EXHIBIT 10.1
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$225,000,000
CREDIT AGREEMENT
AMONG
COMPUCOM SYSTEMS, INC.
CERTAIN LENDERS PARTY HERETO
AND
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE LENDER
September 26, 1996
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TABLE OF CONTENTS
Page
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ARTICLE 1
Definitions
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Section 1.1 Defined Terms....................................... 1
Section 1.2 Amendments and Renewals............................. 25
Section 1.3 Construction........................................ 26
ARTICLE 2
Advances
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Section 2.1 The Advances........................................ 26
Section 2.2 Manner of Borrowing and Disbursement................ 27
Section 2.3 Interest............................................ 29
Section 2.4 Fees................................................ 31
Section 2.5 Prepayments......................................... 32
Section 2.6 Reduction of Commitments............................ 33
Section 2.7 Non-Receipt of Funds by the Administrative Lender... 33
Section 2.8 Payment of Principal of Advances.................... 34
Section 2.9 Reimbursement....................................... 34
Section 2.10 Manner of Payment................................... 35
Section 2.11 LIBOR Lending Offices............................... 36
Section 2.12 Sharing of Payments................................. 36
Section 2.13 Calculation of LIBOR Rate........................... 36
Section 2.14 Taxes............................................... 36
Section 2.15 Letters of Credit................................... 40
ARTICLE 3
Conditions Precedent
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Section 3.1 Conditions Precedent to the Initial Advance and the
Initial Issuance of Letters of Credit............... 45
Section 3.2 Conditions Precedent to All Advances and Letters of
Credit.............................................. 47
Section 3.3 Conditions Precedent to Conversions and Continuations 48
ARTICLE 4
Representations and Warranties
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Section 4.1 Representations and Warranties...................... 49
Section 4.2 Survival of Representations and Warranties, etc..... 56
ARTICLE 5
General Covenants
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Section 5.1 Preservation of Existence and Similar Matters....... 56
Section 5.2 Business; Compliance with Applicable Law............ 57
Section 5.3 Maintenance of Properties........................... 57
Section 5.4 Accounting Methods and Financial Records............ 57
Section 5.5 Insurance........................................... 57
Section 5.6 Payment of Taxes and Claims......................... 57
Section 5.7 Visits and Inspections.............................. 57
Section 5.8 Use of Proceeds..................................... 58
SECTION 5.9 INDEMNITY........................................... 58
Section 5.10 Environmental Law Compliance........................ 59
Section 5.11 Further Assurances.................................. 60
Section 5.12 Subsidiaries........................................ 60
Section 5.13 Real Property....................................... 61
Section 5.14 Agreements in Respect of RPA and TAA................ 61
ARTICLE 6
Information Covenants
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Section 6.1 Borrowing Base Report............................... 62
Section 6.3 Annual Financial Statements and Information;
Certificate of No Default........................... 62
Section 6.4 Compliance Certificate.............................. 62
Section 6.5 Copies of Other Reports and Notices................. 63
Section 6.6 Notice of Litigation, Default and Other Matters..... 64
Section 6.7 ERISA Reporting Requirements........................ 64
Section 6.8 RPA and TAA Reporting Requirements.................. 65
ARTICLE 7
Negative Covenants
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Section 7.1 Indebtedness........................................ 66
Section 7.2 Liens............................................... 67
Section 7.3 Investments......................................... 67
Section 7.4 Liquidation, Merger................................. 68
Section 7.5 Sales of Assets..................................... 68
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Section 7.6 Acquisitions........................................ 69
Section 7.7 Capital Expenditures................................ 69
Section 7.8 Restricted Payments................................. 69
Section 7.9 Affiliate Transactions.............................. 70
Section 7.10 Compliance with ERISA............................... 70
Section 7.11 Maximum Leverage Ratio.............................. 70
Section 7.12 Minimum Fixed Charge Coverage Ratio................. 70
Section 7.13 Minimum Tangible Net Worth.......................... 70
Section 7.14 Minimum Asset Coverage Ratio........................ 71
Section 7.15 Maximum Funded Debt to Capital...................... 71
Section 7.16 Sale and Leaseback.................................. 71
Section 7.17 Sale or Discount of Receivables..................... 71
Section 7.18 Capital Stock....................................... 71
Section 7.19 Business............................................ 71
Section 7.20 Fiscal Year......................................... 71
Section 7.21 Amendment of Organizational Documents............... 71
Section 7.22 Amendments and Waivers of Subordinated Debt......... 72
Section 7.23 Operating Leases.................................... 72
ARTICLE 8
Default
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Section 8.1 Events of Default................................... 72
Section 8.2 Remedies............................................ 75
ARTICLE 9
Changes in Circumstances
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Section 9.1 LIBOR Basis Determination Inadequate................ 76
Section 9.2 Illegality.......................................... 76
Section 9.3 Increased Costs..................................... 77
Section 9.4 Effect On Base Rate Advances........................ 78
Section 9.5 Capital Adequacy.................................... 78
Section 9.6 Replacement Lender.................................. 79
ARTICLE 10
Agreement Among Lenders
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Section 10.1 Agreement Among Lenders............................. 79
Section 10.2 Lender Credit Decision.............................. 82
Section 10.3 Benefits of Article................................. 82
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ARTICLE 11
Miscellaneous
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Section 11.1 Notices............................................. 83
Section 11.2 Expenses............................................ 83
Section 11.3 Waivers............................................. 84
Section 11.4 Calculation by the Lenders Conclusive and Binding... 84
Section 11.5 Set-Off............................................. 84
Section 11.6 Assignment.......................................... 85
Section 11.7 Counterparts........................................ 87
Section 11.8 Severability........................................ 87
Section 11.9 Interest and Charges................................ 87
Section 11.10 Headings............................................ 88
Section 11.11 Amendment and Waiver................................ 88
Section 11.12 Exception to Covenants.............................. 89
Section 11.13 No Liability of Issuing Bank........................ 89
Section 11.14 Confidentiality..................................... 89
Section 11.15 Amendment, Restatement, Extension, Renewal and
Increase............................................ 90
SECTION 11.16 GOVERNING LAW....................................... 90
SECTION 11.17 WAIVER OF JURY TRIAL................................ 90
SECTION 11.18 ENTIRE AGREEMENT.................................... 91
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Schedules and Exhibits
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Schedule 1: LIBOR Lending Offices
Schedule 2: Existing Liens
Schedule 3: Existing Litigation and Material Liabilities
Schedule 4: Subsidiaries
Schedule 5: Existing Investments
Schedule 6: Existing Indebtedness
Schedule 7: Qualification and Good Standing
Schedule 8: Labor Relations
Schedule 9: Permitted Real Estate Expenditures
Exhibit A: Facility A Note
Exhibit B: Facility B Note
Exhibit C: Swing Line Note
Exhibit D: Security Agreement
Exhibit E: Borrowing Base Report
Exhibit F: Pledge Agreement
Exhibit G: Compliance Certificate
Exhibit H: Assignment Agreement
Exhibit I: Subsidiary Guaranty
Exhibit J: Notice of Borrowing
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CREDIT AGREEMENT
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THIS CREDIT AGREEMENT is dated as of September 26, 1996, among COMPUCOM
SYSTEMS, INC., a Delaware corporation (the "Borrower"), the Lenders from time to
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time party hereto, and NATIONSBANK OF TEXAS, N.A., a national banking
association, as administrative agent for the Lenders.
BACKGROUND
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The Lenders have been requested to provide the Borrower the funds
required to (i) refinance existing debt of the Borrower outstanding to
NationsBank of Texas, N.A. pursuant to the terms of that certain Financing and
Security Agreement, dated as of August 4, 1993, as amended, modified,
supplemented and restated from time to time (the "Existing Credit Agreement"),
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(ii) finance acquisitions permitted hereunder, (iii) finance the ongoing working
capital and general corporate requirements of the Borrower and its Subsidiaries
(as hereinafter defined) and (iv) finance the purchase of certain real estate.
The Lenders have agreed to provide such financing, subject to the terms and
conditions set forth below.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration hereby acknowledged, the
parties hereto agree that the Existing Credit Agreement shall be amended,
restated and superseded as follows:
ARTICLE 1
Definitions
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Section 1.1 Defined Terms. For purposes of this Agreement:
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"Account" has the meaning assigned to such term in the UCC.
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"Acquisition" means any transaction pursuant to which the Borrower or
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any of its Subsidiaries, (i) whether by means of a capital contribution or
purchase or other acquisition of stock or other securities or other equity
participation or interest, (A) acquires more than 50% of the equity interest in
any Person pursuant to a solicitation by the Borrower or such Subsidiary of
tenders of equity securities of such Person, or through one or more negotiated
block, market, private or other transactions, or a combination of any of the
foregoing, or (B) makes any corporation a Subsidiary of the Borrower or such
Subsidiary, or causes any corporation, other than a Subsidiary of the Borrower
or such Subsidiary, to be merged into the Borrower or such Subsidiary (or agrees
to be merged into any other corporation other than a wholly-owned Subsidiary
(excluding directors' qualifying shares) of the Borrower or such Subsidiary), or
(ii) purchases all or substantially all of the business or assets of any Person
or of any operating division of any Person.
"Administrative Lender" means NationsBank of Texas, N.A., a national
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banking association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
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"Administrative Lender Fee Letter" has the meaning specified in Section
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2.4(c) hereof.
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"Advance" means a Facility A Advance, a Facility B Advance or a Swing
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Line Advance and "Advances" means Facility A Advances, Facility B Advances and
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Swing Line Advances.
"Affiliate" means, as applied to any Person, any other Person that,
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directly or indirectly, through one or more Persons, Controls or is Controlled
By or Under Common Control with, that Person.
"Agreement" means this Credit Agreement, as
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amended, modified, supplemented or restated from time to time.
"Agreement Date" means the date of this Agreement.
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"Applicable Environmental Laws" means applicable laws pertaining to
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health or the environment, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (as amended from time
to time, "CERCLA"), the Resource Conservation and Recovery Act of 1976, as
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amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act
amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as
amended from time to time, "RCRA").
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"Applicable Law" means (a) in respect of any Person, all provisions of
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constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a
party, and (b) in respect of contracts relating to interest or finance charges
that are made or performed in the State of Texas, "Applicable Law" shall mean
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the laws of the United States of America, including without limitation 12 USC
(S)(S) 85 and 86, as amended from time to time, and any other statute of the
United States of America now or at any time hereafter prescribing the maximum
rates of interest on loans and extensions of credit, and the laws of the State
of Texas, including, without limitation, Article 5069-1.04, Title 79, Revised
Civil Statutes of Texas, 1925, as amended ("Art. 1.04"), and any other statute
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of the State of Texas; provided that the parties hereto agree that the
provisions of Chapter 15, Title 79, Revised Civil Statutes of Texas, 1925, as
amended, shall not apply to Advances, this Agreement, the Notes or any other
Loan Documents.
"Applicable LIBOR Rate Margin" means the following per annum percentages,
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applicable in the following situations:
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Applicability Facility A Facility B
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(a) Initial Pricing Period 1.000% 1.250%
(b) Subsequent Pricing Period
(1) The Fixed Charge Coverage Ratio 0.750% 1.000%
is greater than or equal to 2.50 to 1
(2) The Fixed Charge Coverage Ratio 0.875% 1.125%
is less than 2.50 to 1 but greater
than or equal to 2.00 to 1
(3) The Fixed Charge Coverage Ratio 1.000% 1.250%
is less than 2.00 to 1 but greater
than or equal to 1.50 to 1
(4) The Fixed Charge Coverage Ratio 1.250% 1.500%
is less than 1.50 to 1
The Applicable LIBOR Rate Margin payable by the Borrower on the LIBOR Advances
outstanding hereunder shall be subject to reduction or increase, as applicable
and as set forth in the table above, on a quarterly basis according to the
performance of the Borrower as tested by using the Fixed Charge Coverage Ratio
calculated as of the end of each fiscal quarter during the Subsequent Pricing
Period; provided, that each adjustment in the LIBOR Basis shall be effective
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with respect to LIBOR Advances (i) made following receipt by the Administrative
Lender of the financial statements required to be delivered pursuant to Section
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6.2 or 6.3 hereof, as applicable, for each such fiscal quarter, and the
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corresponding Compliance Certificate required pursuant to Section 6.4 hereof, on
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the date of making such LIBOR Advance and (ii) outstanding on the date of
receipt of such financial statements and Compliance Certificate referred to in
clause (i) immediately preceding, on the date which is two Business Days
following the date of receipt of such financial statements and Compliance
Certificate. If such financial statements and Compliance Certificate are not
received by the Administrative Lender by the date required, effective as of the
first Business Day following notification thereof from the Administrative Lender
to the Borrower, the Applicable LIBOR Rate Margin shall be determined as if the
Fixed Charge Coverage Ratio is less than 1.50 to 1 until such time as such
financial statements and Compliance Certificate are received.
"Asset Coverage Ratio" means, for the Borrower and its Subsidiaries
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determined in accordance with GAAP on a consolidated basis, at the time in
question, the ratio of (a) the sum of (i) Cash and Cash Equivalents, plus (ii)
Accounts, plus (iii) Inventory to (b) the sum of (i) outstanding obligations in
respect of Facility A and Swing Line Advances, Reimbursement Obligations and
other Indebtedness, plus (ii) the Net Exposure Under Securitization, plus (iii)
accounts payable and accrued liabilities in the ordinary course of business.
"Assignees" means any assignee of a Lender pursuant to an Assignment
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Agreement and shall have the meaning ascribed thereto in Section 11.6 hereof.
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"Assignment Agreement" has the meaning specified in Section 11.6 hereof.
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"Authorized Signatory" means such senior personnel of the Borrower as
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may be duly authorized and designated in writing by the Borrower to execute
documents, agreements and instruments on behalf of the Borrower, and to request
Advances and Letters of Credit hereunder.
"Base Rate Advance" means any Advance bearing interest at the Base Rate
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Basis.
"Base Rate Basis" means, for any day, a per annum interest rate equal
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to the higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on
such day or (b) the Prime Rate on such day. The Base Rate Basis shall be
adjusted automatically without notice as of the opening of business on the
effective date of each change in the Prime Rate to account for such change.
"Borrower" has the meaning specified in the introductory provision hereof.
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"Borrowing Base" means, at the time in question, an amount equal to
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the sum of (i) 85% of the net amount of the Borrower's and its Subsidiaries
(other than CFI) ownership interest in Eligible Accounts, plus (ii) an amount
equal to 50% of Eligible Inventory.
"Borrowing Base Report" means a report, signed by an Authorized
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Signatory, in substantially the form of Exhibit E, appropriately completed.
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"Business Day" means a day on which commercial banks are open (a) for
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the transaction of business in Dallas, Texas, and, (b) with respect to any LIBOR
Advance, for the transaction of international business (including dealings in
U.S. dollar deposits) in London, England.
"Capital" means, for any date of calculation, for the Borrower and its
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Subsidiaries, on a consolidated basis determined in accordance with GAAP, the
sum of (a) Funded Debt plus (b) Net Worth.
"Capital Expenditures" means, for any period, expenditures made by the
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Borrower and its Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements during such period
and the aggregate amount of items leased or acquired under Capitalized Lease
Obligations at the cost of the item, but excluding capital expenditures made
with insurance proceeds to the extent used to replace or repair damaged fixed
assets, plant and equipment) computed in accordance with GAAP, consistently
applied.
"Capital Stock" means, as to any Person, the equity interests in such
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Person, including, without limitation, the shares of each class of capital stock
in any Person that is a corporation, and each class of partnership interest
(including, without limitation, general, limited and preference units) in any
Person that is a partnership.
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"Capitalized Lease Obligations" means that portion of any obligation
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of the Borrower or any Subsidiary of the Borrower as lessee under a lease which
at the time are recorded as capitalized lease obligations on the balance sheet
of the Borrower or such Subsidiary prepared in accordance with GAAP.
"Cash and Cash Equivalents" means with respect to the Borrower and
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each Subsidiary of the Borrower (i) cash (which, after the occurrence of an
Event of Default, shall exclude any cash proceeds of Accounts), (ii) securities
issued or directly and fully guaranteed or insured by the United States
Government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of deposit
and eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any Lender or with any domestic
commercial bank having capital and surplus in excess of $500,000,000, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) entered into with
any financial institution meeting the qualifications specified in clause (iii)
above, (v) commercial paper issued by any Lender or the parent corporation of
any Lender, and commercial paper rated A-1 or the equivalent thereof by Standard
& Poor's Ratings Group, a Division of XxXxxx-Xxxx, Inc., a New York corporation,
or P-1 or the equivalent thereof by Xxxxx'x Investors Service, Inc., and in each
case maturing within six months after the date of acquisition, and (vi) a
readily redeemable "money market mutual fund" advised by a bank described in
clause (iii) hereof, or an investment advisor registered under Section 203 of
the Investment Advisors Act of 1940, that has and maintains an investment policy
limiting its investments primarily to instruments of the types described in
clauses (i) through (v) hereof and having on the date of such Investment total
assets of at least One Hundred Million Dollars ($100,000,000.00).
"CFI" means CSI Funding, Inc., a Delaware corporation and wholly-owned
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Subsidiary of the Borrower, as purchaser under the RPA.
"CFI Note" means the "Subordinated Note" as defined by the RPA, and
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any and all renewals, extensions, modifications, amendments, supplements or
restatements thereof.
"Change of Control" means the occurrence of any of the following
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events after the Agreement Date: (a) any Person or any Persons acting together
which would constitute a "group" (a "Group") for purposes of Section 13(d) of
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the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
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successor provision thereto, other than the Group whose nominees constituted a
majority of the board of directors of the Borrower as of the close of business
on the Agreement Date, together with any Affiliates or Related Persons thereof,
shall beneficially own (as defined in Rule 13d-3 of the Securities and Exchange
Commission under the Exchange Act or any successor provision thereto) at least
30% of the aggregate voting power of all classes of Capital Stock of the
Borrower entitled to vote generally in the election of directors of the
Borrower; or (b) any Person or Group, other than any Person or Group whose
nominees constituted a majority of the board of directors of the Borrower as of
the close of business on the Agreement Date, together with any Affiliates or
Related Persons thereof, shall succeed in having sufficient of its or their
nominees elected to the Board of Directors of the
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Borrower, such that such nominees, when added to any existing director remaining
on the Board of Directors of the Borrower after such election who is an
Affiliate or Related Person of such Group, shall constitute a majority of the
Board of Directors of the Borrower.
"ClientLink Note" means that certain promissory note, dated September
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5, 1996, in the original principal amount of $2,500,000 executed and delivered
by ClientLink, Inc. and payable to the order of the Borrower, and any and all
renewals, extensions, modifications, amendments, supplements or restatements
thereof.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral" means any collateral hereafter granted by any Person to
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the Administrative Lender for the benefit of the Lenders to secure the
Obligations.
"Collateral Document" means any document under which Collateral is granted
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and any document related thereto.
"Commitment Fee" has the meaning specified in Section 2.4(a) hereof.
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"Commitments" means, collectively, the Facility A Commitment and the
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Facility B Commitment, as reduced from time to time pursuant to Section 2.6
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hereof.
"Compliance Certificate" means a certificate, signed by an Authorized
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Signatory, in substantially the form of Exhibit G, appropriately completed.
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"Control" or "Controlled By" or "Under Common Control" means possession,
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directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of voting securities, by
contract or otherwise); provided, however, that in any event any Person which
beneficially owns, directly or indirectly, 10% or more (in number of votes) of
the securities having ordinary voting power for the election of directors of a
corporation shall be conclusively presumed to control such corporation.
"Controlled Group" means as of the applicable date, as to any Person
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not an individual, all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) which are under common
control with such Person and which, together with such Person, are treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code; provided,
however, that the Subsidiaries of the Borrower shall be deemed to be members of
the Borrower's Controlled Group.
"Creditor" means a creditor of the Borrower or any Subsidiary of the
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Borrower and shall not include any Affiliate of any such creditor.
"Current Maturities" means, with respect to any Person, the principal
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portion payable by such Person on Long Term Debt during the twelve-month period
immediately succeeding the date of determination.
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"Debtor Relief Laws" means any applicable liquidation, conservatorship,
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bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief Laws affecting the rights of creditors generally from time to time
in effect.
"Deed of Trust" means any Deed of Trust or Mortgage, as applicable,
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relating to the real property of the Borrower purchased with the proceeds of the
Facility B Advances, in a form acceptable to the Administrative Lender, as
amended, modified, renewed, supplemented or restated from time to time.
"Default" means an Event of Default and/or any of the events specified
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in Section 8.1, regardless of whether there shall have occurred any passage of
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time or giving of notice that would be necessary in order to constitute such
event an Event of Default.
"Default Rate" means a simple per annum interest rate equal to (a)
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with respect to Base Rate Advances the lesser of (i) the Highest Lawful Rate or
(ii) the Prime Rate plus 2.00% or (b) with respect to LIBOR Advances, the lesser
of (i) the Highest Lawful Rate or (ii) the LIBOR Basis plus 2% in excess of the
Applicable Rate Margin then in effect.
"Determining Lenders" means, on any date of determination, any combination
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of the Lenders having at least 66-2/3% of the aggregate amount of the Advances
(which for purposes of the calculation shall include for each Lender an amount
equal to the product of such Lender's Specified Percentage multiplied by the
aggregate principal amount of Swing Line Advances outstanding) then outstanding;
provided, however, that if there are no Advances outstanding hereunder,
"Determining Lenders" shall mean any combination of Lenders whose Specified
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Percentages aggregate at least 66-2/3%.
"Dividend" means, as to any Person, (a) any declaration or payment of
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any dividend (other than a stock dividend) on, or the making of any distribution
on account of, any shares of Capital Stock of, or other similar interest in,
such Person and (b) any purchase, redemption, or other acquisition or retirement
for value of any shares of Capital Stock of, or similar interest in, such
Person.
"Dollar" or "$" means the lawful currency of the United States of America.
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"Domestic Subsidiary" means any Subsidiary of the Borrower other than a
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Foreign Subsidiary.
"EBIT" means, for any period, determined in accordance with GAAP on a
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consolidated basis for the Borrower and its Subsidiaries, the sum of (a) Pretax
Net Income (excluding therefrom, to the extent included in determining Pretax
Net Income, any items of extraordinary gain, including net gains on the sale of
assets other than asset sales in the ordinary course of business, and adding
thereto, to the extent included in determining Pretax Net Income, any items of
extraordinary loss, including net losses on the sale of assets other than asset
sales in the ordinary course of business), plus (b) interest expense.
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"EBITDA" means, for any period, determined in accordance with GAAP on
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a consolidated basis for the Borrower and its Subsidiaries, the sum of (a) EBIT
plus (b) depreciation, amortization and other non-cash charges (to the extent
included in determining EBIT).
"EFC" means Enterprise Funding Corporation, a Delaware corporation, as
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purchaser of a portion of the RPA Interest as provided by the TAA.
"Eligible Accounts" means at the time of any determination thereof,
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the net amount of the Accounts of the Obligors which are reasonably acceptable
to the Determining Lenders in their discretion for the purposes of determining
the Borrowing Base and as to which the following requirements have been
fulfilled, less any reserves against such Eligible Accounts as the Determining
Lenders may, from time to time in their sole discretion without prior notice,
deem to be necessary or appropriate:
(i) An Obligor has lawful and absolute (subject to the RPA Interest)
title to such Account;
(ii) Such Account is a valid, legally enforceable obligation of the
Person who is obligated under such Account (the "account debtor") for goods
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or services that have been delivered or that have been rendered to such
Person;
(iii) If such Account and other Accounts are owed by a Creditor of
the Borrower or any Subsidiary of the Borrower, the amount of all such
Accounts included as Eligible Accounts shall be the amount by which all
such Accounts exceeds the aggregate accounts payable owed by the Borrower
or such Subsidiary to such Creditor;
(iv) There has been excluded from such Account any portion that is
subject to any asserted dispute, offset, discount, counterclaim or other
claim or defense on the part of the account debtor or to any asserted claim
on the part of the account debtor denying liability under such Account;
(v) The applicable Obligor(s) have full and unqualified right to
assign and grant a security interest in such Account (or the applicable
Obligor's ownership interest in such Account) to Administrative Lender as
security for the Obligations;
(vi) Such Account is not evidenced by chattel paper, promissory note
or other instrument payable to any Obligor;
(vii) Such Account has not been due and payable for more than 120
days from the invoice date; provided, that, unless Determining Lenders
agree otherwise, no Accounts from an account debtor shall constitute
Eligible Accounts if 50% or more of the aggregate dollar amount of all
Accounts owed to the Borrower or any Subsidiary of the Borrower by such
account debtor have been due and payable for 120 days or more from their
respective invoice dates;
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(viii) No account debtor in respect of such Account is (a) primarily
conducting business in and organized under the laws of any jurisdiction
located outside the United States of America, (b) the subject of a
proceeding under any Debtor Relief Laws or (c) a Tribunal;
(ix) No account debtor in respect of such Account is (a) an Affiliate
of the Borrower or any Subsidiary or (b) an employee of the Borrower or any
Subsidiary of the Borrower;
(x) The interest of the applicable Obligor(s) in such Account is (a)
subject to a fully perfected first priority (subject, in the case of the
Borrower, to Liens in favor of the Administrative Secured Party under the
MSAA) security interest in favor of Administrative Lender pursuant to the
Loan Documents, prior to the rights of, and enforceable as such against,
any other Person (including holders of a purchase money security interest)
and (b) not subject to any Lien in favor of any other Person except for
Liens in favor of the Administrative Secured Party under the MSAA.
(xi) Such Account was generated in the ordinary course of the
Borrower's business, represents amounts payable in respect of goods that
have been delivered or services that have been performed and is denominated
and payable only in United States dollars in the United States; and
(xii) Such Account is required to be paid in full not more than 30
days after the original invoice date and satisfies all applicable
requirements of the Borrower's credit and collection policies and
practices, as in effect from time to time.
"Eligible Inventory" means, at the time of any determination thereof, each
------------------
item of the Obligors' Inventory (excluding work-in-process, obsolete Inventory,
Inventory on consignment and Inventory used for demonstrations and display)
valued at the lower of cost or market value (allocated on a first-in, first-out
basis), which is reasonably acceptable to the Determining Lenders in their
discretion for purposes of determining the Borrowing Base and as to which the
following requirements have been fulfilled to the satisfaction of the
Determining Lenders, less any reserves against such Eligible Inventory as the
Determining Lenders may, from time to time in their sole discretion without
prior notice, deem to be necessary or appropriate:
(i) An Obligor has lawful and absolute title to such Inventory;
(ii) Such Inventory is not defective or unmerchantable goods;
(iii) Such Inventory is located in the United States of America;
-9-
(iv) Such Inventory is (a) subject to a fully perfected first priority
security interest in favor of Administrative Lender pursuant to the Loan
Documents, prior to the rights of, and enforceable as such against, any
other Person (including holders of a purchase money security interest) and
(b) not subject to any Lien in favor of any other Person;
(v) The sale of such Inventory by Administrative Lender (or its
successors or assigns) upon an Event of Default is not subject to any
Necessary Authorization, restriction or limitation;
(vi) Such Inventory was not supplied (directly or through an agent or
bailee) to the Borrower or any Subsidiary of the Borrower by Compaq
Computer Corporation and such Inventory has not been, and will not be,
attached to, integrated into or installed on any such Inventory supplied by
Compaq Computer Corporation while such Inventory is owned by the Borrower
or any Subsidiary of the Borrower;
(vii) Such Inventory was not manufactured by, or provided to the
Borrower or any Subsidiary of the Borrower by, Hewlett-Packard Company and
such Inventory has not been, and will not be, attached to, integrated into
or installed on any such Inventory manufactured or provided by Hewlett-
Packard Company while such Inventory is owned by the Borrower or any
Subsidiary of the Borrower;
(viii) Such Inventory was not manufactured by, or sold or provided to
the Borrower or any Subsidiary of the Borrower by, Apple Computer, Inc. or
any company affiliated with Apple Computer, Inc. and such Inventory has not
been, and will not be, attached to, integrated into or installed on any
such Inventory manufactured, sold or provided by Apple Computer, Inc. or
any company affiliated with Apple Computer, Inc. while such Inventory is
owned by the Borrower or any Subsidiary of the Borrower;
(ix) Such Inventory was not manufactured by, or sold to the Borrower
or any Subsidiary of the Borrower by, International Business Machines
Corporation or any of its affiliates or Lexmark International, Inc.
(collectively, the "IBM Parties"), such Inventory does not bear the
-----------
trademark, trade name or label of any of the IBM Parties and such Inventory
has not been, and will not be, attached to, integrated into or installed on
any such Inventory manufactured by, sold by or bearing the trademark, trade
name or label of any of the IBM Parties while such Inventory is owned by
the Borrower or any Subsidiary of the Borrower;
(x) Such Inventory is not included in the items classified as "Other
Accessories" in the Borrower's monthly DIMS Valuation Report; and
(xi) Such Inventory is not included in the items classified as "XXXX
Inventory" in the Borrower's monthly XXXX Valuation Report.
-10-
Provided, however, that until November 25, 1996, the failure of the
Borrower to deliver Landlord's Waivers to the Administrative Lender shall not
preclude the Borrower from including in "Eligible Inventory" any of its
inventory that otherwise satisfies the foregoing requirements. Provided
further, however, that if, on or before November 25, 1996, the Borrower has not
delivered to the Administrative Lender Landlord's Waivers covering the
Borrower's Eastern Distribution Center warehouse in Paulsboro, New Jersey, the
Borrower's Western Distribution Center warehouse in Stockton, California, the
Borrower's RMA location on Lombardy Lane in Dallas, Texas and the Borrower's SLC
location in Coppell, Texas, none of the Borrower's Inventory shall thereafter
constitute "Eligible Inventory", or otherwise be included in the calculation of
the Borrowing Base, until all of such Landlord's Waivers have been delivered to
the Administrative Lender.
"Equipment" has the meaning assigned to such term in the UCC.
---------
"Equity" means shares of capital stock or partnership, profits, capital or
------
member interest, or options, warrants or any other right to subscribe for or
otherwise acquire capital stock or a partnership, profits, capital or member
interest, of the Borrower or any Subsidiary of the Borrower.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any regulation promulgated thereunder.
"ERISA Event" means, with respect to the Borrower and its Subsidiaries, (a)
-----------
a Reportable Event (other than a Reportable Event not subject to the provision
for 30-day notice to the PBGC pursuant to regulations issued under Section 43
of ERISA), (b) the withdrawal of any such Person or any member of its Controlled
Group from a Plan subject to Title IV of ERISA during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate under Section 4041(c) of ERISA, (d)
the institution of proceedings to terminate a Plan by the PBGC, (e) the failure
to make required contributions which could result in the imposition of a lien
under Section 412 of the Code or Section 302 of ERISA, or (f) any other event or
condition which might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan or the imposition of any liability under Title IV of ERISA
other than PBGC premiums due but not delinquent under Section 4007 of ERISA.
"Event of Default" means any of the events specified in Section 8.1,
---------------- -----------
provided that any requirement for notice or lapse of time has been satisfied.
"Existing Credit Agreement" has the meaning specified in the Background
-------------------------
provision hereof.
"Facility A Advance" means an Advance made pursuant to Section 2.1(a)
------------------ --------------
hereof.
"Facility A Commitment" means $200,000,000.00, as reduced pursuant to
---------------------
Section 2.6 hereof.
-----------
-11-
"Facility A Maturity Date" means September 25, 1999, or the earlier date of
------------------------
termination in whole of the Facility A Commitment pursuant to Section 2.6 or 8.2
----------- ---
hereof.
"Facility A Notes" means the promissory notes of Borrower evidencing
----------------
Facility A Advances hereunder, substantially in the form of Exhibit A hereto,
---------
together with any extension, renewal, or amendment thereof, or substitution
therefor.
"Facility B Advance" means an Advance made pursuant to Section 2.1(b)
------------------ --------------
hereof.
"Facility B Commitment" means $25,000,000.00, as reduced from time to time
---------------------
pursuant to Section 2.6 hereof.
-----------
"Facility B Commitment Termination" means the earlier of (a) September 24,
---------------------------------
1997 or (b) the date on which the Facility B Advances are made.
"Facility B Maturity Date" means September 25, 1999, or the earlier date of
------------------------
termination in whole of the Facility B Commitment pursuant to Section 2.6 or 8.2
----------- ---
hereof.
"Facility B Notes" means the promissory notes of Borrower evidencing
----------------
Facility B Advances hereunder, substantially in the form of Exhibit B hereto,
---------
together with any extension, renewal, or amendment thereof, or substitution
therefor.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
------------------
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of Dallas on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average of the quotations for
the day for such transactions received by the Administrative Lender from three
Federal funds brokers of recognized standing selected by it.
"Fixed Charges" means, for any date of calculation, calculated for Borrower
-------------
and its Subsidiaries on a consolidated basis, the sum of, without duplication,
(a) the greater of (i) Current Maturities and (ii) 10% of Funded Debt, plus (b)
interest expense (including interest expense pursuant to Capitalized Lease
Obligations).
"Fixed Charge Coverage Ratio" means the ratio of EBITDA to Fixed Charges,
---------------------------
calculated for the four consecutive fiscal quarters immediately preceding the
date of calculation.
"Foreign Subsidiary" means any Subsidiary of the Borrower which is not
------------------
organized under the laws of any state of the United States of America or the
District of Columbia.
-12-
"Funded Debt" means, as of any date of determination, determined for the
-----------
Borrower and its Subsidiaries on a consolidated basis, (i) indebtedness for
borrowed money, (ii) obligations evidenced by bonds, debentures, notes or other
similar instruments, (iii) obligations to pay the deferred purchase price of
property or services other than trade payables incurred in the ordinary course
of business, (iv) Capitalized Lease Obligations and (v) Net Exposure Under
Securitization.
"GAAP" means generally accepted accounting principles applied on a
----
consistent basis, set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants, or their successors
which are applicable in the circumstances as of the date in question. The
requirement that such principles be applied on a consistent basis shall mean
that the accounting principles applied in a current period are comparable in all
material respects to those applied in a preceding period.
"Guaranties" means, collectively, the Parent Guaranty and the Subsidiary
----------
Guaranty.
"Guarantor" means each direct and indirect Subsidiary of the Borrower that
---------
executes and delivers a Subsidiary Guaranty hereunder.
"Guaranty" or "Guaranteed", as applied to an obligation of another Person,
-------- ----------
means (a) a guaranty, direct or indirect, in any manner, of any part or all of
such obligation, and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of any part
or all of such obligation, including, without limiting the foregoing, any
reimbursement obligations with respect to amounts which may be drawn by
beneficiaries of outstanding letters of credit; provided, however, Guaranty does
not mean (i) the endorsement of instruments for collection or deposit in the
ordinary course of business and (ii) customary indemnities given in connection
with asset sales in the ordinary course of business.
"Hedge Agreements" means any and all agreements, devices or arrangements
----------------
designed to protect at least one of the parties thereto from the fluctuations of
interest rates, exchange rates or forward rates applicable to such party's
assets, liabilities or exchange transactions, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap, swap or collar protection
agreements, and forward rate currency or interest rate options, as the same may
be amended or modified and in effect from time to time, and any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Highest Lawful Rate" means at the particular time in question the maximum
-------------------
rate of interest which, under Applicable Law, the Lenders are then permitted to
charge on the Obligations. If the maximum rate of interest which, under
Applicable Law, the Lenders are permitted to charge on the Obligations shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to the
Borrower.
-13-
"Indebtedness" means, with respect to any Person, without duplication, (a)
------------
all obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, (d) all obligations issued or assumed as the deferred
purchase price of property or services, (e) all obligations secured by any Lien
on any property or asset owned by such Person (other than accounts payable
arising in the ordinary course of business), whether or not the obligation
secured thereby shall have been assumed (provided that, unless such obligations
shall have been assumed, for purposes of this definition the amount of such
Indebtedness at any time shall be deemed to equal the fair market value of such
property or asset at such time), (f) to the extent not otherwise included, all
Capitalized Lease Obligations of such Person, all obligations in respect of
letters of credit, bankers' acceptances and similar instruments, and all
obligations under Hedge Agreements, (g) any Guaranty of such Person of any
obligation of another Person constituting obligations of a type set forth above
and (h) the Net Exposure Under Securitization.
"Indemnified Matters" has the meaning specified in Section 5.9(a) hereof.
------------------- --------------
"Indemnitees" has the meaning specified in Section 5.9(a) hereof.
----------- --------------
"Initial Pricing Period" means the period from and including the Agreement
----------------------
Date to and including the Rate Adjustment Date.
"Intangible Assets" means those assets which are treated as intangible
-----------------
pursuant to GAAP, and in any event including, without limitation: (i)
obligations, if any, owing by Affiliates to the Borrower or any Subsidiary of
the Borrower, (ii) the amount, if any, by which inventory exceeds the lower of
cost or market value thereof, (iii) the value of any inventory which is obsolete
or damaged or is otherwise deemed by the Administrative Lender not to be of a
marketable quality commensurate with the inventory of the Borrower and its
Subsidiaries as a whole; (iv) accounts receivable which are deemed by the
Borrower, any of its Subsidiaries or the Administrative Lender to be
uncollectible or which should be subject to a reserve for bad debts in
accordance with GAAP or which are subject to claims or setoffs; (v) leases and
leasehold improvements; (vi) any asset which is intangible or lacks intrinsic
and marketable value or collectibility, including without limitation goodwill,
noncompetition agreements, patents, copyrights, trademarks, franchises or
organization or research and development costs; (vii) organizational and
experimental expense; and (viii) unamortized debt discount and expense.
"Intercreditor Agreements" collectively means the following certain
------------------------
agreements: (i) Amended and Restated Intercreditor Agreement dated effective as
of April 1, 1996 among NationsBank of Texas, N.A., in its capacity as a lender,
the Borrower, IBM Credit Corporation and NationsBank of Texas, N.A. in its
capacity as Administrative Secured Party under the MSAA, (ii) Subordination
Agreement dated August 22, 1994 among NationsBank of Texas, N.A., in its
capacity as a lender, the Borrower, IBM Credit Corporation and Hewlett-Packard
Company, (iii) Intercreditor Agreement dated December 27, 1993 among NationsBank
of Texas, N.A., in its capacity as a lender, the Borrower and Compaq Computer
Corporation, and (iv) any other intercreditor agreement hereafter entered into
among NationsBank of Texas, N.A., in its
-14-
capacity as the Administrative Lender, the Borrower and any Person that is a
vendor to the Borrower of Inventory, as any of the foregoing may be renewed,
extended, modified, amended, supplemented or restated from time to time.
"Interest Period" means the period beginning on the day any LIBOR Advance
---------------
is made and ending one, two, three or six months thereafter (as the Borrower
shall select); provided, however, that all of the foregoing provisions are
-------- -------
subject to the following:
(i) if any Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless, with respect to a LIBOR Advance, the result of such
extension would be to extend such Interest Period into another calendar
month, in which event such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period with respect to a LIBOR Advance that begins
on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a calendar
month; and
(iii) the Borrower may not select any Interest Period which ends
after the date of a scheduled principal payment on the Advances unless,
after giving effect to such selection, the aggregate unpaid principal
amount of the LIBOR Advances for which Interest Periods end after such
scheduled principal payment shall be equal to or less than the principal
amount to which the Advances or Facility B Commitment are required to be
reduced after such scheduled principal payment is made.
"Inventory" has the meaning assigned to such term in the UCC.
---------
"Investment" means any acquisition of all or substantially all assets of
----------
any Person, or any direct or indirect purchase or other acquisition of, or
beneficial interest in, capital stock or other securities of any other Person,
or any direct or indirect loan, advance (other than loans or advances to
employees for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution to, or
investment in any other Person, including without limitation the purchase of
accounts receivable of any other Person that are not current assets or do not
arise in the ordinary course of business.
"Issuing Bank" means NationsBank of Texas, N.A., a national banking
------------
association, in its capacity as issuer of the Letters of Credit.
"Landlord's Waiver" means an agreement in form and substance satisfactory
-----------------
to the Administrative Lender pursuant to which the landlord of any leased
location where any Collateral is located shall waive its rights, if any, to the
Collateral and shall grant to the Administrative Lender rights to enter upon the
premises to inspect, remove or dispose of the Collateral.
-15-
"Law" means any statute, law, ordinance, regulation, rule, order, writ,
---
injunction, or decree of any Tribunal.
"Lender" means each financial institution shown on the signature pages
------
hereof so long as such financial institution maintains a portion of the
Commitments or is owed any part of the Obligations (including the Administrative
Lender in its individual capacity), and each Assignee that hereafter becomes a
party hereto pursuant to Section 11.6 hereof, subject to the limitations set
------------
forth therein.
"L/C Related Documents" has the meaning specified in Section 2.15(e)
--------------------- ---------------
hereof.
"Letter of Credit" has the meaning specified in Section 2.15(a) hereof.
---------------- ---------------
"Letter of Credit Agreement" has the meaning specified in Section 2.15(b)
-------------------------- ---------------
hereof.
"Letter of Credit Facility" has the meaning specified in Section 2.15(a)
------------------------- ---------------
hereof.
"Leverage Ratio" means, for any date of calculation, the ratio of Funded
--------------
Debt as of the date of determination to EBITDA calculated for the four
consecutive fiscal quarters immediately preceding the date of calculation.
"LIBOR Advance" means an Advance which the Borrower requests to be made as
-------------
a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance with
the provisions of Section 2.2 hereof.
-----------
"LIBOR Basis" means a simple per annum interest rate equal to the lesser of
-----------
(a) the Highest Lawful Rate, or (b) the sum of the LIBOR Rate plus the
Applicable LIBOR Rate Margin. The LIBOR Basis shall, with respect to LIBOR
Advances subject to reserve or deposit requirements, be subject to premiums for
such reserve or deposit requirements assessed by each Lender to the extent
incurred by such Lender, which are payable directly to each Lender. Once
determined, the LIBOR Basis shall remain unchanged during the applicable
Interest Period.
"LIBOR Lending Office" means, with respect to a Lender, the office
--------------------
designated as its LIBOR Lending Office on Schedule 1 attached hereto, and such
----------
other office of the Lender or any of its Affiliates hereafter designated by
notice to the Borrower and the Administrative Lender.
"LIBOR Rate" means, for any LIBOR Advance for any Interest Period therefor,
----------
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "LIBOR Rate" shall mean, for any LIBOR Advance for any
----------
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in
-16-
Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
-------- -------
Page, the applicable rate shall be the arithmetic mean of all such rates.
"Lien" means, with respect to any property, any mortgage, lien, pledge,
----
collateral assignment, hypothecation, charge, security interest, title retention
agreement, levy, execution, seizure, attachment, garnishment or other similar
encumbrance of any kind in respect of such property, whether or not xxxxxx,
vested or perfected.
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
----------
investigation by or before any Tribunal, including, without limitation,
proceedings, claims, lawsuits, and/or investigations under or pursuant to any
environmental, occupational, safety and health, antitrust, unfair competition,
securities, Tax or other Law, or under or pursuant to any contract, agreement or
other instrument.
"Loan Documents" means this Agreement, the Notes, the Security Agreement,
--------------
the Pledge Agreement, the Subsidiary Guaranty, any other Collateral Document,
the Administrative Lender Fee Letter, the Upfront Fee Letter, any Hedge
Agreements entered into with any Lender, and any other document or agreement
executed or delivered from time to time by the Borrower, any Subsidiary of the
Borrower or any other Person in connection herewith or as security for the
Obligations.
"Long Term Debt" means any obligation which is due one year or more from
--------------
the date of creation thereof which under GAAP is shown as a liability, plus
(without duplication) amounts equal to the aggregate net rentals (after making
allowances for any interest, taxes or other expenses included therein) payable
more than one year from the date of creation thereof under Capitalized Lease
Obligations.
"Material Adverse Effect" means any act or circumstance or event that (a)
-----------------------
could reasonably be expected to be material and adverse to the business,
financial condition, results of operations, or business prospects of the
Borrower and its Subsidiaries taken as a whole, or (b) in any manner whatsoever
does or could reasonably be expected to materially and adversely affect the
validity or enforceability of any Loan Document.
"MSAA" means the certain Master Security and Administration Agreement,
----
dated as of April 1, 1996, among the Borrower, NationsBank of Texas, N.A. in its
capacity as the original Administrative Secured Party thereunder, NationsBank of
Texas, N.A., in its capacity as a lender, CFI and EFC, as the same may be
renewed, extended, modified, amended or restated from time to time.
"Multiemployer Plan" means, as to any Person, at any time, a "multiemployer
------------------
plan" within the meaning of Section 4001(a)(3) of ERISA and to which such Person
or any member of its Controlled Group is making, or is obligated to make
contributions or has made, or been obligated to make, contributions.
-17-
"NationsBank" means NationsBank of Texas, N.A., a national banking
-----------
association, in its capacity as a Lender hereunder.
"NCGI Note" means that certain subordinated convertible note, dated October
---------
31, 1995, in the original principal amount of $3,000,000, executed and delivered
by the Borrower and payable to the order of Network Compatibility Group, Inc.
"Necessary Authorization" means any right, franchise, license, permit,
-----------------------
consent, approval or authorization from, or any filing or registration with, any
Tribunal or any Person necessary or appropriate to enable the Borrower or any
Subsidiary of the Borrower to maintain and operate its business and properties,
including the sale of any Inventory.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer or
-----------------
other disposition of any asset by any Person, the amount of cash received by
such Person in connection with such transaction (including cash proceeds of any
property received in consideration of any such sale, lease, transfer or other
disposition) after deducting therefrom the aggregate, without duplication, of
the following amounts to the extent properly attributable to such transaction or
to the asset that is the subject thereof: (i) reasonable brokerage commissions,
legal fees, finder's fees, financial advisory fees, accounting fees,
underwriting fees, investment banking fees and other similar commissions and
fees, in each case, to the extent paid or payable by such Person; (ii) filing,
recording or registration fees or charges or similar fees or charges paid by
such Person; (iii) taxes paid or payable by such Person or any shareholder,
partner or member of such Person to governmental taxing authorities as a result
of such sale or other disposition; and (iv) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness that is
secured by a Lien on the asset in question and that is required to be repaid
under the terms thereof as a result of such asset sale.
"Net Exposure Under Securitization" means, for any date of calculation, the
---------------------------------
sum of the following (without duplication): (i) the "Net Investment" (as such
term is defined in the TAA) as of such date of calculation and (ii) any and all
obligations and liabilities of the Borrower, CFI or any other Subsidiary of
Borrower under, or in connection with, the Securitization, as of such date of
calculation, to the extent that same constitute liabilities of the Borrower of
any Subsidiary of the Borrower under GAAP or would, under GAAP, constitute
liabilities of the Borrower or of any Subsidiary of the Borrower if the
Securitization was treated as an on balance sheet transaction.
"Net Income" means, with respect to any Person for any period, the net
----------
income (loss) of such Person, after provisions for taxes and extraordinary
items, determined in accordance with GAAP.
"Net Worth" means, as of any date of calculation, for the Borrower and its
---------
Subsidiaries, on a consolidated basis, determined in accordance with GAAP, the
consolidated total stockholders' equity of the Borrower and its Subsidiaries.
-18-
"Notes" means, collectively, the Facility A Notes, the Facility B Notes and
-----
the Swing Line Note.
"Notice of Borrowing" has the meaning specified in Section 2.2(a) hereof.
------------------- --------------
"Notice of Issuance" has the meaning specified in Section 2.15(b) hereof.
------------------ ---------------
"Obligations" means (a) all obligations of any nature (whether matured or
-----------
unmatured, fixed or contingent, including the Reimbursement Obligations) of the
Borrower or any other Obligor to any Lender or the Administrative Lender under
any of the Loan Documents as they may be amended from time to time, and (b) all
obligations of the Borrower or any other Obligor for losses, damages, expenses
or any other liabilities of any kind that any Lender may suffer by reason of a
breach by the Borrower or any other Obligor of any obligation, covenant or
undertaking with respect to any Loan Document payable by the Borrower or any
other Obligor under any Loan Document.
"Obligor" means the Borrower and each Guarantor.
-------
"Operating Lease" means any operating lease, as defined in the Financial
---------------
Accounting Standard Board Statement of Financial Accounting Standards No. 13,
dated November, 1976 or otherwise in accordance with GAAP.
"Participant" has the meaning specified in Section 11.6(c) hereof.
----------- ---------------
"Participation" has the meaning specified in Section 11.6(c) hereof.
------------- ---------------
"Payment Date" means the last day of the Interest Period for any LIBOR
------------
Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means, as applied to any Person:
---------------
(a) Any Lien in favor of the Lenders to secure the Obligations hereunder;
(b) (i) Liens on real estate for ad valorem taxes not yet delinquent, and
(ii) Liens for taxes, assessments, governmental charges, levies or claims that
are not yet delinquent or that are being diligently contested in good faith by
appropriate proceedings in accordance with Section 5.6 hereof and for which
-----------
adequate reserves shall have been set aside on such Person's books, but only so
long as no foreclosure, restraint, sale or similar proceedings have been
commenced with respect thereto;
-19-
(c) Liens of carriers, warehousemen, mechanics, laborers and materialmen
incurred in the ordinary course of business for sums not yet due or being
contested in good faith, if such reserve or appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
(d) Liens incurred in the ordinary course of business in connection with
worker's compensation, unemployment insurance or similar legislation;
(e) Easements, right-of-way, restrictions and other similar encumbrances
on the use of real property which do not interfere in any material respect with
the ordinary conduct of the business of such Person;
(f) Liens created to secure the purchase price of assets acquired (or
existing on property at the time such property is acquired) by such Person or
created to secure Indebtedness permitted by Section 7.1(c) or 7.1(d) hereof,
-------------- ------
which is incurred solely for the purpose of financing the acquisition of such
assets and incurred at the time of acquisition or which exists against such
assets at the time of acquisition thereof, so long as each such Lien shall at
all times be confined solely to the asset or assets so acquired (and proceeds
thereof), and refinancings thereof so long as any such Lien remains solely on
the asset or assets acquired and the amount of Indebtedness related thereto is
not increased;
(g) Liens in respect of judgments or awards for which appeals or
proceedings for review are being prosecuted and in respect of which a stay of
execution upon any such appeal or proceeding for review shall have been secured,
provided that (i) such Person shall have established adequate reserves for such
judgments or awards, (ii) such judgments or awards shall be fully insured
(subject to customary deductibles) and the insurer shall not have denied
coverage, or (iii) such judgments or awards shall have been bonded to the
satisfaction of the Determining Lenders;
(h) Any Liens which are described on Schedule 2 hereto, and Liens
----------
resulting from the refinancing of the related Indebtedness, provided that the
Indebtedness secured thereby shall not be increased and the Liens shall not
cover additional assets of the Borrower;
(i) Liens arising from filing Uniform Commercial Code financing statements
for precautionary purposes relating solely to true leases of personal property
permitted by this Agreement under which the Borrower or any of its Subsidiaries
is a lessee;
(j) Any zoning or similar law or right reserved to or vested in any
Tribunal to control or regulate the use of any real property;
(k) Any other title exception with respect to real property assets
disclosed by any preliminary title report, title commitment report or other
search of title provided to the Administrative Lender in accordance with this
Agreement unless disapproved by the Administrative Lender prior to the Agreement
Date;
-20-
(l) Any Lien in favor of any Lender to secure any obligations owed to such
Lender in respect of any Hedge Agreement;
(m) Liens incurred or deposits made to secure the performance of bids,
trade contracts (other than for Indebtedness), statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(n) Liens securing Indebtedness or other obligations of the Borrower or a
Subsidiary of the Borrower owing to the Borrower or a Subsidiary;
(o) Liens to the extent allowed under the MSAA or the Intercreditor
Agreements;
(p) any replacements or renewals of Liens (but no increases in the
Indebtedness secured thereby) permitted by clauses (f), (h), (i), (j), (m) and
(o) hereof; and
(q) Liens securing Indebtedness permitted by Section 7.1(k) hereof, to the
--------------
extent only that such Liens cover Inventory manufactured by, purchased from or
acquired from the holder of such Indebtedness and any renewals thereof.
"Permitted Real Estate Expenditures" means those Capital Expenditures in
----------------------------------
respect of real estate described on Schedule 9 hereto.
----------
"Person" means an individual, corporation, partnership, trust or
------
unincorporated organization, or a government or any agency or political
subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of ERISA
----
(including a Multiemployer Plan) pursuant to which any employees of the
Borrower, its Subsidiaries or any member of their Controlled Group participate.
"Pledge Agreement" means the pledge agreement, substantially in the form of
----------------
Exhibit F hereto, as amended, modified, renewed, supplemented or restated from
---------
time to time, executed by the Borrower.
"Pretax Net Income" means net profit (or loss) before taxes of the Borrower
-----------------
and its Subsidiaries, on a consolidated basis, determined in accordance with
GAAP.
"Prime Rate" means, at any time, the prime interest rate announced or
----------
published by the Reference Lender from time to time as its reference rate for
the determination of interest rates for loans of varying maturities in United
States dollars to United States residents of varying degrees of creditworthiness
and being quoted at such time by the Reference Lender as its "prime rate;" it
being understood that such rate may not be the lowest rate of interest charged
by the Reference Lender.
-21-
"Projected Unused Availability" means, as of any date of determination, the
-----------------------------
amount, if any, by which the lesser of (i) the Borrowing Base or (ii) the
Facility A Commitment, exceeds the sum of outstanding Facility A Advances, Swing
Line Advances and Reimbursement Obligations, plus the amount of pending Facility
A Advances, Swing Line Advances and Letters of Credit to be made or issued on
such date (calculated after giving effect to any proposed increase in the RPA
Interest as of such date).
"Quarterly Date" means the last day of each March, June, September and
--------------
December, beginning December 31, 1996.
"Rate Adjustment Date" means the date which is two Business Days following
--------------------
the date that the Lenders receive the financial statements for the fiscal year
ending December 31, 1996, required to be delivered pursuant to Section 6.2
-----------
hereof.
"Receivables" means all of the Obligors' present and future accounts,
-----------
contract rights and accounts receivable, whether now or hereafter owned, held,
or acquired by any Obligor and includes, without limitation, all of the
following insofar as same constitute, result from or are attributable to any of
the foregoing: all of the Obligors' chattel paper, documents, instruments,
deposit accounts, general intangibles and accounts receivable, including all
rights to payment for goods sold or leased or for services rendered, whether or
not earned by performance (and in any case where an account arises from the sale
of goods, the interest of the Obligor(s) in such goods); lease receivables;
license receivables; notes receivable; all other rights to receive payments of
money from any Person; the Obligors' right, title and interest under equipment
leases; the Obligors' rights under any service, lease rental, consulting or
similar agreements; rights or claims under contracts; books of account, customer
lists and other records relating in any way to any of the foregoing.
"Reference Lender" means NationsBank; provided that if the NationsBank
----------------
Commitments shall terminate and it shall have no Advances and Letters of Credit
outstanding hereunder, NationsBank shall cease to be the Reference Lender, and
Administrative Lender (after consultation with Borrower) shall, with notice to
Borrower and Lenders, designate another Lender as the Reference Lender.
"Reimbursement Obligations" means, in respect of any Letter of Credit as at
-------------------------
any date of determination, the sum of (a) the maximum aggregate amount which is
then available to be drawn under such Letter of Credit plus (b) the aggregate
amount of all drawings under such Letter of Credit not theretofore reimbursed by
the Borrower.
"Related Person" means (a) any Affiliate of the Borrower, (b) any
--------------
individual or entity who directly or indirectly holds 10% or more of any class
of Capital Stock of the Borrower, (c) any relative of such individual by blood,
marriage or adoption not more remote than first cousin and (d) any officer or
director of the Borrower.
-22-
"Release Date" means the date on which the Notes have been paid, all other
------------
Obligations due and owing have been paid and performed in full, and the
Commitments have been terminated.
"Reportable Event" has the meaning set forth in Section 4043(b) of ERISA.
----------------
"Restricted Payments" means, collectively, (i) Dividends and (ii) any (A)
-------------------
payment or prepayment of principal, premium or penalty on any Subordinated Debt
of the Borrower or any Subsidiary of the Borrower or any defeasance, redemption,
purchase, repurchase or other acquisition or retirement for value, in whole or
in part, of any Subordinated Debt (including, without limitation, the setting
aside of assets or the deposit of funds therefor) and (B) prepayment of interest
on any Subordinated Debt.
"Rights" means rights, remedies, powers and privileges.
------
"RPA" means the certain Receivables Purchase Agreement, dated as of April
---
1, 1996, between the Borrower and CFI providing for the sale by the Borrower to
CFI and the purchase by CFI from the Borrower (subject to the terms of the MSAA)
of an undivided fractional ownership interest in all Receivables now owned and
hereafter acquired and arising from time to time prior to termination of the
RPA, on the terms provided therein, as the same may be renewed, extended,
modified, amended or restated from time to time.
"RPA Interest" means, at any time, the undivided fractional ownership
------------
interest in the Receivables sold and transferred by the Borrower to CFI pursuant
to the RPA.
"Securitization" means, collectively, the transactions evidenced and
--------------
governed by the Securitization Documents.
"Securitization Documents" means, collectively, the MSAA, the RPA and the
------------------------
TAA and any other agreements or documents executed or delivered by any Person in
connection therewith.
"Security Agreement" means the security agreement relating to all
------------------
Receivables, Inventory and Equipment (and all computer programs, applications,
disks, plans, manuals, specifications, files and other records pertaining
thereto) of the Borrower and its Subsidiaries, substantially in the form of
Exhibit D hereto, as amended, modified, renewed, supplemented or restated from
---------
time to time.
"Solvent" means, with respect to any Person, that the fair value of the
-------
assets of such Person (both at fair valuation and at present fair saleable
value) is, on the date of determination, greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person
as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and such Person does not
have unreasonably small capital with which to carry on its business. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can
-23-
reasonably be expected to become an actual or matured liability discounted to
present value at rates believed to be reasonable by such Person.
"Special Counsel" means the law firm of Xxxxxxx, Xxxxxxx & Xxxxxxx, P.C.,
---------------
or such other legal counsel as the Administrative Lender may select.
"Specified Percentage" means, as to any Lender, the percentage indicated
--------------------
beside its name on the signature pages hereof, or if applicable, specified in
its most recent Assignment Agreement.
"Subordinated Debt" means (i) the NCGI Note and (ii) any other Indebtedness
-----------------
of the Borrower or any Subsidiary of the Borrower having maturities and terms,
and which is subordinated to payment of the Obligations in a manner, approved in
writing by the Administrative Lender and the Determining Lenders, with only such
changes or amendments as are not prohibited by Section 7.22 hereof.
------------
"Subsequent Pricing Period" means the period from and including the date
-------------------------
which is the first day following the end of the Initial Pricing Period to and
including the Facility A Maturity Date or Facility B Maturity Date, whichever is
later.
"Subsidiary" of any Person means any corporation, partnership, joint
----------
venture, trust or estate or other Person of which (or in which) more than 50%
of:
(a) the outstanding capital stock having voting power to elect a
majority of the Board of Directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency),
(b) the interest in the capital or profits of such partnership or
joint venture,
(c) the beneficial interest of such trust or estate, or
(d) the equity interest of such other Person,
is at the time directly or indirectly owned by such Person, by such Person
and one or more of its Subsidiaries or by one or more of such Person's
Subsidiaries; provided, however, that no Person shall be deemed to be a
Subsidiary of the Borrower solely by virtue of the fact that certain shares
of the stock of such Person have been pledged to the Borrower.
"Subsidiary Guaranty" means a guaranty, substantially in the form of
-------------------
Exhibit I hereto, executed and delivered by each Guarantor, as such
---------
guaranty(ies) may be amended, supplemented, modified, renewed or otherwise
restated from time to time.
"Swing Line Advance" means an Advance made pursuant to Section 2.1(c)
------------------ --------------
hereof.
-24-
"Swing Line Bank" means NationsBank of Texas, N.A. and any successor
---------------
thereto appointed in accordance with Section 10.1(b) hereof.
---------------
"Swing Line Facility" has the meaning specified in Section 2.1(c) hereof.
------------------- --------------
"Swing Line Note" means the Swing Line Note of the Borrower payable to the
---------------
order of the Swing Line Bank, substantially in the form of Exhibit C hereto,
---------
together with any extension, renewal, or amendment thereof, or substitution
therefor.
"TAA" means the certain Transfer and Administration Agreement, dated as of
---
April 1, 1996, between the Borrower, CFI, EFC and NationsBank, N.A. in its
capacity as Agent and a Bank Investor thereunder, providing for the transfer by
CFI to EFC and the acceptance by EFC from CFI of a portion of the RPA Interest,
from time to time, on the terms provided therein, as the same may be renewed,
extended, modified, amended or restated from time to time.
"Tangible Net Worth" means the sum of the following for the Borrower and
------------------
its Subsidiaries, on a consolidated basis, determined in accordance with GAAP,
(a) Net Worth minus (b) the sum of the following (without duplication in respect
of items already deducted in arriving at Net Worth): Intangible Assets, and any
write-up in the book value of assets resulting from revaluation thereof
subsequent to December 31, 1995.
"Taxes" has the meaning specified in Section 2.14 hereof.
----- ------------
"Tribunal" means any state, commonwealth, federal, foreign, territorial, or
--------
other court or government body, subdivision, agency, department, commission,
board, bureau, or instrumentality of a governmental or other regulatory or
public body or authority.
"UCC" means the Uniform Commercial Code of Texas, as amended from time to
---
time, and the Uniform Commercial Code applicable in such other states as any
Collateral may be located.
"Unused Portion" means an amount equal to the result of (a) the sum of (i)
--------------
the Facility A Commitment plus (ii) the Facility B Commitment minus (b) the sum
of (i) the outstanding Facility A Advances plus (ii) the outstanding Facility B
Advances plus (iii) the outstanding Reimbursement Obligations in respect of the
Letters of Credit.
"Upfront Fee Letter" has the meaning specified in Section 2.4(b) hereof.
------------------ --------------
Section 1.2 Amendments and Renewals. Each definition of an agreement in
-----------------------
this Article 1 shall include such agreement as amended to date, and as amended
---------
or renewed from time to time in accordance with its terms, but only with the
prior written consent of the Determining Lenders or all the Lenders as required
pursuant to Section 11.11 hereof.
-------------
-25-
Section 1.3 Construction. The terms defined in this Article 1 (except as
------------
otherwise expressly provided in this Agreement) for all purposes shall have the
meanings set forth in Section 1.1 hereof, and the singular shall include the
-----------
plural, and vice versa, unless otherwise specifically required by the context.
All accounting terms used in this Agreement which are not otherwise defined
herein shall be construed in accordance with GAAP on a consolidated basis for
the Borrower and its Subsidiaries, unless otherwise expressly stated herein.
ARTICLE 2
Advances
--------
Section 2.1 The Advances.
------------
(a) Facility A Advances. Each Lender severally agrees, upon the terms and
-------------------
subject to the conditions of this Agreement, to make Facility A Advances to the
Borrower from time to time until the Facility A Maturity Date in an aggregate
amount not to exceed its Specified Percentage of the Facility A Commitment less
its Specified Percentage of the aggregate amount of all Reimbursement
Obligations then outstanding (assuming compliance with all conditions to
drawing), for the purposes set forth in Section 5.8(a) hereof. Subject to
--------------
Section 2.9 hereof, Facility A Advances may be repaid and then reborrowed.
-----------
Notwithstanding any provision in any Loan Document to the contrary, in no event
shall the principal amount of all outstanding Facility A Advances exceed the
lesser of (i) the result of (A) the Borrowing Base minus (B) the aggregate
outstanding Reimbursement Obligations and Swing Line Advances and (ii) the
Facility A Commitment.
(b) Facility B Advances. Each Lender severally agrees, upon the terms and
-------------------
subject to the conditions of this Agreement, to make a one-time Facility B
Advance to the Borrower prior to or on the Facility B Commitment Termination
Date in an amount not to exceed its Specified Percentage of the Facility B
Commitment for the purposes set forth in Section 5.8(b) hereof. Notwithstanding
--------------
any provision in any Loan Document to the contrary, in no event shall the
principal amount of all outstanding Facility B Advances exceed the Facility B
Commitment. Facility B Advances may not be repaid and then reborrowed.
(c) The Swing Line Loans. The Borrower mayrequest Swing Line Bank to
--------------------
make, and Swing Line Bank agrees to make, on the terms and conditions
hereinafter set forth, advances ("Swing Line Advances") to the Borrower from
-------------------
time to time on any Business Day during the period from the date hereof until
the Facility A Maturity Date in an aggregate amount not to exceed at any time
outstanding the lesser of (i) $5,000,000, and (ii) the Borrowing Base, less the
sum of (A) the aggregate principal amount of Facility A Advances then
outstanding plus (B) the aggregate principal amount of all Reimbursement
----
Obligations then outstanding (assuming compliance with all conditions to
drawing) (the "Swing Line Facility"). Each Swing Line Advance shall be in an
-------------------
amount not less than $100,000 and in multiples thereof. Each Swing Line Advance
shall be a Base Rate Advance. Within the limits of the Swing Line Facility,
Swing Line Advances may be repaid and then reborrowed.
-26-
(d) Any Advance shall, at the option of the Borrower as provided in
Section 2.2 hereof (and, in the case of LIBOR Advances, subject to the
-----------
provisions of Article 9 hereof), be made as a Base Rate Advance or a LIBOR
---------
Advance; provided that there shall not be outstanding, at any one time, more
than ten LIBOR Advances.
Section 2.2 Manner of Borrowing and Disbursement.
------------------------------------
(a) In the case of Base Rate Advances, the Borrower, through an Authorized
Signatory, shall give the Administrative Lender prior to 11:00 a.m., Dallas,
Texas time, on the date of any proposed Base Rate Advance irrevocable written
notice, or irrevocable telephonic notice followed immediately by written notice,
in substantially the form of Exhibit J hereto (a "Notice of Borrowing")
--------- -------------------
(provided, however, that the Borrower's failure to confirm any telephonic notice
in writing shall not invalidate any notice so given), of its intention to borrow
a Base Rate Advance hereunder. Such notice of borrowing shall specify the
requested funding date, which shall be a Business Day, and the amount of the
proposed aggregate Base Rate Advances to be made by Lenders.
(b) In the case of LIBOR Advances, the Borrower, through an Authorized
Signatory, shall give the Administrative Lender at least two Business Days'
irrevocable written notice, or irrevocable telephonic notice followed
immediately by written notice (provided, however, that the Borrower's failure to
confirm any telephonic notice in writing shall not invalidate any notice so
given) pursuant to a Notice of Borrowing, of its intention to borrow a LIBOR
Advance hereunder. Notice shall be given to the Administrative Lender prior to
11:00 a.m., Dallas, Texas time, in order for such Business Day to count toward
the minimum number of Business Days required. LIBOR Advances shall in all cases
be subject to Article 9 hereof. For LIBOR Advances, the notice of borrowing
---------
shall specify the requested funding date, which shall be a Business Day, the
amount of the proposed aggregate LIBOR Advances to be made by Lenders and the
Interest Period selected by the Borrower, provided that no such Interest Period
shall extend past the Facility A Maturity Date or the Facility B Maturity Date,
as appropriate, or prohibit or impair the Borrower's ability to comply with
Section 2.5 or 2.8 hereof.
----------- ---
(c) In the case of Swing Line Advances, the Borrower, through an
Authorized Signatory, shall give the Swing Line Bank and the Administrative
Lender prior to 12:00 noon, Dallas, Texas time, on the date of any proposed
Swing Line Advance irrevocable written notice or irrevocable telephonic notice
followed immediately by written notice (provided, however, that the Borrower's
failure to confirm any telephonic notice in writing shall not invalidate any
notice so given), of its intention to borrow or reborrow a Swing Line Advance.
Such notice of borrowing shall specify the requested funding date, which shall
be a Business Day, and the amount of the proposed Swing Line Advance.
(d) Subject to Sections 2.1 and 2.9 hereof, the Borrower shall have the
------------ ---
option (i) to convert at any time all or any part (subject to the requirements
contained herein as to the minimum amounts of LIBOR Advances) of the outstanding
Base Rate Advances to LIBOR Advances and all or any part of the outstanding
LIBOR Advances to Base Rate Advances or (ii) upon expiration of any Interest
Period applicable to a LIBOR Advance, to continue all or
-27-
any portion of such LIBOR Advance equal to $5,000,000 and integral multiples of
$1,000,000 in excess of that amount as a LIBOR Advance and the succeeding
Interest Period(s) of such continued LIBOR Advance shall commence on the last
day of the Interest Period of the LIBOR Advance to be continued; provided,
however, (a) LIBOR Advances may only be converted into Base Rate Advances on the
expiration date of the Interest Period applicable thereto and (b)
notwithstanding anything in this Agreement to the contrary, no outstanding
Advance may be continued as, or converted into, a LIBOR Advance when any Default
or Event of Default has occurred and is continuing. At least two Business Days
prior to a proposed conversion/continuation date, the Borrower, through an
Authorized Signatory, shall give the Administrative Lender irrevocable written
notice, or irrevocable telephonic notice followed immediately by written notice
(provided, however, that the Borrower's failure to confirm any telephonic notice
in writing shall not invalidate any notice so given), stating (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount of
the Advance to be converted/continued, (iii) in the case of a conversion to, or
a continuation of, a LIBOR Advance, the requested Interest Period, and (iv) in
the case of a conversion of a Base Rate Advance to a LIBOR Advance or
continuation of a LIBOR Advance, stating that no Default or Event of Default has
occurred and is continuing. If the Borrower shall fail to give any notice in
accordance with this Section 2.2(d), the Borrower shall be deemed irrevocably to
--------------
have requested that such LIBOR Advance be converted to a Base Rate Advance in
the same principal amount. Notice shall be given to the Administrative Lender
prior to 11:00 a.m., Dallas, Texas time, in order for such Business Day to count
toward the minimum number of Business Days required.
(e) The aggregate amount of Base Rate Advances to be made by the Lenders
on any day shall be in a principal amount which is at least $3,000,000 and which
is an integral multiple of $500,000; provided, however, that such amount may
equal the unused amount of the applicable Commitment. The aggregate amount of
LIBOR Advances having the same Interest Period and to be made by the Lenders on
any day shall be in a principal amount which is at least $5,000,000 and which is
an integral multiple of $1,000,000.
(f) The Administrative Lender shall promptly notify the Lenders of each
notice (other than with respect to a Swing Line Advance) received from the
Borrower pursuant to this Section. Each Lender shall, not later than 2:00 p.m.,
Dallas, Texas time, on the date of any Advance, deliver to the Administrative
Lender, at its address set forth herein, such Lender's Specified Percentage of
such Advance in immediately available funds in accordance with the
Administrative Lender's instructions. Prior to 2:30 p.m., Dallas, Texas time, on
the date of any Advance hereunder, the Administrative Lender shall, subject to
satisfaction of the conditions set forth in Article 3, disburse the amounts made
---------
available to the Administrative Lender by the Lenders by (i) transferring such
amounts by wire transfer pursuant to the Borrower's instructions, or (ii) in the
absence of such instructions, crediting such amounts to the account of the
Borrower maintained with the Administrative Lender. All Advances shall be made
by each Lender according to its Specified Percentage.
-28-
(g) The Swing Line Bank shall, not later than 1:30 p.m., Dallas, Texas
time, on the date of any Swing Line Advance, deliver to the Administrative
Lender at its address set forth herein, the amount of such Swing Line Advance in
immediately available funds in accordance with the Administrative Lender's
instructions. Prior to 2:00 p.m., Dallas, Texas time, on the date of any Swing
Line Advance, the Administrative Lender shall, subject to the conditions set
forth in Article 3, disburse the amount made available to the Administrative
---------
Lender by the Swing Line Bank by (i) transferring such amounts by wire transfer
pursuant to the Borrower's instruction or (ii) in the absence of such
instructions, crediting such amounts to the account of the Borrower maintained
with the Administrative Lender. Forthwith upon demand by the Swing Line Bank and
in any event upon the making of the request or the granting of the consent
specified by Section 8.2 to authorize the Administrative Lender to declare the
-----------
Advances due and payable pursuant to the provisions of Section 8.2, each Lender,
-----------
including the Swing Line Bank, notwithstanding the failure of the Borrower at
such time to satisfy each condition specified in Article 3, shall make by 12:00
noon (Dallas, Texas time) on the first Business Day following receipt by such
Lender of notice from the Swing Line Bank, a Facility A Advance which is a Base
Rate Advance in an amount equal to the product of (i) the Specified Percentage
of such Lender times (ii) the aggregate outstanding principal amount of the
Swing Line Advances. The proceeds of such Facility A Advances shall be applied
by the Administrative Lender to repay the outstanding Swing Line Advance.
Section 2.3 Interest.
--------
(a) On Base Rate Advances.
---------------------
(i) The Borrower shall pay interest on the outstanding unpaid
principal amount of the Base Rate Advances outstanding from time to time,
until such Base Rate Advances are due (whether at maturity, by reason of
acceleration, by scheduled reduction, or otherwise) or repaid at a simple
interest rate per annum equal to the Base Rate Basis for the Base Rate
Advances as in effect from time to time. If at any time the Base Rate
Basis would exceed the Highest Lawful Rate, interest payable on the Base
Rate Advances shall be limited to the Highest Lawful Rate, but the Base
Rate Basis shall not thereafter be reduced below the Highest Lawful Rate
until the total amount of interest accrued on the Base Rate Advances equals
the amount of interest that would have accrued if the Base Rate Basis had
been in effect at all times.
(ii) Interest on the Base Rate Advances shall be computed on the basis
of a year of 365 or 366 days, as appropriate, for the actual number of days
elapsed, and shall be payable in arrears on each Quarterly Date and on the
Facility A Maturity Date or the Facility B Maturity Date, as appropriate.
-29-
(b) On LIBOR Advances.
-----------------
(i) The Borrower shall pay interest on the unpaid principal amount of
each LIBOR Advance, from the date such Advance is made until it is due
(whether at maturity, by reason of acceleration, by scheduled reduction, or
otherwise) or repaid, at a rate per annum equal to the LIBOR Basis for such
LIBOR Advance. The Administrative Lender, whose determination shall be
controlling in the absence of manifest error, shall determine the LIBOR
Basis on the second Business Day prior to the applicable funding date and
shall notify the Borrower and the Lenders of such LIBOR Basis.
(ii) Subject to Section 11.9 hereof, interest on each LIBOR Advance
------------
shall be computed on the basis of a 360-day year for the actual number of
days elapsed, and shall be payable in arrears on the applicable Payment
Date and on the Facility A Maturity Date and the Facility B Maturity Date,
as appropriate; provided, however, that if the Interest Period for such
LIBOR Advance exceeds three months, interest shall also be due and payable
in arrears on each three-month anniversary of the commencement of such
Interest Period during such Interest Period.
(c) On Swing Line Advances.
----------------------
(i) The Borrower shall pay interest on the outstanding principal
amount of each Swing Line Advance, from the date each Swing Line Advance is
made until it is due (whether at maturity, by acceleration or otherwise) or
repaid, at a rate per annum equal to the Base Rate Basis in effect from
time to time. If at any time the Base Rate Basis would exceed the Highest
Lawful Rate, interest payable on the Swing Line Advances shall be limited
to the Highest Lawful Rate, but the Base Rate Basis shall not thereafter be
reduced below the Highest Lawful Rate until the total amount of interest
accrued on the Swing Line Advances equals the amount of interest that would
have accrued if the Base Rate Basis had been in effect at all times.
(ii) Interest on each Swing Line Advance shall be computed on the
basis of a year of 365 or 366 days, as applicable, for the number of days
elapsed, and shall be payable quarterly in arrears on each Quarterly Date
and on the Facility A Maturity Date.
(d) Interest After an Event of Default. (i) After an Event of Default
----------------------------------
(other than an Event of Default specified in Section 8.1(f) or (g) hereof) and
-------------- ---
during any continuance thereof, at the option of Determining Lenders and
provided that the Administrative Lender has given notice of the decision to
charge interest at the Default Rate, and (ii) after an Event of Default
specified in Section 8.1(f) or (g) hereof and during any continuance thereof,
-------------- ---
automatically and without any action or notice by the Administrative Lender or
any Lender, the Obligations shall bear interest at a rate per annum equal to the
Default Rate. Such interest shall be payable on the earlier of demand or the
Facility A Maturity Date or the Facility B Maturity Date, as appropriate, and
shall accrue until the earlier of (i) waiver or cure (to the satisfaction of the
Determining Lenders) of the applicable Event of Default, (ii) agreement by the
Lenders to
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rescind the charging of interest at the Default Rate, or (iii) payment in full
of the Obligations. The Lenders shall not be required to accelerate the maturity
of the Advances, to exercise any other rights or remedies under the Loan
Documents, or to give notice to the Borrower of the decision to charge interest
at the Default Rate.
Section 2.4 Fees.
----
(a) Commitment Fee. Subject to Section 11.9 hereof, the Borrower agrees
-------------- ------------
to pay to the Administrative Lender, for the ratable account of the Lenders, a
commitment fee (the "Commitment Fee") on the daily average Unused Portion during
--------------
the period commencing on the Agreement Date and ending on the Facility A
Maturity Date, at the following per annum percentages, applicable in the
following situations:
Applicability Percentage
------------- ----------
(a) Initial Pricing Period 0.300%
----------------------
(b) Subsequent Pricing Period
-------------------------
(1) The Fixed Charge Coverage 0.225%
Ratio is greater than or equal to
2.50 to 1
(2) The Fixed Charge Coverage 0.250%
Ratio is less than 2.50 to 1 but
greater than or equal to 2.00 to 1
(3) The Fixed Charge Coverage 0.300%
Ratio is less than 2.00 to 1 but
greater than or equal to 1.50 to 1
(4) The Fixed Charge Coverage 0.375%
Ratio is less than 1.50 to 1
The Commitment Fee shall be subject to reduction or increase, as applicable and
as set forth in the table above, on a quarterly basis according to the
performance of the Borrower as tested by using the Fixed Charge Coverage Ratio
calculated as of the end of each fiscal quarter during the Subsequent Pricing
Period; provided, that each adjustment in the Commitment Fee shall be effective
--------
on the date which is two Business Days following the date of receipt of the
financial statements required to be furnished pursuant to Section 6.2 or 6.3
----------- ---
hereof, as applicable, and the corresponding Compliance Certificate required
pursuant to Section 6.4 hereof. If such financial statements are not received
-----------
by the Administrative Lender by the date required, effective as of the first
Business Day following notification thereof from the Administrative Lender to
the Borrower the Commitment Fee shall be determined as if the Fixed Charge
Coverage Ratio is less than 1.50 to 1 until such time as such financial
statements and Compliance Certificate are received. The fee shall be (i)
payable in arrears on each Quarterly Date and on the Facility A Maturity Date,
(ii) fully earned when due and, subject to Section 11.9 hereof, nonrefundable
------------
when paid and (iii) subject to Section 11.9 hereof, computed on the basis of a
------------
year of 365 or 366 days, as appropriate, for the actual number of days elapsed.
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(b) Upfront Fee. Subject to Section 11.9 hereof, the Borrower agrees to
----------- ------------
pay to the Administrative Lender, for the account of the Lenders (other than the
Administrative Lender) the fees on the dates and in the amounts specified in the
letter agreement, dated July 26, 1996, between the Borrower and the
Administrative Lender and the term sheet attached thereto (collectively, the
"Upfront Fee Letter").
(c) Other Fees. Subject to Section 11.9 hereof, the Borrower agrees to
---------- ------------
pay to the Administrative Lender, for the account of the Administrative Lender,
the fees on the dates and in the amounts specified in the letter agreement (the
"Administrative Lender Fee Letter"), dated as of the Agreement Date, between the
--------------------------------
Borrower and the Administrative Lender.
Section 2.5 Prepayments.
-----------
(a) Voluntary LIBOR Advance Prepayments. Upon three Business Days' prior
-----------------------------------
telephonic notice (to be promptly followed by written notice) by an Authorized
Signatory to the Administrative Lender, LIBOR Advances may be voluntarily
prepaid but only so long as the Borrower concurrently reimburses the Lenders in
accordance with Section 2.9 hereof. Any notice of prepayment shall be
-----------
irrevocable.
(b) Mandatory Prepayment. On or before the date of any reduction of the
--------------------
Facility A Commitment, the Borrower shall prepay applicable outstanding Facility
A Advances in an amount necessary to reduce the sum of outstanding Facility A
Advances, Swing Line Advances and Reimbursement Obligations to an amount less
than or equal to the Facility A Commitment as so reduced. On any date that the
aggregate principal amount of outstanding Facility A Advances, Swing Line
Advances and Reimbursement Obligations (other than such Reimbursement
Obligations which are fully secured by funds in the L/C Cash Collateral Account
pursuant to Section 2.15(g) hereof) exceed the Borrowing Base, the Borrower
---------------
shall immediately prepay Facility A Advances in an amount equal to such excess
amount and all interest attributable to such excess amount. To the extent
required by the immediately preceding two sentences, the Borrower shall first
prepay all Base Rate Advances, second prepay all Swing Line Advances and shall
thereafter prepay LIBOR Advances. To the extent that any prepayment requires
that a LIBOR Advance be repaid on a date other than the last day of its Interest
Period, the Borrower shall reimburse each Lender in accordance with Section 2.9
-----------
hereof. To the extent that outstanding Facility A and Swing Line Advances
exceed the Facility A Commitment after any reduction thereof, the Borrower shall
repay any such excess amount and all accrued interest attributable to such
excess Facility A Advances on the date of such reduction.
(c) Prepayment from Sales of Equity/Issuance of Indebtedness.
--------------------------------------------------------
Concurrently with receipt of Net Cash Proceeds from (i) the issuance of any
Indebtedness the proceeds of which are used to purchase or refinance
Indebtedness with respect to real property or (ii) the sale or disposition by
the Borrower of any Equity, the Borrower shall prepay Facility B Advances in an
aggregate principal amount equal to 100% of the aggregate Net Cash Proceeds
received by the Borrower from such issuance, sale or disposition of Equity or
Indebtedness. Any such prepayments shall be applied in the inverse order of
maturity to the scheduled payments of the Facility B Advances required pursuant
to Section 2.6(c).
--------------
-32-
(d) Payments, Generally. Any prepayment of any LIBOR Advance shall be
-------------------
accompanied by interest accrued on the principal amount being prepaid. Any
voluntary partial payment of a Base Rate Advance shall be in a principal amount
which is at least $3,000,000 and which is an integral multiple of $500,000. Any
voluntary partial payment of a LIBOR Advance shall be in a principal amount
which is at least $5,000,000 and which is an integral multiple of $1,000,000,
and to the extent that any prepayment of a LIBOR Advance is made on a date other
than the last day of its Interest Period, the Borrower shall reimburse each
Lender in accordance with Section 2.9 hereof. Any voluntary partial payment of
-----------
a Swing Line Advance shall be in a principal amount which is at least $100,000
or an integral multiple thereof.
Section 2.6 Reduction of Commitments.
------------------------
(a) Voluntary Reduction. The Borrower shall have the right, upon not less
-------------------
than ten Business Days' notice by an Authorized Signatory to the Administrative
Lender (if telephonic, to be confirmed by telex or in writing on or before the
date of reduction or termination), which shall promptly notify the Lenders, to
terminate or reduce either the Facility A Commitment or the Facility B
Commitment, in whole or in part, without premium or penalty except as provided
in the next sentence. Each partial termination shall be in an aggregate amount
which is at least $5,000,000 and which is an integral multiple of $1,000,000,
and no voluntary reduction of the Facility A Commitment shall cause any LIBOR
Advance to be repaid prior to the last day of its Interest Period unless the
Borrower shall reimburse each Lender in accordance with Section 2.9 hereof.
-----------
(b) Mandatory Reduction. The Facility A Commitment shall be automatically
-------------------
reduced to zero on the Facility A Maturity Date. The Facility B Commitment
shall be automatically reduced to zero on the Facility B Commitment Termination
Date.
(c) Amortization. An amount equal to 50% of the principal amount of the
------------
Facility B Advances outstanding on the Facility B Commitment Termination shall
be payable on (i) September 25, 1998 and (ii) the Facility B Maturity Date.
(d) General Requirements. Upon any reduction of a Commitment pursuant to
--------------------
this Section, the Borrower shall immediately make a repayment of applicable
Advances in accordance with Section 2.5(b) hereof. The Borrower shall reimburse
--------------
each Lender in connection with any such payment in accordance with Section 2.9
-----------
hereof to the extent applicable. The Borrower shall not have any right to
rescind any termination or reduction. Once reduced, the Commitments may not be
increased or reinstated.
Section 2.7 Non-Receipt of Funds by the Administrative Lender. Unless the
-------------------------------------------------
Administrative Lender shall have been notified by a Lender prior to the date of
any proposed Advance (other than a Swing Line Advance) that such Lender does not
intend to make the proceeds of such Advance available to the Administrative
Lender, the Administrative Lender may assume that such Lender has made such
proceeds available to the Administrative Lender on such date, and the
Administrative Lender may in reliance upon such assumption (but shall not be
required to) make available to the Borrower a corresponding amount. If such
-33-
corresponding amount is not in fact made available to the Administrative Lender
by such Lender, the Administrative Lender shall be entitled to recover such
amount on demand from such Lender (or, if such Lender fails to pay such amount
forthwith upon such demand, from the Borrower) together with interest thereon in
respect of each day during the period commencing on the date such amount was
available to the Borrower and ending on (but excluding) the date the
Administrative Lender receives such amount from (a) the Lender, at a per annum
rate equal to the lesser of (i) the Highest Lawful Rate or (ii) the Federal
Funds Rate or (b) the Borrower, at the per annum rate applicable at the time to
such Advance. No Lender shall be liable for any other Lender's failure to fund
an Advance hereunder.
Section 2.8 Payment of Principal of Advances. To the extent not otherwise
--------------------------------
required to be paid earlier as provided herein, the principal amount of the
Facility A Advances, all accrued interest and fees thereon, and all other
Obligations related thereto, shall be due and payable in full on the Facility A
Maturity Date. To the extent not otherwise required to be paid earlier as
provided herein, the principal amount of the Facility B Advances, all accrued
interest and fees thereon, and all other Obligations related thereto, shall be
due and payable in full on the Facility B Maturity Date. To the extent not
otherwise required to be paid earlier as provided herein, the principal amount
of each Swing Line Advance, all accrued interest and fees thereon, and all other
Obligations related thereto, shall be due and payable in full on the seventh
Business Day following the making of such Swing Line Advance.
Section 2.9 Reimbursement. Whenever any Lender shall sustain or incur
-------------
(other than through a default by that Lender) any losses (inclusive of any such
losses attributable to change(s) in the LIBOR Rate during the applicable
period(s), but exclusive of any losses of any other anticipated profits on the
part of such Lender) or reasonable out-of-pocket expenses actually incurred in
connection with (a) failure by the Borrower to borrow any LIBOR Advance after
having given notice of its intention to borrow in accordance with Section 2.2
-----------
hereof (whether by reason of the Borrower's election not to proceed or the non-
fulfillment of any of the conditions set forth in Article 3 hereof) or (b) any
prepayment for any reason of any LIBOR Advance in whole or in part (including a
prepayment pursuant to Section 9.3(b) hereof) on other than the last day of an
--------------
Interest Period applicable to such LIBOR Advance, the Borrower agrees to pay to
any such Lender, within 30 days after demand by such Lender, an amount
sufficient to compensate such Lender for all such losses (inclusive of any such
losses attributable to change(s) in the LIBOR Rate during the applicable
period(s), but exclusive of any losses of any other anticipated profits on the
part of such Lender) and out-of-pocket expenses, subject to Section 11.9 hereof.
------------
Such losses shall include, without limiting the generality of the foregoing,
reasonable expenses incurred by such Lender in connection with the re-employment
of funds prepaid, repaid, converted or not borrowed, converted or paid, as the
case may be. A certificate as to any amounts payable to any Lender under this
Section 2.9 submitted to the Borrower by such Lender shall certify that such
-----------
amounts were actually incurred by such Lender and shall show in reasonable
detail an accounting of the amount payable and the calculations used to
determine in good faith such amount and shall be conclusive absent manifest or
demonstrable error. Nothing in this Section 2.9 shall provide the Borrower or
-----------
any Subsidiary of the Borrower the right to inspect the records, files or books
of any Lender.
-34-
Section 2.10 Manner of Payment.
-----------------
(a) Each payment (including prepayments) by the Borrower of the principal
of or interest on the Advances, fees, and any other amount owed under this
Agreement or any other Loan Document shall be made not later than 12:00 noon
(Dallas, Texas time) on the date specified for payment under this Agreement to
the Administrative Lender at the Administrative Lender's office, in lawful money
of the United States of America constituting immediately available funds.
(b) If any payment under this Agreement or any other Loan Document shall
be specified to be made upon a day which is not a Business Day, it shall be made
on the next succeeding day which is a Business Day, unless, with respect to a
payment due in respect of a LIBOR Advance, such Business Day falls in another
calendar month, in which case payment shall be made on the preceding Business
Day. Any extension of time shall in such case be included in computing interest
and fees, if any, in connection with such payment.
(c) Without waiving any other rights or recourse that the Borrower may
otherwise have against any Lender for such Lender's breach of its obligations
hereunder, the Borrower agrees to pay principal, interest, fees and all other
amounts due under the Loan Documents without deduction for set-off or
counterclaim or any deduction whatsoever.
(d) If some but less than all amounts due from the Borrower are received
by the Administrative Lender, the Administrative Lender shall apply such amounts
in the following order of priority: (i) to the payment of the Administrative
Lender's expenses incurred on behalf of the Lenders then due and payable, if
any; (ii) to the payment of all other fees then due and payable; (iii) to the
payment of interest then due and payable on the Advances; (iv) to the payment of
all other amounts not otherwise referred to in this clause (d) then due and
payable under the Loan Documents; and (v) to the payment of principal then due
and payable on the Advances.
(e) Each payment by the Borrower in respect of obligations relating to the
Facility A Advances, Facility B Advances and the Letters of Credit (whether for
principal, interest, fees or otherwise) shall be made to the Administrative
Lender for the account of the Lenders pro rata in accordance with their
respective Specified Percentages. Each payment by the Borrower in respect of
obligations relating to Swing Line Advances (whether for principal, interest,
fees or otherwise) shall be made to the Administrative Lender for the account of
the Swing Line Bank. Notwithstanding anything in this Section 2.10(e) or any
---------------
other provision of this Agreement or any other Loan Document to the contrary,
any payment by the Borrower in respect of any Advances after acceleration of the
Advances pursuant to Section 8.2 or any monies received by the Administrative
-----------
Lender as a result of the exercise of remedies under any Loan Documents after
acceleration of the Advances pursuant to Section 8.2 shall be distributed pro
-----------
rata to each Lender based on the percentage that the outstanding Advances and
Reimbursement Obligations owed to such Lender bears to the aggregate Advances
and Reimbursement Obligations owed to all Lenders.
-35-
Section 2.11 LIBOR Lending Offices. Each Lender's initial LIBOR Lending
---------------------
Office is set forth opposite its name in Schedule 1 attached hereto. Each
----------
Lender shall have the right at any time and from time to time to designate a
different office of itself or of any Affiliate of such Lender as such Lender's
LIBOR Lending Office, and to transfer any outstanding LIBOR Advance to such
LIBOR Lending Office. No such designation or transfer shall result in any
liability on the part of the Borrower for increased costs or expenses resulting
solely from such designation or transfer (except any such transfer which is made
by a Lender pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose
----------- ---
of complying with Applicable Law, to the extent that Applicable Law, or any
relevant construction or interpretation thereof, changes after the Agreement
Date). Increased costs for expenses resulting from a change in law occurring
subsequent to any such designation or transfer shall be deemed not to result
solely from such designation or transfer.
Section 2.12 Sharing of Payments. Any Lender obtaining a payment (whether
-------------------
voluntary or involuntary, due to the exercise of any right of set-off, or
otherwise) on account of its Facility A Advances, Facility B Advances or its
participation in the Letters of Credit (other than pursuant to Sections 2.4(b),
---------------
2.14, 2.15(d), 9.3 or 9.5) in excess of its Specified Percentage of all payments
---- ------- --- ---
made by the Borrower with respect to Facility A Advances, Facility B Advances
and the Letters of Credit shall purchase from each other Lender such
participation in the Facility A Advances and Facility B Advances made by such
other Lender or its participation in the Letters of Credit as shall be necessary
to cause such purchasing Lender to share the excess payment pro rata according
to Specified Percentages with each other Lender; provided, however, that if all
or any portion of such excess payment is thereafter recovered from such
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section, to the fullest extent permitted by law, may exercise
all its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
Section 2.13 Calculation of LIBOR Rate. The provisions of this Agreement
-------------------------
relating to calculation of the LIBOR Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid hereunder that are
based upon such rate, it being understood that each Lender shall be entitled to
fund and maintain its funding of all or any part of a LIBOR Advance as it sees
fit.
Section 2.14 Taxes.
-----
(a) Any and all payments by the Borrower hereunder shall be made, in
accordance with Section 2.10, free and clear of and without deduction for any
------------
and all present or future taxes, levies, imposts, deductions, charges and
withholdings, and all liabilities with respect thereto, excluding, in the case
---------
of each Lender and the Administrative Lender, (i) taxes imposed on, based upon
or measured by its overall net income, net worth or capital, and franchise
taxes, doing business taxes or minimum taxes imposed on it, (A) by the
jurisdiction under the laws of which such Lender or the Administrative Lender
(as the case may be) is organized or in which
-36-
it has its applicable lending office or any political subdivision thereof; or
(B) by any other jurisdiction, or any political subdivision thereof, other than
those imposed by reason of (1) an asserted relation of such jurisdiction to the
transactions contemplated by this Agreement, (2) the activities of the Borrower
in such jurisdiction or (3) the activities in connection with the transactions
contemplated by this Agreement of a Lender or the Administrative Lender; (ii)
taxes imposed by reason of failure by the Lender or the Administrative Lender to
comply with the requirements of paragraph (e) of this Section 2.14; and (iii) in
------------
the case of any Lender, any Taxes in the nature of transfer, stamp, recording or
documentary taxes resulting from a transfer (other than as a result of
foreclosure) by such Lender of all or any portion of its interest in this
Agreement, the Notes or any other Loan Documents; (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by Law to
-----
deduct or withhold any Taxes from or in respect of any sum payable hereunder to
any Lender or the Administrative Lender, (x) the sum payable shall be increased
as may be necessary so that after making all required deductions for Taxes
(including deductions applicable to additional sums payable under this Section
-------
2.14) such Lender or the Administrative Lender (as the case may be) receives an
----
amount equal to the sum it would have received had no such deductions been made,
(y) the Borrower shall make such deductions and (z) the Borrower shall pay the
full amount of Taxes deducted to the relevant taxation authority or other
authority in accordance with Applicable Law.
(b) In addition, the Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies (other than Taxes described in clause (iii) of the first sentence
of Section 2.14(a)) that arise from any payment made hereunder or from the
---------------
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other Taxes").
-----------
(c) The Borrower will indemnify each Lender and the Administrative Lender
for the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.14) paid by such Lender or the Administrative Lender (as the case may
------------
be) and all liabilities (including penalties, additions to tax, interest and
reasonable expenses) arising therefrom or with respect thereto whether or not
such Taxes or Other Taxes were correctly or legally asserted, other than
penalties, additions to tax, interest and expenses arising as a result of gross
negligence or wilful misconduct on the part of such Lender or the Administrative
Lender, provided, however, that the Borrower shall have no obligation to
-------- -------
indemnify such Lender or the Administrative Lender unless and until such Lender
or the Administrative Lender shall have delivered to the Borrower a certificate
certifying that such Taxes or Other Taxes (and/or penalties, additions to tax,
interest and reasonable expenses) were actually incurred by such Lender or the
Administrative Lender and showing in reasonable detail an accounting of the
amount payable and the calculations used to determine in good faith such amount,
which certificate shall be conclusive absent manifest or demonstrable error.
Nothing in this Section 2.14 shall provide the Borrower or any Subsidiary of the
------------
Borrower the right to inspect the records, files or books of any Lender or the
Administrative Lender. This indemnification shall be made within 30 days from
the date such Lender or the Administrative Lender (as the case may be) makes
written demand therefor.
-37-
(d) As soon as practicable after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Lender the original or a certified
copy of a receipt evidencing payment thereof. For purposes of this Section 2.14
------------
the terms "United States" and "United States Person" shall have the meanings set
------------- --------------------
forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees that:
(i) it shall, no later than the Agreement Date (or, in the case of a
Lender which becomes a party hereto pursuant to Section 11.6 after the
------------
Agreement Date, the date upon which such Lender becomes a party hereto) and
at such times as necessary in the reasonable determination of the Borrower,
deliver to the Borrower through the Administrative Lender, with a copy to
the Administrative Lender:
(A) if any lending office is located in the United States of America,
two (2) accurate and complete signed originals of Internal
Revenue Service Form 4224 or any successor thereto ("Form 4224"),
---------
(B) if any lending office is located outside the United States of
America, two (2) accurate and complete signed originals of
Internal Revenue Service Form 1001 or any successor thereto
("Form 1001"),
-----------
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the
account of such lending office or lending offices under this Agreement free
from withholding of United States Federal income tax;
(ii) if at any time such Lender changes its lending office or lending
offices or selects an additional lending office it shall, at the same time
or reasonably promptly thereafter but only to the extent the forms
previously delivered by it hereunder are no longer effective, deliver to
the Borrower through the Administrative Lender, with a copy to the
Administrative Lender, in replacement for the forms previously delivered by
it hereunder:
(A) if such changed or additional lending office is located in the
United States of America, two (2) accurate and complete signed
originals of Form 4224; or
(B) otherwise, two (2) accurate and complete signed originals of Form
1001,
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the
account of such changed or additional lending office under this Agreement
free from withholding of United States Federal income tax;
-38-
(iii) it shall, before or promptly after the occurrence of any event
(including the passing of time but excluding any event mentioned in clause
(ii) above) requiring a change in the most recent Form 4224 or Form 1001
previously delivered by such Lender and if the delivery of the same be
lawful, deliver to the Borrower through the Administrative Lender with a
copy to the Administrative Lender, two (2) accurate and complete original
signed copies of Form 4224 or Form 1001 in replacement for the forms
previously delivered by such Lender;
(iv) it shall, promptly upon the request of the Borrower to that
effect, deliver to the Borrower such other forms or similar documentation
as may be required from time to time by any applicable law, treaty, rule or
regulation in order to establish such Lender's tax status for withholding
purposes; and
(v) it shall notify the Borrower after any event (including an
amendment to, or a change in any applicable law or regulation or in the
written interpretation thereof by any regulatory authority or any judicial
authority, or by ruling applicable to such Lender of any governmental
authority charged with the interpretation or administration of any law)
shall occur that results in such Lender no longer being capable of
receiving payments under this Agreement without any deduction or
withholding of United States federal income tax.
(f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.14 shall survive the payment in full of principal and interest
------------
hereunder.
(g) Each Lender (and the Administrative Lender with respect to payments to
the Administrative Lender for its own account) agrees that (i) it will take all
reasonable actions by all usual means to maintain all exemptions, if any,
available to it from United States withholding taxes (whether available by
treaty, existing administrative waiver or by virtue of the location of any
Lender's lending office), (ii) it will use reasonable best efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its lending office, if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and would not, in the reasonable judgment of such Lender, be
materially disadvantageous to such Lender, and (iii) otherwise cooperate with
the Borrower to minimize amounts payable by the Borrower under this Section
-------
2.14; provided, however, the Lenders and the Administrative Lender shall not be
---- -------- -------
obligated by reason of this Section 2.14(g) to contest the payment of any Taxes
---------------
or Other Taxes or to disclose any information regarding its tax affairs or tax
computations or reorder its tax or other affairs or tax or other planning.
Subject to the foregoing, to the extent the Borrower pays sums pursuant to this
Section 2.14 and the Lender or the Administrative Lender receives a refund of
------------
any or all of such sums, such refund shall be applied to reduce any amounts then
due and owing under this Agreement or, to the extent that no amounts are due and
owing under this Agreement at the time such refunds are received, the party
receiving such refund shall promptly pay over all such refunded sums to the
Borrower, provided that (i) no Event of Default is in existence at such time or
(ii) all of the Obligations have been fully and finally paid or satisfied. At
such time, if any, that such Default or
-39-
Event of Default is cured or waived, the party receiving such refund shall
promptly pay over all such refunded sums to the Borrower.
(h) If the Borrower becomes obligated to pay additional amounts described
in this Section 2.14 to any Lender, the Borrower may designate a financial
------------
institution reasonably acceptable to the Administrative Lender to replace such
Lender by purchasing for cash and receiving an assignment of such Lender's pro
rata share of the Commitments and the Rights of such Lender under the Loan
Documents without recourse to or warranty by, or expense to, such Lender, for a
purchase price equal to the outstanding amounts owed to such Lender (including
such additional amounts owing to such Lender pursuant to this Section 2.14).
------------
Upon execution of an Assignment Agreement, such other financial institution
shall be deemed to be a "Lender" for all purposes of this Agreement as set forth
in Section 11.6 hereof.
------------
Section 2.15 Letters of Credit.
-----------------
(a) The Letter of Credit Facility. The Borrower may request the Issuing
-----------------------------
Bank, on the terms and conditions hereinafter set forth, to issue, and the
Issuing Bank shall, if so requested, issue, letters of credit (the "Letters of
----------
Credit") for the account of the Borrower from time to time on any Business Day
------
from the date of the initial Advance until the Facility A Maturity Date in an
aggregate maximum amount (assuming compliance with all conditions to drawing)
not to exceed, at any time outstanding, the lesser of (i) $5,000,000 (the
"Letter of Credit Facility") and (ii) the Borrowing Base, less the sum of (A)
--------------------------
the aggregate principal amount of Facility A Advances then outstanding plus (B)
the aggregate principal amount of Swing Line Advances outstanding. No Letter of
Credit shall have an expiration date (including all rights of renewal) later
than the earlier of (i) the Facility A Maturity Date or (ii) one year after the
date of issuance thereof. Immediately upon the issuance of each Letter of
Credit, the Issuing Bank shall be deemed to have sold and transferred to each
Lender, and each Lender shall be deemed to have purchased and received from the
Issuing Bank, in each case irrevocably and without any further action by any
party, an undivided interest and participation in such Letter of Credit, each
drawing thereunder and the obligations of the Borrower under this Agreement in
respect thereof in an amount equal to the product of (x) such Lender's Specified
Percentage times (y) the maximum amount available to be drawn under such Letter
of Credit (assuming compliance with all conditions to drawing). Within the
limits of the Letter of Credit Facility, and subject to the limits referred to
above, the Borrower may request the issuance of Letters of Credit under this
Section 2.15(a), repay any Facility A Advances resulting from drawings
---------------
thereunder pursuant to Section 2.15(c) and request the issuance of additional
---------------
Letters of Credit under this Section 2.15(a).
---------------
(b) Request for Issuance. Each Letter of Credit shall be issued upon
--------------------
notice, given not later than 11:00 a.m. (Dallas, Texas time) on the fourth
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank. Each Letter of Credit shall be
issued upon notice given in accordance with the terms of any separate agreement
between the Borrower and the Issuing Bank in form and substance reasonably
satisfactory to the Borrower and the Issuing Bank providing for the issuance of
Letters of Credit pursuant to this Agreement and containing terms and conditions
not inconsistent with this
-40-
Agreement (a "Letter of Credit Agreement"), provided that if any such terms and
-------------------------- --------
conditions are inconsistent with this Agreement, this Agreement shall control.
Each such notice of issuance of a Letter of Credit by the Borrower (a "Notice of
---------
Issuance") shall be by telecopier, specifying therein, in the case of a Letter
--------
of Credit, the requested (A) date of such issuance (which shall be a Business
Day), (B) maximum amount of such Letter of Credit, (C) expiration date of such
Letter of Credit, (D) name and address of the beneficiary of such Letter of
Credit, and (E) form of such Letter of Credit and specifying such other
information as shall be required pursuant to the relevant Letter of Credit
Agreement. If the requested terms of such Letter of Credit are acceptable to the
Issuing Bank in its reasonable discretion, the Issuing Bank will, upon
fulfillment of the applicable conditions set forth in Article 3 hereof, make
---------
such Letter of Credit available to the Borrower at its office referred to in
Section 11.1 or as otherwise agreed with the Borrower in connection with such
------------
issuance.
(c) Drawing and Reimbursement. The payment by the Issuing Bank of a draft
-------------------------
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of a Facility A Advance, which shall
bear interest at the Base Rate Basis, in the amount of such draft (but without
any requirement for compliance with the conditions set forth in Article 3
---------
hereof). In the event that a drawing under any Letter of Credit is not
reimbursed by the Borrower by 11:00 a.m. (Dallas, Texas time) on the first
Business Day after such drawing, the Issuing Bank shall promptly notify
Administrative Lender and each other Lender. Each such Lender shall, on the
first Business Day following such notification, make a Facility A Advance, which
shall bear interest at the Base Rate Basis, and shall be used to repay the
applicable portion of the Issuing Bank's Advance with respect to such Letter of
Credit, in an amount equal to the amount of its participation in such drawing
for application to reimburse the Issuing Bank (but without any requirement for
compliance with the applicable conditions set forth in Article 3 hereof) and
---------
shall make available to the Administrative Lender for the account of the Issuing
Bank, by deposit at the Administrative Lender's office, in same day funds, the
amount of such Advance. In the event that any Lender fails to make available to
the Administrative Lender for the account of the Issuing Bank the amount of such
Advance, the Issuing Bank shall be entitled to recover such amount on demand
from such Lender together with interest thereon at a rate per annum equal to the
lesser of (i) the Highest Lawful Rate or (ii) the Federal Funds Rate.
(d) Increased Costs. If after the Agreement Date any change in any Law or
---------------
in the interpretation thereof by any court or administrative or governmental
authority charged with the administration thereof shall either (i) impose,
modify or deem applicable any reserve, special deposit or similar requirement
against letters of credit or guarantees issued by, or assets held by, or
deposits in or for the account of, the Issuing Bank or any Lender or any
corporation controlling the Issuing Bank or any Lender or (ii) impose on the
Issuing Bank or any Lender or any corporation controlling the Issuing Bank or
any Lender any other condition regarding this Agreement or any Letter of Credit,
and the result of any event referred to in the preceding clause (i) or (ii)
shall be to increase the cost to the Issuing Bank or any corporation controlling
the Issuing Bank of issuing or maintaining any Letter of Credit or to any Lender
or any corporation controlling such Lender of purchasing any participation
therein or making any Advance pursuant to Section 2.15(c), then, within 30 days
---------------
after demand by the Issuing Bank or
-41-
such Lender (which demand shall be made not later than one year after the
Issuing Bank or applicable Lender receives notice of the relevant change), the
Borrower shall, subject to Section 11.9 hereof, pay to the Issuing Bank or such
------------
Lender, from time to time as specified by the Issuing Bank or such Lender,
additional amounts that shall be sufficient to compensate the Issuing Bank or
such Lender or any corporation controlling such Lender for such increased cost.
A certificate as to the amount of such increased cost, submitted to the Borrower
by the Issuing Bank or such Lender, shall certify that such increased costs were
actually incurred by the Issuing Bank or such Lender and shall show in
reasonable detail an accounting of the amount payable and the calculation used
to determine in good faith such amount and shall be conclusive absent manifest
or demonstrable error. In determining such amount, the Issuing Bank or such
Lender may use any reasonable averaging or attribution method. Nothing in this
Section 2.15(d) shall provide the Borrower or any Subsidiary of the Borrower the
---------------
right to inspect the records, files or books of the Issuing Bank or any Lender.
If the Borrower becomes obligated to pay additional amounts described in this
Section 2.15(d) to any Lender, the Borrower may designate a financial
---------------
institution reasonably acceptable to the Administrative Lender to replace such
Lender by purchasing for cash and receiving an assignment of such Lender's pro
rata share of the Commitments and the Rights of such Lender under the Loan
Documents without recourse to or warranty by, or expenses to, such Lender, for a
purchase price equal to the outstanding amounts owing to such Lender (including
such additional amounts owing to such Lender pursuant to this Section 2.15(d).
---------------
Upon execution of an Assignment Agreement, such other financial institution
shall be deemed to be a "Lender" for all purposes of this Agreement as set forth
in Section 11.6 hereof. The obligations of the Borrower under this Section
------------ -------
2.15(d) shall survive termination of this Agreement. The Issuing Bank or any
-------
Lender claiming any additional compensation under this Section 2.15(d) shall use
---------------
reasonable efforts (consistent with legal and regulatory restrictions) to reduce
or eliminate any such additional compensation which may thereafter accrue and
which efforts would not, in the reasonable judgment of the Issuing Bank or such
Lender, be otherwise disadvantageous.
(e) Obligations Absolute. Except in the case of gross negligence or
--------------------
wilful misconduct on the part of the Issuing Bank, the obligations of the
Borrower under this Agreement with respect to any Letter of Credit, any Letter
of Credit Agreement and any other agreement or instrument relating to any Letter
of Credit or any Facility A Advance pursuant to Section 2.15(c) shall be
---------------
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement, such Letter of Credit Agreement and such other
agreement or instrument under all circumstances, including, without limitation,
the following circumstances:
(i) any lack of validity or enforceability of this Agreement, any
other Loan Document, any Letter of Credit Agreement, any Letter of Credit
or any other agreement or instrument relating thereto (collectively, the
"L/C Related Documents");
----------------------
(ii) (A) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of the Borrower in respect
of the Letters of Credit or any Facility A Advance pursuant to Section
-------
2.15(c) or (B) any other amendment or waiver of or any consent to departure
-------
from all or any of the L/C Related Documents;
-42-
(iii) the existence of any claim, set-off, defense or other right
that the Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank, any
Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C Related Documents or any
unrelated transaction;
(iv) any statement or any other document presented under a 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;
(v) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not comply with the terms
of the Letter of Credit;
(vi) any exchange, release or non-perfection of any Collateral, or any
release or amendment or waiver of or consent to departure from any
guarantee, for all or any of the Obligations of the Borrower in respect of
the Letters of Credit or any Revolving Credit Advance pursuant to Section
-------
2.15(c); or
-------
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a guarantor.
(f) Compensation for Letters of Credit.
----------------------------------
(i) Credit Fee. Subject to Section 11.9 hereof, the Borrower shall
---------- ------------
pay to the Administrative Lender for the ratable account of each Lender a
fee (which shall be payable quarterly in arrears on each Quarterly Date and
on the Facility A Maturity Date) equal to a rate per annum equal to the
product of the Applicable LIBOR Rate Margin in effect from time to time
multiplied by the average daily amount available for drawing under all
outstanding Letters of Credit. Subject to Section 11.9 hereof, such fee
------------
shall be computed on the basis of a 360-day year for the actual number of
days elapsed.
(ii) Issuance Fee. Subject to Section 11.9 hereof, the Borrower shall
------------ ------------
pay to the Administrative Lender for the account of the Issuing Bank an
issuance fee (which shall be payable on the date of issuance of each Letter
of Credit) in an amount equal to the greater of (a) $250 or (b) the product
of (x) 0.125% times (y) the face amount of the Letter of Credit being
issued.
(iii) Other Fees. Subject to Section 11.9 hereof, the Borrower shall
---------- ------------
pay, with respect to each amendment, renewal or transfer of each Letter of
Credit and each drawing made thereunder, reasonable documentary and
processing charges in accordance with the Issuing Bank's standard schedule
for such charges in effect at the time of such amendment, renewal, transfer
or drawing, as the case may be.
-43-
(g) L/C Cash Collateral Account.
---------------------------
(i) Upon the Facility A Maturity Date or the occurrence, and during
the continuance, of an Event of Default and demand by the Administrative
Lender pursuant to Section 8.2(c), the Borrower will promptly pay to the
--------------
Administrative Lender in immediately available funds an amount equal to the
maximum amount then available to be drawn under the Letters of Credit then
outstanding. Any amounts so received by the Administrative Lender shall be
deposited by the Administrative Lender in a deposit account maintained by
the Issuing Bank (the "L/C Cash Collateral Account").
---------------------------
(ii) As security for the payment of all Reimbursement Obligations and
for any other Obligations, the Borrower hereby grants, conveys, assigns,
pledges, sets over and transfers to the Administrative Lender (for the
benefit of the Issuing Bank and Lenders), and creates in the Administrative
Lender's favor (for the benefit of the Issuing Bank and Lenders) a Lien in,
all money, instruments and securities at any time held in or acquired in
connection with the L/C Cash Collateral Account, together with all proceeds
thereof. The L/C Cash Collateral Account shall be under the sole dominion
and control of the Administrative Lender and the Borrower shall have no
right to withdraw or to cause the Administrative Lender to withdraw any
funds deposited in the L/C Cash Collateral Account. At any time and from
time to time, upon the Administrative Lender's request, the Borrower
promptly shall execute and deliver any and all such further instruments and
documents, including UCC financing statements, as may be necessary,
appropriate or desirable in the Administrative Lender's judgment to obtain
the full benefits (including perfection and priority) of the security
interest created or intended to be created by this paragraph (ii) and of
the rights and powers herein granted. The Borrower shall not create or
suffer to exist any Lien on any amounts or investments held in the L/C Cash
Collateral Account other than the Lien granted under this paragraph (ii).
(iii) The Administrative Lender shall (A) apply any funds in the L/C
Cash Collateral Account on account of Reimbursement Obligations when the
same become due and payable, (B) after the Facility A Maturity Date, apply
any proceeds remaining in the L/C Cash Collateral Account first to pay any
-----
unpaid Obligations then outstanding hereunder and then to refund any
----
remaining amount to the Borrower.
(iv) The Borrower, no more than once in any calendar month, may direct
the Administrative Lender to invest the funds held in the L/C Cash
Collateral Account (so long as the aggregate amount of such funds exceeds
any relevant minimum investment requirement) in (A) Cash and Cash
Equivalents or direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency
thereof and (B) one or more other types of investments permitted by the
Determining Lenders, in each case with such maturities as the Borrower,
with the consent of the Determining Lenders, may specify, pending
application of such funds on account of Reimbursement Obligations or on
account of other Obligations, as the case may be. In the absence of any
such direction from the Borrower, the Administrative Lender shall invest
the funds held in the L/C Cash Collateral Account (so long as the aggregate
-44-
amount of such funds exceeds any relevant minimum investment requirement)
in one or more types of investments with the consent of the Determining
Lenders with such maturities as the Borrower, with the consent of the
Determining Lenders, may specify, pending application of such funds on
account of Reimbursement Obligations or on account of other Obligations, as
the case may be. All such investments shall be made in the Administrative
Lender's name for the account of the Lenders, subject to the ownership
interest therein of the Borrower. The Borrower recognizes that any losses
or taxes with respect to such investments shall be borne solely by the
Borrower, and the Borrower agrees to hold the Administrative Lender and the
Lenders harmless from any and all such losses and taxes, except to the
extent that such losses or taxes are finally judicially determined by a
court of competent jurisdiction to be the result of gross negligence or
wilful misconduct of the Administrative Lender. Administrative Lender may
liquidate any investment held in the L/C Cash Collateral Account in order
to apply the proceeds of such investment on account of the Reimbursement
Obligations as provided in Section 2.15(g)(iii) hereof (or on account of
--------------------
any other Obligation then due and payable, as the case may be) without
regard to whether such investment has matured and without liability for any
penalty or other fee incurred (with respect to which the Borrower hereby
agrees to reimburse the Administrative Lender) as a result of such
application.
(v) After the establishment of the L/C Cash Collateral Account
pursuant to Section 2.15(g)(i) hereof, the Borrower shall pay to the
------------------
Administrative Lender the fees customarily charged by the Issuing Bank with
respect to the maintenance of accounts similar to the L/C Cash Collateral
Account.
ARTICLE 3
Conditions Precedent
--------------------
Section 3.1 Conditions Precedent to the Initial Advance and the Initial
-----------------------------------------------------------
Issuance of Letters of Credit. The obligation of each Lender to make any Advance
-----------------------------
and the obligation of the Issuing Bank to issue Letters of Credit is subject to
(i) receipt by the Administrative Lender of the following items which are to be
delivered, in form and substance satisfactory to each Lender, with a copy
(except for the Notes and this Agreement) for each Lender, and (ii) satisfaction
of the following conditions which are to be satisfied:
(a) A loan certificate of each Obligor certifying as to the accuracy of
its representations and warranties in the Loan Documents, certifying that no
Default has occurred, and including a certificate of incumbency with respect to
each Authorized Signatory, and including (i) a copy of the articles or
certificate of incorporation of such Obligor, certified to be true, complete and
correct by the secretary of state of its state of organization, and (ii) a copy
of a certificate of good standing and a certificate of existence for its state
of organization and, with respect to the Borrower, the States of Texas,
California and New Jersey;
-45-
(b) a duly executed Facility A Note and Facility B Note payable to the
order of each Lender and in an amount for each Lender equal to its Specified
Percentage of each Commitment, respectively;
(c) UCC searches in appropriate jurisdictions where Collateral is located;
(d) opinions of counsel to each Obligor addressed to the Lenders and in
form and substance satisfactory to the Lenders, dated the Agreement Date, and
covering certain of the matters set forth in Sections 4.1(a), (b), (c), (e),
--------------- --- --- ---
(f), (h), (m), (n), (o) and (p) and such other matters incident to the
--- --- --- --- --- ---
transactions contemplated hereby as the Administrative Lender or Special Counsel
may reasonably request;
(e) reimbursement for the Administrative Lender for Special Counsel's
reasonable and customary fees (on an hourly basis) and expenses rendered through
the date hereof, to the extent invoiced;
(f) evidence that all proceedings of each Obligor taken 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
Special Counsel; and the Lenders shall have received copies of all documents or
other evidence which the Administrative Lender, Special Counsel or any Lender
may reasonably request in connection with such transactions;
(g) any fees or expenses required to be paid on or before the Agreement
Date pursuant to the Administrative Lender Fee Letter and/or the Upfront Fee
Letter;
(h) duly executed and completed Security Agreements, dated as of the
Agreement Date, granting a Lien, in all Collateral covered thereby, together
with related financing statements, the CFI Note and the ClientLink Note duly
endorsed, and insurance certificates listing Administrative Lender as loss payee
and additional insured and otherwise in a form required by the Collateral
Documents;
(i) the duly executed Swing Line Note payable to the order of the Swing
Line Bank in the aggregate principal amount of $5,000,000;
(j) a duly executed completed Pledge Agreement, dated as of the Agreement
Date, granting a Lien in all Collateral covered thereby, together with related
financing statements, stock powers and stock certificates evidencing ownership
of CFI;
(k) simultaneously with the making of the initial Advance, executed UCC-3
Termination Statements to be filed in appropriate jurisdictions to terminate all
Liens against assets of the Borrower and its Subsidiaries other than Permitted
Liens;
-46-
(l) all Securitization Documents, which shall be on terms and conditions
acceptable to the Administrative Lender, including any amendments and
modifications thereto as the Administrative Lender determines are necessary as a
result of the transactions contemplated by this Agreement and the other Loan
Documents;
(m) there shall have occurred no material adverse change in the business,
assets or financial condition of the Borrower and its Subsidiaries, taken as a
whole, since the date of the financial statements referred to in Section
-------
4.1(j)(i) hereof;
---------
(n) each of the Guaranties, duly executed by the Guarantor party thereto;
(o) all Indebtedness of the Borrower under the Existing Credit Agreement
shall have been (or shall simultaneously therewith be) refinanced in full
pursuant to the terms hereof;
(p) in form and substance reasonably satisfactory to the Lenders and
Special Counsel, such other documents, instruments and certificates as the
Administrative Lender or any Lender may reasonably require in connection with
the transactions contemplated hereby, including without limitation, evidence of
the status, organization or authority of the Borrower or any Subsidiary of the
Borrower, and the enforceability of the Obligations; and
(q) The Borrower shall have delivered a Borrowing Base Report reflecting
Eligible Accounts and Eligible Inventory as of August 31, 1996, but reflecting
the RPA Interest as of the Agreement Date.
Section 3.2 Conditions Precedent to All Advances and Letters of Credit.
----------------------------------------------------------
The obligation of each Lender to make each Advance hereunder (including the
initial Advance) and the obligation of the Issuing Bank to issue each Letter of
Credit (including the initial Letter of Credit) is subject to fulfillment of the
following conditions immediately prior to or contemporaneously with each such
Advance or issuance:
(a) With respect to each Advance and each issuance of a Letter of Credit,
all of the representations and warranties of each Obligor under the Loan
Documents, which, pursuant to Section 4.2 hereof, are made at and as of the time
-----------
of each such Advance or issuance, shall be true and correct at such time in all
material respects, both before and after giving effect to the application of the
proceeds of the Advance or Letter of Credit.
(b) The incumbency of the Authorized Signatories shall be as stated in the
certificate of incumbency delivered in the Borrower's loan certificate pursuant
to Section 3.1(a) or as subsequently modified and reflected in a certificate of
--------------
incumbency delivered to the Administrative Lender. The Lenders may, without
waiving this condition, consider it fulfilled and a representation by the
Borrower made to such effect if no written notice to the contrary, dated on or
before the date of such Advance or Letter of Credit, is received by the
Administrative Lender from the Borrower prior to the making of such Advance or
issuance of such Letter of Credit;
-47-
(c) There shall not exist a Default or Event of Default hereunder that has
not been waived;
(d) The aggregate Advances and Letters of Credit, after giving effect to
such proposed Advance or Letter of Credit, shall not exceed the maximum
principal amount then permitted to be outstanding hereunder;
(e) No order, judgment, injunction or decree of any Tribunal shall purport
to enjoin or restrain any Lender or the Issuing Bank from making any Advance or
issuing any Letter of Credit;
(f) There shall not be pending, or to the knowledge of the Borrower,
threatened any Litigation against or affecting the Borrower or any Subsidiary of
the Borrower or any property of the Borrower or any Subsidiary of the Borrower
that has not been disclosed in writing by the Borrower pursuant to Section
-------
4.1(h) or 6.6(a) prior to the making of the last preceding Advance or the
------ ------
issuance of the last preceding Letter of Credit (or in the case of the initial
Advances and Letters of Credit, prior to the Agreement Date) and there shall
have occurred no development not so disclosed in any such Litigation that, in
either event, could reasonably be expected to have a Material Adverse Effect;
and
(g) There shall have occurred no material adverse change in the business,
financial condition, results of operations or business prospects of the Borrower
and its Subsidiaries, taken as a whole, since December 31, 1995.
Notwithstanding anything herein to the contrary, the obligation of
each Lender to make a Facility A Advance, pursuant to Section 2.2(g) and 2.15(c)
-------------- -------
shall be absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, (i) the occurrence of any Default
or Event of Default, (ii) the failure of the Borrower to satisfy any condition
set forth in this Section 3.2 or (iii) any other circumstance, happening or
-----------
event whatsoever.
Section 3.3 Conditions Precedent to Conversions and Continuations.
-----------------------------------------------------
The obligation of the Lenders to convert any existing Base Rate
Advance into a LIBOR Advance or to continue any existing LIBOR Advance is
subject to the condition precedent that on the date of such conversion or
continuation no Default or Event of Default shall have occurred and be
continuing or would result from the making of such conversion or continuation.
The acceptance of the benefits of each such conversion and continuation shall
constitute a representation and warranty by the Borrower to each of the Lenders
that no Default or Event of Default shall have occurred and be continuing or
would result from the making of such conversion or continuation.
-48-
ARTICLE 4
Representations and Warranties
------------------------------
Section 4.1 Representations and Warranties. The Borrower hereby
------------------------------
represents and warrants to each Lender as follows:
(a) Organization; Power; Qualification. The respective jurisdiction of
----------------------------------
organization or incorporation and percentage ownership by the Borrower of the
Subsidiaries listed on Schedule 4 are true and correct as of the Agreement Date.
----------
Schedule 4 is a complete and accurate listing as of the Agreement Date, showing
----------
with respect to the Borrower and each Subsidiary of the Borrower (a) its mailing
address, which is its principal place of business, (b) the classes of its
Capital Stock and the number and amount of its Capital Stock authorized and
outstanding, (c) each record and beneficial owner of 5% or more of its
outstanding Capital Stock, and (d) all outstanding options, rights, rights of
conversion, redemption, purchase or repurchase, rights of first refusal and
similar rights relating to the Capital Stock. All of the outstanding Capital
Stock of the Borrower and each Subsidiary of the Borrower is validly issued,
fully paid and non-assessable. Each of the Borrower and its Subsidiaries is a
corporation or other legal Person duly organized, validly existing and in good
standing under the laws of its state of incorporation or organization. Each of
the Borrower and its Subsidiaries has the legal power and authority to own its
properties and to carry on its business as now being and hereafter proposed to
be conducted. Each of the Borrower and its Subsidiaries is authorized to do
business, duly qualified and in good standing as set forth in Schedule 7 and no
----------
qualification or authorization is necessary in any other jurisdictions in which
the character of its properties or the nature of its business requires such
qualification or authorization, except where the failure to be so qualified or
authorized could not reasonably be expected to have a Material Adverse Effect.
(b) Authorization. The Borrower has legal power and has taken all
-------------
necessary legal action to authorize it to borrow and request Letters of Credit
hereunder. Each of the Borrower and its Subsidiaries has legal power and has
taken all necessary legal action to execute, deliver and perform the Loan
Documents to which it is party in accordance with the terms thereof, and to
consummate the transactions contemplated thereby. Each Loan Document has been
duly executed and delivered by the Borrower or the Subsidiary of the Borrower
executing it. Each of the Loan Documents to which the Borrower or any of its
Subsidiaries is a party is a legal, valid and binding obligation of the Borrower
or such Subsidiary, as applicable, enforceable in accordance with its terms,
subject, to enforcement of remedies, to the following qualifications: (i)
equitable principles generally, and (ii) Debtor Relief Laws (insofar as any such
law relates to the bankruptcy, insolvency or similar event of the Borrower or
any Subsidiary of the Borrower).
(c) Compliance with Other Loan Documents and Contemplated Transactions.
------------------------------------------------------------------
Borrower and its Subsidiaries of the Loan Documents to which they are
respectively a party, and the consummation of the transactions contemplated
thereby, do not and will not (i) require any consent or approval necessary on or
-49-
prior to the Agreement Date not already obtained, except to the extent that the
failure to obtain any such consent or approval could not reasonably be expected
to have a Material Adverse Effect, (ii) violate any Applicable Law, (iii)
conflict with, result in a breach of, or constitute a default under the
certificate of incorporation or by-laws of the Borrower or any Subsidiary of the
Borrower, (iv) conflict with, result in a breach of, or constitute a default
under any Necessary Authorization, indenture, agreement or other instrument, to
which the Borrower or any Subsidiary of the Borrower is a party or by which they
or their respective properties may be bound, the result of which could
reasonably be expected to have a Material Adverse Effect, or (v) result in or
require the creation or imposition of any Lien (other than Liens in favor of the
Lenders to secure the Obligations hereunder) upon or with respect to any
property now owned or hereafter acquired by the Borrower or any Subsidiary of
the Borrower.
(d) Business. The Borrower and its Subsidiaries are engaged primarily
--------
in the business of providing distributed desktop computer-related products and
network integration services for large corporate customers worldwide and
providing related services, including LAN/WAN projects and consulting, network
management, help desk, field engineering configuration, distribution and
procurement and activities directly related thereto.
(e) Licenses, etc. All Necessary Authorizations have been duly obtained,
--------------
and are in full force and effect without any known conflict with the rights of
others and free from any unduly burdensome restrictions, unless the failure to
obtain or have in effect such Necessary Authorizations could not reasonably be
expected to result in a Material Adverse Effect. The Borrower and its
Subsidiaries are and will continue to be in compliance in all material respects
with all provisions thereof. No circumstance exists which could reasonably be
expected to impair the utility of the Necessary Authorization or the right to
renew such Necessary Authorization the effect of which could reasonably be
expected to have a Material Adverse Effect. No Necessary Authorization is the
subject of any pending or, to the best of the Borrower's knowledge, threatened
challenge, suspension, cancellation or revocation, the effect of which could
reasonably be expected to have a Material Adverse Effect.
(f) Compliance with Law. The Borrower and its Subsidiaries are in
-------------------
compliance in all respects with all Applicable Laws, except where the failure to
so comply could not reasonably be expected to have a Material Adverse Effect.
(g) Title to Properties. The Borrower and its Subsidiaries have good and
-------------------
indefeasible title to, or a valid leasehold interest in, all of their material
assets. None of their assets are subject to any Liens, except Permitted Liens.
No financing statement or other Lien filing (except relating to Permitted Liens)
is on file in any state or jurisdiction that names the Borrower or any of its
Subsidiaries as debtor or covers (or purports to cover) any assets of the
Borrower or any of its Subsidiaries. The Borrower and its Subsidiaries have not
signed any such financing statement or filing, nor any security agreement
authorizing any Person to file any such financing statement or filing (except
relating to Permitted Liens).
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(h) Litigation. Except as reflected on Schedule 3 hereto, as of the
---------- ----------
Agreement Date there is no Litigation pending against, or, to the Borrower's
current actual knowledge, threatened against the Borrower, or in any other
manner relating directly and adversely to the Borrower or any of its
Subsidiaries, or any of their respective properties, in any court or before any
arbitrator of any kind or before or by any governmental body in which the amount
claimed (in excess of applicable insurance) exceeds $100,000.
(i) Taxes. All material federal, state and other tax returns of the
-----
Borrower and its Subsidiaries required by law to be filed have been duly filed
or extensions have been timely filed, and all material federal, state and other
Taxes upon the Borrower, its Subsidiaries or any of their properties, income,
profits and assets, which are due and payable, have been paid, unless the same
are being diligently contested in accordance with Section 5.6 hereof. The
-----------
charges, accruals and reserves on the books of the Borrower and its Subsidiaries
in respect of their Taxes are, in the reasonable judgment of the Borrower,
adequate.
(j) Financial Statements; Material Liabilities.
------------------------------------------
(i) The Borrower has heretofore delivered to Lenders (a) the audited
consolidated balance sheets of the Borrower and its Subsidiaries as at
December 31, 1995, and the related statements of earnings and changes in
investment and statement of cash flows for the twelve-month period then
ended, and (b) unaudited consolidated balance sheets of the Borrower and
its Subsidiaries as at June 30, 1996, and the related statements of
earnings and changes in investment and statement of cash flows for the six-
month period then ended. Such financial statements were prepared in
conformity with GAAP (except for the absence of footnotes) and fairly
present, in all material respects, the financial position of the Borrower
and its Subsidiaries as at the date thereof and the combined results of
operations and cash flows for the period covered thereby.
(ii) The projected financial statements of the Borrower and its
Subsidiaries delivered to the Lenders prior to or on the Agreement Date
were prepared in good faith and management of the Borrower believes them to
be based on reasonable assumptions (which assumptions have been included in
the most recent projections furnished to the Lenders prior to the Agreement
Date) and to fairly present in all material respects the projected
financial condition of the Borrower and its Subsidiaries and the projected
results of operations as of the dates and for the periods shown for the
Borrower and its Subsidiaries, it being recognized by the Lenders that such
projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections
may differ from the projected results.
(iii) The financial statements of the Borrower and its Subsidiaries
delivered to the Lenders pursuant to Section 6.1, 6.2 and 6.3 hereof fairly
----------- --- ---
present in all material respects their respective financial condition and
their respective results of operations as of the dates and for the periods
shown, all in accordance with GAAP, subject to normal year-end adjustments.
The latest of such financial statements reflects all material liabilities,
direct and contingent, of the Borrower and each Subsidiary of the Borrower
-51-
that are required to be disclosed in accordance with GAAP. As of the date
of the latest of such financial statements, there were no Guaranties,
liabilities for Taxes, forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are substantial in
amount that are required to be reflected but that are not reflected on such
financial statements.
(k) No Adverse Change. Since December 31, 1995, no event or circumstance
-----------------
has occurred or arisen which is reasonably likely to have a Material Adverse
Effect.
(l) ERISA. None of the Borrower or its Controlled Group maintains or
-----
contributes to any Plan subject to Title IV of ERISA other than those disclosed
to the Administrative Lender in writing. Each such Plan (other than any
Multiemployer Plan) is in compliance in all material respects with the
applicable provisions of ERISA, the Code, and any other applicable Law, except
to the extent that failure to so comply would not reasonably be expected to have
a Material Adverse Effect. With respect to each Plan (other than any
Multiemployer Plan) of the Borrower and each member of its Controlled Group, all
reports required under ERISA or any other Applicable Law to be filed with any
Tribunal, the failure of which to file could reasonably be expected to result in
liability of the Borrower or any member of its Controlled Group in excess of
$100,000, have been duly filed. All such reports are true and correct in all
material respects as of the date given. No Plan of the Borrower or any member
of its Controlled Group has been terminated under Section 4041(c) of ERISA nor
has any accumulated funding deficiency (as defined in Section 412(a) of the
Code) been incurred (without regard to any waiver granted under Section 412 of
the Code), nor has any funding waiver from the Internal Revenue Service been
received or requested the result of which could reasonably be expected to have a
Material Adverse Effect. None of the Borrower or any member of its Controlled
Group has failed to make any contribution or pay any amount due or owing as
required under the terms of any such Plan, or by Section 412 of the Code or
Section 302 of ERISA by the due date under Section 412 of the Code and Section
302 of ERISA, the result of which could reasonably be expected to have a
Material Adverse Effect. There has been no ERISA Event or any event requiring
disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any
Plan or its related trust of the Borrower or any member of its Controlled Group
since the effective date of ERISA. The present value of the benefit
liabilities, as defined in Title IV of ERISA, of each Plan subject to Title IV
of ERISA (other than a Multiemployer Plan) of the Borrower and each member of
its Controlled Group does not exceed by more than $500,000 the present value of
the assets of each such Plan as of the most recent valuation date using each
such Plan's actuarial assumptions at such date. There are no pending, or to the
Borrower's knowledge threatened, claims, lawsuits or actions (other than routine
claims for benefits in the ordinary course) asserted or instituted against, and
neither the Borrower nor any member of its Controlled Group has knowledge of any
threatened litigation or claims against, the assets of any Plan or its related
trust or against any fiduciary of a Plan with respect to the operation of such
Plan, the result of which could reasonably be expected to have a Material
Adverse Effect. None of the Borrower or, to the Borrower's knowledge, any
member of its Controlled Group has engaged in any prohibited transactions,
within the meaning of Section 406 of ERISA or Section 4975 of the Code, in
connection with any Plan the result of which could reasonably be expected to
have a Material Adverse Effect. None of the Borrower or any member of its
Controlled
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Group has withdrawn from any Multiemployer Plan, nor has incurred or
reasonably expects to incur (A) any liability under Title IV of ERISA (other
than premiums due under Section 4007 of ERISA to the PBGC), (B) any withdrawal
liability (and no event has occurred which with the giving of notice under
Section 4219 of ERISA would result in such liability) under Section 4201 of
ERISA as a result of a complete or partial withdrawal (within the meaning of
Section 4203 or 4205 of ERISA) from a Multiemployer Plan, or (C) any liability
under Section 4062 of ERISA to the PBGC or to a trustee appointed under Section
4042 of ERISA. None of the Borrower, any member of its Controlled Group, or any
organization to which the Borrower or any member of its Controlled Group is a
successor or parent corporation within the meaning of ERISA Section 4069(b), has
engaged in a transaction within the meaning of ERISA Section 4069, the result of
which could reasonably be expected to have a Material Adverse Effect. None of
the Borrower or any member of its Controlled Group maintains or has established
any Plan, which is a welfare benefit plan within the meaning of Section 3(1) of
ERISA and which provides for continuing benefits or coverage for any participant
or any beneficiary of any participant after such participant's termination of
employment, except as may be required by any Applicable Law, the result of which
could reasonably be expected to have a Material Adverse Effect. Each of
Borrower and its Controlled Group which maintains a Plan which is a welfare
benefit plan within the meaning of Section 3(1) of ERISA has complied in all
material respects with any applicable notice and continuation requirements of
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the
regulations thereunder. None of the Borrower or any member of its Controlled
Group maintains, has established, or has ever participated in a multiemployer
welfare benefit arrangement within the meaning of Section 3(40)(A) of ERISA.
(m) Compliance with Regulations G, T, U and X. The Borrower is not
-----------------------------------------
engaged principally or as one of its important activities in the business of
extending credit for the purpose of purchasing or carrying any margin stock
within the meaning of Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System, and no part of the proceeds of the Advances or Letters
of Credit will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock. No more
than 25% of the assets of the Borrower and its Subsidiaries are margin stock.
None of the Borrower and its Subsidiaries nor any agent acting on their behalf,
have taken or will knowingly take any action which would cause this Agreement or
any other Loan Documents to violate any regulation of the Board of Governors of
the Federal Reserve System or to violate the Securities Exchange Act of 1934, in
each case as in effect now or as the same may hereafter be in effect.
(n) Authorization. The Borrower and its Subsidiaries are not required to
-------------
obtain any Necessary Authorization on or prior to the Agreement Date that has
not already been obtained from, or effect any material filing or registration
that has not already been effected with, any Tribunal in connection with the
execution and delivery of this Agreement or any other Loan Document, or the
performance thereof, in accordance with their respective terms, including any
borrowings hereunder, except for the filing of financing statements (and other
similar notices) containing a description of the Collateral with certain
Tribunals, including the United States Trademark and Copyright Offices.
-53-
(o) Absence of Default. The Borrower and its Subsidiaries are in
------------------
compliance in all material respects with all of the provisions of their
certificate of incorporation and by-laws, and no event has occurred or failed to
occur, which has not been remedied or waived, the occurrence or non-occurrence
of which constitutes, or which with the passage of time or giving of notice or
both would constitute, (i) an Event of Default or (ii) a default by the Borrower
or any of its Subsidiaries under any material indenture, agreement or other
instrument, or any judgment, decree or order to which the Borrower or any of its
Subsidiaries or by which they or any of their respective properties is bound,
except to the extent that such default could not reasonably be expected to have
a Material Adverse Effect.
(p) Governmental Regulation. Neither the Borrower nor any of its
-----------------------
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940. Neither the entering into or performance by the
Borrower of this Agreement nor the issuance of the Notes violates any provision
of such act or requires any consent, approval, or authorization of, or
registration with, the Securities and Exchange Commission or any other Tribunal
pursuant to any provisions of such act.
(q) Environmental Matters. Neither the Borrower nor any Subsidiary has
---------------------
any current actual knowledge that any substance deemed hazardous by any
Applicable Environmental Law, has been installed (i) on any real property fee
title to which is now owned by the Borrower or any of its Subsidiaries or (ii)
by Borrower or any of its Subsidiaries on any real property leased by the
Borrower or any of its Subsidiaries, in either case in a manner which does not
comply with Applicable Environmental Laws, except to the extent that the failure
to so comply could not reasonably be expected to have a Material Adverse Effect.
The Borrower and its Subsidiaries are not in violation of or subject to any
existing, pending or, to the best of the Borrower's knowledge, threatened
investigation or inquiry by any Tribunal or to any remedial obligations under
any Applicable Environmental Laws, the effect of which could reasonably be
expected to have a Material Adverse Effect. The Borrower and its Subsidiaries
have not obtained and are not required to obtain any permits, licenses or
similar authorizations other than certificates of occupancy and building permits
and other authorizations that have been obtained to construct, occupy, operate
or use any buildings, improvements, fixtures, and equipment forming a part of
any real property owned or leased by the Borrower or any Subsidiary of the
Borrower by reason of any Applicable Environmental Laws, except to the extent
that the failure to so obtain could not reasonably be expected to have a
Material Adverse Effect. The Borrower and its Subsidiaries undertook, at the
time of acquisition of fee title to any real property, reasonable inquiry into
the previous ownership and uses of such real property consistent with good
commercial or customary practice. The Borrower and its Subsidiaries have taken
reasonable steps to determine, and the Borrower and its Subsidiaries have no
current actual knowledge, that any hazardous substances or solid wastes have
been disposed of or otherwise released (i) on or to the real property fee title
to which is owned by the Borrower or any of its Subsidiaries or (ii) by Borrower
or any of its Subsidiaries on or to any real property leased by Borrower or any
of its Subsidiaries, all within the meaning of the Applicable Environmental
Laws, the effect of which could reasonably be expected to have a Material
Adverse Effect. The Borrower and its Subsidiaries have disposed of all
hazardous substances and solid wastes (if
-54-
any), all within the meaning of the Applicable Environmental Laws, generated in
their respective businesses in compliance with all Applicable Environmental
Laws, except to the extent that the failure to so comply could not reasonably be
expected to have a Material Adverse Effect.
(r) Certain Fees. No broker's, finder's or other fee or commission will
------------
be payable by the Borrower (other than to the Lenders hereunder) with respect to
the making of the Commitments or the Advances hereunder. The Borrower agrees to
indemnify and hold harmless the Administrative Lender and each Lender from and
against any claims, demand, liability, proceedings, costs or expenses asserted
with respect to or arising in connection with any such fees or commissions.
(s) Patents, Etc. The Borrower and its Subsidiaries have collectively
------------
obtained or applied for all patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their business as presently conducted and as
proposed to be conducted, except to the extent that the failure to so obtain or
apply could not reasonably be expected to have a Material Adverse Effect.
Nothing has come to the current actual knowledge of the Borrower or any of its
Subsidiaries to the effect that (i) any process, method, part or other material
presently contemplated to be employed by the Borrower or any Subsidiary of the
Borrower may infringe any patent, trademark, service xxxx, trade name,
copyright, license or other right owned by any other Person, or (ii) there is
pending or overtly threatened any claim or litigation against or affecting the
Borrower or any Subsidiary of the Borrower contesting its right to sell or use
any such process, method, part or other material, which could reasonably be
expected to have a Material Adverse Effect.
(t) Disclosure. All factual information furnished by the Borrower or any
----------
of its Subsidiaries in writing to the Administrative Lender or any Lender in
connection with this Agreement, the other Loan Documents or any transaction
contemplated herein or therein is, and all other factual information hereafter
furnished by or on behalf of the Borrower or any of its Subsidiaries in writing
to the Administrative Lender or any Lender will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided. There is no fact known
to the Borrower and not known to the public generally that could reasonably be
expected to have a Material Adverse Effect, which has not been set forth in this
Agreement or in the documents, certificates and statements furnished to the
Lenders by or on behalf of the Borrower prior to the date hereof in connection
with the transaction contemplated hereby.
(u) Solvency. The Borrower is, and Borrower and its Subsidiaries on a
--------
consolidated basis are, Solvent.
(v) Labor Relations. Except as provided on Schedule 8, neither the
--------------- ----------
Borrower nor any Subsidiary is a party to a collective bargaining agreement or
similar agreement, and the Borrower and each Subsidiary is in compliance in all
material respects with all Laws respecting employment and employment practices,
terms and conditions of employment, wages and hours
-55-
and other laws related to the employment of its employees, except where the
failure to comply could not reasonably be expected to result in a Material
Adverse Effect, and there are no arrears in the payment of wages, withholding or
social security taxes, unemployment insurance premiums or other similar
obligations of the Borrower or any Subsidiary or for which the Borrower or any
Subsidiary may be responsible other than in the ordinary course of business,
except for such unpaid or unwithheld arrears which could not reasonably be
expected to result in a Material Adverse Effect. There is no strike, work
stoppage or labor dispute with any union or group of employees pending or
overtly threatened involving Borrower or any Subsidiary that could reasonably be
expected to have a Material Adverse Effect.
(w) Consolidated Business Entity. The Borrower and its Material
----------------------------
Subsidiaries are operated as a part of one consolidated business entity and are
directly or indirectly dependent upon each other for and in connection with
their respective business activities.
Section 4.2 Survival of Representations and Warranties, etc. All
-----------------------------------------------
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made at and as of the Agreement Date and at and
as of the date of each Advance and the date of issuance of each Letter of
Credit, and each shall be true and correct in all material respects when made,
except to the extent (a) previously fulfilled in accordance with the terms
hereof or (b) previously waived in writing by the Determining Lenders with
respect to any particular factual circumstance or permitted by the terms of this
Agreement. All such representations and warranties shall survive, and not be
waived by, the execution hereof by any Lender, any investigation or inquiry by
any Lender, or by the making of any Advance or the issuance of any Letter of
Credit under this Agreement.
ARTICLE 5
General Covenants
-----------------
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 5.1 Preservation of Existence and Similar Matters. The Borrower
---------------------------------------------
shall, and shall cause each Subsidiary of the Borrower to:
(a) except as otherwise permitted pursuant to Section 7.4 hereof,
-----------
preserve and maintain, or timely obtain and thereafter preserve and maintain,
its existence, rights, franchises, licenses, authorizations, consents,
privileges and all other Necessary Authorizations from any Tribunal, the loss of
which could reasonably be expected to have a Material Adverse Effect; and
(b) except as otherwise permitted pursuant to Section 7.4 hereof,
-----------
qualify and remain qualified and authorized to do business in each jurisdiction
in which the character of its properties or the nature of its business requires
such qualification or authorization, unless the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
-56-
Section 5.2 Business; Compliance with Applicable Law. The Borrower and
----------------------------------------
its Subsidiaries shall (a) engage primarily in the businesses set forth in
Section 4.1(d) hereof, and (b) comply in all respects with the requirements of
--------------
all Applicable Law, except where the failure to so comply could not reasonably
be expected to have a Material Adverse Effect.
Section 5.3 Maintenance of Properties. The Borrower shall, and shall
-------------------------
cause each Subsidiary of the Borrower to, maintain or cause to be maintained all
its properties (whether owned or held under lease) in reasonably good repair,
working order and condition, taken as a whole, and from time to time make or
cause to be made all appropriate (in the reasonable judgment of the Borrower)
repairs, renewals, replacements, additions, betterments and improvements
thereto, except where the failure to so maintain, repair, renew, replace or
improve could not reasonably be expected to have a Material Adverse Effect.
Section 5.4 Accounting Methods and Financial Records. The Borrower
----------------------------------------
shall, and shall cause each Subsidiary of the Borrower to, maintain a system
of accounting established and administered in accordance with GAAP, keep
adequate records and books of account in which complete entries will be made and
all transactions reflected in accordance with GAAP, and keep accurate and
complete records of its respective assets. Except with respect to a change in
the fiscal year of any Subsidiary to conform to the fiscal year of the Borrower,
the Borrower and each of its Subsidiaries shall maintain its fiscal year in the
manner in existence on the Agreement Date.
Section 5.5 Insurance. The Borrower shall, and shall cause each
---------
Subsidiary of the Borrower to, maintain insurance from responsible companies in
such amounts and against such risks as shall be customary and usual in the
industry for companies of similar size and capability. Each insurance policy
shall (a) provide for at least 30 days' prior notice to the Administrative
Lender of any proposed termination or cancellation of such policy, whether on
account of default or otherwise and (b) otherwise contain the requirements for
insurance set forth in the Security Agreements.
Section 5.6 Payment of Taxes and Claims. The Borrower shall, and shall
---------------------------
cause each Subsidiary of the Borrower to, pay and discharge all material Taxes
to which they are subject prior to the date on which penalties attach thereto,
and all lawful material claims for labor, materials and supplies which, if
unpaid, might become a Lien upon any of its properties; except that no such Tax
or claim need be paid which is being diligently contested in good faith by
appropriate proceedings and for which adequate reserves shall have been set
aside on the appropriate books, but only so long as no Lien shall attach with
respect thereto and no foreclosure, distraint, sale or similar proceedings shall
have been commenced. The Borrower shall, and shall cause each Subsidiary of the
Borrower to, timely file all information returns (or extensions of such filing
deadlines) required by federal, state or local tax authorities.
Section 5.7 Visits and Inspections. The Borrower shall, and shall cause
----------------------
each Subsidiary of the Borrower to, promptly permit representatives of the
Administrative Lender or any Lender from time to time after reasonable notice by
the Administrative Lender or any Lender to (a) visit and inspect the properties
of the Borrower and its Subsidiaries as often as the
-57-
Administrative Lender or any Lender shall reasonably deem advisable, (b) audit,
inspect and make extracts from and copies of the Borrower's and each such
Subsidiary's books and records, and (c) discuss with the Borrower's and each
such Subsidiary's appropriate directors, officers, employees and auditors its
business, assets, liabilities, financial positions, results of operations and
business prospects, provided that such representatives of the Administrative
--------
Lender or any Lender shall keep confidential all information obtained pursuant
to this Section 5.7 to the extent required by Section 11.14. The Borrower shall
----------- -------------
pay the reasonable expenses related to inspections and audits performed by the
Administrative Lender. Prior to the occurrence of an Event of Default, all such
visits and inspections shall be conducted during normal business hours.
Following the occurrence and during the continuance of an Event of Default, such
visits and inspections shall be conducted at any time requested by the
Administrative Lender or any Lender without any requirement for reasonable
notice.
Section 5.8 Use of Proceeds. The proceeds of (a) the Facility A Advances
---------------
and the Letters of Credit shall be used by the Borrower for refinancing of
Indebtedness of the Borrower, Capital Expenditures, Acquisitions permitted under
Section 7.6 hereof and for working capital and for other general corporate
-----------
purposes and (b) the Facility B Advances shall be used solely to purchase real
property to be utilized as the corporate headquarters for the Borrower.
SECTION 5.9 INDEMNITY.
---------
(a) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS
THE ADMINISTRATIVE LENDER, EACH LENDER, EACH OF THEIR RESPECTIVE AFFILIATES, AND
EACH OF THEIR RESPECTIVE (INCLUDING SUCH AFFILIATES') OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS AND CONSULTANTS (INCLUDING, WITHOUT LIMITATION,
THOSE RETAINED IN CONNECTION WITH THE SATISFACTION OR ATTEMPTED SATISFACTION OF
ANY OF THE CONDITIONS SET FORTH HEREIN) OF EACH OF THE FOREGOING (COLLECTIVELY,
"INDEMNITEES") FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
-----------
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, REASONABLE COSTS,
REASONABLE EXPENSES AND REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS
OF COUNSEL FOR SUCH INDEMNITEES IN CONNECTION WITH ANY INVESTIGATIVE,
ADMINISTRATIVE OR JUDICIAL PROCEEDING, WHETHER OR NOT SUCH INDEMNITEES SHALL BE
DESIGNATED A PARTY THERETO), IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH
INDEMNITEES (WHETHER DIRECT, INDIRECT OR CONSEQUENTIAL AND WHETHER BASED ON ANY
FEDERAL, STATE, OR LOCAL LAWS AND REGULATIONS, UNDER COMMON LAW OR AT EQUITABLE
CAUSE, OR ON CONTRACT, TORT OR OTHERWISE, ARISING FROM OR CONNECTED WITH THE
PAST, PRESENT OR FUTURE OPERATIONS OF THE BORROWER, ITS SUBSIDIARIES OR THEIR
RESPECTIVE PREDECESSORS IN INTEREST, OR THE PAST, PRESENT OR FUTURE
ENVIRONMENTAL CONDITION OF PROPERTY OF THE BORROWER OR ITS SUBSIDIARIES),
RELATING TO OR ARISING OUT OF
-58-
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY ACT, EVENT OR TRANSACTION OR
ALLEGED ACT, EVENT OR TRANSACTION RELATING OR ATTENDANT THERETO, THE MANAGEMENT
OF THE ADVANCES OR LETTERS OF CREDIT, INCLUDING IN CONNECTION WITH, OR AS A
RESULT, IN WHOLE OR IN PART, OF ANY ORDINARY OR MERE NEGLIGENCE OF
ADMINISTRATIVE LENDER OR ANY LENDER (OTHER THAN THOSE MATTERS RAISED EXCLUSIVELY
BY A PARTICIPANT AGAINST THE ADMINISTRATIVE LENDER OR ANY LENDER AND NOT THE
BORROWER OR ANY OF ITS SUBSIDIARIES), OR THE USE OR INTENDED USE OF THE PROCEEDS
OF THE ADVANCES OR LETTERS OF CREDIT HEREUNDER, OR IN CONNECTION WITH ANY
INVESTIGATION OF ANY POTENTIAL MATTER COVERED HEREBY, BUT EXCLUDING (i) ANY
CLAIM OR LIABILITY THAT ARISES AS THE RESULT OF THE GROSS NEGLIGENCE OR WILFUL
MISCONDUCT OF ANY INDEMNITEE, AS FINALLY JUDICIALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION, AND (ii) MATTERS RAISED BY ONE LENDER AGAINST ANOTHER
LENDER OR BY ANY SHAREHOLDERS OF A LENDER AGAINST A LENDER OR ITS MANAGEMENT
(COLLECTIVELY, "INDEMNIFIED MATTERS"). TO THE EXTENT THAT ANY INDEMNIFIED MATTER
--------------------
INVOLVES ONE OR MORE INDEMNITEES, SUCH INDEMNITEES SHALL USE THE SAME LEGAL
COUNSEL UNLESS ANY INDEMNITEE IN ITS REASONABLE DISCRETION DETERMINES THAT
CONFLICTS EXIST OR MAY ARISE IN CONNECTION WITH SUCH REPRESENTATION.
(b) WITHOUT DUPLICATION, THE BORROWER SHALL PERIODICALLY, UPON REQUEST,
REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE LEGAL AND OTHER ACTUAL REASONABLE
EXPENSES (INCLUDING THE REASONABLE COST OF ANY INVESTIGATION AND PREPARATION)
INCURRED IN CONNECTION WITH ANY INDEMNIFIED MATTER. THE REIMBURSEMENT, INDEMNITY
AND CONTRIBUTION OBLIGATIONS UNDER THIS SECTION SHALL BE IN ADDITION TO ANY
LIABILITY WHICH THE BORROWER MAY OTHERWISE HAVE, SHALL EXTEND UPON THE SAME
TERMS AND CONDITIONS TO EACH INDEMNITEE, AND SHALL BE BINDING UPON AND INURE TO
THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL REPRESENTATIVES OF
THE BORROWER, THE ADMINISTRATIVE LENDER, THE LENDERS AND ALL OTHER INDEMNITEES.
THIS SECTION SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE
OBLIGATIONS.
Section 5.10 Environmental Law Compliance. The use which the Borrower or
----------------------------
any Subsidiary of the Borrower intends to make of any real property which is
owned or leased by it will not result in the disposal or other release of any
hazardous substance or solid waste on or to such real property which is in
violation of Applicable Environmental Laws, the effect of which could reasonably
be expected to have a Material Adverse Effect. As used herein, the terms
"hazardous substance" and "release" as used in this Section shall have the
meanings specified in CERCLA (as defined in the definition of Applicable
Environmental Laws), and the terms "solid waste" and "disposal" shall have the
meanings specified in RCRA (as defined in the definition of Applicable
Environmental Laws); provided, however, that if CERCLA or
-59-
RCRA is amended so as to broaden or lessen the meaning of any term defined
thereby, such broader or lesser meaning shall apply subsequent to the effective
date of such amendment; and provided further, to the extent that any other law
applicable to the Borrower, any Subsidiary or any of their properties
establishes a meaning for "hazardous substance," "release," "solid waste," or
"disposal" which is broader or lesser than that specified in either CERCLA or
RCRA, such broader or lesser meaning shall apply. The Borrower agrees to
indemnify and hold the Administrative Lender and each Lender harmless from and
against, and to reimburse them with respect to, any and all claims, demands,
causes of action, loss, damage, liabilities, reasonable costs and reasonable
expenses (including reasonable attorneys' fees and courts costs) of any kind or
character, known or unknown, fixed or contingent, asserted against or incurred
by any of them at any time and from time to time by reason of or arising out of
(a) the failure of the Borrower or any Subsidiary to perform any of their
obligations hereunder regarding asbestos or Applicable Environmental Laws, (b)
any violation on or before the Release Date of any Applicable Environmental Law
in effect on or before the Release Date, and (c) any act, omission, event or
circumstance existing or occurring on or prior to the Release Date (including
without limitation the presence on such real property or release from such real
property of hazardous substances or solid wastes disposed of or otherwise
released on or prior to the Release Date), resulting from or in connection with
the ownership of the real property, regardless of whether the act, omission,
event or circumstance constituted a violation of any Applicable Environmental
Law at the time of its existence or occurrence; provided that, the Borrower
shall not be under any obligation to indemnify the Administrative Lender or any
Lender to the extent that any such liability arises as the result of the gross
negligence or wilful misconduct of such Person, as finally judicially determined
by a court of competent jurisdiction. The provisions of this paragraph shall
survive the Release Date and shall continue thereafter in full force and effect.
Section 5.11 Further Assurances. At any time or from time to time upon
------------------
request by the Administrative Lender, the Borrower or any Subsidiary of the
Borrower shall execute and deliver such further documents and do such other acts
and things as the Administrative Lender may reasonably request in order to
effect fully the purposes of this Agreement and the other Loan Documents and to
provide for payment of the Obligations in accordance with the terms of this
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, the Borrower agrees to (a) update and deliver to the Administrative
Lender Schedules 3 and 4 hereto at the time of delivery of the financial
-----------------
statements set forth in Sections 6.1 and 6.2 hereof if the information provided
------------ ---
therein is not complete and correct, and (b) update and deliver to the
Administrative Lender Schedule 1 to the Security Agreements promptly upon
----------
discovery if the information provided therein is not complete and correct.
Section 5.12 Subsidiaries. At any time that any Person becomes a
------------
Subsidiary other than pursuant to Section 7.3(f) hereof, (a) such Subsidiary
--------------
shall execute a Subsidiary Guaranty of the Obligations and a Security
Agreement granting a first priority Lien in all its assets of the types or
classes included in the Collateral, except, to the extent applicable, for Liens
permitted in clause (f) of the definition of Permitted Liens, to secure the
Obligations and (b) the Lenders shall receive such board resolutions, officer's
certificates and opinions of counsel as the
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Administrative Lender shall reasonably request in connection with the actions
described in clause (a) above.
Section 5.13 Real Property. At any time that the Borrower acquires any
-------------
real property with the proceeds of a Facility B Advance, the Borrower shall (a)
execute a Deed of Trust granting a first priority Lien in the real property
acquired with such proceeds, (b) deliver to the Administrative Lender a title
insurance policy with respect to such real property, in form and substance
acceptable to the Administrative Lender, (c) deliver to the Administrative
Lender an environmental site assessment with respect to such real property, in
form and substance acceptable to the Administrative Lender, prepared by a Person
acceptable to the Administrative Lender, (d) deliver to the Administrative
Lender surveys with respect to such real property, in form and substance
acceptable to the Administrative Lender, and (e) the Lenders shall receive such
board resolutions, officer's certificates and opinions of counsel as the
Administrative Lender shall reasonably request with respect thereto.
Section 5.14 Agreements in Respect of RPA and TAA. With respect to the
------------------------------------
RPA and the TAA, respectively, (a) unless otherwise agreed by the
Administrative Lender, the Borrower at all times shall have and maintain the
sole and exclusive right to service, administer and collect the Receivables,
subject at all times, however, to the Loan Documents and the MSAA, (b) the
-----------------------------
Borrower will not in any event effect an increase in the RPA Interest Percentage
(as defined by the MSAA) if as of the proposed time of the effectiveness of any
such increase (i) any Default or Event of Default is in existence, or would
exist upon such effectiveness or (ii) Projected Unused Availability is less than
zero dollars ($0.00), (c) contemporaneously upon effecting any increase in the
RPA Interest Percentage (as defined by the MSAA) the Borrower shall deliver to
the Administrative Lender a current Borrowing Base Report, dated as of the
effective date of any such increase, (d) at all times after the occurrence and
during the continuance of any Default or Event of Default, the Borrower shall
cause all proceeds of any increase in the Net Investment (as defined by the TAA)
received by CFI and paid to the Borrower in payment of any RPA Interest under
the RPA to be paid directly to the Administrative Lender for application to the
Obligations, (e) the Borrower will not effect any increase in the Maximum Net
Investment (as defined by the TAA) without the prior written consent of the
Administrative Lender and (f) the Borrower will not enter into any agreement to
amend the RPA without the prior written consent of the Determining Lenders if
such agreement, or the amendment to the RPA contemplated thereby, would have a
material adverse effect upon any of the Lenders or the Administrative Lender.
ARTICLE 6
Information Covenants
---------------------
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled), the Borrower shall furnish or cause to be furnished to
each Lender or shall notify each Lender of the following events:
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Section 6.1 Borrowing Base Report. Within 15 days after the end of each
---------------------
month of each fiscal year and contemporaneously with any change in the RPA
Interest or any change in the Administrative Lender's beneficial interest under
the MSAA, the Borrowing Base Report setting forth a certification of Eligible
Accounts and Eligible Inventory, and calculation of the Borrowing Base. Each
Borrowing Base Report shall certify the CompuCom Interest Percentage and the RPA
Interest Percentage (each as defined in the MSAA) outstanding as of the
effective date thereof.
Section 6.2 Quarterly Financial Statements and Information. Within 45
----------------------------------------------
days after the end of each fiscal quarter of each fiscal year, the consolidated
balance sheets of the Borrower and its Subsidiaries as at the end of such fiscal
quarter and the related consolidated statements of income for such fiscal
quarter and for the elapsed portion of the year ended with the last day of such
fiscal quarter, and consolidated statements of cash flow for the elapsed portion
of the year ended with the last day of such fiscal quarter, all of which shall
be certified by the president, chief financial officer, treasurer or controller
of the Borrower, to, in his or her opinion acting solely in his or her capacity
as an officer of the Borrower, present fairly in all material respects, in
accordance with GAAP (except for the absence of footnotes), the financial
position and results of operations of the Borrower and its Subsidiaries as at
the end of and for such fiscal quarter, and for the elapsed portion of the year
ended with the last day of such fiscal quarter, subject only to normal year-end
adjustments.
Section 6.3 Annual Financial Statements and Information; Certificate of
-----------------------------------------------------------
No Default.
----------
(a) Within 120 days after the end of each fiscal year, a copy of (i) the
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries, as of the end of the current and prior fiscal years and (ii) the
consolidated and consolidating statements of earnings and consolidated
statements of changes in shareholders' equity, and statements of cash flow as of
and through the end of such Fiscal Year, all of which are prepared in accordance
with GAAP, and certified by independent certified public accountants reasonably
acceptable to the Lenders (provided, however, any big six public accounting firm
shall be acceptable to the Lenders), whose opinion shall be in scope and
substance in accordance with generally accepted auditing standards and shall be
unqualified as to scope of audit and going concern.
(b) As soon as available, but in any event within 30 days after December
31, 1997 and within 30 days after the end of each fiscal year thereafter, a copy
of the annual consolidated financial projections (including proforma income
statements, balance sheets and statements of cash flow) of the Borrower and its
Subsidiaries for the succeeding three fiscal years.
Section 6.4 Compliance Certificate. At the time financial statements are
----------------------
furnished pursuant to Sections 6.2 and 6.3 hereof, the Compliance Certificate,
------------ ---
completed as provided therein, executed by the Chief Financial Officer,
Treasurer or Vice President of Finance of the Borrower.
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Section 6.5 Copies of Other Reports and Notices.
-----------------------------------
(a) Promptly upon their becoming available, a copy of (i) all material
final reports or letters submitted to the Borrower or any Subsidiary of the
Borrower by accountants in connection with any annual, interim or special audit,
including without limitation any final report prepared in connection with the
annual audit referred to in Section 6.2 hereof, and, if requested by the
-----------
Administrative Lender, any other comment letter submitted to management in
connection with any such audit, (ii) each financial statement, report, notice or
proxy statement sent by the Borrower to stockholders generally, (iii) each
regular, periodic or other report and any registration statement (other than
statements on Form S-8) or prospectus (or material written communication in
respect of any thereof) filed by the Borrower or any Subsidiary of the Borrower
with any securities exchange, with the Securities and Exchange Commission or any
successor agency, and (iv) all press releases concerning material financial
aspects of the Borrower or any Subsidiary of the Borrower;
(b) Promptly upon becoming aware that (i) the holder(s) of any note(s) or
other evidence of indebtedness or other security of the Borrower or any
Subsidiary of the Borrower in excess of $500,000 in the aggregate has given
notice or taken any action with respect to a breach, failure to perform, claimed
default or event of default thereunder, (ii) any occurrence or non-occurrence of
any event which constitutes or which with the passage of time or giving of
notice or both could constitute a material breach by the Borrower or any
Subsidiary of the Borrower under any material agreement or instrument other than
this Agreement to which the Borrower or any Subsidiary of the Borrower is a
party or by which any of their properties may be bound, or (iii) any event,
circumstance or condition which could reasonably be expected to be classified as
a Material Adverse Effect, a written notice specifying the details thereof (or
the nature of any claimed default or event of default) and what action is being
taken or is proposed to be taken with respect thereto;
(c) Promptly upon becoming aware that any party to any Capitalized Lease
Obligations or Operating Lease, in each case, in excess of $500,000, has given
notice or taken any action with respect to a breach, failure to perform, claimed
default or event of default thereunder, a written notice specifying the details
thereof (or the nature of any claimed default or event of default) and what
action is being taken or is proposed to be taken with respect thereto;
(d) Promptly upon receipt thereof, information with respect to and copies
of any notices received from any Tribunal relating to any order, ruling, law,
information or policy that relates to a breach of or noncompliance with any Law,
or could reasonably be expected to result in the payment of money by the
Borrower or any Subsidiary of the Borrower in an amount of $500,000 or more in
the aggregate, or otherwise have a Material Adverse Effect, or result in the
loss or suspension of any Necessary Authorization where such loss could
reasonably be expected to have a Material Adverse Effect; and
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(e) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the assets, business, liabilities, financial position, projections, results of
operations or business prospects of the Borrower and its Subsidiaries, as the
Administrative Lender or any Lender may reasonably request.
Section 6.6 Notice of Litigation, Default and Other Matters. Prompt
-----------------------------------------------
notice of the following events after the Borrower has knowledge or notice
thereof:
(a) The commencement of all Litigation and investigations by or before any
Tribunal, and all actions and proceedings in any court or before any arbitrator
involving claims for damages (including punitive damages) in excess of $500,000
(after deducting the amount with respect to the Borrower or any Subsidiary of
the Borrower is insured), against or in any other way relating directly to the
Borrower, any Subsidiary of the Borrower, or any of their respective properties
or businesses; and
(b) Promptly upon the happening of any condition or event of which the
Borrower has current actual knowledge which constitutes a Default, a written
notice specifying the nature and period of existence thereof and what action is
being taken or is proposed to be taken with respect thereto.
Section 6.7 ERISA Reporting Requirements.
----------------------------
(a) Promptly and in any event (i) within 30 days after the Borrower or any
member of its Controlled Group has current actual knowledge that any ERISA Event
described in clause (a) of the definition of ERISA Event or any event described
in Section 4063(a) of ERISA with respect to any Plan of the Borrower or any
member of its Controlled Group has occurred, and (ii) within 10 days after the
Borrower or any member of its Controlled Group has current actual knowledge that
any other ERISA Event with respect to any Plan of the Borrower or any member of
its Controlled Group has occurred or a request for a minimum funding waiver
under Section 412 of the Code has been made with respect to any Plan of the
Borrower or any member of its Controlled Group, a written notice describing such
event and describing what action is being taken or is proposed to be taken with
respect thereto, together with a copy of any notice of such event that is given
to the PBGC;
(b) Promptly and in any event within three Business Days after receipt
thereof by the Borrower or any member of its Controlled Group from the PBGC,
copies of each notice received by the Borrower or any member of its Controlled
Group of the PBGC's intention to terminate any Plan or to have a trustee
appointed to administer any Plan;
(c) Promptly and in any event within 30 days after the filing thereof by
the Borrower or any member of its Controlled Group with the United States
Department of Labor or the Internal Revenue Service, copies of each annual
report (including Schedule B thereto, if applicable) with respect to each Plan
subject to Title IV of ERISA of which Borrower or any member of its Controlled
Group is the "plan sponsor";
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(d) Promptly, and in any event within 10 Business Days after receipt
thereof, a copy of any correspondence the Borrower or any member of its
Controlled Group receives from the Plan Sponsor (as defined by Section
4001(a)(10) of ERISA) of any Plan concerning potential withdrawal liability
pursuant to Section 4219 or 4202 of ERISA, and a statement from the chief
financial officer of the Borrower or such member of its Controlled Group setting
forth details as to the events giving rise to such potential withdrawal
liability and the action which the Borrower or such member of its Controlled
Group is taking or proposes to take with respect thereto;
(e) Notification within 30 days of any material increases in the benefits
provided under any existing Plan which is not a Multiemployer Plan, or the
establishment of any new Plans, or the commencement of contributions to any Plan
to which the Borrower or any member of its Controlled Group was not previously
contributing, which could reasonably be expected in any such case to result in
an additional material liability to the Borrower;
(f) Notification within three Business Days after the Borrower or any
member of its Controlled Group knows that the Borrower or any such member of its
Controlled Group has filed or intends to file a notice of intent to terminate
any Plan under a distress termination within the meaning of Section 4041(c) of
ERISA and a copy of such notice; and
(g) Within three Business Days after receipt of written notice of
commencement thereof, notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any member of
its Controlled Group with respect to any Plan, except those which, in the
aggregate, if adversely determined could not reasonably be expected to have a
Material Adverse Effect.
Section 6.8 RPA and TAA Reporting Requirements.
----------------------------------
(a) (i) At such times as the Administrative Lender may request, the amount
of the RPA Interest Percentage (as defined by the MSAA) and the Maximum Net
Investment (as defined by the TAA), (ii) at least one (1) Business Day before
effecting any change in the RPA Interest under the terms of the RPA, as provided
in Section 2.2(b) of the MSAA, (iii) promptly upon any termination of the RPA or
the TAA, or upon receiving or sending any notice of intended or pending or
potential termination of the RPA or the TAA, (iv) promptly at any time when the
"Percentage Factor" exceeds the "Maximum Percentage Factor" (as those terms are
defined by the TAA); (v) promptly upon becoming aware of any assignment by EFC,
or any request by CFI for an assignment by EFC, of EFC's interest under the TAA
to any "Bank Investor" (as defined in the TAA) pursuant to Section 9.7 of the
TAA and (vi) promptly upon becoming aware of any "Termination Event" or
"Potential Termination Event" (as those terms are defined in the TAA) under the
TAA.
(b) A true and correct copy of (i) at Administrative Lender's request,
each report delivered by the Borrower to CFI and/or EFC under the RPA and/or the
TAA; (ii) each notice, if any, at any time given by CFI pursuant to Section
5.1(b)(i) of the TAA (notifications in
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respect of any "Termination Event" or "Potential Termination Event", as those
terms are defined by the TAA) and (iii) any notice (or copy of any such notice)
of termination, or of intended, pending or potential termination of the RPA or
the TAA sent or received by the Borrower or CFI.
ARTICLE 7
Negative Covenants
------------------
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 7.1 Indebtedness. The Borrower shall not, and shall not permit
------------
any Subsidiary of the Borrower to, create, assume, incur or otherwise become or
remain obligated in respect of, or permit to be outstanding, or suffer to exist
any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Accounts payable and accrued liabilities incurred in the ordinary
course of business;
(c) Indebtedness, including in respect of Capitalized Lease Obligations,
incurred to purchase, or to finance the purchase of, assets which constitute
property, plant and equipment, in an aggregate principal amount not in excess of
$10,000,000 outstanding at any time;
(d) Indebtedness incurred or assumed in respect of Acquisitions permitted
pursuant to Section 7.6 hereof in an aggregate principal amount not in excess of
-----------
$20,000,000 per calendar year;
(e) Hedging obligations under Agreements entered into with any Lender;
(f) Indebtedness existing on the Agreement Date which is described on
Schedule 6 hereto, including renewals, replacements and refinancings (but no
----------
increases) thereof;
(g) Indebtedness in respect of endorsement of negotiable instruments in
the ordinary course of business;
(h) Indebtedness owing to the Borrower or any Guarantor by any Subsidiary
or the Borrower, which Indebtedness is evidenced by an entry on the financial
records of the Borrower and any such Subsidiary of the Borrower;
(i) Indebtedness of ClientLink, Inc. not to exceed $3,000,000 for working
capital;
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(j) Guaranties by the Borrower or by Subsidiaries of the Borrower of
Indebtedness of the Borrower or Subsidiaries of the Borrower, to the extent such
underlying Indebtedness is permitted hereunder;
(k) Trade accounts payable owing by the Borrower or any of its
Subsidiaries to any of (i) IBM Credit Corporation, (ii) Compaq Computer
Corporation, (iii) Hewlett-Packard Company or (iv) Apple Computer, Inc. for
goods furnished by any of such Persons to any of the Obligors;
(l) Unsecured trade accounts payable, incurred in the ordinary course of
the business of Borrower or any of its Subsidiaries; and
(m) Indebtedness of CFI to the Borrower evidenced by the CFI Note if, and
to the extent that, the Administrative Lender has a valid, perfected first
priority Lien in, and physical possession of, the CFI Note, together with any
and all necessary or appropriate endorsements to such CFI Note.
(n) Unsecured Indebtedness not otherwise permitted pursuant to clauses (a)
through (m) above not to exceed $50,000,000 (less any and all Indebtedness under
Subsections (c), (d) and/or (i) of this Section 7.1) in the aggregate principal
--- --- -----------
amount outstanding at any time.
Section 7.2 Liens. The Borrower shall not, and shall not permit any
-----
Subsidiary of Borrower to, create, assume, incur, permit or suffer to exist,
directly or indirectly, any Lien on any of its assets, whether now owned or
hereafter acquired, except Permitted Liens. The Borrower shall not, and shall
not permit any Subsidiary to, agree with any other Person that it shall not
create, assume, incur, permit or suffer to exist or to be created, assumed,
incurred or permitted to exist, directly or indirectly, any Lien on any of its
assets other than in respect of Indebtedness permitted by Sections 7.1(c), (d),
-------- ---
(f) and (k), provided that such agreement relates only to the assets purchased
--- ---
or acquired.
Section 7.3 Investments. The Borrower shall not, and shall not permit
-----------
any Subsidiary of Borrower to, make any Investment, except that the Borrower and
any Subsidiary of the Borrower may purchase or otherwise acquire and own:
(a) Cash and Cash Equivalents;
(b) Accounts receivable that arise in the ordinary course of business and
are payable on standard terms;
(c) Investments in existence on the Agreement Date which are described
on Schedule 5 hereto;
----------
(d) Investments which are Acquisitions permitted pursuant to
Section 7.6 hereof;
-----------
(e) Investments in the form of Hedge Agreements permitted by
Section 7.1(e) hereof;
--------------
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(f) Investments (excluding accounts receivable from Subsidiaries of the
Borrower created in the ordinary course of business) in, and expenditures in
respect of Acquisitions of, Subsidiaries which are not Guarantors by the
Borrower in an aggregate amount not to exceed (calculated immediately prior to
the date of each such Investment or Acquisition) 5% of Net Worth at any time
outstanding;
(g) Investments in Subsidiaries of the Borrower (i) which have executed a
Subsidiary Guaranty and a Security Agreement granting a first priority Lien in
all its assets of the types or classes included in the Collateral to secure the
Obligations and (ii) which have delivered to the Lenders such board resolutions,
officer's certificates and opinions of counsel as the Administrative Lender
shall reasonably request;
(h) Guaranties permitted under Section 7.1(j) hereof;
--------------
(i) Investments arising from transactions by the Borrower or any of its
Subsidiaries with customers or suppliers in the ordinary course of business,
including endorsements of negotiable instruments, debt obligations and other
investments received in connection with the bankruptcy or reorganization of
customers and suppliers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers; and
(j) Other Investments not to exceed $5,000,000 in aggregate amount
outstanding at any time.
Section 7.4 Liquidation, Merger. The Borrower shall not, and shall not
-------------------
permit any Subsidiary of Borrower to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, except that a Subsidiary of the Borrower may
liquidate or dissolve into the Borrower or a Subsidiary of the Borrower; o r
(b) enter into any merger or consolidation unless (i) with respect to a
merger or consolidation involving the Borrower, the Borrower shall be the
surviving corporation, or if the merger or consolidation involves a Subsidiary
of the Borrower and not the Borrower, such Subsidiary shall be the surviving
corporation, (ii) such transaction shall not be utilized to circumvent
compliance with any term or provision herein and (iii) no Default or Event of
Default shall then be in existence or occur as a result of such transaction.
Section 7.5 Sales of Assets. The Borrower shall not, and shall not
---------------
permit any Subsidiary of the Borrower to, sell, lease, transfer or otherwise
dispose of, any of its assets except (a) inventory in the ordinary course of
business, (b) obsolete or worn-out assets, (c) asset sales in which the Net Cash
Proceeds from the disposition thereof are reinvested, within 90 days before or
after such disposition, in productive tangible assets of a similar nature of the
Borrower and its Subsidiaries, (d) asset sales between Obligors, (e) sales of
interests in Accounts pursuant to the Securitization and (f) other asset sales
not to exceed $100,000 in the aggregate amount during any one fiscal year.
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Section 7.6 Acquisitions. The Borrower shall not, and shall not permit
------------
any Subsidiary of Borrower to, make any Acquisitions; provided, however, if
immediately prior to and after giving effect to the proposed Acquisition there
shall not exist a Default or Event of Default, the Borrower or any Subsidiary of
the Borrower may make Acquisitions so long as (i) such Acquisition shall not be
opposed by the board of the directors of the Person being acquired, (ii) Lenders
shall have received written notice at least 15 Business Days prior to the date
of such Acquisition, (iii) the Administrative Lender shall have received at
least 10 Business Days prior to the date of such Acquisition a Compliance
Certificate setting forth the covenant calculations both immediately prior to
and after giving effect to the proposed Acquisition, (iv) the assets, property
or business acquired shall be in the business described in Section 4.1(d) hereof
--------------
and the Administrative Lender for the benefit of the Lenders shall have a first
priority Lien in such assets except for Liens permitted in clause (f) of the
definition of Permitted Liens, (v) the aggregate consideration (exclusive of
Equity in the Borrower or any Subsidiary of the Borrower, but inclusive of any
Indebtedness incurred or assumed by the Borrower or any Subsidiary of the
Borrower) paid or given by the Borrower and/or Borrower's Subsidiaries during
any calendar year in connection with Acquisitions shall not exceed $20,000,000
and (vi) at the Borrower's option, (A) such Subsidiary shall execute a
Subsidiary Guaranty of the Obligations and a Security Agreement granting a first
priority Lien in all its assets of the types or classes included in the
Collateral, except for Liens permitted in clause (f) of the definition of
Permitted Liens, to secure the Obligations and (B) the Lenders receive such
board resolutions, officer's certificates and opinions of counsel as the
Administrative Lender shall reasonably request in connection with the actions
described in clause (A) above. Notwithstanding anything in this Section 7.6 or
-----------
any other provision of this Agreement to the contrary, the aggregate
amount of expenditures in respect of Acquisitions of, and Investments in,
Subsidiaries of the Borrower that are not Obligors shall not exceed (calculated
immediately prior to the date of each such Investment or Acquisition) 5% of Net
Worth at any time outstanding.
Section 7.7 Capital Expenditures. The Borrower shall not, and shall not
--------------------
permit any Subsidiary of the Borrower to, make or commit to make any Capital
Expenditures (excluding Permitted Real Estate Expenditures) during any fiscal
year in an aggregate amount in excess of $15,000,000.
Section 7.8 Restricted Payments. The Borrower shall not, and shall not
-------------------
permit any Subsidiary of the Borrower to, directly or indirectly declare, pay or
make any Restricted Payments except (a) Dividends payable by a Subsidiary to the
Borrower or to a Guarantor, (b) scheduled payments of principal and interest on
the Subordinated Debt, (c) Dividends payable on "Series B Cumulative Preferred
Stock" of the Borrower to Safeguard Scientifics, Inc. in an aggregate amount for
any fiscal year not to exceed $2,000,000, (d) purchases by the Borrower of
treasury stock of the Borrower in an aggregate amount per fiscal year not to
exceed 25% of the Net Income of the Borrower and its Subsidiaries for the
immediately preceding fiscal year and (e) payments to the Borrower under the CFI
Note; provided, however, the Borrower shall not, and shall not permit any
Subsidiary of the Borrower to, declare, pay or make any Restricted Payments
permitted by this Section 7.8 unless there shall exist no Default or Event of
-----------
Default prior to or after giving effect to any such proposed Restricted Payment.
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Section 7.9 Affiliate Transactions. The Borrower shall not, and shall
----------------------
not permit any Subsidiary of the Borrower to, at any time engage in any
transaction with an Affiliate (other than as evidenced by the RPA or the TAA)
other than in the ordinary course of business and on terms not materially less
advantageous to the Borrower or such Subsidiary than would be the case if such
transaction had been effected with a non-Affiliate. The Borrower shall not, and
shall not permit any Subsidiary of the Borrower to, incur or suffer to exist any
Indebtedness or Guaranty in favor of any Affiliate, unless such Affiliate shall
(i) subordinate the payment and performance thereof to the Obligations on terms,
conditions and documentation satisfactory to the Determining Lenders or (ii)
pledge the applicable Indebtedness to the Administrative Lender pursuant to
documentation acceptable to the Administrative Lender.
Section 7.10 Compliance with ERISA. The Borrower shall not, and shall
---------------------
not permit any Subsidiary to, directly or indirectly, or permit any member of
its Controlled Group to directly or indirectly, (a) terminate any Plan so as
likely to result in any material (in the reasonable opinion of the Determining
Lenders) liability to the Borrower or any member of its Controlled Group taken
as a whole, (b) permit to exist any ERISA Event, or any other event or condition
with respect to a Plan which could reasonably be expected to have a Material
Adverse Effect, (c) make a complete or partial withdrawal (within the meaning of
Section 4201 of ERISA) from any Multiemployer Plan so as likely to result in any
material (in the reasonable opinion of the Determining Lenders) liability to the
Borrower or any member of its Controlled Group taken as a whole, (d) enter into
any new Plan or modify any existing Plan so as to increase its obligations
thereunder which could reasonably be expected to have a Material Adverse Effect,
or (e) permit the present value of all benefit liabilities, as defined in Title
IV of ERISA, under any Plan (other than a Multiemployer Plan) of the Borrower or
any member of its Controlled Group that is subject to Title IV of ERISA (using
the actuarial assumptions utilized by each such Plan) to exceed the fair market
value of Plan assets allocable to such benefits by more than $500,000, all
determined as of the most recent valuation date for such Plan.
Section 7.11 Maximum Leverage Ratio. The Borrower shall not permit the
----------------------
Leverage Ratio to be greater than (a) 4.75 to 1 at the end of any fiscal quarter
ending prior to and including December 31, 1997 and (b) 4.25 to 1 at the end of
any fiscal quarter thereafter.
Section 7.12 Minimum Fixed Charge Coverage Ratio. The Borrower shall not
-----------------------------------
permit the Fixed Charge Coverage Ratio to be less than 1.25 to 1 at the end of
any fiscal quarter.
Section 7.13 Minimum Tangible Net Worth. The Borrower shall not permit
--------------------------
the Tangible Net Worth to be less than an amount equal to the sum of (a)
$110,000,000, plus (b) 75% of cumulative Net Income for the period from, but not
including, June 30, 1996 through the date of calculation (but excluding from the
calculation of such cumulative Net Income the effect, if any, of any fiscal
quarter (or portion of a fiscal quarter not then ended) of the Borrower for
which Net Income was a negative number), plus (c) 75% of the Net Cash Proceeds
received by the Borrower as a result of any offering of Equity or pursuant to
any conversion or exchange of convertible Indebtedness or preferred Capital
Stock into common Capital Stock of the Borrower, plus (d) an amount equal to the
net worth of any Person that
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becomes a Subsidiary of the Borrower or is merged into or consolidated with the
Borrower or any Subsidiary of the Borrower or substantially all of the assets of
which are acquired by the Borrower or any Subsidiary of the Borrower to the
extent the purchase price paid therefor is paid in equity securities of the
Borrower or any Subsidiary of the Borrower.
Section 7.14 Minimum Asset Coverage Ratio. The Borrower shall not permit
----------------------------
the Asset Coverage Ratio to be less than 1.10 to 1 at the end of any fiscal
quarter.
Section 7.15 Maximum Funded Debt to Capital. The Borrower shall not
------------------------------
permit the ratio of Funded Debt to Capital to exceed 0.65 to 1 at the end of any
fiscal quarter.
Section 7.16 Sale and Leaseback. The Borrower shall not, and shall not
------------------
permit any Subsidiary of the Borrower to, enter into any arrangement whereby it
sells or transfers any of its assets, and thereafter rents or leases such
assets.
Section 7.17 Sale or Discount of Receivables. The Borrower shall not,
-------------------------------
and shall not permit any Subsidiary of the Borrower to, directly or indirectly,
sell, with or without recourse, for discount or otherwise, any notes or Accounts
other than pursuant to the Securitization.
Section 7.18 Capital Stock. The Borrower shall not, and shall not permit
-------------
any Subsidiary of the Borrower to, issue, sell or otherwise dispose of any
Capital Stock in the Borrower or any Subsidiary of the Borrower or any options
or any rights to acquire such Capital Stock, except (i) to the extent that the
Net Cash Proceeds thereof during any fiscal year do not exceed $3,000,000 and
the Net Cash Proceeds thereof are, within 90 days after receipt by the Borrower
or the applicable Subsidiary of the Borrower, reinvested in productive tangible
assets of the Borrower and its Subsidiaries, (ii) to the extent that the Net
Cash Proceeds thereof are applied as provided in Section 2.5(c) hereof, (iii)
-------------
any Subsidiary of the Borrower may issue Capital Stock to the Borrower or to any
Guarantor which is the parent of such Subsidiary and (iv) the issuance or
disposition of Capital Stock in the Borrower attributable to the conversion of
the NCGI Note into Equity in the Borrower in accordance with the terms of the
NCGI Note.
Section 7.19 Business. Neither the Borrower nor any Subsidiary of the
--------
Borrower shall conduct any business other than the business described in
Section 4.1(d) hereof.
--------------
Section 7.20 Fiscal Year. Except with respect to a change in the fiscal
-----------
year of any Subsidiary to conform to the fiscal year of the Borrower, neither
the Borrower nor any Subsidiary of the Borrower shall change its fiscal year.
Section 7.21 Amendment of Organizational Documents. The Borrower shall
-------------------------------------
not, and shall not permit any Subsidiary of the Borrower to, amend its articles
of incorporation or bylaws in any manner that could reasonably be expected to
(a) result in a Material Adverse Effect or (b) impair or affect the Rights of
the Administrative Lender or any Lender under any Loan Documents or in respect
of any Collateral.
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Section 7.22 Amendments and Waivers of Subordinated Debt. The Borrower
-------------------------------------------
shall not, and shall not permit any Subsidiary to, change or amend (or take any
action or fail to take any action the result of which is an effective amendment
or change) or accept any waiver or consent with respect to, any document,
instrument or agreement relating to any Subordinated Debt that would result in
(a) an increase in the principal, interest, overdue interest, fees or other
amounts payable under the Subordinated Debt, (b) an acceleration in any date
fixed for payment or prepayment of principal, interest, fees or other amounts
payable under the Subordinated Debt (including, without limitation, as a result
of any redemption), (c) a reduction in any percentage of holders of the
Subordinated Debt required under the terms of the Subordinated Debt to take (or
refrain from taking) any action under the Subordinated Debt, (d) a change in any
financial covenant under the Subordinated Debt making such financial covenant
more restrictive, (e) a change in any default or event of default (however
designated) under the Subordinated Debt which makes such default or event of
default more restrictive, (f) a change in the definition of "Change of Control"
as provided in the Subordinated Debt which would result in such definition being
more restrictive than such definition in this Agreement, (g) a change in any of
the subordination provisions of the Subordinated Debt, (h) a change in any
covenant, term or provision in the Subordinated Debt which would result in such
term or provision being more restrictive than the terms of this Agreement and
the other Loan Documents or (i) a change in any term or provision of the
Subordinated Debt that could have, in any material respect, an adverse effect on
the interest of the Lenders.
Section 7.23 Operating Leases. The Borrower shall not, and shall not
----------------
permit any Subsidiary of the Borrower to, enter into any Operating Leases except
for Operating Leases entered into in the ordinary course of business in a manner
and to an extent consistent with past practice; provided, however, that the
total rent per annum for all Operating Leases of the Borrower and its
Subsidiaries shall not exceed $12,000,000 in aggregate amount for any fiscal
year.
ARTICLE 8
Default
-------
Section 8.1 Events of Default. Each of the following shall constitute an
-----------------
Event of Default, whatever the reason for such event, and whether voluntary,
involuntary, or effected by operation of law or pursuant to any judgment or
order of any court or any order, rule or regulation of any governmental or non-
governmental body:
(a) Any representation or warranty made under any Loan Document shall
prove to have been incorrect or misleading in any material respect when made;
(b) The Borrower shall fail to pay any (i) principal under any Note when
due or (ii) interest under any Note or any fees payable hereunder or any other
costs, fees, expenses or other amounts payable hereunder or under any other Loan
Document within two Business Days after the date due;
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(c) The Borrower or any Subsidiary of the Borrower shall default in the
performance or observance of any agreement or covenant contained in Section 5.1
-----------
or Article 7;
---------
(d) The Borrower or any Subsidiary of the Borrower shall default in the
performance or observance of any other agreement or covenant contained in this
Agreement not specifically referred to elsewhere in this Section 8.1, and such
-----------
default shall not be cured within a period of fifteen days after the earlier of
notice from the Administrative Lender thereof or actual notice thereof by the
Borrower or such Subsidiary;
(e) There shall occur any default or breach in the performance or
observance of any agreement or covenant in any of the Loan Documents (other than
this Agreement) and such default shall not be cured within a period of thirty
days after the earlier of notice from the Administrative Lender thereof or
actual notice thereof by an officer of any Obligor;
(f) There shall be entered a decree or order by a court having
jurisdiction in the premises constituting an order for relief in respect of any
Obligor under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable Federal, state or foreign bankruptcy
law or other similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or similar official of any Obligor, or of any
substantial part of their respective properties, or ordering the winding-up or
liquidation of the affairs of any Obligor, and any such decree or order shall
continue unstayed and in effect for a period of thirty consecutive days;
(g) Any Obligor shall file a petition, answer or consent seeking relief
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable Federal, state or foreign bankruptcy law or
other similar law, or any Obligor shall consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of any Obligor or of
substantially all of its properties, or any Obligor shall take any corporate
action in furtherance of any such action;
(h) A final judgment or judgments shall be entered by any court against
any Obligor for the payment of money which exceeds $500,000 in the aggregate, or
a warrant of attachment or execution or similar process shall be issued or
levied against property of any Obligor which, together with all other such
property of the Borrower and its Subsidiaries subject to other such process,
exceeds in value $500,000 in the aggregate, and if such judgment or award is not
insured or, within 30 days after the entry, issue or levy thereof, such
judgment, warrant or process shall not have been paid or discharged or stayed
pending appeal, or if, after the expiration of any such stay, such judgment,
warrant or process shall not have been paid or discharged;
(i) With respect to any Plan of the Borrower or any member of its
Controlled Group: (i) the Borrower, any such member, or any other party-in-
interest or disqualified person (other than any Lender) shall engage in
transactions which in the aggregate would reasonably be expected to result in a
direct or indirect liability to the Borrower or any member of its
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Controlled Group under Section 409 or 502 of ERISA or Section 4975 of the Code;
(ii) the Borrower or any member of its Controlled Group shall incur any
accumulated funding deficiency, as defined in Section 412 of the Code, or
request a funding waiver from the Internal Revenue Service for contributions;
(iii) the Borrower or any member of its Controlled Group shall incur any
withdrawal liability as a result of a complete or partial withdrawal within the
meaning of Section 4203 or 4205 of ERISA, or any other liability with respect to
a Plan, unless the amount of such liability has been funded within the Plan or
pursuant to one or more insurance contracts; (iv) the Borrower or any member of
its Controlled Group shall fail to make a required contribution by the due date
under Section 412 of the Code or Section 302 of ERISA which would result in the
imposition of a lien under Section 412 of the Code or Section 302 of ERISA; (v)
the Borrower, any member of its Controlled Group or any Plan sponsor shall
notify the PBGC of an intent to terminate, or the PBGC shall institute
proceedings to terminate, or the PBGC shall institute proceedings to terminate,
any Plan subject to Title IV of ERISA; (vi) a Reportable Event shall occur with
respect to a Plan subject to Title IV of ERISA, and within 15 days after the
reporting of such Reportable Event to the Administrative Lender, the
Administrative Lender shall have notified the Borrower in writing that the
Determining Lenders have made a determination that, on the basis of such
Reportable Event, there are reasonable grounds for the termination of such Plan
by the PBGC or for the appointment by the appropriate United States District
Court of a trustee to administer such Plan and as a result thereof an Event of
Default shall have occurred hereunder; (vii) a trustee shall be appointed by a
court of competent jurisdiction to administer any Plan or the assets thereof; or
(viii) any ERISA Event with respect to a Plan subject to Title IV of ERISA shall
have occurred, and 30 days thereafter (A) such ERISA Event, other than such
event described in clause (f) of the definition of ERISA Event herein, (if
correctable) shall not have been corrected and (B) the then present value of
such Plan's benefit liabilities, as defined in Title IV of ERISA, shall exceed
the then current value of assets accumulated in such Plan; provided, however,
-------- -------
that the events listed in subsections (i) - (viii) above shall constitute Events
of Default only if the maximum aggregate liability which the Borrower or any
member of its Controlled Group has a reasonable likelihood of incurring under
the applicable provisions of ERISA resulting from an event or events exceeds
$100,000.
(j) The Borrower or any Subsidiary of the Borrower shall default in the
payment of any Indebtedness or any lease obligations in an aggregate amount of
$1,000,000 or more beyond any grace period provided with respect thereto, or any
other event or condition shall exist under any agreement or instrument under
which such Indebtedness is created or evidenced beyond any applicable grace
period, if the effect of such event or condition is to permit or cause the
holder of such Indebtedness (or a trustee on behalf of any such holder) to (i)
cause such Indebtedness to be prepaid or to become due prior to its date of
maturity or (ii) require the Borrower or any Subsidiary of the Borrower to
purchase such Indebtedness;
(k) Any lease where the Borrower or any Subsidiary of the Borrower is the
lessee shall terminate or cease to be effective, and termination or cessation
thereof, together with all other leases, if any, which have been terminated or
cease to be effective, could reasonably be expected to have a Material Adverse
Effect; provided, however, that termination or cessation
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of a lease shall not constitute an Event of Default if another lease reasonably
satisfactory to the Determining Lenders is contemporaneously substituted
therefor;
(l) Any material provision of any Loan Document shall for any reason cease
to be valid and binding on or enforceable against any party to it (other than
the Administrative Lender or any Lender) other than in accordance with its
terms, or any such party (other than the Administrative Lender or any Lender)
shall so assert in writing and any such event or circumstance shall continue for
seven days following notification of the occurrence or existence thereof from
the Administrative Lender to the Borrower; provided, however, that such notice,
grace and cure period shall not apply to any event or circumstance evidenced or
represented by any assertion in writing by the Borrower or any Affiliate of the
Borrower;
(m) Any Collateral Document shall for any reason (other than pursuant to
the terms thereof) cease to create a valid and perfected first priority Lien in
Collateral having a value in an aggregate amount in excess of $100,000;
(n) A Change of Control shall occur; or
(o) The Borrower, CFI or EFC shall breach or be in default of any
obligations under the MSAA and such breach or default continues beyond any
applicable grace and/or cure period contained therein; or there shall occur a
material impairment of the enforceability of the rights and benefits intended
for the benefit of NationsBank as a Beneficial Secured Party (as such term is
defined in the MSAA) under the MSAA or the taking of any action by any Person to
challenge same; or the Borrower, CFI or EFC shall breach or be in default of any
obligations under the RPA and such breach or default continues beyond any
applicable grace and/or cure period contained therein; or there shall occur any
"Termination Event" or "Potential Termination Event" as those terms are defined
by the TAA.
Section 8.2 Remedies. If an Event of Default shall have occurred and
--------
shall be continuing:
(a) With the exception of an Event of Default specified in Section 8.1(f)
--------------
or (g) hereof, the Administrative Lender shall, upon the direction of the
---
Determining Lenders, terminate the Commitments and/or declare the principal of
and interest on the Advances and all Obligations and other amounts owed under
the Loan Documents to be forthwith due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything in the Loan Documents to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default specified in Section
-------
8.1(f) or (g) hereof, such principal, interest and other amounts shall thereupon
------ ---
and concurrently therewith become due and payable and the Commitments shall
forthwith terminate, all without any action by the Administrative Lender, any
Lender or any holders of the Notes and without presentment, demand, protest or
other notice of any kind, all of which are expressly waived, anything in the
Loan Documents to the contrary notwithstanding.
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(c) If any Letter of Credit shall be then outstanding, the Administrative
Lender may, and upon the direction of the Determining Lenders shall, demand upon
the Borrower to, and forthwith upon such demand, the Borrower shall, pay to the
Administrative Lender in same day funds at the office of the Administrative
Lender for deposit in the L/C Cash Collateral Account, an amount equal to the
maximum amount available to be drawn under the Letters of Credit then
outstanding.
(d) The Administrative Lender and the Lenders may exercise all of the
Rights granted to them under the Loan Documents or under Applicable Law.
(e) The Rights of the Administrative Lender and the Lenders hereunder
shall be cumulative, and not exclusive.
ARTICLE 9
Changes in Circumstances
------------------------
Section 9.1 LIBOR Basis Determination Inadequate. If with respect to
------------------------------------
any proposed LIBOR Advance for any Interest Period, (i) any Lender determines
that deposits in dollars (in the applicable amount) are not being offered to
that Lender in the relevant market for such Interest Period or (ii) the
Determining Lenders determine that the LIBOR Rate for such proposed LIBOR
Advance does not adequately cover the cost to such Lender of making and
maintaining such proposed LIBOR Advance for such Interest Period, such Lender or
Determining Lenders, as the case may be, shall forthwith give notice thereof to
the Borrower, whereupon until such Lender or Determining Lenders, as the case
may be, notify the Borrower that the circumstances giving rise to such situation
no longer exist, the obligation of such Lender to make LIBOR Advances shall be
suspended; provided, however, such Lender or the Determining Lenders, as the
-------- -------
case may be, shall promptly notify the Borrower if the circumstances giving rise
to such situation no longer exist.
Section 9.2 Illegality. If any change in applicable law, rule or
----------
regulation, or adoption thereof, or any change in any interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its LIBOR Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency, shall make it unlawful or impossible for such Lender (or its
LIBOR Lending Office) to make, maintain or fund its LIBOR Advances, such Lender
shall so notify the Borrower and the Administrative Lender. Before giving any
notice to the Borrower pursuant to this Section, the notifying Lender shall
designate a different LIBOR Lending Office or other lending office if such
designation will avoid the need for giving such notice and will not, in the sole
judgment of the Lender, be materially disadvantageous to the Lender. Upon
receipt of such notice, notwithstanding anything contained in Article 2 hereof,
---------
the Borrower shall repay in full the then outstanding principal amount of each
LIBOR Advance owing to the notifying Lender,
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together with accrued interest thereon and any reimbursement required under
Section 2.9 hereof, on either (a) the last day of the Interest Period applicable
-----------
to such Advance, if the Lender may lawfully continue to maintain and fund such
Advance to such day, or (b) immediately, if the Lender may not lawfully continue
to fund and maintain such Advance to such day or if the Borrower so elects.
Concurrently with repaying each affected LIBOR Advance owing to such Lender if
the Borrower does not terminate this Agreement, notwithstanding anything
contained in Article 2 hereof, the Borrower may, without any requirement to
---------
satisfy the conditions precedent set forth in Section 3.1, 3.2 or 3.3, borrow a
----------- --- ---
Base Rate Advance from such Lender, and such Lender shall make such Base Rate
Advance, in an amount such that the outstanding principal amount of the Advances
owing to such Lender shall equal the outstanding principal amount of the
Advances owing immediately prior to such repayment.
Section 9.3 Increased Costs.
---------------
(a) If after the Agreement Date any change in or adoption of any law, rule
or regulation, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by any Lender (or its
LIBOR Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or compatible agency:
(i) shall subject a Lender (or its LIBOR Lending Office) to any Tax
(net of any tax benefit engendered thereby) with respect to its LIBOR
Advances or its obligation to make such Advances, or shall change the basis
of taxation of payments to a Lender (or to its LIBOR Lending Office) of the
principal of or interest on its LIBOR Advances or in respect of any other
amounts due under this Agreement, as the case may be, or its obligation to
make such Advances (except for changes in the rate of tax on the overall
net income, net worth or capital of the Lender and franchise taxes, doing
business taxes or minimum taxes imposed upon such Lender); or
(ii) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, a Lender's
LIBOR Lending Office or shall impose on the Lender (or its LIBOR Lending
Office) or on the London interbank market any other condition affecting its
LIBOR Advances or its obligation to make such Advances (but excluding any
reserves or deposits that are included in the calculation of LIBOR Basis);
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum received or receivable by a Lender (or its LIBOR
Lending Office) with respect thereto, by an amount deemed by a Lender to be
material, then, within 30 days after demand by a Lender, the Borrower agrees to
pay to such Lender such additional amount as will compensate such Lender for
such increased costs or reduced amounts, subject to Section 11.9 hereof. The
------------
affected
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Lender will as soon as practicable notify the Borrower of any event of which it
has knowledge, occurring after the date hereof, which will entitle such Lender
to compensation pursuant to this Section and will designate a different LIBOR
Lending Office or other lending office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the reasonable
judgment of the affected Lender made in good faith, be disadvantageous to such
Lender.
(b) A certificate of any Lender claiming compensation under this Section
and setting forth the additional amounts to be paid to it hereunder shall
certify that such amounts or costs were actually incurred by such Lender and
shall show in reasonable detail an accounting of the amount payable and the
calculations used to determine in good faith such amount and shall be conclusive
absent manifest or demonstrable error. In determining such amount, a Lender may
use any reasonable averaging and attribution methods. Nothing in this Section
-------
9.3 shall provide the Borrower or any Subsidiary of the Borrower the right to
---
inspect the records, files or books of any Lender. If a Lender demands
compensation under this Section, the Borrower may at any time, upon at least
five Business Days' prior notice to the Lender, after reimbursement to the
Lender by the Borrower in accordance with this Section of all costs incurred,
prepay in full the then outstanding LIBOR Advances of the Lender, together with
accrued interest thereon to the date of prepayment, along with any reimbursement
required under Section 2.9 hereof. Concurrently with prepaying such LIBOR
-----------
Advances, the Borrower may borrow a Base Rate Advance from the Lender, and the
Lender shall make such Base Rate Advance, in an amount such that the outstanding
principal amount of the Advances owing to such Lender shall equal the
outstanding principal amount of the Advances owing immediately prior to such
prepayment.
Section 9.4 Effect On Base Rate Advances. If notice has been given
----------------------------
pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the obligation of a Lender
----------- --- ---
to make LIBOR Advances, or requiring LIBOR Advances of a Lender to be repaid or
prepaid, then, unless and until the Lender notifies the Borrower that the
circumstances giving rise to such repayment no longer apply, all Advances which
would otherwise be made by such Lender as LIBOR Advances shall be made instead
as Base Rate Advances.
Section 9.5 Capital Adequacy. If after the Agreement Date, (a) the
----------------
introduction of or any change in or in the interpretation of any law, rule or
regulation or (b) compliance by a Lender with any law, rule or regulation or any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) adopted or promulgated after the
Agreement Date affects or would affect the amount of capital required or
expected to be maintained by a Lender or any corporation controlling such
Lender, and such Lender determines that the amount of such capital is increased
by or based upon the existence of such Lender's commitment or Advances hereunder
and other commitments or advances of such Lender of this type, then, within 30
days after demand by such Lender, subject to Section 11.9, the Borrower shall
------------
immediately pay to such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender with respect to such
circumstances, to the extent that such Lender reasonably determines in good
faith such increase in capital to be allocable to the existence of such Lender's
Commitments hereunder. A
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certificate as to any additional amounts payable to any Lender under this
Section 9.5 submitted to the Borrower by such Lender shall certify that such
-----------
amounts were actually incurred by such Lender or corporation controlling such
Lender and shall show in reasonable detail an accounting of the amount payable
and the calculations used to determine in good faith such amount and shall be
conclusive absent manifest or demonstrable error. In determining such amount,
such Lender or a corporation controlling such Lender may use any reasonable
averaging and attribution methods. Notwithstanding the foregoing, nothing in
this Section 9.5 shall provide the Borrower or any Subsidiary of the Borrower
-----------
the right to inspect the records, files or books of any Lender or any
corporation controlling such Lender.
Section 9.6 Replacement Lender. If (i) any Lender is unable or unwilling
------------------
to make, maintain or fund any LIBOR Advance pursuant to Section 9.1 or 9.2 or
----------- ---
(ii) the Borrower becomes obligated to pay additional amounts to any Lender
described in Section 9.3 or 9.5, the Borrower may designate a financial
----------- ---
institution reasonably acceptable to the Administrative Lender to replace such
Lender by purchasing for cash and receiving an assignment of such Lender's pro
rata share of such Lender's Commitment and the Rights of such Lender under the
Loan Documents without recourse to or warranty by, or expense to, such Lender,
for a purchase price equal to the outstanding amounts owing to such Lender
(including such additional amounts owing to such Lender pursuant to Section 9.2,
------------
9.3 or 9.5). Upon execution of an Assignment Agreement, such other financial
--- ---
institution shall be deemed to be a "Lender" for all purposes of this Agreement
as set forth in Section 11.6 hereof.
------------
ARTICLE 10
Agreement Among Lenders
-----------------------
Section 10.1 Agreement Among Lenders. The Lenders agree among themselves
-----------------------
that:
(a) Administrative Lender. Each Lender hereby appoints the
---------------------
Administrative Lender as its nominee in its name and on its behalf, to receive
all documents and items to be furnished hereunder; to act as nominee for and on
behalf of all Lenders under the Loan Documents; to, except as otherwise
expressly set forth herein, take such action as may be requested by the
Determining Lenders, provided that, (i) unless and until the Administrative
Lender shall have received such requests, the Administrative Lender may take
such administrative action, or refrain from taking such administrative action,
as it may deem advisable and in the best interests of the Lenders, and (ii) the
Administrative Lender shall not be required to take any action that exposes the
Administrative Lender to personal liability or that is contrary to any Loan
Document or Applicable Law; to arrange the means whereby the proceeds of the
Advances of the Lenders are to be made available to the Borrower; to distribute
promptly to each Lender information, requests and documents received from the
Borrower hereunder and not otherwise provided to such Lender by the Borrower or
any other Person, and each payment (in like funds received) with respect to any
of such Lender's Advances, or the ratable amount of fees or other amounts; and
to deliver to the Borrower requests, demands, approvals and consents received
from the
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Lenders. Administrative Lender agrees to promptly distribute to each Lender, at
such Lender's address set forth below information, requests, documents and
payments received from the Borrower and not otherwise provided to such Lender by
the Borrower or any other Person. The Administrative Lender shall have no
fiduciary relationship in respect of any Lender by reason of this Agreement or
any other Loan Document. The Administrative Lender shall have no duties or
responsibilities except those expressly set forth in this Agreement. The duties
of the Administrative Lender are mechanical and administrative in nature.
(b) Replacement of Administrative Lender. Should the Administrative
------------------------------------
Lender or any successor Administrative Lender ever cease to be a Lender
hereunder, or should the Administrative Lender or any successor Administrative
Lender ever resign as Administrative Lender, or should the Administrative Lender
or any successor Administrative Lender ever be removed with cause or without
cause by the action of all Lenders (other than the Administrative Lender), then
the Lender appointed by the other Lenders (with the consent of the Borrower,
which consent shall not be unreasonably withheld) shall forthwith become the
Administrative Lender, and the Borrower and the Lenders shall execute such
documents as any Lender may reasonably request to reflect such change. If the
Administrative Lender also then serves in the capacity of the Swing Line Bank or
the Issuing Bank, such resignation or removal shall constitute resignation or
removal of the Swing Line Bank and the Issuing Bank. Any resignation or removal
of the Administrative Lender or any successor Administrative Lender shall become
effective upon the appointment by the Lenders of a successor Administrative
Lender; provided, however, if no successor Administrative Lender shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Administrative Lender's giving of notice of resignation or the Lenders'
removal of the retiring Administrative Lender, then the retiring Administrative
Lender may, on behalf of the Lenders, appoint a successor Administrative Lender,
which shall be a commercial bank organized under the Laws of the United States
of America or of any State thereof and having a combined capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment as the
Administrative Lender hereunder by a successor Administrative Lender, such
successor Administrative Lender shall thereupon succeed to and become vested
with all the rights and duties of the retiring Administrative Lender, and the
retiring Administrative Lender shall be discharged from its duties and
obligations under the Loan Documents, provided that if the retiring or removed
Administrative Lender is unable to appoint a successor Administrative Lender,
the Administrative Lender shall, after the expiration of a 60 day period from
the date of notice, be relieved of all obligations as Administrative Lender
hereunder. Notwithstanding any Administrative Lender's resignation or removal
hereunder, the provisions of this Article shall continue to inure to its benefit
as to any actions taken or omitted to be taken by it while it was the
Administrative Lender under this Agreement.
(c) Expenses. Each Lender shall pay its pro rata share, based on its
--------
Specified Percentage, of any expenses paid by the Administrative Lender directly
and solely in connection with any of the Loan Documents and/or the
Securitization Documents if Administrative Lender does not receive reimbursement
therefor from other sources within 60 days after the date incurred. Any amount
so paid by the Lenders to the Administrative Lender shall be returned
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by the Administrative Lender pro rata to each paying Lender to the extent later
paid by the Borrower or any other Person on the Borrower's behalf to the
Administrative Lender.
(d) Delegation of Duties. The Administrative Lender may execute any of
--------------------
its duties hereunder by or through officers, directors, employees, attorneys or
agents, and shall be entitled to (and shall be protected in relying upon) advice
of counsel concerning all matters pertaining to its duties hereunder.
(e) Reliance by Administrative Lender. The Administrative Lender and its
---------------------------------
officers, directors, employees, attorneys and agents shall be entitled to rely
and shall be fully protected in relying on any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telex or teletype
message, statement, order, or other document or conversation reasonably believed
by it or them in good faith to be genuine and correct and to have been signed or
made by the proper Person and, with respect to legal matters, upon opinions of
counsel selected by the Administrative Lender. The Administrative Lender may, in
its reasonable judgment, deem and treat the payee of any Note as the owner
thereof for all purposes hereof.
(f) Limitation of Administrative Lender's Liability. Neither the
-----------------------------------------------
Administrative Lender nor any of its officers, directors, employees, attorneys
or agents shall be liable for any action taken or omitted to be taken by it or
them hereunder in good faith and believed by it or them to be within the
discretion or power conferred to it or them by the Loan Documents or be
responsible for the consequences of any error of judgment, except for its or
their own gross negligence or wilful misconduct. Except as aforesaid, the
Administrative Lender shall be under no duty to enforce any rights with respect
to any of the Advances, or any security therefor. The Administrative Lender
shall not be compelled to do any act hereunder or to take any action towards the
execution or enforcement of the powers hereby created or to prosecute or defend
any suit in respect hereof, unless indemnified to its reasonable satisfaction
against loss, cost, liability and expense unless expressly provided to the
contrary herein. The Administrative Lender shall not be responsible in any
manner to any Lender for the effectiveness, enforceability, genuineness,
validity or due execution of any of the Loan Documents, or for any
representation, warranty, document, certificate, report or statement made herein
or furnished in connection with any Loan Documents, or be under any obligation
to any Lender to ascertain or to inquire as to the performance or observation of
any of the terms, covenants or conditions of any Loan Documents on the part of
the Borrower. TO THE EXTENT NOT REIMBURSED BY THE BORROWER, EACH LENDER HEREBY
SEVERALLY INDEMNIFIES AND HOLDS HARMLESS THE ADMINISTRATIVE LENDER, PRO RATA
ACCORDING TO ITS SPECIFIED PERCENTAGE, FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES AND/OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY THE ADMINISTRATIVE LENDER (IN SUCH
CAPACITY) IN ANY WAY WITH RESPECT TO ANY LOAN DOCUMENTS OR ANY ACTION TAKEN OR
OMITTED BY THE ADMINISTRATIVE LENDER UNDER THE LOAN DOCUMENTS (INCLUDING ANY
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NEGLIGENT ACTION OF THE ADMINISTRATIVE LENDER), EXCEPT TO THE EXTENT THE SAME
ARE FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION TO RESULT FROM GROSS
NEGLIGENCE OR WILFUL MISCONDUCT BY THE ADMINISTRATIVE LENDER. THE INDEMNITY
PROVIDED IN THIS SECTION 10.1(f) SHALL SURVIVE TERMINATION OF THIS AGREEMENT.
---------------
(g) Liability Among Lenders. No Lender shall incur any liability (other
-----------------------
than the sharing of expenses and other matters specifically set forth herein and
in the other Loan Documents) to any other Lender, except for acts or omissions
in bad faith.
(h) Rights as Lender. With respect to its commitment hereunder, the
----------------
Advances made by it and the Notes issued to it, the Administrative Lender shall
have the same rights as a Lender and may exercise the same as though it were not
the Administrative Lender, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Administrative Lender in its individual
capacity. The Administrative Lender or any Lender may accept deposits from, act
as trustee under indentures of, and generally engage in any kind of business
with, the Borrower and any of its Affiliates, and any Person who may do business
with or own securities of the Borrower or any of its Affiliates, all as if the
Administrative Lender were not the Administrative Lender hereunder and without
any duty to account therefor to the Lenders.
Section 10.2 Lender Credit Decision. Each Lender acknowledges that it
----------------------
has, independently and without reliance upon the Administrative Lender or any
other Lender and based upon the financial statements referred to in Sections
--------
4.1(j), 6.1, and 6.2 hereof, and such other documents and information as it has
------ --- ---
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Lender or any other Lender and based upon such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents. Each Lender also acknowledges that its
decision to fund the initial Advances shall constitute evidence to the
Administrative Lender that such Lender has deemed all of the conditions set
forth in Section 3.1 to have been satisfied.
Section 10.3 Benefits of Article. None of the provisions of this Article
-------------------
shall inure to the benefit of any Person other than Lenders and, with respect to
Section 10.1(b), the Borrower; consequently, no such other Person shall be
---------------
entitled to rely upon, or to raise as a defense, in any manner whatsoever, the
failure of the Administrative Lender or any Lender to comply with such
provisions.
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ARTICLE 11
Miscellaneous
-------------
Section 11.1 Notices.
-------
(a) All notices and other communications under this Agreement shall be in
writing (except in those cases where giving notice by telephone is expressly
permitted) and shall be deemed to have been given on the date personally
delivered or sent by telecopy (answerback received), or three days after deposit
in the mail, designated as certified mail, return receipt requested, postage-
prepaid, or one day after being entrusted to a reputable commercial overnight
delivery service, addressed to the party to which such notice is directed at its
address determined as provided in this Section. All notices and other
communications under this Agreement shall be given to the parties hereto at the
following addresses:
(i) If to the Borrower, at:
CompuCom Systems, Inc.
00000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Senior Vice President, Finance and Chief Financial Officer
(ii) If to the Administrative Lender, at:
NationsBank of Texas, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx
Vice President
(iii) If to a Lender, at its address shown below its name on the
signature pages hereof, or if applicable, set forth in its
Assignment Agreement.
(b) Any party hereto may change the address to which notices shall be
directed by giving 10 days' written notice of such change to the other parties.
Section 11.2 Expenses. The Borrower shall promptly pay:
--------
(a) all reasonable out-of-pocket expenses of the Administrative Lender in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents, the transactions contemplated hereunder
and thereunder, and the making of
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Advances hereunder, including without limitation the reasonable fees and
disbursements of Special Counsel;
(b) all reasonable out-of-pocket expenses and reasonable attorneys' fees
of the Administrative Lender in connection with the administration of the
transactions contemplated in this Agreement and the other Loan Documents and the
preparation, negotiation, execution and delivery of any waiver, amendment or
consent by the Administrative Lender relating to this Agreement or the other
Loan Documents; and
(c) all reasonable costs, out-of-pocket expenses and reasonable attorneys'
fees of the Administrative Lender and each Lender incurred for enforcement,
collection, restructuring, refinancing and "work-out", or otherwise incurred in
obtaining performance under the Loan Documents, which in each case shall include
without limitation fees and expenses of consultants, counsel for the
Administrative Lender and any Lender, and administrative fees for the
Administrative Lender.
Section 11.3 Waivers. The rights and remedies of the Lenders under this
-------
Agreement and the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which they would otherwise have. No failure or delay by
the Administrative Lender or any Lender in exercising any right shall operate as
a waiver of such right. The Lenders expressly reserve the right to require
strict compliance with the terms of this Agreement in connection with any
funding of a request for an Advance or issuance of a Letter of Credit. In the
event that any Lender decides to fund an Advance at a time when the Borrower is
not in strict compliance with the terms of this Agreement, such decision by such
Lender shall not be deemed to constitute an undertaking by the Lender to fund
any further requests for Advances or preclude the Lenders from exercising any
rights available under the Loan Documents or at law or equity. Any waiver or
indulgence granted by the Lenders shall not constitute a modification of this
Agreement, except to the extent expressly provided in such waiver or indulgence,
or constitute a course of dealing by the Lenders at variance with the terms of
the Agreement such as to require further notice by the Lenders of the Lenders'
intent to require strict adherence to the terms of the Agreement in the future.
Any such actions shall not in any way affect the ability of the Administrative
Lender or the Lenders, in their discretion, to exercise any rights available to
them under this Agreement or under any other agreement, whether or not the
Administrative Lender or any of the Lenders are a party thereto, relating to the
Borrower.
Section 11.4 Calculation by the Lenders Conclusive and Binding. Any
-------------------------------------------------
mathematical calculation required or expressly permitted to be made by the
Administrative Lender or any Lender under this Agreement shall be made in its
reasonable judgment and in good faith, and shall when made, absent manifest
error, be controlling.
Section 11.5 Set-Off. In addition to any rights now or hereafter granted
-------
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence and during the continuation of an Event of Default, each Lender and
any subsequent holder of any Note, and any assignee of any Note is hereby
authorized by the Borrower at any time or from time to
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time, without notice to the Borrower or any other Person, any such notice being
hereby expressly waived, to set-off, appropriate and apply any deposits (general
or special (except trust and escrow accounts), time or demand, including without
limitation Indebtedness evidenced by certificates of deposit, in each case
whether matured or unmatured) and any other Indebtedness at any time held or
owing by such Lender or holder to or for the credit or the account of the
Borrower, against and on account of the Obligations and other liabilities of the
Borrower to such Lender or holder, irrespective of whether or not (a) the Lender
or holder shall have made any demand hereunder, or (b) the Lender or holder
shall have declared the principal of and interest on the Advances and other
amounts due hereunder to be due and payable as permitted by Section 8.2. Any
-----------
sums obtained by any Lender or by any assignee or subsequent holder of any Note
shall be subject to pro rata treatment of all Obligations and other liabilities
hereunder. Any Lender exercising any Rights under this Section 11.5 shall give
------------
the Borrower prompt notice thereof after such exercise.
Section 11.6 Assignment.
----------
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior
written consent of the Lenders.
(b) No Lender shall be entitled to assign or grant a participation in its
interest in this Agreement, its Notes or its Advances, except as hereinafter set
forth.
(c) Without the consent of the Borrower, any Lender may at any time sell
participations in all or any part of its Advances and Reimbursement Obligations
(collectively, "Participations") to any banks or other financial institutions
--------------
("Participants") provided that neither such Participation nor any agreement
--------------
relating thereto shall confer on any Person (other than the parties hereto) any
right to vote on, approve or sign amendments or waivers, or any other
independent benefit or any legal or equitable right, remedy or other claim under
this Agreement or any other Loan Documents, other than the right to vote on,
approve, or sign amendments or waivers or consents with respect to items that
would result in (i) any increase in the commitment of any Participant; or
(ii)(A) the extension of the date of maturity of, or (B) the extension of the
due date for any payment of principal, interest or fees respecting, or (C) the
reduction of the amount of any installment of principal or interest on or the
change or reduction of any mandatory reduction required hereunder, or (D) a
reduction of the rate of interest on, the Advances, the Letters of Credit, or
the Reimbursement Obligations to which such Participant is entitled; or (iii)
the release of security for the Obligations, including without limitation any
guarantee, except pursuant to this Agreement or the other Loan Documents; or
(iv) the reduction of any fees payable hereunder to which such Participant is
entitled. Notwithstanding the foregoing, the Borrower agrees that the
Participants shall be entitled to the benefits of Article 9 hereof as though
---------
they were Lenders and the Lenders may, subject to Section 11.14 hereof, provide
-------------
copies of all financial information received from the Borrower to such
Participants.
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(d) Each Lender may assign to one or more financial institutions organized
under the laws of the United States, or any state thereof, or under the laws of
any other country that is a member of the Organization for Economic Cooperation
and Development, or a political subdivision of any such country, which is
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business (each, an "Assignee") its rights and obligations
--------
under this Agreement and the other Loan Documents; provided, however, that (i)
-------- -------
each such assignment shall be subject to the prior written consent of the
Administrative Lender and Borrower, which consent shall not be unreasonably
withheld (provided, however, notwithstanding anything herein to the contrary, no
-------- -------
consent of the Borrower is required for any assignment during any time that an
Event of Default has occurred and is continuing), (ii) no such assignment shall
be in an amount of Commitments less than $10,000,000 unless such lesser amount
represents the entirety of the Commitments of the applicable Lender, (iii) the
applicable Lender, Administrative Lender and applicable Assignee shall execute
and deliver to the Administrative Lender an Assignment and Acceptance Agreement
(an "Assignment Agreement") in substantially the form of Exhibit H hereto,
-------------------- ---------
together with the Notes subject to such assignment, (iv) the Assignee executing
the Assignment, shall deliver to the Administrative Lender a processing fee of
$3,000 and (v) each such assignment shall be a constant, not a varying,
percentage of the assigning Lender's Rights and obligations in respect of the
Facility A Advances and the Facility B Advances. Upon such execution, delivery
and acceptance from and after the effective date specified in each Assignment,
which effective date shall be at least three Business Days after the execution
thereof, (A) the Assignee thereunder shall be party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment, have the rights and obligations of a Lender hereunder and (B) the
applicable Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment, relinquish such rights and
be released from such obligations under this Agreement.
(e) Notwithstanding anything in clause (d) above to the contrary, any
Lender may assign and pledge all or any portion of its Advances and Notes to any
Federal Reserve Bank as collateral security pursuant to Regulation A of F.R.S.
Board and any Operating Circular issued by such Federal Reserve Bank; provided,
however, that no such assignment under this clause (e) shall release the
assignor Lender from its obligations hereunder.
(f) Upon its receipt of an Assignment Agreement executed by a Lender and
an Assignee, and any Note or Notes subject to such assignment, the Borrower
shall, within five Business Days after its receipt of such Assignment Agreement,
at no expense to the Borrower, execute and deliver to the Administrative Lender
in exchange for the surrendered Notes new Notes to the order of such Assignee in
an amount equal to the portion of the Advances and Commitments assigned to it
pursuant to such Assignment Agreement and new Notes to the order of the assignor
Lender in an amount equal to the portion of the Advances and Commitments
retained by it hereunder. Such new Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Notes, shall
be dated the effective date of such Assignment Agreement and shall otherwise be
in substantially the form of Exhibit A or B hereto, as applicable.
--------- -
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(g) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 11.6, disclose to
------------
the assignee or Participant or proposed assignee or participant, any information
relating to the Borrower furnished to such Lender by or on behalf of the
Borrower, provided such Person agrees in writing to handle such information in
accordance with the standards set forth in Section 11.14 hereof.
-------------
(h) Except as specifically set forth in this Section 11.6, nothing in this
------------
Agreement or any other Loan Documents, expressed or implied, is intended to or
shall confer on any Person other than the respective parties hereto and thereto
and their successors and assignees permitted hereunder and thereunder any
benefit or any legal or equitable right, remedy or other claim under this
Agreement or any other Loan Documents.
(i) Notwithstanding anything in this Section 11.6 to the contrary, no
------------
Assignee or Participant (nor the assigning or participating Lender) shall be
entitled to receive (whether individually or collectively) any greater payment
under Section 2.14 or Section 9.3 or Section 9.5 than such assigning or
------------ ----------- -----------
participating Lender would have been entitled to receive with respect to the
interest assigned or participated to such Assignee or Participant.
Section 11.7 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Severability. Any provision of this Agreement which is for
------------
any reason prohibited or found or held invalid or unenforceable by any court or
governmental agency shall be ineffective to the extent of such prohibition or
invalidity or unenforceability without invalidating the remaining provisions
hereof in such jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 11.9 Interest and Charges. It is not the intention of any parties
--------------------
to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to receive, collect or apply,
as interest on the Obligations, any amount in excess of the Highest Lawful
Amount. If any Lender or participant ever receives, collects or applies, as
interest, any such excess, such amount which would be excessive interest shall
be deemed a partial repayment of principal and treated hereunder as such; and if
principal is paid in full, any remaining excess shall be paid to the Borrower.
In determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Borrower and the Lenders
shall, to the maximum extent permitted under Applicable Law, (a) characterize
any nonprincipal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effect thereof, and (c) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligations so that the interest
rate is uniform throughout the entire term of the Obligations; provided,
however, that if the Obligations are paid and performed in full prior to the end
of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the
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Highest Lawful Rate, the Lenders shall refund to the Borrower the amount of such
excess or credit the amount of such excess against the total principal amount of
the Obligations owing, and, in such event, the Lenders shall not be subject to
any penalties provided by any laws for contracting for, charging or receiving
interest in excess of the Highest Lawful Rate. This Section shall control every
other provision of all agreements pertaining to the transactions contemplated by
or contained in the Loan Documents.
Section 11.10 Headings. Headings used in this Agreement are for
--------
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 11.11 Amendment and Waiver. The provisions of this Agreement may
--------------------
not be amended, modified or waived except by the written agreement of the
Borrower and the Determining Lenders; provided, however, that no such amendment,
modification or waiver shall be made (a) without the consent of all Lenders, if
it would (i) increase the Specified Percentage or commitment of any Lender, or
(ii) extend or postpone the date of maturity of, extend the due date for any
payment of principal or interest on, reduce the amount of any installment of
principal or interest on, or reduce the rate of interest on, any Advance, the
Reimbursement Obligations or other amount owing under any Loan Documents to
which such Lender is entitled, or (iii) release any security for or guaranty of
the Obligations (except pursuant to this Agreement or the other Loan Documents),
or (iv) reduce the fees payable hereunder to which such Lender is entitled, or
(v) revise this Section 11.11, or (vi) waive the date for payment of any
-------------
principal, interest or fees hereunder or (vii) amend the definition of
Determining Lenders; (b) without the consent of the Swing Line Bank, if it would
alter the rights, duties or obligations of the Swing Line Bank; (c) without the
consent of the Administrative Lender, if it would alter the rights, duties or
obligations of the Administrative Lender; or (d) without the consent of the
Issuing Bank, if it would alter the rights, duties or obligations of the Issuing
Bank. Neither this Agreement nor any term hereof may be amended orally, nor may
any provision hereof be waived orally but only by an instrument in writing
signed by the Administrative Lender and, in the case of an amendment, by the
Borrower. Notwithstanding the foregoing, each Lender (in its capacity as a
Lender hereunder and, if applicable, in its capacity as a "Participant" under
the Existing Credit Agreement) hereby consents to, and authorizes, the release
by the Administrative Lender of any and all Liens insofar as same (i) arose
under the Existing Credit Agreement and (ii) cover property other than the
Borrower's Receivables, the Borrower's Inventory, the CFI Note, the ClientLink
Note, the Equity interest of the Borrower in CFI, the rights of CompuCom
Properties, Inc. under that certain Trademark License Agreement, dated as of
October 25, 1991, between CompuCom Properties, Inc., as licensor, and the
Borrower, as licensee, and/or any proceeds, products, amendments, modifications
and/or restatements of or to any of the foregoing property. Furthermore, each
Lender which is a "Participant" (as such term is defined in the Existing Credit
Agreement) hereby consents to, and authorizes, the sale and transfer of the
Existing Credit Agreement and the indebtedness, Liens and other rights
thereunder or in connection therewith to the Administrative Lender, for the
ratable benefit of the Lenders hereunder.
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Section 11.12 Exception to Covenants. Neither the Borrower nor any
----------------------
Subsidiary of the Borrower shall be deemed to be permitted to take any action or
fail to take any action which is permitted as an exception to any of the
covenants contained herein or which is within the permissible limits of any of
the covenants contained herein if such action or omission would result in the
breach of any other covenant contained herein.
Section 11.13 No Liability of Issuing Bank. The Borrower assumes all
----------------------------
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any Lender nor any of their respective officers or directors shall be
liable or responsible for: (a) the use that may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing
Bank against presentation of documents that do not comply with the terms of a
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to the Letter of Credit, except for any payment made upon the
Issuing Bank's gross negligence or wilful misconduct; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, except that the Borrower shall have a claim against the Issuing Bank,
------
and the Issuing Bank shall be liable to the Borrower, to the extent of any
direct, but not consequential, damages suffered by the Borrower that a court of
competent jurisdiction determines were caused by (i) the Issuing Bank's wilful
misconduct or gross negligence or (ii) the Issuing Bank's wilful failure to make
lawful payment under a Letter of Credit after the presentation to it of a draft
and certificates strictly complying with the terms and conditions of the Letter
of Credit. In furtherance and not in limitation of the foregoing, the Issuing
Bank may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
Section 11.14 Confidentiality. Each Lender and the Administrative Lender
---------------
agrees (on behalf of itself and each of its Affiliates, directors, officers,
employees and representatives) to use reasonable precautions to keep
confidential, in accordance with customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking
practices, any non-public information supplied to it by the Borrower pursuant to
this Agreement which is identified by the Borrower as being confidential at the
time the same is delivered to the Lenders or the Administrative Lender, provided
that nothing herein shall limit the disclosure of any such information (a) to
the extent required by statute, rule, regulation or judicial process, (b) to
counsel for any Lender or the Administrative Lender, (c) to bank examiners,
auditors or accountants of any Lender, (d) to the Administrative Lender or any
other Lender, (e) in connection with any Litigation to which any one or more of
Lenders is a party, provided, further, that, unless specifically prohibited by
Applicable Law or court order, each Lender shall, prior to disclosure thereof,
notify Borrower of any request for disclosure of any such non-public information
(i) by any Tribunal or representative thereof (other than any such request in
connection with an examination of such Lender's financial condition by such
governmental agency) or (ii) pursuant to legal process, or (f) to any Assignee
or Participant (or prospective Assignee or
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Participant) so long as such Assignee or Participant (or prospective Assignee or
Participant) agrees in writing to handle such information in accordance with the
provisions of this Section 11.14.
-------------
Section 11.15 Amendment, Restatement, Extension, Renewal and Increase.
-------------------------------------------------------
This Agreement is a renewal, extension, amendment, increase and restatement of
the Existing Credit Agreement, and is not a novation of the "Obligations" (as
defined in the Existing Credit Agreement) thereunder. On the Agreement Date,
the "Revolving Note" (as defined in the Existing Credit Agreement), all of the
outstanding indebtedness of the Borrower under the Existing Credit Agreement and
all of the liens, security interests and other rights and interests of
NationsBank of Texas, N.A. under the Existing Credit Agreement and under the
other Loan Documents (as defined in the Existing Credit Agreement) shall be
acquired by the Administrative Lender for the ratable benefit of the Lenders in
their respective Specified Percentages. On the Agreement Date, the outstanding
indebtedness of the Borrower under the Revolving Note shall be renewed,
extended, modified and restated by the Facility A Notes. The Borrower hereby
consents to the acquisition by the Administrative Lender of the indebtedness,
rights and interests described above. All terms and provisions of this
Agreement supersede in their entirety the Existing Credit Agreement. All Liens
covering the Collateral, or any part thereof, under the collateral documents
executed in connection with the Existing Credit Agreement shall remain valid,
binding and enforceable Liens against the Persons which granted such Liens.
SECTION 11.16 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
-------------
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS) AND THE UNITED
STATES OF AMERICA. THE LOAN DOCUMENTS ARE PERFORMABLE IN DALLAS, TEXAS, AND
BORROWER AND EACH SURETY, GUARANTOR, ENDORSER AND ANY OTHER PARTY EVER LIABLE
FOR PAYMENT OF ANY MONEY PAYABLE WITH RESPECT TO THE LOAN DOCUMENTS, JOINTLY AND
SEVERALLY WAIVE THE RIGHT TO BE SUED ELSEWHERE. WITHOUT EXCLUDING ANY OTHER
JURISDICTION, THE BORROWER, THE ADMINISTRATIVE LENDER AND EACH LENDER EACH
AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS,
SHALL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS AND HEREBY SUBMITS WITH RESPECT TO ITSELF AND ITS
PROPERTY TO THE JURISDICTION OF ANY SUCH COURT FOR THE PURPOSE OF ANY SUIT,
ACTION, PROCEEDING OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT.
SECTION 11.17 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
--------------------
ADMINISTRATIVE LENDER AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY
AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
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THEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO
THIS AGREEMENT AND MAKING ANY ADVANCES HEREUNDER.
SECTION 11.18 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE
----------------
OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
REGARDING THE SUBJECT MATTER HEREIN AND THEREIN AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, this Credit Agreement is executed as of the date first
set forth above.
BORROWER: COMPUCOM SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President, Finance and
Chief Financial Officer
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ADMINISTRATIVE LENDER: NATIONSBANK OF TEXAS, N.A., as Administrative
Lender
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
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LENDERS: NATIONSBANK OF TEXAS, N.A., as a Lender, Swing
Line Bank and Issuing Bank
Specified Percentage:
14.222222223%
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx
Vice President
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Specified Percentage: SANWA BUSINESS CREDIT CORPORATION
10.666666667%%
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
0 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
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Specified Percentage: CORESTATES BANK, N.A.
8.888888889% By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx x. Xxxxxxx
Title: Commercial Officer
0000 Xxxxxxxx Xxxxxx, FC 0-0-0-00
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
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Specified Percentage: NATIONAL CITY BANK OF KENTUCKY
8.888888889% By: /s/ Xxxx X. Xxxx
--------------------------------------------
Name: Xxxx X. Xxxx
Title: Senior Vice President
000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
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Specified Percentage: PNC BANK, NATIONAL ASSOCIATION, successor-
by-merger to Midlantic Bank, N.A.
8.888888889%
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Banking Officer
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
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Specified Percentage: CREDIT LYONNAIS NEW YORK BRANCH
8.888888889% By: /s/ Xxxxxxx-Xxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxxx-Xxxx Xxxxxxx
Title: Senior Vice President
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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Specified Percentage: UNION BANK OF CALIFORNIA, N.A.
8.888888889% By: /s/ Xxxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
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Specified Percentage: NATIONAL BANK OF CANADA
8.000000000%
By: /s/ Xxxx Xxxxx
--------------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
0000 Xxx Xxxxxxx
Xxxxxx, Xxxxx 00000
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Specified Percentage: THE SUMITOMO BANK, LIMITED
6.666666666% By: /s/ Xxxx X. Xxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President & Manager
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
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Specified Percentage: XXXXXXX BANK, N.A.
5.333333333% By: /s/ Xxxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Assistant Vice President
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
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Specified Percentage: COMERICA BANK
5.333333333% By: /s/ Xxxxxxxx X. Xxxxxxxxx, III
--------------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Vice President
000 Xxxxxxxx Xxxxxx
0xx Xxxxx
Mail Code 3281
Xxxxxxx, Xxxxxxxx 00000
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Specified Percentage: FLEET NATIONAL BANK
5.333333333% By: /s/ Xxxxx X. Xxxxxx III
--------------------------------------------
Name: Xxxxx X. Xxxxxx III
Title: Vice President
One Federal Street, MA-OF-0323
Xxxxxx, Xxxxxxxxxxxxx 00000
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