Exhibit 99.3
$32,000,000 REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
by and among
AUDIO COMMUNICATIONS NETWORK, INC.
and
THE BANKS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, As Agent
Dated as of May 30, 1997
TABLE OF CONTENTS
Section Page
------- ----
1. CERTAIN DEFINITIONS..........................................................................................1
1.1 Certain Definitions......................................................................................1
1.2 Construction..........................................................................................16
1.2.1Number; Inclusion.16
1.2.2Determination.16
1.2.3Agent's Discretion and Consent.16
1.2.4Documents Taken As a Whole.17
1.2.5Headings.17
1.2.6Implied References to this Agreement.17
1.2.7Persons.17
1.2.8Modifications to Documents.17
1.2.9From, To and Through.17
1.2.10Shall; Will.17
1.3 Accounting Principles.................................................................................18
2. REVOLVING CREDIT FACILITY...................................................................................18
2.1 Revolving Credit Commitments..........................................................................18
2.1.1Automatic Reduction of Commitment.18
2.1.2Voluntary Reduction of Commitment.19
2.2 Nature of Banks' Obligations with Respect to Revolving Credit Loans...................................20
2.3 Commitment Fees.......................................................................................20
2.4 Revolving Credit Facility Fee.........................................................................20
2.5 Revolving Credit Loan Requests........................................................................20
- 1 -
TABLE OF CONTENTS
Section Page
------- -----
2.6 Making Revolving Credit Loans.........................................................................21
2.7 Revolving Credit Notes................................................................................21
2.8 Use of Proceeds.......................................................................................21
3. INTEREST RATES..............................................................................................22
3.1 Interest Rate Options.................................................................................22
3.1.1Revolving Credit Interest Rate Options.22
3.1.2Rate Quotations.22
3.2 Interest Periods......................................................................................22
3.2.1Ending Date and Business Day.23
3.2.2Amount of Borrowing Tranche.23
3.2.3Termination Before Expiration Date.23
3.2.4Renewals.23
3.3 Interest After Default................................................................................23
3.3.1Interest Rate.23
3.3.2Other Obligations.23
3.3.3Acknowledgment.24
3.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available........................24
3.4.1Unascertainable.24
3.4.2Illegality; Increased Costs; Deposits Not Available.24
3.4.3Agent's and Bank's Rights.25
3.5 Selection of Interest Rate Options....................................................................25
- 2 -
TABLE OF CONTENTS
Section Page
------- -----
4. PAYMENTS....................................................................................................25
4.1 Payments..............................................................................................25
4.2 Pro Rata Treatment of Banks...........................................................................26
4.3 Interest Payment Dates................................................................................26
4.4 Voluntary Prepayments.................................................................................26
4.4.1Right to Prepay.26
4.5 Mandatory Prepayments.................................................................................27
4.5.1Excess Cash Flow.27
4.5.2Sale of Assets.28
4.5.3Equity Infusion.28
4.5.4Reduction of Commitment.28
4.5.5Application Among Interest Rate Options.28
4.6 Additional Compensation in Certain Circumstances......................................................29
4.6.1Increased Costs or Reduced Return Resulting from Taxes, Reserves, Capital
Adequacy Requirements, Expenses, Etc.29
4.6.2Indemnity.30
5. REPRESENTATIONS AND WARRANTIES..............................................................................30
5.1 Representations and Warranties........................................................................30
5.1.1Organization and Qualification.30
5.1.2Capitalization and Ownership.31
5.1.3Subsidiaries.31
5.1.4Power and Authority.31
5.1.5Validity and Binding Effect.32
5.1.6No Conflict.32
- 3 -
TABLE OF CONTENTS
Section Page
------- -----
5.1.7Litigation.32
5.1.8Title to Properties.32
5.1.9Financial Statements.33
5.1.10Use of Proceeds; Margin Stock.33
5.1.11Full Disclosure.34
5.1.12Taxes.34
5.1.13Consents and Approvals.34
5.1.14No Event of Default; Compliance with Instruments.34
5.1.15Patents, Trademarks, Copyrights, Licenses, Etc.35
5.1.16Security Interests.36
5.1.17Contract and License Collateral36
5.1.18Status of the Pledged Collateral.36
5.1.19Insurance.37
5.1.20Compliance with Laws.37
5.1.21Material Contracts; Burdensome Restrictions.37
5.1.22Investment Companies; Regulated Entities.37
5.1.23Plans and Benefit Arrangements.38
5.1.24Employment Matters.39
5.1.25Environmental Matters.39
5.1.26Senior Debt Status.40
5.1.27Scope of Business.40
5.2 Updates to Schedules..................................................................................41
6. CONDITIONS OF LENDING.......................................................................................41
6.1 First Loans...........................................................................................41
6.1.1Officer's Certificate.41
6.1.2Secretary's Certificate.42
6.1.3Delivery of Loan Documents.42
6.1.4Opinion of Counsel.42
6.1.5Legal Details.42
6.1.6Payment of Fees.43
- 4 -
TABLE OF CONTENTS
Section Page
------- -----
6.1.7Subordinated Lender's Consent.43
6.1.8Consents.43
6.1.9Officer's Certificate Regarding MACs.43
6.1.10No Violation of Laws.43
6.1.11No Actions or Proceedings.44
6.1.12Insurance Policies; Certificates of Insurance; Endorsements.44
6.1.13Schell Purchase.44
6.1.14Filing Receipts; Payoff.44
6.1.15Subscriber Reports.44
6.2 Each Additional Loan..................................................................................44
7. COVENANTS...................................................................................................45
7.1 Affirmative Covenants.................................................................................45
7.1.1Preservation of Existence, Etc.45
7.1.2Payment of Liabilities, Including Taxes, Etc.45
7.1.3Maintenance of Insurance.46
7.1.4Maintenance of Properties and Leases.47
7.1.5Maintenance of Patents, Trademarks, Etc.47
7.1.6Visitation Rights.47
7.1.7Keeping of Records and Books of Account.47
7.1.8Plans and Benefit Arrangements.47
7.1.9Compliance with Laws.48
7.1.10Use of Proceeds.48
7.1.11Further Assurances.48
7.1.12Subordination of Intercompany Loans.48
7.1.13Maintenance of Accounts at PNC Bank.48
7.1.14Interest Rate Protection48
7.2 Negative Covenants....................................................................................49
7.2.1Indebtedness.49
7.2.2Liens.49
- 5 -
TABLE OF CONTENTS
Section Page
------- -----
7.2.3Guaranties.49
7.2.4Loans and Investments.50
7.2.5Dividends and Related Distributions.50
7.2.6Liquidations, Mergers, Consolidations, Acquisitions.50
7.2.7Dispositions of Assets or Subsidiaries.51
7.2.8Affiliate Transactions; Advances.52
7.2.9Subsidiaries, Partnerships and Joint Ventures.52
7.2.10Continuation of or Change in Business.52
7.2.11Plans and Benefit Arrangements.52
7.2.12Fiscal Year.53
7.2.13Issuance of Stock.53
7.2.14Changes in Documents; Restrictive Agreements.53
7.2.15Capital Expenditures and Leases.54
7.2.16Minimum Fixed Charge Coverage Ratio.54
7.2.17Maximum Leverage Ratio.55
7.2.18Minimum Interest Coverage Ratio.55
7.2.19Attrition Limitations.55
7.3 Reporting Requirements................................................................................55
7.3.1Quarterly Financial Statements.56
7.3.2Annual Financial Statements.56
7.3.3Certificate of the Borrower.56
7.3.4Notice of Default.57
7.3.5Notice of Litigation.57
7.3.6Certain Events.57
7.3.7Budgets, Forecasts, Other Reports and Information.58
7.3.8Notices Regarding Plans and Benefit Arrangements.58
8. DEFAULT.....................................................................................................60
8.1 Events of Default.....................................................................................60
8.1.1Payments Under Loan Documents.60
8.1.2Breach of Warranty.60
- 6 -
TABLE OF CONTENTS
Section Page
------- -----
8.1.3Breach of Covenants, etc.60
8.1.4Breach of Other Covenants.60
8.1.5Defaults in Other Agreements or Indebtedness.60
8.1.6Final Judgments or Orders.61
8.1.7Loan Document Unenforceable.61
8.1.8Uninsured Losses; Proceedings Against Assets.61
8.1.9Notice of Lien or Assessment.61
8.1.10Insolvency.62
8.1.11Events Relating to Plans and Benefit Arrangements.62
8.1.12Cessation of Business.62
8.1.13Change of Control.62
8.1.14Involuntary Proceedings.62
8.1.15Voluntary Proceedings.63
8.2 Consequences of Event of Default......................................................................63
8.2.1Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings.63
8.2.2Bankruptcy, Insolvency or Reorganization Proceedings.63
8.2.3Set-off.64
8.2.4Suits, Actions, Proceedings.64
8.2.5Application of Proceeds.64
8.2.6Other Rights and Remedies.65
8.3 Notice of Sale........................................................................................65
9. THE AGENT...................................................................................................65
9.1 Appointment...........................................................................................65
9.2 Delegation of Duties..................................................................................66
9.3 Nature of Duties; Independent Credit Investigation....................................................66
- 7 -
TABLE OF CONTENTS
Section Page
------- -----
9.4 Actions in Discretion of Agent; Instructions From the Banks...........................................66
9.5 Reimbursement and Indemnification of Agent by the Borrower............................................67
9.6 Exculpatory Provisions; Limitation of Liability.......................................................67
9.7 Reimbursement and Indemnification of Agent by Banks...................................................68
9.8 Reliance by Agent.....................................................................................69
9.9 Notice of Default.....................................................................................69
9.10 Notices...........................................................................................69
9.11 Banks in Their Individual Capacities..............................................................69
9.12 Holders of Notes..................................................................................70
9.13 Equalization of Banks.............................................................................70
9.14 Successor Agent...................................................................................70
9.15 Agent's Fee.......................................................................................71
9.16 Availability of Funds.............................................................................71
9.17 Calculations......................................................................................72
9.18 Beneficiaries.....................................................................................72
10. MISCELLANEOUS.........................................................................................72
- 8 -
TABLE OF CONTENTS
Section Page
------- -----
10.1 Modifications, Amendments or Waivers..............................................................72
10.1.1Increase of Commitment; Extension or Expiration Date.73
10.1.2Extension of Payment; Reduction of Principal Interest or Fees; Modification of
Terms of Payment.73
10.1.3Release of Collateral or Guarantor.73
10.1.4Miscellaneous73
10.2 No Implied Waivers; Cumulative Remedies; Writing Required.........................................74
10.3 Reimbursement and Indemnification of Banks by the Borrower; Taxes.................................74
10.4 Holidays..........................................................................................75
10.5 Funding by Branch, Subsidiary or Affiliate........................................................75
10.5.1Notional Funding.75
10.5.2Actual Funding.75
10.6 Notices...........................................................................................76
10.7 Severability......................................................................................76
10.8 Governing Law.....................................................................................76
10.9 Prior Understanding...............................................................................76
10.10 Duration; Survival................................................................................77
10.11 Successors and Assigns............................................................................77
10.12 Confidentiality...................................................................................78
10.13 Counterparts......................................................................................78
- 9 -
TABLE OF CONTENTS
Section Page
------- -----
10.14 Agent's or Bank's Consent.........................................................................78
10.15 Exceptions........................................................................................79
10.16 Consent To Forum; Waiver Of Jury Trial............................................................79
10.17 Tax Withholding Clause............................................................................79
10.18 Joinder of Guarantors.............................................................................80
- 10 -
LIST OF SCHEDULES AND EXHIBITS
SCHEDULE
SCHEDULE 1.1(B) - COMMITMENTS OF BANKS AND ADDRESSES FOR
NOTICES
SCHEDULE 1.1(M) - MUZAK LICENSES
SCHEDULE 1.1(P) - PERMITTED LIENS
SCHEDULE 5.1.1 - QUALIFICATIONS TO DO BUSINESS
SCHEDULE 5.1.2 - CAPITALIZATION
SCHEDULE 5.1.3 - SUBSIDIARIES
SCHEDULE 5.1.7 - LITIGATION
SCHEDULE 5.1.8 - OWNED AND LEASED REAL PROPERTY
SCHEDULE 5.1.13 - CONSENTS AND APPROVALS
SCHEDULE 5.1.15 - PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES,
ETC.
SCHEDULE 5.1.18 - PARTNERSHIP AGREEMENTS; LLC AGREEMENTS
SCHEDULE 5.1.19 - INSURANCE POLICIES
SCHEDULE 5.1.21 - MATERIAL CONTRACTS
SCHEDULE 5.1.23 - EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 5.1.25 - ENVIRONMENTAL DISCLOSURES
SCHEDULE 5.1.27.1 - LOAN PARTIES' TERRITORIES
SCHEDULE 5.1.27.2 - NAMES USED BY LOAN PARTIES AND SUNCOM
SCHEDULE 7.2.1 - PERMITTED INDEBTEDNESS
SCHEDULE 7.2.8 - CERTAIN EMPLOYMENT AND OPTION AGREEMENTS
EXHIBITS
EXHIBIT 1.1(A) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(G)(1) - GUARANTOR JOINDER
EXHIBIT 1.1(I)(1) - INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT 2.5 - LOAN REQUEST
EXHIBIT 7.3.3 - QUARTERLY COMPLIANCE CERTIFICATE
- 11 -
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of May 30, 1997 and is made by and
among AUDIO COMMUNICATIONS NETWORK, INC., a Florida corporation (the
"Borrower"), each of the Guarantors (as hereinafter defined), the BANKS (as
hereinafter defined), and PNC BANK, NATIONAL ASSOCIATION, in its capacity as
agent for the Banks under this Agreement (hereinafter referred to in such
capacity as the "Agent").
WITNESSETH:
WHEREAS, the Borrower has requested the Banks to provide a revolving
credit facility to the Borrower in an aggregate principal amount not to exceed
$32,000,000; and
WHEREAS, the revolving credit facility shall be used for the
Borrower's working capital and general corporate purposes; and
WHEREAS, the Banks are willing to provide such credit upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
1.CERTAIN DEFINITIONS
-------------------
1.1 Certain Definitions.
-------------------
In addition to words and terms defined elsewhere in this Agreement,
the following words and terms shall have the following meanings, respectively,
unless the context hereof clearly requires otherwise:
Acquisition Subsidiary shall mean Suncom, Inc., a Delaware corporation
----------------------
and a wholly-owned Subsidiary of the Borrower which will effect the Suncom Asset
Purchase.
Affiliate as to any Person shall mean any other Person (i) which
---------
directly or indirectly controls, is controlled by, or is under common control
with such Person, (ii) which beneficially owns or holds 5% or more of any class
of the voting or other equity interests of such Person, or (iii) 5% or more of
any class of voting interests or other equity interests of which is beneficially
owned or held, directly or indirectly, by such Person. Control, as used in this
definition, shall mean 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, including
the power to elect a majority of the directors or trustees of a corporation or
trust, as the case may be.
1
Agent shall mean PNC Bank, National Association, and its successors and
-----
assigns.
Agent's Fee shall have the meaning assigned to that term in Section
-----------
9.15.
Agent's Letter shall have the meaning assigned to that term in Section
--------------
9.15.
Agreement shall mean this Credit Agreement, as the same may be
---------
supplemented or amended from time to time, including all schedules and exhibits.
Annual Statements shall have the meaning assigned to that term in
-----------------
Section 5.1.9(i).
Applicable Margin shall mean, at any time during which the Borrower's
-----------------
Leverage Ratio falls within the ranges set forth below, and with respect to
Base-Rate Loans or Euro-Rate Loans, the amounts set forth below opposite such
ranges for such types of Loans:
Applicable Margin
-----------------
Leverage Ratio Base-Rate Loans Euro-Rate Loans
-------------- --------------- ---------------
greater than 3.5:1 1.75% 3.25%
greater than 3.0:1 but less
than or equal to 3.5:1 1.50% 3.00%
greater than 2.5:1 but less
than or equal to 3.0:1 1.25% 2.75%
greater than 2.0:1 but
less than or equal to 2.5:1 1.00% 2.50%
less than or equal to 2.0:1 0.50% 2.00%
Notwithstanding the foregoing table, the Applicable Margin from the Closing Date
through receipt of the September 30, 1997 financial statements shall be 1.75%
for Base-Rate Loans and 3.25% for Euro-Rate Loans.
Assignment and Assumption Agreement shall mean an Assignment and
-----------------------------------
Assumption Agreement by and among a Purchasing Bank, a Transferor Bank and the
Agent, as Agent and on behalf of the remaining Banks, substantially in the form
of Exhibit 1.1(A).
--------------
2
Attrition Rate shall mean in respect of customer locations of the Loan
--------------
Parties whose subscription agreements may, without violating the provisions of
such agreements, be terminated or not renewed in any fiscal quarter, the ratio,
expressed as a percentage, of (x) the number of such locations which do
terminate or are not renewed to (y) the number of all such locations, excluding
from both (x) and (y) those locations billed by the Borrower as an accommodation
to other MUZAK affiliates and franchisees under regional or national account
programs.
Authorized Officer shall mean those individuals, designated by written
------------------
notice to the Agent from the Borrower, authorized to execute notices, reports
and other documents on behalf of the Loan Parties required hereunder. The
Borrower may amend such list of individuals from time to time by giving written
notice of such amendment to the Agent.
Banks shall mean the financial institutions named on Schedule 1.1(B) and
-----
their respective and assigns as permitted hereunder, each of which is referred
to herein as a Bank.
Base Rate shall mean the greater of (i) the interest rate per annum
---------
announced from time to time by the Agent at its Principal Office as its then
prime rate, which rate may not be the lowest rate then being charged commercial
borrowers by the Agent, or (ii) the Federal Funds Effective Rate plus .5% per
annum.
Benefit Arrangement shall mean at any time an "employee benefit plan,"
-------------------
within the meaning of Section 3(3) of ERISA, which is neither a Plan nor a
Multiemployer Plan and which is maintained, sponsored or otherwise contributed
to by any member of the ERISA Group.
Borrower shall mean Audio Communications Network, Inc., a corporation
--------
organized and existing under the laws of the State of Florida.
Borrowing Date shall mean, with respect to any Loan, the date for the
--------------
making thereof or the renewal or conversion thereof at or to the same or a
different Interest Rate Option, which shall be a Business Day.
Borrowing Tranche shall mean specified portions of Loans outstanding as
-----------------
follows: (i) any Loans to which a Euro-Rate Option applies which become subject
to the same Interest Rate Option under the same Loan Request by the Borrower and
which have the same Interest Period shall constitute one Borrowing Tranche, and
(ii) all Loans to which a Base Rate Option applies shall constitute one
Borrowing Tranche.
Business Day shall mean any day other than a Saturday or Sunday or a
------------
legal holiday on which commercial banks are authorized or required to be closed
for business in Philadelphia, Pennsylvania.
Closing Date shall mean the date hereof.
------------
Collateral shall mean the Pledged Collateral, the Contract and License
----------
Collateral and the UCC Collateral.
3
Commitment Fee shall have the meaning assigned to that term in Section
--------------
2.3.
Conditional MUZAK Assignment shall mean the Conditional Assignment of
----------------------------
MUZAK License Agreements dated the Closing Date by and among the Company, the
Agent and MUZAK relating to the MUZAK Licenses.
Contract and License Collateral shall mean the property of the Loan
-------------------------------
Parties in which security interests are to be granted under the Conditional
MUZAK Assignment.
Defaulting Bank shall have the meaning assigned to that term in Section
---------------
9.16.2.
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money
-----------------------------
of the United States of America.
EBITDA for any period of determination shall mean (i) the sum of net
------
income, depreciation, amortization, other non-cash charges to net income, cash
interest expense, income taxes paid, Xxxxxx Agreement Payments and non-recurring
expenses which do not exceed in the aggregate during the period of determination
$500,000 minus (ii) nonrecurring extraordinary income and non-cash credits to
net income, in each case of the Borrower and its Subsidiaries for such period
determined and consolidated in accordance with GAAP.
Environmental Complaint shall mean any written complaint setting forth a
-----------------------
cause of action for personal or property damage or natural resource damage or
equitable relief, order, notice of violation, citation, request for information
issued pursuant to any Environmental Laws by an Official Body, subpoena or other
written notice of any type relating to, arising out of, or issued pursuant to,
any of the Environmental Laws or any Environmental Conditions, as the case may
be.
Environmental Conditions shall mean any conditions of the environment,
------------------------
including the workplace, the ocean, natural resources (including flora or
fauna), soil, surface water, groundwater, any actual or potential drinking water
supply sources, substrata or the ambient air, relating to or arising out of, or
caused by, the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, emptying, discharging,
injecting, escaping, leaching, disposal, dumping, threatened release or other
management or mismanagement of Regulated Substances resulting from the use of,
or operations on, any Property.
Environmental Laws shall mean all federal, state, local and foreign Laws
------------------
and regulations, including permits, licenses, authorizations, bonds, orders,
judgments, and consent decrees issued, or entered into, pursuant thereto,
relating to pollution or protection of human health or the environment or
employee safety in the workplace.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
-----
the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
4
ERISA Group shall mean, at any time, the Borrower and all other entities
-----------
which, together with the Borrower, are treated as a single employer under
Section 414 of the Internal Revenue Code.
Euro-Rate shall mean, with respect to the Loans comprising any Borrowing
---------
Tranche to which the Euro-Rate Option applies for any Interest Period, the
interest rate per annum determined by the Agent by dividing (the resulting
quotient rounded upward to the nearest 1/100th of 1% per annum) (i) the rate of
interest determined by the Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the average of
the London interbank offered rates of interest per annum for Dollars set forth
on Telerate display page 3750 or such other display page on the Telerate System
as may replace such page to evidence the average of rates quoted by banks
designated by the British Bankers' Association (or appropriate successor or, if
the British Bankers' Association or its successor ceases to provide such quotes,
a comparable replacement determined by the Agent), two (2) Business Days prior
to the first day of such Interest Period for an amount comparable to such
Borrowing Tranche and having a borrowing date and a maturity comparable to such
Interest Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. The Euro-Rate may also be expressed by the following formula:
Euro-Rate =Telerate page 3750 quoted by British Bankers'
Association or appropriate successor
------------------------------------
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option
outstanding on the effective date of any change in the Euro-Rate Reserve
Percentage as of such effective date. The Agent shall give prompt notice to the
Borrower of the Euro-Rate as determined or adjusted in accordance herewith,
which determination shall be conclusive absent manifest error.
Euro-Rate Reserve Percentage shall mean the maximum percentage
----------------------------
(expressed as a decimal rounded upward to the nearest 1/100 of 1%) as determined
by the Agent which is in effect during any relevant period, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding (currently
referred to as "Eurocurrency Liabilities") of a member bank in such System.
Event of Default shall mean any of the events described in Section 8.1
----------------
and referred to therein as an "Event of Default."
Excess Cash Flow shall be computed as of the close of each fiscal year
----------------
by taking the difference between EBITDA for such fiscal year and Fixed Charges
for such fiscal year. All determinations of Excess Cash Flow shall be based on
the immediately preceding fiscal year and shall be made following the delivery
by the Borrower to the Agent of the Borrower's audited financial statements for
such preceding year.
Existing Bank Indebtedness shall mean (i) as to the Borrower,
--------------------------
Indebtedness owing pursuant to the Second Amended and Restated Loan Agreement
dated December 21, 1995 effective January 2, 1996
5
with Sun Trust Bank, Central Florida, N.A., the principal amount outstanding of
which as of March 31, 1997 was $10,000,000, and (ii) as to Suncom, Indebtedness
owing pursuant to the Term Loan Agreement dated September 14, 1995 with
Midlantic Bank, National Association (predecessor to PNC Bank), as amended, the
principal amount outstanding of which as of March 31, 1997 was $14,000,000.
Expiration Date shall mean, with respect to the Revolving Credit
---------------
Commitments, May 15, 2004.
FCC shall mean the Federal Communications Commission.
---
Facility Fees shall mean the fees referred to in Section 2.4.
-------------
Federal Funds Effective Rate for any day shall mean the rate per annum
----------------------------
(based on a year of 360 days and actual days elapsed and rounded upward to the
nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such Federal
--------
Reserve Bank (or its successor) does not announce such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
Financial Projections shall have the meaning assigned to that term in
---------------------
Section 5.1.9(ii).
Fixed Charge Coverage Ratio shall mean the ratio of EBITDA to
---------------------------
Fixed Charges.
Fixed Charges shall mean for any period of determination the sum of cash
-------------
interest expense, income taxes paid, scheduled reductions of the Commitments (to
the extent that outstanding Senior Debt exceeds the Commitments), Xxxxxx
Agreement Payments, scheduled payments of principal under Subordinated Debt (as
adjusted for prepayments), capital expenditures and payments under capitalized
leases, in each case of the Borrower and its Subsidiaries for such period
determined and consolidated in accordance with GAAP.
GAAP shall mean generally accepted accounting principles as are in
----
effect from time to time, subject to the provisions of Section 1.3, and applied
on a consistent basis both as to classification of items and amounts.
Guarantor shall mean each of the parties to this Agreement which is
---------
designated as a "Guarantor" on the signature page hereof (including each
Subsidiary of the Borrower) and each other Person which joins this Agreement as
a Guarantor after the date hereof pursuant to Section 10.18.
Guaranty of any Person shall mean any obligation of such Person
--------
guaranteeing or in effect guaranteeing any liability or obligation of any other
Person in any manner, whether directly or indirectly, including any agreement to
indemnify or hold harmless any other Person, any performance bond or other
suretyship arrangement and any other form of assurance against loss, except
endorsement of negotiable or
6
other instruments for deposit or collection in the ordinary course of
business.
Guaranty Agreement shall mean the Guaranty and Suretyship Agreement
------------------
executed and delivered by each of the Guarantors to the Agent for the benefit
of the Banks.
Historical Statements shall have the meaning assigned to that term in
---------------------
Section 5.1.9(i).
Indebtedness shall mean, as to any Person at any time, any and all
------------
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of: (i) borrowed money, (ii)
amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement obligations (contingent or
otherwise) under any letter of credit, currency swap agreement, interest rate
swap, cap, collar or floor agreement or other interest rate management device,
(iv) any other transaction (including forward sale or purchase agreements,
capitalized leases and conditional sales agreements) having the commercial
effect of a borrowing of money entered into by such Person to finance its
operations or capital requirements (but not including trade payables and accrued
expenses incurred in the ordinary course of business which are not represented
by a promissory note or other evidence of indebtedness and which are either (x)
not more than ninety (90) days past due and do not exceed $250,000 outstanding
at any one time (net of Indebtedness owing to the Borrower or any other Loan
Party by such Person) or otherwise (y) not more than sixty (60) days past due),
or (v) any Guaranty of Indebtedness for borrowed money.
Ineligible Security shall mean any security which may not be
-------------------
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
Insolvency Proceeding shall mean, with respect to any Person, (a) case,
---------------------
action or proceeding with respect to such Person (i) before any court or any
other Official Body under any bankruptcy, insolvency, reorganization or other
similar Law now or hereafter in effect, or (ii) for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of any Loan Party or otherwise relating to liquidation,
dissolution, winding-up or relief of such Person, or (b) any general assignment
for the benefit of creditors, composition, marshaling of assets for creditors,
or other, similar arrangement in respect of such Person's creditors generally or
any substantial portion of its creditors; undertaken under any Law.
Intercompany Subordination Agreement shall mean a Subordination
------------------------------------
Agreement among the Loan Parties in the form attached hereto as Exhibit
-------
1.1(I)(1).
---------
Interest Coverage Ratio shall mean the ratio of (x) EBITDA to (y) cash
-----------------------
interest expense.
Interest Period shall have the meaning assigned to such term in
---------------
Section 3.2.
Interest Rate Option shall mean any Euro-Rate Option or Base Rate
--------------------
Option.
Interim Statements shall have the meaning assigned to that term in
------------------
Section 5.1.9(i).
7
Internal Revenue Code shall mean the Internal Revenue Code of 1986, as
---------------------
the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
Labor Contracts shall mean all employment agreements, employment
---------------
contracts, collective bargaining agreements and other agreements among any Loan
Party or Subsidiary of a Loan Party and its employees.
Law shall mean any law (including common law), constitution, statute,
---
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Official Body and including without
limitation any of the foregoing issued by the FCC.
Leverage Ratio shall mean the ratio (x) of the Borrower's Senior Debt to
--------------
(y) EBITDA.
Lien shall mean any mortgage, deed of trust, pledge, lien, security
----
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing).
LLC Interests shall have the meaning given to such term in Section
-------------
5.1.3.
Loan Documents shall mean this Agreement, the Agent's Letter, the
--------------
Conditional MUZAK Assignment, the Subordination Agreement, the Notes, the Pledge
Agreement, the Security Agreement, and any other instruments, certificates or
documents delivered or contemplated to be delivered hereunder or thereunder or
in connection herewith or therewith, as the same may be supplemented or amended
from time to time in accordance herewith or therewith, and Loan Document shall
-------------
mean any of the Loan Documents.
Loan Parties shall mean the Borrower and the Guarantors.
------------
Loan Request shall have the meaning given to such term in Section 2.5.
------------
Mandatory Prepayment Date shall have the meaning assigned to that term in
-------------------------
Section 4.5.1.
Material Adverse Change shall mean any set of circumstances or events which
-----------------------
(a) has or could reasonably be expected to have any material adverse effect
whatsoever upon the validity or enforceability of this Agreement or any other
Loan Document, (b) is or could reasonably be expected to be material and adverse
to the business, properties, assets, financial condition, results of operations
or prospects of the Loan Parties taken as a whole, (c) impairs materially or
could reasonably be expected to impair materially the ability of the Loan
Parties taken as a whole to duly and punctually pay or perform its material
Indebtedness, or (d) impairs materially or could reasonably be expected to
impair materially the ability of the Agent or any of the Banks, to the extent
permitted, to enforce their legal remedies pursuant to this Agreement or any
other Loan Document.
8
Month, with respect to an Interest Period under the Euro-Rate Option,
-----
shall mean the interval between the days in consecutive calendar months
numerically corresponding to the first day of such Interest Period. If any Euro-
Rate Interest Period begins on a day of a calendar month for which there is no
numerically corresponding day in the month in which such Interest Period is to
end, the final month of such Interest Period shall be deemed to end on the last
Business Day of such final month.
Multiemployer Plan shall mean any employee benefit plan which is a
------------------
"Multiemployer Plan" within the meaning of Section 4001(a)(3) of ERISA and to
which the Borrower or any member of the ERISA Group is then making or accruing
an obligation to make contributions.
Multiple Employer Plan shall mean a Plan which has two or more
----------------------
contributing sponsors (including the Borrower or any member of the ERISA Group)
at least two of whom are not under common control, as such a plan is described
in Sections 4063 and 4064 of ERISA.
MUZAK shall mean MUZAK Limited Partnership, a Delaware limited
-----
partnership.
MUZAK Licenses shall mean the licenses listed on Schedule 1.1(M).
-------------- ---------------
Notices shall have the meaning assigned to that term in Section 10.6.
-------
Obligation shall mean any obligation or liability of any of the Loan
----------
Parties to the Agent or any of the Banks, howsoever created, arising or
evidenced, direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due, under or in connection with this Agreement,
the Notes, the Agent's Letter, any other Loan Document or under any interest
rate protection arrangements or fixed rate Indebtedness referred to in Section
7.1.14.
Official Body shall mean any national, federal, state, local or other
-------------
government or political subdivision or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
Partnership Interests shall have the meaning given to such term in
---------------------
Section 5.1.3.
PBGC shall mean the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA or any successor.
Permitted Investments shall mean:
---------------------
(i)direct obligations of the United States of America or any agency or
instrumentality thereof or obligations backed by the full faith and credit of
the United States of America maturing in twelve (12) months or less from the
date of acquisition;
(ii)commercial paper maturing in 180 days or less rated not lower than A-1,
by Standard & Poor's or P-1 by Xxxxx'x Investors Service, Inc. on the date of
acquisition.
(iii)demand deposits, time deposits or certificates of deposit maturing
within one year in
9
commercial banks whose obligations are rated A-1, A or the equivalent or better
by Standard & Poor's on the date of acquisition; and
(iv)the ownership of the Acquisition Subsidiary and other of Borrower's
Subsidiaries.
Permitted Liens shall mean:
---------------
(i)Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business and which are not yet due and payable;
(ii)Pledges or deposits made in the ordinary course of business to
secure payment of workmen's compensation, or to participate in any fund in
connection with workmen's compensation, unemployment insurance, old-age pensions
or other social security programs;
(iii)Liens of mechanics, materialmen, warehousemen, carriers, or other like
Liens, securing obligations incurred in the ordinary course of business that are
not yet due and payable and Liens of landlords securing obligations to pay lease
payments that are not yet due and payable or in default;
(iv)Good-faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, not in excess of the aggregate amount
due thereunder, or to secure statutory obligations, or surety, appeal,
indemnity, performance or other similar bonds required in the ordinary course of
business;
(v)Encumbrances consisting of zoning restrictions, easements or other
restrictions on the use of real property, none of which materially impairs the
use of such property or the value thereof, and none of which is violated in any
material respect by existing or proposed structures or land use;
(vi)Liens and security interests in favor of the Agent for the benefit
of the Banks or otherwise to secure any of the Obligations;
(vii)Liens on property leased by any Loan Party or Subsidiary of a
Loan Party under capital and operating leases permitted in Section 7.2.15
securing obligations of such Loan Party or Subsidiary to the lessor under such
leases;
(viii)Any Lien existing on the date of this Agreement and described on
Schedule 1.1(P), provided that the principal amount secured thereby is not
hereafter increased, and no additional assets become subject to such Lien;
(ix)Purchase Money Security Interests, provided that the aggregate amount
of loans and deferred payments secured by such Purchase Money Security Interests
shall not exceed $1,000,000 (excluding for the purpose of this computation any
loans or deferred payments secured by Liens described on Schedule 1.1(P)) to the
---------------
extent such Purchase Money Security Interests do not have debt service in excess
of $250,000 per year; and
10
(x)The following, (A) if the validity or amount thereof is being
contested in good faith by stayed and continue to be stayed or (B) if a final
judgment is entered and such judgment is discharged, stayed or bonded within
thirty (30) days of entry, and in either case they do not materially affect the
Collateral or, in the aggregate, materially impair the ability of any Loan Party
to perform its Obligations hereunder or under the other Loan Documents:
(1)Claims or Liens for taxes, assessments or charges due and payable
and subject to interest or penalty, provided that the applicable Loan Party
maintains such reserves or other appropriate provisions as shall be
required by GAAP and pays all such taxes, assessments or charges forthwith
upon the commencement of proceedings to foreclose any such Lien;
(2)Claims, Liens or encumbrances upon, and defects of title to, real
or personal property other than the Collateral, including any attachment of
personal or real property or other legal process prior to adjudication of a
dispute on the merits; or
(3)Claims or Liens of mechanics, materialmen, warehousemen,
carriers, or other statutory nonconsentual Liens.
(4)Liens resulting from final judgments or orders described in
Section 8.1.6.
Person shall mean any individual, corporation, partnership, limited
------
liability company, association, joint-stock company, trust, unincorporated
organization, joint venture, government or political subdivision or agency
thereof, or any other entity.
Plan shall mean at any time an employee pension benefit plan
----
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and is maintained by any member
of the ERISA Group for employees of any member of the ERISA Group.
Pledge Agreement shall mean the Pledge Agreement dated the Closing
----------------
Date by and among the Borrower and the Agent on behalf of the Banks dated the
Closing Date in respect of the Pledged Collateral.
Pledged Collateral shall mean the Subsidiary Shares, the Partnership
------------------
Interests and LLC Interests owned by the Borrower in all of its Subsidiaries,
all of which shall be subject to the Pledge Agreement.
PNC Bank shall mean PNC Bank, National Association, its successors
--------
and assigns.
Potential Default shall mean any event or condition which with notice,
-----------------
passage of time or a determination by the Agent or the Required Banks, or any
combination of the foregoing, would constitute an Event of Default.
Principal Office shall mean the main banking office of the Agent in
----------------
Philadelphia, Pennsylvania.
11
Prior Security Interest shall mean a valid and enforceable perfected
-----------------------
first-priority security interest under the Uniform Commercial Code in the UCC
Collateral and the Pledged Collateral and the Contract and License Collateral
which is subject only to Liens for taxes not yet due and payable to the extent
such prospective tax payments are given priority by statute or Purchase Money
Security Interests as permitted hereunder.
Prohibited Transaction shall mean any prohibited transaction as defined
----------------------
in Section 4975(c) of the Internal Revenue Code or Section 406(a) or (b) of
ERISA which is not exempt under Section 4975(d) of the Internal Revenue Code or
Section 408 of ERISA and for which neither an individual nor a class exemption
has been issued by the United States Department of Labor.
Property shall mean all real property, both owned and leased, of any Loan
--------
Party or Subsidiary of a Loan Party.
Purchase Money Security Interest shall mean Liens upon tangible personal
--------------------------------
property securing loans to any Loan Party or Subsidiary of a Loan Party or
deferred payments by such Loan Party or Subsidiary for the purchase of such
tangible personal property.
Purchasing Bank shall mean a Bank which becomes a party to this
---------------
Agreement by executing an Assignment and Assumption Agreement.
Ratable Share shall mean the proportion that a Bank's Commitment bears
-------------
to the Commitments of all of the Banks.
Reference Bank shall mean PNC Bank.
--------------
Regulated Substances shall mean any substance, including any solid,
--------------------
liquid, semisolid, gaseous, thermal, thoriated or radioactive material, refuse,
garbage, wastes, chemicals, petroleum products, by-products, co-products,
impurities, dust, scrap, heavy metals, defined as a "hazardous substance,"
"pollutant," "pollution," "contaminant," "hazardous or toxic substance,"
"extremely hazardous substance," "toxic chemical," "toxic waste," "hazardous
waste," "industrial waste," "residual waste," "solid waste," "municipal waste,"
"mixed waste," "infectious waste," "chemotherapeutic waste," "medical waste," or
"regulated substance" or any related materials, substances or wastes as now or
hereafter defined pursuant to any Environmental Laws, ordinances, rules,
regulations or other directives of any Official Body, the generation,
manufacture, extraction, processing, distribution, treatment, storage, disposal,
transport, recycling, reclamation, use, reuse, spilling, leaking, dumping,
injection, pumping, leaching, emptying, discharge, escape, release or other
management or mismanagement of which is regulated by the Environmental Laws.
Regulation U shall mean Regulation U, T, G or X as promulgated by the
------------
Board of Governors of the Federal Reserve System, as amended from time to time.
Reportable Event shall mean a reportable event described in Section
----------------
4043(b) of ERISA and regulations thereunder with respect to a Plan or
Multiemployer Plan.
12
Required Banks shall mean:
--------------
(i)if there are no Loans outstanding, Banks whose Commitments aggregate
at least 66b% of the Commitments of all of the Banks, or
(ii)if there are Loans outstanding, any Bank or group of Banks if the
Loans of such Banks then outstanding aggregates at least 66b% of the total
principal amount of all of the Loans then outstanding.
Revolving Credit Base Rate Option or Base Rate Option shall mean the option
--------------------------------- ----------------
of the Borrower to have Revolving Credit Loans bear interest at the rate and
under the terms and conditions set forth in Section 3.1.1(i).
Revolving Credit Commitment or Commitment shall mean, as to any Bank at
--------------------------- ----------
any time, the amount initially set forth opposite its name on Schedule 1.1(B) in
---------------
the column labeled "Amount of Commitment for Revolving Credit Loans," and
thereafter on Schedule I to the most recent Assignment and Assumption Agreement,
----------
and Revolving Credit Commitments or Commitments shall mean the aggregate
-------------------------------------------
Revolving Credit Commitments of all of the Banks.
Revolving Credit Euro-Rate Option or Euro-Rate Option shall mean the
--------------------------------- ----------------
option of the Borrower to have Revolving Credit Loans bear interest at the rate
and under the terms and conditions set forth in Section 3.1.1(ii).
Revolving Credit Loans or Loans shall mean collectively and Revolving
---------------------- ----- ---------
Credit Loan shall mean separately all Revolving Credit Loans or any Revolving
-----------
Credit Loan made by the Banks or one of the Banks to the Borrower pursuant to
Section 2.1.
Revolving Credit Notes or Notes shall mean collectively and Revolving
---------------------- -----
Credit Note or Note shall mean separately all the Revolving Credit Notes of the
Borrower in the form of Exhibit 1.1(R) evidencing the Revolving Credit Loans
--------------
together with all amendments, extensions, renewals, replacements, refinancings
or refundings thereof in whole or in part.
Revolving Facility Usage shall mean at any time the sum of the Revolving
------------------------
Credit Loans outstanding.
Xxxxxx Agreement Payments shall mean payments to Xx Xxxxxx pursuant to
-------------------------
Section 7 of the Employment Agreement between him and the Borrower dated as of
the Closing Date, a complete copy of which has been delivered to the Banks.
Section 20 Subsidiary shall mean the Subsidiary of the bank holding
---------------------
company controlling any Bank, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
Security Agreement shall mean the Security Agreement executed and
------------------
delivered by each of the Loan Parties to the Agent for the benefit of the Banks.
13
Senior Debt shall mean the Borrower's consolidated Indebtedness for
-----------
borrowed money (including the Obligations) but excluding amounts owing to
Subordinated Lender which are subject to the Subordination Agreement plus the
face amount of all letters of credit, contingent liabilities and Guaranties.
Shares shall have the meaning assigned to that term in Section 5.1.2.
------
Standard & Poor's shall mean Standard & Poor's Ratings Services, a division
-----------------
of The XxXxxx-Xxxx Companies, Inc.
Subordinated Lender shall mean Midwest Mezzanine Fund, L.P., a Delaware
-------------------
limited partnership.
Subordination Agreement shall mean any of the several subordination
-----------------------
agreements dated the Closing Date by and among (i) the Borrower, the Agent on
behalf of the Banks, the Subordinated Lender and Acquisition Subsidiary in the
form attached hereto as Exhibit 1.1(I)(2) and (ii) the Intercompany
-----------------
Subordination Agreement.
Subsidiary of any Person at any time shall mean (i) any corporation or
----------
trust of which 50% or more (by number of shares or number of votes) of the
outstanding capital stock or shares of beneficial interest normally entitled to
vote for the election of one or more directors or trustees (regardless of any
contingency which does or may suspend or dilute the voting rights) is at such
time owned directly or indirectly by such Person or one or more of such Person's
Subsidiaries, (ii) any partnership of which such Person is a general partner or
of which 50% or more of the partnership interests is at the time directly or
indirectly owned by such Person or one or more of such Person's Subsidiaries,
(iii) any limited liability company of which such Person is a member or of which
50% or more of the limited liability company interests is at the time directly
or indirectly owned by such Person or one or more of such Person's Subsidiaries
or (iv) any corporation, trust, partnership, limited liability company or other
entity which is controlled or capable of being controlled by such Person or one
or more of such Person's Subsidiaries.
Subsidiary Shares shall have the meaning assigned to that term in
-----------------
Section 5.1.3.
Suncom shall mean Suncom Communications LLC, a Delaware limited liability
------
company.
Suncom Asset Purchase shall mean the purchase of substantially all of the
---------------------
Suncom's assets pursuant to the Asset Purchase Agreement dated November 19,
1996 between Suncom and Acquisition Subsidiary as assignee of the Borrower, a
complete copy of which, including any amendments, has been delivered to the
Agent.
Transferor Bank shall mean the selling Bank pursuant to an Assignment and
---------------
Assumption Agreement.
UCC Collateral shall mean the property of the Loan Parties in which security
--------------
interests are to be granted under the Security Agreement.
14
Uniform Commercial Code shall have the meaning assigned to that term
-----------------------
in Section 5.1.16.
Warrant shall mean the Option Agreement between Suncom and the
-------
Borrower dated the date hereof relating to 1,000,000 shares of the Borrower's
stock.
1.2 Construction.
------------
Unless the context of this Agreement otherwise clearly requires, the
following rules of construction shall apply to this Agreement and each of the
other Loan Documents:
1.2.1 Number; Inclusion.
-----------------
references to the plural include the singular, the plural, the part
and the whole; "or" has the inclusive meaning represented by the phrase
"and/or," and "including" has the meaning represented by the phrase "including
without limitation";
1.2.2 Determination.
-------------
references to "determination" of or by the Agent or the Banks shall
be deemed to include good-faith estimates by the Agent or the Banks (in the
case of quantitative determinations) and good-faith beliefs by the Agent or the
Banks (in the case of qualitative determinations) and such determination shall
be conclusive absent manifest error;
1.2.3 Agent's Discretion and Consent.
------------------------------
whenever the Agent or the Banks are granted the right herein to act
in its or their sole discretion or to grant or withhold consent such right shall
be exercised in good faith;
Documents Taken As a Whole.
--------------------------
the words "hereof," "herein," "hereunder," "hereto" and similar terms in this
Agreement or any other Loan Document refer to this Agreement or such other Loan
Document as a whole and not to any particular provision of this Agreement or
such other Loan Document;
1.2.5 Headings.
--------
the section and other headings contained in this Agreement or such
other Loan Document and the Table of Contents (if any), preceding this Agreement
or such other Loan Document are for reference purposes only and shall not
control or affect the construction of this Agreement or such other Loan Document
or the interpretation thereof in any respect;
1.2.6 Implied References to this Agreement.
------------------------------------
article, section, subsection, clause, schedule and exhibit references
are to this Agreement or other Loan Document, as the case may be, unless
otherwise specified;
15
1.2.7 Persons.
-------
reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are permitted by
this Agreement or such other Loan Document, as the case may be, and reference to
a Person in a particular capacity excludes such Person in any other capacity;
1.2.8 Modifications to Documents.
--------------------------
reference to any agreement (including this Agreement and any other
Loan Document together with the schedules and exhibits hereto or thereto),
document or instrument means such agreement, document or instrument as amended,
modified, replaced, substituted for, superseded or restated;
1.2.9 From, To and Through.
--------------------
relative to the determination of any period of time, "from" means
"from and including," "to" means "to but excluding," and "through" means
"through and including"; and
1.2.10 Shall; Will.
-----------
references to "shall" and "will" are intended to have the same
meaning.
Accounting Principles.
---------------------
Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and prepared
in accordance with GAAP (including principles of consolidation where
appropriate), and all accounting or financial terms shall have the meanings
ascribed to such terms by GAAP; provided, however, that all accounting terms
-------- -------
used in Section 7.2 (and all defined terms used in the definition of any
accounting term used in Section 7.2) shall have the meaning given to such terms
(and defined terms) under GAAP as in effect on the date hereof applied on a
basis consistent with those used in preparing the Annual Statements referred to
in Section 5.1.9(i). In the event of any change after the date hereof in GAAP,
and if such change would result in the inability to determine compliance with
the financial covenants set forth in Section 7.2 based upon the Borrower's
regularly prepared financial statements by reason of the preceding sentence,
then the parties hereto agree to endeavor, in good faith, to agree upon an
amendment to this Agreement that would adjust such financial covenants in a
manner that would not affect the substance thereof, but would allow compliance
therewith to be determined in accordance with the Borrower's financial
statements at that time.
16
2. REVOLVING CREDIT FACILITY
-------------------------
2.1 Revolving Credit Commitments.
----------------------------
Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Bank severally agrees to
make Revolving Credit Loans to the Borrower at any time or from time to time on
or after the date hereof to the Expiration Date provided that after giving
effect to such Loan the aggregate amount of Loans from such Bank shall not
exceed such Bank's Revolving Credit Commitment. Within such limits of time and
amount and subject to the other provisions of this Agreement, the Borrower may
borrow, repay and reborrow pursuant to this Section 2.1.
2.1.1 Automatic Reduction of Commitment.
---------------------------------
The Commitment shall automatically reduce (and the Borrower shall make
any payments required under Section 4.5.4) on the last day of each March, June,
September and December by the amount set forth below:
Quarter Ended Reduction in Commitment ($)
------------- -----------------------
September 30, 1997 250,000
December 31, 1997 250,000
March 31, 1998 250,000
June 30, 1998 250,000
September 30, 1998 375,000
December 31, 1998 375,000
March 31, 1999 375,000
June 30, 1999 375,000
September 30, 1999 500,000
December 31, 1999 500,000
March 31, 2000 500,000
June 30, 2000 500,000
September 30, 2000 875,000
December 31, 2000 875,000
March 31, 2001 875,000
June 30, 2001 875,000
September 30, 2001 1,000,000
December 31, 2001 1,000,000
March 31, 2002 1,000,000
June 30, 2002 1,000,000
17
September 30, 2002 1,500,000
December 31, 2002 1,500,000
March 31, 2003 1,500,000
June 30, 2003 1,500,000
September 30, 2003 1,750,000
December 31, 2003 1,750,000
March 31, 2004 1,750,000
May 15, 2004 All remaining amounts
2.1.2 Voluntary Reduction of Commitment.
---------------------------------
The Borrower shall have the right at any time and from time to time
upon five (5) Business Days' prior written notice to the Agent to reduce
permanently, in a minimum amount of $500,000 and whole multiples of $100,000 of
principal, or terminate the Commitments, without penalty or premium except as
hereinafter set forth, provided that any such reduction or termination shall be
accompanied by prepayment of the Notes, together with outstanding Commitment
Fees, and the full amount of interest accrued on the principal sum to be prepaid
(and all amounts referred to in Section 4.6.2 hereof), to the extent that the
aggregate amount thereof then outstanding exceeds the Commitment as so reduced
or terminated. Such reductions shall be applied currently to the next-following
scheduled reduction of the Commitments or, at the Borrower's request, pro rata
among all remaining reductions of the Commitments pursuant to Section 2.1.1. All
notices to reduce the Commitment shall be irrevocable.
2.2 Nature of Banks' Obligations with Respect to Revolving Credit Loans.
-------------------------------------------------------------------
Each Bank shall be obligated to participate in each request for
Revolving Credit Loans pursuant to Section 2.5 in accordance with its Ratable
Share. The aggregate of each Bank's Revolving Credit Loans outstanding hereunder
to the Borrower at any time shall never exceed its Revolving Credit Commitment.
The obligations of each Bank hereunder are several. The failure of any Bank to
perform its obligations hereunder shall not affect the Obligations of the
Borrower to any other party nor shall any other party be liable for the failure
of such Bank to perform its obligations hereunder. The Banks shall have no
obligation to make Revolving Credit Loans hereunder on or after the Expiration
Date.
18
2.3 Commitment Fees.
---------------
Accruing from the date hereof until the Expiration Date, the Borrower
agrees to pay to the Agent for the account of each Bank, as consideration for
such Bank's Revolving Credit Commitment hereunder, a nonrefundable commitment
fee (the "Commitment Fee") equal to .5% per annum (computed on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed) on the
average daily difference between the amount of (i) such Bank's Revolving Credit
Commitment as the same may be constituted from time to time and the (ii) the
principal amount of such Bank's Ratable Share of Revolving Credit Usage. All
Commitment Fees shall be payable in arrears on the last Business Day of each
March, June, September and December after the date hereof and on the Expiration
Date or upon acceleration of the Notes.
2.4 Revolving Credit Facility Fee.
-----------------------------
The Borrower agrees to pay to the Agent for the account of each Bank,
as consideration for such Bank's Revolving Credit Commitment, nonrefundable
facility fees as required on the Closing Date by the Agent or one or more Banks.
2.5 Revolving Credit Loan Requests.
------------------------------
Except as otherwise provided herein, the Borrower may from time to
time prior to the Expiration Date request the Banks to make Revolving Credit
Loans, or renew or convert the Interest Rate Option applicable to existing
Revolving Credit Loans pursuant to Section 3.2 by delivering to the Agent, not
later than 10:00 a.m., Philadelphia time, (i) three (3) Business Days prior to
the proposed Borrowing Date with respect to the making of Revolving Credit Loans
to which the Euro-Rate Option applies or the conversion to or the renewal of the
Euro-Rate Option for any Loans; and (ii) one (1) Business Day prior to either
the proposed Borrowing Date with respect to the making of a Revolving Credit
Loan to which the Base Rate Option applies or the last day of the preceding
Interest Period with respect to the conversion to the Base Rate Option for any
Loan, of a duly completed request therefor substantially in the form of
Exhibit 2.5 or a request by telephone immediately confirmed in writing by
-----------
letter, facsimile or telex in such form (each, a "Loan Request"), it being
understood that the Agent may rely on the authority of any individual making
such a telephonic request without the necessity of receipt of such written
confirmation. Each Loan Request shall be irrevocable and shall specify (i) the
proposed Borrowing Date; (ii) the aggregate amount of the proposed Loans
comprising each Borrowing Tranche, which shall be in integral multiples of
$100,000 and not less than $1,000,000 for each Borrowing Tranche to which the
Euro-Rate Option applies and not less than the lesser of $300,000 or the maximum
amount available for Borrowing Tranches to which the Base Rate Option applies;
(iii) whether the Euro-Rate Option or Base Rate Option shall apply to the
proposed Loans comprising the applicable Borrowing Tranche; and (iv) in the case
of a Borrowing Tranche to which the Euro-Rate Option applies, an appropriate
Interest Period for the Loans comprising such Borrowing Tranche.
19
2.6 Making Revolving Credit Loans.
-----------------------------
The Agent shall, promptly after receipt by it of a Loan Request
pursuant to Section 2.5, notify the Banks of its receipt of such Loan Request
specifying: (i) the proposed Borrowing Date and the time and method of
disbursement of the Revolving Credit Loans requested thereby; (ii) the amount
and type of each such Revolving Credit Loan and the applicable Interest Period
(if any); and (iii) the apportionment among the Banks of such Revolving Credit
Loans as determined by the Agent in accordance with Section 2.2. Each Bank shall
remit the principal amount of each Revolving Credit Loan to the Agent such that
the Agent is able to, and the Agent shall, to the extent the Banks have made
funds available to it for such purpose and subject to Section 6.2, fund such
Revolving Credit Loans to the Borrower in U.S. Dollars and immediately available
funds at the Principal Office prior to 2:00 p.m., Philadelphia time, on the
applicable Borrowing Date, provided that if any Bank fails to remit such funds
--------
to the Agent in a timely manner, the Agent may elect in its sole discretion to
fund with its own funds the Revolving Credit Loans of such Bank on such
Borrowing Date, and such Bank shall be subject to the repayment obligation in
Section 9.16.
2.7 Revolving Credit Notes.
----------------------
The Obligation of the Borrower to repay the aggregate unpaid principal
amount of the Revolving Credit Loans made to it by each Bank, together with
interest thereon, shall be evidenced by a Revolving Credit Note dated the
Closing Date payable to the order of such Bank in a face amount equal to the
Revolving Credit Commitment of such Bank.
2.8 Use of Proceeds.
---------------
The proceeds of the Revolving Credit Loans shall be used to repay
Existing Bank Indebtedness and for the Borrower's working capital and general
corporate needs and in accordance with Section 7.1.10.
20
INTEREST RATES
--------------
3.1 Interest Rate Options.
---------------------
The Borrower shall pay interest in respect of the outstanding unpaid
principal amount of the Loans as selected by it from the Base Rate Option or
Euro-Rate Option set forth below applicable to the Loans, it being understood
that, subject to the provisions of this Agreement, the Borrower may select
different Interest Rate Options and different Interest Periods to apply
simultaneously to the Loans comprising different Borrowing Tranches and may
convert to or renew one or more Interest Rate Options with respect to all or any
portion of the Loans comprising any Borrowing Tranche, provided that there shall
--------
not be at any one time outstanding more than four (4) Borrowing Tranches in the
aggregate among all of the Loans accruing interest at a Euro-Rate Option. If at
any time the designated rate applicable to any Loan made by any Bank exceeds
such Bank's highest lawful rate, the rate of interest on such Bank's Loan shall
be limited to such Bank's highest lawful rate.
3.1.1 Revolving Credit Interest Rate Options.
--------------------------------------
The Borrower shall have the right to select from the following
Interest Rate Options applicable to the Revolving Credit Loans, except that the
Euro-Rate Option may not be selected if there exists an Event of Default or
Potential Default:
(i) Revolving Credit Base Rate Option: A fluctuating rate per
---------------------------------
annum (computed on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed) equal to the Base Rate plus the Applicable Margin, such
interest rate to change automatically from time to time effective as of the
effective date of each change in the Base Rate; or
(ii) Revolving Credit Euro-Rate Option: A rate per annum
---------------------------------
(computed on the basis of a year of 360 days and actual days elapsed) equal to
the Euro-Rate plus the Applicable Margin.
3.1.2 Rate Quotations.
---------------
The Borrower may call the Agent on or before the date on which a Loan
Request is to be delivered to receive an indication of the rates then in effect,
but it is acknowledged that such projection shall not be binding on the Agent or
the Banks nor affect the rate of interest which thereafter is actually in effect
when the election is made.
21
3.2 Interest Periods.
----------------
On the Closing Date, the Loans shall bear interest at the Base Rate Option.
Thereafter, at any time when the Borrower shall select, convert to or renew a
Euro-Rate Option, the Borrower shall notify the Agent thereof at least three (3)
Business Days prior to the effective date of such Euro-Rate Option by delivering
a Loan Request. The notice shall specify an interest period (the "Interest
Period") during which such Interest Rate Option shall apply, such Interest
Period to be one, two, three or six Months. Notwithstanding the preceding
sentence, the following provisions shall apply to any selection of, renewal of,
or conversion to Euro-Rate Option:
3.2.1 Ending Date and Business Day.
----------------------------
any Interest Period which would otherwise end on a date which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such Interest
Period shall end on the immediately preceding Business Day;
3.2.2 Amount of Borrowing Tranche.
---------------------------
each Borrowing Tranche of Euro-Rate Loans shall be in integral
multiples of $100,000 and not less than $1,000,000;
3.2.3 Termination Before Expiration Date.
----------------------------------
the Borrower shall not select, convert to or renew an Interest Period
for any portion of the Loans that would end after the Expiration Date;
3.2.4 Renewals.
--------
in the case of the renewal of a Euro-Rate Option at the end of an
Interest Period, the first day of the new Interest Period shall be the last day
of the preceding Interest Period, without duplication in payment of interest for
such day; and
3.3 Interest After Default.
----------------------
To the extent permitted by Law, upon the occurrence of an Event of Default
and until such time such Event of Default shall have been cured or waived:
3.3.1 Interest Rate.
-------------
the rate of interest for each Loan otherwise applicable pursuant to
Section 3.1 shall be increased to a rate equal to the rate of interest otherwise
applicable plus an additional 2.0% per annum; and
22
3.3.2 Other Obligations.
-----------------
each other Obligation hereunder if not paid when due shall bear
interest at a rate per annum equal to the sum of the rate of interest applicable
under the Revolving Credit Base Rate Option plus an additional 2.0% per annum
from the time such Obligation becomes due and payable and until it is paid in
full.
Acknowledgment.
--------------
The Borrower acknowledges that the increase in rates referred to in
this Section 3.3 reflects, among other things, the fact that such Loans or other
amounts have become a substantially greater risk given their default status and
that the Banks are entitled to additional compensation for such risk; and all
such interest shall be payable by Borrower upon demand by Agent.
3.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not
--------------------------------------------------------------------
Available.
---------
3.4.1 Unascertainable.
---------------
If on any date on which a Euro-Rate would otherwise be determined, the
Agent shall have determined that:
(i) adequate and reasonable means do not exist for
ascertaining such Euro-Rate, or
(ii) a contingency has occurred which materially and adversely
affects the secondary market for negotiable certificates of deposit maintained
by dealers of recognized standing relating to the London interbank eurodollar
market relating to the Euro-Rate, the Agent shall have the rights specified in
Section 3.4.3.
3.4.2 Illegality; Increased Costs; Deposits Not Available.
---------------------------------------------------
If at any time any Bank shall have determined that:
(i) the making, maintenance or funding of any Loan to which a
Euro-Rate Option applies has been made impracticable or unlawful by compliance
by such Bank in good faith with any Law or any interpretation or application
thereof by any Official Body or with any request or directive of any such
Official Body (whether or not having the force of Law), or
(ii) such Euro-Rate Option will not adequately and fairly
reflect the cost to such Bank of the establishment or maintenance of any such
Loan, or
(iii) after making all reasonable efforts, deposits of the
relevant amount in Dollars for the relevant Interest Period for a Loan to which
a Euro-Rate Option applies, respectively, are not available to such Bank with
respect to such Loan, in the London interbank market,
23
then the Agent shall have the rights specified in Section 3.4.3.
Agent's and Bank's Rights.
-------------------------
In the case of any event specified in Section 3.4.1 above, the Agent
shall promptly so notify the Banks and the Borrower thereof, and in the case of
an event specified in Section 3.4.2 above, such Bank shall promptly so notify
the Agent and endorse a certificate to such notice as to the specific
circumstances of such notice, and the Agent shall promptly send copies of such
notice and certificate to the other Banks and the Borrower. Upon such date as
shall be specified in such notice (which shall not be earlier than the date such
notice is given), the obligation of (A) the Banks, in the case of such notice
given by the Agent, or (B) such Bank, in the case of such notice given by such
Bank, to allow the Borrower to select, convert to or renew a Euro-Rate Option
shall be suspended until the Agent shall have later notified the Borrower, or
such Bank shall have later notified the Agent, of the Agent's or such Bank's, as
the case may be, determination that the circumstances giving rise to such
previous determination no longer exist, of which notice shall be promptly given.
If at any time the Agent makes a determination under Section 3.4.1 and the
Borrower has previously notified the Agent of its selection of, conversion to or
renewal of a Euro-Rate Option and such Interest Rate Option has not yet gone
into effect, such notification shall be deemed to provide for selection of,
conversion to or renewal of the Base Rate Option otherwise available with
respect to such Loans. If any Bank notifies the Agent of a determination under
Section 3.4.2, the Borrower shall, on the date specified in such notice, either
convert such Loan to the Base Rate Option otherwise available with respect to
such Loan or prepay such Loan in accordance with Section 4.4. Absent due notice
from the Borrower of conversion or prepayment, such Loan shall automatically be
converted to the Base Rate Option otherwise available with respect to such Loan
upon such specified date.
3.5 Selection of Interest Rate Options.
----------------------------------
If the Borrower fails to select a new Interest Period to apply to
any Borrowing Tranche of Loans under the Euro-Rate Option at the expiration of
an existing Interest Period applicable to such Borrowing Tranche in accordance
with the provisions of Section 3.2 the Borrower shall be deemed to have
converted such Borrowing Tranche to the Revolving Credit Base Rate Option
commencing upon the last day of the existing Interest Period.
24
4.PAYMENTS
--------
4.1 Payments.
--------
All payments and prepayments to be made in respect of principal, interest,
Commitment Fees, Facility Fees, Agent's Fee or other fees or amounts due from
the Borrower hereunder shall be payable prior to 11:00 a.m., Philadelphia time,
on the date when due without presentment, demand, protest or notice of any kind,
all of which are hereby expressly waived by the Borrower, and without set-off,
counterclaim or other deduction of any nature, and an action therefor shall
immediately accrue. Such payments shall be made to the Agent at the Principal
Office for the ratable accounts of the Banks with respect to the Loans in U.S.
Dollars and in immediately available funds, and the Agent shall promptly
distribute such amounts to the Banks in immediately available funds, provided
--------
that in the event payments are received by 11:00 a.m., Philadelphia time, by the
Agent with respect to the Loans and such payments are not distributed to the
Banks on the same day received by the Agent, the Agent shall pay the Banks the
Federal Funds Effective Rate with respect to the amount of such payments for
each day held by the Agent and not distributed to the Banks. The Agent's and
each Bank's statement of account, ledger or other relevant record shall, in the
absence of manifest error, be conclusive as the statement of the amount of
principal of and interest on the Loans and other amounts owing under this
Agreement and shall be deemed an "account stated."
4.2 Pro Rata Treatment of Banks.
---------------------------
Each borrowing shall be allocated to each Bank according to its Ratable
Share, and each selection of, conversion to or renewal of any Interest Rate
Option and each payment or prepayment by the Borrower with respect to principal,
interest, Commitment Fees, or other fees (except for the Agent's Fee) or amounts
due from the Borrower hereunder to the Banks with respect to the Loans, shall
(except as provided in Section 3.4.3 in the case of an event specified in
Section 3.4 [Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits
Not Available], 4.4 [Voluntary Prepayments] or 4.6 [Additional Compensation in
Certain Circumstances]) be made in proportion to the applicable Loans
outstanding from each Bank and, if no such Loans are then outstanding, in
proportion to the Ratable Share of each Bank.
4.3 Interest Payment Dates.
----------------------
Interest on Loans to which the Base Rate Option applies shall be due and
payable in arrears on the last Business Day of each March, June, September and
December after the date hereof and on the Expiration Date or upon acceleration
of the Notes. Interest on Loans to which the Euro-Rate Option applies shall be
due and payable on the last day of each Interest Period for those Loans and, if
such Interest Period is longer than three (3) Months, also on the 90th day of
such Interest Period. Interest on mandatory prepayments of principal under
Section 4.5 shall be due on the date such mandatory prepayment is due. Interest
on the principal amount of each Loan or other monetary Obligation shall be due
and payable on demand after such principal amount or other monetary Obligation
becomes due and payable (whether on the stated maturity date, upon acceleration
or otherwise).
25
4.4 Voluntary Prepayments.
---------------------
4.4.1 Right to Prepay.
---------------
The Borrower shall have the right at its option from time to time to
prepay the Loans in whole or part without premium or penalty, except as provided
in Section 4.6:
(i) at any time with respect to any Loan to which the
Base Rate Option applies,
on the last day of the applicable Interest Period with
respect to Loans to which a Euro-Rate Option applies,
(iii) on the date specified in a notice by any Bank
pursuant to Section 3.4 [Euro-Rate Unascertainable] with respect to any Loan to
which a Euro-Rate Option applies.
Whenever the Borrower desires to prepay any part of the Loans, it shall
provide a prepayment notice to the Agent at least one (1) Business Day prior to
the date of prepayment of Loans setting forth the following information:
(x) the date, which shall be a Business Day, on which the proposed
prepayment is to be made;
(y) a statement indicating the application of the prepayment between the
Revolving Credit Loans; and
(z) the total principal amount of such prepayment, which shall not be
less than $300,000.
All prepayment notices shall be irrevocable. The principal amount of
the Loans for which a prepayment notice is given, together with interest on such
principal amount except with respect to Loans to which the Base Rate Option
applies, shall be due and payable on the date specified in such prepayment
notice as the date on which the proposed prepayment is to be made. Except as
provided in Section 3.4.3 if the Borrower prepays a Loan but fails to specify
the applicable Borrowing Tranche which the Borrower is prepaying, the prepayment
shall be applied (i) first to Loans to which the Base Rate Option applies, then
(ii) to Loans to which the Euro-Rate Option applies. Any prepayment hereunder
shall be subject to the Borrower's Obligation to indemnify the Banks under
Section 4.6.2, provided that the Borrower may, instead of making repayments of
-------------
Revolving Credit Loans bearing interest at the Euro-Rate at such time and paying
indemnity under Section 4.6.2 incident to such repayment, direct the Agent in
writing to place the amount of such prepayment which remains after repayment of
Revolving Credit Loans bearing interest at the Base Rate in an interest-bearing
cash collateral account in the Borrower's name and controlled by the Agent.
Amounts in such account shall be applied from time to time to pay Revolving
Credit Loans bearing interest at the Euro-Rate at the end of their respective
Interest Periods.
26
4.5 Mandatory Prepayments.
---------------------
4.5.1 Excess Cash Flow.
----------------
Within five (5) Business Days of delivery of the Borrower's annual
financial statements pursuant to Section 7.3.2, but in any event no later than
April 7 of each year during the term hereof (each, a "Mandatory Prepayment
Date"), the Commitments shall automatically be reduced by an amount equal to 75%
of Excess Cash Flow for the fiscal year ended December 31, 1997 and 50% of
Excess Cash Flow in respect of each subsequent fiscal year and the Borrower
shall make all payments required by Section 4.5.4.
4.5.2 Sale of Assets.
--------------
Within five (5) Business Days of any sale of assets authorized by
Section 7.2.7(iv), the Commitments shall automatically be reduced by an amount
equal to the net proceeds (after the repayment of any Indebtedness secured by
Permitted Liens with respect to such assets, all taxes, direct costs and
expenses, including legal fees demonstrated to the reasonable satisfaction of
the Agent) of such sale to the selling Loan Party (as calculated in good faith
by the Borrower) and the Borrower shall make all payments required by Section
4.5.4 except that proceeds not exceeding $100,000 can be retained by the
Borrower.
4.5.3 Equity Infusion.
---------------
Within five (5) days of the funding of any sale (other than a sale to
the Borrower or a Subsidiary of the Borrower) for cash of any securities or
equity or capital shares of any Loan Party, Borrower shall retain (so long as
there exists no Event of Default at the time of such sale) and use in its
operations an amount equal to the net proceeds to such Person up to a maximum of
$5,000,000 in the aggregate on a cumulative basis and the Commitments shall
automatically be reduced by an amount equal to the net proceeds in excess of
$5,000,000 (or all of such net proceeds if there exists an Event of Default at
the time of such sale) and the Borrower shall make all payments required by
Section 4.5.4.
4.5.4 Reduction of Commitment.
-----------------------
Whenever the principal amount of the Revolving Facility Usage exceed the
Commitment (whether because of a reduction thereof pursuant to Sections 2.1,
4.5.1, 4.5.2 or 4.5.3 or otherwise), the Borrower shall make a payment of
principal sufficient to reduce such excess to zero ($0), together with interest
accrued thereon. Reductions of the Commitments pursuant to this Section 4.5
shall be applied to reduce the Commitments in the inverse order of scheduled
reductions of the Commitments pursuant to Section 2.1.1.
27
4.5.5 Application Among Interest Rate Options.
---------------------------------------
All prepayments required pursuant to this Section 4.5 shall first be
applied among the Interest Rate Options to the principal amount of the Loans
subject to the Base Rate Option, then to Loans subject to a Euro-Rate Option.
Any prepayment hereunder shall be subject to the Borrower's Obligation to
indemnify the Banks under Section 4.6.2, provided that the Borrower may, instead
-------------
of making repayments of Revolving Credit Loans bearing interest at the Euro-Rate
at such time and paying indemnity under Section 4.6.2 incident to such
repayment, direct the Agent in writing to place the amount of such prepayment
which remains after repayment of Revolving Credit Loans bearing interest at the
Base Rate in an interest-bearing cash collateral account in the Borrower's name
and controlled by the Agent. Amounts in such account shall be applied from time
to time to pay Revolving Credit Loans bearing interest at the Euro-Rate at the
end of their respective Interest Periods.
4.6 Additional Compensation in Certain Circumstances.
------------------------------------------------
4.6.1 Increased Costs or Reduced Return Resulting from
------------------------------------------------
Taxes, Reserves, Capital Adequacy Requirements, Expenses,
---------------------------------------------------------
Etc.
----
If any Law, guideline or interpretation or any change in any Law,
guideline or interpretation or application thereof by any Official Body charged
with the interpretation or administration thereof or compliance with any request
or directive (whether or not having the force of Law) of any central bank or
other Official Body:
(i) subjects any Bank to any tax or changes the basis
of taxation with respect to this Agreement, the Notes, the Loans or payments by
the Borrower of principal, interest, Commitment Fees, or other amounts due from
the Borrower hereunder or under the Notes (except for taxes on the overall net
income of such Bank),
(ii) imposes, modifies or deems applicable any
reserve, special deposit or similar requirement against credits or commitments
to extend credit extended by, or assets (funded or contingent) of, deposits with
or for the account of, or other acquisitions of funds by, any Bank, or
(iii) imposes, modifies or deems applicable any capital
adequacy or similar requirement (A) against assets (funded or contingent) of, or
letters of credit, other credits or commitments to extend credit extended by,
any Bank, or (B) otherwise applicable to the obligations of any Bank under this
Agreement,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon any
Bank with respect to this Agreement, the Notes or the making, maintenance or
funding of any part of the Loans (or, in the case of any capital adequacy or
similar requirement, to have the effect of reducing the rate of return on any
Bank's capital, taking into
28
consideration such Bank's customary policies with respect to capital adequacy)
by an amount which such Bank in its sole discretion deems to be material, such
Bank shall from time to time promptly notify the Borrower and the Agent of the
amount determined in good faith (using any averaging and attribution methods
employed in good faith) by such Bank to be necessary to compensate such Bank for
such increase in cost, reduction of income, additional expense or reduced rate
of return. Such notice shall set forth in reasonable detail the basis for such
determination and the calculation of such amount. No additional costs shall be
assessed prior to notice to the Borrower of such additional cost. Such amount
shall be due and payable by the Borrower to such Bank ten (10) Business Days
after such notice is given.
Indemnity.
---------
In addition to the compensation required by Section 4.6.1, the Borrower
shall indemnify each Bank against all reasonable liabilities, losses or expenses
(including loss of margin, any loss or expense incurred in liquidating or
employing deposits from third parties and any loss or expense incurred in
connection with funds acquired by a Bank to fund or maintain Loans subject to a
Euro-Rate Option) which such Bank sustains or incurs as a consequence of any
(i) payment, prepayment, conversion or renewal of any Loan
to which a Euro-Rate Option applies on a day other than the last day of the
corresponding Interest Period (whether or not such payment or prepayment is
mandatory, voluntary or automatic and whether or not such payment or prepayment
is then due, but not including mandatory prepayments required by a Bank and made
pursuant to a notice delivered under Section 3.4.3 in respect of the
availability of the Revolving Credit Euro-Rate Option),
(ii) attempt by the Borrower to revoke (expressly, by later
inconsistent notices or otherwise) in whole or part any Loan Requests under
Section 2.5 or Section 3.2 or notice relating to prepayments under Section 4.4,
or
(iii) default by the Borrower in the performance or
observance of any covenant or condition contained in this Agreement or any other
Loan Document, including any failure of the Borrower to pay when due (by
acceleration or otherwise) any principal, interest, Commitment Fee or any other
amount due hereunder.
If any Bank sustains or incurs any such loss or expense, it shall from
time to time notify the Borrower of the amount determined in good faith by such
Bank (which determination may include such assumptions, allocations of costs and
expenses and averaging or attribution methods as such Bank shall deem
reasonable) to be necessary to indemnify such Bank for such loss or expense.
Such notice shall set forth in reasonable detail the basis for and calculation
of such determination. Such amount shall be due and payable by the Borrower to
such Bank ten (10) Business Days after such notice is given.
29
5. REPRESENTATIONS AND WARRANTIES
------------------------------
5.1 Representations and Warranties.
------------------------------
The Loan Parties, jointly and severally, represent and warrant to the Agent
and each of the Banks as follows:
5.1.1 Organization and Qualification.
------------------------------
Each Loan Party and each Subsidiary of each Loan Party is a corporation,
partnership or limited liability company duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Each Loan
Party and each Subsidiary of each Loan Party has the lawful power to own or
lease its properties and to engage in the business it presently conducts or
proposes to conduct. Each Loan Party and each Subsidiary of each Loan Party is
duly licensed or qualified and in good standing in each jurisdiction listed on
Schedule 5.1.1 and in all other jurisdictions where the property owned or leased
--------------
by it or the nature of the business transacted by it or both makes such
licensing or qualification necessary.
5.1.2 Capitalization and Ownership.
----------------------------
As of the Closing Date, the authorized capital stock of the Borrower
consists of 8,000,000 shares, of which approximately 4,450,000 shares (referred
to herein as the "Shares") are issued and outstanding and are owned as indicated
on Schedule 5.1.2. All of the Shares have been validly issued and are fully
--------------
paid and nonassessable. Except as shown on Schedule 5.1.2, there are no
--------------
options, warrants or other rights outstanding to purchase any such shares except
for the Warrant.
5.1.3 Subsidiaries.
------------
Schedule 5.1.3 states the name of each of the Borrower's Subsidiaries,
--------------
its jurisdiction of incorporation, its authorized capital stock, the issued and
outstanding shares (referred to herein as the "Subsidiary Shares") and the
owners thereof if it is a corporation, its outstanding partnership interests
(the "Partnership Interests") if it is a partnership and its outstanding limited
liability company interests, interests assigned to managers thereof and the
voting rights associated therewith (the "LLC Interests") if it is a limited
liability company. The Borrower and each Subsidiary of the Borrower has good
and marketable title to all of the Subsidiary Shares, Partnership Interests and
LLC Interests it purports to own, free and clear in each case of any Lien
(except pursuant to Section 324 of the Delaware General Corporation Law, the
Borrower not being aware of any such Liens). All Subsidiary Shares, Partnership
Interests and LLC Interests have been validly issued, and all Subsidiary Shares
are fully paid and nonassessable (except for claims incident Section 630 of the
New York Business Corporation Law or similar provisions under the applicable law
of the states of incorporation of any Loan Party, the Borrower not being aware
of any such claims). All capital contributions and other consideration required
to be made or paid in connection with the issuance of the Partnership Interests
and LLC Interests have been made or paid, as the case may be. There are no
options, warrants or other rights outstanding to purchase any such Subsidiary
Shares, Partnership Interests of LLC Interests except as indicated on Schedule
--------
5.1.3.
-----
30
5.1.4 Power and Authority.
-------------------
Each Loan Party has full power to enter into, execute, deliver and carry
out this Agreement and the other Loan Documents to which it is a party, to incur
the Indebtedness contemplated by the Loan Documents and to perform its
Obligations under the Loan Documents to which it is a party, and all such
actions have been duly authorized by all necessary proceedings on its part.
Validity and Binding Effect.
---------------------------
This Agreement has been duly and validly executed and delivered by each
Loan Party, and each other Loan Document which any Loan Party is required to
execute and deliver on or after the date hereof will have been duly executed and
delivered by such Loan Party on the required date of delivery of such Loan
Document. This Agreement and each other Loan Document constitutes, or will
constitute, legal, valid and binding obligations of each Loan Party which is or
will be a party thereto on and after its date of delivery thereof, enforceable
against such Loan Party in accordance with its terms, except to the extent that
enforceability of any of such Loan Document may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforceability of creditors' rights generally or limiting the right of specific
performance.
5.1.6 No Conflict.
-----------
Neither the execution and delivery of this Agreement or the other Loan
Documents by any Loan Party nor the consummation of the transactions herein or
therein contemplated or compliance with the terms and provisions hereof or
thereof by any of them will conflict with, constitute a default under or result
in any breach of (i) the terms and conditions of the certificate of
incorporation, bylaws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company agreement or
other organizational documents of any Loan Party or (ii) any Law or any material
agreement or instrument or order, writ, judgment, injunction or decree to which
any Loan Party or any of its Subsidiaries is a party or by which it or any of
its Subsidiaries is bound or to which it is subject, or result in the creation
or enforcement of any Lien, charge or encumbrance whatsoever upon any property
(now or hereafter acquired) of any Loan Party or any of its Subsidiaries (other
than Liens granted under the Loan Documents).
5.1.7 Litigation.
----------
Except as shown on Schedule 5.1.7, there are no actions, suits,
--------------
proceedings or investigations pending or, to the knowledge of any Loan Party,
threatened against such Loan Party or any Subsidiary of such Loan Party at law
or equity before any Official Body which individually or in the aggregate may
result in any Material Adverse Change. None of the Loan Parties or any
Subsidiaries of any Loan Party is in violation of any order, writ, injunction or
any decree of any Official Body which may result in any Material Adverse Change.
31
5.1.8 Title to Properties.
-------------------
The real property owned or leased by each Loan Party and each Subsidiary
of each Loan Party is described on Schedule 5.1.8. Each Loan Party and each
--------------
Subsidiary of each Loan Party has good and valid title to or valid leasehold
interest in all properties, assets and other rights which it purports to own or
lease or which are reflected as owned or leased on its books and records, free
and clear of all Liens and encumbrances except Permitted Liens, and subject to
the terms and conditions of the applicable leases. All leases of real property
are in full force and effect without the necessity for any consent which has not
previously been obtained upon consummation of the transactions contemplated
hereby.
5.1.9 Financial Statements.
--------------------
(i) Historical Statements. The Borrower has
---------------------
delivered to the Agent copies of its and Suncom's audited consolidated year-end
financial statements for and as of the end of the fiscal year ended December,
1996 (the "Annual Statements"). In addition, the Borrower has delivered to the
Agent copies of its unaudited pro forma consolidated interim closing balance
sheet as of Closing Date (the "Interim Statements") (the Annual and Interim
Statements being collectively referred to as the "Historical Statements"). The
Historical Statements were compiled from the books and records maintained by
Borrower's and Suncom's management, and to the best of the Borrower's knowledge
are: correct and complete and fairly represent the consolidated financial
condition of Suncom and the Borrower and its Subsidiaries as of their dates and
the results of operations for the fiscal periods then ended and have been
prepared in accordance with GAAP consistently applied, subject (in the case of
the Interim Statements) to normal year-end audit adjustments.
(ii) Financial Projections. The Borrower has
---------------------
delivered to the Agent a pro forma opening balance sheet and financial
projections of the Borrower and its Subsidiaries for the period January 1, 1997
through December 31, 2004 derived from various assumptions of the Borrower's
management (the "Financial Projections"). The Financial Projections represent a
reasonable range of possible results in light of the history of the business,
present and foreseeable conditions and the intentions of the Borrower's
management. The Financial Projections accurately reflect the liabilities of the
Borrower and its Subsidiaries upon consummation of the transactions contemplated
hereby as of the Closing Date.
(iii) Accuracy of Financial Statements. Neither the
--------------------------------
Borrower nor any Subsidiary of the Borrower has any material liabilities,
contingent or otherwise, or forward or long-term commitments that are not
disclosed in the Historical Statements or in the notes thereto, and except as
disclosed therein there are no unrealized or anticipated losses from any
commitments of the Borrower or any Subsidiary of the Borrower which may cause a
Material Adverse Change. Since December 31, 1996, no Material Adverse Change has
occurred.
32
5.1.10 Use of Proceeds; Margin Stock.
-----------------------------
The Loan Parties intend to use the proceeds of the Loans in accordance
with Sections 2.8 and 7.1.10. None of the Loan Parties or any Subsidiaries of
any Loan Party engages or intends to engage principally, or as one of its
important activities, in the business of extending credit for the purpose,
immediately, incidentally or ultimately, of purchasing or carrying margin stock
(within the meaning of Regulation U). No part of the proceeds of any Loan has
been or will be used, immediately, incidentally or ultimately, to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or to refund Indebtedness originally
incurred for such purpose, or for any purpose which entails a violation of or
which is inconsistent with the provisions of the regulations of the Board of
Governors of the Federal Reserve System. None of the Loan Parties or any
Subsidiary of any Loan Party holds or intends to hold margin stock in such
amounts that more than 25% of the reasonable value of the assets of any Loan
Party or Subsidiary of any Loan Party are or will be represented by margin
stock.
5.1.11 Full Disclosure.
---------------
Neither this Agreement nor any other Loan Document, nor any certificate,
statement, agreement or other documents furnished to the Agent or any Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to any Loan Party which materially adversely affects the business,
property, assets, financial condition, results of operations or prospects of any
Loan Party or Subsidiary of any Loan Party which has not been set forth in this
Agreement or in the certificates, statements, agreements or other documents
furnished in writing to the Agent and the Banks prior to or at the date hereof
in connection with the transactions contemplated hereby.
5.1.12 Taxes.
-----
All federal, state, local and other tax returns required to have been
filed with respect to each Loan Party and each Subsidiary of each Loan Party
have been filed, and payment or adequate provision has been made for the payment
of all taxes, fees, assessments and other governmental charges which have or may
become due pursuant to said returns or to assessments received, except to the
extent that such taxes, fees, assessments and other charges are being contested
in good faith by appropriate proceedings diligently conducted and for which such
reserves or other appropriate provisions, if any, as shall be required by GAAP
shall have been made. There are no agreements or waivers extending the
statutory period of limitations applicable to any federal income tax return of
any Loan Party or Subsidiary of any Loan Party for any period.
33
5.1.13 Consents and Approvals.
----------------------
Except for the filing of financing statements in the state and county
filing offices, no consent, approval, exemption, order or authorization of, or a
registration or filing with, any Official Body or any other Person is required
by any Law or any agreement in connection with the execution, delivery and
carrying out of this Agreement and the other Loan Documents by any Loan Party,
except as listed on Schedule 5.1.13, all of which shall have been obtained or
---------------
made on or prior to the Closing Date except as otherwise indicated on Schedule
--------
5.1.13.
------
5.1.14 No Event of Default; Compliance with Instruments.
------------------------------------------------
No event has occurred and is continuing and no condition exists or will
exist after giving effect to the borrowings or other extensions of credit to be
made on the Closing Date under or pursuant to the Loan Documents which
constitutes an Event of Default or Potential Default. None of the Loan Parties
or any Subsidiaries of any Loan Party is in violation of (i) any term of its
certificate of incorporation, bylaws, certificate of limited partnership,
partnership agreement, certificate of formation, limited liability company
agreement or other organizational documents or (ii) any material agreement or
instrument to which it is a party or by which it or any of its properties may be
subject or bound where such violation would constitute a Material Adverse
Change.
5.1.15 Patents, Trademarks, Copyrights, Licenses, Etc.
----------------------------------------------
.1.15.1 Each Loan Party and each Subsidiary of each Loan
Party owns or possesses all the material patents, trademarks, service marks,
trade names, copyrights, licenses, registrations, franchises, permits and rights
necessary to own and operate its properties and to carry on its business as
presently conducted and planned to be conducted by such Loan Party or
Subsidiary, without known possible, alleged or actual conflict with the rights
of others. All material patents, trademarks, service marks, trade names,
copyrights, licenses, registrations, franchises and permits of each Loan Party
and each Subsidiary of each Loan Party are listed and described on Schedule
--------
5.1.15.
------
.1.15.2 The Borrower possesses all approvals necessary
for it to conduct its business as presently conducted, including, without
limitation, those business licenses described on Schedule 5.1.15.1 hereof,
-----------------
except where the failure to possess any such approval will not constitute a
Material Adverse Change. Subject to obtaining any necessary approvals of any
Official Body in connection with the exercise by the Agent and the Banks of
their rights as a secured party, the execution, delivery and performance of each
Loan Document to which the Borrower is party by the Borrower and the
transactions contemplated thereby do not and will not require any additional
registration with, consent or approval of, or notice to, or other action to,
with or by any Official Body, except filings, consents or notices which have
been, or will in due course, be made, obtained or given.
(i) The Borrower has the authority and the right under
all applicable FCC rules, regulations and orders and the terms of the Service
Agreement to distribute the transmission of music programming and other
information offered by the Borrower to its customers (whether by satellite,
telephone line, FM subcarrier or otherwise) and to utilize all radio frequencies
34
necessary in connection therewith.
(ii) The Borrower is the owner of, or has the
legal right to use, all licenses, permits, exceptions, franchises, variances,
waivers, approvals and other authorizations, including those relating to
communications matters (including, without limitation, those licenses necessary
to operate or utilize any radio system necessary to service the Borrower's
customers) of, by or from Official Bodies or other Persons necessary for the
Borrower to conduct its business and has such other licenses issued or issuable
by the FCC as may be necessary for the conduct of the Borrower's business.
Governmental Regulation. The Borrower is not
-----------------------
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, the Investment Company Act of
1940 or any other Law such that its ability to incur indebtedness is limited or
its ability to consummate the transactions contemplated hereby is materially
impaired. Furthermore, the Borrower is not as of the date hereof subject to rate
regulation pursuant to any Law.
5.1.16 Security Interests.
------------------
.1.16.1 The Liens and security interests granted
to the Agent for the benefit of the Banks pursuant to the Conditional MUZAK
Assignment, the Pledge Agreement and the Security Agreement in the Collateral
constitute and will continue to constitute Prior Security Interests under the
Uniform Commercial Code as in effect in each applicable jurisdiction (the
"Uniform Commercial Code") or other applicable Law entitled to all the rights,
benefits and priorities provided by the Uniform Commercial Code or such Law.
Except for any motor vehicles owned by any Loan Party, upon the filing of
financing statements relating to said security interests in each office and in
each jurisdiction where required in order to perfect the security interests
described above, taking possession of any stock certificates or other
certificates evidencing the Pledged Collateral all such action as is necessary
or advisable to establish such rights of the Agent will have been taken, and
there will be upon execution and delivery of the Pledge Agreement, the
Conditional MUZAK Assignment and the Security Agreement, such filings and such
taking of possession, no necessity for any further action in order to preserve,
protect and continue such rights, except the filing of continuation statements
with respect to such financing statements within six months prior to each five-
year anniversary of the filing of such financing statements. All filing fees and
other expenses in connection with each such action have been or will be paid by
the Borrower.
5.1.17 Contract and License Collateral
-------------------------------
All documents setting forth, evidencing or constituting the
Contract and License Collateral have been delivered to the Agent on behalf of
the Banks. The MUZAK Licenses and the Service Agreement are as of the Closing
Date valid and enforceable obligations of the parties thereto and all consents,
transfers or assignments necessary to cause the Borrower or Acquisition
Subsidiary to have all the rights, powers and privileges described or purported
to be granted therein shall have been given and made.
35
5.1.18 Status of the Pledged Collateral.
--------------------------------
All the shares of capital stock, Partnership Interests or LLC Interests
included in the Pledged Collateral to be pledged pursuant to the Pledge
Agreement are or will be upon issuance validly issued and nonassessable and
owned beneficially and of record by the pledgor free and clear of any Lien or
restriction on transfer, except as otherwise provided by the Pledge Agreement
and except as the right of the Banks to dispose of the Shares, Partnership
Interests or LLC Interests may be limited by the Securities Act of 1933, as
amended, and the regulations promulgated by the Securities and Exchange
Commission thereunder and by applicable state securities laws. There are no
shareholder, partnership, limited liability company or other agreements or
understandings with respect to the shares of capital stock, Partnership
Interests or LLC Interests included in the Pledged Collateral except for the
partnership agreements and limited liability company agreements described on
Schedule 5.1.18. The Loan Parties have delivered true and correct copies of
---------------
such partnership agreements and limited liability company agreements to the
Agent.
5.1.19 Insurance.
---------
Schedule 5.1.19 lists all insurance policies (other than insurance in
---------------
connection with Plans or Benefit Arrangements) and other bonds to which any Loan
Party or Subsidiary of any Loan Party is a party, all of which are valid and in
full force and effect. No notice has been given or claim made and to the best
of the Borrower's knowledge no grounds exist to cancel or avoid any of such
policies or bonds or to reduce the coverage provided thereby. Such policies and
bonds provide adequate coverage from reputable and financially sound insurers in
amounts sufficient to insure the assets and risks of each Loan Party and each
Subsidiary of each Loan Party in accordance with prudent business practice in
the industry of the Loan Parties and their Subsidiaries.
5.1.20 Compliance with Laws.
--------------------
The Loan Parties and their Subsidiaries are in compliance in all
material respects with all applicable Laws (other than Environmental Laws which
are specifically addressed in Section 5.1.25) in all jurisdictions in which any
Loan Party or Subsidiary of any Loan Party is presently or will be doing
business except where the failure to do so would not constitute a Material
Adverse Change.
5.1.21 Material Contracts; Burdensome Restrictions.
-------------------------------------------
Schedule 5.1.21 lists all material contracts relating to the business
---------------
operations of each Loan Party and each Subsidiary of any Loan Party, excluding
all employee benefit plans and Labor Contracts. All such material contracts are
valid, binding and enforceable upon such Loan Party or Subsidiary and each of
the other parties thereto in accordance with their respective terms, and there
is no default thereunder, to the Loan Parties' knowledge, with respect to
parties other than such Loan Party or Subsidiary. None of the Loan Parties or
their Subsidiaries is bound by any contractual obligation, or subject to any
restriction in any organization document, or any requirement of Law which could
reasonably result in a Material Adverse Change.
36
5.1.22 Investment Companies; Regulated Entities.
----------------------------------------
None of the Loan Parties or any Subsidiaries of any Loan Party is an
"investment company" registered or required to be registered under the
Investment Company Act of 1940 or under the "control" of an "investment company"
as such terms are defined in the Investment Company Act of 1940 and shall not
become such an "investment company" or under such "control." None of the Loan
Parties or any Subsidiaries of any Loan Party is subject to any other Federal
state statute or regulation limiting its ability to incur Indebtedness for
borrowed money.
5.1.23 Plans and Benefit Arrangements.
------------------------------
Except as set forth on Schedule 5.1.23:
---------------
(i) To the Borrower's knowledge, each Benefit
Arrangement and Plan is maintained in compliance in all material respects with
any applicable provisions of ERISA and the Internal Revenue Code. To the
Borrower's knowledge, there has been no Prohibited Transaction with respect to
any Benefit Arrangement, any Plan, any Multiemployer Plan or any Multiple
Employer Plan which could result in a Material Adverse Change. The Borrower and
all other members of the ERISA Group have made when due any and all
contributions required to be made under any agreement relating to a
Multiemployer Plan or a Multiple Employer Plan. With respect to each Plan and
Multiemployer Plan, the Borrower and each other member of the ERISA Group (i)
have not incurred any liability to the PBGC, and (ii) have not had asserted
against them any penalty for failure to fulfill the minimum funding requirements
of ERISA.
(ii) Neither the Borrower nor any other member of the
ERISA Group has instituted proceedings to terminate any Plan.
(iii) Neither the Borrower nor any other member of the
ERISA Group has been notified that it has incurred any material withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer Plan.
Neither the Borrower nor any other member of the ERISA Group has been notified
by any Multiemployer Plan or Multiple Employer Plan that such Multiemployer Plan
or Multiple Employer Plan has been terminated within the meaning of Title IV of
ERISA and, to the best knowledge of the Borrower, no Multiemployer Plan or
Multiple Employer Plan is in reorganization within the meaning of Title IV of
ERISA.
(iv) To the extent that any Benefit Arrangement is
insured, the Borrower and all other members of the ERISA Group have paid when
due all premiums required to be paid for all periods through the date hereof. To
the extent that any Benefit Arrangement is funded other than with insurance, the
Borrower and all other members of the ERISA Group have made when due all
contributions required to be paid for all periods through the date hereof.
(v) As of the date hereof, no member of the ERISA Group
has maintained, sponsored or otherwise contributed to any Plan that is subject
to Title IV of ERISA, other than such a Plan which is a "Multiemployer Plan"
within the meaning of Section 4001(a)(3) of ERISA.
37
Employment Matters.
------------------
Each of the Loan Parties and each of their Subsidiaries is in compliance
with the Labor Contracts and all applicable federal, state and local labor and
employment Laws including those related to equal employment opportunity and
affirmative action, labor relations, minimum wage, overtime, child labor,
medical insurance continuation, worker adjustment and relocation notices,
immigration controls and worker and unemployment compensation, where the failure
to comply would constitute a Material Adverse Change. To the knowledge of any
Loan Party, there are no outstanding grievances, arbitration awards or appeals
therefrom arising out of the Labor Contracts or current or threatened strikes,
picketing, handbilling or other work stoppages or slowdowns at facilities of any
of the Loan Parties or any of their Subsidiaries which in any case would
constitute a Material Adverse Change. The Borrower has made available to the
Agent true and correct copies of each of the Labor Contracts.
5.1.25 Environmental Matters.
---------------------
Except as disclosed on Schedule 5.1.25:
---------------
(i) None of the Loan Parties or any Subsidiaries of
any Loan Party has received any Environmental Complaint from any Official Body
or private Person alleging that such Loan Party or Subsidiary or any prior or
subsequent owner of any of the Property is a potentially responsible party under
the Comprehensive Environmental Response, Cleanup and Liability Act, 42 U.S.C.
(S) 9601, et seq., and none of the Loan Parties has any reason to believe that
such an Environmental Complaint might be received. There are no pending or, to
any Loan Party's knowledge, threatened Environmental Complaints relating to any
Loan Party or Subsidiary of any Loan Party or, to any Loan Party's knowledge,
any prior or subsequent owner of any of the Property pertaining to, or arising
out of, any Environmental Conditions.
(ii) There are no circumstances known to the
Borrower at, on or under any of the Property that constitute a breach of or non-
compliance with any of the Environmental Laws, and there are no past or present
Environmental Conditions at, on or under any of the Property or, to any Loan
Party's knowledge, at, on or under adjacent property, that prevent compliance
with the Environmental Laws at any of the Property.
(iii) Neither any of the Property nor any structures,
improvements, equipment, fixtures, activities or facilities thereon or
thereunder contain or use Regulated Substances except in compliance with
Environmental Laws. There are no processes, facilities, operations, equipment or
other activities at, on or under any of the Property, or, to any Loan Party's
knowledge, at, on or under adjacent property, that currently result in the
release or threatened release of Regulated Substances onto any of the Property,
except to the extent that such releases or threatened releases are not a breach
of or otherwise not a violation of the Environmental Laws.
(iv) To the best of Borrower's knowledge, there are
no aboveground storage tanks, underground storage tanks or underground piping
associated with such tanks, used for the management of Regulated Substances at,
on or under any of the Property that (a) do not have,
38
to the extent required by Environmental Laws, a full operational secondary
containment system in place, and (b) are not otherwise in compliance with all
Environmental Laws. To the best of Borrower's knowledge, there are no abandoned
underground storage tanks or underground piping associated with such tanks,
previously used for the management of Regulated Substances at, on or under any
of the Property that have not either been closed in place in accordance with
Environmental Laws or removed in compliance with all applicable Environmental
Laws and no contamination associated with the use of such tanks exists on any of
the Property that is not in compliance with Environmental Laws.
(v) Each Loan Party and each Subsidiary of any
Loan Party has all material permits, licenses, authorizations, plans and
approvals necessary under the Environmental Laws for the conduct of the business
of such Loan Party or Subsidiary as presently conducted. Each Loan Party and
each Subsidiary of any Loan Party has submitted all material notices, reports
and other filings required by the Environmental Laws to be submitted by it to an
Official Body which pertain to past and current operations on any of the
Property.
(vi) To the best of Borrower's knowledge, all past
and present on-site generation, storage, processing, treatment, recycling,
reclamation, disposal or other use or management of Regulated Substances at, on,
or under any of the Property and all off-site transportation, storage,
processing, treatment, recycling, reclamation, disposal or other use or
management of Regulated Substances have been done in accordance with the
Environmental Laws.
5.1.26 Senior Debt Status.
------------------
The Obligations of each Loan Party under this Agreement, the Notes, the
Guaranty Agreement and each of the other Loan Documents to which it is a party
do rank and will rank senior in priority of payment with all other Indebtedness
of such Loan Party except Indebtedness of such Loan Party to the extent secured
by Permitted Liens. There is no Lien upon or with respect to any of the
properties or income of any Loan Party or Subsidiary of any Loan Party which
secures indebtedness or other obligations of any Person except for Permitted
Liens.
5.1.27 Scope of Business.
-----------------
.1.27.1 Geographic Areas of the Borrower's Business.
-------------------------------------------
A complete list of all geographic areas served by the Borrower's business as of
the Closing Date is set forth on Schedule 5.1.27.1. The Borrower has no
-----------------
knowledge that Muzak Limited Partnership or any Affiliate of Muzak limited
partnership has authorized any other Person to provide any background or
foreground music subscription service within any of the geographic areas
described on said Schedule 5.1.27.1. All of the Loan Parties' books and records
-----------------
are maintained at the address set forth on Schedule A to the Security Agreement.
----------
.1.27.1 Business Name. The only names by which any
-------------
Loan Party or Suncom is known or under which the Borrower or Suncom is
conducting or has within the past five (5) years conducted its business are as
set forth on Schedule 5.1.27.2.
-----------------
39
.1.27.3 Suncom Asset Purchase. The Suncom Asset
---------------------
Purchase has been completed as of the Closing Date.
5.2 Updates to Schedules.
-------------------------
Should any of the information or disclosures provided on any of the
schedules attached hereto become outdated or incorrect in any material respect,
the Borrower shall promptly provide the Agent in writing with such revisions or
updates to such schedule as may be necessary or appropriate to update or correct
same; provided, however, that if any of the updated information or any such
--------
revised schedule would reflect an Event of Default, Potential Default or
Material Adverse Change, then the underlying schedule shall not be deemed to
have been amended by such information unless and until the Required Banks, in
their sole and absolute discretion, shall have accepted such updated information
in writing.
6.CONDITIONS OF LENDING
---------------------
The obligation of each Bank to make Loans hereunder is subject to the
performance by each of the Loan Parties of its Obligations to be performed
hereunder at or prior to the making of any such Loans and to the satisfaction of
the following further conditions:
6.1 First Loans.
-----------
On the Closing Date:
6.1.1 Officer's Certificate.
---------------------
The representations and warranties of each of the Loan Parties contained
in Section 5 and in each of the other Loan Documents shall be true and accurate
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date or time,
which representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein), and each of the Loan Parties shall
have performed and complied with all covenants and conditions hereof and
thereof, no Event of Default or Potential Default shall have occurred and be
continuing or shall exist; and there shall be delivered to the Agent for the
benefit of each Bank a certificate of each of the Loan Parties, dated the
Closing Date and signed by the Chief Executive Officer, President or Chief
Financial Officer of each of the Loan Parties, to each such effect.
Secretary's Certificate.
-----------------------
There shall be delivered to the Agent for the benefit of each Bank a
certificate dated the Closing Date and signed by the Secretary or an Assistant
Secretary of each of the Loan Parties, certifying as appropriate as to:
(i) all action taken by each Loan Party in
connection with
40
this Agreement and the other Loan Documents;
(ii) the names of the officer or officers
authorized to sign this Agreement and the other Loan Documents and the true
signatures of such officer or officers and specifying the Authorized Officers
permitted to act on behalf of each Loan Party for purposes of this Agreement and
the true signatures of such officers, on which the Agent and each Bank may
conclusively rely; and
(iii) as to the Borrower, a "long-form"
certificate of good standing certified by the appropriate state official and as
to each Loan Party copies of its organizational documents, including its
certificate of incorporation, bylaws, certificate of limited partnership,
partnership agreement, certificate of formation, and limited liability company
agreement as in effect on the Closing Date certified by the Secretary of such
Person, together with certificates from the appropriate state officials as to
the continued existence and good standing of each Loan Party in each state where
organized or qualified to do business.
6.1.3 Delivery of Loan Documents.
--------------------------
The Pledge Agreement, the Conditional MUZAK Assignment, Notes,
Subordination Agreement and Security Agreement and all financing statements
relating thereto shall have been duly executed and delivered to the Agent for
the benefit of the Banks, together with all appropriate financing statements and
appropriate stock powers and certificates evidencing the Shares, the Partnership
Interests and the LLC Interests.
6.1.4 Opinion of Counsel.
------------------
There shall be delivered to the Agent for the benefit of each Bank (x) a
written opinion of Xxxx, Marks & Xxxxx, LLP counsel for the Loan Parties (who
may rely on the opinions of such other counsel as may be acceptable to the
Agent), dated the Closing Date and in form and substance satisfactory to the
Agent and its counsel as to such matters incident to the transactions
contemplated herein as the Agent may reasonably request and (y) copies of the
opinions of counsel to the seller and the buyer in the Suncom Asset Purchase on
which the Agent and the Banks shall, by the terms thereof, be entitled to rely.
6.1.5 Legal Details.
-------------
All legal details and proceedings in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall be in form and
substance reasonably satisfactory to the Agent and counsel for the Agent, and
the Agent shall have received all such other counterpart originals or certified
or other copies of such documents and proceedings in connection with such
transactions, in form and substance satisfactory to the Agent and said counsel,
as the Agent or said counsel may reasonably request.
41
6.1.6 Payment of Fees.
---------------
The Borrower shall have paid or caused to be paid to the Agent for
itself and for the account of the Banks to the extent not previously paid the
Facility Fees, all other commitment and other fees accrued through the Closing
Date and the costs and expenses, including reasonable attorneys' fees and
expenses, for which the Agent and the Banks are entitled to be reimbursed.
6.1.7 Subordinated Lender's Consent.
-----------------------------
The Loan Parties shall have delivered to the Agent evidence satisfactory
to the Agent that Subordinated Lender has consented to the Suncom Asset
Purchase, the repayment of the Existing Bank Indebtedness and the effectuation
of the transactions contemplated in the Loan Documents, and Subordinated Lender
shall have executed and delivered to the Agent the Subordination Agreement.
6.1.8 Consents.
--------
All material consents required to effectuate the transactions
contemplated hereby as set forth on Schedule 5.1.13 shall have been obtained and
---------------
the Agent shall have received evidence of the approval by the FCC of the
transfer of the microwave radio facilities operating under call signs WNTP325,
WNTP522, WNTG947 and WNTG948 incident to the Suncom Asset Purchase.
6.1.9 Officer's Certificate Regarding MACs.
------------------------------------
Since December 31, 1996, no Material Adverse Change shall have occurred;
prior to the Closing Date, there shall have been no material change in the
management of any Loan Party or Subsidiary of any Loan Party other than as
contemplated in documents executed in connection with the Suncom Asset Purchase
and delivered to the Agent; and there shall have been delivered to the Agent for
the benefit of each Bank a certificate dated the Closing Date and signed by the
Chief Executive Officer, President or Chief Financial Officer of each Loan Party
to each such effect.
6.1.10 No Violation of Laws.
--------------------
The making of the Loans shall not contravene any Law applicable to any
Loan Party or any of the Banks.
No Actions or Proceedings.
-------------------------
No action, proceeding, investigation, regulation or legislation shall
have been instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, restrain or prohibit, or to obtain damages
in respect of, this Agreement, the other Loan Documents or the consummation of
the transactions contemplated hereby or thereby or which, in the Agent's sole
but reasonable discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan Documents.
42
6.1.12 Insurance Policies; Certificates of Insurance;
----------------------------------------------
Endorsements.
------------
The Loan Parties shall have delivered evidence acceptable to the Agent
that adequate insurance in compliance with Section 7.1.3 is in full force and
effect and that all premiums then due thereon have been paid, together with a
certified copy of each Loan Party's casualty insurance policy or policies
evidencing coverage satisfactory to the Agent, with additional insured, in form
and substance satisfactory to the Agent and its counsel naming the Agent as
additional insured, and lender loss payee.
6.1.13 Xxxxxx Purchase.
---------------
The Loan Parties shall have delivered evidence acceptable to the Agent that
substantially all of the shares of stock of the Borrower owned by X.X. Xxxxxx
shall have been purchased by Suncom.
6.1.14 Filing Receipts; Payoff.
-----------------------
The Agent shall have received (1) if possible, copies of all filing
receipts and acknowledgments issued by any governmental authority to evidence
any recordation or filing necessary to perfect the Lien of the Banks on the
Collateral or other satisfactory evidence of such recordation and filing and (2)
a payoff letter in respect of the Existing Bank Indebtedness, the conditions in
which having been satisfied and termination statements and similar items in
respect of which shall have been delivered to the Agent.
6.1.15 Subscriber Reports.
------------------
The Banks shall have received a report satisfactory in form and substance
satisfactory to the Agent describing the Borrower's, Suncom's and (if
applicable) Acquisition Subsidiary's subscriber attrition, subscription growth,
subscription contract agings, subscriber location and other information
reasonably requested by the Agent.
6.2 Each Additional Loan.
--------------------
At the time of making any Loans other than Loans made on the Closing Date
and after giving effect to the proposed extensions of credit: the
representations and warranties of the Loan Parties contained in Section 5 and in
the other Loan Documents shall be true on and as of the date of such additional
Loan (after taking into account updates and revisions to schedules in accordance
with Section 5.2) with the same effect as though such representations and
warranties had been made on and as of such date (except for representations and
warranties which expressly relate solely to an earlier date or time, which
representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein) and the Loan Parties shall have
performed and complied with all covenants and conditions hereof; no Event of
Default or Potential Default shall have occurred and be continuing or shall
exist; the making of the Loans shall not contravene any Law applicable to any
Loan Party or Subsidiary of any Loan Party or any of the Banks; and the Borrower
shall have delivered to the Agent a duly executed and completed Loan Request.
43
7.COVENANTS
---------
7.1 Affirmative Covenants.
---------------------
The Loan Parties, jointly and severally, covenant and agree that until
payment in full of the Loans and interest thereon and satisfaction of all of the
Loan Parties' other Obligations under the Loan Documents and termination of the
Commitments, the Loan Parties shall comply at all times with the following
affirmative covenants:
7.1.1 Preservation of Existence, Etc.
------------------------------
Each Loan Party shall, and shall cause each of its Subsidiaries to,
maintain its legal existence as a corporation, limited partnership or limited
liability company and its license or qualification and good standing in each
jurisdiction in which its ownership or lease of property or the nature of its
business makes such license or qualification necessary, except as otherwise
expressly permitted in Section 7.2.6.
7.1.2 Payment of Liabilities, Including Taxes, Etc.
--------------------------------------------
Each Loan Party shall, and shall cause each of its Subsidiaries to, duly
pay and discharge all liabilities to which it is subject or which are asserted
against it, promptly as and when the same shall become due and payable,
including all taxes, assessments and governmental charges upon it or any of its
properties, assets, income or profits, prior to the date on which penalties
attach thereto, except to the extent that such liabilities, including taxes,
assessments or charges, are being contested in good faith and by appropriate and
lawful proceedings diligently conducted and for which such reserve or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made, but only to the extent that failure to discharge any such liabilities
would not result in any additional liability which would adversely affect to a
material extent the financial condition of any Loan Party or Subsidiary of any
Loan Party or the Collateral, provided that the Loan Parties and their
--------
Subsidiaries will pay all such liabilities forthwith upon the commencement of
proceedings to foreclose any Lien which may have attached as security therefor.
44
Maintenance of Insurance.
------------------------
Each Loan Party shall, and shall cause each of its Subsidiaries to,
insure its properties and assets against loss or damage by fire and such other
insurable hazards as such assets are commonly insured (including fire, extended
coverage, property damage, workers' compensation, public liability and business
interruption insurance) and against other risks in such amounts as similar
properties and assets are insured by prudent companies in similar circumstances
carrying on similar businesses, and with reputable and financially sound
insurers, including self-insurance to the extent customary, all as reasonably
determined by the Agent. At the request of the Agent, the Loan Parties shall
deliver to the Agent and each of the Banks (x) on the Closing Date and annually
thereafter an original certificate of insurance signed by the Loan Parties'
independent insurance broker describing and certifying as to the existence of
the insurance on the Collateral required to be maintained by this Agreement and
the other Loan Documents, together with a copy of the endorsement described in
the next sentence attached to such certificate and (y) from time to time a
summary schedule indicating all insurance then in force with respect to each of
the Loan Parties. Such policies of insurance shall contain special
endorsements, in form and substance acceptable to the Agent, which shall (i)
specify the Agent as an additional insured, and lender loss payee as its
interests may appear, with the understanding that any obligation imposed upon
the insured (including the liability to pay premiums) shall be the sole
obligation of the applicable Loan Parties and not that of the Agent or the
Banks, (ii) provide that the interest of the Banks shall be insured regardless
of any breach or violation by the applicable Loan Parties of any warranties,
declarations or conditions contained in such policies or any action or inaction
of the applicable Loan Parties or others insured under such policies, (iii)
provide a waiver of any right of the insurers to set off or counterclaim or any
other deduction, whether by attachment or otherwise, (iv) provide that any and
all rights of subrogation which the insurers may have or acquire shall be, at
all times and in all respects, junior and subordinate to the prior payment in
full of the Indebtedness hereunder and that no insurer shall exercise or assert
any right of subrogation until such time as the Indebtedness hereunder has been
paid in full and the Commitments have terminated, (v) provide, except in the
case of public liability insurance and workmen's compensation insurance, that
all insurance proceeds for losses of less than $500,000 shall be adjusted with
and payable to the applicable Loan Parties and that all insurance proceeds for
losses of $500,000 or more shall be adjusted with and payable to the Agent, (vi)
include effective waivers by the insurer of all claims for insurance premiums
against the Agent, (vii) provide that no cancellation of such policies for any
reason nor any change therein shall be effective until at least thirty (30) days
after receipt by the Agent of written notice of such cancellation or change or
ten (10) days in respect of non-payment of premium, (viii) be primary without
right of contribution of any other insurance carried by or on behalf of any
additional insureds with respect to their respective interests in the
Collateral, and (ix) provide that inasmuch as the policy covers more than one
insured, all terms, conditions, insuring agreements and endorsements (except
limits of liability) shall operate as if there were a separate policy covering
each insured. The applicable Loan Parties shall notify the Agent promptly of
any occurrence causing a material loss or decline in value of the Collateral and
the estimated (or actual, if available) amount of such loss or decline.
45
Maintenance of Properties and Leases.
------------------------------------
Each Loan Party shall, and shall cause each of its Subsidiaries to,
maintain in good repair, working order and condition (ordinary wear and tear
excepted) in accordance with the general practice of other businesses of similar
character and size, all of those properties useful or necessary to its business,
and from time to time, such Loan Party will make or cause to be made all
appropriate repairs, renewals or replacements thereof.
7.1.5 Maintenance of Patents, Trademarks, Etc.
---------------------------------------
Each Loan Party shall, and shall cause each of its Subsidiaries to,
maintain in full force and effect all patents, trademarks, service marks, trade
names, copyrights, licenses, franchises, permits and other authorizations
necessary for the ownership and operation of its properties and business if the
failure so to maintain the same would constitute a Material Adverse Change.
7.1.6 Visitation Rights.
-----------------
Each Loan Party shall, and shall cause each of its Subsidiaries to,
permit any of the officers or authorized employees or representatives of the
Agent or any of the Banks to visit and inspect any of its properties and to
examine and make excerpts from its books and records and discuss its business
affairs, finances and accounts with its officers, all in such detail and at such
times and as often as any of the Banks may reasonably request, provided that
--------
each Bank shall provide the Borrower and the Agent with reasonable notice prior
to any visit or inspection and such visit or inspection shall be conducted in a
reasonable manner. In the event any Bank desires to conduct an audit of any
Loan Party, such Bank shall make a reasonable effort to conduct such audit
contemporaneously with any audit to be performed by the Agent.
7.1.7 Keeping of Records and Books of Account.
---------------------------------------
The Borrower shall, and shall cause each Subsidiary of the Borrower to,
maintain and keep proper books of record and account which enable the Borrower
and its Subsidiaries to issue financial statements in accordance with GAAP and
as otherwise required by applicable Laws of any Official Body having
jurisdiction over the Borrower or any Subsidiary of the Borrower, and in which
full, true and correct entries shall be made in all material respects of all its
dealings and business and financial affairs.
7.1.8 Plans and Benefit Arrangements.
------------------------------
The Borrower shall, and shall cause each other member of the ERISA Group
to, comply with ERISA, the Internal Revenue Code and other applicable Laws
applicable to Plans and Benefit Arrangements except where such failure, alone or
in conjunction with any other such failure, would not result in a Material
Adverse Change. Without limiting the generality of the foregoing, the Borrower
shall cause all of its Plans and all Plans maintained by any member of the ERISA
Group to be funded in accordance with the minimum funding requirements of ERISA
and shall make, and cause each member of the ERISA Group to make, in a timely
manner, all contributions due under the Plans, Benefit Arrangements and
Multiemployer Plans.
46
7.1.9 Compliance with Laws.
--------------------
Each Loan Party shall, and shall cause each of its Subsidiaries to,
comply with all applicable Laws, including all Environmental Laws, in all
respects, provided that it shall not be deemed to be a violation of this Section
--------
7.1.9 if any failure to comply with any Law would not result in fines,
penalties, remediation costs, other similar liabilities or injunctive relief
which in the aggregate would constitute a Material Adverse Change.
7.1.10 Use of Proceeds.
---------------
The Loan Parties will use the proceeds of the Loans only for general
corporate purposes and for working capital and to repay the Existing Bank
Indebtedness. The Loan Parties' use of the proceeds of the Loans will not
contravene any applicable Law or any provision hereof.
7.1.11 Further Assurances.
------------------
Each Loan Party shall, from time to time, at its expense, faithfully
preserve and protect the Agent's Lien on and Prior Security Interest in the
Collateral as a continuing first priority perfected Lien, subject only to
Permitted Liens, and shall do such other acts and things as the Agent in its
sole discretion may deem necessary or advisable from time to time in order to
preserve, perfect and protect the Liens granted under the Loan Documents and to
exercise and enforce its rights and remedies thereunder with respect to the
Collateral.
7.1.12 Subordination of Intercompany Loans.
-----------------------------------
Each Loan Party shall cause any intercompany Indebtedness, loans or
advances owed by any Loan Party to any other Loan Party to be subordinated
pursuant to the terms of the Intercompany Subordination Agreement.
7.1.13 Maintenance of Accounts at PNC Bank.
-----------------------------------
The Borrower and Acquisition Subsidiary shall maintain the principal
depository and operating accounts at PNC Bank.
47
7.1.14 Interest Rate Protection
------------------------
The Borrower and Acquisition Subsidiary shall maintain an interest rate
cap contract for a minimum of two (2) years after the Closing Date with a strike
price of not more than 7% per annum and a contract amount of not less than
$16,000,000. The amount of (i) Suncom's interest rate protection
agreements (whether caps or otherwise) with PNC Bank existing on the Closing
Date and (ii) Suncom's fixed rate Indebtedness bearing an annual interest rate
not in excess of 10.25% shall be applied to satisfy such $16,000,000
requirement. Such interest rate protection contracts entered into on or after
the Closing Date shall be entered into with PNC Bank, unless its fees and rates
are not equal to or better than competitive bids received by the Borrower for
substantially identical contracts. The fixed rate Indebtedness shall be
provided by PNC Bank unless PNC Bank is unwilling to match the terms of another
Person's binding commitment to provide such Indebtedness and, if provided by PNC
Bank, shall be Obligations hereunder.
7.2 Negative Covenants.
------------------
The Loan Parties, jointly and severally, covenant and agree that until
payment in full of the Loans and interest thereon and satisfaction of all of the
Loan Parties' other Obligations hereunder and termination of the Commitments,
the Loan Parties shall comply with the following negative covenants:
7.2.1 Indebtedness.
------------
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) Existing Indebtedness as set forth on Schedule 7.2.1
--------------
(including any extensions or renewals thereof, provided there is no increase in
--------
the amount thereof or other significant change in the terms thereof unless
otherwise specified on Schedule 7.2.1) ;
--------------
(iii) Capitalized and operating leases as and to the
extent permitted under Section 7.2.15;
(iv) Indebtedness secured by Purchase Money Security
Interests which are described in item (ix) of the definition of Permitted Liens;
and
(v) Indebtedness of a Loan Party to another Loan Party
which is subordinated in accordance with the provisions of Section 7.1.12.
48
7.2.2 Liens.
-----
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time create, incur, assume or suffer to exist any Lien
on any of its property or assets, tangible or intangible, now owned or hereafter
acquired, or agree or become liable to do so, except Permitted Liens.
7.2.3 Guaranties.
----------
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time, directly or indirectly, become or be liable in
respect of any Guaranty, or assume, guarantee, become surety for, endorse or
otherwise agree, become or remain directly or contingently liable upon or with
respect to any obligation or liability of any other Person, except for
Guaranties of Indebtedness of the Loan Parties permitted hereunder and except or
contemplated in the Subordination Agreement.
7.2.4 Loans and Investments.
---------------------
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time make or suffer to remain outstanding any loan or
advance to, or purchase, acquire or own any stock, bonds, notes or securities
of, or any partnership interest (whether general or limited) or limited
liability company interest in, or any other investment or interest in, or make
any capital contribution to, any other Person, or agree, become or remain liable
to do any of the foregoing, except:
(i) trade credit extended on usual and
customary terms in the ordinary course of business and Loans to employees not to
exceed $100,000 outstanding at any one time;
(ii) advances to employees to meet expenses
incurred by such employees in the ordinary course of business and other loans to
employees not to exceed $100,000 outstanding at any one time;
(iii) Permitted Investments; and
(iv) loans, advances and investments in other
Loan Parties.
7.2.5 Dividends and Related Distributions.
-----------------------------------
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, make or pay, or agree to become or remain liable to make or
pay, any dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of its shares of
capital stock, partnership interests or limited liability company interests on
account of the purchase, redemption, retirement or acquisition of its shares of
capital stock (or warrants, options or rights therefor), partnership interests
or limited liability company interests, except dividends or other distributions
payable to another Loan Party.
49
7.2.6 Liquidations, Mergers, Consolidations, Acquisitions.
---------------------------------------------------
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, dissolve, liquidate or wind-up its affairs, or become a party
to any merger or consolidation, or acquire by purchase, lease or otherwise all
or substantially all of the assets or capital stock of any other Person,
provided that:
--------
(i) any Loan Party other than the Borrower may consolidate or merge
into another Loan Party which is wholly-owned by one or more of the other Loan
Parties;
(ii) the Borrower may acquire for not more than $3,000,000 the
business assets of another Person related to provision of background or
foreground music services if the following conditions are met as to this item
(ii): (a) such assets are acquired by the Borrower or a Subsidiary of the
Borrower, (b) any Subsidiary of the Borrower established in connection with the
acquisition shall become a Guarantor pursuant to the terms of this Agreement,
including Section 10.18 hereof, (c) no Potential Default or Event of Default
shall exist after such acquisition; (d) upon and after the completion of such
acquisition, the Commitments exceed the Revolving Credit Usage by at least
$2,000,000 and (e) the Borrower has delivered to the Banks financial analyses of
such acquisition demonstrating to the reasonable satisfaction of the Agent and
the Banks pro forma compliance with the financial covenants set forth in
--- -----
Sections 7.2.16, 7.2.17 and 7.2.18 after such acquisition.
7.2.7 Dispositions of Assets or Subsidiaries.
--------------------------------------
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, sell, convey, assign, lease, abandon or otherwise transfer or
dispose of, voluntarily or involuntarily, any of its properties or assets,
tangible or intangible (including sale, assignment, discount or other
disposition of accounts, contract rights, chattel paper, equipment or general
intangibles with or without recourse or of capital stock, shares of beneficial
interest, partnership interests or limited liability company interests of a
Subsidiary of such Loan Party), except:
(i) transactions involving the sale or lease of
inventory or sale or lease of equipment in the ordinary course of business;
(ii) any sale, transfer or lease of assets by any
wholly owned Subsidiary of such Loan Party to another Loan Party;
(iii) any sale, transfer or lease of assets having
a value not in excess of $500,000 which are replaced by substitute assets
acquired or leased within the parameters of Section 7.2.15, provided such
--------
substitute assets are subject to the Banks' Prior Security Interest; or
(iv) any sale, transfer or lease of assets, other
than those specifically excepted pursuant to clauses (i) through (iii) above,
which is approved by the Required Banks so long as the proceeds (net of amounts
to repay any Indebtedness secured by Permitted Liens on such assets, taxes,
direct cost expenses, including legal fees, as reasonably calculated by the
Borrower) are applied as a mandatory prepayment of the Commitments in accordance
with the provisions of Section 4.5
50
above except that such proceeds not exceeding $100,000 may be retained by the
Borrower.
Affiliate Transactions; Advances.
--------------------------------
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, enter into or carry out any transaction (including purchasing
property or services from or selling property or services) with any Affiliate of
any Loan Party unless such transaction is not otherwise prohibited by this
Agreement, is entered into in the ordinary course of business upon fair and
reasonable arm's-length terms and conditions which are fully disclosed to the
Agent and is in accordance with all applicable Law. The employment and option
agreements described in Schedule 7.2.8 shall not be deemed to violate this
--------------
Section 7.2.8.
7.2.9 Subsidiaries, Partnerships and Joint Ventures.
---------------------------------------------
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, own or create directly or indirectly any Subsidiaries other
than (i) any Subsidiary which has joined this Agreement as Guarantor on the
Closing Date; and (ii) any Subsidiary formed after the Closing Date which joins
this Agreement as a Guarantor pursuant to Section 10.18, provided that the
Required Banks shall have consented to such formation and joinder and that such
Subsidiary and the Loan Parties, as applicable, shall grant and cause to be
perfected first priority Liens to the Agent for the benefit of the Banks in the
assets held by, and stock of or other ownership interests in, such Subsidiary.
No Loan Party shall become or agree to become (1) a general or limited partner
in any general or limited partnership, except that the Loan Parties may be
general or limited partners in other Loan Parties, (2) a member or manager of,
or hold a limited liability company interest in, a limited liability company,
except that the Loan Parties may be members or managers of, or hold limited
liability company interests in, other Loan Parties, or (3) a joint venturer or
hold a joint venture interest in any joint venture.
7.2.10 Continuation of or Change in Business.
-------------------------------------
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, engage in any business other than substantially as conducted
and operated by such Loan Party or Subsidiary during the present fiscal year,
and such Loan Party or Subsidiary shall not permit any material change in such
business.
7.2.11 Plans and Benefit Arrangements.
------------------------------
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to:
(i) fail to satisfy the minimum funding requirements
of ERISA and the Internal Revenue Code with respect to any Plan;
(ii) engage in a Prohibited Transaction with any Plan,
Benefit Arrangement or Multiemployer Plan which would constitute a Material
Adverse Change;
51
permit the aggregate actuarial present value of all vested benefit liabilities
under each Plan as disclosed in the most recent actuarial report completed with
respect to such Plan, if any, to exceed, as of any actuarial valuation date, the
fair market value of the assets of such Plan;
(iv) after receipt of notice from any Multiemployer
Plan, fail to make any contribution to such Multiemployer Plan that the Borrower
or any member of the ERISA Group may be required to make under any agreement
relating to such Multiemployer Plan;
(v) withdraw (completely or partially) from any
Multiemployer Plan or withdraw (or be deemed under Section 4062(e) of ERISA to
withdraw) from any Multiple Employer Plan, where any such withdrawal is likely
to result in a Material Adverse Change;
(vi) terminate, or institute proceedings to terminate,
any Plan, where such termination is likely to result in a Material Adverse
Change;
(vii) make any amendment to any Plan, with respect to
which amendment, security is required under Section 307 of ERISA; or
(viii) fail to give any and all notices and make all
disclosures and governmental filings required under ERISA or the Internal
Revenue Code, where such failure is likely to result in a Material Adverse
Change.
7.2.12 Fiscal Year.
-----------
The Borrower shall not, and shall not permit any Subsidiary of the
Borrower to, change its fiscal year end from December 31.
7.2.13 Issuance of Stock.
-----------------
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, issue any additional shares of its capital stock or any
options, warrants or other rights in respect thereof, except for: (a) in
accordance with Section 4.5.3, (b) the Warrant and (c) stock of the Borrower
issued to employees, directors or representatives of any of the Loan Parties
pursuant to stock option or stock purchase plans, employment contracts, as fees
or compensation or otherwise in the ordinary course of business.
7.2.14 Changes in Documents; Restrictive Agreements.
--------------------------------------------
.2.14.1 Each of the Loan Parties shall not, and shall
not permit any of its Subsidiaries to, amend in any respect its certificate of
incorporation (including any provisions or resolutions relating to capital
stock), by-laws, certificate of limited partnership, partnership agreement,
certificate of formation, limited liability company agreement or other
organizational documents without providing at least thirty (30) calendar days'
prior written notice to the Agent and the Banks and, in the event such change
would be materially adverse to the Banks as determined by the Agent in its sole
discretion, obtaining the prior written consent of the Required Banks.
52
.2.14.2 Each of the Loan Parties shall not, and shall not
permit any Subsidiary to, amend or modify any provision of any of the documents
relating to amounts owing to Subordinated Lender, including the Subordination
Agreement.
.2.14.3 The Borrower and Acquisition Subsidiary shall
not, and shall not permit any Subsidiary to agree to restrict or limit the
granting of any Lien to the Agent or any Bank or, except as provided in the Loan
Documents, the declaration or payment of any dividend to the Borrower.
7.2.15 Capital Expenditures and Leases.
-------------------------------
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, make any payments in the aggregate in any fiscal year on
account of the purchase or lease of any assets which if purchased would
constitute fixed assets or which if leased would constitute a capitalized lease
which exceed the amount set forth below:
Year Limit ($)
---- -----
1997 4,000,000
1998 3,900,000
1999 4,100,000
2000 4,250,000
2001 4,450,000
2002 4,650,000
2003 4,900,000
Up to $1,000,000 of any such amount not used in such year may be applied to
increase the permitted amount for the immediately following year provided no
Potential Default or Event of Default would otherwise be caused thereby.
7.2.16 Minimum Fixed Charge Coverage Ratio.
-----------------------------------
The Loan Parties shall not permit the Fixed Charge Coverage Ratio,
calculated as of the end of each fiscal quarter for the prior four (4) fiscal
quarters (or if such period does not include the four (4) fiscal quarters after
the Closing Date, for the number of full fiscal quarters which have elapsed
since the Closing Date), to be less than 1.05 to 1.0 from the Closing Date until
December 31, 1998 and 1.1 to 1.0 thereafter.
53
Maximum Leverage Ratio.
----------------------
The Loan Parties shall not at any time permit the Leverage Ratio for the prior
four (4) fiscal quarters to exceed the ratio set forth below for the periods
specified below:
Period Ratio
------------
Closing Date through December 30, 19984.0:1
December 31, 1998 through December 30, 19993.5:1
December 31, 1999 through December 30, 20003.0:1
December 31, 2000 through December 30, 20032.5:1
December 31, 2003 and thereafter2.25:1
For the following periods in 1997 only, the Leverage Ratio shall be
calculated by multiplying the EBITDA by the following factors: for the fiscal
quarter ended June 30, 1997, the factor is 4; for the two fiscal quarters ended
September 30, 1997, the factor is 2; and for the three fiscal quarters December
31, 1997, the factor is 4/3. Calculations in respect of the EBITDA for the
fiscal quarter ending June 30, 1997 shall be adjusted by including on a pro
forma basis Suncom's results from April 1, 1997 through the Closing Date.
7.2.18 Minimum Interest Coverage Ratio.
-------------------------------
The Loan Parties shall not permit the Interest Coverage Ratio calculated as
of the end of each fiscal quarter for the prior four (4) fiscal quarters (or if
such period does not include the four (4) fiscal quarters after the Closing
Date, for the number of full fiscal quarters which have elapsed since the
Closing Date), to be less than the ratio set forth below for the four period
specified below:
Period Ratio
------------
Closing Date through December 30, 19982.25:1
December 31, 1998 through December 30, 19992.50:1
December 31, 1999 through December 30, 20002.75:1
December 31, 2000 and thereafter3.00:1
7.2.19 Attrition Limitations.
---------------------
The Loan Parties shall not permit the Attrition Rate in any two (2) consecutive
fiscal quarters to exceed 10%.
54
7.3 Reporting Requirements.
----------------------
The Loan Parties, jointly and severally, covenant and agree that until
payment in full of the Loans and interest thereon and satisfaction of all of the
Loan Parties' other Obligations hereunder and under the other Loan Documents and
termination of the Commitments, the Loan Parties will furnish or cause to be
furnished to the Agent and each of the Banks:
7.3.1 Quarterly Financial Statements.
------------------------------
As soon as available and in any event within forty-five (45) calendar days
after the end of each of the first three fiscal quarters in each fiscal year,
financial statements of the Borrower, consisting of a consolidated and
consolidating balance sheet as of the end of such fiscal quarter and related
consolidated and consolidating statements of income, stockholders' equity and
cash flows for the fiscal quarter then ended and the fiscal year through that
date, all in reasonable detail and certified (subject to normal year-end audit
adjustments) by the Chief Executive Officer, President or Chief Financial
Officer of the Borrower as having been prepared in accordance with GAAP,
consistently applied, and setting forth in comparative form the respective
financial statements for the corresponding date and period in the previous
fiscal year.
7.3.2 Annual Financial Statements.
---------------------------
As soon as available and in any event within ninety (90) days after the end
of each fiscal year of the Borrower, financial statements of the Borrower
consisting of a consolidated and consolidating balance sheet as of the end of
such fiscal year, and related consolidated and consolidating statements of
income, stockholders' equity and cash flows for the fiscal year then ended, all
in reasonable detail and setting forth in comparative form the financial
statements as of the end of and for the preceding fiscal year, and certified by
independent certified public accountants of nationally recognized standing
satisfactory to the Agent. The certificate or report of accountants shall be
free of qualifications (other than any consistency qualification that may result
from a change in the method used to prepare the financial statements as to which
such accountants concur) and shall not indicate the occurrence or existence of
any event, condition or contingency which would materially impair the prospect
of payment or performance of any covenant, agreement or duty of any Loan Party
under any of the Loan Documents. The Loan Parties shall deliver with such
financial statements and certification by their accountants a letter of such
accountants to the Agent and the Banks substantially (i) to the effect that,
based upon their ordinary and customary examination of the affairs of the
Borrower, performed in connection with the preparation of such consolidated
financial statements, and in accordance with generally accepted auditing
standards, they are not aware of the existence of any condition or event which
constitutes an Event of Default or Potential Default or, if they are aware of
such condition or event, stating the nature thereof and confirming the
Borrower's calculations with respect to the certificate to be delivered pursuant
to Section 7.3.3 with respect to such financial statements and (ii) to the
effect that the Banks are intended to rely upon such accountant's certification
of the annual financial statements and that such accountants authorize the Loan
Parties to deliver such reports and certificate to the Banks on such
accountants' behalf.
55
7.3.3 Certificate of the Borrower.
---------------------------
Concurrently with the financial statements of the Borrower furnished to the
Agent and to the Banks pursuant to Sections 7.3.1 and 7.3.2 a certificate of the
Borrower signed by the Chief Executive Officer, President or Chief Financial
Officer of the Borrower, in the form of Exhibit 8.3.4, to the effect that,
-------------
except as described pursuant to Section 7.3.4, (i) the representations and
warranties of the Borrower contained in Section 5 and in the other Loan
Documents are true on and as of the date of such certificate (after taking into
account schedule revisions and updates pursuant to Section 5.2) with the same
effect as though such representations and warranties had been made on and as of
such date (except for representations and warranties which expressly relate
solely to an earlier date or time) and the Loan Parties have performed and
complied with all covenants and conditions hereof, (ii) no Event of Default or
Potential Default exists and is continuing on the date of such certificate and
(iii) containing calculations in sufficient detail to demonstrate compliance as
of the date of such financial statements with all financial covenants contained
in Section 7.2. The certificate delivered with the annual financial statements
pursuant to Section 7.3.2 shall include a determination in reasonable detail of
the Excess Cash Flow and the amount of the mandatory prepayment of Excess Cash
Flow pursuant to Section 4.5.1 applicable to such fiscal year.
7.3.4 Notice of Default.
-----------------
Promptly after any officer of any Loan Party has learned of the occurrence
of an Event of Default or Potential Default, a certificate signed by the Chief
Executive Officer, President or Chief Financial Officer of such Loan Party
setting forth the details of such Event of Default or Potential Default and the
action which the such Loan Party proposes to take with respect thereto.
7.3.5 Notice of Litigation.
--------------------
Promptly after the commencement thereof, notice of all actions, suits,
proceedings or investigations before or by any Official Body or any other Person
against any Loan Party or Subsidiary of any Loan Party which relate to the
Collateral, involve a claim or series of claims outstanding for more than thirty
(30) days or in excess of $250,000 in the aggregate or which if adversely
determined would constitute a Material Adverse Change.
7.3.6 Certain Events.
--------------
Written notice to the Agent:
(i) at least thirty (30) calendar days prior thereto, with respect to
any proposed sale or transfer of assets pursuant to Section 7.2.7(iii) or (iv),
(ii) within the time limits set forth in Section 7.2.14, any amendment
to the organizational documents of any Loan Party; and
(iii) at least thirty (30) calendar days prior thereto, with respect to
any change in any Loan Party's locations from the locations set forth in
Schedule A to the Security Agreement.
----------
56
Budgets, Forecasts, Other Reports and Information.
-------------------------------------------------
Promptly upon their becoming available to the Borrower:
(i) the annual budget and any forecasts or projections of the
Borrower, to be supplied not later than thirty (30) days prior to commencement
of the fiscal year to which any of the foregoing may be applicable (but, in the
case of such forecasts or projections in respect of fiscal year 1998, at any
time on or before December 31, 1997),
(ii) any reports including management letters submitted to the
Borrower by independent accountants in connection with any annual, interim or
special audit,
(iii) any reports, notices or proxy statements generally distributed by
the Borrower to its stockholders on a date no later than the date supplied to
such stockholders,
(iv) regular or periodic reports, including Forms 10-K, 10-Q and 8-K,
registration statements and prospectuses, filed by the Borrower with the
Securities and Exchange Commission,
(v) a copy of any order in any proceeding to which the Borrower or
any of its Subsidiaries is a party issued by any Official Body,
(vi) reports of the type described in Section 6.1.15, and
(vii) such other reports and information as any of the Banks may from
time to time reasonably request. The Borrower shall also notify the Banks
promptly upon the Borrower becoming aware of the enactment or adoption of any
Law which may result in a Material Adverse Change.
7.3.8 Notices Regarding Plans and Benefit Arrangements.
------------------------------------------------
.3.8.1 Certain Events
--------------
Within thirty (30) days after becoming aware of the occurrence thereof,
notice (including the nature of the event and, when known, any action taken or
threatened by the Internal Revenue Service or the PBGC with respect thereto) of:
(i) notice of any Reportable Event with respect to the Borrower or
any other member of the ERISA Group is provided to the PBGC,
(ii) any Prohibited Transaction which could subject the Borrower or
any other member of the ERISA Group to a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the Internal Revenue
Code in connection with any Plan, any Benefit Arrangement or any trust created
thereunder, and which penalty or tax is likely to result in a Material Adverse
Change,
(iii) the Borrower or any member of the ERISA Group receives notice of
assessment of withdrawal liability with respect to any Multiemployer Plan, which
is likely to result in a Material Adverse Change,
57
(iv) any cessation of operations (by the Borrower or any other member
of the ERISA Group) at a facility in the circumstances described in Section 4062
(e) of ERISA which is likely to result in a Material Adverse Change,
(v) withdrawal by the Borrower or any other member of the ERISA Group
from a Multiple Employer Plan which is likely to result in a Material Adverse
Change,
(vi) a failure by the Borrower or any other member of the ERISA Group
to make a contribution to a Plan required to avoid imposition of a Lien under
Section 302(f) of ERISA,
(vii) the adoption of an amendment to a Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA, or
(viii) any change in the actuarial assumptions or funding methods used
for any Plan, where the effect of such change is likely to result in a Material
Adverse Change.
.3.8.2 Notices of Involuntary Termination and Annual Reports.
-----------------------------------------------------
Within thirty (30) days after receipt thereof, copies of all notices
received by the Borrower or any other member of the ERISA Group of the PBGC's
intent to terminate any Plan administered or maintained by the Borrower or any
member of the ERISA Group, or to have a trustee appointed to administer any such
Plan; and at the request of the Agent or any Bank, the most recent annual report
(IRS Form 5500 series) and all accompanying schedules filed with the Internal
Revenue Service and the most recent actuarial reports, if any, of each Plan
maintained by the Borrower or any other member of the ERISA Group.
.3.8.3 Notice of Voluntary Termination.
-------------------------------
Promptly upon the filing thereof, copies of any Form 5310, or any successor
to Form 5310 required to be, filed with the PBGC in connection with the
termination of any Plan.
DEFAULT
-------
8.1 Events of Default.
-----------------
An Event of Default shall mean the occurrence or existence of any one or
more of the following events or conditions (whatever the reason therefor and
whether voluntary, involuntary or effected by operation of Law):
58
8.1.1 Payments Under Loan Documents.
-----------------------------
The Borrower shall fail to pay any principal of any Loan (including
mandatory prepayments or the payment due at maturity) or shall fail to pay any
interest on any Loan or, after such principal, interest or other amount becomes
due in accordance with the terms hereof or thereof or shall fail to pay any
other Obligations or any other amount owing hereunder or under the other Loan
documents ten (10) days after notice is given to the Borrower thereof;
8.1.2 Breach of Warranty.
------------------
Any representation or warranty made at any time by any of the Loan
Parties herein or by any of the Loan Parties in any other Loan Document, or in
any certificate, other instrument or statement furnished pursuant to the
provisions hereof or thereof, shall prove to have been false or misleading in
any material respect as of the time it was made or furnished;
8.1.3 Breach of Covenants, etc.
-------------------------
Any of the Loan Parties shall default in the observance or performance
of any covenant contained in Section 7.2 (other than Section 7.2 and 7.2) or
Section 7.2 (other than Section 7.2.11);
8.1.4 Breach of Other Covenants.
-------------------------
Any of the Loan Parties shall default in the observance or performance
of any other covenant, condition or provision hereof or of any other Loan
Document and such default shall continue unremedied for a period of fifteen (15)
Business Days after any officer of any Loan Party becomes aware of the
occurrence thereof (such grace period to be applicable only in the event such
default can be remedied by corrective action of the Loan Parties as determined
by the Agent in its sole discretion);
8.1.5 Defaults in Other Agreements or Indebtedness.
--------------------------------------------
A default or event of default shall occur at any time under the terms of
any other agreement involving borrowed money or the extension of credit or any
other Indebtedness under which any Loan Party or Subsidiary of any Loan Party
may be obligated as a borrower or guarantor in excess of $250,000 in the
aggregate, and such breach, default or event of default consists of the failure
to pay (beyond any period of grace permitted with respect thereto, and is not
otherwise waived by the holder thereof) any indebtedness when due (whether at
stated maturity, by acceleration or otherwise) or if such breach or default
permits or causes the acceleration of any indebtedness or the termination of any
commitment to lend and is not otherwise waived by the holder thereof. (Without
limiting the foregoing, a default under the Note Assumption Agreement dated as
of the Closing Date between Subordinated Lender and certain of the Loan Parties
shall, after the expiration of any applicable notice or cure periods provided
for therein, be an Event of Default hereunder, irrespective of (and specifically
in recognition of) any differences between the default provisions of this
Agreement and such Note Assumption Agreement);
59
8.1.6 Final Judgments or Orders.
-------------------------
Any final judgments or orders for the payment of money the uninsured
portion of which is in excess of $250,000 in the aggregate shall be entered
against any Loan Party by a court having jurisdiction in the premises, which
judgment is not discharged, vacated, bonded or stayed pending appeal within a
period of thirty (30) days from the date of entry;
8.1.7 Loan Document Unenforceable.
---------------------------
Any of the Loan Documents shall cease to be legal, valid and binding
agreements enforceable against the party executing the same or such party's
successors and assigns (as permitted under the Loan Documents) in accordance
with the respective terms thereof or shall in any way be terminated (except in
accordance with its terms) or become or be declared ineffective or inoperative
or shall in any way be challenged or contested or cease to give or provide the
respective Liens, security interests, rights, titles, interests, remedies,
powers or privileges intended to be created thereby;
8.1.8 Uninsured Losses; Proceedings Against Assets.
--------------------------------------------
There shall occur any material uninsured damage to or loss, theft or
destruction of any of the Collateral in excess of $250,000 or the Collateral or
any other of the Loan Parties' or any of their Subsidiaries' assets are
attached, seized, levied upon or subjected to a writ or distress warrant; or
such come within the possession of any receiver, trustee, custodian or assignee
for the benefit of creditors and the same is not cured, bonded against, stayed
or dismissed within thirty (30) days thereafter;
8.1.9 Notice of Lien or Assessment.
----------------------------
A notice of Lien or assessment in excess of $250,000 which is not a
Permitted Lien is filed of record with respect to all or any part of any of the
Loan Parties' or any of their Subsidiaries' assets by the United States, or any
department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, including the PBGC, or any taxes or
debts owing at any time or times hereafter to any one of these becomes payable
and the same is not paid, stayed or bonded within thirty (30) days after the
same becomes payable (except to the extent such is being contested in good faith
and appropriate reserves have been taken under GAAP on the financial statements
of the Borrower);
Insolvency.
----------
Any Loan Party or any Subsidiary of a Loan Party ceases to be solvent or
admits in writing its inability to pay its debts as they mature;
60
8.1.11 Events Relating to Plans and Benefit
------------------------------------
Arrangements.
------------
Notwithstanding the provisions of Section 8.1.3, any of the following
occurs: (i) notice is provided to the PBGC of any Reportable Event, which the
Agent determines in good faith constitutes grounds for the termination of any
Plan by the PBGC or the appointment of a trustee to administer or liquidate any
Plan, and such Reportable Event is continuing; (ii) proceedings shall have been
instituted or other action taken by the PBGC to terminate any Plan; (iii) a
trustee shall be appointed to administer or liquidate any Plan; (iv) the PBGC
shall give notice of its intent to institute proceedings to terminate any Plan
or Plans or to appoint a trustee to administer or liquidate any Plan; (v) the
Borrower or any other member of the ERISA Group shall make any amendment to a
Plan with respect to which security is required under Section 307 of ERISA; (vi)
the Borrower or any other member of the ERISA Group shall withdraw completely or
partially from a Multiemployer Plan; (vii) the Borrower or any other member of
the ERISA Group shall withdraw (or shall be deemed under Section 4062(e) of
ERISA to withdraw) from a Multiple Employer Plan; and, with respect to any of
the events specified in (i), (ii), (iii), (iv), (v), (vi), or (vii), the Agent
determines in good faith that any such occurrence would result in a Material
Adverse Change;
8.1.12 Cessation of Business.
---------------------
Any Loan Party or Subsidiary of a Loan Party ceases to conduct its
business as contemplated, except as expressly permitted under Section 7.2.6 or
7.2.7, or any Loan Party or Subsidiary of a Loan Party is enjoined, restrained
or in any way prevented by court order from conducting all or any material part
of its business and such injunction, restraint or other preventive order is not
dismissed or stayed within thirty (30) days after the entry thereof;
8.1.13 Change of Control.
-----------------
There shall occur either of the following: (i) Suncom shall cease to be
represented on the board of directors of the Borrower by fewer than four (4)
directors and fewer than five (5) directors from and after the date of the
Borrower's annual shareholders meeting next following the Closing Date, or (ii)
Suncom owns less than 51% of the voting control of the Borrower, or (iii) both
Xxxxxxxx Xxxxxxxxxxxx and Xxxxx X. Xxxxx shall cease to be president and
executive vice president, respectively, of the Borrower, or (iv) both Xxxxxxxx
Xxxxxxxxxxxx and Xxxxx X. Xxxxx shall cease being managing members, directly or
indirectly, of Suncom;
61
8.1.14 Involuntary Proceedings.
-----------------------
A proceeding shall have been instituted in a court having jurisdiction
in the premises seeking a decree or order for relief in respect of any Loan
Party or Subsidiary of a Loan Party in an involuntary case under any applicable
bankruptcy, insolvency, reorganization or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator, conservator (or similar official) of any Loan Party or
Subsidiary of a Loan Party for any substantial part of its property, or for the
winding-up or liquidation of its affairs, and such proceeding shall remain
undismissed or unstayed and in effect for a period of sixty (60) consecutive
days or such court shall enter a decree or order granting any of the relief
sought in such proceeding; or
8.1.15 Voluntary Proceedings.
---------------------
Any Loan Party or Subsidiary of a Loan Party shall commence a voluntary
case under any applicable bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect, shall consent to the entry of an order
for relief in an involuntary case under any such law, or shall consent to the
appointment or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator, conservator (or other similar official) of itself or for
any substantial part of its property or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any action in furtherance of any of the foregoing.
8.2 Consequences of Event of Default.
--------------------------------
8.2.1 Events of Default Other Than Bankruptcy,
----------------------------------------
Insolvency or Reorganization Proceedings.
----------------------------------------
If an Event of Default specified under Sections 8.1.1 through 8.1.13
shall occur and be continuing, the Banks and the Agent shall be under no further
obligation to make Loans and the Agent may, and upon the request of the Required
Banks, shall by written notice to the Borrower, declare the unpaid principal
amount of the Notes then outstanding and all interest accrued thereon, any
unpaid fees and all other Indebtedness of the Borrower to the Banks hereunder
and thereunder to be forthwith due and payable, and the same shall thereupon
become and be immediately due and payable to the Agent for the benefit of each
Bank without presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived; and
8.2.2 Bankruptcy, Insolvency or Reorganization
----------------------------------------
Proceedings.
-----------
If an Event of Default specified under Section 8.1.14 or 8.1.15 shall
occur, the Banks shall be under no further obligations to make Loans hereunder
and the unpaid principal amount of the then outstanding and all interest accrued
thereon, any unpaid fees and all other Indebtedness of the Borrower to the Banks
hereunder and thereunder shall be immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived; and
62
Set-off.
-------
If an Event of Default shall occur and be continuing, any Bank to whom
any Obligation is owed by any Loan Party hereunder or under any other Loan
Document or any participant of such Bank which has agreed in writing to be bound
by the provisions of Section 9.13 and any branch, Subsidiary or Affiliate of
such Bank or participant anywhere in the world shall have the right, in addition
to all other rights and remedies available to it, without notice to such Loan
Party, to set-off against and apply to the then unpaid balance of all the Loans
and all other Obligations of the Borrower and the other Loan Parties hereunder
or under any other Loan Document any debt owing to, and any other funds held in
any manner for the account of, the Borrower or such other Loan Party by such
Bank or participant or by such branch, Subsidiary or Affiliate, including all
funds in all deposit accounts (whether time or demand, general or special,
provisionally credited or finally credited, or otherwise) now or hereafter
maintained by the Borrower or such other Loan Party for its own account (but not
including funds held in custodian or trust accounts) with such Bank or
participant or such branch, Subsidiary or Affiliate. Such right shall exist
whether or not any Bank or the Agent shall have made any demand under this
Agreement or any other Loan Document, whether or not such debt owing to or funds
held for the account of the Borrower or such other Loan Party is or are matured
or unmatured and regardless of the existence or adequacy of any Collateral,
Guaranty or any other security, right or remedy available to any Bank or the
Agent; and
8.2.4 Suits, Actions, Proceedings.
---------------------------
If an Event of Default shall occur and be continuing, and whether or not
the Agent shall have accelerated the maturity of Loans pursuant to any of the
foregoing provisions of this Section 8.2, the Agent or any Bank, if owed any
amount with respect to the Notes may proceed to protect and enforce its rights
by suit in equity, action at law and/or other appropriate proceeding, whether
for the specific performance of any covenant or agreement contained in this
Agreement or the Notes, including as permitted by applicable Law the obtaining
of the ex parte appointment of a receiver, and, if such amount shall have become
-- -----
due, by declaration or otherwise, proceed to enforce the payment thereof or any
other legal or equitable right of the Agent or such Bank; and
8.2.5 Application of Proceeds.
-----------------------
From and after the date on which the Agent has taken any action pursuant
to this Section 8.2 and until all Obligations of the Loan Parties have been paid
in full, any and all proceeds received by the Agent from any sale or other
disposition of the Collateral, or any part thereof, or the exercise of any other
remedy by the Agent, shall be applied as follows:
(i) first, to reimburse the Agent and the
Banks for out-of-pocket costs, expenses and disbursements, including reasonable
attorneys' and paralegals' fees and legal expenses, incurred by the Agent or the
Banks in connection with realizing on the Collateral or collection of any
Obligations of any of the Loan Parties under any of the Loan Documents,
including advances made by the Banks or any one of them or the Agent for the
reasonable maintenance, preservation, protection or enforcement of, or
realization upon, the Collateral, including advances for taxes, insurance,
repairs and the like and reasonable expenses incurred to sell or otherwise
realize on, or prepare for sale or other realization
63
on, any of the Collateral;
(ii) second, to the repayment of all
Indebtedness then due and unpaid of the Loan Parties to the Banks incurred under
this Agreement or any of the other Loan Documents, whether of principal,
interest, fees, expenses or otherwise, in such manner as the Agent may determine
in its discretion; and
(iii) the balance, if any, as required by
Law.
8.2.6 Other Rights and Remedies.
-------------------------
In addition to all of the rights and remedies contained in this
Agreement or in any of the other Loan Documents, the Agent shall have all of the
rights and remedies of a secured party under the Uniform Commercial Code or
other applicable Law, all of which rights and remedies shall be cumulative and
non-exclusive, to the extent permitted by Law. The Agent may, and upon the
request of the Required Banks shall, exercise all post-default rights granted to
the Agent and the Banks under the Loan Documents or applicable Law.
8.3 Notice of Sale.
--------------
Any notice required to be given by the Agent of a sale, lease,
or other disposition of the Collateral or any other intended action by the
Agent, if given ten (10) Business Days prior to such proposed action, shall
constitute commercially reasonable and fair notice thereof to the Borrower.
9.THE AGENT
---------
9.1 Appointment.
-----------
Each Bank hereby irrevocably designates, appoints and
authorizes PNC Bank to act as Agent for such Bank under this Agreement and to
execute and deliver or accept on behalf of each of the Banks the other Loan
Documents. Each Bank hereby irrevocably authorizes, and each holder of any Note
by the acceptance of a Note shall be deemed irrevocably to authorize, the Agent
to take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and any other instruments and agreements referred to
herein, and to exercise such powers and to perform such duties hereunder as are
specifically delegated to or required of the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. PNC Bank agrees to act as
the Agent on behalf of the Banks to the extent provided in this Agreement.
64
Delegation of Duties.
--------------------
The Agent may perform any of its duties hereunder by or
through agents or employees (provided such delegation does not constitute a
--------
relinquishment of its duties as Agent) and, subject to Sections 9.5 and 9.6,
shall be entitled to engage and pay for the advice or services of any attorneys,
accountants or other experts concerning all matters pertaining to its duties
hereunder and to rely upon any advice so obtained.
9.3 Nature of Duties; Independent Credit Investigation.
--------------------------------------------------
The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and no implied covenants, functions,
responsibilities, duties, obligations, or liabilities shall be read into this
Agreement or otherwise exist. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement a
fiduciary or trust relationship in respect of any Bank; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement except as
expressly set forth herein. Without limiting the generality of the foregoing,
the use of the term "agent" in this Agreement with reference to the Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable Law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties. Each
Bank expressly acknowledges (i) that the Agent has not made any representations
or warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of any of the Loan Parties, shall be deemed to constitute
any representation or warranty by the Agent to any Bank; (ii) that it has made
and will continue to make, without reliance upon the Agent, its own independent
investigation of the financial condition and affairs and its own appraisal of
the creditworthiness of each of the Loan Parties in connection with this
Agreement and the making and continuance of the Loans hereunder; and (iii)
except as expressly provided herein, that the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Bank
with any credit or other information with respect thereto, whether coming into
its possession before the making of any Loan or at any time or times thereafter.
65
9.4 Actions in Discretion of Agent; Instructions From the Banks.
-----------------------------------------------------------
The Agent agrees, upon the written request of the Required Banks, to take
or refrain from taking any action of the type specified as being within the
Agent's rights, powers or discretion herein, provided that the Agent shall not
--------
be required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement or any other Loan Document or applicable
Law. In the absence of a request by the Required Banks, the Agent shall have
authority, in its sole discretion, to take or not to take any such action,
unless this Agreement specifically requires the consent of the Required Banks or
all of the Banks. Any action taken or failure to act pursuant to such
instructions or discretion shall be binding on the Banks, subject to Section
9.6. Subject to the provisions of Section 9.6, no Bank shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Banks, or in the absence of such instructions, in the absolute
discretion of the Agent.
9.5 Reimbursement and Indemnification of Agent by the Borrower.
----------------------------------------------------------
The Borrower unconditionally agrees to pay or reimburse the Agent and hold
the Agent harmless against (a) liability for the payment of all reasonable out-
of-pocket costs, expenses and disbursements, including fees and expenses of
counsel (including the allocated costs of staff counsel), appraisers and
environmental consultants, incurred by the Agent (i) in connection with the
development, negotiation, preparation, printing, execution, administration,
syndication, interpretation and performance of this Agreement and the other Loan
Documents, (ii) relating to any requested amendments, waivers or consents
pursuant to the provisions hereof, (iii) in connection with the enforcement of
this Agreement or any other Loan Document or collection of amounts due hereunder
or thereunder or the proof and allowability of any claim arising under this
Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and (iv) in any workout or restructuring or in
connection with the protection, preservation, exercise or enforcement of any of
the terms hereof or of any rights hereunder or under any other Loan Document or
in connection with any foreclosure, collection or bankruptcy proceedings, and
(b) all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent,
in its capacity as such, in any way relating to or arising out of this Agreement
or any other Loan Documents or any action taken or omitted by the Agent
hereunder or thereunder, provided that the Borrower shall not be liable for any
--------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements if the same results from the
Agent's gross negligence or willful misconduct, or if the Borrower was not given
notice of the subject claim and the opportunity to participate in the defense
thereof, at its expense (except that the Borrower shall remain liable to the
extent such failure to give notice does not result in a loss to the Borrower),
or if the same results from a compromise or settlement agreement entered into
without the consent of the Borrower, which shall not be unreasonably withheld.
In addition, the Borrower agrees to reimburse and pay all reasonable out-of-
pocket expenses of the Agent's regular employees and agents engaged periodically
to perform audits of the Loan Parties' books, records and business properties;
the Agent will seek such reimbursement for no more than two (2) such audits in
each year unless they are conducted during or incident to an Event of Default.
66
9.6 Exculpatory Provisions; Limitation of Liability.
-----------------------------------------------
Neither the Agent nor any of its directors, officers, employees, agents,
attorneys or Affiliates shall (a) be liable to any Bank for any action taken or
omitted to be taken by it or them hereunder, or in connection herewith including
pursuant to any Loan Document, unless caused by its or their own gross
negligence or willful misconduct, (b) be responsible in any manner to any of the
Banks for the effectiveness, enforceability, genuineness, validity or the due
execution of this Agreement or any other Loan Documents or for any recital,
representation, warranty, document, certificate, report or statement herein or
made or furnished under or in connection with this Agreement or any other Loan
Documents, or (c) be under any obligation to any of the Banks to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions hereof or thereof on the part of the Loan Parties, or the financial
condition of the Loan Parties, or the existence or possible existence of any
Event of Default or Potential Default. No claim may be made by any of the Loan
Parties, any Bank, the Agent or any of their respective Subsidiaries against the
Agent, any Bank or any of their respective directors, officers, employees,
agents, attorneys or Affiliates, or any of them, for any special, indirect or
consequential damages or, to the fullest extent permitted by Law, for any
punitive damages in respect of any claim or cause of action (whether based on
contract, tort, statutory liability, or any other ground) based on, arising out
of or related to any Loan Document or the transactions contemplated hereby or
any act, omission or event occurring in connection therewith, including the
negotiation, documentation, administration or collection of the Loans, and each
of the Loan Parties, (for itself and on behalf of each of its Subsidiaries), the
Agent and each Bank hereby waive, releases and agree never to xxx upon any claim
for any such damages, whether such claim now exists or hereafter arises and
whether or not it is now known or suspected to exist in its favor. Each Bank
agrees that, except for notices, reports and other documents expressly required
to be furnished to the Banks by the Agent hereunder or given to the Agent for
the account of or with copies for the Banks, the Agent and each of its
directors, officers, employees, agents, attorneys or Affiliates shall not have
any duty or responsibility to provide any Bank with an credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Loan Parties which may come
into the possession of the Agent or any of its directors, officers, employees,
agents, attorneys or Affiliates.
67
9.7 Reimbursement and Indemnification of Agent by Banks.
---------------------------------------------------
Each Bank agrees to reimburse and indemnify the Agent (to the extent not
reimbursed by the Borrower and without limiting the Obligation of the Borrower
to do so) in proportion to its Ratable Share from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements, including attorneys' fees and disbursements
(including the allocated costs of staff counsel), and costs of appraisers and
environmental consultants, of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent, in its capacity as such, in any
way relating to or arising out of this Agreement or any other Loan Documents or
any action taken or omitted by the Agent hereunder or thereunder, provided that
--------
no Bank shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (a) if the same results from the Agent's gross negligence or
willful misconduct, or (b) if such Bank was not given notice of the subject
claim and the opportunity to participate in the defense thereof, at its expense
(except that such Bank shall remain liable to the extent such failure to give
notice does not result in a loss to the Bank), or (c) if the same results from a
compromise and settlement agreement entered into without the consent of such
Bank, which shall not be unreasonably withheld. In addition, each Bank agrees
promptly upon demand to reimburse the Agent (to the extent not reimbursed by the
Borrower and without limiting the Obligation of the Borrower to do so) in
proportion to its Ratable Share for all amounts due and payable by the Borrower
to the Agent in connection with the Agent's periodic audit of the Loan Parties'
books, records and business properties.
9.8 Reliance by Agent.
-----------------
The Agent shall be entitled to rely upon any writing, telegram, telex or
teletype message, resolution, notice, consent, certificate, letter, facsimile,
statement, order or other document or conversation by telephone or otherwise
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons, and upon the advice and opinions of counsel and
other professional advisers selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action hereunder unless it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
9.9 Notice of Default.
-----------------
The Agent shall not be deemed to have knowledge or notice of the occurrence
of any Potential Default or Event of Default unless the Agent has received
written notice from a Bank or the Borrower referring to this Agreement,
describing such Potential Default or Event of Default and stating that such
notice is a "notice of default."
9.10 Notices.
-------
The Agent shall promptly send to each Bank a copy of all notices received
from the Borrower pursuant to the provisions of this Agreement or the other Loan
Documents promptly upon receipt thereof. The Agent shall promptly notify the
Borrower and the other Banks of each change in the Base Rate and the effective
date thereof.
68
9.11 Banks in Their Individual Capacities.
------------------------------------
With respect to its Revolving Credit Commitment, the Revolving Credit
Loans, made by it and any other rights and powers given to it as a Bank
hereunder or under any of the other Loan Documents, the Agent shall have the
same rights and powers hereunder as any other Bank and may exercise the same as
though it were not the Agent, and the term "Banks" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. PNC Bank and
its Affiliates and each of the Banks and their respective Affiliates may,
without liability to account, except as prohibited herein, make loans to, accept
deposits from, discount drafts for, act as trustee under indentures of, and
generally engage in any kind of banking or trust business with, the Loan Parties
and their Affiliates, in the case of the Agent, as though it were not acting as
Agent hereunder and in the case of each Bank, as though such Bank were not a
Bank hereunder. The Banks acknowledge that, pursuant to such activities, the
Agent or its Affiliates may (i) receive information regarding the Loan Parties
(including information that may be subject to confidentiality obligations in
favor of the Loan Parties) and acknowledge that the Agent shall be under no
obligation to provide such information to them, and (ii) accept fees and other
consideration from the Loan Parties for services in connection with this
Agreement and otherwise without having to account for the same to the Banks.
9.12 Holders of Notes.
----------------
The Agent may deem and treat any payee of any Note as the owner thereof for
all purposes hereof unless and until written notice of the assignment or
transfer thereof shall have been filed with the Agent. Any request, authority
or consent of any Person who at the time of making such request or giving such
authority or consent is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
9.13 Equalization of Banks.
---------------------
The Banks and the holders of any participations in any Notes agree among
themselves that, with respect to all amounts received by any Bank or any such
holder for application on any Obligation hereunder or under any Note or under
any such participation, whether received by voluntary payment, by realization
upon security, by the exercise of the right of set-off or banker's lien, by
counterclaim or by any other non-pro rata source, equitable adjustment will be
made in the manner stated in the following sentence so that, in effect, all such
excess amounts will be shared ratably among the Banks and such holders in
proportion to their interests in payments under the Notes, except as otherwise
provided in Section 3.4.3 or Section 4.6. The Banks or any such holder
receiving any such amount shall purchase for cash from each of the other Banks
an interest in such Bank's Loans in such amount as shall result in a ratable
participation by the Banks and each such holder in the aggregate unpaid amount
under the Notes, provided that if all or any portion of such excess amount is
--------
thereafter recovered from the Bank or the holder making such purchase, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, together with interest or other amounts, if any, required by law
(including court order) to be paid by the Bank or the holder making such
purchase.
69
9.14 Successor Agent.
---------------
The Agent may resign as Agent by giving not less than thirty (30) days'
prior written notice to the Borrower. If the Agent shall resign under this
Agreement, then either (a) the Required Banks shall appoint from among the Banks
a successor agent for the Banks, subject to the consent of the Borrower, such
consent not to be unreasonably withheld, or (b) if a successor agent shall not
be so appointed and approved within the thirty (30) day period following the
Agent's notice to the Banks of its resignation, then the Agent shall appoint,
with the consent of the Borrower, such consent not to be unreasonably withheld,
a successor agent who shall serve as Agent until such time as the Required Banks
appoint and the Borrower consents to the appointment of a successor agent. Upon
its appointment pursuant to either clause (a) or (b) above, such successor agent
shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall mean such successor agent, effective upon its appointment, and the
former Agent's rights, powers and duties as Agent shall be terminated without
any other or further act or deed on the part of such former Agent or any of the
parties to this Agreement. After the resignation of any Agent hereunder, the
provisions of this Section 9 shall inure to the benefit of such former Agent and
such former Agent shall not by reason of such resignation be deemed to be
released from liability for any actions taken or not taken by it while it was an
Agent under this Agreement.
9.15 Agent's Fee.
-----------
The Borrower shall pay to the Agent a nonrefundable fee (the "Agent's Fee")
under the terms of a letter (the "Agent's Letter") between the Borrower and
Agent, as amended from time to time.
9.16 Availability of Funds.
---------------------
9.16.1 The Agent may assume that each Bank has made or will
make the proceeds of a Loan available to the Agent unless the Agent shall have
been notified by such Bank on or before the close of business on the Business
Day preceding the Borrowing Date with respect to such Loan. The Agent may, in
reliance upon such assumption (but shall not be required to), make available to
the Borrower a corresponding amount.
9.16.2 A Bank who fails to pay the Agent its Ratable Share
of any Revolving Credit Loans made available by the Agent on such Bank's behalf,
or who fails to pay any other amounts owing by it to the Agent (including,
without limitation, amounts due under Section 9.7), is a "Defaulting Bank." The
Agent is entitled to recover from such Defaulting Bank all such amounts owing by
such Defaulting Bank on demand. If the Defaulting Bank does not pay such
amounts on the Agent's demand, the Agent shall promptly notify the Borrower and
the Borrower shall pay such amounts within five Business Days of the Borrower's
receipt of such notice. In addition, the Defaulting Bank or the Borrower shall
pay to the Agent for its own account interest on such amount for each day from
the date such amount was made available by the Agent to the Borrower to the date
it is recovered by the Agent at a rate per annum equal to the then applicable
rate of interest for Revolving Credit Loans; plus, in each case, the expenses
and losses, if any, incurred as a result of the Defaulting Bank's failure to
perform its obligations. Nothing contained herein shall be deemed to relieve
any Bank of its obligation to fulfill its Commitment
70
hereunder or to prejudice any rights which the Borrower may have against any
Bank as a result of any default by such Bank hereunder, including, without
limitation, the right of the Borrower to seek reimbursement from any Defaulting
Bank for any amounts paid by the Borrower under this Section 9.16.2 on account
of such Defaulting Bank's default.
9.16.3 The failure of any Bank to fund its Ratable Share of
a Revolving Credit Loan shall not relieve any other Bank of its obligation to
fund its Ratable Share of a Revolving Credit Loan. Conversely, no Bank shall be
responsible for the failure of another Bank to fund its Ratable Share of a
Revolving Loan.
9.16.4 The Agent shall not be obligated to transfer to a
Defaulting Bank any payments made by the Borrower to the Agent for the
Defaulting Bank's benefit nor shall a Defaulting Bank be entitled to the sharing
of any payments hereunder. Amounts payable to a Defaulting Bank shall instead
be paid to or retained by the Agent. The Agent may hold and, in its discretion,
re-lend to the Borrowers the amount of all such payments received by it for the
account of such Defaulting Bank. For purposes of voting or consenting to
matters with respect to any matter in the Loan Documents and determining Ratable
Shares, such Defaulting Bank shall be deemed not to be a "Bank" and such
Defaulting Bank's Revolving Credit Loan Commitment shall be deemed to be zero
(-0-). This Section 9.16 shall remain effective with respect to such Defaulting
Bank until (x) the Liabilities shall have been declared or shall have become
immediately due and payable or (y) the Required Banks, the Agent and the
Borrower shall have waived such Defaulting Bank's default in writing. The
operation of this Section 9.16 shall not be construed to increase or otherwise
affect the Revolving Credit Loan Commitment of any Bank, or relieve or excuse
the performance by the Borrower of its duties and obligations hereunder.
9.16.5 If the failure by a Defaulting Bank to fund a Loan
effectively reduces the full availability of the Commitment, then the Commitment
Fee payable pursuant to Section 2.3 shall be recalculated and reduced
proportionately for the period of such effective unavailability and when paid
shall be distributed to the Banks which are not Defaulting Banks in respect
thereof.
9.17 Calculations.
------------
In the absence of gross negligence or willful misconduct, the Agent shall
not be liable for any error in computing the amount payable to any Bank whether
in respect of the Loans, fees or any other amounts due to the Banks under this
Agreement. In the event an error in computing any amount payable to any Bank is
made, the Agent, the Borrower and each affected Bank shall, forthwith upon
discovery of such error, make such adjustments as shall be required to correct
such error, and any compensation therefor will be calculated at the Federal
Funds Effective Rate.
71
9.18 Beneficiaries.
-------------
Except as expressly provided herein, the provisions of this Section 9 are
solely for the benefit of the Agent and the Banks, and the Loan Parties shall
not have any rights to rely on or enforce any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for any
of the Loan Parties.
10.MISCELLANEOUS
-------------
10.1 Modifications, Amendments or Waivers.
------------------------------------
With the written consent of the Required Banks, the Agent, acting on behalf
of all the Banks, and the Borrower, on behalf of the Loan Parties, may from time
to time enter into written agreements amending or changing any provision of this
Agreement or any other Loan Document or the rights of the Banks or the Loan
Parties hereunder or thereunder, or may grant written waivers or consents to a
departure from the due performance of the Obligations of the Loan Parties
hereunder or thereunder. Any such agreement, waiver or consent made with such
written consent shall be effective to bind all the Banks and the Loan Parties;
provided, that, without the written consent of all the Banks, no such agreement,
--------
waiver or consent may be made which will:
10.1.1 Increase of Commitment; Extension or Expiration Date.
----------------------------------------------------
Increase the amount of the Revolving Credit Commitment of any Bank
hereunder or extend the Expiration Date;
10.1.2 Extension of Payment; Reduction of Principal Interest or
--------------------------------------------------------
Fees; Modification of Terms of Payment.
--------------------------------------
Whether or not any Loans are outstanding, extend the time for payment of
principal or interest of any Loan (excluding the due date of any mandatory
prepayment of a Loan or any mandatory Commitment reduction in connection with
such a mandatory prepayment hereunder except for mandatory reductions of the
Commitments on the Expiration Date), the Commitment Fee or any other fee payable
to any Bank, or reduce the principal amount of or the rate of interest borne by
any Loan or reduce the Commitment Fee or any other fee payable to any Bank, or
otherwise affect the terms of payment of the principal of or interest of any
Loan, the Commitment Fee or any other fee payable to any Bank;
10.1.3 Release of Collateral or Guarantor.
----------------------------------
Except for sales of assets permitted by Section 7.2.7, release any
Collateral consisting of capital stock or other ownership interests of any Loan
Party or its Subsidiary or substantially all of the assets of any Loan Party any
Guarantor from its Obligations under the Guaranty Agreement or any other
security for any of the Loan Parties' Obligations; or
72
10.1.4 Miscellaneous
-------------
Amend Section 4.2 [Pro Rata Treatment of Banks], 9.6 [Exculpatory
Provisions, Etc.] or 9.13 [Equalization of Banks] or this Section 10.1, alter
any provision regarding the pro rata treatment of the Banks, change the
definition of Required Banks, or change any requirement providing for the Banks
or the Required Banks to authorize the taking of any action hereunder;
provided, further, that no agreement, waiver or consent which would modify the
--------
interests, rights or obligations of the Agent in its capacity as Agent shall be
effective without the written consent of the Agent.
No Implied Waivers; Cumulative Remedies; Writing Required.
---------------------------------------------------------
No course of dealing and no delay or failure of the Agent or any Bank
in exercising any right, power, remedy or privilege under this Agreement or any
other Loan Document shall affect any other or future exercise thereof or operate
as a waiver thereof, nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege preclude any further exercise thereof or of any other right, power,
remedy or privilege. The rights and remedies of the Agent and the Banks under
this Agreement and any other Loan Documents are cumulative and not exclusive of
any rights or remedies which they would otherwise have. Any waiver, permit,
consent or approval of any kind or character on the part of any Bank of any
breach or default under this Agreement or any such waiver of any provision or
condition of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing.
73
10.3 Reimbursement and Indemnification of Banks by the Borrower; Taxes.
-----------------------------------------------------------------
The Borrower agrees unconditionally upon demand to pay or reimburse to each
Bank (other than the Agent, as to which the Borrower's Obligations are set forth
in Section 9.5) and to save such Bank harmless against (i) liability for the
payment of all reasonable out-of-pocket costs, expenses and disbursements
(including fees and expenses of counsel (including allocated costs of staff
counsel) for each Bank except with respect to (a) and (b) below), incurred by
such Bank (a) in connection with the administration and interpretation of this
Agreement, and other instruments and documents to be delivered hereunder, (b)
relating to any amendments, waivers or consents pursuant to the provisions
hereof, (c) in connection with the enforcement of this Agreement or any other
Loan Document, or collection of amounts due hereunder or thereunder or the proof
and allowability of any claim arising under this Agreement or any other Loan
Document, whether in bankruptcy or receivership proceedings or otherwise, and
(d) in any workout or restructuring or in connection with the protection,
preservation, exercise or enforcement of any of the terms hereof or of any
rights hereunder or under any other Loan Document or in connection with any
foreclosure, collection or bankruptcy proceedings, or (ii) all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against such Bank, in its capacity as such, in any
way relating to or arising out of this Agreement or any other Loan Documents or
any action taken or omitted by such Bank hereunder or thereunder, provided that
--------
the Borrower shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (A) if the same results from such Bank's gross
negligence or willful misconduct, or (B) if the Borrower was not given notice of
the subject claim and the opportunity to participate in the defense thereof, at
its expense (except that the Borrower shall remain liable to the extent such
failure to give notice does not result in a loss to the Borrower), or (C) if the
same results from a compromise or settlement agreement entered into without the
consent of the Borrower, which shall not be unreasonably withheld. The Banks
will attempt to minimize the fees and expenses of legal counsel for the Banks
which are subject to reimbursement by the Borrower hereunder by considering the
usage of one law firm to represent the Banks and the Agent if appropriate under
the circumstances. The Borrower agrees unconditionally to pay all stamp,
document, transfer, recording or filing taxes or fees and similar impositions
now or hereafter reasonably determined by the Agent or any Bank to be payable in
connection with this Agreement or any other Loan Document, and the Borrower
agrees unconditionally to save the Agent and the Banks harmless from and against
any and all present or future claims, liabilities or losses with respect to or
resulting from any omission to pay or delay in paying any such taxes, fees or
impositions.
74
10.4 Holidays.
--------
Whenever payment of a Loan to be made or taken hereunder shall be due
on a day which is not a Business Day such payment shall be due on the next
Business Day and such extension of time shall be included in computing interest
and fee, except that the Loans shall be due on the Business Day preceding the
Expiration Date if the Expiration Date is not a Business Day. Whenever any
payment or action to be made or taken hereunder (other than payment of the
Loans) shall be stated to be due on a day which is not a Business Day, such
payment or action shall be made or taken on the next following Business Day
(except as provided in Section 3.2 with respect to Interest Periods under the
Euro-Rate Option), and such extension of time shall not be included in computing
interest or fees, if any, in connection with such payment or action.
10.5 Funding by Branch, Subsidiary or Affiliate.
------------------------------------------
10.5.1 Notional Funding.
----------------
Each Bank shall have the right from time to time, without notice to the
Borrower, to deem any branch, Subsidiary or Affiliate (which for the purposes of
this Section 10.5 shall mean any corporation or association which is directly or
indirectly controlled by or is under direct or indirect common control with any
corporation or association which directly or indirectly controls such Bank) of
such Bank to have made, maintained or funded any Loan to which the Euro-Rate
Option applies at any time, provided that immediately following (on the
--------
assumption that a payment were then due from the Borrower to such other office),
and as a result of such change, the Borrower would not be under any greater
financial obligation pursuant to Section 4.6 than it would have been in the
absence of such change. Notional funding offices may be selected by each Bank
without regard to such Bank's actual methods of making, maintaining or funding
the Loans or any sources of funding actually used by or available to such Bank.
10.5.2 Actual Funding.
--------------
Each Bank shall have the right from time to time to make or maintain any
Loan by arranging for a branch, Subsidiary or Affiliate of such Bank to make or
maintain such Loan subject to the last sentence of this Section 10.5.2. If any
Bank causes a branch, Subsidiary or Affiliate to make or maintain any part of
the Loans hereunder, all terms and conditions of this Agreement shall, except
where the context clearly requires otherwise, be applicable to such part of the
Loans to the same extent as if such Loans were made or maintained by such Bank,
but in no event shall any Bank's use of such a branch, Subsidiary or Affiliate
to make or maintain any part of the Loans hereunder cause such Bank or such
branch, Subsidiary or Affiliate to incur any cost or expenses payable by the
Borrower hereunder or require the Borrower to pay any other compensation to any
Bank (including any expenses incurred or payable pursuant to Section 4.6 which
would otherwise not be incurred.
75
10.6 Notices.
-------
All notices, requests, demands, directions and other communications (as
used in this Section 10.6, collectively referred to as "notices") given to or
made upon any party hereto under the provisions of this Agreement shall be by
telephone or in writing (including telex or facsimile communication) unless
otherwise expressly permitted hereunder and shall be delivered or sent by any
method contemplated by subparts (a) through (e) below to the respective parties
at the addresses and numbers set forth under their respective names on Schedule
--------
1.1(B) hereof or in accordance with any subsequent unrevoked written direction
------
from any party to the others. All notices shall, except as otherwise expressly
herein provided, be effective (a) in the case of telex or facsimile, when
received, (b) in the case of hand-delivered notice, when hand-delivered, (c) in
the case of telephone, when telephoned, provided, however, that in order to be
--------
effective, telephonic notices must be confirmed in writing no later than the
next day by letter, facsimile or telex, (d) if given by first-class postage
prepaid, return receipt requested, upon receipt or refusal, and (e) if given by
any other means (including by air courier), when delivered; provided, that
--------
notices to the Agent shall not be effective until received. Any Bank giving any
notice to any Loan Party shall simultaneously send a copy thereof to the Agent,
and the Agent shall promptly notify the other Banks of the receipt by it of any
such notice.
10.7 Severability.
------------
The provisions of this Agreement are intended to be severable. If 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.
10.8 Governing Law.
-------------
This Agreement shall be deemed to be a contract under the Laws of the
Commonwealth of Pennsylvania and for all purposes shall be governed by and
construed and enforced in accordance with the internal laws of the Commonwealth
of Pennsylvania without regard to its conflict of laws principles.
10.9 Prior Understanding.
-------------------
This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto and thereto relating to the transactions provided for herein and therein,
including any prior confidentiality agreements and commitments.
76
10.10 Duration; Survival.
------------------
All representations and warranties of the Loan Parties contained herein or
made in connection herewith shall survive the making of Loans and shall not be
waived by the execution and delivery of this Agreement, any investigation by the
Agent or the Banks, the making of Loans or payment in full of the Loans. All
covenants and agreements of the Loan Parties contained in Sections 7.1 and 7.2
herein shall continue in full force and effect from and after the date hereof so
long as the Borrower may borrow hereunder and until termination of the
Commitments and payment in full of the Loans. All covenants and agreements of
the Borrower contained herein relating to the payment of principal, interest,
premiums, additional compensation or expenses and indemnification, including
those set forth in the Notes, Section 4 and Sections 9.5, 9.7 and 10.3, shall
survive payment in full of the Loans and termination of the Commitments.
10.11 Successors and Assigns.
----------------------
(i) This Agreement shall be binding upon and shall inure to the
benefit of the Banks, the Agent, the Loan Parties and their respective
successors and assigns, except that none of the Loan Parties may assign or
transfer any of its rights and Obligations hereunder or any interest herein.
Each Bank may, at its own cost, make assignments of or sell participations in
all or any part of its Commitments and the Loans made by it to one or more banks
or other entities, subject to the prior consent of the Borrower and the Agent
with respect to any assignee, such consent not to be unreasonably withheld,
provided that (1) no consent of the Borrower shall be required in the case of an
--------
assignment by a Bank to an Affiliate of such Bank, and (2) assignment may not be
made in amounts less than $5,000,000. In the case of an assignment, upon receipt
by the Agent of the Assignment and Assumption Agreement, 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 had been a
signatory Bank hereunder, the Commitments shall be adjusted accordingly, and
upon surrender of any Note subject to such assignment, the Borrower shall
execute and deliver a new Note to the assignee in an amount equal to the amount
of the Revolving Credit Commitment assumed by it and a new Revolving Credit Note
to the assigning Bank in an amount equal to the Revolving Credit Commitment
retained by it hereunder. The assigning Bank shall pay to the Agent a service
fee in the amount of $3,500 for each assignment. In the case of a participation,
the participant shall only have the rights specified in Section 8.2.3 (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto and not to include any voting rights except with
respect to changes of the type referenced in Sections 10.1.1, 10.1.2, or
10.1.3), all of such Bank's obligations under this Agreement or any other Loan
Document shall remain unchanged, and all amounts payable by any Loan Party
hereunder or thereunder shall be determined as if such Bank had not sold such
participation.
Any assignee or participant which is not incorporated under the Laws
of the United States of America or a state thereof shall deliver to the Borrower
and the Agent the form of certificate described in Section 10.17 relating to
federal income tax withholding. Each Bank may furnish any publicly available
information concerning any Loan Party or its Subsidiaries and any other
77
information concerning any Loan Party or its Subsidiaries in the possession of
such Bank from time to time to assignees and participants (including prospective
assignees or participants), provided that such assignees and participants agree
--------
to be bound by the provisions of Section 10.12.
(iii) Notwithstanding any other provision in this Agreement, any
Bank may at any time pledge or grant a security interest in all or any portion
of its rights under this Agreement, its Note and the other Loan Documents to any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR Section 203.14 with notice to but without the consent of the
Borrower or the Agent. No such pledge or grant of a security interest shall
release the transferor Bank of its obligations hereunder or under any other Loan
Document.
10.12 Confidentiality.
---------------
The Agent and the Banks each agree to keep confidential all information
obtained from any Loan Party or its Subsidiaries which is nonpublic and
confidential or proprietary in nature (including any information the Borrower
specifically designates as confidential), except as provided below, and to use
such information only in connection with their respective capacities under this
Agreement and for the purposes contemplated hereby. The Agent and the Banks
shall be permitted to disclose such information (i) to outside legal counsel,
accountants and other professional advisors who need to know such information in
connection with the administration and enforcement of this Agreement, subject to
agreement of such Persons to maintain the confidentiality, (ii) to assignees and
participants as contemplated by Section 10.11, (iii) to the extent requested by
any bank regulatory authority or, with notice to the Borrower, as otherwise
required by applicable Law or by any subpoena or similar legal process, or in
connection with any investigation or proceeding arising out of the transactions
contemplated by this Agreement, (iv) if it becomes publicly available other than
as a result of a breach of this Agreement or becomes available from a source not
known to be subject to confidentiality restrictions, or (v) if the Borrower
shall have given its prior consent in writing to such disclosure.
10.13 Counterparts.
------------
This Agreement may be executed by different parties hereto on any number of
separate counterparts, each of which, when so executed and delivered, shall be
an original, and all such counterparts shall together constitute one and the
same instrument.
10.14 Agent's or Bank's Consent.
-------------------------
Whenever the Agent's or any Bank's consent is required to be obtained under
this Agreement or any of the other Loan Documents as a condition to any action,
inaction, condition or event, the Agent and each Bank shall be authorized to
give or withhold such consent in its sole and absolute discretion and to
condition its consent upon the giving of additional collateral, the payment of
money or any other matter.
78
10.15 Exceptions.
----------
The representations, warranties and covenants contained herein shall be
independent of each other, and no exception to any representation, warranty or
covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exceptions be deemed to permit any action or omission that would be in
contravention of applicable Law.
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
--------------------------------------
EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE COURT OF COMMON PLEAS OF PHILADELPHIA COUNTY AND THE UNITED
STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH LOAN
PARTY AT THE ADDRESSES PROVIDED FOR IN SECTION 10.6 AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH LOAN PARTY WAIVES ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE. EACH LOAN PARTY, THE AGENT AND THE BANKS HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND
ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.
79
10.17 Tax Withholding Clause.
----------------------
Each Bank or assignee or participant of a Bank that is not incorporated
under the Laws of the United States of America or a state thereof agrees that it
will deliver to each of the Borrower and the Agent two (2) duly completed copies
of the following: (i) Internal Revenue Service Form W-9, 4224 or 1001, or other
applicable form prescribed by the Internal Revenue Service, certifying that such
Bank, assignee or participant is entitled to receive payments under this
Agreement and the other Loan Documents without deduction or withholding of any
United States federal income taxes, or is subject to such tax at a reduced rate
under an applicable tax treaty, or (ii) Internal Revenue Service Form W-8 or
other applicable form or a certificate of such Bank, assignee or participant
indicating that no such exemption or reduced rate is allowable with respect to
such payments. Each Bank, assignee or participant required to deliver to the
Borrower and the Agent a form or certificate pursuant to the preceding sentence
shall deliver such form or certificate as follows: (A) each Bank which is a
party hereto on the Closing Date shall deliver such form or certificate at least
five (5) Business Days prior to the first date on which any interest or fees are
payable by the Borrower hereunder for the account of such Bank; (B) each
assignee or participant shall deliver such form or certificate at least five (5)
Business Days before the effective date of such assignment or participation
(unless the Agent in its sole discretion shall permit such assignee or
participant to deliver such form or certificate less than five (5) Business Days
before such date in which case it shall be due on the date specified by the
Agent). Each Bank, assignee or participant which so delivers a Form W-8, W-9,
4224 or 1001 further undertakes to deliver to each of the Borrower and the Agent
two (2) additional copies of such form (or a successor form) on or before the
date that such form expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, either certifying that such Bank,
assignee or participant is entitled to receive payments under this Agreement and
the other Loan Documents without deduction or withholding of any United States
federal income taxes or is subject to such tax at a reduced rate under an
applicable tax treaty or stating that no such exemption or reduced rate is
allowable. The Agent shall be entitled to withhold United States federal income
taxes at the full withholding rate unless the Bank, assignee or participant
establishes an exemption or that it is subject to a reduced rate as established
pursuant to the above provisions.
80
10.18 Joinder of Guarantors.
---------------------
Any Subsidiary of the Borrower which is required to join this Agreement as
a Guarantor pursuant to Section 7.2.9 shall execute and deliver to the Agent (i)
a Guarantor Joinder in substantially the form attached hereto as Exhibit
-------
1.1(G)(1) pursuant to which it shall join as a Guarantor or party (as the case
---------
may be) each of the documents to which the Guarantors are parties (including
without limitation, the Security Agreement, the Subordination Agreement and the
Guaranty); (ii) documents in the forms described in Section 6.1 [First Loans]
modified as appropriate to relate to such Subsidiary; and (iii) documents
necessary to grant and perfect Prior Security Interests to the Agent for the
benefit of the Banks in all Collateral held by such Subsidiary and all of the
issued and outstanding capital stock of such Subsidiary. The Loan Parties shall
deliver such Guarantor Joinder and related documents to the Agent within five
(5) Business Days after the date of the filing of such Subsidiary's articles of
incorporation if the Subsidiary is a corporation, the date of the filing of its
certificate of limited partnership if it is a limited partnership or the date of
its organization if it is an entity other than a limited partnership or
corporation.
81
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
ATTEST: AUDIO COMMUNICATIONS NETWORK, INC., a Florida corporation
By:
----
--------------- Title:
----
[Seal]
By:
----
Title:
----
PNC BANK, NATIONAL ASSOCIATION, individually
and as Agent
By:
----
Title:
----
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By:
----
Title:
----
XXXXXX COMMERCIAL PAPER INC.
By:
----
Title:
----
GUARANTORS:
AMERICAN MUSIC NETWORK, INC., a California
corporation
By:
----
Title:
----
82
AUDIO COMMUNICATIONS NETWORK,
INC., a Missouri corporation
By:
----
Title:
----
FLORIDA SOUND ENGINEERING COMPANY, a Florida
corporation
By:
----
Title:
----
AUDIO COMMUNICATIONS NETWORK, INC., a
Maryland corporation
By:
----
Title:
----
SUNCOM, INC., a Delaware corporation
By:
----
Title:
----
83
SCHEDULE 1.1(B)
COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
Page 1 of 3
Part 1 - Commitments of Banks and Addresses for Notices to Banks
----------------------------------------------------------------
Bank Commitment Ratable Share
---- ---------- -------------
PNC Bank, N.A.
Xxx Xxxxxx Xxxxxxxx Xxxxx
Xxxx Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Telephone (000) 000-0000
Telecopy: (000) 000-0000 $16,500,000 51.56%
SunTrust Bank, Central Florida,
N.A.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxxxxxxxx X. Xxxxxxx
Telephone (000) 000-0000
Telecopy: (000) 000-0000 $12,500,000 39.06%
Xxxxxx Commercial Paper Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx Xxx, Esq.
Telephone (000) 000-0000
Telecopy: (000) 000-0000 $ 3,000,000 9.38%
Total $32,000,000 100%
1
SCHEDULE 1.1(B)
COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
Page 2 of 3
Part 2 - Addresses for Notices to Borrower and Guarantors:
AGENT
PNC Capital Markets, Inc.
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
WITH COPIES TO
Xxxxxx Xxxxx
PNC Bank, N.A.
One PNC Plaza, 4th Floor Annex
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
Xxxxx X. Xxxxxxx, Esquire
Xxxxxxxx Xxxxxxxxx, Professional Corporation
Eleven Xxxx Xxxxxx, 00xx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
BORROWER AND GUARANTORS:
Name: Audio Communications Network, Inc.
Address: 0000 Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxxxxxx or Xxxxx Xxxxx
Telephone: (000) 000-0000
2
Telecopy: (000) 000-0000
WITH A COPY TO:
Xxxx Marks & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esquire
3
