EXHIBIT 99.2
LOAN AND SECURITY AGREEMENT
BY AND AMONG
ADVANCED MARKETING SERVICES, INC.
AND
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS BORROWERS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
XXXXX FARGO FOOTHILL, INC.
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF APRIL 27, 2004
TABLE OF CONTENTS
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1. DEFINITIONS AND CONSTRUCTION........................................................................... 1
1.1 Definitions................................................................................... 1
1.2 Accounting Terms.............................................................................. 30
1.3 Code.......................................................................................... 30
1.4 Construction.................................................................................. 30
1.5 Schedules and Exhibits........................................................................ 31
2. LOAN AND TERMS OF PAYMENT.............................................................................. 31
2.1 Revolver Advances............................................................................. 31
2.2 Intentionally Omitted......................................................................... 31
2.3 Borrowing Procedures and Settlements.......................................................... 31
2.4 Payments...................................................................................... 38
2.5 Overadvances.................................................................................. 40
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations................... 41
2.7 Cash Management............................................................................... 42
2.8 Crediting Payments; Float Charge.............................................................. 43
2.9 Designated Account............................................................................ 43
2.10 Maintenance of Loan Account; Statements of Obligations........................................ 44
2.11 Fees.......................................................................................... 44
2.12 Letters of Credit............................................................................. 45
2.13 LIBOR Option.................................................................................. 48
2.14 Capital Requirements.......................................................................... 51
2.15 Joint and Several Liability of Borrowers...................................................... 51
3. CONDITIONS; TERM OF AGREEMENT.......................................................................... 54
3.1 Conditions Precedent to the Initial Extension of Credit....................................... 54
3.2 Conditions Subsequent to the Initial Extension of Credit...................................... 57
3.3 Conditions Precedent to all Extensions of Credit.............................................. 58
3.4 Term.......................................................................................... 59
3.5 Effect of Termination......................................................................... 59
3.6 Early Termination by Borrowers................................................................ 59
4. CREATION OF SECURITY INTEREST.......................................................................... 60
4.1 Grant of Security Interest.................................................................... 60
4.2 Negotiable Collateral......................................................................... 60
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral........................ 60
4.4 Filing of Financing Statements; Commercial Tort Claims; Delivery of Additional
Documentation Required. ...................................................................... 61
4.5 Power of Attorney............................................................................. 62
4.6 Right to Inspect.............................................................................. 62
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(continued)
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4.7 Control Agreements............................................................................ 63
5. REPRESENTATIONS AND WARRANTIES......................................................................... 63
5.1 No Encumbrances............................................................................... 63
5.2 Eligible Accounts............................................................................. 63
5.3 Intentionally Omitted......................................................................... 63
5.4 Intentionally Omitted......................................................................... 63
5.5 Location of Inventory......................................................................... 63
5.6 Inventory Records............................................................................. 64
5.7 State of Incorporation; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims................................................. 64
5.8 Due Organization and Qualification; Subsidiaries.............................................. 64
5.9 Due Authorization; No Conflict................................................................ 65
5.10 Litigation.................................................................................... 67
5.11 No Material Adverse Change.................................................................... 67
5.12 Fraudulent Transfer........................................................................... 67
5.13 Employee Benefits............................................................................. 67
5.14 Environmental Condition....................................................................... 67
5.15 Brokerage Fees................................................................................ 68
5.16 Intellectual Property......................................................................... 68
5.17 Leases........................................................................................ 68
5.18 Deposit Accounts and Securities Accounts...................................................... 68
5.19 Complete Disclosure........................................................................... 68
5.20 Indebtedness.................................................................................. 69
6. AFFIRMATIVE COVENANTS.................................................................................. 69
6.1 Accounting System............................................................................. 69
6.2 Collateral Reporting.......................................................................... 69
6.3 Financial Statements, Reports, Certificates................................................... 71
6.4 Guarantor Reports............................................................................. 73
6.5 Returns....................................................................................... 73
6.6 Maintenance of Properties..................................................................... 73
6.7 Taxes......................................................................................... 73
6.8 Insurance..................................................................................... 73
6.9 Location of Inventory and Equipment........................................................... 74
6.10 Compliance with Laws.......................................................................... 74
6.11 Leases........................................................................................ 74
6.12 Existence..................................................................................... 75
6.13 Environmental................................................................................. 75
6.14 Disclosure Updates............................................................................ 75
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TABLE OF CONTENTS
(continued)
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6.15 Formation of Subsidiaries..................................................................... 75
7. NEGATIVE COVENANTS..................................................................................... 76
7.1 Indebtedness.................................................................................. 76
7.2 Liens......................................................................................... 77
7.3 Restrictions on Fundamental Changes........................................................... 77
7.4 Disposal of Assets............................................................................ 78
7.5 Change Name................................................................................... 78
7.6 Nature of Business............................................................................ 78
7.7 Prepayments and Amendments.................................................................... 78
7.8 Change of Control............................................................................. 78
7.9 Consignments.................................................................................. 78
7.10 Distributions................................................................................. 78
7.11 Accounting Methods............................................................................ 79
7.12 Investments................................................................................... 79
7.13 Transactions with Affiliates.................................................................. 79
7.14 Suspension.................................................................................... 79
7.15 [Intentionally Deleted]....................................................................... 79
7.16 Use of Proceeds............................................................................... 79
7.17 Inventory and Equipment with Bailees.......................................................... 79
7.18 Financial Covenants........................................................................... 80
7.19 Inactive Subsidiaries......................................................................... 80
7.20 Restatement of Financial Statements........................................................... 80
8. EVENTS OF DEFAULT...................................................................................... 81
9. THE LENDER GROUP'S RIGHTS AND REMEDIES................................................................. 83
9.1 Rights and Remedies........................................................................... 83
9.2 Remedies Cumulative........................................................................... 85
10. TAXES AND EXPENSES..................................................................................... 85
11. WAIVERS; INDEMNIFICATION............................................................................... 86
11.1 Demand; Protest; etc.......................................................................... 86
11.2 The Lender Group's Liability for Borrower Collateral.......................................... 86
11.3 Indemnification............................................................................... 86
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(continued)
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12. NOTICES................................................................................................ 87
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER............................................................. 88
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS............................................................. 89
14.1 Assignments and Participations................................................................ 89
14.2 Successors.................................................................................... 92
15. AMENDMENTS; WAIVERS.................................................................................... 92
15.1 Amendments and Waivers........................................................................ 92
15.2 Replacement of Holdout Lender................................................................. 93
15.3 No Waivers; Cumulative Remedies............................................................... 94
16. AGENT; THE LENDER GROUP................................................................................ 94
16.1 Appointment and Authorization of Agent........................................................ 94
16.2 Delegation of Duties.......................................................................... 95
16.3 Liability of Agent............................................................................ 95
16.4 Reliance by Agent............................................................................. 96
16.5 Notice of Default or Event of Default......................................................... 96
16.6 Credit Decision............................................................................... 96
16.7 Costs and Expenses; Indemnification........................................................... 97
16.8 Agent in Individual Capacity.................................................................. 98
16.9 Successor Agent............................................................................... 98
16.10 Lender in Individual Capacity................................................................. 98
16.11 Withholding Taxes............................................................................. 99
16.12 Collateral Matters........................................................................... 101
16.13 Restrictions on Actions by Lenders; Sharing of Payments...................................... 102
16.14 Agency for Perfection........................................................................ 103
16.15 Payments by Agent to the Lenders............................................................. 103
16.16 Concerning the Collateral and Related Loan Documents......................................... 103
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information....................................................... 103
16.18 Several Obligations; No Liability............................................................ 104
16.19 Bank Product Providers....................................................................... 105
16.20 Legal Representation of Agent................................................................ 105
17. GENERAL PROVISIONS.................................................................................... 105
17.1 Effectiveness................................................................................ 105
17.2 Section Headings............................................................................. 105
17.3 Interpretation............................................................................... 105
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(continued)
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17.4 Severability of Provisions................................................................... 106
17.5 Counterparts; Electronic Execution........................................................... 106
17.6 Revival and Reinstatement of Obligations..................................................... 106
17.7 Confidentiality.............................................................................. 106
17.8 Integration.................................................................................. 107
17.9 Parent as Agent for Borrowers................................................................ 107
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as
of April 27, 2004, by and among, on the one hand, the lenders identified on the
signature pages hereof (such lenders, together with their respective successors
and permitted assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), and XXXXX FARGO FOOTHILL, INC., a
California corporation, as the arranger and administrative agent for the Lenders
(in such capacity, together with its successors and assigns in such capacity,
"Agent"), and, on the other hand, ADVANCED MARKETING SERVICES, INC., a Delaware
corporation ("Parent"), and each of Parent's Subsidiaries identified on the
signature pages hereof (such Subsidiaries, together with Parent, are referred to
hereinafter each individually as a "Borrower", and individually and
collectively, jointly and severally, as the "Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following definitions:
"Account" means an account (as that term is defined in the
Code).
"Account Debtor" means any Person who is obligated on an
Account, chattel paper, or a General Intangible.
"ACH Transactions" means any cash management or related
services (including the Automated Clearing House processing of electronic funds
transfers through the direct Federal Reserve Fedline system) provided by a Bank
Product Provider for the account of Administrative Borrower or its Subsidiaries.
"Acquisition" means (a) any Stock Acquisition, or (b) any
Asset Acquisition.
"Additional Documents" has the meaning set forth in Section
4.4(c).
"Administrative Borrower" has the meaning set forth in Section
17.10.
"Advanced Mexico" means Advanced Marketing S. de R.I. de C.V.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the
1
management and policies of a Person, whether through the ownership of Stock, by
contract, or otherwise; provided, however, that, for purposes of the definition
of Eligible Accounts and Section 7.13 hereof: (a) any Person which owns directly
or indirectly 10% or more of the Stock having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person or non-managing member of such Person) shall
be deemed an Affiliate of such Person, (b) each director (or comparable manager)
of a Person shall be deemed to be an Affiliate of such Person, and (c) each
partnership or limited liability company in which a Person is a general partner
or managing member shall be deemed an Affiliate of such Person.
"Agent" has the meaning set forth in the preamble to this
Agreement.
"Agent Advances" has the meaning set forth in Section
2.3(e)(i).
"Agent-Related Persons" means Agent, together with its
Affiliates, officers, directors, employees, attorneys, and agents.
"Agent's Account" means the Deposit Account of Agent
identified on Schedule A-1.
"Agent's Liens" means the Liens granted by Borrowers or their
Subsidiaries to Agent under this Agreement or the other Loan Documents.
"Agreement" has the meaning set forth in the preamble hereto.
"AMSI" means Advanced Marketing Services Investments, Inc., a
California corporation.
"Applicable Margin" means, with respect to Base Rate Loans or
LIBOR Rate Loans, as the case may be, as of any date of determination, the
margin set forth in the following table that corresponds to the most recent TTM
EBITDA calculation (determined as set forth in the following paragraph) for the
most recently completed fiscal quarter of Parent; provided, however, that for
the period from the Closing Date through the date Agent receives a Compliance
Certificate in respect of the covenant testing period ending June 30, 2004, the
Applicable Margin shall be the margin in the row styled "Level II" below:
2
Margin
Margin above Base above
Level TTM EBITDA Rate LIBOR Rate
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I greater than $30,000,000 0.00% 1.75%
II greater than $20,000,000, but 0.50% 2.25%
less than or equal to $30,000,000
III less than or equal to $20,000,000 1.00% 2.75%
The Applicable Margin shall be based upon the most recent TTM EBITDA calculation
and shall be redetermined each fiscal quarter of Parent as of the first day of
the month following the date Agent receives the certified calculation of TTM
EBITDA in a Compliance Certificate pursuant to Section 6.3(a)(ii) hereof;
provided, however, that if Borrower fails to provide the Compliance Certificate
when due, the Applicable Margin shall be the margin in the row styled "Level
III" as of the first day of the month following the date on which the Compliance
Certificate was required to be delivered until the first day of the month
following the date on which it is delivered (on which date (but not
rectroactively), without constituting a waiver of any Default or Event of
Default caused by the failure to timely deliver the Compliance Certificate, the
Applicable Margin shall be set at a margin based upon the TTM EBITDA calculation
set forth therein.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to, during the period from and after the date of
the execution and delivery of this Agreement up to the date that is the first
anniversary of the Closing Date, 1.0% times the Maximum Revolver Amount;
provided, however, that if this Agreement is terminated and the Obligations
prepaid as a result of refinancing by a commercial banking unit of Xxxxx Fargo,
then the Applicable Prepayment Premium shall be $0.
"Asset Acquisition" means the purchase or other acquisition by
a Person or its Subsidiaries of all or substantially all of the assets of any
other Person.
"Assignee" has the meaning set forth in Section 14.1(a).
"Assignment and Acceptance" means an Assignment and Acceptance
Agreement substantially in the form of Exhibit A-1.
"Authorized Person" means any officer or employee of
Administrative Borrower.
"Availability" means, as of any date of determination, the
amount that Borrowers are entitled to borrow as Advances hereunder (after giving
effect to all then
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outstanding Obligations (other than Bank Product Obligations) and all sublimits
and reserves then applicable hereunder).
"Bank Product" means any financial accommodation extended to
Administrative Borrower or its Subsidiaries by a Bank Product Provider (other
than pursuant to this Agreement) including: (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions,
(f) cash management, including controlled disbursement, accounts or services, or
(g) transactions under Hedge Agreements.
"Bank Product Agreements" means those agreements entered into
from time to time by Administrative Borrower or its Subsidiaries with a Bank
Product Provider in connection with the obtaining of any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Administrative
Borrower or its Subsidiaries to any Bank Product Provider pursuant to or
evidenced by the Bank Product Agreements and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including all such amounts
that Administrative Borrower or its Subsidiaries are obligated to reimburse to
Agent or any member of the Lender Group as a result of Agent or such member of
the Lender Group purchasing participations from, or executing indemnities or
reimbursement obligations to, a Bank Product Provider with respect to the Bank
Products provided by such Bank Product Provider to Administrative Borrower or
its Subsidiaries.
"Bank Product Provider" means Xxxxx Fargo or any of its
Affiliates.
"Bank Product Reserve" means, as of any date of determination,
the lesser of (a) $3,000,000, and (b) the amount of reserves that Agent has
established (based upon the Bank Product Providers' reasonable determination of
the credit exposure of Administrative Borrower and its Subsidiaries in respect
of Bank Products) in respect of Bank Products then provided or outstanding.
"Bankruptcy Code" means title 11 of the United States Code.
"Base LIBOR Rate" means the rate per annum, determined by
Agent in accordance with its customary procedures, and utilizing such electronic
or other quotation sources as it considers appropriate (rounded upwards, if
necessary, to the next 1/100%), to be the rate at which Dollar deposits (for
delivery on the first day of the requested Interest Period) are offered to major
banks in the London interbank market 2 Business Days prior to the commencement
of the requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a
conversion of a Base Rate Loan to a LIBOR Rate Loan) by Administrative Borrower
in accordance with this Agreement, which determination shall be conclusive in
the absence of manifest error.
4
"Base Rate" means, the rate of interest announced, from time
to time, within Xxxxx Fargo at its principal office in San Francisco as its
"prime rate", with the understanding that the "prime rate" is one of Xxxxx
Fargo's base rates (not necessarily the lowest of such rates) and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as Xxxxx Fargo may designate.
"Base Rate Loan" means the portion of the Advances that bears
interest at a rate determined by reference to the Base Rate.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA).
"Board of Directors" means the board of directors of Parent.
"Books" means all of Administrative Borrower's and its
Subsidiaries' now owned or hereafter acquired books and records (including all
of their Records indicating, summarizing, or evidencing their assets (including
the Collateral) or liabilities, all of Administrative Borrower's and its
Subsidiaries' Records relating to their business operations or financial
condition, and all of their goods or General Intangibles related to such
information).
"Borrower" and "Borrowers" have the respective meanings set
forth in the preamble to this Agreement.
"Borrower Collateral" means all of each Borrower's now owned
or hereafter acquired right, title, and interest in and to each of the
following:
(a) all of its Accounts,
(b) all of its Books,
(c) all of its commercial tort claims described on Schedule
5.7(d),
(d) all of its Deposit Accounts,
(e) all of its Equipment,
(f) all of its General Intangibles,
(g) all of its Inventory,
(h) all of its Investment Property (including all of its
securities and Securities Accounts),
(i) all of its Negotiable Collateral,
5
(j) all of its Supporting Obligations,
(k) money or other assets of each such Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(l) the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any or all of
the foregoing, and any and all Accounts, Books, Deposit Accounts, Equipment,
General Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, Supporting Obligations, money, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition of
any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof.
"Borrowing" means a borrowing hereunder consisting of Advances
made on the same day by the Lenders (or Agent on behalf thereof), or by Swing
Lender in the case of a Swing Loan, or by Agent in the case of an Agent Advance,
in each case, to Administrative Borrower.
"Borrowing Base" means, as of any date of determination, the
result of:
(a) the lesser of:
(i) 85% of the amount of Eligible Accounts, and
(ii) an amount equal to Borrowers' Collections
with respect to Accounts for the immediately
preceding 45 day period, minus
(b) the sum of (i) the Bank Product Reserve, (ii) the
Dilution Reserve and (iii) reserves established by
Agent under Section 2.1(b).
"Borrowing Base Availability" means, as of any date of
determination, the amount that Borrowers would be entitled to borrow as Advances
hereunder (after giving effect to all then outstanding Obligations (other than
Bank Product Obligations) and reserves then applicable hereunder but without
giving effect to the Maximum Revolver Amount).
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which banks are authorized or required to close in the state of
California, except that, if a determination of a Business Day shall relate to a
LIBOR Rate Loan, the term "Business Day" also shall exclude any day on which
banks are closed for dealings in Dollar deposits in the London interbank market.
"Capital Expenditures" means, with respect to any Person for
any period, the aggregate of all expenditures by such Person and its
Subsidiaries during such period that are in accordance with GAAP included in
"addition to property, plant or equipment" or comparable items, whether such
expenditures are paid in cash or financed. For purposes of
6
this definition, the purchase price of equipment that is purchased
simultaneously with the trade-in of existing equipment or with insurance
proceeds shall be included in Capital Expenditures only to the extent of the
gross amount of such purchase price less the credit granted by the seller of
such equipment for the equipment being traded in at such time or the amount of
such proceeds, as the case may be.
"Capitalized Lease Obligation" means that portion of the
obligations under a Capital Lease that is required to be capitalized in
accordance with GAAP.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Cash Dominion Triggering Event" means the occurrence of any
of the following (i) an Event of Default, (ii) Borrowing Base Availability is
less than $10,000,000, or (iii) Excess Availability is less than $7,000,000.
"Cash Equivalents" means (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or Xxxxx'x Investors Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's, (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank
that satisfies the criteria described in clause (d) above, or (ii) any other
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any such other bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, and (f)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (e) above.
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash
management agreements, in form and substance satisfactory to Agent, each of
which is among Administrative Borrower or one of its Subsidiaries, Agent, and
one of the Cash Management Banks.
"Cash Management Bank" has the meaning set forth in Section
2.7(a).
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"Change of Control" means that (a) any "person" or "group"
(within the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than
Permitted Holders, becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 25%, or more, of the Stock of
Parent having the right to vote for the election of members of the Board of
Directors, or (b) a majority of the members of the Board of Directors do not
constitute Continuing Directors, or (c) other than in a Permitted Reorganization
Transaction, any Borrower ceases to own, directly or indirectly, and control
100% of the outstanding Stock of each of its Subsidiaries in existence as of the
Closing Date.
"Closing Date" means the date of the making of the initial
Advance (or other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of
Borrowers for a 1 year period following the Closing Date (on a month by month
basis), in form and substance (including as to scope and underlying assumptions)
reasonably satisfactory to Agent.
"Code" means the California Uniform Commercial Code, as in
effect from time to time; provided, however, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection,
priority, or remedies with respect to Agent's Lien on any Collateral is governed
by the Uniform Commercial Code as enacted and in effect in a jurisdiction other
than the State of California the term "Code" shall mean the Uniform Commercial
Code as enacted and in effect in such other jurisdiction solely for purposes of
the provisions thereof relating to such attachment, perfection, priority, or
remedies.
"Collateral" means all assets and interests in assets and
proceeds thereof now owned or hereafter acquired by Administrative Borrower or
its Subsidiaries in or upon which a Lien is granted under any of the Loan
Documents.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in Administrative Borrower's or its Subsidiaries' Books,
Equipment or Inventory, in each case, in form and substance reasonably
satisfactory to Agent, with the form of landlord waiver attached hereto as
Exhibit C-1 deemed satisfactory to Agent.
"Collateral Reporting Triggering Event" means the occurrence
of either of the following (i) an Event of Default, or (ii) Borrowing Base
Availability is less than $10,000,000.
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds).
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"Commercial Tort Claim Assignment" has the meaning set forth
in Section 4.4(b).
"Commitment" means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 14.1.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C-2 delivered by the chief financial officer of Parent to
Agent.
"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Parent on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the members of the Board of
Directors on the Closing Date or whose appointment or nomination was previously
so approved, but excluding any such individual originally proposed for election
in opposition to the Board of Directors in office at the Closing Date in an
actual or threatened election contest relating to the election of the directors
(or comparable managers) of Parent and whose initial assumption of office
resulted from such contest or the settlement thereof.
"Control Agreement" means a control agreement, in form and
substance satisfactory to Agent, executed and delivered by the Administrative
Borrower or one of its Subsidiaries, Agent, and the applicable securities
intermediary (with respect to a Securities Account) or bank (with respect to a
Deposit Account).
"Daily Balance" means, as of any date of determination and
with respect to any Obligation, the amount of such Obligation owed at the end of
such day.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) for the first 3 days from
and after the date the relevant payment is due, the Base Rate, and (b)
thereafter, the interest rate then applicable to Advances that are Base Rate
Loans (inclusive of the Applicable Margin applicable thereto).
9
"Deposit Account" means any deposit account (as that term is
defined in the Code).
"Designated Account" means the Deposit Account of
Administrative Borrower identified on Schedule D-1.
"Designated Account Bank" has the meaning ascribed thereto on
Schedule D-1.
"Dilution" means, as of any date of determination, a
percentage, based upon the experience of the immediately prior 90 consecutive
days, that is the result of dividing the Dollar amount of (a) bad debt
write-downs, discounts, advertising allowances, credits, or other dilutive items
with respect to Borrowers' Accounts during such period, by (b) Borrowers'
xxxxxxxx with respect to Accounts during such period.
"Dilution Reserve" means, as of any date of determination, an
amount sufficient to reduce the advance rate against Eligible Accounts by 1
percentage point for each percentage point by which Dilution is in excess of 5%.
"Disbursement Letter" means an instructional letter executed
and delivered by Borrowers to Agent regarding the extensions of credit to be
made on the Closing Date, the form and substance of which is satisfactory to
Agent.
"Dollars" or "$" means United States dollars.
"EBITDA" means, with respect to any fiscal period, Parent's
and its Subsidiaries' consolidated net income (or loss) without giving effect to
any non-cash losses as a result of impairment of good will to the extent
required by State of Financial Accounting Standards No. 142, minus extraordinary
gains and interest income, plus (i) interest expense (including all commissions,
discounts and other fees and charges payable in connection with any financing,
letter of credit, bankers' acceptance or Hedge Agreement), (ii) federal, state,
local and foreign income taxes, (iii) losses, not to exceed $1,000,000 in the
aggregate, arising from the sale or disposition of assets outside the ordinary
course of business to the extent such sale or disposition is permitted
hereunder, (iv) depreciation and amortization for such period, and (v) non-cash
items reducing consolidated net income, in each case, as determined in
accordance with GAAP.
"Eligible Accounts" means those Accounts created by one of
Borrowers in the ordinary course of its business, that arise out of its sale of
goods or rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made in the Loan Documents, and that are
not excluded as ineligible by virtue of one or more of the excluding criteria
set forth below; provided, however, that such criteria may be revised from time
to time by Agent in Agent's Permitted Discretion to address the results of any
audit performed by Agent from time to time after the Closing Date. In
determining the amount to
10
be included, Eligible Accounts shall be calculated net of customer deposits and
unapplied cash. Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within
90 days of original invoice date or Accounts with selling terms of more than 60
days,
(b) Accounts owed by an Account Debtor (or its Affiliates)
where 50% or more of all Accounts owed by that Account Debtor (or its
Affiliates) are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
Affiliate of any Borrower or an employee or agent of any Borrower or any
Affiliate of any Borrower,
(d) Accounts arising in a transaction wherein goods are placed
on consignment or are sold pursuant to a guaranteed sale, a sale or return, a
sale on approval, a xxxx and hold, or any other terms by reason of which the
payment by the Account Debtor may be conditional, except to the extent of
customary rights of return in the ordinary course of Borrowers' business,
consistent with past practices,
(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor either
(i) does not maintain its chief executive office in the United States, or (ii)
is not organized under the laws of the United States or any state thereof, or
(iii) is the government of any foreign country or sovereign state, or of any
state, province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(y) the Account is supported by an irrevocable letter of credit satisfactory to
Agent (as to form, substance, and issuer or domestic confirming bank) that has
been delivered to Agent and is directly drawable by Agent, or (z) the Account is
covered by credit insurance in form, substance, and amount, and by an insurer,
satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor is
either (i) the United States or any department, agency, or instrumentality of
the United States (exclusive, however, of Accounts with respect to which the
applicable Borrower has complied, to the reasonable satisfaction of Agent, with
the Assignment of Claims Act, 31 USC Section 3727), or (ii) any state of the
United States,
(h) Accounts with respect to which the Account Debtor is a
creditor of any Borrower, has or has asserted a right of setoff, or has disputed
its obligation to pay all or any portion of the Account, to the extent of such
claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to Borrower exceed 10% (or, with respect to each of Costco and
Sam's Club 35%, with respect to Borders Books (inclusive of Xxxxxx Books) 30%,
or, with respect to BJ's Wholesale 15%) of Eligible Accounts (with all such
percentages, as applied to a particular
11
Account Debtor, being subject to reduction by Agent in its Permitted Discretion
if the creditworthiness of such Account Debtor deteriorates), to the extent of
the obligations owing by such Account Debtor in excess of such percentage;
provided, however, that, in each case, the amount of Eligible Accounts that are
excluded because they exceed the foregoing percentage shall be determined by
Agent based on all of the otherwise Eligible Accounts prior to giving effect to
any eliminations based upon the foregoing concentration limit,
(j) Accounts with respect to which the Account Debtor is
subject to an Insolvency Proceeding, is not Solvent, has gone out of business,
or as to which a Borrower has received notice of an imminent Insolvency
Proceeding,
(k) Accounts with respect to which the Account Debtor is
located in a state or jurisdiction (e.g., New Jersey, Minnesota, and West
Virginia) that requires, as a condition to access to the courts of such
jurisdiction, that a creditor qualify to transact business, file a business
activities report or other report or form, or take one or more other actions,
unless the applicable Borrower has so qualified, filed such reports or forms, or
taken such actions (and, in each case, paid any required fees or other charges),
except to the extent that the applicable Borrower (i) may qualify subsequently
as a foreign entity authorized to transact business in such state or
jurisdiction and gain access to such courts, without incurring any cost or
penalty viewed by Agent to be significant in amount, and such later
qualification cures any access to such courts to enforce payment of such
Account, or (ii) has access to the courts of another jurisdiction where it can
adequately enforce payment of such account,
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(m) Accounts that are not subject to a valid and perfected
first priority Agent's Lien,
(n) Accounts with respect to which (i) the goods giving rise
to such Account have not been shipped and billed to the Account Debtor, or (ii)
the services giving rise to such Account have not been performed and billed to
the Account Debtor, or
(o) Accounts that represent the right to receive progress
payments or other advance xxxxxxxx that are due prior to the completion of
performance by the applicable Borrower of the subject contract for goods or
services.
"Eligible Transferee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $250,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its
12
business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender, (e) so
long as no Event of Default has occurred and is continuing, any other Person
approved by Agent and Administrative Borrower (which approval of Administrative
Borrower shall not be unreasonably withheld, delayed, or conditioned), and (f)
during the continuation of an Event of Default, any other Person approved by
Agent.
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, or judgment, from any Governmental Authority, or
any third party involving violations of Environmental Laws or releases of
Hazardous Materials from (a) any assets, properties, or businesses of any
Borrower, any Subsidiary of a Borrower, or any of their predecessors in
interest, (b) from adjoining properties or businesses, or (c) from or onto any
facilities which received Hazardous Materials generated by any Borrower, any
Subsidiary of a Borrower, or any of their predecessors in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, in each case, to the extent
binding on any Borrower or any Subsidiary of a Borrower, relating to the
environment, the effect of the environment on employee health, or Hazardous
Materials, including the Comprehensive Environmental Response Compensation and
Liability Act, 42 USC Section 9601 et seq. ("CERCLA"); the Resource Conservation
and Recovery Act, 42 USC Section 6901 et seq. ("RCRA"); the Federal Water
Pollution Control Act, 33 USC Section 1251 et seq; the Toxic Substances Control
Act, 15 USC Section 2601 et seq; the Clean Air Act, 42 USC Section 7401 et seq.;
the Safe Drinking Water Act, 42 USC Section 3803 et seq.; the Oil Pollution Act
of 1990, 33 USC Section 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 USC Section 11001 et seq.; the Hazardous Material
Transportation Act, 49 USC Section 1801 et seq.; and the Occupational Safety and
Health Act, 29 USC Section 651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including all reasonable fees, disbursements
and expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
13
"Equipment" means equipment (as that term is defined in the
Code), and includes machinery, machine tools, motors, furniture, furnishings,
fixtures, vehicles (including motor vehicles), computer hardware, tools, parts,
and goods (other than consumer goods, farm products, or Inventory), wherever
located, including all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower or a Subsidiary of a Borrower under IRC Section 414(b), (b) any trade
or business subject to ERISA whose employees are treated as employed by the same
employer as the employees of a Borrower or a Subsidiary of a Borrower under IRC
Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412
of the IRC, any organization subject to ERISA that is a member of an affiliated
service group of which a Borrower or a Subsidiary of a Borrower is a member
under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with a Borrower or a Subsidiary of a Borrower and whose employees
are aggregated with the employees of a Borrower or a Subsidiary of a Borrower
under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Events of Default Letter Agreement" means that certain Events
of Default Letter Agreement, dated as of even date herewith, between Borrowers
and Agent, in form and substance satisfactory to Agent.
"Excess Availability" means, as of any date of determination,
the amount equal to Availability minus the aggregate amount, if any, of all
trade payables of Borrowers and their Subsidiaries aged in excess of their
historical levels with respect thereto and all book overdrafts of Borrowers and
their Subsidiaries in excess of their historical practices with respect thereto,
in each case as determined by Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934.
"Existing Lender" means, collectively, California Bank &
Trust, Bank of the West and Union Bank of California.
"Fee Letter" means that certain fee letter, dated as of even
date herewith, between Borrowers and Agent, in form and substance satisfactory
to Agent.
"Filing Authorization Letter" means a letter duly executed by
each Borrower authorizing Agent to file appropriate financing statements without
the signature of such Borrower in such office or offices as may be necessary or,
in the opinion of Agent, desirable to perfect the security interests purported
to be created by the Loan Documents.
14
"Financial Covenant Triggering Event" means the occurrence of
either of the following (i) an Event of Default, or (ii) Excess Availability
plus Qualified Cash is less than $20,000,000.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section
2.13(b)(ii).
"GAAP" means generally accepted accounting principles set
forth in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination, consistently applied.
"General Intangibles" means general intangibles (as that term
is defined in the Code), including payment intangibles, contract rights, rights
to payment, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trade secrets, trademarks,
servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, route lists, rights to payment and
other rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims and any other personal property other than Accounts, Deposit
Accounts, goods, Investment Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or
other governmental or administrative body, instrumentality, board, department,
or agency or any court, tribunal, administrative hearing body, arbitration
panel, commission, or other similar dispute-resolving panel or body.
"Guarantors" means any Subsidiary that hereafter becomes a
Guarantor pursuant to the terms hereof, and "Guarantor" means any one of them.
"Guarantor Security Agreement" means one or more security
agreements executed and delivered by each Guarantor in favor of Agent, in each
case, in form and substance satisfactory to Agent.
"Guaranty" means that certain general continuing guaranty
executed and delivered by any Subsidiary that hereafter becomes a Guarantor
pursuant to the terms hereof in favor of Agent, in form and substance
satisfactory to Agent.
15
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all agreements, or documents
now existing or hereafter entered into by Administrative Borrower or any of its
Subsidiaries that provide for an interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging
Administrative Borrower's or any of its Subsidiaries' exposure to fluctuations
in interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.
"Holdout Lender" has the meaning set forth in Section 15.2(a).
"Indebtedness" means (without duplication) (a) all obligations
for borrowed money, (b) all obligations evidenced by bonds, debentures, notes,
or other similar instruments and all reimbursement or other obligations in
respect of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations as a lessee under Capital Leases, (d)
all obligations or liabilities of others secured by a Lien on any asset of a
Person or its Subsidiaries, irrespective of whether such obligation or liability
is assumed, (e) all obligations to pay the deferred purchase price of assets
(other than trade payables incurred in the ordinary course of business and
repayable in accordance with customary trade practices), (f) all obligations
owing under Hedge Agreements, and (g) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person that
constitutes Indebtedness under any of clauses (a) through (f) above.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section
11.3.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
16
"Intellectual Property Security Agreement" means an
intellectual property security agreement executed and delivered by one or more
of the Borrowers, the form and substance of which is satisfactory to Agent.
"Intercompany Advances" means loans or advances or the
repayment of loans or advances from Parent or one of its Subsidiaries to Parent
or one of its Subsidiaries.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Borrowers and each of their Subsidiaries and
Agent, the form and substance of which is satisfactory to Agent.
"Interest Expense" means, for any period, the aggregate of the
interest expense of Parent and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Interest Period" means, with respect to each LIBOR Rate Loan,
a period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, 3 or 6 months thereafter; provided, however,
that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, 3 or 6 months after the date on which the Interest Period
began, as applicable, and (e) Borrowers (or Administrative Borrower on behalf
thereof) may not elect an Interest Period which will end after the Maturity
Date.
"Inventory" means inventory (as that term is defined in the
Code).
"Investment" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other
acquisitions of Indebtedness, Stock, or all or substantially all of the assets
of such other Person (or of any division or business line of such other Person),
and any other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP.
17
"Investment Property" means investment property (as that term
is defined in the Code).
"IRC" means the Internal Revenue Code of 1986.
"Issuing Lender" means WFF or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent, agrees, in
such Lender's sole discretion, to become an Issuing Lender for the purpose of
issuing L/Cs or L/C Undertakings pursuant to Section 2.12.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section
2.12(a).
"Lender" and "Lenders" have the respective meanings set forth
in the preamble to this Agreement, and shall include any other Person made a
party to this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of
the Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by a Borrower or
its Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by the Lender Group, (b) fees or charges paid or incurred by Agent in
connection with the Lender Group's transactions with Borrowers or their
Subsidiaries, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, and UCC searches and including searches with the patent
and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
and with respect to Real Property Collateral, if any, real estate surveys, real
estate title policies and endorsements, and environmental audits, (c) costs and
expenses incurred by Agent in the disbursement of funds to or for the account of
Borrowers or other members of the Lender Group (by wire transfer or otherwise),
(d) charges paid or incurred by Agent resulting from the dishonor of checks, (e)
reasonable costs and expenses paid or incurred by the Lender Group to correct
any default or enforce any provision of the Loan Documents, or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated, (f) audit fees and
expenses of Agent related to audit examinations of the Books to the extent of
the fees and charges (and up to the amount of any limitation) contained in this
Agreement, (g) reasonable costs and expenses of third party claims or any
18
other suit paid or incurred by the Lender Group in enforcing or defending the
Loan Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group's relationship with any Borrower or any Subsidiary
of a Borrower, but specifically excluding any Lender's (other than Agent's)
costs and expenses in negotiating, advising, structuring, drafting, reviewing,
or amending the Loan Documents, (h) Agent's reasonable costs and expenses
(including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, syndicating, or amending the Loan Documents, and (i)
Agent's and each Lender's reasonable costs and expenses (including attorneys,
accountants, consultants, and other advisors fees and expenses) incurred in
terminating, enforcing (including attorneys, accountants, consultants, and other
advisors fees and expenses incurred in connection with a "workout," a
"restructuring," or an Insolvency Proceeding concerning any Borrower or any
Subsidiary of a Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender,
such Lender, together with such Lender's Affiliates, officers, directors,
employees, attorneys, and agents.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of
determination, the aggregate undrawn amount of all outstanding Letters of
Credit.
"LIBOR Deadline" has the meaning set forth in Section
2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit
L-1.
"LIBOR Option" has the meaning set forth in Section 2.13(a).
"LIBOR Rate" means, for each Interest Period for each LIBOR
Rate Loan, the rate per annum determined by Agent (rounded upwards, if
necessary, to the next 1/100%) by dividing (a) the Base LIBOR Rate for such
Interest Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset,
irrespective of whether (a) such interest is based on the common law, statute,
or contract, (b) such interest is recorded or perfected, and (c) such interest
is contingent upon the occurrence of some future event or events or the
existence of some future circumstance or circumstances. Without limiting the
generality of the foregoing, the term "Lien" includes the lien or security
interest arising from
19
a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, security agreement, conditional sale or trust receipt, or
from a lease, consignment, or bailment for security purposes and also includes
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product
Agreements, the Cash Management Agreements, the Control Agreements, the
Intellectual Property Security Agreement, the Disbursement Letter, the Fee
Letter, the Intercompany Subordination Agreement, the Letters of Credit, the
Stock Pledge Agreement, any note or notes executed by a Borrower in connection
with this Agreement and payable to a member of the Lender Group, and any other
agreement entered into, now or in the future, by any Borrower and the Lender
Group in connection with this Agreement.
"Material Adverse Change" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrowers and their
Subsidiaries, taken as a whole, (b) a material impairment of a Borrower's or any
of its Subsidiaries' ability to perform its obligations under the Loan Documents
to which it is a party or of the Lender Group's ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of the Agent's Liens with respect to the Collateral
as a result of an action or failure to act on the part of a Borrower or a
Subsidiary of a Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $60,000,000.
"Mira Mesa" means Mira Mesa Marketing, a California
corporation.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a
Borrower or a Subsidiary of a Borrower in favor of Agent, in form and substance
satisfactory to Agent, that encumber any fee-owned Real Property Collateral.
"Negotiable Collateral" means letters of credit, letter of
credit rights, instruments, promissory notes, drafts, documents, and chattel
paper (including electronic chattel paper and tangible chattel paper).
"Obligations" means (a) all Advances, debts, principal,
interest (including any interest that, but for the commencement of an Insolvency
Proceeding, would have accrued), contingent reimbursement obligations with
respect to outstanding Letters of Credit, premiums, liabilities (including all
amounts charged to Borrowers' Loan Account pursuant hereto), obligations
(including indemnification obligations), fees (including the fees provided
20
for in the Fee Letter), charges, costs, Lender Group Expenses (including any
fees or expenses that, but for the commencement of an Insolvency Proceeding,
would have accrued), lease payments, guaranties, covenants, and duties of any
kind and description owing by Borrowers to the Lender Group pursuant to or
evidenced by the Loan Documents and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all interest not paid when due
and all Lender Group Expenses that Borrowers are required to pay or reimburse by
the Loan Documents, by law, or otherwise, and (b) all Bank Product Obligations.
Any reference in this Agreement or in the Loan Documents to the Obligations
shall include all extensions, modifications, renewals, or alterations thereof,
both prior and subsequent to any Insolvency Proceeding.
"Officer" means a chief executive officer, chief financial
officer, general counsel, controller, treasurer or vice president.
"Originating Lender" has the meaning set forth in Section
14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(e).
"Pay-Off Letter" means a letter, in form and substance
satisfactory to Agent, from Existing Lender to Agent respecting the amount
necessary to repay in full all of the obligations of Borrowers and their
Subsidiaries owing to Existing Lender and obtain a release of all of the Liens
existing in favor of Existing Lender in and to the assets of Borrowers and their
Subsidiaries.
"Permitted Acquisition" means a Permitted Cash Acquisition or
a Permitted Non-Cash Acquisition, as the context requires.
"Permitted Cash Acquisition" means any Acquisition as to which
each of the following is applicable (a) such Acquisition qualifies as a
Permitted Non-Cash Acquisition in all respects except that the consideration
payable in respect of the proposed Acquisition includes some form of
consideration other than solely the common Stock of Parent; (b) the aggregate
consideration paid (other than Stock of Parent) and obligations assumed by
Borrowers for any individual Acquisition would not exceed $10,000,000 and for
all such Acquisitions (including the proposed Acquisition) in any fiscal year of
Parent would not exceed $15,000,000 in the aggregate, (c) Availability of at
least $15,000,000 must exist after giving effect to the Acquisition, and (d) no
Indebtedness that is not permitted under Section 7.1 will be incurred as a
result of such Acquisition.
21
"Permitted Discretion" means a determination made in the
exercise of commercially reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions
of Equipment that is worn, damaged, or obsolete in the ordinary course of
business, (b) sales of Inventory to buyers in the ordinary course of business,
(c) the use or transfer of money or Cash Equivalents in a manner that is not
prohibited by the terms of this Agreement or the other Loan Documents, (d) the
licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of business, (e)
Permitted Intercompany Advances, (f) sales, assignments, transfers, or
dispositions of Accounts that are not Eligible Accounts (and were not Eligible
Accounts as of the most recent Borrowing Base Certificate delivered to Agent
prior to the undertaking of any such actions) for cash, provided that no Default
or Event of Default has occurred and is continuing or would result therefrom,
such actions are arm's length transactions, and the net cash proceeds of such
actions are delivered to Agent for application to the Advances in accordance
with Section 2.4(b), and (g) other sales or dispositions of property (other than
Accounts) not otherwise permitted by another clause of this definition in an
amount not to exceed $1,000,000 in the aggregate during any fiscal year of
Parent, provided that no Default or Event of Default has occurred and is
continuing or would result therefrom and such disposition is consummated at fair
market value, in good faith, in an arm's length transaction.
"Permitted Intercompany Advances" means Intercompany Advances
(a) made by Parent or any of Parent's Subsidiaries to Borrowers, so long as they
are subject to the Intercompany Subordination Agreement, (b) made by any of
Parent's Subsidiaries that is not a Borrower to any other of Parent's
Subsidiaries that is not a Borrower, and (c) made by Parent or a Borrower to any
of their foreign Subsidiaries either (i) before the Closing Date, or (ii) after
the Closing Date in an aggregate amount not to exceed, at any time outstanding,
the difference of (y) $2,000,000, less (z) the aggregate Dollar exposure of
Borrowers under any guaranties of the Indebtedness or other obligations of
Parent's foreign Subsidiaries, provided, that all such Intercompany Advances
shall only be allowed so long as they are made at a time when no Default or
Event of Default exists or would result therefrom.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) Investments received in settlement of amounts due to a
Borrower or any Subsidiary of a Borrower effected in the ordinary course of
business or owing to a Borrower or any Subsidiary of a Borrower as a result of
Insolvency Proceedings involving an Account Debtor or upon the foreclosure or
enforcement of any Lien in favor of a Borrower or any Subsidiary of a Borrower,
(e) Permitted Intercompany Advances, (f) Investments set forth on Schedule P-1,
(g) additional equity Investments in a wholly owned Subsidiary that is a
Borrower, (h) Capital Expenditures permitted under Section 7.18(b), (i)
obligations of one or more officers or other employees of Borrowers or their
Subsidiaries in connection with such
22
officers' or employees' acquisition of shares of Parent's Stock, so long as no
cash is actually advanced by Borrowers or any their Subsidiaries to such
officers or employees in connection with the acquisition of any such
obligations, (j) Permitted Acquisitions, (k) (i) that existing term loan advance
in the original principal amount of $2,000,000 made by Parent to Grove/Atlantic,
Inc., a New York corporation ("Grove/Atlantic"), pursuant to the terms of that
certain Term Loan Note and related documents, all dated October 27, 2003,
provided that any amounts loaned thereunder if repaid may not be reborrowed, and
(ii) revolving advances required to be made from time to time by Parent to
Grove/Atlantic pursuant to the terms of that certain Revolving Loan Note and
related documents, all dated October 27, 2003, provided that not more than
$2,000,000 of such revolving advances may be outstanding at any one time, and
(l) other Investments in an aggregate amount not to exceed $1,000,000 at any
time outstanding.
"Permitted Liens" means (a) Liens held by Agent, (b) Liens for
unpaid taxes that either (i) are not yet delinquent, or (ii) do not constitute
an Event of Default hereunder and are the subject of Permitted Protests, (c)
Liens set forth on Schedule P-2, (d) the interests of lessors under operating
leases, (e) purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as such Lien attaches only to the asset purchased
or acquired and the proceeds thereof, (f) Liens arising by operation of law in
favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of Borrowers' business and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests, (g) Liens on
amounts deposited in connection with obtaining worker's compensation or other
unemployment insurance, (h) Liens on amounts deposited in connection with the
making or entering into of bids, tenders, or leases in the ordinary course of
business and not in connection with the borrowing of money, (i) Liens on amounts
deposited as security for surety or appeal bonds in connection with obtaining
such bonds in the ordinary course of business, (j) Liens resulting from any
judgment or award that is not an Event of Default hereunder, (k) with respect to
any Real Property, easements, rights of way, and zoning restrictions,
encroachments, and other minor defects or irregularities in title that do not
materially interfere with or impair the use or operation thereof, (l) rights of
setoff or bankers' liens upon deposits of cash in favor of banks or other
depository institutions, solely to the extent incurred in connection with the
maintenance of such deposit accounts in the ordinary course of business, (m) any
attachment or judgment Lien not constituting an Event of Default under Section
8.8, (n) Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of customs duties in connection with the importation of
goods, (o) Liens on assets acquired in a Permitted Acquisition and Liens on
assets of a Person that becomes a direct or indirect Subsidiary of Borrowers
after the date of this Agreement in a Permitted Acquisition; provided, however,
that such Liens exist at the time such Person becomes a Subsidiary and are not
created in anticipation of such acquisition; and, provided, further that the
total of all Liens permitted hereby shall not secure Indebtedness exceeding
$1,000,000 in the aggregate amount outstanding at any time, and
23
(p) other Liens on fixed assets securing Indebtedness not to exceed $1,000,000
in the aggregate amount outstanding at any time.
"Permitted Non-Cash Acquisition" means any Acquisition so long
as:
(a) no Default or Event of Default shall have occurred and be
continuing or would result from the consummation of the proposed Acquisition,
(b) the assets being acquired, or the Person whose Stock is
being acquired, are useful in or engaged in, as applicable, the business of
Borrowers,
(c) the consideration payable in respect of the proposed
Acquisition shall be composed solely of common Stock of Parent,
(d) Administrative Borrower has provided Agent with historical
financial statements of the Person or assets being acquired, together with
written confirmation, supported by reasonably detailed calculations, showing
that (i) if the Acquisition is a Stock Acquisition, then the Person being
acquired had a positive EBITDA for the 12 month period immediately preceding the
Acquisition, using a methodology to be mutually agreed upon by the
Administrative Borrower and Agent; and (ii) the Parent, on a pro forma basis
(including the Person being acquired if such Acquisition is a Stock Acquisition
or the assets being acquired if such Acquisition is an Asset Acquisition) will
be in compliance with all of the financial covenants set forth in Section 7.18,
for the 12 month period following the consummation of the Acquisition,
(e) Parent has provided Agent with a written certification of
the proposed Acquisition not less than 15 Business Days prior to the anticipated
closing date of the subject Acquisition which certification reflects, but is not
limited to (i) advising Agent of the proposed Acquisition, (ii) confirming that
the requirements for Permitted Acquisitions have been satisfied, (iii)
indicating that Borrowers are in compliance with this Agreement, and (iv)
providing an informational financial package relating to the Acquisition in form
and substance comparable to the package submitted to Borrowers' Board of
Directors, and providing such documentation that Agent may require demonstrating
that after giving effect to the subject Acquisition, Parent and its Subsidiaries
(taken as a whole) could not reasonably be expected to suffer a Material Adverse
Change as a result of such proposed Acquisition (and Agent shall have 10
Business Days from and after the receipt by Agent of such documentation to
notify Parent of its contention that the proposed Acquisition cannot proceed
because a Material Adverse Change could reasonably be expected to result from
the proposed Acquisition and failure to so notify Parent shall be deemed an
approval),
(f) in the case of an Asset Acquisition, the subject assets
are being acquired directly by Parent or a Borrower,
(g) in the case of a Stock Acquisition, the subject Stock is
being acquired directly by Parent or a Borrower,
24
(h) in the case of an Asset Acquisition, the relevant
Borrower, within 30 days following the Acquisition closing date, shall have
executed and delivered or authorized, as applicable, any and all security
agreements, financing statements, fixture filings, and other documentation
reasonably requested by Agent in order to include the newly acquired assets
within the collateral hypothecated under the Loan Documents,
(i) in the case of a Stock Acquisition, the relevant Borrower,
within 30 days following the Acquisition closing date, shall have executed and
delivered a pledge agreement respecting the Stock being acquired and shall have
delivered to Agent possession of the original Stock certificates respecting all
of the issued and outstanding shares of Stock of such acquired Person, together
with stock powers with respect thereto endorsed in blank, and
(j) in the case of a Stock Acquisition, the relevant Borrower
shall have caused such acquired Person to execute and deliver a Guaranty and to
execute a Guarantor Security Agreement (in form satisfactory to Agent) in order
to make such Person an obligor with respect to the Obligations, together with
any and all financing statements, fixture filings, and other documentation
reasonably requested by Agent in order to cause such acquired Person to be
obligated with respect to the Obligations and to include the assets of the
acquired Person within the collateral hypothecated under the Loan Documents.
"Permitted Protest" means the right of Administrative Borrower
or any of its Subsidiaries to protest any Lien (other than any Lien that secures
the Obligations), taxes (other than payroll taxes or taxes that are the subject
of a United States federal tax lien), or rental payment, provided that (a) a
reserve with respect to such obligation is established on the Books in such
amount as is required under GAAP, (b) any such protest is instituted promptly
and prosecuted diligently by Administrative Borrower or any of its Subsidiaries,
as applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date
of determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate amount outstanding at any one time not in excess of $2,000,000.
"Permitted Reorganization Transaction" means (a) the merger of
(i) a wholly owned Subsidiary of a Borrower with and into a Borrower (so long as
Borrower is the surviving entity in such merger), or (ii) a Subsidiary of a
Borrower with and into another Subsidiary of Borrower provided, that no Borrower
may be merged into a Person that is not a Borrower), (b) the dissolution and
transfer of all assets or properties (i) by a Subsidiary of a Borrower to a
Borrower, or (ii) by a Subsidiary of a Borrower that is not a Borrower to
another Subsidiary of a Borrower that is not a Borrower, or (c) Borrowers or
their Subsidiaries may sell or dispose of shares of capital Stock of any of
their foreign Subsidiaries in order to qualify members of the governing body of
the foreign Subsidiary if and only to
25
the extent required by applicable law, provided, however, that in no event shall
Borrowers or their Subsidiaries sell or dispose of shares to the extent that
such sale or disposal would result in a breach of a Stock Pledge Agreement.
"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"PGI" means Publishers Group, Inc., a California corporation.
"Projections" means Parent's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means, as of any date of determination:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (i) prior to the Revolver Commitments being terminated or reduced to
zero, the percentage obtained by dividing (y) such Lender's Revolver Commitment,
by (z) the aggregate Revolver Commitments of all Lenders, and (ii) from and
after the time that the Revolver Commitments have been terminated or reduced to
zero, the percentage obtained by dividing (y) the aggregate outstanding
principal amount of such Lender's Advances by (z) the aggregate outstanding
principal amount of all Advances,
(b) with respect to a Lender's obligation to participate in
Letters of Credit, to reimburse the Issuing Lender, and to receive payments of
fees with respect thereto, (i) prior to the Revolver Commitments being
terminated or reduced to zero, the percentage obtained by dividing (y) such
Lender's Revolver Commitment, by (z) the aggregate Revolver Commitments of all
Lenders, and (ii) from and after the time that the Revolver Commitments have
been terminated or reduced to zero, the percentage obtained by dividing (y) the
aggregate outstanding principal amount of such Lender's Advances by (z) the
aggregate outstanding principal amount of all Advances,
(c) with respect to all other matters as to a particular
Lender (including the indemnification obligations arising under Section 16.7),
the percentage obtained by dividing (i) such Lender's Revolver Commitment, by
(ii) the aggregate amount of Revolver Commitments of all Lenders; provided,
however, that in the event the Revolver Commitments have been terminated or
reduced to zero, Pro Rata Share under this clause shall be the percentage
obtained by dividing (A) the outstanding principal amount of such Lender's
Advances plus such Lender's ratable portion of the Risk Participation Liability
with respect to outstanding Letters of Credit, by (B) the outstanding principal
amount of all
26
Advances plus the aggregate amount of the Risk Participation Liability with
respect to outstanding Letters of Credit.
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"Qualified Cash" means, as of any date of determination, the
amount of unrestricted cash and Cash Equivalents of Borrowers and their
Subsidiaries that is in Deposit Accounts or in Securities Accounts, or any
combination thereof, and which such Deposit Account or Securities Account is the
subject of a Control Agreement and is maintained by a branch office of the bank
or securities intermediary located within the United States.
"Real Property" means any estates or interests in real
property now owned or hereafter acquired by any Borrower or a Subsidiary of any
Borrower and the improvements thereto.
"Real Property Collateral" means the fee-owned Real Property
identified on Schedule R-1 and any fee-owned Real Property hereafter acquired by
a Borrower or any Subsidiary of a Borrower.
"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials authorized by Environmental Laws.
"Replacement Lender" has the meaning set forth in Section
15.2(a).
"Report" has the meaning set forth in Section 16.17.
"Required Lenders" means, at any time, Lenders whose aggregate
Pro Rata Shares (calculated under clause (d) of the definition of Pro Rata
Shares) equal or exceed 50.1%.
"Reserve Percentage" means, on any day, for any Lender, the
maximum percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the reserve
requirements (including any
27
basic, supplemental, marginal, or emergency reserves) that are in effect on such
date with respect to eurocurrency funding (currently referred to as
"eurocurrency liabilities") of that Lender, but so long as such Lender is not
required or directed under applicable regulations to maintain such reserves, the
Reserve Percentage shall be zero.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or in the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 14.1.
"Revolver Usage" means, as of any date of determination, the
sum of (a) the amount of outstanding Advances, plus (b) the amount of the Letter
of Credit Usage.
"Risk Participation Liability" means, as to each Letter of
Credit, all reimbursement obligations of Borrowers to the Issuing Lender with
respect to an L/C Undertaking, consisting of (a) the amount available to be
drawn or which may become available to be drawn, (b) all amounts that have been
paid by the Issuing Lender to the Underlying Issuer to the extent not reimbursed
by Borrowers, whether by the making of an Advance or otherwise, and (c) all
accrued and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"Securities Account" means a "securities account" as that term
is defined in the Code.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section
2.3(f)(i).
"Solvent" means, with respect to any Person on a particular
date, that, at fair valuations, the sum of such Person's assets is greater than
all of such Person's debts.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Stock Acquisition" means the purchase or other acquisition by
a Person or its Subsidiaries of all or substantially all of the Stock of any
other Person.
28
"Stock Pledge Agreement" means a stock pledge agreement, in
form and substance satisfactory to Agent, executed and delivered by each
Borrower.
"Subsidiary" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
"Supplemental Information" means (i) information contained in
each of Administrative Borrower's filings with the SEC and all press releases
and other public announcements made by Administrative Borrower on or after July
23, 2003 and prior to the Closing Date, which filings, press releases and other
public announcements are incorporated herein by reference and (ii) information
arising out of the restatement, audit or reaudit of any of Borrowers' financial
statements underway as of the Closing Date, for periods prior to March 31, 2003.
"Supporting Obligation" means a letter-of-credit right or
secondary obligation that supports the payment or performance of an Account,
chattel paper, document, General Intangible, instrument, or Investment Property.
"Swing Lender" means WFF or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender under Section 2.3(d).
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 16.11.
"TTM EBITDA" means, as of any date of determination, the
EBITDA of Parent and its Subsidiaries for the 12 month period most recently
ended for which Parent has delivered (or is obligated to have delivered) a
Compliance Certificate pursuant hereto.
"Underlying Issuer" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that
has been issued by an Underlying Issuer.
"United States" means the United States of America.
"Voidable Transfer" has the meaning set forth in Section 17.6.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a
national banking association.
29
"WFF" means Xxxxx Fargo Foothill, Inc., a California
corporation.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein, provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 shall govern.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms "includes"
and "including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein) and any definition of or reference
to any law, statute, regulation, rule or other legislative action shall mean
such law, statute, regulation, rule or other legislative action as amended,
supplemented or otherwise modified from time to time. Any reference herein to
the satisfaction or repayment in full of the Obligations shall mean the
repayment in full in cash (or cash collateralization in accordance with the
terms hereof) of all Obligations other than contingent indemnification
Obligations and other than any Bank Product Obligations that, at such time, are
allowed by the applicable Bank Product Provider to remain outstanding and are
not required to be repaid or cash collateralized pursuant to the provisions of
this Agreement. Any reference herein to any Person shall be construed to include
such Person's successors and assigns. Any requirement of a writing contained
herein or in the other Loan Documents shall be satisfied by the transmission of
a Record and any Record transmitted shall constitute a representation and
warranty as to the accuracy and completeness of the information contained
therein.
30
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Borrowers in an amount at any one time outstanding not to exceed such
Lender's Pro Rata Share of an amount equal to the lesser of (i) the Maximum
Revolver Amount less the Letter of Credit Usage, or (ii) the Borrowing Base less
the Letter of Credit Usage.
(b) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted Discretion
shall deem necessary or appropriate, against the Borrowing Base, including
reserves with respect to (i) sums that Borrowers are required to pay (such as
taxes, assessments, insurance premiums, or, in the case of leased assets, rents
or other amounts payable under such leases) and have failed to pay under any
Section of this Agreement or any other Loan Document, and (ii) amounts owing by
Borrowers or their Subsidiaries to any Person to the extent secured by a Lien
on, or trust over, any of the Collateral (other than any existing Permitted Lien
set forth on Schedule P-2 which is specifically identified thereon as entitled
to have priority over the Agent's Liens), which Lien or trust, in the Permitted
Discretion of Agent likely would have a priority superior to the Agent's Liens
(such as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad
valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral.
(c) The Lenders with Revolver Commitments shall have no
obligation to make additional Advances hereunder to the extent such additional
Advances would cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section 2.1 may be
repaid and, subject to the terms and conditions of this Agreement, reborrowed at
any time during the term of this Agreement.
2.2 INTENTIONALLY OMITTED.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by
an irrevocable written request by an Authorized Person delivered to Agent. Such
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day prior to the
31
date that is the requested Funding Date specifying (i) the amount of such
Borrowing, and (ii) the requested Funding Date, which shall be a Business Day;
provided, however, that in the case of a request for a Swing Loan in an amount
of $10,000,000, or less, such notice will be timely received if it is received
by Agent no later than 10:00 a.m. (California time) on the Business Day that is
the requested Funding Date. At Agent's election, in lieu of delivering the
above-described written request, any Authorized Person may give Agent telephonic
notice of such request by the required time. In such circumstances, Borrowers
agree that any such telephonic notice will be confirmed in writing within 24
hours of the giving of such telephonic notice, but the failure to provide such
written confirmation shall not affect the validity of the request.
(b) AGENT'S ELECTION. Promptly after receipt of a request for
a Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion,
(i) to have the terms of Section 2.3(c) apply to such requested Borrowing, or
(ii) if the Borrowing is for an Advance, to request Swing Lender to make a Swing
Loan pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
have the terms of Section 2.3(c) apply to such requested Borrowing.
(c) MAKING OF LOANS.
(i) In the event that Agent shall elect to have
the terms of this Section 2.3(c) apply to a requested Borrowing as described in
Section 2.3(b), then promptly after receipt of a request for a Borrowing
pursuant to Section 2.3(a), Agent shall notify the Lenders, not later than 1:00
p.m. (California time) on the Business Day immediately preceding the Funding
Date applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing available to Agent in
immediately available funds, to Agent's Account, not later than 10:00 a.m.
(California time) on the Funding Date applicable thereto. After Agent's receipt
of the proceeds of such Advances, Agent shall make the proceeds thereof
available to Administrative Borrower on the applicable Funding Date by
transferring immediately available funds equal to such proceeds received by
Agent to Administrative Borrower's Designated Account; provided, however, that,
subject to the provisions of Section 2.3(i), Agent shall not request any Lender
to make, and no Lender shall have the obligation to make, any Advance if Agent
shall have actual knowledge that (1) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the requested Funding
Date for the applicable Borrowing unless such condition has been waived, or (2)
the requested Borrowing would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender
on or prior to the Closing Date or, with respect to any Borrowing after the
Closing Date, prior to 9:00 a.m. (California time) on the date of such
Borrowing, that such Lender will not make available as and when required
hereunder to Agent for the account of Borrowers the amount of that
32
Lender's Pro Rata Share of the Borrowing, Agent may assume that each Lender has
made or will make such amount available to Agent in immediately available funds
on the Funding Date and Agent may (but shall not be so required), in reliance
upon such assumption, make available to Borrowers on such date a corresponding
amount. If and to the extent any Lender shall not have made its full amount
available to Agent in immediately available funds and Agent in such
circumstances has made available to Borrowers such amount, that Lender shall on
the Business Day following such Funding Date make such amount available to
Agent, together with interest at the Defaulting Lender Rate for each day during
such period. A notice submitted by Agent to any Lender with respect to amounts
owing under this subsection shall be conclusive, absent manifest error. If such
amount is so made available, such payment to Agent shall constitute such
Lender's Advance on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to Agent on the Business Day following the
Funding Date, Agent will notify Administrative Borrower of such failure to fund
and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Advances composing such Borrowing. The failure of any Lender to make
any Advance on any Funding Date shall not relieve any other Lender of any
obligation hereunder to make an Advance on such Funding Date, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to
a Defaulting Lender any payments made by Borrowers to Agent for the Defaulting
Lender's benefit, and, in the absence of such transfer to the Defaulting Lender,
Agent shall transfer any such payments to each other non-Defaulting Lender
member of the Lender Group ratably in accordance with their Commitments (but
only to the extent that such Defaulting Lender's Advance was funded by the other
members of the Lender Group) or, if so directed by Administrative Borrower and
if no Default or Event of Default had occurred and is continuing (and to the
extent such Defaulting Lender's Advance was not funded by the Lender Group),
retain same to be re-advanced to Borrowers as if such Defaulting Lender had made
Advances to Borrowers. Subject to the foregoing, Agent may hold and, in its
Permitted Discretion, re-lend to Borrowers for the account of such Defaulting
Lender the amount of all such payments received and retained by Agent for the
account of such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's Commitment shall be
deemed to be zero. This Section shall remain effective with respect to such
Lender until (x) the Obligations under this Agreement shall have been declared
or shall have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Administrative Borrower shall have waived such Defaulting
Lender's default in writing, or (z) the Defaulting Lender makes its Pro Rata
Share of the applicable Advance and pays to Agent all amounts owing by
Defaulting Lender in respect thereof. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, to
relieve or excuse the performance by such Defaulting Lender or any other Lender
of its duties and obligations hereunder, or to relieve or excuse the performance
by Borrowers of their duties
33
and obligations hereunder to Agent or to the Lenders other than such Defaulting
Lender. Any such failure to fund by any Defaulting Lender shall constitute a
material breach by such Defaulting Lender of this Agreement and shall entitle
Administrative Borrower at its option, upon written notice to Agent, to arrange
for a substitute Lender to assume the Commitment of such Defaulting Lender, such
substitute Lender to be acceptable to Agent. In connection with the arrangement
of such a substitute Lender, the Defaulting Lender shall have no right to refuse
to be replaced hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance in favor of the substitute Lender (and agrees that it
shall be deemed to have executed and delivered such document if it fails to do
so) subject only to being repaid its share of the outstanding Obligations (other
than Bank Product Obligations, but including an assumption of its Pro Rata Share
of the Risk Participation Liability) without any premium or penalty of any kind
whatsoever; provided however, that any such assumption of the Commitment of such
Defaulting Lender shall not be deemed to constitute a waiver of any of the
Lender Groups' or Borrowers' rights or remedies against any such Defaulting
Lender arising out of or in relation to such failure to fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the
consent of Swing Lender, as a Lender, to have the terms of this Section 2.3(d)
apply to a requested Borrowing as described in Section 2.3(b), Swing Lender as a
Lender shall make such Advance in the amount of such Borrowing (any such Advance
made solely by Swing Lender as a Lender pursuant to this Section 2.3(d) being
referred to as a "Swing Loan" and such Advances being referred to collectively
as "Swing Loans") available to Borrowers on the Funding Date applicable thereto
by transferring immediately available funds to Administrative Borrower's
Designated Account. Each Swing Loan shall be deemed to be an Advance hereunder
and shall be subject to all the terms and conditions applicable to other
Advances, except that no such Swing Loan shall be eligible to be a LIBOR Rate
Loan and all payments on any Swing Loan shall be payable to Swing Lender as a
Lender solely for its own account (and for the account of the holder of any
participation interest with respect to such Swing Loan). Subject to the
provisions of Section 2.3(i), Agent shall not request Swing Lender as a Lender
to make, and Swing Lender as a Lender shall not make, any Swing Loan if Agent
has actual knowledge that (i) one or more of the applicable conditions precedent
set forth in Section 3 will not be satisfied on the requested Funding Date for
the applicable Borrowing unless such condition has been waived, or (ii) the
requested Borrowing would exceed the Availability on such Funding Date. Swing
Lender as a Lender shall not otherwise be required to determine whether the
applicable conditions precedent set forth in Section 3 have been satisfied on
the Funding Date applicable thereto prior to making, in its sole discretion, any
Swing Loan.
(ii) The Swing Loans shall be secured by the
Agent's Liens, constitute Obligations hereunder, and bear interest at the rate
applicable from time to time to Advances that are Base Rate Loans.
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(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrowers and
the Lenders, from time to time in Agent's sole discretion, (1) after the
occurrence and during the continuance of a Default or an Event of Default, or
(2) at any time that any of the other applicable conditions precedent set forth
in Section 3 have not been satisfied, to make Advances to Borrowers on behalf of
the Lenders that Agent, in its Permitted Discretion deems necessary or desirable
(A) to preserve or protect the Collateral, or any portion thereof, (B) to
enhance the likelihood of repayment of the Obligations (other than the Bank
Product Obligations), or (C) to pay any other amount chargeable to Borrowers
pursuant to the terms of this Agreement, including Lender Group Expenses and the
costs, fees, and expenses described in Section 10 (any of the Advances described
in this Section 2.3(e) shall be referred to as "Agent Advances"). Each Agent
Advance shall be deemed to be an Advance hereunder, except that no such Agent
Advance shall be eligible to be a LIBOR Rate Loan and all payments thereon shall
be payable to Agent solely for its own account.
(ii) The Agent Advances shall be repayable on
demand, secured by the Agent's Liens granted to Agent under the Loan Documents,
constitute Obligations hereunder, and bear interest at the rate applicable from
time to time to Advances that are Base Rate Loans.
(f) SETTLEMENT. It is agreed that each Lender's funded portion
of the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement")
with the Lenders on a weekly basis, or on a more frequent basis if so determined
by Agent, (1) on behalf of Swing Lender, with respect to each outstanding Swing
Loan, (2) for itself, with respect to each Agent Advance, and (3) with respect
to Borrowers' or their Subsidiaries' Collections received, as to each by
notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m. (California
time) on the Business Day immediately prior to the date of such requested
Settlement (the date of such requested Settlement being the "Settlement Date").
Such notice of a Settlement Date shall include a summary statement of the amount
of outstanding Advances, Swing Loans, and Agent Advances for the period since
the prior Settlement Date. Subject to the terms and conditions contained herein
(including Section 2.3(c)(iii)): (y) if a Lender's balance of the Advances
(including Swing Loans and Agent Advances) exceeds such Lender's Pro Rata Share
of the Advances (including Swing Loans and Agent Advances) as of a Settlement
Date, then Agent shall, by no later than 12:00 p.m. (California time) on the
Settlement Date, transfer in immediately available funds to a Deposit Account of
such Lender (as such Lender
35
may designate), an amount such that each such Lender shall, upon receipt of such
amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Agent Advances), and (z) if a Lender's balance of the
Advances (including Swing Loans and Agent Advances) is less than such Lender's
Pro Rata Share of the Advances (including Swing Loans and Agent Advances) as of
a Settlement Date, such Lender shall no later than 12:00 p.m. (California time)
on the Settlement Date transfer in immediately available funds to the Agent's
Account, an amount such that each such Lender shall, upon transfer of such
amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Agent Advances). Such amounts made available to Agent
under clause (z) of the immediately preceding sentence shall be applied against
the amounts of the applicable Swing Loans or Agent Advances and, together with
the portion of such Swing Loans or Agent Advances representing Swing Lender's
Pro Rata Share thereof, shall constitute Advances of such Lenders. If any such
amount is not made available to Agent by any Lender on the Settlement Date
applicable thereto to the extent required by the terms hereof, Agent shall be
entitled to recover for its account such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of
the Advances, Swing Loans, and Agent Advances is less than, equal to, or greater
than such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent
Advances as of a Settlement Date, Agent shall, as part of the relevant
Settlement, apply to such balance the portion of payments actually received in
good funds by Agent with respect to principal, interest, fees payable by
Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral. To
the extent that a net amount is owed to any such Lender after such application,
such net amount shall be distributed by Agent to that Lender as part of such
next Settlement.
(iii) Between Settlement Dates, Agent, to the
extent no Agent Advances or Swing Loans are outstanding, may pay over to Swing
Lender any payments received by Agent, that in accordance with the terms of this
Agreement would be applied to the reduction of the Advances, for application to
Swing Lender's Pro Rata Share of the Advances. If, as of any Settlement Date,
Collections of Borrowers or their Subsidiaries received since the then
immediately preceding Settlement Date have been applied to Swing Lender's Pro
Rata Share of the Advances other than to Swing Loans, as provided for in the
previous sentence, Swing Lender shall pay to Agent for the accounts of the
Lenders, and Agent shall pay to the Lenders, to be applied to the outstanding
Advances of such Lenders, an amount such that each Lender shall, upon receipt of
such amount, have, as of such Settlement Date, its Pro Rata Share of the
Advances. During the period between Settlement Dates, Swing Lender with respect
to Swing Loans, Agent with respect to Agent Advances, and each Lender (subject
to the effect of agreements between Agent and individual Lenders) with respect
to the Advances other than Swing Loans and Agent Advances, shall be entitled to
interest at the applicable rate or rates payable under this Agreement on the
daily amount of funds employed by Swing Lender, Agent, or the Lenders, as
applicable.
36
(g) NOTATION. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time and such records shall, absent manifest error,
conclusively be presumed to be correct and accurate. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment of principal of such Lender's Advances in its books and records,
including computer records.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than
Swing Loans and Agent Advances) shall be made by the Lenders contemporaneously
and in accordance with their Pro Rata Shares. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder, nor
shall any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary provision of this
Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender,
as applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby
would be created, so long as (i) after giving effect to such Advances, the
outstanding Revolver Usage does not exceed the Borrowing Base by more than
$6,000,000, (ii) after giving effect to such Advances, the outstanding Revolver
Usage (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver
Amount, and (iii) at the time of the making of any such Advance, Agent does not
believe, in good faith, that the Overadvance created by such Advance will be
outstanding for more than 90 days. The foregoing provisions are for the
exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended
to benefit Borrowers in any way. The Advances and Swing Loans, as applicable,
that are made pursuant to this Section 2.3(i) shall be subject to the same terms
and conditions as any other Advance or Swing Loan, as applicable, except that
they shall not be eligible for the LIBOR Option and the rate of interest
applicable thereto shall be the rate applicable to Advances that are Base Rate
Loans under Section 2.6(c) hereof without regard to the presence or absence of a
Default or Event of Default.
(A) In the event Agent obtains actual
knowledge that the Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such excess, Agent shall
notify the Lenders as soon as practicable (and prior to making any (or any
additional) intentional Overadvances (except for and excluding amounts charged
to the Loan Account for interest, fees, or Lender Group Expenses) unless Agent
determines that prior notice would result in imminent harm to the Collateral or
its value), and the Lenders with Revolver Commitments thereupon shall, together
with Agent, jointly determine the terms of arrangements that shall be
implemented
37
with Borrowers intended to reduce, within a reasonable time, the outstanding
principal amount of the Advances to Borrowers to an amount permitted by the
preceding paragraph. In the event Agent or any Lender disagrees over the terms
of reduction or repayment of any Overadvance, the terms of reduction or
repayment thereof shall be implemented according to the determination of the
Required Lenders.
(B) Each Lender with a Revolver Commitment
shall be obligated to settle with Agent as provided in Section 2.3(f) for the
amount of such Lender's Pro Rata Share of any unintentional Overadvances by
Agent reported to such Lender, any intentional Overadvances made as permitted
under this Section 2.3(i), and any Overadvances resulting from the charging to
the Loan Account of interest, fees, or Lender Group Expenses.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided
herein, all payments by Borrowers shall be made to Agent's Account for the
account of the Lender Group and shall be made in immediately available funds, no
later than 11:00 a.m. (California time) on the date specified herein. Any
payment received by Agent later than 11:00 a.m. (California time), shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from
Administrative Borrower prior to the date on which any payment is due to the
Lenders that Borrowers will not make such payment in full as and when required,
Agent may assume that Borrowers have made (or will make) such payment in full to
Agent on such date in immediately available funds and Agent may (but shall not
be so required), in reliance upon such assumption, distribute to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent Borrowers do not make such payment in full to Agent on the date when due,
each Lender severally shall repay to Agent on demand such amount distributed to
such Lender, together with interest thereon at the Defaulting Lender Rate for
each day from the date such amount is distributed to such Lender until the date
repaid.
(b) APPORTIONMENT AND APPLICATION.
(i) Except as otherwise provided with respect to
Defaulting Lenders and except as otherwise provided in the Loan Documents
(including agreements between Agent and individual Lenders), aggregate principal
and interest payments shall be apportioned ratably among the Lenders (according
to the unpaid principal balance of the Obligations to which such payments relate
held by each Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account, after giving effect to any
agreements between Agent and individual Lenders) shall be apportioned ratably
among the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to
38
which a particular fee relates. All payments shall be remitted to Agent and all
such payments, and all proceeds of Collateral received by Agent, shall be
applied as follows:
(A) first, to pay any Lender Group Expenses
then due to Agent under the Loan Documents, until paid in full,
(B) second, to pay any Lender Group Expenses
then due to the Lenders under the Loan Documents, on a ratable basis, until paid
in full,
(C) third, to pay any fees then due to Agent
(for its separate accounts, after giving effect to any agreements between Agent
and individual Lenders) under the Loan Documents until paid in full,
(D) fourth, to pay any fees then due to any
or all of the Lenders (after giving effect to any agreements between Agent and
individual Lenders) under the Loan Documents, on a ratable basis, until paid in
full,
(E) fifth, to pay interest due in respect of
all Agent Advances, until paid in full,
(F) sixth, ratably to pay interest due in
respect of the Advances (other than Agent Advances) and the Swing Loans, until
paid in full,
(G) seventh, to pay the principal of all
Agent Advances until paid in full,
(H) eighth, to pay the principal of all
Swing Loans until paid in full,
(I) ninth, so long as no Event of Default
has occurred and is continuing, and at Agent's election (which election Agent
agrees will not be made if an Overadvance would be created thereby), to pay
amounts then due and owing by Administrative Borrower or its Subsidiaries in
respect of Bank Products, until paid in full,
(J) tenth, so long as no Event of Default
has occurred and is continuing, to pay the principal of all Advances until paid
in full,
(K) eleventh, if an Event of Default has
occurred and is continuing, ratably (i) to pay the principal of all Advances
until paid in full, (ii) to Agent, to be held by Agent, for the ratable benefit
of Issuing Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the Letter of Credit Usage until paid in
full, and (iii) to Agent, to be held by Agent, for the benefit of the Bank
Product Providers, as cash collateral in an amount up to the amount of the Bank
Product Reserve established prior to the occurrence of, and not in contemplation
of, the subject Event
39
of Default until Borrowers' and its Subsidiaries' obligations in respect of Bank
Products have been paid in full or the cash collateral amount has been
exhausted,
(L) twelfth, if an Event of Default has
occurred and is continuing, to pay any other Obligations (including the
provision of amounts to Agent, to be held by Agent, for the benefit of the Bank
Product Providers, as cash collateral in an amount up to the amount determined
by Agent in its Permitted Discretion as the amount necessary to secure
Borrowers' and its Subsidiaries' obligations in respect of Bank Products), and
(M) thirteenth, to Borrowers (to be wired to
the Designated Account) or such other Person entitled thereto under applicable
law.
(ii) Agent promptly shall distribute to each
Lender, pursuant to the applicable wire instructions received from each Lender
in writing, such funds as it may be entitled to receive, subject to a Settlement
delay as provided in Section 2.3(f).
(iii) In each instance, so long as no Event of
Default has occurred and is continuing, this Section 2.4(b) shall not apply to
any payment made by Borrowers to Agent and specified by Borrowers to be for the
payment of specific Obligations then due and payable (or prepayable) under any
provision of this Agreement.
(iv) For purposes of the foregoing, "paid in
full" means payment of all amounts owing under the Loan Documents according to
the terms thereof, including loan fees, service fees, professional fees,
interest (and specifically including interest accrued after the commencement of
any Insolvency Proceeding), default interest, interest on interest, and expense
reimbursements, whether or not any of the foregoing would be or is allowed or
disallowed in whole or in part in any Insolvency Proceeding.
(v) In the event of a direct conflict between
the priority provisions of this Section 2.4 and other provisions contained in
any other Loan Document, it is the intention of the parties hereto that such
priority provisions in such documents shall be read together and construed, to
the fullest extent possible, to be in concert with each other. In the event of
any actual, irreconcilable conflict that cannot be resolved as aforesaid, the
terms and provisions of this Section 2.4 shall control and govern.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to the
Lender Group pursuant to Section 2.1 or Section 2.12 is greater than any of the
limitations set forth in Section 2.1 or Section 2.12, as applicable (an
"Overadvance"), Borrowers immediately shall pay to Agent, in cash, the amount of
such excess, which amount shall be used by Agent to reduce the Obligations in
accordance with the priorities set forth in Section 2.4(b). In addition,
Borrowers hereby promise to pay the Obligations (including principal, interest,
fees, costs, and expenses) in Dollars in full as and when due and payable under
the terms of this Agreement and the other Loan Documents.
40
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below,
all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest on the Daily Balance thereof as follows (i) if
the relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum
rate equal to the LIBOR Rate plus the Applicable Margin for LIBOR Rate Loans,
and (ii) otherwise, at a per annum rate equal to the Base Rate plus the
Applicable Margin for Base Rate Loans.
The foregoing notwithstanding, at no time shall any portion of
the Obligations (other than Bank Product Obligations) bear interest on the Daily
Balance thereof at a per annum rate less than 2.50%. To the extent that interest
accrued hereunder at the rate set forth herein would be less than the foregoing
minimum daily rate, the interest rate chargeable hereunder for such day
automatically shall be deemed increased to the minimum rate.
(b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment, subject to any
agreements between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in Section
2.12(e)) which shall accrue at a rate equal to the Applicable Margin then in
effect for LIBOR Rate Loans, per annum, times the Daily Balance of the undrawn
amount of all outstanding Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters
of Credit and except for Bank Product Obligations) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to 2 percentage points above the per
annum rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above
shall be increased to 2 percentage points above the per annum rate otherwise
applicable hereunder.
(d) PAYMENT. Except as provided to the contrary in Section
2.11 or Section 2.13(a), interest, Letter of Credit fees, and all other fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month at any time that Obligations or Commitments are outstanding. Borrowers
hereby authorize Agent, from time to time, without prior notice to Borrowers, to
charge all interest and fees (when due and payable), all Lender Group Expenses
(as and when incurred), all charges, commissions, fees, and costs provided for
in Section 2.12(e) (as and when accrued or incurred), all fees and costs
provided for in Section 2.11 (as and when accrued or incurred), and all other
payments as and when due and payable under any Loan Document (including any
amounts due and payable to the Bank Product Providers in respect of Bank
Products up to the amount of the Bank Product
41
Reserve) to Borrowers' Loan Account, which amounts thereafter shall constitute
Advances hereunder and shall accrue interest at the rate then applicable to
Advances hereunder. Any interest not paid when due shall be compounded by being
charged to Borrowers' Loan Account and shall thereafter constitute Advances
hereunder and shall accrue interest at the rate then applicable to Advances that
are Base Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrowers and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall
be liable only for the payment of such maximum as allowed by law, and payment
received from Borrowers in excess of such legal maximum, whenever received,
shall be applied to reduce the principal balance of the Obligations to the
extent of such excess.
2.7 CASH MANAGEMENT.
(a) Borrowers shall and shall cause each of their Subsidiaries
to (i) establish and maintain cash management services of a type and on terms
satisfactory to Agent at one or more of the banks set forth on Schedule 2.7(a)
(each a "Cash Management Bank"), and shall request in writing and otherwise take
such reasonable steps to ensure that all of their and their Subsidiaries'
Account Debtors forward payment of the amounts owed by them directly to such
Cash Management Bank, and (ii) deposit or cause to be deposited promptly, and in
any event no later than the first Business Day after the date of receipt
thereof, all of their Collections (including those sent directly by their
Account Debtors to Borrowers or their Subsidiaries) into a bank account in
Agent's name (a "Cash Management Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain
Cash Management Agreements with Agent and Borrowers, in form and substance
reasonably acceptable to Agent. Each such Cash Management Agreement shall
provide, among other things, that (i) the Cash Management Bank will comply only
with any instructions originated by Agent directing the disposition of the funds
in such Cash Management Account without further consent by Borrowers or their
Subsidiaries, as applicable, (ii) the Cash Management
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Bank has no rights of setoff or recoupment or any other claim against the
applicable Cash Management Account, other than for payment of its service fees
and other charges directly related to the administration of such Cash Management
Account and for returned checks or other items of payment, and (iii) if Agent
has given the Cash Management Bank a notice of exclusive control (which shall
not be given prior to the occurrence of a Cash Dominion Triggering Event), it
will forward by daily sweep all amounts in the applicable Cash Management
Account to the Agent's Account.
(c) So long as no Default or Event of Default has occurred and
is continuing, Administrative Borrower may amend Schedule 2.7(a) to add or
replace a Cash Management Bank or Cash Management Account; provided, however,
that (i) such prospective Cash Management Bank shall be reasonably satisfactory
to Agent, and (ii) prior to the time of the opening of such Cash Management
Account, a Borrower or its Subsidiary, as applicable, and such prospective Cash
Management Bank shall have executed and delivered to Agent a Cash Management
Agreement. Borrowers (or their Subsidiaries, as applicable) shall close any of
their Cash Management Accounts (and establish replacement cash management
accounts in accordance with the foregoing sentence) promptly and in any event
within 30 days of notice from Agent that the creditworthiness of any Cash
Management Bank is no longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within 60 days of notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Cash Management Accounts
or Agent's liability under any Cash Management Agreement with such Cash
Management Bank is no longer acceptable in Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral
accounts subject to Control Agreements.
2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt of any payment item
by Agent (whether from transfers to Agent by the Cash Management Banks pursuant
to the Cash Management Agreements or otherwise) shall not be considered a
payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Agent's Account or unless and until such
payment item is honored when presented for payment. Should any payment item not
be honored when presented for payment, then Borrowers shall be deemed not to
have made such payment and interest shall be calculated accordingly. Anything to
the contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into the Agent's Account on a Business
Day on or before 11:00 a.m. (California time). If any payment item is received
into the Agent's Account on a non-Business Day or after 11:00 a.m. (California
time) on a Business Day, it shall be deemed to have been received by Agent as of
the opening of business on the immediately following Business Day.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances, and
Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon
43
telephonic or other instructions received from anyone purporting to be an
Authorized Person or, without instructions, if pursuant to Section 2.6(d).
Administrative Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by Borrowers and made by Agent or the Lenders hereunder.
Unless otherwise agreed by Agent and Administrative Borrower, any Advance, Agent
Advance, or Swing Loan requested by Borrowers and made by Agent or the Lenders
hereunder shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of Borrowers (the "Loan
Account") on which Borrowers will be charged with all Advances (including Agent
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers' account, the Letters of Credit issued by Issuing
Lender for Borrowers' account, and with all other payment Obligations hereunder
or under the other Loan Documents (except for Bank Product Obligations),
including, accrued interest, fees and expenses, and Lender Group Expenses. In
accordance with Section 2.8, the Loan Account will be credited with all payments
received by Agent from Borrowers or for Borrowers' account, including all
amounts received in the Agent's Account from any Cash Management Bank. Agent
shall render statements regarding the Loan Account to Administrative Borrower,
including principal, interest, fees, and including an itemization of all charges
and expenses constituting Lender Group Expenses owing, and such statements,
absent manifest error, shall be conclusively presumed to be correct and accurate
and constitute an account stated between Borrowers and the Lender Group unless,
within 30 days after receipt thereof by Administrative Borrower, Administrative
Borrower shall deliver to Agent written objection thereto describing the error
or errors contained in any such statements.
2.11 FEES. Borrowers shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of agreements between Agent and
individual Lenders:
(a) UNUSED LINE FEE. On the first day of each month during the
term of this Agreement, an unused line fee in an amount equal to 0.375% per
annum times the result of (i) the Maximum Revolver Amount, less (ii) the sum of
(A) the average Daily Balance of Advances that were outstanding during the
immediately preceding month, plus (B) the average Daily Balance of the Letter of
Credit Usage during the immediately preceding month,
(b) FEE LETTER FEES. As and when due and payable under the
terms of the Fee Letter, the fees set forth in the Fee Letter, and
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. Audit, appraisal,
and valuation fees and charges as follows (i) a fee of $850 per day, per
auditor, plus out-of-pocket expenses for each collateral audit of a Borrower
performed by personnel employed by
44
Agent, which collateral audits may be performed as frequently as Agent deems
necessary, provided, however that so long as no Collateral Reporting Triggering
Event shall have occurred and be continuing, Borrowers shall not be obligated to
reimburse Agent for more than 1 collateral audit during any calendar year (with
additional collateral audits at the Agent's expense), (ii) if implemented, a fee
of $850 per day, per applicable individual, plus out of pocket expenses for the
establishment of electronic collateral reporting systems, (iii) a fee of $1,500
per day per appraiser, plus out-of-pocket expenses, for each appraisal of the
Collateral, or any portion thereof, performed by personnel employed by Agent,
and (iv) the actual charges paid or incurred by Agent if it elects to employ the
services of one or more third Persons to perform financial audits of Borrowers
or their Subsidiaries, to establish electronic collateral reporting systems, to
appraise the Collateral, or any portion thereof, or to assess Borrowers' and
their Subsidiaries' business valuation.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Xxxxx Fargo) for the account of
Borrowers. Each request for the issuance of a Letter of Credit or the amendment,
renewal, or extension of any outstanding Letter of Credit shall be made in
writing by an Authorized Person and delivered to the Issuing Lender and Agent
via hand delivery, telefacsimile, or other electronic method of transmission
reasonably in advance of the requested date of issuance, amendment, renewal, or
extension. Each such request shall be in form and substance satisfactory to the
Issuing Lender in its Permitted Discretion and shall specify (i) the amount of
such Letter of Credit, (ii) the date of issuance, amendment, renewal, or
extension of such Letter of Credit, (iii) the expiration of such Letter of
Credit, (iv) the name and address of the beneficiary thereof (or the beneficiary
of the Underlying Letter of Credit, as applicable), and (v) such other
information (including, in the case of an amendment, renewal, or extension,
identification of the outstanding Letter of Credit to be so amended, renewed, or
extended) as shall be necessary to prepare, amend, renew, or extend such Letter
of Credit. If requested by the Issuing Lender, Borrowers also shall be an
applicant under the application with respect to any Underlying Letter of Credit
that is to be the subject of an L/C Undertaking. The Issuing Lender shall have
no obligation to issue a Letter of Credit if any of the following would result
after giving effect to the issuance of such requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the
Borrowing Base less the outstanding amount of Advances, or
(ii) the Letter of Credit Usage would exceed
$10,000,000, or
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(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount less the outstanding amount of Advances.
Borrowers and the Lender Group acknowledge and agree that
certain Underlying Letters of Credit may be issued to support letters of credit
that already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance
hereunder, Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrowers had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitment, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrowers on the date due as provided in clause (a) of
this Section, or of any
46
reimbursement payment required to be refunded to Borrowers for any reason. Each
Lender with a Revolver Commitment acknowledges and agrees that its obligation to
deliver to Agent, for the account of the Issuing Lender, an amount equal to its
respective Pro Rata Share of each L/C Disbursement made by the Issuing Lender
pursuant to this Section 2.12(b) shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuation of an
Event of Default or Default or the failure to satisfy any condition set forth in
Section 3 hereof. If any such Lender fails to make available to Agent the amount
of such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing
Lender in respect of such Letter of Credit as provided in this Section, such
Lender shall be deemed to be a Defaulting Lender and Agent (for the account of
the Issuing Lender) shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.
(c) Each Borrower hereby agrees to indemnify, save, defend,
and hold the Lender Group harmless from any loss, cost, expense, or liability,
and reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability to
the extent that it is caused by the gross negligence or willful misconduct of
the Issuing Lender or any other member of the Lender Group. Each Borrower agrees
to be bound by the Underlying Issuer's regulations and interpretations of any
Underlying Letter of Credit or by Issuing Lender's interpretations of any L/C
issued by Issuing Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrowers' instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group. Each
Borrower hereby acknowledges and agrees that neither the Lender Group nor the
Issuing Lender shall be responsible for delays, errors, or omissions resulting
from the malfunction of equipment in connection with any Letter of Credit.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
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(e) Any and all charges, commissions, fees, and costs incurred
by the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change after the Closing Date in
any applicable law, treaty, rule, or regulation or any change in the
interpretation or application thereof by any Governmental Authority, or (ii)
compliance by the Underlying Issuer or the Lender Group with any direction,
request, or requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):
(i) any reserve, deposit, or similar requirement
is or shall be imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying
Issuer or the Lender Group any other condition regarding any Underlying Letter
of Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having
interest charged at the rate based upon the Base Rate, Borrowers shall have the
option (the "LIBOR Option") to have interest on all or a portion of the Advances
be charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR
Rate Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, and in addition, with respect to any Interest Period
of 6 months, on the date that is three months after the first day of the
Interest Period applicable thereto, (ii) the occurrence of an Event of Default
in consequence
48
of which the Required Lenders or Agent on behalf thereof have elected to
accelerate the maturity of all or any portion of the Obligations, or (iii)
termination of this Agreement pursuant to the terms hereof. On the last day of
each applicable Interest Period, unless Administrative Borrower properly has
exercised the LIBOR Option with respect thereto, the interest rate applicable to
such LIBOR Rate Loan automatically shall convert to the rate of interest then
applicable to Base Rate Loans of the same type hereunder. At any time that an
Event of Default has occurred and is continuing, Borrowers no longer shall have
the option to request that Advances bear interest at a rate based upon the LIBOR
Rate and Agent shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder.
(b) LIBOR ELECTION.
(i) Administrative Borrower may, at any time and
from time to time, so long as no Event of Default has occurred and is
continuing, elect to exercise the LIBOR Option by notifying Agent prior to 11:00
a.m. (California time) at least 3 Business Days prior to the commencement of the
proposed Interest Period (the "LIBOR Deadline"). Notice of Administrative
Borrower's election of the LIBOR Option for a permitted portion of the Advances
and an Interest Period pursuant to this Section shall be made by delivery to
Agent of a LIBOR Notice received by Agent before the LIBOR Deadline, or by
telephonic notice received by Agent before the LIBOR Deadline (to be confirmed
by delivery to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m.
(California time) on the same day). Promptly upon its receipt of each such LIBOR
Notice, Agent shall provide a copy thereof to each of the Lenders having a
Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable and
binding on Borrowers. In connection with each LIBOR Rate Loan, each Borrower
shall indemnify, defend, and hold Agent and the Lenders harmless against any
loss, cost, or expense incurred by Agent or any Lender as a result of (a) the
payment of any principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any LIBOR Rate Loan other than on the last day
of the Interest Period applicable thereto, or (c) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, and expenses,
collectively, "Funding Losses"). Funding Losses shall, with respect to Agent or
any Lender, be deemed to equal the amount determined by Agent or such Lender to
be the excess, if any, of (i) the amount of interest that would have accrued on
the principal amount of such LIBOR Rate Loan had such event not occurred, at the
LIBOR Rate that would have been applicable thereto, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period therefor), minus (ii) the amount of interest
that would accrue on such principal amount for such period at the interest rate
which Agent or such Lender would be offered were it to be offered, at the
commencement of such period, Dollar deposits of a comparable amount and period
in the London interbank market. A certificate of Agent or a Lender delivered to
49
Administrative Borrower setting forth any amount or amounts that Agent or such
Lender is entitled to receive pursuant to this Section 2.13 shall be conclusive
absent manifest error.
(iii) Borrowers shall have not more than 5 LIBOR
Rate Loans in effect at any given time. Borrowers only may exercise the LIBOR
Option for LIBOR Rate Loans of at least $1,000,000 and integral multiples of
$500,000 in excess thereof.
(c) PREPAYMENTS. Borrowers may prepay LIBOR Rate Loans at any
time; provided, however, that in the event that LIBOR Rate Loans are prepaid on
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Borrowers' and their Subsidiaries'
Collections in accordance with Section 2.4(b) or for any other reason, including
early termination of the term of this Agreement or acceleration of all or any
portion of the Obligations pursuant to the terms hereof, each Borrower shall
indemnify, defend, and hold Agent and the Lenders and their Participants
harmless against any and all Funding Losses in accordance with clause (b)(ii)
above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with
respect to any Lender on a prospective basis to take into account any additional
or increased costs to such Lender of maintaining or obtaining any eurodollar
deposits or increased costs, in each case, due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding loans bearing interest at the LIBOR Rate. In any
such event, the affected Lender shall give Administrative Borrower and Agent
notice of such a determination and adjustment and Agent promptly shall transmit
the notice to each other Lender and, upon its receipt of the notice from the
affected Lender, Administrative Borrower may, by notice to such affected Lender
(y) require such Lender to furnish to Administrative Borrower a statement
setting forth the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment, or (z) repay the LIBOR Rate Loans
with respect to which such adjustment is made (together with any amounts due
under clause (b)(ii) above).
(ii) In the event that any change in market
conditions or any law, regulation, treaty, or directive, or any change therein
or in the interpretation of application thereof, shall at any time after the
date hereof, in the reasonable opinion of any Lender, make it unlawful or
impractical for such Lender to fund or maintain LIBOR Advances or to continue
such funding or maintaining, or to determine or charge interest rates at the
LIBOR Rate, such Lender shall give notice of such changed circumstances to Agent
and Administrative Borrower and Agent promptly shall transmit the notice to each
other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date
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specified in such Lender's notice shall be deemed to be the last day of the
Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans
of such Lender thereafter shall accrue interest at the rate then applicable to
Base Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR
Option until such Lender determines that it would no longer be unlawful or
impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the
contrary contained herein notwithstanding, neither Agent, nor any Lender, nor
any of their Participants, is required actually to acquire eurodollar deposits
to fund or otherwise match fund any Obligation as to which interest accrues at
the LIBOR Rate. The provisions of this Section shall apply as if each Lender or
its Participants had match funded any Obligation as to which interest is
accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBOR Rate Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
2.15 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each Borrower is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Lender Group under this Agreement, for the
mutual benefit, directly and indirectly, of each Borrower and in consideration
of the undertakings of the other Borrowers to accept joint and several liability
for the Obligations.
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(b) Each Borrower, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Borrowers, with respect to the
payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this Section 2.15), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Borrower without preferences or distinction among
them.
(c) If and to the extent that any Borrower shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each such
event the other Borrowers will make such payment with respect to, or perform,
such Obligation.
(d) The Obligations of each Borrower under the provisions of
this Section 2.15 constitute the absolute and unconditional, full recourse
Obligations of each Borrower enforceable against each Borrower to the full
extent of its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement,
each Borrower hereby waives notice of acceptance of its joint and several
liability, notice of any Advances or Letters of Credit issued under or pursuant
to this Agreement, notice of the occurrence of any Default, Event of Default, or
of any demand for any payment under this Agreement, notice of any action at any
time taken or omitted by Agent or Lenders under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement). Each Borrower hereby assents to, and waives notice
of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by Agent or Lenders at any time or times in respect of any
default by any Borrower in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Borrower. Without limiting
the generality of the foregoing, each Borrower assents to any other action or
delay in acting or failure to act on the part of any Agent or Lender with
respect to the failure by any Borrower to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
Section 2.15 afford grounds for terminating, discharging or relieving any
Borrower, in whole or in part, from any of its Obligations under this Section
2.15, it being the intention of each Borrower that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of each Borrower under
this Section 2.15 shall
52
not be discharged except by performance and then only to the extent of such
performance. The Obligations of each Borrower under this Section 2.15 shall not
be diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Borrower or any Agent or Lender.
(f) Each Borrower represents and warrants to Agent and Lenders
that such Borrower is currently informed of the financial condition of the other
Borrowers and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Each Borrower
further represents and warrants to Agent and Lenders that such Borrower has read
and understands the terms and conditions of the Loan Documents. Each Borrower
hereby covenants that such Borrower will continue to keep informed of the other
Borrowers' financial condition, the financial condition of other guarantors, if
any, and of all other circumstances which bear upon the risk of nonpayment or
nonperformance of the Obligations.
(g) Each Borrower waives all rights and defenses arising out
of an election of remedies by Agent or any Lender, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed Agent's or such Lender's rights of
subrogation and reimbursement against such Borrower by the operation of Section
580(d) of the California Code of Civil Procedure or otherwise:
(h) Each Borrower waives all rights and defenses that such
Borrower may have because the Obligations are secured by Real Property. This
means, among other things:
(i) Agent and Lenders may collect from such
Borrower without first foreclosing on any Real or Personal Property Collateral
pledged by Borrowers.
(ii) If Agent or any Lender forecloses on any
Real Property Collateral pledged by Borrowers:
(A) The amount of the Obligations may be
reduced only by the price for which that collateral is sold at the foreclosure
sale, even if the collateral is worth more than the sale price.
(B) Agent and Lenders may collect from such
Borrower even if Agent or Lenders, by foreclosing on the Real Property
Collateral, has destroyed any right such Borrower may have to collect from the
other Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.
(i) The provisions of this Section 2.15 are made for the
benefit of Agent, Lenders and their respective successors and assigns, and may
be enforced by it or them from
53
time to time against any or all Borrowers as often as occasion therefor may
arise and without requirement on the part of any such Agent, Lender, successor
or assign first to marshal any of its or their claims or to exercise any of its
or their rights against any Borrower or to exhaust any remedies available to it
or them against any Borrower or to resort to any other source or means of
obtaining payment of any of the Obligations hereunder or to elect any other
remedy. The provisions of this Section 2.15 shall remain in effect until all of
the Obligations shall have been paid in full or otherwise fully satisfied. If at
any time, any payment, or any part thereof, made in respect of any of the
Obligations, is rescinded or must otherwise be restored or returned by any Agent
or Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or
otherwise, the provisions of this Section 2.15 will forthwith be reinstated in
effect, as though such payment had not been made.
(j) Each Borrower hereby agrees that it will not enforce any
of its rights of contribution or subrogation against any other Borrower with
respect to any liability incurred by it hereunder or under any of the other Loan
Documents, any payments made by it to Agent or Lenders with respect to any of
the Obligations or any collateral security therefor until such time as all of
the Obligations have been paid in full in cash. Any claim which any Borrower may
have against any other Borrower with respect to any payments to any Agent or
Lender hereunder or under any other Loan Documents are hereby expressly made
subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any
other Borrower therefor.
(k) Each Borrower hereby agrees that, after the occurrence and
during the continuance of any Default or Event of Default, the payment of any
amounts due with respect to the indebtedness owing by any Borrower to any other
Borrower is hereby subordinated to the prior payment in full in cash of the
Obligations. Each Borrower hereby agrees that after the occurrence and during
the continuance of any Default or Event of Default, such Borrower will not
demand, xxx for or otherwise attempt to collect any indebtedness of any other
Borrower owing to such Borrower until the Obligations shall have been paid in
full in cash. If, notwithstanding the foregoing sentence, such Borrower shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as trustee
for Agent, and such Borrower shall deliver any such amounts to Agent for
application to the Obligations in accordance with Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of each Lender to make its initial extension of credit provided for
hereunder, is subject to the
54
fulfillment, to the satisfaction of Agent and each Lender (the making of such
initial extension of credit by a Lender being conclusively deemed to be its
satisfaction or waiver of the following), of each of the following conditions
precedent:
(a) the Closing Date shall occur on or before April 30, 2004;
(b) Agent shall have received a Filing Authorization Letter,
duly executed by each Borrower, together with appropriate financing statements
duly filed in such office or offices as may be necessary or, in the opinion of
Agent, desirable to perfect the Agent's Liens in and to the Collateral;
(c) Agent shall have received each of the following documents,
in form and substance satisfactory to Agent, duly executed, and each such
document shall be in full force and effect:
(i) the Cash Management Agreements,
(ii) the Control Agreements,
(iii) the Intellectual Property Security Agreement,
(iv) the Disbursement Letter,
(v) the Fee Letter,
(vi) the Intercompany Subordination Agreement,
(vii) the Pay-Off Letter, together with termination
statements and other documentation evidencing the termination by Existing Lender
of its Liens in and to the properties and assets of Borrowers and their
Subsidiaries,
(viii) the Stock Pledge Agreement, together with all
certificates representing the shares of domestic Stock pledged thereunder, as
well as Stock powers with respect thereto endorsed in blank, and
(ix) the Events of Default Letter Agreement.
(d) Agent shall have received a certificate from the Secretary
of each Borrower (i) attesting to the resolutions of such Borrower's Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Borrower is a party, (ii) authorizing
specific officers of such Borrower to execute the same, and (iii) attesting to
the incumbency and signatures of such specific officers of such Borrower;
55
(e) Agent shall have received copies of each Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with
respect to each Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status with
respect to each Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;
(h) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8, the form
and substance of which shall be satisfactory to Agent;
(i) Agent shall have received opinions of Borrowers' and
Guarantors' counsel in form and substance satisfactory to Agent;
(j) Agent shall have received satisfactory evidence (including
a certificate of the chief financial officer of Parent) that all tax returns
required to be filed by Borrowers and their Subsidiaries have been timely filed
and all taxes upon Borrowers and their Subsidiaries or their properties, assets,
income, and franchises (including Real Property taxes, sales taxes, and payroll
taxes) have been paid prior to delinquency, except such taxes that are the
subject of a Permitted Protest;
(k) Borrowers shall have Excess Availability of at least
$10,000,000 after giving effect to the initial extensions of credit hereunder
and the payment of all fees and expenses required to be paid by Borrowers on the
Closing Date under this Agreement or the other Loan Documents;
(l) Agent shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit and review of
Borrowers' and their Subsidiaries' books and records and verification of
Borrowers' representations and warranties to the Lender Group, the results of
which shall be satisfactory to Agent, and (ii) an inspection of each of the
locations where Borrowers' and their Subsidiaries' Inventory is located, the
results of which shall be satisfactory to Agent;
(m) Agent shall have received completed background and
reference checks with respect to Borrowers' senior management, the results of
which are satisfactory to Agent in its sole discretion;
56
(n) Agent shall have received Borrowers' Closing Date Business
Plan and Agent shall be satisfied with the form and content of same;
(o) Borrowers shall have paid all Lender Group Expenses
incurred in connection with the transactions evidenced by this Agreement;
(p) Borrowers and each of their Subsidiaries shall have
received all licenses, approvals or evidence of other actions required by any
Governmental Authority in connection with the execution and delivery by
Borrowers or their Subsidiaries of the Loan Document or with the consummation of
the transactions contemplated thereby;
(q) Agent shall have received Uniform Commercial Code, tax
lien, and litigation searches with respect to each Borrower and Guarantor, the
results of which are to be satisfactory to Agent;
(r) Agent shall have received and reviewed copies of all of
Borrowers' material agreements, with the results of such review to be
satisfactory to Agent;
(s) Agent shall have completed its review of the pending
investigations of Borrowers by the U.S. District Attorney and the SEC, with the
results of such review to be satisfactory to Agent;
(t) Agent shall have completed its review of all pending
litigation against Borrowers, with the results of such results of such review to
be satisfactory to Agent;
(u) Agent shall have received final credit approval for the
transactions; and
(v) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Agent.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to Agent
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by Section 6.8, the form and substance of which shall
be reasonably satisfactory to Agent and its counsel;
(b) Borrowers shall use commercially reasonable efforts to
obtain for Agent, within 60 days of the Closing Date, satisfactory Collateral
Access Agreements with respect to the following locations: 0000 Xxxxxxx Xxxxx,
Xxx Xxxxx, XX 00000; 0000 Xxxxxx
00
Xxxxxx, Xxxxxxxx, XX 00000; 0000 Xxxx Xxxxx, Xxxxxxxx, XX 00000; 0000 Xxxxxxx
Xxx, Xxxxxxx, XX 00000; 0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000;
and 0000 X. 00xx Xx., Xxxxxxxxxxxx, XX 00000;
(c) within 30 days of the Closing Date, Agent shall have
received searches reflecting the filing of the financing statements set forth in
Section 3.1(b) above;
(d) within 30 days of the Closing Date, deliver to Agent (in
connection with the Stock Pledge Agreement), all certificates representing the
shares of foreign Stock pledged thereunder, as well as Stock powers with respect
thereto endorsed in blank;
(e) with respect to any Stock of foreign Subsidiaries of
Parent that is pledged pursuant to the Stock Pledge Agreement, within 60 days of
the Closing Date, Borrowers shall use their best efforts to complete any steps
required by the law of the jurisdiction of the issuer of such Stock to ensure
that such pledge is valid, binding, enforceable (subject to equitable
principles, bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally) and creates a perfected (or
the local equivalent) Lien in favor of Agent;
(f) within 5 days of the Closing Date, Agent shall have
received the signatures of all foreign Subsidiaries with respect to the
Intercompany Subordination Agreement; and
(g) such other conditions set forth on the side letter
regarding post closing conditions entered into by Agent and Borrowers of even
date herewith.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
the Lender Group (or any member thereof) to make any Advances hereunder at any
time (or to extend any other credit hereunder) shall be subject to the following
conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of
any nature restricting or prohibiting, directly or indirectly, the extending of
such credit shall have been issued and remain in force by any Governmental
Authority against any Borrower, Agent, any Lender, or any of their Affiliates;
and
(d) no Material Adverse Change shall have occurred.
58
3.4 TERM. This Agreement shall continue in full force and effect for a
term ending on April 30, 2009 (the "Maturity Date"). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrowers with respect to outstanding Letters of Credit and including all Bank
Products Obligations) immediately shall become due and payable without notice or
demand (including (a) either (i) providing cash collateral to be held by Agent
for the benefit of those Lenders with a Revolver Commitment in an amount equal
to 105% of the Letter of Credit Usage, or (ii) causing the original Letters of
Credit to be returned to the Issuing Lender, and (b) providing cash collateral
(in an amount determined by Agent as sufficient to satisfy the reasonably
estimated credit exposure) to be held by Agent for the benefit of the Bank
Product Providers with respect to the Bank Products Obligations). No termination
of this Agreement, however, shall relieve or discharge Borrowers or their
Subsidiaries of their duties, Obligations, or covenants hereunder or under any
other Loan Document and the Agent's Liens in the Collateral shall remain in
effect until all Obligations have been paid in full and the Lender Group's
obligations to provide additional credit hereunder have been terminated. When
this Agreement has been terminated and all of the Obligations have been paid in
full and the Lender Group's obligations to provide additional credit under the
Loan Documents have been terminated irrevocably, Agent will, at Borrowers' sole
expense, execute and deliver any termination statements, lien releases, mortgage
releases, re-assignments of trademarks, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, the Agent's Liens
and all notices of security interests and liens previously filed by Agent with
respect to the Obligations.
3.6 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at any
time upon 60 days prior written notice by Administrative Borrower to Agent, to
terminate this Agreement by paying to Agent, in cash, the Obligations (including
(a) either (i) providing cash collateral to be held by Agent for the benefit of
those Lenders with a Revolver Commitment in an amount equal to 105% of the
Letter of Credit Usage, or (ii) causing the original Letters of Credit to be
returned to the Issuing Lender, and (b) providing cash collateral (in an amount
determined by Agent as sufficient to satisfy the reasonably estimated credit
exposure) to be held by Agent for the benefit of the Bank Product Providers with
respect to the Bank Products Obligations), in full, together with the Applicable
Prepayment Premium (to be allocated based upon agreements between Agent and
individual Lenders). If Administrative Borrower has sent a notice of termination
pursuant to the provisions of this Section, then the Commitments shall terminate
and Borrowers shall be obligated to repay the Obligations (including (a) either
(i) providing cash collateral to be held by Agent for the benefit of those
Lenders with a Revolver Commitment in an amount equal to 105% of the Letter of
Credit Usage, or (ii) causing the original Letters of Credit to be returned to
the
59
Issuing Lender, and (b) providing cash collateral (in an amount determined by
Agent as sufficient to satisfy the reasonably estimated credit exposure) to be
held by Agent for the benefit of the Bank Product Providers with respect to the
Bank Products Obligations), in full, together with the Applicable Prepayment
Premium, on the date set forth as the date of termination of this Agreement in
such notice. In the event of the termination of this Agreement and repayment of
the Obligations at any time prior to the Maturity Date, for any other reason,
including (a) termination upon the election of the Required Lenders to terminate
after the occurrence and during the continuation of an Event of Default, (b)
foreclosure and sale of Collateral, (c) sale of the Collateral in any Insolvency
Proceeding, or (d) restructure, reorganization or compromise of the Obligations
by the confirmation of a plan of reorganization or any other plan of compromise,
restructure, or arrangement in any Insolvency Proceeding, then, in view of the
impracticability and extreme difficulty of ascertaining the actual amount of
damages to the Lender Group or profits lost by the Lender Group as a result of
such early termination, and by mutual agreement of the parties as to a
reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrowers shall pay the Applicable Prepayment Premium to Agent (to
be allocated based upon agreements between Agent and individual Lenders),
measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Each Borrower hereby grants to Agent,
for the benefit of the Lender Group and the Bank Product Providers, a continuing
security interest in all of its right, title, and interest in all currently
existing and hereafter acquired or arising Borrower Collateral in order to
secure prompt repayment of any and all of the Obligations in accordance with the
terms and conditions of the Loan Documents and in order to secure prompt
performance by Borrowers of each of their covenants and duties under the Loan
Documents. The Agent's Liens in and to the Borrower Collateral shall attach to
all Borrower Collateral without further act on the part of Agent or Borrowers.
Anything contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrowers and their
Subsidiaries have no authority, express or implied, to dispose of any item or
portion of the Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Borrower Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that Agent determines that perfection or priority of Agent's
security interest is dependent on or enhanced by possession, the applicable
Borrower, promptly upon the request of Agent, shall endorse and deliver physical
possession of such Negotiable Collateral to Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that Borrowers' Accounts, chattel paper, or General Intangibles have
been assigned to Agent or that Agent has a security interest therein, or (b)
collect Borrowers' Accounts, chattel paper, or General
60
Intangibles directly and charge the collection costs and expenses to the Loan
Account. Each Borrower agrees that it will hold in trust for the Lender Group,
as the Lender Group's trustee, any of its or its Subsidiaries' Collections that
it receives and immediately will deliver such Collections to Agent or a Cash
Management Bank in their original form as received by such Borrower or its
Subsidiaries.
4.4 FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS; DELIVERY OF
ADDITIONAL DOCUMENTATION REQUIRED.
(a) Borrowers authorize Agent to file any financing statement
necessary or desirable to effectuate the transactions contemplated by the Loan
Documents, and any continuation statement or amendment with respect thereto, in
any appropriate filing office without the signature of Borrowers where permitted
by applicable law. Borrowers hereby ratify the filing of any financing statement
filed without the signature of Borrowers prior to the date hereof.
(b) If Borrowers or their Subsidiaries acquire any commercial
tort claims after the date hereof, Borrowers shall promptly (but in any event
within 10 Business Days after such acquisition) deliver to Agent a written
description of such commercial tort claim and shall deliver a written agreement,
in form and substance satisfactory to Agent, pursuant to which such Borrower or
its Subsidiary, as applicable, shall grant a perfected security interest in all
of its right, title and interest in and to such commercial tort claim to Agent,
as security for the Obligations (a "Commercial Tort Claim Assignment").
(c) At any time upon the request of Agent, Borrowers shall
execute or deliver to Agent and shall cause their Subsidiaries to execute or
deliver to Agent any and all financing statements, original financing statements
in lieu of continuation statements, amendments to financing statements, fixture
filings, security agreements, pledges, assignments, Commercial Tort Claim
Assignments, endorsements of certificates of title, and all other documents
(collectively, the "Additional Documents") that Agent may request in its
Permitted Discretion, in form and substance satisfactory to Agent in its
Permitted Discretion, to create, perfect, and continue perfected or to better
perfect the Agent's Liens in the assets of Borrowers and their Subsidiaries
(whether now owned or hereafter arising or acquired, tangible or intangible,
real or personal), to create and perfect Liens in favor of Agent in any owned
Real Property acquired after the Closing Date, and in order to fully consummate
all of the transactions contemplated hereby and under the other Loan Documents.
To the maximum extent permitted by applicable law, each Borrower authorizes
Agent to execute any such Additional Documents in the applicable Borrower's name
and authorizes Agent to file such executed Additional Documents in any
appropriate filing office. In addition, on such periodic basis as Agent shall
require, Borrowers shall (i) provide Agent with a report of all new material
patentable, copyrightable, or trademarkable materials acquired or generated by
any Borrower or its Subsidiaries during the prior period, (ii) cause all
material patents, copyrights, and trademarks acquired or generated by Borrowers
or their Subsidiaries that are not already the subject of a registration with
the appropriate filing office (or an application
61
therefor diligently prosecuted) to be registered with such appropriate filing
office in a manner sufficient to impart constructive notice of such Borrower's
or such Subsidiary's ownership thereof, and (iii) cause to be prepared,
executed, and delivered to Agent supplemental schedules to the applicable Loan
Documents to identify such patents, copyrights, and trademarks as being subject
to the security interests created thereunder; provided, however, that none of
Borrowers or their Subsidiaries shall register with the U.S. Copyright Office
any unregistered copyrights (whether in existence on the Closing Date or
thereafter acquired, arising, or developed) unless (i) the applicable Person
provides Agent with written notice of its intent to register such copyrights not
less than 30 days prior to the date of the proposed registration, and (ii) prior
to such registration, the applicable Person executes and delivers to Agent an
intellectual property security agreement in form and substance satisfactory to
Agent, supplemental schedules to any existing intellectual property security
agreement, or such other documentation as Agent reasonably deems necessary in
order to perfect and continue perfected Agent's Liens on such copyrights
following such registration.
4.5 POWER OF ATTORNEY. Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or xxxx of lading relating to the Borrower Collateral, drafts against Account
Debtors, or notices to Account Debtors, (c) send requests for verification of
Borrowers' or their Subsidiaries' Accounts, (d) endorse such Borrower's name on
any of its payment items (including all of its Collections) that may come into
the Lender Group's possession, (e) at any time that an Event of Default has
occurred and is continuing, make, settle, and adjust all claims under such
Borrower's policies of insurance and make all determinations and decisions with
respect to such policies of insurance, and (f) at any time that an Event of
Default has occurred and is continuing, settle and adjust disputes and claims
respecting Borrowers' or their Subsidiaries' Accounts, chattel paper, or General
Intangibles directly with Account Debtors, for amounts and upon terms that Agent
determines to be reasonable, and Agent may cause to be executed and delivered
any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and the Lender
Group's obligations to extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter to inspect the Books and make copies or abstracts thereof and to
check, test, and appraise the Collateral, or any portion thereof, in order to
verify Borrowers' and their Subsidiaries' financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.
62
4.7 CONTROL AGREEMENTS. Borrowers agree that they will and will cause
their Subsidiaries to take any or all commercially reasonable steps in order for
Agent to obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106,
and 9-107 of the Code with respect to (subject to the proviso contained in
Section 7.12) all of their Securities Accounts, Deposit Accounts, electronic
chattel paper, Investment Property, and letter-of-credit rights. Upon the
occurrence and during the continuance of a Default or Event of Default, Agent
may notify any bank or securities intermediary to liquidate the applicable
Deposit Account or Securities Account or any related Investment Property
maintained or held thereby and remit the proceeds thereof to the Agent's
Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, each
Borrower makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects, as of the
date hereof, and shall be true, correct, and complete, in all material respects,
as of the Closing Date, and at and as of the date of the making of each Advance
(or other extension of credit) made thereafter, as though made on and as of the
date of such Advance (or other extension of credit) (except to the extent that
such representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 NO ENCUMBRANCES. Each Borrower and its Subsidiaries has good and
indefeasible title to, or a valid leasehold interest in, their personal property
assets and good and marketable title to, or a valid leasehold interest in, their
material Real Property, in each case, free and clear of Liens except for
Permitted Liens.
5.2 ELIGIBLE ACCOUNTS. As to each Account that is identified by a
Borrower as an Eligible Account in a borrowing base report submitted to Agent,
such Account is (a) a bona fide existing payment obligations of the applicable
Account Debtors created by the sale and delivery of Inventory or the rendition
of services to such Account Debtors in the ordinary course of Borrowers'
business, (b) owed to Borrowers without any known defenses, disputes, offsets,
counterclaims, or rights of return or cancellation, and (c) not excluded as
ineligible by virtue of one or more of the excluding criteria set forth in the
definition of Eligible Accounts (other than paragraph (l) of such definition),
and (d) to the Borrowers' knowledge, not excluded as ineligible by virtue of the
excluding criteria set forth in clause (l) of the definition of Eligible
Accounts.
5.3 INTENTIONALLY OMITTED.
5.4 INTENTIONALLY OMITTED.
5.5 LOCATION OF INVENTORY. Except to the extent set forth on Schedule
5.5, the Inventory of Borrowers and their Subsidiaries are not stored with a
bailee, warehouseman, or similar party and are located only at, or in-transit
between, the locations identified on Schedule 5.5 (as such Schedule may be
updated pursuant to Section 6.9).
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5.6 INVENTORY RECORDS. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its
Subsidiaries' Inventory and the book value thereof, except in each case where
the failure could not reasonably be expected to result in a Material Adverse
Change.
5.7 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.
(a) The jurisdiction of organization of each Borrower and each
of its Subsidiaries is set forth on Schedule 5.7(a).
(b) The chief executive office of each Borrower and each of
its Subsidiaries is located at the address indicated on Schedule 5.7(b) (as such
Schedule may be updated pursuant to Section 6.9).
(c) Each Borrower's and each of its Subsidiaries'
organizational identification number, if any, are identified on Schedule 5.7(c).
(d) As of the Closing Date, Borrowers and their Subsidiaries
do not hold any commercial tort claims, except as set forth on Schedule 5.7(d).
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to result in a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of each Borrower, by class, and, as
of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 5.8(b),
there are no subscriptions, options, warrants, or calls relating to any shares
of each Borrower's capital Stock, including any right of conversion or exchange
under any outstanding security or other instrument. No Borrower is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate
list of each Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization, (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries, and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by the applicable Borrower. All of the outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable. Neither AMSI nor Mira Mesa: (a) owns any
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assets (except that AMSI owns a 1% equity interest in Advanced Mexico), (b) is
liable on any Indebtedness; or (c) conducts business.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Borrower or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the other Loan Documents to
which it is a party have been duly authorized by all necessary action on the
part of such Borrower.
(b) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the other Loan Documents to
which it is a party do not and will not (i) violate any provision of federal,
state, or local law or regulation applicable to any Borrower, the Governing
Documents of any Borrower, or any order, judgment, or decree of any court or
other Governmental Authority binding on any Borrower, (ii) conflict with, result
in a breach of, or constitute (with due notice or lapse of time or both) a
default under any material contractual obligation of any Borrower, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of Borrower, other than Permitted Liens, or (iv)
require any approval of any Borrower's interestholders or any approval or
consent of any Person under any material contractual obligation of any Borrower,
other than consents or approvals that have been obtained and that are still in
force and effect.
(c) Other than the filing of financing statements and the
delivery of the certificates regarding Stock of foreign Subsidiaries which will
be completed within 30 days of the Closing Date, the execution, delivery, and
performance by each Borrower of this Agreement and the other Loan Documents to
which such Borrower is a party do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by, any
Governmental Authority, other than consents or approvals that have been obtained
and that are still in force and effect and, with respect to the Agent's Liens in
the Stock of any foreign Subsidiaries of Parent, other than any steps that may
be required by the law of the jurisdiction of the issuer or by the
organizational documents of the issuer, to create or perfect such Lien.
(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their
65
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally, and, with respect to the
enforceability of any pledge of the Stock of any foreign Subsidiaries of Parent,
the laws of the jurisdiction of the issuer, or with respect to the
organizational documents of such issuer, and the delivery of the certificates
regarding foreign Subsidiaries which will be completed within 30 days of the
Closing Date.
(e) Upon the filing of UCC-1 Financing Statements (in the form
and with the filing officers previously disclosed by Agent to Borrowers), the
Agent's Liens will be validly created, perfected, and first priority Liens,
subject only to Permitted Liens and except to the extent that the Agent's Liens
in the Stock of any foreign Subsidiaries of Parent may require additional steps
under the laws of the jurisdiction of the issuer, or with respect to the
organizational documents of such issuer, and the delivery of the certificates
regarding Stock of foreign Subsidiary which will be completed within 30 days of
the Closing Date, and except with respect to registered copyrights.
(f) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Guarantor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
such Guarantor, (iii) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any properties or assets of such Guarantor,
other than Permitted Liens, or (iv) require any approval of such Guarantor's
interestholders or any approval or consent of any Person under any material
contractual obligation of such Guarantor, other than consents or approvals that
have been obtained and that are still in force and effect.
(h) Other than the filing of financing statements and the
recordation of the Mortgages, the execution, delivery, and performance by each
Guarantor of the Loan Documents to which such Guarantor is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority, other than consents or
approvals that have been obtained and that are still in force and effect.
(i) The Loan Documents to which each Guarantor is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Guarantor will be the legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may
66
be limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights generally.
5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10
and the matters set forth in the Supplemental Information, and other than
matters arising after the Closing Date that reasonably could not be expected to
result in a Material Adverse Change, there are no actions, suits, or proceedings
pending or, to the best knowledge of each Borrower, threatened against any
Borrower or any of its Subsidiaries.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrowers and their Subsidiaries or Guarantors that have been delivered by
Borrowers to the Lender Group have been prepared in accordance with GAAP
(except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments; and except, in the
case of monthly financial statements for the first two months of each fiscal
quarter, with respect to balance sheet reserves) and present fairly in all
material respects, Borrowers' and their Subsidiaries' (or any Guarantor's, as
applicable) financial condition as of the date thereof and results of operations
for the period then ended, except to the extent set forth in the Supplemental
Information (but subject to the terms of Section 7.20). Except as set forth in
the Supplemental Information (but subject to the terms of Section 7.20), there
has not been a Material Adverse Change with respect to Borrowers and their
Subsidiaries (or any Guarantor, as applicable) since the date of the latest
financial statements submitted to Agent on or before the Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) Each Borrower and each Subsidiary of a Borrower is
Solvent.
(b) No transfer of property is being made by any Borrower or
any Subsidiary of a Borrower and no obligation is being incurred by any Borrower
or any Subsidiary of a Borrower in connection with the transactions contemplated
by this Agreement or the other Loan Documents with the intent to hinder, delay,
or defraud either present or future creditors of Borrowers or their
Subsidiaries.
5.13 EMPLOYEE BENEFITS. None of Borrowers, any of their Subsidiaries,
or any of their respective ERISA Affiliates is an "employer" (as defined in
Section 3(5) of ERISA) in relation to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14, (a)
to Borrowers' knowledge, none of Borrowers' or their Subsidiaries' properties or
assets has ever been used by Borrowers, their Subsidiaries, or by previous
owners or operators in the disposal of, or to produce, store, handle, treat,
release, or transport, any Hazardous Materials, where such production, storage,
handling, treatment, release or transport was in violation, in any material
respect, of applicable Environmental Law, except for such violations that could
not reasonably be expected to result in a Material Adverse Change, (b) to
Borrowers' knowledge, none of Borrowers' nor their Subsidiaries' properties or
assets has ever been
67
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) none of Borrowers nor any of
their Subsidiaries have received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by Borrowers or their Subsidiaries, and (d) none of Borrowers nor any
of their Subsidiaries have received a summons, citation, notice, or directive
from the United States Environmental Protection Agency or any other federal or
state governmental agency concerning any action or omission by any Borrower or
any Subsidiary of a Borrower resulting in the releasing or disposing of
Hazardous Materials into the environment.
5.15 BROKERAGE FEES. Borrowers and their Subsidiaries have not utilized
the services of any broker or finder in connection with obtaining financing from
the Lender Group under this Agreement and no brokerage commission or finders fee
is payable by Borrowers or their Subsidiaries in connection herewith as a result
of actions of Borrowers or their Subsidiaries.
5.16 INTELLECTUAL PROPERTY. Each Borrower and each Subsidiary of a
Borrower owns, or holds licenses in, all trademarks, trade names, copyrights,
patents, patent rights, and licenses that are reasonably necessary to the
conduct of its business as currently conducted, and attached hereto as Schedule
5.16 (as updated from time to time) is a true, correct, and complete listing of
all material patents, patent applications, trademarks, trademark applications,
copyrights, and copyright registrations as to which each Borrower or one of its
Subsidiaries is the owner or is an exclusive licensee.
5.17 LEASES. Borrowers and their Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
they are parties or under which they are operating and all of such leases are
valid and subsisting and no material default by Borrowers or their Subsidiaries
exists under any of them, except for such defaults that individually, or in the
aggregate, could not be expected to result in a Material Adverse Change.
5.18 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on Schedule
5.18 is a listing of all of Borrowers' and their Subsidiaries' Deposit Accounts
and Securities Accounts, including, with respect to each bank or securities
intermediary (a) the name and address of such Person, and (b) the account
numbers of the Deposit Accounts or Securities Accounts maintained with such
Person.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Borrowers or their Subsidiaries in writing to Agent
or any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents but excluding any Projections) for purposes of or in
connection with this Agreement, the other Loan Documents or any transaction
contemplated herein or therein is, and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of Borrowers or their
Subsidiaries in writing to Agent or any Lender (excluding any Projections) will
be, true
68
and accurate in all material respects on the date as of which such information
is dated or certified and not incomplete by omitting to state any fact necessary
to make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such information
was provided, except in the case of financial information, which is subject to
changes resulting from audit and year-end adjustments and, subject to Section
7.20, information from prior periods that are under review for restatement and
re-audit, all as set forth in the Supplemental Information. On the Closing Date,
the Closing Date Projections represent, and as of the date on which any other
Projections are delivered to Agent, such additional Projections represent
Borrowers' good faith best estimate, utilizing reasonable assumptions, of their
and their Subsidiaries' future performance for the periods covered thereby, it
being recognized by Lenders that such Projections as to future events are
subject to uncertainties and contingencies and that actual results during the
period or periods covered by any such Projections may differ from the projected
results.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of each Borrower and each Subsidiary of a Borrower
outstanding immediately prior to the Closing Date that is to remain outstanding
after the Closing Date and such Schedule accurately reflects the aggregate
principal amount of such Indebtedness and describes the principal terms thereof.
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, until termination of all of
the Commitments and payment in full of the Obligations, Borrowers shall and
shall cause each of their respective Subsidiaries to do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrowers also shall keep a reporting
system that shows all additions, sales, claims, returns, and allowances with
respect to their and their Subsidiaries' sales.
6.2 COLLATERAL REPORTING. Provide Agent (and if so requested by Agent,
with copies for each Lender) with the following documents at the following times
in form satisfactory to Agent:
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Weekly(1) (a) a sales journal, collection journal, and
credit register since the last such schedule, a
report regarding credit memoranda that have been
issued since the last such report, and a
calculation of the Borrowing Base as of such
date, and
Monthly (not later (b) a detailed calculation of the Borrowing Base
than the 10th day (including detail regarding those Accounts of
of each month) Borrowers that are not Eligible Accounts),
(c) a detailed aging, by total, of the Accounts
of Borrowers, together with a reconciliation to
the detailed calculation of the Borrowing Base
previously provided to Agent, and together with
a reconciliation to the general ledger,
(d) a summary aging, by vendor, of Borrowers'
and their Subsidiaries' accounts payable,
accrued expenses, held check listing and any
book overdraft, together with a reconciliation
to the general ledger,
(e) a detailed report regarding Borrowers' and
their Subsidiaries' cash and Cash Equivalents
including an indication of which amounts
constitute Qualified Cash, and
Quarterly (f) a detailed list of each Borrower's and each
of its Subsidiaries' customers,
(g) a report regarding each Borrower's and each
of its Subsidiaries' accrued, but unpaid, ad
valorem taxes, and
Upon request by (h) copies of invoices in connection with
Agent Borrowers' and their Subsidiaries' Accounts,
credit memos, remittance advices, deposit slips,
shipping and delivery documents in connection
with Borrowers' and their Subsidiaries' Accounts
and, for Inventory and Equipment acquired by
Borrowers or their Subsidiaries, purchase
orders and invoices,
(i) such other reports as to the Collateral or
the financial condition of Borrowers and their
Subsidiaries, as Agent may request, and
----------
(1) Commencing on the occurrence of the Collateral Reporting Triggering
Event, such periodic reporting will be required on each Business Day.
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(j) notice of all claims, offsets, or disputes
asserted by Account Debtors with respect to
Borrowers' and their Subsidiaries' Accounts.
In addition, each Borrower agrees to cooperate to the extent
commercially reasonable with Agent to facilitate and implement a system of
electronic collateral reporting in order to provide electronic reporting of each
of the items set forth above.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of one of Parent's fiscal quarters)
after the end of each month during each of Parent's fiscal years,
(i) an unaudited consolidated and consolidating
balance sheet, income statement, and statement of cash flow covering Parent's
and its Subsidiaries' operations during such period, together with a statement
of all Intercompany Advances for such fiscal month, and
(ii) a Compliance Certificate,
(b) as soon as available, but in any event within 90 days
after the end of each of Parent's fiscal years,
(i) consolidated financial statements of Parent
and its Subsidiaries for each such fiscal year, audited by independent certified
public accountants reasonably acceptable to Agent and certified, without any
qualifications, (including any (A) "going concern" or like qualification or
exception, (B) qualification or exception as to the scope of such audit, or (C)
qualification which relates to the treatment or classification of any item and
which, as a condition to the removal of such qualification, would require an
adjustment to such item, the effect of which would be to cause any noncompliance
with the provisions of Section 7.18), by such accountants to have been prepared
in accordance with GAAP (such audited financial statements to include a balance
sheet, income statement, and statement of cash flow and, if prepared, such
accountants' letter to management), and
(ii) a Compliance Certificate,
(c) as soon as available, but in any event within 30 days
prior to the start of each of Parent's fiscal years, copies of Borrowers'
Projections, in substantially the form previously approved for the Closing Date
Business Plan and in substance (including as to scope and underlying
assumptions) reasonably satisfactory to Agent, in its Permitted Discretion, for
the forthcoming 3 years, year by year, and for the forthcoming fiscal year,
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month by month, certified by the chief financial officer of Parent as being such
officer's good faith estimate of the financial performance of Parent and its
Subsidiaries during the period covered thereby,
(d) if and when filed by any Borrower,
(i) Form 10-Q quarterly reports, Form 10-K
annual reports, and Form 8-K current reports,
(ii) any other filings made by any Borrower with
the SEC,
(iii) copies of Borrowers' federal income tax
returns, and any amendments thereto, filed with the Internal Revenue Service,
and
(iv) any other information that is provided by
Parent to its shareholders generally,
(e) promptly, but in any event within 5 days after any officer
of a Borrower has knowledge of any event or condition that constitutes a Default
or an Event of Default, notice thereof and a statement of the curative action
that Borrowers propose to take with respect thereto,
(f) promptly after the commencement thereof, but in any event
within 5 days after the service of process with respect thereto on any Borrower
or any Subsidiary of a Borrower, notice of all actions, suits, or proceedings
brought by or against any Borrower or any Subsidiary of a Borrower before any
Governmental Authority which, if determined adversely to such Borrower or such
Subsidiary, reasonably could be expected to result in a Material Adverse Change,
(g) promptly, but in any event within 5 days after any Officer
of Borrower has knowledge thereof, any notices of judgments, settlements, fines
or material adverse events relating to the investigation of Borrowers by the
United States Attorney and the SEC pending as of the Closing Date, and
(h) upon the request of Agent, any other information
reasonably requested relating to the financial condition of Borrowers or their
Subsidiaries.
In addition, Parent agrees that no Subsidiary of Parent will
have a fiscal year different from that of Parent. Borrowers agree to cooperate
with Agent to allow Agent to consult with their independent certified public
accountants if Agent reasonably requests the right to do so and that, in such
connection, their independent certified public accountants are authorized to
communicate with Agent and to release to Agent whatever financial information
concerning Borrowers or their Subsidiaries that Agent reasonably may request.
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6.4 GUARANTOR REPORTS. Cause each Guarantor to deliver its annual
financial statements at the time when Parent provides its audited financial
statements to Agent, but only to the extent such Guarantor's financial
statements are not consolidated with Parent's financial statements.
6.5 RETURNS. Cause returns and allowances as between Borrowers and
their Subsidiaries and their Account Debtors, to be on the same basis and in
accordance with the ordinary course of business of Borrowers and their
Subsidiaries, as they exist at the time of the execution and delivery of this
Agreement.
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of their
properties which are necessary or useful in the proper conduct to their business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee,
so as to prevent any loss or forfeiture thereof or thereunder, except in each
case where such failure could not reasonably be expected to result in a Material
Adverse Change.
6.7 TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers,
their Subsidiaries, or any of their respective assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Borrowers will and will cause their Subsidiaries to make
timely payment or deposit of all tax payments and withholding taxes required of
them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes, and will, upon
written request, furnish Agent with proof satisfactory to Agent indicating that
the applicable Borrower or Subsidiary of a Borrower has made such payments or
deposits.
6.8 INSURANCE.
(a) At Borrowers' expense, maintain insurance respecting their
and their Subsidiaries' assets wherever located, covering loss or damage by
fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses.
Borrowers also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrowers shall deliver copies of all such policies to Agent with an
endorsement naming Agent as the sole loss payee (under a satisfactory lender's
loss payable endorsement) or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice of
any loss in excess of $250,000 covered by such insurance. Agent shall have the
exclusive right to adjust
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any losses claimed under any such insurance policies in excess of $250,000 (or
in any amount after the occurrence and during the continuation of an Event of
Default), without any liability to Borrowers whatsoever in respect of such
adjustments. Any monies received as payment for any loss under any insurance
policy mentioned above (other than liability insurance policies) or as payment
of any award or compensation for condemnation or taking by eminent domain, shall
be paid over to Agent to be applied at the option of the Required Lenders either
to the prepayment of the Obligations or shall be disbursed to Administrative
Borrower under staged payment terms reasonably satisfactory to the Required
Lenders for application to the cost of repairs, replacements, or restorations.
Any such repairs, replacements, or restorations shall be effected with
reasonable promptness and shall be of a value at least equal to the value of the
items or property destroyed prior to such damage or destruction.
(c) Borrowers will not, and will not suffer or permit their
Subsidiaries to, take out separate insurance concurrent in form or contributing
in the event of loss with that required to be maintained under this Section 6.8,
unless Agent is included thereon as an additional insured or loss payee under a
lender's loss payable endorsement. Administrative Borrower promptly shall notify
Agent whenever such separate insurance is taken out, specifying the insurer
thereunder and full particulars as to the policies evidencing the same, and
copies of such policies promptly shall be provided to Agent.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep Borrowers' and their
domestic Subsidiaries' Inventory and Equipment only at the locations identified
on Schedule 5.5 and their chief executive offices only at the locations
identified on Schedule 5.7(b); provided, however, that Administrative Borrower
may amend Schedule 5.5 and Schedule 5.7 so long as such amendment occurs by
written notice to Agent not less than 10 days prior to the date on which such
Inventory or Equipment is moved to such new location or such chief executive
office is relocated, so long as such new location is within the continental
United States, and so long as, at the time of such written notification, the
applicable Borrower uses commercially reasonable efforts to provide Agent a
Collateral Access Agreement with respect thereto.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Change and other than Parent's failure to file with the SEC
certain of its Form 10-Q and Form 10-K reports pending completion of the reaudit
and/or restatement thereof currently underway as of the Closing Date as publicly
disclosed by Parent.
6.11 LEASES. Pay when due all rents and other amounts payable under any
material leases to which any Borrower or any Subsidiary of a Borrower is a party
or by which any Borrower's or any of its Subsidiaries' properties and assets are
bound, unless such payments are the subject of a Permitted Protest, or unless
the effect of the failure (individually or
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collectively) to make any such payments could not reasonably be expected to
result in a Material Adverse Change.
6.12 EXISTENCE. Except for the consummation of Permitted Reorganization
Transactions, at all times preserve and keep in full force and effect (a) each
Borrower's and each Guarantors' valid existence and good standing and any rights
and franchises material to their businesses, and (b) Parent's Subsidiaries'
(other than the Borrowers and Guarantors) valid existence and good standing and
any rights and franchises material to their businesses, except to the extent
that such failure could not reasonably be expected to result in a Material
Adverse Change.
6.13 ENVIRONMENTAL.
(a) Keep any property either owned or operated by any Borrower
or any Subsidiary of a Borrower free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply with Environmental Laws except
to the extent that such failure individually or in the aggregate could not
reasonably be expected to result in a Material Adverse Change, (c) promptly
notify Agent of any release of a Hazardous Material in any reportable quantity
from or onto property owned or operated by any Borrower or any Subsidiary of a
Borrower and take any Remedial Actions required to xxxxx said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly, but in any event within 5 days of its receipt thereof, provide Agent
with written notice of any of the following: (i) notice that an Environmental
Lien has been filed against any of the real or personal property of any Borrower
or any Subsidiary of a Borrower, (ii) commencement of any Environmental Action
or notice that an Environmental Action will be filed against any Borrower or any
Subsidiary of a Borrower, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.
6.14 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after any Officer obtaining knowledge thereof, notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained, at the
time it was furnished, any untrue statement of a material fact or omitted to
state any material fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made. The foregoing to the
contrary notwithstanding, any notification pursuant to the foregoing provision
will not cure or remedy the effect of the prior untrue statement of a material
fact or omission of any material fact nor shall any such notification have the
affect of amending or modifying this Agreement or any of the Schedules hereto.
6.15 FORMATION OF SUBSIDIARIES. At the time that any Borrower or any
Guarantor forms any direct or indirect domestic Subsidiary or acquires any
direct or indirect domestic Subsidiary after the Closing Date, such Borrower or
such Guarantor shall (a) at Agent's request, cause such new Subsidiary to
provide to Agent a joinder to this Agreement or the
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Guaranty and the Guarantor Security Agreement, together with such other security
documents (including Mortgages with respect to any owned Real Property of such
new Subsidiary), as well as appropriate financing statements (and with respect
to all property subject to a Mortgage, fixture filings), all in form and
substance satisfactory to Agent in its Permitted Discretion (including being
sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in
and to the assets of such newly formed or acquired Subsidiary), (b) provide to
Agent a pledge agreement and appropriate certificates and powers or financing
statements, hypothecating all of the direct or beneficial ownership interest in
such new Subsidiary, in form and substance satisfactory to Agent in its
Permitted Discretion, and (c) provide to Agent all other documentation,
including one or more opinions of counsel satisfactory to Agent in its Permitted
Discretion, which in its opinion is appropriate with respect to the execution
and delivery of the applicable documentation referred to above (including
policies of title insurance or other documentation with respect to all property
subject to a Mortgage). Any document, agreement, or instrument executed or
issued pursuant to this Section 6.15 shall be a Loan Document.
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, until termination of all of
the Commitments and payment in full of the Obligations, Borrowers will not and
will not permit any of their respective Subsidiaries to do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit,
(b) Indebtedness set forth on Schedule 5.20,
(c) Permitted Purchase Money Indebtedness,
(d) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b) and (c) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not, in Agent's
reasonable judgment, materially impair the prospects of repayment of the
Obligations by Borrowers or materially impair Borrowers' creditworthiness, (ii)
such refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended or add one or more Borrowers as liable with
respect thereto if such additional Borrowers were not liable with respect to the
original Indebtedness, (iii) such refinancings, renewals, or extensions do not
result in a shortening of the average weighted maturity of the Indebtedness so
refinanced, renewed, or extended, nor are they on terms or conditions, that,
taken as a whole, are materially more burdensome or restrictive to the
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applicable Borrower, (iv) if the Indebtedness that is refinanced, renewed, or
extended was subordinated in right of payment to the Obligations, then the terms
and conditions of the refinancing, renewal, or extension Indebtedness must
include subordination terms and conditions that are at least as favorable to the
Lender Group as those that were applicable to the refinanced, renewed, or
extended Indebtedness, and (v) the Indebtedness that is refinanced, renewed, or
extended is not recourse to any Person that is liable on account of the
Obligations other than those Persons which were obligated with respect to the
Indebtedness that was refinanced, renewed, or extended,
(e) endorsement of instruments or other payment items for
deposit,
(f) Permitted Intercompany Advances and other Indebtedness
composing Permitted Investments,
(g) existing Indebtedness of any Person acquired in a
Permitted Acquisition so long as no Borrower shall be obligated thereon and such
Indebtedness was not incurred in anticipation of or in connection with such
Acquisition,
(h) Indebtedness incurred by Borrowers' foreign Subsidiaries,
and
(i) other unsecured Indebtedness in an aggregate amount not to
exceed $500,000 in the aggregate.
7.2 LIENS. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Except in connection with the consummation of a Permitted
Reorganization Transaction, enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its Stock.
(b) Except in connection with the consummation of a Permitted
Reorganization Transaction, liquidate, wind up, or dissolve itself (or suffer
any liquidation or dissolution), with the further exception that Parent's
Subsidiary, Mira Mesa, shall be allowed to dissolve itself.
(c) Except in connection with the consummation of a Permitted
Reorganization Transaction, convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
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7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of the
assets of any Borrower or any Subsidiary of a Borrower, except that Borrowers
and their Subsidiaries may sell or dispose of shares of Capital Stock of any of
their Subsidiaries in order to qualify members of the governing body of the
Subsidiary if, and only to the extent, required by applicable law, provided,
however, that in no event shall Borrowers or their Subsidiaries sell or dispose
of shares to the extent that such sale or disposal would result in a breach of a
Stock Pledge Agreement.
7.5 CHANGE NAME. Change any Borrower's or any of its Subsidiaries'
name, organizational identification number, state of organization, or
organizational identity; provided, however, that a Borrower or a Subsidiary of a
Borrower may change its name upon at least 10 days prior written notice by
Administrative Borrower to Agent of such change and so long as, at the time of
such written notification, such Borrower or such Subsidiary provides any
financing statements necessary to perfect and continue perfected the Agent's
Liens.
7.6 NATURE OF BUSINESS. Make any change in the principal nature of
their business.
7.7 PREPAYMENTS AND AMENDMENTS. Except in connection with a refinancing
permitted by Section 7.1(d),
(a) optionally prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of any Borrower or any Subsidiary of a Borrower, other
than the Obligations in accordance with this Agreement, or
(b) directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under Section 7.1(b) or (c).
7.8 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.9 CONSIGNMENTS. Consign any of their Inventory or sell any of their
Inventory on xxxx and hold, or, except in the ordinary course of Borrowers' or
their Subsidiaries' business, consistent with past practices, sell any Inventory
or sale or return, sale on approval, or other conditional terms of sale.
7.10 DISTRIBUTIONS. Other than distributions or declaration and payment
of dividends by a Subsidiary of a Borrower to a Borrower, make any distribution
or declare or pay any dividends (in cash or other property, other than common
Stock) on, or purchase, acquire, redeem, or retire any of any Borrower's Stock,
of any class, whether now or hereafter outstanding.
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7.11 ACCOUNTING METHODS. Modify or change their fiscal year or their
method of accounting (other than as may be required to conform to GAAP) or enter
into, modify, or terminate any agreement currently existing, or at any time
hereafter entered into with any third party accounting firm or service bureau
for the preparation or storage of Borrowers' or their Subsidiaries' accounting
records without said accounting firm or service bureau agreeing to provide Agent
information regarding Borrowers' and their Subsidiaries' financial condition.
7.12 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment, or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Borrowers shall not have Permitted Investments (other than in the
Cash Management Accounts) in Deposit Accounts or Securities Accounts in an
aggregate amount in excess of $100,000 at any one time unless the applicable
Borrower and the applicable securities intermediary or bank have entered into
Control Agreements governing such Permitted Investments in order to perfect (and
further establish) the Agent's Liens in such Permitted Investments. Subject to
the foregoing proviso, Borrowers shall not establish or maintain any Deposit
Account or Securities Account unless Agent shall have received a Control
Agreement in respect of such Deposit Account or Securities Account.
7.13 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of any Borrower except for
transactions that (a)(i) are in the ordinary course of Borrowers' business, (ii)
are upon fair and reasonable terms, (iii) if they involve one or more payments
by any Borrower or any of its Subsidiaries in excess of $100,000, are fully
disclosed to Agent, and (iv) are no less favorable to Borrowers or their
respective Subsidiaries, as applicable, than would be obtained in an arm's
length transaction with a non-Affiliate, and (b) Permitted Intercompany
Advances.
7.14 SUSPENSION. With respect to a Borrower, suspend or go out of a
substantial portion of its business.
7.15 [INTENTIONALLY DELETED]
7.16 USE OF PROCEEDS. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, (i) to repay in full the outstanding
principal, accrued interest, and accrued fees and expenses owing to Existing
Lender, and (ii) to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, the other Loan Documents, and the transactions
contemplated hereby and thereby, and (b) thereafter, consistent with the terms
and conditions hereof, for its lawful and permitted business and general
corporate purposes including the financing of working capital needs and capital
expenditures.
7.17 INVENTORY AND EQUIPMENT WITH BAILEES. Store the Inventory or
Equipment of Borrowers at any time now or hereafter with a bailee, warehouseman,
or similar party, other than the storage of Inventory with bailees in foreign
countries in an amount not to
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exceed $500,000 at any one time unless a Collateral Access Agreement is
delivered with respect thereto.
7.18 FINANCIAL COVENANTS.
(a) Following the occurrence of the Financial Covenant
Triggering Event, fail to maintain or achieve:
(i) MINIMUM EBITDA. EBITDA, measured on a
quarterly basis, of at least the required amount set forth in the following
table for the applicable period set forth opposite thereto:
Applicable Amount Applicable Period
-------------------------------------------------------------------------------
($ 3,700,000) For the 3 month period ending June 30, 2004
$ 2,700,000 For the 6 month period ending September 30, 2004
$20,200,000 For the 9 month period ending December 31, 2005
$20,700,000 For the 12 month period ending March 31, 2005
$20,700,000 For the trailing 12 month period ending on the
last day of each fiscal quarter of Administrative
Borrower thereafter
(b) Following the occurrence of the Financial Covenant
Triggering Event, make:
(i) CAPITAL EXPENDITURES. Capital Expenditures
in excess of $12,200,000 in any fiscal year (provided that for fiscal years 2006
and beyond such amount may be adjusted downward if Agent, in its Permitted
Discretion, determines that a lower amount is warranted by the Projections) plus
(for fiscal year 2006 and thereafter) the unspent amount of any Capital
Expenditures permitted in the prior year.
7.19 INACTIVE SUBSIDIARIES. Neither AMSI nor Mira Mesa conduct business
nor will they conduct business in the future, and neither of them own, nor will
they in the future own, any assets (except that AMSI may own a 1% equity
interest in Advanced Mexico).
7.20 RESTATEMENT OF FINANCIAL STATEMENTS. Announce, in connection with
any restatement or re-audit of Parent's financial statements concerning the
seven year period ending March 31, 2003, revised or restated aggregate net
income for such period that reflects a reduction from the previously reported
aggregate net income for such period by an amount
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that is greater than 130% of the expected aggregate reduction of net income for
such period as disclosed in writing to Agent prior to the Closing Date.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrowers fail to pay when due and payable, or when declared due
and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations); provided, however, that in the case of Overadvances that are
caused by the charging of interest, fees, or Lender Expenses to the Loan
Account, such event shall not constitute an Event of Default if, within 3
Business Days of its receipt of telephonic notice of such Overadvance, Borrowers
eliminate such Overadvance.
8.2 If any Borrower or any Subsidiary of any Borrower fails to (a)
perform, keep, or observe any covenant or other provision contained in Sections
6.2, 6.3, 6.4, 6.10, 6.11, or 6.15 hereof and such failure or neglect continues
for a period of 5 days after the date on which such failure or neglect first
occurs, (b) perform, keep, or observe any covenant or other provision contained
in Sections 6.1, 6.5, 6.6, 6.7, 6.9, 6.13, or 6.14 hereof or any other Section
of this Agreement (other than a Section that is expressly dealt with elsewhere
in this Section 8) or the other Loan Documents (other than a Section of such
other Loan Documents dealt with elsewhere in this Section 8) and such failure or
neglect is not cured within 15 days after the date on which such failure or
neglect first occurs, or (c) perform, keep, or observe any covenant or other
provision contained in Sections 3.2, 6.8, 6.12, or 7.1 through 7.19 of this
Agreement or any comparable provision contained in any of the other Loan
Documents;
8.3 If any material portion of Borrowers' assets, taken as a whole, is
attached, seized, subjected to a writ or distress warrant, levied upon, or comes
into the possession of any third Person and the same is not discharged before
the earlier of 30 days after the date it first arises or 5 days before the date
on which such property or asset is subject to forfeiture by the applicable
Person;
8.4 If an Insolvency Proceeding is commenced by any Borrower or any
domestic Subsidiary of any Borrower;
8.5 If an Insolvency Proceeding is commenced against any Borrower, or
any domestic Subsidiary of any Borrower, and any of the following events occur:
(a) the applicable Borrower or Subsidiary consents to the institution of such
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted; provided, however, that, during the
pendency of such period, Agent (including any successor agent) and each other
member of the Lender Group shall be relieved of their obligations to
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extend credit hereunder; (c) the petition commencing the Insolvency Proceeding
is not dismissed within 60 calendar days of the date of the filing thereof;
provided, however, that, during the pendency of such period, Agent (including
any successor agent) and each other member of the Lender Group shall be relieved
of their obligations to extend credit hereunder; (d) an interim trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
such Borrower or such Subsidiary, or (e) an order for relief shall have been
entered therein;
8.6 If any Borrower is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of the business
affairs of the Borrowers, taken as a whole;
8.7 The Events of Default specified in that certain Events of Default
Letter Agreement entered into concurrently herewith among Borrowers and the
Lender Group.
8.8 If one or more judgments or other claims involving an aggregate
amount of $1,000,000, or more, in excess of the amount covered by insurance,
becomes a Lien or encumbrance upon any material portion of Borrowers' assets and
the same is not released, discharged, bonded against, or stayed pending appeal
before the earlier of 30 days after the date it first arises or 5 days prior to
the date on which such assets are subject to being forfeited;
8.9 If (a) there is a default under or with respect to one or more
agreements to which a Borrower is a party or with respect to which a Borrower is
a guarantor or obligor, evidencing Indebtedness for borrowed money in an
aggregate amount of $250,000 or more, if the effect of such default (i) occurs
at the final maturity of the obligations thereunder, or (ii) results in a right
by the other party thereto, irrespective of whether exercised, to accelerate the
maturity of such Borrower's obligations thereunder or with respect thereto,
unless such right is waived, or (b) there is a default in any other agreement to
which any Borrower or any of its Subsidiaries is a party the loss of which could
reasonably be expected to result in a Material Adverse Change and such default
results in a right by the other party thereto, irrespective of whether
exercised, to terminate such agreement, or to refuse to renew such agreement
pursuant to an automatic renewal right therein, unless such right is waived;
8.10 If any Borrower or any Subsidiary of a Borrower makes any payment
on account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted (or not prohibited) by the terms of the subordination provisions
applicable to such Indebtedness;
8.11 If any material misstatement or material misrepresentation exists
now or hereafter in any warranty, representation, statement, or Record made to
the Lender Group by a Borrower, or any officer, employee, or director of a
Borrower;
8.12 [INTENTIONALLY DELETED]
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8.13 If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason (other than the Agent's failure to take any
action reasonably within its control), fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral (other than the
failure of this Agreement or any other Loan Document to create a perfected Lien
in and to property and assets having an aggregate value of less than $100,000;
or
8.14 Any material provision of any Loan Document shall at any time for
any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Borrower or any Subsidiary of a Borrower, or a
proceeding shall be commenced by any Borrower or any Subsidiary of any Borrower,
or by any Governmental Authority having jurisdiction over any Borrower or any
Subsidiary of any Borrower, seeking to establish the invalidity or
unenforceability thereof, or any Borrower or any Subsidiary of any Borrower
shall deny that it has any liability or obligation purported to be created under
any Loan Document.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrowers:
(a) Declare all or any portion of the Obligations, whether
evidenced by this Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
(d) Settle or adjust disputes and claims directly with
Borrowers' Account Debtors for amounts and upon terms which Agent considers
advisable, and in such cases, Agent will credit the Loan Account with only the
net amounts received by Agent in payment of such disputed Accounts after
deducting all Lender Group Expenses incurred or expended in connection
therewith;
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(e) Cause Borrowers to hold all of their returned Inventory in
trust for the Lender Group and segregate all such Inventory from all other
assets of Borrowers or in Borrowers' possession;
(f) Without notice to or demand upon any Borrower, make such
payments and do such acts as Agent considers necessary or reasonable to protect
its security interests in the Collateral. Each Borrower agrees to assemble the
Collateral if Agent so requires, and to make the Collateral available to Agent
at a place that Agent may designate which is reasonably convenient to both
parties. Each Borrower authorizes Agent to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any Lien that in
Agent's determination appears to conflict with the priority of the Agent's Liens
in and to the Collateral and to pay all expenses incurred in connection
therewith and to charge Borrowers' Loan Account therefor. With respect to any of
Borrowers' owned or leased premises, each Borrower hereby grants Agent a license
to enter into possession of such premises and to occupy the same, without
charge, in order to exercise any of the Lender Group's rights or remedies
provided herein, at law, in equity, or otherwise;
(g) Without notice to any Borrower (such notice being
expressly waived), and without constituting an acceptance of any collateral in
full or partial satisfaction of an obligation (within the meaning of the Code),
set off and apply to the Obligations any and all (i) balances and deposits of
any Borrower held by the Lender Group (including any amounts received in the
Cash Management Accounts), or (ii) Indebtedness at any time owing to or for the
credit or the account of any Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and
deposits of any Borrower held by the Lender Group, and any amounts received in
the Cash Management Accounts, to secure the full and final repayment of all of
the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Borrower Collateral. Each Borrower hereby grants to Agent a license
or other right to use, without charge, such Borrower's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Borrower Collateral, in completing production of, advertising for sale, and
selling any Borrower Collateral and such Borrower's rights under all licenses
and all franchise agreements shall inure to the Lender Group's benefit;
(j) Sell the Borrower Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrowers' premises) as
Agent determines is commercially reasonable. It is not necessary that the
Borrower Collateral be present at any such sale;
(k) Except in those circumstances where no notice is required
under the Code, Agent shall give notice of the disposition of the Borrower
Collateral as follows:
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(i) Agent shall give Administrative Borrower
(for the benefit of the applicable Borrower) a notice in writing of the time and
place of public sale, or, if the sale is a private sale or some other
disposition other than a public sale is to be made of the Borrower Collateral,
the time on or after which the private sale or other disposition is to be made;
and
(ii) The notice shall be personally delivered or
mailed, postage prepaid, to Administrative Borrower as provided in Section 12,
at least 10 days before the earliest time of disposition set forth in the
notice; no notice needs to be given prior to the disposition of any portion of
the Borrower Collateral that is perishable or threatens to decline speedily in
value or that is of a type customarily sold on a recognized market;
(l) Agent, on behalf of the Lender Group may credit bid and
purchase at any public sale;
(m) Agent may seek the appointment of a receiver or keeper to
take possession of all or any portion of the Borrower Collateral or to operate
same and, to the maximum extent permitted by law, may seek the appointment of
such a receiver without the requirement of prior notice or a hearing; and
(n) The Lender Group shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan Document.
The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to Borrowers or any other Person or any act
by the Lender Group, the Commitments shall automatically terminate and the
Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by Borrowers.
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its
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Permitted Discretion and without prior notice to any Borrower, may do any or all
of the following: (a) make payment of the same or any part thereof, (b) set up
such reserves against the Borrowing Base or the Maximum Revolver Amount as Agent
deems necessary to protect the Lender Group from the exposure created by such
failure, or (c) in the case of the failure to comply with Section 6.8 hereof,
obtain and maintain insurance policies of the type described in Section 6.8 and
take any action with respect to such policies as Agent deems prudent. Any such
amounts paid by Agent shall constitute Lender Group Expenses and any such
payments shall not constitute an agreement by the Lender Group to make similar
payments in the future or a waiver by the Lender Group of any Event of Default
under this Agreement. Agent need not inquire as to, or contest the validity of,
any such expense, tax, or Lien and the receipt of the usual official notice for
the payment thereof shall be conclusive evidence that the same was validly due
and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Each Borrower waives demand, protest, notice
of protest, notice of default (except to the extent specifically and expressly
required under this Agreement or the other Loan Documents) or dishonor, notice
of payment and nonpayment, nonpayment at maturity, release, compromise,
settlement, extension, or renewal of documents, instruments, chattel paper, and
guarantees at any time held by the Lender Group on which any such Borrower may
in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR BORROWER COLLATERAL. Each
Borrower hereby agrees that: (a) so long as Agent complies with its obligations,
if any, under the Code, the Lender Group shall not in any way or manner be
liable or responsible for: (i) the safekeeping of the Borrower Collateral, (ii)
any loss or damage thereto occurring or arising in any manner or fashion from
any cause, (iii) any diminution in the value thereof, or (iv) any act or default
of any carrier, warehouseman, bailee, forwarding agency, or other Person, and
(b) all risk of loss, damage, or destruction of the Borrower Collateral shall be
borne by Borrowers.
11.3 INDEMNIFICATION. Each Borrower shall pay, indemnify, defend, and
hold the Agent-Related Persons, the Lender-Related Persons, and each Participant
(each, an "Indemnified Person") harmless (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, and damages, and all reasonable attorneys fees and
disbursements and other costs and expenses actually incurred in connection
therewith or in connection with the enforcement of this indemnification (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution, delivery, enforcement,
performance, or administration (including any restructuring or workout with
respect hereto) of this Agreement, any of the other Loan Documents, or the
transactions contemplated hereby or thereby or the monitoring of Borrowers' and
their Subsidiaries' compliance with the terms of the Loan Documents, and (b)
with respect to any investigation, litigation, or proceeding related to this
Agreement, any
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other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event, or circumstance in any manner related thereto (all the
foregoing, collectively, the "Indemnified Liabilities"). The foregoing to the
contrary notwithstanding, Borrowers shall have no obligation to any Indemnified
Person under this Section 11.3 with respect to any Indemnified Liability that a
court of competent jurisdiction finally determines to have resulted from the
gross negligence or willful misconduct of such Indemnified Person. This
provision shall survive the termination of this Agreement and the repayment of
the Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
If to Administrative ADVANCED MARKETING SERVICES, INC.
Borrower: 0000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxx, Chief Financial Officer
Fax No.: (000) 000-0000
With copies to: O'MELVENY & XXXXX
000 Xxxxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attn.: Xxxxxxx Xxxxxx, Esq.
Fax No.: (000) 000-0000
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If to Agent: XXXXX FARGO FOOTHILL, INC.
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Business Finance Manager
Fax No.: (000) 000-0000
with copies to: BUCHALTER, NEMER, FIELDS & YOUNGER
000 X. Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
Agent and Borrowers may change the address at which they are
to receive notices hereunder, by notice in writing in the foregoing manner given
to the other party. All notices or demands sent in accordance with this Section
12, other than notices by Agent in connection with enforcement rights against
the Borrower Collateral under the provisions of the Code, shall be deemed
received on the earlier of the date of actual receipt or 3 Business Days after
the deposit thereof in the mail. Each Borrower acknowledges and agrees that
notices sent by the Lender Group in connection with the exercise of enforcement
rights against Borrower Collateral under the provisions of the Code shall be
deemed sent when deposited in the mail or personally delivered, or, where
permitted by law, transmitted by telefacsimile or any other method set forth
above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA,
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
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ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND
EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR
TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH
THIS SECTION 13(B).
(c) BORROWERS AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWERS AND EACH MEMBER
OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may assign and delegate to one or more
assignees (each an "Assignee") that are Eligible Transferees all, or any ratable
part of all, of the Obligations, the Commitments and the other rights and
obligations of such Lender hereunder and under the other Loan Documents, in a
minimum amount of $5,000,000; provided, however, that Borrowers and Agent may
continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses, and related information with
respect to the Assignee, have been given to Administrative Borrower and Agent by
such Lender and the Assignee, (ii) such Lender and its Assignee have delivered
to Administrative Borrower and Agent an Assignment and Acceptance, and (iii) the
assigning Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $5,000. Anything contained herein to the
contrary notwithstanding, the payment of any fees shall not be required and the
Assignee need not be an Eligible Transferee if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of the assigning
Lender.
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(b) From and after the date that Agent notifies the assigning
Lender (with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assigning Lender shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights (except with respect to Section 11.3 hereof) and be released from any
future obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall effect
a novation between Borrowers and the Assignee; provided, however, that nothing
contained herein shall release any assigning Lender from obligations that
survive the termination of this Agreement, including such assigning Lender's
obligations under Article 16 and Section 17.7 of this Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon Agent's receipt of the required
processing fee payment and the fully executed Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The
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Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
in its Obligations, the Commitment, and the other rights and interests of that
Lender (the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or substantially all of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums, and (v) all amounts
payable by Borrowers hereunder shall be determined as if such Lender had not
sold such participation, except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. The rights of any Participant only shall be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the
Collections of Borrowers or their Subsidiaries, the Collateral, or otherwise in
respect of the Obligations. No Participant shall have the right to participate
directly in the making of decisions by the Lenders among themselves.
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(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may, subject to the provisions of
Section 17.7, disclose all documents and information which it now or hereafter
may have relating to Borrowers and their Subsidiaries and their respective
businesses.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss. 203.24, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document (other than Bank Product Agreements),
and no consent with respect to any departure by Borrowers therefrom, shall be
effective unless the same shall be in writing and signed by the Required Lenders
(or by Agent at the written request of the Required Lenders) and Administrative
Borrower (on behalf of all Borrowers) and then any such waiver or consent shall
be effective, but only in the specific instance and for the specific purpose for
which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all of the Lenders affected thereby and
Administrative Borrower (on behalf of all Borrowers) and acknowledged by Agent,
do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
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(d) change the Pro Rata Share that is required to take any
action hereunder,
(e) amend or modify this Section or any provision of the
Agreement providing for consent or other action by all Lenders,
(f) other than as permitted by Section 16.12, release Agent's
Lien in and to any of the Collateral,
(g) change the definition of "Required Lenders" or "Pro Rata
Share",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower or any Guarantor from any obligation
for the payment of money,
(j) change the definition of Borrowing Base or the definitions
of Eligible Accounts, Eligible Inventory, Maximum Revolver Amount, or change
Section 2.1(b), or
(k) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrowers, shall not require consent by or the agreement of Borrowers.
15.2 REPLACEMENT OF HOLDOUT LENDER.
(a) If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of all
Lenders, and a Lender ("Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a "Replacement Lender"), and
the Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
(b) Prior to the effective date of such replacement, the
Holdout Lender and each Replacement Lender shall execute and deliver an
Assignment and Acceptance, subject only to the Holdout Lender being repaid its
share of the outstanding Obligations (including an assumption of its Pro Rata
Share of the Risk Participation Liability) without any premium
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or penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to
execute and deliver any such Assignment and Acceptance prior to the effective
date of such replacement, the Holdout Lender shall be deemed to have executed
and delivered such Assignment and Acceptance. The replacement of any Holdout
Lender shall be made in accordance with the terms of Section 14.1. Until such
time as the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints WFF as its representative under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes Agent to
execute and deliver each of the other Loan Documents on its behalf and to take
such other action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
The provisions of this Section 16 (other than the proviso to Section 16.11(a))
are solely for the benefit of Agent, and the Lenders, and Borrowers and their
Subsidiaries shall have no rights as a third party beneficiary of any of the
provisions contained herein. Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that WFF is
merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent
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expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect: (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Obligations, the Collateral, the Collections of Borrowers and their
Subsidiaries, and related matters, (b) execute or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections of Borrowers and their Subsidiaries as provided in the Loan
Documents, (e) open and maintain such bank accounts and cash management
arrangements as Agent deems necessary and appropriate in accordance with the
Loan Documents for the foregoing purposes with respect to the Collateral and the
Collections of Borrowers and their Subsidiaries, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrowers, the Obligations, the Collateral, the Collections of Borrowers and
their Subsidiaries, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 LIABILITY OF AGENT. None of the Agent Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.
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16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrowers or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders
and, except with respect to Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or
Administrative Borrower referring to this Agreement, describing such Default or
Event of Default, and stating that such notice is a "notice of default." Agent
promptly will notify the Lenders of its receipt of any such notice or of any
Event of Default of which Agent has actual knowledge. If any Lender obtains
actual knowledge of any Event of Default, such Lender promptly shall notify the
other Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 16.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the Agent
Related Persons has made any representation or warranty to it, and that no act
by Agent hereinafter taken, including any review of the affairs of Borrowers and
their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person party to a Loan Document, and
all applicable bank regulatory laws relating
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to the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person party to a Loan Document.
Except for notices, reports, and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrowers and any other Person party to a Loan
Document that may come into the possession of any of the Agent Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, attorneys
fees and expenses, fees and expenses of financial accountants, advisors,
consultants, and appraisers, costs of collection by outside collection agencies,
auctioneer fees and expenses, and costs of security guards or insurance premiums
paid to maintain the Collateral, whether or not Borrowers are obligated to
reimburse Agent or Lenders for such expenses pursuant to this Agreement or
otherwise. Agent is authorized and directed to deduct and retain sufficient
amounts from the Collections of Borrowers and their Subsidiaries received by
Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the
distribution of any amounts to Lenders. In the event Agent is not reimbursed for
such costs and expenses from the Collections of Borrowers and their Subsidiaries
received by Agent, each Lender hereby agrees that it is and shall be obligated
to pay to or reimburse Agent for the amount of such Lender's Pro Rata Share
thereof. Whether or not the transactions contemplated hereby are consummated,
the Lenders shall indemnify upon demand the Agent Related Persons (to the extent
not reimbursed by or on behalf of Borrowers and without limiting the obligation
of Borrowers to do so), according to their Pro Rata Shares, from and against any
and all Indemnified Liabilities; provided, however, that no Lender shall be
liable for the payment to any Agent Related Person of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct nor shall any Lender be liable for the obligations of any
Defaulting Lender in failing to make an Advance or other extension of credit
hereunder. Without limitation of the foregoing, each Lender shall reimburse
Agent upon demand for such Lender's Pro Rata Share of any costs or out of pocket
expenses (including attorneys, accountants, advisors, and consultants fees and
expenses) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment, or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that Agent is not reimbursed for such expenses by or on behalf of Borrowers. The
undertaking in this
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Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. WFF and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though WFF were not Agent hereunder, and, in each case, without notice to or
consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, WFF or its
Affiliates may receive information regarding Borrowers or their Affiliates and
any other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include WFF in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person party to
any Loan Documents as though such Lender were not a Lender hereunder without
notice to or consent of the other members of the Lender Group. The other members
of the Lender Group acknowledge that, pursuant to such activities, such Lender
and its respective Affiliates may receive information regarding Borrowers or
their Affiliates and
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any other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender shall not be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of Agent.
16.11 WITHHOLDING TAXES.
(a) All payments made by any Borrower hereunder or under any
note or other Loan Document will be made without setoff, counterclaim, or other
defense. In addition, subject to the provisions of this Section 16.11, all such
payments will be made free and clear of, and without deduction or withholding
for, any present or future Taxes, and in the event any deduction or withholding
of Taxes is required, each Borrower shall comply with the penultimate sentence
of this Section 16.11(a). "Taxes" shall mean, any taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding any taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (and any
interest, penalties or similar liabilities with respect thereto) that imposed by
any jurisdiction or by any political subdivision or taxing authority thereof or
therein (i) are measured by or based on the net income or net profits of such
Lender, or (ii) would not have been imposed but for Agent's or such Lender's own
willful misconduct or gross negligence (as finally determined by a court of
competent jurisdiction)) and all interest, penalties or similar liabilities with
respect thereto. If any Taxes are so levied or imposed, each Borrower agrees to
pay the full amount of such Taxes and such additional amounts as may be
necessary so that every payment of all amounts due under this Agreement, any
note, or Loan Document, including any amount paid pursuant to this Section
16.11(a) after withholding or deduction for or on account of any Taxes, will not
be less than the amount provided for herein. Each Borrower will furnish to
Lender as promptly as possible after the date the payment of any Tax by such
Borrower is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by any Borrower.
(b) If a Lender claims an exemption from, or a reduction of,
United States withholding or backup withholding tax, such Lender agrees with and
in favor of Agent and any Borrower, to deliver to Agent:
(i) if such Lender claims an exemption from
United States withholding tax pursuant to the portfolio interest exception under
the IRC, (A) a statement of the Lender, signed under penalty of perjury, that it
is not (I) a "bank" as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
shareholder of any Borrower (within the meaning of
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Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation
related to any Borrower within the meaning of Section 864(d)(4) of the IRC, and
(B) a properly completed and executed IRS Form W-8BEN, before receiving its
first payment under this Agreement, promptly upon any change in circumstances
that causes any information provided on or with such statement or form to no
longer be correct, upon the lapse of the validity of such form, and at any other
time reasonably requested by Agent or any Borrower;
(ii) if such Lender claims an exemption from, or
a reduction of, tax under a United States tax treaty, a properly completed and
executed IRS Form W-8BEN claiming the benefits of such treaty, before receiving
its first payment under this Agreement, promptly upon any change in
circumstances that causes any information provided on or with such form to no
longer be correct, upon the lapse of the validity of such form, and at any other
time reasonably requested by Agent or any Borrower;
(iii) if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Lender, two
properly completed and executed copies of IRS Form W-8ECI before receiving its
first payment under this Agreement, promptly upon any change in circumstances
that causes any information provided on or with such statement or form to no
longer be correct, upon the lapse of the validity of such form, and at any other
time reasonably requested by Agent or any Borrower; or
(iv) such other form or forms or other
documentation, including IRS Form W-9, as may be required under the IRC or other
laws of the United States as a condition to exemption from, or reduction of,
United States withholding or backup withholding tax before receiving its first
payment under this Agreement, promptly upon any change in circumstances that
causes any information provided on or with such form, forms or documentation to
no longer be correct, upon the lapse of the validity of such form or forms, and
at any other time reasonably requested by Agent or any Borrower.
Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(c) If a Lender claims an exemption from withholding tax in a
jurisdiction other than the United States, Lender agrees with and in favor of
Agent and Borrowers, to deliver to Agent any such form or forms, as may be
required under the laws of such jurisdiction as a condition to exemption from,
or reduction of, foreign withholding or backup withholding tax before receiving
its first payment under this Agreement and at any other time reasonably
requested by Agent or Administrative Borrower.
Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(d) If any Lender claims an exemption from, or reduction of,
withholding or backup withholding tax and such Lender sells, assigns, grants a
participation in, or
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otherwise transfers all or part of the Obligations of Borrowers, such Lender
agrees to notify Agent and Administrative Borrower of the percentage amount in
which it is no longer the beneficial owner of Obligations of Borrowers to such
Lender and, where applicable, to provide to Agent a properly completed and
executed IRS Form W-8IMY. To the extent of such percentage amount, Agent and
Borrowers will treat such Lender's documentation provided pursuant to Sections
16.11(b) or 16.11(c) as no longer valid. With respect to such percentage amount,
such Lender shall provide new documentation, pursuant to Sections 16.11(b) or
16.11(c), if applicable, to establish such Lender's entitlement to an exemption
from or reduction of withholding or backup withholding tax.
(e) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (b),
(c) or (d) of this Section 16.11 are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(f) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender due to a
failure on the part of the Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent, as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section 16.11, together with all costs and expenses (including
attorneys fees and expenses). The obligation of the Lenders under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of Agent.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrowers of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under Section 7.4 of this Agreement or the other Loan Documents (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which no Borrower or its Subsidiaries owned any
interest at the time the Agent's Lien was granted nor at any time thereafter, or
(iv) constituting property leased to a Borrower or its Subsidiaries under a
lease that has expired or is terminated in a transaction permitted under this
Agreement. Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written
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authorization of (y) if the release is of all or substantially all of the
Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon
request by Agent or Administrative Borrower at any time, the Lenders will
confirm in writing Agent's authority to release any such Liens on particular
types or items of Collateral pursuant to this Section 16.12; provided, however,
that (1) Agent shall not be required to execute any document necessary to
evidence such release on terms that, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Lien without recourse, representation, or warranty, and (2) such
release shall not in any manner discharge, affect, or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
Borrowers in respect of) all interests retained by Borrowers, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrowers or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express written consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the written request of Agent, set off against
the Obligations, any amounts owing by such Lender to Borrowers or any deposit
accounts of Borrowers now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
in writing by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations, except for any such proceeds or
payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender's ratable
portion of all such distributions by Agent, such Lender promptly shall (1) turn
the same over to Agent, in kind, and with such endorsements as may be required
to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable
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provisions of this Agreement, or (2) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to the other
Lenders so that such excess payment received shall be applied ratably as among
the Lenders in accordance with their Pro Rata Shares; provided, however, that to
the extent that such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor shall deliver possession or control of such Collateral to Agent or in
accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer of immediately
available funds pursuant to such wire transfer instructions as each party may
designate for itself by written notice to Agent. Concurrently with each such
payment, Agent shall identify whether such payment (or any portion thereof)
represents principal, premium, fees, or interest of the Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member
of the Lender Group authorizes and directs Agent to enter into this Agreement
and the other Loan Documents. Each member of the Lender Group agrees that any
action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent of its
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by
Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
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(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrowers
and will rely significantly upon the Books, as well as on representations of
Borrowers' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner in
accordance with Section 17.7, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or fail to take or any conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to
Borrowers, or the indemnifying Lender's participation in, or the indemnifying
Lender's purchase of, a loan or loans of Borrowers; and (ii) to pay and protect,
and indemnify, defend and hold Agent, and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including, attorneys fees and costs)
incurred by Agent and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrowers, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of
Administrative Borrower the additional reports or information reasonably
specified by such Lender, and, upon receipt thereof from Administrative
Borrower, Agent promptly shall provide a copy of same to such Lender, and (z)
any time that Agent renders to Administrative Borrower a statement regarding the
Loan Account, Agent shall send a copy of such statement to each Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any
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Lender to any liability for, or in respect of, the business, assets, profits,
losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 16.7, no member of the Lender Group shall have any
liability for the acts or any other member of the Lender Group. No Lender shall
be responsible to any Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to
advance for it or on its behalf in connection with its Commitment, nor to take
any other action on its behalf hereunder or in connection with the financing
contemplated herein.
16.19 BANK PRODUCT PROVIDERS. Each Bank Product Provider shall be
deemed a party hereto for purposes of any reference in a Loan Document to the
parties for whom Agent is acting; it being understood and agreed that the rights
and benefits of such Bank Product Provider under the Loan Documents consist
exclusively of such Bank Product Provider's right to share in payments and
collections out of the Collateral as more fully set forth herein. In connection
with any such distribution of payments and collections, Agent shall be entitled
to assume no amounts are due to any Bank Product Provider unless such Bank
Product Provider has notified Agent in writing of the amount of any such
liability owed to it prior to such distribution.
16.20 LEGAL REPRESENTATION OF AGENT. In connection with the
negotiation, drafting, and execution of this Agreement and the other Loan
Documents, or in connection with future legal representation relating to loan
administration, amendments, modifications, waivers, or enforcement of remedies,
Buchalter, Nemer, Fields & Younger ("BNFY") only has represented and only shall
represent WFF in its capacity as Agent and as a Lender. Each other Lender hereby
acknowledges that BNFY does not represent it in connection with any such
matters.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrowers, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Borrowers,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
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17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 COUNTERPARTS; ELECTRONIC EXECUTION. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.6 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Borrower or Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers or Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
17.7 CONFIDENTIALITY. Agent and Lenders each individually (and not
jointly or jointly and severally) agree that material, non-public information
regarding Borrowers and their Subsidiaries, their operations, assets, and
existing and contemplated business plans shall be treated by Agent and the
Lenders in a confidential manner, and shall not be disclosed by Agent and the
Lenders to Persons who are not parties to this Agreement, except: (a) to
attorneys for and other advisors, accountants, auditors, and consultants to any
member of the Lender Group, (b) to Subsidiaries and Affiliates of any member of
the Lender Group (including the Bank Product Providers), provided that any such
Subsidiary or Affiliate shall have agreed to receive such information hereunder
subject to the terms of this Section 17.7, (c) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation, (d) as may
be agreed to in advance by Administrative Borrower or its Subsidiaries or as
requested or required by any Governmental Authority pursuant to any subpoena or
other legal process, (e) as to any such information that is or becomes generally
available to the public (other than as a result of prohibited disclosure by
Agent or the Lenders), (f) in connection with any assignment, prospective
assignment, sale, prospective
106
sale, participation or prospective participations, or pledge or prospective
pledge of any Lender's interest under this Agreement, provided that any such
assignee, prospective assignee, purchaser, prospective purchaser, participant,
prospective participant, pledgee, or prospective pledgee shall have agreed in
writing to receive such information hereunder subject to the terms of this
Section, and (g) in connection with any litigation or other adversary proceeding
involving parties hereto which such litigation or adversary proceeding involves
claims related to the rights or duties of such parties under this Agreement or
the other Loan Documents. The provisions of this Section 17.7 shall survive for
2 years after the payment in full of the Obligations.
17.8 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.9 PARENT AS AGENT FOR BORROWERS. Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group. To
induce the Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 17.9 with respect to any liability that has been finally determined
by a court of competent
107
jurisdiction to have resulted solely from the gross negligence or willful
misconduct of such Agent-Related Person or Lender-Related Person, as the case
may be.
[Signature pages to follow.]
108
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
ADVANCED MARKETING SERVICES, INC.,
a Delaware corporation
By________________________________
Title:
PUBLISHERS GROUP WEST INCORPORATED,
a California corporation
By________________________________
Title:
PUBLISHERS GROUP INCORPORATED,
a California corporation
By________________________________
Title:
XXXXX FARGO FOOTHILL, INC.,
a California corporation, as Agent
and as a Lender
By________________________________
Title:
S-1
Loan and Security Agreement
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Collateral Access Agreement (Landlord Waiver)
Exhibit C-2 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule P-1 Permitted Investments
Schedule P-2 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.7(a) Cash Management Banks
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7(a) States of Organization
Schedule 5.7(b) Chief Executive Offices
Schedule 5.7(c) Organizational Identification Numbers
Schedule 5.7(d) Commercial Tort Claims
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Deposit Accounts and Securities Accounts
Schedule 5.20 Permitted Indebtedness
Recording Requested By
And When Recorded Mail To:
XXXXX FARGO FOOTHILL, INC.
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, XX 00000
Attn: Business Finance Division Manager
________________________________________________________________________________
(SPACE ABOVE LINE FOR RECORDER'S USE ONLY)
WAIVER AND CONSENT BY REAL PROPERTY OWNER
("WAIVER AND CONSENT")
This WAIVER AND CONSENT is made and entered into between
_______________________ ("Owner"), on the one hand, and XXXXX FARGO FOOTHILL,
INC., a California corporation as agent ("Agent"), for itself and certain other
lenders ("Lenders") now or in the future party to that certain Loan and Security
Agreement, dated as of April __, 2004, and other agreements related thereto
(collectively, the "Agreements"), by and between Agent and Lenders, on the one
hand, and Advanced Marketing Services, Inc., a Delaware corporation, Publisher
Group Incorporated, a California corporation, and Publishers Group West
Incorporated, a California corporation (collectively, the "Borrowers"), on the
other hand, and affects that real property commonly known as
_____________________ and more particularly described on Exhibit "A" attached
hereto (the "Premises").
A. This Waiver and Consent is executed to induce Agent and Lenders to
enter into or refrain from terminating the Agreements, which, among other
things, were given by Borrowers to Agent and Lenders for the purpose of securing
the repayment of all obligations and the performance of all duties now or
hereafter owing by Borrowers to Agent and Lenders, of every kind and
description. This Waiver and Consent does not amend any of the terms of the
Agreements and reference thereto is made for further particulars;
B. Under the terms of the Agreements, Agent and Lenders have loaned or
have agreed to loan monies and/or extend other financial accommodations against
the security of, among other collateral, all of Borrowers' personal property,
including, but not limited to Borrowers' inventory, equipment, furniture,
furnishings, fixtures, machinery, and tools, together with all additions,
substitutions, replacements, and improvements to the same (hereinafter referred
to as "Goods"), which Goods are or are to be located on and may be affixed to
the Premises or be improvements thereon; and
Exhibit C-1
1
C. Borrowers have leased the Premises from Owner pursuant to that
certain __________________, dated _________________________ (the "Lease").
Now, therefore, in light of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Agent and Owner agree that:
1. The Goods shall be and remain personal property notwithstanding the
manner of their annexation to the Premises, their adaptability to the uses and
purposes for which the Premises are used, or the intentions of the party making
the annexation.
2. Owner hereby waives any rights which Owner may claim to have in and
to the Goods, no matter how arising, including all rights of levy or distraint
for rent.
3. Owner consents to the installation of the Goods on the Premises,
agrees that Agent may do to and with the Goods any or all of the acts below
enumerated, and grants Agent a right, as set forth below, to enter into
possession of the Premises to do any or all of the following (the "Permitted
Actions") with respect to the Goods: assemble, have appraised, display, sever,
remove, maintain, prepare for sale or lease, advertise, inspect, repair, lease,
transfer, and/or sell (at public auction or private sale). Agent shall have the
right to enter into and to occupy the Premises, for the purposes described
above, for an actual occupancy period of up to one hundred twenty days (at
Agent's discretion), following the later of: (a) Owner placing Agent in
possession of the Premises; and (b) abandonment or surrender of the Premises by
Borrowers, whether voluntary or involuntary. Agent shall pay Owner,
periodically, a per diem occupancy fee equivalent to the monthly rental provided
for in the Lease (including actual and reasonable costs chargeable to Borrowers
under the Lease for taxes, insurance, and utilities), based upon a thirty day
month for actual days of occupancy by Agent. Any extensions of the foregoing
period shall be with the written consent of Owner and at the same rate. Owner
shall be reimbursed for, or Agent shall cause to be repaired, at its expense,
all physical damage to the Premises caused by the removal of the Goods.
4. Owner acknowledges that at any time prior to Owner placing Agent in
possession of the Premises, or abandonment of or surrender of the Premises by
Borrowers, Agent may take any or all of the Permitted Actions subject only to
Agent's agreements with Borrowers.
5. Owner agrees to give to Agent notice within two days of termination
of, any abandonment or surrender under, or default of any of the provisions of
the Lease, said notice to be sent to the following address: Xxxxx Fargo
Foothill, Inc., 0000 Xxxxxxxx Xxxxxx, Xxxxx 0000 Xxxx, Xxxxx Xxxxxx, Xxxxxxxxxx
00000, Attention: Business Finance Division Manager.
Exhibit C-1
2
6. Owner represents and warrants to Agent that:
(a) The Lease has not been modified, changed, altered, or
amended in any respect (except as previously disclosed to Agent), and is the
only lease between Owner and Borrowers affecting the Premises.
(b) The Lease is in full force and effect, Borrowers presently
occupy the Premises, and Borrowers are paying rent on a current basis. Owner has
no setoffs, claims, or defenses to enforcement of the Lease.
(c) Borrowers are not in default in the performance of the
Lease and have not committed any breach of the Lease, and no notice of default
which has not been cured or waived has been given to Borrowers.
(d) Owner is not in default in the performance of the Lease
and has not committed any breach of the Lease.
7. This Waiver and Consent shall continue until such time as all of
Borrowers' obligations to Agent and Lenders, and expenses (including, without
limitation, attorneys' fees) incurred in connection therewith, have been paid in
full and all covenants and conditions as more specifically enumerated in the
Agreements have been fully performed.
8. This Waiver and Consent shall bind and inure to the benefit of the
respective successors and assigns of Owner and Agent.
9. OWNER AND AGENT HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. OWNER AND AGENT
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
Exhibit C-1
3
IN WITNESS WHEREOF, the parties hereto have executed this Waiver and
Consent as of this _____ day of ________________, 2004.
__________________________________
("Owner")
By:_______________________________
Name:
Title:
XXXXX FARGO FOOTHILL, INC.,
a California corporation, as Agent
By:_______________________________
Name:
Title:
Exhibit C-1
4
STATE OF )
) ss.
COUNTY OF __________ )
On ________________, 200_, before me, ___________________ personally
appeared ___________________________________, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________
STATE OF )
) ss.
COUNTY OF __________ )
On ________________, 200_, before me, ___________________ personally
appeared ___________________________________, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________
Exhibit C-1
5
EXHIBIT "A"
REAL PROPERTY LEGAL DESCRIPTION
[attach legal description]
Exhibit C-1
6
SCHEDULE A-1
AGENT'S ACCOUNT
An account at a bank designated by Agent from time to time as
the account into which Borrowers shall make all payments to Agent for the
benefit of the Lender Group and into which the Lender Group shall make all
payments to Agent under this Agreement and the other Loan Documents; unless and
until Agent notifies Administrative Borrower and the Lender Group to the
contrary, Agent's Account shall be that certain deposit account bearing account
number 323-266193 and maintained by Agent with JPMorgan Chase Bank, 0 Xxx Xxxx
Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, ABA #000000000.
SCHEDULE C-1
COMMITMENTS
LENDER REVOLVER COMMITMENT
------ -------------------
Xxxxx Fargo Foothill, Inc. $60,000,000
All Lenders $60,000,000
SCHEDULE D-1
DESIGNATED ACCOUNT
Account number _________ of Administrative Borrower maintained
with Administrative Borrower's Designated Account Bank, or such other deposit
account of Administrative Borrower (located within the United States) that has
been designed as such, in writing, by Administrative Borrower to Agent.
"Designated Account Bank" means ____________, whose office is
located at _________, and whose ABA number is ____________.
