Exhibit 11
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of April 11, 2003
among
PERSONNEL GROUP OF AMERICA, INC.
as Borrower,
THE SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
BANK OF AMERICA, N.A.,
formerly NationsBank, N.A.,
as Agent
TABLE OF CONTENTS
SECTION 1 DEFINITIONS......................................................................................1
-----------
1.1 Definitions.....................................................................................1
-----------
1.2 Computation of Time Periods....................................................................22
---------------------------
1.3 Accounting Terms...............................................................................22
----------------
SECTION 2 CREDIT FACILITIES...............................................................................22
-----------------
2.1 Loans..........................................................................................22
-----
2.2 Letter of Credit Subfacility...................................................................23
----------------------------
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES..................................................28
----------------------------------------------
3.1 Default Rate...................................................................................28
------------
3.2 [Reserved].....................................................................................28
---------
3.3 Prepayments....................................................................................28
-----------
3.4 Termination and Reduction of Committed Amount; Extension Options...............................30
----------------------------------------------------------------
3.5 Fees...........................................................................................31
----
3.6 Capital Adequacy...............................................................................32
----------------
3.7 [Reserved].....................................................................................32
---------
3.8 [Reserved].....................................................................................32
----------
3.9 Requirements of Law............................................................................32
-------------------
3.10 Taxes..........................................................................................33
-----
3.11 Pro Rata Treatment.............................................................................35
------------------
3.12 Sharing of Payments............................................................................36
-------------------
3.13 Payments, Computations, Etc....................................................................36
----------------------------
3.14 Evidence of Debt...............................................................................38
----------------
3.15 Mandatory Assignment...........................................................................39
--------------------
SECTION 4 GUARANTY........................................................................................39
--------
4.1 The Guarantee..................................................................................39
-------------
4.2 Obligations Unconditional......................................................................40
-------------------------
4.3 Reinstatement..................................................................................41
-------------
4.4 Certain Additional Waivers.....................................................................41
--------------------------
4.5 Remedies.......................................................................................41
--------
4.6 Rights of Contribution.........................................................................41
----------------------
4.7 Continuing Guarantee...........................................................................42
--------------------
SECTION 5 CONDITIONS......................................................................................42
----------
5.1 Closing Conditions.............................................................................42
------------------
5.2 Conditions to all Extensions of Credit.........................................................44
--------------------------------------
SECTION 6 REPRESENTATIONS AND WARRANTIES..................................................................45
------------------------------
6.1 Financial Condition............................................................................45
-------------------
6.2 No Change; Dividends...........................................................................45
--------------------
6.3 Organization; Existence; Compliance with Law...................................................46
--------------------------------------------
6.4 Power; Authorization; Enforceable Obligations..................................................46
---------------------------------------------
6.5 No Legal Bar...................................................................................47
------------
6.6 No Material Litigation.........................................................................47
----------------------
6.7 No Default.....................................................................................47
----------
6.8 Ownership of Property; Liens...................................................................47
----------------------------
6.9 Intellectual Property..........................................................................47
---------------------
6.10 No Burdensome Restrictions.....................................................................48
--------------------------
-i-
6.11 Taxes..........................................................................................48
-----
6.12 ERISA..........................................................................................48
-----
6.13 Governmental Regulations, Etc..................................................................49
-----------------------------
6.14 Subsidiaries...................................................................................50
------------
6.15 Purpose of Loans and Letters of Credit.........................................................50
--------------------------------------
6.16 Environmental Matters..........................................................................51
---------------------
6.17 Perfected Security Interests...................................................................51
----------------------------
6.18 Borrower's Obligations.........................................................................52
----------------------
6.19 Indebtedness...................................................................................52
------------
6.20 Investments....................................................................................52
-----------
6.21 Disclosure.....................................................................................52
----------
SECTION 7 AFFIRMATIVE COVENANTS...........................................................................52
---------------------
7.1 Information Covenants..........................................................................53
---------------------
7.2 Preservation of Existence and Franchises.......................................................57
----------------------------------------
7.3 Books and Records..............................................................................57
-----------------
7.4 Compliance with Law............................................................................57
-------------------
7.5 Payment of Taxes and Other Indebtedness........................................................57
---------------------------------------
7.6 Insurance......................................................................................57
---------
7.7 Maintenance of Property........................................................................58
-----------------------
7.8 Performance of Obligations.....................................................................58
--------------------------
7.9 Use of Proceeds................................................................................58
---------------
7.10 Audits/Inspections.............................................................................58
------------------
7.11 Financial Covenants............................................................................59
-------------------
7.12 Additional Credit Parties......................................................................59
-------------------------
7.13 Ownership of Subsidiaries......................................................................59
-------------------------
7.14 Pledged Assets.................................................................................59
--------------
7.15 [Reserved].....................................................................................59
----------
7.16 Field Examination..............................................................................60
-----------------
7.17 Engagement of Financial Advisor to Lenders.....................................................60
------------------------------------------
7.18 Deposit Accounts...............................................................................60
----------------
7.19 Periodic Meetings..............................................................................61
-----------------
SECTION 8 NEGATIVE COVENANTS..............................................................................61
------------------
8.1 Indebtedness...................................................................................61
------------
8.2 Liens..........................................................................................62
-----
8.3 Nature of Business.............................................................................62
------------------
8.4 Consolidation, Merger, Sale or Purchase of Assets, etc.........................................62
-------------------------------------------------------
8.5 Advances, Investments, Loans, etc..............................................................63
----------------------------------
8.6 Restricted Payments............................................................................63
-------------------
8.7 Prepayments of Indebtedness, etc...............................................................64
---------------------------------
8.8 Transactions with Affiliates...................................................................64
----------------------------
8.9 Fiscal Year....................................................................................65
-----------
8.10 Limitation on Restrictions on Subsidiary Dividends and Other Distributions, etc................65
--------------------------------------------------------------------------------
8.11 Issuance and Sale of Subsidiary Stock..........................................................65
-------------------------------------
8.12 Sale Leasebacks................................................................................65
---------------
8.13 No Further Negative Pledges....................................................................65
---------------------------
8.14 No Foreign Subsidiaries........................................................................66
-----------------------
-ii-
8.15 Capital Expenditures...........................................................................66
--------------------
8.16 Consolidated Earn-Outs.........................................................................66
----------------------
SECTION 9 EVENTS OF DEFAULT...............................................................................66
-----------------
9.1 Events of Default..............................................................................66
-----------------
9.2 Acceleration; Remedies.........................................................................69
----------------------
SECTION 10.................................................................................................70
AGENT......................................................................................................70
-----
10.1 Appointment and Authorization of Agent.........................................................70
---- --------------------------------------
10.2 Delegation of Duties...........................................................................71
---- --------------------
10.3 Liability of Agent.............................................................................71
---- ------------------
10.4 Reliance by Agent..............................................................................71
-----------------
10.5 Notice of Default..............................................................................72
-----------------
10.6 Credit Decision; Disclosure of Information by Agent............................................72
---------------------------------------------------
10.7 Indemnification of Agent.......................................................................73
------------------------
10.8 Agent in its Individual Capacity...............................................................73
--------------------------------
10.9 Successor Agent................................................................................73
---------------
10.10 Agent May File Proofs of Claim.................................................................74
------------------------------
10.11 Collateral and Guaranty Matters................................................................75
-------------------------------
SECTION 11 MISCELLANEOUS..................................................................................75
-------------
11.1 Notices........................................................................................75
-------
11.2 Right of Set-Off...............................................................................76
----------------
11.3 Benefit of Agreement...........................................................................77
--------------------
11.4 No Waiver; Remedies Cumulative.................................................................79
------------------------------
11.5 Payment of Expenses, etc.......................................................................79
------------------------
11.6 Amendments, Waivers and Consents...............................................................80
--------------------------------
11.7 Counterparts...................................................................................81
------------
11.8 Headings.......................................................................................81
--------
11.9 Survival.......................................................................................81
--------
11.10 Governing Law; Submission to Jurisdiction; Venue...............................................81
------------------------------------------------
11.11 Severability...................................................................................82
------------
11.12 Entirety.......................................................................................82
--------
11.13 Binding Effect; Amendment and Restatement of Existing Credit Agreement.........................82
----------------------------------------------------------------------
11.14 Confidentiality................................................................................83
---------------
11.15 Source of Funds................................................................................83
---------------
11.16 Conflict.......................................................................................84
--------
-iii-
SCHEDULES
Schedule 1.1A Investments
Schedule 1.1B Liens
Schedule 1.1C Form of Amended and Restated Pledge Agreement
Schedule 2.1(a) Lenders
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Amended, Restated and Substituted Note
Schedule 6.4 Required Consents, Authorizations, Notices and Filings
Schedule 6.9 Intellectual Property
Schedule 6.11 Taxes
Schedule 6.14 Subsidiaries
Schedule 7.1(c)(i) Form of Officer's Compliance Certificate
Schedule 7.1(c)(ii) Form of Officer's Compliance Certificate
Schedule 7.1(k) Form of Borrowing Base Certificate
Schedule 7.12 Form of Joinder Agreement
Schedule 7.18 Form of Agency Agreement
Schedule 8.1 Indebtedness
Schedule 11.3(b) Form of Assignment and Acceptance
-iv-
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of April
11, 2003 (the "Credit Agreement"), is by and among PERSONNEL GROUP OF AMERICA,
INC., a Delaware corporation (the "Borrower"), the subsidiaries of the
Borrower identified on the signature pages hereto and such other subsidiaries
as may from time to time become a party hereto (the "Guarantors"), the several
lenders identified on the signature pages hereto and such other lenders as may
from time to time become a party hereto (the "Lenders") and BANK OF AMERICA,
N.A., formerly NationsBank, N.A., as agent for the Lenders (in such capacity,
the "Agent").
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors party thereto, the Lenders
party thereto and the Agent entered into that certain Amended and Restated
Credit Agreement dated as of June 23, 1997 (as amended by Amendment No. 1 to
Amended and Restated Credit Agreement dated as of March 17, 1998, Amendment
No. 2 to Amended and Restated Credit Agreement dated as of September 29, 1999,
Amendment No. 3 to Amended and Restated Credit Agreement dated as of March 21,
2001, a Waiver Agreement dated as of December 14, 2001, Amendment No. 4 to
Amended and Restated Credit Agreement dated as of February 8, 2002 and
Amendment No. 5 to Amended and Restated Credit Agreement and Waiver dated as
of December 31, 2002 and as otherwise modified prior to the date hereof, the
"Existing Credit Agreement").
WHEREAS, the parties hereto have agreed to amend and restate the
Existing Credit Agreement as set forth herein in order to, among other things,
extend the Termination Date;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Additional Credit Party" means each Person that becomes a
Guarantor after the Closing Date by execution of a Joinder Agreement.
"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or
under direct or indirect common control with such Person or (ii)
directly or indirectly owning or holding five percent (5%) or more of
the equity interest in such Person. For purposes of this definition,
"control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Agency Services Address" means Bank of America, N.A.,
NC1-001-15-04, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx
00000, Attn: Agency Services, or such other address as may be
identified by written notice from the Agent to the Borrower.
"Agent" shall have the meaning assigned to such term in the
heading hereof, together with any successors or assigns.
"Agent-Related Persons" means the Agent, together with its
Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"Agent's Fee Letter" means that certain letter agreement,
dated as of April 11, 2003, between the Agent and the Borrower, as
amended, modified, supplemented or replaced from time to time.
"Agent's Fees" shall have the meaning assigned to such term
in Section 3.5(c).
"Applicable Percentage" means, for purposes of calculating
the applicable interest rate for any day for any Loan or the
applicable rate of the Unused Fee for any day for purposes of Section
3.5(a) or the applicable rate of the Letter of Credit Fee for any day
for purposes of Section 3.5(b)(i), the appropriate applicable
percentage corresponding to the relevant period set forth below:
2
============================================ ===================== ===================== ===================
Applicable Applicable Applicable
Percentage for Base Percentage for Percentage for
Period Rate Loans Letter of Credit Fee Unused Fee
-------------------------------------------- --------------------- --------------------- -------------------
From the Closing Date through June 30, 2003 3.25% 6.25% 0.50%
-------------------------------------------- --------------------- --------------------- -------------------
From July 1, 2003 through December 31, 2003 3.75% 6.50% 0.50%
-------------------------------------------- --------------------- --------------------- -------------------
From January 1, 2004 through June 30, 2004 4.25% 6.75% 0.50%
-------------------------------------------- --------------------- --------------------- -------------------
From July 1, 2004 through December 31, 2004 4.50% 7.00% 0.50%
-------------------------------------------- --------------------- --------------------- -------------------
From January 1, 2005 through 5.00% 7.25% 0.50%
May 1, 2005*
============================================ ===================== ===================== ===================
*Applicable Percentages for May 1, 2004 and thereafter are
contingent on extension option being exercised pursuant to Section
3.4(e) of this Credit Agreement.
"Asset Sale" means (i) any sale, lease, transfer or other
disposition (including any such transaction effected by way of
merger, amalgamation or consolidation) by the Borrower or any of its
Subsidiaries subsequent to the date hereof of any asset (including
stock in Subsidiaries of the Borrower), including without limitation
any sale leaseback transaction (whether or not involving a Capital
Lease), but excluding (a) the sale of inventory in the ordinary
course of business for fair consideration, (b) the sale or
disposition of machinery and equipment no longer used or useful in
the conduct of such Person's business and (c) the sale of any asset
having a net book value of less than $50,000 and (ii) receipt by the
Borrower or any of its Subsidiaries of any cash insurance proceeds or
condemnation award payable by reason of theft, loss, physical
destruction or damage, taking or similar event with respect to any of
the property or assets of the Borrower and its Subsidiaries.
"Attorney Costs" means and includes all fees, expenses and
disbursements of any law firm or other external counsel and, without
duplication, the allocated cost of internal legal services and all
expenses and disbursements of internal counsel.
"Availability" means, as of any date of determination, (i)
the Committed Amount as of such date minus (ii) the sum of (a) the
aggregate principal amount of outstanding Loans on such date plus (b)
LOC Obligations outstanding as of such date.
"Bank of America" means Bank of America, N.A. (formerly
NationsBank, N.A.) and its successors.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of
the United States Code, as amended, modified, succeeded or replaced
from time to time.
3
"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a
court or governmental agency having jurisdiction in the premises
shall enter a decree or order for relief in respect of such Person in
an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or for any substantial part of its
Property or ordering the winding up or liquidation of its affairs; or
(ii) there shall be commenced against such Person an involuntary case
under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or any case, proceeding or other action for
the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or for the winding up or liquidation
of its affairs, and such involuntary case or other case, proceeding
or other action shall remain undismissed, undischarged or unbonded
for a period of sixty (60) consecutive days; or (iii) such Person
shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
consent to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any
substantial part of its Property or make any general assignment for
the benefit of creditors; or (iv) such Person shall be unable to, or
shall admit in writing its inability to, pay its debts generally as
they become due.
"Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (a) the Federal Funds Rate in effect on such
day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If
for any reason the Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable after
due inquiry to ascertain the Federal Funds Rate for any reason,
including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Base Rate shall
be determined without regard to clause (a) of the first sentence of
this definition until the circumstances giving rise to such inability
no longer exist. Any change in the Base Rate due to a change in the
Prime Rate or the Federal Funds Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds
Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Bond Conversion" means the conversion to common stock
equity in the Borrower of at least $109,961,000 of the 5-3/4%
Convertible Subordinated Notes due 2004.
"Borrower" means the Person identified as such in the
heading hereof, together with any permitted successors and assigns.
"Borrower's Obligations" means, without duplication, (i) all
of the obligations of the Borrower to the Lenders (including the
Issuing Lender) and the Agent, whenever arising, under the Credit
Agreement, the Notes or any of the other Credit Documents (including,
but
4
not limited to, any interest accruing after the occurrence of a
Bankruptcy Event with respect to the Borrower, regardless of whether
such interest is an allowed claim under the Bankruptcy Code) and (ii)
all liabilities and obligations, whenever arising, owing from the
Borrower to any Lender, or any Affiliate of a Lender, arising under
any Hedging Agreement.
"Borrowing Base" means, as of any day, an amount equal to
the sum of (i) 85% of Eligible Receivables (other than Eligible
Receivables that are unbilled receivables) as set forth in the
applicable Borrowing Base report delivered to the Agent in accordance
with Section 7.1(k) plus (ii) 75% of Eligible Receivables that are
unbilled receivables as set forth in the applicable Borrowing Base
report delivered to the Agent in accordance with Section 7.1(k) plus
(iii) the applicable Overadvance.
"Borrowing Base Certificate" shall have the meaning assigned
to such term in Section 7.1(k).
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina are
authorized or required by law to close.
"Capital Lease" means, as applied to any Person, any lease
of any Property (whether real, personal or mixed) by that Person as
lessee which, in accordance with GAAP, is or should be accounted for
as a capital lease on the balance sheet of that Person.
"Cash Collateralize" means to pledge and deposit with or
deliver to the Agent, for the benefit of the Issuing Lender and the
Lenders, as collateral for the LOC Obligations, cash or deposit
account balances pursuant to documentation in form and substance
satisfactory to the Agent and the Issuing Lender (which documents are
hereby consented to by the Lenders). Cash collateral shall be
maintained in blocked, interest bearing deposit accounts at Bank of
America.
"Cash Equivalents" means (a) securities issued or directly
and fully guaranteed or insured by the United States of America or
any agency or instrumentality thereof (provided that the full faith
and credit of the United States of America is pledged in support
thereof) having maturities of not more than twelve months from the
date of acquisition, (b) U.S. dollar denominated time deposits and
certificates of deposit of (i) any Lender, or (ii) any domestic
commercial bank of recognized standing (y) having capital and surplus
in excess of $500,000,000 and (z) whose short-term commercial paper
rating from S&P is at least A-1 or the equivalent thereof or from
Xxxxx'x is at least P-1 or the equivalent thereof (any such bank
being an "Approved Lender"), in each case with maturities of not more
than 270 days from the date of acquisition, (c) commercial paper and
variable or fixed rate notes issued by any Approved Lender (or by the
parent company thereof) and maturing within six months of the date of
acquisition, (d) repurchase agreements entered into by a Person with
a bank or trust company (including any of the Lenders) or recognized
securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by
the United States of America in which such Person shall have a
perfected first priority security interest (subject to no other
Liens) and having, on the date of purchase thereof, a
5
fair market value of at least 100% of the amount of the repurchase
obligations, (e) obligations of any State of the United States or any
political subdivision thereof, the interest with respect to which is
exempt from federal income taxation under Section 103 of the Code,
having a long term rating of at least AA- or Aa-3 by S&P or Moody's,
respectively, and maturing within three years from the date of
acquisition thereof, (f) Investments in municipal auction preferred
stock (i) rated AAA (or the equivalent thereof) or better by S&P or
Aaa (or the equivalent thereof) or better by Moody's and (ii) with
dividends that reset at least once every 365 days and (g)
Investments, classified in accordance with GAAP as current assets, in
money market investment programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $100,000,000 and
the portfolios of which are limited to Investments of the character
described in the foregoing subdivisions (a), (b), (c), (e) and (f).
"Change of Control" means the occurrence of any of the
following events, other than as a result of the Bond Conversion or
the other transactions contemplated pursuant to the Restructuring
Agreement: (i) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership, directly or indirectly, of,
or shall have acquired by contract or otherwise, or shall have
entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of, control over, Voting Stock of
the Borrower (or other securities convertible into such Voting Stock)
representing 30% or more of the combined voting power of all Voting
Stock of the Borrower, (ii) during any period of up to 24 consecutive
months, commencing after the Closing Date, individuals who at the
beginning of such 24 month period were directors of the Borrower
(together with any new director whose election by the Borrower's
Board of Directors or whose nomination for election by the Borrower's
shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the directors of the Borrower then in office or (iii) the
occurrence of a "Change of Control" under and as defined in either
the Subordinated Note Indenture or the Subordinated Notes. As used
herein, "beneficial ownership" shall have the meaning provided in
Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor thereto, as interpreted by the rules and
regulations issued thereunder, in each case as in effect from time to
time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Collateral" means a collective reference to the collateral
which at any time will be covered by the Collateral Documents.
"Collateral Documents" means a collective reference to the
Security Agreement, the Pledge Agreement and such other documents
executed and delivered in connection with the attachment and
perfection of the Agent's security interests and liens arising
6
thereunder, including without limitation, UCC financing statements
and patent and trademark filings.
"Commitment" means (i) with respect to each Lender, the
commitment of such Lender in an aggregate principal amount at any
time outstanding of up to such Lender's Commitment Percentage of the
Committed Amount, (A) to make Loans in accordance with the provisions
of Section 2.1(a) and (B) to purchase participation interests in
Letters of Credit in accordance with the provisions of Section 2.2(c)
and (ii) with respect to the Issuing Lender, the LOC Commitment.
"Commitment Percentage" means, for any Lender, the
percentage identified as its Commitment Percentage on Schedule
2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3.
"Committed Amount" shall have the meaning assigned to such
term in Section 2.1(a).
"Consolidated Capital Expenditures" means, for any period,
all capital expenditures of the Borrower and its Subsidiaries on a
consolidated basis for such period, as determined in accordance with
GAAP.
["Consolidated Coverage Ratio" means, as of the last day of
any month, the ratio of (i) Consolidated EBITDA for the twelve month
period (except as set forth below) ending on such date to (ii)
Consolidated Interest Expense for the twelve month period (except as
set forth below) ending on such date for the twelve month period
(except as set forth below) ending on such date; provided, however,
that (i) as of June 30, 2003, such ratio shall be calculated only for
the three month period ending as of such date, (ii) as of July 31,
2003, such ratio shall be calculated only for the four month period
ending as of such date, (iii) as of August 31, 2003, such ratio shall
be calculated only for the five month period ending as of such date,
(iv) as of September 30, 2003, such ratio shall be calculated only
for the six month period ending as of such date, (v) as of October
31, 2003, such ratio shall be calculated only for the seven month
period ending as of such date, (vi) as of November 30, 2003, such
ratio shall be calculated only for the eight month period ending as
of such date, (vii) as of December 31, 2003, such ratio shall be
calculated only for the nine month period ending as of such date,
(viii) as of January 31, 2004, such ratio shall be calculated only
for the ten month period ending as of such date and (ix) as of
February 29, 2004, such ratio shall be calculated only for the eleven
fiscal month period ending as of such date.]
"Consolidated Earn-Outs" means, for any period, all earn-out
payments made by the Borrower and its Subsidiaries on a consolidated
basis for such period.
"Consolidated EBITDA" means, for any period, the sum of (i)
Consolidated Net Income for such period plus (ii) an amount which, in
the determination of Consolidated Net Income for such period, has
been deducted for (A) interest expense, (B) total Federal, state,
7
local and foreign income, value added and similar taxes, (C)
depreciation and amortization expense, (D) for any period during the
Borrower's fiscal year 2003 and beyond, Restructuring Charges taken
by the Borrower and its Subsidiaries (but in no event shall all of
the add-backs pursuant to this clause (D) exceed $5,000,000 (plus the
amount of any Restructuring Charges consisting of (x) expenses that
may be incurred in connection with the hiring of investment advisers
to address the Borrower's capital structure and (y) other fees and
expenses not to exceed $3,100,000 in the aggregate incurred by the
Borrower after December 29, 2002 in connection with any financial
restructuring transaction) and (E) non-cash intangible asset
impairment charges taken by the Borrower and its Subsidiaries after
December 29, 2002 (but in no event shall all of the add-backs
pursuant to this clause (E) exceed $104,000,000 in the aggregate).
"Consolidated Funded Indebtedness" means, for any date, (i)
the outstanding principal amount of all Funded Indebtedness, without
duplication, of the Borrower and its Subsidiaries as of such date
less (ii) so long as no Loans are outstanding hereunder, the
aggregate amount of cash and Cash Equivalents held by the Borrower as
of such date.
"Consolidated Interest Expense" means, as of the last day of
any fiscal period, interest expense of the Borrower and its
Subsidiaries on a consolidated basis required to be paid in cash
(plus the amortization of ongoing fees previously paid) for the
relevant period ending on such day. For purposes of this Credit
Agreement, the interest expense required to be paid under this Credit
Agreement is the Base Rate plus the margin set forth in the
definition of "Applicable Percentage".
"Consolidated Net Income" means, for any period, (i) net
income after taxes for such period for the Borrower and its
Subsidiaries on a consolidated basis, as determined in accordance
with GAAP plus (ii) to the extent not included in the amount
determined pursuant to clause (i) above and as calculated on a pro
forma basis, net income after taxes for such period for any Person
acquired by the Borrower or any of its Subsidiaries during such
period (after giving effect to changes in the operating costs of any
acquired Person as if such changes were in effect for such period and
are reasonably expected to continue).
"Consolidated Scheduled Funded Indebtedness Payments" means,
as of the last day of any fiscal period, total scheduled payments of
principal on Funded Indebtedness for the Borrower and its
Subsidiaries on a consolidated basis for the relevant period
beginning on the immediately succeeding day. Consolidated Scheduled
Funded Indebtedness Payments shall not include any Consolidated
Earn-Outs.
"Consolidated Senior Funded Indebtedness" means, for any
date, (i) the outstanding principal amount of all Consolidated Funded
Indebtedness, without duplication, of the Borrower and its
Subsidiaries as of such date less (ii) the outstanding principal
amount of all Subordinated Indebtedness as of such date.
"Credit Documents" means a collective reference to this
Credit Agreement, the Notes, the LOC Documents, the Collateral
Documents, each Joinder Agreement, the Agent's Fee Letter, the
Restructure Agreement, the Warrants, the Registration Rights
8
Agreement and all other related agreements and documents issued or
delivered hereunder or thereunder or pursuant hereto or thereto.
"Credit Party" means any of the Borrower and the Guarantors.
"Debt Issuance" means the issuance of any Indebtedness for
borrowed money (including debt securities) by the Borrower or any of
its Subsidiaries, other than (i) the Loans, (ii) Subordinated
Indebtedness evidencing contingent earn-out payment obligations or
similar obligations or incurred pursuant to Section 8.1(g) hereof,
and (iii) purchase money Indebtedness permitted under Section 8.1(c).
"Default" means any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of
Default.
"Default Rate" means an interest rate equal to (a) the Base
Rate plus (b) the Applicable Percentage, if any, applicable to Base
Rate Loans plus (c) 2% per annum.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Eligible Receivables" means, as of any date of
determination and without duplication, the aggregate book value of
all accounts receivable, receivables, and obligations for payment
created or arising from the sale of inventory or the rendering of
services in the ordinary course of business (collectively, the
"Receivables"), owned by or owing to the Borrower or any of its
Subsidiaries, net of allowances and reserves for doubtful or
uncollectible accounts, refunds, discounts and sales adjustments
consistent with such Person's internal policies and in any event in
accordance with GAAP, but excluding in any event (i) any Receivable
which is (a) not subject to a perfected, first priority Lien in favor
of the Agent to secure the Borrower's Obligations or (b) subject to
any other Lien that is not a Permitted Lien, (ii) Receivables and
credit balances which are more than 90 days past due (net of reserves
for bad debts in connection with any such receivables), (iii) 75% of
the book value of all non-past-due Receivables owing from an account
debtor if 50% or more or such account debtor's Receivables are 90
days or more past due, (iv) Receivables evidenced by notes, chattel
paper or other instruments, unless such notes, chattel paper or
instruments have been delivered to and are in the possession of the
Agent, (v) Receivables owing by an account debtor which is not
solvent or is subject to any bankruptcy or insolvency proceeding of
any kind, (vi) Receivables owing by an account debtor located outside
of the United States (unless payment for the goods shipped is secured
by an irrevocable letter of credit in a form and from an institution
acceptable to the Agent), (vii) Receivables which are contingent or
subject to offset, deduction, counterclaim, dispute or other defense
to payment, in each case to the extent of such offset, deduction,
counterclaim, dispute or other defense, (viii) Receivables for which
any direct or indirect Subsidiary or any Affiliate is the account
debtor, (ix) Receivables representing a sale to the government of the
United States of America or any subdivision thereof unless the
Federal Assignment of Claims Act or other similar applicable law has
been complied with to the satisfaction of the Agent with respect to
the granting of a security interest in such Receivable, (x) unbilled
receivables in excess of
9
$10,000,000 in the aggregate and (xi) Receivables which fail to meet
such other specifications and requirements as may from time to time be
established by the Agent in its reasonable discretion.
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including, without limitation, ambient air,
surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes.
"Equity Transaction" means any issuance by the Borrower or
any of its Subsidiaries to any Person of shares of its capital stock
or other equity interests, any shares of its capital stock or other
equity interests pursuant to the exercise of options or warrants or
any shares of its capital stock or other equity interests pursuant to
the conversion of any debt securities to equity other than (i) the
Bond Conversion, (ii) the issuance of the Warrants and any issuance
of common stock upon exercise of the Warrants, (iii) the conversion
of any shares of newly issued Series B Preferred Stock and (iv) any
reverse stock splits.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted
by the rules and regulations thereunder, all as the same may be in
effect from time to time. References to sections of ERISA shall be
construed also to refer to any successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Credit Party within the meaning of Section
4001(a)(14) of ERISA, or is a member of a group which includes the
Borrower and which is treated as a single employer under Sections
414(b), (c), (m), or (o) of the Code.
"Event of Default" means such term as defined in Section
9.1.
"Existing Credit Agreement" means such term as defined in
the preamble hereto.
"Fees" means all fees payable pursuant to (i) Section 3.5
and/or (ii) the Restructure Agreement.
"Federal Funds Rate" means, for any day, the rate of
interest per annum (rounded upwards, if necessary, to the nearest
whole multiple of 1/100 of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day,
as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that (A) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Business Day and (B) if no
such rate is so
10
published on such next preceding Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to the Agent on such
day on such transactions as determined by the Agent.
"First Extension Fee" means a fee equal to the Committed
Amount as of May 1, 2004 multiplied by 0.50%.
"First Extension Option" means the Borrower's option to
extend the Termination Date, as more fully set out in Section
3.4(e)(i).
"Funded Indebtedness" means, with respect to any Person,
without duplication, (i) all Indebtedness of such Person for borrowed
money, (ii) all amounts due and owing by such Person under any
contingent earn-out agreements to which such Person is a party, (iii)
all purchase money Indebtedness of such Person, including without
limitation the principal portion of all obligations of such Person
under Capital Leases, (iv) all Guaranty Obligations of such Person
with respect to Funded Indebtedness of another Person, (v) the
maximum available amount of all standby letters of credit or
acceptances issued or created for the account of such Person, (vi)
all Funded Indebtedness of another Person secured by a Lien on any
Property of such Person, whether or not such Funded Indebtedness has
been assumed, and (vii) the principal balance outstanding under any
synthetic lease, tax retention operating lease, off-balance sheet
loan or similar off-balance sheet financing product to which such
Person is a party, where such transaction is considered borrowed
money indebtedness for tax purposes but is classified as an operating
lease in accordance with GAAP. The Funded Indebtedness of any Person
shall include the Funded Indebtedness of any partnership or joint
venture in which such Person is a general partner or joint venturer.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms
of Section 1.3 hereof.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guarantor" means each of those Persons identified as a
"Guarantor" on the signature pages hereto, and each Additional Credit
Party which may hereafter execute a Joinder Agreement, together with
their successors and permitted assigns.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing or intended to
guarantee any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or
any Property constituting security therefor, (ii) to advance or
provide funds or other support for the payment or purchase of any
such Indebtedness or to maintain working capital, solvency or other
balance sheet condition of such other Person (including without
limitation keep well agreements, maintenance agreements, comfort
letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other
11
Person, (iii) to lease or purchase Property, securities or services
primarily for the purpose of assuring the holder of such Indebtedness,
or (iv) to otherwise assure or hold harmless the holder of such
Indebtedness against loss in respect thereof. The amount of any
Guaranty Obligation hereunder shall (subject to any limitations set
forth therein) be deemed to be an amount equal to the outstanding
principal amount (or maximum principal amount, if larger) of the
Indebtedness in respect of which such Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection
agreement or foreign currency exchange agreement between the Borrower
and any Lender, or any Affiliate of a Lender.
"Indebtedness" of any Person means (i) all obligations of
such Person for borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made, (iii) all obligations
of such Person under conditional sale or other title retention
agreements relating to Property purchased by such Person (other than
customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (iv) all
obligations of such Person issued or assumed as the deferred purchase
price of Property or services purchased by such Person (other than
trade debt incurred in the ordinary course of business and due within
six months of the incurrence thereof) which would appear as
liabilities on a balance sheet of such Person, (v) all obligations of
such Person under take-or-pay or similar arrangements or under
commodities agreements, (vi) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable
out of the proceeds of production from, Property owned or acquired by
such Person, whether or not the obligations secured thereby have been
assumed, (vii) all Guaranty Obligations of such Person (excluding, to
the extent entered in the ordinary course of business, any Guaranty
Obligations of the Borrower with respect to Operating Leases of any
Subsidiary of the Borrower), (viii) the principal portion of all
obligations of such Person under Capital Leases, (ix) all obligations
of such Person in respect of interest rate protection agreements,
foreign currency exchange agreements, commodity purchase or option
agreements or other interest or exchange rate or commodity price
hedging agreements (including, but not limited to, the Hedging
Agreements), (x) the maximum amount of all standby letters of credit
issued or bankers' acceptances facilities created for the account of
such Person and, without duplication, all drafts drawn thereunder (to
the extent unreimbursed), (xi) all preferred stock issued by such
Person and required by the terms thereof to be redeemed, or for which
mandatory sinking fund payments are due, by a fixed date and (xii)
the principal balance outstanding under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product to which such Person is a party,
where such transaction is considered borrowed money indebtedness for
tax purposes but is classified as an operating lease in accordance
with GAAP. The Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person
is a general partner or a joint venturer.
"Intercompany Indebtedness" means any Indebtedness of a
Credit Party (other than the Borrower) which (i) is owing to the
Borrower or any other Credit Party and (ii) by its
12
terms is specifically subordinated in right of payment to the prior
payment of the obligations of the Credit Parties under this Credit
Agreement and the other Credit Documents on terms and conditions
reasonably satisfactory to the Required Lenders.
"Interest Payment Date" means as to any Loan, the last day
of each calendar month, the date of repayment of principal of such
Loan and the Termination Date. If an Interest Payment Date falls on a
date which is not a Business Day, such Interest Payment Date shall be
deemed to be the next succeeding Business Day.
"Investment", in any Person, means any loan or advance to
such Person, any purchase or other acquisition of any capital stock,
warrants, rights, options, obligations or other securities of, or
equity interest in, such Person, any capital contribution to such
Person or any other investment in such Person, including, without
limitation, any Guaranty Obligation incurred for the benefit of such
Person. In computing the amount involved in any Investment, (i)
undistributed earnings of, and interest accrued in respect of
Indebtedness owing by, any such other Person accrued after the date
of such Investment shall not be included, (ii) there shall not be
deducted from the amounts invested in any such other Person any
amounts received as earnings (in the form of dividends, interest or
otherwise) on such Investment or as loans or advances from such other
Person, and (iii) unrealized increases or decreases in value, or
write-ups, write-downs or write-offs, of Investments in any such
other Person shall be disregarded.
"Issuing Lender" means Bank of America.
"Issuing Lender Fees" shall have the meaning assigned to
such term in Section 3.5(b)(iii).
"Joinder Agreement" means a Joinder Agreement substantially
in the form of Schedule 7.12 hereto, executed and delivered by an
Additional Credit Party in accordance with the provisions of Section
7.12.
"Laws" means, collectively, all international, foreign,
Federal, state and local statutes, treaties, rules, guidelines,
regulations, ordinances, codes and administrative or judicial
precedents or authorities, including the interpretation or
administration thereof by any Governmental Authority charged with the
enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authority, in each case whether or not having the force
of law.
"Lenders" means each of the Persons identified as a "Lender"
on the signature pages hereto, and each Person which may become a
Lender by way of assignment in accordance with the terms hereof,
together with their successors and permitted assigns.
"Letter of Credit" means any letter of credit issued by the
Issuing Lender for the account of the Borrower in accordance with the
terms of Section 2.2.
13
"Letter of Credit Fee" shall have the meaning assigned to
such term in Section 3.5(b)(i).
"Lien" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance, lien
(statutory or otherwise), preference, priority or charge of any kind
(including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any financing or
similar statement or notice filed under the Uniform Commercial Code
as adopted and in effect in the relevant jurisdiction or other
similar recording or notice statute, and any lease in the nature
thereof).
"Loan" or "Loans" shall have the meaning assigned to such
term in Section 2.1(a).
"LOC Commitment" means the commitment of the Issuing Lender
to issue Letters of Credit in an aggregate face amount at any time
outstanding (together with the amounts of any unreimbursed drawings
thereon) of up to the LOC Committed Amount.
"LOC Committed Amount" shall have the meaning assigned to
such term in Section 2.2.
"LOC Documents" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents
delivered in connection therewith, any application therefor, and any
agreements, instruments, guarantees or other documents (whether
general in application or applicable only to such Letter of Credit)
governing or providing for (i) the rights and obligations of the
parties concerned or at risk or (ii) any collateral security for such
obligations.
"LOC Obligations" means, at any time, the sum of (i) the
maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then outstanding,
assuming compliance with all requirements for drawings referred to in
such Letters of Credit plus (ii) the aggregate amount of all drawings
under Letters of Credit honored by the Issuing Lender but not
theretofore reimbursed.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business,
assets, liabilities or prospects of the Borrower and its Subsidiaries
taken as a whole, (ii) the ability of any Credit Party to perform any
material obligation under the Credit Documents to which it is a party
or (iii) the material rights and remedies of the Lenders under the
Credit Documents.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Laws,
including, without limitation, asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation.
"Moody's" means Xxxxx'x Investors Service, Inc., or any
successor or assignee of the business of such company in the
business of rating securities.
14
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which the Borrower,
any Subsidiary of the Borrower or any ERISA Affiliate and at least
one employer other than the Borrower, any Subsidiary of the Borrower
or any ERISA Affiliate are contributing sponsors.
"Net Proceeds" means cash proceeds, which in the aggregate
exceed $500,000 for any single transaction, received by the Borrower
or any of its Subsidiaries from time to time in connection with any
Asset Sale, any Equity Transaction or any Debt Issuance, net of
actual costs (including, without limitation, commissions and
underwriting discounts, if any) and taxes paid by such Person in
connection with and attributable to such Asset Sale, Equity
Transaction or Debt Issuance; provided, however, "Net Proceeds" shall
not include the aggregate cash proceeds received by the Borrower from
time to time in connection with the issuance by the Borrower of any
capital stock or other equity interests pursuant to (i) any stock
option plan, equity plan or other employee benefit plan of the
Borrower or (ii) the Warrants. It is understood that "Net Proceeds"
shall include, without limitation, any cash or Cash Equivalents
received upon the realization or payment of, or sale or other
disposition of, any non-cash consideration received by any Credit
Party in connection with any Asset Sale, Equity Transaction or Debt
Issuance.
"Non-Excluded Taxes" means such term as is defined in
Section 3.10.
"Note" means a promissory note of the Borrower in favor of a
Lender delivered pursuant to Section 2.1(e) and evidencing the Loans
of such Lender, as such promissory note may be amended, modified,
restated or replaced from time to time.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Schedule 2.1(b)(i), as required by Section
2.1(b)(i).
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Overadvance" means $17,800,000; provided, however, that the
amount of such Overadvance shall be permanently reduced by an amount
equal to all reductions in the Committed Amount pursuant to Section
3.3(c) or Section 3.4(a); provided, further, that if such reduction
in the Committed Amount in the preceding proviso involves the
application of proceeds from a sale that includes the sale of
Eligible Receivables (or an entity that owns Eligible Receivables),
then the amount of the reduction in the Overadvance pursuant to the
preceding proviso shall not include 85% of such Eligible Receivables
sold.
15
"Participation Interest" means, the extension of credit by a
Lender by way of a purchase of a participation in any Letters of
Credit or LOC Obligations as provided in Section 2.2(c) or in any
Loans as provided in Section 3.13.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
"Permitted Investments" means Investments which are either
(i) cash and Cash Equivalents; (ii) accounts receivable created,
acquired or made by the Borrower or any of its Subsidiaries in the
ordinary course of business and payable or dischargeable in
accordance with customary trade terms; (iii) Investments consisting
of stock, obligations, securities or other property received by the
Borrower or any of its Subsidiaries in settlement of accounts
receivable (created in the ordinary course of business) from
insolvent or bankrupt obligors; (iv) Investments existing as of the
Closing Date and set forth in Schedule 1.1A, (v) Guaranty Obligations
permitted by Section 8.1; (vi) transactions explicitly permitted by
clauses (i), (ii) and (iv) of Section 8.8; (vii) advances or loans to
directors, officers, agents, customers or suppliers that do not
exceed $250,000 in the aggregate at any one time outstanding; (viii)
short term advances or loans to employees in the ordinary course of
business for such employees' ordinary business expenses that do not
exceed $500,000 in the aggregate at any one time outstanding (ix)
Intercompany Indebtedness permitted by Section 8.1; and (x) other
Investments, provided that the aggregate outstanding amount of all
such other Investments taken together shall not exceed $1,000,000.
"Permitted Liens" means:
(i) Liens in favor of the Agent on behalf of the
Lenders;
(ii) Liens (other than Liens created or imposed
under ERISA) for taxes, assessments or governmental charges
or levies not yet due or Liens for taxes being contested in
good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any
such Lien is not yet subject to foreclosure, sale or loss on
account thereof);
(iii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers
and other Liens imposed by law or pursuant to customary
reservations or retentions of title arising in the ordinary
course of business, provided that such Liens secure only
amounts not yet due and payable or, if due and payable, are
unfiled and no other action has been taken to enforce the
same or are being contested in good faith by appropriate
proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed
under ERISA) incurred or deposits made by the Borrower and
its Subsidiaries in the ordinary course of
16
business in connection with workers' compensation,
unemployment insurance and other types of social security,
or to secure the performance of tenders, statutory
obligations, bids, leases, government contracts, performance
and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed
money);
(v) Liens in connection with attachments or
judgments (including judgment or appeal bonds) provided that
the judgments secured shall, within 30 days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 30 days
after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions
(including zoning restrictions), minor defects or
irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use
of the encumbered Property for its intended purposes;
(vii) Liens on Property securing purchase money
Indebtedness (including Capital Leases) to the extent
permitted under Section 8.1(c), provided that any such Lien
attaches to such Property concurrently with or within 90
days after the acquisition thereof;
(viii) normal and customary rights of setoff upon
deposits of cash in favor of banks or other depository
institutions;
(ix) other Liens, provided that the aggregate
amount Indebtedness secured by such Liens shall not exceed
an aggregate principal amount of $1,000,000; and
(x) Liens existing as of the Closing Date and set
forth on Schedule 1.1B.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
"Plan" means any employee benefit plan (as defined in
Section 3(3) of ERISA) which is covered by ERISA and with respect to
which the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" within the
meaning of Section 3(5) of ERISA.
"Pledge Agreement" means the amended and restated pledge and
security agreement dated as of June 23, 1997, executed in favor of
the Agent by each Credit Party which owns any stock in any Subsidiary
of the Borrower, as amended, modified, restated or supplemented from
time to time.
17
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by Bank of America as its prime rate in
effect at its principal office in Charlotte, North Carolina, with
each change in the Prime Rate being effective on the date such change
is publicly announced as effective (it being understood and agreed
that the Prime Rate is a reference rate used by Bank of America in
determining interest rates on certain loans and is not intended to be
the lowest rate of interest charged on any extension of credit by
Bank of America to any debtor).
"Pro Forma Basis" means, with respect to any Pro Forma
Transaction, that such Pro Forma Transaction shall be deemed to have
occurred as of the first day of the four fiscal-quarter period ending
as of the most recent fiscal quarter end preceding the date of such
Pro Forma Transaction with respect to which the Agent and the Lenders
have received the officer's certificate in accordance with the
provisions of Section 7.1(c)(i). With respect to any incurrence,
assumption or retirement of Indebtedness as referred to in Section
8.1(h), any such Indebtedness which has a floating or formula rate
shall have an implied rate of interest for the applicable period
equal to the rate which is or would be in effect with respect to such
Indebtedness as at the relevant date of determination.
"Pro Forma Transaction" means any incurrence, assumption or
retirement of Indebtedness as referred to in Section 8.1(h).
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Register" shall have the meaning given such term in Section
11.3(c).
"Registration Rights Agreement" means that certain
Registration Rights Agreement dated as of the date hereof among the
Borrower, the Guarantors, the Lenders and the Agent as amended,
modified, restated or supplemented from time to time.
"Regulation D, U, or X" means Regulation D, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing into the environment (including the abandonment
or discarding of barrels, containers and other closed receptacles
containing any Materials of Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
post-event notice requirement is waived under subsections .13, .14,
.18, .19, or .20 of PBGC Reg. ss. 2615.
"Repurchase Event" shall have the meaning assigned to such
term in the Subordinated Note Indenture.
18
"Required Lenders" means, at any time, Lenders which are
then in compliance with their obligations hereunder (as determined by
the Agent) and holding in the aggregate at least 66 2/3% of (i) the
Commitments (and Participation Interests therein) or (ii) if the
Commitments have been terminated, the outstanding Loans and
Participation Interests (including the Participation Interests of the
Issuing Lender in any Letters of Credit).
"Requirement of Law" means, as to any Person, the
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon
such Person or any of its material property is subject.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any
class of stock of the Borrower or any of its Subsidiaries, now or
hereafter outstanding, (ii) any redemption, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of the Borrower or
any of its Subsidiaries, now or hereafter outstanding, (iii) any
payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of
any class of stock of the Borrower or any of its Subsidiaries, now or
hereafter outstanding and (iv) any payment or prepayment of principal
of, premium, if any, or interest on, redemption, purchase,
retirement, defeasance, sinking fund or similar payment with respect
to, any Subordinated Indebtedness.
"Restructure Agreement" means that certain Restructure
Agreement dated as of the date hereof among the Borrower, the
Guarantors, the Lenders and the Agent as amended, modified, restated
or supplemented from time to time
"Restructuring Charges" means for any period non-recurring
restructuring charges taken by the Borrower and its Subsidiaries in
such period including, without limitation, severance payments,
abandoned lease obligations, office relocation expenses, re-branding
expenses, asset write-offs, legal, accounting, audit, tax, financial
advisor and other professional advisor fees but only to the extent
the foregoing relate to the Borrower's restructuring and
rationalization of its operations or to the financial restructuring
transaction.
"S&P" means Standard & Poor's Ratings Services, a division
of The XxXxxx-Xxxx Companies, Inc., or any successor or assignee of
the business of such division in the business of rating securities.
"Second Extension Fee" means a fee equal to the Committed
Amount as of November 1, 2004 multiplied by 0.75%.
"Second Extension Option" means the Borrower's option to
extend the Termination Date, as more fully set at in Section
3.4(e)(ii).
19
"Security Agreement" means a security agreement in form and
substance satisfactory to the Agent to be executed in favor of the
Agent by the Borrower and each Subsidiary, as amended, modified,
restated or supplemented from time to time.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" or "Solvency" means, with respect to any Person as
of a particular date, that on such date (i) such Person is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the
normal course of business, (ii) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in their
ordinary course, (iii) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a
transaction, for which such Person's Property would constitute
unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which such Person is engaged
or is to engage, (iv) the fair value of the Property of such Person
is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person and (v) the
present fair saleable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured. In
computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
"Subordinated Indebtedness" means (i) any Indebtedness
arising under the Subordinated Note Documents and (ii) any additional
Indebtedness (including contingent earn-outs) incurred by the
Borrower or any of its Subsidiaries which by its terms is
specifically subordinated in right of payment to the prior payment of
the obligations of the Credit Parties under this Credit Agreement and
the other Credit Documents on terms and conditions satisfactory to
the Agent.
"Subordinated Note" means any of the 5 3/4% Convertible
Subordinated Notes due 2004 issued by the Borrower in favor of the
Subordinated Noteholders pursuant to the Subordinated Note Indenture,
as such Subordinated Notes may be amended, modified, restated or
supplemented and in effect from time to time.
"Subordinated Note Documents" means a collective reference
to the Subordinated Note Indenture, the Subordinated Notes and all
other related agreements and documents issued or delivered thereunder
or pursuant thereto.
"Subordinated Note Indenture" means that certain Indenture,
dated as of June 23, 1997, by and between the Borrower and First
Union National Bank, as trustee, as the same may be amended,
modified, restated or supplemented and in effect from time to time.
20
"Subordinated Noteholder" means any of the holders from time
to time of the Subordinated Notes.
"Subsidiary" means, as to any Person, (a) any corporation
more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the
time, any class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is
at the time owned by such Person directly or indirectly through
Subsidiaries, and (b) any partnership, association, joint venture or
other entity in which such Person directly or indirectly through
Subsidiaries has more than 50% equity interest at any time.
"Termination Date" means, subject to Section 3.4(e), May 1,
2004.
"Termination Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (ii) the
withdrawal by the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate from a Multiple Employer Plan during a plan year in
which it was a substantial employer (as such term is defined in
Section 4001(a)(2) of ERISA), or the termination of a Multiple
Employer Plan; (iii) the distribution of a notice of intent to
terminate or the actual termination of a Plan pursuant to Section
4041(a)(2) or 4041A of ERISA; (iv) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC under
Section 4042 of ERISA; (v) any event or condition which might
constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan; or (vi)
the complete or partial withdrawal of the Borrower, any Subsidiary of
the Borrower or any ERISA Affiliate from a Multiemployer Plan.
"Unused Committed Amount" means, for any period, the amount
by which (a) the then applicable Committed Amount exceeds (b) the
daily average sum for such period of (i) the outstanding aggregate
principal amount of all Loans plus (ii) the outstanding aggregate
principal amount of all LOC Obligations.
"Unused Fee" shall have the meaning assigned to such term in
Section 3.5(a).
"Unused Fee Calculation Period" shall have the meaning
assigned to such term in Section 3.5(a).
"Voting Stock" means, with respect to any Person, capital
stock issued by such Person the holders of which are ordinarily, in
the absence of contingencies, entitled to vote for the election of
directors (or persons performing similar functions) of such Person,
even though the right so to vote has been suspended by the happening
of such a contingency.
"Warrants" shall have the meaning assigned to such term in
the Restructure Agreement.
21
1.2 Computation of Time Periods.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to
the Lenders hereunder shall be prepared, in accordance with GAAP applied on a
consistent basis. All calculations made for the purposes of determining
compliance with this Credit Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP applied on a basis consistent
with the most recent annual or quarterly financial statements delivered
pursuant to Section 7.1 hereof (or, prior to the delivery of the first
financial statements pursuant to Section 7.1 hereof, consistent with the
financial statements as of December 30, 2001); provided, however, if (a) the
Borrower shall object to determining such compliance on such basis at the time
of delivery of such financial statements due to any change in GAAP or the
rules promulgated with respect thereto or (b) the Agent or the Required
Lenders shall so object in writing within 30 days after delivery of such
financial statements, then such calculations shall be made on a basis
consistent with the most recent financial statements delivered by the Borrower
to the Lenders as to which no such objection shall have been made.
SECTION 2
CREDIT FACILITIES
2.1 Loans.
(a) Commitment. Subject to the terms and conditions hereof and in
reliance upon the representations and warranties set forth herein, each Lender
severally agrees to make available to the Borrower such Lender's Commitment
Percentage of revolving credit loans requested by the Borrower in Dollars
("Loans") from time to time from the Closing Date until the Termination Date,
or such earlier date as the Commitments shall have been terminated as provided
herein for the purposes hereinafter set forth; provided, however, that the sum
of the aggregate principal amount of outstanding Loans shall not exceed the
lesser of (i) SEVENTY MILLION SEVEN HUNDRED THOUSAND DOLLARS ($70,700,000) (as
such aggregate maximum amount may be reduced from time to time as provided in
Section 3.4, the "Committed Amount") and (ii) the Borrowing Base; provided,
further, (A) with regard to each Lender individually, such Lender's
outstanding Loans shall not exceed such Lender's Commitment Percentage of the
lesser of (i) the Committed Amount, and (ii) the Borrowing Base; and (B) with
regard to the Lenders collectively, the aggregate principal amount of
outstanding Loans plus LOC Obligations outstanding shall not exceed the lesser
of (1) the Committed Amount and (2) the Borrowing Base. All loans shall be
Base Rate Loans, and may be repaid and reborrowed in accordance with the
provisions hereof.
22
(b) Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a Loan
borrowing by written notice (or telephone notice promptly confirmed
in writing) to the Agent not later than 11:00 A.M. (Charlotte, North
Carolina time) on the Business Day prior to the date of the requested
borrowing. Each such request for borrowing shall be irrevocable and
shall specify (A) that a Loan is requested, (B) the date of the
requested borrowing (which shall be a Business Day), and (C) the
aggregate principal amount to be borrowed. The Agent shall give
notice to each affected Lender promptly upon receipt of each Notice
of Borrowing pursuant to this Section 2.1(b)(i), the contents thereof
and each such Lender's share of any borrowing to be made pursuant
thereto.
(ii) Minimum Amounts. Each Loan shall be in a minimum
aggregate principal amount of $500,000 and integral multiples of
$100,000 in excess thereof (or the remaining amount of the Committed
Amount, if less).
(iii) Advances. Each Lender will make its Commitment
Percentage of each Loan borrowing available to the Agent for the
account of the Borrower as specified in Section 3.14(a), or in such
other manner as the Agent may specify in writing, by 1:00 P.M.
(Charlotte, North Carolina time) on the date specified in the
applicable Notice of Borrowing in Dollars and in funds immediately
available to the Agent. Such borrowing will then be made available to
the Borrower by the Agent by crediting the account of the Borrower on
the books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as received
by the Agent.
(c) Repayment. The principal amount of all Loans shall be due and
payable in full on the Termination Date.
(d) Interest. Subject to the provisions of Section 3.1, all Loans
shall bear interest at a per annum rate equal to the Base Rate plus the
Applicable Percentage. Interest on Loans shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be specified
herein).
(e) Notes. The Loans made by each Lender shall be evidenced by a duly
executed promissory note of the Borrower to such Lender in an original
principal amount equal to such Lender's Commitment Percentage of the Committed
Amount and in substantially the form of Schedule 2.1(e).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of the
LOC Documents, if any, and any other terms and conditions which the Issuing
Lender may reasonably require, the Lenders will participate in the issuance by
the Issuing Lender from time to time of such Letters of Credit in Dollars from
the Closing Date until the Termination Date as the Borrower may request, in a
form acceptable to the Issuing Lender; provided, however, that (i) the LOC
Obligations outstanding shall not at any time exceed TWELVE MILLION EIGHT
HUNDRED
23
THOUSAND DOLLARS ($12,800,000) (the "LOC Committed Amount") and (ii)
the sum of the aggregate principal amount of outstanding Loans plus LOC
Obligations outstanding shall not at any time exceed the lesser of (A) the
Committed Amount and (B) the Borrowing Base. No Letter of Credit shall (x)
have an original expiry date more than one year from the date of issuance or
(y) as originally issued or as extended, have an expiry date extending beyond
the Termination Date (as then in effect), unless (1) such Letter of Credit
will expire within one (1) year of the Termination Date, (2) such Letter of
Credit shall be fully cash collateralized on and after the Termination Date in
accordance with Section 3.3(b)(i)(B), and (3) the Issuing Lender shall have
consented to such expiry date. Each Letter of Credit shall comply with the
related LOC Documents. The issuance and expiry date of each Letter of Credit
shall be a Business Day.
(b) Notice and Reports. The request for the issuance of a Letter of
Credit shall be submitted by the Borrower to the Issuing Lender at least three
(3) Business Days prior to the requested date of issuance. The Issuing Lender
will, at least quarterly and more frequently upon request, disseminate to each
of the Lenders a detailed report specifying the Letters of Credit which are
then issued and outstanding and any activity with respect thereto which may
have occurred since the date of the prior report, and including therein, among
other things, the beneficiary, the face amount, expiry date as well as any
payment or expirations which may have occurred.
(c) Participation. Each Lender, upon issuance of a Letter of Credit,
shall be deemed to have purchased without recourse a risk participation from
the applicable Issuing Lender in such Letter of Credit and the obligations
arising thereunder, in each case in an amount equal to its pro rata share of
the obligations under such Letter of Credit (based on the respective
Commitment Percentages of the Lenders) and shall absolutely, unconditionally
and irrevocably assume, as primary obligor and not as surety, and be obligated
to pay to the Issuing Lender therefor and discharge when due, its pro rata
share of the obligations arising under such Letter of Credit. Without limiting
the scope and nature of each Lender's participation in any Letter of Credit,
to the extent that the Issuing Lender has not been reimbursed as required
hereunder or under any such Letter of Credit, each such Lender shall pay to
the Issuing Lender its pro rata share of such unreimbursed drawing in same day
funds on the day of notification by the Issuing Lender of an unreimbursed
drawing pursuant to the provisions of subsection (d) hereof. The obligation of
each Lender to so reimburse the Issuing Lender shall be absolute and
unconditional and shall not be affected by the occurrence of a Default, an
Event of Default or any other occurrence or event. Any such reimbursement
shall not relieve or otherwise impair the obligation of the Borrower to
reimburse the Issuing Lender under any Letter of Credit, together with
interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any Letter of
Credit, the Issuing Lender will promptly notify the Borrower. Unless the
Borrower shall immediately notify the Issuing Lender that the Borrower intends
to otherwise reimburse the Issuing Lender for such drawing, the Borrower shall
be deemed to have requested that the Lenders make a Loan in the amount of the
drawing as provided in subsection (e) hereof on the related Letter of Credit,
the proceeds of which will be used to satisfy the related reimbursement
obligations. The Borrower promises to reimburse the Issuing Lender on the day
of drawing under any Letter of Credit (either with the proceeds of a Loan
obtained hereunder or otherwise) in same day funds. If the Borrower shall fail
to reimburse the Issuing Lender as provided hereinabove, the unreimbursed
amount of
24
such drawing shall bear interest at a per annum rate equal to the Base
Rate plus the Applicable Percentage plus two percent (2%). The Borrower's
reimbursement obligations hereunder shall be absolute and unconditional under
all circumstances irrespective of any rights of setoff, counterclaim or
defense to payment the Borrower may claim or have against the Issuing Lender,
the Agent, the Lenders, the beneficiary of the Letter of Credit drawn upon or
any other Person, including without limitation any defense based on any
failure of the Borrower or any other Credit Party to receive consideration or
the legality, validity, regularity or unenforceability of the Letter of
Credit. The Issuing Lender will promptly notify the other Lenders of the
amount of any unreimbursed drawing and each Lender shall promptly pay to the
Agent for the account of the Issuing Lender in Dollars and in immediately
available funds, the amount of such Lender's pro rata share of such
unreimbursed drawing. Such payment shall be made on the day such notice is
received by such Lender from the Issuing Lender if such notice is received at
or before 2:00 P.M. (Charlotte, North Carolina time) otherwise such payment
shall be made at or before 12:00 Noon (Charlotte, North Carolina time) on the
Business Day next succeeding the day such notice is received. If such Lender
does not pay such amount to the Issuing Lender in full upon such request, such
Lender shall, on demand, pay to the Agent for the account of the Issuing
Lender interest on the unpaid amount during the period from the date of such
drawing until such Lender pays such amount to the Issuing Lender in full at a
rate per annum equal to, if paid within two (2) Business Days of the date that
such Lender is required to make payments of such amount pursuant to the
preceding sentence, the Federal Funds Rate and thereafter at a rate equal to
the Base Rate. Each Lender's obligation to make such payment to the Issuing
Lender, and the right of the Issuing Lender to receive the same, shall be
absolute and unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this Credit Agreement or
the Commitments hereunder, the existence of a Default or Event of Default or
the acceleration of the obligations of the Borrower hereunder and shall be
made without any offset, abatement, withholding or reduction whatsoever.
Simultaneously with the making of each such payment by a Lender to the Issuing
Lender, such Lender shall, automatically and without any further action on the
part of the Issuing Lender or such Lender, acquire a participation in an
amount equal to such payment (excluding the portion of such payment
constituting interest owing to the Issuing Lender) in the related unreimbursed
drawing portion of the LOC Obligation and in the interest thereon and in the
related LOC Documents, and shall have a claim against the Borrower with
respect thereto.
(e) Repayment with Loans. On any day on which the Borrower shall have
requested, or been deemed to have requested, a Loan advance to reimburse a
drawing under a Letter of Credit, the Agent shall give notice to the Lenders
that a Loan has been requested or deemed requested by the Borrower to be made
in connection with a drawing under a Letter of Credit, in which case a Loan
advance comprised of Base Rate Loans shall be immediately made to the Borrower
by all Lenders (notwithstanding any termination of the Commitments pursuant to
Section 9.2) pro rata based on the respective Commitment Percentages of the
Lenders (determined before giving effect to any termination of the Commitments
pursuant to Section 9.2) and the proceeds thereof shall be paid directly to
the Issuing Lender for application to the respective LOC Obligations. Each
such Lender hereby irrevocably agrees to make its pro rata share of each such
Loan immediately upon any such request or deemed request in the amount, in the
manner and on the date specified in the preceding sentence notwithstanding (i)
the amount of such borrowing may not comply with the minimum amount for
advances of Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 5.2 are then satisfied, (iii) whether a Default or an
Event of Default then exists, (iv)
25
failure for any such request or deemed request for Loan to be made by the time
otherwise required hereunder, (v) whether the date of such borrowing is a date
on which Loans are otherwise permitted to be made hereunder or (vi) any
termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Loan cannot for
any reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any Credit Party), then each
such Lender hereby agrees that it shall forthwith purchase (as of the date
such borrowing would otherwise have occurred, but adjusted for any payments
received from the Borrower on or after such date and prior to such purchase)
from the Issuing Lender such participation in the outstanding LOC Obligations
as shall be necessary to cause each such Lender to share in such LOC
Obligations ratably (based upon the respective Commitment Percentages of the
Lenders (determined before giving effect to any termination of the Commitments
pursuant to Section 9.2)), provided that at the time any purchase of
participation pursuant to this sentence is actually made, the purchasing
Lender shall be required to pay to the Issuing Lender, to the extent not paid
to the Issuer by the Borrower in accordance with the terms of subsection (d)
hereof, interest on the principal amount of participation purchased for each
day from and including the day upon which such borrowing would otherwise have
occurred to but excluding the date of payment for such participation, at the
rate equal to, if paid within two (2) Business Days of the date of the Loan
advance, the Federal Funds Rate, and thereafter at a rate equal to the Base
Rate.
(f) Designation of Subsidiaries as Account Parties. Notwithstanding
anything to the contrary set forth in this Credit Agreement, including without
limitation Section 2.2(a) hereof, a Letter of Credit issued hereunder may
contain a statement to the effect that such Letter of Credit is issued for the
account of a Subsidiary of the Borrower, provided that notwithstanding such
statement, the Borrower shall be the actual account party for all purposes of
this Credit Agreement for such Letter of Credit and such statement shall not
affect the Borrower's reimbursement obligations hereunder with respect to such
Letter of Credit.
(g) Renewal, Extension. The renewal or extension of any Letter of
Credit shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.
(h) Uniform Customs and Practices. The Issuing Lender may have the
Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits, as published as of the date of issue by the International
Chamber of Commerce (the "UCP"), in which case the UCP may be incorporated
therein and deemed in all respects to be a part thereof.
(i) Indemnification; Nature of Issuing Lender's Duties. (i) In
addition to its other obligations under this Section 2.2, the
Borrower hereby agrees to protect, indemnify, pay and save the
Issuing Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (A) the issuance
of any Letter of Credit or (B) the failure of the Issuing Lender to
honor a drawing under a Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de
jure or de facto government or governmental authority (all such acts
or omissions, herein called "Government Acts").
26
(ii) As between the Borrower and the Issuing Lender, the
Borrower shall assume all risks of the acts, omissions or misuse of
any Letter of Credit by the beneficiary thereof. The Issuing Lender
shall not be responsible: (A) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any
Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (B)
for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in
part, that may prove to be invalid or ineffective for any reason; (C)
for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (D) for any loss or
delay in the transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of the proceeds
thereof; and (E) for any consequences arising from causes beyond the
control of the Issuing Lender, including, without limitation, any
Government Acts. None of the above shall affect, impair, or prevent
the vesting of the Issuing Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Lender, under or in connection with any Letter
of Credit or the related certificates, if taken or omitted without
gross negligence or bad faith, shall not put such Issuing Lender
under any resulting liability to the Borrower or any other Credit
Party. It is the intention of the parties that this Credit Agreement
shall be construed and applied to protect and indemnify the Issuing
Lender against any and all risks involved in the issuance of the
Letters of Credit, all of which risks are hereby assumed by the
Borrower (on behalf of itself and each of the other Credit Parties),
including, without limitation, any and all Government Acts. The
Issuing Lender shall not, in any way, be liable for any failure by
the Issuing Lender or anyone else to pay any drawing under any Letter
of Credit as a result of any Government Acts or any other cause
beyond the control of the Issuing Lender.
(iv) Nothing in this subsection (h) is intended to limit the
reimbursement obligations of the Borrower contained in subsection (d)
above. The obligations of the Borrower under this subsection (h)
shall survive the termination of this Credit Agreement. No act or
omissions of any current or prior beneficiary of a Letter of Credit
shall in any way affect or impair the rights of the Issuing Lender to
enforce any right, power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained in
this subsection (h), the Borrower shall have no obligation to
indemnify the Issuing Lender in respect of any liability incurred by
the Issuing Lender (A) arising out of the gross negligence or willful
misconduct of the Issuing Lender, as determined by a court of
competent jurisdiction, or (B) caused by the Issuing Lender's failure
to pay under any Letter of Credit after presentation to it of a
request strictly complying with the terms and conditions of such
Letter of Credit, as determined by a court of competent jurisdiction,
unless such payment is prohibited by any law, regulation, court order
or decree.
27
(j) Responsibility of Issuing Lender. It is expressly understood and
agreed that the obligations of the Issuing Lender hereunder to the Lenders are
only those expressly set forth in this Credit Agreement and that the Issuing
Lender shall be entitled to assume that the conditions precedent set forth in
Section 5.2 have been satisfied unless it shall have acquired actual knowledge
that any such condition precedent has not been satisfied; provided, however,
that nothing set forth in this Section 2.2 shall be deemed to prejudice the
right of any Lender to recover from the Issuing Lender any amounts made
available by such Lender to the Issuing Lender pursuant to this Section 2.2 in
the event that it is determined by a court of competent jurisdiction that the
payment with respect to a Letter of Credit constituted gross negligence or
willful misconduct on the part of the Issuing Lender.
(k) Conflict with LOC Documents. In the event of any conflict between
this Credit Agreement and any LOC Document (including any letter of credit
application), this Credit Agreement shall control.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate.
If any amount payable by the Borrower under any Credit Document is
not paid when due (without regard to any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, such amount shall thereafter
bear interest at a fluctuating interest rate per annum at all times equal to
the Default Rate to the fullest extent permitted by applicable Laws.
Furthermore, while any Event of Default exists, the Borrower shall pay
interest on the principal amount of all outstanding Borrower's Obligations
hereunder at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable laws. Accrued and
unpaid interest on past due amounts (including interest on past due interest)
shall be due and payable upon demand.
3.2 [Reserved].
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part from time to time without premium or penalty;
provided, however, that each such partial prepayment of Loans shall be in a
minimum principal amount of $500,000 or such lesser amount as may be approved
by the Agent. Subject to the foregoing terms, amounts prepaid under this
Section 3.3(a) shall be applied as the Borrower may elect or, if the Borrower
has not so specified, first to Base Rate Loans and then (after all Loans have
been repaid) to cash collateralize the LOC Obligations (in a manner
satisfactory to the Agent).
28
(b) Mandatory Prepayments and Cash Collateralization.
(i) (A) Committed Amount. If at any time, the sum of the
aggregate principal amount of outstanding Loans plus LOC
Obligations outstanding shall exceed the lesser of (I) the
Committed Amount and (II) the Borrowing Base, the Borrower
promises to prepay immediately the outstanding principal balance
on the Loans and (after all Loans have been repaid) cash
collateralize the LOC Obligations (in a manner satisfactory to
the Agent) in an amount sufficient to eliminate such excess (to
be applied as set forth in Section 3.3(c) below). Without
limiting the foregoing, each Credit Party acknowledges and agrees
that the Committed Amount will be automatically reduced on the
dates and in the amounts set forth in Section 3.4(b), and that a
mandatory prepayment will be required on each such date to the
extent necessary to cause the sum of the aggregate principal
amount of outstanding Loans plus LOC Obligations outstanding not
to exceed the lesser of (I) the reduced Committed Amount as of
such date and (II) the Borrowing Base.
(B) LOC Committed Amount/LOC Expiry. If at any time, the
aggregate principal amount of LOC Obligations shall exceed the
LOC Committed Amount, the Borrower immediately shall cash
collateralize the LOC Obligations (in a manner satisfactory to
the Agent) in an amount sufficient to eliminate such excess. If
any Letter of Credit remains outstanding and unexpired or
uncancelled on the Termination Date, then the Borrower shall
immediately cash collateralize such Letter of Credit (in a manner
satisfactory to the Agent) in an amount equal to the maximum
amount which is, or at any time thereafter may become, available
to be drawn under such Letter of Credit.
(ii) Asset Sales. Immediately upon the occurrence of any
Asset Sale, the Borrower shall prepay the Loans and (after all Loans
have been repaid) cash collateralize the LOC Obligations (in a manner
satisfactory to the Agent) in an amount equal to 100% of the Net
Proceeds of the related Asset Sale (to be applied as set forth in
Section 3.3(c) below).
(iii) Equity Transactions. Immediately upon the occurrence
of any Equity Transaction, the Borrower shall prepay the Loans and
(after all Loans have been repaid) cash collateralize the LOC
Obligations (in a manner satisfactory to the Agent) in an amount
equal to 100% of the Net Proceeds of the related Equity Transaction
(to be applied as set forth in Section 3.3(c) below).
(iv) Debt Issuances. Immediately upon the consummation of
any Debt Issuance, the Borrower shall prepay the Loans and (after all
Loans have been repaid) cash collateralize the LOC Obligations (in a
manner satisfactory to the Agent) in an amount equal to 100% of the
Net Proceeds of the related Debt Issuance (to be applied as set forth
in Section 3.3(c) below).
(v) Tax Refunds. Immediately upon the receipt by the
Borrower or any of its Subsidiaries of any income tax or other
similar refund in an amount in excess of $250,000 in the aggregate in
any fiscal year, the Borrower shall prepay the Loans and
29
(after all Loans have been repaid) cash collateralize the LOC
Obligations (in a manner satisfactory to the Agent) in an amount equal
to 100% of such refund (to be applied as set forth in Section 3.3(c)
below).
(c) Application of Mandatory Prepayments. All amounts required to be
paid pursuant to Section 3.3(b) shall be applied as follows:
(i) with respect to all amounts prepaid pursuant to Section
3.3(b)(i)(A), to Loans and (after all Loans have been repaid) to a
cash collateral account in respect of LOC Obligations;
(ii) with respect to all amounts prepaid pursuant to Section
3.3(b)(i)(B), to a cash collateral account in respect of LOC
Obligations;
(iii) with respect to all amounts prepaid pursuant to
Sections 3.3(b)(ii) and 3.3(b)(iv) to Loans and (after all Loans have
been repaid) to a cash collateral account in respect of LOC
Obligations (with a corresponding reduction in the Committed Amount
in an amount equal to 100% of the Net Proceeds of the related Asset
Sale or Debt Issuance, rounded down to the nearest $500,000;
(iv) with respect to all amounts prepaid pursuant to Section
3.3(b)(iii) to Loans and (after all Loans have been repaid) to a cash
collateral account in respect of LOC Obligations (with a
corresponding reduction in the Committed Amount in an amount equal to
100% of the Net Proceeds of the related Equity Transaction, rounded
up or down to the nearest $500,000); and
(v) with respect to all amounts paid pursuant to Section
3.3(b)(v), to Loans and (after all Loans have been repaid) to a cash
collateral account in respect of LOC Obligations (with a
corresponding reduction in the Committed Amount in an amount equal to
100% of the amount of such refund, rounded up or down to the nearest
$50,000).
3.4 Termination and Reduction of Committed Amount; Extension Options.
(a) Voluntary Reductions. The Borrower may from time to time
permanently reduce or terminate the Committed Amount in whole or in part (in
minimum aggregate amounts of $1,000,000 or in integral multiples of $1,000,000
in excess thereof (or, if less, the full remaining amount of the then
applicable Committed Amount)) upon five Business Days' prior written notice to
the Agent; provided, however, no such termination or reduction shall be made
which would cause the aggregate principal amount of outstanding Loans plus LOC
Obligations outstanding to exceed the lesser of (i) the Committed Amount and
(ii) the Borrowing Base unless, concurrently with such termination or
reduction, the Loans are repaid to the extent necessary to eliminate such
excess. The Commitments of the Lenders and the Issuing Lender shall
automatically terminate on the Termination Date. The Agent shall promptly
notify each affected Lender of receipt by the Agent of any notice from the
Borrower pursuant to this Section 3.4(a).
(b) [Reserved]
30
(c) Termination Date. The Commitments of the Lenders and the LOC
Commitment of the Issuing Lender shall automatically terminate on the
Termination Date.
(d) General. The Borrower shall pay to the Agent for the account of
the Lenders in accordance with the terms of Section 3.5(a), on the date of
each termination or reduction of the Committed Amount, the Unused Fee accrued
through the date of such termination or reduction on the amount of the
Committed Amount so terminated or reduced.
(e) Extension Options.
(i) If (i) the Borrower has given the Agent and the Lenders
at least 30 days prior written notice of its desire to extend the
Termination Date, (ii) as of May 1, 2004, each of the conditions
precedent set forth in clauses (ii), (iii) and (iv) of Section 5.2 is
then satisfied (or waived by all of the Lenders, as applicable), as
certified by a responsible officer of the Borrower in an officer's
certificate, the form of which shall be satisfactory to the Agent,
and (iii) on or before May 1, 2004 the Borrower has paid the First
Extension Fee to the Agent for the benefit of the Lenders, then the
Borrower may exercise the First Extension Option to extend the
Termination Date to November 1, 2004.
(ii) If (i) the Borrower has given the Agent and the Lenders
at least 30 days prior written notice of its desire to extend the
Termination Date, (ii) as of November 1, 2004, each of the conditions
precedent set forth in clauses (ii), (iii) and (iv) of Section 5.2 is
then satisfied (or waived by all of the Lenders, as applicable), as
certified by a responsible officer of the Borrower in an officer's
certificate, the form of which shall be satisfactory to the Agent,
and (iii) on or before November 1, 2004 the Borrower has paid the
Second Extension Fee to the Agent for the benefit of the Lenders,
then the Borrower may exercise the Second Extension Option to extend
the Termination Date to May 1, 2005.
3.5 Fees.
(a) Unused Fee. In consideration of the Commitments of the Lenders
hereunder, the Borrower agrees to pay to the Agent for the account of each
Lender a fee (the "Unused Fee") on the Unused Committed Amount computed at a
per annum rate for each day during the applicable Unused Fee Calculation
Period (hereinafter defined) at a rate equal to the Applicable Percentage in
effect from time to time. The Unused Fee commenced to accrue on the date
hereof and is due and payable in arrears on the last business day of each
calendar month (and any date that the Committed Amount is reduced as provided
in Section 3.4(a) and the Termination Date) for the immediately preceding
month (or portion thereof) (each such month or portion thereof for which the
Unused Fee is payable hereunder being herein referred to as an "Unused Fee
Calculation Period").
(b) Letter of Credit Fees.
(i) Letter of Credit Issuance Fee. In consideration of the
issuance of Letters of Credit hereunder, the Borrower promises to pay
to the Agent for the account of each Lender a fee (the "Letter of
Credit Fee") on such Lender's Commitment Percentage of the average
31
daily maximum amount available to be drawn under each such Letter of
Credit computed at a per annum rate for each day from the date of
issuance to the date of expiration equal to the Applicable
Percentage. The Letter of Credit Fee will be payable monthly in
arrears on the last Business Day of each calendar month for the
immediately preceding month (or a portion thereof).
(ii) Issuing Lender Fees. In addition to the Letter of
Credit Fee payable pursuant to clause (i) above, the Borrower
promises to pay to the Issuing Lender for its own account without
sharing by the other Lenders (A) a letter of credit fronting and
negotiation fee equal to 0.125% of the average daily maximum amount
available to be drawn under each Letter of Credit computed at a per
annum rate for each day from the date of issuance to the date of
expiration and (B) the customary charges from time to time of the
Issuing Lender with respect to the issuance, amendment, transfer,
administration, cancellation and conversion of, and drawings under,
such Letters of Credit (collectively, the "Issuing Lender Fees").
(c) Administrative Fees. The Borrower agrees to pay to the Agent, for
its own account, the fees referred to in the Agent's Fee Letter (collectively,
the "Agent's Fees").
3.6 Capital Adequacy.
If any Lender has determined, after the date hereof, that the
adoption or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or
administration of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's capital or assets as a
consequence of its commitments or obligations hereunder to a level below that
which such Lender could have achieved but for such adoption, effectiveness,
change or compliance (taking into consideration such Lender's policies with
respect to capital adequacy), then, upon notice from such Lender to the
Borrower, the Borrower shall be obligated to pay to such Lender such
additional amount or amounts as will compensate such Lender for such
reduction. Each determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding on the parties
hereto.
3.7 [Reserved].
3.8 [Reserved].
3.9 Requirements of Law.
If, after the date hereof, the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable
to any Lender, or compliance by any Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority, in each case made subsequent to the Closing Date (or,
if later, the date on which such Lender becomes a Lender):
32
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit or change the basis
of taxation of payments to such Lender in respect thereof (except for
(i) Non-Excluded Taxes covered by Section 3.10 (including
Non-Excluded Taxes imposed solely by reason of any failure of such
Lender to comply with its obligations under Section 3.10(b)) and (ii)
changes in taxes measured by or imposed upon the overall net income,
or franchise tax (imposed in lieu of such net income tax), of such
Lender or its applicable lending office, branch, or any affiliate
thereof));
(b) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account
of, advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender; or
(c) shall impose on such Lender any other condition
(excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Agent, in accordance herewith, the Borrower shall be obligated to
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable.
If any Lender becomes entitled to claim any additional amounts pursuant to
this subsection, it shall provide prompt notice thereof to the Borrower,
through the Agent, certifying (x) that one of the events described in this
paragraph (a) has occurred and describing in reasonable detail the nature of
such event, (y) as to the increased cost or reduced amount resulting from such
event and (z) as to the additional amount demanded by such Lender and a
reasonably detailed explanation of the calculation thereof. Such a certificate
as to any additional amounts payable pursuant to this subsection submitted by
such Lender, through the Agent, to the Borrower shall be conclusive and
binding on the parties hereto in the absence of manifest error. This covenant
shall survive the termination of this Credit Agreement and the payment of the
Loans and all other amounts payable hereunder.
3.10 Taxes.
(a) Except as provided below in this subsection, all payments made by
the Borrower under this Credit Agreement and any Notes shall be made free and
clear of, and without deduction or withholding for or on account of, any
present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any court, or governmental body, agency or
other official, excluding taxes measured by or imposed upon the overall net
income of any Lender or its applicable lending office, or any branch or
affiliate thereof, and all franchise taxes, branch taxes, taxes on doing
business or taxes on the overall capital or net worth of any Lender or its
applicable lending office, or any branch or affiliate thereof, in each case
imposed in lieu of net income taxes, imposed: (i) by the jurisdiction under
the laws of which such Lender, applicable lending office, branch or affiliate
is organized or is located, or in which its principal executive office is
located, or any nation
33
within which such jurisdiction is located or any political subdivision
thereof; or (ii) by reason of any connection between the jurisdiction imposing
such tax and such Lender, applicable lending office, branch or affiliate other
than a connection arising solely from such Lender having executed, delivered
or performed its obligations, or received payment under or enforced, this
Credit Agreement or any Notes. If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") are required to be withheld from any amounts payable to the Agent or
any Lender hereunder or under any Notes, (A) the amounts so payable to the
Agent or such Lender shall be increased to the extent necessary to yield to
the Agent or such Lender (after payment of all Non-Excluded Taxes) interest or
any such other amounts payable hereunder at the rates or in the amounts
specified in this Credit Agreement and any Notes, provided, however, that the
Borrower shall be entitled to deduct and withhold any Non-Excluded Taxes and
shall not be required to increase any such amounts payable to any Lender that
is not organized under the laws of the United States of America or a state
thereof if such Lender fails to comply with the requirements of paragraph (b)
of this subsection whenever any Non-Excluded Taxes are payable by the
Borrower, and (B) as promptly as possible thereafter the Borrower shall send
to the Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Agent and the Lenders for any
incremental taxes, interest or penalties that may become payable by the Agent
or any Lender as a result of any such failure. The agreements in this
subsection shall survive the termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(X) (i) on or before the date of any payment by the Borrower
under this Credit Agreement or Notes to such Lender, deliver to the
Borrower and the Agent (A) two (2) duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, certifying that it is entitled
to receive payments under this Credit Agreement and any Notes without
deduction or withholding of any United States federal income taxes
and (B) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be, certifying that it is entitled
to an exemption from United States backup withholding tax;
(ii) deliver to the Borrower and the Agent two (2)
further copies of any such form or certification on or
before the date that any such form or certification expires
or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously
delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be
requested by the Borrower or the Agent; or
(Y) in the case of any such Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Internal Revenue
Code, (i) represent to the Borrower (for the
34
benefit of the Borrower and the Agent) that it is not a bank within
the meaning of Section 881(c)(3)(A) of the Internal Revenue Code,
(ii) agree to furnish to the Borrower on or before the date of any
payment by the Borrower, with a copy to the Agent two (2) accurate
and complete original signed copies of Internal Revenue Service Form
W-8, or successor applicable form certifying to such Lender's legal
entitlement at the date of such certificate to an exemption from U.S.
withholding tax under the provisions of Section 881(c) of the
Internal Revenue Code with respect to payments to be made under this
Credit Agreement and any Notes (and to deliver to the Borrower and
the Agent two (2) further copies of such form on or before the date
it expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recently provided form and, if
necessary, obtain any extensions of time reasonably requested by the
Borrower or the Agent for filing and completing such forms), and
(iii) agree, to the extent legally entitled to do so, upon reasonable
request by the Borrower, to provide to the Borrower (for the benefit
of the Borrower and the Agent) such other forms as may be reasonably
required in order to establish the legal entitlement of such Lender
to an exemption from withholding with respect to payments under this
Credit Agreement and any Notes;
unless in any such case any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect
to it and such Lender so advises the Borrower and the Agent. Each
Person that shall become a Lender or a participant of a Lender
pursuant to subsection 11.3 shall, upon the effectiveness of the
related transfer, be required to provide all of the forms,
certifications and statements required pursuant to this subsection,
provided that in the case of a participant of a Lender the
obligations of such participant of a Lender pursuant to this
subsection (b) shall be determined as if the participant of a Lender
were a Lender except that such participant of a Lender shall furnish
all such required forms, certifications and statements to the Lender
from which the related participation shall have been purchased.
3.11 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Loan, each payment or prepayment of
principal of any Loan or reimbursement obligations arising from
drawings under Letters of Credit, each payment of interest on the
Loans or reimbursement obligations arising from drawings under
Letters of Credit, each payment of Unused Fees, each payment of the
Standby Letter of Credit Fee, each payment of the Trade Letter of
Credit Fee, each reduction of the Committed Amount and each
conversion or extension of any Loan, shall be allocated pro rata
among the Lenders in accordance with the respective principal amounts
of their outstanding Loans and Participation Interests.
(b) Advances. Unless the Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not
make the amount that would constitute its ratable share of such
borrowing available to the Agent, the Agent may assume
35
that such Lender is making such amount available to the Agent, and
the Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made
available to the Agent by such Lender within the time period
specified therefor hereunder, such Lender shall pay to the Agent, on
demand, such amount with interest thereon at a rate equal to the
Federal Funds Rate for the period until such Lender makes such amount
immediately available to the Agent. A certificate of the Agent
submitted to any Lender with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error.
3.12 Sharing of Payments.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan, LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the
exercise of a right of setoff, banker's lien or counterclaim, or pursuant to a
secured claim under Section 506 of Title 11 of the United States Code or other
security or interest arising from, or in lieu of, such secured claim, received
by such Lender under any applicable bankruptcy, insolvency or other similar
law or otherwise, or by any other means, in excess of its pro rata share of
such payment as provided for in this Credit Agreement, such Lender shall
promptly purchase from the other Lenders a participation in such Loans, LOC
Obligations and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all
Lenders share such payment in accordance with their respective ratable shares
as provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of a
participation theretofore sold, return its share of that benefit (together
with its share of any accrued interest payable with respect thereto) to each
Lender whose payment shall have been rescinded or otherwise restored. The
Borrower agrees that any Lender so purchasing such a participation may, to the
fullest extent permitted by law, exercise all rights of payment, including
setoff, banker's lien or counterclaim, with respect to such participation as
fully as if such Lender were a holder of such Loan, LOC Obligations or other
obligation in the amount of such participation. Except as otherwise expressly
provided in this Credit Agreement, if any Lender or the Agent shall fail to
remit to the Agent or any other Lender an amount payable by such Lender or the
Agent to the Agent or such other Lender pursuant to this Credit Agreement on
the date when such amount is due, such payments shall be made together with
interest thereon for each date from the date such amount is due until the date
such amount is paid to the Agent or such other Lender at a rate per annum
equal to the Federal Funds Rate. If under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu
of a setoff to which this Section 3.12 applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders under this Section 3.12 to
share in the benefits of any recovery on such secured claim.
3.13 Payments, Computations, Etc.
(a) Except as otherwise specifically provided herein, all payments
hereunder shall be made to the Agent in dollars in immediately available
funds, without offset, deduction, counterclaim
36
or withholding of any kind, at the Agent's office specified in Schedule 2.1(a)
not later than 2:00 P.M. (Charlotte, North Carolina time) on the date when
due. Payments received after such time shall be deemed to have been received
on the next succeeding Business Day. The Agent may (but shall not be obligated
to) debit the amount of any such payment which is not made by such time to any
ordinary deposit account of the Borrower maintained with the Agent (with
notice to the Borrower). The Borrower shall, at the time it makes any payment
under this Credit Agreement, specify to the Agent the Loans, LOC Obligations,
Fees, interest or other amounts payable by the Borrower hereunder to which
such payment is to be applied (and in the event that it fails so to specify,
or if such application would be inconsistent with the terms hereof, the Agent
shall distribute such payment to the Lenders in such manner as the Agent may
determine to be appropriate in respect of obligations owing by the Borrower
hereunder, subject to the terms of Section 3.11(a)). The Agent will distribute
such payments to such Lenders, if any such payment is received prior to 12:00
Noon (Charlotte, North Carolina time) on a Business Day in like funds as
received prior to the end of such Business Day and otherwise the Agent will
distribute such payment to such Lenders on the next succeeding Business Day.
Whenever any payment hereunder shall be stated to be due on a day which is not
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day (subject to accrual of interest and Fees for the period of such
extension). Except as expressly provided otherwise herein, all computations of
interest and fees shall be made on the basis of actual number of days elapsed
over a year of 360 days, except with respect to computation of interest on
Base Rate Loans which (unless the Base Rate is determined by reference to the
Federal Funds Rate) shall be calculated based on a year of 365 or 366 days, as
appropriate. Interest shall accrue from and include the date of borrowing, but
exclude the date of payment.
(b) Allocation of Payments After Event of Default. Notwithstanding
any other provisions of this Credit Agreement to the contrary, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Agent or any Lender on account of the Borrower's
Obligations or any other amounts outstanding under any of the Credit Documents
or in respect of the Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys'
fees) of the Agent in connection with enforcing the rights of the
Lenders under the Credit Documents and any protective advances made
by the Agent with respect to the Collateral under or pursuant to the
terms of the Collateral Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation, reasonable attorneys'
fees) of each of the Lenders in connection with enforcing its rights
under the Credit Documents or otherwise with respect to the
Borrower's Obligations owing to such Lender;
FOURTH, to the payment of all of the Borrower's Obligations
consisting of accrued fees and interest;
37
FIFTH, to the payment of the outstanding principal amount of
the Borrower's Obligations;
SIXTH, to the Agent for the account of the Issuing Lender,
to Cash Collateralize that portion of LOC Obligations comprised of
the aggregate undrawn amount of Letters of Credit;
SEVENTH, to all other Borrower's Obligations and other
obligations which shall have become due and payable under the Credit
Documents or otherwise and not repaid pursuant to clauses "FIRST"
through "SIXTH" above; and
EIGHTH, to the payment of the surplus, if any, to whoever
may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders shall receive an amount
equal to its pro rata share (based on the proportion that the then outstanding
Loans held by such Lender bears to the aggregate then outstanding Loans) of
amounts available to be applied pursuant to clauses "THIRD", "FOURTH",
"FIFTH", "SIXTH" and "SEVENTH" above.
3.14 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts evidencing each
Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Credit Agreement. Each Lender will make reasonable efforts to
maintain the accuracy of its account or accounts and to promptly update its
account or accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section 11.3(c)
hereof, and a subaccount for each Lender, in which Register and subaccounts
(taken together) shall be recorded (i) the amount, type and Interest Period of
each such Loan hereunder, (ii) the amount of any principal or interest due and
payable or to become due and payable to each Lender hereunder and (iii) the
amount of any sum received by the Agent hereunder from or for the account of
the Borrower and each Lender's share thereof. The Agent will make reasonable
efforts to maintain the accuracy of the subaccounts referred to in the
preceding sentence and to promptly update such subaccounts from time to time,
as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.15 (and, if consistent
with the entries of the Agent, subsection (a)) shall be prima facie evidence
of the existence and amounts of the obligations of the Borrower therein
recorded; provided, however, that the failure of any Lender or the Agent to
maintain any such account, such Register or such subaccount, as applicable, or
any error therein, shall not in any manner affect the obligation of the
Borrower to repay the Loans made by such Lender in accordance with the terms
hereof.
38
3.15 Mandatory Assignment.
In the event any Lender delivers to the Borrower any notice in
accordance with Section 3.9, then, provided that no Default or Event of
Default has occurred and is continuing at such time, the Borrower may, at its
own expense (such expense to include any transfer fee payable to the Agent
under Section 11.3(b)), and in its sole discretion require such Lender to
transfer and assign in whole or in part, without recourse (in accordance with
and subject to the terms and conditions of Section 11.3(b)), all or part of
its interests, rights and obligations under this Credit Agreement to any
assignee which shall assume such assigned obligations, provided that (i) such
assignee shall be (a) any Lender or any Affiliate or Subsidiary of a Lender,
or (b) any other commercial bank, financial institution or "accredited
investor" (as defined in Regulation D of the Securities and Exchange
Commission) reasonably acceptable to the Agent and the Required Lenders, (ii)
such assignment shall not conflict with any law, rule or regulation or order
of any court or other Governmental Authority and (iii) the Borrower or such
assignee shall have paid to the assigning Lender in immediately available
funds the principal of and interest accrued to the date of such payment on the
Loans made by it hereunder and all other amounts owed to it hereunder
(including, without limitation, any amounts owing pursuant to Section 3.9).
SECTION 4
GUARANTY
4.1 The Guarantee.
Each of the Guarantors hereby jointly and severally guarantees to
each Lender, each Affiliate of a Lender that enters into a Hedging Agreement
and the Agent as hereinafter provided the prompt payment of the Borrower's
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Guarantors hereby further
agree that if any of the Borrower's Obligations are not paid in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as
mandatory cash collateralization or otherwise), the Guarantors will, jointly
and severally, promptly pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of any of
the Borrower's Obligations, the same will be promptly paid in full when due
(whether at extended maturity, as a mandatory prepayment, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents or Hedging Agreements, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers) then the
obligations of each Guarantor hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
39
4.2 Obligations Unconditional.
The obligations of the Guarantors under Section 4.1 hereof are joint
and several, absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of any of the Credit
Documents or Hedging Agreements, or any other agreement or instrument referred
to therein, or any substitution, release or exchange of any other guarantee of
or security for any of the Borrower's Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of
a surety or guarantor, it being the intent of this Section 4.2 that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances. Each Guarantor agrees that such Guarantor
shall have no right of subrogation, indemnity, reimbursement or contribution
against the Borrower or any other Guarantor of the Borrower's Obligations for
amounts paid under this Guaranty until such time as the Lenders (and any
Affiliates of Lenders entering into Hedging Agreements) have been paid in
full, all Commitments under the Credit Agreement have been terminated and no
Person or Governmental Authority shall have any right to request any return or
reimbursement of funds from the Lenders in connection with monies received
under the Credit Documents or Hedging Agreements. Without limiting the
generality of the foregoing, it is agreed that, to the fullest extent
permitted by law, the occurrence of any one or more of the following shall not
alter or impair the liability of any Guarantor hereunder which shall remain
absolute and unconditional as described above:
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Borrower's Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of
any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or
Hedging Agreements shall be done or omitted;
(iii) the maturity of any of the Borrower's Obligations
shall be accelerated, or any of the Borrower's Obligations shall be
modified, supplemented or amended in any respect, or any right under
any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or
Hedging Agreements shall be waived or any other guarantee of any of
the Borrower's Obligations or any security therefor shall be released
or exchanged in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any
Lender or Lenders as security for any of the Borrower's Obligations
shall fail to attach or be perfected; or
(v) any of the Borrower's Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit
of any creditor of any Guarantor) or shall be subordinated to the
claims of any Person (including, without limitation, any creditor of
any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the
40
Agent or any Lender exhaust any right, power or remedy or proceed against any
Person under any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or Hedging
Agreements, or against any other Person under any other guarantee of, or
security for, any of the Borrower's Obligations.
4.3 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment
by or on behalf of any Person in respect of the Borrower's Obligations is
rescinded or must be otherwise restored by any holder of any of the Borrower's
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers.
Without limiting the generality of the provisions of this Section 4,
each Guarantor hereby specifically waives the benefits of N.C. Gen.
Stat.ss.ss.26-7 through 26-9, inclusive. Each Guarantor further agrees that
such Guarantor shall have no right of recourse to security for the Borrower's
Obligations, except through the exercise of the rights of subrogation pursuant
to Section 4.2.
4.5 Remedies.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agent and the Lenders, on the
other hand, the Borrower's Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section
9.2) for purposes of Section 4.1 hereof notwithstanding any stay, injunction
or other prohibition preventing such declaration (or preventing the Borrower's
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Borrower's
Obligations being deemed to have become automatically due and payable), the
Borrower's Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of said
Section 4.1.
4.6 Rights of Contribution.
The Guarantors hereby agree, as among themselves, that if any
Guarantor shall become an Excess Funding Guarantor (as defined below), each
other Guarantor shall, on demand of such Excess Funding Guarantor (but subject
to the succeeding provisions of this Section 4.6), pay to such Excess Funding
Guarantor an amount equal to such Guarantor's Pro Rata Share (as defined below
and determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment
41
obligation of any Guarantor to any Excess Funding Guarantor under this Section
4.6 shall be subordinate and subject in right of payment to the prior payment
in full of the obligations of such Guarantor under the other provisions of
this Section 4, and such Excess Funding Guarantor shall not exercise any right
or remedy with respect to such excess until payment and satisfaction in full
of all of such obligations. For purposes hereof, (i) "Excess Funding
Guarantor" shall mean, in respect of any obligations arising under the other
provisions of this Section 4 (hereafter, the "Guaranteed Obligations"), a
Guarantor that has paid an amount in excess of its Pro Rata Share of the
Guaranteed Obligations; (ii) "Excess Payment" shall mean, in respect of any
Guaranteed Obligations, the amount paid by an Excess Funding Guarantor in
excess of its Pro Rata Share of such Guaranteed Obligations; and (iii) "Pro
Rata Share", for the purposes of this Section 4.6, shall mean, for any
Guarantor, the ratio (expressed as a percentage) of (a) the amount by which
the aggregate present fair saleable value of all of its assets and properties
exceeds the amount of all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated liabilities, but
excluding the obligations of such Guarantor hereunder) to (b) the amount by
which the aggregate present fair saleable value of all assets and other
properties of the Borrower and all of the Guarantors exceeds the amount of all
of the debts and liabilities (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of the Borrower
and the Guarantors hereunder) of the Borrower and all of the Guarantors, all
as of the Closing Date (if any Guarantor becomes a party hereto subsequent to
the Closing Date, then for the purposes of this Section 4.6 such subsequent
Guarantor shall be deemed to have been a Guarantor as of the Closing Date and
the information pertaining to, and only pertaining to, such Guarantor as of
the date such Guarantor became a Guarantor shall be deemed true as of the
Closing Date).
4.7 Continuing Guarantee.
The guarantee in this Section 4 is a continuing guarantee, and shall
apply to all Borrower's Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit Agreement and
to make the initial Loans or the Issuing Lender to issue the initial Letter of
Credit, whichever shall occur first, shall be subject to satisfaction of the
following conditions (in form and substance acceptable to the Lenders):
(a) The Agent shall have received original counterparts of
this Credit Agreement executed by each of the parties hereto;
(b) The Agent shall have received an appropriate original
Note for each Lender requesting such Note, executed by the Borrower;
42
(c) The Agent shall have received original counterparts of
the Restructure Agreement, executed by each of the parties thereto;
(d) The Agent shall have received all documents it may
reasonably request relating to the existence and good standing of
each of the Credit Parties, the corporate or other necessary
authority for and the validity of the Credit Documents, and any other
matters relevant thereto, all in form and substance reasonably
satisfactory to the Agent;
(e) The Agent shall have received, in form and substance
satisfactory to the Agent, a legal opinion of Xxxxxxxx, Xxxxxxxx &
Xxxxxx, P.A., counsel for the Credit Parties, dated as of the Closing
Date;
(f) The Agent shall have received, for its own account and
for the accounts of the Lenders, all fees and expenses required by
this Credit Agreement or any other Credit Document to be paid on or
before the Closing Date (including, without limitation, any and all
out-of-pocket costs (to the extent invoiced) incurred by the Agent
(including, without limitation, the reasonable fees and expenses of
Xxxxx & Xxx Xxxxx, PLLC and Ernst and Young Corporate Finance LLC),
and fees and other amounts payable to the Agent, in each case in
connection with the negotiation, preparation, execution and delivery
of this Credit Agreement);
(g) The Agent, on behalf of each Lender, shall have received
an amendment fee equal to the sum of (i) 1.00% of each such Lender's
Commitment after giving effect to the transactions contemplated
hereby plus (ii) 1.00% of each Lender's portion of the Forgiven
Balance (as defined in the Restructure Agreement);
(h) Availability shall be at least $8,000,000;
(i) the Agent shall have received approximately $13,685,000
in cash on hand from the Borrower to be applied to Loans outstanding
immediately prior to giving effect to the transactions contemplated
hereby;
(j) the Agent shall have received, for the benefit of the
Lenders, attached warrants to purchase up to ten percent (10%) of the
fully diluted shares of common stock of the Borrower in the
aggregate, such warrants having a strike price equal to in the
aggregate, $60 million equity value and exercisable within ten years
of the Closing Date;
(k) at least $109,961,000 of the 5-3/4% Convertible
Subordinated Notes due 2004 shall have been exchanged for common
stock equity in the Borrower; and
(l) The Agent shall have received such other documents,
agreements or information which may be reasonably requested by the
Agent.
43
5.2 Conditions to all Extensions of Credit.
The obligations of each Lender to make, convert or extend any Loan
and of the Issuing Lender to issue or extend Letters of Credit (including the
initial Loans and the initial Letter of Credit) are subject to satisfaction of
the following conditions in addition to satisfaction on the Closing Date of
the conditions set forth in Section 5.1:
(i) The Borrower shall have delivered (A) in the case of any
Loan, an appropriate Notice of Borrowing or (B) in the case of any
Letter of Credit, the Issuing Lender shall have received an
appropriate request for issuance in accordance with the provisions of
Section 2.2(b);
(ii) The representations and warranties set forth in Section
6 shall be, subject to the limitations set forth therein, true and
correct in all material respects as of such date (except for those
which expressly relate to an earlier date), which shall be true and
correct in all material aspects as of such earlier date;
(iii) There shall not have been commenced against the
Borrower or any Guarantor an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in
effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of
its Property or for the winding up or liquidation of its affairs, and
such involuntary case or other case, proceeding or other action shall
remain undismissed, undischarged or unbonded;
(iv) No Default or Event of Default shall exist and be
continuing either prior to or after giving effect thereto; and
(v) Immediately after giving effect to the making of such
Loan (and the application of the proceeds thereof) or to the issuance
of such Letter of Credit, as the case may be, (A) the sum of the
aggregate principal amount of outstanding Loans plus LOC Obligations
outstanding shall not exceed the lesser of (I) the Committed Amount
and (II) the Borrowing Base, and (B) the LOC Obligations shall not
exceed the LOC Committed Amount.
The delivery of each Notice of Borrowing and each request for the issuance of
a Letter of Credit pursuant to Section 2.2(b) shall constitute a
representation and warranty by the Borrower of the correctness of the matters
specified in subsections (ii), (iii), (iv) and (v) above.
44
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each Lender
that:
6.1 Financial Condition.
(a) The audited consolidated balance sheet of the Borrower and its
Subsidiaries as of December 30, 2001 and the audited consolidated statements
of operations and statements of cash flows for the years ended December 30,
2001 have heretofore been furnished to each Lender. Such financial statements
(including the notes thereto) (i) have been audited by PricewaterhouseCoopers,
LLP, (ii) have been prepared in accordance with GAAP consistently, applied
throughout the periods covered thereby and (iii) present fairly (on the basis
disclosed in the footnotes to such financial statements) the consolidated
financial condition, results of operations and cash flows of the Borrower and
its Subsidiaries as of such date and for such periods. The unaudited interim
balance sheets of the Borrower and its Subsidiaries as at the end of, and the
related unaudited interim statements of operations and of cash flows for, each
quarterly period ended after December 30, 2001 and prior to the Closing Date
have heretofore been furnished to each Lender. Such interim financial
statements for each such quarterly period, (i) have been prepared in
accordance with Regulation S-X of the Securities and Exchange Commission
consistently applied throughout the periods covered thereby and (ii) present
fairly (on the basis disclosed in the footnotes to such financial statements)
the consolidated financial condition, results of operations and cash flows of
the Borrower and its Subsidiaries as of such date and for such periods. During
the period from September 29, 2002 to and including the Closing Date, there
has been no sale, transfer or other disposition by the Borrower or any of its
Subsidiaries of any material part of the business or property of the Borrower
and its Subsidiaries, taken as a whole, and no purchase or other acquisition
by any of them of any business or property (including any capital stock of any
other person) material in relation to the consolidated financial condition of
the Borrower and its Subsidiaries, taken as a whole, in each case, which has
not been disclosed in writing to the Lenders on or prior to the Closing Date
or otherwise publicly disclosed.
(b) The projected consolidated and consolidating balance sheets of
the Borrower and its Subsidiaries as at the end of, and the related projected
statements of operations and of cash flows for, the years ended December 28,
2003, January 2, 2005 and January 1, 2006 (heretofore furnished to each
Lender) are based upon reasonable assumptions made known to the Lenders and
upon information not known to be incorrect or misleading in any material
respect (except as otherwise previously publicly disclosed), subject to the
uncertainties and approximations inherent in any projections.
6.2 No Change; Dividends.
Except as set forth on Schedule 6.2, since December 30, 2001, (a)
there has been no development or event relating to or affecting the Borrower
or any of its Subsidiaries which has had or would be reasonably expected to
have a Material Adverse Effect (except as has been publicly disclosed prior to
the Closing Date) and (b) except as permitted under this Credit Agreement, no
45
dividends or other distributions have been declared, paid or made upon the
capital stock or other equity interest in the Borrower or any of its
Subsidiaries nor, except to the extent permitted under this Credit Agreement,
has any of the capital stock or other equity interest in the Borrower or any
of its Subsidiaries been redeemed, retired, purchased or otherwise acquired
for value by such Person.
6.3 Organization; Existence; Compliance with Law.
Each of the Borrower and its Subsidiaries (a) is a corporation or
limited liability company or limited partnership, as the case may be, duly
organized, validly existing and is in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has the corporate or
other necessary power and authority, and the legal right, to own and operate
its property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, except to the extent that the
failure to have such legal right would not be reasonably expected to have a
Material Adverse Effect, (c) is duly qualified as a foreign entity and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not be reasonably expected to have a
Material Adverse Effect, and (d) is in compliance with all material
Requirements of Law, except to the extent that the failure to comply therewith
would not, in the aggregate, be reasonably expected to have a Material Adverse
Effect.
6.4 Power; Authorization; Enforceable Obligations.
Each of the Credit Parties has the corporate or other necessary power
and authority, and the legal right, to make, deliver and perform the Credit
Documents and Subordinated Note Documents to which it is a party, and in the
case of the Borrower, to borrow hereunder, and has taken all necessary
corporate action to authorize the borrowings on the terms and conditions of
this Credit Agreement and to authorize the execution, delivery and performance
of the Credit Documents and Subordinated Note Documents to which it is a
party. No consent or authorization of, filing with, notice to or other similar
act by or in respect of, any Governmental Authority or any other Person is
required to be obtained or made by or on behalf of any Credit Party in
connection with the Indebtedness arising under the Subordinated Note
Documents, the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Credit Documents and
Subordinated Note Documents to which such Credit Party is a party, except for
(i) filings to perfect the Liens created by the Collateral Documents and (ii)
consents, authorizations, notices and filings described in Schedule 6.4, all
of which have been obtained or made or have the status described in such
Schedule 6.4. This Credit Agreement has been, and each other Credit Document
and Subordinated Note Document to which any Credit Party is a party will be,
duly executed and delivered on behalf of the Credit Parties. This Credit
Agreement constitutes and each other Credit Document and each Subordinated
Note Document to which any Credit Party is a party when executed and delivered
will constitute, a legal, valid and binding obligation of such Credit Party
enforceable against such party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
46
6.5 No Legal Bar.
The execution, delivery and performance of the Credit Documents and
Subordinated Note Documents by the Credit Parties, the borrowings hereunder
and the use of the proceeds thereof (a) will not violate any Requirement of
Law or contractual obligation of the Borrower or any of its Subsidiaries, or
cause an event of default under any material indenture, loan agreement,
mortgage, deed of trust, contract or other agreement or instrument to which it
is a party or by which it may be bound, in any respect that would reasonably
be expected to have a Material Adverse Effect, (b) will not result in, or
require, the creation or imposition of any Lien (other than the Liens created
by the Collateral Documents) on any of the properties or revenues of any of
the Borrower or any of its Subsidiaries pursuant to any such Requirement of
Law or contractual obligation, and (c) will not violate or conflict with any
provision of any Credit Party's articles of incorporation or by-laws.
6.6 No Material Litigation.
No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best knowledge of
the Credit Parties, threatened by or against the Borrower or any of its
Subsidiaries or against any of their respective properties or revenues which
(a) relates to any of the Credit Documents or any of the transactions
contemplated hereby or thereby, (b) relates to any of the Subordinated Note
Documents or any of the transactions contemplated thereby or (c) would be
reasonably expected to have a Material Adverse Effect.
6.7 No Default.
Neither the Borrower nor any of its Subsidiaries is in default under
or with respect to any of their contractual obligations in any respect which
would be reasonably expected to have a Material Adverse Effect; provided,
however, that to the extent the Borrower is not in compliance with the
Subordinated Note Documents due to the de-listing of the Borrower's stock or
any related Repurchase Event, such non-compliance shall be deemed not to
constitute a violation of this Section 6.7.
6.8 Ownership of Property; Liens.
Each of the Borrower and its Subsidiaries has good record and
marketable title in fee simple to, or a valid leasehold interest in, all its
material real property, and good title to, or a valid leasehold interest in,
all its other material property, and none of such property is subject to any
Lien, except for Permitted Liens.
6.9 Intellectual Property.
Each of the Borrower and its Subsidiaries owns, or has the legal
right to use, all United States trademarks, tradenames, copyrights,
technology, know-how and processes, if any, necessary for each of them to
conduct its business as currently conducted (the "Intellectual Property")
except for those the failure to own or have such legal right to use would not
be reasonably expected to have a Material Adverse Effect. No claim has been
asserted and is pending by any Person challenging or questioning the use of
any such
47
Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does any Credit Party know of any such claim, and
the use of such Intellectual Property and, to the knowledge of the responsible
officers of the Credit Parties, the use of the Intellectual Property by the
Borrower or any of its Subsidiaries or the granting of a right or a license in
respect of the Intellectual Property from any Credit Party does not infringe
on the rights of any Person, except for such claims and infringements that in
the aggregate, would not be reasonably expected to have a Material Adverse
Effect. Set forth on Schedule 6.9 is a list of all Intellectual Property
registered with the United States Copyright Office or the United States Patent
and Trademark Office and owned by each Credit Party. As of the Closing Date,
none of the Intellectual Property of the Credit Parties is subject to any
licensing agreement or similar agreement with a Credit Party as licensor
except as set forth on Schedule 6.9.
6.10 No Burdensome Restrictions.
Except as previously disclosed in writing to the Lenders on or prior
to the Closing Date, no Requirement of Law or contractual obligation of the
Borrower or any of its Subsidiaries would be reasonably expected to have a
Material Adverse Effect.
6.11 Taxes.
Each of the Borrower and its Subsidiaries has filed or caused to be
filed all United States federal income tax returns and all other material tax
returns which, to the best knowledge of the Credit Parties, are required to be
filed and, except to the extent it has made alternative arrangements with the
relevant taxing authority, has disclosed such arrangements to the Agent and is
in compliance with such arrangements, has paid (a) all taxes shown to be due
and payable on said returns or (b) all taxes shown to be due and payable on
any assessments of which it has received notice made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority (other than any (i) taxes, fees or
other charges with respect to which the failure to pay, in the aggregate,
would not have a Material Adverse Effect or (ii) taxes, fees or other charges
the amount or validity of which are currently being contested and with respect
to which reserves in conformity with GAAP have been provided on the books of
such Person), and no tax Lien has been filed, and, to the best knowledge of
the Credit Parties, no claim is being asserted, with respect to any such tax,
fee or other charge. No Credit Party is aware as of the Closing Date of any
proposed tax assessments against it or any other Credit Party except those set
forth on Schedule 6.11.
6.12 ERISA.
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no Termination Event has occurred,
and, to the best knowledge of the Credit Parties, no event or condition has
occurred or exists as a result of which any Termination Event could reasonably
be expected to occur, with respect to any Plan; (ii) no "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and Section 412
of the Code, whether or not waived, has occurred with respect to any Plan;
(iii) each Plan has been maintained, operated, and funded in compliance with
its own terms and in material compliance with the provisions of ERISA, the
Code, and any other applicable federal or state laws; and (iv) no lien in
favor of the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
48
(b) The actuarial present value of all "benefit liabilities" under
all Single Employer Plans (determined within the meaning of Section 401(a)(2)
of the Code, utilizing the actuarial assumptions used to fund such Plans),
whether or not vested, did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the
current value of the assets of all such Plans.
(c) Neither the Borrower, any of the Subsidiaries of the Borrower nor
any ERISA Affiliate has incurred, or, to the best knowledge of the Credit
Parties, could be reasonably expected to incur, any withdrawal liability under
ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither the
Borrower, any of the Subsidiaries of the Borrower nor any ERISA Affiliate
would become subject to any withdrawal liability under ERISA if the Borrower,
any of the Subsidiaries of the Borrower or any ERISA Affiliate were to
withdraw completely from all Multiemployer Plans and Multiple Employer Plans
as of the valuation date most closely preceding the date on which this
representation is made or deemed made. Neither the Borrower, any of the
Subsidiaries of the Borrower nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization (within the
meaning of Section 4241 of ERISA), is insolvent (within the meaning of Section
4245 of ERISA), or has been terminated (within the meaning of Title IV of
ERISA), and no Multiemployer Plan is, to the best knowledge of the Credit
Parties, reasonably expected to be in reorganization, insolvent, or
terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has
occurred with respect to a Plan which has subjected or may subject the
Borrower, any of the Subsidiaries of the Borrower or any ERISA Affiliate to
any liability under Sections 406, 409, 502(i), or 502(l) of ERISA or Section
4975 of the Code, or under any agreement or other instrument pursuant to which
the Borrower, any of the Subsidiaries of the Borrower or any ERISA Affiliate
has agreed or is required to indemnify any person against any such liability.
6.13 Governmental Regulations, Etc.
(a) No part of the proceeds of the Loans will be used, directly or
indirectly, for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulation G or Regulation U, or for the purpose of
purchasing or carrying or trading in any securities. If requested by any
Lender or the Agent, the Borrower will furnish to the Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR
Form U-1 referred to in said Regulation U. No indebtedness being reduced or
retired out of the proceeds of the Loans was or will be incurred for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulation U or any "margin security" within the meaning of Regulation T.
"Margin stock" within the meanings of Regulation U does not constitute more
than 25% of the value of the consolidated assets of the Borrower and its
Subsidiaries. None of the transactions contemplated by this Credit Agreement
(including, without limitation, the direct or indirect use of the proceeds of
the Loans) will violate or result in a violation of the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, or
regulations issued pursuant thereto, or Regulation G, T, U or X.
49
(b) Neither the Borrower nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940, each as amended. In addition,
neither the Borrower nor any of its Subsidiaries is (i) an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, as amended, and is not controlled by such a company, or (ii) a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary" of a "holding
company", within the meaning of the Public Utility Holding Company Act of
1935, as amended.
(c) Except as set forth on Schedule 6.13, no director, executive
officer or principal shareholder of the Borrower or any of its Subsidiaries is
a director, executive officer or principal shareholder of any Lender. For the
purposes hereof the terms "director", "executive officer" and "principal
shareholder" (when used with reference to any Lender) have the respective
meanings assigned thereto in Regulation O issued by the Board of Governors of
the Federal Reserve System.
(d) Each of the Borrower and its Subsidiaries has obtained all
material licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its respective Property and to the conduct of
its business.
(e) Neither the Borrower nor any of its Subsidiaries is in violation
of any applicable statute, regulation or ordinance of the United States of
America, or of any state, city, town, municipality, county or any other
jurisdiction, or of any agency thereof (including without limitation,
environmental laws and regulations), which violation could reasonably be
expected to have a Material Adverse Effect.
(f) Except as set forth on Schedule 6.13, each of the Borrower and
its Subsidiaries is current with all material reports and documents, if any,
required to be filed with any state or federal securities commission or
similar agency and is in full compliance in all material respects with all
applicable rules and regulations of such commissions.
6.14 Subsidiaries.
Schedule 6.14 sets forth all the Subsidiaries of the Borrower at the
Closing Date, the jurisdiction of their incorporation and the direct or
indirect ownership interest of the Borrower therein. All of the outstanding
capital stock of such Subsidiaries has been validly issued, is fully paid and
non-assessable and is owned by the Borrower or one or more of its Subsidiaries
free and clear of all Liens (other than Liens in favor of the Agent, for the
benefit of the Lenders). All of the outstanding capital stock of the Borrower
has been validly issued, is fully paid and non-assessable.
6.15 Purpose of Loans and Letters of Credit.
The proceeds of the Loans hereunder shall be used solely by the
Borrower for working capital and general corporate purposes of the Credit
Parties. The Letters of Credit shall be used only for or in connection with
appeal bonds, reimbursement obligations arising in connection with surety and
reclamation bonds, reinsurance, domestic or international trade transactions,
worker's
50
compensation bonds and obligations not otherwise aforementioned relating to
transactions entered into by the applicable account party in the ordinary
course of business.
6.16 Environmental Matters.
(a) Each of the facilities and properties owned, leased or operated
by the Borrower or any of its Subsidiaries (the "Properties") and all
operations at the Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Law with
respect to the Properties or the businesses operated by the Borrower or any of
its Subsidiaries (the "Businesses"), and there are no conditions relating to
the Businesses or Properties that could give rise to liability under any
applicable Environmental Laws.
(b) None of the Properties contains, or has previously contained, any
Materials of Environmental Concern at, on or under the Properties in amounts
or concentrations that constitute or constituted a violation of, or could give
rise to liability under, Environmental Laws.
(c) Neither the Borrower nor any of its Subsidiaries has received any
written or verbal notice of, or inquiry from any Governmental Authority
regarding, any violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Businesses, nor
does the Borrower or any of its Subsidiaries have knowledge or reason to
believe that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, or generated, treated, stored or disposed of
at, on or under any of the Properties or any other location, in each case by
or on behalf of the Borrower or any of its Subsidiaries in violation of, or in
a manner that would be reasonably likely to give rise to liability under, any
applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the best knowledge of any Credit Party, threatened, under
any Environmental Law to which the Borrower or any of its Subsidiaries is or
will be named as a party, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect
to the Borrower or any of its Subsidiaries, the Properties or the Businesses.
(f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations (including, without limitation, disposal) of the Borrower or
any of its Subsidiaries in connection with the Properties or otherwise in
connection with the Businesses, in violation of or in amounts or in a manner
that could give rise to liability under Environmental Laws.
6.17 Perfected Security Interests.
Except as the result of or in connection with a disposition permitted
by Section 8.4(c), at all times after execution and delivery of the Collateral
Documents by the Credit Parties and satisfaction
51
of the conditions specified therein, the security interests created in favor
of the Agent, for the benefit of the Lenders, will constitute valid, perfected
security interests in the Collateral.
6.18 Borrower's Obligations.
All of the Borrower's Obligations are "Senior Indebtedness" under and
as defined in the Subordinated Note Indenture.
6.19 Indebtedness.
Except as otherwise permitted under Section 8.1, the Credit Parties
have no Indebtedness.
6.20 Investments.
All Investments of each Credit Party are Permitted Investments.
6.21 Disclosure.
Neither this Credit Agreement nor any financial statements delivered
to the Lenders nor any other document, certificate or statement furnished to
the Lenders by or on behalf of any Credit Party in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained therein or herein not misleading.
6.22 Tax Shelter Regulations.
The Borrower does not intend to treat the Loans and/or Letters of
Credit and related transactions as being a "reportable transaction" (within
the meaning of Treasury Regulation Section 1.6011-4). In the event the
Borrower determines to take any action inconsistent with such intention, it
will promptly notify the Agent thereof. If the Borrower so notifies the Agent,
the Borrower acknowledges that one or more of the Lenders may treat its Loans
and/or its interest in Letters of Credit as part of a transaction that is
subject to Treasury Regulation Section 301.6112-1, and such Lender or Lenders,
as applicable, will maintain the lists and other records required by such
Treasury Regulation.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all of the
Commitments hereunder shall have terminated:
52
7.1 Information Covenants.
The Borrower will furnish, or cause to be furnished, to the Agent:
(a) Annual Financial Statements. As soon as available, and
in any event within 90 days after the close of each fiscal year of
the Borrower and its Subsidiaries (except that the relevant period
shall be 106 days with respect to the 2002 fiscal year), a
consolidated and consolidating balance sheet and income statement of
the Borrower and its Subsidiaries, as of the end of such fiscal year,
together with related consolidated and consolidating statements of
earnings and consolidated statements of retained earnings and of cash
flows for such fiscal year, setting forth in comparative form
consolidated and, if applicable, consolidating figures for the
preceding fiscal year, all such financial information described above
to be in reasonable form and detail and, and with respect to all such
consolidated financial statements, audited by independent certified
public accountants of recognized national standing reasonably
acceptable to the Agent and whose opinion shall be to the effect that
such financial statements have been prepared in accordance with GAAP
(except for changes with which such accountants concur) and shall not
be limited as to the scope of the audit or qualified as to the status
of the Borrower and its Subsidiaries as a going concern.
(b) Quarterly Financial Statements. As soon as available,
and in any event within 45 days after the close of each fiscal
quarter of the Borrower and its Subsidiaries (other than the fourth
fiscal quarter, in which case 106 days after the end thereof) a
consolidated and consolidating balance sheet and income statement of
the Borrower and its Subsidiaries, as of the end of such fiscal
quarter, together with related consolidated and consolidating
statements of operations and consolidated statements of retained
earnings and of cash flows for such fiscal quarter in each case
setting forth in comparative form consolidated and, if applicable,
consolidating figures for the corresponding period of the preceding
fiscal year, all such financial information described above to be in
reasonable form and detail and reasonably acceptable to the Agent,
and accompanied by a certificate of the chief financial officer of
the Borrower to the effect that such quarterly financial statements
fairly present in all material respects the financial condition of
the Borrower and its Subsidiaries and have been prepared in
accordance with GAAP, subject to changes resulting from audit and
normal year-end audit adjustments.
(c) Officer's Certificates.
(i) At the time of delivery of the financial
statements provided for in Sections 7.1(a) and 7.1(b) above,
a certificate of the chief financial officer of the Borrower
substantially in the form of Schedule 7.1(c)(i), (A)
demonstrating compliance with the financial covenants
contained in Section 7.11 by calculation thereof as of the
end of each such fiscal period, and (B) stating that no
Default or Event of Default exists, or if any Default or
Event of Default does exist, specifying the nature and
extent thereof and what action the Borrower proposes to take
with respect thereto.
53
(ii) Prior to the consummation of any Pro Forma
Transaction, a certificate of the chief financial officer of
the Borrower in the form of Schedule 7.1(c)(ii), (A)
demonstrating compliance with the financial covenants
contained in Section 7.11 by calculation thereof on a Pro
Forma Basis and (B) stating that, after giving effect on a
Pro Forma Basis to such Pro Forma Transaction, no Default or
Event of Default would exist.
(iii) Within 90 days after the end of each fiscal
year of the Borrower, a certificate of the chief financial
officer of the Borrower containing information regarding the
amount of all Asset Sales and Equity Transactions (other
than the issuance by the Borrower of any capital stock or
other equity interests pursuant to any stock option plan,
equity plan or other employee benefit plan of the Borrower)
that were made during the prior fiscal year.
(iv) Upon the issuance of any Subordinated
Indebtedness, a certificate of the chief financial officer
of the Borrower describing such Subordinated Indebtedness,
including, without limitation, (A) the name and address of
the holders thereof or, with respect to the Subordinated
Notes, the trustee for the Subordinated Noteholders, (B)
dates on which scheduled payments are owing with respect to
such Subordinated Indebtedness (and the amounts owing on
such dates) and (C) any other information requested by the
Agent with respect to such Subordinated Indebtedness.
(d) Annual Business Plan and Budgets. No later than 30 days
following the end of each fiscal year of the Borrower, beginning with
the fiscal year ending December 28, 2003, an annual business plan and
budget of the Borrower containing, among other things, pro forma
financial statements for the next fiscal year.
(e) Accountant's Certificate. Within the period for delivery
of the annual financial statements provided in Section 7.1(a), a
certificate of the accountants conducting the annual audit stating
that they have reviewed this Credit Agreement and stating further
whether, in the course of their audit, they have become aware of any
Default or Event of Default and, if any such Default or Event of
Default exists, specifying the nature and extent thereof.
(f) Auditor's Reports. Promptly upon receipt thereof, a copy
of any other report or "management letter" submitted by independent
accountants to the Borrower or any of its Subsidiaries in connection
with any annual, interim or special audit of the books of such
Person.
(g) Reports. Promptly upon transmission or receipt thereof,
(a) copies of any filings and registrations with, and reports to or
from, the Securities and Exchange Commission, or any successor
agency, and copies of all financial statements, proxy statements,
notices and reports as the Borrower or any of its Subsidiaries shall
send to its shareholders or to a holder of any Indebtedness owed by
the Borrower or any of its Subsidiaries in its capacity as such a
holder and (b) upon the request of the Agent, all reports and written
information to and from the United States Environmental Protection
Agency, or
54
any state or local agency responsible for environmental
matters, the United States Occupational Health and Safety
Administration, or any state or local agency responsible for health
and safety matters, or any successor agencies or authorities
concerning environmental, health or safety matters.
(h) Notices. Upon obtaining knowledge thereof, the Borrower
will give written notice to the Agent immediately of (a) the
occurrence of an event or condition consisting of a Default or Event
of Default, specifying the nature and existence thereof and what
action the Credit Parties propose to take with respect thereto, and
(b) the occurrence of any of the following with respect to the
Borrower or any of its Subsidiaries (i) the pendency or commencement
of any litigation, arbitral or governmental proceeding against such
Person which if adversely determined is likely to have a Material
Adverse Effect, (ii) the institution of any proceedings against such
Person with respect to, or the receipt of notice by such Person of
potential liability or responsibility for violation, or alleged
violation of any federal, state or local law, rule or regulation,
including but not limited to, Environmental Laws, the violation of
which would likely have a Material Adverse Effect, or (iii) any
notice or determination concerning the imposition of any withdrawal
liability by a Multiemployer Plan against such Person or any ERISA
Affiliate, the determination that a Multiemployer Plan is, or is
expected to be, in reorganization within the meaning of Title IV of
ERISA or the termination of any Plan.
(i) ERISA. Upon obtaining knowledge thereof, the Borrower
will give written notice to the Agent promptly (and in any event
within five business days) of: (i) of any event or condition,
including, but not limited to, any Reportable Event, that
constitutes, or might reasonably lead to, a Termination Event; (ii)
with respect to any Multiemployer Plan, the receipt of notice as
prescribed in ERISA or otherwise of any withdrawal liability assessed
against the Borrower or any of its ERISA Affiliates, or of a
determination that any Multiemployer Plan is in reorganization or
insolvent (both within the meaning of Title IV of ERISA); (iii) the
failure to make full payment on or before the due date (including
extensions) thereof of all amounts which the Borrower, any of the
Subsidiaries of the Borrower or any ERISA Affiliate is required to
contribute to each Plan pursuant to its terms and as required to meet
the minimum funding standard set forth in ERISA and the Code with
respect thereto; or (iv) any change in the funding status of any Plan
that could have a Material Adverse Effect, together with a
description of any such event or condition or a copy of any such
notice and a statement by the chief financial officer of the Borrower
briefly setting forth the details regarding such event, condition, or
notice, and the action, if any, which has been or is being taken or
is proposed to be taken by the Credit Parties with respect thereto.
Promptly upon request, the Borrower shall furnish the Agent and the
Lenders with such additional information concerning any Plan as may
be reasonably requested, including, but not limited to, copies of
each annual report/return (Form 5500 series), as well as all
schedules and attachments thereto required to be filed with the
Department of Labor and/or the Internal Revenue Service pursuant to
ERISA and the Code, respectively, for each "plan year" (within the
meaning of Section 3(39) of ERISA).
(j) Subordinated Indebtedness. Immediately upon obtaining
knowledge thereof, the Borrower will give written notice to each
holder of Subordinated Indebtedness (or, with
55
respect to the Subordinated Notes, the trustee for the Subordinated
Noteholders) of the occurrence of an event or condition consisting of
a Default or Event of Default.
(k) Monthly Financial Statements/Borrowing Base Certificate.
Within 30 days after the end of each calendar month, a certificate as
of the end of the immediately preceding month, substantially in the
form of Schedule 7.1(k) and certified by the chief financial officer
of the Borrower to be true and correct as of the date thereof (a
"Borrowing Base Certificate"). Concurrent with the delivery of such
Borrowing Base Certificate, a consolidated and consolidating balance
sheet and income statement of the Borrower and its Subsidiaries, as
of the end of such calendar month, together with related consolidated
statements of cash flows for such calendar month, all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Agent, and accompanied by a certificate
of the chief financial officer of the Borrower to the effect that
such monthly financial statements fairly present in all material
respects the financial condition of the Borrower and its Subsidiaries
and have been prepared in accordance with GAAP, subject to changes
resulting from normal quarterly and year-end adjustments and the
absence of footnotes. Additionally, on a monthly basis concurrently
with the delivery of the other items set forth in this Section
7.1(k), a certificate of the chief financial officer of the Borrower
demonstrating compliance with the financial covenants set forth in
Section 7.11 as of the end of such fiscal month or quarter (as
applicable) and stating that no Default or Event of Default exists,
or if any Default or Event of Default does exist, specifying the
nature and extent thereof and what action the Borrower proposes to
take with respect thereto.
(l) Six Month Forecast. On or before the last day of each
calendar month, commencing in April 2003, a six month rolling cash
flow forecast (which shall include projected cash flow on a monthly
basis), in form and substance satisfactory to the Agent, for the six
month period immediately following the month then ending, prepared
and signed by the chief financial officer or the chief accounting
officer of the Borrower, such forecast to be based upon reasonable
assumptions made known to the Lenders and upon information not known
to be incorrect or misleading in any material respect. Commencing in
April 2003, concurrently with the aforesaid cash flow forecast, a
reconciliation of actual cash flow for the calendar month most
recently ended against projected cash flow for such calendar month
contained in the six month rolling cash flow forecast furnished to
the Lenders pursuant to this Section 7.1(l) during the preceding
calendar month, such reconciliation to be in a form satisfactory to
the Agent.
(m) 2002 Form 10-K. No later than April 14, 2003, a copy of
the Borrower's Form 10-K for the 2002 fiscal year.
(n) Promptly after the Borrower has notified the Agent of
any intention by the Borrower to treat the Loans and/or Letters of
Credit and related transactions as being a "reportable transaction"
(within the meaning of Treasury Regulation Section 1.6011-4), a duly
completed copy of IRS Form 8886 or any successor form;
(o) Other Information. With reasonable promptness upon any
such request, such other information regarding the business,
properties or financial condition of the
56
Borrower or any of its Subsidiaries as the Agent or the Required
Lenders may reasonably request.
(p) Business Day. If the last day for timely delivery of any
of the items in this Section 7.1 falls on a day that is not a
Business Day, then such information shall be due on the Business Day
immediately succeeding such due date.
7.2 Preservation of Existence and Franchises.
Except as a result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted under Section 8.4, the Borrower will,
and will cause each of its Subsidiaries to, do all things necessary to
preserve and keep in full force and effect its existence, rights, franchises
and authority.
7.3 Books and Records.
The Borrower will, and will cause each of its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment
and maintenance of appropriate reserves).
7.4 Compliance with Law.
The Borrower will, and will cause each of its Subsidiaries to, comply
with all laws, rules, regulations and orders, and all applicable restrictions
imposed by all Governmental Authorities, applicable to it and its property if
noncompliance with any such law, rule, regulation, order or restriction would
have a Material Adverse Effect.
7.5 Payment of Taxes and Other Indebtedness.
Except as otherwise provided pursuant to the terms of the definition
of "Permitted Liens" set forth in Section 1.1 or (in the case of the following
clause (i)), to the extent alternative arrangements have been made with the
relevant taxing authority, such agreements have been disclosed to the Agent
and the Borrower is in compliance with such arrangements, the Borrower will,
and will cause each of its Subsidiaries to, pay and discharge (i) all taxes,
assessments and governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties, before they shall become
delinquent, (ii) all lawful claims (including claims for labor, materials and
supplies) which, if unpaid, might give rise to a Lien upon any of its
properties, and (iii) except as prohibited hereunder, all of its other
Indebtedness as it shall become due.
7.6 Insurance.
The Borrower will maintain, and will cause each of its Subsidiaries
to maintain, or be covered under, (i) physical damage insurance on all real
and personal property on an all risks basis (including the perils of flood and
quake), covering the repair and replacement cost of all such property and
consequential loss coverage for extra expense and (ii) public liability
insurance (including products/completed operations liability coverage), all on
terms and conditions and in
57
scope substantially commensurate with that which is currently maintained (or,
if such terms and conditions and scope are not up to industry standards for a
company of like size and with a similar business, substantially commensurate
with such industry standards) and evidenced by the certificate contemplated by
clause (w) of the second following sentence and with risk retention thereunder
up to an amount which in the good faith business judgement of the Borrower's
or such Subsidiary's management could not reasonably be expected to expose the
Borrower or such Subsidiary to a materially adverse noninsured loss. On or
before the Closing Date, and at all times thereafter, the Agent shall be named
as loss payee or mortgagee, as its interest may appear, and/or additional
insured with respect to any such insurance providing coverage in respect of
any Collateral. All such insurance shall be provided by insurers having an
A.M. Best policyholders rating of not less than B+ or such other insurers as
the Required Lenders may approve in writing. The Borrower will deliver to the
Agent for distribution to each of the Lenders (w) on or before the Closing
Date, a certificate as of a recent date showing the amount of coverage as of
such date, (x) upon request of any Lender through the Agent from time to time
full information as to the insurance carried, (y) within seven Business Days
of receipt of notice from any insurer a copy of any notice of cancellation,
alteration or material change in coverage from that existing on the Closing
Date and (z) forthwith upon receipt thereof, notice of any cancellation or
nonrenewal of coverage by the Borrower or any of its Subsidiaries.
7.7 Maintenance of Property.
The Borrower will, and will cause each of its Subsidiaries to,
maintain and preserve its properties and equipment material to the conduct of
its business in good repair, working order and condition, normal wear and tear
and casualty and condemnation excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as
may be needed or proper, to the extent and in the manner customary for
companies in similar businesses.
7.8 Performance of Obligations.
The Borrower will, and will cause each of its Subsidiaries to,
perform in all material respects all of its obligations under the terms of all
material agreements, indentures, mortgages, security agreements or other debt
instruments to which it is a party or by which it is bound; provided, however,
that to the extent the Borrower is not in compliance with the Subordinated
Note Documents due to the de-listing of the Borrower's stock or any related
Repurchase Event, such non-compliance shall be deemed not to constitute a
violation of this Section 7.8.
7.9 Use of Proceeds.
The Borrower will use the proceeds of the Loans and will use the
Letters of Credit solely for the purposes set forth in Section 6.15.
7.10 Audits/Inspections.
Upon reasonable notice and during normal business hours, the Borrower
will, and will cause each of its Subsidiaries to, permit representatives
appointed by the Agent, including, without
58
limitation, independent accountants, agents, attorneys, and appraisers to
visit and inspect its property, including its books and records, its accounts
receivable and inventory, its facilities and its other business assets, and to
make photocopies or photographs thereof and to write down and record any
information such representative obtains and shall permit the Agent or its
representatives to investigate and verify the accuracy of information provided
to the Lenders and to discuss all such matters with the officers, employees
and representatives of such Person.
7.11 Financial Covenants.
[(a) Consolidated Coverage Ratio.]
[(b) Minimum Consolidated EBITDA.]
7.12 Additional Credit Parties.
At the time that any Person becomes a Subsidiary of the Borrower, the
Borrower shall immediately (and in any event within two (2) Business Days) so
notify the Agent and shall within five (5) Business Days (or such longer
period of time as the Agent may agree to) (a) cause such Person to execute a
Joinder Agreement in substantially the form of Schedule 7.12, (b) cause 100%
of the capital stock of such Person to be delivered to the Agent (together
with undated stock powers signed in blank) and pledged to the Agent, for the
benefit of the Lenders, pursuant to an appropriate pledge agreement(s) in
substantially the form of the Pledge Agreement and otherwise in form
acceptable to the Agent and (c) deliver such other documentation as the Agent
may reasonably request in connection with the foregoing, including, without
limitation, certified resolutions and other organizational and authorizing
documents of such Person, appropriate UCC-1 financing statements and favorable
opinions of counsel to such Person (which shall cover, among other things, the
legality, validity, binding effect and enforceability of the documentation
referred to above), all in form, content and scope reasonably satisfactory to
the Agent.
7.13 Ownership of Subsidiaries.
Except to the extent otherwise provided in Section 8.11, the Borrower
shall, directly or indirectly, own at all times 100% of the capital stock of
each of its Subsidiaries.
7.14 Pledged Assets.
The Borrower will cause, and will cause each Subsidiary to cause, all
of its owned personal property located in the United States to the extent such
property is deemed to be material by the Agent or the Required Lenders in its
or their reasonable discretion, to be subject at all times, except as
otherwise set forth in Section 8.4(c), to first priority, perfected Liens in
favor of the Agent to secure the Borrower's Obligations in accordance with the
terms and conditions of the Collateral Documents, subject in any case to
Permitted Liens.
7.15 [Reserved].
59
7.16 Field Examination.
The Borrower and each of its Subsidiaries shall permit the Agent (or
a third party satisfactory to the Agent) to conduct a written business audit
of the accounts receivable, inventory, payables, controls and systems of the
Borrower and its Subsidiaries at a frequency to be determined in the
reasonable discretion of the Agent.
7.17 Engagement of Financial Advisor to Lenders.
(a) The Credit Parties acknowledge and agree that the Agent, on
behalf of the Lenders, may retain a financial advisor (the "Lender's Financial
Advisor") to the Lenders for matters related to the Credit Agreement. The
Lender's Financial Advisor shall agree to abide by the confidentiality terms
set forth in Section 11.14 hereof or other terms regarding confidentiality as
may be agreed to among the Agent, the Lender's Financial Advisor and the
Credit Parties.
(b) The Credit Parties covenant and agree that they shall cooperate
fully with the Lender's Financial Advisor in order that the Lender's Financial
Advisor shall be able to carry out all duties required by the Lenders in
connection with the Lender's Financial Advisor's work as a consultant.
Specifically, each Credit Party shall (i) permit the Lender's Financial
Advisor to visit and inspect its property during reasonable business hours,
including its books and records, its accounts receivable and its inventory,
its facility and its other business assets, and to make photocopies or
photographs thereof and to write down and record any information the Lender's
Financial Advisor obtains and (ii) permit the Lender's Financial Advisor to
investigate and verify the accuracy of such information and to discuss all
such matters with the officers, employees and representatives of such Credit
Party.
(c) The Credit Parties agree that they shall pay, on demand, and be
jointly and severally liable for, all reasonable costs and expenses of the
Lender's Financial Advisor, as financial advisor to the Lenders.
7.18 Deposit Accounts.
The Borrower will, and will cause each of the other Credit Parties,
to establish and maintain at all times any and all deposit accounts, other
than payroll, withholding tax and other fiduciary accounts established in the
ordinary course of business and containing only such amounts as are necessary
to cover obligations incurred and/or liabilities assumed in the ordinary
course of business (collectively, the "Excluded Deposit Accounts"), with
either (i) the Agent or (ii) other Persons approved by the Agent that have
executed tri-party agency agreements in substantially the form attached as
Schedule 7.18 or otherwise in form reasonably acceptable to the Agent (each an
"Agency Agreement"); provided, however, that any of the Credit Parties may
maintain deposit accounts with banking institutions other than the Agent or
Persons executing such Agency Agreements so long as (a) the aggregate amount
of funds contained in all such deposit accounts (other than any amounts in any
Excluded Deposit Accounts) does not exceed $2,500,000 at any time and (b) all
funds contained in such deposit accounts, other than an amount not to exceed
$1,000,000 at any time, relate to deposits in the ordinary course of business
to cover accounts payable to independent contractors for work already
performed. The Borrower shall provide the Agent, within thirty calendar days
after the end of each fiscal month,
60
a report (in a form reasonably satisfactory to the Agent) identifying all
deposit accounts of the Credit Parties and their collected balances as of the
last day of the preceding fiscal month.
7.19 Periodic Meetings.
(a) On a quarterly basis, and in conjunction with the filing of the
Borrower's Form 10-Q with the Securities and Exchange Commission, the Borrower
shall hold a telephonic meeting, at an agreed upon time, at which (i) the
Lenders' Financial Advisor will present to the Lenders (subject to existing
confidentiality and other applicable restrictions among the Agent and any of
the Lenders) a written report prepared by the Lenders' Financial Advisor
analyzing the Borrower's financial results as of the end of such fiscal
quarter, and (ii) the Borrower will review such financial results and discuss
the market outlook.
(b) Upon the request of the Agent, the Borrower shall hold a meeting
on an agreed upon date and at an agreed upon location to discuss the reports
delivered pursuant to Section 7.1(k) or Section 7.19(a).
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all of the
Commitments hereunder shall have terminated:
8.1 Indebtedness.
The Borrower will not, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the
other Credit Documents;
(b) Indebtedness of the Borrower and any of its Subsidiaries
set forth in Schedule 8.1;
(c) purchase money Indebtedness (including Capital Leases)
hereafter incurred by the Borrower or any of its Subsidiaries to
finance the purchase of fixed assets provided that (i) the total of
all such Indebtedness (for all such Persons taken together) shall not
exceed an aggregate principal amount of $3,000,000 at any one time
outstanding (including any such Indebtedness referred to in
subsection (b) above (other than any such Indebtedness incurred in
connection with acquisitions)); (ii) such Indebtedness when incurred
shall not exceed the purchase price of the asset(s) financed; and
(iii) no such Indebtedness shall be refinanced for a principal amount
in excess of the principal balance outstanding thereon at the time of
such refinancing;
61
(d) obligations of the Borrower in respect of Hedging
Agreements entered into in order to manage existing or anticipated
interest rate or exchange rate risks and not for speculative
purposes;
(e) Intercompany Indebtedness incurred in the ordinary
course of business and consistent with past practices or for cash
management purposes;
(f) additional Subordinated Indebtedness which by its terms
(i) requires repayment of principal (including any sinking fund) and
annual cash interest payments in amounts not greater than and at such
times not earlier than are required by the Subordinated Note
Documents, (ii) is unsecured, and (iii) is on market terms, including
without limitation subordination and other intercreditor terms, that
are consistent with the public bond market and that have been
approved by the Required Lenders;
(g) Subordinated Indebtedness issued in exchange for
Subordinated Indebtedness listed on Schedule 8.1, provided such
Subordinated Indebtedness meets the requirements of clauses (i), (ii)
and (iii) of Section 8.1(f) above; and
(h) in addition to the Indebtedness otherwise permitted by
this Section 8.1, other Indebtedness hereafter incurred by the
Borrower or any of its Subsidiaries provided that (i) the loan
documentation with respect to such Indebtedness shall not contain
covenants or default provisions relating to the Borrower and its
Subsidiaries that are more restrictive than the covenants and default
provisions contained in the Credit Documents, (ii) on the date of
incurrence of such Indebtedness after giving effect on a Pro Forma
Basis to the incurrence of such Indebtedness of the Borrower or any
of its Subsidiaries, no Default or Event of Default would exist
hereunder, and (iii) the aggregate principal amount of such
Indebtedness shall not exceed $2,500,000 at any time.
8.2 Liens.
The Borrower will not, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Lien with respect to
any of their Property, whether now owned or after acquired, except for
Permitted Liens.
8.3 Nature of Business.
The Borrower will not, nor will it permit any of its Subsidiaries to,
substantively alter the character or conduct of the business conducted by such
Person as of the Closing Date.
8.4 Consolidation, Merger, Sale or Purchase of Assets, etc.
The Borrower will not, nor will it permit any of its Subsidiaries to:
(a) except in connection with a disposition of assets
permitted by the terms of subsection (c) below, dissolve, liquidate
or wind up their affairs;
62
(b) enter into any transaction of merger or consolidation;
provided, however, that, so long as no Default or Event of Default
would be directly or indirectly caused as a result thereof, any
Credit Party (other than the Borrower) may merge or consolidate with
any other Credit Party (other than the Borrower);
(c) sell, lease, transfer or otherwise dispose of any
Property of the Borrower and its Subsidiaries other than (i) the sale
or disposition of machinery and equipment no longer used or useful in
the conduct of such Person's business, (ii) other sales of assets
(but not accounts receivable, except delinquent accounts sold for
collection purposes only), provided that, after giving effect to such
sale or other disposition, the aggregate book value of assets sold or
otherwise disposed of pursuant to this clause (ii) does not exceed
$500,000 in any fiscal year and (iii) the grant of any option or
other right to purchase any asset in a transaction that would be
permitted under the provisions of the foregoing clause (ii), provided
that no Default or Event of Default has occurred and is continuing at
the time of such grant;
(d) acquire all or any portion of the capital stock or
securities of any other Person or purchase, lease or otherwise
acquire (in a single transaction or a series of related transactions)
all or any portion of the Property of any other Person, except for
any merger or consolidation permitted pursuant to Section 8.4(b); or
(e) become a general partner in any general or limited
partnership, joint venture or similar arrangement.
Upon a sale of any Property of a Credit Party permitted by Section 8.4(c), the
Agent shall (to the extent applicable) deliver to the Credit Parties, upon the
Credit Parties' request and at the Credit Parties' expense, such documentation
as is reasonably necessary to evidence the release of the Agent's security
interest, if any, in such Property, including, without limitation, amendments
or terminations of UCC financing statements, if any, the return of stock
certificates, if any, and the release of such Credit Party from all of its
obligations, if any, under the Credit Documents.
8.5 Advances, Investments, Loans, etc.
The Borrower will not, nor will it permit any of its Subsidiaries to,
make Investments in or to any Person, except for Permitted Investments.
8.6 Restricted Payments.
The Borrower will not, nor will it permit any of its Subsidiaries to,
directly or indirectly declare, order, make or set apart any sum for or pay
any Restricted Payment, except (i) to make dividends payable solely in the
same class of capital stock of such Person, (ii) to make dividends or other
distributions payable to the Borrower (directly or indirectly through
Subsidiaries of the Borrower), (iii) as permitted by Section 8.7, (iv) to make
payments on Subordinated Indebtedness (other than Indebtedness arising under
the Subordinated Note Documents) in accordance with any subordination
provisions applicable thereto, (v) provided that no Default or Event of
Default has occurred and is continuing at such time or would be directly or
indirectly caused as a result thereof,
63
to make regularly scheduled interest and principal payments in respect of
Indebtedness arising under the Subordinated Note Documents, (vi) payments in
connection with the Bond conversion and the payments for fractional shares
arising from the 25-for-1 reverse stock split of the Borrower's common stock
to be presented for the approval of the Borrower's stockholders at the 2003
annual meeting; provided that the total of all such payments pursuant to this
subclause (vi) shall not exceed [$__________].
8.7 Prepayments of Indebtedness, etc.
No Credit Party will, nor will it permit any of its Subsidiaries to:
(a) (i) amend or modify any of the terms of any Indebtedness
of such Person (other than Indebtedness arising under the Credit
Documents) if such amendment or modification would add or change any
terms in a manner materially adverse to such Person or to the Lenders
other than the Bond Conversion, or (ii) shorten the final maturity or
average life to maturity thereof or require any payment thereon to be
made sooner than originally scheduled or increase the interest rate
or fees applicable thereto or change any subordination provision
thereof, or (iii) make (or give any notice with respect thereto) any
voluntary or optional payment or prepayment thereof, or (iv) make (or
give any notice with respect thereto) any redemption or acquisition
for value or defeasance (including without limitation, by way of
depositing money or securities with the trustee with respect thereto
before due for the purpose of paying when due), refund, refinance or
exchange with respect thereto, other than prepayments made by a
Credit Party in connection with any Asset Sale permitted under
Section 8.4, in the amount necessary to prepay or retire any
Indebtedness either secured by a Permitted Lien (ranking senior to
any Lien of the Agent) on the related Property or incurred in
connection with the acquisition of any Property that is disposed of
in connection with such Asset Sale; or
(b) make interest payments in respect of any Subordinated
Indebtedness in violation of the applicable subordination provisions.
8.8 Transactions with Affiliates.
The Borrower will not, nor will it permit any of its Subsidiaries to,
enter into or permit to exist any transaction or series of transactions with
any officer, director, shareholder, Subsidiary or Affiliate of such Person
other than (i) advances of working capital to any Credit Party, (ii) transfers
of cash and assets to any Credit Party, (iii) transactions permitted by
Section 8.1, Section 8.4, Section 8.5 (other than pursuant to clause (vii) of
the definition of "Permitted Investments" set forth in Section 1.1), or
Section 8.6, (iv) normal compensation and reimbursement of expenses of
officers and directors. (v) transactions contemplated by the Restructuring
Agreement and (vi) except as otherwise specifically limited in this Credit
Agreement, other transactions which are entered into in the ordinary course of
such Person's business on terms and conditions substantially as favorable to
such Person as would be obtainable by it in a comparable arms-length
transaction with a Person other than an officer, director, shareholder,
Subsidiary or Affiliate.
64
8.9 Fiscal Year.
The Borrower will not, nor will it permit any of its Subsidiaries to,
change its fiscal year.
8.10 Limitation on Restrictions on Subsidiary Dividends and Other
Distributions, etc.
The Borrower will not, nor will it permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause, incur, assume, suffer or
permit to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any such Person to (i) pay dividends or make any
other distribution on any of such Person's capital stock, (ii) subject to
subordination provisions under any Intercompany Indebtedness, pay any
Indebtedness owed to the Borrower or any other Credit Party, (iii) make loans
or advances to any other Credit Party or (iv) transfer any of its Property to
any other Credit Party, except for encumbrances or restrictions existing under
or by reason of (A) customary non-assignment provisions in any lease governing
a leasehold interest and (B) this Credit Agreement and the other Credit
Documents.
8.11 Issuance and Sale of Subsidiary Stock.
The Borrower will not, nor will it permit any of its Subsidiaries to,
except as otherwise permitted under the terms of Section 8.4(c), sell,
transfer or otherwise dispose of, any shares of capital stock of any of its
Subsidiaries or permit any of its Subsidiaries to issue, sell or otherwise
dispose of, any shares of capital stock of any of its Subsidiaries.
8.12 Sale Leasebacks.
Except to the extent it complies with the mandatory prepayment
provisions for Asset Sales pursuant to Section 3.3, the Borrower will not, nor
will it permit any of its Subsidiaries to, directly or indirectly, become or
remain liable as lessee or as guarantor or other surety with respect to any
lease, whether an Operating Lease or a Capital Lease, of any Property (whether
real or personal or mixed), whether now owned or hereafter acquired, (i) which
such Person has sold or transferred or is to sell or transfer to any other
Person other than a Credit Party or (ii) which such Person intends to use for
substantially the same purpose as any other Property which has been sold or is
to be sold or transferred by such Person to any other Person in connection
with such lease.
8.13 No Further Negative Pledges.
Except (a) pursuant to this Credit Agreement and the other Credit
Documents and (b) with respect to prohibitions against other encumbrances on
specific Property encumbered to secure payment of particular Indebtedness
(which Indebtedness relates solely to such specific Property, and improvements
and accretions thereto, and is otherwise permitted hereby) the Borrower will
not, nor will it permit any of its Subsidiaries to, enter into, assume or
become subject to any agreement prohibiting or otherwise restricting the
creation or assumption of any Lien upon its properties or assets, whether now
owned or hereafter acquired, or requiring the grant of any security for such
obligation if security is given for some other obligation.
65
8.14 No Foreign Subsidiaries.
Neither the Borrower nor any of its Subsidiaries will create, acquire
or permit to exist any direct or indirect Subsidiary of such Credit Party
which is not incorporated or organized under the laws of any State of the
United States or the District of Columbia.
8.15 Capital Expenditures.
Neither the Borrower nor any of its Subsidiaries will permit
Consolidated Capital Expenditures in any fiscal period to exceed the dollar
amount (with no carry over from the preceding fiscal period) set forth below
opposite the relevant fiscal period set forth below:
Fiscal Period Capital Expenditure Limit
------------- -------------------------
December 30, 2002 through $1,350,000
December 28, 2003
December 29, 2003 through $2,000,000
January 2, 2005
January 3, 2005 through May 1, $1,000,000
2005
8.16 Consolidated Earn-Outs.
Neither the Borrower nor any of its Subsidiaries will permit any
Consolidated Earn-Outs to be made after the Closing Date.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any
principal of any of the Loans or of any reimbursement
obligations arising from drawings under Letters of Credit,
or
(ii) default, and such defaults shall continue for
three (3) or more Business Days, in the payment when due of
any interest on the Loans or on any reimbursement
obligations arising from drawings under Letters of Credit,
or of any Fees or other amounts owing hereunder, under any
of the other Credit Documents or in connection herewith or
therewith; or
66
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party herein, in
any of the other Credit Documents, or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto
shall prove untrue in any material respect on the date as of which it
was deemed to have been made; or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.2,
7.9, 7.11, 7.12 or 8.1 through 8.17, inclusive, or
(ii) default in the due performance or observance
of any term, covenant or agreement contained in Section 7.1
and such default shall continue for a period of at least
three (3) days after the earlier of a responsible officer of
a Credit Party becoming aware of such default or notice
thereof by the Agent; or
(iii) default in the due performance or observance
by it of any term, covenant or agreement (other than those
referred to in subsections (a), (b) or (c)(i) or (ii) of
this Section 9.1) contained in this Credit Agreement and
such default shall continue unremedied for a period of at
least 30 days after the earlier of a responsible officer of
a Credit Party becoming aware of such default or notice
thereof by the Agent; or
(d) Other Credit Documents. (i) Any Credit Party shall
default in the due performance or observance of any term, covenant or
agreement in any of the other Credit Documents (subject to applicable
grace or cure periods, if any), or (ii) except as the result of or in
connection with a dissolution, merger or disposition of a Subsidiary
permitted under Section 8.4, any Credit Document shall fail to be in
full force and effect or to give the Agent and/or the Lenders the
Liens, rights, powers and privileges purported to be created thereby,
or any Credit Party shall state any of the foregoing in writing; or
(e) Guaranties. Except as the result of or in connection
with a dissolution, merger or disposition of a Subsidiary permitted
under Section 8.4, the guaranty given by any Guarantor hereunder
(including any Additional Credit Party) or any material provision
thereof shall cease to be in full force and effect, or any Guarantor
(including any Additional Credit Party) hereunder or any Person
acting by or on behalf of such Guarantor shall deny or disaffirm such
Guarantor's obligations under such guaranty, or any Guarantor shall
default in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to any
guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with
respect to the Borrower or any of its Subsidiaries; or
(g) Defaults under Other Agreements.
67
(i) The Borrower or any of its Subsidiaries shall
default in the performance or observance (beyond the
applicable grace period with respect thereto, if any) or any
material obligation or condition of any contract or lease
material to the Borrower and its Subsidiaries taken as a
whole; provided, however that to the extent the Borrower is
not in compliance with the Subordinated Note Documents due
to the de-listing of the Borrower's stock or any Repurchase
Event, such non-compliance, default or non-performance shall
be deemed not to constitute a Default or Event of Default
hereunder; or
(ii) With respect to any other Indebtedness (other
than Indebtedness outstanding under this Credit Agreement)
in excess of $1,500,000 in the aggregate for the Borrower
and its Subsidiaries taken as a whole, (A) the Borrower or
any of its Subsidiaries shall (1) default in any payment
(beyond the applicable grace period with respect thereto, if
any) with respect to any such Indebtedness, or (2) the
occurrence and continuance of a default in the observance or
performance relating to such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating
thereto, or any other event or condition shall occur or
condition exist, the effect of which default or other event
or condition is to cause, or permit, the holder or holders
of such Indebtedness (or trustee or agent on behalf of such
holders) to cause (determined without regard to whether any
notice or lapse of time is required), any such Indebtedness
to become due prior to its stated maturity; or (B) any such
Indebtedness shall be declared due and payable, or required
to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof; or
(h) Judgments. One or more judgments or decrees shall be
entered against the Borrower or any of its Subsidiaries involving a
liability of $2,500,000 or more in the aggregate (to the extent not
paid or fully covered by insurance provided by a carrier who has
acknowledged coverage) and any such judgments or decrees shall not
have been vacated, discharged or stayed or bonded pending appeal
within 30 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions, if
such event or condition could be expected to involve possible taxes,
penalties, and other liabilities in an aggregate amount in excess of
$1,000,000: (1) any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether
or not waived, shall exist with respect to any Plan, or any lien
shall arise on the assets of the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate in favor of the PBGC or a Plan; (2) a
Termination Event shall occur with respect to a Single Employer Plan,
which is, in the reasonable opinion of the Agent, likely to result in
the termination of such Plan for purposes of Title IV of ERISA; (3) a
Termination Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the
Agent, likely to result in (i) the termination of such Plan for
purposes of Title IV of ERISA, or (ii) the Borrower, any Subsidiary
of the Borrower or any ERISA Affiliate incurring any liability in
connection with a withdrawal from, reorganization of (within the
meaning of Section 4241 of ERISA), or insolvency or (within the
meaning of Section 4245 of ERISA) such Plan; or (4) any prohibited
transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) or breach of fiduciary responsibility shall occur
which may
68
subject the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate to any liability under Sections 406, 409, 502(i), or
502(l) of ERISA or Section 4975 of the Code, or under any agreement
or other instrument pursuant to which the Borrower, any Subsidiary of
the Borrower or any ERISA Affiliate has agreed or is required to
indemnify any person against any such liability; or
(j) Nature of Business. The Borrower shall engage in any
business, activity or operations other than owning and holding the
capital stock of its Subsidiaries and such business activities
incidental or related thereto (including acting as Borrower hereunder
and pledging its assets to the Agent, for the benefit of the Lenders,
pursuant to the Collateral Documents); or
(k) Subordinated Note Indentures. (i) There shall occur and
be continuing any Event of Default or Repurchase Event under, and in
each case, as defined in the Subordinated Note Indenture, and the
Subordinated Noteholders have caused the Subordinated Indebtedness to
be accelerated and such acceleration is not rescinded within 30 days,
or (ii) any of the Borrower's Obligations for any reason shall cease
to be "Senior Indebtedness" under and as defined in the Subordinated
Note Indenture; or
(l) Collateral. Any of the Borrower's Obligations for any
reason shall fail to be secured under the Collateral Documents; or
(m) Ownership. There shall occur a Change of Control.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time
thereafter unless and until such Event of Default has been waived by the
Required Lenders or cured to the satisfaction of the Required Lenders
(pursuant to the voting procedures in Section 11.6), the Agent shall, upon the
request and direction of the Required Lenders, by written notice to the Credit
Parties take any of the following actions:
(i) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(ii) Acceleration. Declare the unpaid principal of and any
accrued interest in respect of all Loans, any reimbursement
obligations arising from drawings under Letters of Credit and any and
all other indebtedness or obligations of any and every kind owing by
the Borrower to the Agent and/or any of the Lenders hereunder to be
due whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower.
(iii) Cash Collateral. Direct the Borrower to pay (and the
Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 9.1(f), it will
immediately pay) to the Agent additional cash,
69
to be held by the Agent, for the benefit of the Lenders, in a cash
collateral account as additional security for the LOC Obligations in
respect of subsequent drawings under all then outstanding Letters of
Credit in an amount equal to the maximum aggregate amount which may be
drawn under all Letters of Credits then outstanding.
(iv) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents and all
rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in
Section 9.1(f) shall occur, then the Commitments shall automatically terminate
and all Loans, all reimbursement obligations arising from drawings under
Letters of Credit, all accrued interest in respect thereof, all accrued and
unpaid Fees and other indebtedness or obligations owing to the Agent and/or
any of the Lenders hereunder automatically shall immediately become due and
payable without the giving of any notice or other action by the Agent or the
Lenders.
SECTION 10
AGENT
10.1 Appointment and Authorization of Agent.
(a) Each Lender hereby irrevocably appoints, designates and
authorizes the Agent to take such action on its behalf under the provisions of
this Credit Agreement and each other Credit Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms
of this Credit Agreement or any other Credit Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere herein or in any other Credit Document, the
Agent shall not have any duties or responsibilities, except those expressly
set forth herein, nor shall the Agent have or be deemed to have any fiduciary
relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Credit Agreement or any other Credit Document or otherwise exist
against the Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" herein and in the other Credit Documents with
reference to the Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable Law. Instead, such term is used merely as a matter of market
custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.
(b) The Issuing Lender shall act on behalf of the Lenders with
respect to any Letters of Credit issued by it and the documents associated
therewith, and the Issuing Lender shall have all of the benefits and
immunities (i) provided to the Agent in this Article X with respect to any
acts taken or omissions suffered by the Issuing Lender in connection with
Letters of Credit issued by it or proposed to be issued by it and the
applications and agreements for letters of credit pertaining to such Letters
of Credit as fully as if the term "Agent" as used in this Article X and in the
definition of "Agent-Related Person" included the Issuing Lender with respect
to such acts or omissions, and (ii) as additionally provided herein with
respect to the Issuing Lender.
70
10.2 Delegation of Duties.
The Agent may execute any of its duties under this Credit Agreement
or any other Credit Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. The
Agent shall not be responsible for the negligence or misconduct of any agent
or attorney-in-fact that it selects in the absence of gross negligence or
willful misconduct.
10.3 Liability of Agent.
No Agent-Related Person shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Credit
Agreement or any other Credit Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct in connection with
its duties expressly set forth herein), or (b) be responsible in any manner to
any Lender or participant for any recital, statement, representation or
warranty made by any Credit Party or any officer thereof, contained herein or
in any other Credit Document, or in any certificate, report, statement or
other document referred to or provided for in, or received by the Agent under
or in connection with, this Credit Agreement or any other Credit Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of
this Credit Agreement or any other Credit Document, or for any failure of any
Credit Party or any other party to any Credit Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under
any obligation to any Lender or participant to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Credit Agreement or any other Credit Document, or to
inspect the properties, books or records of any Credit Party or any Affiliate
thereof.
10.4 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, electronic mail message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to any Credit
Party), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
any Credit Document unless it shall first receive such advice or concurrence
of the Required Lenders as it deems appropriate and, if it so requests, it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Credit Agreement
or any other Credit Document in accordance with a request or consent of the
Required Lenders (or such greater number of Lenders as may be expressly
required hereby in any instance) and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders.
71
(b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Lender that has signed this Credit Agreement
shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to a Lender unless the Agent shall
have received notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.
10.5 Notice of Default.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Agent for the account
of the Lenders, unless the Agent shall have received written notice from a
Lender or the Borrower referring to this Credit Agreement, describing such
Default and stating that such notice is a "notice of default." The Agent will
notify the Lenders of its receipt of any such notice. The Agent shall take
such action with respect to such Default as may be directed by the Required
Lenders in accordance with Article IX; provided, however, that unless and
until the Agent has received any such direction, the Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default as it shall deem advisable or in the best interest of
the Lenders.
10.6 Credit Decision; Disclosure of Information by Agent.
Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Agent hereafter
taken, including any consent to and acceptance of any assignment or review of
the affairs of any Credit Party or any Affiliate thereof, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender as to any matter, including whether Agent-Related Persons have
disclosed material information in their possession. Each Lender represents to
the Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Credit Parties and their respective Subsidiaries, and
all applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Credit
Agreement and to extend credit to the Borrower hereunder. Each Lender also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Credit
Agreement and the other Credit Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower
and the other Credit Parties. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent herein, the
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of any of the
Credit Parties or any of their respective Affiliates which may come into the
possession of any Agent-Related Person.
72
10.7 Indemnification of Agent.
Whether or not the transactions contemplated hereby are consummated,
the Lenders shall indemnify upon demand each Agent-Related Person (to the
extent not reimbursed by or on behalf of any Credit Party and without limiting
the obligation of any Credit Party to do so), pro rata, and hold harmless each
Agent-Related Person from and against any and all Indemnified Liabilities
incurred by it; provided, however, that no Lender shall be liable for the
payment to any Agent-Related Person of any portion of such Indemnified
Liabilities to the extent determined in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Agent-Related
Person's own gross negligence or willful misconduct; provided, however, that
no action taken in accordance with the directions of the Required Lenders
shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section. Without limitation of the foregoing, each Lender
shall reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Credit Agreement, any other Credit Document, or
any document contemplated by or referred to herein, to the extent that the
Agent is not reimbursed for such expenses by or on behalf of the Borrower. The
undertaking in this Section shall survive termination of the Commitments, the
payment of all other Borrower's Obligations and the resignation of the Agent.
10.8 Agent in its Individual Capacity.
Bank of America and its Affiliates may make loans to, issue letters
of credit for the account of, accept deposits from, acquire equity interests
in and generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with each of the Credit Parties and their
respective Affiliates as though Bank of America were not the Agent or the
Issuing Lender hereunder and without notice to or consent of the Lenders. The
Lenders acknowledge that, pursuant to such activities, Bank of America or its
Affiliates may receive information regarding any Credit Party or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of such Credit Party or such Affiliate) and acknowledge
that the Agent shall be under no obligation to provide such information to
them. With respect to its Loans, Bank of America shall have the same rights
and powers under this Credit Agreement as any other Lender and may exercise
such rights and powers as though it were not the Agent or the Issuing Lender,
and the terms "Lender" and "Lenders" include Bank of America in its individual
capacity.
10.9 Successor Agent.
The Agent may resign as Agent upon 30 days' notice to the Lenders;
provided that any such resignation by Bank of America shall also constitute
its resignation as Issuing Lender. If the Agent resigns under this Credit
Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall be consented to
by the Borrower at all times other than during the existence of an Event of
Default (which consent of the Borrower shall not be unreasonably withheld or
delayed). If no successor agent is appointed prior to the effective date of
the resignation of the Agent, the Agent may appoint, after
73
consulting with the Lenders and the Borrower, a successor agent from among the
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
the Person acting as such successor agent shall succeed to all the rights,
powers and duties of the retiring Agent and Issuing Lender and the respective
terms "Agent" and Issuing Lender shall mean such successor agent and Letter of
Credit issuer, the retiring Agent's appointment, powers and duties as Agent
shall be terminated and the retiring Issuing Lender's rights, powers and
duties as such shall be terminated, without any other or further act or deed
on the part of such retiring Issuing Lender or any other Lender, other than
the obligation of the successor Issuing Lender to issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of
such succession or to make other arrangements satisfactory to the retiring
Issuing Lender to effectively assume the obligations of the retiring Issuing
Lender with respect to such Letters of Credit. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article X and Section
11.5 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Credit Agreement. If no successor agent
has accepted appointment as Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of
the duties of the Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.
10.10 Agent May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Credit Party, the Agent (irrespective of
whether the principal of any Loan or LOC Obligation shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise
(a) to file and prove a claim for the whole amount of the principal
and interest owing and unpaid in respect of the Loans, LOC
Obligations and all other Borrower's Obligations that are owing and
unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders and the Agent
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Agent and their
respective agents and counsel and all other amounts due the Lenders
and the Agent under Section 3.5 and 11.5) allowed in such judicial
proceeding; and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Agent and, in the event that the
Agent shall consent to the making of such payments directly to the Lenders, to
pay to the Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Agent and its agents and counsel, and any
other amounts due the Agent under Sections 3.5 and 11.5.
74
Nothing contained herein shall be deemed to authorize the Agent to authorize
or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Borrower's Obligations or the rights of any Lender or to authorize the Agent
to vote in respect of the claim of any Lender in any such proceeding.
10.11 Collateral and Guaranty Matters.
The Lenders irrevocably authorize the Agent, at its option and in its
discretion,
(a) to release any Lien on any property granted to or held by the
Agent under any Credit Document (i) upon termination of the
Commitments and payment in full of all Borrower's Obligations (other
than contingent indemnification obligations) and the expiration or
termination of all Letters of Credit, (ii) that is sold or to be sold
as part of or in connection with any sale permitted hereunder or
under any other Credit Document, or (iii) subject to Section 11.6, if
approved, authorized or ratified in writing by the Required Lenders;
(b) to subordinate any Lien on any property granted to or held by
the Agent under any Credit Document to the holder of any Lien on such
property that is permitted by clause (ix) of the definition of
"Permitted Liens"; and
(c) to release any Guarantor from its obligations under Article IV
if such Person ceases to be a Subsidiary as a result of a transaction
permitted hereunder.
Upon request by the Agent at any time, the Required Lenders will confirm in
writing the Agent's authority to release or subordinate its interest in
particular types or items of property, or to release any Guarantor from its
obligations under Article IV pursuant to this Section 10.11.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) to
the number set out below, (iii) the day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (iv) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address, in the case of the Borrower, Guarantors and
the Agent, set forth below, and, in the case of the Lenders, set forth on
Schedule 2.1(a), or at such other address as such party may specify by written
notice to the other parties hereto:
75
if to the Borrower or the Guarantors:
Personnel Group of America, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx, Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Agent:
Bank of America, N.A.
0000 Xxxxxx Xxxxxx, 5th Floor
CA5-701-05-19
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Agency Management/SuzieAnna Wan
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Bank of America, N.A.
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
11.2 Right of Set-Off.
In addition to any rights now or hereafter granted under applicable
law or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special), but excluding
deposits in an Excluded Deposit Account (as defined in Section 7.18), and any
other indebtedness at any time held or owing by such Lender (including,
without limitation branches, agencies or Affiliates of such Lender wherever
located) to or for the credit or the account of any Credit Party against
obligations and liabilities of such Person to such Lender hereunder, under the
Notes, the other Credit Documents or otherwise, irrespective of whether such
Lender shall have made any demand hereunder and although such obligations,
liabilities or claims, or any of them, may be contingent or unmatured, and any
such set-off shall be deemed to have been made immediately upon the occurrence
of an Event of Default even though such charge is made or entered on the books
of such Lender subsequent thereto. Any Person purchasing a participation in
the Loans and Commitments hereunder pursuant to Section 3.12 or Section
11.3(d) may exercise all rights of set-off with respect to its participation
interest as fully as if such Person were a Lender hereunder.
76
11.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and assigns
of the parties hereto; provided that none of the Credit Parties may assign or
transfer any of its interests without prior written consent of the Lenders;
provided further that the rights of each Lender to transfer, assign or grant
participations in its rights and/or obligations hereunder shall be limited as
set forth in this Section 11.3, provided however that nothing herein shall
prevent or prohibit any Lender from (i) pledging its Loans hereunder to a
Federal Reserve Bank in support of borrowings made by such Lender from such
Federal Reserve Bank, or (ii) granting assignments or selling participations
in such Lender's Loans and/or Commitments hereunder to its parent company
and/or to any Affiliate or Subsidiary of such Lender.
(b) Assignments. Each Lender may assign all or a portion of its
rights and obligations hereunder, pursuant to an assignment agreement
substantially in the form of Schedule 11.3(b), to (i) any Lender or any
Affiliate or Subsidiary of a Lender, or (ii) any other commercial bank,
financial institution or "accredited investor" (as defined in Regulation D of
the Securities and Exchange Commission) reasonably acceptable to the Agent
and, so long as no Default or Event of Default has occurred and is continuing,
the Borrower; provided that (i) any such assignment (other than any assignment
to an existing Lender) shall be in a minimum aggregate amount of $5,000,000
(or, if less, the remaining amount of the Commitment being assigned by such
Lender) of the Commitments and in integral multiples of $1,000,000 above such
amount and (ii) each such assignment shall be of a constant, not varying,
percentage of all such Lender's rights and obligations under this Credit
Agreement. For purposes of the Borrower's acceptance of the proposed assignee
in clause (ii) of the foregoing sentence, the Borrower shall have been deemed
to accept any such assignee unless the Borrower provides to the Agent and such
assigning Lender, written notice of the Borrower's objection to the assignment
setting forth the specific reasons for its objection, such notice to be
delivered no later than three (3) Business Days after the Borrower receives
notice of the requested assignment (as set forth below). Any assignment
hereunder shall be effective upon delivery to the Agent of written notice of
the assignment together with a transfer fee of $3,500 payable to the Agent for
its own account from and after the later of (i) the effective date specified
in the applicable assignment agreement and (ii) the date of recording of such
assignment in the Register pursuant to the terms of subsection (c) below. The
assigning Lender will give prompt notice to the Agent and the Borrower of any
such assignment. Upon the effectiveness of any such assignment (and after
notice to, and (to the extent required pursuant to the terms hereof), with the
consent of, the Borrower as provided herein), the assignee shall become a
"Lender" for all purposes of this Credit Agreement and the other Credit
Documents and, to the extent of such assignment, the assigning Lender shall be
relieved of its obligations hereunder to the extent of the Loans and
Commitment components being assigned. Along such lines the Borrower agrees
that upon notice of any such assignment and surrender of the appropriate Note
or Notes, it will promptly provide to the assigning Lender and to the assignee
separate promissory notes in the amount of their respective interests
substantially in the form of the original Note (but with notation thereon that
it is given in substitution for and replacement of the original Note or any
replacement notes thereof). By executing and delivering an assignment
agreement in accordance with this Section 11.3(b), the assigning Lender
thereunder and the assignee thereunder shall be deemed to confirm to and agree
77
with each other and the other parties hereto as follows: (i) such assigning
Lender warrants that it is the legal and beneficial owner of the interest
being assigned thereby free and clear of any adverse claim; (ii) except as set
forth in clause (i) above, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto or the financial condition of
any Credit Party or any of their respective Affiliates or the performance or
observance by any Credit Party of any of its obligations under this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such assignment
agreement; (iv) such assignee confirms that it has received a copy of this
Credit Agreement, the other Credit Documents and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such assignment agreement; (v) such assignee will
independently and without reliance upon the Agent, such assigning Lender or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under this Credit Agreement and the other Credit
Documents; (vi) such assignee appoints and authorizes the Agent to take such
action on its behalf and to exercise such powers under this Credit Agreement
or any other Credit Document as are delegated to the Agent by the terms hereof
or thereof, together with such powers as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their
terms all the obligations which by the terms of this Credit Agreement and the
other Credit Documents are required to be performed by it as a Lender.
(c) Maintenance of Register. The Agent shall maintain at one of its
offices in Charlotte, North Carolina a copy of each Lender assignment
agreement delivered to it in accordance with the terms of subsection (b) above
and a register for the recordation of the identity of the principal amount,
type and Interest Period of each Loan outstanding hereunder, the names,
addresses and the Commitments of the Lenders pursuant to the terms hereof from
time to time (the "Register"). The Agent will make reasonable efforts to
maintain the accuracy of the Register and to promptly update the Register from
time to time, as necessary. The entries in the Register shall be conclusive in
the absence of manifest error and the Borrower, the Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Credit Agreement. The
Register shall be available for inspection by the Borrower and each Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Participations. Each Lender may sell, transfer, grant or assign
participations in all or any part of such Lender's interests and obligations
hereunder; provided that (i) such selling Lender shall remain a "Lender" for
all purposes under this Credit Agreement (such selling Lender's obligations
under the Credit Documents remaining unchanged) and the participant shall not
constitute a Lender hereunder, (ii) no such participant shall have, or be
granted, rights to approve any amendment or waiver relating to this Credit
Agreement or the other Credit Documents except to the extent any such
amendment or waiver would (A) reduce the principal of or rate of interest on
or Fees in respect of any Loans in which the participant is participating, (B)
postpone the date fixed for any payment of principal (including extension of
the Termination Date or the date of any mandatory
78
prepayment), interest or Fees in which the participant is participating or (C)
except as expressly provided in the Credit Documents, release all or
substantially all of the Collateral or release any Guarantor from its guaranty
obligations hereunder, and (iii) sub-participations by the participant (except
to an affiliate, parent company or affiliate of a parent company of the
participant) shall be prohibited. In the case of any such participation, the
participant shall not have any rights under this Credit Agreement or the other
Credit Documents (the participant's rights against the selling Lender in
respect of such participation to be those set forth in the participation
agreement with such Lender creating such participation) and all amounts
payable by the Borrower hereunder shall be determined as if such Lender had
not sold such participation, provided, however, that such participant shall be
entitled to receive additional amounts under Sections 3.6, 3.9 and 3.10 on the
same basis as if it were a Lender.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Agent or any Lender and any of
the Credit Parties shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which the Agent or any Lender would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle the Borrower or any other
Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent or the Lenders
to any other or further action in any circumstances without notice or demand.
11.5 Payment of Expenses, etc.
The Borrower agrees to: (i) pay all reasonable out-of-pocket costs
and expenses (A) of the Agent in connection with the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the
other Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of Xxxxx &
Xxx Xxxxx, PLLC, special counsel to the Agent) and any amendment, waiver or
consent relating hereto and thereto including, but not limited to, any such
amendments, waivers or consents resulting from or related to any work-out,
renegotiation or restructure relating to the performance by the Credit Parties
under this Credit Agreement and (B) of the Agent and the Lenders in connection
with enforcement of the Credit Documents and the documents and instruments
referred to therein (including, without limitation, in connection with any
such enforcement, the reasonable fees and disbursements of counsel for the
Agent and each of the Lenders); (ii) pay and hold each of the Lenders harmless
from and against any and all present and future stamp and other similar taxes
with respect to the foregoing matters and save each of the Lenders harmless
from and against any and all liabilities with respect to or resulting from any
delay or omission (other than to the extent attributable to such Lender) to
pay such taxes; and (iii) indemnify each Lender, its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred
by any of them as a result of, or arising out of, or in any way related to, or
by reason of (A) any investigation, litigation or other
79
proceeding (whether or not any Lender is a party thereto) related to the
entering into and/or performance of any Credit Document or the use of proceeds
of any Loans (including other extensions of credit) hereunder or the
consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation, litigation or
other proceeding or (B) the presence or Release of any Materials of
Environmental Concern at, under or from any Property owned, operated or leased
by the Borrower or any of its Subsidiaries, or the failure by the Borrower or
any of its Subsidiaries to comply with any Environmental Law (but excluding,
in the case of either of clause (A) or (B) above, any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of
gross negligence or willful misconduct on the part of the Person to be
indemnified).
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any
of the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is
in writing entered into by, or approved in writing by, the Required Lenders
and the Borrower, provided that no such amendment, change, waiver, discharge
or termination shall, without the consent of each Lender:
(i) extend the final maturity of any Loan, or any portion
thereof;
(ii) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) on any Loan or fees
hereunder;
(iii) reduce the principal amount on any Loan, or increase
the Commitments of the Lenders over the amount thereof in effect (it
being understood and agreed that a waiver of any Default or Event of
Default or of a mandatory reduction in the total commitments shall
not constitute a change in the terms of any Commitment of any
Lender);
(iv) except as the result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted under
Section 8.4, release all or substantially all of (A) the Guarantors
from the guaranty obligations hereunder or (B) the Collateral;
(v) amend, modify or waive any provision of this Section
11.6 or Section 3.6, 3.10, 3.11, 3.12, 9.1(a), 11.2, 11.3, 11.5 or
11.9;
(vi) reduce any percentage specified in, or otherwise
modify, the definition of "Required Lenders;" or
(vii) consent to the assignment or transfer by the Borrower
(or any Guarantor) of any of its rights and obligations under (or in
respect of) the Credit Documents to which it is a party.
80
No provision of Section 2.2 may be amended without the consent of the Issuing
Lender and no provision of Section 10 may be amended without the consent of
the Agent.
11.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary
in making proof of this Credit Agreement to produce or account for more than
one such counterpart.
11.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction
of any provision of this Credit Agreement.
11.9 Survival.
All indemnities set forth herein, including, without limitation, in
Section 2.2(i), 3.9, 10.7 or 11.5 shall survive the execution and delivery of
this Credit Agreement, the making of the Loans, the issuance of the Letters of
Credit, the repayment of the Loans, LOC Obligations and other obligations
under the Credit Documents and the termination of the Commitments hereunder,
and all representations and warranties made by the Credit Parties herein shall
survive delivery of the Notes and the making of the Loans hereunder.
11.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA. Any legal action or proceeding with respect to this
Credit Agreement or any other Credit Document may be brought in the courts of
the State of North Carolina in Mecklenburg County, or of the United States for
the Western District of North Carolina, and, by execution and delivery of this
Credit Agreement, each of the Credit Parties hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the
nonexclusive jurisdiction of such courts. Each of the Credit Parties further
irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to it at the
address set out for notices pursuant to Section 11.1, such service to become
effective three (3) days after such mailing. Nothing herein shall affect the
right of the Agent to serve process in any other manner permitted by law or to
commence legal proceedings or to otherwise proceed against any Credit Party in
any other jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Credit Agreement or any other Credit Document brought in the courts referred
to in subsection (a) hereof and hereby further irrevocably waives and agrees
not to
81
plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE LENDERS,
THE BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 Entirety.
This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
11.13 Binding Effect; Amendment and Restatement of Existing Credit Agreement.
(a) This Credit Agreement shall become effective at such time, on or
after the Closing Date, that the conditions precedent set forth in Section 5.1
have been satisfied and when it shall have been executed by each of the Credit
Parties and the Agent, and the Agent shall have received copies hereof
(telefaxed or otherwise) which, when taken together, bear the signatures of
each Lender (including the Issuing Lender), and thereafter this Credit
Agreement shall be binding upon and inure to the benefit of each Credit Party,
each Lender (including the Issuing Lender) and the Agent, together with their
permitted successors and assigns. The Credit Parties and the Lenders
(including the Issuing Lender) each hereby agrees that, at such time as this
Credit Agreement shall have become effective pursuant to the terms of the
immediately preceding sentence, (i) the Existing Credit Agreement
automatically shall be deemed amended and restated in its entirety by this
Credit Agreement, and all obligations and commitments outstanding under the
Existing Credit Agreement shall be governed by the terms of this Credit
Agreement (as such obligations or commitments may be modified or amended
hereunder) and (ii) all of the promissory notes executed by the Borrower in
connection with the Existing Credit Agreement automatically shall be
substituted and replaced by the amended and restated promissory notes executed
in connection with this Credit Agreement, and the Lenders agree to promptly
return such prior notes to the Borrower.
(b) Each of the Credit Parties hereby acknowledges and agrees that it
has no claims, counterclaims, offsets, or defenses to the Credit Documents and
the performance of its obligations
82
thereunder, or if such Credit Party has any such claims, counterclaims,
offsets, or defenses to the Credit Documents or any transaction related to the
Credit Documents, the same are hereby waived, relinquished and released in
consideration of the Lenders' execution and delivery of this Credit Agreement.
11.14 Confidentiality.
The Agent and the Lenders agree to keep confidential (and to cause
their respective affiliates, officers, directors, employees, agents and
representatives to keep confidential) all information, materials and documents
furnished to the Agent or any such Lender by or on behalf of any Credit Party
(whether before or after the Closing Date) which relates to the Borrower or
any of its Subsidiaries (the "Information"). Notwithstanding the foregoing,
the Agent and each Lender shall be permitted to disclose Information (i) to
its affiliates, officers, directors, employees, agents and representatives in
connection with its participation in any of the transactions evidenced by this
Credit Agreement or any other Credit Documents or the administration of this
Credit Agreement or any other Credit Documents; (ii) to the extent required by
applicable laws and regulations or by any subpoena or similar legal process,
or requested by any Governmental Authority; (iii) to the extent such
Information (A) becomes publicly available other than as a result of a breach
of this Credit Agreement or any agreement entered into pursuant to clause (iv)
below, (B) becomes available to the Agent or such Lender on a non-confidential
basis from a source other than a Credit Party or (C) was available to the
Agent or such Lender on a non-confidential basis prior to its disclosure to
the Agent or such Lender by a Credit Party; (iv) to any assignee or
participant (or prospective assignee or participant) so long as such assignee
or participant (or prospective assignee or participant) first specifically
agrees in a writing furnished to and for the benefit of the Credit Parties to
be bound by the terms of this Section 11.14; or (v) to the extent that the
Borrower shall have consented in writing to such disclosure. Nothing set forth
in this Section 11.14 shall obligate the Agent or any Lender to return any
materials furnished by the Credit Parties. Notwithstanding anything herein to
the contrary, the information subject to this Section 11.14 shall not include,
and the Agent and each Lender may disclose without limitation of any kind, any
information with respect to the "tax treatment" and "tax structure" (in each
case, within the meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to the Agent or such Lender
relating to such tax treatment and tax structure; provided that with respect
to any document or similar item that in either case contains information
concerning the tax treatment or tax structure of the transactions as well as
other information, this sentence shall only apply to such portions of the
document or similar item that relate to the tax treatment or tax structure of
the Loans, Letters of Credit and transactions contemplated hereby
11.15 Source of Funds.
Each of the Lenders hereby represents and warrants to the Borrower
that at least one of the following statements is an accurate representation as
to the source of funds to be used by such Lender in connection with the
financing hereunder:
83
(a) no part of such funds constitutes assets allocated to
any separate account maintained by such Lender in which any employee
benefit plan (or its related trust) has any interest;
(b) to the extent that any part of such funds constitutes
assets allocated to any separate account maintained by such Lender,
such Lender has disclosed to the Borrower the name of each employee
benefit plan whose assets in such account exceed 10% of the total
assets of such account as of the date of such purchase (and, for
purposes of this subsection (b), all employee benefit plans
maintained by the same employer or employee organization are deemed
to be a single plan); or
(c) such funds constitute assets of one or more specific
benefit plans which such Lender has identified in writing to the
Borrower.
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section
3 of ERISA.
11.16 Conflict.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document,
on the other hand, this Credit Agreement shall control.
84
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amended and Restated Credit Agreement to be duly executed
and delivered as of the date first above written.
BORROWER: PERSONNEL GROUP OF AMERICA, INC.,
-------- a Delaware corporation
By:
--------------------------------
Name: Xxxxx X. Xxxx
Title: President and
Chief Financial Officer
GUARANTORS: STAFFPLUS, INC.,
---------- a Delaware corporation
INFOTECH SERVICES LLC,
a North Carolina limited liability company
BAL ASSOCIATES INCORPORATED,
a California corporation
ADVANCED BUSINESS CONSULTANTS, INC.,
a Kansas corporation
VENTURI STAFFING PARTNERS, LLC,
a California limited liability company
By:
-------------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President of each of the
above-named Guarantors
PERSONNEL GROUP HOLDINGS, INC.,
a Florida corporation
PFI CORP.,
a Delaware corporation
By:
-------------------------------
Name: Xxxxx X. Xxxx
Title: President of each of the above-named
Guarantors
VENTURI TEXAS STAFFING PARTNERS, LP,
a Texas limited partnership
By: StaffPLUS, Inc.
Its: General Partner
By:
--------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President
AGENT: BANK OF AMERICA, N.A.,
----- formerly known as NationsBank, N.A.
and Bank of America Illinois,
as Agent
By:
-------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
LENDERS: BANC OF AMERICA
------- STRATEGIC SOLUTIONS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
-------------------------------------------
[name of Lender]
By:
---------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
