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EXHIBIT 10.2
CREDIT AGREEMENT
AMONG
SAFEGUARD SCIENTIFICS, INC.
SAFEGUARD SCIENTIFICS (DELAWARE) INC.
SAFEGUARD DELAWARE, INC.
AND
PNC BANK, NATIONAL ASSOCIATION
AND
THE OTHER LENDERS NOW OR
HEREAFTER A PARTY HERETO
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TABLE OF CONTENTS
SECTION TITLE PAGE
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ARTICLE 1. DEFINITIONS........................................................................... 1
1.1 TERMS DEFINED......................................................................... 1
1.2 DIRECTLY OR INDIRECTLY................................................................ 8
1.3 ACCOUNTING TERMS; TEST GROUP.......................................................... 8
ARTICLE 2. AMOUNT AND TERMS OF REVOLVING LOAN; COLLATERAL........................................ 8
2.1.1 REVOLVING LOAN........................................................................ 8
2.2 CHANGES IN REVOLVING LOAN COMMITMENT.................................................. 11
2.3 NOTICES............................................................................... 11
2.4 FEES.................................................................................. 12
2.5 BORROWINGS............................................................................ 12
2.6 USE OF LOAN PROCEEDS.................................................................. 14
2.7 PAYMENT OF REVOLVING LOAN............................................................. 14
2.8 INTEREST.............................................................................. 15
2.9 NOTES................................................................................. 17
2.10 COMPUTATIONS; APPLICATION OF PAYMENTS................................................. 18
2.11 MINIMUM AMOUNT OF BORROWINGS.......................................................... 18
2.12 SET-OFF............................................................................... 18
2.13 PREPAYMENT............................................................................ 18
2.14 COLLATERAL............................................................................ 18
2.15 VALUATION OF COLLATERAL COVERAGE SECURITIES; SALE..................................... 19
ARTICLE 3. REPRESENTATIONS AND WARRANTIES........................................................ 19
3.1 ORGANIZATION.......................................................................... 19
3.2 POWER, AUTHORITY, CONSENTS............................................................ 19
3.3 NO VIOLATION OF LAW OR AGREEMENTS..................................................... 20
3.4 DUE EXECUTION, VALIDITY, ENFORCEABILITY............................................... 20
3.5 PROPERTIES, PRIORITY OF LIENS......................................................... 20
3.6 JUDGMENTS, ACTIONS, PROCEEDINGS....................................................... 20
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3.7 NO DEFAULTS........................................................................... 20
3.8 BURDENSOME DOCUMENTS.................................................................. 21
3.9 FINANCIAL STATEMENTS.................................................................. 21
3.10 TAX RETURNS........................................................................... 21
3.11 INTANGIBLE ASSETS..................................................................... 21
3.12 NAME CHANGES.......................................................................... 22
3.13 FULL DISCLOSURE....................................................................... 22
3.14 ERISA................................................................................. 22
3.15 EMPLOYEE GRIEVANCES................................................................... 23
3.16 INDEBTEDNESS.......................................................................... 23
3.17 INVESTMENT COMPANY.................................................................... 23
ARTICLE 4. THE CLOSINGS; CONDITIONS TO THE LOANS................................................. 23
4.1 THE CLOSING........................................................................... 23
4.2 CONDITIONS TO INITIAL ADVANCE......................................................... 23
4.3 CONDITIONS TO SUBSEQUENT ADVANCES..................................................... 24
ARTICLE 5. DELIVERY OF FINANCIAL REPORTS, DOCUMENTS AND OTHER INFORMATION........................ 25
5.1 ANNUAL FINANCIAL STATEMENTS........................................................... 25
5.2 QUARTERLY FINANCIAL STATEMENTS........................................................ 25
5.3 ADDITIONAL INFORMATION................................................................ 26
5.4 NO DEFAULT CERTIFICATE................................................................ 26
5.5 COPIES OF OTHER REPORTS............................................................... 26
5.6 COPIES OF DOCUMENTS................................................................... 26
5.7 NOTICE OF DEFAULTS.................................................................... 27
5.8 ERISA NOTICES......................................................................... 27
5.9 PROJECTIONS........................................................................... 27
ARTICLE 6. COVENANTS............................................................................. 27
6.1 PAYMENT OF TAXES AND CLAIMS........................................................... 28
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SECTION TITLE PAGE
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6.2 MAINTENANCE OF PROPERTIES, INSURANCE, RECORDS AND CORPORATE EXISTENCE; INSPECTIONS
AND AUDITS; ETC. ..................................................................... 28
6.3 INDEBTEDNESS.......................................................................... 29
6.4 LIENS................................................................................. 30
6.5 GUARANTIES............................................................................ 30
6.6 EQUITY INTERESTS AND LOANS............................................................ 31
6.7 CONSOLIDATION AND MERGER.............................................................. 31
6.8 TANGIBLE NET WORTH; ADJUSTED TANGIBLE NET WORTH....................................... 31
6.9 LIQUIDITY............................................................................. 32
6.10 CHANGE OF BUSINESS; SALE OF ASSETS.................................................... 32
6.11 LEASES................................................................................ 32
6.12 ISSUANCE OF STOCK..................................................................... 32
6.13 FISCAL YEAR........................................................................... 32
6.14 DIVIDENDS............................................................................. 32
6.15 ERISA COMPLIANCE; OBLIGATIONS......................................................... 32
6.16 PREPAYMENTS........................................................................... 33
6.17 SECURITIES MONETIZATIONS.............................................................. 33
6.18 LETTERS OF CREDIT..................................................................... 33
6.19 DISPOSITIONS.......................................................................... 34
6.20 SUBORDINATED INDEBTEDNESS............................................................. 34
ARTICLE 7. EVENTS OF DEFAULT; REMEDIES........................................................... 34
7.1 PAYMENTS.............................................................................. 34
7.2 COVENANTS............................................................................. 34
7.3 OTHER COVENANTS....................................................................... 35
7.4 OTHER DEFAULTS........................................................................ 35
7.5 REPRESENTATIONS AND WARRANTIES........................................................ 35
7.6 BANKRUPTCY............................................................................ 35
7.7 JUDGMENTS............................................................................. 36
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7.8 ERISA................................................................................. 36
7.9 LIENS................................................................................. 36
7.10 OWNERSHIP............................................................................. 36
ARTICLE 8. THE AGENT............................................................................. 37
8.1 APPOINTMENT AND AUTHORIZATION......................................................... 37
8.2 GENERAL IMMUNITY...................................................................... 37
8.3 CONSULTATION WITH COUNSEL............................................................. 38
8.4 DOCUMENTS............................................................................. 38
8.5 RIGHTS AS A LENDER.................................................................... 38
8.6 RESPONSIBILITY OF AGENT............................................................... 38
8.7 COLLECTIONS AND DISBURSEMENTS......................................................... 38
8.8 INDEMNIFICATION....................................................................... 39
8.9 EXPENSES.............................................................................. 39
8.10 NO RELIANCE........................................................................... 40
8.11 REPORTING............................................................................. 40
8.12 REMOVAL OF AGENT...................................................................... 40
8.13 ACTION ON INSTRUCTIONS OF LENDERS..................................................... 40
8.14 SEVERAL OBLIGATIONS................................................................... 40
8.15 CONSENT OF LENDERS.................................................................... 40
8.16 PARTICIPATION AND ASSIGNMENTS......................................................... 42
8.17 OTHER CREDIT FACILITIES OF PNC BANK, NATIONAL ASSOCIATION............................. 43
ARTICLE 9. MISCELLANEOUS PROVISIONS.............................................................. 43
9.1 FEES AND EXPENSES..................................................................... 43
9.2 TAXES................................................................................. 43
9.3 PAYMENTS.............................................................................. 44
9.4 SURVIVAL OF AGREEMENTS AND REPRESENTATIONS, WAIVER OF TRIAL BY JURY................... 44
9.5 LIEN ON AND SET-OFF OF DEPOSITS....................................................... 44
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9.6 MODIFICATIONS, CONSENTS AND WAIVERS; ENTIRE AGREEMENT................................. 45
9.7 REMEDIES CUMULATIVE................................................................... 45
9.8 FURTHER ASSURANCES.................................................................... 45
9.9 NOTICES............................................................................... 46
9.10 COUNTERPARTS.......................................................................... 46
9.11 CONSTRUCTION; GOVERNING LAW; JURISDICTION............................................. 47
9.12 SEVERABILITY.......................................................................... 47
9.13 BINDING EFFECT; NO ASSIGNMENT OR DELEGATION........................................... 47
9.14 JOINT AND SEVERAL OBLIGATIONS......................................................... 47
9.15 THIRD PARTY........................................................................... 48
9.16 CONFIDENTIALITY OF INFORMATION........................................................ 48
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CREDIT AGREEMENT
AGREEMENT (the "Agreement") made as of this 23 day of May, 2001, by and
among SAFEGUARD SCIENTIFICS, INC., a Pennsylvania corporation ("SSI" or a
"Borrower"), SAFEGUARD SCIENTIFICS (DELAWARE) INC., a Delaware corporation
("SSD" or a "Borrower") and SAFEGUARD DELAWARE, INC., a Delaware corporation
("SDI" or a "Borrower" and, collectively with SSI and SSD, the "Borrowers"), PNC
BANK, NATIONAL ASSOCIATION and the other lending institutions listed from time
to time on Schedule A attached hereto and incorporated herein that are parties
to this Agreement (collectively, "Lenders" and singly, a "Lender"), PNC BANK,
NATIONAL ASSOCIATION, a national banking association, as issuer of letters of
credit hereunder (in such capacity, "Issuer"), and PNC BANK, NATIONAL
ASSOCIATION, as administrative and collateral agent for the Issuer and Lenders
hereunder (in such capacity, "Agent").
The Borrowers have requested Lenders to establish certain credit
facilities and Lenders are willing to do so under and subject to the terms
hereof.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
Article 1. Definitions.
1.1 Terms Defined.
As used in this Agreement, the following terms shall have the following
respective meanings set forth below or set forth in the section referred to
following such term:
"Adjusted Earnings" - earnings as otherwise calculated in accordance
with generally accepted accounting principles but eliminating therefrom all then
past and present earnings attributable to ICG which Borrowers realize as a
result of the application of the equity method of accounting for Borrowers'
investment in ICG.
"Adjusted Tangible Net Worth" - Tangible Net Worth, adjusted in order
to (i) reflect the then ICG Stock Value as an asset in an amount not to exceed
$100,000,000 and (ii) otherwise eliminate the then past and present impact on
the "owner's equity" portion of Borrowers' balance sheet resulting from the
application of the equity method of accounting for Borrowers' investment in ICG.
"Advance" or "Advances" - Revolving Loan Advance(s).
"Business Day" - any day other than Saturday, Sunday or any other day
on which commercial banks in Pennsylvania and New York are authorized or
required by law or executive order to close.
"Capitalized Lease Obligations" - as to any Person, any obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under generally accepted accounting principles. For
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with generally accepted
accounting principles.
"Certificate" - a certificate executed either by the president, the
treasurer or controller or any vice president of any Borrower.
"Closing" - the transactions provided for in Sections 4.1 and 4.2
hereof.
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"Collateral" - the collateral provided for herein and in the Security
Documents.
"Collateral Coverage Base" - a dollar amount equal to the following
percentages of the value of the Collateral Coverage Securities, in no event,
however, to exceed the lesser of (i) as to Collateral Coverage Securities which
constitute "margin stock" pursuant to Regulation U of the Board of Governors of
the Federal Reserve System, 12 C.F.R. 221 et seq. ("Regulation U"), 50% (or the
then maximum "loan value" for margin stock pursuant to Regulation U) of the
value of such Collateral Coverage Securities, (ii) as to Collateral Coverage
Securities of any one issuer, 50% of the then Revolving Loan Commitment, and
(iii) the following dollar maximum specified for each type of Collateral
Coverage Securities:
SECURITIES % MAXIMUM $
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ICG 25% $ 50 Million
Compucom 33.33% $37.5 Million
Cambridge 50% $ 50 Million
Tangram 25% $ 5 Million
USDATA 25% $12.5 Million
Xxxxxxx 50% $37.5 Million
ChromaVision 25% $12.5 Million
OAO 25% $12.5 Million
eMerge 25% $12.5 Million
Pac-West 25% $12.5 Million
Life F/X 25% $12.5 Million
New Public Companies 25% $ 25 Million
"Collateral Coverage Securities" - Pledged Securities consisting of
common stock issued by one or more of the following corporations but only as
long as (A) such securities are traded on the New York Stock Exchange or on the
NASDAQ national market, (B) such securities are not Restricted Securities, and
(C) the per share value of such securities has after the date hereof (including
after the date of any re-inclusion as next set forth) not been $1.00 or less for
ten (10) consecutive trading days; provided, however, that if the per share
value of such securities shall thereafter be maintained at more than $1.00 for
thirty (30) consecutive trading days, such securities shall be included in
"Collateral Coverage Securities" from and after the next succeeding day, without
notice or further action:
(i) CompuCom Systems, Inc. ("CompuCom")
(ii) Cambridge Technology Partners (Massachusetts), Inc.
("Cambridge")
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(iii) OAO Technology Solutions, Inc. ("OAO")
(iv) eMerge Interactive, Inc. ("e-Merge")
(v) Tangram Enterprise Solutions, Inc. ("Tangram")
(vi) USDATA Corporation ("USDATA")
(vii) ChromaVision Medical Systems, Inc. ("ChromaVision")
(viii) Xxxxxxx Computer Associates, Inc. ("Xxxxxxx")
(ix) Pac-West Telecomm, Inc. ("Pac-West")
(x) Internet Capital Group ("ICG")
(xi) LifeF/X, Inc. ("LifeF/X")
(xii) New Public Companies
"Commitment Termination Date" - May 21, 2002.
"Compliance Certificate" - as defined in Section 4.2(g) hereof.
"Cost of Prepayment" - with respect to prepayment of principal earning
interest at the LIBOR Rate, an amount equal to the present value, if positive,
of the product of (a) the difference between (i) the yield, on the beginning
date of the applicable Rate Period, of a U.S. Treasury obligation with a
maturity similar to the applicable Rate Period minus (ii) the yield on the
prepayment date, of a U.S. Treasury obligation with a maturity similar to the
remaining maturity of the applicable Rate Period, and (b) the principal amount
to be prepaid, and (c) the number of years, including fractional years, from the
prepayment date to the end of the applicable Rate Period. The yield on any U.S.
Treasury obligation shall be determined by reference to Federal Reserve
Statistical Release H.15(519) "Selected Interest Rates". For purposes of making
present value calculations, the yield to maturity of a similar maturity U.S.
Treasury obligation on the prepayment date shall be deemed the discount rate.
The Cost of Prepayment shall also apply to any payments made after acceleration
of the maturity.
"Debt Instrument" - as defined in Section 7.4(a) hereof.
"Default" - an event which with notice or the lapse of time or both
would constitute an Event of Default.
"Dollars" and "$" - lawful money of the United States of America.
"Equity Interests" - any loans, advances or extensions of credit (other
than guaranties) or any purchase of any debt or equity security, including
without limitation, capital stock, bonds, debentures, notes, general partnership
interests, limited partnership interests, warrants or other rights, all whether
certificated or uncertificated.
"ERISA" - as defined in Section 3.14 hereof
"Event of Default" - as defined in Article 7 hereof.
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"Fed Funds Rate" - The daily rate of interest announced from time to
time by the Board of Governors of the Federal Reserve System in publication
H.15, or any successor publication, as the "Federal Funds Rate".
"Financial Statements" -
(a) The audited balance sheets of SSI and its Subsidiaries (including,
without limitation, SSD and SDI) at December 31, 2000, and the related audited
consolidated statements of operations, shareholder's equity and cash flows, and
the notes thereto, of SSI and its Subsidiaries for the above mentioned year
certified without qualification or explanatory paragraphs by independent
certified public accountants satisfactory to the Agent;
(b) The unaudited consolidating balance sheets of SSI and its
Subsidiaries (including without limitation, SSD and SDI), as at December 31,
2000, and the unaudited internal consolidating statement of operations of SSI
and its Subsidiaries (including, without limitation, SSD and SDI) for the twelve
months then ended; and
(c) The unaudited consolidated balance sheets of SSI and its
Subsidiaries (including, without limitation, SSD and SDI) as at December 31,
2000, and the related unaudited consolidated statement of operations and cash
flows, and the notes thereto, of SSI and its Subsidiaries (including without
limitation SSD and SDI) for the twelve months then ended.
"Funded Debt" - as of any date, without duplication, all Indebtedness
for borrowed money, including without limitation outstanding Advances (including
the face amount of outstanding Letters of Credit) and unreimbursed draws on
Letters of Credit, but excluding Subordinated Indebtedness.
"ICG" - Internet Capital Group
"ICG Stock" - common stock of ICG now or hereafter owned by the
Borrowers.
"ICG Stock Value" - the market value of the ICG Stock, valued in the
same manner as Collateral Coverage Securities as set forth in Section 2.15
hereof. If the ICG Stock ever ceases to be traded on the NASDAQ national market,
the ICG Stock Value shall then and thereafter be deemed to be $0 for all
purposes hereof.
"Included Subsidiary" - the entities set forth in Schedule 1.1. hereto,
together with each new partnership established by Borrowers after the date
hereof the purpose of which is to hold acquisitions other than private equity
fund interests.
"Indebtedness" - with respect to any Person, without duplication, all
(i) liabilities or obligations which in accordance with generally accepted
accounting principles would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Person at the date as of
which Indebtedness is to be determined, including, without limitation,
Capitalized Lease Obligations of such Person but excluding in any event
contingent funding or capitalization commitments; (ii) liabilities or
obligations secured by Liens on any assets of such Person, whether or not such
liabilities or obligations shall have been assumed by it; and (iii) liabilities
in connection with interest rate and currency hedge agreements, including
Permitted SWAPS.
"IRS" - as defined in Section 3.14 hereof.
"Leases" - leases and subleases (other than the leases or subleases the
obligation to pay rent or other amounts under which is a Capitalized Lease
Obligation), licenses, easements,
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grants, pole attachment and conduit or trench agreements and other attachment
rights and similar instruments under which any Borrower has the right to use
real or personal property or rights of way.
"Lending Office" - 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
or such other office as the Agent may from time to time specify to the Borrowers
as the office at which Advances are to be made.
"Letters of Credit" - as defined in Section 2.1.1(b) hereof.
"Liabilities" - for the purposes of calculating Tangible Net Worth and
for the purposes of determining "Liabilities" of Borrowers, Liabilities shall
not include minority shareholder interest which may appear on a balance sheet of
SSI, prepared in accordance with generally accepted accounting principles,
consistently applied.
"Lien" - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and including but not limited
to the security interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For the
purpose of this Agreement, any Borrower shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement
or other arrangement pursuant to which title to the Property has been retained
by or vested in some other person for security purposes.
"Liquidity" - (A) cash of Borrowers, including money market accounts
and other like liquid deposit and investment accounts, not subject to a lien or
right of set-off in favor of any Person other than in favor of Lenders as
security for the Obligations, and which is not on deposit with or otherwise in
the possession of any Person to which any Borrower has any obligations or has
any indebtedness owing other than the Lenders with respect to the Obligations,
minus the then outstanding principal balance (including the face amount of
outstanding Letters of Credit and unreimbursed draws) of the Revolving Loan.
"Loan Documents" - this Agreement, the Notes, the Security Documents
and all other documents executed and delivered in connection herewith or
therewith, including all amendments, modifications and supplements of or to all
such documents.
"Majority Lenders" - at any time, Lenders holding Pro Rata Percentages
aggregating at least 66.67% at such time.
"Material Adverse Effect" - any specified event, condition or
occurrence as to any Borrower which individually or in the aggregate with any
other such event, condition or occurrence and whether through the effect on such
Borrower's business, property, prospects, profits or condition (financial or
otherwise) or otherwise could reasonably be expected to result in, to the extent
not fully covered by insurance, any liability, loss, forfeiture, penalty, costs,
fine, expense, payment or other monetary obligation or loss of property in
excess of $10,000,000.00 as to any Borrower or as to all Borrowers taken as a
whole.
"Monetization/Sub Debt Annual Limit" - $400,000,000.
"New Public Companies" - corporations in which a Borrower hereafter
acquires common stock.
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"Notes" - the Revolving Loan Notes.
"Obligations" - the obligations of the Borrowers to pay the principal
of and interest on the Notes and to satisfy and perform all of their other
existing and future obligations, liabilities and indebtedness to Agent, Issuer
and each Lender hereunder and under any of the other Loan Documents, including,
without limitation, any extensions, modifications, restatements, renewals
thereof and substitutions therefor.
"Permitted SWAPS" - swap, cap, collar and other interest rate hedging
products, provided that any such product is purchased from one or more of the
Lenders and in order to hedge solely against the interest rates hereunder for
Revolving Loan Advances.
"Person" - an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Pledge Agreement" - The Pledge Agreement between Agent and Borrowers
dated the date hereof, as the same may hereafter be amended from time to time.
"Pledged Securities" - Securities owned by the Borrowers pledged as
collateral from time to time for the performance of the Borrowers' Secured
Obligations.
"Post-Default Rate" - in respect of any amounts not paid when due
(whether at stated maturity, by acceleration or otherwise), a rate per annum
during the period commencing on the due date until such amounts are paid in full
equal to 2% per annum above the rate(s) otherwise applicable to such amounts as
provided for in Section 2.8 hereof.
"Prime Rate" - the interest rate which Agent announces from time to
time at its Principal Office as its prime rate. Each change in any interest rate
provided for herein based upon the Prime Rate resulting from a change in the
Prime Rate shall take effect at the time of such change in the Prime Rate. The
Borrowers acknowledge that such Prime Rate is not tied to an external rate of
interest or index and does not necessarily reflect the lowest rate of interest
actually charged by the Agent to any particular class or category of customer.
"Principal Office" - Agent's principal office presently located at 0000
Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
"Pro Rata Percentage" - The percentage set forth opposite each Lender's
name on Schedule A.
"Property" - any interest in any kind of property or asset, whether
real, personal or mixed or tangible or intangible.
"Quarterly Dates" - the last Business Day of each March, June,
September and December.
"Restricted Securities" - securities now or hereafter owned by a
Borrower which such Borrower is, or Agent or any Lender as pledgor or if
required from Borrowers would be, prohibited under applicable federal or state
law or regulations, or pursuant to private contract (including so-called broker
lock-up agreements), from publicly offering or selling in open market
transactions throughout the United States. For this purpose securities which can
lawfully be sold pursuant to Rule 144 of the Securities Act of 1933, as amended,
subject only to volume limitations set forth in Rule 144(e), are not "Restricted
Securities" solely by reason of such volume limitations.
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"Revolving Credit Period" - as defined in Section 2.1.1(a) hereof.
"Revolving Loan" - as defined in Section 2.1.1(a) hereof.
"Revolving Loan Commitment" - $100,000,000, as the same may be reduced
pursuant to Section 2.2 hereof.
"Revolving Loan Advance" - as defined in Section 2.1.1(a) hereof.
"Revolving Loan Notes" - as defined in Section 2.9 hereof.
"Secured Obligations" - all Obligations.
"Securities Monetization" - the transfer by a Borrower of stock
pursuant to a transaction substantially identical to that provided for in the
Sails Mandatorily Exchangeable Securities Contract dated as of August 30, 1999
among SSD, Credit Suisse Financial Products and CSFP, Inc., and which is
otherwise satisfactory to the Agent and the Majority Lenders in their reasonable
business judgment, but excluding any modifications, extensions, refinancings or
restructuring of any such transactions consummated prior to the date hereof to
the extent such modifications, etc. do not increase Borrowers' monetary
obligations. In the event of any disagreement between the parties as to whether
a transaction proposed to be entered into by the Borrowers constitutes a
"Securities Monetization" for purposes hereof, the good faith determination by
the Agent shall be conclusive.
"Security Documents" - as defined in Section 2.14 hereof.
"Sub Debt Aggregate Sub Limit" - $500,000,000.
"Subordinated Indebtedness" - unsecured Indebtedness of the Borrowers
the holder of which has agreed with or for the benefit of the Lenders pursuant
to a written agreement satisfactory to Agent and the Majority Lenders that the
principal of and interest on such Indebtedness will not be repaid in any
liquidation or dissolution of the Borrowers until all obligations and
indebtedness of Borrowers to Lenders have been repaid in full and Lenders'
lending commitment to Borrowers has terminated, and which is otherwise
satisfactory to Agent in its reasonable business judgment. In the event of any
disagreement between the parties as to whether a transaction proposed to be
entered into by the Borrowers constitutes Subordinated Indebtedness for purposes
hereof, the good faith determination by the Agent shall be conclusive.
"Subsidiary" - any corporation controlled directly, or indirectly
through one or more intermediaries, of any Borrower.
"Tangible Net Worth" - the excess of total assets over the sum of total
liabilities (excluding Subordinated Indebtedness) and minority shareholder
interests, to be determined in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the Financial
Statements, excluding, however, from the determination of total assets (without
duplication) (a) all assets which would be classified as intangible assets under
generally accepted accounting principles, including, without limitation,
goodwill (whether representing the excess of cost over book value of assets
acquired or otherwise), patents, trademarks, trade names, copyrights,
franchises, and deferred charges (including, without limitation, unamortized
debt discount and expense, organization costs and research and development
costs); (b) treasury stock; (c) cash set apart and held in sinking or other
analogous funds established for the purpose of redemption or other retirement of
capital stock; (d) to the extent not already deducted from total assets,
reserves for depreciation, depletion, obsolescence and/or amortization of
properties and all other reserves or appropriations of retained earnings which,
in accordance with generally accepted accounting principles, should be
established in
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connection with the businesses conducted by the Borrowers; (e) to the extent not
provided for in clause (a) or (d) above, the amount, if any, by which the value
of any assets or business hereafter acquired at the time of the acquisition
thereof unreasonably exceeds the book value thereof on the books of the Person
from whom such assets or business were so acquired (before any write-up of such
book value by such Person in contemplation of such acquisition if such write-up
shall have occurred within nine (9) months prior to the date of signing of any
contract relating to such acquisition); and (f) loans to employees, whether for
purchasing stock of the Borrowers or any Subsidiaries or otherwise; provided
that the loans made or to be made in the approximate amount of $35,000,000 owing
from Xxxxxx X. Xxxxxx shall not be deemed to be loan(s) to employees for
purposes hereof.
1.2 Directly or Indirectly.
Where any provision in this Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provisions
shall be applicable whether such action is taken directly or indirectly by such
Person.
1.3 Accounting Terms; Test Group.
(a) Any accounting terms used in this Agreement which are not
specifically defined shall have the meanings customarily given thereto in
accordance with generally accepted accounting principles; provided, however,
that notwithstanding any contrary definition provided herein, with respect to
the use of the term "Subsidiary" in connection with financial reporting required
hereunder, such term shall have the meaning customarily given thereto in
accordance with generally accepted accounting principles. If the generally
accepted accounting principles in effect on the date hereof shall change, the
terms calculated herein under such principles shall be changed accordingly.
(b) The financial covenants set forth in Sections 6.8 and 6.9
hereof shall be computed on a separate basis for the Borrowers, without
combination or consolidation with any other Person, including any Subsidiary of
any Borrower unless such Subsidiary is another Borrower.
Article 2. Amount and Terms of Revolving Loan; Collateral.
2.1.1 Revolving Loan.
(a) (i) Subject to the terms and conditions of this Agreement,
each Lender hereby establishes for Borrowers a revolving credit facility
(collectively, the "Revolving Loan") pursuant to which Lenders will make cash
loans and Issuer will issue Letters of Credit hereinafter provided for in this
Section 2.1.1 (individually, a "Revolving Loan Advance" and, collectively, the
"Revolving Loan Advances") to or for the account of the Borrowers, at any time
and from time to time during the period (the "Revolving Credit Period") from the
date hereof to and including the Commitment Termination Date, in an aggregate
principal amount at any one time outstanding (including, without duplication,
the face amount of all outstanding Letters of Credit and unreimbursed draws on
Letters of Credit) up to but not exceeding the lesser of the Revolving Loan
Commitment as then in effect or the Collateral Coverage Base. Subject to the
terms of this Agreement, during the Revolving Credit Period the Borrowers may
borrow, repay and reborrow (all as provided herein).
(ii) On Friday (or, if not a Business day, the
immediately preceding Business Day of each such week) of each week, Borrowers
shall execute a Borrowing Base Certificate ("Borrowing Base Certificate")
prepared by Borrowers and certified by their corporate controller or chief
financial officer setting forth the values of the Collateral and the
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Borrowers' compliance with the Collateral Coverage Base as of the immediately
preceding Business Day.
(iii) Each Lender agrees severally to make cash
Revolving Loan Advances to Borrowers, as a part of the Revolving Loan, subject
to the terms of this Agreement, up to such Lender's Pro Rata Percentage of the
Revolving Loan, as more fully set forth in Section 2.5 hereof.
(b) (i) During the Revolving Credit Period, Borrowers may
obtain letters of credit (each a "Letter of Credit" and, collectively, "Letters
of Credit") from the Issuer, on behalf of all Lenders, in an aggregate amount
not to exceed $10,000,000 (measured by the face amount thereof) at any time
outstanding, upon prior approval of the Issuer, on such terms (including without
limitation the expiry date, which Borrowers agree will in no event be twelve
months beyond the Commitment Termination Date) as the Issuer may require and
with such documentation, including Issuer's then standard Letter of Credit
Application and Security Agreement, as shall be satisfactory in form and
substance to the Issuer. Borrowers will pay to Agent, for the account of each
Lender in accordance with their Pro Rata Percentages, a letter of credit fee for
each Letter of Credit issued hereunder in the amount of 2.5% per annum of the
face amount of such Letter of Credit, payable quarterly in arrears (measured
from the date of issuance) (the "L/C Fee"). Borrowers will pay to Issuer, for
its own account, all issuance, negotiation, draw and other administrative fees
from time to time assessed by Issuer in accordance with Issuer's then standard
fee schedule for the issuance and administration of letters of credit.
(ii) (A) Immediately upon the issuance of any Letter
of Credit, Issuer is deemed to have granted to each other Lender, and each other
Lender is hereby deemed to have acquired, an undivided participating interest
(without recourse to or warranty by Issuer), in accordance with each such other
Lender's respective Pro Rata Percentage, in all of Issuer's rights and
liabilities with respect to such Letter of Credit. Each Lender shall be directly
and unconditionally obligated to Issuer, according to its Pro Rata Percentage,
to reimburse Issuer for any draws not reimbursed by Borrowers in accordance with
the terms hereof, made at any time without regard to the occurrence of a Default
or Event of Default (including, without limitation, any draw made following the
commencement of any bankruptcy, reorganization, receivership, liquidation or
dissolution proceeding with respect to any Borrower) under any Letter of Credit
outstanding under the Revolving Loan.
(B) Each Letter of Credit issued from time
to time under the Revolving Loan which remains undrawn (and the amounts of draws
on Letters of Credit prior to payment as hereinafter set forth) shall reduce
dollar for dollar the amount available to be borrowed by Borrowers under the
Revolving Loan.
(C) In the event of any request for drawing
under any Letter of Credit by the beneficiary thereof, Issuer shall promptly
notify Borrowers and Borrowers shall immediately reimburse Issuer on the day
when such drawing is honored, including by way of a cash Revolving Loan Advance
under the Revolving Loan if otherwise available pursuant to this Agreement.
Borrowers' reimbursement obligation for draws under Letters of Credit shall
herein be referred to collectively as Borrowers' "Reimbursement Obligations".
All of Borrowers' Reimbursement Obligations hereunder with respect to Letters of
Credit shall apply unconditionally and absolutely to, and shall be joint and
several with respect to, Letters of Credit issued hereunder on behalf of
Borrowers.
(D) (1) In the event that Borrowers shall
fail to reimburse Issuer as provided in subpart (C) above in an amount equal to
the amount of the drawing honored by Issuer under a Letter of Credit, Issuer
shall promptly notify each Lender of the unreimbursed
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amount of such drawing and of such Lender's participation therein based on such
Lender's Pro Rata Percentage. Each Lender shall make available to Issuer an
amount equal to its respective participation in same day funds, at the office of
Issuer specified in such notice, not later than 1:00 p.m. (Philadelphia time) on
the Business Day after the date notified by Issuer. In the event that any Lender
fails to make available to such Issuer the amount of such Lender's participation
based on such Lender's Pro Rata Percentage in such Letter of Credit, as provided
in this Section 2.1.1(b), Issuer shall be entitled to recover such amount on
demand from such Lender together with interest at the Fed Funds Rate for one (1)
Business Day and thereafter at two (2) percentage points above the Agent's Prime
Rate. Nothing in this Section shall be deemed to relieve any Lender from its
obligation to pay all amounts payable by it under this Section with respect to
any Letter of Credit issued by Issuer or to prejudice any rights that Issuer may
have against a Lender as a result of any default by such Lender hereunder and no
Lender shall be responsible for the failure of any other Lender to pay its
respective participation, based on its Pro Rata Percentage, payable under this
Section.
(2) In connection with the failure
of any Lender to make available to Issuer the amount of such Lender's
participation in any Letter of Credit, such Lender hereby agrees to indemnify
Issuer from and against any and all costs and expenses (including, without
limitation, reasonable attorneys' fees, allocated costs of internal counsel and
the costs in connection with any related litigation) which Issuer may incur or
be subject to as a consequence, direct or indirect, of the failure of such
Lender to make available its participation in such Letter of Credit.
Notwithstanding anything to the contrary contained in this Section, no Lender
failing to provide its participation in any Letter of Credit shall have any
obligation to indemnify Issuer in respect of any liability incurred by Issuer
arising solely out of the gross negligence or willful misconduct of Issuer.
(E) The obligation of Borrowers to reimburse
Issuer for drawings made (or Lenders for cash Revolving Loan Advances made to
cover drawings made) under the Letters of Credit and the obligations of Lenders
to Issuer under Section 2.1.1(b)(ii)(D) shall be unconditional and irrevocable
and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances including, without limitation, the following circumstances:
(1) any lack of validity or
enforceability of any Letter of Credit;
(2) the existence of any claim,
setoff, defense or other right that Borrowers or any other Person may have at
any time against a beneficiary or any transferee of any Letter of Credit (or any
Person for whom any such beneficiary or transferee may be acting), Issuer,
Agent, any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction;
(3) any draft, demand, certificate
or any other document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(4) payment by Issuer under any
Letter of Credit against presentation of a demand, draft or certificate, or
other document that does not comply with the terms of such Letter of Credit
unless Issuer shall have acted with willful misconduct or gross negligence in
issuing such payment; or
(5) the fact that a Default or Event
of Default shall have occurred and be continuing.
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(F) (1) In addition to amounts payable
as elsewhere provided in this Section, without duplication, Borrowers hereby
agree to protect, indemnify, pay and save Issuer, Agent and Lenders harmless
from and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable attorneys' fees) which Issuer
may incur or be subject to as a consequence, direct or indirect, of (A) the
issuance of the Letters of Credit or (B) the failure of Issuer to honor a
drawing under any 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").
(2) As between Borrowers and Issuer,
Agent, and Lenders, Borrowers assume all risks of the acts and omissions of, or
misuse of the Letters of Credit issued by Issuer by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, Issuer shall not be responsible: (a) for the form, validity,
sufficiency, accuracy, genuineness or legal effects of any document submitted by
any party in connection with the application for and issuance of such Letters 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 such 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 failure of the beneficiary of any
such Letter of Credit to comply fully with conditions required in order to draw
upon such Letter of Credit so long as Issuer acts in good faith and without
gross negligence or willful misconduct; (d) for errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they are in cipher, unless any of
the foregoing are caused by Issuer's gross negligence or willful misconduct; (e)
for errors in interpretation of technical terms; (f) for any loss or delay in
the transmission of any document required in order to make a drawing under any
such Letter of Credit or of the proceeds thereof, unless caused by Issuer's
gross negligence or willful misconduct; (g) for the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; and (h) for any consequences arising from causes beyond
the control of Issuer, including, without limitation, any Government Acts. None
of the above shall affect, impair, or prevent the vesting of any of Issuer's
rights or powers hereunder.
(3) In furtherance and extension and
not in limitation of the specific provisions hereinabove set forth, any action
taken or omitted by Issuer in connection with the Letters of Credit issued by it
or the related certificates, if taken or omitted in good faith, shall not create
any liability on the part of Issuer to Borrowers.
(4) The term "Lender" shall, unless
the context otherwise indicates, include the Issuer in its individual capacity
as a Lender.
2.2 Changes in Revolving Loan Commitment.
The Borrowers shall be entitled to terminate or reduce the Revolving
Loan Commitment, provided that the Borrowers shall give notice of each such
termination or reduction to the Agent as provided in Section 2.3 hereof and that
any partial reduction of the Revolving Loan Commitment shall be in an aggregate
amount equal to $100,000 or an integral multiple thereof. Any such termination
or reduction shall be permanent and irrevocable.
2.3 Notices.
SSI, as agent hereunder for the Borrowers, shall give the Agent
telephonic and written notice of each termination or reduction of the Revolving
Loan Commitment, each borrowing, and repayment of the Revolving Loan. All
requests for borrowings shall be made, subject to the
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terms and conditions of this Agreement and subject further to the terms of
Section 2.5(c) hereof, by telephonic or facsimile request of any Borrower. Agent
may rely upon any and all telephonic, facsimile and written requests purported
to be made by any Borrower through any of its officers. Each such written notice
shall be irrevocable and shall be effective only if received by the Agent not
later than 1:00 p.m., Philadelphia time, on the date which is: (a) in the case
of each notice of termination one Business Day prior to the date of the related
termination, and (b) in the case of a notice of borrowing or reduction, the
Business Day on which the requested borrowing or reduction is to be made,
subject, as to borrowings for which the LIBOR Rate is being selected, to the
provisions of Section 2.8(c) hereof.
2.4 Fees
(a) The Borrowers shall pay to the Agent, for the account of
each Lender in accordance with their Pro Rata Percentages, a commitment fee at
the rate of four-tenths of one percent (4/10%) per annum on the daily average
unused amount of the Revolving Loan Commitment (which shall be calculated as the
Revolving Loan Commitment minus all cash advances outstanding under the
Revolving Loan on the date of such calculation) during each calendar quarter for
the period from the date hereof to and including the earlier of the date on
which the Revolving Loan Commitment is terminated or the Commitment Termination
Date. The commitment fee shall be payable quarterly in arrears on the Quarterly
Dates and on the earlier of the date the Revolving Loan Commitment is terminated
or the Commitment Termination Date.
(b) The Borrowers shall pay to Agent, for its own account, a
non-refundable Agent Fee (the "Agent Fee") in such amount as to which Agent and
Borrowers may from time to time agree.
2.5 Borrowings.
(a) Except as otherwise provided in subparts (b), (c) and (e)
below, upon receiving a request for a cash Advance in accordance with Section
2.3 hereof, Agent shall prior to 2:00 p.m. or as soon as reasonably practical
thereafter notify all Lenders of the request. Each Lender shall advance its
applicable Pro Rata Percentage of the requested Advance to Agent by remitting
federal funds, immediately available, to Agent pursuant to Agent's instructions
prior to 3:00 p.m. Philadelphia time or as soon as is reasonably practicable
thereafter on the date of such notice. Subject to the satisfaction of the terms
and conditions hereof, and receipt by the Agent of all required funds from the
other Lenders, Agent shall make the requested Advance available to the Borrowers
by crediting such amount to SSI's operating account with Agent, or to such other
account as SSI may from time to time designate to Agent, as soon as is
reasonably practicable thereafter on the day on which such Advance was
requested.
(b) In lieu of the foregoing, Agent may, in its discretion
(and without any obligation to do so or continue to do so), fund the Pro Rata
Percentage of an Advance (including any cash Revolving Loan Advance to reimburse
Issuer for unreimbursed draws under a Letter of Credit) on behalf of any one or
more Lenders (unconditionally and absolutely obliging such affected Lender to
reimburse Agent in full without deduction or setoffs for its portion of such
Advance) with a settlement among Lenders on the following Business Day or under
such other settlement procedures as Agent and Lenders may mutually agree upon
from time to time.
(c) In addition to the funding procedure set forth in subparts
(a) and (b) above, Agent hereby establishes for the Borrowers an interim line of
credit (herein, the "Swing Line") under which Agent will at Borrowers' request,
for Agent's own account except as otherwise set forth in this Section 2.5(c),
fund cash Revolving Loan Advances under the Revolving Loan, subject to the
following terms and conditions:
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(i) Revolving Loan Advances made from the Swing
Line shall not exceed $15,000,000 in the
aggregate at any time outstanding;
(ii) principal outstanding under the Swing Line
will accrue interest at the Agent's Prime
Rate as otherwise set forth in Section 2.8
(a) hereof, which interest shall, except as
provided in subpart (vii) below, be entirely
for Agent's own account;
(iii) all principal payments made by Borrower on
account of the Revolving Loan shall be
applied first to principal outstanding under
the Swing Line prior to application thereof
to the principal of the Revolving Loan not
advanced under the Swing Line;
(iv) if there is neither any Advance under nor
repayment of principal on account of the
Swing Line for seven (7) consecutive
Business Days, the unpaid principal of the
Swing Line as of the expiration of such
seven (7) Business Day period shall be
funded by Banks under the Revolving Loan in
accordance with subpart (a) or (b) above, as
the case may be;
(v) the Swing Line will be advanced pursuant to
the procedures set forth in and will
otherwise be subject to the terms of the
Working Cash Agreements referred to in
Section 4.2 hereof;
(vi) except as otherwise specifically set forth
in this subpart (c), Advances under the
Swing Loan are subject to the same terms and
conditions of this Agreement which are
applicable to the Revolving Loan and shall
be deemed to be "Obligations" and "Secured
Obligations" of the Borrowers for all
purposes of this Agreement, and in no event
will the outstanding principal of the Swing
Line, when taken together with the
outstanding principal of the Revolving Loan
(including the face amount of Letters of
Credit and outstanding Reimbursement
Obligations), exceed the Revolving Loan
Commitment; and
(vii) immediately upon the making by Agent of each
cash Advance under the Swing Line (each such
advance being herein called a "Swing Loan"),
Agent is deemed to have granted to each
Lender, and each Lender is hereby deemed to
have acquired, an undivided participating
interest (without recourse to or warranty by
Agent), in accordance with each such
Lender's respective Pro Rata Percentage, in
all of Agent's rights and liabilities with
respect to such Swing Loan. In the event
that the Obligations are accelerated
incident to an Event of Default, Agent shall
promptly notify each Lender of the unpaid
principal balance of all Swing Loans and all
of such Lender's participation therein based
on such Lender's Pro Rata Percentage. Each
Lender shall make available to Agent an
amount equal to its respective participation
in same day funds, at the office of Agent
specified in such notice, not later than
1:00 p.m. (Philadelphia time) on the
Business Day after the date notified by
Agent. In the event that any Lender fails to
make available to Agent the amount of such
Lender's participation based on such
Lender's Pro Rata Percentage in such Swing
Loans, Agent
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shall be entitled to recover such amount on
demand from such Lender together with
interest at the Fed Funds Rate for one (1)
Business Day and thereafter at two (2)
percentage points above the Agent's Prime
Rate. Agent shall distribute to each other
Lender which has paid all amounts payable by
it under this subpart (c) with respect to
any Swing Loans, such other Lender's share,
based on such Lender's Pro Rata Percentage,
of all payments received by Agent from
Borrowers in payment of such Swing Loans,
when such payments are received.
(d) Neither Agent nor any other Lender shall be obligated, for
any reason whatsoever, to advance the share of any other Lender. If such
corresponding amount is not made available to Agent by such Lender on the date
the Advance is to be made and Agent elects (at its discretion, without any
obligation to do so) to make such Lender's share of the Advance (including any
cash Revolving Loan Advance to reimburse Issuer for unreimbursed draws under a
Letter of Credit), Agent shall be entitled to recover such amount on demand from
such Lender, together with interest in respect of each day during the period
commencing on the date such amount was made available to the Borrowers (or on
that date Agent required such funds to be advanced pursuant to the settlement
procedures established by Agent) and ending on (but excluding) the date Agent
recovers such amount, at a per annum rate equal to the Fed Funds Rate for the
first Business Day and thereafter at two (2) percentage points above the Agent's
Prime Rate. Agent shall also be entitled to recover any and all losses and
damages (including without limitation, attorneys' fees) from any Lender failing
to so advance upon demand of Agent. Agent may set off the obligations of a
Lender under this paragraph against any distributions or payments of the
Obligations which Agent would otherwise make available to such Lender. To the
extent any Lender fails to provide or delays providing its respective Pro Rata
Percentage of any requested Advance, such Lender's Pro Rata Percentage of all
payments of the Obligations (but not its Pro Rata Percentage of Advances
required to be funded by such Lender) shall decrease to reflect the actual
percentage which its actual outstanding Advances bears to the total outstanding
Advances of all Lenders. If a Lender fails to make its share of any Advance
available to the Agent within three (3) Business Days after the date such Lender
was obligated to do so under the terms hereof, the Borrowers agree that the
Agent, if the Agent at its election advanced such share on such Lender's behalf,
shall be entitled to recover such amount with interest therein at the Agent's
Prime Rate, on demand, from the Borrower.
2.6 Use of Loan Proceeds.
Advances under the Revolving Loan shall be used solely for general
corporate purposes, including for acquisition of Equity Interests subject to the
limitations set forth in Section 6.6 hereof.
2.7 Payment of Revolving Loan.
(a) Unless sooner accelerated pursuant to the terms hereof,
the applicable Revolving Loan shall be due and payable on the Commitment
Termination Date. Borrowers will, on the Commitment Termination Date, provide
Agent with cash collateral in an amount equal to 105% of the face amount of all
issued and then outstanding Letters of Credit issued under this Agreement.
(b) Except to the extent otherwise set forth in this
Agreement, all payments of principal and of interest on the Revolving Loan, and
all other fees and charges and any other Obligations of Borrowers hereunder,
shall be made to Agent at its Principal Office, in United States dollars, in
immediately available funds, and without set-off, counterclaim or deduction of
any kind, not later than 1:00 p.m. Philadelphia time on the date on which such
payment is due.
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Agent and each Lender, on behalf of all Lenders, shall have the unconditional
right and discretion to charge any Borrower's operating account with any such
respective institution for all of Borrowers' Obligations as they become due from
time to time under this Agreement including without limitation, interest,
principal, fees and reimbursement of reasonable out-of-pocket expenses.
Alternatively, Agent may in its discretion (and Borrowers hereby authorize Agent
to) direct the Lenders to make a cash Advance under the Revolving Loan (subject
to the terms and provisions of this Agreement) in a sum sufficient to pay all
interest accrued and payable on the Obligations during the immediately preceding
month and to pay all costs, fees and reasonable out-of-pocket expenses owing
hereunder.
2.8 Interest.
(a) Subject to the provisions of subsection (c) hereof and
subject further to the provisions of Section 2.5(c)(ii), the Borrowers shall pay
interest on the unpaid principal amount of each Advance for the period
commencing on the date of such Advance until such Advance shall be paid in full,
at a rate per annum equal to Agent's Prime Rate. Notwithstanding the foregoing,
the Borrowers shall pay interest on any Advance, and on any other amount payable
by the Borrowers hereunder (including, to the extent permitted by law, interest)
which shall not be paid in full when due (whether at stated maturity, by
acceleration or otherwise, and including all reimbursement obligations on
Letters of Credit which are not immediately repaid from an Advance or otherwise)
for the period commencing on the due date thereof until the payment in full at
the Post-Default Rate. Except as provided in the next sentence, accrued interest
on the Revolving Loan shall be payable (i) monthly in arrears within 10 days of
Borrowers' receipt of a xxxx therefor, and (ii) on the earlier of the date the
Revolving Loan Commitment is terminated or the Commitment Termination Date.
Interest payable at the Post-Default Rate shall be payable from time to time on
demand of the Agent. Interest shall continue to accrue and be paid at the
applicable rate provided herein even after Default, an Event of Default, entry
of judgment against any or all of the Borrowers or the commencement of any
bankruptcy, reorganization or insolvency proceeding, and any such judgment
entered in connection with the enforcement hereof or the collection of the
Obligations shall earn interest at the Post-Default Rate.
(b) Notwithstanding any provision herein or in the Notes, the
total liability for payments of interest, or in the nature of interest, shall
not exceed the limits imposed by any applicable laws. If the terms of this
Agreement or the Security Documents, the Notes, or any other agreement or
instrument entered into in connection herewith require or shall require
Borrowers to pay interest in excess of amounts allowed by law, the rate of
interest payable shall be reduced immediately, without action by Lenders or
Agent, to the applicable maximum rate, and any excess payment made by Borrowers
at any time shall be immediately and automatically applied to the unpaid balance
of the outstanding principal due hereunder and not to the payment of interest.
In the event of acceleration of sums due hereunder, the total charges for
interest and in the nature of interest shall not exceed the maximum allowed by
law, and any excess portions of such charges which may have been prepaid and
cannot be applied to repayment of principal shall be refunded to Borrowers.
Borrowers agree that in determining whether or not any interest payable under
this Agreement, the Notes or the Security Documents exceeds the highest
applicable rate permitted by law, any non-principal payment including, without
limitation, fees, costs, Post-Default Rate and late charges, shall be deemed to
the extent permitted by law to be an expense, fee or penalty not deemed interest
by law.
(c) (i) As used in this Section 2.8(c), the following terms
shall have the following meanings:
(A) "Good Business Day" means any day when
both Agent and banks in London, England are open for business.
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(B) "LIBOR Rate" means for any day during
each Rate Period (a) the per annum rate of interest (computed on a basis of a
year of 360 days and actual days elapsed) determined by Agent as being the
composite rate available to Agent at approximately 11:00 a.m., London time in
the London Interbank Market, as referenced by Telerate (page 3750), in
accordance with the usual practice in such market, for the Rate Period elected
by Borrowers, in effect two (2) Good Business Days prior to the funding date for
a requested LIBOR Rate advance for deposits of dollars in amounts equal (as
nearly as may be estimated) to the amount of the LIBOR Rate advance which shall
then be loaned by the Lenders to Borrowers as of the time of such determination,
as such rate (the "Base Rate") may be adjusted by the reserve percentage
applicable during the Rate Period in effect (or if more than one such percentage
shall be applicable, the daily average of such percentages for those days in
such Rate Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for the Agent with respect to liabilities or
assets consisting of or including "Eurocurrency Liabilities" as such term is
defined in Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time, having a term equal to such Rate Period
("Eurocurrency Reserve Requirement"), plus (b) 2.50 percentage points. Such
reserve adjustment shall be effectuated by calculating, and the LIBOR Rate shall
be equal to, (a) the quotient of (i) the Base Rate divided by (ii) one minus the
Eurocurrency Reserve Requirement, plus (b) 2.50 percentage points.
(C) "Notification" means telephonic notice
(which shall be irrevocable) by Borrowers to Agent that Borrowers have requested
that the LIBOR Rate, as quoted by Agent from time to time upon Borrower's
request for quotation made not less than one (1) Business Day prior to the
requested date of quotation, shall apply to some portion of the principal amount
of the Revolving Loan in accordance with the provisions of this Section 2.8(c),
which notice shall be given no later than 11:00 a.m. Philadelphia time, on the
day which is at least 2 Business Days prior to the Business Day on which such
election is to become effective, which notice shall specify (i) that the LIBOR
Rate option is being selected; (ii) the principal amount of cash Advances under
the Revolving Loan to be subject to such rate; (iii) whether such amount is a
new advance, a renewal of a previous request of such rate, a conversion from one
interest rate to another, or a combination thereof; (iv) the Rate Period(s)
selected; and (y) the date on which such request is to become effective (which
date shall be a date selected in accordance with Section 2.8(c) (ii) hereof).
(D) "Rate Period" means for any portion of
principal under the Loans for which Borrowers elect the LIBOR Rate the period of
time for which such rate shall apply to such principal portion. Rate Periods for
principal earning interest at the LIBOR Rate shall be for periods of 30 days
only until such time as PNC Bank, National Association, in its capacity as a
"Lender" hereunder, has a Pro Rata Percentage of 26.660% or less, and thereafter
for periods of 30, 60, 90 or 180 days and for no other length of time, provided,
that, no Rate Period may end on other than a Business Day or after the
Commitment Termination Date.
(ii) (A) Subject to the terms of this Section 2.8 (c)
(ii), by giving Notification, Borrowers may request to have all or a portion of
the outstanding principal of cash Advances under the Revolving Loans, (other
than Swing Loans) as hereinafter permitted earn interest at the LIBOR Rate as
follows: (1) with respect to the principal amount of any cash Advance under the
Revolving Loan, from the date of such Advance until the end of the Rate Period
specified in the Notification; and/or (2) with respect to the principal amount
of any portion of cash Advances under the Revolving Loan outstanding and earning
interest at the LIBOR Rate at the time of the Notification related to such
principal amount, from the expiration of the then current Rate Period related to
such principal amount until the end of the Rate Period specified in the
Notification; and/or (3) with respect to all or any portion of the principal
amount
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of cash Advances under the Revolving Loan outstanding and earning interest at
the Prime Rate at the time of Notification, from the date set forth in the
Notification until the end of the Rate Period specified in the Notification.
(B) Borrowers understand and agree: (1) that
subject to the provisions of this Agreement, the Prime Rate and the LIBOR Rate
may apply simultaneously to different parts of the outstanding principal of cash
Advances under the Revolving Loan, (2) that the LIBOR Rate applicable to any
portion of outstanding principal may be different from the LIBOR Rate applicable
to any other portion of outstanding principal, (3) that no more than 8 portions
of principal of cash Advances under the Revolving Loan bearing interest at the
LIBOR Rate may be outstanding at any one time, (4) that the minimum amount of
principal for which any LIBOR Rate election may be made shall be $5,000,000, and
(5) that Agent shall have the right to terminate any Rate Period, and the
interest rate applicable thereto, prior to maturity of such Rate Period, if
Agent determines in good faith (which determination shall be conclusive) that
continuance of such interest rate has been made unlawful by any Law to which any
Lender may be subject, in which event the principal to which such terminated
Rate Period relates thereafter shall earn interest at the Prime Rate.
(C) After expiration of any Rate Period, any
principal portion corresponding to such Rate Period which has not been converted
or renewed in accordance with this Section 2.8(c) (ii) shall earn interest
automatically at the Prime Rate from the date of expiration of such Rate Period
until paid in full, unless and until the Borrowers request and Agent approves a
conversion to the LIBOR Rate in accordance with this Section 2.8. With respect
to any cash Advances (whether an advance of new funds or an already outstanding
amount), if Borrowers fail to request the LIBOR Rate option by giving Bank a
Notification, or if Agent fails to approve such request when made, such
principal amount shall earn interest at the Prime Rate.
(D) Borrowers shall indemnify Lenders
against any and all loss or expense (including loss of margin) which any Lender
actually has sustained or incurred as a consequence of (a) any payment of any
principal amount earning interest at the LIBOR Rate on a day other than the last
day of the corresponding Rate Period (whether or not any such payment is made
pursuant to acceleration upon or after an Event of Default, demand by Agent
otherwise made under this Agreement, by reason of an application of proceeds
incident to an insured loss or condemnation of property, or for any other
reason, and whether or not any such payment is consented to by Agent, unless
Agent shall have expressly waived such indemnity in writing); (2) any attempt by
a Borrower to revoke in whole or part any Notification given pursuant to this
Agreement; (3) any conversion or renewal of any principal amount earning
interest at the LIBOR Rate on a day other than the last day of the corresponding
Rate Period (whether or not such conversion or renewal is consented to by Agent,
unless Agent shall have expressly waived such indemnity in writing); or (4) any
breach of or default by any Borrower.
2.9 Notes.
Contemporaneously herewith, Borrowers shall execute and deliver to each
Lender their Notes in the principal amount of such Lender's Pro Rata Share of
the Revolving Loan (each a "Revolving Loan Note"), evidencing Borrowers'
unconditional joint and several obligations to repay such Lender's Pro Rata
Percentage of the Revolving Loan.
2.10 Computations; Application of Payments.
(a) Interest on the Revolving Loan and commitment fees shall
be computed on the basis of a year of 360 days and actual days elapsed
(including the first day but excluding the last) in the period for which
payable;
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(b) Each payment of principal and interest made by any
Borrower hereunder shall be applied first on account of due and unpaid interest
and the balance, if any, toward reduction of the unpaid principal balance of the
Revolving Loans.
2.11 Minimum Amount of Borrowings.
Except for borrowings which exhaust the full remaining amount of the
Revolving Loan Commitment, each cash Advance under the Revolving Loan shall be
in the amount of $100,000 or an integral multiple thereof.
2.12 Set-Off.
Each of the Borrowers hereby agrees that, in addition to (and without
limitation of) any right of set-off, banker's lien or counterclaim any Lender
may otherwise have, each Lender and any affiliate of any Lender or any such
participant shall be entitled, at its option, and for the ratable benefit of all
Lenders, to offset balances held by it at any of its offices against any
principal of or interest on the Revolving Loan which is not paid when due
(regardless of whether such balances are then due to such Borrower), in which
case it shall promptly notify such Borrower thereof, provided that its failure
to give such notice shall not affect the validity of any such offset.
2.13 Prepayment.
The outstanding principal balance of the Revolving Loan may be prepaid
in whole or in part and from time to time, provided that Borrowers shall provide
Agent with at least one (1) Business Day notice prior to prepayment prior to the
last day of the applicable Rate Period of principal earning interest at the
LIBOR Rate, and provided further, that in the event that such of the principal
of the Revolving Loan earning interest at the LIBOR Rate at the time of
repayment is repaid prior to the last day of the applicable Rate Period (whether
or not any such repayment is made pursuant to acceleration upon or after an
Event of Default, demand by Agent otherwise made under this Agreement, by reason
of an application of proceeds incident to an insured loss or condemnation of
property, or for any other reason), Borrowers shall, together with such
repayment, pay to Agent, for the account of Lenders, any indemnity amount due
under Section 2.8(c)(ii)(D) hereof, including the Cost of Prepayment.
2.14 Collateral.
(a) Borrowers hereby agree that their grant of a security
interest in the Collateral contained in the Pledge Agreement, in other security
and collateral agreements of Borrowers and all other agreements executed in
connection herewith and all collateral, liens, security interests and pledges
created by Borrowers described therein cover and secure all of the Secured
Obligations.
(b) The Pledge Agreement, and the aforesaid agreements,
instruments and documents, are sometimes hereinafter referred to collectively as
the "Security Documents."
2.15 Valuation of Collateral Coverage Securities; Sale
The value of the Collateral Coverage Securities shall be based on
market value as determined on a recognized national securities exchange or by
the NASDAQ national market, all as of the close of the last previous trading
day. Any determination of the value of the Collateral Coverage Securities by the
Agent through its brokerage services shall be conclusive and binding on
Borrowers absent manifest error. Borrowers may sell Collateral Coverage
Securities in accordance with the terms of the Pledge Agreement so long as after
giving effect to any such
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sale, Borrowers are not in violation of the Collateral Coverage Base and the
proceeds thereof shall be paid over to Agent as provided in the Pledge
Agreement.
Article 3. Representations and Warranties.
The Borrowers hereby represent and warrant to each Lender that:
3.1 Organization.
(a) Each Borrower is a corporation duly organized, validly
existing and in good standing under the laws of its respective state of
incorporation, as set forth in Exhibit 3.1 hereto; each Borrower has the power
to own its assets and to transact the business in which it is presently engaged
and in which it proposes to be engaged. The authorized and outstanding shares of
capital stock of each Borrower is accurately and completely listed in Exhibit
3.1. All such shares which are issued and outstanding have been duly and validly
issued and are fully paid and nonassessable, are, as to SSD and SDI, owned by
the Persons referred to on Exhibit 3.1 and, as to SSI, are publicly traded, in
each case free and clear of any mortgage, pledge, lien or encumbrance. Except as
set forth in Exhibit 3.1, there are no outstanding warrants, options, contracts
or commitments of any kind entitling any person to purchase or otherwise acquire
any shares of capital stock of any Borrower, nor are there outstanding any
securities which are convertible into or exchangeable for any shares of capital
stock of any Borrower. Except as set forth on Exhibit 3.1, no Borrower has any
Subsidiary (other than another Borrower).
(b) There are no jurisdictions other than as set forth on
Exhibit 3.1 hereto in which the character of the properties owned or proposed to
be owned by the Borrowers or in which the transaction of the business of any of
the Borrowers as now conducted or as proposed to be conducted requires or will
require any Borrower to qualify to do business in any such other jurisdiction
where the failure to do so would have a Material Adverse Effect on such
Borrower.
3.2 Power, Authority, Consents.
Each Borrower has the power to execute, deliver and perform this
Agreement, the Notes and the Security Documents to be executed by it, and to
borrow hereunder. Each Borrower has taken all necessary action to authorize (i)
the borrowing hereunder on the terms and conditions of this Agreement, (ii) the
execution, delivery and performance of this Agreement, the Notes, the Security
Documents to be executed by it and all other agreements, instruments and
documents provided for herein or therein. No consent or approval of any person
(including, without limitation, any stockholder of the Borrowers), no consent or
approval of any landlord or mortgagee, no waiver of any lien or right of
distraint or other similar right and no consent, license, approval,
authorization or declaration of any governmental authority, bureau or agency, is
or will be required in connection with the execution, delivery or performance by
any Borrower, as the case may be, or the validity, enforcement or priority of,
this Agreement, the Notes, the Security Documents (or any Lien created and
granted thereunder) or any other agreements, instruments or documents to be
executed or delivered pursuant hereto or thereto, except as set forth on Exhibit
3.2 annexed hereto, each of which either will have been duly and validly
obtained on or prior to the date hereof and will then be in full force and
effect, or is designated on Exhibit 3.2 as waived by the Agent.
3.3 No Violation of Law or Agreements.
The execution and delivery by each Borrower of this Agreement, the
Notes and the Security Documents executed by it and any other agreements,
instruments or documents to be executed and delivered by it hereunder, and
performance by it hereunder and thereunder will not,
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if the same would have a Material Adverse Effect, violate any provision of law
or conflict with or result in a breach of any order, writ, injunction,
ordinance, resolution, decree of any court or governmental authority, bureau or
agency, domestic or foreign, or certificate of incorporation or bylaws of any
Borrower or create (with or without the giving of notice or lapse of time, or
both) a default under or breach of any agreement, bond, note or indenture to
which any Borrower is a party, or by which it is bound or any of its properties
or assets is affected, or result in the imposition of any Lien of any nature
whatsoever upon any of the properties or assets owned by or used in connection
with the business of such Borrower, except for the liens and security interests
created and granted pursuant to the Security Documents.
3.4 Due Execution, Validity, Enforceability.
This Agreement has been duly executed and delivered by each Borrower
and constitutes, and the Notes and each of the Security Documents to be executed
by a Borrower, upon execution and delivery by such Borrower in accordance with
the terms hereof, will constitute, the valid and legally binding obligation and
agreement of such Borrower, as the case may be, enforceable in accordance with
its terms.
3.5 Properties, Priority of Liens.
All of the Collateral is owned by Borrowers, free and clear of any Lien
of any nature whatsoever, except as provided for in the Security Documents to be
executed and delivered pursuant hereto. The Liens which will be created and
granted by the Security Documents upon their execution and delivery by the
parties thereto, will thereupon and thereafter constitute valid first Liens on
the properties and assets covered by the Security Documents as security for the
Secured Obligations, subject to no Lien other than in favor of the Lenders.
3.6 Judgments, Actions, Proceedings.
There are no outstanding judgments, and no actions, suits or
proceedings pending or threatened before any court, governmental authority,
bureau, commission, board, instrumentality or agency, with respect to or
affecting any Borrower or any of their Properties, which would have a Material
Adverse Effect, nor is there any reasonable basis for the institution of any
such action, suit or proceeding, whether or not covered by insurance, nor are
there any such actions or proceedings in which any Borrower is a plaintiff or
complainant where the amount demanded or sued for exceeds $10,000,000, except as
set forth on Exhibit 3.6 annexed hereto.
3.7 No Defaults.
None of the Borrowers is in default under any agreement, ordinance,
resolution, decree, bond, note, indenture, order or judgment to which it is a
party or by which it is bound, or any other agreement or other instrument by
which any of the properties or assets owned by it or used in the conduct of its
business is affected, and each Borrower has complied and is in compliance with
all applicable laws, ordinances and regulations applicable to them, where any of
the foregoing would have a Material Adverse Effect.
3.8 Burdensome Documents.
Except as set forth on Exhibit 3.8 annexed hereto, none of the
Borrowers is a party to or bound by, nor are any of the properties or assets
owned by any of the Borrowers or used in the conduct of their respective
businesses affected by, any agreement, ordinance, resolution, decree, bond,
note, indenture, order or judgment, or subject to any restriction, which would
have a Material Adverse Effect.
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3.9 Financial Statements.
The Borrowers have delivered to each Lender the Financial Statements.
Each of the Financial Statements is true and complete and presents fairly in all
material respects the consolidated financial position of SSI and its
Subsidiaries, including, without limitation, SSD, and the results of their
respective operations and, if applicable, changes in cash flows, as at the dates
and for the period referred to therein; and has been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with that
of the prior period (except as disclosed therein or in the notes thereto, and
with respect to the unaudited financial statements as of December 31, 2000 and
for the period then ended, subject to normal year-end audit adjustments). There
has been no material adverse change in the financial position or operations of
any Borrower, any wholly-owned Subsidiary or, to Borrowers' knowledge, any other
Subsidiary since December 31, 2000 except as set forth in Exhibit 3.9 hereto. No
Borrower, wholly-owned Subsidiary or, to Borrowers' knowledge, any other
Subsidiary of a Borrower has any material obligation, liability or commitment,
direct or contingent, which is not reflected in the Financial Statements.
3.10 Tax Returns.
Each of the Borrowers has filed all federal, state and local tax
returns required to be filed by it and has not failed to pay any taxes, or
interest and penalties relating thereto, on or before the due dates thereof.
There are no waivers or agreements by any Borrower for the extension of time for
the assessment of any tax. Except for tax liabilities not in excess of
$1,000,000 in the aggregate with respect to the Borrowers and except to the
extent that reserves therefor are reflected in the Financial Statements, (a)
there are no material federal, state or local tax liabilities of any Borrower
due or to become due for any tax year ended on or prior to December 31, 2000
whether incurred in respect of or measured by the income of such Borrower which
are not properly reflected in the Financial Statements, and (b) there are no
material claims pending or, to the knowledge of any Borrower, proposed or
threatened against any Borrower for past federal, state or local taxes, except
those, if any, as to which proper reserves are reflected in the Financial
Statements.
3.11 Intangible Assets.
Except as set forth in Exhibit 3.11 hereto, to each Borrower's
knowledge, each of the Borrowers possesses all necessary franchises, patents,
licenses, trademarks, trademark rights, trade names, trade name rights and
copyrights to conduct its business as now conducted and as proposed to be
conducted, without any conflict with the franchises, patents, licenses,
trademark rights, trade names, trade name rights and copyrights of others.
3.12 Name Changes.
Except as described in Exhibit 3.12 hereto, none of the Borrowers has
within the six-year period immediately preceding the date of this Agreement,
changed its name, been the surviving entity of a merger or consolidation, or
acquired all or substantially all of the assets of any Person.
3.13 Full Disclosure.
None of the Financial Statements, nor any certificate, opinion, or any
other statement made or furnished in writing to any Lender by or on behalf of
any of the Borrowers in connection with this Agreement or the transactions
contemplated herein, 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, as of the date such statement was made. There
is no fact known to any Borrower which has, or would in the now foreseeable
future have,
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a Material Adverse Effect, which fact has not been set forth herein, in any of
the Financial Statements or any certificate, opinion, or other written statement
so made or furnished to any Lender.
3.14 ERISA.
(a) The Borrowers have no pension or other employee benefit
plans which are subject to the provisions of Title IV of ERISA (any such plans
which have been or may hereafter be adopted or assumed by the Borrowers are
hereinafter referred to individually as a "Plan" and, collectively, as the
"Plans"), the application of which is reasonably likely to give rise to direct
or contingent liabilities of the Borrowers to the Pension Benefit Guaranty
Corporation ("PBGC"), the Department of Labor or the Internal Revenue Service
("IRS"). None of the Borrowers is a participating employer in any Plan under
which more than one employer makes contributions as described in Sections 4063
and 4064 of ERISA. The Borrowers have no withdrawal liability to any
multiemployer plan and no withdrawal from any multiemployer plan is contemplated
or pending by any of the Borrowers.
(b) Except as described in Exhibit 3.14 hereto, the Borrowers
are and have at all times been in full compliance with all applicable provisions
of ERISA.
(c) With respect to any of the Plans, Borrowers have no
knowledge of any Reportable Event, as described in Section 4043 of ERISA, except
that there has or may have occurred (1) a reduction in the number of active
participants as described in Section 4043(b) (3) of ERISA; (2) a termination or
partial termination; or (3) a merger or consolidation with, or transfer of
assets to, another plan. The Borrowers have no outstanding liability to the PBGC
for reason of any such Reportable Event, and the Borrowers have not received any
notice from the PBGC that any of the Plans should be terminated or from the
Secretary of the Treasury that any partial or full termination of any of the
Plans has occurred.
(d) No termination proceedings with respect to any of the
Plans have been commenced and have not yet been concluded.
(e) With respect to any of the Plans, there has not occurred
any prohibited transaction (as defined in Section 406 of ERISA or Section 4975
of the Internal Revenue Code) for which a prohibited transaction exemption has
not been provided by statute or regulation, ruling or opinion issued by the
Department of Labor or Internal Revenue Service and which may result in the
imposition upon the Borrowers of any prohibited transaction excise tax or civil
liability under Section 502(i) of ERISA.
(f) The Borrowers have made all required contributions under
the Plans for all periods through and including the date hereof or adequate
accruals therefor have been provided for as shown in the Financial Statements.
No "accumulated funding deficiency" (as defined in section 302 of ERISA) has
occurred with respect to any of the Plans.
For purposes of this Agreement, all references to "ERISA" shall be deemed to
refer to the Employee Retirement Income Security Act of 1974 (including any
sections of the Internal Revenue Code of 1986 amended by it), as heretofore
amended and as it may hereafter be amended or modified, and all regulations
promulgated thereunder, and all references to the Borrowers in this Section
3.14, or in any other Section of this Agreement relating to ERISA, shall be
deemed to refer to the Borrowers and all other entities which are part of a
controlled or affiliated group or under common control with the Borrowers within
the meaning of Sections 414(b), 414(c) and 415(h) of the Internal Revenue Code
of 1986, as amended, and Section 4001 (a) (2) of ERISA.
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3.15 Employee Grievances.
There are no actions or proceedings pending or, to the best of any
Borrower's knowledge, threatened against any Borrower, by or on behalf of or
with respect to its employees, which would have a Material Adverse Effect.
3.16 Indebtedness.
There is set forth on Exhibit 3.16 hereto a true and complete schedule
of all Indebtedness for borrowed money (including guaranties of borrowed money)
and Capitalized Lease Obligations of the Borrowers in existence as of the date
of this Agreement, setting forth with respect to all such Indebtedness, the
holders, the payment schedules and the interest or other charges payable.
3.17 Investment Company.
No Borrower is an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, nor is any
Borrower controlled by such a company.
Article 4. The Closings; Conditions to the Loans.
4.1 The Closing.
Subject to the satisfaction of the conditions precedent set forth in
Section 4.2 hereof, the Closing shall take place at the offices of Xxxx Xxxxx,
LLP, counsel to the Agent, simultaneously with the execution and delivery of
this Agreement.
4.2 Conditions to Initial Advance.
The obligation of Lenders to lend the initial Advance shall be subject
to the fulfillment to the satisfaction of the Agent (but, as between the Lenders
and the Agent, subject to Section 8.15 hereof) of the following conditions
precedent:
(a) Each Borrower shall have executed and delivered to Agent
the Notes.
(b) Each Borrower shall have executed and delivered to Agent
the Pledge Agreement as required by Section 2.14 hereof.
(c) Borrowers shall, in connection with the Swing Line, have
executed and delivered to Agent a Working Cash Line of Credit, Investment Swap
Rider (the "Working Cash Agreements").
(d) Counsel to the Borrowers shall have delivered to Agent its
opinion, in form and substance satisfactory to Agent.
(e) Agent shall have received copies of the following:
(i) All of the consents, approvals and waivers
referred to on Exhibit 3.2 hereto, except only those which, as stated on Exhibit
3.2, shall not be delivered and each such consent, waiver and approval so
delivered shall be in form and substance satisfactory to Lenders;
(ii) Copies of all corporate action (including,
without limitation, directors' resolutions and stockholders' consents) taken by
each Borrower to authorize the
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execution, delivery and performance of any agreement, instruments and documents
to which it is a party pursuant hereto or in connection herewith, and an
incumbency certificate with respect to each such corporation in each case
certified by its respective secretary;
(iii) Such other documents, including UCC-1 Financing
Statements and UCC-3 Amendment Statements (or other document necessary to grant
or perfect a lien on personal property or real estate under the applicable law
of a particular jurisdiction) as any Lender may require;
(f) (i) The Borrowers shall have complied and shall then
be in compliance with all of the terms, covenants and conditions of this
Agreement;
(ii) There shall exist no Event of Default or
Default; and
(iii) The representations and warranties contained in
Article 3 hereof shall be true in all material respects;
(g) Agent shall have received a Certificate (a "Compliance
Certificate") of the president, a vice president, the treasurer or the corporate
controller of each Borrower dated the date of the Closing certifying that the
conditions set forth in Subsection 4.2(f) hereof are satisfied on such date;
(h) The Borrowers shall have delivered to Agent, initialed by
the Borrowers for identification, copies of the Financial Statements (prior
receipt of which Agent acknowledges); and
(i) Agent shall have received an initial Borrowing Base
Certificate and initial Liquidity Reports (including account statements) per
Section 5.10 hereof; and
(j) All legal matters incident to the transactions
contemplated hereby shall be satisfactory to counsel to Agent.
4.3 Conditions to Subsequent Advances.
The obligation of Lenders to make each Advance subsequent to the
initial Advance shall be subject to the fulfillment to the satisfaction of Agent
(but, as between the Lenders and the Agent, subject to Section 8.15 hereof) of
the following conditions precedent:
(a) Except with respect to borrowings under the Swing Line,
Agent shall have received a request for a borrowing as provided for in
subsection 2.3 hereof.
(b) Agent shall have received a Borrowing Base Certificate and
Liquidity Report as required by Section 2.1.1(a)(ii) hereof
(c) The matters contained in Section 4.2(f) hereof shall be
true as of such date.
(d) All legal matters incident to such advance shall be
satisfactory to counsel to Agent.
Article 5. Delivery of Financial Reports, Documents and Other
Information.
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While the Revolving Loan Commitment or any Advance remains
outstanding, so long as any Borrower is indebted to the Lenders and until
payment in full of the Notes and full and complete performance of all of their
other obligations arising hereunder, the Borrowers shall deliver to Agent and to
each Lender:
5.1 Annual Financial Statements.
(a) Annually, as soon as available, but in any event within
100 days after the last day of each of its fiscal years, a consolidated and
consolidating Balance Sheet and statement of operations of SSI and its
Subsidiaries as at such last day of the fiscal year, and consolidated
shareholders' equity and cash flows of SSI and its Subsidiaries for such fiscal
year, each prepared in accordance with generally accepted accounting principles
consistently applied, each to be in reasonable detail and, with respect to such
consolidated financial statements, audited without qualification or explanatory
paragraphs by KPMG Peat Marwick or another firm of independent certified public
accountants satisfactory to Agent.
(b) Annually, as soon as available, but in any event within
100 days after the last day of each of its fiscal years, the unaudited Balance
Sheet of SSI as at such last day of the fiscal year, and the unaudited statement
of operations of SSI for such fiscal year, in each case prepared on both a
consolidated basis for SSI and its Subsidiaries and on a consolidated basis for
SSI excluding all Subsidiaries other than if another Borrower and prepared in
accordance with generally accepted accounting principles consistently applied,
each to be in reasonable detail and certified by SSI's chief financial officer
or corporate controller and in each case showing the calculation of the
covenants in Sections 6.8 and 6.9 hereof, and accompanied by a reconciliation
between the financial statements for SSI and it Subsidiaries and those proposed
for the Borrowers only.
5.2 Quarterly Financial Statements.
(a) As soon as available, but in any event within 45 days
after the end of the first three fiscal quarterly periods of each fiscal year,
an unaudited consolidated Balance Sheet of SSI and its Subsidiaries, as at such
last day of the fiscal quarter, and an unaudited consolidated statement of
operations of SSI and its Subsidiaries for such fiscal quarter, and with respect
to the second and third fiscal quarters such statements shall also include
statements of operations and cash flows for the period from the commencement of
the then current fiscal year to the end of such quarter, each to be in
reasonable detail and certified by the chief financial officer or corporate
controller of the Borrowers as having been prepared in accordance with generally
accepted accounting principles consistently applied, subject to year-end audit
adjustments.
(b) As soon as available, but in any event within 45 days
after the end of each of the first three fiscal quarterly periods of each fiscal
year, unaudited consolidating Balance Sheets and statement of operations of SSI
and its Subsidiaries as at such last day of such fiscal quarter, and with
respect to the second and third fiscal quarters, such statements shall also
include consolidating statements of operations for the period from the
commencement of the current fiscal year to the end of such quarter, each to be
in reasonable detail.
(c) As soon as available, but in any event within 45 days
after the end of the first three fiscal quarterly periods of each fiscal year,
an unaudited Balance Sheet of SSI as at such last day of the fiscal quarter, and
an unaudited statement of operations of SSI for such fiscal quarter, and with
respect to the second and third fiscal quarters such statements shall also
include statements of operations for the period from the commencement of the
then current fiscal year to the end of such quarter, in each case prepared on a
consolidated basis for SSI excluding all Subsidiaries other than if another
Borrower and to be in reasonable detail and certified by the chief financial
officer or corporate controller of the Borrowers as having been prepared in
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accordance with generally accepted accounting principles consistently applied,
subject to year-end audit adjustments, and in each case showing the calculation
of the covenants in Sections 6.8 and 6.9 hereof, and accompanied by a
reconciliation between such "Borrower only" financial statements and the
consolidated financial statements required by subpart (a) above.
5.3 Additional Information.
Promptly after a written request therefor, such other financial data or
information evidencing compliance with the requirements of this Agreement, the
Notes and the Security Documents, as Agent or any Lender may reasonably request
from time to time.
5.4 No Default Certificate.
At the same time as it delivers the financial statements required under
the provisions of Sections 5.1 and 5.2, a Certificate of the president,
treasurer, corporate controller or any vice president of SSI, to the effect that
no Event of Default hereunder, or Default, has occurred and is continuing, or,
if such cannot be so certified, specifying in reasonable detail the exceptions,
if any, to such statement. Such certificate shall be accompanied by a detailed
calculation indicating compliance with the covenants contained in Sections 6.8
and 6.9.
5.5 Copies of Other Reports.
Promptly upon receipt thereof, copies of all other final reports
submitted to the Borrowers by its independent accountants in connection with any
annual or interim audit of the books of the Borrowers made by such accountants.
5.6 Copies of Documents.
Promptly upon their becoming available, copies of any (a) financial
statements, notices (other than routine correspondence), requests for waivers
and proxy statements delivered by any Borrower to any other lending institution
or to its stockholders (as such); (b) material non-routine correspondence or
material official notices received by any Borrower from any federal, state or
local governmental authority which regulates the operations of such Borrower;
(c) registration statements and any amendments and supplements thereto, and any
regular and periodic reports, if any, filed by any Borrower with any securities
exchange or with the Securities and Exchange Commission or any governmental
authority succeeding to any or all of the functions of the said Commission
(including without limitation form 10-K not later than 90 days after the last
day of each fiscal year of SSI and form 10-Q not later than 45 days after the
last day of each fiscal quarter of SSI); (d) all form 8-Ks not later than 15
days after filing; and (e) letters of comment or material non-routine
correspondence sent to any Borrower by any such securities exchange or such
Commission in relation to such corporation and its affairs.
5.7 Notice of Defaults.
Promptly, notice of the occurrence of an Event of Default hereunder, or
Default which would have a Material Adverse Effect.
5.8 ERISA Notices.
(a) Concurrently with such filing, a copy of each annual
report which is filed with respect to each Plan with the Secretary of Labor or
the PBGC; and
(b) promptly, upon their becoming available, copies of (i) all
non-routine correspondence with the PBGC, the Secretary of Labor or any
representative of the IRS with
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respect to any Plan; (ii) copies of all reports received by any Borrower from
its actuary with respect to any Plan; and (iii) copies of any notices of Plan
termination filed by any Plan Administrator (as those terms are used in ERISA)
with the PBGC and of any notices from the PBGC to any Borrower with respect to
the intent of the PBGC to institute involuntary termination proceedings; and
(iv) copies of all non-routine correspondence with the plan sponsor with respect
to any multiemployer plan.
5.9 Projections.
Quarterly within forty-five (45) days after each fiscal quarter, cash
flow projections for SSI and its consolidated Subsidiaries for the four fiscal
quarters following such fiscal quarter.
5.10 Liquidity Reports.
(a) Weekly on the last Business Day of each week for the
Friday through Thursday period most recently ending, a Liquidity certificate,
certified by the chief financial officer or corporate controller of Borrowers,
detailing Borrowers' Liquidity.
(b) Monthly within fifteen (15) days after each calendar
month, copies of account statements from each depositary or other financial
intermediary reflecting cash and cash equivalents included within the Liquidity
convenant.
Article 6. Covenants.
While the Revolving Loan Commitment or any Advance remains outstanding,
so long as any Borrower is indebted to the Lenders and until payment in full of
the Notes and full and complete performance of all of its other obligations
arising hereunder:
6.1 Payment of Taxes and Claims.
The Borrowers will, and will cause the Included Subsidiaries to, pay
and discharge before they become delinquent:
(a) all taxes, assessments, and governmental charges or levies
imposed upon each such Person, its income or its Property;
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons which, if unpaid, might result in
the creation of a Lien upon any Borrower's or any Included Subsidiary's
Property;
(c) all claims, assessments, or levies required to be paid by
any such entity pursuant to any agreement, contract, law, ordinance, or
governmental rule or regulation governing any pension, retirement,
profit-sharing or any similar plan of any Borrower or Included Subsidiary; and
(d) all other obligations and liabilities of each Borrower and
Included Subsidiary;
where in any such case the failure to pay or discharge would have a Material
Adverse Effect; provided, that items of the foregoing description need not be
paid while being contested in good faith and by appropriate proceedings and
provided further that a bond is filed in cases where the filing of a bond is
necessary to avoid the creation of a Lien against the Collateral.
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6.2 Maintenance of Properties, Insurance, Records and Corporate
Existence; Inspections and Audits; etc.
The Borrowers will:
(a) Property. Maintain their respective Properties in good
condition, working order and repair, subject to normal wear and tear.
(b) Insurance.
(i) Maintain, with financially sound and reputable
insurers, insurance with respect to their respective Properties and businesses
against such casualties and contingencies of such types and in such amounts as
is customary in the case of corporations of established reputations engaged in
the same or a similar business and file with Agent upon its request a detailed
list of the insurance then in effect, stating the names of the insurance
companies, the amounts and rates of insurance, dates of the expiration thereof
and the properties and risks covered thereby.
(ii) Pay all premiums to the PBGC as may be required
for the plan termination and insolvency insurance provided by the PBGC.
(c) Financial Records. Keep proper books of record and account
in a manner satisfactory to Agent in which full, true and correct entries in
accordance with generally accepted accounting principles shall be made of all
dealings or transactions in relation to its business activities.
(d) Maintenance of Existence. Subject to the terms of Section
6.7 hereof, do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and all franchises, rights and
privileges necessary for the proper conduct of businesses and continue to engage
in the same type of business as it is presently engaged.
(e) Delivery of Amendments. Promptly deliver to Agent copies
of any amendments or modifications to its certificate of incorporation or
by-laws, certified, with respect to the certificate of incorporation, by the
Secretary of State of its jurisdiction of incorporation and, with respect to the
by-laws, by the Secretary of the corporation.
(f) Notice of Disputes. Promptly notify Agent in writing of
any litigation, legal proceeding or dispute which is reasonably likely to result
in liability in excess of $10,000,000 whether or not fully covered by insurance.
(g) Compliance with Law. Comply with all laws, ordinances,
governmental rules and regulations to which such entity is subject (including,
without limitation, ERISA and environmental laws) and obtain any licenses,
permits, franchises, or other governmental authorizations necessary to the
ownership of their respective Properties or to the conduct of their respective
businesses, where in any such event the failure to do so would have a Material
Adverse Effect.
(h) Inspections and Audits. Permit each Lender to make or
cause to be made, at the Borrowers' expense (which expense shall be limited to a
reasonable amount prior to any Default), inspections and audits of any books,
records and papers of each Borrower and to make extracts therefrom, or to make
inspections and examinations of any properties and facilities of any Borrower on
reasonable notice, at all such reasonable times and as often as any Lender may
reasonably require.
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6.3 Indebtedness.
The Borrowers shall not, nor suffer or permit the Included
Subsidiaries to, create, incur, permit to exist or have outstanding any
Indebtedness (for this purpose not including Subordinated Indebtedness, which is
addressed in Section 6.20 hereof), except:
(a) Indebtedness of the Borrowers to the Lenders under this
Agreement and the Notes;
(b) Taxes, assessments and governmental charges, current trade
accounts payable, accrued expenses, customer payments received in advance and
deferred liabilities other than for borrowed money (e.g., deferred compensation
and deferred taxes), in each case incurred and continuing in the ordinary course
of business;
(c) Existing Indebtedness for borrowed money set forth on
Exhibit 3.16 annexed hereto;
(d) Purchase money Indebtedness (including Capitalized Lease
Obligations) hereafter incurred for equipment or real estate in an amount not to
exceed $7,500,000 at any time outstanding in the aggregate for the Borrowers and
the Included Subsidiaries;
(e) Indebtedness of Borrowers owing to Persons in which Equity
Interests have been or hereafter are acquired (as permitted in Section 6.6
hereof) in an aggregate amount not to exceed $40,000,000 at any time outstanding
and, in each case, modifications, extensions, refinancings or restructurings of
any such transactions to the extent such modifications, etc. do not increase
Borrowers' monetary obligations with respect to the indebtedness so modified,
etc; and
(f) Permitted SWAPS.
6.4 Liens.
No Borrower will, nor suffer or permit any Included Subsidiary to,
cause or permit in the future (upon the happening of a contingency or otherwise)
any of their respective Properties, whether now owned or hereafter acquired, to
be subject to a Lien except:
(a) Liens created by the Security Documents;
(b) Liens for taxes or other governmental charges which are
not delinquent or which are being contested in good faith and for which a
reserve shall have been established as required in accordance with generally
accepted accounting principles;
(c) Pledges or deposits to secure obligations under workmen's
compensation laws or similar legislation; pledges or deposits to secure
performance in connection with bids, tenders, contracts (other than contracts
for the payment of money) or leases to which any of the Borrowers is a party;
deposits to secure public or statutory obligations; materialmen's, mechanics',
carriers', workmen's, repairmen's or other like liens, or deposits to obtain the
release of such liens, in an aggregate amount with respect to the Borrowers and
the Included Subsidiaries not exceeding $1,500,000 at any one time outstanding;
and deposits to secure surety, appeal or customs bonds on which any of the
Borrowers or Included Subsidiaries is the principal; as to all of the foregoing,
however, only to the extent arising and continuing in the ordinary course of
business;
(d) Existing Liens set forth on Exhibit 3.16 annexed hereto;
and
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(e) Purchase Money Liens on equipment and real estate to
secure purchase money Indebtedness permitted by Section 6.3 (d) hereof.
Further, no Borrower will enter into or permit to exist any agreement
with any Person which by its terms prohibits any Borrower from granting Agent or
any Lender a lien on or security interest or pledge of the Collateral or any of
Borrowers' Equity Interests.
6.5 Guaranties.
The Borrowers shall not, nor suffer or permit any Included Subsidiary
to, assume, endorse, be or become liable for, or guarantee, the obligation of
any Person, except:
(a) by the endorsement of negotiable instruments for deposit
or collection in the ordinary course of business;
(b) guaranties existing on the date hereof as set forth on
Exhibit 3.16 hereof;
(c) future guaranties to the extent that, after giving effect
to such future guaranties, the aggregate amount of all guaranties by the
Borrowers and the Included Subsidiaries (including those referred to in
Paragraph (b) hereof and excluding those referred to in Paragraph (a) hereof)
would not exceed Fifty Million Dollars ($50,000,000.00) at any time outstanding,
provided that in no event will any such guaranty(ies) heretofore or hereafter
issued for the indebtedness or obligations of any one Person exceed $20,000,000
in the aggregate at any time outstanding.
For the purposes hereof, the term "guaranties" shall mean any
obligation to pay money on behalf of or in regard to another Person (other than
(i) a Borrower or an Included Subsidiary, as to which such Borrower's or
Included Subsidiary's obligation is permitted pursuant to Section 6.3 hereof,
and (ii) a partnership or LTIP as to which such Borrower's guaranteed
obligations arise solely as a result of such Borrowers' status as a general
partner of such entity), including without limitation any obligation as
guarantor, surety, purchaser, indemnitor, lessee, repurchaser, investor,
contributor, subscriber, lender or otherwise. It is intended that the term
"guaranties" be interpreted in the broadest sense possible and the examples in
the foregoing sentence are illustrations and not limitations.
Furthermore, reimbursement obligations with respect to Letters of
Credit shall not be "guaranties" for purposes of this Section 6.5.
6.6 Equity Interests and Loans.
The Borrowers may acquire Equity Interests in other Persons, in
addition to Equity Interests existing on the date of Closing and disclosed in
Exhibit "6.6" hereto, subject to the following limitations:
(a) (i) Borrowers may only invest in any fiscal year, whether
as further Equity Interests in a Person in which an Equity Interest has
previously been acquired or as a new Equity Interest in a new Person,
$100,000,000 per Equity Interest for up to two such Equity Interests and
$50,000,000 per Equity Interest for other Equity Interests.
(ii) Notwithstanding subpart (a) (i) above, the term
"Equity Interest" as used therein shall not include a transaction which would
otherwise constitute an Equity Interest but for which the consideration given by
Borrowers in connection therewith consists entirely of capital stock issued by
SSI (herein, "Non Cash Investments"), provided that should any such
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stock thereafter be redeemed in whole or in part for cash, the cash so paid will
be deemed an "Equity Interest" in the fiscal year so paid.
(b) Borrowers shall notify Agent of any Equity Interest in any
Person in which no previous Equity Interest has been acquired by any Borrower,
within a reasonable period after acquiring such Equity Interest, and shall
provide Agent with full information on the Equity Interest, including without
limitation, balance sheets, statements of income, statements of stockholders
equity and such other information that Agent may request.
For purposes of measuring the amount of Equity Interests, an Equity Interest
shall be deemed acquired in the year in which a Borrower becomes contractually
obligated to make a payment notwithstanding that the payment is acquired in a
later year.
6.7 Consolidation and Merger.
No Borrower will consolidate with or merge into any other Person other
than another Borrower or permit any other Person to consolidate with or merge
into any Borrower other than such consolidations and mergers as to which a
Borrower is the surviving entity.
6.8 Tangible Net Worth; Adjusted Tangible Net Worth.
The Borrowers shall have and maintain: (a) Tangible Net Worth of not
less than $675,000,000 as of December 31, 2000, increasing by the sum of (i) 75%
of after tax earnings plus (ii) 100% of additional equity (including
Subordinated Indebtedness) net of transaction expenses, for all periods after
December 31, 2000 (determined on a cumulative basis), and (b) Adjusted Tangible
Net Worth of not less than $750,000,000 as of December 31, 2000, increasing by
the sum of (i) 75% of after tax Adjusted Earnings plus (ii) 100% of additional
equity (including Subordinated Indebtedness) net of transaction expenses, for
all periods after December 31, 2000 (determined on a cumulative basis); in each
case tested as of the last day of each fiscal quarter and as set forth in
Section 1.3 hereof.
6.9 Liquidity.
The Borrowers shall maintain Liquidity of $42,000,000 or more, to be
tested as provided in Section 5.10 hereof.
6.10 Change of Business; Sale of Assets.
The Borrowers shall not make any material change in its business or in
the nature of its operations or liquidate or dissolve itself (or suffer any
liquidation or dissolution) or convey, sell, lease, or otherwise dispose of any
of its Properties (other than Equity Interests and Pledged Securities), assets
or business, except in the ordinary course of business for a fair consideration,
or, except as provided below, dispose of any Equity Interests on Pledged
Securities whether now owned or hereafter acquired; provided, however, that
nothing contained in this Section 6.10 shall prohibit (i) the sale of any Equity
Interest, the stock of which Equity Interest is not a part of the Pledged
Securities, or (ii) the acquiring of any Equity Interest permitted under Section
6.6 hereof, or (iii) sales of Pledged Securities in the ordinary course of any
Borrower's business provided that Borrowers are at all times in compliance with
the Collateral Coverage Base and subject to the terms of Section 4(c) of the
Pledge Agreement.
6.11 Leases.
The Borrowers shall not enter into any leases (other than leases giving
rise to Capitalized Lease Obligations) to the extent that, after giving effect
to any such lease, the aggregate amount
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of rental payments and all other payments by the Borrowers under such leases in
any fiscal year of SSI would exceed $10,000,000.
6.12 Issuance of Stock.
The Borrowers will not permit SSD or SDI to issue, sell or dispose of
any shares of stock of any class, excluding stock hereafter issued pursuant to
outstanding warrants, options, option plans, contracts or commitments listed in
Exhibit 3.1.
6.13 Fiscal Year.
The Borrowers shall not change their fiscal year.
6.14 Dividends. The Borrowers shall not pay or declare any cash
dividends other than to another Borrower.
6.15 ERISA Compliance; Obligations.
(a) The Borrowers shall:
(i) comply in all material respects with all
applicable provisions of ERISA now or hereafter in effect;
(ii) promptly notify the Agent in writing of the
occurrence of any Reportable Event, as defined in ERISA, together with a
description of such Reportable Event and a statement of the action that any such
Borrower intends to take with respect thereto, together with a copy of the
notice (if any) thereof given to the PBGC; and
(iii) promptly notify Agent in writing of any
proposed withdrawal from a multiemployer plan.
(b) The Borrowers will not:
(i) be or become obligated to the PBGC or any
multiemployer plan in excess of $500,000; or
(ii) be or become obligated to the IRS with respect
to excise or other penalty taxes provided for in those provisions of the
Internal Revenue Code which were enacted pursuant to ERISA, as now in effect or
hereafter amended or supplemented, in excess of $500,000.
6.16 Prepayments.
None of the Borrowers will make any voluntary or optional prepayment of
any Indebtedness for borrowed money incurred or permitted to exist under the
terms of this Agreement, other than Indebtedness evidenced by the Notes, subject
to the prepayment terms hereof, and other than with respect to the Subordinated
Indebtedness.
6.17 Securities Monetizations.
Securities Monetizations will not be subject to any of the other
covenants set forth in this Section 6, including without limitation Section 6.3
(Indebtedness), 6.4 (Liens) and 6.10 (Sale of Assets) hereof, but instead will
be subject to the following limitations:
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(a) the entire net proceeds from such Securities
Monetization will concurrently with Borrowers' receipt thereof be paid against
the principal of the Revolving Loan (subject to Borrowers' right to re-borrow if
otherwise permitted under
the terms of this Agreement);
(b) no Default or Event of Default shall be
outstanding as of the date on which such transaction is to be closed or would
result therefrom, including an Event of Default by reason of non-compliance with
the Collateral Coverage Base as a
result of such Securities Monetization; and
(c) the combined aggregate amount of all Securities
Monetizations (measured by the consideration received by the Borrowers in
exchange for the "transferred" stock) and all Subordinated Indebtedness (as
defined and as otherwise permitted by Section 6.20 and measured by principal
amount) incurred on or after the date hereof through and including May 21, 2002
will not exceed the Monetization/Sub Debt Annual Limit.
6.18 Letters of Credit.
The Borrowers shall not obtain any letters of credit or enter into any
agreements or execute any obligations with respect to letters of credit except
with respect to Letters of Credit issued by Issuer pursuant hereto.
6.19 Dispositions.
The Borrowers shall notify Agent of the disposition of the capital
stock or other ownership interest in any Person by telephone at the latest
contemporaneously therewith followed promptly by written notice. In the event of
the disposition of Pledged Securities written notice shall not be later than
twenty-four (24) hours after the time when Agent is to deliver such Pledged
Securities. The proceeds of the sale of any Collateral shall be applied as set
forth in Section 4(c) of the Pledge Agreement.
6.20 Subordinated Indebtedness.
(a) Subordinated Indebtedness will not be subject to the
prohibition contained in Section 6.3 (Indebtedness) hereof but instead will be
subject to the limitations that (A) the combined aggregate amount of principal
of all Subordinated Indebtedness and all Securities Monetizations (as permitted
and measured in Section 6.17 hereof) incurred on and after January 1, 2000 shall
not exceed the Monetization/Sub Debt Annual Limit and (B) the aggregate amount
of all Subordinated Indebtedness incurred on and after the date hereof through
and including May 21, 2002 will not exceed the Sub Debt Aggregate Sub Limit.
(b) In the event that any Subordinated Indebtedness is by its
terms convertible to stock of SSI, or in the event that Borrowers have the
option to redeem Subordinated Indebtedness prior to maturity, Borrowers may
issue stock of SSI in connection with any such conversion or redemption, subject
to the change of ownership limitation set forth in Section 7.10 hereof, provided
that Borrowers will exercise such optional redemption right only when it
reasonably and in good faith appears to Borrowers that the holder will accept
SSI stock in full payment thereof, such as by reason of the then price per share
being in excess of the then conversion price, although Borrowers may, subject to
the other terms hereof, make a cash payment for such redemption if nevertheless
required by the holder.
Article 7. Events of Default; Remedies.
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Any one or more of the following events shall constitute an Event of
Default:
7.1 Payments.
(a) Failure to make any payment of interest upon any of the
Notes, or to make any payment of the commitment fees, within seven (7) days
after the date upon which any such payment is due; or
(b) Failure to make any payment of principal required
hereunder when due; or
(c) Should the principal balance (including the face amount of
outstanding Letters of Credit and unreimbursed draws under Letters of Credit)
outstanding under the Revolving Loan at any time exceed the Collateral Coverage
Base; or
7.2 Covenants.
Failure by any Borrower to perform or observe any of their respective
agreements contained in Article 6 hereof (except Sections 6.1, 6.2, 6.8, 6.9, or
6.15(a) of Article 6); or
7.3 Other Covenants.
Failure by any Borrower to perform or observe any other term, condition
or covenant of this Agreement not described in Section 7.2 above, the Notes, the
Security Documents, or any other agreement or document delivered pursuant hereto
or thereto which shall remain unremedied for a period of thirty (30) days after
notice thereof shall have been given by Agent to SSI; or
7.4 Other Defaults.
(a) Failure by any Borrower to perform or observe any term,
condition or covenant of any bond, note, debenture, loan agreement, indenture,
guaranty, trust agreement, mortgage or similar instrument (including, without
limitation, any debt which is subordinated to the obligations created pursuant
to this Agreement) to which any Borrower is a party or by which it is bound, or
by which any of its Properties or assets may be affected (a "Debt Instrument"),
and, as a result thereof (assuming the giving of appropriate notice thereof, if
required), Indebtedness in excess of $9,000,000 which is included therein or
secured or covered thereby shall have been declared due and payable prior to the
date on which such Indebtedness would otherwise become due and payable; or
(b) Any event or condition referred to in any Debt Instrument
shall have occurred or failed to occur, and, as a result thereof, Indebtedness
in excess of $9,000,000 which is included therein or secured or covered thereby
shall have been declared due and payable prior to the date on which such
Indebtedness would otherwise become due and payable; or
(c) Failure to pay any Indebtedness for borrowed money in
excess of $9,000,000 due at final maturity or pursuant to demand under any Debt
Instrument.
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7.5 Representations and Warranties.
Any representation or warranty made in writing to Agent or any Lender
in any of the Loan Documents or in connection with the making of the Loans, or
any certificate, statement or report made or delivered in compliance with this
Agreement, shall have been false or misleading in any material respect when made
or delivered; or
7.6 Bankruptcy.
(a) Any Borrower shall make an assignment for the benefit of
creditors, file a petition in bankruptcy, be adjudicated insolvent or bankrupt,
suffer an order for relief under any federal bankruptcy law, petition or apply
to any tribunal for the appointment of a receiver, custodian, or any trustee for
it or a substantial part of its assets, or shall commence any proceeding under
any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or there shall have been filed any such petition or application, or any
such proceeding shall have been commenced against it, which remains undismissed
for a period of sixty (60) days or more; or any order for relief shall be
entered in any such proceeding; or any Borrower by any act or omission shall
indicate its consent to, approval of or acquiesced in any such petition,
application or proceeding or the appointment of a custodian, receiver or any
trustee for it or any substantial part of any of its properties, or shall suffer
any custodianship, receivership or trusteeship to continue undischarged for a
period of sixty (60) days or more; or
(b) Any Borrower shall generally not pay its debts as such
debts become due; or
(c) Any Borrower shall have concealed, removed, or permitted
to be concealed or removed, any part of its property, with intent to hinder,
delay or defraud its creditors or any of them, or made or suffered a transfer of
any of its property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; or shall have made any transfer of its property to or
for the benefit of a creditor at a time when other creditors similarly situated
have not been paid; or shall have suffered or permitted, while insolvent, any
creditor to obtain a Lien upon any of its property through legal proceedings or
distraint which is not vacated within sixty (60) days from the date thereof; or
7.7 Judgments.
Any judgment against any Borrower or any attachment, levy of execution
against any of their respective properties for any amount in excess of
$9,000,000 shall remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of sixty (60) days or more; or
7.8 ERISA.
(a) The termination of any Plan or the institution by the PBGC
of proceedings for the involuntary termination of any Plan, in either case, with
a vested unfunded liability in excess of $9,000,000; or
(b) Failure by any Borrower to fund, in accordance with the
applicable provisions of ERISA, each of the Plans hereafter established or
assumed by it provided, that such failure to fund shall not constitute an Event
of Default hereunder unless such failure shall continue for 5 days after the
date on which such funding was required; or
(c) The withdrawal by any Borrower from any multiemployer plan
giving rise to a withdrawal liability in excess of $9,000,000; or
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7.9 Liens.
Any of the Liens created and granted to the Lenders under the Security
Documents shall at any time fail to be valid, first, perfected Liens, subject to
no other Lien; or
7.10 Ownership.
Any Person shall acquire more than 30 percent of the issued and
outstanding capital stock of SSI.
7.11 Remedies.
(a) In addition to all other rights, options and remedies
granted or available to Agent or Lenders under this Agreement or the other Loan
Documents or otherwise available at law or in equity, upon or at any time after
the occurrence and during the continuance of a Default or an Event of Default,
all obligations of Lenders to make further Advances shall, at Agent's discretion
(but, as between Agent and Lenders, subject to Section 8.15 hereof), cease.
(b) In addition to all other rights, options and remedies
granted or available to Agent under this Agreement or the other Loan Documents,
Agent may, in its discretion (but, as between Agent and Lenders, subject to
Section 8.15 hereof), upon or at any time after the occurrence and during the
continuance of an Event of Default, terminate the Loans and declare the
Obligations immediately due and payable, all without demand, notice, presentment
or protest or further action of any kind (it also being understood that the
occurrence of any of the events or conditions set forth in Section 7.6 shall
automatically cause a termination of the Lenders' commitment to make Advances
hereunder and an acceleration of the Obligations).
(c) In addition to all other rights, options and remedies
granted or available to Agent, under this Agreement or the other Loan Documents,
upon or at any time after the occurrence and during the continuance of an Event
of Default, Borrowers shall be obligated to deliver and pledge to Agent, on
behalf of all Lenders, cash collateral in the amount of all outstanding Letters
of Credit.
(d) In addition to all other rights, options and remedies
granted or available to Agent under this Agreement or the other Loan Documents,
Agent may in its discretion (but, as between Agent and Lenders, subject to
Section 8.15 hereof), upon or at any time after the acceleration of the
Obligations following occurrence of an Event of Default, exercise all rights
under the UCC and any other applicable law or in equity, and under all Loan
Documents permitted to be exercised after the occurrence of an Event of Default.
(e) All rights and remedies granted Agent and the Lenders
hereunder and under the other Loan Documents, or otherwise available at law or
in equity, shall be deemed concurrent and cumulative, and not alternative
remedies, and Agent and the Lenders (subject, as between the Agent and the
Lenders, to the provisions of Section 8.15 hereof) may proceed with any number
of remedies at the same time until all Obligations are satisfied in full. The
exercise of any one right or remedy shall not be deemed a waiver or release of
any other right or remedy, and Agent, upon or at any time after the occurrence
of an Event of Default, may proceed against any Borrower, at any time, under any
agreement, with any available remedy and in any order.
Article 8. The Agent.
As between Agent, on one hand, and Lenders, on the other hand, Agent
and each Lender, who are now or shall become parties to this Agreement, agree as
follows:
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8.1 Appointment and Authorization. Each Lender, and each subsequent
holder of any of the Notes by its acceptance thereof, hereby irrevocably
appoints and authorizes Agent to take such action on its behalf and to exercise
such powers under this Agreement as are delegated to Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. Subject to the
provisions of this Agreement, Agent will handle all transactions relating to the
Loans and all other Obligations, including, without limitation, all transactions
with respect to Letters of Credit, this Agreement, the Loan Documents and all
related documents, in accordance with its usual banking practices. Except as
otherwise expressly provided herein, Borrowers are hereby authorized by Lenders
to deal solely with Agent in all transactions which affect Lenders under this
Agreement and the Loan Documents. The rights, privileges and remedies accorded
to Agent hereunder shall be exercised by Agent on behalf of all of the Lenders.
8.2 General Immunity. In performing its duties as Agent hereunder,
Agent will take the same care as it takes in connection with loans in which it
alone is interested. Subject to Section 8.6 of this Agreement, neither Agent nor
any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them hereunder or in connection
herewith except such action or omission to the extent caused from its or their
own gross negligence or willful misconduct unless such action was taken or
omitted to be taken by Agent at the direction of Majority Lenders.
8.3 Consultation with Counsel. Agent may consult with legal counsel and
any other professional advisors or consultants deemed necessary or appropriate
and selected by Agent and shall not be liable for any action taken or suffered
in good faith by it in accordance with the advice of such counsel.
8.4 Documents. Agent shall not be under a duty to examine into or pass
upon the effectiveness, genuineness or validity of this Agreement or any of the
Notes or any other instrument or document furnished pursuant hereto or in
connection herewith, and Agent shall be entitled to assume that the same are
valid, effective and genuine and what they purport to be. In addition Agent
shall not be liable for failing to make any inquiry concerning the accuracy,
performance or observance of any of the terms, provisions or conditions of such
instrument or document. Agent shall furnish to Lenders copies of all notices and
financial statements received from Borrowers hereunder.
8.5 Rights as a Lender. With respect to its applicable Pro Rata
Percentage of the Loans, PNC Bank National Association shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include Agent in its individual capacity as a
"Lender". Subject to the provisions of this Agreement, Agent may accept deposits
from, lend money to and generally engage in any kind of banking or trust
business with Borrowers and their affiliates and Subsidiaries as if it were not
Agent.
8.6 Responsibility of Agent. It is expressly understood and agreed that
the obligations of Agent hereunder are only those expressly set forth in this
Agreement and that Agent shall be entitled to assume that no Default or Event of
Default has occurred and is continuing, unless Agent has actual knowledge of
such fact. Except to the extent Agent is required by Lenders pursuant to the
express terms hereof to take a specific action, Agent shall be entitled to use
its discretion with respect to exercising or refraining from exercising any
rights which may be vested in it by, or with respect to taking or refraining
from taking any action or actions that it may be able to take under or in
respect of, this Agreement and the Loan Documents. Agent shall incur no
liability under or in respect of this Agreement and the Loan Documents by acting
upon any notice, consent, certificate, warranty or other paper or instrument
believed by it to be genuine or authentic or to be signed by the proper party or
parties, or with
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respect to anything that it may do or refrain from doing in the reasonable
exercise of its judgment, or that may seem to it to be necessary or desirable
under the circumstances. It is agreed among Agent and Lenders that Agent shall
have no responsibility to carry out audits or otherwise examine the books and
records or properties of Borrowers, except as Agent in its sole discretion deems
appropriate or as otherwise expressly required hereunder. The relationship
between Agent and each Lender is and shall be that of agent and principal only
and nothing herein shall be construed to constitute Agent a joint venturer with
any Lender, a trustee or fiduciary for any of Lenders or for the holder of a
participation therein nor impose on Agent duties and obligations other than
those set forth herein.
8.7 Collections and Disbursements.
(a) Agent will have the right to collect and receive all
payments of the Obligations, and to collect and receive all reimbursements for
draws made under the Letters of Credit, together with all fees, charges or other
amounts due under this Agreement and the Loan Documents, and Agent will remit to
each Lender, according to its applicable Pro Rata Percentage, all such payments
actually received by Agent (subject to any required clearance procedures) in
accordance with the settlement procedures established by Agent from time to
time, provided that each Lender acknowledges that the Agent Fee and issuance and
other administrative fees for Letters of Credit and interest on the Swing Line
may be retained by Agent for its own account.
(b) If any such payment, other than the Agent Fee, received by
Agent is rescinded or otherwise required to be returned for any reason at any
time, whether before or after termination of this Agreement and the Loan
Documents, each Lender will, upon written notice from Agent, promptly pay over
to Agent its Pro Rata Percentage of the amount so rescinded or returned,
together with interest and other fees thereon if also required to be rescinded
or returned.
(c) All payments by Agent and Lenders to each other hereunder
shall be in immediately available funds. Agent will at all times maintain proper
books of account and records reflecting the interest of each Lender in the
Revolving Loan, in a manner customary to Agent's keeping of such records, which
books and records shall be available for inspection by each Lender at reasonable
times during normal business hours, at such Lender's sole expense. Agent may
treat the payees of any Revolving Loan Note as the holder thereof until written
notice of the transfer thereof shall have been received by Agent. In the event
that any Lender shall receive any payments in reduction of the Revolving Loan in
an amount greater than its applicable Pro Rata Percentage in respect of
indebtedness to Lenders evidenced hereby (including, without limitation amounts
obtained by reason of setoffs), such Lender shall hold such excess in trust for
Agent (on behalf of all other Lenders) and shall promptly remit to Agent such
excess amount so that the amounts received by each Lender hereunder shall at all
times be in accordance with its applicable Pro Rata Percentage. To the extent
necessary for each Lender's actual percentage of all outstanding Advances to
equal its applicable Pro Rata Percentage, any Lender having a greater share of
any payment(s) than its applicable Pro Rata Percentage shall acquire a
participation in the applicable Pro Rata Percentage of the other Lenders as
determined by Agent.
8.8 Indemnification. Lenders hereby each indemnify Agent (and Issuer
with respect to Letters of Credit) ratably according to each Lender's Pro Rata
Percentage, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by or asserted
against Agent (or Issuer, as the case may be) in any way relating to or arising
out of this Agreement or any other Loan Document or any action taken or omitted
by Agent (or Issuer, as the case may be) under or related to this Agreement, and
as to which the Agent (or Issuer) has not been reimbursed by the Borrowers,
provided that no Lender shall be liable for any portion of
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such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements to the extent resulting from Agent's (or
Issuer's, as the case may be) gross negligence or willful misconduct unless such
action was taken or omitted by Agent (or Issuer, as the case may be) at the
direction of the Majority Lenders. Agent shall have the right to deduct, from
any amounts to be paid by Agent to any Lender hereunder, any amounts owing to
Agent by such Lender by virtue of this paragraph.
8.9 Expenses.
(a) All out-of-pocket costs and out-of-pocket expenses
incurred by Agent and not reimbursed on demand by Borrowers, in connection with
the amendment, administration, termination, work-out, forbearance and
enforcement of the Revolving Loan (including, without limitation, audit
expenses, counsel fees and expenditures to protect, preserve and defend Agent's
and each Lender's rights and interest under the Loan Documents) shall be shared
and paid on demand by Lenders pro rata based on their applicable Pro Rata
Percentage.
(b) Agent may deduct from payments or distributions to be made
to Lenders such funds as may be necessary to pay or reimburse Agent for such
costs or expenses.
8.10 No Reliance. By execution of or joining in this Agreement, each
Lender acknowledges that it has entered into this Agreement and the Loan
Documents solely upon its own independent investigation and is not relying upon
any information supplied by or any representations made by Agent. Each Lender
shall continue to make its own analysis and evaluation of Borrowers. Agent makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower, any obligor or any account debtor of any
Borrower; the accuracy, sufficiency or currency of any information concerning
the financial condition, prospects or results of operations of any Borrower; or
for sufficiency, authenticity, legal effect, validity or enforceability of the
Loan Documents. Agent assumes no responsibility or liability with respect to the
collectibility of the Obligations or the performance by Borrowers of any
obligation under the Loan Documents.
8.11 Reporting. During the term of this Agreement, Agent will, to the
extent not required to be delivered by Borrowers to each Lender pursuant to the
other terms of this Agreement, promptly furnish each Lender with copies of all
financial statements and Borrowing Base Certificates of Borrowers to be
delivered to or obtained by Agent hereunder. Agent will immediately notify
Lenders when it receives actual knowledge of any Event of Default under the Loan
Documents.
8.12 Removal of Agent. Agent may resign at any time upon giving thirty
(30) days prior written notice thereof to Lenders and Borrowers. Agent may be
removed as Agent hereunder upon the written direction of such of the other
Lenders having 66.67% of the Pro Rata Percentage of all Lenders other than
Agent. Upon any resignation or removal of Agent, the Lenders (exclusive of
Agent) shall have the right to appoint a successor Agent by majority vote of the
other Lenders (based upon the Pro Rata Percentages of the other Lenders). Upon
the acceptance of the appointment as a successor Agent hereunder by such
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all rights, powers, obligations and duties of the retiring Agent and
the retiring Agent shall be discharged from its duties and obligations
hereunder. Until such successor Agent shall be appointed and shall have accepted
such appointment, Agent shall continue to discharge all of its duties as Agent
hereunder, including without limitation, to make Swing Line Loans and issue
Letters of Credit.
8.13 Action on Instructions of Lenders. With respect to any provision
of this Agreement, or any issue arising thereunder, concerning which Agent is
authorized to act or withhold action by direction of Lenders (including the
Majority Lenders), Agent shall in all cases
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be fully protected in so acting, or in so refraining from acting, hereunder in
accordance with written instructions signed by such Lenders. Such instructions
and any action taken or failure to act pursuant thereto shall be binding on all
Lenders and on all holders of the Revolving Loan Notes.
8.14 Several Obligations. The obligation of each Lender is several, and
neither Agent nor any other Lender shall be responsible for the obligation and
commitment of any other Lender.
8.15 Consent of Lenders.
(a) Except as expressly provided herein, Agent shall have the
sole and exclusive right and obligation to service, administer and monitor the
Revolving Loan and the Loan Documents, including without limitation, exercising
or refraining from exercising all rights, remedies, privileges and options under
the Loan Documents, the determination as to the basis on which and extent to
which Advances may be made and the determination as to whether draws should be
honored for Letters of Credit, and the right to modify, waive or alter the terms
of the Loan Documents and grant such indulgences, forbearances and other waivers
as it shall determine.
(b) Notwithstanding anything to the contrary contained in
subparagraph (a) above, Agent shall not, without the prior written consent of
all Lenders: (i) extend any payment date for any obligation owing to the Lenders
under the Loan Documents or the Commitment Termination Date, (ii) reduce any
interest rate (other than the interest rate on the Swing Line) applicable to the
Revolving Loan or any fee (other than the Agent Fee and issuance and other
administrative fees for Letters of Credit) or other amount payable to the
Lenders hereunder, (iii) increase the Revolving Loan Commitment or change the
definition of the Collateral Coverage Base, (iv) release any obligor from the
Obligations except in connection with termination of the Revolving Loan and full
payment and satisfaction of all Obligations, (v) amend the definition of
Majority Lenders, (vi) amend this Section 8.15, (vii) knowingly waive for a
period in excess of three (3) Business Days the requirement that Borrower
deliver a Borrowing Base Certificate in accordance with Section 2.1.1 (a) (ii)
hereof, (viii) release any of the Collateral except upon a sale thereof by
Borrowers to the extent permitted by and subject to the terms of the Pledge
Agreement, or (ix) knowingly waive or fail to enforce any remedy available under
the Loan Documents upon an Event of Default under Sections 7.1 or 7.6(a) hereof,
or fail to terminate all obligations of Lenders or the Issuer to make any
further loans or other credit extensions (including Letters of Credit) under the
Revolving Loan at any time after Agent has actual knowledge (including by reason
of its receipt of written notice thereof from a Lender or the Borrowers) of the
occurrence of any Event of Default under Sections 7.1 or 7.6(a) hereof or of any
Default which with the lapse of time referred to in Section 7.6(a) hereof would
constitute an Event of Default under Section 7.6(a).
(c) Notwithstanding anything to the contrary contained in
subparagraph (a) above, Agent shall not, without the prior written consent of
the Majority Lenders: (i) modify, knowingly and intentionally waive or amend the
covenants or Events of Default ("Controlled Covenants") set forth in Sections
5.1, 5.2, 5.4, 5.7, 6.1, 6.2(d), 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11,
6.13, 6.14, 6.15, 6.17, 6.19, 6.20, 7.4, 7.5, 7.7, 7.8, 7.9 and 7.10 hereof,
(ii) fail to provide Borrowers, within 20 days after Agent's obtaining actual
knowledge thereof, with notice of noncompliance by Borrowers with any of the
Controlled Covenants, (iii) knowingly waive or fail to declare the Obligations
due and payable and enforce any Event of Default incident to noncompliance by
Borrowers with the Controlled Covenants, or (iv) fail to terminate all
obligations of Lenders and Issuer to make any further loans or other credit
extensions (including Letters of Credit) under the Revolving Loan at any time
after the declaration by Agent of an Event of Default incident to noncompliance
by Borrowers with any of the Controlled Covenants.
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With respect to any Controlled Covenant compliance or noncompliance with which
is contingent on a Material Adverse Effect, the reasonable good faith
determination of the Agent shall control.
(d) Subject in all events to subparts (b) and (c) above, in
the course of the enforcement by Agent of Borrowers' Obligations after an
acceleration of the Obligations, Agent shall have the sole and exclusive right
and obligation, after consultation (to the extent reasonably practicable under
the circumstances) with all Lenders, to exercise or refrain from exercising any
particular right, remedy, privilege or option under the Loan Documents in a
manner which in its reasonable judgment it reasonably deems prudent under the
circumstances to the end of collecting the Obligations, including realization of
Collateral, and may incur all such expenses it reasonably and in good xxxxx
xxxxx necessary under the circumstances.
(e) To the extent Agent is required to obtain or otherwise
elects to seek the consent of Lenders to an action Agent desires to take or omit
to take, if any Lender fails to notify Agent, in writing, of its consent or
dissent to any request of Agent hereunder within ten (10) days of such Lender's
receipt of such request, such Lender shall be deemed to have given its consent
thereto.
8.16 Participation and Assignments. No Lender shall voluntarily (other
than to a successor in interest by operation of law or pursuant to a transfer of
assets in connection with a business combination or to a Federal Reserve Bank)
or involuntarily transfer, assign, participate or otherwise set over all or any
part of its share in the Revolving Loan other than to an affiliate, without the
prior written consent of Agent, which consent shall not be unreasonably
withheld, provided, that notwithstanding the foregoing:
(a) each Lender may sell participations to one or more banks
or other entities in all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of the Note held by
it); provided that:
(i) each such participation shall be in a amount not
less than $5,000,000;
(ii) such Lender's obligations under this Agreement
(including, without limitation, its commitment to lend) shall remain unchanged;
(iii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Note
held by it for all purposes of this Agreement;
(v) the Borrowers, the Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement;
(vi) such Lender shall not permit such participant
the right to approve any waivers, amendments or other modifications to this
Agreement or any other Loan Document other than waivers, amendments or
modifications which would reduce the principal of or the interest rate on any
Advance or Reimbursement Obligation, extend the term or increase the amount of
the Revolving Loan Commitment, reduce the amount of any fees to which such
participant is entitled, extend any scheduled payment date for principal of any
Advance or release of any Collateral except as permitted by this Agreement,
provided that any such approval needed from a participant shall be solely with
respect to the applicable Lender's rights and
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obligations between such Lender and its participant and shall not alter, affect
or delay the obligations of such Lender to the other parties hereto; and
(vii) any such disposition shall not, without the
consent of the Borrowers, require the Borrowers to file a registration statement
with the Securities and Exchange Commission to apply to qualify the Revolving
Loan or the applicable Note under the blue sky law of any state; and
(b) PNC Bank, National Association, in its capacity as a
Lender hereunder ("PNC"), shall have the right, but not the obligation, to
assign its rights and delegate its duties with respect to such of its Pro Rata
Percentage of the Revolving Loan Commitment as well, after giving effect to such
assignment(s), reduce PNC's Pro Rata Percentage to not less than 25%; after any
such assignment, the assignee shall, provided that such assignee has joined in
this Agreement and assumed all obligations of a "Lender" hereunder to the extent
of such assignee's Pro Rata Percentage, all in a manner satisfactory to the
Agent, be deemed a "Lender" for all purposes hereof and PNC shall no longer have
any rights or obligations with respect to such assignee's Pro Rata Percentage of
the Revolving Loan Commitment.
8.17 Other Credit Facilities of PNC Bank, National Association. Each
Lender acknowledges that PNC Bank, National Association ("PNC") has heretofore
established for various entities various credit facilities ("Other Credit
Facilities") secured by, inter alia, the guaranties of SSI, SSD and SDI. The
parties further acknowledge that Borrowers may now have or hereafter establish
with PNC or an affiliate of PNC one or more deposit or custodian accounts. PNC
agrees with each other Lender that any amounts at any time realized by PNC, or
an affiliate thereof, on behalf of PNC, by virtue of any set-off exercised at
any time against or in the enforcement of any lien at any time obtained on said
deposit or custodian accounts shall, notwithstanding in what capacity as against
the Borrowers any such set-off is exercised or lien obtained, be first applied
against the Revolving Loan and all other Obligations of Borrowers hereunder
until paid in full before any thereof shall be applied against the principal
balance of the Other Credit Facilities.
Article 9. Miscellaneous Provisions.
9.1 Fees and Expenses.
The Borrowers, jointly and severally, will promptly (and in any event
within 30 days after receipt of an invoice or statement therefor) pay all
reasonable costs of preparing and complying with this Agreement and of the
performance by all of the Borrowers of and compliance by all of them with all
agreements and conditions contained herein and in the other Loan Documents on
their part to be performed or complied with (including, without limitation, all
costs of filing or recording any assignment, financing statements and other
documents), and the reasonable fees and expenses and disbursements of: (i)
counsel to the Agent in connection with the preparation, execution and delivery,
administration, interpretation, work-out and enforcement of this Agreement, the
Notes, the Security Documents, the other Loan Documents and all other
agreements, obligations, instruments and documents relating to this transaction
and (ii) counsel to each Lender (excluding PNC Bank, National Association in its
capacity as Agent) but only to the extent incurred after a declaration of an
Event of Default in connection with the work-out and enforcement of this
Agreement, the Notes and the Security Documents and limited as to each such
Lender to $25,000. The Borrowers, jointly and severally, shall at all times
protect, indemnify, defend and save harmless the Agent and each Lender from and
against any and all claims, actions, suits and other legal proceedings
(commenced or asserted by or against them), and liabilities, damages, costs,
interest, charges, counsel fees and other expenses and penalties which any of
them may, at any time, sustain or incur by reason of or in consequence of
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or arising out of the execution and delivery of this Agreement, the consummation
of the transactions contemplated hereby, the breach by Borrowers of any of their
covenants contained herein and/or the enforcement by Agent of its rights and
remedies herein and/or in the other Loan Documents, except and to the extent
that Borrowers prove that such claim, action, suit, liability, etc. was caused
by the gross negligence or willful misconduct or manifest bad faith of the
Lender or Agent in question. The provisions of this Section 9.1 shall survive
the payment of the Notes or any disposition thereof by any Lender and the
termination of this Agreement.
9.2 Taxes.
If, under any law in effect on the date of the closing of the Loans
hereunder, or under any retroactive provision of any law subsequently enacted,
it shall be determined that any Federal, state or local tax is payable in
respect of the issuance of the Notes, or in connection with the filing or
recording of any assignment, financing statements, or other documents (whether
measured by the amount of indebtedness secured or otherwise) as contemplated by
this Agreement, then the Borrowers will pay any such tax and all interest and
penalties, if any, and will indemnify each Lender against and save it harmless
from any loss or damage resulting from or arising out of the nonpayment or delay
in payment of any such tax. If any such tax or taxes shall be assessed or levied
against any Lender, such Lender may notify the Borrowers and make immediate
payment thereof, together with interest or penalties in connection therewith,
and shall thereupon be entitled to and shall receive immediate reimbursement
therefor from the Borrowers. Notwithstanding any other provision contained in
this Agreement, the covenants and agreements of the Borrowers in this Section
9.2 shall survive payment of the Notes and the termination of this Agreement.
9.3 Payments.
All payments by the Borrowers on account of principal, interest and
other charges (including any indemnities) shall be made to Agent at its
Principal Office, in lawful money of the United States of America in immediately
available funds, by wire transfer or otherwise, not later than 1:00 p.m.
Philadelphia time on the date such payment is due. Any such payment made on such
date but after such time shall, if the amount paid bears interest, be deemed to
have been made on and interest shall continue to accrue and be payable thereon
until the next succeeding Business Day. If any payment of principal or interest
becomes due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day and such extension shall be included in
computing interest in connection with such payment. All payments hereunder and
under the Notes shall be made without set-off or counterclaim and in such
amounts as may be necessary in order that all such payments shall not be less
than the amounts otherwise specified to be paid under this Agreement and the
Notes (after withholding for or on account of (i) any present or future taxes,
levies, imposts, duties or other similar charges of whatever nature imposed by
any government or any political subdivision or taxing authority thereof, other
than any tax (except those referred to in clause (ii) below) on or measured by
the net income of the Lenders pursuant to applicable federal, state and local
income tax laws, and (ii) deduction of an amount equal to the taxes on or
measured by the net income of any Lender payable by such Lender with respect to
the amount by which the payments required to be made under this sentence exceed
the amounts otherwise specified to be paid in this Agreement and the Notes.
9.4 Survival of Agreements and Representations, Waiver of Trial by
Jury.
All agreements, representations and warranties made herein shall
survive the delivery of this Agreement and the Notes. EACH BORROWER AND LENDER
IRREVOCABLY WAIVES TRIAL BY JURY AND THE RIGHT THERETO IN ANY LITIGATION IN ANY
COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF, THIS AGREEMENT,
THE NOTES, THE SECURITY DOCUMENTS, ANY OF THE OTHER
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LOAN DOCUMENTS, OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS
AGREEMENT, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR
ENFORCEMENT THEREOF.
9.5 Lien on and Set-off of Deposits.
As security for the due payment and performance of all the Obligations,
each Borrower hereby grants to each Lender a lien on and security interest in
any and all deposits or other sums at any time credited by or due from such
Lender to such Borrower, whether in regular or special depository accounts or
otherwise, and any and all monies, securities and other property of such
Borrower, and the proceeds thereof, now or hereafter held or received by or in
transit to such Lender from or for such Borrower, whether for safekeeping,
custody, pledge, transmission, collection or otherwise, and any such deposits,
sums, monies, securities and other property may at any time be set-off,
appropriated and applied by Lenders against any of the obligations, indebtedness
or liabilities hereunder, under the Notes and under the Security Documents, in
each case for the ratable benefit of all Lenders, whether or not any such
obligation is then due or is secured by any collateral, or, if it is so secured,
whether or not the collateral is considered to be adequate.
9.6 Modifications, Consents and Waivers; Entire Agreement.
No modification, amendment or waiver of or with respect to any
provision of this Agreement, the Notes, the Security Documents, or any of the
other Loan Documents and all other agreements, instruments and documents
delivered pursuant hereto or thereto, nor consent to any departure by any
Borrower from any of the terms or conditions thereof, shall in any event be
effective unless it shall be in writing and signed by the Agent (subject, as
between Lenders and Agent, to the provisions of Section 8.15 hereof) and then
any such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No consent to or demand on any Borrower in any
case shall, of itself, entitle it to any other or further notice or demand in
similar or other circumstances. This Agreement embodies the entire agreement and
understanding among the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof.
9.7 Remedies Cumulative.
Each and every right granted to the Agent hereunder or under any other
document delivered hereunder or in connection herewith, or allowed it by law or
equity, shall be cumulative and may be exercised from time to time. No failure
on the part of the Agent to exercise, and no delay in exercising, any right
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right preclude any other or future exercise thereof or the exercise of any
other right. The due payment and performance of any Borrower's indebtedness,
liabilities and obligations under the Notes and this Agreement shall be without
regard to any counterclaim, right of offset or any other claim whatsoever which
such Borrower may have against any Lender and without regard to any other
obligation of any nature whatsoever which any Lender may have to such Borrower
and no such counterclaim or offset shall be asserted by such Borrower in any
action, suit or proceeding instituted by Agent for payment or performance of
such Borrower's indebtedness, liabilities or obligation under the Notes, this
Agreement, the Security Documents or otherwise.
9.8 Further Assurances.
At any time and from time to time, upon the request of the Agent or the
Majority Lenders, the Borrowers shall execute, deliver and acknowledge or cause
to be executed, delivered and acknowledged, such further documents and
instruments and do such other acts and
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things as the Agent or the Majority Lenders may reasonably request in order to
fully effect the purposes of this Agreement, the Notes, the Security Documents,
the other Loan Documents and any other agreements, instruments and documents
delivered pursuant hereto or in connection with the Loans.
9.9 Notices.
(a) Any notice, request, demand, direction or other
communication (for purposes of this Section 9.9 only, a "Notice") to be given to
or made upon any party hereto under any provision of this Agreement shall be
given or made by telephone or in writing (which includes by means of electronic
transmission (i.e., "e-mail")) or facsimile transmission or by setting forth
such Notice on a site on the World Wide Web (a "Website Posting") if Notice of
such Website Posting (including the information necessary to access such site)
has previously been delivered to the applicable parties hereto by another means
set forth in this Section 9.9 in accordance with this Section 9.9; provided,
however, that no requests or notices with respect to funding or utilization of
the facilities, no payment notices, no notices of Events of Default, and no
requests for waivers or consents shall be effective if transmitted by e-mail or
Website Posting. Any such Notice must be delivered to the applicable parties
hereto at the addresses and numbers set forth under their respective names on
the signature pages hereto or in accordance with any subsequent unrevoked Notice
from any such party that is given in accordance with this Section 9.9. Any
Notice shall be effective:
(i) In the case of hand-delivery, when delivered;
(ii) If given by mail, four days after such Notice is
deposited with the United States Postal Service, with first-class postage
prepaid, return receipt requested;
(iii) In the case of a telephonic Notice, when a
party is contacted by telephone, if delivery of such telephonic Notice is
confirmed no later that the next Business Day by hand-delivery, a facsimile or
electronic transmission, a Website Posting or an overnight courier delivery of a
confirmatory Notice (received at or before noon on such next Business Day);
(iv) In the case of facsimile transmission, when sent
to the applicable party's facsimile machine's telephone number, if the party
sending such Notice receives confirmation of the delivery thereof from its own
facsimile machine;
(v) In the case of electronic transmission, when
actually received;
(vi) In the case of a Website Posting, upon delivery
of a Notice of such posting (including the information necessary to access such
site) by another means set forth in this Section 9.9; and
(vii) If given by any other means (including by
overnight courier), when actually received.
Any Lender giving a Notice to another Lender or to a Borrower shall
concurrently send a copy thereof to the Agent, and the Agent shall promptly
notify the other Lenders of its receipt of such Notice.
(b) Each of the Borrowers hereby revocably appoints SSI as its
agent to give and receive any notice, request, report and other communication
pursuant to this Agreement, and for such other purposes as are provided for
herein. Each of the Borrowers agrees that the Agent may rely and act upon,
without any investigation or inquiry as to the authority or power to give,
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or accuracy or reasonableness of, and each of the Borrowers will be
unconditionally and irrevocably bound and obligated by any instructions, notice,
request, report or other communication given by SSI to the Bank.
9.10 Counterparts.
This Agreement may be signed in any number of counterparts with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
9.11 Construction; Governing Law; Jurisdiction.
The headings used in this Agreement are for convenience only and shall
not be deemed to constitute a part hereof. All uses herein of the masculine
gender or of the feminine or neuter gender or plural or singular terms includes
the other as the context may require. This Agreement, the Notes, the Security
Documents, the other Loan Documents and all other documents and instruments
executed and delivered in connection herewith and therewith, shall be governed
by, and construed and interpreted in accordance with, the laws of the
Commonwealth of Pennsylvania applicable to contracts executed and to be
performed therein. The Borrowers and each Lender hereby irrevocably consent to
the jurisdiction of the Courts of Common Pleas of the Commonwealth of
Pennsylvania and of the United States District Court for the Eastern District of
Pennsylvania in any and all actions and proceedings in connection with this
Agreement, the Notes or the Security Documents and irrevocably consent, in
addition to any method of service of process permissible under applicable law,
to service of process by certified mail, return receipt requested to the
addresses of Borrowers as set forth herein and the address of Lenders set forth
on the signature page hereto. The Borrowers and Lenders agree that in any action
or proceeding brought by them in connection with this Agreement or the
transactions contemplated hereby, exclusive jurisdiction shall be in the courts
of the Courts of Common Pleas of the Commonwealth of Pennsylvania, and the
United States District Court for the Eastern District of Pennsylvania.
9.12 Severability.
The provisions of this Agreement are severable, and if any clause or
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction and shall not in any
manner affect such clause or provision in any other jurisdiction, or any other
clause or provision in this Agreement in any jurisdiction. Each of the
covenants, agreements and conditions contained in this Agreement is independent
and compliance by any Borrower with any of them shall not excuse noncompliance
by any Borrower with any other.
9.13 Binding Effect; No Assignment or Delegation.
This Agreement shall be binding upon and inure to the benefit of each
Borrower, Agent and each Lender, and its successors and permitted assignees. The
rights and obligations of each Borrower under this Agreement shall not be
assigned or delegated without the prior written consent of all Lenders, and any
purported assignment or delegation without such consent shall be void.
9.14 Joint and Several Obligations.
(a) All of the indebtedness, liabilities and obligations of
the Borrowers under this Agreement and the Loan Documents shall be the joint and
several obligations of the Borrowers.
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(b) Each Borrower agrees that the Agent may, in its
discretion, without affecting or modifying the joint and several obligations of
each Borrower for all of the Indebtedness, liabilities and obligations under
this Agreement and the Loan Documents including, without limitation, the
Obligations, (i) release, discharge, compromise or settle with, or grant
indulgences to, refuse to proceed or take action against, any one or more of the
Borrowers with respect to their respective obligations under this Agreement,
including, without limitation, the Obligations, (ii) release, surrender, modify,
impair, exchange, substitute or extend the period or duration of time for the
performance, discharge or payment of, refuse to enforce, compromise or settle
its Lien against, any and all deposits and other property or assets on which the
Agent or any Lender may have a Lien or which secures any of the Indebtedness,
liabilities and obligations, including without limitation, the Obligations of
any Borrower under this Agreement, (iii) amend, modify, alter or restate, in
accordance with their respective terms, this Agreement or any of the Loan
Documents or otherwise, accept deposits or other property from, or enter into
transactions of any kind or nature with, any one or more of the Borrowers, and
(iv) disburse all or part of the proceeds of the Loans as instructed by SSI as
agent for all of the Borrowers, without inquiry or investigation of any kind by
the Agent as to the use of such proceeds (each Borrower confirms that it will be
directly or indirectly benefited by each and every Advance and any and all other
advances under this Agreement or any of the Loan Documents).
9.15 Third Party.
No rights are intended to be created hereunder for the benefit of any
third party donee, creditor or incidental beneficiary.
9.16 Confidentiality of Information.
Unless otherwise consented to by the Borrowers in writing, each of the
Lenders and the Agent agrees (on behalf of itself and each of its affiliates,
directors, officers, employees and representatives) to use its customary
precautions to keep confidential, in accordance with its customary procedures
for handling confidential information of the same nature and in accordance with
safe and sound banking practices, any non-public information supplied to it by
the Borrowers pursuant to this Agreement, it being agreed and understood that
each of Agent, Lenders and Borrowers would be in possible violation of
securities laws of the United States and various states if non-public
information is provided by Borrowers to the Agent or Lenders prior to filing
with the Securities and Exchange Commission and the information is not kept
confidential and its use restricted exclusively for purposes of information on
and administration of the Loans; provided that, subject to the aforesaid,
nothing herein shall limit the disclosure of any such information (a) to the
extent required by statute, rule, regulation or judicial process, (b) to counsel
for any Lender or the Agent, (c) to bank examiners, auditors or accountants, (d)
to the Agent or any of the Lenders, (e) in connection with any litigation to
which any one or more of the Lenders or the Agent is a party, and (f) to any
other bank or financial institution which hereafter becomes or which reasonably
appears to any Lender or Agent to be interested in becoming a Lender hereunder
or a participant or assignee of any Lender so long as such prospective bank
agrees to comply with the requirements of this section.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SAFEGUARD SCIENTIFICS, INC.
By: ____________________________________________
Address: 800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx,
Executive Vice President/
Chief Financial Officer
Facsimile:
E-mail:
SAFEGUARD SCIENTIFICS (DELAWARE) INC.
By: ____________________________________________
Address: 800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx,
Executive Vice President/
Chief Financial Officer
Facsimile:
E-mail:
SAFEGUARD DELAWARE, INC.
By: ____________________________________________
Address: 800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx,
Executive Vice President/
Chief Financial Officer
Facsimile:
E-mail:
PNC BANK, NATIONAL ASSOCIATION, as Agent, Lender
and Issuer
By: ____________________________________________
Address: Xxxxxx Xxxxxxxxxx, Vice President
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Facsimile: 000-000-0000
E-mail: xxxxxx.xxxxxxxxxx@xxxxxxx.xxx
cc: Xxx XXX Xxxxx, 00xx Xxxxx
PNC Agency Services
000 0xx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxx
Facsimile:
E-mail: xxxxxx.xxxxx@xxxxxxx.xxx
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COMERICA BANK
By: ____________________________________________
Address: Xxxxxx Xxxxx
Vice President
00 Xxxxxxx Xxxx., 0xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
E-mail: xxxxxx_x_xxxxx@xxxxxxxx.xxx
FIRST UNION NATIONAL BANK
By: ____________________________________________
Address: Xxxxxxx X. Xxxxxxx
Vice President
000 Xxxxx Xxxx
Xxxxxx, XX 00000
Facsimile: 000-000-0000
E-mail: xxxxxxx.xxxxxxx@xxxx.xxx
NATIONAL CITY BANK OF PENNSYLVANIA
By: ____________________________________________
Address: Xxxxxxx X. Xxxxxxxx
Vice President
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Facsimile: 000-000-0000
E-mail:
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