================================================================================
EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
BY AND AMONG
PENTON MEDIA, INC.
AS BORROWER,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
XXXXX FARGO FOOTHILL, INC.
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF AUGUST 13, 2003
================================================================================
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into
as of August 13, 2003, by and among, on the one hand, the lenders identified on
the signature pages hereof (such lenders, together with their respective
successors and permitted assigns, are referred to hereinafter each individually
as a "Lender" and collectively as the "Lenders") and XXXXX FARGO FOOTHILL, INC.,
a California corporation, as the arranger and administrative agent for the
Lenders ("Agent"), and, on the other hand, PENTON MEDIA, INC., a Delaware
corporation ("Borrower").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall have
the following definitions:
"Account" means an account (as that term is defined in the Code),
and any and all supporting obligations in respect thereof.
"Account Debtor" means an account debtor (as that term is defined in
the Code).
"Acquisition" has the meaning set forth in the definition of
"Permitted Acquisition."
"Acquisition Agreement" means the acquisition, purchase or other
agreement that sets forth the terms and conditions of a Permitted Acquisition
and is executed by the applicable Seller and Borrower or a Guarantor, as the
case may be.
"Additional Documents" has the meaning set forth in Section 4.4(c).
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of Section 7.13 hereof: (a) any Person
that owns directly or indirectly 10% or more of the Stock having ordinary voting
power for the election of directors or other members of the governing body of a
Person or 10% or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed an
Affiliate of such Person, (b) each director (or comparable manager) of a Person
shall be deemed to be an Affiliate of such Person, and (c) each
-1-
partnership in which a Person is a general partner shall be deemed an Affiliate
of such Person.
"Agent" has the meaning set forth in the preamble of this Agreement,
and any successor thereto.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
"Agent-Related Persons" means Agent, together with its Affiliates,
officers, directors, employees, attorneys, and agents.
"Agent's Account" means the Deposit Account of Agent identified on
Schedule A-1.
"Agent's Liens" means the Liens granted by Borrower or its
Subsidiaries to Agent under this Agreement or the other Loan Documents.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Applicable Amount" means (a) with respect to an early termination
of this Agreement under Section 3.6, the Maximum Revolver Amount, or (b) with
respect to any optional reduction of the Maximum Revolver Amount under Section
2.2, the Dollar amount by which the Maximum Revolver Amount is being reduced.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period from and after the date
of the execution and delivery of this Agreement up to the date that is the first
anniversary of the Closing Date, 4.0% times the Applicable Amount, (b) during
the period from and including the date that is the first anniversary of the
Closing Date up to the date that is the second anniversary of the Closing Date,
3.0% times the Applicable Amount, (c) during the period from and including the
date that is the second anniversary of the Closing Date up to the date that is
the third anniversary of the Closing Date, 2.0% times the Applicable Amount, and
(d) during the period from and including the date that is the third anniversary
of the Closing Date up to but excluding the Maturity Date, 1.0% times the
Applicable Amount.
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance
Agreement substantially in the form of Exhibit A-1.
"Assignment of Control Agreement" has the meaning set forth in the
definition of "Control Agreement".
"Authorized Person" means any officer or employee of Borrower.
-2-
"Availability" means, as of any date of determination, the amount
that Borrower is entitled to borrow as Advances hereunder (after giving effect
to all then outstanding Obligations and all sublimits and reserves then
applicable hereunder).
"Bankruptcy Code" means title 11 of the United States Code, as in
effect from time to time.
"Base LIBOR Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/100%), to be the rate at which Dollar deposits (for delivery on the
first day of the requested Interest Period) are offered to major banks in the
London interbank market 2 Business Days prior to the commencement of the
requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of an extant LIBOR Rate Loan or as
a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrower in accordance
with this Agreement, which determination shall be conclusive in the absence of
manifest error.
"Base Rate" means, the rate of interest announced, from time to
time, within Xxxxx Fargo at its principal office in San Francisco as its "prime
rate", with the understanding that the "prime rate" is one of Xxxxx Fargo's base
rates (not necessarily the lowest of such rates) and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as Xxxxx Fargo may designate.
"Base Rate Loan" means the portion of the Advances that bears
interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means 3.0 percentage points.
"Benefit Plan" means a Plan that is or is intended to be a "defined
benefit plan" (as defined in Section 3(35) of ERISA) for which Borrower or any
Subsidiary or ERISA Affiliate of Borrower has maintained, contributed to, has an
obligation to contribute to, or has been an "employer" (as defined in Section
3(5) of ERISA) within the past six years.
"Board of Directors" means the board of directors (or comparable
managers) of Borrower or any committee thereof duly authorized to act on behalf
of the board of directors (or comparable managers).
"Books" means Borrower's and its Subsidiaries' now owned or
hereafter acquired books and records (including all of their Records indicating,
summarizing, or evidencing their assets (including the Collateral) or
liabilities, all of Borrower's or its
-3-
Subsidiaries' Records relating to their business operations or financial
condition, and all of their goods or General Intangibles related to such
information).
"Borrower" has the meaning set forth in the preamble to this
Agreement.
"Borrower Collateral" means all of Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) all of its Accounts,
(b) all of its Books,
(c) all of its Commercial Tort Claims,
(d) all of its Deposit Accounts,
(e) all of its Equipment,
(f) all of its General Intangibles,
(g) all of its Inventory,
(h) all of its Investment Property (including all of its securities
and Securities Accounts),
(i) all of its Negotiable Collateral,
(j) supporting obligations with respect to any of the foregoing,
(k) money or other assets of Borrower that now or hereafter come
into the possession, custody, or control of any member of the Lender Group, and
(l) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof; provided,
however, that Borrower Collateral shall not include any Excluded Collateral.
"Borrowing" means a borrowing hereunder consisting of Advances made
on the same day by the Lenders (or Agent on behalf thereof), or by Swing Lender
in the case of a Swing Loan, or by Agent in the case of an Agent Advance.
"Borrowing Base" means, as of any date of determination, the result
of:
-4-
(a) the lowest of
(i) (A) during the period from and after the Closing Date up
to the date that is the first anniversary of the Closing Date, the
product of 2.5 times TTM EBITDA, (B) during the period from and
after the date that is the first anniversary of the Closing Date up
to the date that is the second anniversary of the Closing Date, the
product of 2.25 times TTM EBITDA, and (C) during the period from and
after the date that is the second anniversary of the Closing Date,
the product of 2.0 times TTM EBITDA,
(ii) 40% of the total consolidated revenue of Borrower and its
Subsidiaries for the 6 month period most recently ended for which
financial statements have been delivered pursuant to Section 6.3(a),
(iii) 25% of the enterprise value of Borrower and its
Subsidiaries (based on the Enterprise Valuation most recently
received by Agent),
minus
(b) the sum of (i) the UCC Filing Reserve, and (ii) the aggregate
amount of reserves, if any, established by Agent under Section 2.1(b).
"Budget" means Borrower's (a) forecasted profit and loss statements,
(b) forecasted cash flow statements, and (c) a current, year-end balance sheet,
all prepared on a basis consistent with Borrower's historical financial
statements, together with appropriate supporting details and a statement of
underlying assumptions.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which banks are authorized or required to close in either the state
of California or New York, except that, if a determination of a Business Day
shall relate to a LIBOR Rate Loan, the term "Business Day" also shall exclude
any day on which banks are closed for dealings in Dollar deposits in the London
interbank market.
"Capital Expenditures" means, with respect to any Person for any
period, the aggregate of all expenditures by such Person and its Subsidiaries
during such period that are capital expenditures as determined in accordance
with GAAP, whether such expenditures are paid in cash or financed.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means that portion of the obligations
under a Capital Lease that is required to be capitalized in accordance with
GAAP.
-5-
"Cash Equivalents" means (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or Xxxxx'x Investors Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-2 from S&P or at least P-2 from Moody's, (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) demand Deposit Accounts maintained with any
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any individual bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, (f)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (e) above, and (g)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (a), (b), and (d) above entered
into with any financial institution meeting the qualifications specified in
clause (d) above.
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
"Change of Control" means (a) any sale, transfer, conveyance or
other disposition (other than by way of merger or consolidation) of all or
substantially all of Borrower's assets, on a consolidated basis, in one
transaction or a series of related transactions, to any "person" or "group"
(within the meaning of Sections 13(d) and 14(d) of the Exchange Act), (b) the
consummation of any transaction, including any merger or consolidation, whereby
any "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of more than 35% of the Stock of
Borrower (or other surviving entity) having the right to vote for the election
of members of the Board of Directors, (c) the Continuing Directors cease for any
reason to constitute a majority of the Board of Directors then in office, or (d)
Borrower adopts a plan of liquidation.
"Closing Date" means the date on which Agent sends Borrower a
written notice that each of the conditions precedent set forth in Section 3.1
either have been satisfied or have been waived.
-6-
"Closing Date Business Plan" means the forecast for the 2003 fiscal
year of Borrower (on a month by month basis) and the June 30, 2003 balance sheet
of Borrower, in form and scope satisfactory to Agent.
"Code" means the New York Uniform Commercial Code, as in effect from
time to time.
"Collateral" means all assets and interests in assets and proceeds
thereof now owned or hereafter acquired by Borrower or its Subsidiaries in or
upon which a Lien is granted under any of the Loan Documents.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in Borrower's or its Subsidiaries' Books, Equipment, or
Inventory, in each case, in form and substance satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Commercial Tort Claim" means a commercial tort claim (as that term
is defined in the Code).
"Commercial Tort Claim Assignments" has the meaning set forth in
Section 4.4(b).
"Commitment" means, with respect to each Lender, its Commitment,
and, with respect to all Lenders, their Commitments, in each case as such Dollar
amounts are set forth beside such Lender's name under the applicable heading on
Schedule C-1 or in the Assignment and Acceptance pursuant to which such Lender
became a Lender hereunder in accordance with the provisions of Section 14.1.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Borrower to
Agent.
"Continuing Directors" means during any period of 12 consecutive
months after March 28, 2002, individuals who at the beginning of any such
12-month period constituted the Board of Directors (together with any new
directors whose election by the Board of Directors or whose nomination for
election by the stockholders of Borrower was approved by a vote of a majority of
the directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved).
-7-
"Control Agreement" means (a) a control agreement, in form and
substance satisfactory to Agent, executed and delivered by Borrower or a
Guarantor, Agent, the trustee under the Senior Indenture, and the applicable
securities intermediary (with respect to a Securities Account) or bank (with
respect to a Deposit Account), or (b) with respect to any Deposit Account
existing on the Closing Date, a control agreement executed and delivered by
Borrower or a Guarantor, Existing Agent, the trustee under the Senior Indenture,
and the applicable bank that has been assigned by Existing Agent to Agent
pursuant to an assignment agreement in form and substance satisfactory to Agent
(each, an "Assignment of Control Agreement").
"Copyright Security Agreement" means a copyright security agreement
executed and delivered by Borrower or a Guarantor and Agent, the form and
substance of which is satisfactory to Agent.
"Daily Balance" means, as of any date of determination and with
respect to any Obligation, the amount of such Obligation owed at the end of such
day.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance
(or other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) for the first 3 days from and
after the date the relevant payment is due, the Base Rate, and (b) thereafter,
the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).
"De Minimis Deposit Account" has the meaning set forth in Section
4.7(a).
"Deposit Account" means any deposit account (as that term is defined
in the Code).
"Designated Account" means the Deposit Account of Borrower
identified on Schedule D-1.
"Designated Account Bank" has the meaning ascribed thereto on
Schedule D-1.
"Disbursement Letter" means an instructional letter executed and
delivered by Borrower to Agent regarding the extensions of credit to be made on
the Closing Date, the form and substance of which is satisfactory to Agent.
"Dollars" or "$" means United States dollars.
-8-
"Domestic Subsidiary" means any Subsidiary of Borrower organized
under the laws of the United States, any state, territory, or possession
thereof, or the District of Columbia; provided, however, that a Subsidiary that
is characterized as a partnership for United States federal income tax purposes
is not a Domestic Subsidiary hereunder if any member of such Subsidiary is a
"controlled foreign corporation" (as defined in IRC Section 957(a)) that has
liability for any of the Obligations of such Subsidiary.
"EBITDA" means, subject to Section 1.6, with respect to any fiscal
period, Borrower's and its Subsidiaries (a) net earnings (or loss) for such
period, minus (b) extraordinary gains, plus (c) Interest Expense, provisions for
income taxes, depreciation and amortization, extraordinary losses, non-cash
charges against income and non-recurring charges to income for such period, all
as determined on a consolidated basis and in accordance with GAAP.
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized 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 and that has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender, including
a fund or account managed by such Lender or an Affiliate of such Lender or its
investment manager (a "Related Fund"), (e) so long as no Event of Default has
occurred and is continuing, any other Person approved by Agent and Borrower
(which approval of Borrower shall not be unreasonably withheld, delayed, or
conditioned), and (f) during the continuation of an Event of Default, any other
Person approved by Agent.
"Enterprise Valuation" means the net present enterprise value of
Borrower and its Subsidiaries as set forth in an appraisal prepared by a third
party valuation firm acceptable to Agent.
"Environmental Actions" means any written complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other written communication
from any Governmental Authority, or any third party involving violations of
Environmental Laws or releases of Hazardous Materials from (a) any assets,
properties, or businesses of Borrower, its Subsidiaries, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or (c)
from or onto any facilities which received Hazardous Materials generated by
Borrower, its Subsidiaries, or any of their predecessors in interest.
-9-
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Borrower or its
Subsidiaries, relating to the environment, employee health and safety, or
Hazardous Materials, including CERCLA; RCRA; the Federal Water Pollution Control
Act, 33 USC Section 1251 et seq.; the Toxic Substances Control Act, 15 USC
Section 2601 et seq.; the Clean Air Act, 42 USC Section 7401 et seq.; the Safe
Drinking Water Act, 42 USC Section 3803 et seq.; the Oil Pollution Act of 1990,
33 USC Section 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 USC Section 11001 et seq.; the Hazardous Material
Transportation Act, 49 USC Section 1801 et seq.; and the Occupational Safety and
Health Act, 29 USC Section651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and that relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means equipment (as that term is defined in the Code)
and includes machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), computer hardware, tools, parts, and goods
(other than consumer goods, farm products, or Inventory), wherever located,
including all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any regulations promulgated thereunder and any successor statute
and regulations thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower or its Subsidiaries under IRC Section 414(b), (b) any trade or business
subject to ERISA whose employees are treated as employed by the same employer as
the employees of Borrower or its Subsidiaries under IRC Section 414(c), (c)
solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Borrower or any of its Subsidiaries is a member under IRC Section 414(m),
or (d) solely for purposes of Section 302 of ERISA and Section 412 of the
-10-
IRC, any Person subject to ERISA that is a party to an arrangement with Borrower
or any of its Subsidiaries and whose employees are aggregated with the employees
of Borrower or its Subsidiaries under IRC Section 414(o).
"ERISA Event" means, with respect to the Borrower, its Subsidiaries,
or any ERISA Affiliate, (a) the institution of proceedings to terminate a
Benefit Plan by the PBGC; (b) the failure by Borrower, its Subsidiaries, or any
ERISA Affiliate to make when due required contributions to a Benefit Plan; (c)
any other event or condition that 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 Benefit Plan or for the imposition of liability
under Section 4069 or 4212(c) of ERISA; or (d) the loss of a Qualified Plan's
qualification or tax exempt status.
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means, as of any date of determination, the
amount equal to Availability minus the aggregate amount, if any, of all trade
payables of Borrower and its Subsidiaries aged in excess of 90 days and all book
overdrafts of Borrower and its Subsidiaries in excess of historical practices
with respect thereto, in each case as determined by Agent in its Permitted
Discretion.
"Excess Liquidity" means the amount, as of the date any
determination thereof is to be made, equal to the sum of (a) Excess Availability
plus (b) Qualified Cash.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Excluded Collateral" means (a) any lease, license, contract, or
agreement to which Borrower is a party or any of its rights or interests
thereunder if and for so long as the grant of a Lien to Agent shall constitute
or result in (i) the abandonment, invalidation, or unenforceability of any
right, title, or interest of Borrower therein or (ii) a breach or termination
pursuant to the terms of, or a default under, any such lease, license, contract,
property rights, or agreement (in each case, other than to the extent that the
restrictive terms of any such lease, license, contract, or agreement would be
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the
Code (or any successor provision or provisions) of any relevant jurisdiction or
any other applicable law (including the Bankruptcy Code) or principles of
equity), provided, however, that such Lien shall attach immediately at such time
as the condition causing such abandonment, invalidation, unenforceability,
breach, or termination shall be remedied and shall attach immediately to the
products and proceeds of such lease, license, contract, or agreement and, to the
extent severable, to any portion of such lease, license, contract, or agreement
that does not result in any of the consequences specified in clauses (i) or (ii)
above; (b) any Equipment subject to a Permitted Lien under either of clauses (c)
or (e) of the definition of "Permitted Lien" to the extent, but only to the
extent, that a Lien on such Equipment would be prohibited by any agreement or
other
-11-
document relating to such Permitted Lien; provided, however, that a Lien in
favor of Agent on such Equipment shall attach immediately at such time as the
condition causing such prohibition shall be remedied, and shall attach
immediately to the products and proceeds of such Equipment and, to the extent
severable, to any portion of such Equipment that are not subject to such
prohibition; or (c) any of the outstanding Stock or other equity interest of a
Foreign Subsidiary in excess of 65% of the voting power of all classes of
capital stock of such Foreign Subsidiary entitled to vote.
"Existing Agent" means The Bank of New York.
"Existing Facility" means the credit facility evidenced by that
certain Amended and Restated Credit Agreement, dated as of March 8, 2002, among
Borrower, the Existing Agent, and the lenders party thereto, as amended from
time to time.
"Fee Letter" means that certain fee letter, dated as of even date
herewith, between Borrower and Agent, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
"Financial Officer" means, with respect to any Person, such Person's
president, chief executive officer, chief financial officer, controller,
treasurer, or assistant treasurer.
"Foreign Subsidiary" means any Subsidiary of Borrower that is not a
Domestic Subsidiary.
"Four Quarter Period" has the meaning set forth in Section 1.6.
"Funded Bank Debt Leverage Ratio" means, with respect to Borrower
and its Subsidiaries for any period and on a consolidated basis, the ratio of
(a) the outstanding principal amount of Advances as of the last day of such
period to (b) EBITDA for such period.
"Funding Date" means the date on which a Borrowing occurs, which
shall be a Business Day.
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"General Intangibles" means general intangibles (as that term is
defined in the Code).
-12-
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"Guarantor" means (a) each of Xxxxxxxx.xxx, a California
corporation, PMI Three, Inc., a Delaware corporation, Internet World Media,
Inc., a Delaware corporation, Tech Conferences, Incorporated, a Connecticut
corporation, Xxxxxxxxxx.xxx, Inc., a Delaware corporation, Xxxxxxx Xxxxxx
Publishing Company, an Illinois corporation, Duke Investments, Inc., a Colorado
corporation, One, Inc., a Colorado corporation, PMI Two, Inc., a Colorado
corporation, Penton Internet, Inc., a Delaware corporation, and Duke
Communications International, Inc., a Colorado corporation, and (b) any Person
that becomes a direct or indirect Domestic Subsidiary of Borrower after the
Closing Date and executes a joinder to the Guaranty and the Guarantor Security
Agreement as provided in Section 6.15.
"Guarantor Security Agreement" means the Security Agreement, in form
and substance satisfactory to Agent, entered into on or after the date hereof by
each Guarantor in favor of Agent.
"Guaranty" means the General Continuing Guaranty, in form and
substance satisfactory to Agent, entered into on or after the date hereof by
each Guarantor in favor of Agent, in form and substance satisfactory to Agent.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all agreements or documents now
existing or hereafter entered into by Borrower or its Subsidiaries that provide
for an interest rate, credit, commodity or equity swap, cap, floor, collar,
forward foreign exchange transaction, currency swap, cross currency rate swap,
currency option, or other interest rate management device, or any combination
of, or option with respect to, these or similar transactions.
-13-
"Hold-Back Amount" means, with respect to any disposition or
Acquisition, the aggregate amount of all payments payable to Borrower or its
Subsidiaries, directly or indirectly, in connection with such disposition or
Acquisition, whether at the time thereof or after such disposition or
Acquisition, under earn-outs, escrowed funds, or other similar arrangements
entered into in connection with such disposition or Acquisition.
"Holdout Lender" has the meaning set forth in Section 15.2(a).
"Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit and
bankers acceptances, (c) all Capital Lease Obligations, (d) all obligations and
liabilities of others secured by a Lien on any asset of a Person or its
Subsidiaries, irrespective of whether such obligation or liability is assumed,
(e) all obligations to pay the deferred purchase price of assets (other than
trade payables incurred in the ordinary course of business and repayable in
accordance with customary trade practices and Hold-Back Amounts with respect to
Permitted Acquisitions and Acquisitions that closed prior to the Closing Date),
(f) all net obligations owing under Hedge Agreements, and (g) any obligation
guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation
of any other Person that constitutes Indebtedness under any of clauses (a)
through (f) above.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any Person, that portion
of the book value of all of such Person's assets that would be treated as
intangibles under GAAP.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Borrower and each of its Subsidiaries and
Agent, the form and substance of which is satisfactory to Agent.
"Intercreditor Agreement" means the Intercreditor Agreement, in form
and substance satisfactory to Agent, entered into between Agent and U.S. Bank
National Association (together with its successors and assigns), as trustee
under the Senior Indenture, the form and substance of which is satisfactory to
Agent.
-14-
"Interest Expense" means, for any period, the aggregate of the
interest expense of Borrower and its Subsidiaries for such period (excluding all
fees paid in connection with the incurrence of Indebtedness that are amortized
and are added to net earnings (or loss) under clause (c) of the definition of
EBITDA), determined on a consolidated basis in accordance with GAAP.
"Interest Period" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter; provided, however,
that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period 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), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, or 3 months after the date on which the Interest Period
began, as applicable, and (e) Borrower may not elect an Interest Period that
will end after the Maturity Date.
"Inventory" means inventory (as that term is defined in the Code).
"Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other
acquisitions of Indebtedness, Stock, or all or substantially all of the assets
of such other Person (or of any division or business line of such other Person),
and any other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP.
"Investment Property" means investment property (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
"Issuing Lender" means WFF or any other Lender that, at the request
of Borrower and with the consent of Agent, agrees, in such Lender's sole
discretion, to become
-15-
an Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings pursuant
to Section 2.12.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement, and shall also include any Swing Lender and any
Eligible Transferee or other Person made a party to this Agreement in accordance
with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by Borrower or its
Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by the Lender Group, (b) fees or charges paid or incurred by Agent in
connection with the Lender Group's transactions with Borrower or its
Subsidiaries, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, and UCC searches and including searches with the patent
and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
Enterprise Valuations, collateral appraisals or business valuations to the
extent of the fees and charges (and up to the amount of any limitation)
contained in this Agreement), real estate surveys, real estate title policies
and endorsements, and environmental audits, (c) costs and expenses incurred by
Agent in the disbursement of funds to Borrower or other members of the Lender
Group (by wire transfer or otherwise), (d) charges paid or incurred by Agent
resulting from the dishonor of checks, (e) reasonable costs and expenses paid or
incurred by the Lender Group to correct any default or enforce any provision of
the Loan Documents, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or advertising to
sell the Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) audit fees and expenses of Agent related to audit examinations
of the Books to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by the Lender Group in
enforcing or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents or the Lender Group's relationship with
Borrower or any its Subsidiaries, (h) Agent's reasonable costs and
-16-
expenses (including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, syndicating, or amending the Loan Documents, and (i)
Agent's and each Lender's reasonable costs and expenses (including attorneys,
accountants, consultants, and other advisors fees and expenses) incurred in
terminating, enforcing (including attorneys, accountants, consultants, and other
advisors fees and expenses incurred in connection with a "workout," a
"restructuring," or an Insolvency Proceeding concerning Borrower or its
Subsidiaries or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, officers, directors, employees,
attorneys, and agents.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Option" has the meaning set forth in Section 2.13(a).
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate
Loan, the rate per annum determined by Agent (rounded upwards, if necessary, to
the next 1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period,
by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on
and as of the effective day of any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means 5.0 percentage points.
"Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, irrespective of
whether (a) such interest is based on the common law, statute, or contract, (b)
such interest is recorded or perfected, and (c) such interest is contingent upon
the occurrence of some future event or events or the existence of some future
circumstance or circumstances. Without limiting the generality of the foregoing,
the term "Lien" includes the lien or security interest arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, security agreement, conditional sale or trust receipt, or from a
lease, consignment, or bailment for security purposes and also includes
reservations, exceptions,
-17-
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases, and other title exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Control Agreements, the
Copyright Security Agreement, the Disbursement Letter, the Fee Letter, the
Guarantor Security Agreement, the Guaranty, the Intercompany Subordination
Agreement, the Letters of Credit, the Officers' Certificate, the Stock Pledge
Agreement, the Trademark Security Agreement, any note or notes executed by
Borrower in connection with this Agreement and payable to a member of the Lender
Group, and any other agreement entered into, now or in the future, by Borrower
and the Lender Group in connection with this Agreement.
"Material Adverse Change" means (a) a material adverse change in the
business, operations, results of operations, assets, liabilities or financial or
other condition of Borrower and its Subsidiaries, taken as a whole, (b) a
material impairment of Borrower's and its Subsidiaries ability to perform their
obligations under the Loan Documents to which they are parties or of the Lender
Group's ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of the Agent's Liens
with respect to the Collateral as a result of an action or failure to act on the
part of Borrower or its Subsidiaries.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $40,000,000 as such amount may be
decreased down to a minimum amount of $28,000,000, upon and subject to the
satisfaction of the conditions set forth in Section 2.2.
"Minimum Daily Rate" has the meaning set forth in Section 2.6(a).
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Borrower or any Subsidiary of Borrower in favor of Agent, in form and substance
satisfactory to Agent, that encumber Real Property.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which Borrower, its Subsidiaries or any
ERISA Affiliate is making, is obligated to make or has made or been obligated to
make, contributions.
"Negotiable Collateral" means letters of credit, letter of credit
rights, instruments, promissory notes, drafts, documents, and chattel paper
(including electronic chattel paper and tangible chattel paper), and any and all
supporting obligations in respect thereof.
-18-
"Net Proceeds" means, with respect to any event, (a) the cash
proceeds received in respect of such event, including (i) any cash received in
respect of any non-cash proceeds, but only as and when received, (ii) in the
case of a casualty, insurance proceeds, and (iii) in the case of a condemnation
or similar event, condemnation awards and similar payments, net of (b) the sum
of (i) all fees and expenses paid or payable by Borrower and/or any of its
Subsidiaries to third parties in connection with such event (including, without
limitation, all transaction costs and expenses, attorneys' fees and expenses,
and commissions), (ii) in the case of a sale, transfer or other disposition of
an asset (including pursuant to a sale and leaseback transaction or a casualty
or a condemnation or similar proceeding), the amount of all payments required to
be made by Borrower and/or any of its Subsidiaries as a result of such event to
repay Indebtedness (other than Advances) secured by such asset, (iii) the amount
of all taxes paid (or reasonably estimated to be payable) by Borrower and/or any
of its Subsidiaries in connection with such event, and (iv) the amount of any
reserves established by Borrower and/or any of its Subsidiaries to fund
contingent liabilities in connection with such event.
"Obligations" means all loans, Advances, debts, principal, interest
(including any interest that, but for the commencement of an Insolvency
Proceeding, would have accrued), contingent reimbursement obligations with
respect to outstanding Letters of Credit, premiums, liabilities (including all
amounts charged to Borrower's Loan Account pursuant hereto), obligations
(including indemnification obligations), fees (including the fees provided for
in the Fee Letter), charges, costs, Lender Group Expenses (including any fees or
expenses that, but for the commencement of an Insolvency Proceeding, would have
accrued), lease payments, guaranties, covenants, and duties of any kind and
description owing by Borrower to the Lender Group pursuant to or evidenced by
the Loan Documents and irrespective of whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including all interest not paid when due and all
Lender Group Expenses that Borrower is required to pay or reimburse by the Loan
Documents, by law, or otherwise. Any reference in this Agreement or in the Loan
Documents to the Obligations shall include all extensions, modifications,
renewals, or alterations thereof, both prior and subsequent to any Insolvency
Proceeding.
"Officers' Certificate" means the certificate of representations and
warranties of officers of Borrower and the Guarantors, dated as of the date
hereof.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Participant" has the meaning set forth in Section 14.1(e).
"Participant Register" has the meaning set forth in Section 14.1(i).
-19-
"Pay-Off Letter" means a letter, in form and substance satisfactory
to Agent, from Existing Agent to Agent and Borrower respecting the amount
necessary to repay in full all of the obligations of Borrower and its
Subsidiaries owing to Existing Agent (and the lenders represented by Existing
Agent) and obtain a release of all of the Liens existing in favor of Existing
Agent in and to the assets of Borrower and its Subsidiaries.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Acquisition" means any acquisition by Borrower or any of
its Subsidiaries from a Person that is not an Affiliate of Borrower (the
"Seller"), whether by way of the purchase of assets or Stock, by merger or
consolidation or otherwise, of substantially all of the assets of or Stock of
such Person (or of any division or business line of such Person) (each an
"Acquisition"), so long as:
(a) No Default or Event of Default shall have occurred or be
continuing or shall result from the consummation of such Acquisition;
(b) If such Acquisition involves the purchase of Stock, such
Acquisition shall be effected in such a manner as to assure that the acquired
entity becomes a wholly owned direct or indirect Subsidiary of Borrower after
giving effect to such Acquisition;
(c) No later than (i) 10 Business Days prior to the closing of such
Acquisition, Borrower shall have delivered to Agent a summary of the principal
terms of such Acquisition and all applicable financial information provided to
Borrower by such Person in respect of (A) such Person if it is a Stock purchase
or (B) the assets of such Person if it is an asset purchase, including a summary
forecast, in form and substance satisfactory to Agent, reflecting the effect of
such Acquisition and any related transactions, (2) promptly following a request
therefor, copies of such other information or documents relating to such
Acquisition as Agent shall have reasonably requested, and (3) promptly following
the closing of such Acquisition, a copy of the executed Acquisition Agreement,
together with all schedules and exhibits thereto;
(d) The aggregate amount of all consideration payable by Borrower or
the Guarantors in connection with such Acquisition (other than Hold-Back Amounts
and Indebtedness permitted under Section 7.1) shall be payable on the date of
such Acquisition;
(e) Neither Borrower, its Subsidiaries, nor any ERISA Affiliate
shall, in connection with such Acquisition, assume or remain liable with respect
to any Indebtedness (including any unpaid material tax or material ERISA
liability), except (a) to the extent permitted under Section 7.1 and (b)
obligations of the Seller or its Subsidiaries incurred in the ordinary course of
business and necessary or desirable to the continued operation of the underlying
properties, and any other such liabilities or obligations not permitted to be
assumed or otherwise supported by Borrower, its Subsidiaries and ERISA
Affiliates hereunder shall be paid in full or released on or before the closing
of such Acquisition;
-20-
(f) All assets and properties acquired in connection with such
Acquisition shall be free and clear of any Liens other than those permitted
under Section 7.2;
(g) The Hold-Back Amount in connection with such Acquisition is not
greater than 20% of the aggregate consideration paid for such Acquisition;
(h) (i) After giving effect to the closing of such Acquisition,
Borrower and its Subsidiaries shall be in compliance with the financial
covenants of Section 7.18, calculated on a pro forma basis, and (ii) within 10
Business Days after the closing of such Acquisition, Borrower shall provide to
Agent, in form and substance satisfactory to Agent, a certificate of its chief
financial officer certifying such compliance;
(i) Borrower shall comply with Section 6.15 if any new Subsidiary is
acquired or formed in connection with such Acquisition; and
(j) The aggregate consideration paid by Borrower or its Subsidiaries
with respect to such Acquisition, when aggregated with the aggregate
consideration paid by Borrower and its Subsidiaries with respect to all other
Acquisitions made by Borrower or its Subsidiaries during the then current fiscal
year, does not exceed $5,000,000.
"Permitted Business Disposition" means the disposition by Borrower
or any of its Subsidiaries of any division or line of business so long as:
(a) No Default or Event of Default shall have occurred and be
continuing or shall result from the consummation of such disposition;
(b) Concurrent with the closing of such disposition, Borrower or
such Subsidiary receives payment in cash or Cash Equivalents of at least 80% of
the aggregate consideration to be paid from such disposition;
(c) upon Agent's request, Agent shall have received reasonably
satisfactory evidence that the Board of Directors and, if required by law, the
holders of Stock of Borrower or its Subsidiaries have approved such disposition;
(d) such disposition shall be consummated at fair value, in good
faith, and pursuant to an arm's length transaction; and
(e) the Hold-Back Amount in connection with such disposition is not
greater than 20% of the aggregate consideration received from such disposition.
"Permitted Discretion" means a determination made in the exercise of
reasonable (from the perspective of a secured asset-based lender) business
judgment.
"Permitted Dispositions" means (a) sales or other dispositions of
Equipment or other assets that are worn, damaged, or obsolete, (b) sales of
Inventory to buyers in the
-21-
ordinary course of business, (c) the use or transfer of money or Cash
Equivalents in a manner that is not prohibited by the terms of this Agreement or
the other Loan Documents, (d) the licensing, on a non-exclusive basis, of
patents, trademarks, copyrights, and other intellectual property rights in the
ordinary course of business, (e) Permitted Business Dispositions so long as (i)
the Net Proceeds received for any one Permitted Business Disposition does not
exceed $5,000,000 and if such Net Proceeds are less than 75% of the total
consideration for such Permitted Business Disposition, the total consideration
for such Permitted Business Disposition does not exceed $6,750,000, and (ii) the
aggregate amount of Net Proceeds received for all Permitted Business
Dispositions consummated during the term of this Agreement does not exceed
$12,000,000 and if such aggregate Net Proceeds are less than 75% of the total
consideration for all such Permitted Business Dispositions, the total
consideration for all such Permitted Business Dispositions does not exceed
$16,000,000, (f) any sale, lease, transfer or other disposition of any or all
assets by Borrower to any Guarantor or by any Guarantor to Borrower or any other
Guarantor, (g) any sale, lease, transfer or other disposition of any or all
assets by any Foreign Subsidiary to any other Foreign Subsidiary, (h) issuances
of Stock by any Subsidiary of Borrower to Borrower or any of its Subsidiaries,
(i) the sale, lease, transfer or other disposition of an asset that constitutes
a Permitted Investment, and (j) transfers or other dispositions that constitute
Permitted Distributions.
"Permitted Distributions" means (a) dividends paid by Borrower
solely in its Stock, (b) dividends paid by any Subsidiary of Borrower to
Borrower or any other Subsidiary with respect to the Stock of such Subsidiary,
and (c) dividends or other distributions made by Borrower in connection with and
pursuant to the terms of employee benefit and stock option plans.
"Permitted Indenture Debt" means (a) Indebtedness evidenced by the
Senior Notes and the Subordinated Notes, (b) any refinancing (in whole or in
part) of Indebtedness described under the foregoing clause (a) (whether such
refinancing occurs as a result of an exchange of Senior Notes for Subordinated
Notes or Subordinated Notes for Senior Notes or a new issuance of Indebtedness
or any combination thereof or otherwise) so long as (i) the aggregate principal
amount of Indebtedness attributable to the Senior Notes, the Subordinated Notes
and any refinancing thereof does not exceed the sum of (A) the lesser of (1) the
aggregate principal amount outstanding under the Senior Indenture and the
Subordinated Indenture on the Closing Date or (2) the aggregate principal amount
outstanding under the Senior Indenture and the Subordinated Indenture at the
time of such refinancing (but without giving effect to such refinancing) and (B)
all reasonable fees, costs and expenses (including reasonable attorneys' fees)
incurred by Borrower in connection with such refinancing, (ii) such refinancing
is not subject to terms and conditions that are materially more burdensome or
restrictive to Borrower than the terms of the Senior Indenture as of the Closing
Date, (iii) such refinancing is subject to debt or lien (as applicable)
subordination provisions that are no less favorable to the Lender Group than
those set forth in the Intercreditor Agreement and the Subordinated Indenture
(as applicable), (iv) the maturity of such refinancing is at least 6 months
after the Maturity Date, and (v) there is no principal amortization with respect
to such refinancing that begins prior to the date that is 6 months after the
Maturity Date, and (c) Indebtedness issued by Borrower the proceeds of which are
used to redeem all or a portion of the Senior Notes so long as (i) the aggregate
principal amount of such Indebtedness issued does not exceed the sum of (A)
105.9375% of the original aggregate principal amount of the Senior Notes and (B)
all reasonable fees, costs and expenses (including reasonable attorneys' fees)
incurred by Borrower in connection with the issuance of such Indebtedness, (ii)
such Indebtedness is not subject to terms and conditions that are materially
more burdensome or restrictive to Borrower than the terms of the Senior
Indenture as of the Closing Date, (iii) such Indebtedness is subject to lien
subordination provisions that are no less favorable to the Lender Group than
those set forth in the Intercreditor Agreement, (iv) the maturity of such
Indebtedness is at least 6 months after the Maturity Date, and (v) there is no
-22-
principal amortization with respect to such refinancing that begins prior to
the date that is 6 months after the Maturity Date, and (c) Indebtedness issued
by Borrower the proceeds of which are used to redeem all or a portion of the
Senior Notes so long as (i) the aggregate principal amount of such Indebtedness
issued does not exceed the sum of (A) 105.9375% of the original aggregate
principal amount of the Senior Notes and (B) all reasonable fees, costs and
expenses (including reasonable attorneys' fees) incurred by Borrower in
connection with the issuance of such Indebtedness, (ii) such Indebtedness is
not subject to terms and conditions that are materially more burdensome or
restrictive to Borrower than the terms of the Senior Indenture as of the
Closing Date, (iii) such Indebtedness is subject to lien subordination
provisions that are no less favorable to the Lender Group than those set forth
in the Intercreditor Agreement, (iv) the maturity of such Indebtedness is at
least 6 months after the Maturity Date, and (v) there is no principal
amortization with respect to such Indebtedness that begins prior to
the date that is 6 months after the Maturity Date.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) Investments received in settlement of amounts due to
Borrower or any of its Subsidiaries effected in the ordinary course of business
or owing to Borrower or any of its Subsidiaries as a result of Insolvency
Proceedings involving an Account Debtor or upon the foreclosure or enforcement
of any Lien in favor of Borrower or its Subsidiaries, (e) Permitted
Acquisitions, (f) Investments existing on the Closing Date as set forth on
Schedule P-2 and any renewal or replacement thereof, (g) Investments made by
Borrower to or in any Guarantor and Investments made by any Guarantor to or in
Borrower or any other Guarantor, (h) Investments made by any Foreign Subsidiary
to or in any other Foreign Subsidiary, (i) the acquisition by Borrower of all or
any part of the assets of any Guarantor and the acquisition by any Guarantor of
all or any part of the assets of any other Guarantor, (j) the acquisition of all
or any part of the assets of any Foreign Subsidiary by any other Foreign
Subsidiary, (k) guaranties permitted by Section 7.1 and any payments with
respect thereto and any rights of subrogation that arise therefrom, (l) equity
Investments owned as of the Closing Date by Borrower or any of its Subsidiaries
in any of their respective Subsidiaries, (m) Investments in the form of
deposits, prepayments and other credits to suppliers made in the ordinary course
of business, (n) Investments made in any Person to the extent such Investment
represents the non-cash portion of the consideration received in connection with
a Permitted Business Disposition, and (o) other Investments not permitted
pursuant to any subclause above, so long as the aggregate amount of such
Investments made after the Closing Date does not exceed $1,750,000.
"Permitted Liens" means (a) Liens created under the Loan Documents,
(b) Liens for taxes and other obligations or requirements owing to or imposed by
Governmental Authorities existing or having priority by operation of law that
either (i) are not yet delinquent, or (ii) do not constitute an Event of Default
hereunder and are the subject of Permitted Protests, (c) Liens set forth on
Schedule P-1 and any replacement or extension
-23-
thereof so long as such replacement or extension Lien secures Indebtedness, the
replacement or extension of which is permitted under Section 7.1(d), (d) the
interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
statutory Liens of banks and other financial institutions (and rights of
set-off), Liens of carriers, warehousemen, mechanics, repairmen, workmen and
materialmen, and other Liens imposed by law, in each case incurred in the
ordinary course of business and not in connection with the borrowing of money,
and which Liens either (i) are for sums not yet delinquent, or (ii) are the
subject of Permitted Protests, (g) Liens (i) incurred in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or (ii) Liens, pledges and deposits incurred in
the ordinary course of business to secure the performance of tenders, statutory
obligations, performance and completion bonds, surety and appeal bonds, bids,
leases, licenses, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money or other Indebtedness), (h) any interest or
title of a lessor or sublessor under any lease of real estate by Borrower or any
of its Subsidiaries and any leases or subleases of any real estate by Borrower
or any of its Subsidiaries to another Person in the ordinary course of business,
(j) Liens resulting from any judgment or award that is not an Event of Default
hereunder, (k) with respect to any Real Property, easements, rights-of-way,
restrictions, encroachments, and other defects or irregularities in title, in
each case which do not and will not interfere in any material respect with the
ordinary conduct of the business of Borrower or any of its Subsidiaries, (l) (i)
Liens granted to the trustees under the Senior Indenture and the Subordinated
Intenture on assets held by or collected by the applicable trustee in such
capacity to secure the compensation and indemnity obligations owing to the
applicable trustee, and (ii) other Liens granted to the trustee under the Senior
Indenture that secure the Indebtedness evidenced by the Senior Notes, (m) (i)
statutory landlord's Liens under leases under which Borrower or any of its
Subsidiaries is a tenant, (ii) rights reserved to or vested in any municipality
or governmental, statutory or public authority to control or regulate any
property of Borrower or any of its Subsidiaries, or to use such property in any
manner which does not materially impair the use of such property for the
purposes for which it is held by Borrower or any such Subsidiary, (iii) zoning
laws and ordinances and municipal regulations, (n) non-exclusive licenses of
patents, trademarks and other intellectual property rights granted by Borrower
or any of its Subsidiaries in the ordinary course of business and not
interfering in any respect with the ordinary conduct of the business of Borrower
or such Subsidiary, and (o) Liens on products and proceeds (including dividends,
distributions, interest and like payments on or with respect to, and insurance
and condemnation proceeds and rental, lease, licensing and similar proceeds) of,
and property evidencing or embodying, or constituting rights or other general
intangibles directly relating to or arising out of, and accessions and
improvements to, property or assets subject to any Lien permitted pursuant to
Section 7.2.
-24-
"Permitted Protest" means the right of Borrower or any of its
Subsidiaries to protest any Lien (other than any Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on the Books in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by Borrower or its Subsidiary, as applicable, in good faith, and (c)
Agent is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Agent's
Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate principal amount outstanding at any one time not in excess of (a)
$8,000,000 if EBITDA is equal to or greater than $31,000,000 for the most
recently completed fiscal year of Borrower, (b) $7,000,000 if EBITDA is equal to
or greater than $27,000,000 but less than $31,000,000 for the most recently
completed fiscal year of Borrower, (c) $6,000,000 if EBITDA is equal to or
greater than $23,000,000 but less than $27,000,000 for the most recently
completed fiscal year of Borrower, or (d) $5,000,000 at all other times.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Plan" means an "employee benefit plan," as defined in Section 3(3)
of ERISA, including a Multiemployer Plan, that Borrower, its Subsidiaries, or
ERISA Affiliates maintain, contribute to or have an obligation to contribute to.
"Pro Rata Share" means, as of any date of determination:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (i) prior to the Commitments being terminated or reduced to zero, the
percentage obtained by dividing (y) such Lender's Commitment, by (z) the
aggregate Commitments of all Lenders, and (ii) from and after the time that the
Commitments have been terminated or reduced to zero, the percentage obtained by
dividing (y) the aggregate outstanding principal amount of such Lender's
Advances by (z) the aggregate outstanding principal amount of all Advances,
(b) with respect to a Lender's obligation to participate in Letters
of Credit, to reimburse the Issuing Lender, and to receive payments of fees with
respect thereto, (i) prior to the Commitments being terminated or reduced to
zero, the percentage obtained by dividing (y) such Lender's Commitment, by (z)
the aggregate Commitments of all Lenders, and (ii) from and after the time that
the Commitments have been terminated or reduced to zero, the percentage obtained
by dividing (y) the aggregate outstanding principal amount of
-25-
such Lender's Advances by (z) the aggregate outstanding principal amount of all
Advances, and
(c) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 16.7), the
percentage obtained by dividing (i) such Lender's Commitment by (ii) the
aggregate amount of Commitments of all Lenders; provided, however, that in the
event the Commitments have been terminated or reduced to zero, Pro Rata Share
under this clause shall be the percentage obtained by dividing (A) the
outstanding principal amount of such Lender's Advances plus such Lender's
ratable portion of the Risk Participation Liability with respect to outstanding
Letters of Credit, by (B) the outstanding principal amount of all Advances plus
the aggregate amount of the Risk Participation Liability with respect to
outstanding Letters of Credit.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Qualified Cash" means, as of any date of determination, the amount
of unrestricted cash and Cash Equivalents of Borrower and its Subsidiaries that
is in Deposit Accounts or in Securities Accounts, or any combination thereof,
and which such Deposit Account or Securities Account is the subject of a Control
Agreement and is maintained by a branch office of the bank or securities
intermediary located within the United States.
"Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by Borrower or its Subsidiaries and the improvements
thereto.
"Record" means information that is inscribed on a tangible medium or
that is stored in an electronic or other medium and is retrievable in
perceivable form.
"Recurring Trade Show" has the meaning set forth in Section 1.6.
"Register" has the meaning set forth in Section 14.1(h).
"Registered Loan" has the meaning set forth in Section 2.15.
"Registered Note" has the meaning set forth in Section 2.15.
"Related Fund" has the meaning set forth in the definition of
"Eligible Transferee".
-26-
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Replacement Lender" has the meaning set forth in Section 15.2(a).
"Report" has the meaning set forth in Section 16.17.
"Reportable Event" has the meaning set forth in Section 4043(c) of
ERISA.
"Required Availability" means that the sum of (a) Excess
Availability, plus (b) Qualified Cash exceeds $25,000,000.
"Required Lenders" means, at any time, Lenders whose aggregate Pro
Rata Shares (calculated under clause (c) of the definition of Pro Rata Shares)
equal or exceed 50.1%.
"Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Revolver Usage" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of Credit,
all reimbursement obligations of Borrower to the Issuing Lender with respect to
an L/C Undertaking, consisting of (a) the amount available to be drawn or that
may become available to be drawn, (b) all amounts that have been paid by the
Issuing Lender to the Underlying Issuer to the extent not reimbursed by
Borrower, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
-27-
"Securities Account" means a securities account (as that term is
defined in the Code).
"Seller" has the meaning set forth in the definition of "Permitted
Acquisition."
"Senior Indenture" means that certain Indenture dated as of March
28, 2002, by and among Borrower, certain Subsidiaries of Borrower, and U.S. Bank
National Association, as trustee.
"Senior Notes" means the 11-7/8% Senior Secured Notes due October 1,
2007 issued by Borrower pursuant to the Senior Indenture.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
"Solvent" means, with respect to any Person on a particular date,
that, at fair valuations, the sum of such Person's assets is greater than all of
such Person's debts.
"Stock" means all shares, options, warrants, interests,
participations, or other equity equivalents (regardless of how designated) of or
in a Person, whether voting or nonvoting, including common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the SEC under the Exchange
Act).
"Stock Pledge Agreement" means the Stock Pledge Agreement, in form
and substance satisfactory to Agent, entered into on or after the date hereof by
Borrower and each Guarantor in favor of Agent with respect to the pledge of
Stock owned by Borrower or such Guarantor that is required to be pledged
hereunder.
"Subordinated Indenture" means that certain Indenture dated as of
June 28, 2001, by and among Borrower, certain Subsidiaries of Borrower, and The
Bank of New York, as trustee.
"Subordinated Notes" means the 10.375% Senior Subordinated Notes due
June 15, 2011 issued by Borrower pursuant to the Subordinated Indenture.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
-28-
"Swing Lender" means WFF or any other Lender that, at the request of
Borrower and with the consent of Agent agrees, in such Lender's sole discretion,
to become the Swing Lender under Section 2.3(d).
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 16.11.
"Trademark Security Agreement" means a trademark security agreement
executed and delivered by Borrower or a Guarantor and Agent, the form and
substance of which is satisfactory to Agent.
"TTM EBITDA" means, as of any date of determination, EBITDA for the
12 month period ended on the date of the most recent financial statements
delivered by Borrower to Agent pursuant to Section 6.3(a).
"UCC Filing Reserve" means a reserve against the Maximum Revolver
Amount and the Borrowing Base in the amount of $10,000,000 which will be imposed
from the Closing Date through the date upon which Agent has confirmed the filing
of UCC-1 financing statements in the office or offices as may be necessary or,
in the opinion of Agent, desirable to perfect the Agent's Liens in and to the
Collateral and Agent has received searches, satisfactory to Agent in its
Permitted Discretion, reflecting such filings; provided that the amount of such
reserve shall be reduced to $5,000,000 on the date that Agent has confirmed the
filing of a UCC-1 financing statement with respect to the Borrower Collateral in
the office of the Secretary of State of the State of Delaware and Agent has
received searches, satisfactory to Agent in its Permitted Discretion, reflecting
such filings.
"United States" means the United States of America.
"Underlying Issuer" means a third Person that is the beneficiary of
an L/C Undertaking and that has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrower.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"Unfunded Current Liability" of any Benefit Plan shall mean the
amount, if any, by which the value of the accumulated plan benefits under the
Plan determined on a plan termination basis in accordance with actuarial
assumptions at such time consistent with those prescribed by the PBGC for
purposes of Section 4044 of ERISA, exceeds the actual fair market value of all
plan assets allocable to such liabilities under Title IV of ERISA (excluding any
accrued but unpaid contributions).
-29-
"Unfunded Pension Liability" means the aggregate amount of the sum
of (a) the greater of (i) the amount at any time by which the projected benefit
obligation (PBO) for a Benefit Plan as determined in accordance with FAS 87
exceeds the actual fair market value of its assets as of the most recent
valuation date; or (ii) the amount by which the present value of all accrued
benefits under a Benefit Plan exceeds the actual fair market value of all assets
of such Benefit Plan allocable to such benefits in accordance with Title IV of
ERISA determined as of the most recent valuation date for each such Benefit Plan
using the actuarial assumptions for funding purposes then in effect under such
Benefit Plan, and (b) for a period of 5 years following a transaction that might
reasonably be expected to be covered by Section 4069 of ERISA, the liabilities
(whether or not accrued) that could be avoided by the Borrower, its
Subsidiaries, or any ERISA Affiliate as a result of such transaction.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a
national banking association.
"WFF" means Xxxxx Fargo Foothill, Inc., a California corporation.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP as in effect from time to time;
provided that, if Borrower notifies Agent that Borrower requests an amendment to
any provision hereof to eliminate the effect of any change occurring after the
Closing Date in GAAP or in the application thereof on the operation of such
provision (or if Agent notifies Borrower that Agent requests an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith. Whenever the term "Borrower" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Borrower and
its Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references
-30-
herein are to this Agreement unless otherwise specified. Any reference in this
Agreement or in the other Loan Documents to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein to the repayment in full of the Obligations shall mean the
repayment in full in cash of all Obligations other than contingent
indemnification Obligations. Any reference herein to any Person shall be
construed to include such Person's successors and assigns. Any requirement of a
writing contained herein or in the other Loan Documents shall be satisfied by
the transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
1.6 CALCULATION OF CERTAIN FINANCIAL TERMS.
(a) In the event that any annual trade show produced by Borrower or
any of its Subsidiaries on a regular basis (each, a "Recurring Trade Show")
occurred both (i) more than once during any four fiscal quarter period (each, a
"Four Quarter Period") and (ii) during the last four weeks of such Four Quarter
Period, then EBITDA shall be calculated with respect to such Four Quarter Period
as if all such Recurring Trade Shows that occurred during such Four Quarter
Period (other than the last such Recurring Trade Show) occurred instead in the
fiscal quarter immediately preceding such Four Quarter Period.
(b) In the event that any Recurring Trade Show did not occur during
any Four Quarter Period, but did occur during the four week period immediately
succeeding such Four Quarter Period, then EBITDA shall be calculated with
respect to such Four Quarter Period as if the Recurring Trade Show, if any, that
last occurred during the fiscal quarter immediately preceding such Four Quarter
Period occurred instead in the last quarter of such Four Quarter Period.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender agrees (severally, not jointly or
jointly and severally) to make advances ("Advances") to Borrower in an amount at
any one time outstanding not to exceed such Lender's Pro Rata Share of an amount
equal to the lesser of (i) the Maximum Revolver Amount less the Letter of Credit
Usage less the UCC Filing Reserve, or (ii) the Borrowing Base less the Letter of
Credit Usage.
-31-
(b) Anything to the contrary in this Section 2.1 notwithstanding,
Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that Borrower is required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay under any Section
of this Agreement or any other Loan Document, and (ii) amounts owing by Borrower
or its Subsidiaries to any Person to the extent secured by a Lien on, or trust
over, any of the Collateral (other than any existing Permitted Lien set forth on
Schedule P-1 which is specifically identified thereon as entitled to have
priority over the Agent's Liens), which Lien or trust, in the Permitted
Discretion of Agent likely would have a priority superior to the Agent's Liens
(such as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad
valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral. Agent shall provide prompt written
notice to Borrower of the establishment of any reserve pursuant to this Section,
concurrently with the establishment of such reserve, which notice shall
specifically state the basis for such reserve; provided that the failure of
Agent to provide such notice shall not affect the validity of any such reserve.
In addition to the foregoing, Agent shall have the right to have Enterprise
Valuations conducted annually after the Closing Date (or with greater frequency
if an Event of Default has occurred and is continuing) for the purpose of
re-determining Borrower's and its Subsidiaries' enterprise value and, as a
result, re-determining the Borrowing Base.
(c) The Lenders shall have no obligation to make Advances hereunder
to the extent such Advances would cause the Revolver Usage to exceed the Maximum
Revolver Amount.
(d) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
2.2 OPTIONAL REDUCTION OF MAXIMUM REVOLVER AMOUNT.
Upon 10 Business Days prior written notice by Borrower to Agent and
subject to payment of the Applicable Prepayment Premium, Borrower may reduce the
Maximum Revolver Amount to an amount not less than the greater of (i) the sum of
(x) the aggregate unpaid principal amount of all Advances (including Swing Loans
and Agent Advances) then outstanding, (y) the aggregate principal amount of all
Advances not yet made as to which a request has been made by Borrower under
Section 2.3, and (z) the then extant Letter of Credit Usage, and (ii)
$28,000,000. Any such reduction shall be in an amount which is an integral
multiple of $1,000,000 and shall be irrevocable. Once reduced, the Maximum
Revolver Amount may not be increased. Each such reduction of the Maximum
Revolver
-32-
Amount shall reduce the Commitment of each Lender proportionately in accordance
with its Pro Rata Share thereof.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person, specifying (i) the amount
of such Borrowing, (ii) whether such Borrowing is to be a Swing Loan, (iii) if
such Borrowing is not to be a Swing Loan, whether such Borrowing is to be a
LIBOR Rate Loan (including the Interest Period applicable thereto) or a Base
Rate Loan, and (iv) the requested Funding Date, delivered to Agent (A), with
respect to Borrowings other than Borrowings described in subpart (B) below, no
later than 10:00 a.m. (California time) on the Business Day prior to the date
that is the requested Funding Date or (B), with respect to Borrowings for which
Borrower has requested a Swing Loan in an amount of $3,000,000 or less, no later
than 10:00 a.m. (California time) on the requested Funding Date. At Agent's
election, in lieu of delivering the above-described written request, any
Authorized Person may give Agent telephonic notice of such request by the
required time. In such circumstances, Borrower agrees that any such telephonic
notice will be confirmed in writing within 24 hours of the giving of such notice
and the failure to provide such written confirmation shall not affect the
validity of the request. If Swing Lender declines in its sole discretion to make
a Swing Loan pursuant to Section 2.3(d), the terms of Section 2.3(c) shall apply
to such requested Borrowing, and any request for a Borrowing given pursuant to
Section 2.3(a)(ii)(B) shall be deemed a request for a Borrowing given pursuant
to Section 2.3(a)(ii)(A) on the date on which such request was delivered to
Agent.
(b) [INTENTIONALLY OMITTED]
(c) MAKING OF LOANS OTHER THAN SWING LOANS.
(i) With respect to any Borrowing other than a Swing Loan,
promptly after receipt of a request for a Borrowing pursuant to
Section 2.3(a), Agent shall notify the Lenders, not later than 1:00
p.m. (California time) on the Business Day immediately preceding the
Funding Date applicable thereto, by telecopy, telephone, or other
similar form of transmission, of the requested Borrowing. Each
Lender shall make the amount of such Lender's Pro Rata Share of the
requested Borrowing available to Agent in immediately available
funds, to Agent's Account, not later than 10:00 a.m. (California
time) on the Funding Date applicable thereto. After Agent's receipt
of the proceeds of such Advances, Agent shall make the proceeds
thereof available to Borrower on the applicable Funding Date by
transferring immediately available funds equal to such proceeds
received by Agent to Borrower's Designated Account; provided,
however, that, subject to the provisions of Section 2.3(i), Agent
shall not request any Lender to make, and no Lender shall have the
obligation to make, any Advance if Agent shall have actual knowledge
that (1) one or more
-33-
of the applicable conditions precedent set forth in Section 3 will
not be satisfied on the requested Funding Date for the applicable
Borrowing unless such condition has been waived, or (2) the
requested Borrowing would exceed the Availability on such Funding
Date.
(ii) Unless Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing
Date, prior to 9:00 a.m. (California time) on the date of such
Borrowing, that such Lender will not make available as and when
required hereunder to Agent for the account of Borrower the amount
of that Lender's Pro Rata Share of the Borrowing, Agent may assume
that each Lender has made or will make such amount available to
Agent in immediately available funds on the Funding Date and Agent
may (but shall not be so required), in reliance upon such
assumption, make available to Borrower on such date a corresponding
amount. If and to the extent any Lender shall not have made its full
amount available to Agent in immediately available funds and Agent
in such circumstances has made available to Borrower such amount,
that Lender shall on the Business Day following such Funding Date
make such amount available to Agent, together with interest at the
Defaulting Lender Rate for each day during such period. A notice
submitted by Agent to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest error. If such
amount is so made available, such payment to Agent shall constitute
such Lender's Advance on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to Agent on the
Business Day following the Funding Date, Agent will notify Borrower
of such failure to fund and, upon demand by Agent, Borrower shall
pay such amount to Agent for Agent's account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to
the Advances composing such Borrowing. The failure of any Lender to
make any Advance on any Funding Date shall not relieve any other
Lender of any obligation hereunder to make an Advance on such
Funding Date, but no Lender shall be responsible for the failure of
any other Lender to make the Advance to be made by such other Lender
on any Funding Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrower to Agent for the Defaulting
Lender's benefit, and, in the absence of such transfer to the
Defaulting Lender, Agent shall transfer any such payments to each
other non-Defaulting Lender member of the Lender Group ratably in
accordance with their Commitments (but only to the extent that such
Defaulting Lender's Advance was funded by the other members of the
Lender Group) or, if so directed by Borrower and if no Default or
Event of Default had occurred and is continuing (and to the extent
such
-34-
Defaulting Lender's Advance was not funded by the Lender Group),
retain same to be re-advanced to Borrower as if such Defaulting
Lender had made Advances to Borrower. Subject to the foregoing,
Agent may hold and, in its Permitted Discretion, re-lend to Borrower
for the account of such Defaulting Lender the amount of all such
payments received and retained by Agent for the account of such
Defaulting Lender. Solely for the purposes of voting or consenting
to matters with respect to the Loan Documents, such Defaulting
Lender shall be deemed not to be a "Lender" and such Lender's
Commitment shall be deemed to be zero. This Section shall remain
effective with respect to such Lender until (x) the Obligations
under this Agreement shall have been declared or shall have become
immediately due and payable, (y) the non-Defaulting Lenders, Agent,
and Borrower shall have waived such Defaulting Lender's default in
writing, or (z) the Defaulting Lender makes its Pro Rata Share of
the applicable Advance and pays to Agent all amounts owing by
Defaulting Lender in respect thereof. The operation of this Section
shall not be construed to increase or otherwise affect the
Commitment of any Lender, to relieve or excuse the performance by
such Defaulting Lender or any other Lender of its duties and
obligations hereunder, or to relieve or excuse the performance by
Borrower of its duties and obligations hereunder to Agent or to the
Lenders other than such Defaulting Lender. Any such failure to fund
by any Defaulting Lender shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Borrower at
its option, upon written notice to Agent, to arrange for a
substitute Lender to assume the Commitment of such Defaulting
Lender, such substitute Lender to be acceptable to Agent. In
connection with the arrangement of such a substitute Lender, the
Defaulting Lender shall have no right to refuse to be replaced
hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance in favor of the substitute Lender (and
agrees that it shall be deemed to have executed and delivered such
document if it fails to do so) subject only to being repaid its
share of the outstanding Obligations (including an assumption of its
Pro Rata Share of the Risk Participation Liability) without any
premium or penalty of any kind whatsoever; provided, however, that
any such assumption of the Commitment of such Defaulting Lender
shall not be deemed to constitute a waiver of any of the Lender
Groups' or Borrower's rights or remedies against any such Defaulting
Lender arising out of or in relation to such failure to fund.
(d) MAKING OF SWING LOANS.
(i) At the option of Swing Lender after receipt of a request
for a Swing Loan pursuant to Section 2.3(a), Swing Lender may make
Advances pursuant to this Section 2.3(d) (each such Advance being
referred to as a "Swing Loan" and all such Advances being referred
to collectively as "Swing Loans") to Borrower on the Funding Date
applicable thereto by transferring
-35-
immediately available funds to Borrower's Designated Account;
provided that, with respect to any request for a Swing Loan pursuant
to Section 2.3(a), Swing Lender shall notify Borrower and Agent by
11:00 a.m. (California time) on the date such request is made if
Swing Lender will not make such Swing Loan. Each Swing Loan shall be
deemed to be an Advance hereunder and shall be subject to all the
terms and conditions applicable to other Advances, except that no
such Swing Loan shall be eligible to be a LIBOR Rate Loan and all
payments on any Swing Loan shall be payable to Swing Lender as a
Lender solely for its own account (and for the account of the holder
of any participation interest with respect to such Swing Loan).
Subject to the provisions of Section 2.3(i), Agent shall not request
Swing Lender as a Lender to make, and Swing Lender as a Lender shall
not make, any Swing Loan if Agent has actual knowledge that (i) one
or more of the applicable conditions precedent set forth in Section
3 will not be satisfied on the requested Funding Date for the
applicable Borrowing unless such condition has been waived, or (ii)
the requested Borrowing would exceed the Availability on such
Funding Date. Swing Lender as a Lender shall not otherwise be
required to determine whether the applicable conditions precedent
set forth in Section 3 have been satisfied on the Funding Date
applicable thereto prior to making, in its sole discretion, any
Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens,
constitute Obligations hereunder, and bear interest at the rate
applicable from time to time to Advances that are Base Rate Loans.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrower and the Lenders,
from time to time in Agent's sole discretion, (1) after the
occurrence and during the continuance of a Default or an Event of
Default, or (2) at any time that any of the other applicable
conditions precedent set forth in Section 3 have not been satisfied,
to make Advances to Borrower on behalf of the Lenders that Agent, in
its Permitted Discretion deems necessary or desirable (A) to
preserve or protect the Collateral, or any portion thereof, (B) to
enhance the likelihood of repayment of the Obligations, or (C) to
pay any other amount chargeable to Borrower pursuant to the terms of
this Agreement, including Lender Group Expenses and the costs, fees,
and expenses described in Section 10 (any of the Advances described
in this Section 2.3(e) shall be referred to as "Agent Advances");
provided, that notwithstanding anything to the contrary contained in
this Section 2.3(e), the aggregate principal amount of Agent
Advances outstanding at any time, when taken together with the
aggregate principal amount of Overadvances made in accordance with
Section 2.3(i) hereof outstanding at such time, shall not exceed an
amount equal to the lesser of (x)
-36-
10% of the Borrowing Base then in effect and (y) $4,000,000. Each
Agent Advance shall be deemed to be an Advance hereunder, except
that no such Agent Advance shall be eligible to be a LIBOR Rate Loan
and all payments thereon shall be payable to Agent solely for its
own account.
(ii) The Agent Advances shall be repayable on demand, secured
by the Agent's Liens granted to Agent under the Loan Documents,
constitute Obligations hereunder, and bear interest at the rate
applicable from time to time to Advances that are Base Rate Loans.
(f) SETTLEMENT. It is agreed that each Lender's funded portion of
the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrower) that to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so
determined by Agent, (1) on behalf of Swing Lender, with respect to
each outstanding Swing Loan, (2) for itself, with respect to each
Agent Advance, and (3) with respect to Borrower's or its
Subsidiaries' Collections received, as to each by notifying the
Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m.
(California time) on the Business Day immediately prior to the date
of such requested Settlement (the date of such requested Settlement
being the "Settlement Date"). Such notice of a Settlement Date shall
include a summary statement of the amount of outstanding Advances,
Swing Loans, and Agent Advances for the period since the prior
Settlement Date. Subject to the terms and conditions contained
herein (including Section 2.3(c)(iii)): (y) if a Lender's balance of
the Advances (including Swing Loans and Agent Advances) exceeds such
Lender's Pro Rata Share of the Advances (including Swing Loans and
Agent Advances) as of a Settlement Date, then Agent shall, by no
later than 12:00 p.m. (California time) on the Settlement Date,
transfer in immediately available funds to a Deposit Account of such
Lender (as such Lender may designate), an amount such that each such
Lender shall, upon receipt of such amount, have as of the Settlement
Date, its Pro Rata Share of the Advances (including Swing Loans and
Agent Advances), and (z) if a Lender's balance of the Advances
(including Swing Loans and Agent Advances) is less than such
Lender's Pro Rata Share of the Advances (including Swing Loans and
Agent Advances) as of a Settlement Date, such Lender shall no later
than 12:00 p.m. (California time) on the Settlement Date transfer in
immediately available
-37-
funds to the Agent's Account, an amount such that each
such Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances (including Swing
Loans and Agent Advances). Such amounts made available to Agent
under clause (z) of the immediately preceding sentence shall be
applied against the amounts of the applicable Swing Loans or Agent
Advances and, together with the portion of such Swing Loans or Agent
Advances representing Swing Lender's Pro Rata Share thereof, shall
constitute Advances of such Lenders. If any such amount is not made
available to Agent by any Lender on the Settlement Date applicable
thereto to the extent required by the terms hereof, Agent shall be
entitled to recover for its account such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Swing
Loans, and Agent Advances as of a Settlement Date, Agent shall, as
part of the relevant Settlement, apply to such balance the portion
of payments actually received in good funds by Agent with respect to
principal, interest, fees payable by Borrower and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a
net amount is owed to any such Lender after such application, such
net amount shall be distributed by Agent to that Lender as part of
such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing
Lender any payments received by Agent, that in accordance with the
terms of this Agreement would be applied to the reduction of the
Advances, for application to Swing Lender's Pro Rata Share of the
Advances. If, as of any Settlement Date, Collections of Borrower or
its Subsidiaries received since the then immediately preceding
Settlement Date have been applied to Swing Lender's Pro Rata Share
of the Advances other than to Swing Loans, as provided for in the
previous sentence, Swing Lender shall pay to Agent for the accounts
of the Lenders, and Agent shall pay to the Lenders, to be applied to
the outstanding Advances of such Lenders, an amount such that each
Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Advances. During the
period between Settlement Dates, Swing Lender with respect to Swing
Loans, Agent with respect to Agent Advances, and each Lender
(subject to the effect of letter agreements between Agent and
individual Lenders) with respect to the Advances other than Swing
Loans and Agent Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the daily
amount of funds employed by Swing Lender, Agent, or the Lenders, as
applicable.
-38-
(g) NOTATION. Agent shall record on its books the principal amount
of the Advances owing to each Lender, including the Swing Loans owing to Swing
Lender, and Agent Advances owing to Agent, and the interests therein of each
Lender, from time to time and such records shall, absent manifest error,
conclusively be presumed to be correct and accurate. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment of principal of such Lender's Advances in its books and records,
including computer records.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than Swing
Loans and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as
applicable, and Agent or Swing Lender, as applicable, may, but is not obligated
to, knowingly and intentionally, continue to make Advances (including Swing
Loans) to Borrower notwithstanding that an Overadvance exists or thereby would
be created, so long as (i) after giving effect to such Advances, the outstanding
Revolver Usage does not exceed the Borrowing Base by more than $4,000,000, (ii)
after giving effect to such Advances, the outstanding Revolver Usage (except for
and excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) does not exceed the Maximum Revolver Amount, and (iii) at the
time of the making of any such Advance, Agent does not believe, in good faith,
that the Overadvance created by such Advance will be outstanding for more than
90 days. The foregoing provisions are for the exclusive benefit of Agent, Swing
Lender, and the Lenders and are not intended to benefit Borrower in any way. The
Advances and Swing Loans, as applicable, that are made pursuant to this Section
2.3(i) shall be subject to the same terms and conditions as any other Advance or
Swing Loan, as applicable, except that they shall not be eligible for the LIBOR
Option and the rate of interest applicable thereto shall be the rate applicable
to Advances that are Base Rate Loans under Section 2.6(c) hereof without regard
to the presence or absence of a Default or Event of Default.
(A) In the event Agent obtains actual knowledge that the
Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such excess,
Agent shall notify the Lenders as soon as practicable (and prior to
making any (or any additional) intentional Overadvances (except for
and excluding amounts charged to the Loan Account for interest,
fees, or Lender Group Expenses) unless Agent determines that prior
notice
-39-
would result in imminent harm to the Collateral or its value),
and the Lenders thereupon shall, together with Agent, jointly
determine the terms of arrangements that shall be implemented
with Borrower intended to reduce, within a reasonable time,
the outstanding principal amount of the Advances to Borrower
to an amount permitted by the preceding paragraph. In the
event Agent or any Lender disagrees over the terms of
reduction or repayment of any Overadvance, the terms of
reduction or repayment thereof shall be implemented according
to the determination of the Required Lenders.
(B) Each Lender shall be obligated to settle with Agent
as provided in Section 2.3(f) for the amount of such Lender's
Pro Rata Share of any unintentional Overadvances by Agent
reported to such Lender, any intentional Overadvances made as
permitted under this Section 2.3(i), and any Overadvances
resulting from the charging to the Loan Account of interest,
fees, or Lender Group Expenses.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWER.
(i) Except as otherwise expressly provided herein, all
payments by Borrower shall be made to Agent's Account for the
account of the Lender Group and shall be made in immediately
available funds, no later than 11:00 a.m. (California time) on the
date specified herein. Any payment received by Agent later than
11:00 a.m. (California time) shall be deemed to have been received
on the following Business Day and any applicable interest or fee
shall continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Borrower prior to the
date on which any payment is due to the Lenders that Borrower will
not make such payment in full as and when required, Agent may assume
that Borrower has made (or will make) such payment in full to Agent
on such date in immediately available funds and Agent may (but shall
not be so required), in reliance upon such assumption, distribute to
each Lender on such due date an amount equal to the amount then due
such Lender. If and to the extent Borrower does not make such
payment in full to Agent on the date when due, each Lender severally
shall repay to Agent on demand such amount distributed to such
Lender, together with interest thereon at the Defaulting Lender Rate
for each day from the date such amount is distributed to such Lender
until the date repaid.
(b) APPORTIONMENT AND APPLICATION OF PAYMENTS.
-40-
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan Documents
(including letter agreements between Agent and individual Lenders),
aggregate principal and interest payments shall be apportioned
ratably among the Lenders (according to the unpaid principal balance
of the Obligations to which such payments relate held by each
Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account, after giving effect
to any letter agreements between Agent and individual Lenders) shall
be apportioned ratably among the Lenders having a Pro Rata Share of
the type of Commitment or Obligation to which a particular fee
relates. Subject to Section 2.4(b)(iii), all payments shall be
remitted to Agent and all such payments, and all proceeds of
Collateral received by Agent, shall be applied as follows:
(A) first, to pay any Lender Group Expenses then due to
Agent under the Loan Documents, until paid in full,
(B) second, to pay any Lender Group Expenses then due to
the Lenders under the Loan Documents, on a ratable basis,
until paid in full,
(C) third, to pay any fees then due to Agent (for its
separate account, after giving effect to any letter agreements
between Agent and individual Lenders) under the Loan Documents
until paid in full,
(D) fourth, to pay any fees then due to any or all of
the Lenders (after giving effect to any letter agreements
between Agent and individual Lenders) under the Loan
Documents, on a ratable basis, until paid in full,
(E) fifth, to pay interest due in respect of all Agent
Advances until paid in full,
(F) sixth, ratably to pay interest due in respect of the
Advances (other than Agent Advances), and the Swing Loans
until paid in full,
(G) seventh, to pay the principal of all Agent Advances
until paid in full,
(H) eighth, to pay the principal of all Swing Loans
until paid in full,
-41-
(I) ninth, so long as no Event of Default has occurred
and is continuing, to pay the principal of all Advances until
paid in full,
(J) tenth, if an Event of Default has occurred and is
continuing, ratably (i) to pay the principal of all Advances
until paid in full, and (ii) to Agent, to be held by Agent,
for the ratable benefit of Issuing Lender and Lenders, as cash
collateral in an amount up to 105% of the then extant Letter
of Credit Usage until paid in full,
(K) eleventh, if an Event of Default has occurred and is
continuing, to pay any other Obligations, and
(L) twelfth, to Borrower (to be wired to the Designated
Account) or such other Person entitled thereto under
applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant
to the applicable wire instructions received from each Lender in
writing, such funds as it may be entitled to receive, subject to a
Settlement delay as provided in Section 2.3(f).
(iii) In each instance, so long as no Event of Default has
occurred and is continuing, this Section 2.4(b) shall not be deemed
to apply to any payment by Borrower specified by Borrower to be for
the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to
the terms thereof, including loan fees, service fees, professional
fees, interest (and specifically including interest accrued after
the commencement of any Insolvency Proceeding), default interest,
interest on interest, and expense reimbursements, whether or not any
of the foregoing would be or is allowed or disallowed in whole or in
part in any Insolvency Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that
such priority provisions in such documents shall be read together
and construed, to the fullest extent possible, to be in concert with
each other. In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrower to the Lender Group pursuant to Section 2.1 or
Section 2.12 is greater
-42-
than either the Dollar or percentage limitations set forth in Section 2.1 or
Section 2.12, as applicable (an "Overadvance"), Borrower immediately shall pay
to Agent, in cash, the amount of such excess, which amount shall be used by
Agent to reduce the Obligations in accordance with the priorities set forth in
Section 2.4(b). In addition, Borrower hereby promises to pay the Obligations
(including principal, interest, fees, costs, and expenses) in Dollars in full as
and when due and payable under the terms of this Agreement and the other Loan
Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof as follows (i) if the relevant Obligation is an Advance that is
a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR
Rate Margin, and (ii) otherwise, at a per annum rate equal to the Base Rate plus
the Base Rate Margin.
The foregoing notwithstanding, at no time shall any portion of the
Obligations bear interest on the Daily Balance thereof at a per annum rate less
than 6.50% (the "Minimum Daily Rate"). To the extent that interest accrued
hereunder at the rate set forth herein would be less than the Minimum Daily
Rate, the interest rate chargeable hereunder for such day automatically shall be
deemed increased to the Minimum Daily Rate.
(b) LETTER OF CREDIT FEE. Borrower shall pay Agent (for the ratable
benefit of the Lenders, subject to any letter agreement between Agent and
individual Lenders), a Letter of Credit fee (in addition to the charges,
commissions, fees, and costs set forth in Section 2.12(e)) that shall accrue at
a rate equal to 3.0% per annum times the Daily Balance of the undrawn amount of
all outstanding Letters of Credit.
(c) DEFAULT RATE. At the election of Agent or the Required Lenders
upon the occurrence and during the continuation of an Event of Default,
(i) all Obligations (except for undrawn Letters of Credit)
that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof at a per
annum rate equal to 3 percentage points above the per annum rate
otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above shall be
increased to 3 percentage points above the per annum rate otherwise
applicable hereunder.
(d) PAYMENT. Except as provided to the contrary in Section 2.13(a),
interest, Letter of Credit fees, and all other fees payable hereunder shall be
due and payable, in arrears, on the first day of each month at any time that
Obligations or Commitments are
-43-
outstanding. Borrower hereby authorizes Agent, from time to time without prior
notice to Borrower, to charge such interest and fees, all Lender Group Expenses
(as and when incurred), the charges, commissions, fees, and costs provided for
in Section 2.12(e) (as and when accrued or incurred), the fees and costs
provided for in Section 2.11 (as and when accrued or incurred), and all other
payments as and when due and payable under any Loan Document to Borrower's Loan
Account, which amounts thereafter shall, unless otherwise paid, constitute
Advances hereunder and shall accrue interest at the rate then applicable to
Advances hereunder. Agent shall provide Borrower written notice, as part of its
monthly statement to Borrower, of any such charges to Borrower's Loan Account,
which notice shall include the aggregate amount charged thereto. Any interest
not paid when due shall be compounded by being charged to Borrower's Loan
Account and shall thereafter constitute Advances hereunder and shall accrue
interest at the rate then applicable to Advances that are Base Rate Loans
hereunder.
(e) COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrower and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.
2.7 CASH MANAGEMENT.
(a) Borrower shall and shall cause each of the Guarantors to (i)
establish and maintain cash management services at one or more of the banks set
forth on Schedule 2.7(a) (each, a "Cash Management Bank"), and shall request in
writing and otherwise take such reasonable steps to ensure that all of its and
the Guarantors' Account Debtors forward payment of the amounts owed by them
directly to such Cash Management Banks, and (ii) deposit or cause to be
deposited promptly, and in any event no later than the first Business Day after
the date of receipt thereof, all of their Collections (including those sent
directly by
-44-
their Account Debtors to a Cash Management Bank) into a bank account (a "Cash
Management Account") at one of the Cash Management Banks.
(b) To the extent required under Section 4.7, each Cash Management
Bank shall establish and maintain Control Agreements with Agent and Borrower.
Anything contained herein to the contrary notwithstanding, Agent agrees that it
shall not provide the above-described notice to the Cash Management Bank unless
and until an Event of Default has occurred and is continuing. Once an Event of
Default has occurred and is continuing, Agent shall be free to exercise its
right to issue such notice and the subsequent elimination of the subject Event
of Default shall not eliminate the effectiveness of such notice.
(c) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Schedule 2.7(a) to add or replace a Cash
Management Bank or Cash Management Account; provided, however, that prior to or
contemporaneously with the time of the opening of such Cash Management Account,
Borrower (or Guarantor, as applicable) and such prospective Cash Management Bank
shall have executed and delivered to Agent a Control Agreement.
(d) The Cash Management Accounts shall be cash collateral accounts,
with all cash, checks and similar items of payment in such accounts securing
payment of the Obligations, and in which Borrower hereby grants a Lien to Agent.
2.8 CREDITING PAYMENTS. The receipt of any payment item by Agent shall not
be considered a payment on account unless such payment item is a wire transfer
of immediately available federal funds made to the Agent's Account or unless and
until such payment item is honored when presented for payment. Should any
payment item not be honored when presented for payment, then Borrower shall be
deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into the
Agent's Account on a Business Day on or before 11:00 a.m. (California time). If
any payment item is received into the Agent's Account on a non-Business Day or
after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have
been received by Agent as of the opening of business on the immediately
following Business Day.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances, and
Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person or, without instructions, if pursuant to
Section 2.6(d). Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by Borrower and made by Agent or the Lenders hereunder.
Unless otherwise agreed by Agent and Borrower, any Advance, Agent Advance, or
Swing Loan requested by Borrower and made by Agent or the Lenders hereunder
shall be made to the Designated Account.
-45-
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent shall
maintain an account on its books in the name of Borrower (the "Loan Account") on
which Borrower will be charged with all Advances (including Agent Advances and
Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrower or for
Borrower's account, the Letters of Credit issued by Issuing Lender for
Borrower's account, and with all other payment Obligations hereunder or under
the other Loan Documents, including, accrued interest, fees and expenses, and
Lender Group Expenses. In accordance with Section 2.8, the Loan Account will be
credited with all payments received by Agent from Borrower or for Borrower's
account, including all amounts received in the Agent's Account from any Cash
Management Bank. Agent shall render statements regarding the Loan Account to
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing, and such
statements, absent manifest error, shall be presumed to be correct and accurate
and constitute an account stated between Borrower and the Lender Group.
2.11 FEES. Borrower shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) UNUSED LINE FEE. On the first day of each calendar quarter
during the term of this Agreement, an unused line fee in an amount equal to
0.75% per annum times the result of (i) the Maximum Revolver Amount, less (ii)
the sum of (A) the average Daily Balance of Advances that were outstanding
during the immediately preceding quarter, plus (B) the average Daily Balance of
the Letter of Credit Usage during the immediately preceding quarter; provided
that if this Agreement is terminated on any date that is not the first day of a
calendar quarter, the ratable portion of the foregoing fee that has accrued
through the date of termination shall be payable on the date of termination,
(b) FEE LETTER FEES. As and when due and payable under the terms of
the Fee Letter, the fees set forth in the Fee Letter, and
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. Audit, appraisal, and
valuation fees and charges as follows (i) a fee of $850 per day, per auditor,
plus out-of-pocket expenses for each financial audit of Borrower performed by
personnel employed by Agent, and (ii) the actual charges paid or incurred by
Agent if it elects to employ the services of one or more third Persons to
perform financial audits of Borrower or its Subsidiaries or to conduct
Enterprise Valuations.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrower or
any Guarantor (each, an "L/C") or to purchase participations or execute
indemnities or reimbursement obligations
-46-
(each such undertaking, an "L/C Undertaking") with respect to letters of credit
issued by an Underlying Issuer (as of the Closing Date, the prospective
Underlying Issuer is to be Xxxxx Fargo) for the account of Borrower or any
Guarantor. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Lender) to the Issuing Lender and Agent (reasonably in advance of the requested
date of issuance, amendment, renewal, or extension) a notice requesting the
issuance of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking
to be amended, renewed, or extended, the date of issuance, amendment, renewal,
or extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or the beneficiary of the Underlying Letter of Credit, as applicable),
and such other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by the Issuing Lender, Borrower
or the appropriate Guarantor also shall be an applicant under the application
with respect to any Underlying Letter of Credit that is to be the subject of an
L/C Undertaking. The Issuing Lender shall have no obligation to issue a Letter
of Credit if any of the following would result after giving effect to the
requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
less the then extant amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $5,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the then extant amount of outstanding Advances.
Borrower and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrower immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Borrower shall have received written or telephonic notice of such L/C
Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Borrower prior to such time on such date, then
not later than 11:00 a.m., California time, on the Business Day that Borrower
receives such notice, if such notice is received prior to 10:00 a.m., California
time, on the date of receipt, and, in the absence of such reimbursement, the L/C
Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, thereafter, shall bear interest at the rate then applicable to
Advances that are Base Rate
-47-
Loans under Section 2.6. To the extent an L/C Disbursement is deemed to be an
Advance hereunder, Borrower's obligation to reimburse such L/C Disbursement
shall be discharged and replaced by the resulting Advance. Promptly following
receipt by Agent of any payment from Borrower pursuant to this paragraph, Agent
shall distribute such payment to the Issuing Lender or, to the extent that
Lenders have made payments pursuant to Section 2.12(c) to reimburse the Issuing
Lender, then to such Lenders and the Issuing Lender as their interests may
appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender agrees to fund its Pro Rata Share of
any Advance deemed made pursuant to the foregoing subsection on the same terms
and conditions as if Borrower had requested such Advance and Agent shall
promptly pay to Issuing Lender the amounts so received by it from the Lenders.
By the issuance of a Letter of Credit (or an amendment to a Letter of Credit
increasing the amount thereof) and without any further action on the part of the
Issuing Lender or the Lenders, the Issuing Lender shall be deemed to have
granted to each Lender, and each Lender shall be deemed to have purchased, a
participation in each Letter of Credit, in an amount equal to its Pro Rata Share
of the Risk Participation Liability of such Letter of Credit, and each such
Lender agrees to pay to Agent, for the account of the Issuing Lender, such
Lender's Pro Rata Share of any payments made by the Issuing Lender under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of each L/C
Disbursement made by the Issuing Lender and not reimbursed by Borrower on the
date due as provided in clause (a) of this Section, or of any reimbursement
payment required to be refunded to Borrower for any reason. Each Lender
acknowledges and agrees that its obligation to deliver to Agent, for the account
of the Issuing Lender, an amount equal to its respective Pro Rata Share of each
L/C Disbursement made by the Issuing Lender pursuant to this Section 2.12(b)
shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in Section 3 hereof. If any
such Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of each L/C Disbursement made by the Issuing Lender in respect of
such Letter of Credit as provided in this Section, such Lender shall be deemed
to be a Defaulting Lender and Agent (for the account of the Issuing Lender)
shall be entitled to recover such amount on demand from such Lender together
with interest thereon at the Defaulting Lender Rate until paid in full.
(c) Borrower hereby agrees to indemnify, save, defend, and hold the
Lender Group harmless from any loss, cost, expense, or liability, and reasonable
attorneys fees incurred by the Lender Group arising out of or in connection with
any Letter of Credit; provided, however, that Borrower shall not be obligated
hereunder to indemnify for any loss, cost, expense, or liability to the extent
that it is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Borrower agrees to be bound by
the Underlying Issuer's regulations and interpretations of any
-48-
Underlying Letter of Credit or by Issuing Lender's interpretations of any L/C
issued by Issuing Lender to or for Borrower's account, even though this
interpretation may be different from Borrower's own, and Borrower understands
and agrees that the Lender Group shall not be liable for any error, negligence,
or mistake, whether of omission or commission, in following Borrower's
instructions or those contained in the Letter of Credit or any modifications,
amendments, or supplements thereto. Borrower understands that the L/C
Undertakings may require Issuing Lender to indemnify the Underlying Issuer for
certain costs or liabilities arising out of claims by Borrower against such
Underlying Issuer. Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless with respect to any loss, cost, expense (including
reasonable attorneys fees), or liability incurred by the Lender Group under any
L/C Undertaking as a result of the Lender Group's indemnification of any
Underlying Issuer; provided, however, that Borrower shall not be obligated
hereunder to indemnify for any loss, cost, expense, or liability to the extent
that it is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group.
(d) Borrower hereby authorizes and directs any Underlying Issuer to
deliver to the Issuing Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon the Issuing Lender's instructions with
respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by
the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrower to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by Borrower that, as of the Closing Date, the
usage charge imposed by the prospective Underlying Issuer is .75% per annum
times the face amount of each Underlying Letter of Credit, that such usage
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of
Credit or any Letter of Credit issued pursuant hereto,
-49-
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period (but in no event longer than 180 days) after the additional cost is
incurred or the amount received is reduced, notify Borrower, and Borrower shall
pay on demand such amounts as Agent may specify to be necessary to compensate
the Lender Group for such additional cost or reduced receipt, together with
interest on such amount from the date of such demand until payment in full
thereof at the rate then applicable to Base Rate Loans hereunder. The
determination by Agent of any amount due pursuant to this Section, as set forth
in a certificate setting forth the calculation thereof in reasonable detail,
shall, in the absence of manifest or demonstrable error, be final and conclusive
and binding on all of the parties hereto.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having interest
charged at the rate based upon the Base Rate, Borrower shall have the option
(the "LIBOR Option") to have interest on all or a portion of the Advances be
charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate
Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the occurrence of an Event of Default in
consequence of which the Required Lenders or Agent on behalf thereof elect to
accelerate the maturity of all or any portion of the Obligations, or (iii)
termination of this Agreement pursuant to the terms hereof. On the last day of
each applicable Interest Period, unless Borrower properly has exercised the
LIBOR Option with respect thereto, the interest rate applicable to such LIBOR
Rate Loan automatically shall convert to the rate of interest then applicable to
Base Rate Loans of the same type hereunder. At any time that an Event of Default
has occurred and is continuing, Borrower no longer shall have the option to
request that Advances bear interest at the LIBOR Rate and Agent shall have the
right to convert the interest rate on all outstanding LIBOR Rate Loans to the
rate then applicable to Base Rate Loans hereunder.
(b) LIBOR ELECTION.
(i) Borrower may, at any time and from time to time, so long
as no Event of Default has occurred and is continuing, elect to
exercise the LIBOR Option by notifying Agent prior to 11:00 a.m.
(California time) at least 3 Business Days prior to the commencement
of the proposed Interest Period (the "LIBOR Deadline"). Notice of
Borrower's election of the LIBOR Option for a permitted portion of
the Advances and an Interest Period pursuant to this Section shall
be made by delivery to Agent of a LIBOR Notice received by Agent
before the LIBOR Deadline, or by telephonic notice received by Agent
before the LIBOR Deadline (to be confirmed by delivery to Agent of a
LIBOR Notice received by Agent prior to 5:00 p.m. (California time)
on the same
-50-
day). Promptly upon its receipt of each such LIBOR Notice, Agent
shall provide a copy thereof to each of the Lenders.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrower. In connection with each LIBOR Rate Loan, Borrower shall
indemnify, defend, and hold Agent and the Lenders harmless against
any loss, cost, or expense incurred by Agent or any Lender as a
result of (a) the payment of any principal of any LIBOR Rate Loan
other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default and an acceleration of
the Obligations), (b) the conversion of any LIBOR Rate Loan other
than on the last day of the Interest Period applicable thereto, or
(c) the failure to borrow, convert, continue or prepay any LIBOR
Rate Loan on the date specified in any LIBOR Notice delivered
pursuant hereto (such losses, costs, and expenses, collectively,
"Funding Losses"). Funding Losses shall, with respect to Agent or
any Lender, be deemed to equal the amount determined by Agent or
such Lender to be the excess, if any, of (i) the amount of interest
that would have accrued on the principal amount of such LIBOR Rate
Loan had such event not occurred, at the LIBOR Rate that would have
been applicable thereto, for the period from the date of such event
to the last day of the then current Interest Period therefor (or, in
the case of a failure to borrow, convert, or continue, for the
period that would have been the Interest Period therefor), minus
(ii) the amount of interest that would accrue on such principal
amount for such period at the interest rate that Agent or such
Lender would be offered were it to be offered, at the commencement
of such period, Dollar deposits of a comparable amount and period in
the London interbank market. A certificate of Agent or a Lender
delivered to Borrower setting forth any amount or amounts that Agent
or such Lender is entitled to receive pursuant to this Section 2.13
shall be conclusive absent manifest error.
(iii) Borrower shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrower only may exercise the LIBOR
Option for LIBOR Rate Loans of at least $1,000,000 and integral
multiples of $500,000 in excess thereof.
(c) PREPAYMENTS. Borrower may prepay LIBOR Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Borrower's and its Subsidiaries' Collections
in accordance with Section 2.4(b) or for any other reason, including early
termination of the term of this Agreement or acceleration of all or any portion
of the Obligations pursuant to the terms hereof, Borrower shall indemnify,
defend, and hold Agent and the Lenders and their Participants harmless against
any and all Funding Losses in accordance with clause (b)(ii) above.
-51-
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with respect to
any Lender on a prospective basis to take into account any
additional or increased costs to such Lender of maintaining or
obtaining any eurodollar deposits or increased costs due to changes
in applicable law occurring subsequent to the commencement of the
then applicable Interest Period, including changes in tax laws
(except changes of general applicability in corporate income tax
laws) and changes in the reserve requirements imposed by the Board
of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased
costs would increase the cost of funding loans bearing interest at
the LIBOR Rate. In any such event, the affected Lender shall give
Borrower and Agent notice of such a determination and adjustment and
Agent promptly shall transmit the notice to each other Lender and,
upon its receipt of the notice from the affected Lender, Borrower
may, by notice to such affected Lender (y) require such Lender to
furnish to Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount
of such adjustment, or (z) repay the LIBOR Rate Loans with respect
to which such adjustment is made (together with any amounts due
under clause (b)(ii) above).
(ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in
the interpretation of application thereof, shall at any time after
the date hereof, in the reasonable opinion of any Lender, make it
unlawful or impractical for such Lender to fund or maintain LIBOR
Advances or to continue such funding or maintaining, or to determine
or charge interest rates at the LIBOR Rate, such Lender shall give
notice of such changed circumstances to Agent and Borrower and Agent
promptly shall transmit the notice to each other Lender and (y) in
the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be
deemed to be the last day of the Interest Period of such LIBOR Rate
Loans, and interest upon the LIBOR Rate Loans of such Lender
thereafter shall accrue interest at the rate then applicable to Base
Rate Loans, and (z) Borrower shall not be entitled to elect the
LIBOR Option until such Lender determines that it would no longer be
unlawful or impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as
-52-
to which interest is accruing at the LIBOR Rate by acquiring eurodollar deposits
for each Interest Period in the amount of the LIBOR Rate Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount reasonably deemed by such Lender to be material,
then such Lender may notify Borrower and Agent thereof. Following receipt of
such notice, Borrower agrees to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
2.15 REGISTERED NOTES. Agent agrees to record each Advance on the Register
referred to in Section 14.1(h). Each Advance recorded on the Register (the
"Registered Loan") may not be evidenced by promissory notes other than
Registered Notes (as defined below). Upon the registration of each Advance,
Borrower agrees, at the request of any Lender, to execute and deliver to such
Lender a promissory note, in conformity with the terms of this Agreement, in
registered form to evidence such Registered Loan, in form and substance
reasonably satisfactory to such Lender, and registered as provided in Section
14.1(h) (a "Registered Note"), payable to the order of such Lender and otherwise
duly completed, provided that any Registered Note issued to evidence Advances
shall be issued in the principal amount of the applicable Lender's Commitment.
Once recorded on the Register, each Advance may not be removed from the Register
so long as it or they remain outstanding, and a Registered Note may not be
exchanged for a promissory note that is not a Registered Note.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to
-53-
extend any credit provided for hereunder), is subject to the fulfillment, to the
satisfaction of Agent, of each of the conditions precedent set forth below:
(a) the Closing Date shall occur on or before August 15, 2003;
(b) Agent shall have caused to be filed appropriate financing
statements on Form UCC-1 in such office or offices as may be necessary or, in
the opinion of Agent, desirable to perfect the Agent's Liens in and to the
Collateral;
(c) Agent shall have received each of the following documents, in
form and substance satisfactory to Agent, duly executed, and each such document
shall be in full force and effect:
(i) an Assignment of Control Agreements with respect to each
applicable Deposit Account in accordance with Section 4.7,
(ii) the Copyright Security Agreement,
(iii) the Disbursement Letter,
(iv) the Fee Letter,
(v) the Guarantor Security Agreement,
(vi) the Guaranty,
(vii) the Intercreditor Agreement,
(viii) the Intercompany Subordination Agreement,
(ix) the Officers' Certificate,
(x) the Pay-Off Letter, together with UCC termination
statements and other documentation evidencing the termination by
Existing Agent of its Liens in and to the properties and assets of
Borrower and its Subsidiaries,
(xi) the Stock Pledge Agreement, together with all
certificates representing the shares of Stock pledged thereunder, as
well as Stock powers with respect thereto endorsed in blank, and
(xii) the Trademark Security Agreement,
(d) Agent shall have received a certificate from the Secretary of
Borrower attesting to the resolutions of Borrower's Board of Directors
authorizing its execution,
-54-
delivery, and performance of this Agreement and the other Loan Documents to
which Borrower is a party and authorizing specific officers of Borrower to
execute the same;
(e) Agent shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Borrower;
(f) Agent shall have received a certificate of status with respect
to Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;
(g) Agent shall have received certificates of status with respect to
Borrower, each dated within 30 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Borrower is in good standing in such
jurisdictions;
(h) Agent shall have received a certificate from the Secretary of
each Guarantor attesting to the resolutions of such Guarantor's board of
directors authorizing its execution, delivery, and performance of the Loan
Documents to which such Guarantor is a party and authorizing specific officers
of such Guarantor to execute the same;
(i) Agent shall have received copies of each Guarantor's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Guarantor;
(j) Agent shall have received a certificate of status with respect
to each Guarantor, dated within 10 days of the Closing Date (or in the case of
the State of Colorado, within 20 days of the Closing Date), such certificate to
be issued by the appropriate officer of the jurisdiction of organization of such
Guarantor, which certificate shall indicate that such Guarantor is in good
standing in such jurisdiction;
(k) Agent shall have received certificates of status with respect to
each Guarantor, each dated within 30 days of the Closing Date, such certificates
to be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Guarantor) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
(l) Agent shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.8, the form and
substance of which shall be satisfactory to Agent;
-55-
(m) Agent shall have received an opinion of Borrower's counsel in
form and substance satisfactory to Agent;
(n) Agent shall have received satisfactory evidence (including a
certificate of the chief financial officer of Borrower) that all tax returns
required to be filed by Borrower and its Subsidiaries have been timely filed and
all taxes upon Borrower and its Subsidiaries or their properties, assets,
income, and franchises (including Real Property taxes, sales taxes, and payroll
taxes) have been paid prior to delinquency, except such taxes that are the
subject of a Permitted Protest;
(o) Borrower shall have the Required Availability after giving
effect to the initial extensions of credit hereunder and the payment of all fees
and expenses required to be paid by Borrower on the Closing Date under this
Agreement or the other Loan Documents;
(p) Agent shall have completed its business, legal, and collateral
due diligence, including a collateral audit and review of Borrower's and its
Subsidiaries books and records and verification of Borrower's representations
and warranties to the Lender Group, the results of which shall be satisfactory
to Agent;
(q) Agent shall have received Borrower's Closing Date Business Plan;
(r) Borrower shall have paid all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement for which Borrower
has received an invoice on or before the Closing Date;
(s) Borrower and each of its Subsidiaries shall have received all
licenses, approvals or evidence of other actions required by any Governmental
Authority in connection with the execution and delivery by Borrower or its
Subsidiaries of the Loan Document or with the consummation of the transactions
contemplated thereby;
(t) Agent shall have received an unaudited, company prepared
consolidated balance sheet, income statement, and cash flow with respect to
Borrower's fiscal quarter ending June 30, 2003, covering Borrower's and its
Subsidiaries' operations during such period,
(u) Borrower and the Guarantors shall have transferred all funds
from their Securities Accounts into Deposit Accounts that are subject to Control
Agreements in favor of Agent and Agent shall have received a certificate from
the chief financial officer of Borrower certifying the completion of such
transfers; and
(v) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent.
-56-
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrower to so perform or cause to be performed
constituting an Event of Default):
(a) within 90 days of the Closing Date, deliver to Agent certified
copies of the policies of insurance, together with the endorsements thereto, as
are required by Section 6.8, the form and substance of which shall be
satisfactory to Agent and its counsel;
(b) within 60 days of the Closing Date, Agent shall have received a
Collateral Access Agreement with respect to Borrower's chief executive office
located at 0000 Xxxx 0xx Xxxxxx, Xxxxxxxxx, Xxxx 00000;
(c) within 60 days of the Closing Date, Agent shall have received a
Control Agreement on each Securities Account maintained by Borrower or any
Guarantor; and
(d) within 60 days of the Closing Date, Agent shall have perfected
its Lien on the portion of the Stock of Penton Media (Holdings) Ltd. that is not
Excluded Collateral under the laws of the United Kingdom and shall have received
assurances from local counsel that such Lien has priority over all other Liens.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
the Lender Group (or any member thereof) to make any Advances hereunder at any
time (or to extend any other credit hereunder) shall be subject to the following
conditions precedent:
(a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the date of such extension of credit, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date),
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof,
(c) no injunction, writ, restraining order, or other order of any
nature restricting or prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental Authority
against Borrower, Agent, any Lender, or any of their Affiliates, and
(d) no Material Adverse Change shall have occurred.
3.4 TERM. This Agreement shall continue in full force and effect for a
term ending on August 13, 2007 (the "Maturity Date"). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its
-57-
obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default in accordance with
Section 9.1(c).
3.5 EFFECT OF TERMINATION. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrower with
respect to outstanding Letters of Credit) immediately shall become due and
payable without notice or demand (including either (i) providing cash collateral
to be held by Agent for the benefit of the Lenders in an amount equal to 105% of
the then extant Letter of Credit Usage, or (ii) causing the original Letters of
Credit to be returned to the Issuing Lender). No termination of this Agreement,
however, shall relieve or discharge Borrower or its Subsidiaries of their
duties, Obligations, or covenants hereunder and the Agent's Liens in the
Collateral shall remain in effect until all Obligations have been paid in full
and the Lender Group's obligations to provide additional credit hereunder have
been terminated. When this Agreement has been terminated and all of the
Obligations have been paid in full and the Lender Group's obligations to provide
additional credit under the Loan Documents have been terminated irrevocably,
Agent will, at Borrower's sole expense, execute and deliver any UCC termination
statements, lien releases, mortgage releases, re-assignments of trademarks,
discharges of security interests, and other similar discharge or release
documents (and, if applicable, in recordable form) as are reasonably necessary
to release, as of record, the Agent's Liens and all notices of security
interests and liens previously filed by Agent with respect to the Obligations.
3.6 EARLY TERMINATION BY BORROWER. Borrower has the option, at any time
upon 30 days prior written notice to Agent (which notice shall be revocable), to
terminate this Agreement by paying to Agent, in cash, the Obligations (including
either (i) providing cash collateral to be held by Agent for the benefit of the
Lenders in an amount equal to 105% of the then extant Letter of Credit Usage, or
(ii) causing the original Letters of Credit to be returned to the Issuing
Lender), in full, together with the Applicable Prepayment Premium (to be
allocated based upon letter agreements between Agent and individual Lenders). If
Borrower has sent a notice of termination pursuant to the provisions of this
Section, then the Commitments shall terminate and Borrower shall be obligated to
repay the Obligations (including either (i) providing cash collateral to be held
by Agent for the benefit of the Lenders in an amount equal to 105% of the then
extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to the Issuing Lender), in full, together with the Applicable
Prepayment Premium, on the date set forth as the date of termination of this
Agreement in such notice. In the event of the termination of this Agreement and
repayment of the Obligations at any time prior to the Maturity Date, for any
other reason, including (a) termination upon the election of the Required
Lenders to terminate after the occurrence and during the continuation of an
Event of Default, (b) foreclosure and sale of Collateral, (c) sale of the
Collateral in any Insolvency Proceeding, or (d) restructure, reorganization, or
compromise of the Obligations by the confirmation of a plan of reorganization or
any other plan of compromise, restructure, or arrangement in any Insolvency
Proceeding, then, in view of the impracticability and extreme difficulty of
ascertaining the actual amount of damages to
-58-
the Lender Group or profits lost by the Lender Group as a result of such early
termination, and by mutual agreement of the parties as to a reasonable
estimation and calculation of the lost profits or damages of the Lender Group,
Borrower shall pay the Applicable Prepayment Premium to Agent (to be allocated
based upon letter agreements between Agent and individual Lenders), measured as
of the date of such termination. The foregoing to the contrary notwithstanding,
in the event that any termination of this Agreement by Borrower pursuant to the
first sentence of this Section 3.6 occurs as a result of or in connection with
(1) a private placement of equity or subordinated debt by Borrower, (2) a public
offering of Borrower's Stock, or (3) the sale of all or substantially all of
Borrower's assets or Stock, in one or a series of related transactions, and the
outstanding Obligations are paid in full by Borrower out of the proceeds from
any such transaction, then the Applicable Prepayment Premium shall be reduced by
50%.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Agent, for the
benefit of the Lender Group, a continuing security interest in all of its right,
title, and interest in all currently existing and hereafter acquired or arising
Borrower Collateral to secure prompt repayment of any and all of the Obligations
in accordance with the terms and conditions of the Loan Documents and to secure
prompt performance by Borrower of each of its covenants and duties under the
Loan Documents. The Agent's Liens in and to the Borrower Collateral shall attach
to all Borrower Collateral without further act on the part of Agent or Borrower.
Anything contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrower and its
Subsidiaries have no authority, express or implied, to dispose of any item or
portion of the Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Borrower Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that Agent determines that perfection or priority of Agent's
security interest is dependent on or enhanced by possession, Borrower,
immediately upon the request of Agent, shall endorse and deliver physical
possession of such Negotiable Collateral to Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrower that Borrower's Accounts, chattel paper, or General Intangibles have
been assigned to Agent or that Agent has a security interest therein, or (b)
collect Borrower's Accounts, chattel paper, or General Intangibles directly and
charge the collection costs and expenses to the Loan Account. Borrower agrees
that it will hold in trust for the Lender Group, as the Lender Group's trustee,
any of its or the Guarantors' Collections that it receives and immediately will
deliver such Collections to Agent or a Cash Management Bank in their original
form as received by Borrower or such Guarantor.
-59-
4.4 FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS; DELIVERY OF
ADDITIONAL DOCUMENTATION REQUIRED.
(a) Borrower authorizes Agent to file any financing statement
necessary or desirable to effectuate the transactions contemplated by the Loan
Documents, and any continuation statement or amendment with respect thereto, in
any appropriate filing office without the signature of Borrower where permitted
by applicable law. Borrower hereby ratifies the filing of any financing
statement filed without the signature of Borrower prior to the date hereof.
(b) If Borrower or any Guarantor acquires any Commercial Tort Claim
involving a potential cash recovery of $100,000 or more, the proceeds of which
are not otherwise required to be delivered to any insurance carrier or other
Person, after the date hereof, Borrower shall promptly (but in any event within
30 days after a Financial Officer of Borrower having knowledge thereof) deliver
to Agent a written description of such Commercial Tort Claim and shall, upon
request of Agent, promptly deliver a written agreement, in form and substance
satisfactory to Agent, pursuant to which Borrower or such Guarantor, as
applicable, shall, to the extent not prohibited by law or any agreement, grant a
security interest in such Commercial Tort Claim to Agent, as security for the
Obligations (a "Commercial Tort Claim Assignment").
(c) At any time upon the reasonable request of Agent, Borrower shall
execute or deliver to Agent, and shall cause each Guarantor to execute or
deliver to Agent, any and all financing statements, original financing
statements in lieu of continuation statements, fixture filings, security
agreements, pledges, assignments, Commercial Tort Claim Assignments,
endorsements of certificates of title, and all other documents (collectively,
the "Additional Documents") that Agent may request in its Permitted Discretion,
in form and substance satisfactory to Agent, to create, perfect, and continue
perfected or to better perfect the Agent's Liens in the assets of Borrower and
the Guarantors (whether now owned or hereafter arising or acquired, tangible or
intangible, real or personal), to create and perfect Liens in favor of Agent in
any Real Property acquired by Borrower or Guarantor after the Closing Date, and
in order to fully consummate all of the transactions contemplated hereby and
under the other Loan Documents. To the maximum extent permitted by applicable
law, if Borrower has not executed any Additional Document Agent is entitled to
obtain hereunder after Agent has made an appropriate request therefor, Borrower
authorizes Agent to execute any such Additional Documents in Borrower's name and
authorizes Agent to file such executed Additional Documents in any appropriate
filing office. In addition, once per calendar quarter, Borrower shall (i)
provide Agent with a report of all new registered patents, trademarks, or
copyrights (or applications therefor) acquired or generated by Borrower or any
Guarantor during the prior period, (ii) cause all material patents, copyrights
and trademarks acquired or generated by Borrower or any Guarantor that are not
already the subject of a registration with the appropriate filing office (or an
application therefor diligently prosecuted) to be registered with such
appropriate filing office
-60-
in a manner sufficient to impart constructive notice of Borrower's or the
applicable Guarantor's ownership thereof, and (iii) cause to be prepared,
executed, and delivered to Agent supplemental schedules to the applicable Loan
Documents to identify such patents, copyrights, and trademarks as being subject
to the security interests created thereunder.
4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes, constitutes, and
appoints Agent (and any of Agent's officers, employees, or agents designated by
Agent) as Borrower's true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign Borrower's name on any invoice or xxxx of lading
relating to the Borrower Collateral, drafts against Account Debtors, or notices
to Account Debtors, (c) at any time that an Event of Default has occurred and is
continuing, send requests for verification of Borrower's or any Guarantor's
Accounts, (d) at any time that an Event of Default has occurred and is
continuing, endorse Borrower's name on any of its payment items (including all
of its Collections) that may come into the Lender Group's possession, (e) at any
time that an Event of Default has occurred and is continuing, make, settle, and
adjust all claims under Borrower's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, and (f)
at any time that an Event of Default has occurred and is continuing, settle and
adjust disputes and claims respecting Borrower's or any Guarantor's Accounts,
chattel paper, or General Intangibles directly with Account Debtors, for amounts
and upon terms that Agent determines to be reasonable, and Agent may cause to be
executed and delivered any documents and releases that Agent determines to be
necessary. The appointment of Agent as Borrower's attorney, and each and every
one of its rights and powers, being coupled with an interest, is irrevocable
until all of the Obligations have been fully and finally repaid and performed
and the Lender Group's obligations to extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter to inspect the Books and make copies or abstracts thereof and to
check, test, and appraise the Collateral, or any portion thereof, in order to
verify Borrower's and its Subsidiaries' financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral;
provided that so long as no Event of Default has occurred and is continuing, (a)
any such inspection or appraisal shall be conducted during Borrower's regular
business hours, (b) no such inspection or appraisal shall be conducted sooner
than 60 days after the Closing Date, and (c) no such inspection or appraisal
shall be conducted while Borrower's annual cpa-conducted audit is in progress at
Borrower's facilities. Based on Agent's initial internal rating of Borrower,
Agent will conduct no more than 2 inspections or appraisals per fiscal year of
Borrower. However, in the event of a change in Agent's internal rating of
Borrower according to Agent's customary internal rating procedures, Agent, in
its Permitted Discretion, may increase the number of inspections and appraisals
to the number of inspections and appraisals then required by such procedures,
but in no event more than 4 per
-61-
fiscal year; provided, however, if an Event of Default has occurred and is
continuing, there shall be no limitation on the number of inspections or
appraisals that can be conducted.
4.7 CONTROL AGREEMENTS.
(a) With respect to each of the Deposit Accounts of Borrower and the
Guarantors that currently exist and existed on April 15, 2002, which are set
forth on Schedule 4.7(a) hereto, Borrower shall deliver, and shall cause each
applicable Guarantor to deliver, to Agent on or prior to the Closing Date, a
duly executed Assignment of Control Agreement with respect to each such Deposit
Account (other than a Deposit Account that at all times has less than (A)
$25,000 on deposit therein, and (B) when aggregated with all other Deposit
Accounts that are not subject to a Control Agreement in favor of Agent, $100,000
on deposit therein (each such Deposit Account, a "De Minimis Deposit Account")).
(b) With respect to each of the Deposit Accounts of Borrower and the
Guarantors that currently exists and was opened after April 15, 2002, which are
set forth on Schedule 4.7(b) hereto, Borrower shall deliver, and shall cause
each applicable Guarantor to deliver, to Agent on or prior to the Closing Date,
a duly executed Control Agreement with respect to each such Deposit Account.
(c) Borrower and the Guarantors shall maintain a zero balance in
each of their Securities Accounts until a Control Agreement in favor of Agent is
executed and delivered to Agent with respect to such Securities Account in
accordance with Section 3.2(c).
(d) Subject to the exception set forth in Section 4.7(a) for De
Minimis Deposit Accounts, neither Borrower nor any Guarantor shall at any time
establish or maintain any Deposit Account (including Deposit Accounts that, as
of the Closing Date, are De Minimis Deposit Accounts but that subsequently have
amounts on deposit therein that exceed the requirements for De Minimis Deposit
Accounts) or Securities Account without concurrently therewith delivering to
Agent a duly executed Control Agreement with respect to such Deposit Account or
Securities Account.
5. REPRESENTATIONS AND WARRANTIES.
To induce the Lender Group to enter into this Agreement, Borrower
makes the following representations and warranties to the Lender Group that
shall be true, correct, and complete, in all material respects, as of the date
hereof, and shall be true, correct, and complete, in all material respects, as
of the Closing Date, and at and as of the date of the making of each Advance (or
other extension of credit) made thereafter, as though made on and as of the date
of such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
-62-
5.1 NO ENCUMBRANCES. Borrower and its Subsidiaries have good and
indefeasible title to their personal property assets and good and marketable
title to their Real Property, in each case, free and clear of Liens except for
Permitted Liens.
5.2 ACCOUNTS. Borrower's and its Subsidiaries' Accounts are bona fide
existing payment obligations of Account Debtors created by the sale and delivery
of Inventory or the rendition of services to such Account Debtors in the
ordinary course of Borrower's business.
5.3 [INTENTIONALLY OMITTED].
5.4 EQUIPMENT. All of the Equipment of Borrower and its Subsidiaries is
used or held for use in their business and is fit for such purposes.
5.5 LOCATION OF EQUIPMENT. The Equipment of Borrower and the Guarantors
(other than Equipment of de minimis value) is located only at the locations
identified on Schedule 5.5 (as such Schedule may be updated pursuant to Section
6.9).
5.6 [INTENTIONALLY OMITTED].
5.7 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN;
ORGANIZATIONAL ID NUMBER; COMMERCIAL TORT CLAIMS.
(a) The jurisdiction of organization of Borrower and each of its
Subsidiaries is set forth on Schedule 5.7(a).
(b) The chief executive office of Borrower and each of its
Subsidiaries is located at the address indicated on Schedule 5.7(b) (as such
Schedule may be updated pursuant to Section 6.9).
(c) Borrower's and each Guarantor's FEIN and organizational
identification number, if any, are identified on Schedule 5.7(c).
(d) As of the Closing Date, Borrower and the Guarantors do not hold
any Commercial Tort Claims, except as set forth on Schedule 5.7(d).
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of Borrower, by class, and, as of
the Closing Date, a description of the number of shares of each such class that
are issued and outstanding. Other than as described on Schedule 5.8(b), as of
the Closing Date, (i) there are no subscriptions, options,
-63-
warrants, or calls relating to any shares of Borrower's capital Stock, including
any right of conversion or exchange under any outstanding security or other
instrument and (ii) Borrower is not subject to any obligation (contingent or
otherwise) mandatorily to repurchase or otherwise acquire or retire for cash any
shares of its capital Stock or any security convertible into or exchangeable for
any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate list of
Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization, (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries, and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by Borrower. All of the outstanding capital Stock of each such
Subsidiary has been validly issued and is fully paid and non-assessable.
(d) Except as set forth on Schedule 5.8(c), (i) there are no
subscriptions, options, warrants, or calls relating to any shares of Borrower's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument, and (ii) neither Borrower nor any
of its Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Borrower's Subsidiaries'
capital Stock or any security convertible into or exchangeable for any such
capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) The execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of Borrower.
(b) The execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which it is a party do not and will
not (i) violate any provision of federal, state, or local law or regulation
applicable to Borrower, the Governing Documents of Borrower, or any order,
judgment, or decree of any court or other Governmental Authority binding on
Borrower, (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material contractual
obligation of Borrower, (iii) result in or require the creation or imposition of
any Lien of any nature whatsoever upon any properties or assets of Borrower,
other than Permitted Liens, or (iv) require any approval of Borrower's
interestholders or any approval or consent of any Person under any material
contractual obligation of Borrower, other than consents or approvals that have
been obtained and that are still in force and effect and other than consents or
approvals the failure to obtain reasonably could not be expected to result in a
Material Adverse Change. Without limiting the generality of clause (ii) above,
the incurrence of the Obligations by Borrower and the Guarantors does not
violate Section 4.11 of the Subordinated Indenture or Section 4.11 of the Senior
Indenture, and the granting of the
-64-
Agent's Liens does not violate Section 4.16 of the Subordinated Indenture or
Section 4.16 of the Senior Indenture.
(c) The execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which Borrower is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority, other than (i) those
registrations, notices, actions, consents, or approvals that have been made,
given, taken, or obtained and that are still in force and effect, (ii) customary
filings, registrations, notices, or similar actions required to be made or given
in the ordinary course of business in accordance with law or regulation or
pursuant to the covenants of this Agreement, and (iii) filings or recordings
with respect to the Collateral to be made or otherwise obtained by Agent.
(d) This Agreement and the other Loan Documents to which Borrower is
a party, and all other documents contemplated hereby and thereby, when executed
and delivered by Borrower will be the legally valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors' rights generally.
(e) Upon filing UCC financing statements describing the Collateral
in the appropriate filing offices, the Agent's Liens will constitute perfected
security interests in the Collateral owned by Borrower and each Guarantor to the
extent that a security interest therein may be perfected by filing a UCC
financing statement pursuant to the Code, prior to all Liens therein except
Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor of
the Loan Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor of
the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Guarantor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
such Guarantor, (iii) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any properties or assets of such Guarantor,
other than Permitted Liens, or (iv) require any approval of such Guarantor's
interestholders or any approval or consent of any Person under any material
contractual obligation of such Guarantor, other than consents or approvals that
have been obtained and that are still in force and effect and other than
consents or approvals the failure to obtain reasonably could not be expected to
result in a Material Adverse Change.
-65-
(h) The execution, delivery, and performance by each Guarantor of
this Agreement and the other Loan Documents to which such Guarantor is a party
do not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any Governmental Authority, other than
(i) those registrations, notices, actions, consents, or approvals that have been
made, given, taken, or obtained and that are still in force and effect, (ii)
customary filings, registrations, notices, or similar actions required to be
made or given in the ordinary course of business in accordance with law or
regulation or pursuant to the covenants of this Agreement, and (iii) filings or
recordings with respect to the Collateral to be made or otherwise obtained by
Agent.
(i) The Loan Documents to which each Guarantor is a party, and all
other documents contemplated hereby and thereby, when executed and delivered by
such Guarantor will be the legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrower, threatened against Borrower, or any of its Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), or (b) matters arising after the Closing Date that
reasonably could not be expected to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. On the date of this Agreement, all
financial statements listed on Schedule 5.11 have been delivered by Borrower to
the Lender Group, have been prepared in accordance with GAAP (except, in the
case of unaudited financial statements, for the lack of footnotes and being
subject to year-end audit adjustments) and present fairly in all material
respects, Borrower's and its Subsidiaries' financial condition as of the date
thereof and results of operations for the period then ended. There has not been
a Material Adverse Change with respect to Borrower and its Subsidiaries since
March 31, 2003.
5.12 FRAUDULENT TRANSFER.
(a) Borrower and its Subsidiaries, on a consolidated basis, are
Solvent.
(b) No transfer of property is being made by Borrower or its
Subsidiaries and no obligation is being incurred by Borrower or its Subsidiaries
in connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Borrower or its Subsidiaries.
5.13 EMPLOYEE BENEFITS.
-66-
(a) Except for the Penton Media, Inc. Retirement Plan (as amended)
and the Penton Media, Inc. Supplemental Executive Retirement Plan (as amended),
none of Borrower, any of its Subsidiaries, or any of their ERISA Affiliates
maintains or contributes to any Benefit Plan.
(b) No Plan is a Multiemployer Plan.
(c) Schedule 5.13 lists all Plans and separately identifies all
Benefit Plans. Copies of all such listed Benefit Plans, together with a copy of
the latest form 5500-series for each such Benefit Plan have been made available
to Agent. Each Qualified Plan has been determined by the IRS to qualify under
Section 401 of the IRC, the trusts created thereunder have been determined to be
exempt from tax under the provisions of Section 501 of the IRC, and nothing has
occurred that would cause the loss of such qualification or tax-exempt status.
Each Plan is in material compliance with the applicable provisions of ERISA and
the IRC, including the timely filing of all reports required under the IRC or
ERISA, including the statement required by 29 CFR Section 2520.104-23. Borrower,
its Subsidiaries, and each ERISA Affiliate have made all contributions and paid
all amounts due as and when required by either Section 412 of the IRC, Section
302 of ERISA, and the terms of any such Plan. Borrower, its Subsidiaries, and
each ERISA Affiliate have not engaged in a "prohibited transaction," as defined
in Section 406 of ERISA and Section 4975 of the IRC, in connection with any
Plan, that would subject Borrower, its Subsidiaries, or any ERISA Affiliate to a
material tax on prohibited transactions imposed by Section 502(i) of ERISA or
Section 4975 of the IRC.
(d) Except as set forth in Schedule 5.13: (i) no Benefit Plan has
any Unfunded Pension Liability; (ii) no ERISA Event or event described in
Section 4062(e) of ERISA with respect to any Benefit Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
Borrower, threatened claims (other than claims for benefits in the normal
course), sanctions, actions or lawsuits, asserted or instituted against any Plan
or any Person as fiduciary or sponsor of any Plan; (iv) within the last five
years no Benefit Plan of Borrower, its Subsidiaries, or any ERISA Affiliate has
been terminated, whether or not in a "standard termination" as that term is used
in Section 404(b)(1) of ERISA, nor has any Benefit Plan of Borrower, its
Subsidiaries, or any ERISA Affiliate (determined at any time within the past
five years) with Unfunded Pension Liabilities been transferred outside of the
"controlled group" (within the meaning of Section 4001(a)(14) of ERISA) of
Borrower, its Subsidiaries, or any ERISA Affiliate; (v) Stock of Borrower, its
Subsidiaries, and each ERISA Affiliate makes up, in the aggregate, no more than
10% of fair market value of the assets of any Plan measured on the basis of fair
market value as of the latest valuation date of any Plan; and (vi) no liability
under any Benefit Plan has been satisfied with the purchase of a contract from
an insurance company that is not rated AAA by the Standard & Poor's Corporation
or an equivalent rating by another nationally recognized rating agency.
-67-
(e) The Year-End Disclosure Report for Fiscal Year Ending December
31, 2002 (attached as Schedule 5.13(e), and the most recent annual report (5500)
and all required schedules (attached as Schedule 5.13(e)) are complete and
correct and fairly and accurately reflect the funding status of all Benefit
Plans as of the date of each such report, and since the date of each such
report, there have been no material adverse changes in the funding status of, or
accrued benefits under, each such Benefit Plan.
(f) Except as disclosed on Schedule 5.13, no agreement has been
entered into with any governmental agency with respect to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14, (a) to
Borrower's knowledge, none of Borrower's or its Subsidiaries' assets has ever
been used by Borrower, its Subsidiaries, or by previous owners or operators in
the disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such production, storage, handling, treatment,
release or transport was in violation, in any material respect, of applicable
Environmental Law, (b) to Borrower's knowledge, none of Borrower's or its
Subsidiaries' properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) neither Borrower nor any of its Subsidiaries has received
notice that a Lien arising under any Environmental Law has attached to any
revenues or to any Real Property owned or operated by Borrower or its
Subsidiaries, and (d) neither Borrower nor its Subsidiaries has received a
summons, citation, notice, or directive from the Environmental Protection Agency
or any other federal or state governmental agency concerning any action or
omission by Borrower or its Subsidiaries resulting in the releasing or disposing
of Hazardous Materials into the environment.
5.15 BROKERAGE FEES. Neither Borrower nor any of its Subsidiaries has
utilized the services of any broker or finder, other than Credit Suisse First
Boston, in connection with Borrower's obtaining financing from the Lender Group
under this Agreement and no brokerage commission or finders fee, other than a
fee payable to Credit Suisse First Boston, is payable by Borrower or its
Subsidiaries in connection herewith.
5.16 INTELLECTUAL PROPERTY. Borrower and its Subsidiaries own, or hold
licenses in, all trademarks, trade names, copyrights, patents, patent rights,
and licenses that are necessary to the conduct of its business as currently
conducted. Attached hereto as Schedule 5.16 (as updated from time to time) is a
true, correct, and complete listing of all material patents, patent
applications, trademarks, trademark applications, copyrights, and copyright
registrations as to which Borrower or one of any Guarantor is the owner or is an
exclusive licensee.
5.17 LEASES. All leases of real property by Borrower and each Guarantor
that are material to their respective businesses are valid and subsisting and no
material default that is not being contested in good faith by Borrower or any
Guarantor exists under any of such leases.
-68-
5.18 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on Schedule 5.18
are all of the Deposit Accounts and Securities Accounts of Borrower and each
Guarantor as of the Closing Date, including, with respect to each bank or
securities intermediary (i) the name and address of such Person, and (ii) the
account numbers of the Deposit Accounts or Securities Accounts maintained with
such Person.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Borrower or its Subsidiaries in writing to Agent or
any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan Documents, or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Borrower or its Subsidiaries in writing to Agent 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 in
any material respect at such time in light of the circumstances under which such
information was provided. On the Closing Date, the Closing Date Budget
represents, and as of the date on which any other Budget is delivered to Agent,
such additional Budget represents Borrower's good faith best estimate of its and
its Subsidiaries future performance for the periods covered thereby.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete list
of all Indebtedness of Borrower and its Subsidiaries outstanding immediately
prior to the Closing Date that is to remain outstanding after the Closing Date
and such Schedule accurately reflects the aggregate principal amount of such
Indebtedness and the principal terms thereof.
5.21 SENIOR DEBT, ETC. The Obligations are "Senior Debt" (as defined in
the Subordinated Indenture) and, therefore, the repayment of the Subordinated
Notes is subordinated to the prior payment in full in cash of the Obligations to
the extent and in the manner provided in Article XII of the Subordinated
Indenture. The defined term "Credit Agreement" (as defined in the Subordinated
Indenture) includes this Agreement and the other Loan Documents. The defined
term "Credit Facility" (as defined in the Senior Indenture) includes this
Agreement and the other Loan Documents.
5.22 APPLICATION OF ASSET SALE PROCEEDS; OTHER INDEBTEDNESS.
(a) None of the proceeds from certain sales of assets by Borrower
and its Subsidiaries that occurred during the period from December 2002 through
the Closing Date have been applied by Borrower to repay Indebtedness owing under
the Existing Facility and reduce the commitments of the lenders thereunder.
(b) As of the Closing Date, Borrower and its Subsidiaries have not
incurred any of the $10,000,000 of Indebtedness referenced under Section 4.11(a)
of the Senior Indenture.
-69-
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations, Borrower shall and shall
cause each of its Subsidiaries to do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent.
6.2 COLLATERAL REPORTING. Provide Agent (and if so requested by Agent,
with copies for each Lender) with the following documents at the following times
in form satisfactory to Agent:
Monthly (not later than the (a) a detailed calculation of the Borrowing
30th day of each month) Base,
(b) a detailed aging, by total, of the Accounts
of Borrower,
(c) a summary aging, by vendor, of
Borrower's and its Subsidiaries' accounts
payable and any book overdraft, and
(d) a detailed report regarding Borrower and
its Subsidiaries' cash and Cash Equivalents
including an indication of which amounts
constitute Qualified Cash, and
Quarterly (not later than the (e) a detailed report or reports regarding
45th day after each fiscal magazine advertising and trade show revenue in
quarter end) a form satisfactory to Agent
Upon request by Agent (f) copies of invoices in connection with
Borrower's and each Guarantor's Accounts,
credit memos, remittance advices, deposit
slips, shipping and delivery documents
in connection with Borrower's and each
Guarantor's Accounts and, for Inventory and
Equipment acquired by Borrower or any
Guarantor, purchase orders and invoices, and
(g) such other reports as to the Collateral or
the financial condition of Borrower and each
Guarantor, as Agent may request.
-70-
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 30 days (45 days
in the case of a month that is the end of one of Borrower's fiscal quarters)
after the end of each month during each of Borrower's fiscal years,
(i) a company prepared consolidated balance sheet, income statement,
and cash flow projections (and a quarterly statement of cash flow
delivered for each month that is at the end of one of Borrower's fiscal
quarters) covering Borrower's and its Subsidiaries' operations during such
period,
(ii) a certificate signed by the chief financial officer of Borrower
to the effect that:
(A) the financial statements delivered hereunder (other than
the statements of cash flow which are prepared in accordance with
past practices but not in accordance with GAAP) have been prepared
in accordance with GAAP (except for the lack of footnotes and being
subject to year-end audit adjustments) and fairly present in all
material respects the financial condition of Borrower and its
Subsidiaries,
(B) the representations and warranties of Borrower contained
in this Agreement and the other Loan Documents are true and correct
in all material respects on and as of the date of such certificate,
as though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier
date), and
(C) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent of any
non-compliance, describing such non-compliance as to which he or she
may have knowledge and what action Borrower has taken, is taking, or
proposes to take with respect thereto), and
(iii) for each month that is the date on which a financial covenant
in Section 7.18 is to be tested, a Compliance Certificate demonstrating,
in reasonable detail, compliance at the end of such period with the
applicable financial covenants contained in Section 7.18,
(b) as soon as available, but in any event within 90 days after the
end of each of Borrower's fiscal years,
-71-
(i) financial statements of Borrower and its Subsidiaries for each
such fiscal year, audited by independent certified public accountants
reasonably acceptable to Agent (it being acknowledged by Agent that
PriceWaterhouseCoopers is acceptable to Agent as of the Closing Date) and
certified, without any qualifications, by such accountants to have been
prepared in accordance with GAAP (such audited financial statements to
include a balance sheet, income statement, and statement of cash flow and,
if prepared, such accountants' letter to management), and
(ii) a certificate of such accountants addressed to Agent and the
Lenders stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under Section 7.18,
(c) as soon as available, but in any event within 30 days after the
start of each of Borrower's fiscal years, a copy of the Budget, in form and
substance (including as to scope and underlying assumptions) reasonably
satisfactory to Agent, in its sole discretion, for the forthcoming fiscal year,
month by month, certified by the chief financial officer of Borrower as being
such officer's good faith best estimate of the financial performance of Borrower
during the period covered thereby,
(d) if and when filed by Borrower,
(i) Form 10-Q quarterly reports, Form 10-K annual reports, and
Form 8-K current reports,
(ii) any other filings made by Borrower with the SEC, and
(iii) any other information that is provided by Borrower to
its shareholders generally,
(e) if and when filed by Borrower or its Subsidiaries and as
requested by Agent, satisfactory evidence of payment of applicable excise taxes
in each jurisdiction in which (i) Borrower or any Guarantor conducts business or
is required to pay any such excise tax, (ii) where Borrower's or any Guarantor's
failure to pay any such applicable excise tax would result in a Lien on the
properties or assets of Borrower or any Guarantor, or (iii) where Borrower's or
any Guarantor's failure to pay any such applicable excise tax reasonably could
be expected to result in a Material Adverse Change,
(f) within 5 Business Days after Borrower has knowledge of any event
or condition that constitutes a Default or an Event of Default, notice thereof
and a statement of the curative action that Borrower proposes to take with
respect thereto,
(g) promptly after the commencement thereof, but in any event within
5 days after the service of process with respect thereto on Borrower or any of
its Subsidiaries,
-72-
notice of all actions, suits, or proceedings brought by or against Borrower or
any of its Subsidiaries before any Governmental Authority which, if determined
adversely to Borrower or such Subsidiary, reasonably could be expected to result
in a Material Adverse Change,
(h) on or before December 1 of each year, a schedule of all the
Recurring Trade Shows that are planned for the following year, and
(i) upon the request of Agent, any other report reasonably requested
relating to the financial condition of Borrower or its Subsidiaries.
In addition to the financial statements referred to above, Borrower
agrees to deliver financial statements prepared on a consolidated basis and
revenue and EBITDA summaries on a business segment basis and agrees that no
Subsidiary of Borrower will have a fiscal year different from that of Borrower.
Borrower agrees to cooperate with Agent to allow Agent to consult with its
independent certified public accountants if Agent reasonably requests the right
to do so and that, in such connection, its independent certified public
accountants are authorized to communicate with Agent and to release to Agent
whatever financial information concerning Borrower or its Subsidiaries Agent
reasonably may request.
6.4 GUARANTOR REPORTS. Cause each Guarantor to deliver its annual
financial statements at the time when Borrower provides its audited financial
statements to Agent, but only to the extent such Guarantor's financial
statements are not consolidated with Borrower's financial statements, and copies
of all federal income tax returns as soon as the same are available and in any
event no later than 30 days after the same are required to be filed by law.
6.5 BENEFIT PLANS.
(a) Deliver to the Agent written notice, as soon as possible and, in
any event, no later than
(i) 10 Business Days after Borrower, its Subsidiaries, or any
ERISA Affiliate knows or has reason to know that: (1) an ERISA Event
or Reportable Event has or is likely to occur; or (2) that a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of
a Benefit Plan is subject to the advance reporting requirement of
PBGC Regulation Section 4043.61 (without regard to subparagraph
(b)(1) thereof) and an event described in subsection .62-.68 of
PBGC Regulation Section 4043 is reasonably expected to occur with
respect to such Benefit Plan within the following 30 days;
(ii) 3 Business Days after Borrower, its Subsidiaries, or any
ERISA Affiliate knows or has reason to know that: (A) any
governmental agency intends to investigate or terminate any Benefit
Plan or to have or consider having a trustee appointed to administer
any Benefit Plan; (B) that an accumulated funding deficiency (within
the meaning of Section 412 of the Code or Section 302 of ERISA, has
been incurred or an application may be or has been made for a waiver
or modification of the minimum funding standard (including any
required installment payments or an extension of any amortization
period under Section 412 of the
-73-
Code or Section 303 or 304 of ERISA with respect to a Plan; (C) any
Person files a lawsuit involving a Plan other than a claim for
benefits in the ordinary course of business; (D) any contribution
required to be made with respect to a Plan has been or will be made
late; (E) a Benefit Plan has been or may be involuntarily
terminated, reorganized, partitioned or declared insolvent; (F) a
Benefit Plan has an Unfunded Pension Liability in excess of
$15,000,000; (G) proceedings may be or have been instituted to
involuntarily terminate or appoint a trustee to administer a Benefit
Plan; (H) an involuntary proceeding has been instituted pursuant to
Section 515 of ERISA to collect a delinquent contribution to a
Benefit Plan; (I) Borrower, its Subsidiaries, or any ERISA Affiliate
will or may incur any material liability to or on account of the
termination of or withdrawal from a Benefit Plan; or (J) a material
adverse change in the funding status of, or accrued benefits under,
a Benefit Plan from that reflected on the documents attached as
Schedule 5.13(e) has occurred.
(b) Any such notice shall (i) set forth to the extent known and in
reasonable detail the occurrence and the action, if any, that Borrower, its
Subsidiaries, any ERISA Affiliate, Benefit Plan, or Benefit Plan administrator
is required or proposes to take, (ii) attach any notice required or proposed to
be given to or filed by any entity listed in clause (i) to or with the PBGC or
any other governmental agency or provided to any Benefit Plan participant; and
(iii) any notice received by any entity listed in clause (i) from the PBGC or
any other governmental agency.
(c) Promptly after receipt of a written request from Agent, deliver
to Agent copies of documents required to be filed with any governmental agency
with respect to any Benefit Plan within 20 Business Days of filing such
documents, including all documents that must be furnished to the PBGC and a
complete copy of the annual report (5500 series) of each Benefit Plan (including
all related financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information) required to be filed with
the Internal Revenue Service.
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its properties
that are necessary or useful in the proper conduct to its business in good
working order and condition, ordinary wear and tear excepted, and comply at all
times with the provisions of all leases to which it is a party as lessee so as
to prevent any loss or forfeiture thereof or thereunder except, in each case,
where the failure to do so reasonably could not be expected to have a Material
Adverse Change.
-74-
6.7 TAXES. Cause all material assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or assessed
against Borrower, its Subsidiaries, or any of their respective assets to be paid
in full, before delinquency or before the expiration of any extension period,
except to the extent that the validity of such assessment or tax shall be the
subject of a Permitted Protest. Borrower will and will cause its Subsidiaries to
make timely payment or deposit of all tax payments and withholding taxes
required of it and them by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and federal income
taxes, and will, upon request, furnish Agent with proof satisfactory to Agent
indicating that Borrower and its Subsidiaries have made such payments or
deposits.
6.8 INSURANCE.
(a) Maintain insurance respecting its and its Subsidiaries' assets
wherever located, covering loss or damage by fire, theft, explosion, and all
other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses. Borrower also shall maintain business
interruption, public liability, and product liability insurance, as well as
insurance against larceny, embezzlement, and criminal misappropriation as are
ordinarily maintained by Persons engaged in the same or similar business as
Borrower. All such policies of insurance shall be in such amounts and with such
insurance companies as are reasonably satisfactory to Agent. Borrower shall
deliver copies of all such policies to Agent with a satisfactory lender's loss
payable endorsement naming Agent as sole loss payee or additional insured, as
appropriate. Each such policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Agent in the event of cancellation of the policy for any reason whatsoever.
(b) Borrower shall give Agent prompt notice of any loss covered by
such insurance in excess of $100,000. Agent shall have the exclusive right to
adjust any losses claimed under any such insurance policies in excess of
$100,000 (or in any amount after the occurrence and during the continuation of
an Event of Default), without any liability to Borrower whatsoever in respect of
such adjustments. Any Net Proceeds received as payment for any loss under any
insurance policy mentioned above (other than liability insurance policies) or as
payment of any award or compensation for condemnation or taking by eminent
domain, shall be paid over to Agent to be disbursed to Borrower under staged
payment terms reasonably satisfactory to Agent for application to the cost of
repairs, replacements, or restorations or, if an Event of Default has occurred
and is continuing, shall be applied at the option of the Required Lenders to the
prepayment of the Obligations. Any such repairs, replacements, or restorations
shall be effected with reasonable promptness and shall be of a value at least
equal to the value of the items of property destroyed prior to such damage or
destruction.
(c) Borrower will not and will not suffer or permit the Guarantors
to take out separate insurance concurrent in form or contributing in the event
of loss with that
-75-
required to be maintained under this Section 6.8, unless Agent is included
thereon as named insured with the loss payable to Agent under a lender's loss
payable endorsement or its equivalent. Borrower immediately shall notify Agent
whenever such separate insurance is taken out, specifying the insurer thereunder
and full particulars as to the policies evidencing the same, and copies of such
policies promptly shall be provided to Agent.
6.9 LOCATION OF EQUIPMENT. Keep Borrower's and the Guarantors' Equipment
(other than Equipment of de minimis value) only at the locations identified on
Schedule 5.5 and their chief executive offices only at the locations identified
on Schedule 5.7(b); provided, however, that Borrower may amend Schedule 5.5 and
Schedule 5.7 so long as such amendment occurs by written notice to Agent not
less than 15 days after the date on which such Equipment is moved to such new
location or such chief executive office is relocated, so long as such new
location is within the continental United States.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, reasonably could not be expected to result in a Material
Adverse Change.
6.11 LEASES. Pay when due all rents and other amounts payable under any
material leases to which Borrower or any of its Subsidiaries is a party or by
which Borrower's or any such Subsidiaries' properties and assets are bound,
unless such payments are the subject of a Permitted Protest.
6.12 EXISTENCE. At all times preserve and keep in full force and effect
Borrower's and its Subsidiaries' valid existence and good standing and any
rights and franchises material to their businesses except (a) to the extent
permitted by Section 7.3, or (b) where the failure to not keep in full force and
effect Borrower's and its Subsidiaries' rights and franchises material to their
business reasonably could not be expected to result in a Material Adverse
Change.
6.13 ENVIRONMENTAL.
(a) Keep any property either owned or operated by Borrower or its
Subsidiaries free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance that Agent reasonably
requests, (c) promptly notify Agent of any release of a Hazardous Material in
any reportable quantity from or onto property owned or operated by Borrower or
its Subsidiaries and take any Remedial Actions required to xxxxx said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly, but in any event within 5 days of its receipt thereof, provide Agent
with written notice of any of the following: (i) notice that an Environmental
Lien has been
-76-
filed against any of the real or personal property of Borrower or its
Subsidiaries, (ii) commencement of any Environmental Action or notice that an
Environmental Action will be filed against Borrower or its Subsidiaries, and
(iii) notice of a violation, citation, or other administrative order, which
reasonably could be expected to result in a Material Adverse Change.
6.14 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after a Financial Officer of Borrower obtains knowledge thereof, notify
Agent if any written information, exhibit, or report furnished to the Lender
Group contained any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the affect of
amending or modifying this Agreement or any of the Schedules hereto.
6.15 FORMATION OF SUBSIDIARIES. At the time that Borrower or any Guarantor
forms any direct or indirect Subsidiary or acquires any direct or indirect
Subsidiary after the Closing Date or within 15 days thereafter, Borrower or such
Guarantor shall (a), in the case of each Domestic Subsidiary, cause such new
Subsidiary to provide to Agent a joinder to the Guaranty and the Guarantor
Security Agreement, together with such other security documents (including
Mortgages with respect to any Real Property of such new Subsidiary), as well as
appropriate UCC-1 financing statements (and with respect to all property subject
to a Mortgage, fixture filings), all in form and substance satisfactory to Agent
(including being sufficient to grant Agent a first priority Lien (subject to
Permitted Liens) in and to the assets of such newly formed or acquired
Subsidiary), (b) provide to Agent a pledge agreement and appropriate
certificates and powers or UCC-1 financing statements, hypothecating all or, in
the case of any Foreign Subsidiary, not more than 65%, of the direct or
beneficial ownership interest in such new Subsidiary, in form and substance
satisfactory to Agent, and (c) provide to Agent all other documentation,
including one or more opinions of counsel satisfactory to Agent, that in its
opinion is appropriate with respect to the execution and delivery of the
applicable documentation referred to above (including policies of title
insurance or other documentation with respect to all property subject to a
Mortgage). Any document, agreement, or instrument executed or issued pursuant to
this Section 6.15 shall be a Loan Document.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations, Borrower will not and will
not permit any of its Subsidiaries to do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
-77-
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit,
(b) Indebtedness set forth on Schedule 5.20,
(c) Permitted Purchase Money Indebtedness,
(d) (i) refinancings of the Subordinated Notes and the Senior Notes
permitted under the definition of "Permitted Indenture Debt" (and continuance or
renewal of any Permitted Liens associated therewith), and (ii) refinancings,
renewals, or extensions of Indebtedness permitted under clauses (b) and (c) of
this Section 7.1 (and continuance or renewal of any Permitted Liens associated
therewith) so long as: (A) such refinancings, renewals, or extensions do not
result in an increase in the then extant principal amount of, or interest rate
with respect to, the Indebtedness so refinanced, renewed, or extended, (B) such
refinancings, renewals, or extensions do not result in a shortening of the
average weighted maturity of the Indebtedness so refinanced, renewed, or
extended, nor are they on terms or conditions that, taken as a whole, are
materially more burdensome or restrictive to Borrower, (C) if the Indebtedness
that is refinanced, renewed, or extended was subordinated in right of payment to
the Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must include subordination terms and conditions that are
at least as favorable to the Lender Group as those that were applicable to the
refinanced, renewed, or extended Indebtedness, and (D) the Indebtedness that is
refinanced, renewed, or extended is not recourse to any Person that is liable on
account of the Obligations other than those Persons that were obligated with
respect to the Indebtedness that was refinanced, renewed, or extended,
(e) endorsement of instruments or other payment items for deposit,
and
(f) Indebtedness composing Permitted Investments,
(g) Permitted Indenture Debt,
(h) Indebtedness of Borrower to any Guarantor or Indebtedness of any
Guarantor to Borrower or any other Guarantor,
(i) Indebtedness of any Foreign Subsidiary to any other Foreign
Subsidiary,
(j) guaranties by Borrower of any Indebtedness of any Guarantor and
guaranties by any Guarantor of any Indebtedness of Borrower or any other
Guarantor in each case so long as such Indebtedness was permitted to be incurred
pursuant to this Section 7.1,
-78-
(k) Indebtedness that may be deemed to exist pursuant to any
guaranties, performance, surety, statutory, appeal or similar obligations
incurred in the ordinary course of business,
(l) Indebtedness in connection with any Hedge Agreement entered into
in the ordinary course of business and not for speculative purposes,
(m) unsecured Indebtedness of Borrower or any of its Subsidiaries in
an aggregate principal amount not to exceed $2,500,000 outstanding at any time,
and
(n) Indebtedness assumed by Borrower or any Guarantor in accordance
with Section 7.3(a)(i) or Section 7.3(b)(ii).
7.2 LIENS. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock, provided that (i) any Subsidiary of
Borrower may merge into Borrower or any Guarantor and any Foreign Subsidiary may
merge into any other Foreign Subsidiary so long as the liabilities of a
Subsidiary of Borrower that is not a Guarantor assumed by Borrower or a
Guarantor in connection with any such merger do not exceed, in the aggregate
during the term of this Agreement, an amount equal to the difference of $500,000
minus the amount of liabilities assumed by Borrower or a Guarantor under Section
7.3(b), (ii) any Subsidiary may merge into any Person in connection with a
Permitted Acquisition or a Permitted Disposition, (iii) Borrower may effect a
reverse split of its common Stock and, in connection therewith, may pay holders
of fractional shares in cash so long as the aggregate payment to such holders
does not exceed $50,000, and (iv) Borrower may enter into any transaction with
respect to the Senior Notes and the Subordinated Notes that is provided for in
the definition of "Permitted Indenture Debt".
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution), provided that any Subsidiary that is not a
Guarantor may liquidate (whether voluntarily or involuntarily) or be dissolved
so long as (i) Borrower determines in good faith that such liquidation or
dissolution is in the best interests of Borrower and is not materially
disadvantageous to the Lender Group, and (ii) the liabilities assumed by
Borrower or a Guarantor in connection with any such liquidations or dissolutions
do not exceed, in the aggregate during the term of this Agreement, an amount
equal to the difference of $500,000 minus the amount of liabilities assumed by
Borrower or a Guarantor under Section 7.3(a)(i).
-79-
(c) Sell, lease, transfer, or otherwise dispose of, in one
transaction or a series of transactions, all or any substantial part of its
assets except as permitted pursuant to Section 7.4.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions and transactions
permitted under Section 7.3, sell, lease, transfer, or otherwise dispose of, any
of Borrower's or its Subsidiaries' assets.
7.5 CHANGE NAME. Change Borrower's or any Guarantor's name, FEIN,
organizational identification number, state of organization, or organizational
identity; provided, however, that Borrower or any Guarantor (a) may change its
name, FEIN, or organizational identification number, upon at least 15 days prior
written notice to Agent of such change and so long as, at the time of such
written notification, Borrower or such Guarantor provides any financing
statements necessary to perfect and continue perfected the Agent's Liens and (b)
may change its name, FEIN, organizational identification number, state of
organization, or organizational identity, if any such change is in connection
with a transaction permitted under Section 7.3 or 7.4.
7.6 NATURE OF BUSINESS. Make any material change in the principal nature
of its or their business.
7.7 PREPAYMENTS AND AMENDMENTS.
(a) Prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of Borrower or its Subsidiaries, other than (i) prepayment of the
Obligations in accordance with this Agreement, (ii) a refinancing permitted by
Section 7.1(d), (iii) a transaction described in the definition of Permitted
Indenture Debt, or (iv) purchases by Borrower of its Senior Notes or
Subordinated Notes, so long as in the case of this clause (iv) (A) no Event of
Default exists at the time of the making of any such purchase or would exist
after giving effect thereto and (B) Borrower has Excess Liquidity of at least
$17,500,000 after giving effect to any such purchase, or
(b) Amend, modify, alter, increase, or change any of the terms or
conditions of any agreement, instrument, document, indenture, or other writing
evidencing or concerning Indebtedness permitted under Section 7.1(g) or (h)
other than a supplement that is required to be made pursuant to the terms of
such Indebtedness.
7.8 CHANGE OF CONTROL. Cause or permit any Change of Control.
7.9 [INTENTIONALLY OMITTED].
7.10 DISTRIBUTIONS. Except for Permitted Dispositions and transactions
permitted under Section 7.3, make any distribution or declare or pay any
dividends (in cash or other
-80-
property) on, or purchase, acquire, redeem, or retire any of Borrower's Stock,
of any class, whether now or hereafter outstanding.
7.11 ACCOUNTING METHODS. Modify or change its fiscal year or its method of
accounting (other than as may be required to conform to GAAP) without the prior
written consent of Agent (which consent shall not unreasonably be withheld).
7.12 INVESTMENTS. Except for Permitted Investments and transactions
permitted under Section 7.13 with respect to the Executive Loan Program
referenced on Schedule 5.20, directly or indirectly, make or acquire any
Investment or incur any liabilities (including contingent obligations) for or in
connection with any Investment.
7.13 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower's business, upon fair
and reasonable terms, and that are no less favorable to Borrower than would be
obtained in an arm's length transaction with a non-Affiliate, provided that this
Section shall not apply to any transaction that is permitted under Sections 7.1,
7.3, 7.4, 7.10, or 7.12 between or among Borrower and/or the Guarantors and not
involving any other Affiliate. Notwithstanding anything in this Agreement to the
contrary, Borrower shall be permitted to restructure, or otherwise reduce
amounts owing on, the loans made by Borrower pursuant to the Executive Loan
Program referenced on Schedule 5.20 by way of forgiveness of Indebtedness,
issuance of Stock to the obligors on such loans, or payment of salaries,
bonuses, and other cash payments to or on behalf of the obligors on such loans
approved by the Board of Directors or the compensation committee thereof.
7.14 SUSPENSION. Suspend or go out of a substantial portion of its or
their business, except as permitted under Section 7.3.
7.15 ERISA.
(a) Cause or permit to occur an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA,
(b) Cause or permit to occur an ERISA Event,
(c) Adopt, maintain, contribute to or become obligated to contribute
to any Benefit Plan, Multiemployer Plan, or other Plan that provides material
retiree health benefits not disclosed on Schedule 5.13(e), other than as
required by Section 601 of ERISA and Section 4980B of the Code,
(d) Adopt any amendment to a Benefit Plan that would materially
raise the amount of benefits payable after termination of employment, or
-81-
(e) Cause or permit to occur any event with respect to a Plan that
reasonably could be expected to result in a Material Adverse Change.
7.16 USE OF PROCEEDS. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, (i) to repay, in full, the outstanding
principal, accrued interest, and accrued fees and expenses owing to Existing
Agent (and the lenders represented by Existing Agent), and (ii) to pay
transactional fees, costs, and expenses incurred in connection with this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, for its lawful and permitted purposes.
7.17 [INTENTIONALLY OMITTED].
7.18 FINANCIAL COVENANTS.
(a) FUNDED BANK DEBT LEVERAGE RATIO. Fail to maintain or achieve, at
any time that any Advances are outstanding or at any time of Borrower's making a
request for an Advance, a Funded Bank Debt Leverage Ratio, measured on a
quarter-end basis, of no more than the amount set forth in the following table
for the applicable period set forth opposite thereto:
Applicable Ratio Applicable Period
2.5:1.0 For the 12 month period
ending June 30, 2003
2.5:1.0 For the 12 month period
ending September 30, 2003
2.5:1.0 For the 12 month period
ending December 31, 2003
2.5:1.0 For the 12 month period
ending March 31, 2004
2.25:1.0 For the 12 month period
ending June 30, 2004
2.25:1.0 For the 12 month period
ending September 30, 2004
2.25:1.0 For the 12 month period
ending December 31, 2004
-82-
2.25:1.0 For the 12 month period
ending March 31, 2005
2.0:1.0 For the 12 month period
ending June 30, 2005
and ending on each September 30,
December 31, March 31, and June 30
thereafter
(b) Capital Expenditures. Make Capital Expenditures in any fiscal
year in excess of (a) $8,000,000 if EBITDA is equal to or greater than
$31,000,000 for the most recently completed fiscal year of Borrower, (b)
$7,000,000 if EBITDA is equal to or greater than $27,000,000 but less than
$31,000,000 for the most recently completed fiscal year of Borrower, (c)
$6,000,000 if EBITDA is equal to or greater than $23,000,000 but less than
$27,000,000 for the most recently completed fiscal year of Borrower, or (d)
$5,000,000 at all other times.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrower fails to pay when due and payable or when declared due and
payable, any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due Lender, reimbursement
of Lender Group Expenses, or other amounts constituting Obligations); provided,
however, that in the case of Overadvances that are caused by the charging of
interest, fees, or Lender Group Expenses to the Loan Account, such event shall
not constitute an Event of Default if, within 3 Business Days of its receipt of
telephonic notice of such Overadvance, Borrower eliminates such Overadvance;
8.2 If Borrower or any Guarantor (with respect to Loan Documents to which
such Guarantor is a party):
(a) fails to perform, keep, or observe any term, provision,
covenant, or agreement contained in Sections 2.7, 3.2, 4.2, 4.4, 4.6, 6.8, 6.12,
6.15, and 7.1 through 7.18 of this Agreement;
(b) fails or neglects to perform, keep, or observe any term,
provision, covenant, or agreement contained in Sections 4.5, 6.2, 6.3, 6.5, 6.6,
6.7, 6.9, 6.10, 6.11, and 6.14 of this Agreement and such failure continues for
a period of 5 Business Days; or
(c) fails or neglects to perform, keep, or observe any other term,
provision, covenant, or agreement contained in this Agreement, or in any of the
other Loan Documents (giving effect to any grace periods, cure periods, or
required notices, if any, expressly
-83-
provided for in such Loan Documents); in each case, other than any such term,
provision, covenant, or agreement that is the subject of another provision of
this Section 8, in which event such other provision of this Section 8 shall
govern), and such failure continues for a period of 10 Business Days;
provided that, during any period of time that any such failure or
neglect of any such Obligor referred to in this paragraph exists, even if such
failure or neglect is not yet an Event of Default by virtue of the existence of
a grace or cure period or the pre-condition of the giving of a notice, the
Lender Group shall be relieved of its obligation to extend credit hereunder;
8.3 If any material portion of Borrower's or any of Guarantor's assets is
attached, seized, subjected to a writ or distress warrant, levied upon, or comes
into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by Borrower or any Guarantor;
8.5 If an Insolvency Proceeding is commenced against Borrower, or any
Guarantor, and any of the following events occur: (a) Borrower or such Guarantor
consents to the institution of such Insolvency Proceeding against it, (b) the
petition commencing the Insolvency Proceeding is not timely controverted;
provided, however, that, during the pendency of such period, each member of the
Lender Group shall be relieved of its obligations to extend credit hereunder,
(c) the petition commencing the Insolvency Proceeding is not dismissed within 45
calendar days of the date of the filing thereof; provided, however, that, during
the pendency of such period, each member of the Lender Group shall be relieved
of its obligations to extend credit hereunder, (d) an interim trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
Borrower or any Guarantor, or (e) an order for relief shall have been entered
therein;
8.6 If Borrower is enjoined, restrained, or in any way prevented by court
order from continuing to conduct all or any material part of its business
affairs;
8.7 (a) If a notice of Lien is filed of record with respect to Borrower's
or any Guarantor's assets by the United States or any department, agency, or
instrumentality thereof (a "Federal Lien"), or by any state, county, municipal,
or governmental agency and such state, county, municipal, or governmental agency
Lien has priority over the Agent's Liens in and to the Collateral or any portion
thereof (a "Non-Federal Priority Lien");
(b) If a notice of Lien is filed of record with respect to
Borrower's or any Guarantor's assets by any state, county, municipal, or
governmental agency that is not a Non-Federal Priority Lien (a "Non-Federal
Non-Priority Lien"); provided, however, that, if the aggregate amount claimed
with respect to any such Non-Federal Non-Priority Liens, or the combination
thereof, is less than $500,000, an Event of Default shall not occur under this
-84-
subsection if the claims that are the subject of such Liens are the subject of
Permitted Protests and if the Liens are released, discharged, or bonded against
within 30 days of each such Lien first being filed of record or, if earlier, at
least 5 days prior to the date on which assets that are subject to such Liens
are subject to being sold or forfeited and, in any such case, Lender shall have
the absolute right to establish and maintain a reserve against the Borrowing
Base and the Maximum Revolver Amount in an amount equal to the aggregate amount
of the underlying claims (determined by Agent, in its Permitted Discretion, and
irrespective of any Permitted Protests with respect thereto and including any
penalties or interest that are estimated by Agent, in its Permitted Discretion,
to arise in connection therewith);
8.8 If one or more judgments involving an aggregate amount of $1,000,000,
or more, in excess of the amount covered by insurance, becomes a Lien or
encumbrance upon any of Borrower's or any Guarantor's assets and the same is not
released, discharged, bonded against, or stayed pending appeal before the
earlier of 30 days after the date it first arises or 5 days prior to the date on
which such asset is subject to being forfeited by Borrower or such Guarantor;
8.9 (a) If there is a default in one or more agreements to which Borrower
or any Guarantor is a party with one or more third Persons relative to
Borrower's or such Guarantor's Indebtedness involving an aggregate amount of
$1,000,000, or more, and such default (i) occurs at the final maturity of the
obligations thereunder, or (ii) results in a right by such third Person(s),
irrespective of whether exercised, to accelerate the maturity of Borrower's or
such Guarantor's obligations thereunder, or
(b) If there is a default in any other material agreement to which
Borrower or any Guarantor is a party with one or more third Persons and such
default results in a right by such third Person(s), irrespective of whether
exercised, to terminate such agreement;
8.10 If Borrower or any Guarantor makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the Obligations, except to the extent such payment is permitted by
the terms of the subordination provisions applicable to such Indebtedness;
8.11 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or report made in writing
to Agent or any Lender by Borrower or any Guarantor or any officer, employee,
agent, or director of Borrower or any Guarantor, or if any such warranty or
representation is withdrawn;
8.12 If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by such Guarantor thereunder;
8.13 If this Agreement or any other Loan Document that purports to create
a Lien, shall, for any reason, fail or cease to create a valid and perfected
and, except to the extent
-85-
permitted by the terms hereof or thereof, first priority Lien on or security
interest in the Collateral covered hereby or thereby; or
8.14 Any material provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by Borrower or its Subsidiaries, or a proceeding
shall be commenced by Borrower or its Subsidiaries, or by any Governmental
Authority having jurisdiction over Borrower or its Subsidiaries, seeking to
establish the invalidity or unenforceability thereof, or Borrower or its
Subsidiaries shall deny that Borrower or its Subsidiaries has any liability or
obligation purported to be created under any Loan Document.
8.15 (a) Any Benefit Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof under the Code or ERISA or a
waiver of such standard or extension of any amortization period is sought or
granted, a Reportable Event shall have occurred, a contributing sponsor (as
defined in Section 4001(a)(13) of ERISA) of a Benefit Plan shall be subject to
the advance reporting requirement of PBGC Regulation Section 4043.61 (without
regard to subparagraph (b)(1) thereof) and an event described in subsection
..62-.68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
with respect to such Benefit Plan within the following 30 days, any Benefit Plan
shall have had or is likely to have a trustee appointed to administer such
Benefit Plan pursuant to Section 4042(b) of ERISA, any Benefit Plan is, shall
have been, or is likely to be involuntarily terminated or to be the subject of
termination proceedings under ERISA, any Benefit Plan shall have an Unfunded
Current Liability, a contribution required to be made with respect to a Plan has
not been made when due, any liability has occurred or is likely to occur on
account of a Benefit Plan under Section 409, 502(i), 502(l), 4062, 4063, 4064,
4069 or of ERISA or Section 401(a)(29), 4971 or 4975 of the Code, a "default"
within the meaning of Section 4219(c)(5) of ERISA shall occur with respect to
any Benefit Plan, a material adverse change in the funding status of, or accrued
benefits under, a Benefit Plan from that reflected on the documents attached as
Schedule 5.13(e) has occurred or is likely to occur, any applicable law, rule or
regulation is adopted, changed or interpreted, or the interpretation or
administration thereof is changed, in each case after the date hereof, by any
governmental authority or agency or by any court (a "Change in Law"), or, as a
result of a Change in Law, an event occurs following a Change in Law, with
respect to or otherwise affecting any Plan; (b) there shall result from any such
event or events described above in this Section 8.15 the imposition of a lien,
the granting of a security interest, or a liability resulting from any event
described in clause (a) above; and (c) such lien, security interest, or
liability, individually or in the aggregate, has resulted in, or could
reasonably be expected to result in a Material Adverse Change.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the continuation,
of an Event of Default, the Required Lenders (at their election but without
notice of their
-86-
election and without demand) may authorize and instruct Agent to do any one or
more of the following on behalf of the Lender Group (and Agent, acting upon the
instructions of the Required Lenders, shall do the same on behalf of the Lender
Group), all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by
any of the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit
of Borrower under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents as
to any future liability or obligation of the Lender Group, but without affecting
any of the Agent's Liens in the Collateral and without affecting the
Obligations;
(d) Settle or adjust disputes and claims directly with Borrower's
Account Debtors for amounts and upon terms that Agent considers advisable, and
in such cases, Agent will credit Borrower's Loan Account with only the net
amounts received by Agent in payment of such disputed Accounts after deducting
all Lender Group Expenses incurred or expended in connection therewith;
(e) Cause Borrower to hold all of its returned Inventory in trust
for the Lender Group and segregate all such Inventory from all other assets of
Borrower or in Borrower's possession;
(f) Without notice to or demand upon Borrower, make such payments
and do such acts as Agent considers necessary or reasonable to protect its
security interests in the Collateral. Borrower agrees to assemble the Collateral
if Agent so requires, and to make the Collateral available to Agent at a place
that Agent may designate that is reasonably convenient to both parties. Borrower
authorizes Agent to enter the premises where the Collateral is located, to take
and maintain possession of the Collateral, or any part of it, and to pay,
purchase, contest, or compromise any Lien that in Agent's determination appears
to conflict with the Agent's Liens in and to the Collateral and to pay all
expenses incurred in connection therewith and to charge Borrower's Loan Account
therefor. With respect to any of Borrower's owned or leased premises, Borrower
hereby grants Agent a license to enter into possession of such premises and to
occupy the same, without charge, to exercise any of the Lender Group's rights or
remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to Borrower (such notice being expressly waived),
and without constituting an acceptance of any collateral in full or partial
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of Borrower held
by the Lender Group (including any amounts
-87-
received in the Cash Management Accounts), or (ii) Indebtedness at any time
owing to or for the credit or the account of Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and deposits of
Borrower held by the Lender Group, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Borrower Collateral. Borrower hereby grants to Agent a license or other right to
use, without charge, Borrower's labels, patents, copyrights, trade secrets,
trade names, trademarks, service marks, and advertising matter, or any property
of a similar nature, as it pertains to the Borrower Collateral, in completing
production of, advertising for sale, and selling any Borrower Collateral and
Borrower's rights under all licenses and all franchise agreements shall inure to
the Lender Group's benefit;
(j) Sell the Borrower Collateral at either a public or private sale,
or both, by way of one or more contracts or transactions, for cash or on terms,
in such manner and at such places (including Borrower's premises) as Agent
determines is commercially reasonable. It is not necessary that the Borrower
Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the Borrower
Collateral as follows:
(i) Agent shall give Borrower a notice in writing of the time
and place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the
Borrower Collateral, the time on or after which the private sale or
other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Borrower as provided in Section 12, at least 10
days before the earliest time of disposition set forth in the
notice; no notice needs to be given prior to the disposition of any
portion of the Borrower Collateral that is perishable or threatens
to decline speedily in value or that is of a type customarily sold
on a recognized market;
(l) Agent, on behalf of the Lender Group, may credit bid and
purchase at any public sale;
(m) Agent may seek the appointment of a receiver or keeper to
take possession of all or any portion of the Borrower Collateral or
to operate same and, to the maximum extent permitted by law, may
seek the appointment of such a receiver without the requirement of
prior notice or a hearing; and
-88-
(n) The Lender Group shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan Document; provided,
however, that upon the occurrence of any Event of Default described in Section
8.4 or Section 8.5, in addition to the remedies set forth above, without any
notice to Borrower or any other Person or any act by the Lender Group, the
Commitments shall automatically terminate and the Obligations then outstanding,
together with all accrued and unpaid interest thereon and all fees and all other
amounts due under this Agreement and the other Loan Documents shall
automatically and immediately become due and payable, without presentment,
demand, protest, or notice of any kind, all of which are expressly waived by
Borrower.
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons and relating to
the Collateral, or fails to make any deposits or furnish any required proof of
payment or deposit, all as required under the terms of this Agreement, then,
Agent, in its Permitted Discretion and without prior notice to Borrower, may do
any or all of the following: (a) make payment of the same or any part thereof,
(b) set up such reserves in Borrower's Loan Account as Agent deems necessary to
protect the Lender Group from the exposure created by such failure, or (c) in
the case of the failure to comply with Section 6.8 hereof, obtain and maintain
insurance policies of the type described in Section 6.8 and take any action with
respect to such policies as Agent deems prudent. Any such amounts paid by Agent
shall constitute Lender Group Expenses and any such payments shall not
constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing. Agent shall use its commercially reasonable efforts to provide notice to
Borrower of any action taken by it under this Section 10.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel
-89-
paper, and guarantees at any time held by the Lender Group on which Borrower may
in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR BORROWER COLLATERAL. Borrower hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Borrower Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Borrower Collateral shall be borne
by Borrower except in the case of any of the foregoing to the extent caused by
or as a result of the willful misconduct or gross negligence of a member of the
Lender Group.
11.3 INDEMNIFICATION. Borrower shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each,
an "Indemnified Person") harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution, delivery, enforcement,
performance, or administration (including any restructuring or workout with
respect hereto) of this Agreement, any of the other Loan Documents, or the
transactions contemplated hereby or thereby or the monitoring of Borrower's and
its Subsidiaries' compliance with the terms of the Loan Documents, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, Borrower shall have no obligation to
any Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that has resulted from or is attributable to the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrower was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrower
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES THAT IN WHOLE OR
IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
-90-
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands
by Borrower or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents that may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Borrower or Agent, as applicable, may designate to each other
in accordance herewith), or telefacsimile to Borrower or Agent, as the case may
be, at its address set forth below:
If to Borrower: PENTON MEDIA, INC.
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Chief Financial Officer
Fax No. (000) 000-0000
with copies to: XXXXX DAY
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attn: Xxxxxxxxxxx X. Xxxxx, Esq.
Fax No. (000) 000-0000
If to Agent: XXXXX FARGO FOOTHILL, INC.
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Group Credit Manager - Specialty Finance
Fax No. 000-000-0000
with copies to: PAUL, HASTINGS, XXXXXXXX & XXXXXX LLP
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx Hilson, Esq.
Fax No. 000-000-0000
Agent and Borrower may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Borrower Collateral under the provisions of the Code, shall be deemed received
on the earlier of the date of actual receipt or 3 Business Days after the
deposit thereof in the mail. Borrower acknowledges and agrees that notices
-91-
sent by the Lender Group in connection with the exercise of enforcement rights
against Borrower Collateral under the provisions of the Code shall be deemed
sent when deposited in the mail or personally delivered, or, where permitted by
law, transmitted by telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE NEW YORK STATE COURTS AND FEDERAL COURTS LOCATED IN THE
CITY OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST
ANY BORROWER COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH BORROWER COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND THE LENDER
GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(B).
(c) BORROWER AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. BORROWER AND THE LENDER GROUP REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS
-92-
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may assign and delegate to one or more assignees that
are Eligible Transferees (each an "Assignee") all, or any ratable part of all,
of the Obligations, the Commitments and the other rights and obligations of such
Lender hereunder and under the other Loan Documents, in a minimum amount of
$5,000,000 (except such minimum amount shall not apply to an Affiliate of a
Lender or a Related Fund); provided, however, that Borrower and Agent may
continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses, and related information with
respect to the Assignee, have been given to Borrower and Agent by such Lender
and the Assignee, (ii) such Lender and its Assignee have delivered to Borrower
and Agent an Assignment and Acceptance, and (iii) the assignor Lender or
Assignee has paid to Agent for Agent's separate account a processing fee in the
amount of $5,000 (except the payment of such fee shall not be required if the
Assignee is an Affiliate of a Lender or a Related Fund). Anything contained
herein to the contrary notwithstanding, the payment of any fees shall not be
required and the Assignee need not be an Eligible Transferee if such assignment
is in connection with any merger, consolidation, sale, transfer, or other
disposition of all or any substantial portion of the business or loan portfolio
of the assigning Lender.
(b) From and after the date that Agent notifies the assignor Lender
(with a copy to Borrower) that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 11.3 hereof) and be released from any future obligations
under this Agreement (and in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement and the other Loan Documents, such Lender shall cease to be
a party hereto and thereto), and such assignment shall effect a novation between
Borrower and the Assignee; provided, however, that nothing contained herein
shall release any assigning Lender from obligations that survive the termination
of this Agreement, including such assigning Lender's obligations under Article
16 and Section 17.8 of this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each
-93-
other and the other parties hereto as follows: (1) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(2) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or the
performance or observance by Borrower of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (3) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(4) such Assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement, (5) such
Assignee appoints and authorizes Agent to take such actions and to exercise such
powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (6) such
Assignee agrees that it will perform all of the obligations that by the terms of
this Agreement are required to be performed by it as a Lender.
(d) Immediately upon Agent's receipt of the required processing fee
payment and the fully executed Assignment and Acceptance, this Agreement shall
be deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of Agent,
sell to one or more commercial banks, financial institutions, or other Persons
not Affiliates of such Lender (a "Participant") participating interests in its
Obligations, the Commitment, and the other rights and interests of that Lender
(the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrower, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the
-94-
Participant has the right to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender, or (E) change
the amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Borrower hereunder shall be determined
as if such Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Borrower, the Collections of Borrower or its Subsidiaries, the Collateral, or
otherwise in respect of the Obligations. No Participant shall have the right to
participate directly in the making of decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may, subject to the provisions of
Section 17.8, disclose all documents and information that it now or hereafter
may have relating to Borrower and its Subsidiaries and their respective
businesses.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR Section203.24, and such Federal Reserve Bank
may enforce such pledge or security interest in any manner permitted under
applicable law.
(h) Agent shall maintain, or cause to be maintained, a register (the
"Register") on which it enters the name of a Lender as the registered owner of
each Advance, held by such Lender. A Registered Loan (and the Registered Note,
if any, evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Registered
Note shall expressly so provide). Any assignment or sale of all or part of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by registration of such assignment or sale on the Register (other
-95-
than with respect to an assignment or delegation to an Affiliate of a Lender or
a Related Fund), together with the surrender of the Registered Note, if any,
evidencing the same duly endorsed by (or accompanied by a written instrument of
assignment or sale duly executed by) the holder of such Registered Note,
whereupon, at the request of the designated assignee(s) or transferee(s), one or
more new Registered Notes in the same aggregate principal amount shall be issued
to the designated assignee(s) or transferee(s). Prior to the registration of
assignment or sale of any Registered Loan (and the Registered Note, if any
evidencing the same), Agent shall treat the Person in whose name such Loan (and
the Registered Note, if any, evidencing the same) is registered as the owner
thereof for the purpose of receiving all payments thereon and for all other
purposes, notwithstanding notice to the contrary. In the case of an assignment
or delegation to an Affiliate of a Lender or a Related Fund, the assigning
Lender shall maintain a comparable Register, on behalf of Agent.
(i) In the event that a Lender sells participations in the
Registered Loan, such Lender shall maintain a register on which it enters the
name of all participants in the Registered Loans held by it (the "Participant
Register"). A Registered Loan (and the Registered Note, if any, evidencing the
same) may be participated in whole or in part only by registration of such
participation on the Participant Register (and each Registered Note shall
expressly so provide). Any participation of such Registered Loan (and the
Registered Note, if any, evidencing the same) may be effected only by the
registration of such participation on the Participant Register.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release Borrower from its Obligations. A Lender may assign this Agreement and
the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Borrower and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all of the Lenders affected thereby and
Borrower, do any of the following:
-96-
(a) increase the amount of or extend the maturity date applicable to
any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required to
take any action hereunder,
(e) amend or modify this Section or any provision of the Agreement
providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section 16.12,
(g) change the definition of "Required Lenders" or "Pro Rata Share",
(h) contractually subordinate any of the Agent's Liens,
(i) release Borrower or any Guarantor from any obligation for the
payment of money, or
(j) change the definition of Borrowing Base or Maximum Revolver
Amount, or change Section 2.1(b), or
(k) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document.
15.2 REPLACEMENT OF HOLDOUT LENDER.
(a) If any action to be taken by the Lender Group or Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders, and
a Lender ("Holdout Lender") fails to give its consent, authorization, or
agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to
the Holdout Lender, may permanently replace the Holdout Lender with one or more
substitute Lenders that are Eligible Transferees (each, a "Replacement Lender"),
and the Holdout Lender shall have no right to refuse to be replaced hereunder.
Such notice to replace the Holdout Lender shall specify an effective
-97-
date for such replacement, which date shall not be later than 15 Business Days
after the date such notice is given.
(b) Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of Section 14.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender's Pro Rata Share of Advances and to purchase a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrower of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby designates
and appoints WFF as its representative under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes Agent to execute and
deliver each of the other Loan Documents on its behalf and to take such other
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 16. The
provisions of this Section 16 (other than the proviso to Section 16.11(e))are
solely for the benefit of Agent, and the Lenders, and Borrower and its
Subsidiaries shall have no rights as a third party beneficiary of any of the
provisions contained herein. Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
-98-
nor shall Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that WFF is
merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections of Borrower and its Subsidiaries, and related matters, (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections of
Borrower and its Subsidiaries as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management arrangements as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections of
Borrower and its Subsidiaries, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Borrower, the
Obligations, the Collateral, the Collections of Borrower and its Subsidiaries,
or otherwise related to any of same as provided in the Loan Documents, and (g)
incur and pay such Lender Group Expenses as Agent may deem necessary or
appropriate for the performance and fulfillment of its functions and powers
pursuant to the Loan Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 LIABILITY OF AGENT. None of the Agent Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Borrower or any Subsidiary or
Affiliate of Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other
-99-
document referred to or provided for in, or received by Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of Borrower or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No Agent
Related Person shall be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the Books or properties of Borrower or the books or records or properties of any
of Borrower's Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a "notice of default." Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 16.4, Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with Section 9; provided, however, that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
-100-
16.6 CREDIT DECISION. Each Lender acknowledges that none of the Agent
Related Persons has made any representation or warranty to it, and that no act
by Agent hereinafter taken, including any review of the affairs of Borrower and
its Subsidiaries or Affiliates, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender. Each Lender represents to
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of
Borrower and any other Person party to a Loan Document, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to Borrower. Each
Lender also represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of Borrower and any other Person party
to a Loan Document. Except for notices, reports, and other documents expressly
herein required to be furnished to the Lenders by Agent, Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of Borrower and any other Person party
to a Loan Document that may come into the possession of any of the Agent Related
Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, attorneys fees and
expenses, fees and expenses of financial accountants, advisors, consultants, and
appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrower is obligated to reimburse Agent
or Lenders for such expenses pursuant to the Loan Agreement or otherwise. Agent
is authorized and directed to deduct and retain sufficient amounts from the
Collections of Borrower and its Subsidiaries received by Agent to reimburse
Agent for such out-of-pocket costs and expenses prior to the distribution of any
amounts to Lenders. In the event Agent is not reimbursed for such costs and
expenses from the Collections of Borrower and its Subsidiaries received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Borrower and without limiting the obligation of Borrower to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to any Agent Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
-101-
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender's Pro Rata Share of any costs or out of pocket expenses
(including attorneys, accountants, advisors, and consultants fees and expenses)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrower. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. WFF and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrower and its
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though WFF were not Agent hereunder, and, in each case, without notice to or
consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, WFF or its
Affiliates may receive information regarding Borrower or its Affiliates and any
other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include WFF in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to the
Lenders and Borrower. If Agent resigns under this Agreement, the Required
Lenders shall appoint a successor Agent for the Lenders. If no successor Agent
is appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with the Lenders and Borrower, a successor Agent. If
Agent has materially breached or failed to perform any material provision of
this Agreement or of applicable law, the Required Lenders may agree in writing
to remove and replace Agent with a successor Agent from among the Lenders. In
any such event, upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the rights, powers, and
duties of the retiring Agent and the term "Agent" shall mean such successor
Agent and the retiring Agent's appointment, powers, and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 16 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement. If no
successor Agent has accepted appointment as Agent by the date that is 45 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of
-102-
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with Borrower
and its Subsidiaries and Affiliates and any other Person party to any Loan
Documents as though such Lender were not a Lender hereunder without notice to or
consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, such Lender and its
respective Affiliates may receive information regarding Borrower or its
Affiliates and any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrower or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender not shall be under any obligation to
provide such information to them. With respect to the Swing Loans and Agent
Advances, Swing Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the sub-agent of Agent.
16.11 WITHHOLDING TAXES.
(a) If any Lender is a "foreign person" within the meaning of the
IRC and such Lender claims exemption from, or a reduction of, U.S. withholding
tax under Sections 1441 or 1442 of the IRC, such Lender agrees with and in favor
of Agent and Borrower, to deliver to Agent and Borrower:
(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (A) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a
"bank" as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
shareholder of Borrower (within the meaning of Section 871(h)(3)(B)
of the IRC), or (III) a controlled foreign corporation related to
Borrower within the meaning of Section 864(d)(4) of the IRC, and (B)
a properly completed and executed IRS Form W-8BEN, before the first
payment of any interest under this Agreement and at any other time
reasonably requested by Agent or Borrower;
(ii) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed and executed IRS Form W 8BEN before the first payment of
any interest under this Agreement and at any other time reasonably
requested by Agent or Borrower;
-103-
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form
W-8ECI before the first payment of any interest is due under this
Agreement and at any other time reasonably requested by Agent or
Borrower;
(iv) such other form or forms as may be required under the IRC
or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Borrower of any change in
circumstances that would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrower to such Lender, such Lender
agrees to notify Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of Borrower to such Lender. To the extent of
such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances that rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
(e) All payments made by Borrower hereunder or under any note will
be made without setoff, counterclaim, or other defense, except as required by
applicable law other than for Taxes (as defined below). All such payments will
be made free and clear of,
-104-
and without deduction or withholding for, any present or future taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction (other than the United States) or by any
political subdivision or taxing authority thereof or therein (other than of the
United States) with respect to such payments (but excluding, any tax imposed by
any jurisdiction or by any political subdivision or taxing authority thereof or
therein (i) measured by or based on or with reference to the net income or net
profits of a Lender, or (ii) to the extent that such tax results from a change
in the circumstances of the Lender, including a change in the residence, place
of organization, or principal place of business of the Lender, or a change in
the branch or lending office of the Lender participating in the transactions set
forth herein) and all interest, penalties or similar liabilities with respect
thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments
or other charges being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, Borrower agrees to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any note, including any amount paid pursuant
to this Section 16.11(e) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that Borrower shall not be required to increase any such amounts payable to
Agent or any Lender (i) that is not organized under the laws of the United
States, if such Person fails to comply with the other requirements of this
Section 16.11, or (ii) if the increase in such amount payable results from
Agent's or such Lender's own willful misconduct or gross negligence. Borrower
will furnish to Agent as promptly as possible after the date the payment of any
Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by Borrower.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its option
and in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrower
of all Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if Borrower
certifies to Agent that the sale or disposition is permitted under Section 7.4
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry), (iii) constituting Excluded
Collateral or property in which Borrower or its Subsidiaries owned no interest
at the time the Agent's Lien was granted nor at any time thereafter, or (iv)
constituting property leased to Borrower or its Subsidiaries under a lease that
has expired or is terminated in a transaction permitted under this Agreement.
Except as provided above, Agent will not execute and deliver a release of any
Lien on any Collateral without the prior written authorization of (y) if the
release is of all or substantially all of the Collateral, all of the Lenders, or
(z) otherwise, the Required Lenders. Upon request by Agent or Borrower at any
time, the Lenders will confirm in writing Agent's authority to release any such
Liens on particular types or items of Collateral pursuant to this Section 16.12;
provided, however, that (1) Agent shall not be required to execute any document
necessary to evidence such release on terms that, in
-105-
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrower in respect of) all
interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders
to assure that the Collateral exists or is owned by Borrower or is cared for,
protected, or insured or has been encumbered, or that the Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express written consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the written request of Agent, set off against
the Obligations, any amounts owing by such Lender to Borrower or any deposit
accounts of Borrower now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
in writing by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations, except for any such proceeds or
payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender's ratable
portion of all such distributions by Agent, such Lender promptly shall (1) turn
the same over to Agent, in kind, and with such endorsements as may be required
to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(2) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; provided, however, that to the extent that such
excess payment received by the
-106-
purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets that, in accordance with Article 9 of the
Code can be perfected only by possession or control. Should any Lender obtain
possession or control of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent's request therefor shall deliver possession or
control of such Collateral to Agent or in accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by Agent
to the Lenders shall be made by bank wire transfer of immediately available
funds pursuant to such wire transfer instructions as each party may designate
for itself by written notice to Agent. Concurrently with each such payment,
Agent shall identify whether such payment (or any portion thereof) represents
principal, premium, or interest of the Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents. Each member of the Lender Group agrees that any action
taken by Agent in accordance with the terms of this Agreement or the other Loan
Documents relating to the Collateral and the exercise by Agent of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS
BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to this
Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by Agent, and
Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make
any representation or warranty as to the accuracy of any Report, and (ii) shall
not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or
-107-
examination will inspect only specific information regarding Borrower and will
rely significantly upon the Books, as well as on representations of Borrower's
personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrower and its Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner in
accordance with Section 17.8, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or fail to take or any conclusion the indemnifying Lender may reach or draw
from any Report in connection with any loans or other credit accommodations that
the indemnifying Lender has made or may make to Borrower, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrower, and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrower, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of Borrower the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Borrower, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Borrower a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters
-108-
relating to the Loan Documents to the extent any such notice may be required,
and no Lender shall have any obligation, duty, or liability to any Participant
of any other Lender. Except as provided in Section 16.7, no member of the Lender
Group shall have any liability for the acts of any other member of the Lender
Group. No Lender shall be responsible to Borrower or any other Person for any
failure by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective
when executed by Borrower, Agent, and each Lender whose signature is provided
for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing signed by those Persons required to sign such amendment pursuant to
Section 15.1.
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
-109-
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by Borrower or any Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrower or any Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
17.8 CONFIDENTIALITY. The Agent and the Lenders each individually (and not
jointly or jointly and severally) agree that material, non-public information
regarding Borrower and its Subsidiaries, their operations, assets, and existing
and contemplated business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except: (a) to attorneys for and
other advisors, accountants, auditors, and consultants to any member of the
Lender Group, (b) to Subsidiaries and Affiliates of any member of the Lender
Group, provided that any such Subsidiary or Affiliate shall have agreed to
receive such information hereunder subject to the terms of this Section 17.8,
(c) as may be required by statute, decision, or judicial or administrative
order, rule, or regulation, (d) as may be agreed to in advance by Borrower or
its Subsidiaries or as requested or required by any Governmental Authority
pursuant to any subpoena or other legal process, (e) as to any such information
that is or becomes generally available to the public (other than as a result of
prohibited disclosure by Agent or the Lenders), (f) in connection with any
assignment, prospective assignment, sale, prospective sale, participation or
prospective participations, or pledge or prospective pledge of any Lender's
interest under this Agreement, provided that any such assignee, prospective
assignee, purchaser, prospective purchaser, participant, prospective
participant, pledgee, or prospective pledgee shall have agreed in writing to
receive such information hereunder subject to the terms of this Section, and (g)
in connection with any litigation or other adversary proceeding involving
parties hereto which such litigation or adversary proceeding involves claims
related to the rights or duties of such parties under this Agreement or the
other Loan Documents. The provisions of this Section 17.8 shall survive for 3
years after the payment in full of the Obligations and termination of this
Agreement. Anything contained herein or in any other Loan Document to the
contrary notwithstanding, the obligations of confidentiality contained herein
and therein, as they relate to the transactions contemplated hereby, shall not
apply to the federal tax structure or federal tax treatment of such
transactions, and each party hereto (and any employee, representative, or agent
of any party hereto) may disclose to any and all Persons, without limitation of
any kind, the federal tax structure and federal tax treatment of such
transactions (including all written materials related to such tax structure and
tax treatment). The preceding sentence is
-110-
intended to cause the transactions contemplated hereby to not be treated as
having been offered under conditions of confidentiality for purposes of Section
1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
promulgated under Section 6011 of the IRC, and shall be construed in a manner
consistent with such purpose. In addition, each party hereto acknowledges that
it has no proprietary or exclusive rights to the tax structure of the
transactions contemplated hereby or any tax matter or tax idea related thereto.
17.9 INTEGRATION. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
[Signature pages to follow.]
-111-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
PENTON MEDIA, INC.,
a Delaware corporation, as Borrower
By:
---------------------------------------
Title:
XXXXX FARGO FOOTHILL, INC.,
a California corporation, as Agent and as
a Lender
By:
---------------------------------------
Title:
ABLECO FINANCE LLC,
a Delaware limited liability company, as
a Lender
By:
---------------------------------------
Title:
-112-
TABLE OF CONTENTS
Page
----
.. DEFINITIONS AND CONSTRUCTION............................................................. 1
1.1 Definitions .................................................................... 1
1.2 Accounting Terms ............................................................... 28
1.3 Code ........................................................................... 29
1.4 Construction ................................................................... 29
1.5 Schedules and Exhibits ......................................................... 29
1.6 Calculation of Certain Financial Terms ......................................... 29
2. LOAN AND TERMS OF PAYMENT ............................................................... 30
2.1 Revolver Advances .............................................................. 30
2.2 Optional Reduction of Maximum Revolver Amount .................................. 31
2.3 Borrowing Procedures and Settlements ........................................... 31
2.4 Payments ....................................................................... 38
2.5 Overadvances ................................................................... 41
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations .... 41
2.7 Cash Management ................................................................ 43
2.8 Crediting Payments ............................................................. 44
2.9 Designated Account ............................................................. 45
2.10 Maintenance of Loan Account; Statements of Obligations ......................... 45
2.11 Fees ........................................................................... 45
2.12 Letters of Credit .............................................................. 46
2.13 LIBOR Option ................................................................... 49
2.14 Capital Requirements ........................................................... 52
3. CONDITIONS; TERM OF AGREEMENT ........................................................... 52
3.1 Conditions Precedent to the Initial Extension of Credit ........................ 52
3.2 Conditions Subsequent to the Initial Extension of Credit ....................... 55
3.3 Conditions Precedent to all Extensions of Credit ............................... 56
3.4 Term ........................................................................... 56
3.5 Effect of Termination .......................................................... 56
3.6 Early Termination by Borrower .................................................. 57
4. CREATION OF SECURITY INTEREST ........................................................... 58
-i-
TABLE OF CONTENTS
(continued)
Page
----
4.1 Grant of Security Interest ..................................................... 58
4.2 Negotiable Collateral .......................................................... 58
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral ......... 58
4.4 Filing of Financing Statements; Commercial Tort Claims; Delivery of Additional
Documentation Required ......................................................... 58
4.5 Power of Attorney .............................................................. 59
4.6 Right to Inspect ............................................................... 60
4.7 Control Agreements ............................................................. 60
5. REPRESENTATIONS AND WARRANTIES .......................................................... 61
5.1 No Encumbrances ................................................................ 61
5.2 Accounts ....................................................................... 61
5.3 [Intentionally Omitted] ........................................................ 61
5.4 Equipment ...................................................................... 61
5.5 Location of Equipment .......................................................... 61
5.6 [Intentionally Omitted] ........................................................ 61
5.7 State of Incorporation; Location of Chief Executive Office; FEIN; Organizational
ID Number; Commercial Tort Claims .............................................. 61
5.8 Due Organization and Qualification; Subsidiaries ............................... 62
5.9 Due Authorization; No Conflict ................................................. 62
5.10 Litigation ..................................................................... 64
5.11 No Material Adverse Change ..................................................... 64
5.12 Fraudulent Transfer ............................................................ 64
5.13 Employee Benefits .............................................................. 65
5.14 Environmental Condition ........................................................ 65
5.15 Brokerage Fees ................................................................. 65
5.16 Intellectual Property .......................................................... 65
5.17 Leases ......................................................................... 65
5.18 Deposit Accounts and Securities Accounts ....................................... 66
5.19 Complete Disclosure ............................................................ 66
5.20 Indebtedness ................................................................... 66
5.21 Senior Debt, Etc ............................................................... 66
-ii-
TABLE OF CONTENTS
(continued)
Page
----
5.22 Application of Asset Sale Proceeds; Other Indebtedness ......................... 66
6. AFFIRMATIVE COVENANTS ................................................................... 67
6.1 Accounting System .............................................................. 67
6.2 Collateral Reporting ........................................................... 67
6.3 Financial Statements, Reports, Certificates .................................... 68
6.4 Guarantor Reports .............................................................. 70
6.5 [Intentionally Omitted] ........................................................ 70
6.6 Maintenance of Properties ...................................................... 70
6.7 Taxes .......................................................................... 70
6.8 Insurance ...................................................................... 70
6.9 Location of Equipment .......................................................... 71
6.10 Compliance with Laws ........................................................... 72
6.11 Leases ......................................................................... 72
6.12 Existence ...................................................................... 72
6.13 Environmental .................................................................. 72
6.14 Disclosure Updates ............................................................. 72
6.15 Formation of Subsidiaries ...................................................... 73
7. NEGATIVE COVENANTS ...................................................................... 73
7.1 Indebtedness ................................................................... 73
7.2 Liens .......................................................................... 74
7.3 Restrictions on Fundamental Changes ............................................ 75
7.4 Disposal of Assets ............................................................. 75
7.5 Change Name .................................................................... 75
7.6 Nature of Business ............................................................. 75
7.7 Prepayments and Amendments ..................................................... 76
7.8 Change of Control .............................................................. 76
7.9 [Intentionally Omitted] ........................................................ 76
7.10 Distributions .................................................................. 76
7.11 Accounting Methods ............................................................. 76
7.12 Investments .................................................................... 76
-iii-
TABLE OF CONTENTS
(continued)
Page
----
7.13 Transactions with Affiliates ................................................... 76
7.14 Suspension ..................................................................... 76
7.15 [Intentionally Omitted] ........................................................ 77
7.16 Use of Proceeds ................................................................ 77
7.17 [Intentionally Omitted] ........................................................ 77
7.18 Financial Covenants ............................................................ 77
8. EVENTS OF DEFAULT ....................................................................... 78
9. THE LENDER GROUP'S RIGHTS AND REMEDIES .................................................. 81
9.1 Rights and Remedies ............................................................ 81
9.2 Remedies Cumulative ............................................................ 83
10. TAXES AND EXPENSES ...................................................................... 83
11. WAIVERS; INDEMNIFICATION ................................................................ 84
11.1 Demand; Protest; etc ........................................................... 84
11.2 The Lender Group's Liability for Borrower Collateral ........................... 84
11.3 Indemnification ................................................................ 84
12. NOTICES ................................................................................. 85
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER .............................................. 86
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS .............................................. 87
14.1 Assignments and Participations ................................................. 87
14.2 Successors ..................................................................... 90
15. AMENDMENTS; WAIVERS ..................................................................... 90
15.1 Amendments and Waivers ......................................................... 90
15.2 Replacement of Holdout Lender .................................................. 91
15.3 No Waivers; Cumulative Remedies ................................................ 91
16. AGENT; THE LENDER GROUP ................................................................. 92
16.1 Appointment and Authorization of Agent ......................................... 92
16.2 Delegation of Duties ........................................................... 93
16.3 Liability of Agent ............................................................. 93
16.4 Reliance by Agent .............................................................. 93
16.5 Notice of Default or Event of Default .......................................... 94
-iv-
TABLE OF CONTENTS
(continued)
Page
----
16.6 Credit Decision ................................................................ 94
16.7 Costs and Expenses; Indemnification ............................................ 95
16.8 Agent in Individual Capacity ................................................... 95
16.9 Successor Agent ................................................................ 96
16.10 Lender in Individual Capacity .................................................. 96
16.11 Withholding Taxes .............................................................. 97
16.12 Collateral Matters ............................................................. 99
16.13 Restrictions on Actions by Lenders; Sharing of Payments ........................ 99
16.14 Agency for Perfection .......................................................... 100
16.15 Payments by Agent to the Lenders ............................................... 100
16.16 Concerning the Collateral and Related Loan Documents ........................... 101
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;
Other Reports and Information .................................................. 101
16.18 Several Obligations; No Liability .............................................. 102
16.19 Legal Representation of Agent .................................................. 102
17. GENERAL PROVISIONS ...................................................................... 102
17.1 Effectiveness .................................................................. 103
17.2 Section Headings ............................................................... 103
17.3 Interpretation ................................................................. 103
17.4 Severability of Provisions ..................................................... 103
17.5 Amendments in Writing .......................................................... 103
17.6 Counterparts; Telefacsimile Execution .......................................... 103
17.7 Revival and Reinstatement of Obligations ....................................... 103
17.8 Confidentiality ................................................................ 104
17.9 Integration .................................................................... 104
-v-
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule P-1 Permitted Liens
Schedule P-2 Permitted Investments
Schedule 2.7(a) Cash Management Banks
Schedule 4.7(a) Deposit Accounts (pre-March 28, 2002)
Schedule 4.7(b) Deposit Accounts (post-March 28, 2002)
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7(a) States of Organization
Schedule 5.7(b) Chief Executive Offices
Schedule 5.7(c) XXXXx
Schedule 5.7(d) Commercial Tort Claims
Schedule 5.8(b) Capitalization of Borrower
Schedule 5.8(c) Capitalization of Borrower's Subsidiaries
Schedule 5.10 Litigation
Schedule 5.11 Financial Statements
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Deposit Accounts and Securities Accounts
Schedule 5.20 Permitted Indebtedness
-1-
SCHEDULE A-1
AGENT'S ACCOUNT
An account at a bank designated by Agent from time to time as the
account into which Borrower shall make all payments to Agent for the benefit of
the Lender Group and into which the Lender Group shall make all payments to
Agent under this Agreement and the other Loan Documents; unless and until Agent
notifies Borrower and the Lender Group to the contrary, Agent's Account shall be
that certain deposit account bearing account number 323-266193 and maintained by
Agent with JPMorgan Chase Bank, 0 Xxx Xxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, ABA #000000000.
-2-
SCHEDULE C-1
COMMITMENTS
Lender Commitment
------ ----------
Xxxxx Fargo Foothill, Inc. $20,000,000
Ableco Finance LLC $20,000,000
All Lenders $40,000,000
-3-
SCHEDULE D-1
DESIGNATED ACCOUNT
Account number 657100970 of Borrower maintained with Borrower's
Designated Account Bank, or such other deposit account of Borrower (located
within the United States) that has been designed as such, in writing, by
Borrower to Agent.
"Designated Account Bank" means National City Bank, whose office is
located at 0000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, and whose ABA number
is 000000000.
-4-
