EXHIBIT 99.15
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of April 14, 2003
among
PERSONNEL GROUP OF AMERICA, INC.
as Borrower,
THE SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
BANK OF AMERICA, N.A.,
formerly NationsBank, N.A.,
as Agent
TABLE OF CONTENTS
SECTION 1 DEFINITIONS............................................................................................1
1.1 Definitions.....................................................................................1
1.2 Computation of Time Periods....................................................................22
1.3 Accounting Terms...............................................................................23
SECTION 2 CREDIT FACILITIES.....................................................................................23
2.1 Loans..........................................................................................23
2.2 Letter of Credit Subfacility...................................................................24
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES........................................................29
3.1 Default Rate...................................................................................29
3.2 [Reserved].....................................................................................29
3.3 Prepayments....................................................................................29
3.4 Termination and Reduction of Committed Amount; Extension Options...............................31
3.5 Fees...........................................................................................32
3.6 Capital Adequacy...............................................................................33
3.7 [Reserved].....................................................................................33
3.8 [Reserved].....................................................................................33
3.9 Requirements of Law............................................................................33
3.10 Taxes..........................................................................................34
3.11 Pro Rata Treatment.............................................................................36
3.12 Sharing of Payments............................................................................37
3.13 Payments, Computations, Etc....................................................................37
3.14 Evidence of Debt...............................................................................39
3.15 Mandatory Assignment...........................................................................40
SECTION 4 GUARANTY..............................................................................................40
4.1 The Guarantee..................................................................................40
4.2 Obligations Unconditional......................................................................41
4.3 Reinstatement..................................................................................42
4.4 Certain Additional Waivers.....................................................................42
4.5 Remedies.......................................................................................42
4.6 Rights of Contribution.........................................................................43
4.7 Continuing Guarantee...........................................................................43
SECTION 5 CONDITIONS............................................................................................44
5.1 Closing Conditions.............................................................................44
5.2 Conditions to all Extensions of Credit.........................................................45
SECTION 6 REPRESENTATIONS AND WARRANTIES........................................................................46
6.1 Financial Condition............................................................................46
6.2 No Change; Dividends...........................................................................47
6.3 Organization; Existence; Compliance with Law...................................................47
6.4 Power; Authorization; Enforceable Obligations..................................................47
6.5 No Legal Bar...................................................................................48
6.6 No Material Litigation.........................................................................48
6.7 No Default.....................................................................................48
6.8 Ownership of Property; Liens...................................................................49
6.9 Intellectual Property..........................................................................49
6.10 No Burdensome Restrictions.....................................................................49
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6.11 Taxes..........................................................................................49
6.12 ERISA..........................................................................................50
6.13 Governmental Regulations, Etc..................................................................51
6.14 Subsidiaries...................................................................................52
6.15 Purpose of Loans and Letters of Credit.........................................................52
6.16 Environmental Matters..........................................................................52
6.17 Perfected Security Interests...................................................................53
6.18 Borrower's Obligations.........................................................................53
6.19 Indebtedness...................................................................................54
6.20 Investments....................................................................................54
6.21 Disclosure.....................................................................................54
6.22 Tax Shelter Regulations........................................................................54
SECTION 7 AFFIRMATIVE COVENANTS.................................................................................54
7.1 Information Covenants..........................................................................54
7.2 Preservation of Existence and Franchises.......................................................59
7.3 Books and Records..............................................................................59
7.4 Compliance with Law............................................................................59
7.5 Payment of Taxes and Other Indebtedness........................................................59
7.6 Insurance......................................................................................60
7.7 Maintenance of Property........................................................................60
7.8 Performance of Obligations.....................................................................60
7.9 Use of Proceeds................................................................................61
7.10 Audits/Inspections.............................................................................61
7.11 Financial Covenants............................................................................61
7.12 Additional Credit Parties......................................................................63
7.13 Ownership of Subsidiaries......................................................................64
7.14 Pledged Assets.................................................................................64
7.15 [Reserved].....................................................................................64
7.16 Field Examination..............................................................................64
7.17 Engagement of Financial Advisor to Lenders.....................................................64
7.18 Deposit Accounts...............................................................................65
7.19 Periodic Meetings..............................................................................65
SECTION 8 NEGATIVE COVENANTS....................................................................................65
8.1 Indebtedness...................................................................................66
8.2 Liens..........................................................................................67
8.3 Nature of Business.............................................................................67
8.4 Consolidation, Merger, Sale or Purchase of Assets, etc.........................................67
8.5 Advances, Investments, Loans, etc..............................................................68
8.6 Restricted Payments............................................................................68
8.7 Prepayments of Indebtedness, etc...............................................................69
8.8 Transactions with Affiliates...................................................................69
8.9 Fiscal Year....................................................................................69
8.10 Limitation on Restrictions on Subsidiary Dividends and Other Distributions, etc................70
8.11 Issuance and Sale of Subsidiary Stock..........................................................70
8.12 Sale Leasebacks................................................................................70
8.13 No Further Negative Pledges....................................................................70
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8.14 No Foreign Subsidiaries........................................................................71
8.15 Capital Expenditures...........................................................................71
8.16 Consolidated Earn-Outs.........................................................................71
SECTION 9 EVENTS OF DEFAULT.....................................................................................71
9.1 Events of Default..............................................................................71
9.2 Acceleration; Remedies.........................................................................74
SECTION 10 AGENT................................................................................................75
10.1 Appointment and Authorization of Agent.........................................................75
10.2 Delegation of Duties...........................................................................76
10.3 Liability of Agent.............................................................................76
10.4 Reliance by Agent..............................................................................77
10.5 Notice of Default..............................................................................77
10.6 Credit Decision; Disclosure of Information by Agent............................................77
10.7 Indemnification of Agent.......................................................................78
10.8 Agent in its Individual Capacity...............................................................78
10.9 Successor Agent................................................................................79
10.10 Agent May File Proofs of Claim.................................................................79
10.11 Collateral and Guaranty Matters................................................................80
SECTION 11 MISCELLANEOUS........................................................................................81
11.1 Notices........................................................................................81
11.2 Right of Set-Off...............................................................................82
11.3 Benefit of Agreement...........................................................................82
11.4 No Waiver; Remedies Cumulative.................................................................84
11.5 Payment of Expenses, etc.......................................................................85
11.6 Amendments, Waivers and Consents...............................................................85
11.7 Counterparts...................................................................................86
11.8 Headings.......................................................................................87
11.9 Survival.......................................................................................87
11.10 Governing Law; Submission to Jurisdiction; Venue...............................................87
11.11 Severability...................................................................................88
11.12 Entirety.......................................................................................88
11.13 Binding Effect; Amendment and Restatement of Existing Credit Agreement.........................88
11.14 Confidentiality................................................................................89
11.15 Source of Funds................................................................................89
11.16 Conflict.......................................................................................90
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SCHEDULES
Schedule 1.1A Investments
Schedule 1.1B Liens
Schedule 2.1(a) Lenders
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Amended, Restated and Substituted Note
Schedule 6.2 No Change: Dividends
Schedule 6.4 Required Consents, Authorizations, Notices and Filings
Schedule 6.9 Intellectual Property
Schedule 6.11 Taxes
Schedule 6.13 Governmental Regulations, etc...
Schedule 6.14 Subsidiaries
Schedule 7.1(c)(i) Form of Officer's Compliance Certificate
Schedule 7.1(c)(ii) Form of Officer's Compliance Certificate
Schedule 7.1(k) Form of Borrowing Base Certificate
Schedule 7.12 Form of Joinder Agreement
Schedule 7.18 Form of Agency Agreement
Schedule 8.1 Indebtedness
Schedule 11.3(b) Form of Assignment and Acceptance
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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 14,
2003 (the "Credit Agreement"), is by and among PERSONNEL GROUP OF AMERICA, INC.,
a Delaware corporation (the "Borrower"), the subsidiaries of the Borrower
identified on the signature pages hereto and such other subsidiaries as may from
time to time become a party hereto (the "Guarantors"), the several lenders
identified on the signature pages hereto and such other lenders as may from time
to time become a party hereto (the "Lenders") and BANK OF AMERICA, N.A.,
formerly NationsBank, N.A., as agent for the Lenders (in such capacity, the
"Agent").
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors party thereto, the Lenders party
thereto and the Agent entered into that certain Amended and Restated Credit
Agreement dated as of June 23, 1997 (as amended by Amendment No. 1 to Amended
and Restated Credit Agreement dated as of March 17, 1998, Amendment No. 2 to
Amended and Restated Credit Agreement dated as of September 29, 1999, Amendment
No. 3 to Amended and Restated Credit Agreement dated as of March 21, 2001, a
Waiver Agreement dated as of December 14, 2001, Amendment No. 4 to Amended and
Restated Credit Agreement dated as of February 8, 2002, Amendment No. 5 to
Amended and Restated Credit Agreement and Waiver dated as of December 31, 2002
and Waiver dated as of March 31, 2003, and as otherwise modified prior to the
date hereof, the "Existing Credit Agreement").
WHEREAS, the parties hereto have agreed to amend and restate the
Existing Credit Agreement as set forth herein in order to, among other things,
extend the Termination Date;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 DEFINITIONS.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Additional Credit Party" means each Person that becomes a
Guarantor after the Closing Date by execution of a Joinder Agreement.
"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person or (ii) directly or
indirectly owning or holding five percent (5%) or more of the equity
interest in such Person. For purposes of this definition, "control"
when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative
to the foregoing.
"Agency Services Address" means Bank of America, N.A.,
NC1-001-15-04, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000,
Attn: Agency Services, or such other address as may be identified by
written notice from the Agent to the Borrower.
"Agent" shall have the meaning assigned to such term in the
heading hereof, together with any successors or assigns.
"Agent-Related Persons" means the Agent, together with its
Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"Agent's Fee Letter" means that certain letter agreement,
dated as of April 14, 2003, between the Agent and the Borrower, as
amended, modified, supplemented or replaced from time to time.
"Agent's Fees" shall have the meaning assigned to such term in
Section 3.5(c).
"Applicable Percentage" means, for purposes of calculating the
applicable interest rate for any day for any Loan or the applicable
rate of the Unused Fee for any day for purposes of Section 3.5(a) or
the applicable rate of the Letter of Credit Fee for any day for
purposes of Section 3.5(b)(i), the appropriate applicable percentage
corresponding to the relevant period set forth below:
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================================================================================================================
Applicable Applicable
Percentage for Percentage for Applicable
Base Rate Letter of Credit Percentage for
Period Loans Fee Unused Fee
----------------------------------------------------------------------------------------------------------------
From the Closing Date through
June 30, 2003 3.25% 6.25% 0.50%
----------------------------------------------------------------------------------------------------------------
From July 1, 2003 through
December 31, 2003 3.75% 6.50% 0.50%
----------------------------------------------------------------------------------------------------------------
From January 1, 2004 through
June 30, 2004* 4.25% 6.75% 0.50%
----------------------------------------------------------------------------------------------------------------
From July 1, 2004 through
December 31, 2004* 4.50% 7.00% 0.50%
----------------------------------------------------------------------------------------------------------------
From January 1, 2005 through
May 1, 2005* 5.00% 7.25% 0.50%
================================================================================================================
*Applicable Percentages for May 1, 2004 and thereafter are
contingent on extension option being exercised pursuant to Section
3.4(e) of this Credit Agreement.
"Asset Sale" means (i) any sale, lease, transfer or other
disposition (including any such transaction effected by way of merger,
amalgamation or consolidation) by the Borrower or any of its
Subsidiaries subsequent to the date hereof of any asset (including
stock in Subsidiaries of the Borrower), including without limitation
any sale leaseback transaction (whether or not involving a Capital
Lease), but excluding (a) the sale of inventory in the ordinary course
of business for fair consideration, (b) the sale or disposition of
machinery and equipment no longer used or useful in the conduct of such
Person's business and (c) the sale of any asset having a net book value
of less than $50,000 and (ii) receipt by the Borrower or any of its
Subsidiaries of any cash insurance proceeds or condemnation award
payable by reason of theft, loss, physical destruction or damage,
taking or similar event with respect to any of the property or assets
of the Borrower and its Subsidiaries.
"Attorney Costs" means and includes all fees, expenses and
disbursements of any law firm or other external counsel.
"Availability" means, as of any date of determination, (i) the
Committed Amount as of such date minus (ii) the sum of (a) the
aggregate principal amount of outstanding Loans on such date plus (b)
LOC Obligations outstanding as of such date.
"Bank of America" means Bank of America, N.A. (formerly
NationsBank, N.A.) and its successors.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from
time to time.
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"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a
court or governmental agency having jurisdiction in the premises shall
enter a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
ordering the winding up or liquidation of its affairs; or (ii) there
shall be commenced against such Person an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its
Property or for the winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded for a period of sixty (60)
consecutive days; or (iii) such Person shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or make any general assignment for the
benefit of creditors; or (iv) such Person shall be unable to, or shall
admit in writing its inability to, pay its debts generally as they
become due.
"Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (a) the Federal Funds Rate in effect on such
day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for
any reason the Agent shall have determined (which determination shall
be conclusive absent manifest error) that it is unable after due
inquiry to ascertain the Federal Funds Rate for any reason, including
the inability or failure of the Agent to obtain sufficient quotations
in accordance with the terms hereof, the Base Rate shall be determined
without regard to clause (a) of the first sentence of this definition
until the circumstances giving rise to such inability no longer exist.
Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Bond Conversion" means the conversion to common stock equity
in the Borrower of at least $109,961,000 of the 5-3/4% Convertible
Subordinated Notes due 2004.
"Borrower" means the Person identified as such in the heading
hereof, together with any permitted successors and assigns.
"Borrower's Obligations" means, without duplication, (i) all
of the obligations of the Borrower to the Lenders (including the
Issuing Lender) and the Agent, whenever arising, under the Credit
Agreement, the Notes or any of the other Credit Documents (including,
but not limited to, any interest accruing after the occurrence of a
Bankruptcy Event with respect
4
to the Borrower, regardless of whether such interest is an allowed
claim under the Bankruptcy Code) and (ii) all liabilities and
obligations, whenever arising, owing from the Borrower to any Lender,
or any Affiliate of a Lender, arising under any Hedging Agreement.
"Borrowing Base" means, as of any day, an amount equal to the
sum of (i) 85% of Eligible Receivables (other than Eligible Receivables
that are unbilled receivables) as set forth in the applicable Borrowing
Base report delivered to the Agent in accordance with Section 7.1(k)
plus (ii) 75% of Eligible Receivables that are unbilled receivables as
set forth in the applicable Borrowing Base report delivered to the
Agent in accordance with Section 7.1(k) plus (iii) the applicable
Overadvance.
"Borrowing Base Certificate" shall have the meaning assigned
to such term in Section 7.1(k).
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina are
authorized or required by law to close.
"Capital Lease" means, as applied to any Person, any lease of
any Property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person.
"Cash Collateralize" means to pledge and deposit with or
deliver to the Agent, for the benefit of the Issuing Lender and the
Lenders, as collateral for the LOC Obligations, cash or deposit account
balances pursuant to documentation in form and substance satisfactory
to the Agent and the Issuing Lender (which documents are hereby
consented to by the Lenders). Cash collateral shall be maintained in
blocked, interest bearing deposit accounts at Bank of America.
"Cash Equivalents" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits and certificates
of deposit of (i) any Lender, or (ii) any domestic commercial bank of
recognized standing (y) having capital and surplus in excess of
$500,000,000 and (z) whose short-term commercial paper rating from S&P
is at least A-1 or the equivalent thereof or from Xxxxx'x is at least
P-1 or the equivalent thereof (any such bank being an "Approved
Lender"), in each case with maturities of not more than 270 days from
the date of acquisition, (c) commercial paper and variable or fixed
rate notes issued by any Approved Lender (or by the parent company
thereof) and maturing within six months of the date of acquisition, (d)
repurchase agreements entered into by a Person with a bank or trust
company (including any of the Lenders) or recognized securities dealer
having capital and surplus in excess of $500,000,000 for direct
obligations issued by or fully guaranteed by the United States of
America in which such Person shall have a perfected first priority
security interest (subject to no other Liens) and having, on the date
of purchase thereof, a fair market value of at least 100% of the amount
of the repurchase obligations, (e)
5
obligations of any State of the United States or any political
subdivision thereof, the interest with respect to which is exempt from
federal income taxation under Section 103 of the Code, having a long
term rating of at least AA- or Aa-3 by S&P or Moody's, respectively,
and maturing within three years from the date of acquisition thereof,
(f) Investments in municipal auction preferred stock (i) rated AAA (or
the equivalent thereof) or better by S&P or Aaa (or the equivalent
thereof) or better by Moody's and (ii) with dividends that reset at
least once every 365 days and (g) Investments, classified in accordance
with GAAP as current assets, in money market investment programs
registered under the Investment Company Act of 1940, as amended, which
are administered by reputable financial institutions having capital of
at least $100,000,000 and the portfolios of which are limited to
Investments of the character described in the foregoing subdivisions
(a), (b), (c), (e) and (f).
"Change of Control" means the occurrence of any of the
following events, other than as a result of the Bond Conversion or the
other transactions contemplated pursuant to the Restructuring
Agreement: (i) any Person or two or more Persons acting in concert
(other than a "Permitted Holder" as defined by the Amended and Restated
Rights Agreement, dated as of the date hereof, between the Borrower and
Wachovia Bank, National Association) shall have acquired beneficial
ownership, directly or indirectly, of, or shall have acquired by
contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation, will result in its or their
acquisition of, control over, Voting Stock of the Borrower (or other
securities convertible into such Voting Stock) representing 30% or more
of the combined voting power of all Voting Stock of the Borrower, (ii)
during any period of up to 24 consecutive months, commencing after the
Closing Date, individuals who at the beginning of such 24 month period
were directors of the Borrower (together with any new director whose
election by the Borrower's Board of Directors or whose nomination for
election by the Borrower's shareholders was approved by a vote of at
least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the directors of the Borrower then
in office or (iii) the occurrence of a "Change of Control" under and as
defined in either the Subordinated Note Indenture or the Subordinated
Notes, in each case as in effect on the date hereof or as amended or
modified. As used herein, "beneficial ownership" shall have the meaning
provided in Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor thereto, as interpreted by the rules and regulations
issued thereunder, in each case as in effect from time to time.
References to sections of the Code shall be construed also to refer to
any successor sections.
"Collateral" means a collective reference to the collateral
which at any time will be covered by the Collateral Documents.
6
"Collateral Documents" means a collective reference to the
Security Agreement, the Pledge Agreement and such other documents
executed and delivered in connection with the attachment and perfection
of the Agent's security interests and liens arising thereunder,
including without limitation, UCC financing statements and patent and
trademark filings.
"Commitment" means (i) with respect to each Lender, the
commitment of such Lender in an aggregate principal amount at any time
outstanding of up to such Lender's Commitment Percentage of the
Committed Amount, (A) to make Loans in accordance with the provisions
of Section 2.1(a) and (B) to purchase participation interests in
Letters of Credit in accordance with the provisions of Section 2.2(c)
and (ii) with respect to the Issuing Lender, the LOC Commitment.
"Commitment Percentage" means, for any Lender, the percentage
identified as its Commitment Percentage on Schedule 2.1(a), as such
percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
"Committed Amount" shall have the meaning assigned to such
term in Section 2.1(a).
"Consolidated Capital Expenditures" means, for any period, all
capital expenditures of the Borrower and its Subsidiaries on a
consolidated basis for such period, as determined in accordance with
GAAP.
"Consolidated Coverage Ratio" means, as of the last day of any
month, the ratio of (i) Consolidated EBITDA for the twelve month period
(except as set forth below) ending on such date to (ii) Consolidated
Interest Expense for the twelve month period (except as set forth
below) ending on such date for the twelve month period (except as set
forth below) ending on such date; provided, however, that (i) as of
June 30, 2003, such ratio shall be calculated only for the three month
period ending as of such date, (ii) as of July 31, 2003, such ratio
shall be calculated only for the four month period ending as of such
date, (iii) as of August 31, 2003, such ratio shall be calculated only
for the five month period ending as of such date, (iv) as of September
30, 2003, such ratio shall be calculated only for the six month period
ending as of such date, (v) as of October 31, 2003, such ratio shall be
calculated only for the seven month period ending as of such date, (vi)
as of November 30, 2003, such ratio shall be calculated only for the
eight month period ending as of such date, (vii) as of December 31,
2003, such ratio shall be calculated only for the nine month period
ending as of such date, (viii) as of January 31, 2004, such ratio shall
be calculated only for the ten month period ending as of such date and
(ix) as of February 29, 2004, such ratio shall be calculated only for
the eleven month period ending as of such date; provided, further,
however, that, commencing with the twelve month period ending May 31,
2004, "Consolidated Coverage Ratio" shall mean the ratio of (i)
Consolidated EBITDA for the twelve month period ending on such date to
(ii) the sum of (a) Consolidated Interest Expense for the twelve month
period ending on such date plus (b) as determined on such date, the
principal outstanding amount of the Subordinated Notes
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that are due both (x) within twelve months from such date and (y) prior
to the Termination Date.
"Consolidated Earn-Outs" means, for any period, all earn-out
payments made by the Borrower and its Subsidiaries on a consolidated
basis for such period.
"Consolidated EBITDA" means, for any period, the sum of (i)
Consolidated Net Income for such period plus (ii) an amount which, in
the determination of Consolidated Net Income for such period, has been
deducted for (A) interest expense, (B) total Federal, state, local and
foreign income, value added and similar taxes, (C) depreciation and
amortization expense, (D) for any period during the Borrower's fiscal
year 2003 and beyond, Restructuring Charges taken by the Borrower and
its Subsidiaries (but in no event shall all of the add-backs pursuant
to this clause (D) exceed $5,000,000 (plus the amount of any
Restructuring Charges consisting of (x) expenses that may be incurred
in connection with the hiring of investment advisers to address the
Borrower's capital structure and (y) other fees and expenses not to
exceed $3,100,000 in the aggregate incurred by the Borrower after
December 29, 2002 in connection with any financial restructuring
transaction), (E) non-cash intangible asset impairment charges taken by
the Borrower and its Subsidiaries after December 29, 2002 (but in no
event shall all of the add-backs pursuant to this clause (E) exceed
$104,000,000 in the aggregate), (F) non-cash compensation charges taken
by the Borrower in connection with accounting for the Borrower's new
stock option plan, (G) cash payments to Subordinated Noteholders
referenced in, and permitted under, Section 8.6(vi) of this Credit
Agreement, and (H) cash payments for fractional shares referenced in,
and permitted under, Section 8.6(vii) of this Credit Agreement.
"Consolidated Funded Indebtedness" means, for any date, (i)
the outstanding principal amount of all Funded Indebtedness, without
duplication, of the Borrower and its Subsidiaries as of such date less
(ii) so long as no Loans are outstanding hereunder, the aggregate
amount of cash and Cash Equivalents held by the Borrower as of such
date.
"Consolidated Interest Expense" means, as of the last day of
any fiscal period, interest expense of the Borrower and its
Subsidiaries on a consolidated basis required to be paid in cash (plus
the amortization of ongoing fees previously paid) for the relevant
period ending on such day. For purposes of this Credit Agreement, the
interest expense required to be paid under this Credit Agreement is the
Base Rate plus the margin set forth in the definition of "Applicable
Percentage".
"Consolidated Net Income" means, for any period, (i) net
income after taxes for such period for the Borrower and its
Subsidiaries on a consolidated basis, as determined in accordance with
GAAP (excluding gain on the debt forgiveness in connection with the
Forgiven Balance (as defined in the Restructure Agreement) and the Bond
Conversion) plus (ii) to the extent not included in the amount
determined pursuant to clause (i) above and as calculated on a pro
forma basis, net income after taxes for such period for any Person
acquired by the Borrower or any of its Subsidiaries during such period
(after giving effect to changes in the operating costs of any acquired
Person as if such changes were in effect for such period and are
reasonably expected to continue).
8
"Consolidated Scheduled Funded Indebtedness Payments" means,
as of the last day of any fiscal period, total scheduled payments of
principal on Funded Indebtedness for the Borrower and its Subsidiaries
on a consolidated basis for the relevant period beginning on the
immediately succeeding day. Consolidated Scheduled Funded Indebtedness
Payments shall not include any Consolidated Earn-Outs.
"Consolidated Senior Funded Indebtedness" means, for any date,
(i) the outstanding principal amount of all Consolidated Funded
Indebtedness, without duplication, of the Borrower and its Subsidiaries
as of such date less (ii) the outstanding principal amount of all
Subordinated Indebtedness as of such date.
"Credit Documents" means a collective reference to this Credit
Agreement, the Notes, the LOC Documents, the Collateral Documents, each
Joinder Agreement, the Agent's Fee Letter, the Restructure Agreement,
the Warrants, the Registration Rights Agreement and all other related
agreements and documents issued or delivered hereunder or thereunder or
pursuant hereto or thereto.
"Credit Party" means any of the Borrower and the Guarantors.
"Debt Issuance" means the issuance of any Indebtedness for
borrowed money (including debt securities) by the Borrower or any of
its Subsidiaries, other than (i) the Loans, (ii) Subordinated
Indebtedness evidencing contingent earn-out payment obligations or
similar obligations or incurred pursuant to Section 8.1(g) hereof, and
(iii) purchase money Indebtedness permitted under Section 8.1(c).
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Default Rate" means an interest rate equal to (a) the Base
Rate plus (b) the Applicable Percentage, if any, applicable to Base
Rate Loans plus (c) 2% per annum.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Eligible Receivables" means, as of any date of determination
and without duplication, the aggregate book value of all accounts
receivable, receivables, and obligations for payment created or arising
from the sale of inventory or the rendering of services in the ordinary
course of business (collectively, the "Receivables"), owned by or owing
to the Borrower or any of its Subsidiaries, net of allowances and
reserves for doubtful or uncollectible accounts, refunds, discounts and
sales adjustments consistent with such Person's internal policies and
in any event in accordance with GAAP, but excluding in any event (i)
any Receivable which is (a) not subject to a perfected, first priority
Lien in favor of the Agent to secure the Borrower's Obligations or (b)
subject to any other Lien that is not a Permitted Lien, (ii)
Receivables and credit balances which are more than 90 days past due
(net of reserves for bad debts in connection with any such
receivables), (iii) 75% of the book value of all non-past-due
Receivables owing from an
9
account debtor if 50% or more or such account debtor's Receivables are
90 days or more past due, (iv) Receivables evidenced by notes, chattel
paper or other instruments, unless such notes, chattel paper or
instruments have been delivered to and are in the possession of the
Agent, (v) Receivables owing by an account debtor which is not solvent
or is subject to any bankruptcy or insolvency proceeding of any kind,
(vi) Receivables owing by an account debtor located outside of the
United States (unless payment for the goods shipped is secured by an
irrevocable letter of credit in a form and from an institution
acceptable to the Agent), (vii) Receivables which are contingent or
subject to offset, deduction, counterclaim, dispute or other defense to
payment, in each case to the extent of such offset, deduction,
counterclaim, dispute or other defense, (viii) Receivables for which
any direct or indirect Subsidiary or any Affiliate is the account
debtor, (ix) Receivables representing a sale to the government of the
United States of America or any subdivision thereof unless the Federal
Assignment of Claims Act or other similar applicable law has been
complied with to the satisfaction of the Agent with respect to the
granting of a security interest in such Receivable, (x) unbilled
receivables in excess of $10,000,000 in the aggregate and (xi)
Receivables which fail to meet such other specifications and
requirements as may from time to time be established by the Agent in
its reasonable discretion.
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
"Equity Transaction" means any issuance by the Borrower or any
of its Subsidiaries to any Person of shares of its capital stock or
other equity interests, any shares of its capital stock or other equity
interests pursuant to the exercise of options or warrants or any shares
of its capital stock or other equity interests pursuant to the
conversion of any debt securities to equity other than (i) the Bond
Conversion, (ii) the issuance of the Warrants and any issuance of
common stock upon exercise of the Warrants, (iii) the conversion of any
shares of newly issued Series B Preferred Stock and (iv) any reverse
stock splits.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Credit Party within the meaning of Section 4001(a)(14)
of ERISA, or is a member of a group which includes the Borrower and
which is treated as a single employer under Sections 414(b), (c), (m),
or (o) of the Code.
10
"Event of Default" means such term as defined in Section 9.1.
"Existing Credit Agreement" means such term as defined in the
preamble hereto.
"Fees" means all fees payable pursuant to (i) Section 3.5
and/or (ii) the Restructure Agreement.
"Federal Funds Rate" means, for any day, the rate of interest
per annum (rounded upwards, if necessary, to the nearest whole multiple
of 1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding
such day, provided that (A) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day and (B) if no such rate is so
published on such next preceding Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to the Agent on such day
on such transactions as determined by the Agent.
"First Extension Fee" means a fee equal to the Committed
Amount as of May 1, 2004 multiplied by 0.50%.
"First Extension Option" means the Borrower's option to extend
the Termination Date, as more fully set out in Section 3.4(e)(i).
"Funded Indebtedness" means, with respect to any Person,
without duplication, (i) all Indebtedness of such Person for borrowed
money, (ii) all amounts due and owing by such Person under any
contingent earn-out agreements to which such Person is a party, (iii)
all purchase money Indebtedness of such Person, including without
limitation the principal portion of all obligations of such Person
under Capital Leases, (iv) all Guaranty Obligations of such Person with
respect to Funded Indebtedness of another Person, (v) the maximum
available amount of all standby letters of credit or acceptances issued
or created for the account of such Person, (vi) all Funded Indebtedness
of another Person secured by a Lien on any Property of such Person,
whether or not such Funded Indebtedness has been assumed, and (vii) the
principal balance outstanding under any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet
financing product to which such Person is a party, where such
transaction is considered borrowed money indebtedness for tax purposes
but is classified as an operating lease in accordance with GAAP. The
Funded Indebtedness of any Person shall include the Funded Indebtedness
of any partnership or joint venture in which such Person is a general
partner or joint venturer.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of
Section 1.3 hereof.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
11
"Guarantor" means each of those Persons identified as a
"Guarantor" on the signature pages hereto, and each Additional Credit
Party which may hereafter execute a Joinder Agreement, together with
their successors and permitted assigns.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing or intended to
guarantee any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or provide
funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance
sheet condition of such other Person (including without limitation keep
well agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or purchase Property,
securities or services primarily for the purpose of assuring the holder
of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount
of any Guaranty Obligation hereunder shall (subject to any limitations
set forth therein) be deemed to be an amount equal to the outstanding
principal amount (or maximum principal amount, if larger) of the
Indebtedness in respect of which such Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection
agreement or foreign currency exchange agreement between the Borrower
and any Lender, or any Affiliate of a Lender.
"Indebtedness" of any Person means (i) all obligations of such
Person for borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to Property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (iv) all obligations
of such Person issued or assumed as the deferred purchase price of
Property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and due within six months
of the incurrence thereof) which would appear as liabilities on a
balance sheet of such Person, (v) all obligations of such Person under
take-or-pay or similar arrangements or under commodities agreements,
(vi) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production
from, Property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (vii) all Guaranty
Obligations of such Person (excluding, to the extent entered in the
ordinary course of business, any Guaranty Obligations of the Borrower
with respect to Operating Leases of any Subsidiary of the Borrower),
(viii) the principal portion of all obligations of such Person under
Capital Leases, (ix) all obligations of such Person in respect of
interest rate protection agreements, foreign currency exchange
agreements, commodity purchase or option agreements or other interest
12
or exchange rate or commodity price hedging agreements (including, but
not limited to, the Hedging Agreements), (x) the maximum amount of all
standby letters of credit issued or bankers' acceptances facilities
created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (xi) all
preferred stock issued by such Person and required by the terms thereof
to be redeemed, or for which mandatory sinking fund payments are due,
by a fixed date and (xii) the principal balance outstanding under any
synthetic lease, tax retention operating lease, off-balance sheet loan
or similar off-balance sheet financing product to which such Person is
a party, where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease
in accordance with GAAP. The Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer.
"Indemnified Liabilities" shall have the meaning assigned to
such term in Section 11.5.
"Intercompany Indebtedness" means any Indebtedness of a Credit
Party (other than the Borrower) which (i) is owing to the Borrower or
any other Credit Party and (ii) by its terms is specifically
subordinated in right of payment to the prior payment of the
obligations of the Credit Parties under this Credit Agreement and the
other Credit Documents on terms and conditions reasonably satisfactory
to the Required Lenders.
"Interest Payment Date" means as to any Loan, the last day of
each calendar month, the date of repayment of principal of such Loan
and the Termination Date. If an Interest Payment Date falls on a date
which is not a Business Day, such Interest Payment Date shall be deemed
to be the next succeeding Business Day.
"Investment", in any Person, means any loan or advance to such
Person, any purchase or other acquisition of any capital stock,
warrants, rights, options, obligations or other securities of, or
equity interest in, such Person, any capital contribution to such
Person or any other investment in such Person, including, without
limitation, any Guaranty Obligation incurred for the benefit of such
Person. In computing the amount involved in any Investment, (i)
undistributed earnings of, and interest accrued in respect of
Indebtedness owing by, any such other Person accrued after the date of
such Investment shall not be included, (ii) there shall not be deducted
from the amounts invested in any such other Person any amounts received
as earnings (in the form of dividends, interest or otherwise) on such
Investment or as loans or advances from such other Person, and (iii)
unrealized increases or decreases in value, or write-ups, write-downs
or write-offs, of Investments in any such other Person shall be
disregarded.
"Issuing Lender" means Bank of America.
"Issuing Lender Fees" shall have the meaning assigned to such
term in Section 3.5(b)(iii).
13
"Joinder Agreement" means a Joinder Agreement substantially in
the form of Schedule 7.12 hereto, executed and delivered by an
Additional Credit Party in accordance with the provisions of Section
7.12.
"Laws" means, collectively, all international, foreign,
Federal, state and local statutes, treaties, rules, guidelines,
regulations, ordinances, codes and administrative or judicial
precedents or authorities, including the interpretation or
administration thereof by any Governmental Authority charged with the
enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authority, in each case whether or not having the force of law.
"Lenders" means each of the Persons identified as a "Lender"
on the signature pages hereto, and each Person which may become a
Lender by way of assignment in accordance with the terms hereof,
together with their successors and permitted assigns.
"Letter of Credit" means any letter of credit issued by the
Issuing Lender for the account of the Borrower in accordance with the
terms of Section 2.2.
"Letter of Credit Fee" shall have the meaning assigned to such
term in Section 3.5(b)(i).
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof).
"Loan" or "Loans" shall have the meaning assigned to such term
in Section 2.1(a).
"LOC Commitment" means the commitment of the Issuing Lender to
issue Letters of Credit in an aggregate face amount at any time
outstanding (together with the amounts of any unreimbursed drawings
thereon) of up to the LOC Committed Amount.
"LOC Committed Amount" shall have the meaning assigned to such
term in Section 2.2.
"LOC Documents" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties concerned
or at risk or (ii) any collateral security for such obligations.
14
"LOC Obligations" means, at any time, the sum of (i) the
maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then outstanding,
assuming compliance with all requirements for drawings referred to in
such Letters of Credit plus (ii) the aggregate amount of all drawings
under Letters of Credit honored by the Issuing Lender but not
theretofore reimbursed.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business,
assets, liabilities or prospects of the Borrower and its Subsidiaries
taken as a whole, (ii) the ability of any Credit Party to perform any
material obligation under the Credit Documents to which it is a party
or (iii) the material rights and remedies of the Lenders under the
Credit Documents.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Laws,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Moody's" means Xxxxx'x Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate and at least one
employer other than the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate are contributing sponsors.
"Net Proceeds" means cash proceeds, which in the aggregate
exceed $500,000 for any single transaction, received by the Borrower or
any of its Subsidiaries from time to time in connection with any Asset
Sale, any Equity Transaction or any Debt Issuance, net of actual costs
(including, without limitation, commissions and underwriting discounts,
if any) and taxes paid by such Person in connection with and
attributable to such Asset Sale, Equity Transaction or Debt Issuance;
provided, however, "Net Proceeds" shall not include the aggregate cash
proceeds received by the Borrower from time to time in connection with
the issuance by the Borrower of any capital stock or other equity
interests pursuant to (i) any stock option plan, equity plan or other
employee benefit plan of the Borrower or (ii) the Warrants. It is
understood that "Net Proceeds" shall include, without limitation, any
cash or Cash Equivalents received upon the realization or payment of,
or sale or other disposition of, any non-cash consideration received by
any Credit Party in connection with any Asset Sale, Equity Transaction
or Debt Issuance.
"Non-Excluded Taxes" means such term as is defined in Section
3.10.
15
"Note" means a promissory note of the Borrower in favor of a
Lender delivered pursuant to Section 2.1(e) and evidencing the Loans of
such Lender, as such promissory note may be amended, modified, restated
or replaced from time to time.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Schedule 2.1(b)(i), as required by Section
2.1(b)(i).
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Overadvance" means for the period set forth in the table
below, the Dollar amount set forth below corresponding to such period:
Period Overadvance Amount
Closing Date through
October 31, 2003 $18,800,000
November 1, 2003 through
May 31, 2004 $19,800,000
June 1, 2004 and thereafter $18,800,000
provided, however, that the amount of such Overadvance shall
be permanently reduced by an amount equal to all reductions in the
Committed Amount pursuant to Section 3.3(c) or Section 3.4(a);
provided, further, that if such reduction in the Committed Amount in
the preceding proviso involves the application of proceeds from a sale
that includes the sale of Eligible Receivables (or an entity that owns
Eligible Receivables), then the amount of the reduction in the
Overadvance pursuant to the preceding proviso shall not include (i) 85%
of such Eligible Receivables (other than Eligible Receivables that are
unbilled receivables) sold and (ii) 75% of such sold Eligible
Receivables that are unbilled receivables.
"Participation Interest" means, the extension of credit by a
Lender by way of a purchase of a participation in any Letters of Credit
or LOC Obligations as provided in Section 2.2(c) or in any Loans as
provided in Section 3.13.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
"Permitted Investments" means Investments which are either (i)
cash and Cash Equivalents; (ii) accounts receivable created, acquired
or made by the Borrower or any of its Subsidiaries in the ordinary
course of business and payable or dischargeable in accordance
16
with customary trade terms; (iii) Investments consisting of stock,
obligations, securities or other property received by the Borrower or
any of its Subsidiaries in settlement of accounts receivable (created
in the ordinary course of business) from insolvent or bankrupt
obligors; (iv) Investments existing as of the Closing Date and set
forth in Schedule 1.1A, (v) Guaranty Obligations permitted by Section
8.1; (vi) transactions explicitly permitted by clauses (i), (ii) and
(iv) of Section 8.8; (vii) advances or loans to directors, officers,
agents, customers or suppliers that do not exceed $250,000 in the
aggregate at any one time outstanding; (viii) short term advances or
loans to employees in the ordinary course of business for such
employees' ordinary business expenses that do not exceed $500,000 in
the aggregate at any one time outstanding (ix) Intercompany
Indebtedness permitted by Section 8.1; and (x) other Investments,
provided that the aggregate outstanding amount of all such other
Investments taken together shall not exceed $1,000,000.
"Permitted Liens" means:
(i) Liens in favor of the Agent on behalf of the
Lenders;
(ii) Liens (other than Liens created or imposed
under ERISA) for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes being contested in good
faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and
as to which the Property subject to any such Lien is not yet
subject to foreclosure, sale or loss on account thereof);
(iii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers
and other Liens imposed by law or pursuant to customary
reservations or retentions of title arising in the ordinary
course of business, provided that such Liens secure only
amounts not yet due and payable or, if due and payable, are
unfiled and no other action has been taken to enforce the same
or are being contested in good faith by appropriate
proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed
under ERISA) incurred or deposits made by the Borrower and its
Subsidiaries in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of
tenders, statutory obligations, bids, leases, government
contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment
of borrowed money);
(v) Liens in connection with attachments or
judgments (including judgment or appeal bonds) provided that
the judgments secured shall, within 30 days after the entry
thereof, have been discharged or execution thereof stayed
pending
17
appeal, or shall have been discharged within 30 days after the
expiration of any such stay;
(vi) easements, rights-of-way, restrictions
(including zoning restrictions), minor defects or
irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use
of the encumbered Property for its intended purposes;
(vii) Liens on Property securing purchase money
Indebtedness (including Capital Leases) to the extent
permitted under Section 8.1(c), provided that any such Lien
attaches to such Property concurrently with or within 90 days
after the acquisition thereof;
(viii) normal and customary rights of setoff upon
deposits of cash in favor of banks or other depository
institutions;
(ix) other Liens, provided that the aggregate amount
Indebtedness secured by such Liens shall not exceed an
aggregate principal amount of $1,000,000; and
(x) Liens existing as of the Closing Date and
set forth on Schedule 1.1B.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section 3(5)
of ERISA.
"Pledge Agreement" means the amended and restated pledge and
security agreement dated as of June 23, 1997, executed in favor of the
Agent by each Credit Party which owns any stock in any Subsidiary of
the Borrower, as amended, modified, restated or supplemented from time
to time.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by Bank of America as its prime rate in
effect at its principal office in Charlotte, North Carolina, with each
change in the Prime Rate being effective on the date such change is
publicly announced as effective (it being understood and agreed that
the Prime Rate is a reference rate used by Bank of America in
determining interest rates on certain loans and is not intended to be
the lowest rate of interest charged on any extension of credit by Bank
of America to any debtor).
18
"Pro Forma Basis" means, with respect to any Pro Forma
Transaction, that such Pro Forma Transaction shall be deemed to have
occurred as of the first day of the four fiscal-quarter period ending
as of the most recent fiscal quarter end preceding the date of such Pro
Forma Transaction with respect to which the Agent and the Lenders have
received the officer's certificate in accordance with the provisions of
Section 7.1(c)(i). With respect to any incurrence, assumption or
retirement of Indebtedness as referred to in Section 8.1(h), any such
Indebtedness which has a floating or formula rate shall have an implied
rate of interest for the applicable period equal to the rate which is
or would be in effect with respect to such Indebtedness as at the
relevant date of determination.
"Pro Forma Transaction" means any incurrence, assumption or
retirement of Indebtedness as referred to in Section 8.1(h).
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Register" shall have the meaning given such term in Section
11.3(c).
"Registration Rights Agreement" means that certain
Registration Rights Agreement dated as of the date hereof among the
Borrower, the Guarantors, the Lenders and the Agent as amended,
modified, restated or supplemented from time to time.
"Regulation D, U, or X" means Regulation D, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including the abandonment or
discarding of barrels, containers and other closed receptacles
containing any Materials of Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
post-event notice requirement is waived under subsections .13, .14,
.18, .19, or .20 of PBGC Reg. ss. 2615.
"Repurchase Event" shall have the meaning assigned to such
term in the Subordinated Note Indenture.
"Required Lenders" means, at any time, Lenders which are then
in compliance with their obligations hereunder (as determined by the
Agent) and holding in the aggregate at least 66 2/3% of (i) the
Commitments (and Participation Interests therein) or (ii) if the
Commitments have been terminated, the outstanding Loans and
Participation Interests (including the Participation Interests of the
Issuing Lender in any Letters of Credit).
"Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty,
19
rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding
upon such Person or any of its material property is subject.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of the Borrower or any of its Subsidiaries, now or hereafter
outstanding, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect,
of any shares of any class of stock of the Borrower or any of its
Subsidiaries, now or hereafter outstanding, (iii) any payment made to
retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock of the
Borrower or any of its Subsidiaries, now or hereafter outstanding and
(iv) any payment or prepayment of principal of, premium, if any, or
interest on, redemption, purchase, retirement, defeasance, sinking fund
or similar payment with respect to, any Subordinated Indebtedness.
"Restructure Agreement" means that certain Restructure
Agreement dated as of the date hereof among the Borrower, the
Guarantors, the Lenders and the Agent as amended, modified, restated or
supplemented from time to time.
"Restructuring Agreement" means that certain Restructuring
Agreement dated as of March 14, 2003 among the Borrower, certain of its
subsidiaries and certain holders of the Subordinated Notes; and the
Participation Agreement dated March 14, 2003 between the Borrower and
LC Capital Master Fund, Ltd., as amended, modified, restated or
supplemented from time to time.
"Restructuring Charges" means for any period non-recurring
restructuring charges taken by the Borrower and its Subsidiaries in
such period including, without limitation, severance payments,
abandoned lease obligations, office relocation expenses, re-branding
expenses, asset write-offs, legal, accounting, audit, tax, financial
advisor and other professional advisor fees but only to the extent the
foregoing relate to the Borrower's restructuring and rationalization of
its operations or to the financial restructuring transaction.
"S&P" means Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc., or any successor or assignee of the
business of such division in the business of rating securities.
"Second Extension Fee" means a fee equal to the Committed
Amount as of November 1, 2004 multiplied by 0.75%.
"Second Extension Option" means the Borrower's option to
extend the Termination Date, as more fully set at in Section
3.4(e)(ii).
"Security Agreement" means a security agreement in form and
substance satisfactory to the Agent to be executed in favor of the
Agent by the Borrower and each Subsidiary, as amended, modified,
restated or supplemented from time to time.
20
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" or "Solvency" means, with respect to any Person as
of a particular date, that on such date (i) such Person is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the
normal course of business, (ii) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in their
ordinary course, (iii) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction,
for which such Person's Property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in
the industry in which such Person is engaged or is to engage, (iv) the
fair value of the Property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent
liabilities, of such Person and (v) the present fair saleable value of
the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as
they become absolute and matured. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Subordinated Indebtedness" means (i) any Indebtedness arising
under the Subordinated Note Documents and (ii) any additional
Indebtedness (including contingent earn-outs) incurred by the Borrower
or any of its Subsidiaries which by its terms is specifically
subordinated in right of payment to the prior payment of the
obligations of the Credit Parties under this Credit Agreement and the
other Credit Documents on terms and conditions satisfactory to the
Agent.
"Subordinated Note" means any of the 5 3/4% Convertible
Subordinated Notes due 2004 issued by the Borrower in favor of the
Subordinated Noteholders pursuant to the Subordinated Note Indenture,
as such Subordinated Notes may be amended, modified, restated or
supplemented and in effect from time to time.
"Subordinated Note Documents" means a collective reference to
the Subordinated Note Indenture, the Subordinated Notes and all other
related agreements and documents issued or delivered thereunder or
pursuant thereto.
"Subordinated Note Indenture" means that certain Indenture,
dated as of June 23, 1997, by and between the Borrower and First Union
National Bank, as trustee, as the same may be amended, modified,
restated or supplemented and in effect from time to time.
"Subordinated Noteholder" means any of the holders from time
to time of the Subordinated Notes.
21
"Subsidiary" means, as to any Person, (a) any corporation more
than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time, any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by
such Person directly or indirectly through Subsidiaries, and (b) any
partnership, association, joint venture or other entity in which such
Person directly or indirectly through Subsidiaries has more than 50%
equity interest at any time.
"Termination Date" means, subject to Section 3.4(e), May 1,
2004.
"Termination Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (ii) the
withdrawal by the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan;
(iii) the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
(iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; or (vi) the complete or partial withdrawal of the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate from a
Multiemployer Plan.
"Unused Committed Amount" means, for any period, the amount by
which (a) the then applicable Committed Amount exceeds (b) the daily
average sum for such period of (i) the outstanding aggregate principal
amount of all Loans plus (ii) the outstanding aggregate principal
amount of all LOC Obligations.
"Unused Fee" shall have the meaning assigned to such term in
Section 3.5(a).
"Unused Fee Calculation Period" shall have the meaning
assigned to such term in Section 3.5(a).
"Voting Stock" means, with respect to any Person, capital
stock issued by such Person the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of
directors (or persons performing similar functions) of such Person,
even though the right so to vote has been suspended by the happening of
such a contingency.
"Warrants" shall have the meaning assigned to such term in the
Restructure Agreement.
1.2 COMPUTATION OF TIME PERIODS.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
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1.3 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1
hereof (or, prior to the delivery of the first financial statements pursuant to
Section 7.1 hereof, consistent with the financial statements as of December 30,
2001); provided, however, if (a) the Borrower shall object to determining such
compliance on such basis at the time of delivery of such financial statements
due to any change in GAAP or the rules promulgated with respect thereto or (b)
the Agent or the Required Lenders shall so object in writing within 30 days
after delivery of such financial statements, then such calculations shall be
made on a basis consistent with the most recent financial statements delivered
by the Borrower to the Lenders as to which no such objection shall have been
made.
SECTION 2
CREDIT FACILITIES
2.1 LOANS.
(a) Commitment. Subject to the terms and conditions hereof and in
reliance upon the representations and warranties set forth herein, each Lender
severally agrees to make available to the Borrower such Lender's Commitment
Percentage of revolving credit loans requested by the Borrower in Dollars
("Loans") from time to time from the Closing Date until the Termination Date, or
such earlier date as the Commitments shall have been terminated as provided
herein for the purposes hereinafter set forth; provided, however, that the sum
of the aggregate principal amount of outstanding Loans shall not exceed the
lesser of (i) SEVENTY MILLION SEVEN HUNDRED THOUSAND DOLLARS ($70,700,000) (as
such aggregate maximum amount may be reduced from time to time as provided in
Section 3.4, the "Committed Amount") and (ii) the Borrowing Base; provided,
further, (A) with regard to each Lender individually, such Lender's outstanding
Loans shall not exceed such Lender's Commitment Percentage of the lesser of (i)
the Committed Amount, and (ii) the Borrowing Base; and (B) with regard to the
Lenders collectively, the aggregate principal amount of outstanding Loans plus
LOC Obligations outstanding shall not exceed the lesser of (1) the Committed
Amount and (2) the Borrowing Base. All loans shall be Base Rate Loans, and may
be repaid and reborrowed in accordance with the provisions hereof.
(b) Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a
Loan borrowing by written notice (or telephone notice promptly
confirmed in writing) to the Agent not later
23
than 11:00 A.M. (Charlotte, North Carolina time) on the Business Day
prior to the date of the requested borrowing. Each such request for
borrowing shall be irrevocable and shall specify (A) that a Loan is
requested, (B) the date of the requested borrowing (which shall be a
Business Day), and (C) the aggregate principal amount to be borrowed.
The Agent shall give notice to each affected Lender promptly upon
receipt of each Notice of Borrowing pursuant to this Section 2.1(b)(i),
the contents thereof and each such Lender's share of any borrowing to
be made pursuant thereto.
(ii) Minimum Amounts. Each Loan shall be in a minimum
aggregate principal amount of $500,000 and integral multiples of
$100,000 in excess thereof (or the remaining amount of the Committed
Amount, if less).
(iii) Advances. Each Lender will make its Commitment
Percentage of each Loan borrowing available to the Agent for the
account of the Borrower as specified in Section 3.14(a), or in such
other manner as the Agent may specify in writing, by 1:00 P.M.
(Charlotte, North Carolina time) on the date specified in the
applicable Notice of Borrowing in Dollars and in funds immediately
available to the Agent. Such borrowing will then be made available to
the Borrower by the Agent by crediting the account of the Borrower on
the books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as received by
the Agent.
(c) Repayment. The principal amount of all Loans shall be due and
payable in full on the Termination Date.
(d) Interest. Subject to the provisions of Section 3.1, all Loans
shall bear interest at a per annum rate equal to the Base Rate plus the
Applicable Percentage. Interest on Loans shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be specified
herein).
(e) Notes. The Loans made by each Lender shall be evidenced by a
duly executed promissory note of the Borrower to such Lender in an original
principal amount equal to such Lender's Commitment Percentage of the Committed
Amount and in substantially the form of Schedule 2.1(e).
2.2 LETTER OF CREDIT SUBFACILITY.
(a) Issuance. Subject to the terms and conditions hereof and of
the LOC Documents, if any, and any other terms and conditions which the Issuing
Lender may reasonably require, the Lenders will participate in the issuance by
the Issuing Lender from time to time of such Letters of Credit in Dollars from
the Closing Date until the Termination Date as the Borrower may request, in a
form acceptable to the Issuing Lender; provided, however, that (i) the LOC
Obligations outstanding shall not at any time exceed TWELVE MILLION EIGHT
HUNDRED THOUSAND DOLLARS ($12,800,000) (the "LOC Committed Amount") and (ii) the
sum of the aggregate principal amount of outstanding Loans plus LOC Obligations
outstanding shall not at any time exceed the lesser of (A) the Committed Amount
and (B) the Borrowing Base. No Letter of Credit shall (x) have an original
expiry date more than one year from the date of issuance or (y) as
24
originally issued or as extended, have an expiry date extending beyond the
Termination Date (as then in effect), unless (1) such Letter of Credit will
expire within one (1) year of the Termination Date, (2) such Letter of Credit
shall be fully cash collateralized on and after the Termination Date in
accordance with Section 3.3(b)(i)(B), and (3) the Issuing Lender shall have
consented to such expiry date. The issuance date of each Letter of Credit shall
be a Business Day.
(b) Notice and Reports. The request for the issuance of a Letter
of Credit shall be submitted by the Borrower to the Issuing Lender (with a copy
to the Agent) at least three (3) Business Days prior to the requested date of
issuance. The Agent will, at least quarterly and more frequently upon request,
disseminate to each of the Lenders a detailed report specifying the Letters of
Credit which are then issued and outstanding and any activity with respect
thereto which may have occurred since the date of the prior report, and
including therein, among other things, the beneficiary, the face amount, expiry
date as well as any payment or expirations which may have occurred.
(c) Participation. Each Lender, upon issuance of a Letter of
Credit, shall be deemed to have purchased without recourse a risk participation
from the applicable Issuing Lender in such Letter of Credit and the obligations
arising thereunder, in each case in an amount equal to its pro rata share of the
obligations under such Letter of Credit (based on the respective Commitment
Percentages of the Lenders) and shall absolutely, unconditionally and
irrevocably assume, as primary obligor and not as surety, and be obligated to
pay to the Issuing Lender therefor and discharge when due, its pro rata share of
the obligations arising under such Letter of Credit. Without limiting the scope
and nature of each Lender's participation in any Letter of Credit, to the extent
that the Issuing Lender has not been reimbursed as required hereunder or under
any such Letter of Credit, each such Lender shall pay to the Issuing Lender its
pro rata share of such unreimbursed drawing in same day funds on the day of
notification by the Agent of an unreimbursed drawing pursuant to the provisions
of subsection (d) hereof. The obligation of each Lender to so reimburse the
Issuing Lender shall be absolute and unconditional and shall not be affected by
the occurrence of a Default, an Event of Default or any other occurrence or
event. Any such reimbursement shall not relieve or otherwise impair the
obligation of the Borrower to reimburse the Issuing Lender under any Letter of
Credit, together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any Letter of
Credit, the Issuing Lender will promptly notify the Borrower and the Agent.
Unless the Borrower shall immediately notify the Issuing Lender and the Agent
that the Borrower intends to otherwise reimburse the Issuing Lender for such
drawing, the Borrower shall be deemed to have requested that the Lenders make a
Loan in the amount of the drawing as provided in subsection (e) hereof on the
related Letter of Credit, the proceeds of which will be used to satisfy the
related reimbursement obligations. The Borrower promises to reimburse the
Issuing Lender on the day of drawing under any Letter of Credit (either with the
proceeds of a Loan obtained hereunder or otherwise) in same day funds. If the
Borrower shall fail to reimburse the Issuing Lender as provided hereinabove, the
unreimbursed amount of such drawing shall bear interest at a per annum rate
equal to the Base Rate plus the Applicable Percentage plus two percent (2%). The
Borrower's reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of any rights of setoff,
counterclaim or defense to payment the Borrower may claim or have against the
Issuing
25
Lender, the Agent, the Lenders, the beneficiary of the Letter of Credit drawn
upon or any other Person, including without limitation any defense based on any
failure of the Borrower or any other Credit Party to receive consideration or
the legality, validity, regularity or unenforceability of the Letter of Credit.
The Agent will promptly notify the other Lenders of the amount of any
unreimbursed drawing and each Lender shall promptly pay to the Agent for the
account of the Issuing Lender in Dollars and in immediately available funds, the
amount of such Lender's pro rata share of such unreimbursed drawing. Such
payment shall be made on the day such notice is received by such Lender from the
Agent if such notice is received at or before 2:00 P.M. (Charlotte, North
Carolina time) otherwise such payment shall be made at or before 12:00 Noon
(Charlotte, North Carolina time) on the Business Day next succeeding the day
such notice is received. If such Lender does not pay such amount to the Issuing
Lender in full upon such request, such Lender shall, on demand, pay to the Agent
for the account of the Agent interest on the unpaid amount during the period
from the date of such drawing until such Lender pays such amount to the Issuing
Lender in full at a rate per annum equal to, if paid within two (2) Business
Days of the date that such Lender is required to make payments of such amount
pursuant to the preceding sentence, the Federal Funds Rate and thereafter at a
rate equal to the Base Rate. Each Lender's obligation to make such payment to
the Issuing Lender, and the right of the Issuing Lender to receive the same,
shall be absolute and unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default or the
acceleration of the obligations of the Borrower hereunder and shall be made
without any offset, abatement, withholding or reduction whatsoever.
Simultaneously with the making of each such payment by a Lender to the Issuing
Lender, such Lender shall, automatically and without any further action on the
part of the Issuing Lender or such Lender, acquire a participation in an amount
equal to such payment (excluding the portion of such payment constituting
interest owing to the Issuing Lender) in the related unreimbursed drawing
portion of the LOC Obligation and in the interest thereon and in the related LOC
Documents, and shall have a claim against the Borrower with respect thereto.
(e) Repayment with Loans. On any day on which the Borrower shall
have requested, or been deemed to have requested, a Loan advance to reimburse a
drawing under a Letter of Credit, the Agent shall give notice to the Lenders
that a Loan has been requested or deemed requested by the Borrower to be made in
connection with a drawing under a Letter of Credit, in which case a Loan advance
comprised of Base Rate Loans shall be immediately made to the Borrower by all
Lenders (notwithstanding any termination of the Commitments pursuant to Section
9.2) pro rata based on the respective Commitment Percentages of the Lenders
(determined before giving effect to any termination of the Commitments pursuant
to Section 9.2) and the proceeds thereof shall be paid directly to the Issuing
Lender through the Agent for application to the respective LOC Obligations. Each
such Lender hereby irrevocably agrees to make its pro rata share of each such
Loan immediately upon any such request or deemed request in the amount, in the
manner and on the date specified in the preceding sentence notwithstanding (i)
the amount of such borrowing may not comply with the minimum amount for advances
of Loans otherwise required hereunder, (ii) whether any conditions specified in
Section 5.2 are then satisfied, (iii) whether a Default or an Event of Default
then exists, (iv) failure for any such request or deemed request for Loan to be
made by the time otherwise required hereunder, (v) whether the date of such
borrowing is a date on which Loans are otherwise permitted to be made hereunder
or (vi) any termination of the Commitments relating thereto immediately prior to
or contemporaneously with such borrowing. In the event that any Loan
26
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any Credit Party), then each
such Lender hereby agrees that it shall forthwith purchase (as of the date such
borrowing would otherwise have occurred, but adjusted for any payments received
from the Borrower on or after such date and prior to such purchase) from the
Issuing Lender such participation in the outstanding LOC Obligations as shall be
necessary to cause each such Lender to share in such LOC Obligations ratably
(based upon the respective Commitment Percentages of the Lenders (determined
before giving effect to any termination of the Commitments pursuant to Section
9.2)), provided that at the time any purchase of participation pursuant to this
sentence is actually made, the purchasing Lender shall be required to pay to the
Issuing Lender, to the extent not paid to the Issuer by the Borrower in
accordance with the terms of subsection (d) hereof, interest on the principal
amount of participation purchased for each day from and including the day upon
which such borrowing would otherwise have occurred to but excluding the date of
payment for such participation, at the rate equal to, if paid within two (2)
Business Days of the date of the Loan advance, the Federal Funds Rate, and
thereafter at a rate equal to the Base Rate.
(f) Designation of Subsidiaries as Account Parties.
Notwithstanding anything to the contrary set forth in this Credit Agreement,
including without limitation Section 2.2(a) hereof, a Letter of Credit issued
hereunder may contain a statement to the effect that such Letter of Credit is
issued for the account of a Subsidiary of the Borrower, provided that
notwithstanding such statement, the Borrower shall be the actual account party
for all purposes of this Credit Agreement for such Letter of Credit and such
statement shall not affect the Borrower's reimbursement obligations hereunder
with respect to such Letter of Credit.
(g) Renewal, Extension. The renewal or extension of any Letter of
Credit shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.
(h) Uniform Customs and Practices/ISP98. The Issuing Lender may
have the Letters of Credit be subject to either The Uniform Customs and Practice
for Documentary Credits, as published as of the date of issue by the
International Chamber of Commerce (the "UCP") or the rules of the "International
Standby Practices 1998" ("ISP98") published by the Institute of International
Banking Law & Practice (or such later version thereof as may be in effect at the
time of issuance), in which case the UCP or the ISP98, as applicable, may be
incorporated therein and deemed in all respects to be a part thereof.
(i) Indemnification; Nature of Issuing Lender's Duties. (i) In
addition to its other obligations under this Section 2.2, the Borrower
hereby agrees to protect, indemnify, pay and save the Issuing Lender
harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Lender may incur or be subject to as
a consequence, direct or indirect, of (A) the issuance of any Letter of
Credit or (B) the failure of the Issuing Lender to honor a drawing
under a Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions,
herein called "Government Acts").
27
(ii) As between the Borrower and the Issuing Lender, the
Borrower shall assume all risks of the acts, omissions or misuse of any
Letter of Credit by the beneficiary thereof. The Issuing Lender shall
not be responsible: (A) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (B) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason; (C) for errors,
omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher; (D) for any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under a
Letter of Credit or of the proceeds thereof; and (E) for any
consequences arising from causes beyond the control of the Issuing
Lender, including, without limitation, any Government Acts. None of the
above shall affect, impair, or prevent the vesting of the Issuing
Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Lender, under or in connection with any Letter
of Credit or the related certificates, if taken or omitted without
gross negligence or bad faith, shall not put such Issuing Lender under
any resulting liability to the Borrower or any other Credit Party. It
is the intention of the parties that this Credit Agreement shall be
construed and applied to protect and indemnify the Issuing Lender
against any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Borrower (on
behalf of itself and each of the other Credit Parties), including,
without limitation, any and all Government Acts. The Issuing Lender
shall not, in any way, be liable for any failure by the Issuing Lender
or anyone else to pay any drawing under any Letter of Credit as a
result of any Government Acts or any other cause beyond the control of
the Issuing Lender.
(iv) Nothing in this subsection (h) is intended to limit
the reimbursement obligations of the Borrower contained in subsection
(d) above. The obligations of the Borrower under this subsection (h)
shall survive the termination of this Credit Agreement. No act or
omissions of any current or prior beneficiary of a Letter of Credit
shall in any way affect or impair the rights of the Issuing Lender to
enforce any right, power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained in
this subsection (h), the Borrower shall have no obligation to indemnify
the Issuing Lender in respect of any liability incurred by the Issuing
Lender (A) arising out of the gross negligence or willful misconduct of
the Issuing Lender, as determined by a court of competent jurisdiction,
or (B) caused by the Issuing Lender's failure to pay under any Letter
of Credit after presentation to it of a request strictly complying with
the terms and conditions of such Letter of Credit, as determined by a
court of competent jurisdiction, unless such payment is prohibited by
any law, regulation, court order or decree.
28
(j) Responsibility of Issuing Lender. It is expressly understood
and agreed that the obligations of the Issuing Lender hereunder to the Lenders
are only those expressly set forth in this Credit Agreement and that the Issuing
Lender shall be entitled to assume that the conditions precedent set forth in
Section 5.2 have been satisfied unless it shall have acquired actual knowledge
that any such condition precedent has not been satisfied; provided, however,
that nothing set forth in this Section 2.2 shall be deemed to prejudice the
right of any Lender to recover from the Issuing Lender any amounts made
available by such Lender to the Issuing Lender pursuant to this Section 2.2 in
the event that it is determined by a court of competent jurisdiction that the
payment with respect to a Letter of Credit constituted gross negligence or
willful misconduct on the part of the Issuing Lender.
(k) Conflict with LOC Documents. In the event of any conflict
between this Credit Agreement and any LOC Document (including any letter of
credit application), this Credit Agreement shall control.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 DEFAULT RATE.
If any amount payable by the Borrower under any Credit Document is not
paid when due (without regard to any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws. Furthermore,
while any Event of Default exists, the Borrower shall pay interest on the
principal amount of all outstanding Borrower's Obligations hereunder at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable laws. Accrued and unpaid interest on
past due amounts (including interest on past due interest) shall be due and
payable upon demand.
3.2 [RESERVED].
3.3 PREPAYMENTS.
(a) Voluntary Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part from time to time without premium or penalty;
provided, however, that each such partial prepayment of Loans shall be in a
minimum principal amount of $500,000 or such lesser amount as may be approved by
the Agent. Subject to the foregoing terms, amounts prepaid under this Section
3.3(a) shall be applied as the Borrower may elect or, if the Borrower has not so
specified, first to Base Rate Loans and then (after all Loans have been repaid)
to cash collateralize the LOC Obligations (in a manner satisfactory to the
Agent).
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(b) Mandatory Prepayments and Cash Collateralization.
(i) (A) Committed Amount. If at any time, the sum of the
aggregate principal amount of outstanding Loans plus LOC
Obligations outstanding shall exceed the lesser of (I) the
Committed Amount and (II) the Borrowing Base, the Borrower
promises to prepay immediately the outstanding principal
balance on the Loans and (after all Loans have been repaid)
cash collateralize the LOC Obligations (in a manner
satisfactory to the Agent) in an amount sufficient to
eliminate such excess (to be applied as set forth in Section
3.3(c) below). Without limiting the foregoing, each Credit
Party acknowledges and agrees that the Committed Amount will
be automatically reduced on the dates and in the amounts set
forth in Section 3.4(b), and that a mandatory prepayment will
be required on each such date to the extent necessary to cause
the sum of the aggregate principal amount of outstanding Loans
plus LOC Obligations outstanding not to exceed the lesser of
(I) the reduced Committed Amount as of such date and (II) the
Borrowing Base.
(B) LOC Committed Amount/LOC Expiry. If at any time,
the aggregate principal amount of LOC Obligations shall exceed
the LOC Committed Amount, the Borrower immediately shall cash
collateralize the LOC Obligations (in a manner satisfactory to
the Agent) in an amount sufficient to eliminate such excess.
If any Letter of Credit remains outstanding and unexpired or
uncancelled on the Termination Date, then the Borrower shall
immediately cash collateralize such Letter of Credit (in a
manner satisfactory to the Agent) in an amount equal to the
maximum amount which is, or at any time thereafter may become,
available to be drawn under such Letter of Credit.
(ii) Asset Sales. Immediately upon the occurrence of any
Asset Sale, the Borrower shall prepay the Loans and (after all Loans
have been repaid) cash collateralize the LOC Obligations (in a manner
satisfactory to the Agent) in an amount equal to 100% of the Net
Proceeds of the related Asset Sale (to be applied as set forth in
Section 3.3(c) below).
(iii) Equity Transactions. Immediately upon the occurrence
of any Equity Transaction, the Borrower shall prepay the Loans and
(after all Loans have been repaid) cash collateralize the LOC
Obligations (in a manner satisfactory to the Agent) in an amount equal
to 100% of the Net Proceeds of the related Equity Transaction (to be
applied as set forth in Section 3.3(c) below).
(iv) Debt Issuances. Immediately upon the consummation of
any Debt Issuance, the Borrower shall prepay the Loans and (after all
Loans have been repaid) cash collateralize the LOC Obligations (in a
manner satisfactory to the Agent) in an amount equal to 100% of the Net
Proceeds of the related Debt Issuance (to be applied as set forth in
Section 3.3(c) below).
(v) Tax Refunds. Immediately upon the receipt by the
Borrower or any of its Subsidiaries of any income tax or other similar
refund in an amount in excess of $250,000 in the aggregate in any
fiscal year, the Borrower shall prepay the Loans and
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(after all Loans have been repaid) cash collateralize the LOC
Obligations (in a manner satisfactory to the Agent) in an amount equal
to 100% of such refund (to be applied as set forth in Section 3.3(c)
below).
(c) Application of Mandatory Prepayments. All amounts required to
be paid pursuant to Section 3.3(b) shall be applied as follows:
(i) with respect to all amounts prepaid pursuant to
Section 3.3(b)(i)(A), to Loans and (after all Loans have been repaid)
to a cash collateral account in respect of LOC Obligations;
(ii) with respect to all amounts prepaid pursuant to
Section 3.3(b)(i)(B), to a cash collateral account in respect of LOC
Obligations;
(iii) with respect to all amounts prepaid pursuant to
Sections 3.3(b)(ii) and 3.3(b)(iv) to Loans and (after all Loans have
been repaid) to a cash collateral account in respect of LOC Obligations
(with a corresponding reduction in the Committed Amount in an amount
equal to 100% of the Net Proceeds of the related Asset Sale or Debt
Issuance, rounded down to the nearest $500,000;
(iv) with respect to all amounts prepaid pursuant to
Section 3.3(b)(iii) to Loans and (after all Loans have been repaid) to
a cash collateral account in respect of LOC Obligations (with a
corresponding reduction in the Committed Amount in an amount equal to
100% of the Net Proceeds of the related Equity Transaction, rounded up
or down to the nearest $500,000); and
(v) with respect to all amounts paid pursuant to Section
3.3(b)(v), to Loans and (after all Loans have been repaid) to a cash
collateral account in respect of LOC Obligations (with a corresponding
reduction in the Committed Amount in an amount equal to 100% of the
amount of such refund, rounded up or down to the nearest $50,000).
3.4 TERMINATION AND REDUCTION OF COMMITTED AMOUNT; EXTENSION OPTIONS.
(a) Voluntary Reductions. The Borrower may from time to time
permanently reduce or terminate the Committed Amount in whole or in part (in
minimum aggregate amounts of $1,000,000 or in integral multiples of $1,000,000
in excess thereof (or, if less, the full remaining amount of the then applicable
Committed Amount)) upon five Business Days' prior written notice to the Agent;
provided, however, no such termination or reduction shall be made which would
cause the aggregate principal amount of outstanding Loans plus LOC Obligations
outstanding to exceed the lesser of (i) the Committed Amount and (ii) the
Borrowing Base unless, concurrently with such termination or reduction, the
Loans are repaid to the extent necessary to eliminate such excess. The
Commitments of the Lenders and the Issuing Lender shall automatically terminate
on the Termination Date. The Agent shall promptly notify each affected Lender of
receipt by the Agent of any notice from the Borrower pursuant to this Section
3.4(a).
(b) [RESERVED]
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(c) Termination Date. The Commitments of the Lenders and the LOC
Commitment of the Issuing Lender shall automatically terminate on the
Termination Date.
(d) General. The Borrower shall pay to the Agent for the account
of the Lenders in accordance with the terms of Section 3.5(a), on the date of
each termination or reduction of the Committed Amount, the Unused Fee accrued
through the date of such termination or reduction on the amount of the Committed
Amount so terminated or reduced.
(e) Extension Options.
(i) If (i) the Borrower has given the Agent and the
Lenders at least 30 days prior written notice of its desire to extend
the Termination Date, (ii) as of May 1, 2004, each of the conditions
precedent set forth in clauses (ii), (iii) and (iv) of Section 5.2 is
then satisfied (or waived by all of the Lenders, as applicable), as
certified by a responsible officer of the Borrower in an officer's
certificate, the form of which shall be satisfactory to the Agent, and
(iii) on or before May 1, 2004 the Borrower has paid the First
Extension Fee to the Agent for the benefit of the Lenders, then the
Borrower may exercise the First Extension Option to extend the
Termination Date to November 1, 2004.
(ii) If (i) the Borrower has given the Agent and the
Lenders at least 30 days prior written notice of its desire to extend
the Termination Date, (ii) as of November 1, 2004, each of the
conditions precedent set forth in clauses (ii), (iii) and (iv) of
Section 5.2 is then satisfied (or waived by all of the Lenders, as
applicable), as certified by a responsible officer of the Borrower in
an officer's certificate, the form of which shall be satisfactory to
the Agent, and (iii) on or before November 1, 2004 the Borrower has
paid the Second Extension Fee to the Agent for the benefit of the
Lenders, then the Borrower may exercise the Second Extension Option to
extend the Termination Date to May 1, 2005.
3.5 FEES.
(a) Unused Fee. In consideration of the Commitments of the Lenders
hereunder, the Borrower agrees to pay to the Agent for the account of each
Lender a fee (the "Unused Fee") on the Unused Committed Amount computed at a per
annum rate for each day during the applicable Unused Fee Calculation Period
(hereinafter defined) at a rate equal to the Applicable Percentage in effect
from time to time. The Unused Fee commenced to accrue on the date hereof and is
due and payable in arrears on the last business day of each calendar month (and
any date that the Committed Amount is reduced as provided in Section 3.4(a) and
the Termination Date) for the immediately preceding month (or portion thereof)
(each such month or portion thereof for which the Unused Fee is payable
hereunder being herein referred to as an "Unused Fee Calculation Period").
(b) Letter of Credit Fees.
(i) Letter of Credit Issuance Fee. In consideration of
the issuance of Letters of Credit hereunder, the Borrower promises to
pay to the Agent for the account of each Lender a fee (the "Letter of
Credit Fee") on such Lender's Commitment Percentage of the average
32
daily maximum amount available to be drawn under each such Letter of
Credit computed at a per annum rate for each day from the date of
issuance to the date of expiration equal to the Applicable Percentage.
The Letter of Credit Fee will be payable monthly in arrears on the last
Business Day of each calendar month for the immediately preceding month
(or a portion thereof).
(ii) Issuing Lender Fees. In addition to the Letter of
Credit Fee payable pursuant to clause (i) above, the Borrower promises
to pay to the Issuing Lender for its own account without sharing by the
other Lenders (A) a letter of credit fronting fee equal to 0.125% of
the average daily maximum amount available to be drawn under each
Letter of Credit computed at a per annum rate for each day from the
date of issuance to the date of expiration and (B) the customary
charges from time to time of the Issuing Lender with respect to the
issuance, amendment, transfer, administration, cancellation and
conversion of, and drawings under, such Letters of Credit
(collectively, the "Issuing Lender Fees").
(c) Administrative Fees. The Borrower agrees to pay to the Agent,
for its own account, the fees referred to in the Agent's Fee Letter
(collectively, the "Agent's Fees").
3.6 CAPITAL ADEQUACY.
If any Lender has determined, after the date hereof, that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy), then,
upon notice from such Lender to the Borrower, the Borrower shall be obligated to
pay to such Lender such additional amount or amounts as will compensate such
Lender for such reduction. Each determination by any such Lender of amounts
owing under this Section shall, absent manifest error, be conclusive and binding
on the parties hereto.
3.7 [RESERVED].
3.8 [RESERVED].
3.9 REQUIREMENTS OF LAW.
If, after the date hereof, the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable to
any Lender, or compliance by any Lender with any request or directive (whether
or not having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Closing Date (or, if later, the
date on which such Lender becomes a Lender):
33
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit or change the basis of
taxation of payments to such Lender in respect thereof (except for (i)
Non-Excluded Taxes covered by Section 3.10 (including Non-Excluded
Taxes imposed solely by reason of any failure of such Lender to comply
with its obligations under Section 3.10(b)) and (ii) changes in taxes
measured by or imposed upon the overall net income, or franchise tax
(imposed in lieu of such net income tax), of such Lender or its
applicable lending office, branch, or any affiliate thereof));
(b) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender; or
(c) shall impose on such Lender any other condition
(excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of participating in Letters
of Credit or to reduce any amount receivable hereunder in respect thereof, then,
in any such case, upon notice to the Borrower from such Lender, through the
Agent, in accordance herewith, the Borrower shall be obligated to promptly pay
such Lender, upon its demand, any additional amounts necessary to compensate
such Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim any additional amounts pursuant to this subsection, it
shall provide prompt notice thereof to the Borrower, through the Agent,
certifying (x) that one of the events described in this paragraph (a) has
occurred and describing in reasonable detail the nature of such event, (y) as to
the increased cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Lender and a reasonably detailed explanation
of the calculation thereof. Such a certificate as to any additional amounts
payable pursuant to this subsection submitted by such Lender, through the Agent,
to the Borrower shall be conclusive and binding on the parties hereto in the
absence of manifest error. This covenant shall survive the termination of this
Credit Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.10 TAXES.
(a) Except as provided below in this subsection, all payments made
by the Borrower under this Credit Agreement and any Notes shall be made free and
clear of, and without deduction or withholding for or on account of, any present
or future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any court, or governmental body, agency or other
official, excluding taxes measured by or imposed upon the overall net income of
any Lender or its applicable lending office, or any branch or affiliate thereof,
and all franchise taxes, branch taxes, taxes on doing business or taxes on the
overall capital or net worth of any Lender or its applicable lending office, or
any branch or affiliate thereof, in each case imposed in lieu of net income
taxes, imposed: (i) by the jurisdiction under the laws of which such Lender,
applicable lending office, branch or affiliate is organized or is located, or in
which its principal executive office is located, or any nation
34
within which such jurisdiction is located or any political subdivision thereof;
or (ii) by reason of any connection between the jurisdiction imposing such tax
and such Lender, applicable lending office, branch or affiliate other than a
connection arising solely from such Lender having executed, delivered or
performed its obligations, or received payment under or enforced, this Credit
Agreement or any Notes. If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required to
be withheld from any amounts payable to the Agent or any Lender hereunder or
under any Notes, (A) the amounts so payable to the Agent or such Lender shall be
increased to the extent necessary to yield to the Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Credit Agreement and
any Notes, provided, however, that the Borrower shall be entitled to deduct and
withhold any Non-Excluded Taxes and shall not be required to increase any such
amounts payable to any Lender that is not organized under the laws of the United
States of America or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this subsection whenever any Non-Excluded Taxes
are payable by the Borrower, and (B) as promptly as possible thereafter the
Borrower shall send to the Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Agent the required receipts or other required documentary evidence,
the Borrower shall indemnify the Agent and the Lenders for any incremental
taxes, interest or penalties that may become payable by the Agent or any Lender
as a result of any such failure. The agreements in this subsection shall survive
the termination of this Credit Agreement and the payment of the Loans and all
other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(X) (i) on or before the date of any payment by the
Borrower under this Credit Agreement or Notes to such Lender, deliver
to the Borrower and the Agent (A) two (2) duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, certifying that it is entitled to
receive payments under this Credit Agreement and any Notes without
deduction or withholding of any United States federal income taxes and
(B) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be, certifying that it is entitled to
an exemption from United States backup withholding tax;
(ii) deliver to the Borrower and the Agent two (2)
further copies of any such form or certification on or before
the date that any such form or certification expires or
becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously
delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be
requested by the Borrower or the Agent; or
(Y) in the case of any such Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Internal Revenue
Code, (i) represent to the Borrower (for the
35
benefit of the Borrower and the Agent) that it is not a bank within the
meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (ii)
agree to furnish to the Borrower on or before the date of any payment
by the Borrower, with a copy to the Agent two (2) accurate and complete
original signed copies of Internal Revenue Service Form W-8, or
successor applicable form certifying to such Lender's legal entitlement
at the date of such certificate to an exemption from U.S. withholding
tax under the provisions of Section 881(c) of the Internal Revenue Code
with respect to payments to be made under this Credit Agreement and any
Notes (and to deliver to the Borrower and the Agent two (2) further
copies of such form on or before the date it expires or becomes
obsolete and after the occurrence of any event requiring a change in
the most recently provided form and, if necessary, obtain any
extensions of time reasonably requested by the Borrower or the Agent
for filing and completing such forms), and (iii) agree, to the extent
legally entitled to do so, upon reasonable request by the Borrower, to
provide to the Borrower (for the benefit of the Borrower and the Agent)
such other forms as may be reasonably required in order to establish
the legal entitlement of such Lender to an exemption from withholding
with respect to payments under this Credit Agreement and any Notes;
unless in any such case any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender
from duly completing and delivering any such form with respect to it
and such Lender so advises the Borrower and the Agent. Each Person that
shall become a Lender or a participant of a Lender pursuant to
subsection 11.3 shall, upon the effectiveness of the related transfer,
be required to provide all of the forms, certifications and statements
required pursuant to this subsection, provided that in the case of a
participant of a Lender the obligations of such participant of a Lender
pursuant to this subsection (b) shall be determined as if the
participant of a Lender were a Lender except that such participant of a
Lender shall furnish all such required forms, certifications and
statements to the Lender from which the related participation shall
have been purchased.
3.11 PRO RATA TREATMENT.
Except to the extent otherwise provided herein:
(a) Loans. Each Loan, each payment or prepayment of
principal of any Loan or reimbursement obligations arising from
drawings under Letters of Credit, each payment of interest on the Loans
or reimbursement obligations arising from drawings under Letters of
Credit, each payment of Unused Fees, each payment of the Standby Letter
of Credit Fee, each payment of the Trade Letter of Credit Fee, each
reduction of the Committed Amount and each conversion or extension of
any Loan, shall be allocated pro rata among the Lenders in accordance
with the respective principal amounts of their outstanding Loans and
Participation Interests.
(b) Advances. Unless the Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not
make the amount that would constitute its ratable share of such
borrowing available to the Agent, the Agent may assume
36
that such Lender is making such amount available to the Agent, and the
Agent may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. If such amount is not made available
to the Agent by such Lender within the time period specified therefor
hereunder, such Lender shall pay to the Agent, on demand, such amount
with interest thereon at a rate equal to the Federal Funds Rate for the
period until such Lender makes such amount immediately available to the
Agent. A certificate of the Agent submitted to any Lender with respect
to any amounts owing under this subsection shall be conclusive in the
absence of manifest error.
3.12 SHARING OF PAYMENTS.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan, LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a participation in such Loans, LOC Obligations
and other obligations in such amounts, and make such other adjustments from time
to time, as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by repurchase of a participation theretofore sold, return
its share of that benefit (together with its share of any accrued interest
payable with respect thereto) to each Lender whose payment shall have been
rescinded or otherwise restored. The Borrower agrees that any Lender so
purchasing such a participation may, to the fullest extent permitted by law,
exercise all rights of payment, including setoff, banker's lien or counterclaim,
with respect to such participation as fully as if such Lender were a holder of
such Loan, LOC Obligations or other obligation in the amount of such
participation. Except as otherwise expressly provided in this Credit Agreement,
if any Lender or the Agent shall fail to remit to the Agent or any other Lender
an amount payable by such Lender or the Agent to the Agent or such other Lender
pursuant to this Credit Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Agent or such
other Lender at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section 3.12 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders under this
Section 3.12 to share in the benefits of any recovery on such secured claim.
3.13 PAYMENTS, COMPUTATIONS, ETC.
(a) Except as otherwise specifically provided herein, all payments
hereunder shall be made to the Agent in dollars in immediately available funds,
without offset, deduction, counterclaim
37
or withholding of any kind, at the Agent's office specified in Schedule 2.1(a)
not later than 2:00 P.M. (Charlotte, North Carolina time) on the date when due.
Payments received after such time shall be deemed to have been received on the
next succeeding Business Day. The Agent may (but shall not be obligated to)
debit the amount of any such payment which is not made by such time to any
ordinary deposit account of the Borrower maintained with the Agent (with notice
to the Borrower). The Borrower shall, at the time it makes any payment under
this Credit Agreement, specify to the Agent the Loans, LOC Obligations, Fees,
interest or other amounts payable by the Borrower hereunder to which such
payment is to be applied (and in the event that it fails so to specify, or if
such application would be inconsistent with the terms hereof, the Agent shall
distribute such payment to the Lenders in such manner as the Agent may determine
to be appropriate in respect of obligations owing by the Borrower hereunder,
subject to the terms of Section 3.11(a)). The Agent will distribute such
payments to such Lenders, if any such payment is received prior to 12:00 Noon
(Charlotte, North Carolina time) on a Business Day in like funds as received
prior to the end of such Business Day and otherwise the Agent will distribute
such payment to such Lenders on the next succeeding Business Day. Whenever any
payment hereunder shall be stated to be due on a day which is not a Business
Day, the due date thereof shall be extended to the next succeeding Business Day
(subject to accrual of interest and Fees for the period of such extension).
Except as expressly provided otherwise herein, all computations of interest and
fees shall be made on the basis of actual number of days elapsed over a year of
360 days, except with respect to computation of interest on Base Rate Loans
which (unless the Base Rate is determined by reference to the Federal Funds
Rate) shall be calculated based on a year of 365 or 366 days, as appropriate.
Interest shall accrue from and include the date of borrowing, but exclude the
date of payment.
(b) Allocation of Payments After Event of Default. Notwithstanding
any other provisions of this Credit Agreement to the contrary, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Agent or any Lender on account of the Borrower's
Obligations or any other amounts outstanding under any of the Credit Documents
or in respect of the Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Agent in connection with enforcing the rights of the Lenders
under the Credit Documents and any protective advances made by the
Agent with respect to the Collateral under or pursuant to the terms of
the Collateral Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation, reasonable attorneys' fees)
of each of the Lenders in connection with enforcing its rights under
the Credit Documents or otherwise with respect to the Borrower's
Obligations owing to such Lender;
FOURTH, to the payment of all of the Borrower's Obligations
consisting of accrued fees and interest;
38
FIFTH, to the payment of the outstanding principal amount of
the Borrower's Obligations;
SIXTH, to the Agent for the account of the Issuing Lender, to
Cash Collateralize that portion of LOC Obligations comprised of the
aggregate undrawn amount of Letters of Credit;
SEVENTH, to all other Borrower's Obligations and other
obligations which shall have become due and payable under the Credit
Documents or otherwise and not repaid pursuant to clauses "FIRST"
through "SIXTH" above; and
EIGHTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion that the then outstanding Loans
held by such Lender bears to the aggregate then outstanding Loans) of amounts
available to be applied pursuant to clauses "THIRD", "FOURTH", "FIFTH", "SIXTH"
and "SEVENTH" above.
3.14 EVIDENCE OF DEBT.
(a) Each Lender shall maintain an account or accounts evidencing
each Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Credit Agreement. Each Lender will make reasonable efforts to
maintain the accuracy of its account or accounts and to promptly update its
account or accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section
11.3(c) hereof, and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and Interest
Period of each such Loan hereunder, (ii) the amount of any principal or interest
due and payable or to become due and payable to each Lender hereunder and (iii)
the amount of any sum received by the Agent hereunder from or for the account of
the Borrower and each Lender's share thereof. The Agent will make reasonable
efforts to maintain the accuracy of the subaccounts referred to in the preceding
sentence and to promptly update such subaccounts from time to time, as
necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.15 (and, if consistent
with the entries of the Agent, subsection (a)) shall be prima facie evidence of
the existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Agent to maintain any
such account, such Register or such subaccount, as applicable, or any error
therein, shall not in any manner affect the obligation of the Borrower to repay
the Loans made by such Lender in accordance with the terms hereof.
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3.15 MANDATORY ASSIGNMENT.
In the event any Lender delivers to the Borrower any notice in
accordance with Section 3.9, then, provided that no Default or Event of Default
has occurred and is continuing at such time, the Borrower may, at its own
expense (such expense to include any transfer fee payable to the Agent under
Section 11.3(b)), and in its sole discretion require such Lender to transfer and
assign in whole or in part, without recourse (in accordance with and subject to
the terms and conditions of Section 11.3(b)), all or part of its interests,
rights and obligations under this Credit Agreement to any assignee which shall
assume such assigned obligations, provided that (i) such assignee shall be (a)
any Lender or any Affiliate or Subsidiary of a Lender, or (b) any other
commercial bank, financial institution or "accredited investor" (as defined in
Regulation D of the Securities and Exchange Commission) reasonably acceptable to
the Agent and the Required Lenders, (ii) such assignment shall not conflict with
any law, rule or regulation or order of any court or other Governmental
Authority and (iii) the Borrower or such assignee shall have paid to the
assigning Lender in immediately available funds the principal of and interest
accrued to the date of such payment on the Loans made by it hereunder and all
other amounts owed to it hereunder (including, without limitation, any amounts
owing pursuant to Section 3.9).
SECTION 4
GUARANTY
4.1 THE GUARANTEE.
Each of the Guarantors hereby jointly and severally guarantees to each
Lender, each Affiliate of a Lender that enters into a Hedging Agreement and the
Agent as hereinafter provided the prompt payment of the Borrower's Obligations
in full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, a mandatory cash collateralization or otherwise) strictly in
accordance with the terms thereof. The Guarantors hereby further agree that if
any of the Borrower's Obligations are not paid in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, as mandatory cash
collateralization or otherwise), the Guarantors will, jointly and severally,
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Borrower's
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents or Hedging Agreements, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers) then the
obligations of each Guarantor hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
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4.2 OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors under Section 4.1 hereof are joint
and several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Borrower's Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 4.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that such Guarantor shall have no right of
subrogation, indemnity, reimbursement or contribution against the Borrower or
any other Guarantor of the Borrower's Obligations for amounts paid under this
Guaranty until such time as the Lenders (and any Affiliates of Lenders entering
into Hedging Agreements) have been paid in full, all Commitments under the
Credit Agreement have been terminated and no Person or Governmental Authority
shall have any right to request any return or reimbursement of funds from the
Lenders in connection with monies received under the Credit Documents or Hedging
Agreements. Without limiting the generality of the foregoing, it is agreed that,
to the fullest extent permitted by law, the occurrence of any one or more of the
following shall not alter or impair the liability of any Guarantor hereunder
which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to
any Guarantor, the time for any performance of or compliance with any
of the Borrower's Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of
any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or Hedging
Agreements shall be done or omitted;
(iii) the maturity of any of the Borrower's Obligations
shall be accelerated, or any of the Borrower's Obligations shall be
modified, supplemented or amended in any respect, or any right under
any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or Hedging
Agreements shall be waived or any other guarantee of any of the
Borrower's Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any
Lender or Lenders as security for any of the Borrower's Obligations
shall fail to attach or be perfected; or
(v) any of the Borrower's Obligations shall be determined
to be void or voidable (including, without limitation, for the benefit
of any creditor of any Guarantor) or shall be subordinated to the
claims of any Person (including, without limitation, any creditor of
any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the
41
Agent or any Lender exhaust any right, power or remedy or proceed against any
Person under any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or Hedging
Agreements, or against any other Person under any other guarantee of, or
security for, any of the Borrower's Obligations.
4.3 REINSTATEMENT.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Borrower's Obligations is rescinded
or must be otherwise restored by any holder of any of the Borrower's
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.4 CERTAIN ADDITIONAL WAIVERS.
Without limiting the generality of the provisions of this Section 4,
each Guarantor hereby specifically waives the benefits of N.C. Gen.
Stat.ss.ss.26-7 through 26-9, inclusive. Each Guarantor further agrees that such
Guarantor shall have no right of recourse to security for the Borrower's
Obligations, except through the exercise of the rights of subrogation pursuant
to Section 4.2.
4.5 REMEDIES.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agent and the Lenders, on the
other hand, the Borrower's Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 hereof notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing the Borrower's
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Borrower's Obligations
being deemed to have become automatically due and payable), the Borrower's
Obligations (whether or not due and payable by any other Person) shall forthwith
become due and payable by the Guarantors for purposes of said Section 4.1.
4.6 RIGHTS OF CONTRIBUTION.
The Guarantors hereby agree, as among themselves, that if any Guarantor
shall become an Excess Funding Guarantor (as defined below), each other
Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the
succeeding provisions of this Section 4.6), pay to such Excess Funding Guarantor
an amount equal to such Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment
42
obligation of any Guarantor to any Excess Funding Guarantor under this Section
4.6 shall be subordinate and subject in right of payment to the prior payment in
full of the obligations of such Guarantor under the other provisions of this
Section 4, and such Excess Funding Guarantor shall not exercise any right or
remedy with respect to such excess until payment and satisfaction in full of all
of such obligations. For purposes hereof, (i) "Excess Funding Guarantor" shall
mean, in respect of any obligations arising under the other provisions of this
Section 4 (hereafter, the "Guaranteed Obligations"), a Guarantor that has paid
an amount in excess of its Pro Rata Share of the Guaranteed Obligations; (ii)
"Excess Payment" shall mean, in respect of any Guaranteed Obligations, the
amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share of
such Guaranteed Obligations; and (iii) "Pro Rata Share", for the purposes of
this Section 4.6, shall mean, for any Guarantor, the ratio (expressed as a
percentage) of (a) the amount by which the aggregate present fair saleable value
of all of its assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (b) the amount by which the aggregate present fair saleable value
of all assets and other properties of the Borrower and all of the Guarantors
exceeds the amount of all of the debts and liabilities (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of the Borrower and the Guarantors hereunder) of the Borrower and
all of the Guarantors, all as of the Closing Date (if any Guarantor becomes a
party hereto subsequent to the Closing Date, then for the purposes of this
Section 4.6 such subsequent Guarantor shall be deemed to have been a Guarantor
as of the Closing Date and the information pertaining to, and only pertaining
to, such Guarantor as of the date such Guarantor became a Guarantor shall be
deemed true as of the Closing Date).
4.7 CONTINUING GUARANTEE.
The guarantee in this Section 4 is a continuing guarantee, and shall
apply to all Borrower's Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 CLOSING CONDITIONS.
The obligation of the Lenders to enter into this Credit Agreement and
to make the initial Loans or the Issuing Lender to issue the initial Letter of
Credit, whichever shall occur first, shall be subject to satisfaction of the
following conditions (in form and substance acceptable to the Lenders):
(a) The Agent shall have received original counterparts
of this Credit Agreement executed by each of the parties hereto;
(b) The Agent shall have received an appropriate original
Note for each Lender requesting such Note, executed by the Borrower;
43
(c) The Agent shall have received original counterparts
of the Restructure Agreement, executed by each of the parties thereto;
(d) The Agent shall have received all documents it may
reasonably request relating to the existence and good standing of each
of the Credit Parties, the corporate or other necessary authority for
and the validity of the Credit Documents, and any other matters
relevant thereto, all in form and substance reasonably satisfactory to
the Agent;
(e) The Agent shall have received, in form and substance
satisfactory to the Agent, legal opinions of Xxxxxxxx, Xxxxxxxx &
Xxxxxx, P.A., counsel for the Credit Parties, dated as of the Closing
Date;
(f) The Agent shall have received, for its own account
and for the accounts of the Lenders, all fees and expenses required by
this Credit Agreement or any other Credit Document to be paid on or
before the Closing Date (including, without limitation, any and all
out-of-pocket costs (to the extent invoiced) incurred by the Agent
(including, without limitation, the reasonable fees and expenses of
Xxxxx & Xxx Xxxxx, PLLC and Ernst and Young Corporate Finance LLC), and
fees and other amounts payable to the Agent, in each case in connection
with the negotiation, preparation, execution and delivery of this
Credit Agreement);
(g) The Agent, on behalf of each Lender, shall have
received an amendment fee equal to the sum of (i) 1.00% of each such
Lender's Commitment after giving effect to the transactions
contemplated hereby plus (ii) 1.00% of each Lender's portion of the
Forgiven Balance (as defined in the Restructure Agreement);
(h) Availability shall be at least $8,000,000;
(i) the Agent shall have received approximately
$37,985,000 in cash on hand from the Borrower to be applied to Loans
outstanding immediately prior to giving effect to the transactions
contemplated hereby;
(j) the Agent shall have received, for the benefit of the
Lenders, attached warrants to purchase up to ten percent (10%) of the
fully diluted shares of common stock of the Borrower in the aggregate,
such warrants having a strike price that corresponds to a $60 million
equity value for the Borrower and exercisable within ten years of the
Closing Date;
(k) at least $109,661,000 of the 5-3/4% Convertible
Subordinated Notes due 2004 shall have been exchanged for common stock
equity in the Borrower; and
(l) The Agent shall have received such other documents,
agreements or information which may be reasonably requested by the
Agent.
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5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
The obligations of each Lender to make, convert or extend any Loan and
of the Issuing Lender to issue or extend Letters of Credit (including the
initial Loans and the initial Letter of Credit) are subject to satisfaction of
the following conditions in addition to satisfaction on the Closing Date of the
conditions set forth in Section 5.1:
(i) The Borrower shall have delivered (A) in the case of
any Loan, an appropriate Notice of Borrowing or (B) in the case of any
Letter of Credit, the Issuing Lender shall have received an appropriate
request for issuance in accordance with the provisions of Section
2.2(b);
(ii) The representations and warranties set forth in
Section 6 shall be, subject to the limitations set forth therein, true
and correct in all material respects as of such date (except for those
which expressly relate to an earlier date, which shall be true and
correct in all material aspects as of such earlier date);
(iii) There shall not have been commenced against the
Borrower or any Guarantor an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
or any case, proceeding or other action for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or for any substantial part of its
Property or for the winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded;
(iv) No Default or Event of Default shall exist and be
continuing either prior to or after giving effect thereto; and
(v) Immediately after giving effect to the making of such
Loan (and the application of the proceeds thereof) or to the issuance
of such Letter of Credit, as the case may be, (A) the sum of the
aggregate principal amount of outstanding Loans plus LOC Obligations
outstanding shall not exceed the lesser of (I) the Committed Amount and
(II) the Borrowing Base, and (B) the LOC Obligations shall not exceed
the LOC Committed Amount.
The delivery of each Notice of Borrowing and each request for the issuance of a
Letter of Credit pursuant to Section 2.2(b) shall constitute a representation
and warranty by the Borrower of the correctness of the matters specified in
subsections (ii), (iii), (iv) and (v) above.
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SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each Lender that:
6.1 FINANCIAL CONDITION.
(a) The audited consolidated balance sheet of the Borrower and its
Subsidiaries as of December 30, 2001 and the audited consolidated statements of
operations and statements of cash flows for the years ended December 30, 2001
have heretofore been furnished to each Lender. Such financial statements
(including the notes thereto) (i) have been audited by PricewaterhouseCoopers,
LLP, (ii) have been prepared in accordance with GAAP consistently, applied
throughout the periods covered thereby and (iii) present fairly (on the basis
disclosed in the footnotes to such financial statements) the consolidated
financial condition, results of operations and cash flows of the Borrower and
its Subsidiaries as of such date and for such periods. The unaudited interim
balance sheets of the Borrower and its Subsidiaries as at the end of, and the
related unaudited interim statements of operations and of cash flows for, each
quarterly period ended after December 30, 2001 and prior to the Closing Date
have heretofore been furnished to each Lender. Such interim financial
statements for each such quarterly period, (i) have been prepared in accordance
with Regulation S-X of the Securities and Exchange Commission consistently
applied throughout the periods covered thereby and (ii) present fairly (on the
basis disclosed in the footnotes to such financial statements) the consolidated
financial condition, results of operations and cash flows of the Borrower and
its Subsidiaries as of such date and for such periods. During the period from
September 29, 2002 to and including the Closing Date, there has been no sale,
transfer or other disposition by the Borrower or any of its Subsidiaries of any
material part of the business or property of the Borrower and its Subsidiaries,
taken as a whole, and no purchase or other acquisition by any of them of any
business or property (including any capital stock of any other person) material
in relation to the consolidated financial condition of the Borrower and its
Subsidiaries, taken as a whole, in each case, which has not been disclosed in
writing to the Lenders on or prior to the Closing Date or otherwise publicly
disclosed.
(b) The projected consolidated and consolidating balance sheets of
the Borrower and its Subsidiaries as at the end of, and the related projected
statements of operations and of cash flows for, the years ended December 28,
2003, January 2, 2005 and January 1, 2006 (heretofore furnished to each Lender)
are based upon reasonable assumptions made known to the Lenders and upon
information not known to be incorrect or misleading in any material respect
(except as otherwise previously publicly disclosed), subject to the
uncertainties and approximations inherent in any projections.
6.2 NO CHANGE; DIVIDENDS.
Except as set forth on Schedule 6.2, since December 30, 2001, (a)
there has been no development or event relating to or affecting the Borrower or
any of its Subsidiaries which has had or would be reasonably expected to have a
Material Adverse Effect (except as has been publicly disclosed prior to the
Closing Date) and (b) except as permitted under this Credit Agreement, no
46
dividends or other distributions have been declared, paid or made upon the
capital stock or other equity interest in the Borrower or any of its
Subsidiaries nor, except to the extent permitted under this Credit Agreement,
has any of the capital stock or other equity interest in the Borrower or any of
its Subsidiaries been redeemed, retired, purchased or otherwise acquired for
value by such Person.
6.3 ORGANIZATION; EXISTENCE; COMPLIANCE WITH LAW.
Each of the Borrower and its Subsidiaries (a) is a corporation or
limited liability company or limited partnership, as the case may be, duly
organized, validly existing and is in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has the corporate or
other necessary power and authority, and the legal right, to own and operate
its property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, except to the extent that the
failure to have such legal right would not be reasonably expected to have a
Material Adverse Effect, (c) is duly qualified as a foreign entity and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not be reasonably expected to have a
Material Adverse Effect, and (d) is in compliance with all material
Requirements of Law, except to the extent that the failure to comply therewith
would not, in the aggregate, be reasonably expected to have a Material Adverse
Effect.
6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each of the Credit Parties has the corporate or other necessary power
and authority, and the legal right, to make, deliver and perform the Credit
Documents and Subordinated Note Documents to which it is a party, and in the
case of the Borrower, to borrow hereunder, and has taken all necessary
corporate action to authorize the borrowings on the terms and conditions of
this Credit Agreement and to authorize the execution, delivery and performance
of the Credit Documents and Subordinated Note Documents to which it is a party.
No consent or authorization of, filing with, notice to or other similar act by
or in respect of, any Governmental Authority or any other Person is required to
be obtained or made by or on behalf of any Credit Party in connection with the
Indebtedness arising under the Subordinated Note Documents, the borrowings
hereunder or with the execution, delivery, performance, validity or
enforceability of the Credit Documents and Subordinated Note Documents to which
such Credit Party is a party, except for (i) filings to perfect the Liens
created by the Collateral Documents and (ii) consents, authorizations, notices
and filings described in Schedule 6.4, all of which have been obtained or made
or have the status described in such Schedule 6.4. This Credit Agreement has
been, and each other Credit Document and Subordinated Note Document to which
any Credit Party is a party will be, duly executed and delivered on behalf of
the Credit Parties. This Credit Agreement constitutes and each other Credit
Document and each Subordinated Note Document to which any Credit Party is a
party when executed and delivered will constitute, a legal, valid and binding
obligation of such Credit Party enforceable against such party in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at law).
47
6.5 NO LEGAL BAR.
The execution, delivery and performance of the Credit Documents and
Subordinated Note Documents by the Credit Parties, the borrowings hereunder and
the use of the proceeds thereof (a) will not violate any Requirement of Law or
contractual obligation of the Borrower or any of its Subsidiaries, or cause an
event of default under any material indenture, loan agreement, mortgage, deed
of trust, contract or other agreement or instrument to which it is a party or
by which it may be bound, in any respect that would reasonably be expected to
have a Material Adverse Effect, (b) will not result in, or require, the
creation or imposition of any Lien (other than the Liens created by the
Collateral Documents) on any of the properties or revenues of any of the
Borrower or any of its Subsidiaries pursuant to any such Requirement of Law or
contractual obligation, and (c) will not violate or conflict with any provision
of any Credit Party's articles of incorporation or by-laws.
6.6 NO MATERIAL LITIGATION.
No litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending or, to the best knowledge of the Credit
Parties, threatened by or against the Borrower or any of its Subsidiaries or
against any of their respective properties or revenues which (a) relates to any
of the Credit Documents or any of the transactions contemplated hereby or
thereby, (b) relates to any of the Subordinated Note Documents or any of the
transactions contemplated thereby or (c) would be reasonably expected to have a
Material Adverse Effect.
6.7 NO DEFAULT.
Neither the Borrower nor any of its Subsidiaries is in default under
or with respect to any of their contractual obligations in any respect which
would be reasonably expected to have a Material Adverse Effect; provided,
however, that to the extent the Borrower is not in compliance with the
Subordinated Note Documents due to the de-listing of the Borrower's stock or
any related Repurchase Event, such non-compliance shall be deemed not to
constitute a violation of this Section 6.7.
6.8 OWNERSHIP OF PROPERTY; LIENS.
Each of the Borrower and its Subsidiaries has good record and
marketable title in fee simple to, or a valid leasehold interest in, all its
material real property, and good title to, or a valid leasehold interest in,
all its other material property, and none of such property is subject to any
Lien, except for Permitted Liens.
6.9 INTELLECTUAL PROPERTY.
Each of the Borrower and its Subsidiaries owns, or has the legal right
to use, all United States trademarks, tradenames, copyrights, technology,
know-how and processes, if any, necessary for each of them to conduct its
business as currently conducted (the "Intellectual Property") except for those
the failure to own or have such legal right to use would not be reasonably
expected to have a Material Adverse Effect. No claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such
48
Intellectual Property, nor does any Credit Party know of any such claim, and
the use of such Intellectual Property and, to the knowledge of the responsible
officers of the Credit Parties, the use of the Intellectual Property by the
Borrower or any of its Subsidiaries or the granting of a right or a license in
respect of the Intellectual Property from any Credit Party does not infringe on
the rights of any Person, except for such claims and infringements that in the
aggregate, would not be reasonably expected to have a Material Adverse Effect.
Set forth on Schedule 6.9 is a list of all Intellectual Property registered
with the United States Copyright Office or the United States Patent and
Trademark Office and owned by each Credit Party. As of the Closing Date, none
of the Intellectual Property of the Credit Parties is subject to any licensing
agreement or similar agreement with a Credit Party as licensor except as set
forth on Schedule 6.9.
6.10 NO BURDENSOME RESTRICTIONS.
Except as previously disclosed in writing to the Lenders on or prior
to the Closing Date, no Requirement of Law or contractual obligation of the
Borrower or any of its Subsidiaries would be reasonably expected to have a
Material Adverse Effect.
6.11 TAXES.
Each of the Borrower and its Subsidiaries has filed or caused to be
filed all United States federal income tax returns and all other material tax
returns which, to the best knowledge of the Credit Parties, are required to be
filed and, except to the extent it has made alternative arrangements with the
relevant taxing authority, has disclosed such arrangements to the Agent and is
in compliance with such arrangements, has paid (a) all taxes shown to be due
and payable on said returns or (b) all taxes shown to be due and payable on any
assessments of which it has received notice made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any (i) taxes, fees or other
charges with respect to which the failure to pay, in the aggregate, would not
have a Material Adverse Effect or (ii) taxes, fees or other charges the amount
or validity of which are currently being contested and with respect to which
reserves in conformity with GAAP have been provided on the books of such
Person), and no tax Lien has been filed, and, to the best knowledge of the
Credit Parties, no claim is being asserted, with respect to any such tax, fee
or other charge. No Credit Party is aware as of the Closing Date of any
proposed tax assessments against it or any other Credit Party except those set
forth on Schedule 6.11.
6.12 ERISA.
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no Termination Event has occurred,
and, to the best knowledge of the Credit Parties, no event or condition has
occurred or exists as a result of which any Termination Event could reasonably
be expected to occur, with respect to any Plan; (ii) no "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and Section 412 of
the Code, whether or not waived, has occurred with respect to any Plan; (iii)
each Plan has been maintained, operated, and funded in compliance with its own
terms and in material compliance with the provisions of ERISA, the Code, and
any other applicable federal or state laws; and (iv) no lien in favor of the
PBGC or a Plan has arisen or is reasonably likely to arise on account of any
Plan.
49
(b) The actuarial present value of all "benefit liabilities" under
all Single Employer Plans (determined within the meaning of Section 401(a)(2)
of the Code, utilizing the actuarial assumptions used to fund such Plans),
whether or not vested, did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the
current value of the assets of all such Plans.
(c) Neither the Borrower, any of the Subsidiaries of the Borrower
nor any ERISA Affiliate has incurred, or, to the best knowledge of the Credit
Parties, could be reasonably expected to incur, any withdrawal liability under
ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither the
Borrower, any of the Subsidiaries of the Borrower nor any ERISA Affiliate would
become subject to any withdrawal liability under ERISA if the Borrower, any of
the Subsidiaries of the Borrower or any ERISA Affiliate were to withdraw
completely from all Multiemployer Plans and Multiple Employer Plans as of the
valuation date most closely preceding the date on which this representation is
made or deemed made. Neither the Borrower, any of the Subsidiaries of the
Borrower nor any ERISA Affiliate has received any notification that any
Multiemployer Plan is in reorganization (within the meaning of Section 4241 of
ERISA), is insolvent (within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and no Multiemployer Plan
is, to the best knowledge of the Credit Parties, reasonably expected to be in
reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has
occurred with respect to a Plan which has subjected or may subject the
Borrower, any of the Subsidiaries of the Borrower or any ERISA Affiliate to any
liability under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975
of the Code, or under any agreement or other instrument pursuant to which the
Borrower, any of the Subsidiaries of the Borrower or any ERISA Affiliate has
agreed or is required to indemnify any person against any such liability.
6.13 GOVERNMENTAL REGULATIONS, ETC.
(a) No part of the proceeds of the Loans will be used, directly or
indirectly, for the purpose of purchasing or carrying any "margin stock" within
the meaning of Regulation G or Regulation U, or for the purpose of purchasing
or carrying or trading in any securities. If requested by any Lender or the
Agent, the Borrower will furnish to the Agent and each Lender a statement to
the foregoing effect in conformity with the requirements of FR Form U-1
referred to in said Regulation U. No indebtedness being reduced or retired out
of the proceeds of the Loans was or will be incurred for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U or
any "margin security" within the meaning of Regulation T. "Margin stock" within
the meanings of Regulation U does not constitute more than 25% of the value of
the consolidated assets of the Borrower and its Subsidiaries. None of the
transactions contemplated by this Credit Agreement (including, without
limitation, the direct or indirect use of the proceeds of the Loans) will
violate or result in a violation of the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, or regulations issued pursuant
thereto, or Regulation G, T, U or X.
50
(b) Neither the Borrower nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940, each as amended. In addition,
neither the Borrower nor any of its Subsidiaries is (i) an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, and is not controlled by such a company, or (ii) a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate"
of a "holding company" or of a "subsidiary" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(c) Except as set forth on Schedule 6.13, no director, executive
officer or principal shareholder of the Borrower or any of its Subsidiaries is
a director, executive officer or principal shareholder of any Lender. For the
purposes hereof the terms "director", "executive officer" and "principal
shareholder" (when used with reference to any Lender) have the respective
meanings assigned thereto in Regulation O issued by the Board of Governors of
the Federal Reserve System.
(d) Each of the Borrower and its Subsidiaries has obtained all
material licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its respective Property and to the conduct of its
business.
(e) Neither the Borrower nor any of its Subsidiaries is in violation
of any applicable statute, regulation or ordinance of the United States of
America, or of any state, city, town, municipality, county or any other
jurisdiction, or of any agency thereof (including without limitation,
environmental laws and regulations), which violation could reasonably be
expected to have a Material Adverse Effect.
(f) Except as set forth on Schedule 6.13, each of the Borrower and
its Subsidiaries is current with all material reports and documents, if any,
required to be filed with any state or federal securities commission or similar
agency and is in full compliance in all material respects with all applicable
rules and regulations of such commissions.
6.14 SUBSIDIARIES.
Schedule 6.14 sets forth all the Subsidiaries of the Borrower at the
Closing Date, the jurisdiction of their incorporation and the direct or
indirect ownership interest of the Borrower therein. All of the outstanding
capital stock of such Subsidiaries has been validly issued, is fully paid and
non-assessable and is owned by the Borrower or one or more of its Subsidiaries
free and clear of all Liens (other than Liens in favor of the Agent, for the
benefit of the Lenders). All of the outstanding capital stock of the Borrower
has been validly issued, is fully paid and non-assessable.
6.15 PURPOSE OF LOANS AND LETTERS OF CREDIT.
The proceeds of the Loans hereunder shall be used solely by the
Borrower for working capital and general corporate purposes of the Credit
Parties. The Letters of Credit shall be used only for or in connection with
appeal bonds, reimbursement obligations arising in connection with surety and
reclamation bonds, reinsurance, domestic or international trade transactions,
worker's
51
compensation bonds and obligations not otherwise aforementioned relating to
transactions entered into by the applicable account party in the ordinary
course of business.
6.16 ENVIRONMENTAL MATTERS.
(a) Each of the facilities and properties owned, leased or operated
by the Borrower or any of its Subsidiaries (the "Properties") and all
operations at the Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Law with
respect to the Properties or the businesses operated by the Borrower or any of
its Subsidiaries (the "Businesses"), and there are no conditions relating to
the Businesses or Properties that could give rise to liability under any
applicable Environmental Laws.
(b) None of the Properties contains, or has previously contained,
any Materials of Environmental Concern at, on or under the Properties in
amounts or concentrations that constitute or constituted a violation of, or
could give rise to liability under, Environmental Laws.
(c) Neither the Borrower nor any of its Subsidiaries has received
any written or verbal notice of, or inquiry from any Governmental Authority
regarding, any violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Businesses, nor
does the Borrower or any of its Subsidiaries have knowledge or reason to
believe that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, or generated, treated, stored or disposed of
at, on or under any of the Properties or any other location, in each case by or
on behalf of the Borrower or any of its Subsidiaries in violation of, or in a
manner that would be reasonably likely to give rise to liability under, any
applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the best knowledge of any Credit Party, threatened, under any
Environmental Law to which the Borrower or any of its Subsidiaries is or will
be named as a party, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect
to the Borrower or any of its Subsidiaries, the Properties or the Businesses.
(f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations (including, without limitation, disposal) of the Borrower or any
of its Subsidiaries in connection with the Properties or otherwise in
connection with the Businesses, in violation of or in amounts or in a manner
that could give rise to liability under Environmental Laws.
6.17 PERFECTED SECURITY INTERESTS.
Except as the result of or in connection with a disposition permitted
by Section 8.4(c), at all times after execution and delivery of the Collateral
Documents by the Credit Parties and satisfaction
52
of the conditions specified therein, the security interests created in favor of
the Agent, for the benefit of the Lenders, will constitute valid, perfected
security interests in the Collateral.
6.18 BORROWER'S OBLIGATIONS.
All of the Borrower's Obligations are "Senior Indebtedness" under and
as defined in the Subordinated Note Indenture.
6.19 INDEBTEDNESS.
Except as otherwise permitted under Section 8.1, the Credit Parties
have no Indebtedness.
6.20 INVESTMENTS.
All Investments of each Credit Party are Permitted Investments.
6.21 DISCLOSURE.
Neither this Credit Agreement nor any financial statements delivered
to the Lenders nor any other document, certificate or statement furnished to
the Lenders by or on behalf of any Credit Party in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained therein or herein not misleading.
6.22 TAX SHELTER REGULATIONS.
The Borrower does not intend to treat the Loans and/or Letters of
Credit and related transactions as being a "reportable transaction" (within the
meaning of Treasury Regulation Section 1.6011-4). In the event the Borrower
determines to take any action inconsistent with such intention, it will
promptly notify the Agent thereof. If the Borrower so notifies the Agent, the
Borrower acknowledges that one or more of the Lenders may treat its Loans
and/or its interest in Letters of Credit as part of a transaction that is
subject to Treasury Regulation Section 301.6112-1, and such Lender or Lenders,
as applicable, will maintain the lists and other records required by such
Treasury Regulation.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all of the
Commitments hereunder shall have terminated:
53
7.1 INFORMATION COVENANTS.
The Borrower will furnish, or cause to be furnished, to the Agent:
(a) Annual Financial Statements. As soon as available, and
in any event within 90 days after the close of each fiscal year of the
Borrower and its Subsidiaries (except that the relevant period shall
be 107 days with respect to the 2002 fiscal year), a consolidated and
consolidating balance sheet and income statement of the Borrower and
its Subsidiaries, as of the end of such fiscal year, together with
related consolidated and consolidating statements of earnings and
consolidated statements of retained earnings and of cash flows for
such fiscal year, setting forth in comparative form consolidated and,
if applicable, consolidating figures for the preceding fiscal year,
all such financial information described above to be in reasonable
form and detail and, and with respect to all such consolidated
financial statements, audited by independent certified public
accountants of recognized national standing reasonably acceptable to
the Agent and whose opinion shall be to the effect that such financial
statements have been prepared in accordance with GAAP (except for
changes with which such accountants concur) and shall not be limited
as to the scope of the audit or qualified as to the status of the
Borrower and its Subsidiaries as a going concern.
(b) Quarterly Financial Statements. As soon as available,
and in any event within 45 days after the close of each fiscal quarter
of the Borrower and its Subsidiaries (other than the fourth fiscal
quarter, in which case 107 days after the end thereof) a consolidated
and consolidating balance sheet and income statement of the Borrower
and its Subsidiaries, as of the end of such fiscal quarter, together
with related consolidated and consolidating statements of operations
and consolidated statements of retained earnings and of cash flows for
such fiscal quarter in each case setting forth in comparative form
consolidated and, if applicable, consolidating figures for the
corresponding period of the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Agent, and accompanied by a certificate
of the chief financial officer of the Borrower to the effect that such
quarterly financial statements fairly present in all material respects
the financial condition of the Borrower and its Subsidiaries and have
been prepared in accordance with GAAP, subject to changes resulting
from audit and normal year-end audit adjustments.
(c) Officer's Certificates.
(i) At the time of delivery of the financial
statements provided for in Sections 7.1(a) and 7.1(b) above,
a certificate of the chief financial officer of the Borrower
substantially in the form of Schedule 7.1(c)(i), (A)
demonstrating compliance with the financial covenants
contained in Section 7.11 by calculation thereof as of the
end of each such fiscal period, and (B) stating that no
Default or Event of Default exists, or if any Default or
Event of Default does exist, specifying the nature and extent
thereof and what action the Borrower proposes to take with
respect thereto.
54
(ii) Prior to the consummation of any Pro Forma
Transaction, a certificate of the chief financial officer of
the Borrower in the form of Schedule 7.1(c)(ii), (A)
demonstrating compliance with the financial covenants
contained in Section 7.11 by calculation thereof on a Pro
Forma Basis and (B) stating that, after giving effect on a
Pro Forma Basis to such Pro Forma Transaction, no Default or
Event of Default would exist.
(iii) Within 90 days after the end of each fiscal
year of the Borrower, a certificate of the chief financial
officer of the Borrower containing information regarding the
amount of all Asset Sales and Equity Transactions (other than
the issuance by the Borrower of any capital stock or other
equity interests pursuant to any stock option plan, equity
plan or other employee benefit plan of the Borrower) that
were made during the prior fiscal year.
(iv) Upon the issuance of any Subordinated
Indebtedness, a certificate of the chief financial officer of
the Borrower describing such Subordinated Indebtedness,
including, without limitation, (A) the name and address of
the holders thereof or, with respect to the Subordinated
Notes, the trustee for the Subordinated Noteholders, (B)
dates on which scheduled payments are owing with respect to
such Subordinated Indebtedness (and the amounts owing on such
dates) and (C) any other information requested by the Agent
with respect to such Subordinated Indebtedness.
(d) Annual Business Plan and Budgets. No later than 30 days
following the end of each fiscal year of the Borrower, beginning with
the fiscal year ending December 28, 2003, an annual business plan and
budget of the Borrower containing, among other things, pro forma
financial statements for the next fiscal year.
(e) Accountant's Certificate. Within the period for delivery
of the annual financial statements provided in Section 7.1(a), a
certificate of the accountants conducting the annual audit stating
that they have reviewed this Credit Agreement and stating further
whether, in the course of their audit, they have become aware of any
Default or Event of Default and, if any such Default or Event of
Default exists, specifying the nature and extent thereof.
(f) Auditor's Reports. Promptly upon receipt thereof, a copy
of any other report or "management letter" submitted by independent
accountants to the Borrower or any of its Subsidiaries in connection
with any annual, interim or special audit of the books of such Person.
(g) Reports. Promptly upon transmission or receipt thereof,
(a) copies of any filings and registrations with, and reports to or
from, the Securities and Exchange Commission, or any successor agency,
and copies of all financial statements, proxy statements, notices and
reports as the Borrower or any of its Subsidiaries shall send to its
shareholders or to a holder of any Indebtedness owed by the Borrower
or any of its Subsidiaries in its capacity as such a holder and (b)
upon the request of the Agent, all reports and written information to
and from the United States Environmental Protection Agency, or
55
any state or local agency responsible for environmental matters, the
United States Occupational Health and Safety Administration, or any
state or local agency responsible for health and safety matters, or
any successor agencies or authorities concerning environmental, health
or safety matters.
(h) Notices. Upon obtaining knowledge thereof, the Borrower
will give written notice to the Agent immediately of (a) the
occurrence of an event or condition consisting of a Default or Event
of Default, specifying the nature and existence thereof and what
action the Credit Parties propose to take with respect thereto, and
(b) the occurrence of any of the following with respect to the
Borrower or any of its Subsidiaries (i) the pendency or commencement
of any litigation, arbitral or governmental proceeding against such
Person which if adversely determined is likely to have a Material
Adverse Effect, (ii) the institution of any proceedings against such
Person with respect to, or the receipt of notice by such Person of
potential liability or responsibility for violation, or alleged
violation of any federal, state or local law, rule or regulation,
including but not limited to, Environmental Laws, the violation of
which would likely have a Material Adverse Effect, or (iii) any notice
or determination concerning the imposition of any withdrawal liability
by a Multiemployer Plan against such Person or any ERISA Affiliate,
the determination that a Multiemployer Plan is, or is expected to be,
in reorganization within the meaning of Title IV of ERISA or the
termination of any Plan.
(i) ERISA. Upon obtaining knowledge thereof, the Borrower
will give written notice to the Agent promptly (and in any event
within five business days) of: (i) of any event or condition,
including, but not limited to, any Reportable Event, that constitutes,
or might reasonably lead to, a Termination Event; (ii) with respect to
any Multiemployer Plan, the receipt of notice as prescribed in ERISA
or otherwise of any withdrawal liability assessed against the Borrower
or any of its ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both within the
meaning of Title IV of ERISA); (iii) the failure to make full payment
on or before the due date (including extensions) thereof of all
amounts which the Borrower, any of the Subsidiaries of the Borrower or
any ERISA Affiliate is required to contribute to each Plan pursuant to
its terms and as required to meet the minimum funding standard set
forth in ERISA and the Code with respect thereto; or (iv) any change
in the funding status of any Plan that could have a Material Adverse
Effect, together with a description of any such event or condition or
a copy of any such notice and a statement by the chief financial
officer of the Borrower briefly setting forth the details regarding
such event, condition, or notice, and the action, if any, which has
been or is being taken or is proposed to be taken by the Credit
Parties with respect thereto. Promptly upon request, the Borrower
shall furnish the Agent and the Lenders with such additional
information concerning any Plan as may be reasonably requested,
including, but not limited to, copies of each annual report/return
(Form 5500 series), as well as all schedules and attachments thereto
required to be filed with the Department of Labor and/or the Internal
Revenue Service pursuant to ERISA and the Code, respectively, for each
"plan year" (within the meaning of Section 3(39) of ERISA).
(j) Subordinated Indebtedness. Immediately upon obtaining
knowledge thereof, the Borrower will give written notice to each
holder of Subordinated Indebtedness (or, with
56
respect to the Subordinated Notes, the trustee for the Subordinated
Noteholders) of the occurrence of an event or condition consisting of
a Default or Event of Default.
(k) Monthly Financial Statements/Borrowing Base Certificate.
Within 30 days after the end of each calendar month, a certificate as
of the end of the immediately preceding month, substantially in the
form of Schedule 7.1(k) and certified by the chief financial officer
of the Borrower to be true and correct as of the date thereof (a
"Borrowing Base Certificate"). Concurrent with the delivery of such
Borrowing Base Certificate, a consolidated and consolidating balance
sheet and income statement of the Borrower and its Subsidiaries, as of
the end of such calendar month, together with related consolidated
statements of cash flows for such calendar month, all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Agent, and accompanied by a certificate
of the chief financial officer of the Borrower to the effect that such
monthly financial statements fairly present in all material respects
the financial condition of the Borrower and its Subsidiaries and have
been prepared in accordance with GAAP, subject to changes resulting
from normal quarterly and year-end adjustments and the absence of
footnotes. Additionally, on a monthly basis concurrently with the
delivery of the other items set forth in this Section 7.1(k), a
certificate of the chief financial officer of the Borrower
demonstrating compliance with the financial covenants set forth in
Section 7.11 as of the end of such fiscal month or quarter (as
applicable) and stating that no Default or Event of Default exists, or
if any Default or Event of Default does exist, specifying the nature
and extent thereof and what action the Borrower proposes to take with
respect thereto. Notwithstanding the foregoing, commencing with the
month ending May 31, 2004 and for any subsequent month thereafter for
which principal payments on the Subordinated Notes are due within 45
days of the end of such month, the Borrower will furnish, or cause to
be furnished, to the Agent within 22 days of the end of such month,
the financial information set forth in the immediately preceding two
sentences of this Section 7.1(k).
(l) Six Month Forecast. On or before the last day of each
calendar month, commencing in April 2003, a six month rolling cash
flow forecast (which shall include projected cash flow on a monthly
basis), in form and substance satisfactory to the Agent, for the six
month period immediately following the month then ending, prepared and
signed by the chief financial officer or the chief accounting officer
of the Borrower, such forecast to be based upon reasonable assumptions
made known to the Lenders and upon information not known to be
incorrect or misleading in any material respect. Commencing in April
2003, concurrently with the aforesaid cash flow forecast, a
reconciliation of actual cash flow for the calendar month most
recently ended against projected cash flow for such calendar month
contained in the six month rolling cash flow forecast furnished to the
Lenders pursuant to this Section 7.1(l) during the preceding calendar
month, such reconciliation to be in a form satisfactory to the Agent.
(m) 2002 Form 10-K. No later than April 15, 2003, a copy of
the Borrower's Form 10-K for the 2002 fiscal year.
(n) Tax Issues. Promptly after the Borrower has notified the
Agent of any intention by the Borrower to treat the Loans and/or
Letters of Credit and related
57
transactions as being a "reportable transaction" (within the meaning
of Treasury Regulation Section 1.6011-4), a duly completed copy of IRS
Form 8886 or any successor form;
(o) Other Information. With reasonable promptness upon any
such request, such other information regarding the business,
properties or financial condition of the Borrower or any of its
Subsidiaries as the Agent or the Required Lenders may reasonably
request.
(p) Business Day. If the last day for timely delivery of any
of the items in this Section 7.1 falls on a day that is not a Business
Day, then such information shall be due on the Business Day
immediately succeeding such due date.
7.2 PRESERVATION OF EXISTENCE AND FRANCHISES.
Except as a result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted under Section 8.4, the Borrower will, and
will cause each of its Subsidiaries to, do all things necessary to preserve and
keep in full force and effect its existence, rights, franchises and authority.
7.3 BOOKS AND RECORDS.
The Borrower will, and will cause each of its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
7.4 COMPLIANCE WITH LAW.
The Borrower will, and will cause each of its Subsidiaries to, comply
with all laws, rules, regulations and orders, and all applicable restrictions
imposed by all Governmental Authorities, applicable to it and its property if
noncompliance with any such law, rule, regulation, order or restriction would
have a Material Adverse Effect.
7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Except as otherwise provided pursuant to the terms of the definition
of "Permitted Liens" set forth in Section 1.1 or (in the case of the following
clause (i)), to the extent alternative arrangements have been made with the
relevant taxing authority, such agreements have been disclosed to the Agent and
the Borrower is in compliance with such arrangements, the Borrower will, and
will cause each of its Subsidiaries to, pay and discharge (i) all taxes,
assessments and governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties, before they shall become
delinquent, (ii) all lawful claims (including claims for labor, materials and
supplies) which, if unpaid, might give rise to a Lien upon any of its
properties, and (iii) except as prohibited hereunder, all of its other
Indebtedness as it shall become due.
58
7.6 INSURANCE.
The Borrower will maintain, and will cause each of its Subsidiaries to
maintain, or be covered under, (i) physical damage insurance on all real and
personal property on an all risks basis (including the perils of flood and
quake), covering the repair and replacement cost of all such property and
consequential loss coverage for extra expense and (ii) public liability
insurance (including products/completed operations liability coverage), all on
terms and conditions and in scope substantially commensurate with that which is
currently maintained (or, if such terms and conditions and scope are not up to
industry standards for a company of like size and with a similar business,
substantially commensurate with such industry standards) and evidenced by the
certificate contemplated by clause (w) of the second following sentence and
with risk retention thereunder up to an amount which in the good faith business
judgement of the Borrower's or such Subsidiary's management could not
reasonably be expected to expose the Borrower or such Subsidiary to a
materially adverse noninsured loss. On or before the Closing Date, and at all
times thereafter, the Agent shall be named as loss payee or mortgagee, as its
interest may appear, and/or additional insured with respect to any such
insurance providing coverage in respect of any Collateral. All such insurance
shall be provided by insurers having an A.M. Best policyholders rating of not
less than B+ or such other insurers as the Required Lenders may approve in
writing. The Borrower will deliver to the Agent for distribution to each of the
Lenders (w) on or before the Closing Date, a certificate as of a recent date
showing the amount of coverage as of such date, (x) upon request of any Lender
through the Agent from time to time full information as to the insurance
carried, (y) within seven Business Days of receipt of notice from any insurer a
copy of any notice of cancellation, alteration or material change in coverage
from that existing on the Closing Date and (z) forthwith upon receipt thereof,
notice of any cancellation or nonrenewal of coverage by the Borrower or any of
its Subsidiaries.
7.7 MAINTENANCE OF PROPERTY.
The Borrower will, and will cause each of its Subsidiaries to,
maintain and preserve its properties and equipment material to the conduct of
its business in good repair, working order and condition, normal wear and tear
and casualty and condemnation excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as
may be needed or proper, to the extent and in the manner customary for
companies in similar businesses.
7.8 PERFORMANCE OF OBLIGATIONS.
The Borrower will, and will cause each of its Subsidiaries to, perform
in all material respects all of its obligations under the terms of all material
agreements, indentures, mortgages, security agreements or other debt
instruments to which it is a party or by which it is bound; provided, however,
that to the extent the Borrower is not in compliance with the Subordinated Note
Documents due to the de-listing of the Borrower's stock or any related
Repurchase Event, such non-compliance shall be deemed not to constitute a
violation of this Section 7.8.
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7.9 USE OF PROCEEDS.
The Borrower will use the proceeds of the Loans and will use the
Letters of Credit solely for the purposes set forth in Section 6.15.
7.10 AUDITS/INSPECTIONS.
Upon reasonable notice and during normal business hours, the Borrower
will, and will cause each of its Subsidiaries to, permit representatives
appointed by the Agent, including, without limitation, independent accountants,
agents, attorneys, and appraisers to visit and inspect its property, including
its books and records, its accounts receivable and inventory, its facilities
and its other business assets, and to make photocopies or photographs thereof
and to write down and record any information such representative obtains and
shall permit the Agent or its representatives to investigate and verify the
accuracy of information provided to the Lenders and to discuss all such matters
with the officers, employees and representatives of such Person.
7.11 FINANCIAL COVENANTS.
(a) Consolidated Coverage Ratio. The Consolidated Coverage Ratio as
of the last day of each fiscal month shall be no less than the ratio shown
below opposite the applicable period corresponding thereto:
Fiscal Month Ending Nearest Ratio
--------------------------- ------------
April 30, 2003 N/A
May 31, 2003 N/A
June 30, 2003 0.35 : 1.00
July 31, 2003 0.40 : 1.00
August 31, 2003 0.45 : 1.00
September 30, 2003 0.90 : 1.00
October 31, 2003 0.90 : 1.00
November 30, 2003 0.90 : 1.00
December 31, 2003 1.05 : 1.00
January 31, 2004 0.95 : 1.00
February 29, 2004 0.85 : 1.00
March 31, 2004 0.95 : 1.00
April 30, 2004 1.05 : 1.00
*May 31, 2004 1.05 : 1.00
*June 30, 2004 1.10 : 1.00
*July 31, 2004 1.10 : 1.00
*August 31, 2004 1.10 : 1.00
*September 30, 2004 1.10 : 1.00
*October 31, 2004 1.10 : 1.00
*November 30, 2004 1.10 : 1.00
*December 31, 2004 1.10 : 1.00
*January 31, 2005 1.15 : 1.00
60
*February 28, 2005 1.15 : 1.00
*March 31, 2005 1.15 : 1.00
*April 30, 2005 1.15 : 1.00
(b) Minimum Consolidated EBITDA. Consolidated EBITDA for the periods
set forth below shall not be less the amount shown below opposite such period:
Minimum
Fiscal Period Consolidated EBITDA
-------------------------- ------------------------
One Month Period Ending ($ 136,000)
April 30, 2003
Two Month Period Ending ($ 527,000)
May 31, 2003
Three Month Period Ending
June 30, 2003 $ 681,000
Four Month Period Ending $ 1,059,600
July 31, 2003
Five Month Period Ending
August 31, 2003 $ 1,479,400
Six Month Period Ending
September 30, 2003 $ 3,489,000
Seventh Month Period Ending
October 31, 2003 $ 4,385,300
Eight Month Period Ending
November 30, 2003 $ 4,485,800
Nine Month Period Ending
December 31, 2003 $ 5,946,000
Ten Month Period Ending
January 31, 2004 $ 5,967,200
Eleven Month Period Ending
February 29, 2004 $ 5,719,200
Twelve Month Period Ending
March 31, 2004 $ 7,172,800
Twelve Month Period Ending
April 30, 2004 $ 7,990,900
*Twelve Month Period Ending
May 31, 2004 $ 8,256,100
*Twelve Month Period Ending
June 30, 2004 $ 8,596,100
*Twelve Month Period Ending
July 31, 2004 $ 8,530,600
*Twelve Month Period Ending
August 31, 2004 $ 8,758,400
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*Twelve Month Period Ending
September 30, 2004 $ 8,807,700
*Twelve Month Period Ending
October 31, 2004 $ 8,549,300
*Twelve Month Period Ending
November 30, 2004 $ 9,083,100
*Twelve Month Period Ending
December 31, 2004 $ 9,632,200
*Twelve Month Period Ending
January 31, 2005 $ 10,315,600
*Twelve Month Period Ending
February 28, 2005 $ 10,982,000
*Twelve Month Period Ending
March 31, 2005 $ 11,405,300
*Twelve Month Period Ending
April 30, 2005 $ 11,724,900
* Contingent on extension option being exercised pursuant to Section 3.4(e) of
this Credit Agreement.
7.12 ADDITIONAL CREDIT PARTIES.
At the time that any Person becomes a Subsidiary of the Borrower, the
Borrower shall immediately (and in any event within two (2) Business Days) so
notify the Agent and shall within five (5) Business Days (or such longer period
of time as the Agent may agree to) (a) cause such Person to execute a Joinder
Agreement in substantially the form of Schedule 7.12, (b) cause 100% of the
capital stock of such Person to be delivered to the Agent (together with
undated stock powers signed in blank) and pledged to the Agent, for the benefit
of the Lenders, pursuant to an appropriate pledge agreement(s) in substantially
the form of the Pledge Agreement and otherwise in form acceptable to the Agent
and (c) deliver such other documentation as the Agent may reasonably request in
connection with the foregoing, including, without limitation, certified
resolutions and other organizational and authorizing documents of such Person,
appropriate UCC-1 financing statements and favorable opinions of counsel to
such Person (which shall cover, among other things, the legality, validity,
binding effect and enforceability of the documentation referred to above), all
in form, content and scope reasonably satisfactory to the Agent.
7.13 OWNERSHIP OF SUBSIDIARIES.
Except to the extent otherwise provided in Section 8.11, the Borrower
shall, directly or indirectly, own at all times 100% of the capital stock of
each of its Subsidiaries.
7.14 PLEDGED ASSETS.
The Borrower will cause, and will cause each Subsidiary to cause, all
of its owned personal property located in the United States to the extent such
property is deemed to be
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material by the Agent or the Required Lenders in its or their reasonable
discretion, to be subject at all times, except as otherwise set forth in
Section 8.4(c), to first priority, perfected Liens in favor of the Agent to
secure the Borrower's Obligations in accordance with the terms and conditions
of the Collateral Documents, subject in any case to Permitted Liens.
7.15 [RESERVED].
7.16 FIELD EXAMINATION.
The Borrower and each of its Subsidiaries shall permit the Agent (or a
third party satisfactory to the Agent) to conduct a written business audit of
the accounts receivable, inventory, payables, controls and systems of the
Borrower and its Subsidiaries at a frequency to be determined in the reasonable
discretion of the Agent.
7.17 ENGAGEMENT OF FINANCIAL ADVISOR TO LENDERS.
(a) The Credit Parties acknowledge and agree that the Agent, on
behalf of the Lenders, may retain a financial advisor (the "Lender's Financial
Advisor") to the Lenders for matters related to the Credit Agreement. The
Lender's Financial Advisor shall agree to abide by the confidentiality terms
set forth in Section 11.14 hereof or other terms regarding confidentiality as
may be agreed to among the Agent, the Lender's Financial Advisor and the Credit
Parties.
(b) The Credit Parties covenant and agree that they shall cooperate
fully with the Lender's Financial Advisor in order that the Lender's Financial
Advisor shall be able to carry out all duties required by the Lenders in
connection with the Lender's Financial Advisor's work as a consultant.
Specifically, each Credit Party shall (i) permit the Lender's Financial Advisor
to visit and inspect its property during reasonable business hours, including
its books and records, its accounts receivable and its inventory, its facility
and its other business assets, and to make photocopies or photographs thereof
and to write down and record any information the Lender's Financial Advisor
obtains and (ii) permit the Lender's Financial Advisor to investigate and
verify the accuracy of such information and to discuss all such matters with
the officers, employees and representatives of such Credit Party.
(c) The Credit Parties agree that they shall pay, on demand, and be
jointly and severally liable for, all reasonable costs and expenses of the
Lender's Financial Advisor, as financial advisor to the Lenders.
7.18 DEPOSIT ACCOUNTS.
The Borrower will, and will cause each of the other Credit Parties, to
establish and maintain at all times any and all deposit accounts, other than
payroll, withholding tax and other fiduciary accounts established in the
ordinary course of business and containing only such amounts as are necessary
to cover obligations incurred and/or liabilities assumed in the ordinary course
of business (collectively, the "Excluded Deposit Accounts"), with either (i)
the Agent or (ii) other Persons approved by the Agent that have executed
tri-party agency agreements in substantially the form attached as Schedule 7.18
or otherwise in form reasonably acceptable to the Agent (each an "Agency
Agreement"); provided, however, that any of the Credit Parties may
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maintain deposit accounts with banking institutions other than the Agent or
Persons executing such Agency Agreements so long as (a) the aggregate amount of
funds contained in all such deposit accounts (other than any amounts in any
Excluded Deposit Accounts) does not exceed $2,500,000 at any time and (b) all
funds contained in such deposit accounts, other than an amount not to exceed
$1,000,000 at any time, relate to deposits in the ordinary course of business
to cover accounts payable to independent contractors for work already
performed. The Borrower shall provide the Agent, within thirty calendar days
after the end of each fiscal month, a report (in a form reasonably satisfactory
to the Agent) identifying all deposit accounts of the Credit Parties and their
collected balances as of the last day of the preceding fiscal month.
7.19 PERIODIC MEETINGS.
(a) On a quarterly basis, and in conjunction with the filing of the
Borrower's Form 10-Q with the Securities and Exchange Commission, the Borrower
shall hold a telephonic meeting, at an agreed upon time, at which (i) the
Lenders' Financial Advisor will present to the Lenders (subject to existing
confidentiality and other applicable restrictions among the Agent and any of
the Lenders) a written report prepared by the Lenders' Financial Advisor
analyzing the Borrower's financial results as of the end of such fiscal
quarter, and (ii) the Borrower will review such financial results and discuss
the market outlook.
(b) Upon the request of the Agent, the Borrower shall hold a meeting
on an agreed upon date and at an agreed upon location to discuss the reports
delivered pursuant to Section 7.1(k) or Section 7.19(a).
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all of the
Commitments hereunder shall have terminated:
8.1 INDEBTEDNESS.
The Borrower will not, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the
other Credit Documents;
(b) Indebtedness of the Borrower and any of its Subsidiaries
set forth in Schedule 8.1;
(c) purchase money Indebtedness (including Capital Leases)
hereafter incurred by the Borrower or any of its Subsidiaries to
finance the purchase of fixed assets provided that (i) the total of
all such Indebtedness (for all such Persons taken together) shall not
64
exceed an aggregate principal amount of $3,000,000 at any one time
outstanding (including any such Indebtedness referred to in subsection
(b) above (other than any such Indebtedness incurred in connection
with acquisitions)); (ii) such Indebtedness when incurred shall not
exceed the purchase price of the asset(s) financed; and (iii) no such
Indebtedness shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such
refinancing;
(d) obligations of the Borrower in respect of Hedging
Agreements entered into in order to manage existing or anticipated
interest rate or exchange rate risks and not for speculative purposes;
(e) Intercompany Indebtedness incurred in the ordinary
course of business and consistent with past practices or for cash
management purposes;
(f) additional Subordinated Indebtedness which by its terms
(i) requires repayment of principal (including any sinking fund) and
annual cash interest payments in amounts not greater than and at such
times not earlier than are required by the Subordinated Note
Documents, (ii) is unsecured, and (iii) is on market terms, including
without limitation subordination and other intercreditor terms, that
are consistent with the public bond market and that have been approved
by the Required Lenders;
(g) Subordinated Indebtedness issued in exchange for
Subordinated Indebtedness listed on Schedule 8.1, provided such
Subordinated Indebtedness meets the requirements of clauses (i), (ii)
and (iii) of Section 8.1(f) above; and
(h) in addition to the Indebtedness otherwise permitted by
this Section 8.1, other Indebtedness hereafter incurred by the
Borrower or any of its Subsidiaries provided that (i) the loan
documentation with respect to such Indebtedness shall not contain
covenants or default provisions relating to the Borrower and its
Subsidiaries that are more restrictive than the covenants and default
provisions contained in the Credit Documents, (ii) on the date of
incurrence of such Indebtedness after giving effect on a Pro Forma
Basis to the incurrence of such Indebtedness of the Borrower or any of
its Subsidiaries, no Default or Event of Default would exist
hereunder, and (iii) the aggregate principal amount of such
Indebtedness shall not exceed $2,500,000 at any time.
8.2 LIENS.
The Borrower will not, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Lien with respect to any
of their Property, whether now owned or after acquired, except for Permitted
Liens.
8.3 NATURE OF BUSINESS.
The Borrower will not, nor will it permit any of its Subsidiaries to,
substantively alter the character or conduct of the business conducted by such
Person as of the Closing Date.
65
8.4 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC.
The Borrower will not, nor will it permit any of its Subsidiaries to:
(a) except in connection with a disposition of assets
permitted by the terms of subsection (c) below, dissolve, liquidate or
wind up their affairs;
(b) enter into any transaction of merger or consolidation;
provided, however, that, so long as no Default or Event of Default
would be directly or indirectly caused as a result thereof, any Credit
Party (other than the Borrower) may merge or consolidate with any
other Credit Party (other than the Borrower);
(c) sell, lease, transfer or otherwise dispose of any
Property of the Borrower and its Subsidiaries other than (i) the sale
or disposition of machinery and equipment no longer used or useful in
the conduct of such Person's business, (ii) other sales of assets (but
not accounts receivable, except delinquent accounts sold for
collection purposes only), provided that, after giving effect to such
sale or other disposition, the aggregate book value of assets sold or
otherwise disposed of pursuant to this clause (ii) does not exceed
$500,000 in any fiscal year and (iii) the grant of any option or other
right to purchase any asset in a transaction that would be permitted
under the provisions of the foregoing clause (ii), provided that no
Default or Event of Default has occurred and is continuing at the time
of such grant;
(d) acquire all or any portion of the capital stock or
securities of any other Person or purchase, lease or otherwise acquire
(in a single transaction or a series of related transactions) all or
any portion of the Property of any other Person, except for any merger
or consolidation permitted pursuant to Section 8.4(b); or
(e) become a general partner in any general or limited
partnership, joint venture or similar arrangement.
Upon a sale of any Property of a Credit Party permitted by Section 8.4(c), the
Agent shall (to the extent applicable) deliver to the Credit Parties, upon the
Credit Parties' request and at the Credit Parties' expense, such documentation
as is reasonably necessary to evidence the release of the Agent's security
interest, if any, in such Property, including, without limitation, amendments
or terminations of UCC financing statements, if any, the return of stock
certificates, if any, and the release of such Credit Party from all of its
obligations, if any, under the Credit Documents.
8.5 ADVANCES, INVESTMENTS, LOANS, ETC.
The Borrower will not, nor will it permit any of its Subsidiaries to,
make Investments in or to any Person, except for Permitted Investments.
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8.6 RESTRICTED PAYMENTS.
The Borrower will not, nor will it permit any of its Subsidiaries to,
directly or indirectly declare, order, make or set apart any sum for or pay any
Restricted Payment, except (i) to make dividends payable solely in the same
class of capital stock of such Person, (ii) to make dividends or other
distributions payable to the Borrower (directly or indirectly through
Subsidiaries of the Borrower), (iii) as permitted by Section 8.7, (iv) to make
payments on Subordinated Indebtedness (other than Indebtedness arising under
the Subordinated Note Documents) in accordance with any subordination
provisions applicable thereto, (v) provided that no Default or Event of Default
has occurred and is continuing at such time or would be directly or indirectly
caused as a result thereof, to make regularly scheduled interest and principal
payments in respect of Indebtedness arising under the Subordinated Note
Documents, (vi) payments in connection with the Bond Conversion provided that
the total of all such payments pursuant to this subclause (vi) shall not exceed
$3,200,000, and (vii) the payments for fractional shares arising from the
25-for-1 reverse stock split of the Borrower's common stock to be presented for
the approval of the Borrower's stockholders at the 2003 annual meeting;
provided that the total of all such payments pursuant to this subclause (vii)
shall not exceed $500,000.
8.7 PREPAYMENTS OF INDEBTEDNESS, ETC.
No Credit Party will, nor will it permit any of its Subsidiaries to:
(a) (i) amend or modify any of the terms of any Indebtedness
of such Person (other than Indebtedness arising under the Credit
Documents) if such amendment or modification would add or change any
terms in a manner materially adverse to such Person or to the Lenders
other than the Bond Conversion, or (ii) shorten the final maturity or
average life to maturity thereof or require any payment thereon to be
made sooner than originally scheduled or increase the interest rate or
fees applicable thereto or change any subordination provision thereof,
or (iii) make (or give any notice with respect thereto) any voluntary
or optional payment or prepayment thereof, or (iv) make (or give any
notice with respect thereto) any redemption or acquisition for value
or defeasance (including without limitation, by way of depositing
money or securities with the trustee with respect thereto before due
for the purpose of paying when due), refund, refinance or exchange
with respect thereto, other than prepayments made by a Credit Party in
connection with any Asset Sale permitted under Section 8.4, in the
amount necessary to prepay or retire any Indebtedness either secured
by a Permitted Lien (ranking senior to any Lien of the Agent) on the
related Property or incurred in connection with the acquisition of any
Property that is disposed of in connection with such Asset Sale; or
(b) make interest payments in respect of any Subordinated
Indebtedness in violation of the applicable subordination provisions.
8.8 TRANSACTIONS WITH AFFILIATES.
The Borrower will not, nor will it permit any of its Subsidiaries to,
enter into or permit to exist any transaction or series of transactions with
any officer, director, shareholder, Subsidiary or
67
Affiliate of such Person other than (i) advances of working capital to any
Credit Party, (ii) transfers of cash and assets to any Credit Party, (iii)
transactions permitted by Section 8.1, Section 8.4, Section 8.5 (other than
pursuant to clause (vii) of the definition of "Permitted Investments" set forth
in Section 1.1), or Section 8.6, (iv) normal compensation and reimbursement of
expenses of officers and directors, (v) transactions contemplated by the
Restructuring Agreement and (vi) except as otherwise specifically limited in
this Credit Agreement, other transactions which are entered into in the
ordinary course of such Person's business on terms and conditions substantially
as favorable to such Person as would be obtainable by it in a comparable
arms-length transaction with a Person other than an officer, director,
shareholder, Subsidiary or Affiliate.
8.9 FISCAL YEAR.
The Borrower will not, nor will it permit any of its Subsidiaries to,
change its fiscal year.
8.10 LIMITATION ON RESTRICTIONS ON SUBSIDIARY DIVIDENDS AND OTHER
DISTRIBUTIONS, ETC.
The Borrower will not, nor will it permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause, incur, assume, suffer or
permit to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any such Person to (i) pay dividends or make any
other distribution on any of such Person's capital stock, (ii) subject to
subordination provisions under any Intercompany Indebtedness, pay any
Indebtedness owed to the Borrower or any other Credit Party, (iii) make loans
or advances to any other Credit Party or (iv) transfer any of its Property to
any other Credit Party, except for encumbrances or restrictions existing under
or by reason of (A) customary non-assignment provisions in any lease governing
a leasehold interest and (B) this Credit Agreement and the other Credit
Documents.
8.11 ISSUANCE AND SALE OF SUBSIDIARY STOCK.
The Borrower will not, nor will it permit any of its Subsidiaries to,
except as otherwise permitted under the terms of Section 8.4(c), sell, transfer
or otherwise dispose of, any shares of capital stock of any of its Subsidiaries
or permit any of its Subsidiaries to issue, sell or otherwise dispose of, any
shares of capital stock of any of its Subsidiaries.
8.12 SALE LEASEBACKS.
Except to the extent it complies with the mandatory prepayment
provisions for Asset Sales pursuant to Section 3.3, the Borrower will not, nor
will it permit any of its Subsidiaries to, directly or indirectly, become or
remain liable as lessee or as guarantor or other surety with respect to any
lease, whether an Operating Lease or a Capital Lease, of any Property (whether
real or personal or mixed), whether now owned or hereafter acquired, (i) which
such Person has sold or transferred or is to sell or transfer to any other
Person other than a Credit Party or (ii) which such Person intends to use for
substantially the same purpose as any other Property which has been sold or is
to be sold or transferred by such Person to any other Person in connection with
such lease.
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8.13 NO FURTHER NEGATIVE PLEDGES.
Except (a) pursuant to this Credit Agreement and the other Credit
Documents and (b) with respect to prohibitions against other encumbrances on
specific Property encumbered to secure payment of particular Indebtedness
(which Indebtedness relates solely to such specific Property, and improvements
and accretions thereto, and is otherwise permitted hereby) the Borrower will
not, nor will it permit any of its Subsidiaries to, enter into, assume or
become subject to any agreement prohibiting or otherwise restricting the
creation or assumption of any Lien upon its properties or assets, whether now
owned or hereafter acquired, or requiring the grant of any security for such
obligation if security is given for some other obligation.
8.14 NO FOREIGN SUBSIDIARIES.
Neither the Borrower nor any of its Subsidiaries will create, acquire
or permit to exist any direct or indirect Subsidiary of such Credit Party which
is not incorporated or organized under the laws of any State of the United
States or the District of Columbia.
8.15 CAPITAL EXPENDITURES.
Neither the Borrower nor any of its Subsidiaries will permit
Consolidated Capital Expenditures in any fiscal period to exceed the dollar
amount (with no carry over from the preceding fiscal period) set forth below
opposite the relevant fiscal period set forth below:
Fiscal Period Capital Expenditure Limit
------------- -------------------------
December 30, 2002 through $1,350,000
December 28, 2003
December 29, 2003 through
January 2, 2005 $2,000,000
January 3, 2005 through
May 1, 2005 $1,000,000
8.16 CONSOLIDATED EARN-OUTS.
Neither the Borrower nor any of its Subsidiaries will permit any
Consolidated Earn-Outs to be made after the Closing Date.
SECTION 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
69
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal
of any of the Loans or of any reimbursement obligations
arising from drawings under Letters of Credit, or
(ii) default, and such defaults shall continue for
three (3) or more Business Days, in the payment when due of
any interest on the Loans or on any reimbursement obligations
arising from drawings under Letters of Credit, or of any Fees
or other amounts owing hereunder, under any of the other
Credit Documents or in connection herewith or therewith; or
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party herein, in any
of the other Credit Documents, or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall
prove untrue in any material respect on the date as of which it was
deemed to have been made; or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.2,
7.9, 7.11, 7.12 or 8.1 through 8.17, inclusive, or
(ii) default in the due performance or observance of
any term, covenant or agreement contained in Section 7.1 and
such default shall continue for a period of at least three
(3) days after the earlier of a responsible officer of a
Credit Party becoming aware of such default or notice thereof
by the Agent; or
(iii) default in the due performance or observance
by it of any term, covenant or agreement (other than those
referred to in subsections (a), (b) or (c)(i) or (ii) of this
Section 9.1) contained in this Credit Agreement and such
default shall continue unremedied for a period of at least 30
days after the earlier of a responsible officer of a Credit
Party becoming aware of such default or notice thereof by the
Agent; or
(d) Other Credit Documents. (i) Any Credit Party shall
default in the due performance or observance of any term, covenant or
agreement in any of the other Credit Documents (subject to applicable
grace or cure periods, if any), or (ii) except as the result of or in
connection with a dissolution, merger or disposition of a Subsidiary
permitted under Section 8.4, any Credit Document shall fail to be in
full force and effect or to give the Agent and/or the Lenders the
Liens, rights, powers and privileges purported to be created thereby,
or any Credit Party shall state any of the foregoing in writing; or
(e) Guaranties. Except as the result of or in connection
with a dissolution, merger or disposition of a Subsidiary permitted
under Section 8.4, the guaranty given by any
70
Guarantor hereunder (including any Additional Credit Party) or any
material provision thereof shall cease to be in full force and effect,
or any Guarantor (including any Additional Credit Party) hereunder or
any Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under such guaranty, or any
Guarantor shall default in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed
pursuant to any guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with
respect to the Borrower or any of its Subsidiaries; or
(g) Defaults under Other Agreements.
(i) The Borrower or any of its Subsidiaries shall
default in the performance or observance (beyond the
applicable grace period with respect thereto, if any) or any
material obligation or condition of any contract or lease
material to the Borrower and its Subsidiaries taken as a
whole; provided, however that to the extent the Borrower is
not in compliance with the Subordinated Note Documents due to
the de-listing of the Borrower's stock or any Repurchase
Event, such non-compliance, default or non-performance shall
be deemed not to constitute a Default or Event of Default
hereunder; or
(ii) With respect to any other Indebtedness (other
than Indebtedness outstanding under this Credit Agreement) in
excess of $1,500,000 in the aggregate for the Borrower and
its Subsidiaries taken as a whole, (A) the Borrower or any of
its Subsidiaries shall (1) default in any payment (beyond the
applicable grace period with respect thereto, if any) with
respect to any such Indebtedness, or (2) the occurrence and
continuance of a default in the observance or performance
relating to such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any
other event or condition shall occur or condition exist, the
effect of which default or other event or condition is to
cause, or permit, the holder or holders of such Indebtedness
(or trustee or agent on behalf of such holders) to cause
(determined without regard to whether any notice or lapse of
time is required), any such Indebtedness to become due prior
to its stated maturity; or (B) any such Indebtedness shall be
declared due and payable, or required to be prepaid other
than by a regularly scheduled required prepayment, prior to
the stated maturity thereof; or
(h) Judgments. One or more judgments or decrees shall be
entered against the Borrower or any of its Subsidiaries involving a
liability of $2,500,000 or more in the aggregate (to the extent not
paid or fully covered by insurance provided by a carrier who has
acknowledged coverage) and any such judgments or decrees shall not
have been vacated, discharged or stayed or bonded pending appeal
within 30 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions, if
such event or condition could be expected to involve possible taxes,
penalties, and other liabilities in an aggregate amount in excess of
$1,000,000: (1) any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether
or not
71
waived, shall exist with respect to any Plan, or any lien shall arise
on the assets of the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate in favor of the PBGC or a Plan; (2) a Termination
Event shall occur with respect to a Single Employer Plan, which is, in
the reasonable opinion of the Agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA; (3) a
Termination Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the
Agent, likely to result in (i) the termination of such Plan for
purposes of Title IV of ERISA, or (ii) the Borrower, any Subsidiary of
the Borrower or any ERISA Affiliate incurring any liability in
connection with a withdrawal from, reorganization of (within the
meaning of Section 4241 of ERISA), or insolvency or (within the
meaning of Section 4245 of ERISA) such Plan; or (4) any prohibited
transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) or breach of fiduciary responsibility shall occur
which may subject the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate to any liability under Sections 406, 409, 502(i), or
502(l) of ERISA or Section 4975 of the Code, or under any agreement or
other instrument pursuant to which the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate has agreed or is required to indemnify
any person against any such liability; or
(j) Nature of Business. The Borrower shall engage in any
business, activity or operations other than owning and holding the
capital stock of its Subsidiaries and such business activities
incidental or related thereto (including acting as Borrower hereunder
and pledging its assets to the Agent, for the benefit of the Lenders,
pursuant to the Collateral Documents); or
(k) Subordinated Note Indentures. (i) There shall occur and
be continuing any Event of Default or Repurchase Event under, and in
each case, as defined in the Subordinated Note Indenture, and the
Subordinated Noteholders have caused the Subordinated Indebtedness to
be accelerated and such acceleration is not rescinded within 30 days,
or (ii) any of the Borrower's Obligations for any reason shall cease
to be "Senior Indebtedness" under and as defined in the Subordinated
Note Indenture; or
(l) Collateral. Any of the Borrower's Obligations for any
reason shall fail to be secured under the Collateral Documents; or
(m) Ownership. There shall occur a Change of Control.
9.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the Required Lenders
or cured to the satisfaction of the Required Lenders (pursuant to the voting
procedures in Section 11.6), the Agent shall, upon the request and direction of
the Required Lenders, by written notice to the Credit Parties take any of the
following actions:
(i) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
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(ii) Acceleration. Declare the unpaid principal of and any
accrued interest in respect of all Loans, any reimbursement
obligations arising from drawings under Letters of Credit and any and
all other indebtedness or obligations of any and every kind owing by
the Borrower to the Agent and/or any of the Lenders hereunder to be
due whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower.
(iii) Cash Collateral. Direct the Borrower to pay (and the
Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 9.1(f), it will
immediately pay) to the Agent additional cash, to be held by the
Agent, for the benefit of the Lenders, in a cash collateral account as
additional security for the LOC Obligations in respect of subsequent
drawings under all then outstanding Letters of Credit in an amount
equal to the maximum aggregate amount which may be drawn under all
Letters of Credits then outstanding.
(iv) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents and all
rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in
Section 9.1(f) shall occur, then the Commitments shall automatically terminate
and all Loans, all reimbursement obligations arising from drawings under
Letters of Credit, all accrued interest in respect thereof, all accrued and
unpaid Fees and other indebtedness or obligations owing to the Agent and/or any
of the Lenders hereunder automatically shall immediately become due and payable
without the giving of any notice or other action by the Agent or the Lenders.
SECTION 10
AGENT
10.1 APPOINTMENT AND AUTHORIZATION OF AGENT.
(a) Each Lender hereby irrevocably appoints, designates and
authorizes the Agent to take such action on its behalf under the provisions of
this Credit Agreement and each other Credit Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Credit Agreement or any other Credit Document, together with such powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary contained elsewhere herein or in any other Credit Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary
relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Credit Agreement or any other Credit Document or otherwise exist
against the Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" herein and in the other Credit Documents with
reference to the Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable Law. Instead,
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such term is used merely as a matter of market custom, and is intended to
create or reflect only an administrative relationship between independent
contracting parties.
(b) The Issuing Lender shall act on behalf of the Lenders with
respect to any Letters of Credit issued by it and the documents associated
therewith, and the Issuing Lender shall have all of the benefits and immunities
(i) provided to the Agent in this Article X with respect to any acts taken or
omissions suffered by the Issuing Lender in connection with Letters of Credit
issued by it or proposed to be issued by it and the applications and agreements
for letters of credit pertaining to such Letters of Credit as fully as if the
term "Agent" as used in this Article X and in the definition of "Agent-Related
Person" included the Issuing Lender with respect to such acts or omissions, and
(ii) as additionally provided herein with respect to the Issuing Lender.
10.2 DELEGATION OF DUTIES.
The Agent may execute any of its duties under this Credit Agreement or
any other Credit Document by or through agents, employees or attorneys-in-fact
and shall be entitled to advice of counsel and other consultants or experts
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects in the absence of gross negligence or willful misconduct.
10.3 LIABILITY OF AGENT.
No Agent-Related Person shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Credit
Agreement or any other Credit Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct in connection with
its duties expressly set forth herein), or (b) be responsible in any manner to
any Lender or participant for any recital, statement, representation or
warranty made by any Credit Party or any officer thereof, contained herein or
in any other Credit Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Credit Agreement or any other Credit Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Credit Agreement or any other Credit Document, or for any failure of any Credit
Party or any other party to any Credit Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender or participant to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Credit Agreement or any other Credit Document, or to inspect the properties,
books or records of any Credit Party or any Affiliate thereof.
10.4 RELIANCE BY AGENT.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, electronic mail 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 any Credit Party),
independent accountants and other experts
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selected by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under any Credit Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Credit Agreement or any other Credit Document in
accordance with a request or consent of the Required Lenders (or such greater
number of Lenders as may be expressly required hereby in any instance) and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Lender that has signed this Credit Agreement
shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to a Lender unless the Agent shall
have received notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.
10.5 NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Agent for the account
of the Lenders, unless the Agent shall have received written notice from a
Lender or the Borrower referring to this Credit Agreement, describing such
Default and stating that such notice is a "notice of default." The Agent will
notify the Lenders of its receipt of any such notice. The Agent shall take such
action with respect to such Default as may be directed by the Required Lenders
in accordance with Article IX; provided, however, that unless and until the
Agent has received any such direction, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default as it shall deem advisable or in the best interest of
the Lenders.
10.6 CREDIT DECISION; DISCLOSURE OF INFORMATION BY AGENT.
Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Agent hereafter taken,
including any consent to and acceptance of any assignment or review of the
affairs of any Credit Party or any Affiliate thereof, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender as to any matter, including whether Agent-Related Persons have disclosed
material information in their possession. Each Lender represents to the 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 the
Credit Parties and their respective Subsidiaries, and all applicable bank or
other regulatory Laws relating to the transactions contemplated hereby, and
made its own decision to enter into this Credit Agreement and to extend credit
to the Borrower hereunder. 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
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make its own credit analysis, appraisals and decisions in taking or not taking
action under this Credit Agreement and the other Credit 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 the Borrower and the other Credit Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent herein, the 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 any of the Credit Parties or any of their
respective Affiliates which may come into the possession of any Agent-Related
Person.
10.7 INDEMNIFICATION OF AGENT.
Whether or not the transactions contemplated hereby are consummated,
the Lenders shall indemnify upon demand each Agent-Related Person (to the
extent not reimbursed by or on behalf of any Credit Party and without limiting
the obligation of any Credit Party to do so), pro rata, and hold harmless each
Agent-Related Person from and against any and all Indemnified Liabilities
incurred by it; provided, however, that no Lender shall be liable for the
payment to any Agent-Related Person of any portion of such Indemnified
Liabilities to the extent determined in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Agent-Related
Person's own gross negligence or willful misconduct; provided, however, that no
action taken in accordance with the directions of the Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of
this Section. Without limitation of the foregoing, each Lender shall reimburse
the Agent upon demand for its ratable share of any costs or out-of-pocket
expenses (including Attorney Costs) incurred by the 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 Credit
Agreement, any other Credit Document, or any document contemplated by or
referred to herein, to the extent that the Agent is not reimbursed for such
expenses by or on behalf of the Borrower. The undertaking in this Section shall
survive termination of the Commitments, the payment of all other Borrower's
Obligations and the resignation of the Agent.
10.8 AGENT IN ITS INDIVIDUAL CAPACITY.
Bank of America 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 each of the Credit Parties and their
respective Affiliates as though Bank of America were not the Agent or the
Issuing Lender hereunder and without notice to or consent of the Lenders. The
Lenders acknowledge that, pursuant to such activities, Bank of America or its
Affiliates may receive information regarding any Credit Party or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of such Credit Party or such Affiliate) and acknowledge that the Agent
shall be under no obligation to provide such information to them. With respect
to its Loans, Bank of America shall have the same rights and powers under this
Credit Agreement as any other Lender and may exercise such rights and powers as
though it were not the Agent or the
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Issuing Lender, and the terms "Lender" and "Lenders" include Bank of America in
its individual capacity.
10.9 SUCCESSOR AGENT.
The Agent may resign as Agent upon 30 days' notice to the Lenders;
provided that any such resignation by Bank of America shall also constitute its
resignation as Issuing Lender. If the Agent resigns under this Credit
Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall be consented to by
the Borrower at all times other than during the existence of an Event of
Default (which consent of the Borrower shall not be unreasonably withheld or
delayed). If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Borrower, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, the Person acting
as such successor agent shall succeed to all the rights, powers and duties of
the retiring Agent and Issuing Lender and the respective terms "Agent" and
Issuing Lender shall mean such successor agent and Letter of Credit issuer, the
retiring Agent's appointment, powers and duties as Agent shall be terminated
and the retiring Issuing Lender's rights, powers and duties as such shall be
terminated, without any other or further act or deed on the part of such
retiring Issuing Lender or any other Lender, other than the obligation of the
successor Issuing Lender to issue letters of credit in substitution for the
Letters of Credit, if any, outstanding at the time of such succession or to
make other arrangements satisfactory to the retiring Issuing Lender to
effectively assume the obligations of the retiring Issuing Lender with respect
to such Letters of Credit. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article X and Section 11.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Credit Agreement. If no successor agent has accepted appointment as
Agent by the date which is 30 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 the Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above.
10.10 AGENT MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Credit Party, the Agent (irrespective of
whether the principal of any Loan or LOC Obligation shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Agent shall have made any demand on the Borrower) shall be entitled
and empowered, by intervention in such proceeding or otherwise
(a) to file and prove a claim for the whole amount of the principal
and interest owing and unpaid in respect of the Loans, LOC Obligations and all
other Borrower's Obligations that are owing and unpaid and to file such other
documents as may be necessary or advisable in order to have the claims of the
Lenders and the Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Agent under Section 3.5 and 11.5) allowed in such judicial proceeding; and
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(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Agent and, in the event that the Agent
shall consent to the making of such payments directly to the Lenders, to pay to
the Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Agent and its agents and counsel, and any
other amounts due the Agent under Sections 3.5 and 11.5.
Nothing contained herein shall be deemed to authorize the Agent to authorize or
consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Borrower's
Obligations or the rights of any Lender or to authorize the Agent to vote in
respect of the claim of any Lender in any such proceeding.
10.11 COLLATERAL AND GUARANTY MATTERS.
The Lenders irrevocably authorize the Agent, at its option and in its
discretion,
(a) to release any Lien on any property granted to or held by the
Agent under any Credit Document (i) upon termination of the Commitments and
payment in full of all Borrower's Obligations (other than contingent
indemnification obligations) and the expiration or termination of all Letters
of Credit, (ii) that is sold or to be sold as part of or in connection with any
sale permitted hereunder or under any other Credit Document, or (iii) subject
to Section 11.6, if approved, authorized or ratified in writing by the Required
Lenders;
(b) to subordinate any Lien on any property granted to or held by
the Agent under any Credit Document to the holder of any Lien on such property
that is permitted by clause (ix) of the definition of "Permitted Liens"; and
(c) to release any Guarantor from its obligations under Article IV
if such Person ceases to be a Subsidiary as a result of a transaction permitted
hereunder.
Upon request by the Agent at any time, the Required Lenders will confirm in
writing the Agent's authority to release or subordinate its interest in
particular types or items of property, or to release any Guarantor from its
obligations under Article IV pursuant to this Section 10.11.
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SECTION 11
MISCELLANEOUS
11.1 NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) to
the number set out below, (iii) the day following the day on which the same has
been delivered prepaid to a reputable national overnight air courier service,
or (iv) the third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case to the respective
parties at the address, in the case of the Borrower, Guarantors and the Agent,
set forth below, and, in the case of the Lenders, set forth on Schedule 2.1(a),
or at such other address as such party may specify by written notice to the
other parties hereto:
if to the Borrower or the Guarantors:
Personnel Group of America, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx, Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Agent:
Bank of America, N.A.
0000 Xxxxxx Xxxxxx, 5th Floor
CA5-701-05-19
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Agency Management/SuzieAnna Wan
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Bank of America, N.A.
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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11.2 RIGHT OF SET-OFF.
In addition to any rights now or hereafter granted under applicable
law or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special), but excluding
deposits in an Excluded Deposit Account (as defined in Section 7.18), and any
other indebtedness at any time held or owing by such Lender (including, without
limitation branches, agencies or Affiliates of such Lender wherever located) to
or for the credit or the account of any Credit Party against obligations and
liabilities of such Person to such Lender hereunder, under the Notes, the other
Credit Documents or otherwise, irrespective of whether such Lender shall have
made any demand hereunder and although such obligations, liabilities or claims,
or any of them, may be contingent or unmatured, and any such set-off shall be
deemed to have been made immediately upon the occurrence of an Event of Default
even though such charge is made or entered on the books of such Lender
subsequent thereto. Any Person purchasing a participation in the Loans and
Commitments hereunder pursuant to Section 3.12 or Section 11.3(d) may exercise
all rights of set-off with respect to its participation interest as fully as if
such Person were a Lender hereunder.
11.3 BENEFIT OF AGREEMENT.
(a) Generally. This Credit Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and assigns
of the parties hereto; provided that none of the Credit Parties may assign or
transfer any of its interests without prior written consent of the Lenders;
provided further that the rights of each Lender to transfer, assign or grant
participations in its rights and/or obligations hereunder shall be limited as
set forth in this Section 11.3, provided however that nothing herein shall
prevent or prohibit any Lender from (i) pledging its Loans hereunder to a
Federal Reserve Bank in support of borrowings made by such Lender from such
Federal Reserve Bank, or (ii) granting assignments or selling participations in
such Lender's Loans and/or Commitments hereunder to its parent company and/or
to any Affiliate or Subsidiary of such Lender.
(b) Assignments. Each Lender may assign all or a portion of its
rights and obligations hereunder, pursuant to an assignment agreement
substantially in the form of Schedule 11.3(b), to (i) any Lender or any
Affiliate or Subsidiary of a Lender, or (ii) any other commercial bank,
financial institution or "accredited investor" (as defined in Regulation D of
the Securities and Exchange Commission) reasonably acceptable to the Agent and,
so long as no Default or Event of Default has occurred and is continuing, the
Borrower; provided that (i) any such assignment (other than any assignment to
an existing Lender) shall be in a minimum aggregate amount of $5,000,000 (or,
if less, the remaining amount of the Commitment being assigned by such Lender)
of the Commitments and in integral multiples of $1,000,000 above such amount,
unless each of the Agent and, so long as no Event of Default has occurred and
is continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed) and (ii) each such assignment shall be of a
constant, not varying, percentage of all such Lender's rights and obligations
under this Credit Agreement. For purposes of the Borrower's acceptance of the
proposed assignee in clause (ii) of the foregoing sentence, the Borrower shall
have been deemed to accept any such
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assignee unless the Borrower provides to the Agent and such assigning Lender,
written notice of the Borrower's objection to the assignment setting forth the
specific reasons for its objection, such notice to be delivered no later than
three (3) Business Days after the Borrower receives notice of the requested
assignment (as set forth below). Any assignment hereunder shall be effective
upon delivery to the Agent of written notice of the assignment together with a
transfer fee of $3,500 payable to the Agent for its own account from and after
the later of (i) the effective date specified in the applicable assignment
agreement and (ii) the date of recording of such assignment in the Register
pursuant to the terms of subsection (c) below. The assigning Lender will give
prompt notice to the Agent and the Borrower of any such assignment. Upon the
effectiveness of any such assignment (and after notice to, and (to the extent
required pursuant to the terms hereof), with the consent of, the Borrower as
provided herein), the assignee shall become a "Lender" for all purposes of this
Credit Agreement and the other Credit Documents and, to the extent of such
assignment, the assigning Lender shall be relieved of its obligations hereunder
to the extent of the Loans and Commitment components being assigned. Along such
lines the Borrower agrees that upon notice of any such assignment and surrender
of the appropriate Note or Notes, it will promptly provide to the assigning
Lender and to the assignee separate promissory notes in the amount of their
respective interests substantially in the form of the original Note (but with
notation thereon that it is given in substitution for and replacement of the
original Note or any replacement notes thereof). By executing and delivering an
assignment agreement in accordance with this Section 11.3(b), the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim; (ii)
except as set forth in clause (i) above, 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
Credit Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto or the financial condition of any
Credit Party or any of their respective Affiliates or the performance or
observance by any Credit Party of any of its obligations under this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such assignment
agreement; (iv) such assignee confirms that it has received a copy of this
Credit Agreement, the other Credit Documents and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such assignment agreement; (v) such assignee will
independently and without reliance upon the 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 Credit Agreement and the other Credit Documents;
(vi) such assignee appoints and authorizes the Agent to take such action on its
behalf and to exercise such powers under this Credit Agreement or any other
Credit Document as are delegated to the Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all the
obligations which by the terms of this Credit Agreement and the other Credit
Documents are required to be performed by it as a Lender.
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(c) Maintenance of Register. The Agent shall maintain at one of its
offices in Charlotte, North Carolina a copy of each Lender assignment agreement
delivered to it in accordance with the terms of subsection (b) above and a
register for the recordation of the identity of the principal amount, type and
Interest Period of each Loan outstanding hereunder, the names, addresses and
the Commitments of the Lenders pursuant to the terms hereof from time to time
(the "Register"). The Agent will make reasonable efforts to maintain the
accuracy of the Register and to promptly update the Register from time to time,
as necessary. The entries in the Register shall be conclusive in the absence of
manifest error and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Credit Agreement. The Register shall
be available for inspection by the Borrower and each Lender, at any reasonable
time and from time to time upon reasonable prior notice.
(d) Participations. Each Lender may sell, transfer, grant or assign
participations in all or any part of such Lender's interests and obligations
hereunder; provided that (i) such selling Lender shall remain a "Lender" for
all purposes under this Credit Agreement (such selling Lender's obligations
under the Credit Documents remaining unchanged) and the participant shall not
constitute a Lender hereunder, (ii) no such participant shall have, or be
granted, rights to approve any amendment or waiver relating to this Credit
Agreement or the other Credit Documents except to the extent any such amendment
or waiver would (A) reduce the principal of or rate of interest on or Fees in
respect of any Loans in which the participant is participating, (B) postpone
the date fixed for any payment of principal (including extension of the
Termination Date or the date of any mandatory prepayment), interest or Fees in
which the participant is participating or (C) except as expressly provided in
the Credit Documents, release all or substantially all of the Collateral or
release any Guarantor from its guaranty obligations hereunder, and (iii)
sub-participations by the participant (except to an affiliate, parent company
or affiliate of a parent company of the participant) shall be prohibited. In
the case of any such participation, the participant shall not have any rights
under this Credit Agreement or the other Credit Documents (the participant's
rights against the selling Lender in respect of such participation to be those
set forth in the participation agreement with such Lender creating such
participation) and all amounts payable by the Borrower hereunder shall be
determined as if such Lender had not sold such participation, provided,
however, that such participant shall be entitled to receive additional amounts
under Sections 3.6, 3.9 and 3.10 on the same basis as if it were a Lender.
11.4 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Agent or any Lender and any of
the Credit Parties shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which the Agent or any Lender would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle the Borrower or any other
Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent or the Lenders
to any other or further action in any circumstances without notice or demand.
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11.5 PAYMENT OF EXPENSES, ETC.
The Borrower agrees to: (i) pay all reasonable out-of-pocket costs and
expenses (A) of the Agent in connection with the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the
other Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of Xxxxx & Xxx
Xxxxx, PLLC, special counsel to the Agent) and any amendment, waiver or consent
relating hereto and thereto including, but not limited to, any such amendments,
waivers or consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Credit Parties under this Credit
Agreement and (B) of the Agent and the Lenders in connection with enforcement
of the Credit Documents and the documents and instruments referred to therein
(including, without limitation, in connection with any such enforcement, the
reasonable fees and disbursements of counsel for the Agent and each of the
Lenders); (ii) pay and hold each of the Lenders harmless from and against any
and all present and future stamp and other similar taxes with respect to the
foregoing matters and save each of the Lenders harmless from and against any
and all liabilities with respect to or resulting from any delay or omission
(other than to the extent attributable to such Lender) to pay such taxes; and
(iii) indemnify each Lender, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses incurred by any of them as
a result of, or arising out of, or in any way related to, or by reason of (A)
any investigation, litigation or other proceeding (whether or not any Lender is
a party thereto) related to the entering into and/or performance of any Credit
Document or the use of proceeds of any Loans (including other extensions of
credit) hereunder or the consummation of any other transactions contemplated in
any Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding or (B) the presence or Release of any Materials
of Environmental Concern at, under or from any Property owned, operated or
leased by the Borrower or any of its Subsidiaries, or the failure by the
Borrower or any of its Subsidiaries to comply with any Environmental Law
(clauses (A) and (B) collectively, the "Indemnified Liabilities"), but
excluding, in the case of either of clause (A) or (B) above, any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of
gross negligence or willful misconduct on the part of the Person to be
indemnified).
11.6 AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is
in writing entered into by, or approved in writing by, the Required Lenders and
the Borrower, provided that no such amendment, change, waiver, discharge or
termination shall, without the consent of each Lender:
(i) extend the final maturity of any Loan, or any portion
thereof;
(ii) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) on any Loan or fees
hereunder;
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(iii) reduce the principal amount on any Loan, or increase
the Commitments of the Lenders over the amount thereof in effect (it
being understood and agreed that a waiver of any Default or Event of
Default or of a mandatory reduction in the total commitments shall not
constitute a change in the terms of any Commitment of any Lender);
(iv) except as the result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted under
Section 8.4, release all or substantially all of (A) the Guarantors
from the guaranty obligations hereunder or (B) the Collateral;
(v) amend, modify or waive any provision of this Section
11.6 or Section 3.6, 3.10, 3.11, 3.12, 9.1(a), 11.2, 11.3, 11.5 or
11.9;
(vi) reduce any percentage specified in, or otherwise modify,
the definition of "Required Lenders;" or
(vii) consent to the assignment or transfer by the Borrower
(or any Guarantor) of any of its rights and obligations under (or in
respect of) the Credit Documents to which it is a party.
No provision of Section 2.2 may be amended without the consent of the Issuing
Lender and no provision of Section 10 may be amended without the consent of the
Agent.
11.7 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary
in making proof of this Credit Agreement to produce or account for more than
one such counterpart.
11.8 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 SURVIVAL.
All indemnities set forth herein, including, without limitation, in
Section 2.2(i), 3.9, 10.7 or 11.5 shall survive the execution and delivery of
this Credit Agreement, the making of the Loans, the issuance of the Letters of
Credit, the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder, and all
representations and warranties made by the Credit Parties herein shall survive
delivery of the Notes and the making of the Loans hereunder.
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11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA. Any legal action or proceeding with respect to this
Credit Agreement or any other Credit Document may be brought in the courts of
the State of North Carolina in Mecklenburg County, or of the United States for
the Western District of North Carolina, and, by execution and delivery of this
Credit Agreement, each of the Credit Parties hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the
nonexclusive jurisdiction of such courts. Each of the Credit Parties further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at the address set out for
notices pursuant to Section 11.1, such service to become effective three (3)
days after such mailing. Nothing herein shall affect the right of the Agent to
serve process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Credit Party in any other
jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Credit Agreement or any other Credit Document brought in the courts referred to
in subsection (a) hereof and hereby further irrevocably waives and agrees not
to plead or claim in any such court that any such action or proceeding brought
in any such court has been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE LENDERS,
THE BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.11 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 ENTIRETY.
This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
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11.13 BINDING EFFECT; AMENDMENT AND RESTATEMENT OF EXISTING CREDIT AGREEMENT.
(a) This Credit Agreement shall become effective at such time, on or
after the Closing Date, that the conditions precedent set forth in Section 5.1
have been satisfied and when it shall have been executed by each of the Credit
Parties and the Agent, and the Agent shall have received copies hereof
(telefaxed or otherwise) which, when taken together, bear the signatures of
each Lender (including the Issuing Lender), and thereafter this Credit
Agreement shall be binding upon and inure to the benefit of each Credit Party,
each Lender (including the Issuing Lender) and the Agent, together with their
permitted successors and assigns. The Credit Parties and the Lenders (including
the Issuing Lender) each hereby agrees that, at such time as this Credit
Agreement shall have become effective pursuant to the terms of the immediately
preceding sentence, (i) the Existing Credit Agreement automatically shall be
deemed amended and restated in its entirety by this Credit Agreement, and all
obligations and commitments outstanding under the Existing Credit Agreement
shall be governed by the terms of this Credit Agreement (as such obligations or
commitments may be modified or amended hereunder) and (ii) all of the
promissory notes executed by the Borrower in connection with the Existing
Credit Agreement automatically shall be substituted and replaced by the amended
and restated promissory notes executed in connection with this Credit
Agreement, and the Lenders agree to promptly return such prior notes to the
Borrower.
(b) Each of the Credit Parties hereby acknowledges and agrees that
it has no claims, counterclaims, offsets, or defenses to the Credit Documents
and the performance of its obligations thereunder, or if such Credit Party has
any such claims, counterclaims, offsets, or defenses to the Credit Documents or
any transaction related to the Credit Documents, the same are hereby waived,
relinquished and released in consideration of the Lenders' execution and
delivery of this Credit Agreement.
11.14 CONFIDENTIALITY.
The Agent and the Lenders agree to keep confidential (and to cause
their respective affiliates, officers, directors, employees, agents and
representatives to keep confidential) all information, materials and documents
furnished to the Agent or any such Lender by or on behalf of any Credit Party
(whether before or after the Closing Date) which relates to the Borrower or any
of its Subsidiaries (the "Information"). Notwithstanding the foregoing, the
Agent and each Lender shall be permitted to disclose Information (i) to its
affiliates, officers, directors, employees, agents and representatives in
connection with its participation in any of the transactions evidenced by this
Credit Agreement or any other Credit Documents or the administration of this
Credit Agreement or any other Credit Documents; (ii) to the extent required by
applicable laws and regulations or by any subpoena or similar legal process, or
requested by any Governmental Authority; (iii) to the extent such Information
(A) becomes publicly available other than as a result of a breach of this
Credit Agreement or any agreement entered into pursuant to clause (iv) below,
(B) becomes available to the Agent or such Lender on a non-confidential basis
from a source other than a Credit Party or (C) was available to the Agent or
such Lender on a non-confidential basis prior to its disclosure to the Agent or
such Lender by a Credit Party; (iv) to any assignee or participant (or
prospective assignee or participant) so long as such assignee or participant
(or prospective assignee or participant) first specifically agrees in a writing
furnished to and for the benefit of the Credit Parties to be bound by
86
the terms of this Section 11.14; or (v) to the extent that the Borrower shall
have consented in writing to such disclosure. Nothing set forth in this Section
11.14 shall obligate the Agent or any Lender to return any materials furnished
by the Credit Parties. Notwithstanding anything herein to the contrary, the
information subject to this Section 11.14 shall not include, and the Agent and
each Lender may disclose without limitation of any kind, any information with
respect to the "tax treatment" and "tax structure" (in each case, within the
meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated hereby and all materials of any kind (including opinions or other
tax analyses) that are provided to the Agent or such Lender relating to such
tax treatment and tax structure; provided that with respect to any document or
similar item that in either case contains information concerning the tax
treatment or tax structure of the transactions as well as other information,
this sentence shall only apply to such portions of the document or similar item
that relate to the tax treatment or tax structure of the Loans, Letters of
Credit and transactions contemplated hereby
11.15 SOURCE OF FUNDS.
Each of the Lenders hereby represents and warrants to the Borrower
that at least one of the following statements is an accurate representation as
to the source of funds to be used by such Lender in connection with the
financing hereunder:
(a) no part of such funds constitutes assets allocated to
any separate account maintained by such Lender in which any employee
benefit plan (or its related trust) has any interest;
(b) to the extent that any part of such funds constitutes
assets allocated to any separate account maintained by such Lender,
such Lender has disclosed to the Borrower the name of each employee
benefit plan whose assets in such account exceed 10% of the total
assets of such account as of the date of such purchase (and, for
purposes of this subsection (b), all employee benefit plans maintained
by the same employer or employee organization are deemed to be a
single plan); or
(c) such funds constitute assets of one or more specific
benefit plans which such Lender has identified in writing to the
Borrower.
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
11.16 CONFLICT.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amended and Restated Credit Agreement to be duly executed
and delivered as of the date first above written.
BORROWER: PERSONNEL GROUP OF AMERICA, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
-------------------------------
Name: Xxxxx X. Xxxx
Title: President and
Chief Financial Officer
GUARANTORS: STAFFPLUS, INC.,
a Delaware corporation
INFOTECH SERVICES LLC,
a North Carolina limited liability
company
BAL ASSOCIATES INCORPORATED,
a California corporation
ADVANCED BUSINESS CONSULTANTS, INC.,
a Kansas corporation
VENTURI STAFFING PARTNERS, LLC,
a California limited liability
company
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President of each
of the above-named Guarantors
PERSONNEL GROUP HOLDINGS, INC.,
a Florida corporation
PFI CORP.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
Title: President of each of the
above-named Guarantors
VENTURI TEXAS STAFFING PARTNERS, LP,
a Texas limited partnership
By: StaffPLUS, Inc.
Its: General Partner
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President
Signature Page to Second Amended and Restated Credit Agreement
Personnel Group of America, Inc.
April 2003
AGENT: BANK OF AMERICA, N.A.,
formerly known as NationsBank, N.A.
and Bank of America Illinois,
as Agent
By: /s/ H. Xxxxxxx Xxxxxx
----------------------------
Name: H. Xxxxxxx Xxxxxx
Title: Managing Director
Signature Page to Second Amended and Restated Credit Agreement
Personnel Group of America, Inc.
April 2003
LENDERS: BANC OF AMERICA
STRATEGIC SOLUTIONS, INC.
By: /s/ H. Xxxxxxx Xxxxxx
---------------------------------
Name: H. Xxxxxxx Xxxxxx
Title: Managing Director
Signature Page to Second Amended and Restated Credit Agreement
Personnel Group of America, Inc.
April 2003
BNP PARIBAS
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxxx
Title: Managing Director
Signature Page to Second Amended and Restated Credit Agreement
Personnel Group of America, Inc.
April 2003
BANK ONE, NA
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx
Title: First Vice President
Signature Page to Second Amended and Restated Credit Agreement
Personnel Group of America, Inc.
April 2003
HBV CAPITAL MANAGEMENT LLC
By: /s/ Xxxxxx X. Konomas
-----------------------------
Name: Xxxxxx X. Konomas
Title: Portfolio Manager
Signature Page to Second Amended and Restated Credit Agreement
Personnel Group of America, Inc.
April 0000
XXXXXX PARTNERS L.P.
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
Title: Attorney-in-Fact
Signature Page to Second Amended and Restated Credit Agreement
Personnel Group of America, Inc.
April 2003
LINKS PARTNERS L.P.
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
Title: Attorney-in-Fact
Signature Page to Second Amended and Restated Credit Agreement
Personnel Group of America, Inc.
April 2003
MATLIN XXXXXXXXX GLOBAL OPPORTUNITIES PARTNERS L.P.
By: Matlin Xxxxxxxxx Global Advisers LLC
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: General Counsel
Signature Page to Second Amended and Restated Credit Agreement
Personnel Group of America, Inc.
April 2003
