Law that would increase the amount of general
income taxes payable by such Issuing Lender, and (b) the Issuing Lender shall
take all reasonable steps to avoid such increased cost, including where
reasonable changing the office handling the account.
Section 3.13 Compliance with Letters of Credit. Notwithstanding anything to the
contrary contained in this Article III or otherwise in this Agreement, but
subject to the specific provisions of Sections 3.04(b) and 3.09, the Issuing
Lender, its correspondents and Lender shall at all times be required to comply
with the facial requirements of each Letter of Credit, including, if applicable,
requiring the delivery of documents, which on their face comply with the
requirements of the face of the Letter of Credit before honoring any draws on
any Letter of Credit.
ARTICLE IV
YIELD PROTECTION; ILLEGALITY; ETC.
Section 4.01 Additional Costs. (a) The Borrower shall pay directly to Lender
from time to time on demand such amounts as Lender may determine to be necessary
to compensate it for any
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increased costs which Lender determines are attributable to its making or
maintaining any Libor Rate Loans under this Agreement or the Note or its
obligation to make any such Loans hereunder, or any reduction in any amount
receivable by Lender hereunder in respect of any such Loans or such obligation
(such increases in costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any Regulatory Change relating to any
such Loans or such obligation which: (i) changes the basis (but not the rate) of
taxation of any amounts payable to Lender under this Agreement or the Note in
respect of any of such Loans (other than franchise, capital, branch profits
taxes or taxes imposed with respect to the income of Lender or of its Lending
Office for any of such Loans by the jurisdiction in which Lender or its
designated Lending Office is organized, doing business or has its Principal
Office or such Lending Office); or (ii) imposes or modifies any reserve, special
deposit, deposit insurance or assessment, minimum capital, capital ratio or
similar requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of, Lender (including any of such Loans
or any deposits referred to in the definition of "Libor Rate" in Section 1.01);
provided that no such compensation shall be payable to the extent that the Libor
Rate has been adjusted to account for such increased cost; or (iii) imposes any
other similar condition affecting this Agreement or the Note (or any of such
extensions of credit or liabilities); provided that Lender demands similar
Additional Costs with respect to all other similarly affected loan facilities
across its portfolio. Lender will notify Borrower in writing of any event
occurring after the date of this Agreement which will entitle Lender to
compensation pursuant to this Section 4.01(a) as promptly as practicable after
it obtains knowledge thereof and determines to request such compensation;
provided, that, the Borrower shall have no liability for any such Additional
Costs otherwise accruing more than 90 days prior to the receipt by Borrower of
the written notice concerning such Additional Costs. The Borrower shall pay any
such Additional Costs within five (5) Business Days of receipt of such a written
notice. If Lender requests compensation from the Borrower under this Section
4.01(a), or under Section 4.01(c), Borrower may, by notice to Lender, require
that Lender's affected Loans with respect to which such compensation is
requested be converted in accordance with Section 4.04. If any Additional Costs
are imposed for which the Borrower would be required to make a payment under
this Section 4.01, the Lender in good faith shall attempt to avoid or reduce
such Additional Costs by taking any appropriate action (including, without
limitation, assigning its rights hereunder to a related entity or a different
Lending Office) if such action will not, in the reasonable judgment of Lender,
be disadvantageous to Lender and provided that the Borrower pays any Additional
Costs resulting from such action and the out-of-pocket costs and expenses of
Lender in undertaking such action. The term "Lender" as used in this Section
4.01(a) shall include, if applicable, Lender's parent holding company.
(b) Without limiting the effect of the foregoing provisions of this
Section 4.01 (but without duplication), in the event that, by reason of any
Regulatory Change, Lender either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of Lender which includes deposits by reference to
which the interest rate on Libor Rate Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of Lender which
includes Libor Rate Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets which it may hold, then, if Lender
so elects by notice to the Borrower, the obligation of Lender to make or renew
Libor Rate Loans and to convert Prime Rate Loans hereunder shall be
29
suspended until the date such Regulatory Change ceases to be in effect (and all
affected Libor Rate Loans held by Lender then outstanding shall be converted in
accordance with Section 4.04).
(c) Without limiting the effect of the foregoing provisions of this
Section 4.01 (but without duplication), the Borrower shall pay directly to
Lender from time to time on request such amounts as Lender may determine to be
necessary to compensate Lender for any costs of capital which it determines are
attributable to the maintenance by it pursuant to the adoption, effectiveness or
implementation of, or any change in, any Law of any jurisdiction or any written
interpretation, directive or request (whether or not having the force of law and
whether in effect on the date of this Agreement or thereafter) of any
Governmental Authority in respect of its Loans hereunder or its obligation to
make Loans hereunder (such compensation to include, without limitation, an
amount equal to any reduction in return on assets or equity of Lender to a level
below that which it could have achieved but for such Law, interpretation,
directive or request). Lender will notify Borrower in writing if it is entitled
to compensation pursuant to this Section 4.01(c) as promptly as practicable
after it determines to request such compensation, but in no event shall Lender
be entitled to reasonable compensation for any period in excess of 90 days prior
to the date of such notice. The Borrower shall pay such additional compensation
within five (5) Business Days of receipt of such written notice.
(d) Determinations and allocations by Lender for purposes of this
Section 4.01 of the effect of any Regulatory Change pursuant to subsections (a)
or (b), or of the effect of capital maintained pursuant to subsection (c), on
its costs of making or maintaining Loans or its obligation to make Loans, or on
amounts receivable by, or the rate of return to, it in respect of Loans or such
obligation, and of the additional amounts required to compensate Lender under
this Section 4.01, shall be set forth in certificates, signed by an officer of
Lender, delivered to Borrower. Such certificates shall include the amount
required to be paid by the Borrower to Lender and the computations made by
Lender to determine such amount. Any such determination and allocation shall be
conclusive, absent demonstrable error, provided that such determinations and
allocations are made in good faith and on a reasonable basis.
Section 4.02 Limitation on Libor Rate Loans. Anything herein to the contrary
notwithstanding, if:
(a) Lender reasonably determines (which determination shall be
conclusive, absent manifest error) that quotations of interest rates for the
relevant deposits referred to in the definition of "Libor Rate" in Section 1.01
are not being provided in the relevant amounts or for the relevant maturities
for purposes of determining the rate of interest for any Libor Rate Loans as
provided in this Agreement; or
(b) the Lender reasonably determines (which determination shall be
conclusive, absent demonstrable error) that the relevant rates of interest
referred to in the definition of "Libor Rate" in Section 1.01 upon the basis of
which the rate of interest for any Libor Rate Loans are to be determined do not
adequately cover the cost to the Lender of making or maintaining such Loans;
then Lender shall give Borrower prompt written notice thereof, and so long as
such condition remains in effect, the Lender shall be under no obligation to
make or renew affected Libor Rate
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Loans, or to convert Prime Rate Loans into affected Libor Rate Loans and the
Borrower shall, on the last day(s) of the then current Interest Period(s) for
the outstanding affected Libor Rate Loans, either prepay such Libor Rate Loans
or convert such Libor Rate Loans into another Type of Loan in accordance with
Section 2.05.
Section 4.03 Illegality. Notwithstanding any other provision in this Agreement,
in the event that it becomes unlawful for Lender or its Lending Office to honor
its obligation to make, maintain or renew Libor Rate Loans hereunder or convert
Prime Rate Loans into Libor Rate Loans, then Lender shall promptly notify
Borrower thereof in writing and Lender's obligation to make, maintain or renew
Libor Rate Loans and to convert Prime Rate Loans into Libor Rate Loans hereunder
shall be suspended until such time as Lender may again make, maintain or renew
such Libor Rate Loans and convert Prime Rate Loans into Libor Rate Loans, and
Lender's outstanding Libor Rate Loans, as the case may be, shall be converted
into Prime Rate Loans in accordance with Section 4.04.
Section 4.04 Certain Conversions Pursuant to Sections 4.01 and Section 4.03. If
Libor Rate Loans are to be converted pursuant to Section 4.01 or Section 4.03,
Libor Rate Loans shall be automatically converted into Prime Rate Loans on the
last day(s) of the then current Interest Period(s) for Libor Rate Loans (or in
the case of a conversion required by Section 4.03, on such earlier date as
Lender may specify in writing to Borrower) and, unless and until Lender gives
notice as provided below that the circumstances specified in Section 4.01 or
Section 4.03 which gave rise to such conversion no longer exist:
(a) to the extent that Libor Rate Loans have been so converted, all
payments and prepayments of principal which would otherwise be applied to Libor
Rate Loans shall be applied instead to Prime Rate Loans; and
(b) all Loans which would otherwise be made or renewed by Lender as
Libor Rate Loans shall be made instead as Prime Rate Loans and all Loans which
would otherwise be converted into Libor Rate Loans shall not be so converted.
Section 4.05 Certain Compensation. Subject to Lender's reasonable efforts to
mitigate such losses, costs and expenses, the Borrower shall pay to the Lender,
upon the request of such Lender, such amount or amounts as shall be sufficient
(in the reasonable opinion of Lender) to compensate it for any loss, cost or
reasonable expense which Lender determines is attributable to:
(a) any payment, prepayment, conversion or renewal of a Libor Rate
Loan made by Lender on a date other than the last day of an Interest Period for
such Loan (whether by reason of acceleration or otherwise); or
(b) any failure by the Borrower to borrow, convert into or renew a
Libor Rate Loan to be made, converted into or renewed by Lender on the date
specified therefor in the relevant notice under Section 2.04, 2.05 or 2.07, as
the case may be.
Without limiting the foregoing, such compensation shall include an amount equal
to the excess, if any, of: (i) the amount of interest which otherwise would have
accrued on the principal amount so paid, prepaid, converted or renewed or not
borrowed, converted or renewed for the period
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from and including the date of such payment, prepayment or conversion or failure
to borrow, convert or renew to but excluding the last day of the then current
Interest Period for such Libor Rate Loan (or, in the case of a failure to
borrow, convert or renew, to but excluding the last day of the Interest Period
for such Libor Rate Loan which would have commenced on the date specified
therefor in the relevant notice) at the applicable rate of interest for such
Libor Rate Loan provided for herein; over (ii) the amount of interest (as
reasonably determined by Lender) Lender would have bid in the London interbank
market for Dollar deposits for amounts comparable to such principal amount and
maturities comparable to such period. A determination of Lender as to the
amounts payable pursuant to this Section 4.05 shall be set forth in
certificates, signed by an officer of Lender, delivered to Borrower. Such
certificates shall include the amount required to be paid by Borrower to Lender
and the computations made by Lender to determine such amount. Any such
determination shall be conclusive, absent demonstrable error, provided that such
determinations are made in good faith and on a reasonable basis.
Section 4.06 Lending Office Designations. Before giving any notice to Borrower
pursuant to Section 4.01, 4.02 or 4.03, Lender shall, if possible, designate a
different Lending Office if such designation will avoid the need for giving such
notice and will not, in the reasonable judgment of Lender, be otherwise
disadvantageous to Lender.
ARTICLE V
CONDITIONS PRECEDENT
Section 5.01 Conditions Precedent to All Loans and Letters of Credit. The
obligations of the Lender to make any Loan (including by means of conversion or
renewal of Loans), and the obligations of the Issuing Lender to issue any
Letters of Credit are subject to the satisfaction of the following conditions
precedent:
(a) Lender shall have received a timely notice as required by
Section 2.04, or an Application as required by Section 3.02;
(b) if Lender has not previously received an appropriate Note,
Lender shall have received a duly executed Note payable to its order and
otherwise complying with the provisions of this Agreement;
(c) the representations and warranties of the Obligors contained in
this Agreement and each other Facility Document shall be true and correct in all
material respects on the date of such Loan or issuance of such Letter of Credit
as though made on and as of such date (provided that any representations and
warranties which speak to a specific date shall remain true and correct in all
material respects as of such specific date);
(d) all agreements and conditions required to be performed and
complied with by any Obligor under this Agreement or any other Facility Document
by such date shall have been performed and complied with by such Obligor in all
material respects to the reasonable satisfaction of the Lender and its counsel;
(e) Lender shall have received all fees and other amounts due and
payable by the Obligors under the Facility Documents; and
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(f) no Default or Event of Default shall have occurred and be
continuing, or would occur as a result of the making of such Loan or the
issuance of such Letter of Credit.
Section 5.02 Documentary Conditions Precedent to Initial Loans and Initial
Letters of Credit. The obligations of the Lender to make any initial Loan, and
the obligations of the Issuing Lender to issue any Letter of Credit on the
Closing Date are subject to the satisfaction of the following documentary
conditions precedent:
Lender shall have received, in form and substance reasonably satisfactory to
Lender and its counsel:
(a) Credit Agreement. This Agreement, duly executed by the
Borrower.
(b) Note. The Note, duly executed by the Borrower.
(c) Guaranty Agreement. The Guaranty Agreement, duly executed by
each of the Guarantors.
(d) Pledge Agreement. The Pledge Agreement, duly executed by the
Obligors (other than Immaterial Subsidiaries), together with (i) financing
statements under the UCC of each jurisdiction necessary or, in the reasonable
opinion of Lender, desirable to perfect the Liens created by the Pledge
Agreement, (ii) copies of searches identifying all of the financing statements
on file with respect to the Obligors in all jurisdictions referred to under
clause (i) of this Section 5.02(d) indicating that no party claims an interest
in and to the Collateral purported to be covered by the Pledge Agreement, (iii)
stock certificates representing all of the outstanding capital stock of the
Subsidiaries to be pledged by the Obligors (other than Immaterial Subsidiaries)
pursuant to the Pledge Agreement together with undated stock powers executed in
blank, (iv) stock certificates and warrants representing certain investments of
an Obligor to be pledged by such Obligor pursuant to the Pledge Agreement
together with undated stock powers executed in blank and (v) a note representing
Debt between certain Obligors to be pledged pursuant to the Pledge Agreement,
together with undated bond or note powers executed in blank.
(e) Security Agreement. The Security Agreement, duly executed by
Borrower and each of its Domestic Subsidiaries, other than Immaterial
Subsidiaries, together with (i) financing statements under the UCC of each
jurisdiction necessary or, in the reasonable opinion of Lender, desirable to
perfect the Liens created by the Security Agreement; (ii) executed copies of the
termination statements duly filed under the UCC of each jurisdiction necessary
to terminate the Liens of other Persons (other than Persons having Permitted
Liens) in and to the Collateral purported to be covered by the Security
Agreement; and (iii) copies of searches identifying all of the financing
statements on file with respect to the Borrower and each of its Domestic
Subsidiaries, other than Immaterial Subsidiaries, in all jurisdictions referred
to under clause (i) of this Section 5.02(e).
(f) Trademark Security Agreement. The Trademark Security Agreement
for Borrower and each of its Domestic Subsidiaries, other than Immaterial
Subsidiaries, duly executed by each of them.
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(g) Employment Agreements. The Borrower shall have delivered to
Lender copies of the executed employment agreements of each of the former senior
officers of Zolfo Xxxxxx, LLC.
(h) Termination of Xxxxxxx Sachs Credit Facility. All outstanding
obligations of Borrower under the Xxxxxxx Xxxxx Credit Facility, except for the
letters of credit listed on Schedule 8.01(e), shall have been repaid in full and
such facility and all liens granted thereunder shall have been terminated.
(i) Other Facility Documents. Each other Facility Document, duly
executed by the appropriate Obligors and such other parties thereto (other than
the Lender), as the case may be.
(j) Possession Collateral. All Possession Collateral.
(k) Opinions. The legal opinion of Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx
LLP, in form and substance reasonably acceptable to Lender and its counsel.
(l) Consents and Acknowledgments. Such consents or acknowledgments,
with respect to the transactions hereunder, from each of the Borrower, the
Subsidiaries and such other Persons as Lender may determine to be necessary or
appropriate.
(m) Officer's Certificate. A certificate of a duly authorized
officer of Borrower, dated the Closing Date, stating that the representations
and warranties contained in Article 6 and in the other Facility Documents are
true and correct in all material respects on such date as though made on and as
of such date (provided that any representations and warranties which speak to a
specific date shall remain true and correct in all material respects as of such
specific date), all agreements and conditions required to be performed and
complied with by such date have been performed and complied with in all material
respects and that no Default or Event of Default has occurred and is continuing,
or would occur as a result of the making of such Loan or the issuance of such
Letter of Credit.
(n) Resolutions. Copies, certified as of the Closing Date by the
Secretary or an Assistant Secretary of each Obligor (other than Immaterial
Subsidiaries), of resolutions of the Board of Directors of such Obligor (other
than Immaterial Subsidiaries) authorizing the execution, delivery and
performance by such Obligor (other than Immaterial Subsidiaries) of the Facility
Documents to which it is a party and, if such Obligor is Borrower, the
borrowings and other extensions of credit hereunder, which certificate shall
state that such resolutions have not been modified, rescinded or amended and are
in full force and effect on the date of such certification.
(o) Organization Documents; Incumbency. (i) copies of the
certificate of incorporation or other formation documents of each Obligor (other
than Immaterial Subsidiaries), and all amendments thereto, certified as of a
recent date by the Secretary of State of the state of organization of such
Obligor (other than Immaterial Subsidiaries); (ii) the certificate of said
Secretary of State as to the due incorporation, valid corporate existence, good
standing and charter documents on file of such Obligor (other than Immaterial
Subsidiaries), as of a recent date; (iii) the certificate of the Secretary of
State of each state in which such Obligor
34
(other than Immaterial Subsidiaries) is required to qualify to do business as to
due qualification to do business as a foreign entity and good standing of such
Obligor (other than Immaterial Subsidiaries), as of a recent date; (iv) the
certificate of the Secretary or Assistant Secretary of such Obligor (other than
Immaterial Subsidiaries), dated the date hereof, certifying (A) that attached
thereto is a true and complete copy of the certificate of incorporation and
by-laws or other formation documents of such Obligor (other than Immaterial
Subsidiaries), as in effect on the date of such certification, (B) that such
certificate of incorporation or other formation documents has not been amended
since the date of the last amendment thereto indicated on the certificate of the
Secretary of State furnished pursuant to clause (i) above, and (C) the
incumbency and signatures of the officers of such Obligor (other than Immaterial
Subsidiaries) executing this Agreement or any other Facility Document on behalf
of such Obligor (other than Immaterial Subsidiaries); and (v) a certificate of
another officer as to the incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant to clause (iv) above.
(p) Insurance. Evidence that the Borrower and the Subsidiaries have
obtained such policies of insurance with such insurance companies as are
required to be maintained by Borrower and the Subsidiaries pursuant to this
Agreement and the other Facility Documents;
(q) Borrowing Notice; Application. (i) For any initial Loans, an
initial borrowing notice of the Borrower relating to the Loans to be made on the
Closing Date (if any) together with a letter from the Borrower containing wire
transfer instructions and account information relating to the funds to be made
available by the Lender to the Borrower on the Closing Date (if any); and (ii)
for any Letters of Credit to be issued on the Closing Date, an Application as
required by Section 3.02.
(r) Other Documents. Such other approvals, opinions and
instruments, certificates and other documents as Lender shall have requested in
its reasonable discretion.
Section 5.03 Additional Conditions Precedent. Notwithstanding anything to the
contrary contained in this Agreement, the obligations of the Lender to make any
initial Loan, and the obligations of the Issuing Lender to issue any Letter of
Credit on or after the Closing Date are subject to the satisfaction of the
provisions of Section 5.02 and the following additional conditions precedent:
(a) No Material Adverse Change. There shall have been no material
adverse change in the financial condition or business condition of the Borrower
and its Subsidiaries taken as a whole since the date of Borrower's most recent
financial statement delivered to the Lender.
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing, or would occur as a result of the making
of such Loan or the issuance of such Letter of Credit.
(c) Field Examination. Lender, or its designated representative,
shall have completed a field examination at the cost and expense of the
Borrower, which field examination shall include, among other things, a review of
the accounts receivable, books, records and systems of the Company and the
Subsidiaries and the results thereof shall be satisfactory to
35
Lender in its sole discretion; provided, that the Borrower shall take all action
necessary and make available all necessary records and information (including,
without limitation, such records and information as may be requested by Lender,
or its designated representative) within thirty (30) days of the Closing Date so
that Lender may cause such examination to be conducted and promptly, from time
to time, thereafter as Lender, or its designated representative, may request, it
being understood and agreed that the Borrower shall use its best efforts to
provide such records and information in a timely manner so that the field
examination may be completed within sixty (60) days of the Closing Date.
(d) Deposit Account Control Agreement. The Deposit Account Control
Agreement, duly executed by Borrower and accepted and agreed to by the relevant
deposit account bank.
(e) Pledge of Certain Foreign First-Tier Subsidiary Stock. Within
sixty (60) days of the Closing Date, the Borrower shall have pledged the capital
stock of Xxxxx Ontrack GmbH, Kroll Holdings Argentina S.A., Kroll Ltd., and KA
de Mexico S. de X.X. de C.V. pursuant to the Pledge Agreement and in accordance
with the requirements of all applicable Laws, including the Laws of the
jurisdiction of incorporation or formation of such Subsidiaries.
(f) Delivery of Consolidated EBITDA Schedule. The Borrower shall
have delivered Schedule 1.01B to the Lender, which shall be satisfactory to the
Lender in its sole discretion.
Section 5.04 Deemed Representations. Each notice of borrowing hereunder and
acceptance by the Borrower of the proceeds of such borrowing, and each
Application and acceptance by the Borrower of any Letter of Credit, shall
constitute a representation and warranty that the representations and warranties
contained in Article VI and in the other Facility Documents are true and correct
in all material respects and shall be deemed to be made on and as of both the
date of such notice or Application and the date of such borrowing or issuance
without regard to any earlier specifically stated date except dates other than
the Closing Date; provided, however, that (i) those representations and
warranties contained in Article VI and in the other Facility Documents which are
not subject to a qualification as to Material Adverse Effect, shall be deemed to
be subject to a qualification as to Material Adverse Effect with respect to
changes from any earlier specifically stated date only for purposes of this
Section 5.04 and (ii) those representations and warranties contained in Section
6.12 shall be deemed to be made on and as of the end of the most recent Fiscal
Year or Fiscal Quarter, as the case may be, for which financial statements have
been delivered in accordance with Section 7.08(a) and (b).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants that:
Section 6.01 Incorporation, Good Standing and Due Qualification. Each Obligor is
duly incorporated or formed, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation, has the corporate or
partnership power and authority to own or
36
lease its Properties and to transact the business in which it is now engaged or
proposed to be engaged, and is duly qualified as a foreign corporation or
foreign partnership and in good standing under the laws of each jurisdiction in
which such qualification is required, except to the extent that such failure to
qualify could not reasonably be expected to cause a Material Adverse Effect.
Section 6.02 Subsidiaries Including Immaterial Subsidiaries. As of the Closing
Date, Schedule 6.02 sets forth the name of each Subsidiary, in each case showing
the jurisdiction of incorporation or formation of such Subsidiary and the
percentage of its parent's ownership in such Subsidiary. Except as set forth in
Schedule 6.02, neither any Borrower nor any of the Subsidiaries owns or holds
the right to acquire any shares of stock or any other security or interest in
any other Person.
Section 6.03 Capitalization. As of the Closing Date, the authorized capital
stock of each of the Subsidiaries, the number of shares of such capital stock of
which are issued and outstanding and all the record holders of such issued and
outstanding capital stock are as set forth on Schedule 6.03. As of the Closing
Date, there are no outstanding preemptive, conversion or other rights, options
or warrants granted or issued by or binding upon any of the Subsidiaries for the
purchase or acquisition by any other Person of any shares of capital stock of
any of the Subsidiaries (other than Borrower or another Subsidiary) or any other
securities convertible into, exchangeable for or evidencing the right to
subscribe for any shares of such capital stock. As of the Closing Date, neither
the Borrower nor any of the Subsidiaries is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock or such other rights. As of the Closing Date, none
of the Subsidiaries is a party to any agreement granting registration rights to
any person with respect to any of its equity or debt securities. As of the
Closing Date, none of the Subsidiaries is a party to any agreement restricting
the voting or transfer of any shares of the capital stock of any Subsidiary.
Section 6.04 Owned Real Property. Schedule 6.04 sets forth, as of the Closing
Date, a complete and accurate list of the real property owned by the Borrower
and its Subsidiaries (other than Foreign Subsidiaries and Immaterial
Subsidiaries).
Section 6.05 Leased Real Property. Schedule 6.05 sets forth, as of the Closing
Date, a complete and accurate list of all leases of real property under which
the Borrower or any other Obligor (other than Immaterial Subsidiaries) is the
lessee, showing as of the date hereof the street address, county or other
relevant jurisdiction, state, lessor, lessee, expiration date and annual rental
cost thereof. To the Borrower's Knowledge, each such lease is valid and
subsisting.
Section 6.06 Material Contracts. Schedule 6.06 sets forth, as of the Closing
Date, a complete and accurate list of all Material Contracts, showing as of the
date hereof the parties, subject matter and listing any amendments or
supplements thereto. To the Borrower's Knowledge, except as described on
Schedule 6.06, each such Material Contract is in full force and effect, and
there exists no material default under any Material Contract by any party
thereto.
Section 6.07 Corporate Power and Authority. The execution, delivery and
performance by each Obligor of the Facility Documents to which it is a party
and, in the case of Borrower, the borrowings and other extensions of credit
hereunder are within such Obligor's corporate or
37
partnership power and authority, have been duly authorized by all necessary
corporate or partnership action and do not and will not: (a) contravene its
certificate of incorporation or by-laws or other organizational documents; (b)
violate any provision of, or require any filing (other than the recording of the
Trademark Security Agreement at the Patent and Trademark Office and the filing
of the financing statements and assignments in each case as required pursuant to
the terms of the Security Documents), registration, consent or approval under,
any applicable Law (including, without limitation, Regulation T, Regulation U
and Regulation X); (c) result in a material breach of or constitute a material
default or require any consent under any Obligor Agreement; or (d) result in, or
require, the creation or imposition of any Lien (other than Permitted Liens),
upon or with respect to any of the Properties now owned or hereafter acquired by
any Obligor.
Section 6.08 Legally Enforceable Agreements. Each Facility Document to which any
Obligor is a party is, or when executed and delivered by such Obligor and the
other parties thereto will be, a legal, valid and binding obligation of such
Obligor enforceable against such Obligor in accordance with its terms, except to
the extent that such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
Section 6.09 No Violation. No Obligor is:
(a) in violation of its certificate of incorporation or by-laws or
other organizational documents, as the case may be;
(b) in violation in any material respect of any applicable Law
(including, without limitation, Regulation T, Regulation U and Regulation X); or
(c) in violation, breach or default of any Law or Obligor Agreement
where such violation, breach or default, individually or in the aggregate, could
reasonably be expected to result in any Material Adverse Effect.
Section 6.10 Licenses, Approvals, etc. All material licenses, permits and other
authorizations, and all material bonds, plans, consents to enter upon leased
property and other filings, required by applicable Law or any effective
restrictive covenant to be obtained or made in order to permit the operation and
conduct of the businesses of the Borrower and the Subsidiaries as now operated
and conducted or proposed to be operated and conducted have been obtained or
made, except for any such authorizations or filings which are not currently so
required and which, in the reasonable judgment of the Borrower, can be obtained
or made in the ordinary course of business prior to the time so required without
material cost or delay.
Section 6.11 Litigation. Except for those actions, suits or proceedings set
forth on Schedule 6.11, which such actions, suits or proceedings could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, as of the Closing Date, there is no action, suit or proceeding
pending or, to the Knowledge of the Borrower, threatened against the Borrower or
any Subsidiary or any of their respective Properties which (a) involves a claim
for damages or relief in an amount greater than $1,000,000 in the aggregate (to
the extent not
38
covered by insurance as to which a solvent and unaffiliated insurance company
has acknowledged coverage); (b) could, individually or in the aggregate, if
adversely determined, reasonably be expected to have a Material Adverse Effect;
or (c) questions the legality, validity or enforceability of any of the Facility
Documents or the transactions contemplated by any of the Facility Documents.
Section 6.12 Financial Statements.
(a) Borrower has heretofore or on the Closing Date furnished to
Lender its audited consolidated and consolidating balance sheets and
consolidated and consolidating income statement and consolidated statement of
cash flows and changes in stockholders' equity as of and for the Fiscal Year
ended December 31, 2001 and its management prepared consolidated balance sheet,
income statement and statements of cash flow, and changes in stockholders'
equity of and for the fiscal quarters ended March 31, 2002, June 30, 2002 and
September 30, 2002 ("Financial Statements"). Such Financial Statements present
fairly, in all material respects, the consolidated, and in the case of the year
end balance sheet and income statement consolidating, financial condition of the
Consolidated Entities as of such date and results of operations for such period
subject, in the case of unaudited Financial Statements, to changes resulting
from audit and normal year-end adjustments. Such Financial Statements were
prepared in accordance with GAAP applied on a consistent basis, except in the
case of the quarterly Financial Statements for the absence of footnotes and
subject, in the case of unaudited Financial Statements, to changes resulting
from audit and normal year-end adjustments.
(b) Except as set forth in the Financial Statements, to the
Knowledge of the Borrower, as of such Financial Statements date, there are no
liabilities of the Borrower and/or the Guarantors, fixed or contingent, which
are material but are not reflected on such Financial Statements and are required
to be disclosed on such Financial Statements in accordance with GAAP, other
than, in the case of the quarterly Financial Statements, disclosures that would
have been included in the footnotes thereof. Since December 31, 2001, there has
been no change (other than events affecting the general economy and financial
markets of the United States) which could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(c) Borrower has furnished to the Lender on December 10, 2002, its
projections for the Fiscal Years ending December 31, 2002 and December 31, 2003
and the assumptions used by Borrower in making such projections were reasonable
under the circumstances and were made in good faith by management of the
Borrower; provided, however, that the projections are not to be viewed as facts
and actual results during the period covered by the projections may differ from
the projections, and such differences may be material.
Section 6.13 Taxes. All taxes, assessments, fees and other governmental charges
upon the Borrower or any Subsidiary, or upon any of their respective Properties,
business, income, profits or franchises, which are due and payable have been
paid, except to the extent permitted by Section 7.10. The Borrower has
established on its books such charges, accruals and reserves in respect of such
taxes, assessments, fees and other governmental charges for all fiscal periods
as are required by GAAP. To the Knowledge of the Borrower, there are no proposed
assessments for material additional taxes, assessments, fees and other
governmental charges for any period.
39
Section 6.14 ERISA. Each Plan and, to the Knowledge of the Borrower, each
Multiemployer Plan, if any, are in compliance in all material respects with, and
have been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other applicable federal or
state law, and no event or condition is occurring or exists concerning which the
Borrower or any of its Subsidiaries would be under an obligation to furnish a
report to the Lender in accordance with Section 7.08(i). To the Knowledge of the
Borrower, as of the Closing Date there exists no Unfunded Benefit Liabilities.
Section 6.15 Environmental Matters. Except as provided in Schedule 6.15, the
Borrower and each Subsidiary is in compliance with all applicable Environmental
Laws except for those non-compliance matters which would not likely result in
Material Adverse Effect. Neither Borrower nor any of its Subsidiaries is subject
to any liability under any Environmental Law except for such liability which
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
Section 6.16 Labor Disputes. Neither the Borrower nor any of its Subsidiaries is
(a) currently affected by any strike, lockout or other material labor dispute or
(b) a party to any collective bargaining agreement.
Section 6.17 Investment Company Act of 1940; etc. Neither the Borrower nor any
of its Subsidiaries is subject to regulation under the Investment Company Act of
1940, the Public Utility Holding Company Act of 1935 or any statute or
regulation limiting its ability in any material respect to incur indebtedness
for money borrowed as contemplated hereby.
Section 6.18 No Forfeiture. Neither the Borrower nor any of its Subsidiaries is
subject to a Forfeiture Proceeding.
Section 6.19 Solvency. Except as set forth on Schedule 6.19,
(a) The present fair saleable value of the assets of the Obligors
after giving effect to all the transactions contemplated by the Facility
Documents exceeds the amount that will be required to be paid on or in respect
of the existing debts and other liabilities (including contingent liabilities)
of the Obligors as they mature.
(b) The Property of each Obligor does not constitute unreasonably
small capital for such Obligor to carry out its business as now conducted and as
proposed to be conducted including the capital needs of such Obligor.
(c) Each Obligor does not intend to, nor does such Obligor believe
that it will, incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be received by such
Obligor, and of amounts to be payable on or in respect of debt of such Obligor).
The cash available to such Obligor after taking into account all other
anticipated uses of the cash of such Obligor, is anticipated to be sufficient to
pay all such amounts on or in respect of debt of such Obligor when such amounts
are required to be paid.
Section 6.20 Patents, Trademarks, etc. Set forth on Schedule 6.20 is a complete
and accurate list, as of the Closing Date, of all rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks, service marks,
trade names and domain names owned or possessed by
40
the Borrower or any of its Subsidiaries, other than Immaterial Subsidiaries,
that are material to the conduct of its business as presently conducted or
proposed to be conducted. The Borrower and each of its Subsidiaries owns or
possesses all such rights, licenses, permits, franchises, authorizations,
patents, copyrights, trademarks, service marks, trade names and domain names
free from any material restrictions.
Section 6.21 Offer of Note. Neither the Borrower nor anyone acting on its behalf
has directly or indirectly offered the Note, or any part thereof or any similar
securities for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect of any of the same with, anyone
other than the Lender and a limited number of other financial institutions.
Neither the Borrower nor anyone acting on its behalf will directly or indirectly
take any action which would subject the issue of the Note to the registration
provisions of the Securities Act of 1933, as amended.
Section 6.22 Use of Proceeds. The Borrower shall use the proceeds of the Loans
and the other extensions of credit hereunder in accordance with Section 2.03. No
such proceeds shall be used, whether directly or indirectly, or immediate,
incidental or ultimate, (a) for the purpose of buying or carrying "margin stock"
within the meaning of Regulation U, (b) for the purpose of extending credit to
others for the purpose of purchasing or carrying any margin stock or (c) for any
purpose which violates or is inconsistent with the provisions of Regulation T,
Regulation U or Regulation X. The Borrower is not engaged in purchasing or
carrying any margin stock. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock. At
no time would more than 25% of the value of the assets of the Borrower or the
Borrower and any Subsidiary that are subject to any "arrangement" (as such term
is used in Section 221.2 (g) of Regulation U) hereunder be represented by margin
stock. No proceeds of the Loans, and none of the Letters of Credit, shall be
used (i) to acquire any equity security of a class that is registered pursuant
to Section 12 of the Exchange Act except for the Acquisitions permitted by this
Agreement or (ii) to prepay the principal amount, in whole or in part, of the
Senior Subordinated Notes.
Section 6.23 Disclosure; No Material Adverse Effect. No Facility Document nor
any certificate or other document furnished to the Lender or the Lenders by or
on behalf of the Borrower or any other Obligor pursuant to any Facility Document
contains, as of its date, any untrue statement of a material fact or omits to
state or will omit to state, as of its date, a material fact necessary in order
to make the statements contained herein and therein, under the circumstances
under which they were made, not misleading. Except as indicated on Schedule
6.23, the Borrower has no Knowledge of any facts or circumstances that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
Section 6.24 Location of Books and Records. The books and records of the
Borrower and each other Obligor (other than Immaterial Subsidiaries) are located
at the locations listed on Schedule 6.24.
Section 6.25 Fiscal Year. The Fiscal Year of the Borrower ends on December 31 of
each year.
Section 6.26 Exchange Act Filings. Since January 1, 2002, the Borrower has
timely filed with the Securities and Exchange Commission all forms, reports and
other documents required to be
41
filed by it under the Exchange Act and none of the foregoing contains, as of its
date, any untrue statement of a material fact or omits to state, as of its date,
a material fact necessary in order to make the statements contained therein,
under the circumstances under which they were made, not misleading.
ARTICLE VII
AFFIRMATIVE COVENANTS
Except as otherwise provided for in any Facility Document, so long
as any Obligation shall remain unpaid or Lender shall have any Revolving Credit
Commitment, the Borrower shall, and shall cause each of its Subsidiaries to:
Section 7.01 Maintenance of Existence; Preservation of Rights, Licenses etc.
Except as otherwise permitted by Section 8.09, (a) preserve and maintain its
corporate or partnership existence and good standing in the jurisdiction of its
incorporation or formation, and qualify and remain qualified as a foreign
corporation or partnership in each jurisdiction in which such qualification is
required, except where the failure to maintain such foreign qualification would
not have a Material Adverse Effect.
(b) Do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights, licenses,
permits, franchises, authorizations, patents, copyrights, trademarks, service
marks and trade names material to the conduct of its business, except in any
such case where the failure to do so would not have a Material Adverse Effect.
Section 7.02 Conduct of Business. Continue to engage in the Business and no
other business.
Section 7.03 Maintenance of Properties. Maintain, keep and preserve all of its
Properties necessary or useful in the conduct of the Business in good working
order and condition, ordinary wear, tear and obsolescence excepted, except where
the failure to so maintain, keep and preserve such Properties could not
reasonably be expected to have a Material Adverse Effect.
Section 7.04 Maintenance of Records. Keep adequate records and books of account
in which true and correct entries will be made reflecting all financial
transactions and the assets of the Borrower and each Subsidiary, and which shall
be in such form which will allow the Borrower to prepare its consolidated
financial statements in accordance with GAAP. Except with the prior written
consent of Lender, keep the books and records of the Borrower and the
Subsidiaries, other than Immaterial Subsidiaries, at the locations set forth in
Section 6.24.
Section 7.05 Maintenance of Insurance. Without limiting any obligation under any
Facility Document, maintain insurance with financially sound and reputable
insurance companies or associations accorded a rating by A.M. Best Company of
"A" or better and a size rating of "Xi" or better. Maintain casualty insurance
policies covering all of the Property subject to the Lien of the Lender under
the Security Documents with appropriate loss payable endorsements indicating
assignment of proceeds thereunder to the Lender and certificates or other
evidence of liability insurance with appropriate endorsements indicating the
coverage of the Lender as an additional insured or loss payee, as applicable.
All insurance shall be in amounts, cover such risks, and have
42
such deductibles as is customary for reputable companies engaged primarily in
the same business as the Business.
Section 7.06 Compliance with Laws. Comply in all material respects with all
applicable Laws (including, without limitation, all applicable Environmental
Laws).
Section 7.07 Right of Inspection; Field Examinations. At any reasonably time and
from time to time upon reasonable prior written notice and during normal
business hours (but no prior notice shall be required if a Default or an Event
of Default has occurred and is continuing), permit the Lender or any
representative thereof, to conduct field examinations, examine and make copies
and abstracts from the records and books of, and visit the Properties of, the
Borrower and each Subsidiary, and to discuss the affairs, finances and accounts
of the Borrower and each Subsidiary with their respective officers and directors
and independent accountants; provided that the Lender agrees that it shall use
its reasonable best efforts to minimize interference with the Borrower's or such
Subsidiary's business; provided that, following satisfaction of the condition in
Section 5.03(c) unless a Default or an Event of Default shall have occurred and
be continuing, such field examinations shall not be conducted more than twice
during any Fiscal Year. The Lender (and its representatives) are hereby
authorized to deliver a copy of any information delivered to it if so requested
by any regulatory body having jurisdiction over it. The documented out-of-pocket
costs of such examinations shall be borne by the Borrower.
Section 7.08 Reporting Requirements. Furnish copies to the Lender of the
following:
(a) as soon as available and in any event within 90 days after the
end of each Fiscal Year, (i) consolidated balance sheet of the Consolidated
Entities as of the end of such Fiscal Year and consolidated income statement and
statement of cash flows and changes in stockholders' equity of the Consolidated
Entities for such Fiscal Year, all in reasonable detail and stating in
comparative form the respective figures for the corresponding date and period in
the prior Fiscal Year and all prepared in accordance with GAAP and accompanied
by a report thereon by Deloitte & Touche LLP or other independent accountants of
national standing selected by the Borrower, which report will be unqualified as
to going concern and scope of audit and will (A) state that such accountants
audited such consolidated financial statements in accordance with generally
accepted auditing standards, that such accountants believe that such audit
provides a reasonable basis for their opinion, and that in their opinion such
consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Consolidated Entities as at the end of
such Fiscal Year and the consolidated results of their operations and cash flows
for such Fiscal Year in conformity with GAAP applied on a basis consistent with
prior years (except as otherwise disclosed in such financial statement), or (B)
contain such statements as are customarily included in unqualified reports of
independent accountants in conformity with the recommendations and requirements
of the American Institute of Certified Public Accountants (or any successor
organization) and (ii) management prepared consolidating balance sheets of the
Consolidated Entities as of the end of each such Fiscal Year and consolidating
income statements of the Consolidated Entities for such Fiscal Year.
(b) as soon as available and in any event within 45 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year, the
management prepared consolidated and
43
consolidating balance sheets of the Consolidated Entities as of the end of such
Fiscal Quarter and consolidated and consolidating income statements and
consolidated statement of cash flows and changes in stockholders' equity of the
Consolidated Entities for the period commencing at the end of the previous
Fiscal Year and ending with the end of such Fiscal Quarter, all in reasonable
detail and stating in comparative form the respective figures for the
corresponding date and period in the previous Fiscal Year and all prepared in
accordance with GAAP applied on a basis consistent with prior years (subject to
year-end and normal audit adjustments and the fact that there are no footnotes
thereto) and certified as to fairness of presentation by the chief financial
officer or the chief accounting officer of Borrower and as having been prepared
in accordance with GAAP applied on a basis consistent with prior years (subject
to year-end and normal audit adjustments and without footnotes);
(c) [Intentionally Omitted];
(d) simultaneously with the delivery of the financial statements
referred to in Section 7.08(a) and Section 7.08(b), a Compliance Certificate of
the chief financial officer or the chief accounting officer of Borrower, under a
cover letter identifying it as such, certifying on behalf of the Borrower that
no Default or Event of Default has occurred and is continuing or, if a Default
or Event of Default has occurred and is continuing, a statement as to the nature
thereof and the action which is proposed to be taken with respect thereto;
(e) simultaneously with the delivery of the annual financial
statements referred to in Section 7.08(a), a certificate of the independent
public accountants who audited such statements to the effect that in making the
examination necessary for the audit of such statements, they have obtained no
knowledge of any condition or event which constitutes a Default or an Event of
Default as a result of non-compliance with the covenants set forth in Article
IX, or if such accountants shall have obtained knowledge of any such condition
or event, specifying in such certificate each such condition or event of which
they have knowledge and the nature and status thereof;
(f) as soon as available, but not later than January 15th of each
Fiscal Year (or the first Business Day thereafter if January 15th is not a
Business Day), projections on an annual basis for the Borrower and its
Subsidiaries in form and substance reasonably acceptable to Lender, prepared in
reasonable detail with appropriate presentation and disclosure of the principal
assumption upon which such projections are based, accompanied by a statement of
the chief financial officer of Borrower on behalf of Borrower to the effect
that, to the best of his Knowledge, the projections were reasonable under the
circumstances and made in good faith by the management of Borrower.
(g) promptly after obtaining Knowledge thereof, notice of any
event, which could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect;
(h) as soon as possible and in any event within five Business Days
after the Borrower obtains Knowledge of the occurrence of any Default or Event
of Default, a written notice setting forth the details of such Default or Event
of Default and the action which is proposed to be taken by the Borrower with
respect thereto;
44
(i) as soon as possible, and in any event within ten days after any
of the Borrower or any Subsidiary has Knowledge that any of the events or
conditions specified below with respect to any Plan or Multiemployer Plan has
occurred or exists, a statement signed by a senior financial officer of Borrower
setting forth details respecting such event or condition and the action, if any,
which such Borrower or such Subsidiary or ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed with or
given to PBGC by the Borrower or such Subsidiary or an ERISA Affiliate with
respect to such event or condition): (i) any reportable event, as defined in
Section 4043 (b) of ERISA, with respect to a Plan with Unfunded Benefit
Liabilities in excess of $250,000, as to which PBGC has not by regulation waived
the requirement of Section 4043 (a) of ERISA that it be notified within 30 days
of the occurrence of such event (provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of ERISA including,
without limitation, the failure to make on or before its due date a required
installment under Section 412 (m) of the Code or Section 302 (e) of ERISA, shall
be a reportable event regardless of the issuance of any waivers in accordance
with Section 412 (d) of the Code) and any request for a waiver under Section 412
(d) of the Code for any such Plan; (ii) the distribution under Section 4041 of
ERISA of a notice of intent to terminate any Plan or any action taken by the
Borrower or such Subsidiary or an ERISA Affiliate to terminate any Plan;
provided that as a result of such termination, the Borrower or such Subsidiary
or such ERISA Affiliate will incur liability in excess of $250,000; (iii) the
institution by PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan with
Unfunded Benefit Liabilities in excess of $250,000, or the receipt by the
Borrower or such Subsidiary or any ERISA Affiliate of a notice from a similarly
underfunded Multiemployer Plan that such action has been taken by PBGC with
respect to such Multiemployer Plan; (iv) the complete or partial withdrawal from
a Multiemployer Plan by any of the Borrower or such Subsidiary or any ERISA
Affiliate that results in a current payment obligation in excess of $250,000
under Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt by any of
the Borrower or such Subsidiary or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvent pursuant to Section
4241 or 4245 of ERISA or that it intends to terminate or has terminated under
Section 4041 A of ERISA; (v) the adoption of an amendment to any Plan that
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA would result
in the loss of tax-exempt status of the trust of which such Plan is a part if
any of the Borrower or such Subsidiary or an ERISA Affiliate fails to timely
provide security in excess of $250,000 to such Plan in accordance with the
provisions of said Sections; (vi) any event or circumstance exists which may
reasonably be expected to constitute grounds for Borrower or such Subsidiary or
any ERISA Affiliate to incur liability in excess of $250,000 under Title IV of
ERISA or under Sections 412(c)(1) or 412 (n) of the Code with respect to any
Plan; or (vii) the Unfunded Benefit Liabilities of one or more Plans increase
after the date of this Agreement in an amount which is material in relation to
the financial condition of the Borrower and the Subsidiaries, taken as a whole;
(j) promptly after the sending thereof, copies of all final proxy
statements, annual and quarterly financial statements and reports which the
Borrower or any Subsidiary sends or has made generally available to its
stockholders, and copies of all regular, periodic and special reports, and after
the effective date thereof, all registration statements, which the Borrower or
any Subsidiary files with the Securities and Exchange Commission or any
45
Governmental Authority which may be substituted therefor, or with any national
securities exchange;
(k) promptly after having Knowledge of (i) the existence of any
material violation or alleged material violation of any Environmental Law by the
Borrower or any Subsidiary, which in either case shall mean that the reasonably
expected cost to the Borrower or any such Subsidiary as a result thereof will be
at least $50,000; (ii) the receipt of any notice or claim that the Borrower or
any Subsidiary is a potentially responsible party for remediation costs in
excess of $50,000 incurred or to be incurred at any Property under any
Environmental Law; (iii) any of the operations or facilities of Borrower or any
Subsidiary having become the subject of any state or federal investigation
evaluating whether any remedial action pursuant to the National Contingency
Plan, or any state equivalent, is needed to respond to a release or threatened
release of Hazardous Materials into the environment; or (iv) any of the
operations or facilities of Borrower or any Subsidiary becoming listed or are
proposed for listing on the National Priorities List in accordance with 40
C.F.R., Part 300, Appendix B, or any state equivalent; prompt written notice
thereof, what action the Borrower or such Subsidiary is taking or proposes to
take with respect thereto and, when known, any action taken, or proposed to be
taken, by any Governmental Authority with respect thereto;
(l) as soon as possible and, in any event, within ten (10) days
after Borrower or any Subsidiary receives written notice of the commencement
thereof, notice of all actions, suits, investigations, litigation and
proceedings before any Governmental Authority against or involving Borrower or
any Subsidiary of the type and size/amount described in Section 6.11 and
thereafter, promptly after the occurrence thereof, notice of any material
adverse change in the status or the financial effect on Borrower or any
Subsidiary of such actions, suits, investigations, litigation and proceedings;
(m) promptly after the commencement thereof or promptly after
Borrower or any Subsidiary knows of the commencement or threat thereof, notice
of any Forfeiture Proceeding; and
(n) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any Subsidiary as Lender may from
time to time reasonably request.
Section 7.09 Additional Subsidiaries. Promptly upon: any Person becoming a
Subsidiary; any Immaterial Subsidiary ceasing to be an Immaterial Subsidiary;
and any Other Foreign Subsidiary becoming a First-Tier Foreign Subsidiary which
is not an Immaterial Subsidiary; (a) if such Subsidiary is a Domestic
Subsidiary, cause such Subsidiary to (i) Guaranty the Obligations, pursuant to a
Guaranty substantially in the form of the Guaranty Agreement or a joinder
agreement thereto and (ii) unless such Subsidiary is an Immaterial Subsidiary,
secure such Guaranty by granting a security interest in all of its personal
Property (other than more than 65% of the Capital Stock of a First-Tier Foreign
Subsidiary which is not an Immaterial Subsidiary) owned by the Borrower or a
Domestic Subsidiary to the Lender, pursuant to a security agreement
substantially in the form of the Security Agreement or a joinder agreement
thereto, (b) unless such Subsidiary is an Immaterial Subsidiary, pledge, or
cause the pledge, of all of the Capital Stock of such Subsidiary (other than
more than 65% of the Capital Stock of a First-Tier Foreign
46
Subsidiary which is not an Immaterial Subsidiary) owned by the Borrower or any
Domestic Subsidiary to the Lender, pursuant to a pledge agreement in form
substantially similar to the Pledge Agreement or a joinder agreement thereto,
(c) deliver to the Lender the stock certificates (if any) representing such
pledged Capital Stock with undated executed stock powers therefor in blank, and
(d) unless such Subsidiary is an Immaterial Subsidiary, deliver to the Lender
such proof of corporate action, incumbency of officers, opinions of counsel and
other documents as is consistent with those delivered by the Borrower pursuant
to Article 5 or as Lender shall have reasonably requested. The requirements of
clauses (a) through (c) above shall be satisfied within five (5) Business Days
and the requirements of clause (d) above shall be satisfied within thirty (30)
days of any Person becoming a Subsidiary or any Immaterial Subsidiary ceasing to
be an Immaterial Subsidiary.
Section 7.10 Payment of Taxes and Claims. File all United States federal income
tax returns and all other foreign, state and local tax returns which are
required to be filed by it, and pay all taxes shown as due thereon, prior to the
date on which any material penalties would attach thereto and pay and discharge
any assessments or governmental charges imposed in connection therewith;
provided, that the Borrower and any Subsidiary shall not be required to pay any
such tax, assessment, charge or claim that are being contested by the Borrower
in good faith by appropriate proceedings, diligently prosecuted, provided that,
at the time of the commencement and during the pendency of such proceedings (a)
adequate reserves have been established on the Borrower's books in accordance
with GAAP (including reserves for any penalty for late payment) and (b) such
non-payment could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Notwithstanding the foregoing, the Borrower
shall, and shall cause each Subsidiary to, pay in full all of its wage
obligations to its employees in accordance with the Fair Labor Standards Act (29
U.S.C. Sections 206-207) and any comparable provisions of any applicable law.
Section 7.11 Bank Accounts. Except for Immaterial Subsidiaries, use its
commercially reasonable efforts to maintain all primary deposit and other bank
accounts with the Lender.
Section 7.12 Material Contracts. Perform and observe in all material respects,
all the terms and provisions of each Material Contract to be performed or
observed by it, unless any failure to perform or observe any term or provision
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Obligation shall remain unpaid or any Lender shall have any
Revolving Credit Commitment, the Borrower shall not, and shall not permit any
Subsidiary to:
Section 8.01 Debt. Create, incur, assume or suffer to exist any Debt, except for
the following Debt, unless otherwise prohibited by Section 8.18:
(a) Debt of the Obligors under this Agreement, the Note and the
other Facility Documents;
47
(b) Debt consisting of Guaranties permitted pursuant to Section
8.02;
(c) Debt incurred or assumed (including prior existing Debt of any
acquired entity) in connection with any Acquisition permitted by Section 8.11 or
on terms and conditions approved by the Lender in writing, provided, that, such
Debt has been subordinated to the Obligations in favor of the Lender in form and
substance reasonably acceptable to the Lender;
(d) Purchase Money Debt, excluding Debt incurred in connection with
an Acquisition permitted under Section 8.11, not to exceed $5,000,000 (including
Debt incurred in connection with Capital Expenditures and Capital Leases
permitted by Section 8.04(b) in the aggregate) during any Fiscal Year; provided,
that any such Purchase Money Debt (i) shall be secured only by the asset
acquired in connection with the incurrence of such Purchase Money Debt and (ii)
shall constitute not less than 50% of the aggregate consideration paid with
respect to such asset;
(e) Existing Debt listed in Schedule 8.01(e);
(f) Debt under Interest Rate Protection Agreements with the
Interest Rate Protection Agreement Counterparty;
(g) Debt owed by any Obligor to any other Obligor;
(h) Debt arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, or from Guaranties or
letters of credit, surety bonds or performance bonds securing the performance by
the Borrower or any Subsidiary pursuant to such agreements, in connection with
Acquisitions permitted by Section 8.11 or permitted dispositions of any
business, assets or Subsidiary of the Borrower or any of its Subsidiaries;
(i) Debt which may be deemed to exist pursuant to any performance,
surety, statutory, appeal or similar obligations incurred in the ordinary course
of business;
(j) Debt in respect of netting services, overdraft protections and
otherwise in connection with deposit accounts;
(k) extensions, renewals, refinancings or replacements of Debt
permitted under this Section 8.01 to the extent such extensions, renewals,
refinancings or replacements include terms and conditions not less favorable to
the obligor thereof than the Debt being extended, renewed, refinanced or
replaced; provided, such Debt permitted under the immediately preceding clause
shall not exceed the principal amount of the Debt being renewed, extended,
refinanced or replaced and such extension, renewal, refinancing or replacement
of Debt shall be pledged to the Lender to the same extent as the Debt which is
extended, renewed, refinanced or replaced; and
(l) other unsecured Debt in an aggregate amount not to exceed
$15,000,000 at any time outstanding.
Section 8.02 Guaranties. Create, incur, assume or suffer to exist any Guaranty,
except for the following Guaranties, unless otherwise prohibited by Section
8.18:
48
(a) Guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business;
(b) Guaranties of the Obligations by the Domestic Subsidiaries;
(c) Guaranties by Borrower or any Subsidiary of Debt or other
obligations of Borrower or any Subsidiaries provided that the incurrence of such
Debt or obligation is permitted by Section 8.01;
(d) Guaranties in the ordinary course of business of the
obligations of suppliers, customers, franchisees, lessees and licensees of the
Borrower and its Subsidiaries;
(e) Guaranties of leases permitted by Section 8.04;
(f) Guaranties by the Borrower or any Subsidiary in connection with
any Acquisition permitted by Section 8.11;
(g) Guaranties of Debt that would otherwise be permitted by Section
8.01; and
(h) existing Guaranties listed on Schedule 8.01(e).
Section 8.03 Liens. Create, incur, assume or suffer to exist any Lien upon or
with respect to any of its Property (including, without limitation, motor
vehicles) now owned or hereafter acquired, except for Permitted Liens.
Section 8.04 Leases. Create, incur, assume or suffer to exist any obligation as
lessee for the rental or hire of any Property, except for the following lease
obligations, unless otherwise prohibited by Section 8.18:
(a) leases existing on the date of this Agreement and any
extensions, supplements or renewals thereof;
(b) Capital Leases (including taxes, insurance, maintenance and
similar expenses which the Borrower or any Subsidiary is required to pay under
the terms of any such lease), including Purchase Money Debt permitted under
Section 8.01(d), not to exceed $5,000,000 in the aggregate during any Fiscal
Year;
(c) leases (other than Capital Leases), the rental payments for
which do not exceed in the aggregate $25,000,000 during any Fiscal Year;
(d) licenses of intellectual property (such as copyrights, patents,
trademarks and software) used in the operation of the Business; and
(e) Capital Leases and other leases in connection with Acquisitions
permitted by Section 8.11.
Section 8.05 Investments. Make any Investment, except for the following
Investments, unless otherwise prohibited by Section 8.18:
49
(a) Investments in cash and Cash Equivalents;
(b) Investments in Property to be used or useful in the ordinary
course of business of the Borrower or any Subsidiary;
(c) Investments in stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to the
Borrower or any Subsidiary;
(d) Investments which are (i) travel, vacation and similar advances
to employees of the Borrower or any Subsidiary for the reimbursement of expenses
made or incurred in the ordinary course of business and (ii) loans and other
advances to employees of the Borrower and any Subsidiary not covered in clause
(i) above in an aggregate amount not to exceed $3,000,000 at any time
outstanding;
(e) Interest Rate Protection Agreements;
(f) Existing Investments listed on Schedule 8.05(f);
(g) Investments in any Obligor that is not an Immaterial
Subsidiary;
(h) Debt owed by an Obligor to any other Obligor to the extent
permitted by Section 8.01(g);
(i) Investments made in connection with Acquisitions permitted by
Section 8.11;
(j) Investments (i) in any marketable securities received in
satisfaction or partial satisfaction thereof from financially troubled account
debtors and (ii) in the form of deposits, prepayments and other credits to
suppliers made in the ordinary course of business consistent with the past
practices of Borrower and its Subsidiaries; and
(k) Other Investments in an aggregate amount not to exceed in any
Fiscal Year $6,000,000.
Section 8.06 Distributions. Make any Distribution, except for the following
Distributions, unless otherwise prohibited by Section 8.18:
(a) the Borrower and any Subsidiary may make Distributions payable
solely in its common stock (and cash for fractional shares;
(b) any Subsidiary of the Borrower may make Distributions to the
Borrower or any Wholly-Owned Domestic Subsidiary of the Borrower; and
(c) the Borrower may redeem or purchase shares of its capital stock
(or options to purchase its capital stock) held by former employees of the
Borrower or any of its Subsidiaries following the termination of their
employment.
50
Section 8.07 Sale of Assets. Sell, lease, assign, transfer or otherwise dispose
of any of its now owned or hereafter acquired Property (including, without
limitation, shares of Capital Stock and indebtedness, and receivables), except
for the following sales, leases, assignments, transfers or dispositions of any
such Property, unless otherwise prohibited by Section 8.18:
(a) sales, leases, assignments, transfers or other dispositions of
inventory in the ordinary course of business;
(b) licenses of intellectual property (such as copyrights,
trademarks, patents and software) in the ordinary course of business;
(c) any sale, lease, assignment, transfer or other disposition of
Property during each Fiscal Year for fair market value in cash so long as the
aggregate consideration for such disposition and all other disposition
considerations made during such Fiscal Year does not exceed $21,000,000 and no
Default or Event of Default has occurred and is continuing or would occur and be
continuing after giving effect to such disposition;
(d) the sale, lease, assignment, transfer or other disposition of
assets in the ordinary course of business, which are obsolete or are no longer
used or useful in the conduct of its Business;
(e) the sale, transfer, disposition or exchange of any of the
Investments permitted by Section 8.05;
(f) sales, leases, assignments, transfers or other dispositions of
Property among Obligors unless otherwise specifically prohibited under this
Agreement or any other Facility Document;
(g) subject to section 8.09, the sale, lease, assignment, transfer
or other disposition of any Immaterial Subsidiary;
(h) the sale, lease, assignment, transfer or other disposition of
any assets between any Immaterial Subsidiaries or between any Foreign
Subsidiaries; and
(i) subject to section 8.09, the sale, lease, assignment, transfer
or other disposition of any assets by any Foreign Subsidiary.
Nothing in this Section 8.07 shall be construed to permit the sale, lease,
assignment, transfer or other disposition of any of the Borrower's or any of its
Subsidiaries' now owned or hereafter acquired Property in which the Lender holds
a Lien pursuant to any of the Security Documents in violation of the
requirements of any of the Security Documents (provided that the foregoing shall
not be construed to prohibit, and all Security Documents shall be deemed to
permit, transfers permitted under clause (f) above and, provided further, that
such transfers shall continue to be subject to any Lien in favor of the Lender).
Section 8.08 Transactions with Affiliates.
51
(a) Make any Investment in an Affiliate other than the Borrower or
any of its Subsidiaries (unless otherwise prohibited by Section 8.18);
(b) transfer, sell, lease, assign or otherwise dispose of any
Property to any Affiliate other than the Borrower or any of its Subsidiaries
(unless otherwise prohibited by Section 8.18);
(c) merge into or consolidate with or purchase or acquire Property
from any Affiliate other than the Borrower or any of its Subsidiaries (unless
otherwise prohibited by Section 8.18); or
(d) enter into any other transaction directly or indirectly with or
for the benefit of any Affiliate other than the Borrower or any of its
Subsidiaries (including, without limitation, guaranties and assumption of
obligations of any Affiliate); provided, that (i) any Affiliate who is an
individual may serve as a director, officer or employee of the Borrower or any
Subsidiary and receive reasonable compensation for his or her services in such
capacity; and (ii) unless otherwise prohibited by Section 8.18, the Borrower or
any Subsidiary may enter into other transactions (other than Investments by the
Borrower or any Subsidiary in any Affiliate other than the Borrower or any of
its Subsidiaries) providing for the rendering or receipt of goods or services in
the ordinary course of business; provided, that in each case in the foregoing
clause (ii) the monetary or business consideration arising therefrom would be
substantially as advantageous to Borrower or such Subsidiary as the monetary or
business consideration which would be obtained in a comparable arm's length
transaction with a Person not an Affiliate and provided further, that if any
transaction or a series of related transactions involves an amount in excess of
$500,000 in any given Fiscal Year, such transaction or transactions shall be
approved by the Board of Directors of Borrower.
Section 8.09 Mergers; Organization of New Subsidiaries. (a) Subject to Section
8.18, merge or consolidate with, or sell, assign, lease or otherwise dispose of
(whether in one transaction or in a series of related transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to,
any Person, or organize new Subsidiaries (other than Immaterial Subsidiaries);
except that, subject to Section 8.18, any Subsidiary of the Borrower may merge
with or into or consolidate with or transfer all or substantially all of its
assets to the Borrower or any Wholly-Owned Subsidiary of the Borrower.
(b) Notwithstanding the foregoing or anything to the contrary
contained in this Agreement, (i) the Borrower, either directly or through any
Wholly-Owned Domestic Subsidiary, may form and organize new Wholly-Owned
Domestic Subsidiaries, provided that (A) within five (5) Business Days of the
formation of any such Wholly-Owned Domestic Subsidiary, the provisions of
Section 7.09(a) through (c) have been complied with in regard to such
Wholly-Owned Domestic Subsidiary, and (B) within thirty (30) days of the
formation of any such Wholly-Owned Domestic Subsidiary, the provisions of
Section 7.09(d) have been complied with in regard to such Wholly-Owned Domestic
Subsidiary, (ii) Wholly-Owned Immaterial Subsidiaries may be formed solely for
the purpose of facilitating an Acquisition as permitted by clause (ii) of the
last sentence of Section 8.18 without satisfying the provisions of Section 7.09
and (iii) the Borrower or any Subsidiary may dissolve any Immaterial Subsidiary.
52
Section 8.10 Subsidiaries' Stock and Debt. Except as otherwise permitted by this
Agreement, directly or indirectly sell, assign, pledge or otherwise dispose of
any capital market debt securities of, or claim against, or any shares of stock
or similar interests or other securities of (or warrants, rights or options to
acquire stock or similar interests or other securities of), any Subsidiary, or
any intercompany Debt listed on Schedule 8.01(e) or any intercompany Debt
permitted under Section 8.01, except to the Lender or a Wholly-Owned Domestic
Subsidiary pursuant to any of the Security Documents, or as directors'
qualifying shares if required by applicable law.
Section 8.11 Acquisitions. Make any Acquisition, except that Borrower or any
Subsidiary may make any Acquisition, unless otherwise prohibited by Section
8.18, if:
(a) such Acquisition relates to the Business and has been approved
in good faith by (i) the Board of Directors of Borrower to the extent required
by the bylaws or other organizational documents of the Borrower, (ii) the Board
of Directors of the entity that is the acquiror and (iii) the Board of Directors
or other organizational governance body of the acquired entity or the Board of
Directors or other organizational governance body of the other parties to the
joint venture (in the case of Acquisitions in a joint venture);
(b) no Default or Event of Default exists or would exist after
giving effect to such Acquisition;
(c) after considering the pro forma position of the Consolidated
Entities subsequent to such Acquisition, the Borrower will continue to be in
compliance with the financial covenants contained in Article IX, and the chief
financial officer of Borrower has delivered a Compliance Certificate to Lender
demonstrating such compliance;
(d) the assets to be acquired shall not be subject to any Lien or
encumbrance, except Permitted Liens;
(e) the Borrower shall have furnished Lender with such additional
documents and information (including without limitation appraisals and
environmental reports), in each case at the Borrower's sole cost, as the Lender
shall have reasonably requested in connection with such Acquisition;
(f) with respect to Acquisitions of Wholly-Owned Subsidiaries only,
and not Acquisitions in joint ventures, the Borrower has complied with Section
7.09 (unless such Acquisition transaction shall comply with the provisions of
clause (ii) of the last sentence of Section 8.18); and
(g) for any Acquisition pursuant to which the Borrower or the
Subsidiaries making such Acquisition pays more than $15,000,000 in consideration
(including the incurrence, continuance or assumption of Debt) in any Fiscal Year
or if, after giving effect to the consummation of such Acquisition, the Borrower
or the Subsidiaries will have paid more than an aggregate of $35,000,000 in
consideration (including the incurrence, continuance or assumption of Debt) with
respect to such Acquisition and all other Acquisitions consummated during any
Fiscal Year, such Acquisition shall have received the prior written consent of
the Lender, and the conditions set forth in clauses (a) through (f) of this
Section shall have been satisfied.
53
Section 8.12 Fiscal Year. Change its Fiscal Year without the prior written
consent of the Lender.
Section 8.13 Restrictions. Enter into, or suffer to exist, any agreement with
any Person other than the Lender that (a) prohibits, requires the consent of
such Person for, or limits the ability of the Borrower or any Subsidiary (i) to
make Distributions or pay liabilities, or make loans or advances (ii) to create,
incur, assume or suffer to exist any Lien upon any of its Property whether now
owned or hereafter acquired in favor of the Lender or (iii) to enter into any
modification or supplement of the Facility Documents; or (b) contains financial
covenants which, taken as a whole, are more restrictive on the Borrower or any
Subsidiary than the financial covenants contained in Article IX.
Section 8.14 Sale-Leaseback Transactions. Enter into any arrangement, directly
or indirectly, with any Person whereby it shall sell or transfer any property,
real or personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property which it
intends to use for substantially the same purpose or purposes as the property
being sold or transferred.
Section 8.15 Accounting Change. Make or permit any change in its accounting
policies or financial reporting practices and procedures, except changes in
accounting policies which are required or permitted by GAAP and changes in
financial reporting practices and procedures which are required or permitted by
GAAP, in each case as to which Borrower shall have delivered to the Lender prior
to the effectiveness of any such change a report prepared by a responsible
financial officer of Borrower describing such change and explaining in
reasonable detail the basis therefor and expected effect thereof.
Section 8.16 Charter Amendments. Amend its certificate or articles of
incorporation or bylaws or other organization documents, in such a way that is
reasonably likely to materially and adversely affect the rights of the Lender
under the Facility Documents.
Section 8.17 Amendment, Modification and Termination of Material Contracts.
Cancel or terminate any Material Contract or consent to or accept any
cancellation or termination thereof (except in accordance with its terms), amend
or otherwise modify any Material Contract or give any consent, waiver or
approval thereunder, waive any default under or any breach of any Material
Contract, agree in any manner to any other amendment, modification or change of
any term or condition of any Material Contract, or take any action that would
cause such Material Contract to cease to be in full force and effect, in each
case if such action could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 8.18 Immaterial and Foreign Subsidiaries. Notwithstanding anything
contained in this Agreement to the contrary, the Borrower, each Domestic
Subsidiary and each First-Tier Foreign Subsidiary shall not:
(a) transfer, sell, lease, assign or otherwise dispose of any
Property to any Immaterial Subsidiary or any Other Foreign Subsidiary, except in
an aggregate amount not to exceed $1,000,000 at any time and except for
Investments permitted by Section 8.18(b);
54
(b) make any Investment in any Immaterial Subsidiary or any Other
Foreign Subsidiary, except in an aggregate amount, in addition to amounts set
forth on Schedule 8.05(f), not to exceed $10,000,000 in any Fiscal Year;
(c) create, incur, assume or suffer to exist any Debt to, or any
Guaranty for the benefit of, any Immaterial Subsidiary or Other Foreign
Subsidiary, except in an aggregate amount, in addition to Debt and Guaranties
set forth on Schedule 8.01(e), not to exceed $10,000,000 at any time outstanding
and except for intercompany payables for intercompany services rendered in the
ordinary course of business;
(d) merge or consolidate with, or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of related transactions)
all or substantially all of its assets (whether now owned or, hereafter
acquired) to, any Immaterial Subsidiary or any Foreign Subsidiary; provided,
that any First-Tier Foreign Subsidiary may merge with or into or consolidate
with or transfer all or substantially all of its assets to any Other Foreign
Subsidiary if as a result of such transaction the surviving entity becomes a
First-Tier Foreign Subsidiary and the requirements of Section 7.09 are
satisfied; and
(e) take any action, including without limitation any of the
actions otherwise permitted by this Section 8.18, if, as a result thereof, the
covenant set forth in Section 9.05 would be violated.
Notwithstanding the foregoing or anything to the contrary contained in this
Agreement, (i) none of the foregoing shall apply to any Immaterial Subsidiary
with respect to which the Borrower and such Immaterial Subsidiary have first
complied with the provisions of Section 7.09, after which such Subsidiary shall
no longer be considered to be an Immaterial Subsidiary hereunder; (ii) any
Immaterial Subsidiary or any Foreign Subsidiary may engage in any of the
foregoing activities or transactions as a part of a related series of
transactions pursuant to an Acquisition otherwise permitted hereunder if, at the
final conclusion of such transaction, such Immaterial Subsidiary or Foreign
Subsidiary will merge with Borrower or a Domestic Subsidiary (other than an
Immaterial Subsidiary) and is or becomes an Obligor hereunder or will remain a
First-Tier Foreign Subsidiary or an Immaterial Subsidiary; and (iii) any one or
more Immaterial Subsidiaries or Foreign Subsidiaries may merge or consolidate
with one another or into Borrower or a Subsidiary that is not an Immaterial
Subsidiary and not a Foreign Subsidiary.
ARTICLE IX
FINANCIAL COVENANTS
Section 9.01 Leverage Ratio. The Borrower shall maintain, as determined as at
the end of each Fiscal Quarter (commencing with the Fiscal Quarter ending on
March 31, 2003), a Leverage Ratio of not greater than 1.00 to 1.00, adjusted to
include, on a pro forma basis, (a) the results of operations of the Recently
Acquired Companies for the portions of the applicable four Fiscal Quarters
period occurring both before and after the respective acquisition dates and (b)
the
55
repayment of all obligations under the Xxxxxxx Xxxxx Credit Facility other than
for the letters of credit listed on Schedule 8.01(e) (the "Pro Forma
Adjustment").
Section 9.02 Total Liabilities to Consolidated Net Worth Ratio. The Borrower
shall maintain, as determined as at the end of each Fiscal Quarter (commencing
with the Fiscal Quarter ending on March 31, 2003), a ratio of Total Liabilities
to Consolidated Net Worth of not greater than 1.0 to 1.0.
Section 9.03 Quarterly Net Income. The Borrower shall have not less than $1.00
of Consolidated Net Income, as determined for and as at the end of each Fiscal
Quarter (commencing with the Fiscal Quarter ending on March 31, 2003).
Section 9.04 Minimum EBITDA. The Borrower shall maintain, as determined as at
the end of each Fiscal Quarter (commencing with the Fiscal Quarter ending on
March 31, 2003), for the four Fiscal Quarter period ending on such date of
determination, Consolidated EBITDA, after giving effect to the Pro Forma
Adjustment, of not less than $62,500,000; such $62,500,000 amount to be
increased by an amount equal to 75% of the EBITDA of any entity (other than the
Recently Acquired Companies) that is the subject of an Acquisition consummated
during such four Fiscal Quarter measurement period (provided that, with respect
to an Acquisition of a joint venture, such joint venture becomes, upon
consummation of the Acquisition, a Consolidated Entity) for the same four Fiscal
Quarter measurement period which includes the date of the Acquisition of such
entity, including the EBITDA of such entity for the portions of such four Fiscal
Quarter measurement period occurring both before and, without duplication, after
the consummation of the Acquisition.
Section 9.05 Domestic Assets. The Borrower, together with all Domestic
Subsidiaries (other than Immaterial Subsidiaries), shall at all times own at
least an aggregate amount of assets comprised of cash, Cash Equivalents and
accounts receivable (net of any allowances for doubtful accounts, determined in
accordance with GAAP) free and clear of all Liens, except Liens granted pursuant
to the Facility Documents, having a value of at least $32,000,000, which assets
shall at all times be maintained and located in the United States of America.
ARTICLE X
EVENTS OF DEFAULT
Section 10.01 Events of Default. Any of the following events shall be an "Event
of Default":
(a) (i) the Borrower shall fail to pay the principal of the Note on
or before the date when due and payable; (ii) any Obligor shall fail to pay
interest on the Note or any fee or other amount due the Lender hereunder or
under any other Facility Document on or before the fifth (5th) Business Day
after the date when due and payable; or (iii) the Borrower shall fail to pay any
fee or other amount due the Issuing Lender or any Interest Rate Protection
Agreement Counterparty on or before the fifth (5th) Business Day after the date
when due and payable;
(b) any representation or warranty made or deemed made by any
Obligor in this Agreement or in any other Facility Document or which is
contained in any written certificate, document, opinion, financial or other
statement furnished at any time under or in
56
connection with any Facility Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made or furnished;
(c) (i) any Obligor shall fail to perform or observe any term,
covenant or agreement contained in Section 2.03, Section 7.05 (to the extent
that the failure to perform involves the failure to maintain insurance), Section
7.08, Section 7.09, Section 7.10, Article 8 or Article 9; or (ii) any Obligor
shall fail to perform or observe any term, covenant or agreement on its part to
be performed or observed (other than the obligations specifically referred to
elsewhere in this Section 10.01) in any Facility Document to which it is a party
and, in each such case referred to in this clause (ii), such failure shall
continue for thirty (30) consecutive days after it has obtained Knowledge
thereof;
(d) any Obligor shall: (i) fail to pay any Debt in an aggregate
principal amount exceeding $2,000,000 (other than the payment obligations
described in (a) above), or any interest or premium thereon, or any other amount
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), taking into account any applicable grace
periods; (ii) fail to perform or observe any term, covenant or condition on its
part to be performed or observed under any agreement or instrument relating to
any such Debt, when required to be performed or observed, taking into account
any applicable grace periods, if the effect of such failure to perform or
observe is to accelerate, or to permit the acceleration of, after the giving of
notice or passage of time, or both, the maturity of such Debt or any other Debt
of any Obligor, unless such failure to perform or observe shall be waived in
writing by the holder of such Debt; or any such Debt shall be declared to be due
and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof;
(e) any Obligor generally does not pay its debts as such debts
become due, or admits in writing its inability to pay its debts generally; any
Obligor commences a voluntary case concerning it under Title 11 of the United
States Code entitled "Bankruptcy" as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against any Obligor under the Bankruptcy Code and an order for relief is entered
or the petition is controverted but remains undismissed for sixty (60) days
after the commencement of the case; or any Obligor commences any other
proceeding under any reorganization, arrangement, readjustment of debt, relief
of debtors, insolvency or liquidation or similar law of any jurisdiction whether
now or hereafter in effect relating to any Obligor; or there is commenced
against any Obligor in a court of competent jurisdiction any such proceeding
which is consented to or acquiesced in by such Obligor or which remains
undismissed for a period of sixty (60) days after the commencement thereof; or
any Obligor consents to the appointment pursuant to a decree or order of a court
in any such proceeding of a custodian (as defined in the Bankruptcy Code) for,
or to take charge of, all or substantially all of its property or any Obligor
suffers any such appointment by a court of competent jurisdiction to continue
undischarged or unstayed for a period of sixty (60) days after such appointment;
or any Obligor makes a general assignment for the benefit of creditors; or any
Obligor takes any action authorizing the taking of any of the foregoing actions
to be taken by it;
(f) one or more judgments, decrees or orders for the payment of
money in excess of $1,000,000 in any individual case or $2,000,000 in the
aggregate (to the extent not covered by insurance as to which a solvent and
unaffiliated insurance company has
57
acknowledged coverage), shall be rendered against any Obligor and (i) any action
shall be taken by a judgment creditor to levy upon any of the Properties of any
Obligor to enforce any such judgment or (ii) such judgments, decrees or orders
shall continue unsatisfied and in effect for a period of thirty (30) consecutive
days without being vacated, discharged, satisfied or stayed or bonded pending
appeal;
(g) any nonmonetary judgment or order shall be rendered against any
Obligor that could reasonably be expected to have a Material Adverse Effect, and
(i) enforcement proceedings shall have been commenced by any person upon such
judgment or order, and (ii) there shall be any period of thirty (30) consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect;
(h) any event or condition shall occur or exist with respect to any
Plan or Multiemployer Plan concerning which the Borrower or any Subsidiary is
under an obligation to furnish a report to the Lenders in accordance with
Section 7.08(i) and as a result of such event or condition, together with all
other such events or conditions, the Borrower or such Subsidiary has incurred or
is reasonably likely to incur an obligation to pay in excess of $1,000,000 at
any time to a Plan, a Multiemployer Plan, the PBGC, or a Section 4042 Trustee
(as defined in ERISA) (or any combination of the foregoing);
(i) an "Event of Default" under and as defined in any other
Facility Document shall have occurred and be continuing;
(j) any of the Security Documents shall at any time after its
execution and delivery and for any reason other than pursuant to the terms
hereof and thereof cease: (i) to create a valid and perfected security interest
in and to any material portion of the Collateral; or (ii) to be in full force
and effect or shall be declared null and void, or the validity or enforceability
thereof shall be contested by any Obligor or such Obligor shall deny it has any
further liability or obligation under the Security Documents or such Person
shall fail to perform any of its material obligations thereunder and such
default shall have continued for a period of thirty (30) days after such Obligor
has obtained Knowledge thereof; or
(k) a Change of Control shall have occurred.
Section 10.02 Remedies. If any Event of Default shall occur and be continuing,
the Lender may, by notice to the Borrower:
(a) declare the Revolving Credit Commitment to be terminated,
whereupon the same shall forthwith terminate;
(b) declare the outstanding principal of the Note, all interest
thereon and all other amounts payable under this Agreement, the Note and the
other Facility Documents to be forthwith due and payable, whereupon the Note,
all such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower;
(c) irrespective of whether it is taking any of the actions
described in this Section 10.02 or otherwise, make demand upon the Borrower to,
and forthwith upon such
58
demand the Borrower will, pay to the Lender on behalf of the Issuing Lender in
same day funds at the Lending Office designated in such demand, for deposit in
the L/C Cash Collateral Account, an amount equal to the aggregate L/C
Obligations. If at any time the Lender determines that any funds held in the L/C
Cash Collateral Account are subject to any right or claim of any Person other
than the Lender, or that the total amount of such funds is less than the
aggregate L/C Obligations, the Borrower will, forthwith upon demand by the
Lender, pay to the Lender, as additional funds to be deposited and held in the
L/C Cash Collateral Account, an amount equal to the excess of (a) such aggregate
L/C Obligations over (b) the total amount of funds, if any, then held in the L/C
Cash Collateral Account that the Lender determines to be free and clear of any
such right and claim; and/or
(d) notify account debtors of Borrower and/or each other Obligor
that Receivables have been assigned to the Lender and collect such Receivables
directly in its own name and charge to the Borrower the collection costs and
expenses incurred by the Lender, including reasonable attorneys' fees;
provided that, in the case of an Event of Default referred to in Section
10.01(e), the Revolving Credit Commitment shall be immediately terminated, and
the Note, all interest thereon and all other amounts payable under this
Agreement, the Note, and the other Facility Documents shall be immediately due
and payable without notice, presentment, demand, protest or other formalities of
any kind, all of which are hereby expressly waived by the Borrower.
Section 10.03 Remedies Cumulative. All remedies set forth in this Agreement and
the other Facility Documents, or provided at law or in equity, are cumulative.
Section 10.04 Application of Proceeds. All monies received by the Lender or
other holder or holders of any of the Notes from the exercise of remedies
hereunder or under any other Facility Documents or under any applicable law,
shall, unless otherwise required by the terms of the Facility Documents or by
applicable. law, be applied as follows:
First: to the payment of all expenses (to the extent not paid by
the Borrower, any Subsidiary or any other Obligor) incurred by the Lender in
connection with the exercise of such rights and remedies;
Second: to the payment of the interest then accrued and unpaid on
the Revolving Credit Loans;
Third: to the payment of all remaining Obligations to the Lender,
the Issuing Lender and Interest Rate Protection Agreement Counterparties (each
such Person, a "Payee") (pro rata based on the proportion that the Obligations
payable to such Payee bear to the aggregate amount of all remaining
Obligations); and
Fourth: to the Borrower or whomever else is entitled thereto.
ARTICLE XI
(INTENTIONALLY OMITTED)
59
ARTICLE XII
MISCELLANEOUS
Section 12.01 Amendments and Waivers; Remedies Cumulative. Except as otherwise
expressly provided in this Agreement or in any other Facility Document, any
provision of this Agreement or any other Facility Document may be amended or
modified only by an instrument in writing signed by the Borrower and Lender, and
any provision of this Agreement or any other Facility Document may be waived by
the Lender. No failure on the part of the Lender to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof or preclude
any other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
Section 12.02 Usury. All agreements among Borrower, Guarantor(s) and Lender are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to Lender for the use or
the forbearance of the indebtedness evidenced hereby exceed the maximum
permissible under applicable law. As used herein, the term "applicable law"
shall mean the law in effect as of the date hereof; provided, however, that in
the event there is a change in the law which results in a higher permissible
rate of interest, then this Agreement or the Note shall be governed by such new
law as of its effective date. In this regard, it is expressly agreed that it is
the intent of Borrower and the Lender in the execution, delivery and acceptance
of this Agreement to contract in strict compliance with the laws of New York
State from time to time in effect. If, under or from any circumstances
whatsoever, fulfillment of any provision hereof or of any of the other Facility
Documents at the time of performance of such provision shall be due, shall
involve transcending the limit of such validity prescribed by applicable law,
then the obligation to be fulfilled shall automatically be reduced to the limits
of such validity, and if under or from circumstances whatsoever Lender should
ever receive as interest an amount which would exceed the highest lawful rate,
such amount which would be excessive interest shall be applied to the reduction
of the principal balance evidenced hereby and not to the payment of interest.
This provision shall control every other provision of all agreements among
Borrower, Guarantors, and Lender.
Section 12.03 Costs; Expenses; Taxes; Indemnification. The Borrower agrees to
pay or reimburse (a) Lender for all its documented costs and expenses
(including, without limitation, the reasonable fees and expenses of attorneys
for the Lender) incurred in connection with the preparation and administration
of this Agreement and the Facility Documents and (b) Lender for all costs and
expenses (including, without limitation, the reasonable fees and expenses of
attorneys for the Lender) incurred in connection with the default, collection,
waiver or amendment of this Agreement or any of the Facility Documents, or in
connection with Lender's exercise, preservation or enforcement of any of their
rights, remedies or options hereunder, including without limitation in
connection with (i) the enforcement or preservation of any rights under this
Agreement or the Note or any other Facility Document or any other instrument or
agreement entered into in connection herewith or therewith including, without
limitation, the reasonable fees and disbursements of attorneys for Lender; (ii)
any claim or action threatened, made or brought against Lender arising out of or
relating to any extent to this Agreement, the Security Agreement, the Note or
any other Facility Documents or any instrument or agreement
60
entered into in connection with the transactions contemplated hereby or thereby;
(iii) the perfection of any security interest in the Collateral or in the
maintenance of the Collateral; (iv) any amendment or modification of any
Facility Document; (v) the payment of any tax, assessment, recording fee or
similar charge; (vi) any waiver of any right of the Lender under any Facility
Document and (vii) the reasonable fees and disbursements of any outside counsel
to the Lender and/or the allocated costs of in-house legal counsel incurred from
time to time in connection with the transactions contemplated by this Agreement,
accounting, consulting, brokerage or other similar professional fees or
expenses, and any fees or expenses associated with travel or other costs
relating to any appraisals or examinations conducted in connection with the
Obligations or any Collateral therefor. All such fees and expenses shall be
Obligations secured by the Collateral and, commencing five (5) Business Days
after demand therefor, shall, until paid, bear interest at the rate applicable
to Loans upon the occurrence of an Event of Default. In addition, the Borrower
shall pay any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of any
of the Security Agreement and all related and/or necessary financing statements,
and agree to save the Lender harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes and fees. The Borrower agrees to indemnify the Lender and its directors,
officers and employees from, and hold each of them harmless against, any and all
costs, losses, liabilities, claims, damages or out-of-pocket expenses incurred
by any of them arising out of or by reason of any investigation of or litigation
or other proceedings (including any threatened investigation or litigation or
other proceedings against Lender) arising out of or relating to this Agreement
or any other Facility Document or to any actual or proposed use by Borrower of
the proceeds of the Loans or other extensions of credit hereunder or to the
performance or enforcement of this Agreement or the other Facility Documents,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation or litigation or other
proceedings. Notwithstanding anything to the contrary contained herein, this
Section 12.03 shall not be applicable with respect to the Lender or any of its
directors, officers or employees to the extent any cost, loss, liability, claim,
damage, or expense arises solely as a result of the gross negligence or willful
misconduct of the Lender or such other Person.
Section 12.04 Survival. The obligations of the Borrower under Article 3 and
Sections 4.01, 4.05, 12.03, and the obligations of the Lender under Section
12.13, shall survive the repayment of the Loans and the termination of the
Revolving Credit Commitments and continue after the Revolving Credit Termination
Date.
Section 12.05 Assignment; Participations.
(a) This Agreement shall be binding upon, and shall inure to the
benefit of, the Borrower, the Lender and their respective successors and
assigns, except that the Borrower may not assign or transfer its rights or
obligations hereunder, without prior written consent of the Lender (any of such
assignment or transfer without such consent shall be null and void). Provided
that the requirements of Section 12.05(c) are met, Lender shall have the
unrestricted right at any time or from time to time to assign or sell
participations in all of its rights and obligations hereunder or any part of its
rights and obligations hereunder to another bank or other financial institution
provided that (i) each such assignment shall be in a minimum amount equal to
$3,000,000 and an integral multiple of $1,000,000 in excess thereof (unless such
amount
61
constitutes the entire remaining amount of Lender's Commitment), (ii) each such
assignment of Lender's Revolving Credit Commitment shall be of a uniform, and
not a varying, percentage of all rights and obligations under and in respect of
Lender's Revolving Credit Commitment, and (iii) each such assignment of Lender's
Revolving Credit Commitment shall be subject to the consent of the Borrower,
which consent will not be unreasonably withheld or delayed (provided that such
consent shall not be required if a Default or an Event of Default has occurred
and is continuing); in which event (x) in the case of an assignment, upon notice
thereof by Lender to the Borrower, the assignee shall have, to the extent of
such assignment (unless otherwise provided therein), the same rights, benefits
and obligations as it would have if it were a Lender hereunder; and (y) in the
case of a participation, the participant shall have no rights under the Facility
Documents and all amounts payable by the Borrower under the Facility Documents,
including, without limitation, under Article 4, shall be determined as if Lender
had not sold such participation. The agreement executed by Lender in favor of
the participant shall not give the participant the right to require Lender to
take or omit to take any action hereunder except action directly relating to (i)
the extension of a payment date with respect to any portion of the principal of
or interest on any amount outstanding hereunder allocated to such participant,
(ii) the reduction of the principal amount outstanding hereunder allocated to
such participant or (iii) the reduction of the rate of interest payable on such
amount or any amount of fees payable hereunder to a rate or amount, as the case
may be, below that which the participant is entitled to receive under its
agreement with Lender. Lender may furnish any information concerning the
Borrower, any Subsidiary or any other Obligor (or any of their respective
affiliates) in the possession of Lender from time to time to assignees and
participants (including prospective assignees and participants); provided that
Lender shall require any such prospective assignee or such participant
(prospective or otherwise) to agree in writing to maintain the confidentiality
of such information in accordance with the provisions of Section 12.13.
(b) In addition to the assignments and participations permitted
under paragraph (a) above, Lender may assign and pledge all or any portion of
the Facility Documents, including any portion of the Note, held by it to (i) any
Affiliate of Lender provided that the requirements of Section 12.05(c) are met
with respect to any Affiliate of Lender or (ii) any Federal Reserve Bank
organized under Section 4 of the Federal Reserve Act, 12 U.S.C., Section 341, as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank. No such pledge or assignment or enforcement
thereof shall release the assigning Lender from its obligations hereunder.
(c) If, pursuant to this Section 12.05, any interest in this
Agreement is transferred to any participant or assignee that is organized under
the laws of any jurisdiction other than the United States or any state thereof,
the Lender transferring such interest (the "Transferor Lender") shall cause such
participant or assignee concurrently with the effectiveness of such transfer,
(i) to represent to the Transferor Lender (for the benefit of the Transferor
Lender and the Borrower) that it is either (A) entitled to the benefits of an
income tax treaty with the United States that provides for an exemption from
United States withholding tax on interest and other payments which may be made
by the Borrower under this Agreement; or (B) is engaged in a trade or business
within the United States and such Loan is effectively connected with such trade
or business, (ii) to furnish to the Transferor Lender and the Borrower either
Internal Revenue Service Form W-8ECI or Internal Revenue Service Form W-8BEN
(wherein such participant or assignee claims entitlement to complete exemption
from federal withholding
62
tax of the United States of America on all payments hereunder) and (iii) to
agree (for the benefit of the Transferor Lender, the Lender and the Borrower) to
provide to the Transferor Lender and Borrower such forms or documentation as may
be required from time to time, including a new Form W-8ECI or Form W-8BEN upon
the obsolescence of any previously delivered form, in accordance with applicable
Laws of the United States of America establishing the current status of such
participant or assignee with regard to continued entitlement to such complete
withholding tax exemption. If, pursuant to this Section 12.05, an interest in
this Agreement is transferred to any participant or assignee that is organized
under the laws of the United States or any state thereof, such assignee or
participant, to the extent required by law, shall provide the Borrower and the
Transferor Lender with a completed Internal Revenue Service Form W-9.
(d) In the event an assignment is permitted under paragraph (a)
above, Borrower agrees that it shall, and it shall cause each Subsidiary to,
execute, or cause to be executed, such documents, including, without limitation,
non-substantive amendments to the Facility Documents and to any other documents,
instruments and agreements executed in connection herewith as the assigning
Lender shall deem necessary to effect the foregoing. In addition, at the request
of the assigning Lender, and any such assignee, Borrower shall issue one or more
new promissory notes, as applicable, to any such assignee and if the assigning
Lender has retained any of its rights and obligations hereunder following such
assignment, to such Lender which new promissory notes shall be issued in
replacement of but not in discharge of, the liability evidenced by the
promissory note held by such Lender prior to such assignment and shall reflect
the amount of the respective commitments and loans held by such assignee and
such Lender after giving effect to such assignment. Upon the execution and
delivery of appropriate assignment documentation, amendments and any other
documentation required by an assigning Lender in connection with such
assignment, and the payment by assignee of the purchase price agreed to by such
Lender and such assignee, such assignee shall be a party to this Agreement and
shall have all of the rights and obligations of a Lender hereunder (and under
any and all other guaranties, documents, instruments and agreements executed in
connection herewith) to the extent that such rights and obligations have been
assigned by Lender pursuant to the assignment documentation between such
assigning Lender and such assignee, and such assigning Lender shall be released
from its obligations hereunder and thereunder to a corresponding extent.
Section 12.06 Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to:
Xxxxx Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
63
with a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(b) if to Lender, to:
Fleet National Bank
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Any party may change its address for notices hereunder by written notice
to each other party hereunder. Each notice, request or other communication shall
be effective (a) if given by facsimile, when such facsimile is transmitted and
electronic confirmation is received, (b) if given by mail (registered or
certified), three (3) days after such communication is deposited in the mails
with registered first class postage prepaid, addressed as aforesaid or (c) if
given by any other acceptable means, when delivered at the address specified in
this Section 12.06.
Section 12.07 Setoff. Borrower hereby grants to the Lender a continuing lien,
security interest and, upon the occurrence and during the continuance of an
Event of Default, right of setoff as security for all liabilities and
obligations to the Lender whether now existing or hereafter arising, upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of the Lender or any entity under
the control of FleetBoston Financial Corporation and its successors and assigns
or in transit to any of them. At any time, upon the occurrence and during the
continuance of an Event of Default, without demand or notice (any such notice
being expressly waived by Borrower), Lender may set off the same or any part
thereof and apply the same to any liability or obligation of Borrower and any
Guarantor even though unmatured and regardless of the adequacy of any other
collateral securing the Loans. ANY AND ALL RIGHTS TO REQUIRE LENDER TO EXERCISE
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOANS
PRIOR TO EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
OR OTHER PROPERTY OF BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.
64
Section 12.08 JURISDICTION; IMMUNITIES.
(a) EACH OF THE BORROWER AND THE LENDER HEREBY IRREVOCABLY SUBMITS
TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING
IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE NOTE OR ANY OTHER FACILITY DOCUMENT, AND EACH OF THE
BORROWER AND THE LENDER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR
FEDERAL COURT. EACH OF THE BORROWER AND THE LENDER IRREVOCABLY CONSENTS TO THE
SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES OF SUCH PROCESS TO SUCH PERSON IN THE MANNER PROVIDED IN SECTION 12.06
FOR THE GIVING OF NOTICES. EACH OF THE BORROWER AND THE LENDER AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. EACH OF THE BORROWER AND THE LENDER FURTHER WAIVES ANY
OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN
SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. BORROWER FURTHER AGREES THAT
ANY ACTION OR PROCEEDING BROUGHT AGAINST THE LENDER SHALL BE BROUGHT ONLY IN A
NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY.
(b) EACH OF THE BORROWER AND THE LENDER (BY ACCEPTANCE OF THE NOTE)
MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO
TRIAL BY JURY, AND BORROWER WAIVES THE RIGHT TO INTERPOSE ANY NON-COMPULSORY
COUNTERCLAIM, IN EACH CASE IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTE AND/OR ANY OTHER FACILITY
DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS OR ACTIONS OF THE LENDER RELATING TO THE ADMINISTRATION OF
THE LOANS OR ENFORCEMENT OF THE FACILITY DOCUMENTS AND AGREE THAT NO PARTY WILL
SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, BORROWER HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. BORROWER CERTIFIES THAT NO REPRESENTATIVE, LENDER
OR ATTORNEY OF THE LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE LENDER TO ENTER
INTO THIS AGREEMENT, ACCEPT THE NOTE AND MAKE THE LOANS.
65
(c) Nothing in this Section 12.08 shall affect the right of the
Borrower or the Lender to serve legal process in any other manner permitted by
law or affect the right of the Lender to bring any action or proceeding against
the Borrower or its Property in the courts of any other jurisdictions.
(d) To the extent that Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its Property, the Borrower
hereby irrevocably waives such immunity to the fullest extent permitted by law
in respect of its obligations under this Agreement, the Note and the other
Facility Documents.
Section 12.09 Table of Contents; Headings. The table of contents and the
headings and captions hereunder are for convenience only and shall not affect
the interpretation or construction of this Agreement.
Section 12.10 Severability. The provisions of this Agreement are intended to be
severable. If for any reason any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 12.11 Entire Agreement. The Facility Documents, are intended by the
parties as the final, complete and exclusive statement of the transactions
evidenced thereby. All prior or contemporaneous promises, agreements and
understandings, whether oral or written, are deemed to be superceded by this
Agreement and such other Facility Documents, and no party is relying on any
promise, agreement or understanding not set forth in this Agreement or such
other Facility Documents.
Section 12.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF, BUT THE
LETTERS OF CREDIT SHALL BE SUBJECT TO THE UNIFORM CUSTOMS, THE PROVISIONS OF
WHICH SHALL BE CONTROLLING IN THE EVENT OF A CONFLICT.
Section 12.13 Confidentiality. Lender agrees (on behalf of itself and each of
its respective affiliates, directors, officers, employees and representatives)
to use reasonable precautions to keep confidential, in accordance with safe and
sound banking practices, any non-public information supplied to it by the
Borrower, the Subsidiaries, any other Obligors and the Business pursuant to the
Facility Documents, provided that nothing herein shall limit the disclosure of
any such information (i) to the extent required by applicable Law, (ii) to
counsel for the Lender, (iii) to bank examiners, and Lender's auditors or
accountants, (iv) to the extent that such information is already publicly known
not as result of any breach of this Section, (v) to any bona fide assignee or
participant (or prospective bona fide assignee or participant) so long as such
assignee or participant (or such prospective assignee or participant) agrees in
writing to be bound by the
66
provisions of this Section 12.13, or (vi) in connection with any litigation to
which Lender is a party; provided, that unless specifically prohibited by
applicable law or court order, the Lender shall make reasonable efforts to
notify the Borrower of any request by any governmental agency or representative
thereof for disclosure of any such non-public information prior to disclosure of
such information, and provided further, that in no event shall Lender be
obligated or required to return any materials furnished by the Borrower, the
Subsidiaries or any other Obligors.
Section 12.14 Replacement Notes, Etc. Upon receipt of an affidavit of an officer
of Lender as to the loss, theft, destruction or mutilation of any Note or any
other security documents which is not of public record, and, in the case of any
such loss, theft, destruction or mutilation, upon cancellation of such Note or
other security document, the Borrower will issue, in lieu thereof, a replacement
note or other security document in the same principal amount thereof and other
wise of like tenor.
Section 12.15 Treatment of Certain Information. The Borrower (a) acknowledges
that services may be offered or provided to it in connection with actions to be
taken under this Agreement and the other Facility Documents by Lender or by one
or more of its Subsidiaries or Affiliates and (b) acknowledges that information
delivered to Lender by the Borrower, any Subsidiary or any other Obligor (or any
of their respective Affiliates) may be provided to each such Subsidiary and
Affiliate; so long as, in each case, each such Subsidiary or Affiliate agrees to
be bound by the provisions of Section 12.13.
Section 12.16 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing any such
counterpart.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
BORROWER:
XXXXX INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
and President
FLEET NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
Lending Office:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ISSUING LENDER:
FLEET NATIONAL BANK, as Issuing Lender
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
68
