Exhibit 10.27.4
AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT
dated as of June 27, 2005
among
XXXXXXX RADIO CORP.,
XXXXXXX RADIO MACAO COMMERCIAL OFFSHORE LIMITED,
MAJEXCO IMPORTS, INC.,
XXXXXXX RADIO (HONG KONG) LIMITED,
And XXXXXXX RADIO INTERNATIONAL LTD.,
as the Borrower
PNC BANK, NATIONAL ASSOCIATION
AND THE OTHER LENDERS PARTY HERETO,
as Lenders
and
PNC BANK, NATIONAL ASSOCIATION, as Agent
TABLE OF CONTENTS
PAGE
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ARTICLE 1 DEFINITIONS.......................................................2
Section 1.1 Defined Terms............................................2
Section 1.2 Other Definitional Provisions...........................21
ARTICLE 2 AMOUNT AND TERMS OF COMMITMENTS..................................21
Section 2.1 Revolving Credit Commitments............................21
Section 2.2 Revolving Credit Note...................................22
Section 2.3 Procedure for Revolving Credit Borrowings...............22
Section 2.4 Commitment and Other Fees...............................24
Section 2.5 Termination/Reduction of Commitments....................24
Section 2.6 Term Loans..............................................31
Section 2.7 Term Notes..............................................31
Section 2.8 Procedure for Term Loan Borrowing.......................31
Section 2.9 Prepayments.............................................32
Section 2.10 Conversion and Continuation Options.....................33
Section 2.11 Minimum Amounts of Tranches/Number of Tranches..........34
Section 2.12 Interest Rates and Payment Dates........................34
Section 2.13 Inability to Determine Interest Rate....................35
Section 2.14 Payments/Funding........................................36
Section 2.15 Change in Legality......................................37
Section 2.16 Increased Costs.........................................37
Section 2.17 Indemnity...............................................40
Section 2.18 Intentionally omitted...................................41
Section 2.19 Purpose of Loans........................................41
ARTICLE 3. REPRESENTATIONS AND WARRANTIES..................................41
Section 3.1 Financial Condition.....................................41
Section 3.2 No Material Adverse Change..............................42
Section 3.3 Corporate Existence; Compliance with Law................42
Section 3.4 Corporate Power; Authorization;
Enforceable Obligations...............................42
Section 3.5 No Legal Bar............................................43
Section 3.6 No Material Litigation..................................43
Section 3.7 No Default..............................................43
Section 3.8 Ownership of Property; Liens............................43
Section 3.9 Intellectual Property...................................43
Section 3.10 No Burdensome Restrictions..............................44
Section 3.11 Taxes...................................................44
Section 3.12 Federal Regulations.....................................44
Section 3.13 Investment Company Act; Public Utility
Holding Company Act; Other Regulations................44
Section 3.14 Subsidiaries............................................44
Section 3.15 Employee Grievances.....................................45
Section 3.16 ERISA...................................................45
Section 3.17 ER Intercompany Payable.................................46
ARTICLE 4. CONDITIONS PRECEDENT............................................49
Section 4.1 Conditions to Effective Date............................49
Section 4.2 Conditions to Each Loan.................................51
ARTICLE 5. AFFIRMATIVE COVENANTS...........................................52
Section 5.1 Financial Statements, Budgets and Forecasts.............52
Section 5.2 Certificates; Other Information.........................53
Section 5.3 Payment of Obligations..................................54
Section 5.4 Conduct of Business and Maintenance of Existence........54
Section 5.5 Maintenance of Property; Insurance......................54
Section 5.6 Inspection of Property; Books and
Records; Discussions..................................55
Section 5.7 Notices.................................................56
Section 5.8 ERISA Compliance........................................56
Section 5.9 Taxes and Claims........................................57
Section 5.10 Environmental Matters...................................57
Section 5.11 Shipping Documents......................................57
Section 5.12 Significant Subsidiary..................................58
Section 5.13 Waivers and Consents....................................58
Section 5.14 Hedging Agreement.......................................59
Section 5.15 Lockbox Account.........................................58
ARTICLE 6. NEGATIVE COVENANTS..............................................58
Section 6.1 Limitation on Indebtedness..............................58
Section 6.2 Limitation on Liens.....................................59
Section 6.3 Limitation on Contingent Obligations....................60
Section 6.4 Limitations on Fundamental Changes......................60
Section 6.5 Limitation on Sale of Assets............................61
Section 6.6 Limitation on Investments, Loans and Advances...........61
Section 6.7 Limitation on Optional Payments and
Modifications of Debt Instruments.....................62
Section 6.8 Transactions with Affiliates............................63
Section 6.9 Fiscal Year.............................................63
Section 6.10 Limitation on Conduct of Business.......................63
Section 6.11 Net Worth...............................................63
Section 6.12 Fixed Charge Coverage Ratio.............................64
Section 6.13 Senior Funded Debt to EBITDA............................64
Section 6.14 Intentionally omitted...................................64
Section 6.15 ERISA Obligations.......................................65
Section 6.16 Restricted Payments.....................................65
ARTICLE 7. EVENTS OF DEFAULT...............................................65
Section 7.1 Events of Default.......................................65
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ARTICLE 8. THE AGENT.......................................................69
Section 8.1 Actions.................................................69
Section 8.2 Exculpation.............................................69
Section 8.3 Successor...............................................70
Section 8.4 Credit Decisions........................................70
Section 8.5 Notices, etc. from Agent................................71
Section 8.6 Security Documents......................................71
ARTICLE 9. PURCHASING LENDER...............................................71
Section 9.1 Purchasing Lender.......................................71
Section 9.2 Disclosure of Information...............................72
Section 9.3 Pledges to Federal Reserve Bank.........................73
ARTICLE 10. MISCELLANEOUS..................................................73
Section 10.1 Amendments and Waivers.................................73
Section 10.2 Notices................................................75
Section 10.3 No Waiver; Cumulative Remedies.........................76
Section 10.4 Survival of Representations and Warranties.............76
Section 10.5 Payment of Expenses and Taxes..........................76
Section 10.6 Successors and Assigns.................................77
Section 10.7 Set-off/Sharing........................................77
Section 10.8 Foreign Subsidiaries...................................78
Section 10.9 Judgment Currency/Withholding Tax......................79
Section 10.10 Counterparts...........................................79
Section 10.11 Severability...........................................79
Section 10.12 Integration............................................80
Section 10.13 Governing Law..........................................80
Section 10.14 Submission To Jurisdiction; Waivers....................80
Section 10.15 Acknowledgments........................................80
Section 10.16 Waivers of Jury Trial..................................81
Section 10.17 SSG.81
EXHIBITS
Exhibit A Revolving Credit Note
Exhibit A-1 Swing Loan Note
Exhibit B Term Note
Exhibit C Borrowing Base Certificate
Exhibit D Omitted
Exhibit E Assumption Agreement
Exhibit F Omitted
Exhibit G Omitted
Exhibit H Stock Pledge Agreement
Exhibit I Intellectual Property Security Agreement
Exhibit J Omitted
iii
Exhibit K Landlord/Warehouse Waiver
Exhibit L Omitted
Exhibit M Borrowing Request
SCHEDULES
---------
Pricing Schedule
Schedule I Commitments
Schedule II Consents (ss. 3.4(b))
Schedule III Litigation (ss. 3.6)
Schedule IV Subsidiaries (ss. 3.14)
Schedule V Employee Grievances (ss. 3.15)
Schedule VI ERISA Plans (ss. 3.16)
Schedule VII Liens (ss. 6.2(g))
Schedule VIII Existing Permitted Investments
Schedule IX Omitted
Schedule X Affiliated Agreements (ss.6.8)
Schedule XI Notice Addresses
Schedule VI (a) Insurance (ss.3.18)
Schedule VI (b) Material Contracts (ss.3.17)
Schedule VI (c) Environmental Matters (ss.3.21)
Schedule 4.1 (n) Closing Checklist
iv
AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT
AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT,
dated as of June 27, 2005 among XXXXXXX RADIO CORP. ("ERC US"), a Delaware
corporation, XXXXXXX RADIO MACAO COMMERCIAL OFFSHORE LIMITED, a Macao
corporation ("ER MACAO"), MAJEXCO IMPORTS, INC. ("MI"), a California
corporation, XXXXXXX RADIO (HONG KONG) LIMITED ("ER HONG KONG") a Hong Kong
corporation, and XXXXXXX RADIO INTERNATIONAL LTD. ("ER BVI"), a British Virgin
Islands company, jointly and severally as co-borrowers and co-obligors, except
as expressly set forth herein in Section 10.8 hereof, (collectively, the
"Borrower"), PNC BANK, NATIONAL ASSOCIATION (in its capacity as lender, "PNC")
and each other lender signatory hereto or which becomes a Lender pursuant to
Section 9.1 (each a "Lender" and, collectively, the "Lenders") and PNC BANK,
NATIONAL ASSOCIATION as agent for the Lenders (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Agent and the Lenders are parties
to the Revolving Credit and Term Loan Agreement, dated June 28, 2002, pursuant
to which the Lenders extended certain credit facilities to the Borrower (the
"Original Credit Agreement");
WHEREAS, the Borrower has requested that the Lenders amend and
restate the terms and conditions of the Original Credit Agreement and extend
certain additional credit facilities to the Borrower; and
WHEREAS, the Lenders have agreed, upon the terms and
conditions set forth herein, to amend and restate the Original Credit Agreement
and to extend such additional credit facilities to the Borrower.
NOW, THEREFORE, in consideration of the premises, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Lenders, the Agent and the Borrower hereby agree as
follows:
ARTICLE 1
DEFINITIONS
Section 1.1. Defined Terms.
As used in this Agreement, the following terms shall have the
following meanings:
"A Stock" when used in reference to inventory, new product
(manufactured of new material and parts and not repaired, remanufactured or
rebuilt), which has not been subjected to use after original manufacture (but
excluding in any event seconds, opened returns and inventory held for resale).
"Adjusted EBITDA" Consolidated EBITDA for ERC US and its
Subsidiaries other than SSG and the Foreign Subsidiaries.
"Affiliate" as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person means
the power, directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors of such
Person or (b) direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"Agent" (a) PNC Bank, National Association; or (b) such other
bank or financial institution as shall have been subsequently appointed as
successor Agent pursuant to Section 8.3 of this Agreement.
"Agreement" this Amended and Restated Revolving Credit and
Term Loan Agreement, as amended, supplemented or otherwise modified from time to
time.
"Anti-Terrorism Laws" shall mean any Laws relating to
terrorism or money laundering, including Executive Order No. 13224, the USA
Patriot Act, the Laws comprising or implementing the Bank Secrecy Act, and the
Laws administered by the United States Treasury Department's Office of Foreign
Asset Control (as any of the foregoing Laws may from time to time be amended,
renewed, extended, or replaced).
"Applicable Fee Rate" means a rate per annum determined in
accordance with the Pricing Schedule. The Agent shall set the Applicable Fee
Rate based on Level II Pricing on the Pricing Schedule until receipt by the
Agent of the financial statements of Borrower for the fiscal quarter ending
September 30, 2005 and thereafter the Agent shall set the Applicable Fee Rate
for each fiscal quarter based upon the financial statements of Borrower for the
immediately preceding fiscal quarter delivered pursuant to Section 5.1. The
Applicable Fee Rate as so determined shall apply effective as of the date the
relevant financial statements are received by the Agent. If the Borrower shall
fail to deliver financial statements as required by Section 5.1, the Applicable
Fee Rate shall be set as determined by Level IV Pricing on the Pricing Schedule
for each fiscal quarter for which such financials are not delivered to the Agent
for the period from the beginning of such fiscal quarter to the date such
financial statements are delivered and from such date to the end of such fiscal
quarter the Applicable Fee Rate shall be set by Agent based upon such financial
statements.
2
"Applicable Margin" means a rate per annum determined in
accordance with the Pricing Schedule. The Agent shall set the Applicable Margin
based on Level II Pricing on the Pricing Schedule until receipt by the Agent of
the financial statements of Borrower for the fiscal quarter ending September 30,
2005 and thereafter the Agent shall set the Applicable Margin for each fiscal
quarter based upon the financial statements of Borrower for the immediately
preceding fiscal quarter delivered pursuant to Section 5.1. The Applicable
Margin as so determined shall apply effective as of the date the relevant
financial statements are received by the Agent. If the Borrower shall fail to
deliver financial statements as required by Section 5.1, the Applicable Margin
shall be set as determined by Level IV Pricing on the Pricing Schedule for each
fiscal quarter for which such financials are not delivered to the Agent for the
period from the beginning of such fiscal quarter to the date such financial
statements are delivered and from such date to the end of such fiscal quarter
the Applicable Margin shall be set by Agent based upon such financial
statements.
"Assignment and Acceptance" as defined in Section 9.1.
"Assumption Agreement" an agreement substantially in the form
of Exhibit E hereto (with such changes therein as are reasonably acceptable to
the Agent) to be delivered to the Agent pursuant to Section 5.12.
"Available Commitment" at any time with respect to Revolving
Credit Loans for each Lender, an amount equal to (i) the amount of such Lender's
Commitment at such time to make Revolving Credit Loans minus (ii) the sum of the
aggregate principal amount of all then outstanding Revolving Credit Loans and
Letters of Credit Outstanding made by such Lender.
"Base Rate" on any date the higher of (i) the Prime Rate then
in effect and (ii) the Federal Funds Open Rate then in effect plus 1/2%.
"Base Rate Loans" Loans whose interest rate is based on the
Base Rate.
"Blocked Person" the meaning assigned to such term in Section
3.22.
"Board" the Board of Governors of the Federal Reserve System
of the United States.
3
"Borrowing Base" means an amount equal to (A) the sum of (x)
80% of the value of Eligible Receivables of ERC US for the most recently ended
Calculation Period (excluding therefrom in all cases the Special Receivables)
plus (y) 65% of the value of the Special Receivables of ERC US for the most
recently ended Calculation Period plus (z) the lesser of (i) 55% (or such
greater percentage as the Required Lenders may approve with respect to any
Calculation Period) of the aggregate value of unsold Eligible Inventory of ERC
US and MI for the most recently ended Calculation Period, (ii) 85% (or such
greater percentage as the Required Lenders may approve with respect to any
Calculation Period) of the Net Recovery Value and (iii) $21,000,000, during the
period from and including January 1 to and including March 31 in each calendar
year and $25,000,000, during the period from and including April 1 to and
including December 31 in each calendar year, less (B) (x) the Rental Reserve
until the Agent shall have received landlord/warehousemen waivers as required by
Section 5.13 in form and substance satisfactory to the Agent from all Persons
providing warehouse and leasehold premises to ERC US, (y) the amount of the
California unitary tax assessed against ERC US (and all penalties, interest and
other amounts payable with respect thereto) in the event a Lien is filed with
respect to such tax by any Governmental Authority so long as such tax is not
paid (provided if ERC US enters into an agreement with the relevant Governmental
Authority assessing such tax in form and substance satisfactory to the Required
Lenders with respect to a schedule for payment of such assessed tax (and any
penalties, interest or other amounts payable with respect thereto), the amount
reserved with respect to such assessed tax shall be limited to all payments
under such agreement due prior to the second anniversary of any date of
determination so long as ERC US is not in breach of such agreement and no
proceedings have been initiated to enforce or foreclose upon the Lien with
respect thereto), (z) at any time during the period from and including January
1st to and including March 31st in each year, an amount equal to 10% of the net
accounts receivable reflected on the then most recent Borrowing Base Certificate
delivered with respect to such period, and (aa) such additional reserves as
Agent shall deem appropriate in its reasonable business judgment in the event
the inventory of any Person constituting the Borrower is underinsured (in
Agent's reasonable business judgment) by the insurance in force pursuant to
Section 5.5. If the Required Lenders shall have approved a change in any
percentage used in determining the Borrowing Base for any Calculation Period,
they shall have no further or future obligation to do so with respect to any
other Calculation Period.
"Borrowing Base Certificate" a certificate in the form of
Exhibit C hereto to be delivered by the ERC US for each Calculation Period.
"Borrowing Date" any Business Day specified in a notice
pursuant to Section 2.3 as a date on which a Borrower requests the Lenders to
make Loans.
"Business Day" a day other than Saturday, Sunday or other day
on which commercial banks in Pittsburgh, Pennsylvania are authorized or required
by law to be closed and, in the case of Eurodollar Loans, a day which is also a
Working Day.
"CAPEX" for any period, the cost attributed in accordance with
GAAP consistent with those applied in preparation of the financial statements
referred to in Section 5.1 hereof to acquisitions during such period by ERC US
and/or its consolidated Subsidiaries (other than SSG) of any asset, tangible or
intangible, or replacements or substitutes therefor or additions thereto which
are treated as a non current asset on such financial statements, including,
without limitation, the acquisition or construction of assets having a useful
life of more than one year.
"Calculation Period" In the case of the initial Loan, the
Calculation Period shall be as of June 24, 2005 and then as of the end of each
successive calendar month until the first date, if any, Undrawn Availability
falls below $2,500,000, on which date the Calculation Period shall, until the
Undrawn Availability equals or exceeds $2,500,000 for a thirty- (30) day period,
be each successive seven day period beginning on a Saturday and ending on the
following Friday.
4
"Capital Lease Obligations" of any Person for any period, the
obligations of such Person to pay rent and other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, for such period, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person
under GAAP.
"Capital Stock" any and all shares, interests, participations
or other equivalents (however designated) of shares of capital or capital stock
of a corporation, any and all equivalent ownership interests in a Person (other
than a corporation) and any and all warrants or options to purchase any of the
foregoing.
"Change in Control" means the acquisition by any Person, or
two or more Persons acting in concert (other than any individuals who are
members of ERC US's senior management on the Effective Date or any entity, if
and so long as, the majority of equity and voting interests in which is owned by
one or more of such individuals), of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of greater than 30% (or such greater percentage as the
Required Lenders may agree to in writing) of the outstanding shares of voting
stock of ERC US.
"Closing Date" the date on which the Lenders make the initial
Loans.
"Code" the Internal Revenue Code of 1986, as amended from time
to time.
"Commitment" for each Lender at any time from and including
the Effective Date to but excluding the Maturity Date the lesser of (i) the
amount set forth opposite such Lender's name in Schedule I under the heading
"Commitment" as such amount may be adjusted pursuant to Sections 2.5 or 9.1 and
(ii) the product of such Lender's Percentage and the Borrowing Base for the then
immediately preceding Calculation Period.
"Consolidated EBITDA" means, for any fiscal period, (a)
Consolidated Net Income (Loss) for such period plus, (b) the sum of (i) other
non-cash charges in accordance with GAAP (including expenses related to stock
options pursuant to FAS 123R), (ii) Consolidated Interest Expense, (iii)
depreciation, (iv) amortization of intangible assets and (v) federal, state,
local and foreign income taxes; all computed and calculated in accordance with
GAAP.
"Consolidated Intangibles" at a particular date, all assets of
ERC US and its consolidated Subsidiaries (excluding SSG), that would be
classified as intangible assets in accordance with GAAP, but in any event
including, without limitation, unamortized organization and reorganization
expense and goodwill.
"Consolidated Interest Expense" for any period, the total
interest expense paid for such period (including, without limitation, that
attributable to Capital Lease Obligations in accordance with GAAP) of ERC US and
its consolidated Subsidiaries (excluding SSG) with respect to all outstanding
Indebtedness of ERC US and its consolidated Subsidiaries (excluding SSG).
5
"Consolidated Net Income" for any period, the consolidated net
income (or net loss) of ERC US and its consolidated Subsidiaries (excluding SSG)
for such period, determined in accordance with GAAP.
"Consolidated Net Worth" at a particular date, the sum of all
amounts which would be included under shareholders' equity on a consolidated
balance sheet of ERC US and its consolidated Subsidiaries (excluding SSG)
determined in accordance with GAAP as at such date.
"Consolidated Tangible Net Worth" as used in Section 7.1(h) at
a particular date, (a) the sum of all amounts which would be included under
shareholders' equity on a consolidated balance sheet of ERC US and its
consolidated Subsidiaries (excluding SSG) determined in accordance with GAAP as
at such date minus (b) Consolidated Intangibles as at such date.
"Contamination" shall mean the presence or release or threat
of release of Regulated Substances in, on, under or emanating to or from the
Property, which pursuant to Environmental Safety Laws requires notification or
reporting to an official body, or which pursuant to Environmental Safety Laws
requires the investigation, cleanup, removal, remediation, containment,
abatement of or other response action or which otherwise constitutes a violation
of Environmental Safety Laws.
"Contingent Obligation" as to any Person any guarantee of
payment, collection or performance by such Person of any Indebtedness or other
obligation of any other Person, or any agreement to provide financial assurance
with respect to the financial condition, or the payment of the obligations of,
such other Person (including, without limitation, purchase or repurchase
agreements, reimbursement agreements with respect to letters of credit or
acceptances, indemnity arrangements, grants of security interests to support the
obligations of another Person, keepwell agreements and take-or-pay or
through-put arrangements) which has the effect of assuring or holding harmless
any third Person against loss with respect to one or more obligations of such
other Person; provided, however, that the term Contingent Obligation shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business or indemnities entered into in the ordinary course of
business in connection with the sale of inventory or licensing of intellectual
property or other proprietary information. The amount of any Contingent
Obligation of any Person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect of
which such Contingent Obligation is made and (b) the maximum amount for which
such contingently liable Person may be liable pursuant to the terms of the
instrument embodying such Contingent Obligation, unless such primary obligation
and the maximum amount for which such contingently liable Person may be liable
are not stated or determinable, in which case the amount of such Contingent
Obligation shall be such contingently liable Person's maximum reasonably
anticipated liability in respect thereof as determined by the contingently
liable Person in good faith.
6
"Contractual Obligation" as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Controlled Group" as set forth in Section 1563(a) of the
Code.
"Default" any of the events specified in Section 7.1, whether
or not any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Director Share" one ordinary share of the Capital Stock of ER
Hong Kong held by Xxxx Xxxxxxx, an individual, or a replacement reasonably
acceptable to Agent.
"Dollar" and "$" lawful currency of the United States of
America.
"Effective Date" as set forth in Section 4.1.
"Eligible Inventory" all A Stock goods of ERC US and MI
excluding work in progress, any inventory purchased from a Person not
constituting the Borrower in which ERC US or MI does not have title, which is
subject to a Lien (other than in favor of the Agent and the Lender), which has
not been shipped to, or at the direction of, ERC US or MI, in which the Agent
does not have a first priority perfected security interest, with respect to
which any representations or warranties contained in the Loan Documents are
untrue or as to which any Person constituting the Borrower has breached its
covenants in the Loan Documents, and excluding any inventory in any warehouse or
other facility for which Agent does not have a Waiver and Consent in form and
substance satisfactory to it, and any other inventory which the Agent deems to
be otherwise unacceptable in its reasonable judgment (including, without
limitation, by reason of its being unacceptable due to age, type, category or
quantity).
"Eligible Receivables" all accounts receivable of ERC US other
than accounts receivable (i) which have remained unpaid for more than 90 days
after the date of their creation; (ii) which are owed by any Person where 50% or
more of the receivables owed by such Person would be excluded by reason of
clause (i) of this definition (the "50% Rule"); (iii) which are owed by any
Person constituting the Borrower or any Affiliate of any Person constituting the
Borrower; (iv) which are payable by any Person not incorporated in a
jurisdiction which is part of the United States of America, Canada or any state
or province thereof; (v) as to which the goods which gave rise to the receivable
have been or are being returned or as to which a credit has been claimed but
only to the extent of such return or claimed credit; (vi) as to which
(collectively, "Contras") the account party has (or claimed the right to) set
off against or has netted out (or claimed the right to net out) charge backs or
other amounts due such account party by any Person constituting the Borrower but
only to the extent of such Contra; (vii) as to which there are accrued and
unpaid late charges, to the extent of such late charges (provided, that this
clause (vii) shall not derogate from the provisions of clause (i) above); (viii)
which are payable by any Person which is the subject of any voluntary or
involuntary bankruptcy or insolvency proceeding (state or federal), which has
made a general assignment for the benefit of creditors or had a receiver,
trustee or other similar official appointed with respect to all or a substantial
portion of its properties or which has ceased doing business; or (ix) which the
Agent deems to be otherwise unacceptable in its reasonable judgment.
7
"Environmental Complaint" shall mean any written complaint by
any Person or setting forth a cause of action for personal injury or property
damage, natural resource damage, contribution or indemnity for response costs,
civil or administrative penalties, criminal fines or penalties, or declaratory
or equitable relief arising under any Environmental Laws or any order, notice of
violation, citation, subpoena, request for information or other written notice
or demand of any type issued by an official body pursuant to any Environmental
Safety Laws.
"Environmental Liabilities" shall mean any and all claims,
demands, penalties, fines, liabilities, settlements, damages, losses, costs and
expenses (including, without limitation, reasonable attorneys' and reasonable
consultants' fees and disbursements, remedial investigation and feasibility
study costs, clean-up costs and other response costs under the Environmental and
Safety Laws, currently in existence or which may be enacted in the future,
laboratory fees, court costs and litigation expenses) of whatever kind or
nature, known or unknown, contingent or otherwise, arising out of or in any way
related to (i) the presence, disposal or release of any Hazardous Materials
which are on, from or which affect any real property owned or leased by any
Person constituting the Borrower or any part thereof, including, without
limitation, soil, water, vegetation, buildings, equipment, personal property, or
which affect Persons, animals or otherwise; (ii) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or related
to such Hazardous Materials or damage to wetlands whether or not relating to
Hazardous Materials; (iii) any lawsuit brought or threatened, settlement
reached, or government order or directive relating to such Hazardous Materials;
and/or (iv) any violation of any Requirement of Law or requirements or demands
of any Governmental Authority, which are based upon or in any way related to
such Hazardous Materials and which are paid or incurred by the Agent or any
Lender.
"Environmental and Safety Laws" shall mean all Requirements of
Law relating to the environment and workplace safety including, without
limitation, the Clean Air Act ("CAA"), the Clean Water Act ("CWA"), the Toxic
Substances Control Act ("TSCA"), the Hazardous Materials Transportation Act
("HMTA"), the Resource Conservation and Recovery Act, as amended ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
as modified by the Superfund Amendments and Reauthorization Act of 1986
("XXXX"), the Emergency Planning and Community Right to Know Act ("EPCRA"), the
Noise Control Act ("NCA"), the Occupational Safety and Health Act ("OSHA"), the
Safe Drinking Water Act and the Federal Insecticide, Fungicide and Rodenticide
Act, as any such Requirements of Laws may be amended, supplemented or otherwise
modified from time to time.
"Environmentally Sensitive Area" shall mean (i) any wetland as
defined by applicable Environmental Laws; (ii) any area designated as a coastal
zone pursuant to applicable laws, including Environmental Safety Laws; (iii) any
area of historic or archeological significance or scenic area as defined or
designated by applicable laws, including Environmental Safety Laws; (iv)
habitats of endangered species or threatened species as designated by applicable
laws, including Environmental Safety Laws; or (v) a floodplain or other flood
hazard area as defined pursuant to any applicable Laws.
8
"ERC Intercompany Payable" the net Indebtedness owed by ERC US
to the Foreign Subsidiaries, including, but not limited to, Indebtedness owed by
ERC US to ER Hong Kong and ER BVI pursuant to a Letter Agreement, dated March
15, 1984, between ERC US and ER Hong Kong.
"ERISA" means the Employee Retirement Income Security Act of
1974 (and any sections of the Code amended by it), as the same from time to time
may be amended, supplemented or modified, and all regulations promulgated
thereunder.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with any Person constituting the Borrower would be
deemed to be a single employer under Section 414 of the Code.
"Eurodollar Loans" Loans whose rate of interest is based upon
the Eurodollar Rate.
"Eurodollar Rate" shall mean, with respect to any Tranche for
any Interest Period, the interest rate per annum determined by the Agent by
dividing (the resulting quotient rounded upwards, if necessary, 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
for U.S. Dollars quoted by the British Bankers' Association as set forth on Dow
Xxxxx Markets Service (formerly known as Telerate) display page 3750 (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 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 Eurodollar Rate may also be expressed by the
following formula:
Eurodollar Rate = Average of London interbank
offered rates on Moneyline Telerate Markets
Service display page 3750 as quoted
by British Bankers' Association or
appropriate successor
---------------------------------------------
1.00 - Euro-Rate Reserve Percentage
The Eurodollar Rate shall be adjusted with respect to any
Tranche 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 Eurodollar 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.
9
"Event of Default" as defined in Section 7.1.
"Executive Order No. 13224" shall mean the Executive Order No.
13224 on Terrorist Financing, effective September 24, 2001, as the same has
been, or shall hereafter be, renewed, extended, amended or replaced.
"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.
"Federal Funds Open Rate" shall mean the rate per annum
determined by the Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the "open" rate
for federal funds transactions as of the opening of business for federal funds
transactions among members of the Federal Reserve System arranged by federal
funds brokers on such day, as quoted by Xxxxxx Guybutler, any successor entity
thereto, or any other broker selected by the Agent, as set forth on the
applicable Telerate display page; provided, however, that if such day is not a
Business Day, the Federal Funds Open Rate for such day shall be the "open" rate
on the immediately preceding Business Day, or if no such rate shall be quoted by
a Federal funds broker at such time, such other rate as determined by the Agent
in accordance with its usual procedures.
"Fixed Charge Coverage Ratio" means, as of the last day of any
fiscal quarter of ERC US, the ratio of (i) Consolidated EBITDA less the sum of
(x) cash federal, state, local and foreign income tax expense, (y) CAPEX
(excluding the cost of acquisitions of interests in other Persons) and (z)
distributions (whether denominated as redemptions, dividends or otherwise and
whether paid in cash or in kind) by ERC US to any holder of any of its Capital
Stock for the four consecutive fiscal quarters of ERC US and its consolidated
Subsidiaries ending on such date to (ii) the sum of (x) Consolidated Interest
Expense, plus (y) scheduled principal payments on any Indebtedness of ERC US and
its Consolidated Subsidiaries (other than SSG) for such period.
"Foreign Subsidiaries" shall mean each of ER Hong Kong, ER
BVI, Xxxxxxx Global Limited and Xxxxxxx Radio Macao Commercial Offshore Limited.
10
"Funded Debt" at any date of determination, for ERC US and its
Subsidiaries other than SSG (determined on a consolidated basis without
duplication in accordance with GAAP): obligations created, issued or incurred
for borrowed money (whether by loan or the issuance and sale of debt securities
or otherwise), all Contingent Obligations relating to obligations created,
issued or incurred for borrowed money, all Capital Lease Obligations and all
reimbursement and other obligations of each such Person in respect of letters of
credit, acceptances and similar obligations issued or created for the account of
such Person (but excluding, in the case of the Foreign Subsidiaries, (i)
reimbursement obligations under back to back letter of credit facilities so long
as no issuer of any letter of credit under any such facilities to a Foreign
Subsidiary as beneficiary, or for its account, has failed to honor a draw
thereunder for any reason, and (ii) the Other Unsecured Foreign Obligations).
"GAAP" generally accepted accounting principles in the United
States of America consistent with those utilized in preparing the audited
financial statements referred to in Section 5.1(a). Unless otherwise
specifically provided herein, any accounting term used in the Agreement shall
have the meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP
consistently applied. That certain items or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. If any "Accounting Changes" (as defined below) occur and such
changes result in a change in the calculation of the financial covenants,
standards or terms used in the Agreement or any other Loan Document, then
Borrower, Agent and Lenders agree to enter into negotiations in order to amend
such provisions of the Agreement so as to equitably reflect such Accounting
Changes with the desired result that the criteria for evaluating Borrower's and
its Subsidiaries' financial condition shall be the same after such Accounting
Changes as if such Accounting Changes had not been made; provided, however, that
the agreement of Required Lenders to any required amendments of such provisions
shall be sufficient to bind all Lenders. "Accounting Changes" means (i) changes
in accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants or the Securities and
Exchange Commission (or successor thereto or any agency with similar functions),
(ii) changes in accounting principles concurred in by Borrower's certified
public accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17
and EITF 88-16, and the application of the accounting principles set forth in
FASB 109, including the establishment of reserves pursuant thereto and any
subsequent reversal (in whole or in part) of such reserves and (iv) the reversal
of any reserves established as a result of purchase accounting adjustments. If
the Required Lenders and Borrower agree upon the required amendments, then after
appropriate amendments have been executed and the underlying Accounting Change
with respect thereto has been implemented, any reference to GAAP contained in
the Agreement or in any other Loan Document shall, only to the extent of such
Accounting Change, refer to GAAP, consistently applied after giving effect to
the implementation of such Accounting Change. If the Required Lenders and
Borrower cannot agree by the date which is 15 days prior to the required
reporting date under Section 5.1 upon the required amendments to reflect any
Accounting Change which has become effective, then all financial statements
delivered and all calculations of financial covenants and other standards and
terms in accordance with the Agreement and the other Loan Documents shall be
prepared, delivered and made without regard to the underlying Accounting Change.
11
"Governmental Authority" any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Hazardous Materials" shall mean, without limitation, any
flammable material, explosives, radioactive materials, gasoline, petroleum
products, asbestos, urea formaldehyde, polychlorinated biphenyls, hazardous
materials, hazardous wastes, hazardous or toxic substances, or related materials
as defined in the Environmental and Safety Laws.
"HK Subordination Agreement" the Subordination Agreement in
the form annexed hereto in Exhibit K to be executed and delivered by ER Hong
Kong, ER BVI and ERC US in favor of the Agent as the same may be amended,
modified or supplemented from time to time.
"Inactive Subsidiary" any Subsidiary which is not a
Significant Subsidiary.
"Indebtedness" of any Person at any date (without
duplication):
(a) all indebtedness of such Person for borrowed money or for
the deferred purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices),
(b) any other indebtedness of such Person which is evidenced
by a note, bond, debenture or similar instrument,
(c) all Capital Lease Obligations of such Person,
(d) all reimbursement and other obligations of such Person in
respect of letters of credit, acceptances and similar obligations issued or
created for the account of such Person,
(e) all liabilities secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof,
(f) net liabilities of such Person under interest rate cap and
or collar agreements, interest rate swap agreements, foreign currency exchange
agreements and other hedging agreements or arrangements,
(g) all Contingent Obligations of such Person, and
(h) withdrawal liabilities of such Person under a Plan.
The Indebtedness of any Person shall include any Indebtedness of any partnership
in which such Person is a general partner and Indebtedness of any limited
liability company of which such Person is a member to the extent, if any, the
organizational documents of such entity provide that members are liable for its
obligations.
12
"Indemnified Liabilities" has the meaning ascribed thereto in
Section 10.5.
"Intellectual Property" has the meaning ascribed thereto in
Section 3.9.
"Intellectual Property Security Agreements" the Intellectual
Property Security Agreements in the form of Exhibit I hereto, to be executed and
delivered by ERC US and Xxxxx to the Agent, as the same may be amended,
supplemented or modified from time to time.
"Interest Payment Date" (a) as to any Base Rate Loan, the
first day of each calendar month to occur while such Loan is outstanding,
beginning on the first day of the first full calendar month occurring after the
date of such Loan, (b) in addition, as to any Eurodollar Loan, the last day of
each Interest Period with respect thereto, and (c) in addition, as to any
Eurodollar Loan with an Interest Period of six months duration, on the last day
of the third calendar month thereof. Interest shall accrue from and including
the first day of an Interest Period to but excluding the last day of such
Interest Period.
"Interest Period" with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the Borrower in
its notice of borrowing or notice of conversion, given with respect thereto,
subject to availability; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and ending
one, two, three, or six months thereafter, as selected by the Borrower by
irrevocable notice to the Agent given not less than three Business Days prior to
the last day of the then current Interest Period with respect thereto, subject
to availability;
provided that, the foregoing provisions relating to Interest Periods are subject
to the following:
(1) if any Interest Period would end on a day other than a
Business Day such Interest Period shall be extended to the next
Business Day unless, in the case of a Eurodollar Loan, such next
succeeding Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day;
(2) in the case of a Eurodollar Loan, if an Interest Period
commences on the last day in a calendar month that is a Business Day,
such Interest Period shall end on the last day that is a Business Day
in the month that is the specified number of months after the month in
which such Interest Period commenced;
(3) an Interest Period that otherwise would extend beyond the
Maturity Date shall end on the Maturity Date; and
(4) Borrower shall elect Interest Periods for Eurodollar Loans
so as to create, if necessary, a principal amount of Base Rate Loans on
each Term Loan Payment Date sufficient to permit any prepayments
required pursuant to Section 2.6(b), and 2.9(f) without requiring the
prepayment of outstanding Eurodollar Loans.
13
"Letter of Credit" shall have the meaning assigned to such
term in Section 2.5A1.
"Letter of Credit Borrowing" shall have the meaning assigned
to such term in Section 2.5A3.4.
Letter of Credit Fee" shall have the meaning assigned to such
term in Section 2.5A2.
"Letters of Credit Outstanding" shall mean at any time the sum
of (i) the aggregate undrawn face amount of outstanding Letters of Credit and
(ii) the aggregate amount of all unpaid and outstanding Reimbursement
Obligations and Letter of Credit Borrowings.
"Lien" any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), other charge or
security interest; or any preference, priority or other agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any Capital
Lease Obligations having substantially the same economic effect as any of the
foregoing). A precautionary filing of a financing statement by a lessor of
property (other than with respect to a Capital Lease Obligation) covering only
such property shall not constitute a Lien.
"Loan" any loan made by the Lenders pursuant to this Agreement
(whether denominated as a Base Rate Loan, Eurodollar Loan, Revolving Credit
Loan, Term Loan, Swing Loan or otherwise).
"Loan Documents" this Agreement, the Notes, the Security
Documents, the HK Subordination Agreement and each other agreement or instrument
executed and delivered pursuant hereto or thereto (other than any Lender Hedge
Agreements).
"Material Adverse Effect" a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of the
Borrower, taken as a whole, or (b) the validity or enforceability of (i) this
Agreement, any of the Notes or the other Loan Documents or (ii) the rights or
remedies of the Lender hereunder or thereunder.
"Maturity Date" June 30, 2008.
"Multiemployer Plan" a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Recovery Value" at any time the net orderly liquidation
value of the Eligible Inventory as set forth in the then most recent valuation
report prepared for the Agent and the Lenders by Ozer Group or other independent
appraiser selected by the Agent.
"Notes" the collective reference to the Revolving Credit
Notes, Swing Loan Note and Term Notes.
14
"Obligations" all obligations (monetary or otherwise) of each
Person constituting the Borrower to the Lenders and/or the Agent arising under
or in connection with this Agreement (including, without limitation, the net
amount owed to any Lender pursuant to any Lender Hedge Agreement), the Notes and
the other Loan Documents. The nominal amount with respect to which any Lender
Hedge Agreements are entered into shall not constitute Obligations for any
purpose.
"Original Credit Agreement" the meaning given to such term in
the recitals hereto.
"Other Unsecured Foreign Obligations" an amount equal to (a)
the reimbursement obligations and obligations in respect of trust receipts,
advances and other loans and extensions of credit to the Foreign Subsidiaries
under all credit facilities opened by financial institutions other than the
Lenders minus (b) any cash collateral held by such other financial institutions
securing such obligations.
"Payment Office" as specified in Section 2.14(a).
"PBGC" the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, and any entity succeeding to any or
all of its functions under ERISA.
"Percentage" of any Lender means, at any time, with respect to
Revolving Credit Loans, the percentage set forth opposite such Lender's name on
Schedule I hereto under the heading "Revolving Credit Loans."
"Permitted Additional Share Repurchases" any purchases of
Capital Stock permitted pursuant to clauses (ii) and (iii) of Section 6.6(b)
hereof.
"Permitted Investments"
(a) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or issued by any agency thereof and
backed by the full faith and credit of the United States of America, in each
case maturing within six months from the date of acquisition thereof; (b)
marketable general obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within six months from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
generally obtainable from either Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc.;
(c) without limiting the provisions of subsection (d) of this
definition, commercial paper maturing no more than six months from the date of
acquisition thereof and, at the time of acquisition, having a rating of A-1 (or
the equivalent) or higher from Standard & Poor's Corporation and P-1 (or the
equivalent) or higher from Xxxxx'x Investors Service, Inc.;
15
(d) commercial paper maturing no more than six months from the
date of acquisition thereof and issued by (i) the holding company of any Lender
or (ii) the holding company of any other bank that has (A) combined capital,
surplus and undivided profits (less any undivided losses) of not less than $250
million, (B) a Xxxxx Bank Watch Rating of C or better and (C) commercial paper
having a rating of A-2 (or the equivalent) from Standard & Poor's Corporation or
P-2 (or the equivalent) or higher from Xxxxx'x Investors Service, Inc.;
(e) domestic and Eurodollar certificates of deposit, time or
demand deposits or bankers' acceptances maturing within six months from the date
of acquisition issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by:
(1) any Lender,
(2) any other commercial bank organized under the laws of the
United States of America, any state thereof or the District of
Columbia, Hong Kong or the British Virgin Islands having combined
capital, surplus and undivided profits (less any undivided losses) of
not less than $500 million (or its equivalent in other currencies),
(3) any branch located in the United States of America of a
commercial bank organized under the laws of the United Kingdom or
Canada having combined capital, surplus and undivided profits (less any
undivided losses) of not less than $500 million or
(4) any domestic commercial bank the deposits of which are
guaranteed by the Federal Deposit Insurance Corporation, provided that
(A) the full amount of the deposits of the Person making such Permitted
Investment are so guaranteed and (B) the aggregate amount of all
Permitted Investments under this clause (iv) does not exceed $500,000;
(5) fully collateralized repurchase agreements with a term of
not more than 30 days for underlying securities of the type described
in subsections (a) and (b) of this definition, entered into with any
institution meeting the qualifications specified in clause (d) or
subclauses (i) through (iii) of clause (e) of this definition;
provided, in each case, that such obligations are payable in Dollars;
and
(6) those investments listed on Schedule VIII to the extent in
existence on the date hereof.
"Person" an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan" any employee benefit plan which is subject to ERISA and
which covers the employees or former employees of any Person constituting the
Borrower or an ERISA Affiliate, under which any Person constituting the Borrower
or an ERISA Affiliate has any obligation or liability or under which such Person
or an ERISA Affiliate has made contributions within the preceding five years.
References herein to a Plan shall include any Multiemployer Plan.
16
"PNC" the meaning given to such term in the recitals hereto.
"Pricing Schedule" means the Schedule identified as such,
attached hereto and made a part hereof.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by PNC as its prime rate. The Prime Rate is not
intended to be the lowest rate of interest charged by PNC in connection with
extensions of credit to debtors.
"Property" shall mean all real property, both owned and
leased, of any Borrower or Subsidiary of a Borrower.
"Purchasing Lender" as defined in Section 9.1.
"Regulated Substances" shall mean, without limitation, any
substance, material or waste, regardless of its form or nature, defined under
Environmental Safety Laws as a "hazardous substance," "pollutant," "pollution,"
"contaminant," "hazardous or toxic substance," "extremely hazardous substance,"
"toxic chemical," "toxic substance," "toxic waste," "hazardous waste," "special
handling waste," "industrial waste," "residual waste," "solid waste," "municipal
waste," "mixed waste," "infectious waste," "chemotherapeutic waste," "medical
waste," or "regulated substance" or any other material, substance or waste,
regardless of its form or nature, which otherwise is regulated by Environmental
Safety Laws.
"Regulation U" Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Reimbursement Obligation" the meaning assigned to such term
in Section 2.5A3.2.
"Rental Reserve" the aggregate charges to ERC US from each
warehouseman and space lessor of ERC US in the United States of America from
whom a Waiver and Consent satisfactory to the Agent shall not have been obtained
for the next three (3) month period at any date of determination.
"Reportable Event" any event set forth in Section 4043(b) of
ERISA or the regulations thereunder.
"Required Environmental Notices" shall mean all notices,
reports, plans, forms or other filings which pursuant to Environmental Safety
Laws, Required Environmental Permits or at the request or direction of an
official body either must be submitted to an official body or which otherwise
must be maintained.
17
"Required Environmental Permits" shall mean all permits,
licenses, bonds, consents, programs, approvals or authorizations required under
Environmental Safety Laws to own, occupy or maintain the Property or which
otherwise are required for the operations and business activities of the
Borrower.
"Required Lenders" means, if there are less than three
Lenders, the Lenders holding 100% of the aggregate Commitments, if no Loans are
outstanding, and, otherwise, Lenders holding 100% of outstanding Loans and, if
there are three or more Lenders, the Lenders holding 51% of the aggregate
Commitments, if no Loans are outstanding, and, otherwise, Lenders holding 51% of
outstanding Loans.
"Requirement of Law" as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer" in such Person's capacity as such, the
chief executive officer of any Person constituting the Borrower or the president
of such Person (if not the chief executive officer) and, with respect to
financial matters, the chief financial officer or corporate controller of such
Person constituting the Borrower; provided, in the case of ER Hong Kong, ER
Macao and ER BVI, "Responsible Officer" shall mean a director of ER Hong Kong,
ER Macao or ER BVI, as the case may be.
"Revolving Credit Loans" as defined in Section 2.1(a).
"Revolving Credit Note" as defined in Section 2.2.
"Revolving Loan Commitment" as to any Lender, the obligation
of such Lender to make Revolving Credit Loans to the Borrower as set forth on
Schedule I hereto, and "Revolving Loan Commitments" shall mean the aggregate
Revolving Loan Commitments of all of the Lenders.
"Revolving Facility Usage" the sum of (i) aggregate amount of
all Revolving Credit Loans outstanding plus (ii) the Letters of Credit
Outstanding.
"Xxxxx" X.X. Xxxxx, Inc., a New Jersey corporation and wholly
owned subsidiary of ERC US.
"Security Agreements" the Security Agreements in the form of
Exhibit G hereto, to be executed and delivered by ERC US and MI to the Agent, as
the same may be amended, supplemented or modified from time to time.
"Security Documents" the collective reference to the Security
Agreements, Intellectual Property Security Agreements and the Stock Pledge
Agreements.
"Senior Funded Debt" all Funded Debt less Subordinated Debt of
ERC US and its consolidated Subsidiaries other than SSG.
"Significant Subsidiary" at any time a Subsidiary of ERC US
(other than SSG) which meets the definition of a "significant subsidiary"
contained as of the date hereof in Regulation S-X of the Securities and Exchange
Commission.
18
"Special Receivables" all account receivables of ERC US so
designated by the Agent in its reasonable discretion due to the level
of dilution with respect to payments due thereunder (as is currently
the case with accounts receivable due from "Walmart" and "Target"), but
are otherwise Eligible Receivables. In addition to the accounts
receivables in which "Walmart" and "Target" are the account debtors,
the Agent reserves the right to designate otherwise Eligible
Receivables to be Special Receivables from time to time in its
reasonable discretion.
"SSG" collectively, Sport Supply Group, Inc. a Delaware
corporation and its wholly owned Subsidiaries.
"Standby Letter of Credit" a Letter of Credit issued to
support obligations of the Borrower, contingent or otherwise, which finance the
working capital and business needs of the Borrower incurred in the ordinary
course of business.
"Stock Pledge Agreements" collectively, each Stock Pledge
Agreement in the form of Exhibit H hereto, to be executed and delivered by ERC
US, ER Hong Kong and Xxxxxxx Global Limited to the Agent, as the same may be
amended, supplemented or modified from time to time.
"Subordinated Debt" means any unsecured Indebtedness of any
Person constituting the Borrower (a) no part of the principal of which is stated
to be payable or is required to be paid (whether by way of mandatory sinking
fund, mandatory redemption, mandatory prepayment or otherwise) prior to October
1, 2005, and the payment of the principal of and interest on which and other
obligations of the Borrower in respect thereof are subordinated to the prior
payment in full of the principal of and interest (including post-petition
interest) on the Notes and all other Obligations hereunder on terms and
conditions approved in writing by the Required Lenders and (b) otherwise
containing terms, covenants and conditions satisfactory in form and substance to
the Required Lenders, as evidenced by their prior written approval thereof.
"Subsidiary" as to any Person (a "Parent") (a) any other
Person in which the Parent owns or controls, directly or indirectly, more than
50% of the Capital Stock of such Person, (b) any other Person of which such
percentage of Capital Stock shall at the time be owned or controlled by the
Parent or one or more of its Subsidiaries as defined in clause (a) or by one or
more such Subsidiaries, or (c) any other Person of which Capital Stock having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such Person are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Parent.
"Subsidiary Borrower" means Majexco Imports, Inc., Xxxxxxx
Radio Macao, ER Hong Kong or ER BVI, and each Subsidiary which executes and
delivers an Assumption Agreement pursuant to Section 5.12, as the case may be,
and, collectively, the "Subsidiary Borrowers."
19
"Swing Loan Commitment" shall mean PNC's commitment to make
Swing Loans to the Borrower pursuant to Section 2.1A hereof in an aggregate
principal amount of up to $500,000, subject in all cases to activation pursuant
to said Section 2.1A.
"Swing Loan Note" shall mean the Swing Loan Note of the
Borrower in the form of Exhibit A-1 evidencing the Swing Loans, together with
all amendments, extensions, renewals, replacements, refinancings or refundings
thereof in whole or in part.
"Swing Loan Request" shall mean a request for Swing Loans made
in accordance with Section 2.3A hereof.
"Swing Loans" shall mean collectively and Swing Loan shall
mean separately all Swing Loans or any Swing Loan made by PNC to the Borrower
pursuant to Section 2.1.A hereof.
"Term Loan Commitment" the commitment of each Lender to make a
Term Loan as set forth on Schedule I hereto.
"Term Loans" as defined in Section 2.6.
"Term Loan Payment Date" shall mean the last Business Day of
each March, June, September and December occurring prior to the Maturity Date
beginning September 30, 2005.
"Term Notes" as defined in Section 2.7.
"Tranche" the collective reference to Eurodollar Loans whose
Interest Periods begin on the same date and end on the same later date (whether
or not such Loans originally were made on the same day).
"Transfer" any direct or indirect sale, conveyance, lease,
transfer, option to purchase or other disposition. (including without
limitation, a sale-leaseback transaction), or a series of related sales,
conveyances, leases, transfers, options to purchase or other dispositions.
"Type" as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"Undrawn Availability" at a particular date shall mean an
amount equal to (a) the lesser of (i) the Borrowing Base, or (ii) the maximum
Commitments of the Lenders set forth on Schedule I for Revolving Credit Loans
minus (b) the then outstanding principal amount of all Revolving Credit Loans.
"USA Patriot Act" shall mean the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall
hereafter be, renewed, extended, amended or replaced.
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"Waiver and Consent" means a landlord/warehouse waiver
substantially in the form of Exhibit L.
"Working Day" any Business Day on which dealings in foreign
currencies and exchange between banks may be carried on in London, England.
Section 1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in the other Loan
Documents or any certificate or other document made or delivered pursuant
hereto.
(b) As used herein and in the Notes, and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
ERC US and its Subsidiaries not defined in Section 1.1 and accounting terms
partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
ARTICLE 2.
AMOUNT AND TERMS OF COMMITMENTS
Section 2.1 Revolving Credit Commitments.
(a) Subject to the terms and conditions of this Agreement,
each Lender severally agrees to make revolving credit loans ("Revolving Credit
Loans") to the Borrower from time to time from the date hereof to but excluding
the Maturity Date in an aggregate principal amount at any one time outstanding
for the Borrower not to exceed the then Available Commitment of such Lender. The
Borrower may borrow and prepay the Revolving Credit Loans in whole or in part,
and reborrow Revolving Credit Loans, all in accordance with the terms and
conditions hereof. All then outstanding Revolving Credit Loans shall be paid in
full on the Maturity Date.
(b) The Revolving Credit Loans may from time to time be
Eurodollar Loans, Base Rate Loans or a combination thereof, as determined by the
Borrower and notified to the Agent in accordance with Section 2.3 and Section
2.10, provided that no Revolving Credit Loan shall be made as a Eurodollar Loan
after the day that is one month prior to the Maturity Date.
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Section 2.1A Swing Loan Commitment.
Subject to the terms and conditions of this Agreement, PNC
may, at its option, cancelable at any time for any reason whatsoever, make swing
loans (the "Swing Loans") to the Borrower at any time or from time to time after
the date hereof to, but not including, the Maturity Date, in an aggregate
principal amount up to but not in excess of $500,000 (the "Swing Loan
Commitment"), provided that the aggregate principal amount of PNC's Swing Loans
and the Revolving Credit Loans of all the Lenders at any one time outstanding
shall not exceed the Revolving Credit Commitments of all the Lenders. 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
2.1A. Swing Loans shall be made in the form of Base Rate Loans only. The
foregoing notwithstanding, the Swing loan Commitment shall not be effective and
no Swing Loans shall be requested or made hereunder, unless and until said
commitment is activated by written notice to PNC from the Required Lenders.
Section 2.2 Revolving Credit Note.
The Revolving Credit Loans made by each Lender shall be
evidenced by a promissory note of the Borrower, substantially in the form of
Exhibit A, with appropriate insertions as to date and principal amount (each a
"Revolving Credit Note"), payable to the order of such Lender and in a principal
amount equal to such Lender's Revolving Loan Commitment. Each Lender is hereby
authorized to record the date, Type and amount of each Revolving Credit Loan,
each continuation thereof, each conversion of all or a portion thereof to
another Type, the date and amount of each payment or prepayment of principal
thereof and, in the case of Eurodollar Loans, the length of each Interest Period
with respect thereto, on the schedule annexed to and constituting a part of each
Revolving Credit Note, and any such recordation shall constitute rebuttable
presumptive evidence of the accuracy of the information so recorded. Each
Revolving Credit Note shall (x) be dated the Closing Date, (y) be stated to
mature on the Maturity Date and (z) provide for the payment of interest in
accordance with Section 2.12.
2.2A Swing Loan Note.
The obligation of the Borrower to repay the unpaid principal
amount of the Swing Loans made to it by PNC together with interest thereon shall
be evidenced by a Swing Loan Note in a face amount equal to the Swing Loan
Commitment.
Section 2.3 Procedure for Revolving Credit Borrowings.
(a) The Borrower may borrow under the Commitment for Revolving
Credit Loans prior to the Maturity Date on any Business Day. The Borrower shall
give the Agent irrevocable notice (which notice must be received by the Agent
prior to 10:00 a.m., Pittsburgh time, three Business Days prior to the requested
Borrowing Date, if all or any part of the requested Revolving Credit Loans are
to be initially Eurodollar Loans and on the requested Borrowing Date in the case
of Base Rate Loans), specifying (1) the amount to be borrowed, (2) the requested
Borrowing Date, (3) whether the borrowing is to be of Eurodollar Loans or Base
Rate Loans or a combination thereof and (4) if the borrowing is to be entirely
or partly of Eurodollar Loans, the amount of such Loans and the length of the
initial Interest Period therefor. Each Revolving Credit Loan shall be in an
amount equal to (x) in the case of Base Rate Loans, $250,000 or a whole multiple
of $50,000 in excess thereof (or, if less, the then Available Commitment) and
(y) in the case of Eurodollar Loans $500,000 or a whole multiple of $100,000 in
excess thereof. The Agent shall promptly notify the Lenders of its receipt of
any such irrevocable notice of borrowing from the Borrower.
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(b) On or before 2:00 p.m., Pittsburgh time, on the Business
Day specified in the Borrower's notice of borrowing, each Lender shall provide
the Agent with funds at the Payment Office in an amount equal to such Lender's
Percentage of the requested borrowing. The proceeds of each borrowing shall be
made available by the Agent to the Borrower pursuant to Section 2.14(d). No
Lender's obligation to make any Loan shall be affected by any other Lender's
failure to make any Loan. Neither the Agent nor any Lender shall have any
liability for the failure of any Lender (other than itself) to fund a Loan.
(c) With respect to any Loan, unless the Agent shall have been
notified in writing by any Lender prior to the date of making such Loan that
such Lender does not intend to make available to the Agent such Lender's portion
of the Loan to be made on such date, the Agent may (but shall not be obligated
to) assume that such Lender has made such amount available to the Agent on that
date and, in reliance on such assumption, the Agent may make available to the
Borrower a corresponding amount. If such amount is not made available by such
Lender to the Agent on the date of making such Loan, such Lender shall be
obligated to pay such amount to the Agent and shall pay to the Agent on demand
interest on such amount at the Federal Funds Effective Rate for the number of
days from and including the date of making such Loan to the date on which such
Lender's portion of the Loan becomes immediately available to the Agent. The
Agent shall also be entitled to recover such amount, with interest thereon at
the rate per annum then applicable to the Loans comprising such borrowing, upon
demand, from the Borrower. A statement of the Agent submitted to any Lender with
respect to any amounts owing under this Section 2.3(c) shall be conclusive and
binding in the absence of demonstrable error. Nothing in this Section 2.3(c)
shall be deemed to relieve any Lender from its obligation to fulfill its
Commitments hereunder.
2.3A Procedure for Swing Loan Borrowing.
Except as otherwise provided herein, the Borrower may from
time to time prior to the Maturity Date request PNC to make Swing Loans by
delivery to PNC not later than 10:00 a.m. Pittsburgh time on the proposed
Borrowing Date a request in writing or by telephone (immediately confirmed in
writing by letter, facsimile or telex) (each, a "Swing 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 Swing Loan Request shall be irrevocable and shall specify the
proposed Borrowing Date and the principal amount of such Swing Loan, which shall
be not less than $250,000.
So long as PNC elects to make Swing Loans, PNC shall, after
receipt by it of a Swing Loan Request pursuant to this Section, fund such Swing
Loan to the Borrower in immediately available funds at the Payment Office prior
to 2:00 p.m. Pittsburgh time on the Borrowing Date.
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Section 2.4 Commitment and Other Fees.
(a) The Borrower agrees to pay to the Agent for the benefit of
and disbursement to the Lenders a nonrefundable commitment fee in respect of the
Commitments to make Revolving Credit Loans, for the period from and including
the date hereof to the Maturity Date, computed at a rate per annum equal to the
Applicable Fee Rate for each calendar quarter, calculated on the basis of a
360-day year for the actual days elapsed, on the average daily amount of the
aggregate Available Commitments during the period for which payment is made,
payable quarterly in arrears on the first Business Day of each April, July,
October and January and on the Maturity Date or such earlier date as the
Commitments shall terminate as provided herein, commencing on the first of such
dates to occur after the date hereof. As soon as practicable the Agent shall
notify the Borrower and the Lenders of each determination of the Applicable Fee
Rate.
(b) The Borrower agrees to pay to PNC Capital Markets an
arrangement fee in an amount and pursuant to the terms set forth in the letter
agreement, dated May 20, 2005, between the Borrower and PNC Capital Markets.
(c) The Borrower agrees to pay to the Agent, for its own
account, an administrative agent's fee in the amount set forth in the letter
agreement, dated May 20, 2005, between the Borrower and PNC Capital Markets in
consideration of PNC's acting as Agent hereunder. The Agent's compensation shall
be paid on the dates set forth in said letter.
(d) The Borrower agrees to pay to the Agent, for distribution
to the Lenders in accordance with their pro rata shares, a closing fee in the
amount set forth in the letter agreement, dated May 20, 2005, between the
Borrower and PNC Capital Markets. The Agent's compensation shall be paid on the
dates set forth in said letter.
Section 2.5 Termination/Reduction/Increase of Commitments.
(a) ERC US shall have the right, upon not less than five
Business Days' written notice to the Agent, to terminate the Revolving Loan
Commitments or, from time to time, to reduce the amount of such Commitments,
provided that at no time may the Revolving Loan Commitments be reduced by the
Borrower to an amount less than the sum of the outstanding principal amount of
Revolving Credit Loans. Any such reduction shall be in an amount equal to
$1,000,000 or a whole multiple of $250,000 in excess thereof and shall reduce
permanently the Revolving Loan Commitments then in effect. Any such reduction in
the Revolving Loan Commitment shall be binding on the Subsidiary Borrowers
whether or not they have notice thereof.
(b) Each reduction in the Revolving Loan Commitments shall be
permanent and irrevocable. All reductions in the Revolving Loan Commitments
shall be made pro rata to the Revolving Loan Commitments of the Lenders. The
Agent shall promptly notify each Lender of the amount of any reduction of its
Revolving Loan Commitment.
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(c) After delivery by ERC US of the annual financial
statements to be provided under Section 5.1(a) for the fiscal year ended March
31, 2006 and provided that at the time of such request there does not exist an
Event of Default or Default, the Borrower may request a pro rata increase of the
Revolving Credit Commitments, in an amount not less than $5,000,000.00 or
greater than $10,000,000.00 in the aggregate by written notice to the Lenders
requesting each Lender's proportional increase, and the Lenders agree to respond
to the Borrower's request for an increase within thirty (30) calendar days
following receipt of same; provided, however, that the failure of any Lender to
respond within such time period shall not in any manner constitute an agreement
by such Lender to said increase of its proportionate share of its Commitment. If
all Lenders elect to increase their proportionate share of their Commitments as
proposed above, this Agreement and the relevant Notes shall be amended to
reflect such increases, all at the cost and expense of the Borrower. If one or
more Lenders decline to so increase their proportionate share of the Commitments
or do not respond to Borrower's request, the provisions of Section 2.5(d) shall
apply.
(d) In the event that one or more Lenders do not agree to the
increase of its proportionate share of the Commitments pursuant to Section
2.5(c) or do not respond to Borrower's request for an increase within the time
required under Section 2.5(c) (each a "Non-Increasing Bank"), then the Lenders
that have agreed to such increase within the time required under Section 2.5(c)
(the "Increasing Banks") may elect to increase their Commitments proportionately
up to the amounts of the Commitments that would have otherwise been assumed by
the Non-Increasing Bank. Any amount of the Commitments not assumed by the
Increasing Banks pursuant to the immediately preceding sentence is referred to
as the "Additional Commitments". Should there exist any Additional Commitments
not assumed by the Increasing Banks, then the Agent and the Borrower may arrange
to have one or more other banks (each a "New Increasing Bank") included as a
Lender hereunder with respect to the Additional Commitments and all other
rights, interests and obligations of a Lender under this Agreement and the other
Loan Documents. Any such assumption shall be (1) pursuant to an assumption
agreement substantially similar to an Assumption Agreement, (2) subject to and
in accordance with this Section 2.5, and (3) effective on the last day of the
Interest Period if any Loans are Eurodollar Loans. Upon the effectiveness of the
increase in the Commitments by the Increasing Banks or the New Increasing Banks,
as the case may be, pursuant to this Section 2.5(d), (i) this Agreement and the
relevant Notes shall be amended and/or restated to reflect the reduction and/or
increase of each Lender's pro rata share of the Commitments contemplated in this
Section 2.5(d) (as determined by the Agent), (ii) the Borrower will issue new
Notes to any New Increasing Bank to evidence the Borrower's obligations with
respect to such New Increasing Bank's Commitment, and (iii) each New Increasing
Bank shall be deemed to be a Lender for all purposes of this Agreement and the
other Loan Documents, all at the cost and expense of the Borrower.
2.5A Letter of Credit Subfacility.
2.5A1 Issuance of Letters of Credit.
The Borrower may request the issuance of a letter of credit
(each a "Letter of Credit") by delivering to the Agent a completed application
and agreement for letters of credit in such form as the Agent may reasonably
specify from time to time by no later than 10:00 a.m., Pittsburgh time, at least
five (5) Business Days, or such shorter period as may be agreed to by the Agent,
in advance of the proposed date of issuance. Each Letter of Credit shall be a
Standby Letter of Credit denominated in Dollars. Subject to the terms and
conditions hereof and in reliance on the agreements of the other Lenders set
forth in this Section 2.5.A1, the Agent will issue a Letter of Credit provided
that each Letter of Credit shall (A) have a maximum maturity of twelve (12)
months from the date of issuance, and (B) in no event expire later than ten (10)
Business Days prior to the Maturity Date and providing that in no event shall
(i) the amount of Letters of Credit Outstanding exceed, at any one time,
$1,000,000 or (ii) the Revolving Facility Usage exceed, at any one time, the
Available Commitment.
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2.5A2 Letter of Credit Fees.
The Borrower shall pay (i) to the Agent for the ratable
account of the Lenders a fee (the "Letter of Credit Fee") equal to the
Applicable Margin for Eurodollar Loans then in effect, and (ii) to the Agent for
its own account a fronting fee equal to 0.125% per annum (computed on the basis
of a year of 360 days and actual days elapsed), which fees shall be computed on
the daily average amount of Letters of Credit Outstanding and shall be payable
quarterly in arrears commencing with the first Business Day of each April, July,
October and January following issuance of each Letter of Credit and on the
Maturity Date. The Borrower shall also pay to the Agent for the Agent's sole
account the Agent's then in effect customary fees and administrative expenses
payable with respect to the Letters of Credit as the Agent may generally charge
or incur from time to time in connection with the issuance, maintenance,
modification (if any), assignment or transfer (if any), negotiation, and
administration of Letters of Credit.
2.5A3 Disbursements, Reimbursement.
2.5A3.1 Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Agent a participation in such
Letter of Credit and each drawing thereunder in an amount equal to such Lender's
pro rata share of the maximum amount available to be drawn under such Letter of
Credit and the amount of such drawing, respectively (based on such Lender's
Percentage).
2.5A3.2 In the event of any request for a drawing under a
Letter of Credit by the beneficiary or transferee thereof, the Agent will
promptly notify the Borrower. Provided that it shall have received such notice,
the Borrower shall reimburse (such obligation to reimburse the Agent shall
sometimes be referred to as a "Reimbursement Obligation") the Agent prior to
12:00 noon, Pittsburgh time on each date that an amount is paid by the Agent
under any Letter of Credit (each such date, a "Drawing Date") in an amount equal
to the amount so paid by the Agent. In the event the Borrower fails to reimburse
the Agent for the full amount of any drawing under any Letter of Credit by 12:00
noon, Pittsburgh time, on the Drawing Date, the Agent will promptly notify each
Lender thereof, and the Borrower shall be deemed to have requested that Base
Rate Loans be made by the Lenders to be disbursed on the Drawing Date under such
Letter of Credit, subject to the amount of the unutilized portion of the
Revolving Credit Commitment and subject to the conditions set forth in Section
4.2 other than any notice requirements. Any notice given by the Agent pursuant
to this Section 2.5A3.2 may be oral if immediately confirmed in writing;
provided that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.
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2.5A3.3 Each Lender shall upon any notice pursuant to Section
2.5A3.2 make available to the Agent an amount in immediately available funds
equal to its pro rata share (based on such Lender's Percentage) of the amount of
the drawing, whereupon the participating Lenders shall (subject to Section
2.5A3.3.4) each be deemed to have made a Base Rate Loan to the Borrower in that
amount. If any Lender so notified fails to make available to the Agent for the
account of the Agent the amount of such Lender's pro rata share (based on such
Lender's Percentage) of such amount by no later than 2:00 p.m., Pittsburgh time
on the Drawing Date, then interest shall accrue on such Lender's obligation to
make such payment, from the Drawing Date to the date on which such Lender makes
such payment (i) at a rate per annum equal to the Federal Funds Effective Rate
during the first three days following the Drawing Date and (ii) at a rate per
annum equal to the rate applicable to Base Rate Loans on and after the fourth
day following the Drawing Date. The Agent will promptly give notice of the
occurrence of the Drawing Date, but failure of the Agent to give any such notice
on the Drawing Date or in sufficient time to enable any Lender to effect such
payment on such date shall not relieve such Lender from its obligation under
this Section 2.5A3.3.
2.5A3.4 With respect to any unreimbursed drawing that is not
converted into a Base Rate Loan of the Borrower in whole or in part as
contemplated by Section 2.5A3.3, because of the Borrower's failure to satisfy
the conditions set forth in Section 4.2 other than any notice requirements or
for any other reason, the Borrower shall be deemed to have incurred from the
Agent a borrowing (each a "Letter of Credit Borrowing") in the amount of such
drawing. Such Letter of Credit Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at the rate per annum
applicable to Base Rate Loans. Each Lender's payment to the Agent pursuant to
Section 2.5A3.3 shall be deemed to be a payment in respect of its participation
in such Letter of Credit Borrowing and shall constitute a "Participation
Advance" from such Lender in satisfaction of its participation obligation under
this Section 2.5A3.
2.5A4 Repayment of Participation Advances.
2.5A4.1 Upon (and only upon) receipt by the Agent for its
account of immediately available funds from the Borrower (i) in reimbursement of
any payment made by the Agent under the Letter of Credit with respect to which
any Lender has made a Participation Advance to the Agent, or (ii) in payment of
interest on such a payment made by the Agent under such a Letter of Credit, the
Agent will pay to each Lender, in the same funds as those received by the Agent,
the amount of such Lender's pro rata share (based on such Lender's Percentage)
of such funds, except the Agent shall retain the amount of the pro rata share
(based on such Lender's Percentage) of such funds of any Lender that did not
make a Participation Advance in respect of such payment by Agent.
2.5A4.2 If the Agent is required at any time to return to
Borrower, or to a trustee, receiver, liquidator, custodian, or any official in
any insolvency proceeding, any portion of the payments made by the Borrower to
the Agent pursuant to Section 2.5A4.1 in reimbursement of a payment made under
the Letter of Credit or interest or fee thereon, each Lender shall, on demand of
the Agent, forthwith return to the Agent the amount of its pro rata share (based
on such Lender's Percentage) of any amounts so returned by the Agent plus
interest thereon from the date such demand is made to the date such amounts are
returned by such Lender to the Agent, at a rate per annum equal to the Federal
Funds Effective Rate in effect from time to time.
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2.5A5 Documentation.
The Borrower agrees to be bound by the terms of the Agent's
application and agreement for letters of credit and the Agent's written
regulations and customary practices relating to letters of credit, though such
interpretation may be different from such Borrower's own. In the event of a
conflict between such application or agreement and this Agreement, this
Agreement shall govern. It is understood and agreed that, except in the case of
gross negligence or willful misconduct, the Agent shall not be liable for any
error, negligence and/or mistakes, whether of omission or commission, in
following any Borrower's instructions or those contained in the Letters of
Credit or any modifications, amendments or supplements thereto.
2.5A6 Determinations to Honor Drawing Requests.
In determining whether to honor any request for drawing under
any Letter of Credit by the beneficiary thereof, the Agent shall be responsible
only to determine that the documents and certificates required to be delivered
under such Letter of Credit have been delivered and that they comply on their
face with the requirements of such Letter of Credit.
2.5A7 Nature of Participation and Reimbursement Obligations.
Each Lender's obligation in accordance with this Agreement to
make the Revolving Credit Loans or Participation Advances, as contemplated by
Section 2.5A3, as a result of a drawing under a Letter of Credit, and the
obligations of the Borrower to reimburse the Agent upon a draw under a Letter of
Credit, shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Section 2.5A under all
circumstances, including the following circumstances:
(i) any setoff, counterclaim, recoupment, defense or other
right which such Lender may have against the Agent, the Borrower or any other
Person for any reason whatsoever;
(ii) the failure of the Borrower or any other Person to
comply, in connection with a Letter of Credit Borrowing, with the conditions set
forth in Section 2.1, 2.3, or 4.2 or as otherwise set forth in this Agreement
for the making of a Revolving Credit Loan, it being acknowledged that such
conditions are not required for the making of a Letter of Credit Borrowing and
the obligation of the Lenders to make Participation Advances under Section
2.5A3;
(iii) any lack of validity or enforceability of any Letter of
Credit;
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(iv) the existence of any claim, setoff, defense or other
right which any Borrower or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons for whom
any such transferee may be acting), the Agent or any Lender or any other Person
or, whether in connection with this Agreement, the transactions contemplated
herein or any unrelated transaction (including any underlying transaction
between any Borrower or Subsidiaries of a Borrower and the beneficiary for which
any Letter of Credit was procured);
(v) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect even if the Agent has been notified thereof;
(vi) payment by the Agent under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
(vii) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of any
Borrower or Subsidiaries of a Loan Party;
(viii) any breach of this Agreement or any other Loan Document
by any party thereto;
(ix) the occurrence or continuance of an insolvency proceeding
with respect to any Borrower;
(x) the fact that an Event of Default or a Default shall have
occurred and be continuing;
(xi) the fact that the Maturity Date shall have passed or this
Agreement or the Commitments hereunder shall have been terminated; and
(xii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing.
2.5A8 Indemnity.
The Borrower hereby agrees to protect, indemnify, pay and save
harmless the Agent from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable fees,
expenses and disbursements of counsel and allocated costs of internal counsel)
which the Agent may incur or be subject to as a consequence, direct or indirect,
of the issuance of any Letter of Credit, other than as a result of (A) the gross
negligence or willful misconduct of the Agent as determined by a final judgment
of a court of competent jurisdiction or (B) the wrongful dishonor by the Agent
of a proper demand for payment made under any Letter of Credit, except if such
dishonor resulted from any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or governmental authority (all
such acts or omissions herein called "Governmental Acts").
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2.5A9 Liability for Acts and Omissions.
As between any Borrower and the Agent, such Borrower assumes
all risks of the acts and omissions of, or misuse of the Letters of Credit by,
the respective beneficiaries of such Letters of Credit. In furtherance and not
in limitation of the foregoing, the Agent shall not be responsible for: (i) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for an
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged
(even if the Agent shall have been notified thereof); (ii) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the beneficiary of
any such Letter of Credit, or any other party to which such Letter of Credit may
be transferred, to comply fully with any conditions required in order to draw
upon such Letter of Credit or any other claim of the Borrower against any
beneficiary of such Letter of Credit, or any such transferee, or any dispute
between or among any Borrower and any beneficiary of any Letter of Credit or any
such transferee; (iv) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (v) errors in interpretation of technical
terms; (vi) any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any such Letter of Credit or of the
proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter
of Credit of the proceeds of any drawing under such Letter of Credit; or (viii)
any consequences arising from causes beyond the control of the Agent, including
any Governmental Acts, and none of the above shall affect or impair, or prevent
the vesting of, any of the Agent's rights or powers hereunder. Nothing in the
preceding sentence shall relieve the Agent from liability for the Agent's gross
negligence or willful misconduct in connection with actions or omissions
described in such clauses (i) through (viii) of such sentence. In no event shall
the Agent or the Agent's Affiliates be liable to the Borrower for any indirect,
incidental, punitive, exemplary or special damages or expenses (including
without limitation attorneys' fees), or for any damages resulting from any
change in the value of any property relating to a Letter of Credit.
Without limiting the generality of the foregoing, the Agent
and each of its Affiliates (i) may rely on any oral or other communication
believed in good faith by the Agent or such Affiliate to have been authorized or
given by or on behalf of the applicant for a Letter of Credit; (ii) may honor
any presentation if the documents presented appear on their face substantially
to comply with the terms and conditions of the relevant Letter of Credit; (iii)
may honor a previously dishonored presentation under a Letter of Credit, whether
such dishonor was pursuant to a court order, to settle or compromise any claim
of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to
the same extent as if such presentation had initially been honored, together
with any interest paid by the Agent or its Affiliates; (iv) may honor any
drawing that is payable upon presentation of a statement advising negotiation or
payment, upon receipt of such statement (even if such statement indicates that a
draft or other document is being delivered separately), and shall not be liable
for any failure of any such draft or other document to arrive, or to conform in
any way with the relevant Letter of Credit; (v) may pay any paying or
negotiating bank claiming that it rightfully honored under the laws or practices
of the place where such bank is located; and (vi) may settle or adjust any claim
or demand made on the Agent or its Affiliate in any way related to any order
issued at the applicant's request to an air carrier, a letter of guarantee or of
indemnity issued to a carrier or any similar document (each an "Order") and
honor any drawing in connection with any Letter of Credit that is the subject of
such Order, notwithstanding that any drafts or other documents presented in
connection with such Letter of Credit fail to conform in any way with such
Letter of Credit.
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In furtherance and extension and not in limitation of the
specific provisions set forth above, any action taken or omitted by the Agent
under or in connection with the Letters of Credit issued by it or any documents
and certificates delivered thereunder, if taken or omitted in good faith, shall
not put the Agent under any resulting liability to the Borrower or any Lender.
Section 2.6 Term Loans.
(a) Subject to the terms and conditions hereof, each Lender
severally agrees to make a term loan (each a "Term Loan") to the Borrower on the
Closing Date in an amount not to exceed the amount of the Term Loan Commitment
of such Lender. The Term Loans may, from time to time, be Base Rate Loans,
Eurodollar Loans or a combination thereof, as determined by the Borrower and
notified to the Agent in accordance with Section 2.8 and 2.10. Any portion of
the Term Loan Commitment which is unused on the Closing Date shall irrevocably
terminate on such date.
(b) The Borrower shall repay the outstanding principal amount
of the Term Loans on each Term Loan Payment Date in an amount equal to $625,000.
The then outstanding principal amount of the Term Loans shall be repaid in full
on the Maturity Date.
Section 2.7 Term Notes.
The Term Loan made by each Lender shall be evidenced by a
promissory note of the Borrower substantially in the form of Exhibit B (each a
"Term Note"), with appropriate insertions therein as to date and principal
amount, payable to the order of such Lender and in a principal amount equal to
such Lender's Term Loan. Each Lender is hereby authorized to record the date and
amount of each payment or prepayment of principal of its Term Loan, each
continuation thereof, each conversion of all or a portion thereof to another
Type and, in the case of Eurodollar Loans, the length of each Interest Period
with respect thereto, on the schedule annexed to and constituting a part of the
Term Note, and any such recordation shall constitute rebuttable presumptive
evidence of the accuracy of the information so recorded.
Section 2.8 Procedure for Term Loan Borrowing.
The Borrower shall give the Agent irrevocable notice (which
notice must be received by the Agent prior to 12:00 noon, New Jersey time, one
Business Day prior to the Closing Date) requesting that the Lenders make Term
Loans on the Closing Date and specifying (1) the amount to be borrowed, (2)
whether the Term Loans are to be initially a Eurodollar Loan or Base Rate Loan
or a combination thereof, and (3) if the Term Loans are to be entirely or partly
a Eurodollar Loan, the amount of such Loan and the length of the initial
Interest Period therefore. Each portion of the Term Loan which is maintained as
a Eurodollar Loan shall be in a principal amount of $500,000 or a multiple of
$100,000 in excess thereof. The Agent shall promptly notify the Lenders of its
receipt of any notice from the Borrower pursuant to this Section.
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Section 2.9 Prepayments.
(a) From time to time the Borrower may voluntarily prepay the
Loans, in whole or in part, subject to the provisions of Section 2.17 but
otherwise without premium or penalty, upon at least three (3) Business Days'
irrevocable notice to the Agent, in the case of Eurodollar Loans and otherwise
by 12:00 noon on the date of payment, specifying the date and amount of
prepayment. Partial prepayments of Revolving Loans shall be in an aggregate
principal amount of $100,000 or a whole multiple in excess thereof or, if less,
the then outstanding principal amount of the Revolving Loans. Partial
prepayments of Term Loans shall be in an aggregate principal amount of
$1,000,000 or a whole multiple of $50,000 in excess thereof or, if less, the
outstanding principal amount of the Loan being prepaid. All prepayments shall be
allocated to the Lenders based on their respective Total Percentages (as such
term is used in the definition of "Percentage"). The Borrower shall further
instruct the Lenders whether to apply such prepayment to Revolving Loans or Term
Loans or both; provided such instructions shall require the same pro rata
allocation by each Lender among the Revolving Loans and Term Loans held by them.
(b) If any notice of prepayment is given, the amount specified
in such notice shall be due and payable on the date specified therein.
Prepayments of the Loans shall be accompanied by payment or accrued interest to
the payment date on the principal amount prepaid.
(c) Partial prepayments of the Term Loans shall be applied to
the installments of principal under the Term Loans in the inverse order of their
respective scheduled maturities.
(d) Amounts prepaid on account of the Term Loans may not be
reborrowed.
(e) [Intentionally omitted].
(f) In the event that (i) any Person constituting the Borrower
or any Subsidiary of any Person constituting the Borrower (other than SSG) shall
effect a Transfer of any Capital Stock issued by ERC US or SSG owned by such
Person constituting the Borrower or any such Subsidiary or (ii) ERC US shall
issue any additional Capital Stock or effect a Transfer of any of its Capital
Stock held as treasury shares or otherwise (other than (1) in satisfaction of
the exercise of stock options held by any employee or director of ERC US
pursuant to ERC US' stock option plan, (2) the issuance of warrants (and Capital
Stock in satisfaction thereof) to brokerage houses in connection with the
marketing of the Capital Stock of ERC US, (3) the issuance of Capital Stock of
ERC US pursuant to exchange offers in connection with investments in other
Persons permitted by the terms hereof and (4) or (iii) any Person constituting
the Borrower or any Subsidiary of any Person constituting the Borrower (other
than SSG) shall effect a Transfer of any assets (other than Transfers of
inventory in the ordinary course of business and Transfers of equipment which is
or to be replaced in the ordinary course within three (3) months from the date
of Transfer); in each case described in the preceding clauses (i), (ii) and
(iii) for a price in excess of $500,000 in the aggregate in any fiscal year
(whether such Transfers are made in one or more transactions); the Borrower
shall, simultaneously with the consummation of any such Transfers, prepay the
Term Loans in an amount equal to the net proceeds of such Transfer(s) (including
the first $500,000 thereof but after deducting reasonable attorneys' fees and
other customary costs of Transfer). Each such prepayment shall be applied to
required payments of the principal of the Term Loan pursuant to Section 2.6(b)
in the inverse order of maturity until the Term Loan is paid in full. Principal
amounts repaid pursuant to this Section 2.9(f) may not reborrowed. No Transfer
referred to in this Section 2.9(f) shall be effected except on arms length
business terms.
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(g) The Agent shall disburse all prepayments of the Loans to
the Lenders on a pro rata basis.
2.9A Borrowings to Repay Swing Loans.
PNC may, at its option, exercisable at any time for any reason
whatsoever, demand repayment of the Swing Loans, and each Lender shall make a
Revolving Credit Loan in an amount equal to such Lender's pro rata share (in
accordance with such Lender's Percentage) of the aggregate principal amount of
the outstanding Swing Loans, plus, if PNC so requests, accrued interest thereon,
provided that no Lender shall be obligated in any event to make Revolving Credit
Loans in excess of its Revolving Loan Commitment. Revolving Credit Loans made
pursuant to the preceding sentence shall be Base Rate Loans and shall be deemed
to have been properly requested in accordance with Section 2.3 without regard to
any of the requirements of that provision. PNC shall provide notice to the
Lenders (which may be telephonic or written notice by letter, facsimile or
telex) that such Revolving Credit Loans are to be made under this Section 2.9A
and of the apportionment among the Lenders, and the Lenders shall be
unconditionally obligated to fund such Revolving Credit Loans (whether or not
the conditions specified in Section 2.3 are then satisfied) by the time PNC so
requests, which shall not be earlier than 3:00 p.m. New Jersey time on the
Business Day next after the date the Lenders receive such notice from PNC.
Section 2.10 Conversion and Continuation Options.
The Borrower shall have the right at any time upon prior
irrevocable notice to the Agent (i) not later than 12:00 noon, New Jersey time,
on any Business Day, to convert any Eurodollar Loan to a Base Rate Loan, (ii)
not later than 12:00 noon, New Jersey time, three Business Days prior to
conversion or continuation, to convert any Base Rate Loan into a Eurodollar Loan
or to continue any Eurodollar Loan as a Eurodollar Loan for any additional
Interest Period, and (iii) not later than 10:00 noon, Pittsburgh time, three
Business Days prior to conversion, to convert the Interest Period with respect
to any Eurodollar Loan to another permissible Interest Period, subject in each
case to the following (provided, that Swing Loans shall only be Base Rate
Loans):
(a) a Eurodollar Loan may not be converted at a time other
than the last day of the Interest Period applicable thereto;
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(b) any portion of a Loan maturing or required to be repaid in
less than one month may not be converted into or continued as a Eurodollar Loan;
(c) no Eurodollar Loan may be continued as such and no Base
Rate Loan may be converted to a Eurodollar Loan when any Event of Default has
occurred and is continuing;
(d) any portion of a Eurodollar Loan that cannot be converted
into or continued as a Eurodollar Loan by reason of Section 2.10(b) or 2.10(c)
or otherwise automatically shall be converted at the end of the Interest Period
in effect for such Loan to a Base Rate Loan;
(e) on the last day of any Interest Period for Eurodollar
Loans, if the Borrower has failed to give notice of conversion or continuation
as described in this subsection or if such conversion or continuation is not
permitted pursuant to Section 2.10(d) or otherwise, such Loans shall be
converted to Base Rate Loans on the last day of such then expiring Interest
Period;
(f) accrued interest on a Loan (or portion thereof) being
converted shall be paid by the Borrower at the time of conversion.
Section 2.11 Minimum Amounts of Tranches/Number of Tranches.
All borrowings, conversions and continuations of Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections that, after giving effect
thereto, the aggregate principal amount of the Loans comprising each Eurodollar
Tranche shall be equal to $500,000 or a whole multiple of $100,000 in excess
thereof. No more than six Eurodollar Tranches may be outstanding at any time.
Section 2.12 Interest Rates and Payment Dates.
(a) Subject to the provisions of Section 2.12(c), each Base
Rate Loan shall bear interest at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 365 days, or 366 days in a leap
year equal to the Base Rate plus the Applicable Margin for Base Rate Loans.
(b) Subject to the provisions of Section 2.12(c), each
Eurodollar Loan shall bear interest (computed on the basis of the actual number
of days elapsed over a year of 360 days) at a rate per annum equal to the
Eurodollar Rate for the Interest Period in effect for such Eurodollar Loan plus
the Applicable Margin for Eurodollar Loans in effect for such Interest Period.
(c) If all or a portion of (A) the principal amount of any
Loan, (B) any interest payable thereon or (C) any commitment fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall, upon notice to the
Borrower from the Agent, bear interest at a rate per annum which is
34
(1) in the case of overdue principal, the rate that otherwise
would be applicable thereto pursuant to the foregoing provisions of
this subsection plus 2% per annum or such other lower rate as a court
may impose, or
(2) in the case of overdue interest or fees or other amounts,
the Base Rate plus 2% per annum or such other lower rate as a court may
impose,
in each case from the date of such nonpayment until such amount is paid in full
(as well as after, to the extent permitted by law, as before judgment). In no
event shall any interest to be paid pursuant to this Agreement exceed the
maximum rate permitted by law.
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing on overdue amounts pursuant to
Section 2.12(c) shall be payable on demand.
(e) As soon as practicable the Agent shall notify the Borrower
and the Lenders of (A) each determination of a Eurodollar Rate and Applicable
Margin and (B) the effective date and the amount of each change in the interest
rate on a Loan. Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the Borrower
and the Lenders in the absence of clearly demonstrable error. At the request of
the Borrower, the Agent shall deliver to the Borrower a statement showing the
quotations used by the Agent in determining any interest rate pursuant to
Sections 2.12(a), (b) or (c).
Section 2.13 Inability to Determine Interest Rate.
If prior to the first day of any Interest Period:
(a) the Agent shall have determined (which determination shall
be conclusive and binding upon the Borrower) that adequate and reasonable means
do not exist for ascertaining the Eurodollar Rate for such Interest Period, or
(b) a Lender notifies the Agent and Borrower that the
Eurodollar Rate determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost to such Lender of making or maintaining
the Eurodollar Loans during such Interest Period, or
(c) The Agent shall have determined (which determination shall
be conclusive and binding upon the Borrower) that Dollar deposits in the
principal amounts of the Eurodollars Loans to which such Interest Period is to
be applicable are not generally available in the London Interbank Market,
the Agent shall give notice thereof to the Borrower by fax or telephone as soon
as practicable thereafter. If such notice is given (A) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be made as
Base Rate Loans, and (B) any Loans that were to have been converted to or
continued as Eurodollar Loans on the first day of such Interest Period shall be
converted to or continued as Base Rate Loans. Until such notice has been
withdrawn by the Agent, no Loans shall be made as or converted to or continued
as Eurodollar Loans.
35
Section 2.14 Payments/Funding.
(a) All payments (including prepayments) made by the Borrower
hereunder and under the Notes, whether on account of principal, interest, fees,
or otherwise, shall be made without setoff or counterclaim and shall be made
prior to 12:00 noon, New Jersey time, on the due date thereof to the Agent, for
the account of the Lenders in Dollars and in immediately available funds to the
Agent's account at such address as the Agent shall give notice to the Borrower
and the Lenders (the "Payment Office"). Except for payments received by the
Agent for the account of the Agent in its capacity as such, for the account of
PNC in connection with Swing Loans or for the account of a specific Lender in
accordance with the provisions of this Agreement, the Agent shall, within one
Business Day of funds collection, distribute like funds relating to the payment
of principal, interest or fees pro rata to the Lenders (based on their
Percentages) to which such payment is due and payable for their accounts and at
the addresses as each such Lender shall specify in its notice to the Agent made
in accordance with Section 10.2 of this Agreement. If the Agent fails to so
distribute funds within the time set forth in the preceding sentence, the Agent
shall pay interest on the amount to be distributed at a rate equal to the
Federal Funds Effective Rate from the date such funds were to be distributed to
the date of distribution.
Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Lenders hereunder that the
Borrower will not make such payment in full, the Agent may (but shall not be
obligated to) assume that the Borrower has made such payment in full to the
Agent on such date, and the Agent may, in reliance upon such assumption, cause
to be distributed to each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent the Borrower shall not have so made
such payment in full to the Agent, each Lender shall repay to the Agent
forthwith on demand the amount distributed to such Lender together with interest
thereon, at the rate equal to the Federal Funds Effective Rate, for each day
from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent.
(b) If any principal payment hereunder (other than payments on
Eurodollar Loans) becomes due and payable on a day other than a Business Day,
such payment date shall be extended to the next succeeding Business Day, and
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a Eurodollar Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day (and interest shall accrue during such extension of
time) unless the result of such extension would be to extend such payment into
another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
(c) If on any date a payment is due hereunder, the Borrower
shall pay less than the amount stated to be due or on any date the Agent shall
receive any payment under any Security Document or pursuant to any proceeding to
enforce the Obligations of any Person constituting the Borrower, such proceeds
shall be distributed to the Lenders pro rata based on their respective
Percentages and shall be applied first to costs of collection incurred by each
Lender, second to accrued and unpaid interest, third to principal and then to
the payment of any other amounts due hereunder or the other Loan Documents.
36
(d) The Agent shall fund each Loan by depositing the proceeds
thereof into the account (the "Account") of ERC US (account no. 8019335317) at
PNC's office at Two Xxxxx Xxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000 or
as otherwise directed in a writing from the Borrower to the Agent directing
payment for purposes permitted by the terms hereof; provided that the proceeds
of each Loan shall first be applied to principal prepayments or payments due on
the date of such Loan (without derogating from the Borrower's obligation to
repay) and proceeds of any conversion or continuation of a Loan to or as a
particular Type shall be applied by the Agent solely to effect such conversion
or continuation. Each Lender is hereby authorized to debit the accounts of each
Person constituting the Borrower for all payments due hereunder; provided the
foregoing shall not derogate from the Borrower's obligation to pay or restrict
any Lender's recourse to any particular fund or source of monies. The Borrower
agrees to maintain its primary depository accounts with PNC's office at Xxx
Xxxxx Xxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000.
Section 2.15 Change in Legality.
Notwithstanding any other provision herein, if any change in
any Requirement of Law or in the interpretation or application thereof by a
Governmental Authority shall make it unlawful for a Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the Commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Loans to Eurodollar Loans forthwith shall be canceled and (b) such Loans
then outstanding as Eurodollar Loans, if any, automatically shall be converted
to Base Rate Loans on the respective last days of the then current Interest
Periods with respect to such Loans or within such earlier period as required by
law. If any such conversion of a Eurodollar Loan occurs on a day which is not
the last day of the then current Interest Period with respect thereto, the
Borrower shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 2.17.
Section 2.16 Increased Costs.
(a) If the adoption of, or any change in, any Requirement of
Law or in the interpretation or application thereof by a Governmental Authority
or compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(1) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note or any Eurodollar Loan made by
it, or change the basis of taxation of payments to such Lender in
respect thereof (except for the imposition of and changes in the rate
of tax on the overall net income of the Lender);
(2) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of a Lender which is not otherwise
included in the determination of the Eurodollar Rate hereunder,
including, without limitation, the imposition of any reserves with
respect to Eurocurrency Liabilities under Regulation D of the Board; or
37
(3) shall impose on a Lender any other condition;
(4) and the result of any of the foregoing is to increase the
cost to such Lender, by an amount which such Lender deems to be
material, of making, converting into, continuing or maintaining
Eurodollar Loans hereunder or to reduce any amount receivable hereunder
in respect thereof then, in any such case, the Borrower shall promptly
pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount
receivable. If a Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Agent
and the Borrower of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant
to this subsection submitted by a Lender to the Borrower and Agent
shall include a computation thereof and be conclusive in the absence of
clearly demonstrable error. This covenant shall survive the termination
of this Agreement and the payment of the Notes and all other amounts
payable hereunder.
(5) Each Lender agrees, as promptly as practicable after it
becomes aware of any circumstances referred to above that would result
in such increased cost, the affected Lender shall, to the extent not
inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and
expenses incurred by it and payable to it by the Borrower.
(b) In the event that a Lender shall have determined that any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof does or shall have the effect of
reducing the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such change or compliance
(taking into consideration Lender's or such corporation's policies with respect
to capital adequacy) by an amount deemed by such Lender to be material, then
from time to time, after submission by such Lender to the Borrower (with a copy
to the Agent) of a written request therefore (which shall contain a computation
of the compensating amount to be paid, such computation to be conclusive in the
absences of demonstrable error), the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction.
38
(c) In the event that by reason of any change in any
Requirement of Law (including, without limitation, the lapse or termination of
any treaty) or in the interpretation thereof, or the adoption of any new law,
regulation or requirement by any Governmental Authority, or the imposition of
any requirement of any central bank whether or not having the force of law, (i)
the Agent or any Lender shall, with respect to this Agreement, the Loans, the
Notes or its obligation to make Loans under this Agreement, be subjected to any
withholding or other tax, levy, impost, charge, fee, duty or deduction of any
kind whatsoever (other than franchise taxes imposed by the jurisdiction in which
the Agent or such Lender is domiciled and other than any tax generally imposed
or based upon the net income or branch profits of the Agent or such Lender)
(collectively, "Taxes") or (ii) any change shall occur in the taxation of the
Agent or such Lender with respect to any Loan, the interest payable thereon or
any fees payable hereunder or referred to herein (other than franchise taxes
imposed by the jurisdiction in which the Agent or such Lender is domiciled and
other than any change which affects, and to the extent that it affects, the
taxation of the net income or branch profits of the Agent or such Lender), and
if any such measures or any other similar measure shall result in an increase in
the cost to the Agent or such Lender of making or maintaining any Loan or a
reduction in the amount of principal, interest or fees receivable by the Agent
or such Lender in respect thereof, the Agent or such Lender promptly after
learning of the imposition of such cost or reduction in any amount shall notify
the Borrower and the Agent (if applicable) stating the reasons therefor. The
Borrower shall thereafter pay to the Agent or such Lender, upon demand from time
to time, as additional consideration hereunder, such additional amounts as will
fully compensate the Agent or such Lender for such increased costs or reduced
amounts and shall promptly provide the Agent or such Lender, as the case may be,
with official tax receipts or other evidence of the payment of any taxes paid by
the Borrower. A certificate as to the increased costs or reduced amounts setting
forth the calculations therefor, shall be submitted promptly by the Agent or
such Lender to the Borrower and the Agent (if applicable) and, in the absence of
demonstrable error, shall be conclusive and binding as to the amount thereof. If
the Agent or Lender receives any additional amounts from the Borrower pursuant
to this subsection (c) if requested by Borrower, the Agent or such Lender shall
(at the Borrower's expense) attempt to obtain a refund, reduction, deduction or
credit for any Taxes with respect to the additional amounts paid under this
subsection (c). If the Agent or such Lender actually receives or enjoys the
benefit of any such refund, reduction, deduction or credit for any such Taxes,
the Agent or such Lender shall reimburse the Borrower if and to the extent, but
only the extent, that the Agent or such Lender determines that it has actually
received (i) a refund of taxes or other amounts (together with any interest
actually received thereon from the respective Governmental Authority) which
refund is attributable to the Taxes with respect to which such additional
amounts were paid; or (ii) an effective net reduction (through a reduction,
deduction, credit or otherwise) in any taxes or other amounts otherwise payable
by the Agent or such Lender (including any taxes imposed on or measured by the
net income of the Agent or such Lender), which reduction is attributable to the
Taxes with respect to which such additional amounts were paid. If, at any time
after the Agent or such Lender makes a payment to the Borrower pursuant to the
preceding sentence, the Agent or such Lender determines that it was not entitled
to the full amount of any refund (together with the interest thereon) reimbursed
to the Borrower as aforesaid or that its taxes are not reduced by a credit or
deduction for the full amount of Taxes reimbursed to the Borrower as aforesaid,
the Borrower upon the demand of the Agent or such Lender will promptly pay to
the Agent or such Lender the amounts so refunded to which the Agent or such
Lender was not so entitled, or the amount by which the taxes of the Agent or
such Lender were not so reduced, as the case may be.
(d) If Borrower is required to pay additional amounts under
this Section 2.16 to any Lender, the Borrower may, at its own expense, require
such Lender to transfer and assign in whole or in part, without recourse all or
part of its interests, rights and obligations under this Agreement to an
assignee (which may be another Lender, if a Lender accepts such assignment)
which shall assume such assigned obligations in a writing in form and substance
reasonably acceptable to the Agent; provided that (i) such assignment shall not
conflict with any law, rule or regulation or order of any court or other
Governmental Authority, (ii) the Borrower shall have received a written consent
of the Agent in the case of any entity that is not a Lender, which consent shall
not be unreasonably withheld, and (iii) the Borrower or such assignee shall have
paid to the assigning Lender in immediately available funds the principal of,
and interest accrued to the date of such payment on, the Loans made by it
hereunder and all other amounts owed to it hereunder as of such date.
39
Section 2.17 Indemnity.
(a) The Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of
(1) default by the Borrower in payment when due of any portion
of the principal amount of or interest on any Eurodollar Loan,
(2) default by Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after Borrower has given a
notice requesting the same in accordance with the provisions of this
Agreement,
(3) default by Borrower in making any prepayment after
Borrower has given a notice thereof in accordance with the provisions
of this Agreement, or
(4) the making of a payment or a prepayment of Eurodollar
Loans on a day which is not the last day of an Interest Period with
respect thereto,
including, without limitation, in each case, any such loss or expense arising
from the reemployment of funds obtained by such Lender or from fees payable to
terminate the deposits from which such funds were obtained.
(b) For the purpose of calculation of all amounts payable to a
Lender under this subsection such Lender shall be deemed to have actually funded
its relevant Eurodollar Loan through the purchase of a deposit bearing interest
at the Eurodollar Rate in an amount equal to the amount of that Eurodollar Loan
and having a maturity comparable to the relevant Interest Period; provided,
however, that each Lender may fund each of its Eurodollar Loans in any manner it
sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder.
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Section 2.18 Intentionally omitted.
Section 2.19 Purpose of Loans.
(a) The proceeds of the Loans shall be used for working
capital needs of the Borrower, general corporate purposes and to fund the cash
consideration of the repurchase of certain Capital Stock pursuant to Section 6.6
(b) hereof.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this
Agreement and to make the Loans, the Borrower hereby represents and warrants to
the Agent and the Lenders that as of the Effective Date:
Section 3.1 Financial Condition.
(a) The consolidated balance sheets of ERC US and its
consolidated Subsidiaries as at March 31, 2005 and the related consolidated
statements of income and of cash flows for the fiscal period ended on each such
date, copies of which have heretofore been furnished to each Lender, present
fairly in all material respects the consolidated financial condition of ERC US
and its consolidated Subsidiaries as at such dates, and the consolidated results
of their operations and their consolidated cash flows for the fiscal years then
ended.
(b) All such financial statements, including the related
schedules, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants and as
disclosed therein).
(c) Neither ERC US nor any of its consolidated Subsidiaries
(other than SSG) had, at the date of the most recent balance sheet delivered to
the Agent pursuant to Section 3.1(a) or 5.1 hereof, any material Contingent
Obligation, material contingent liability or material liability for taxes, or
any material long-term lease or material unusual forward or long-term
commitment, including, without limitation, any interest rate or foreign currency
swap or exchange transaction or other financial derivative, except as reflected
in the foregoing statements or in the notes thereto or would not reasonably be
expected to have a Material Adverse Effect.
(d) During the period from April 1, 2005, to and including the
Effective Date hereof there has been no sale, transfer or other disposition by
ERC US or any of its consolidated Subsidiaries (other than SSG) of any material
part of its business or property (other than in the ordinary course of business)
and no purchase or other acquisition of any business or property (including any
Capital Stock of any other Person, other than Capital Stock of ERC US by ERC US,
in any case, other than in the ordinary course of business) material in relation
to the consolidated financial condition of the Borrower and its consolidated
Subsidiaries at March 31, 2005.
41
Section 3.2 No Material Adverse Change.
Since March 31, 2005, there has been no development or event
which has had or could reasonably be expected to have a Material Adverse Effect.
Section 3.3 Corporate Existence; Compliance with Law.
Each of ERC US and its Subsidiaries (other than Inactive
Subsidiaries) (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the corporate power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except where the failure to so qualify or be in good standing therewith would
not have a Material Adverse Effect and (d) is in compliance with all
Requirements of Law except where the failure to comply therewith would not, in
the aggregate, have a Material Adverse Effect.
Section 3.4 Corporate Power; Authorization; Enforceable
Obligations.
(a) Each Person constituting the Borrower has the corporate
power and authority, and the legal right, to make, deliver and perform this
Agreement, the Notes and each other Loan Document to which it is a party and to
borrow hereunder and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement, the Notes and each
other Loan Document to which it is a party and to authorize the execution,
delivery and performance of this Agreement, the Notes and each other Loan
Document to which it is a party.
(b) Except for consents, authorizations, approvals, notices
and filings described on Schedule II, all of which have been obtained, made or
waived, no consent or authorization of, approval by, notice to, filing with or
other act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of this Agreement or the Notes
or any other Loan Document.
(c) This Agreement has been, and each Note and each other Loan
Document to which it is a party will be, duly executed and delivered on behalf
of each Person constituting the Borrower.
(d) This Agreement constitutes, and each Note and each other
Loan Document when executed and delivered will constitute, a legal, valid and
binding obligation of each Person constituting the Borrower enforceable against
each such Person in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
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Section 3.5 No Legal Bar.
The execution, delivery and performance of this Agreement and
the Notes, the borrowings hereunder and the use of the proceeds thereof will not
violate any Requirement of Law or Contractual Obligation of any Person
constituting the Borrower and will not result in, or require, the creation or
imposition of any Lien on any of its respective properties or revenues pursuant
to any such Requirement of Law or Contractual Obligation.
Section 3.6 No Material Litigation.
Except as set forth on Schedule III or disclosed in writing to
the Lenders, no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of the any
Person constituting the Borrower, threatened by or against any Person
constituting the Borrower or against any of its respective properties or
revenues (a) with respect to this Agreement, the Notes or any of the
transactions contemplated hereby, or (b) which if adversely determined would
have a Material Adverse Effect.
Section 3.7 No Default.
No Person constituting the Borrower is in default under or
with respect to any of their respective Contractual Obligations in any respect
which would reasonably be expected to have a Material Adverse Effect. No Default
or Event of Default has occurred and is continuing.
Section 3.8 Ownership of Property; Liens.
Each Person constituting the Borrower has good record and
marketable title in fee simple to, or a valid leasehold interest in, all its
real property, and good title to, or a valid leasehold interest in, all its
other property, and none of such property is subject to any Lien except as
permitted by Section 6.2.
Section 3.9 Intellectual Property.
Each Person constituting the Borrower owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents, technology, know-how and
processes necessary for the conduct of its business as currently conducted
(collectively, the "Intellectual Property") except where the failure to own or
license any such Intellectual Property would not have a Material Adverse Effect.
The Intellectual Property owned or licensed by each Person constituting the
Borrower is set forth on Exhibit I. Except as set forth on Exhibit I, no claim
has been asserted in writing and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property which would have a Material
Adverse Effect, nor does any Person constituting the Borrower know of any valid
basis for any such claim which, if asserted, would have a Material Adverse
Effect. To the best of the knowledge of the Borrower, the use of such
Intellectual Property by each Person constituting the Borrower does not infringe
the rights of any Person.
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Section 3.10 No Burdensome Restrictions.
No Requirement of Law or Contractual Obligation of any Person
constituting the Borrower has, or could reasonably be expected to have, a
Material Adverse Effect.
Section 3.11 Taxes.
Each Person constituting the Borrower has filed or caused to
be filed all tax returns which, to the knowledge of such Person, are required to
be filed and has paid all taxes shown to be due and payable on said returns or
on any assessments made against it or any of its property and all other taxes,
fees or other charges imposed on it or any of its property by any Governmental
Authority (other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of such Person
constituting the Borrower or its respective Subsidiaries, as the case may be);
no tax Lien has been filed, and, to the knowledge of such Person, no claim is
being asserted, with respect to any such tax, fee or other charge in any case
which would have a Material Adverse Effect, except, there is currently a
California unitary tax assessed against ERC US in an amount of approximately
$1,100,000 and no Lien has been filed with respect thereto.
Section 3.12 Federal Regulations.
No part of the proceeds of any Loans will be used for
"purchasing" or "carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U of the Board as now and from time to
time hereafter in effect or for any purpose which violates the provisions of any
Regulations of the Board. If requested by any Lender at any time, each Person
constituting the Borrower will furnish to such Lender a statement in conformity
with the requirements of FR Form U-1 referred to in Regulation U.
Section 3.13 Investment Company Act; Public Utility Holding
Company Act; Other Regulations.
No Person constituting the Borrower is (a) an "investment
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended, or (b) a "holding
company" as defined in, or otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935. No Person constituting the Borrower is
subject to regulation under any federal or state statute or regulation which
limits its ability to incur Indebtedness.
Section 3.14 Subsidiaries.
All the Subsidiaries of ERC US as of the Effective Date and
the ownership of the Capital Stock of such Subsidiaries are listed on Schedule
IV to this Agreement. None of the Capital Stock of any such Subsidiary is
subject to a Lien in favor of any Person (except Liens in favor of the Agent and
Lenders). The aggregate value of the assets of each Person constituting the
Borrower is equal to an amount that is not less than 95% of the aggregate value
of the assets of ERC US and all of its Subsidiaries, after adjusting for
investments in Subsidiaries and intercompany balances.
44
Section 3.15 Employee Grievances.
Except as set forth on Schedule V hereof, as of the Effective
Date no Person constituting the Borrower is a party to any collective bargaining
agreement or, to the best knowledge of such Person, subject to any current
effort to organize, and there are no actions or proceedings pending or, to the
best of the knowledge of such Person, threatened against it, by or on behalf of,
or with, its employees, other than employee grievances arising in the ordinary
course of business which are not, in the aggregate, material.
Section 3.16 ERISA.
(a) Except as set forth in Schedule VI hereof, as of the
Effective Date no Person constituting the Borrower has any Plan (including
without limitation any Multiemployer Plan) or any similar arrangement (a
"Foreign Plan") under the law of their domicile, in the case of the Foreign
Subsidiaries, or have made or make any payments to any Plan or Foreign Plan.
(b) Each Person constituting the Borrower is and has at all
times been in substantial compliance with all applicable provisions of ERISA,
except where a failure to be in such compliance would not have a Material
Adverse Effect. Each Foreign Subsidiary is in compliance with all Requirements
of Law related to any Foreign Plan.
(c) No Person constituting the Borrower has engaged in a
transaction in connection with which such Person or any ERISA Affiliate could be
subject to a material liability for either a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code.
(d) There has been no termination of a Plan or trust created
under any Plan that would give rise to a material liability to the PBGC on the
part of any Person constituting the Borrower or any ERISA Affiliate. No material
liability to the PBGC has been or is expected to be incurred with respect to any
Plan by any Person constituting the Borrower or any ERISA Affiliate. The PBGC
has not instituted proceedings to terminate any Plan. There exists no condition
or set of circumstances which presents a material risk of termination or partial
termination of any Plan by the PBGC. Each Person constituting the Borrower and
each ERISA Affiliate have paid all premiums to the PBGC when due. No Foreign
Subsidiary has incurred any material liability to any Governmental Authority or
other Person with respect to any Foreign Plan.
(e) Full payment has been made of all amounts which are
required under the terms of each Plan to have been paid as contributions to such
Plan as of the last day of the most recent fiscal year of such Plan ended on or
before the date of this Agreement, and no accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, exists with respect to any Plan. No Person constituting the Borrower nor
any ERISA Affiliate has failed to make a required installment under Section
412(m) of the Code or any other payment required under Section 412 of the Code
on or before the due date.
45
(f) The value of the benefit liabilities (as defined in
Section 4001(a)(16) of ERISA) of each Plan (based on the actuarial assumptions
contained in Title IV of ERISA) does not exceed the fair market value of the
assets of such Plan. No Person constituting the Borrower nor any ERISA Affiliate
is required to provide security to a Plan under Section 401(a)(29) of the Code.
(g) No Person constituting the Borrower nor any ERISA
Affiliate has made a complete or partial withdrawal from a Multiemployer Plan.
To the best knowledge of each Person constituting the Borrower the liability to
which such Person or any ERISA Affiliate would become subject under ERISA if
such Person and all ERISA Affiliates were to withdraw completely from all
Multiemployer Plans as of the most recent valuation date, together with any
secondary liability for withdrawal liability such Person and any ERISA Affiliate
may have as of the date hereof, would not have a Material Adverse Effect. To the
best knowledge of each Person constituting the Borrower no such Multiemployer
Plan is in reorganization (as such term is defined in Section 4241 of ERISA) or
is insolvent (as such term is defined in Section 4245 of ERISA).
(h) No Person constituting the Borrower (i) has any liability
for any Plan or Multiemployer Plan to which any Subsidiary of ERC US (other than
the Subsidiary Borrowers) contributes or as to which such Subsidiary has any
liability; or (ii) makes any contribution to any such Plan or Multiemployer
Plan; or (iii) has any employees enrolled in or covered by any such Plan or
Multiemployer Plan.
Section 3.17 ER Intercompany Payable.
The ER Intercompany Payable is not evidenced by any note or
other instrument or writing except only by entries on the books and records of
the Foreign Subsidiaries. The Foreign Subsidiaries will make a notation on such
books and records to reflect the subordination of the ER Intercompany Payable
pursuant to the HK Subordination Agreement. In the event the ER Intercompany
Payable becomes evidenced by a note, instrument or other writing, the Foreign
Subsidiaries will (prior to its execution) cause the form thereof to contain a
reference to the provisions of the HK Subordination Agreement satisfactory in
form and substance to Agent and shall promptly deliver a copy of such note,
instrument or other writing to the Agent as executed.
Section 3.18 Insurance.
Schedule 3.18 lists all material insurance policies and other
bonds to which any Borrower or Subsidiary of any Borrower is a party, all of
which are valid and in full force and effect. No notice has been given or claim
made and 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 Borrower and each Subsidiary of each
Borrower in accordance with prudent business practice in the industry of each
Borrower and their Subsidiaries.
46
Section 3.19 Security Interests.
The Liens and security interests granted to the Agent for the
benefit of the Lenders pursuant to the Security Documents 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. 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 relevant stock certificates or other
certificates, and recordation of the Intellectual Property Security Agreements
in the United States Patent and Trademark Office and United States Copyright
Office, as applicable, 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 Security Documents, 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.
Section 3.20 Material Contracts; Burdensome Restrictions.
Schedule 3.20 lists all material contracts relating to the
business operations of each Borrower and each Subsidiary of each Borrower,
including all employee benefit plans and labor contracts. All such material
contracts are valid, binding and enforceable upon such Borrower or Subsidiary
and each of the other parties thereto in accordance with their respective terms,
and there is no material default thereunder, to the Borrower's knowledge, with
respect to parties other than such Borrower or Subsidiary. None of the Borrowers
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
result in a Material Adverse Effect
Section 3.21 Environmental Matters.
Except as disclosed on Schedule 3.21:
(i) The Borrower has not received any material Environmental
Complaint, whether directed or issued to Borrower or relating or pertaining to
any prior owner, operator or occupant of the Property, and has no reason to
believe that it might receive a material Environmental Complaint.
(ii) To Borrower's knowledge, no activity of any Borrower at
the Property is being or has been conducted in violation of any Environmental
Safety Law or Required Environmental Permit and to the knowledge of Borrower no
activity of any prior owner, operator or occupant of the Property was conducted
in violation of any Environmental Safety Law.
(iii) Borrower is unaware of any Regulated Substances present
on, in, under, or emanating from, or to Borrower's knowledge emanating to, the
Property or any portion thereof that result in Contamination.
(iv) Each Borrower has all Required Environmental Permits and
all such Required Environmental Permits are in full force and effect.
47
(v) Each Borrower has submitted to an official body and/or
maintains, as appropriate, all Required Environmental Notices.
(vi) To Borrower's knowledge, no structures, improvements,
equipment, fixtures, impoundments, pits, lagoons or aboveground or underground
storage tanks located on the Property contain or use, except in compliance with
Environmental Safety Laws and Required Environmental Permits, Regulated
Substances or otherwise are operated or maintained except in compliance with
Environmental Safety Laws and Required Environmental Permits. To the knowledge
of Borrower, no structures, improvements, equipment, fixtures, impoundments,
pits, lagoons or aboveground or underground storage tanks of prior owners,
operators or occupants of the Property contained or used, except in compliance
with Environmental Safety Laws, Regulated Substances or otherwise were operated
or maintained by any such prior owner, operator or occupant except in compliance
with Environmental Laws.
(vii) To the knowledge of Borrower, no facility or site to
which Borrower, either directly or indirectly by a third party, has sent
Regulated Substances for storage, treatment, disposal or other management has
been or is being operated in violation of Environmental Safety Laws or pursuant
to Environmental Safety Laws is identified or proposed to be identified on any
list of contaminated properties or other properties which pursuant to
Environmental Safety Laws are the subject of an investigation, cleanup, removal,
remediation or other response action by an official body.
(viii) To Borrower's knowledge, no portion of the Property is
identified or to the knowledge of Borrower proposed to be identified on any list
of contaminated properties or other properties which pursuant to Environmental
Safety Laws are the subject of an investigation or remediation action by an
official body, nor to the knowledge of Borrower is any property adjoining or in
the proximity of the Property identified or proposed to be identified on any
such list.
(ix) To Borrower's knowledge, no portion of the Property
constitutes an Environmentally Sensitive Area.
No Borrower is aware of any lien or other encumbrance
authorized by Environmental Safety Laws against the Property or any reason to
believe that such a lien or encumbrance may be imposed.
Section 3.22 Anti-Terrorism Laws.
(i) General.
None of the Borrower or any Affiliate of any Borrower, is in
violation of any Anti-Terrorism Law or engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism
Law.
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(ii) Executive Order No. 13224.
None of the Borrower, or any Affiliate of any Borrower, or
their respective agents acting or benefiting in any capacity in connection with
the Loans, Letters of Credit or other transactions hereunder, is any of the
following (each a "Blocked Person"):
(a) a Person that is listed in the annex to, or is
otherwise subject to the provisions of, the Executive Order No. 13224;
(b) a Person owned or controlled by, or acting for or
on behalf of, any Person that is listed in the annex to, or is
otherwise subject to the provisions of, the Executive Order No. 13224;
(c) a Person or entity with which any Lender is
prohibited from dealing or otherwise engaging in any transaction by any
Anti-Terrorism Law;
(d) a Person or entity that commits, threatens or
conspires to commit or supports "terrorism" as defined in the Executive
Order No. 13224;
(e) a Person or entity that is named as a "specially
designated national" on the most current list published by the U.S.
Treasury Department Office of Foreign Asset Control at its official
website or any replacement website or other replacement official
publication of such list, or
(f) a person or entity who is affiliated or
associated with a person or entity listed above.
No Borrower or to the knowledge of any Borrower, any of its agents
acting in any capacity in connection with the Loans, Letters of Credit or other
transactions hereunder (i) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of
any Blocked Person, or (ii) deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order No. 13224.
Section 3.23 Tax Shelter Regulations.
No Borrower intends to treat the Loans and/or Letters of Credit and
related transactions as being a "reportable transaction" (within the meaning of
Treasury Regulation Section 1.6011-4). In the event any Borrower determines to
take any action inconsistent with such intention, the Borrower will promptly (1)
notify the Agent thereof, and (2) deliver to the Agent a duly completed copy of
IRS Form 8886 or any successor form. If the Borrower so notifies the Agent, the
Borrower acknowledges that one or more of the Lenders may treat its Loans and/or
Letters of Credit as part of a transaction that is subject to Treasury
Regulation Section 301.6112-1, and such Lender or Lenders, as applicable, will
maintain the lists and other records required by such Treasury Regulation.
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ARTICLE 4.
CONDITIONS PRECEDENT
Section 4.1 Conditions to Effective Date.
This Agreement shall become effective on the date (the
"Effective Date") on which each condition listed in Section 4.2 is satisfied and
each of the following shall have occurred:
(a) The Agent shall have received counterparts of (i) this
Agreement, executed and delivered by a duly authorized officer of each Person
constituting the Borrower and each Lender, and (ii) each Security Document and
other Loan Document executed by each Person party thereto. Each Lender shall
have received a Revolving Credit Note and Term Note, and PNC shall have received
a Swing Loan Note, in each case, conforming to the requirements hereof and
executed by a duly authorized officer of each Person constituting the Borrower.
(b) The Agent shall have received an officer's certificate of
a duly authorized officer of each Person constituting the Borrower and Xxxxx
dated as of the Effective Date and certifying that the Secretary's Certificates
delivered to the Agent by each Person constituting a Borrower (except for ER
Macao) and Xxxxx on June 28, 2002, and except as set forth on said certificate
all attachments thereto remain accurate and have not been amended, modified,
revoked or rescinded.
(c) The Agent shall have received the executed legal opinion
of Xxxxxxxxxx Xxxxxxx PC, US counsel to the Persons constituting the Borrower,
together with the opinions of Xxxxx & XxXxxxxx, Hong Kong counsel to ER Hong
Kong, Xxxxxxx, Xxxx & Xxxxxxx, British Virgin Islands counsel to ER BVI and
Xxxxxxx Global Limited, and Macao counsel to ER Macao, substantially in the form
of Exhibit J. Such legal opinions shall cover such matters incident to the
transactions contemplated by this Agreement as the Agent and the Lenders
reasonably may require.
(d) The Agent shall have received a certificate of Xxxxxxx
Radio Macao dated as of the Effective Date and certifying (1) that attached
thereto is a true, complete and correct copy of resolutions duly adopted by its
Board of Directors authorizing (x) the execution, delivery and performance of
this Agreement and the Notes and the other Loan Documents and (y) the borrowings
contemplated hereunder and that such resolutions have not been amended,
modified, revoked or rescinded, (2) as to the incumbency and specimen signature
of each director executing any Loan Documents on its behalf and (3) that
attached thereto are true and complete copies of its organizational documents;
and such certificate and the resolutions attached thereto shall be in form and
substance reasonably satisfactory to the Agent.
(e) The Borrower shall have paid (i) all fees set forth in
Sections 2.4(b) and 2.4(c) and 2.4(d) hereof on the dates specified and (ii) all
fees of counsel to the Agent submitted on the date hereof as previously agreed
to. This condition precedent does not derogate from the Borrower's continuing
obligations under Section 10.5.
(f) The Agent shall have received a Waiver and Consent from
landlords of collateral locations with respect to which a Waiver and Consent is
not currently existing, in each case in form and substance satisfactory to the
Agent.
(g) The Lenders shall have received such other materials,
documents and papers regarding the Borrower or the Loans as the Lenders may
reasonably require.
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(h) The Agent shall have received (i) all UCC Financing
Statements or other public filing documents required to perfect any security
interests and other evidence of the Liens granted pursuant to the Security
Documents and (ii) original stock certificates evidencing all Capital Stock
pledged pursuant to the Stock Pledge Agreement together with original stock
powers (or equivalent forms) executed in blank in form and substance
satisfactory to the Agent.
(i) ERC US shall have delivered to the Agent the most recent
draft of ERC US' financial statements for the fiscal year ended March 31, 2005
and such statements shall be acceptable to the Agent.
(j) The Agent shall have received an appraisal of the property
pledged to the Agent for the benefit of the Lenders pursuant to the Intellectual
Property Security Agreements, in form and substance satisfactory to the Agent.
(k) To the extent not listed above, the Agent shall have
received, or shall have verified completion of, each item referenced on the
closing checklist attached hereto as SCHEDULE 4.1(N), in form or in a manner
reasonably satisfactory to the Agent.
(l) All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall be reasonably
satisfactory in form and substance to the Lenders, and the Agent and the Lenders
shall have received such other documents and legal opinions in respect of any
aspect or consequence of the transactions contemplated hereby or thereby as they
may reasonably request.
Section 4.2 Conditions to Each Loan.
The obligation of the Lenders to make any Loan requested to be
made on any date (including, without limitation, the initial Loan) is subject to
the satisfaction of the following conditions precedent:
(a) Each of the representations and warranties made by each
Person constituting the Borrower in or pursuant to the Loan Documents shall be
true and correct in all material respects on and as of such date as if made on
and as of such date except for representations and warranties which speak as of
another date, in which case such representations and warranties shall have been
true in all material respects as of such date (it being agreed that for purposes
of this Section 4.2 (a) the date referred to in Section 3.2 shall refer to the
date of the then most recent audited financial statements of ERC US and its
consolidated Subsidiaries delivered to the Agent.
(b) No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the Loans requested to be made
on such date.
(c) The Agent shall have received a Borrowing Base Certificate
for the then most recently ended Calculation Period in accordance with Section
5.2(c).
(d) The Agent and the Lenders shall have received all fees due
and owing pursuant to Sections 2.4.
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(e) No notice of, or any other document or instrument
creating, any federal tax Lien or Lien under Section 412 of the Code or Section
4068 of ERISA shall have been issued, recorded or filed in an amount in excess
of $100,000 with respect to the assets of any Person constituting the Borrower
and no Lender shall have informed the Agent or the Borrower that such Lender has
processed any such Lien or has notice thereof.
(f) No restrictions shall have been imposed on the
convertibility or transferability of any currency by any Governmental Authority
where ER Hong Kong or ER BVI is domiciled which the Agent deems in its business
judgment will have an adverse impact on the ability of any Person constituting
the Borrower to pay or perform the Obligations hereunder or under the other Loan
Documents or to continue to operate its business.
Each borrowing hereunder shall constitute a representation and
warranty by the Borrower as of the date of such Loan that the conditions
contained in this Section 4.2 have been satisfied.
ARTICLE 5.
AFFIRMATIVE COVENANTS
Each Person constituting the Borrower hereby agrees that, so
long as the Commitments remain in effect, any Note remains outstanding and
unpaid or any other amount is owing to the Agent or any Lender hereunder, each
Person constituting the Borrower shall and shall cause their respective
Subsidiaries, other than SSG and Inactive Subsidiaries, to:
Section 5.1 Financial Statements, Budgets and Forecasts.
Furnish to the Agent (with sufficient copies for each Lender):
(a) as soon as available but in any event within 120 days of
the end of each fiscal year of ERC US, (1) a copy of the consolidated and
consolidating balance sheet of ERC US and its consolidated Subsidiaries as at
the end of such fiscal year and the related consolidated and consolidating
statements of income and retained earnings and of cash flows for such fiscal
year, setting forth in each case in comparative form the figures for the
previous fiscal year, prepared internally by a Responsible Officer, (2) a copy
of the consolidated balance sheet of ERC US and its consolidated Subsidiaries as
at the end of such fiscal year and the related consolidated statements of income
and retained earnings and of cash flows for such fiscal year, certified by and
reported on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by BDO Xxxxxxx, LLP or
other independent certified public accountants of nationally recognized standing
reasonably acceptable to the Agent; together with consolidating schedules which
set forth columnar information for each of ERC US and its consolidated
Subsidiaries (other than SSG) and SSG, an elimination column and the
consolidated results for ERC US and its consolidated Subsidiaries, and in any
event in substantially the same format as presented to the Agent by Ernst &
Young, LLP for the fiscal year ended March 31, 2003, and (3) a compliance
certificate by a Responsible Officer as to such financial statements being
fairly stated in all material respects when considered in relation to the
consolidated financial statements of ERC US and its consolidated Subsidiaries;
and
52
(b) as soon as available, but in any event not later than 60
days after the end of each of the first three quarterly periods of each fiscal
year of ERC US, the unaudited consolidated and consolidating balance sheet of
ERC US and its consolidated Subsidiaries as at the end of such fiscal quarter
and the related unaudited consolidated and consolidating statements of income
and retained earnings and of cash flows of ERC US and its consolidated
Subsidiaries for such fiscal quarter and the portion of the fiscal year through
the end of such fiscal quarter, setting forth in each case in comparative form
the figures for the previous year, together with a compliance certificate by a
Responsible Officer as to their being fairly stated in all material respects
when considered in relation to the consolidated financial statements of ERC US
and its consolidated Subsidiaries (subject to normal year-end audit
adjustments); and
(c) concurrently with the delivery of the financial statements
referred to in Section 5.1(a) above, the annual budget and any forecasts or
projections of ERC US and its consolidated Subsidiaries (except in the case of
the delivery of the financial statements for the fiscal year ending March 31,
2005, in which case said annual budget shall be due on or before July 31, 2005.
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
Section 5.2 Certificates; Other Information.
Furnish to the Agent (with sufficient copies for each Lender):
(a) concurrently with the delivery of the financial statements
referred to in Sections 5.1(a) and 5.1(b), the following: (i) a certificate of a
Responsible Officer of ERC US (A) stating that, to the best of such Officer's
knowledge such Responsible Officer has obtained no knowledge of any Default or
Event of Default, except as specified in such certificate and (B) showing the
calculation of the financial covenants contained in Sections 6.11, 6.12 and 6.13
hereof and certifying the accuracy of such calculations; and (ii) an updated
listing of all license agreements for intellectual property to which ERC US
and/or any of its Subsidiaries is a party as licensor or licensee.
(b) within five Business Days after the same are sent, copies
of all financial statements and reports which ERC US sends to its stockholders
generally, and within five days after the same are filed, copies of all
financial statements and reports which ERC US may make to, or file with, the
Securities and Exchange Commission or any successor or analogous Governmental
Authority;
(c) within seven Business Days after the end of each
Calculation Period and, in the event the Calculation Period becomes a seven day
period pursuant to the definition of such term, by the Wednesday next following
the end of each Calculation Period, (i) a Borrowing Base Certificate as of the
last day of such Calculation Period which certificate shall include, inter alia,
an accounts receivable aging report for each Person constituting the Borrower as
of the end of the Calculation Period covered by such certificate, and (ii) a
report with respect to each back to back letter of credit facility and each
other credit facility of ER Hong Kong and ER BVI, giving notice of any failure
of any issuer of any letter of credit under any such facility to honor a draw
thereunder for any reason and notice of disputes with respect to any such
letters of credit;
53
(d) promptly upon their becoming available to the Borrower,
management letters submitted to the Borrower by independent accountants in
connection with any annual, interim or special audit;
(e) promptly after any Borrower determines that it intends to
treat any of the Loans, Letters of Credit or related transactions as being a
"reportable transaction" as provided in Section 3.23 (1) a written notice of
such intention to the Agent, and (2) a duly completed copy of IRS Form 8886 or
any successor form; and
(f) promptly, such additional financial and other information
as the Agent from time to time reasonably may request.
Section 5.3 Payment of Obligations.
Pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all its obligations of
whatever nature, except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect thereto have been provided on the books of the relevant
Person constituting the Borrower or its Subsidiaries, as the case may be or
except for amounts not exceeding $500,000, in the aggregate, incurred in the
ordinary course of business but subject to Section 6.2.
Section 5.4 Conduct of Business and Maintenance of Existence.
Continue to engage in businesses related to the businesses now
conducted by it and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business except as otherwise permitted pursuant to Section 6.4; comply with all
Contractual Obligations and Requirements of Law (excluding, for purposes of this
subsection, Requirements of Law specifically addressed in other subsections of
this Article 5) except, in the case of any Inactive Subsidiary, to the extent
that failure to comply therewith would not, in the aggregate, have a Material
Adverse Effect.
54
Section 5.5 Maintenance of Property; Insurance.
Keep all property useful and necessary in its business in good
working order and condition, ordinary wear and tear excepted; maintain with
financially sound and reputable insurance companies (rated A or better by A.M.
Best & Co.) insurance on substantially all its property (including, without
limitation, inventory) in at least such amounts and against at least such risks
(but including in any event general liability, product liability and business
interruption) as is required by Agent in its reasonable business judgment and
available in the marketplace; cause Agent to be a loss payee on all such
insurance policies and furnish to the Agent proof reasonably satisfactory to the
Agent of the annual renewal thereof (within 30 days of such renewal) and, upon
written request, such other information as to the insurance carried as Agent may
reasonably request. Such insurance policies that cover goods shall provide that
the insurance company shall give Agent at least thirty (30) days' written notice
before any such policy of insurance is altered or canceled and that no act,
whether willful or negligent, or default of Borrower shall affect the right of
Agent to recover under such policy of insurance in case of loss or damage.
Borrower irrevocably makes, constitutes and appoints Agent (and all officers,
employees or agents designated by Agent) as Borrower's true and lawful attorney
(and agent-in-fact) for the purpose, following an Event of Default, of making,
settling and adjusting claims under such policies of insurance, endorsing the
name of the relevant Persons constituting the Borrower on any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance and making all determinations and decisions with respect to such
policies of insurance.
Section 5.6 Inspection of Property; Books and Records;
Discussions.
Keep proper books of record and account in which full, true
and correct entries in conformity with prudent business practices and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities; and permit representatives of the Agent and each
Lender during normal business hours and upon reasonable notice (unless an Event
of Default has occurred and is continuing, in which case no such notice from the
Agent or any Lender shall be required) to visit and inspect any of its
properties, examine and make abstracts from any of its books and records and
conduct asset/system reviews and/or appraisals, including, without limitation,
up to two (2) field exams every fiscal year of ERC US during the term hereof to
be performed by a third party acceptable to the Required Lenders and an annual
inventory appraisal to be performed by a third party acceptable to the Required
Lenders (all such asset/system reviews and appraisals, field exams and inventory
appraisals to be at the Borrower's sole cost and expense, the cost of which
shall be paid by Borrower on demand from the Agent) at any reasonable time and
as often as may reasonably be desired and to discuss the business, operations,
properties and financial and other condition of any Person constituting the
Borrower and its Subsidiaries with officers and employees of such Person and its
Subsidiaries and with its independent certified public accountants.
55
Section 5.7 Notices. Promptly give notice to the Agent of:
(a) the occurrence of any Default or Event of Default of which
the Borrower has knowledge;
(b) any (i) default or event of default under any Contractual
Obligation of any Person constituting the Borrower or any of its Subsidiaries,
other than SSG and Inactive Subsidiaries, or (ii) litigation, investigation or
proceeding which may exist at any time between any Person constituting the
Borrower or any of its Subsidiaries, other than SSG and Inactive Subsidiaries,
and any Governmental Authority, which in either case, if not cured or if
adversely determined, as the case may be, would have a Material Adverse Effect;
(c) any litigation or proceeding affecting any Person
constituting the Borrower or any of its Subsidiaries in which the amount
involved is $500,000 or more and not covered by insurance or in which injunctive
or similar relief is sought;
(d) the occurrence of any event having a Material Adverse
Effect; and
(e) The failure of any Person which has issued one or more
letters of credit in a face amount equal to or greater than $100,000 (or its
equivalent in any currency), in the case of trade letters of credit, and
$500,000, in the case of back to back letters of credit (or its equivalent in
any currency), singly or in the aggregate to the Foreign Subsidiaries, as
beneficiary, or for the account of any Foreign Subsidiary, to honor a draw under
such letter of credit for any reason.
Each notice pursuant to this subsection shall be accompanied
by a statement of a Responsible Officer of the relevant Person constituting the
Borrower setting forth details of the occurrence referred to therein and stating
what action such Person proposes to take with respect thereto.
Section 5.8 ERISA Compliance.
Comply with all the applicable provisions of ERISA now or
hereafter in effect with respect to each of its Plans except where the failure
to comply would not have a Material Adverse Effect. Notify the Lender of the
following events, as soon as possible and in any event within thirty days after
the Borrower knows or has reason to know thereof: (i) the occurrence of any
Reportable Event with respect to any Plan; (ii) the occurrence of a prohibited
transaction (as defined in Section 406 of ERISA or Section 4975 of the Code)
with respect to any Plan, (iii) the institution of proceedings or the taking or
expected taking of any other action by the PBGC or any Person constituting the
Borrower or any ERISA Affiliate to terminate or withdraw or partially withdraw
from any Plan and, with respect to a Multiemployer Plan, the Reorganization or
Insolvency of such Plan (as such terms are defined in ERISA), (iv) the failure
of any Person constituting the Borrower or any ERISA Affiliate to make a
required installment under Section 412 (m) of the Code or any other payment
required under Section 412 of the Code on or before the due date or (v) the
adoption of an amendment with respect to a Plan so that any Person constituting
the Borrower or any ERISA Affiliate is required to provide security to the Plan
under Section 401(a)(29) of the Code, and in addition to such notice, promptly
deliver to the Lender a certificate signed by a Responsible Officer setting
forth the details relating thereto, and the action that such Person and the
ERISA Affiliate propose to take with respect thereto and when known, any action
taken or threatened by the Internal Revenue Service or the PBGC, together with a
copy of any notice to the PBGC or the Internal Revenue Service or any notice
delivered by the PBGC or the Internal Revenue Service.
56
Section 5.9 Taxes and Claims.
Pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
property belonging to it and which upon non-payment could become a Lien on any
portion of its property, prior to the date on which penalties attach thereto;
provided that, subject to any more restrictive provisions contained in the Loan
Documents, Borrower shall not be required to pay or cause to be paid any such
tax, assessment, charge or levy the payment of which is being contested in good
faith and by proper proceedings and for which adequate reserves are being
maintained in accordance with GAAP; provided, however, Borrower shall
immediately pay and discharge or cause to be paid and discharged any such
contested taxes, assessments and governmental charges or levies in excess of
$100,000 upon the commencement of any proceeding to foreclose, sell or otherwise
execute on the Lien thereof.
Section 5.10 Environmental Matters.
(a) Borrower shall defend, indemnify and hold harmless the
Agent and all Lenders from and against any and all Environmental Liabilities.
(b) Borrower shall not cause or permit (or allow any subtenant
to cause or permit) (i) any real property owned or leased by it, or any part
thereof, to be used to generate, manufacture, refine, transport, treat, store,
handle, dispose, transfer, produce or process Hazardous Materials in violation
of the Environmental and Safety Laws.
(c) The provisions of this Section 5.10 shall be in addition
to any other obligation and liability the Borrower may have to the Agent and the
Lenders, and shall survive the transactions contemplated herein, the termination
of this Credit Agreement and the repayment of all Obligations.
Section 5.11 Shipping Documents.
Upon reasonable request by Agent, (i) each of the Subsidiary
Borrowers or any one or more of them as Agent shall direct from time to time,
shall deliver the copies of all ocean or other bills of lading and other
shipping documents (collectively, "Shipping Documents") for each shipment of
goods made by or for any Subsidiary Borrower to ERC US, MI or any other
Subsidiary or Person receiving goods (and acting on ERC US' behalf) to be sold
by ERC US to be delivered to the Agent or any Person selected by Agent to act on
its behalf (including without limitation any Lender) and/or (ii) upon the
occurrence and during the continuance of an Event of Default, cause the Agent or
any Person selected by Agent to act on its behalf (including without limitation
any Lender) to be named on such Shipping Documents as a Person necessary to
negotiate or effect a Transfer of such Shipping Documents or the goods covered
thereby, and (iii) ERC US shall cause any other Person shipping goods to ERC US
to take the actions described in clause (i) and (ii) of this Section 5.11.
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Section 5.12 Significant Subsidiary.
Cause each Subsidiary which becomes a Significant Subsidiary
after the Closing Date (if not already a Subsidiary Borrower) to become a party
hereto by executing and delivering an Assumption Agreement to this Agreement. If
any two (2) or more Inactive Subsidiaries (a "Significant Group") taken together
would constitute a Significant Subsidiary, Borrower shall cause so many of such
Inactive Subsidiaries to become a party hereto (by executing and delivering an
Assumption Agreement to this Agreement) as is necessary to cause the remaining
Person(s) in such group to cease to be a Significant Group.
Section 5.13 Waivers and Consents.
Borrower shall use reasonable efforts to obtain Waivers and
Consents substantially in the form of Exhibit L hereto from each
warehousemen/lessor of each location in the United States of America at which
any Person constituting the Borrower maintains any Collateral (as defined in the
Security Agreements) and which has not been obtained prior to the Effective
Date.
Section 5.14 Lockbox Account.
ERC US shall maintain those lockbox and other deposit accounts
and full cash dominion with PNC Bank, National Association (in that capacity,
the "Depository") to which their customers will be directed to make payment on
accounts and into which proceeds of collateral shall be promptly deposited, and
shall maintain control agreements with the Depository and the Agent with respect
to such deposit accounts providing for a first security therein in favor of the
Agent for the benefit of the Lenders, all in form and substance satisfactory to
the Required Lenders.
ARTICLE 6.
NEGATIVE COVENANTS
Each Person constituting the Borrower hereby agrees that, so
long as the Commitments remain in effect, any Note remains outstanding and
unpaid or any other amount is owing to the Agent or any Lender hereunder, it
shall not, and shall not permit any of their respective Subsidiaries, other than
SSG, to, directly or indirectly:
Section 6.1 Limitation on Indebtedness.
Create, incur, assume or suffer to exist any Indebtedness,
except:
(a) Indebtedness (i) in respect of the Loans, the Notes and
other obligations of such Person constituting the Borrower under this Agreement
and (ii) arising with respect to Hedging Agreements;
(b) Indebtedness of all Foreign Subsidiaries shall not exceed
$95,000,000 in the aggregate, and any collateral pledged to secure such
Indebtedness shall not exceed an amount in excess of 35% of the of such
Indebtedness.
58
(c) ERC US may guarantee up to $5,000,000 (or its equivalent
in other currencies) of the aggregate liability of any Foreign Subsidiary or
other trade letter of credit facilities permitted by 6.1(b).
(d) ERC Intercompany Payable in the aggregate principal amount
of $44,000,000 during the fiscal year ending March 31, 2006 plus an additional
$3,000,000 for each fiscal year thereafter. ERC US shall not (i) at any time
reduce the outstanding principal amount of the ERC Intercompany Payable to an
amount that is less than $44,000,000 during the fiscal year ended March 31, 2006
plus an additional $3,000,000 for each fiscal year thereafter, and (ii) make any
payment with respect thereto at any time during which an Event of Default has
occurred and is continuing. None of ER Hong Kong, ER BVI or ER Macao shall
effect a Transfer of the ERC Intercompany Payable.
(e) Unsecured Indebtedness not exceeding $500,000 and which
has no negative pledge covenant of a Person which becomes a Subsidiary after the
date hereof, provided that such Indebtedness existed at the time such Person
became a Subsidiary and was not created in anticipation thereof;
(f) Capital Lease Obligations plus purchase money indebtedness
existing on the Effective Date plus additional Capital Lease Obligations and
purchase money indebtedness provided the aggregate amount of such additional
Capital Lease Obligations and purchase money indebtedness does not increase in
any fiscal year during the term of this Agreement by more than $500,000 over the
amount thereof in the prior fiscal year; and
(g) Contingent Obligations in accordance with Section 6.3 of
this Agreement.
Section 6.2 Limitation on Liens.
Create, incur, assume or suffer to exist any Lien upon any of
its property, assets (including, without limitation, any Capital Stock of ER
Hong Kong, ER BVI, MI, SSG, Xxxxxxx Global Limited or ER Macao) or revenues,
whether now owned or hereafter acquired, except for:
(a) Liens securing the Obligations.
(b) Liens securing Indebtedness permitted by Section 6.1(f);
provided, that, in the case of Liens securing Indebtedness permitted by Section
6.1(f) such Liens shall not encumber any property not financed by such
Indebtedness, and in the case of any Liens permitted by Section 6.1(e), such
Liens shall not encumber any property owned by any Person other than the new
Subsidiary or any property not encumbered by such Lien at the time it was
created, such Liens existed at the time such Person became a Subsidiary and were
not created in anticipation of the acquisition, and any such Lien does not by
its terms secure any Indebtedness other than Indebtedness existing immediately
prior to the time such Person becomes a Subsidiary;
(c) Subject to Section 5.9, Liens for taxes not yet due or
which are being contested in good faith by appropriate proceedings, provided
that adequate reserves with respect thereto are maintained on the books of the
relevant Person constituting the Borrower or its Subsidiaries, as the case may
be, in conformity with GAAP;
59
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlords' or other like Liens on inventory and equipment arising
in the ordinary course of business which secure amounts not overdue for a period
of more than 60 days or which are being contested in good faith by appropriate
proceedings provided, the Borrower shall give immediate written notice to the
Agent of any action taken by the holder of any such Lien to foreclose or enforce
such Lien and shall immediately pay and discharge the same upon notice from the
Agent that in the Agent's business judgment such Lien impairs or may impair the
Agent's security interest in, or the value of, any Collateral (as defined in any
of the Loan Documents);
(e) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation and
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements;
(f) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business; and
(g) Liens listed on Schedule VII, provided that no such Lien
is amended after the date of this Agreement to cover any additional property or
to secure additional Indebtedness.
Notwithstanding the termination pursuant to the terms of any
Intellectual Property Security Agreement of any Lien on any Intellectual
Property of any Person constituting the Borrower, except upon payment in full of
the Obligations and termination of the Commitments, no Person constituting the
Borrower shall create, incur, assume or suffer to exist any Lien on any
Intellectual Property owned by it except in favor of the Agent and the Lenders.
Section 6.3 Limitation on Contingent Obligations.
Create, incur, assume or suffer to exist any Contingent
Obligation, except as permitted by this Agreement, including without limitation,
Section 6.1(b) and 6.1(c), provided, in any case those obligations are not
otherwise prohibited under this Agreement.
Section 6.4 Limitations on Fundamental Changes.
Enter into any merger, consolidation or amalgamation, or
(except in the case of Inactive Subsidiaries) liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), reincorporate itself in any
other jurisdiction, or convey, sell, lease, assign, transfer or otherwise
dispose of, all or substantially all of its property, business or assets, make,
in the case of any Subsidiary Borrower, any amendments to its organizational
documents, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of ERC US, other than ER Hong Kong or ER
BVI, may be merged or consolidated with or into ERC US (provided that ERC US
shall be the continuing or surviving corporation) or with or into any one or
more wholly owned Subsidiaries of ERC US other than SSG or any Inactive
Subsidiary (provided that the wholly owned Subsidiary or Subsidiaries or the
Subsidiary Borrower, if it is a party to such merger or consolidation, shall be
the continuing or surviving corporation) and after giving effect to any of such
transactions, no Default or Event of Default shall exist; and
60
(b) any wholly owned Subsidiary of ERC US other than the
Foreign Subsidiaries may sell, lease, transfer or otherwise dispose of any or
all of its assets (upon voluntary liquidation or otherwise) to ERC US or any
wholly-owned Subsidiary of ERC US other than SSG or any Inactive Subsidiary; and
(c) sales of assets in accordance with Section 6.5 of this
Agreement.
Section 6.5 Limitation on Sale of Assets.
Convey, sell, lease, assign, transfer or otherwise dispose of
any of its property, business or assets, tangible or intangible, (including,
without limitation, Capital Stock of any Person constituting the Borrower (other
than Capital Stock of ERC US or SSG, provided the provisions of Section 2.9(f)
are complied with), receivables and leasehold interests), whether now owned or
hereafter acquired, except:
(a) obsolete or worn out property and property no longer used
or useful in such Persons' business disposed of in the ordinary course of
business;
(b) the sale of inventory in the ordinary course of business;
(c) the sale or discount without recourse of accounts
receivable only in connection with the compromise thereof or the assignment of
past-due accounts receivable for collection; and
(d) as otherwise contemplated by Section 6.4 of this
Agreement.
Section 6.6 Limitation on Investments, Loans and Advances.
Purchase, hold or acquire beneficially any Capital Stock,
other securities or evidences of indebtedness of, make or permit to exist any
loans or advances to, or make or permit to exist any investment or acquire any
interest whatsoever in, any other Person, except:
(a) extensions of trade credit to customers in the ordinary
course of business provided payment of such trade credit is made on normal
business terms.
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(b) So long as no Event of Default shall have occurred and be
continuing, ERC US may (i) acquire Capital Stock in SSG (provided such Capital
Stock of SSG is acquired only with Capital Stock of ERC US and provided giving
effect to any such acquisition shall not cause any Person who holds less than
10% (or such greater percentage as the Required Lenders may agree to in writing)
of any class of Capital Stock of ERC US on the date hereof to hold more than 10%
(or such greater percentage as the Required Lenders may agree to in writing) of
any such class of Capital Stock of ERC US; (ii) prior to the Transfer of all of
Borrower's Capital Stock of SSG, acquire (A) from Xxxxxxxx Xxxxxx Capital Stock
of ERC US having a fair market value of not greater than $8,500,000 and (B) from
any other Person that is not an Affiliate of ERC US Capital Stock of ERC US
having a fair market value of not greater than $2,500,000, provided that the
aggregate cash consideration paid by ERC US for the ERC US Capital Stock
acquired pursuant to clauses 6.6(b)(ii)(A) and 6.6(b)(ii)(B) above shall not
exceed $7,500,000; and (iii) after the Transfer of all of Borrower's Capital
Stock of SSG, acquire (A) from Xxxxxxxx Xxxxxx Capital Stock of ERC US having a
fair market value of not greater than $17,800,000 (inclusive of acquisitions
from Xxxxxxxx Xxxxxx pursuant to clause 6.6(b)(ii)(A) above) and (B) from any
other Person that is not an Affiliate of ERC US Capital Stock of ERC US having a
fair market value of not greater than $2,500,000; provided that the aggregate
cash consideration paid by ERC US for the ERC US Capital Stock acquired pursuant
to clauses 6.6(b)(iii)(A) and 6.6(b)(iii)(B) above shall not exceed
$18,500,000); provided, however, that the acquisitions described in clauses
6.6(b)(ii) and 6.6(b)(iii) above shall not be permitted unless the Borrower
shall have (A) demonstrated to the Agent, on a pro forma basis, compliance after
such acquisitions with the financial covenants set forth in Sections 6.11, 6.12
and 6.13 hereof and (B) in connection with Transfers from Xxxxxxxx Xxxxxx,
delivered to Agent the minutes and authorizing resolution of independent
directors of ERC US related thereto, together with any reports, pro forma
financial statements or other information provided to said independent directors
in connection with their consideration of the approval of such Transfers from
Xxxxxxxx Xxxxxx, and such other information as the Agent may reasonably require.
(c) Permitted Investments, provided if the Person making the
Permitted Investment is organized under the laws of any state of the United
States of America, the District of Columbia, Puerto Rico, or any other territory
or possession of the United States of America the Agent shall have been granted
a first priority perfected security interest therein;
(d) capital contributions, loans and advances by ER Hong Kong,
Xxxxxxx Global, Ltd., ER Macao and/or ER BVI to ERC US;
(e) loans and advances in the form of cash by any Person
constituting the Borrower in an aggregate amount for all Persons constituting
Borrower not to exceed $1,000,000 in outstanding principal amount at any time;
and
(f) loans and advances between ER Hong Kong, Xxxxxxx Global,
Ltd., ER Macao and ER BVI in the ordinary course of business.
(g) prior to the occurrence of an Event of Default, advances
by any Person constituting the Borrower to Inactive Subsidiaries to pay charges
imposed by Governmental Authorities related to the maintenance of such Inactive
Subsidiary's corporate existence, such as annual filing and franchise fees and
other minimal expenses necessary to maintain such Inactive Subsidiary in good
standing.
Section 6.7 Limitation on Optional Payments and Modifications
of Debt Instruments.
Make any optional payment or prepayment on or redemption,
defeasance or purchase of any Subordinated Debt, or amend, modify or change, or
consent or agree to any amendment, modification or change to any of the terms
relating to the payment or prepayment or principal of or interest on, any such
Indebtedness, other than any amendment, modification or change which would
extend the maturity or reduce the amount of any payment of principal thereof or
which would reduce the rate or extend the date for payment of interest thereon.
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Section 6.8 Transactions with Affiliates.
Enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service,
with any Affiliate unless such transaction is (a) not otherwise prohibited under
this Agreement, and (b) upon fair and reasonable terms no less favorable to the
relevant Person constituting the Borrower, than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate. Transactions
entered into pursuant to the agreements listed on Schedule X are permitted,
provided in the case of the management agreements or other transactions with
SSG, the net amount owed by SSG at any time shall not exceed $100,000.
Section 6.9 Fiscal Year.
Permit the fiscal year of the Borrower to end on a day other
than March 31st of each year.
Section 6.10 Limitation on Conduct of Business.
Enter into any business either directly or through any
Subsidiary except for businesses in which ERC US and its Subsidiaries are
engaged on the date of this Agreement and business related to such existing
businesses.
Section 6.11 Net Worth.
(a) Prior to the Transfer of Borrower's Capital Stock of SSG,
permit Consolidated Net Worth at the end of any fiscal quarter of ERC US to be
less than the sum of (a) $53,380,000, minus an amount equal to the actual
consideration paid in respect of Permitted Additional Share Repurchases, not to
exceed $7,500,000 plus (b) 50% of the aggregate, cumulative Consolidated Net
Income (but excluding net losses for purposes of this calculation), if any, for
each quarter occurring after the Closing Date.
(b) Subsequent to the Transfer of Borrower's Capital Stock of
SSG, permit Consolidated Net Worth at the end of any fiscal quarter of ERC US to
be less than the sum of (a) an amount equal to (i) 85% of (ii) an amount equal
to the Consolidated Net Worth as shown in the financial statements (including,
but not limited to, a balance sheet and income statement giving effect to said
Transfer) accompanying the ERC US filing with the Securities and Exchange
Commission (or analogous Governmental Authority) under "Form 8-K" (or comparable
successor form), minus an amount equal the actual consideration paid in respect
of Permitted Additional Share Repurchases, not to exceed $9,000,000 (inclusive
of consideration paid prior to the Transfer of Borrower's Capital Stock of SSG)
plus (b) 50% of the aggregate, cumulative Consolidated Net Income (but excluding
net losses for purposes of this calculation), if any, for each quarter occurring
after said Transfer; provided however that in no event shall the Consolidated
Net Worth requirement as calculated pursuant to this Section 6.11(b) for the
fiscal quarter ended immediately subsequent to said Transfer be less than the
Consolidated Net Worth requirement as calculated pursuant to Section 6.11(a)
hereof for the fiscal quarter ended immediately prior to said Transfer.
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Section 6.12 Fixed Charge Coverage Ratio.
Permit the Fixed Charge Coverage Ratio for the period of four
consecutive fiscal quarters preceding any date of determination to be less than
1.25 to 1.
Section 6.13 Senior Funded Debt to EBITDA.
(a) Permit the ratio of Senior Funded Debt of ERC US and its
consolidated Subsidiaries to Consolidated EBITDA to be greater than the
following thresholds: (i) 4.00 to 1.00 for the four consecutive fiscal quarters
preceding June 30, 2005; (ii) 4.75 to 1.00 for the four consecutive fiscal
quarters preceding September 30, 2005; (iii) 3.25 to 1.00 for the four
consecutive fiscal quarters preceding December 31, 2005; (iv) 1.75 to 1.00 for
the four consecutive fiscal quarters preceding March 31, 2006; (v) 2.60 to 1.00
for the four consecutive fiscal quarters preceding June 30, 2006; (vi) 3.85 to
1.00 for the four consecutive fiscal quarters preceding September 30, 2006;
(vii) 1.90 to 1.00 for the four consecutive fiscal quarters preceding December
31, 2006; (viii) 1.20 to 1.00 for the four consecutive fiscal quarters preceding
March 31, 2007; (ix) 2.00 to 1.00 for the four consecutive fiscal quarters
preceding June 30, 2007; (x) 3.00 to 1.00 for the four consecutive fiscal
quarters preceding September 30, 2007; (xi) 1.50 to 1.00 for the four
consecutive fiscal quarters preceding December 31, 2007; and (xii) 1.20 to 1.00
for the four consecutive fiscal quarters preceding March 31, 2008.
(b) The foregoing notwithstanding, upon the Transfer of the
Capital Stock of SSG by Borrower, the Borrowers shall not permit the ratio of
Senior Funded Debt of ERC US and its consolidated Subsidiaries to Consolidated
EBITDA to be greater than the following thresholds: (i) 3.50 to 1.00 for the
four consecutive fiscal quarters preceding June 30, 2005; (ii) 3.50 to 1.00 for
the four consecutive fiscal quarters preceding September 30, 2005; (iii) 2.50 to
1.00 for the four consecutive fiscal quarters preceding December 31, 2005; (iv)
1.75 to 1.00 for the four consecutive fiscal quarters preceding March 31, 2006;
(v) 2.10 to 1.00 for the four consecutive fiscal quarters preceding June 30,
2006; (vi) 3.50 to 1.00 for the four consecutive fiscal quarters preceding
September 30, 2006; (vii) 1.60 to 1.00 for the four consecutive fiscal quarters
preceding December 31, 2006; (viii) 1.20 to 1.00 for the four consecutive fiscal
quarters preceding March 31, 2007; (ix) 1.75 to 1.00 for the four consecutive
fiscal quarters preceding June 30, 2007; (x) 2.95 to 1.00 for the four
consecutive fiscal quarters preceding September 30, 2007; (xi) 1.60 to 1.00 for
the four consecutive fiscal quarters preceding December 31, 2007; and (xii) 1.20
to 1.00 for the four consecutive fiscal quarters preceding March 31, 2008.
Section 6.14 Intentionally omitted.
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Section 6.15 ERISA Obligations.
Be or become obligated to the PBGC, in any material respect,
other than in respect of annual premium payments.
Section 6.16 Restricted Payments.
Make any purchase, redemption or other acquisition of any
Capital Stock of ERC US other than as permitted pursuant to Section 6.6(b)
hereof. Make any other distribution to holders of the Capital Stock of ERC US,
in their capacity as such, except for the issuance of Capital Stock of ERC US in
transactions described in the parenthetical contained in Section 2.9(f)(ii) and
pursuant to transactions contemplated by Section 6.6(b)(i).
Section 6.17. Anti-Terrorism Laws.
Each Borrower and their respective Affiliates and agents shall
not (i) conduct any business or engage in any transaction or dealing with any
Blocked Person, including the making or receiving any contribution of funds,
goods or services to or for the benefit of any Blocked Person, (ii) deal in, or
otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order No. 13224; or (iii) engage in
or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in the Executive Order No. 13224, the USA Patriot Act or any other
Anti-Terrorism Law. The Borrower shall deliver to the Lenders any certification
or other evidence requested from time to time by any Lender in its sole
discretion, confirming Borrower's compliance with this Section 6.17.
ARTICLE 7.
EVENTS OF DEFAULT
Section 7.1 Events of Default.
If any of the following events (each, an "Event of Default")
shall occur and be continuing:
(a) (i) The Borrower shall fail to pay any principal of any
Note or the Loans when due in accordance with the terms thereof or
hereof; or (ii) the Borrower shall fail to pay any interest on any Note
or the Loans, or any other amount payable hereunder, or any Person
constituting the Borrower shall fail to pay any net amount due by it
under any Lender Hedge Agreement, in each case within two (2) Business
Days' after any such interest or other amount becomes due in accordance
with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by any
Person constituting the Borrower or any other party to a Loan Document
herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished at any
time under or in connection with this Agreement shall prove to have
been incorrect in any material respect on or as of the date made or
deemed made; or
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(c) Any Person constituting the Borrower shall default in the
observance or performance of any agreement contained in Article 6,
Section 5.1, 5.2, 5.6, 5.7 or 5.11 or in any covenant or agreement in
any Security Document, or in any covenant or agreement in any other
Loan Document which has a grace period expressed with respect thereto;
or
(d) Any Person constituting the Borrower or any other Party to
a Loan Document shall default in the observance or performance of any
other agreement contained in this Agreement (other than as provided in
Sections 7.1(a), (b) or (c)) or any other Loan Document, and such
default shall continue unremedied for a period of 30 days, provided, if
such Event of Default is not a monetary Event of Default and is capable
of cure and the relevant Person is diligently proceeding to cure such
Event of Default, such Person shall have an additional thirty (30) days
to effect such cure; or
(e) ERC US or any of its Subsidiaries, other than SSG, shall:
(1) default in any payment of principal of or
interest on any Indebtedness (other than the Notes) or in the
payment of any Contingent Obligation in either case in excess
of $500,000, beyond the period of grace, if any, provided in
the instrument or agreement under which such Indebtedness or
Contingent Obligation was created; or
(2) default in the observance or performance of any
other agreement or condition relating to any such Indebtedness
or Contingent Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of
which default or other event or condition is to cause the
holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Contingent Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated
maturity or such Contingent Obligation to become payable; or
(f) (1) ERC US or any of its Subsidiaries, other than SSG,
shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, conservatorship or
relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to
it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or
any substantial part of its assets, or ERC US or any of its
Subsidiaries, other than SSG, shall make a general assignment for the
benefit of its creditors; or (2) there shall be commenced against ERC
US or any of its Subsidiaries, other than SSG, any case, proceeding or
other action of a nature referred to in clause (1) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (3) there shall be commenced against ERC US or
any of its Subsidiaries, other than SSG, any case, proceeding or other
action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (4) ERC US or any of
its Subsidiaries, other than SSG, shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any
of the acts set forth in clause (1), (2) or (3) above; or (5) ERC US or
any of its Subsidiaries, other than SSG, shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts
as they become due; or
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(g) One or more judgments or decrees shall be entered against
ERC US or any of its Subsidiaries, other than SSG, involving in the
aggregate a liability (not paid or fully covered by insurance) of
$900,000 or more and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days
from the entry thereof; or
(h) (i) Any Reportable Event, which the Required Lenders
determine in good faith (which determination shall be final and
conclusive) constitutes grounds for the termination of any Plan or
Plans by PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer or liquidate any Plan or
Plans, shall have occurred and be continuing thirty (30) days after
written or telegraphic or telephonic notice to such effect shall have
been given to the Borrower by the Agent; or (ii) a decision shall have
been made by the Board of Directors (or any committee thereof), any
authorized officer or other employee of any Person constituting the
Borrower, or any trustee or trustees of any Plan or Plans to terminate
any Plan or Plans or to file a termination notice with respect to any
Plan or Plans; or (iii) a trustee shall be appointed by the appropriate
United States District Court to administer any Plan or Plans, or any
Plan or Plans shall be terminated; or (iv) PBGC shall institute
proceedings to terminate any Plan or Plans or to appoint a trustee to
administer any Plan or Plans; or (v) any Person constituting the
Borrower or any ERISA Affiliate shall fail with respect to any Plan or
Plans to meet the minimum funding standards established in the Code, or
shall obtain a waiver of such minimum funding standards; or (vi) any
Person constituting the Borrower or any ERISA Affiliate shall
completely or partially withdraw from a Plan; or (vii) any Person
constituting the Borrower or any ERISA Affiliate shall make a decision
to cease operations at a facility or facilities where such cessation
would result in a separation from employment of more than 20% of the
total number of employees who are participants under a Plan; where in
the case of any one or more of the events described in the preceding
clauses (i) through (vii) the aggregate outstanding amount of unfunded
vested liabilities under such Plan if a single employer plan (including
unfunded vested liabilities which arise or might arise as a result of
the termination of or withdrawal from such Plan) or the allocable
portion of such outstanding unfunded vested liabilities under a
Multiemployer Plan shall exceed (either singly or in the aggregate in
the case of any such liability arising out of one or more of the events
described in the preceding clauses (i) through (vii) under more than
one such Plan) 2% of the Consolidated Tangible Net Worth of ERC US and
shall in good faith be determined by the Required Lenders (which
determination shall be final and conclusive) to have a Material Adverse
Effect; or
(i) A Change in Control shall occur; or
(j) Any Subsidiary of any Person constituting the Borrower
shall take any action set forth in Article 6 which the Borrower has
undertaken not to permit; or
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(k) Any Subsidiary of any Person constituting the Borrower
shall fail to take any action set forth in Article 5 which the Borrower
has undertaken to cause and such failure shall not be remedied for a
period of 30 days; or
(l) An Event of Default under (and as defined in) any other
Loan Document shall occur; or
(m) ERC US shall cease to own all of the issued and
outstanding Capital Stock of ER Hong Kong (other than the Director
Share) or MI, or Xxxx Xxxxxxx, an individual with an office at Suite
3105, Hampton Court, Xxx Xxxxxxx, 00-00 Xxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx
1, or other nominee of ERC US reasonably acceptable to Agent, shall
cease to own the Director Share as nominee for ERC US; or
(n) ER Hong Kong shall cease to own all the issued and
outstanding Capital Stock of ER BVI; or
(o) any Person shall become a member of the Board of Directors
of ER Hong Kong unless simultaneously with becoming a member of said
Board of Directors such Person has delivered an ER Hong Kong Director
Resignation to the Agent;
(p) Xxxxxxxx X. Xxxxxx shall cease to be the Chairman of the
Board and Chief Executive Officer of ERC US or shall own less than 20%
of its issued and outstanding common Capital Stock of ERC US; or
then, and in any such event, (A) if such event is an Event of Default specified
in clause (1) or (2) of Section 7.1(f) above with respect to any Person
constituting the Borrower, automatically the Commitments shall immediately
terminate and the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the Notes shall immediately become due
and payable, and (B) if such event is any other Event of Default, any one or
more of the following actions may be taken: (i) the Agent may (with the consent
of the Required Lenders) and shall (upon the request of the Required Lenders),
by written notice to the Borrower, declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; (ii) the Agent
may (with the consent of the Required Lenders) and shall (upon the request of
the Required Lenders), by written notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the Notes to be due and payable forthwith, whereupon the same
shall immediately become due and payable and (iii) the Agent may (with the
consent of the Required Lenders) and shall (upon the request of the Required
Lenders but subject to the provisions of Article 8), proceed to enforce the
rights and remedies of the Secured Party under the Security Documents. Except as
expressly provided above in this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.
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ARTICLE 8.
THE AGENT
Section 8.1 Actions.
Each Lender authorizes the Agent to act on behalf of such
Lender under this Agreement, the other Loan Documents and any other related
instruments and, in the absence of other written instructions from the Lenders
received from time to time by the Agent (with respect to which the Agent agrees
that it will, subject to the last two sentences of this Section 8.1, comply in
good faith except as otherwise advised by counsel), to exercise such powers
hereunder and thereunder as are specifically delegated to or required of the
Agent by the terms hereof and thereof, together with such powers as may be
reasonably incidental thereto. Each Lender agrees (which agreement shall survive
any termination of this Agreement) to indemnify the Agent, pro rata according to
such Lender's Percentage (as defined in Schedule I), from and against any and
all liabilities, obligations, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may at
any time be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of this Agreement, the Notes, any of the other Loan
Documents and any other related instruments, including, without limitation, the
reimbursement of the Agent for all reasonable out-of-pocket expenses (including,
without limitation, syndication costs and attorneys' fees) incurred by the Agent
hereunder or in connection herewith or in enforcing the obligations of the
Borrower or any Lender under this Agreement, under any of the other Loan
Documents or any other related instruments, in all cases as to which the Agent
is not reimbursed by the Borrower; provided that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements determined by a
court of proper jurisdiction in a final proceeding to have resulted from the
Agent's gross negligence or willful misconduct. The Agent shall not be required
to take any action hereunder or under any other related instruments, or to
prosecute or defend any suit in respect of this Agreement or any such
instrument, unless indemnified to its satisfaction by the Lenders against costs,
liability, and expense. If any indemnity in favor of the Agent shall become
impaired, it may call for additional indemnity and cease to do the acts
indemnified against until such additional indemnity is given. The Agent may
delegate its duties hereunder to affiliates, agents or attorneys-in-fact
selected in good faith by the Agent. Each Lender's obligation to indemnify the
Agent as set forth above shall be unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which such
Lender may have or have had against the Agent, any other Lender, the Borrower,
any Subsidiary or any other Person.
Section 8.2 Exculpation.
The Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement. Neither the Agent nor any of its
directors, officers, employees, or agents (collectively, the "Related Parties")
shall be liable to any Lender for any action taken or omitted to be taken by it
under this Agreement, the other Loan Documents or any other related instrument,
or in connection herewith or therewith, except for its own willful misconduct or
gross negligence, nor shall the Agent or any Related Parties be responsible for
any recitals or representations or warranties herein or therein, or for the
effectiveness, enforceability, validity or due execution of this Agreement, the
other Loan Documents or any other related instruments, nor shall the Agent or
any Related Parties be obligated to make any inquiry respecting the performance
by the Borrower of its obligations hereunder or thereunder. The Agent shall be
entitled to rely upon advice of counsel concerning legal matters and upon any
notice, consent, certificate, statement or writing which it believes to be
genuine and to have been presented by a proper Person. The Agent may at any time
request instructions from the Lenders with respect to any actions or approvals
which, by the terms of this Agreement, the Agent is permitted or required to
take or grant, and the Agent shall be absolutely entitled to refrain from taking
any action or to withhold any approval and shall not be under any liability
whatsoever to any Person for refraining from taking any action or withholding
any approval under this Agreement or any of the other Loan Documents until it
has received instructions from the Required Lenders. No Lender shall have any
right of action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder or under any of the other Loan Documents in
accordance with instructions from the (i) Required Lenders, or (ii) all of the
Lenders to the extent required hereunder.
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Section 8.3 Successor.
The Agent may resign as such at any time upon at least ten
(10) Business Days' prior notice to the Borrower and all Lenders, and the Agent
may be removed at any time by written notice from the Required Lenders. If the
Agent at any time shall resign or be removed, the Required Lenders may appoint
another Lender as a successor Agent. If the Required Lenders do not make such
appointment within thirty days, the resigning or removed Agent shall appoint a
new Agent from among the Lenders or, if no Lender accepts such appointment, from
among commercial banking institutions or trust institutions generally; provided
such successor agent shall be a domestic commercial bank having a combined
capital and surplus in excess of $500,000,000 and, if not a Lender, shall be
reasonably acceptable to ERC US (ERC US' approval not to be unreasonably
withheld or delayed). Upon the acceptance of any appointment as Agent by a
successor Agent, such successor Agent shall thereupon become the Agent hereunder
and shall be entitled to receive from the prior Agent such documents of transfer
and assignment as such successor Agent may reasonably request, and the resigning
or removed Agent shall (i) be discharged from its duties and obligations under
this Agreement and the other related instruments and (ii) entitled to the
continued benefit of this Article 8 with respect to all actions taken by it
prior to its removal or resignation.
Section 8.4 Credit Decisions.
Each Lender represents and acknowledges to the Agent that it
has, independently of the Agent and each other Lender, and based on the
financial information referred to in this Agreement and the other Loan Documents
and such other documents, information and investigations as it has deemed
appropriate, made its own credit decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently of the Agent and each
Lender, and based on such documents, information and investigations as it shall
deem appropriate at any time, continue to make its own credit decisions as to
exercising or not exercising from time to time any rights and privileges
available to it under this Agreement, the Loan Documents or any other related
instruments.
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Section 8.5 Notices, etc. from Agent.
The Agent shall give prompt notice to each Lender of each
notice or request given to the Agent by the Borrower or by the Agent to the
Borrower pursuant to the terms of this Agreement. The Agent will promptly
distribute to each Lender each instrument received for its account and copies of
all other communications received by the Agent from the Borrower for
distribution to the Lenders by the Agent in accordance with the terms of this
Agreement.
Section 8.6 Security Documents.
Each Lender hereby authorizes the Agent to enter into the
Security Documents and to take all action contemplated thereby. Each Lender
hereby confirms its agreement to be bound by the terms and conditions of the
Security Documents. Each Lender agrees that no Lender shall have any right
individually to seek to realize upon the collateral granted for the benefit of
the Lenders pursuant to any of the Security Documents, it being understood and
agreed that such rights and remedies may be exercised by the Agent for the
benefit of the Agent and the Lenders upon the terms of the Security Documents.
Section 8.7 No Reliance on Agent's Customer Identification
Program.
Each Lender acknowledges and agrees that neither such Lender,
nor any of its Affiliates, participants or assignees, may rely on the Agent to
carry out such Lender's, Affiliate's, participant's or assignee's customer
identification program, or other obligations required or imposed under or
pursuant to the USA Patriot Act or the regulations thereunder, including the
regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the
"CIP Regulations"), or any other Anti-Terrorism Law, including any programs
involving any of the following items relating to or in connection with any
Borrower, their Affiliates or their agents, the Loan Documents or the
transactions hereunder or contemplated hereby: (1) any identity verification
procedures, (2) any recordkeeping, (3) comparisons with government lists, (4)
customer notices or (5) other procedures required under the CIP Regulations or
such other Laws.
ARTICLE 9.
PURCHASING LENDER
Section 9.1 Purchasing Lender.
(a) Each Lender, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time may sell,
assign and delegate to any Affiliate of such Lender and/or, with the consent of
the Agent and ERC US (which in each case shall not be unreasonably withheld or
delayed and shall not be required of ERC US after the occurrence during the
continuance of an Event of Default), to one or more additional banks or
financial institutions (each, a "Purchasing Lender") all or any part (but not
less than $5,000,000 in aggregate of such Lender's rights and obligations under
this Agreement, the Notes and the other Loan Documents (provided, that any such
sale, assignment and delegation shall be made with respect to each Loan and the
Commitment and Term Loan Commitment of such Lender hereunder) pursuant to an
agreement ("Assignment and Acceptance") executed by the Purchasing Lender and
such Lender. Such Assignment and Acceptance shall specify an effective date
which is not less than five Business Days after the date of execution thereof.
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Upon such execution, delivery, and acceptance, from and after the effective date
determined pursuant to such Assignment and Acceptance and payment by the
assigning Lender of a $3,000 administrative fee to the Agent for its own account
with respect to each Purchasing Lender party to such Assignment and Acceptance,
(A) the Purchasing Lender thereunder shall be a party hereto and, to the extent
of the Commitments assigned and Loans sold pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder with a
Commitment as set forth therein, and (B) the assigning Lender thereunder shall,
to the extent of the Commitments assigned pursuant to such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such assigning
Lender shall cease to be a party hereto). Such Assignment and Acceptance shall
be deemed to amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Lender as a Lender and the
resulting adjustment of Commitments arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such assigning
Lender under this Agreement and the Notes. On or prior to the effective date
determined pursuant to such Assignment and Acceptance, the Borrower, at its own
expense, shall execute and deliver to the assigning Lender and Purchasing Lender
in exchange for the surrendered Notes, new Notes to the order of such Purchasing
Lender in an amount equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Commitment
hereunder, new Notes to the order of the assigning Lender in an amount equal to
the Commitment retained by it hereunder. Such new Notes shall be dated the
Closing Date and otherwise shall be in the form of the Notes replaced thereby.
The Notes surrendered by the assigning Lender shall be returned to the Borrower
marked "replaced." The assigning Lender shall provide the Agent with a copy of
each Assignment and Acceptance.
(b) If, pursuant to this Agreement, any interest in this
Agreement or any other Loan Documents is assigned to any transferee, or a
participation in any interest in this Agreement is given to a transferee, in
either case which is organized under the laws of any jurisdiction other than the
United States or any State thereof, the transferor Lender shall cause such
transferee, concurrently with the effectiveness of such transfer, (i) to
represent to the transferor Lender (for the benefit of the transferor Lender,
the Agent and the Borrower) that under applicable law and treaties no taxes will
be required to be withheld by the Agent, the Borrower or the transferor Lender
with respect to any payments to be made to such transferee in respect of the
Loans, (ii) to furnish to the transferor Lender, the Agent and the Borrower Form
W-8ECI or W-8BEN (Ownership Exemption or Reduced Rate Certificate) (wherein such
transferee claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and (iii) to agree (for the
benefit of the transferor Lender, the Agent and the Borrower) to provide the
transferor Lender, the Agent and the Borrower a new Form W-8ECI or W-8BEN upon
the expiration or obsolescence of any previously delivered form and comparable
statements in accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such transferee, and to comply from
time to time with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
Section 9.2 Disclosure of Information.
Each Person constituting the Borrower authorizes the Lenders
to disclose to any Purchasing Lender and any prospective Purchasing Lender any
and all information relating to each Person constituting the Borrower and its
Affiliates which has been furnished to the Agent and the Lenders by or on behalf
of each Person constituting the Borrower; provided that any such Purchasing
Lender agrees to keep any information relating to any Person constituting the
Borrower received hereunder confidential except as may be required by any
Requirement of Law.
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Section 9.3 Pledges to Federal Reserve Bank.
Nothing herein shall prohibit any Lender from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
ARTICLE 10.
MISCELLANEOUS
Section 10.1 Amendments and Waivers.
(a) No amendment or waiver of any provision of this Agreement,
or any of the other Loan Documents, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent, unless in
writing and signed by all the Lenders, shall do any of the following: (A) waive
any of the conditions specified in Section 4.1 (though the Agent alone may defer
the fulfillment of such conditions until the date of the applicable borrowing),
(B) increase the amount or extend the term of the Commitments of the Lenders or
subject the Lenders to any additional obligations, (C) reduce the principal of,
or interest on, the Loans, the Reimbursement Obligations or any of the Notes, or
reduce any fees payable hereunder, (D) postpone any date fixed for any payment
in respect of principal of, or interest on, the Loans, the Reimbursement
Obligations or any of the Notes, as the case may be, or fees payable hereunder,
(E) change any of the components which shall be required for the Lenders or any
Lender to take any action hereunder, (i.e., the Percentage of the Commitments,
or the aggregate unpaid principal amount of the Loans, or the number of
Lenders), (F) release all or any substantial portion of the collateral subject
to any Security Document except as contemplated by the Intellectual Property
Security Agreements and, with respect to intellectual property, the Security
Agreements executed and delivered by ERC US and Xxxxx or (G) amend this Section
10.1; and provided, further, that no amendment, waiver or consent shall, unless
in writing and signed by the Agent in addition to the Lenders hereinabove
required to take such action, affect the rights or duties of the Agent under
this Agreement. Without derogating from the foregoing, no amendment to this
Agreement shall be effective unless signed by each Person constituting the
Borrower.
(b) The liability of each Person constituting the Borrower
hereunder shall be absolute and unconditional irrespective of:
(1) any change in the time, manner, or place of payment or in
any other term of, or any other amendment or waiver of, or any consent
to departure from any of the Loan Agreement, any of the Loan Documents
or any Obligations;
73
(2) any change in the name, Capital Stock, Certificate of
Incorporation or by-laws, as the case may be, of any Person
constituting the Borrower;
(3) the insolvency of, or the voluntary or involuntary
bankruptcy, assignment for the benefit of creditors, reorganization or
other similar proceedings affecting any Person constituting the
Borrower or any of their respective assets; or
(4) any other circumstance or claim which might otherwise
constitute a defense available to, or a discharge of, any Person
constituting the Borrower in respect of the Obligations.
(c) No payment made by any Person constituting the Borrower,
or received or collected by the Agent or any of the Lenders, from any Person
constituting the Borrower by virtue of any action or proceeding or set-off or
application at any time in reduction of or in payment of the Obligations shall
be deemed to modify, release or otherwise affect the liability of any Person
constituting the Borrower under the Loan Documents. Notwithstanding any such
payments received or collected by the Agent or any of the Lenders in connection
with the Obligations, each Person constituting the Borrower shall remain liable
for the Obligations until all Obligations are paid in full. The joint and
several obligation of each Person constituting the Borrower shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Obligations is rescinded or must otherwise be returned by the Agent
or the Lenders upon the insolvency, bankruptcy or reorganization of any Person
constituting the Borrower or otherwise, all as though such payment had not been
made.
(d) The obligations and liabilities of each Person
constituting the Borrower hereunder shall not be released, discharged, limited
or in any way affected by anything done, suffered or permitted by the Agent or
Lenders in connection with any monies or credit advanced by the Agent or Lenders
to any Person constituting the Borrower or any security therefor, including,
without limitation, any loss of, or in respect of, any security received by the
Agent or any of the Lenders from any Person constituting the Borrower. It is
agreed that the Lenders and/or the Agent, without releasing, discharging,
limiting or otherwise affecting in whole or in part the obligations and
liabilities of any Person constituting the Borrower hereunder, may, without
limiting the generality of the foregoing:
(1) grant time, renewals, extensions, indulgences, releases
and discharges to any Person constituting the Borrower;
(2) take or abstain from taking security or collateral for the
Obligations or from perfecting security or collateral for the
Obligations;
(3) release, discharge, compromise or otherwise deal with
(with or without consideration) any and all collateral, mortgages,
indemnities, guaranties or other security given by any Person
constituting the Borrower with respect to the Obligations;
(4) accept compromises from any Person constituting the
Borrower;
(5) after an Event of Default, apply all monies at any time
received from any Person constituting the Borrower or from any
guaranties, indemnities or any collateral upon such part of the
Obligations as the Lenders and/or Agent may see fit or change any such
application in whole or in part from time to time as the Agent or such
Lenders may see fit; or
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(6) otherwise deal with each Person constituting the Borrower
and all other Persons and collateral as the Lenders and/or Agent may
see fit;
(e) neither the Agent nor any of the Lenders shall be bound or
obligated to exhaust recourse against any Person constituting the
Borrower or other Persons or any security, guarantee, indemnity,
mortgage or collateral it may hold or take any other action before
being entitled to payment from each Person constituting the Borrower
hereunder and each Person constituting the Borrower hereby waives any
requirement that would otherwise compel the Agent or the Lenders to do
any of the foregoing.
Section 10.2 Notices.
Any notice, request, demand, direction or other communication
(for purposes of this Section 10.2 only, a "Notice") to be given to or made upon
any party hereto under any provision of this Agreement shall be given or made by
telephone or in writing (which includes by means of electronic transmission
(i.e., "e-mail") or facsimile transmission). Any such Notice must be delivered
to the applicable parties hereto at the addresses and numbers set forth under
their respective names on Schedule XI hereof or in accordance with any
subsequent unrevoked Notice from any such party that is given in accordance with
this Section 10.2. Any notice shall be effective:
(a) In the case of hand-delivery, when delivered;
(b) If given by mail, four days after such Notice is deposited
with the United States Postal Service, with first-class postage prepaid, return
receipt requested;
(c) In the case of a telephonic Notice, when a party is
contacted by telephone, if delivery of such telephonic Notice is confirmed no
later than the next Business Day by hand delivery, a facsimile or electronic
transmission, or an overnight courier delivery of a confirmatory Notice
(received at or before noon on such next Business Day);
(d) In the case of a facsimile transmission, when sent to the
applicable party's facsimile machine's telephone number, if the party sending
such Notice receives confirmation of the delivery thereof from its own facsimile
machine;
(e) In the case of electronic transmission, when actually
received.
Any Lender giving a Notice to a Person constituting the Borrower shall
concurrently send a copy thereof to the Agent, and the Agent shall promptly
notify the other Lenders of its receipt of such Notice, provided that any
notice, request or demand to or upon the Agent pursuant to Section 2.3, Section
2.5, Section 2.8, Section 2.9(a) or Section 2.10 shall not be effective until
received. Any party may change its address for notices by notice to the other
parties hereto in the manner provided in this subsection. Any notice to the
Borrower or given by the Borrower shall be binding upon, and deemed received or
given by, all Persons constituting the Borrower if given by any Person
constituting the Borrower (in the case of notices from the Borrower) or
delivered to any Person constituting the Borrower at the address set forth on
Schedule XI (or such other address noticed to the Lender as provided herein) and
no separate notice to or by any other Person constituting the Borrower shall be
necessary for the binding effect or deemed receipt of a notice to or by the
Borrower.
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Section 10.3 No Waiver; Cumulative Remedies.
(a) No failure to exercise and no delay in exercising, on the
part of the Agent or any Lender, any right, remedy, power or privilege hereunder
shall operate as a waiver thereof.
(b) No single or partial exercise of any right, remedy, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.
(c) The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
Section 10.4 Survival of Representations and Warranties.
All representations and warranties made hereunder and in any
document, certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement and the
Notes.
Section 10.5 Payment of Expenses and Taxes. The Borrower
shall:
(a) pay or reimburse the Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the negotiation,
preparation and execution of, and any proposed or effective amendment,
supplement or modification to, this Agreement and the Notes and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation of the transactions contemplated hereby and thereby,
including, without limitation, the reasonable fees and disbursements of counsel
to the Agent;
(b) pay or reimburse the Agent and each Lender for all
reasonable out-of-pocket costs and expenses incurred by each of them in
connection with the enforcement or preservation of any rights under this
Agreement, the Notes, the other Loan Documents and any such other documents,
including, without limitation, reasonable fees and disbursements of counsel to
the Agent and each Lender;
(c) pay, indemnify, and hold the Agent and each Lender
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
similar taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the Notes, the
other Loan Documents and any such other documents; and
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(d) pay, indemnify, and hold the Agent and each Lender
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions (whether sounding in contract, in tort or on any
other ground), judgments, suits, reasonable out-of-pocket costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, (i) this Agreement, the Notes, the other Loan
Documents or any other documents contemplated by or referred to herein or
therein, (ii) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan (including without
limitation, any disbursement from the Escrow Fund with respect to the purchase
or payment of any Convertible Debentures), (iii) any investigation, litigation
or proceeding relating to any acquisition or proposed acquisition by ERC US or
any of its Subsidiaries of all or a portion of the Capital Stock or all or
substantially all of the assets of any Person, regardless of whether any Lender
is a party thereto or (iv)any action taken or omitted to be taken by the Agent
or any Lender with respect to any of the foregoing;
(all the foregoing, collectively, the "Indemnified Liabilities"), and if and to
the extent that the foregoing undertaking may be unenforceable for any reason,
the Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law; provided, that the Borrower shall have no obligation hereunder
to the Agent or any Lender with respect to Indemnified Liabilities arising from
the gross negligence or willful misconduct of the Agent or such Lender. The
agreements in this subsection shall survive repayment of the Notes and all other
amounts payable hereunder.
Section 10.6 Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit
of the Borrower, the Agent, the Lenders, all future holders of the Notes and
their respective successors and assigns, except that no Person constituting the
Borrower may assign, transfer or delegate any of their rights or obligations
under this Agreement without the prior written consent of the Lenders other than
pursuant to the operation of law by reason of a transaction permitted by Section
6.4.
Section 10.7 Setoff/Sharing.
(a) In addition to any rights and remedies of the Agent and
Lenders provided by law, each Lender shall have the right, without prior notice
to any Person constituting the Borrower, any such notice being expressly waived
by each Person constituting the Borrower to the extent permitted by applicable
law, upon any amount becoming due and payable by any Person constituting the
Borrower hereunder or under the Notes or the other Loan Documents (whether at
the stated maturity, by acceleration or otherwise) to setoff and appropriate and
apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency of such Lender to or for the credit
or the account of any Person constituting the Borrower. Each Lender agrees
promptly to notify the Borrower and Agent after any such setoff and application
made by such Lender, provided that the failure to give such notice shall not
affect the validity of such setoff and application.
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(b) Each of the Lenders agree among themselves that with
respect to all amounts received by them which are applicable to the payment or
satisfaction of all or part of the Loans or Reimbursement Obligations, interest
thereon, any fees or any other amount payable hereunder or under the other Loan
Documents, equitable adjustment will be made so that, in effect, all such
amounts will be shared among the Lenders in proportion to their respective
Percentages, whether received by voluntary payment, by the exercise of the right
of setoff or banker's lien, by counterclaim or by the enforcement of their
rights hereunder or under the other Loan Documents.
(c) If any Lender shall, through the exercise of any right of
counterclaim, setoff, banker's lien or otherwise, receive payment or reduction
of a proportion of the aggregate amount of the Loans or interest thereon due to
such Lender, or any other amount payable hereunder, as the case may be, which is
greater than the proportion received by any other Lender or Lenders in respect
to the aggregate amount of any Loan or Reimbursement Obligation and interest
thereon due such Lender, or with respect to any other amount payable hereunder,
that Lender receiving such proportionately greater payment shall notify the
other Lenders and the Agent of such receipt and purchase participations (which
it shall be deemed to have done simultaneously upon the receipt of such excess
payment) in the Loans and Reimbursement Obligations held by the other Lender or
Lenders so that all such recoveries of principal and interest with respect to
the Loans shall be proportionate to each Lender's respective Percentage;
provided that if all or part of such proportionately greater payment received by
such purchasing Lender is thereafter recovered from such Lender, those purchases
shall be rescinded and the purchase prices paid for such participations shall be
returned to the purchasing Lender to the extent of such recovery, together with
a pro rata portion (based on the amount of each participation) of the interest
thereon (or other amounts), if any, recovered from the purchasing Lender.
(d) The Borrower expressly consents to the arrangement
described in this Section 10.7.
Section 10.8 Foreign Subsidiaries.
Notwithstanding anything to the contrary contained herein, the
joint and several liability of the Foreign Subsidiaries and the Significant
Subsidiaries which are formed in a jurisdiction outside the United States
hereunder shall be limited to $5,000,000 of the Obligations outstanding on the
Maturity Date or such earlier date (an "Accelerated Maturity Date") to which the
maturity of the Obligations is accelerated pursuant to Section 7.1 (and whether
denominated as principal, interest, Revolving Credit Loans, Term Loans, or
otherwise). It is agreed that no payment of interest on, or principal of, the
Revolving Credit Loans or Term Loans by any Person (whether or not a Foreign
Subsidiary) prior to the Maturity Date or any Accelerated Maturity Date shall be
counted towards, satisfy or discharge such $5,000,000 limit on liability
provided, that, on the date the Term Loans, and all accrued and unpaid interest
thereon, are paid in full, the Foreign Subsidiaries shall have no further
liability for the Obligations. Nothing in this Section 10.8 shall (i) release or
impair the validity of the Obligations, (ii) in any way affect or impair any
Lien granted pursuant to any Security Document or any other Loan Document, (iii)
in any way affect or impair the right of the Agent and the Lenders to foreclose
the Security Documents or enforce any other Loan Documents pursuant to the terms
thereof or (iv) impair or reduce the liability of ERC US or MI for the whole of
the Obligations which liability is unlimited. The establishment of multiple
accounts by Persons constituting the Borrower shall not derogate from their
joint and several liability for the Obligations as limited by this Section 10.8.
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Section 10.9 Judgment Currency/Withholding Tax.
(a) If for the purposes of obtaining a judgment in any court
with respect to any obligation of any Person constituting the Borrower under
this Agreement, the Notes or any other instrument or agreement executed and
delivered by any Person constituting the Borrower in connection therewith it
becomes necessary to convert into any other currency any amount in Dollars due
thereunder, then such conversion shall be made at the buying spot rate of
exchange for freely transferable Dollars at the close of business on the day
before the day on which the judgment is given at the place where such court is
located. If there is a change in such rate of exchange prevailing between the
day before the day on which the judgment is given and the date of the payment
thereof, the Borrower agrees to pay such additional amounts (if any) as may be
necessary to insure that the amount paid on such date is the amount in such
other currency which, when converted at such rate of exchange in effect on the
date of payment, is the amount then due in Dollars. Any amount due under this
Section 10.9 will be due in Dollars. Any amount due under this Section 10.9 will
be due as a separate debt and shall not be affected by or merged into any
judgment being obtained for any other sums due under or in respect of this
Agreement, the Notes or any other instrument or agreement executed and delivered
by any Person constituting the Borrower in connection therewith. In no event,
however, shall the Borrower be required to pay more Dollars at such rate of
exchange when payment is made than the amount of Dollars stated to be due.
(b) If any payment of the Obligations by any Subsidiary
Borrower which is organized or located in a jurisdiction outside the United
States of America is subject in such jurisdiction to any withholding or other
tax, levy, impost, charge, fee, duty or deduction of any kind whatsoever (each,
a "Foreign Tax"), the Borrower shall pay to the Agent or Lender, as the case may
be, such additional amounts as will result in a net payment to the Agent or such
Lender equal to the amount such payee would have received had no such Foreign
Tax been imposed.
Section 10.10 Counterparts.
This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 10.11 Severability.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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Section 10.12 Integration.
This Agreement represents the agreement of the Borrower, the
Agent and the Lenders with respect to the subject matter hereof, and there are
no promises, undertakings, representations or warranties by the Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
Section 10.13 Governing Law.
This Agreement and the Notes and the rights and obligations of
the parties under this Agreement and the Notes shall be governed by, and
construed and interpreted in accordance with, the law of the State of New
Jersey.
Section 10.14 Submission To Jurisdiction; Waivers.
Each Person constituting the Borrower hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to or arising out of this Agreement and the other Loan
Documents to which it is a party, or the conduct of any party with respect
thereto, or for recognition and enforcement of any judgment in respect thereof,
to the nonexclusive general jurisdiction of the Courts of the State of New
Jersey, the courts of the United States of America for the District of New
Jersey, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives to the fullest extent permitted by law any objection
that it may now or hereafter have to the venue of any such action or proceeding
in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower at the address set forth in Section 10.2 or at such other address of
which the Lender shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent permitted by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this subsection any special, exemplary, punitive or consequential damages.
Section 10.15 Acknowledgments.
Each Person constituting the Borrower hereby acknowledges
that:
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(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Notes and the other Loan
Documents;
(b) it has not been advised by the Agent or any Lender or
their respective counsel as to any tax or other financial implications or
consequences of the transactions contemplated by the Loan Documents and each
Person constituting the Borrower has made an independent analysis of, and
decision with respect to, such matters, relying on its own legal counsel and
other professionals. It is further acknowledged that the Agent, the Lenders and
their respective counsel had and have no obligation to advise any Person
constituting the Borrower with respect to any such matters.
(c) neither the Agent nor any Lender has any fiduciary
relationship to any Person constituting the Borrower, and the relationship
between the Agent and the Lenders, on one hand, and each Person constituting the
Borrower, on the other hand, is solely that of debtor and creditor; and
(d) no joint venture exists among any Person constituting the
Borrower, the Agent or any Lender.
Section 10.16 Waivers of Jury Trial.
EACH PERSON CONSTITUTING THE BORROWER, THE AGENT AND EACH
LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
Section 10.17 SSG.
Notwithstanding anything to the contrary contained herein, SSG
is not a party hereto and is not obligated in anyway hereunder.
Section 10.18 Affirmation of Obligations
Upon the effectiveness of this Agreement, from and after the
Effective Date: (a) the terms and conditions of the Original Credit Agreement
shall be amended as set forth herein and, as so amended, shall be restated in
their entirety, but only with respect to the rights, duties and obligations
among Borrowers, the Lenders and the Agent accruing from and after the Closing
Date; (b) this Agreement shall not in any way release or impair the rights,
duties, Obligations or Liens created pursuant to the Original Credit Agreement
or any other Loan Document (as defined therein) or affect the relative
priorities thereof, in each case to the extent in force and effect thereunder as
of the Effective Date and except as modified hereby or by documents, instruments
and agreements executed and delivered in connection herewith, and all of such
rights, duties, Obligations and Liens are assumed, ratified and affirmed by each
of the Borrowers and parties to the Loan Documents; (c) all indemnification
obligations of the Borrowers and parties to the Loan Documents under the
Original Credit Agreement and any other Loan Documents (as defined therein)
shall survive the execution and delivery of this Agreement and shall continue in
full force and effect for the benefit of the Lenders, the Agent, and any other
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Person indemnified under the Original Credit Agreement or any other Loan
Document (as defined therein) at any time prior to the Effective Date, (d) the
Obligations incurred under the Original Credit Agreement shall, to the extent
outstanding on the Effective Date, continue outstanding under this Agreement and
shall not be deemed to be paid, released, discharged or otherwise satisfied by
the execution of this Agreement, and this Agreement shall not constitute a
refinancing, substitution or novation of such Obligations or any of the other
rights, duties and obligations of the parties hereunder, and the terms
"Obligations" as such term is used in the Loan Documents shall include the
Obligations as increased, amended and restated under this Agreement; (e) the
execution, delivery and effectiveness of this Agreement shall not operate as a
waiver of any right, power or remedy of the Lenders or the Agent (as defined
therein) under the Original Credit Agreement, nor constitute a waiver of any
covenant, agreement or obligation under the Original Credit Agreement, except to
the extent that any such covenant, agreement or obligation is no longer set
forth herein or is modified hereby; (f) any and all references to the Original
Credit Agreement in any Security Document or other Loan Document shall, without
further action of the parties, be deemed a reference to the Original Credit
Agreement, as amended and restated by this Agreement, and as this Agreement
shall be further amended, restated, supplemented or otherwise modified from time
to time, and any and all references to the Security Documents or Loan Documents
in any such Security Documents or any other Loan Documents shall be deemed a
reference to the Security Documents or Loan Documents under the Original Credit
Agreement, as amended and restated by this Agreement, and as this Agreement
shall be further amended, restated, supplemented or otherwise modified from time
to time; and (g) the Liens granted pursuant to the Security Documents shall
continue without any diminution thereof and shall remain in full force and
effect on and after the Effective Date.
Section 10.19 USA Patriot Act.
Each Lender or assignee or participant of a Lender that is not
incorporated under the laws of the United States of America or a state thereof
(and is not excepted from the certification requirement contained in Section 313
of the USA Patriot Act and the applicable regulations because it is both (i) an
affiliate of a depository institution or foreign bank that maintains a physical
presence in the United states or foreign county, and (ii) subject to supervision
by a banking authority regulating such affiliated depository institution or
foreign bank) shall deliver to the Agent the certification, or, if applicable,
recertification, certifying that such Lender is not a "shell" and certifying to
other matters as required by Section 313 of the USA Patriot Act and the
applicable regulations: (1) within 10 days after the Effective Date, and (2) as
such other times as are required under the USA Patriot Act.
Section 10.20 Joinder to HK Subordination Agreement.
ER Macao, by its signature below, becomes a "Subordinated
Creditor" under the HK Subordination Agreement with the same force and effect as
if originally named therein as a Subordinated Creditor, and ER Macao hereby
agrees to all the terms and provisions of the HK Subordination Agreement
applicable to it as a Subordinated Creditor thereunder. Each reference to a
"Subordinated Creditor" in the HK Subordination Agreement shall be deemed to
include each ER Macao.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
BORROWERS:
XXXXXXX RADIO CORP
By: /s/ Xxx X. Xxxxxxxx
---------------------------------
Name: Xxx X. Xxxxxxxx
Title: VP-CFO
MAJEXCO IMPORTS, INC.
By: /s/ Xxxx X. Xxxx
---------------------------------
Name: Xxxx X. Xxxx
Title: SVP-Int'l
XXXXXXX RADIO (HONG KONG) LIMITED
By: /s/ Xxxx X. Xxxx
---------------------------------
Name: Xxxx X. Xxxx
Title: Director
XXXXXXX RADIO INTERNATIONAL LTD.
By: /s/ Xxxx X. Xxxx
---------------------------------
Name: Xxxx X. Xxxx
Title: Director
XXXXXXX RADIO MACAO
COMMERCIAL OFFSHORE LIMITED
By: /s/ Xxxx X. Xxxx
---------------------------------
Name: Xxxx X. Xxxx
Title: Director
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LENDERS:
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxxx
Senior Vice President
SOVEREIGN BANK
By: /s/ Xxxxx X. Xxxxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President
AGENT:
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxx
Senior Vice President
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PRICING SCHEDULE
"Applicable Margin", in the case of Revolving Credit Loans,
Term Loans, Swing Loans and the Applicable Fee Rate means for any date, the
rates set forth below in the row opposite such term and in the column
corresponding to the "Pricing Level" that applies at such date:
------------------- ----------------- ----------------- ----------------- -----------------
Xxxxx X Xxxxx XX Xxxxx XXX Xxxxx XX
------------------- ----------------- ----------------- ----------------- -----------------
Applicable Plus 1.50% Plus 2.00% Plus 2.50% Plus 3.00%
Eurodollar Margin
------------------- ----------------- ----------------- ----------------- -----------------
Applicable Base 0.0% .50% 1.00% 1.50%
Rate Margin
------------------- ----------------- ----------------- ----------------- -----------------
Applicable Fee .25% .25% .30% .30%
Rate
------------------- ----------------- ----------------- ----------------- -----------------
For purposes of this Pricing Schedule, the following terms have the
following meanings:
"Level I Pricing" applies at any date if the ratio of Senior Funded
Debt to EBITDA on such date is less than 2.00:1.
"Level II Pricing" applies at any date if (i) the ratio of Senior
Funded Debt to EBITDA in effect on such date is less than 2.50:1 and (ii) Level
I Pricing does not apply.
"Level III Pricing: applies at any date if (i) the ratio of Senior
Funded Debt to EBITDA in effect on such date is less than 3.00:1 and (ii)
neither Level I Pricing nor Level II Pricing applies.
"Level IV Pricing" applies at any date if, on such date, the ratio of
Senior Funded Debt to EBITDA is equal to or greater than 3.00:1.00.
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