Exhibit 10.1
THIRD AMENDED AND RESTATED ACCOUNTS RECEIVABLE
MANAGEMENT AND SECURITY AGREEMENT
BY AND AMONG
BNY FINANCIAL CORPORATION
AS LENDER AND AS AGENT,
THE OTHER LENDERS NAMED HEREIN
AND
TMP WORLDWIDE, INC.
AS BORROWER
November 5, 1998
TABLE OF CONTENTS
1. (A) General Definitions..................................................................................1
(B) Accounting Terms........................................................................................23
(C) Other Terms.............................................................................................23
2. Loans; Letters of Credit................................................................................23
2.1. (a) Revolving Credit Advances...........................................................................24
(b) Alternate Currency Loans................................................................................24
(c) Permitted Overadvances.........................................................................25
(d) Discretionary Rights...........................................................................25
2.2. (a) Canadian Subsidiary Loans...........................................................................25
(b) UK Subsidiary Loans............................................................................25
2.3. Charges to Borrower's Account...........................................................................25
2.4. Statement of Account....................................................................................26
2.5. Disbursement of Loan Proceeds...........................................................................26
2.6. Maximum Loan Amount; Adjustment of Maximum Loan Amount..................................................26
2.7. Letters of Credit.......................................................................................26
2.8. Issuance of Letters of Credit...........................................................................27
2.9. Requirements For Issuance of Letters of Credit..........................................................27
2.10. Use of Proceeds.........................................................................................29
2.11. Repayment of Loans......................................................................................29
2.12. Procedure for Revolving Credit Advances.................................................................30
(a) Notice of Borrowing; Alternate Base Rate Loans.................................................30
(b) Alternate Currency Loans.......................................................................31
(c) LIBO Rate Loans................................................................................32
(d) Interest Periods...............................................................................32
(e) Conversion.....................................................................................32
(f) Prepayment of LIBO Rate Loans..................................................................33
(g) Indemnification...............................................................................33
3. Interest and Fees.......................................................................................33
(a) Variable Rate of Interest; Applicable Margin...................................................33
(b) Intentionally Omitted..........................................................................35
(c) Fees...........................................................................................35
(i) Unused Line Fee.......................................................................35
(ii) Arranging Fee.........................................................................36
(iii) Letter of Credit Fees.................................................................36
(d) Increased Costs................................................................................37
(e) Capital Adequacy...............................................................................37
(f) Matured Funds..................................................................................38
(g) Withholding Taxes; Non-US Transferees..........................................................38
4. Accounts Receivables Management.........................................................................39
5. Conditions..............................................................................................41
5.1. Conditions to Initial Loans.............................................................................41
(a) Loan Agreement.................................................................................41
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(b) Closing Documents..............................................................................41
(c) Filings, Registrations and Recordings..........................................................41
(d) Corporate Proceedings of Borrower..............................................................41
(e) Incumbency Certificates of Borrower............................................................41
(f) Certificates...................................................................................42
(g) Good Standing Certificates.....................................................................42
(h) Legal Opinion..................................................................................42
(i) No Litigation..................................................................................42
(j) Fees...........................................................................................42
(k) Payment Instructions...........................................................................42
(l) Consents.......................................................................................42
(m) No Material Adverse Effect.....................................................................43
(n) Closing Certificate............................................................................43
(o) Financial Condition Certificate................................................................43
(p) Financial Statements...........................................................................43
(q) Information; Collateral Examination............................................................43
(r) Warranties and Representations.................................................................43
(s) No Default.....................................................................................44
(t) Ratification Agreement.........................................................................44
(u) UK Credit Agreement and Canadian Credit Agreement..............................................44
(v) Other..........................................................................................44
5.2. Conditions to All Loans.................................................................................44
(a) Warranties and Representations.................................................................44
(b) No Event of Default............................................................................45
6. Security Interest.......................................................................................45
7. Representations Concerning the Collateral...............................................................46
8. Covenants Concerning the Collateral.....................................................................46
9. Collection and Maintenance of Collateral and Records....................................................47
10. Inspections.............................................................................................49
11. Financial Information...................................................................................49
12.1 General Representations and Warranties..................................................................50
(a) Formation and Qualification....................................................................50
(b) Authority; Enforceable Obligation..............................................................51
(c) Executive Offices..............................................................................51
(d) ERISA..........................................................................................51
(e) Solvency.......................................................................................51
(f) No Litigation..................................................................................51
(g) Financial Statements...........................................................................51
(h) Patents, Trademarks, Copyrights and Licenses...................................................52
(i) Accountants....................................................................................52
(j) Year 2000 Issue................................................................................52
12.2. Affirmative Covenants...................................................................................52
(a) Compliance with Laws; Environmental Compliance.................................................52
(b) Taxes..........................................................................................54
(c) Notification of Certain Events.................................................................54
(d) Projections....................................................................................54
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(e) Insurance......................................................................................54
(f) Guaranty Agreements............................................................................55
(g) Agent's Rights to Bid..........................................................................55
(h) BNY UK.........................................................................................55
(i) Landlord Waivers...............................................................................55
(j) Invoice Notation...............................................................................55
(k) Year 2000 Issue................................................................................55
12.3. Negative Covenants......................................................................................56
(a) Indebtedness...................................................................................56
(b) Dividends......................................................................................56
(c) Repayment of Indebtedness......................................................................56
(d) Loans..........................................................................................56
(e) Guaranties.....................................................................................56
(f) Acquisitions...................................................................................57
(g) Mergers........................................................................................57
(h) Formation of Subsidiaries......................................................................57
(i) Nature of Business.............................................................................58
(j) Fiscal Year and Accounting Charges.............................................................58
(k) Transactions with Affiliates...................................................................58
(l) Names; Tradenames..............................................................................58
(m) Margin Regulations.............................................................................58
(n) Payables.......................................................................................58
(o) Permitted Investments..........................................................................58
(p) Dilution.......................................................................................59
(q) Foreign Currency Contracts.....................................................................59
12.2. Financial Covenants.....................................................................................59
(a) Net Worth......................................................................................59
(b) Interest Coverage Ratio........................................................................59
(c) Funded Indebtedness to EBITDA..................................................................60
13. Power of Attorney.......................................................................................60
14. Expenses................................................................................................61
15. Assignment By a Lender..................................................................................61
16. Waivers.................................................................................................63
17. Term of Agreement.......................................................................................63
18. Events of Default.......................................................................................64
19. Remedies................................................................................................66
20. Waiver; Cumulative Remedies.............................................................................67
21. Application of Payments.................................................................................67
22. Establishment of a Lockbox Account, Dominion Account....................................................68
23. Revival.................................................................................................68
24. Notices.................................................................................................68
25. Governing Law and Waiver of Jury Trial..................................................................69
26. Limitation of Liability.................................................................................70
27. Entire Understanding....................................................................................70
28. Regarding Agent.........................................................................................71
(a) Appointment....................................................................................71
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(b) Nature of Duties...............................................................................72
(c) Payments by Lenders............................................................................72
(d) Excess Payments................................................................................73
(e) Lack of Reliance and Resignation...............................................................73
(f) Certain Rights of Agent........................................................................74
(g) Reliance.......................................................................................74
(h) Notice of Default..............................................................................74
(i) Indemnification................................................................................74
(j) Agent in its Individual Capacity...............................................................75
(k) Delivery of Document...........................................................................75
(l) Borrower's Undertaking to Agent................................................................75
29. Determination of Dollar Equivalent......................................................................77
30. European Monetary Union.................................................................................77
31. Deliveries..............................................................................................77
32. Additional Documents....................................................................................78
33. Severability............................................................................................78
34. Captions 78
35. Counterparts; Telecopied Signatures.....................................................................78
36. Construction............................................................................................78
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THIRD AMENDED AND RESTATED ACCOUNTS RECEIVABLE
MANAGEMENT AND SECURITY AGREEMENT
This Third Amended and Restated Accounts Receivable Management and
Security Agreement (this "Agreement") is made as of November 5, 1998 by and
between BNY FINANCIAL CORPORATION ("BNY"), each of the undersigned financial
institutions and the various other financial institutions which become Lenders
hereunder (BNY and each of the other financial institutions collectively, the
"Lenders" and individually a "Lender"), BNY as agent for the Lenders and for BNY
FINANCIAL LIMITED ("BNY UK") and XXX XXXXXXXXX XXXXXXXXXXX - XXXXXX ("XXX
Xxxxxx") (BNY in such capacity, the "Agent") and TMP WORLDWIDE INC.
("Borrower"), a Delaware corporation.
BACKGROUND
Borrower and BNY are parties to a Second Amended and Restated Accounts
Receivable Management and Security Agreement made as of November 14, 1997 (as
same has been amended, modified or supplemented from time to time, the "Original
ARM Agreement"). Borrower has requested and BNY has agreed to amend, by
restating in full, the terms of the Original ARM Agreement. The parties intend
(a) that all amounts advanced or financial accommodations provided pursuant to
the Original ARM Agreement will remain outstanding and all security interests
and liens granted pursuant to the Existing Ancillary Agreements (as hereafter
defined) shall remain in full force and effect and not be limited but rather
shall be expanded and ratified by this Agreement and the Ancillary Agreements to
be for the benefit of all Lenders and to secure all Loans (as hereafter defined)
and (b) to restate and amend the Original ARM Agreement on the terms and
conditions hereafter set forth. The parties further intend that the terms and
conditions of all existing and future Loans (as hereafter defined) and
Collateral (as hereafter defined) interests shall be governed by this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings and the terms and conditions contained herein, the parties hereto
agree as follows:
A. AMENDMENT AND RESTATEMENT
As of the date of this Agreement, the terms, conditions,
covenants, agreements, representations and warranties contained in the Original
ARM Agreement shall be deemed amended and restated in their entirety as follows
and the Original ARM Agreement shall be consolidated with and into and
superseded by this Agreement; provided, however, that nothing contained in this
Agreement shall impair, limit or affect the liens and security interests
heretofore granted, pledged and/or assigned to Agent for the ratable benefit of
Lenders as security for Borrower's Obligations to Lenders under the Original ARM
Agreement.
1. (A) General Definitions. When used in this Agreement, the following
terms shall have the following meanings:
"Acquisition" shall have the meaning set forth in paragraph 12.3(f).
"Affiliate" of any Person means (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or executive officer (i) of such Person, (ii) of any Subsidiary of such Person
or (iii) of any Person described in clause (a) above. For purposes of this
definition, control of a Person shall mean the power, direct or indirect, (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such Person, or (ii) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"Affiliate Receivables" means and includes all of each Scheduled
Affiliate's now owned or hereafter acquired accounts and contract rights,
instruments, insurance proceeds, documents, chattel paper, letters of credit and
each Scheduled Affiliate's rights to receive payment thereunder, any and all
rights to the payment or receipt of money or other forms of consideration of any
kind at any time now or hereafter owing or to be owing to a Scheduled Affiliate,
all proceeds thereof and all files in which any Scheduled Affiliate has any
interest whatsoever containing information identifying or pertaining to any of a
Scheduled Affiliate's Receivables, together with all of such Scheduled
Affiliate's rights to any merchandise which is represented thereby, and all of
such Scheduled Affiliate's right, title, security and guaranties with respect to
each Affiliate Receivable, including, without limitation, all rights of stoppage
in transit, repletion and reclamation and all rights as an unpaid vendor.
"Agent" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Agreement" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate in effect on such day and (ii) the Federal Funds
Rate in effect on such day plus 1/2 of 1%.
"Alternate Base Rate Loan" shall mean any Loan that bears interest
based upon the Alternate Base Rate.
"Alternate Currencies" shall mean collectively, (i) Sterling, and
Canadian Dollars and (ii) such other currencies as shall be requested by
Borrower to be an Alternate Currency hereunder subject to the approval of Agent
and all of the Lenders in their sole and absolute discretion; (each, an
"Alternate Currency").
"Alternate Currency Bank" shall mean, as applicable, (i) BNY UK or any
affiliate thereof with respect to Sterling Loans, (ii) the Canadian Lender or
any affiliate thereof with respect to Canadian Loans and (iii) The Bank of New
York or any affiliate thereof or such other bank designated by Agent in its sole
discretion with respect to all other Alternate Currency Loans.
"Alternate Currency Base Rate" shall mean, with respect to Sterling
Loans, the U.K. Base Rate; with respect to Canadian Loans, the Canadian Prime
Rate; and with respect to all other Alternate Currency Loans, the base
commercial lending rate of interest charged by
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commercial banks as publicly announced by a bank located in the applicable
country and selected by Agent in its sole discretion to be in effect from time
to time, such rate to be adjusted automatically, without notice, on the
effective date of any change in such rate.
"Alternate Currency Base Rate Loans" shall mean an Alternate Currency
Loan which bears interest at the Alternate Currency Base Rate.
"Alternate Currency LIBO Rate" shall mean, with respect to Canadian
Loans, the Canadian LIBO Rate; and with respect to all other Alternate Currency
LIBO Rate Loans relative to any day for the then current Interest Period, the
rate of interest equal to the offered quotation notified to Agent by the
Alternate Currency Bank two (2) Business Days prior to the first day of such
Interest Period for the offering by the Alternate Currency Bank to prime
commercial banks in the London interbank market for such Alternate Currency
deposits in immediately available funds for a period equal to such Interest
Period and in an amount equal to the amount of such Alternate Currency Rate
Loan.
"Alternate Currency LIBO Rate Loans" shall mean an Alternate Currency
Loan which bears interest at the Alternate Currency LIBO Rate.
"Alternate Currency Equivalent" shall mean with respect to any
Alternate Currency, on any date of determination thereof, the amount of such
Alternate Currency which could be purchased with the amount of Dollars involved
in such computation at the spot rate at which such Alternate Currency may be
exchanged into Dollars as determined by the Bank as of 11:00 a.m. (London time)
on such date of determination thereof for delivery two Business Days later,
which such determination shall be made on the basis of the spot exchange rate
then being quoted by the Bank to its corporate customers with comparable credit
status to Borrower.
"Alternate Currency Loan" shall mean a Loan by Lenders to Borrower
denominated in an Alternate Currency, including Domestic Sterling Loans and
Domestic Canadian Loans.
"Ancillary Agreements" means all agreements, instruments, and documents
including, without limitation, guaranties, mortgages, pledges, powers of
attorney, consents, assignments, contracts, notices, security agreements, trust
agreements whether heretofore, concurrently, or hereafter executed by or on
behalf of Borrower or delivered to Agent or any Lender, relating to the Original
ARM Agreement, this Agreement, the U.K. Security Documents, the U.K. Credit
Agreement, the Canadian Security Documents, the Canadian Credit Agreement or to
the transactions contemplated hereby or thereby.
"Applicable Margin" for any period shall be determined by the ratio of
Funded Indebtedness as at the end of the most recent fiscal quarter to EBITDA as
at the end of the most recent fiscal quarter calculated on a rolling four (4)
quarter basis with respect to the four fiscal quarters then ended and which
shall be subject to adjustment from time to time as set forth in Section
3(a)(vi). The Applicable Margin with respect to Alternate Base Rate Loans, LIBO
Rate Loans, Alternate Currency LIBO Rate Loans, Canadian Base Rate Loans, U.K.
Base Rate Loans, the Unused Line Fee provided for in Section 3(c)(i) hereof, and
the Standby Letter of Credit Fee, as the case may be, shall be the percentage
set forth below as corresponds to the applicable ratio
3
set forth below. The Applicable Margin for all other Alternate Currency Loans
shall be determined by the mutual consent of the parties to this Agreement at
the time of a request for an Alternate Currency Loan which is not a Canadian
Loan or a Sterling Loan.
----------------------- --------------- ----------------- ----------------- ------------- ------------ --------------
LIBO Rate
And
Alternate
Funded Indebtedness Alternate Currency Canadian Base UK Base Unused Standby
To EBITDA Base Rate LIBO Rate Margin Rate Margin Rate Margin Line Letter of
Margin Fee Credit Fee
----------------------- --------------- ----------------- ----------------- ------------- ------------ --------------
Greater than or equal .375% 1.625% -.025% 1.775% .375% 1.625%
to 4.0 to 1.0
----------------------- --------------- ----------------- ----------------- ------------- ------------ --------------
Greater than or equal 0% 1.500% -.150% 1.650% .250% 1.500%
to 3.5 to 1.0 but
less than 4.0 to 1.0
----------------------- --------------- ----------------- ----------------- ------------- ------------ --------------
Greater than or equal 0% 1.25% -.400% 1.400% .250% 1.250%
to 3.0 to 1.0 but
less than 3.5 to 1.0
----------------------- --------------- ----------------- ----------------- ------------- ------------ --------------
Greater than or equal 0% .875% -.775% 1.025% .250% .875%
to 2.0 to 1.0 but
less than 3.0 to 1.0
----------------------- --------------- ----------------- ----------------- ------------- ------------ --------------
Greater than or equal 0% .750% -.900% .900% .200% .750%
to 1.5 to 1.0 but
less than 2.0 to 1.0
----------------------- --------------- ----------------- ----------------- ------------- ------------ --------------
Greater than or equal 0% .625% -1.025% .775% .200% .625%
to 1.0 to 1.0 but
less than 1.5 to 1.0
----------------------- --------------- ----------------- ----------------- ------------- ------------ --------------
Less than 1.0 to 1.0 0% .500% -1.150% .650% .200% .500%
----------------------- --------------- ----------------- ----------------- ------------- ------------ --------------
"ARM Services" shall have the meaning set forth in Section 4(a) of this
Agreement.
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"Xxxxxx Xxxxxx" shall mean Xxxxxx Xxxxxx Limited, a company organized
under the laws of the United Kingdom.
"Bank" means The Bank of New York.
"Blocked Accounts" shall have the meaning set forth in Section 22.
"BNY Canada" shall have the meaning set forth in the introductory
paragraph hereof.
"BNY Company" shall mean, individually and collectively, Agent, BNY,
BNY UK, BNY Canada or any Affiliate thereof.
"BNY Overadvances" shall have the meaning set forth in Section 2.1(c).
"BNY UK" shall have the meaning set forth in the introductory paragraph
hereof.
"Borrower on a Consolidated Basis" means the combination in accordance
with GAAP of (i) the consolidation in accordance with GAAP of the accounts and
other items of Borrower and its consolidated Subsidiaries and (ii) the
combination in accordance with GAAP of the accounts and other items of all
Scheduled Affiliates (other than as included in preceding clause (i)).
"Borrower's Account" shall have the meaning set forth in Section 2.4 of
this Agreement.
"Borrowing Base Certificate" shall mean the certificates and assignment
schedule duly executed and delivered by an officer of Borrower to Agent
appropriately completed and in substantially the form attached as Exhibit 1.2
hereto.
"Borrowing Notice" shall have the meaning set forth in the Section 2.12
hereof.
"Business Day" shall mean with respect to (i) Sterling Loans, any day
on which commercial banks are open for domestic and international business,
including dealings in Dollar deposits in London, England and New York, New York,
(ii) Canadian Loans, any day other than a day on which commercial banks in
Toronto, Canada and New York, New York are authorized or required by law to
close, (iii) Alternate Currency Loans other than Sterling Loans and Canadian
Loans, any day other than a day on which commercial banks in the applicable
country are authorized or required by law to close and (iv) all other Loans, any
day other than a day on which commercial banks in New York, New York are
authorized or required by law to close.
"Cala" shall mean Cala TMPW, Ltd., a company organized under the laws
of Canada.
"Calendar Year" shall mean each twelve month period beginning on
January 1 and ending on December 31.
"Canadian Base Rate Loan" shall mean the Canadian Loans or any portion
thereof bearing interest at a rate of interest determined by reference to the
Canadian Prime Rate.
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"Canadian Collateral" shall mean all of the assets (both real and
personal) of Borrower and each of its Subsidiaries which are subject to liens or
security interests described in the Canadian Security Documents.
"Canadian Commitment" shall mean the Canadian Lender's obligation to
make Canadian Subsidiary Loans in amounts not to exceed the amounts set forth in
the Canadian Credit Agreement, as such amount may be reduced from time to time
as provided therein.
"Canadian Credit Agreement" shall mean the Accounts Receivable
Management and Security Agreement dated March 13, 1995 entered into by
BNY-Canada with TMP Canada and Cala, as amended, supplemented, restated or
replaced from time to time, pursuant to which Canadian Lender funds Canadian
Loans to the Canadian Subsidiaries, and all other agreements executed in
connection therewith.
"Canadian Dollars" shall mean the lawful money of Canada.
"Canadian Lender" shall mean BNY Canada or any other Lender which makes
Canadian Loans.
"Canadian LIBO Rate" shall mean, relative to any day for the then
current Interest Period relating to any Canadian LIBO Rate Loan, the rate of
interest equal to the offered quotation notified to Agent by Canadian Lender as
its Canadian LIBO Rate two (2) Business Days prior to the first day of such
Interest Period for the offering by Canadian Lender to prime commercial banks in
the London interbank market of Canadian Dollar deposits in immediately available
funds for a period equal to such Interest Period and in an amount equal to the
amount of such Canadian LIBO Rate Loan.
"Canadian LIBO Rate Loan" shall mean the Canadian Loans or any portion
thereof earning interest at a rate of interest determined by reference to the
Canadian LIBO Rate.
"Canadian Loans" shall mean, as applicable, (i) Domestic Canadian Loans
and (ii) Canadian Subsidiary Loans.
"Canadian Prime Rate" shall mean the interest rate per annum from time
to time publicized by The Toronto-Dominion Bank as its prime rate, such rate to
be adjusted automatically, without notice, on the effective date of any change
in such rate. This rate of interest is determined from time to time and is
neither tied to any external rate of interest or index nor does it necessarily
reflect the lowest rate of interest actually charged to any particular class or
category of customers.
"Canadian Receivables" means and includes all of any Canadian
Subsidiary's now owned or hereafter acquired accounts and contract rights,
instruments, insurance proceeds, documents, chattel paper, letters of credit and
each Canadian Subsidiary's rights to receive payment thereunder, any and all
rights to the payment or receipt of money or other forms of consideration of any
kind at any time now or hereafter owing or to be owing to a Canadian Subsidiary,
all proceeds thereof and all files in which any Canadian Subsidiary has any
interest
6
whatsoever containing information identifying or pertaining to any of a Canadian
Subsidiary's Receivables, together with all of such Canadian Subsidiary's rights
to any merchandise which is represented thereby, and all of such Canadian
Subsidiary's right, title, security and guaranties with respect to each Canadian
Receivable, including, without limitation, all rights of stoppage in transit,
replevin and reclamation and all rights as an unpaid vendor.
"Canadian Security Documents" shall mean each agreement executed by a
Canadian Subsidiary in favor of Canadian Lender pursuant to which Canadian
Lender is granted a Lien or hypothec upon the Canadian Collateral as security
for the Canadian Subsidiary Obligations and each guaranty and guaranty security
agreement executed by Borrower or any other Person as collateral security for
the Canadian Subsidiary Obligations, each as same may be amended, modified,
supplemented or ratified from time to time.
"Canadian Subsidiaries" shall mean TMP Canada, Cala and Dir-Ad.
"Canadian Subsidiary Loans" shall mean loans made by the Canadian
Lender to the Canadian Subsidiaries in accordance with the Canadian Credit
Agreement.
"Canadian Subsidiary Obligations" shall have the meaning given to the
term "OBLIGATIONS" under the Canadian Credit Agreement.
"Capital Expenditures" means for any period, the aggregate amount of
all payments made by any Person directly or indirectly for the purpose of
acquiring, constructing or maintaining fixed assets, real property or equipment
which, in accordance with GAAP, would be added as a debit to the fixed asset
account of such Person.
"Capitalized Lease Obligations" means Indebtedness of Borrower
represented by obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP and the amount of such
indebtedness shall be the capitalized amount of such obligations determined in
accordance with such principles.
"Change of Control" shall mean the occurrence of any event (whether in
one or more transactions and including any merger or consolidation of or with
Borrower or a Scheduled Affiliate or sale of all or substantially all of the
property or assets of Borrower or a Scheduled Affiliate) which results in a
transfer of control of Borrower or a Scheduled Affiliate to a Person other than
the Original Owner or a Person controlled by the Original Owner. For purposes of
this definition, "control of Borrower or a Scheduled Affiliate" shall mean the
power, direct or indirect (x) to vote 50% or more of the securities having
ordinary voting power for the election of directors of Borrower or an Affiliate
or (y) to direct or cause the direction of the management and policies of
Borrower or an Affiliate by contract or otherwise.
"Close Date" shall mean the final date for the submission of or the
cancellation of a yellow page advertisement as determined by the respective
directory publisher.
"Close Date Receivable" shall mean Receivables (including without
limitation Media Billing Receivables and Recruitment Media Billing Receivables)
where the Close Date has
7
passed but the Publication Date has not yet occurred and the Receivable has not
yet been invoiced).
"Closing Date" means November 5, 1998 or such other date as may be
agreed upon by the parties hereto.
"Collateral" means and includes
(A) all Inventory;
(B) all Equipment;
(C) all General Intangibles;
(D) all Receivables;
(E) all Subsidiary Stock of Domestic Subsidiaries and 65% of the
outstanding Subsidiary Stock of Foreign Subsidiaries;
(F) all books, records, ledgercards, files, correspondence, computer
programs, tapes, disks and related data processing software (owned by Borrower
or in which it has an interest) which at any time evidence or contain
information relating to (A), (B), (C), (D) and (E) above or are otherwise
necessary or helpful in the collection thereof or realization thereupon;
(G) documents of title, policies and certificates of insurance,
securities, chattel paper, other documents or instruments evidencing or
pertaining to (A), (B), (C), (D), (E) and (F) above;
(H) all guaranties, liens on real or personal property, leases, and
other agreements and property granted to Borrower or a Scheduled Affiliate which
in any way secure or relate to (A), (B), (C), (D), (E), (F) and (G) above, or
are acquired for the purpose of securing and enforcing any item thereof;
(I) (i) all cash held as cash collateral to the extent not otherwise
constituting Collateral, all other cash or property at any time on deposit with
or held by Agent or any Lender for the account of Borrower (whether for
safekeeping, custody, pledge, transmission or otherwise), (ii) all present or
future deposit accounts (whether time or demand, interest or non-interest
bearing) of Borrower with Lender or any other Person including those to which
any such cash may at any time and from time to time be credited, (iii) all
investments and reinvestments (however evidenced) of amounts from time to time
credited to such accounts, (iv) all now owned or hereafter acquired investment
property, including all securities, whether certificated or uncertificated,
securities entitlements, securities accounts, commodities and futures accounts,
and (v) all interest, dividends, distributions and other proceeds payable on or
with respect to (x) such investments and reinvestments and (y) such accounts;
and
8
(J) all products and proceeds of (A), (B), (C), (D), (E), (F), (G), (H)
and (I) above (including, but not limited to, all claims to items referred to in
(A), (B), (C), (D), (E), (F), (G), (H) and (I) above) and all claims of Borrower
against third parties (x) for (i) loss of, damage to, or destruction of, and
(ii) payments due or to become due under leases, rentals and hires of, any or
all of (A), (B), (C), (D), (E), (F), (G), (H) and (I) above and (y) proceeds to
Borrower and unearned premiums of Borrower with respect to policies of insurance
in whatever form.
"Commitment Percentages" shall mean, as applicable, the Total
Commitment Percentage, U.S. Commitment Percentage, U.K. Commitment Percentage
and Canadian Commitment Percentage.
"Commitment Transfer Supplement" shall mean a document in the form of
Exhibit 15 hereto, properly completed and otherwise in form and substance
satisfactory to Agent by which the Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to make Loans under this Agreement.
"Commitments" shall mean, as applicable, the Total Commitment, the U.S.
Commitment, the U.K. Commitment and the Canadian Commitment.
"Contract Rate" means an interest rate per annum equal to the (i) sum
of the Alternate Base Rate plus the Applicable Margin with respect to Alternate
Base Rate Loans, (ii) the sum of the LIBO Rate plus the Applicable Margin with
respect to LIBO Rate Loans, as applicable, (iii) the sum of the Canadian Prime
Rate plus the Applicable Margin with respect to Canadian Base Rate Loans made to
Borrower, (iv) the sum of the U.K. Base Rate plus the Applicable Margin with
respect to U.K. Base Rate Loans made to Borrower or (v) the sum of the Alternate
Currency LIBO Rate plus the Applicable Margin with respect to Alternate Currency
LIBO Rate Loans made to Borrower.
"Contract Year" means the twelve month period beginning on the Closing
Date or on the anniversary of the Closing Date in any year.
"Customer" means and includes the account debtor with respect to any
Receivable or Affiliate Receivable, and/or the prospective purchaser of goods,
services or both with respect to any contract or contract right, and/or any
party who enters into or proposes to enter into any contract or other
arrangement with Borrower or any Scheduled Affiliate, pursuant to which Borrower
or any Scheduled Affiliate is to deliver any personal property or perform any
services.
"Cycle Billing" means yellow page xxxxxxxx made by Borrower or a
Scheduled Affiliate to a Customer on the basis of equal monthly installments,
the first installment to be billed no later than the first month following the
Publication Date in an amount equal to between 1/2 and 1/12 of the xxxxxxxx to
such Customer with respect to the applicable directory; provided that Borrower
or such Scheduled Affiliate may not change the billing terms with respect to
specific services rendered.
"Default Rate" means a rate equal to two (2%) percent per annum in
excess of the applicable Contract Rate.
9
"Depository Accounts" shall have the meaning set forth in Section 22.
"Dilution" means, with respect to any period, the percentage obtained
by dividing (a) the sum of chargebacks plus credit memos issued for such period
as determined by Borrower and verified by Agent at Agent's discretion, by (b)
the sum of collections, chargebacks, open deductions and credit memos issued for
such period.
"Dir-Ad" shall mean Dir-Ad Inc., a company organized under the laws of
Canada.
"Dispute" means any cause asserted for nonpayment of any Receivable or
Affiliate Receivable, including without limitation, any alleged defense,
counterclaim, offset, dispute or other claim (real or merely asserted) whether
arising from or relating to the sale of goods or rendition of services or
arising from or relating to any other transaction or occurrence.
"Dollar" and the sign "$" shall mean lawful money of the United States
of America.
"Dollar Equivalent" shall mean, on any date of determination thereof,
the amount of Dollars which could be purchased with the amount of the relevant
Alternate Currency at the spot rate then being offered by the Bank to its
corporate customers with comparable credit status to Borrower at which Dollars
may be exchanged into the applicable Alternate Currency as shall be determined
by Agent.
"Dollar Loans" means Loans denominated and payable in Dollars.
"Domestic Canadian Loans" shall mean Loans made by Lenders in their
discretion to Borrower denominated and payable in Canadian Dollars.
"Domestic Persons" means any Financial Party or any Subsidiary of any
Financial Party (i) which has been formed or incorporated pursuant to the laws
of a state or commonwealth of the United States of America or (ii) as to which
no less than 90% of the value of such party's assets are located in the United
States of America.
"Domestic Sterling Loans" shall mean Loans made by Lenders in their
discretion to Borrower denominated and payable in Sterling.
"EBITDA" shall mean, with respect to Borrower on a Consolidated Basis
for any applicable fiscal period, each calculated for such period: (a) net
income before taxes for such period (excluding extraordinary or non-recurring
gains or losses but including losses attributable to foreign currency
transactions) plus (b) net interest expense, plus (c) all charges against income
for such period for federal, state and local income taxes actually paid or
accrued, plus (d) depreciation, amortization (including amortization of any
goodwill or other general intangibles) and other non-cash charges deducted in
determining net income for such period, minus (e) gains attributable to any
asset sales calculated in determining net income for such period, plus (f)
losses attributable to any asset sales calculated in determining net income for
such period.
10
"Eligible Receivables" means and includes each Receivable and Affiliate
Receivable which conforms to the following criteria:
(a) the rendition of services has been completed; provided,
however, that Receivables related to executive search services and
selection services and which otherwise constitute Eligible Receivables
shall not be deemed ineligible solely by virtue of this subsection (a);
(b) services shall not have been rejected or disputed by the
Customer and there shall not have been asserted any offset, defense,
counterclaim, or Dispute with respect to such Receivable or Affiliate
Receivable;
(c) it continues to be in full conformity with the
representations and warranties made by Borrower or another Financial
Party to Lenders with respect thereto;
(d) Agent is, and continues to be, in the good faith exercise
of its reasonable discretion satisfied with the credit standing of the
Customer in relation to the amount of credit extended;
(e) it is documented by an invoice in a form approved by Agent
(evidence of which has been received by Agent or, in Agent's sole
discretion, has been sent to but not yet received by Agent) and shall
not be unpaid more than: (x) ninety (90) days from due date, (y) one
hundred and twenty (120) days from invoice date, all with respect to
regular billing and (z) three hundred sixty (360) days from the first
invoice date with respect to Cycle Billing;
(f) less than 75% of the unpaid amount of invoices due from
such Customer remain unpaid more than ninety (90) days from due date;
(g) it is not evidenced by chattel paper or an instrument of
any kind with respect to or in payment of the Receivable or Affiliate
Receivable unless such instrument is duly endorsed to and in possession
of Agent or represents a check in payment of a Receivable or Affiliate
Receivable;
(h) if the Customer is not in the United States, the services
which gave rise to such Receivable or Affiliate Receivable were
provided after receipt by Borrower or any other Financial Party from or
on behalf of the Customer of an irrevocable letter of credit, assigned
and delivered to Agent and confirmed by a financial institution
acceptable to Agent and is in form and substance acceptable to Agent,
payable in the full amount of the Receivable or Affiliate Receivable in
Dollars at a place of payment located within the United States;
(i) such Receivable or Affiliate Receivable is not subject to
any lien, other than Permitted Liens;
11
(j) it does not arise out of transactions with an Affiliate of
Borrower or any other Financial Party or a Person controlled by an
Affiliate of Borrower or any other Financial Party;
(k) it is payable to Borrower or any other Financial Party;
(l) if the Receivable or Affiliate Receivable arises out of a
sale to any Person to which Borrower or any other Financial Party is
indebted, the amount of such indebtedness, and any anticipated
indebtedness payable pursuant to a written agreement, may in Agent's
sole discretion be deducted in determining the face amount of such
Receivable or Affiliate Receivable;
(m) it is net of any returns, discounts, claims, credits and
allowances;
(n) if the Receivable or Affiliate Receivable arises out of
contracts between Borrower or any other Financial Party and the United
States, any state, or any department, agency or instrumentality of any
of them, Borrower or any other Financial Party has so notified Agent,
in writing, prior to the creation of such Receivable, and, if Agent so
requests, there has been compliance with any governmental notice or
approval requirements, including without limitation, compliance with
the Federal Assignment of Claims Act;
(o) it is a good and valid account representing an undisputed
bona fide indebtedness incurred by the Customer therein named, for a
fixed sum as set forth in the invoice relating thereto with respect to
work, labor and/or services rendered by Borrower or any other Financial
Party, provided, however, that Receivables relating to executive search
services and selection services rendered pursuant to a valid and
enforceable contract shall not be deemed ineligible solely by virtue of
this subsection (o);
(p) (i) such Affiliate Receivable arises out of a sale or
rendition of services by a Financial Party that (x) has executed and
delivered a Guaranty and Guarantor Security Agreement, (y) is majority
owned or controlled by Xxxxxx XxXxxxxx, Borrower or a Guarantor and
(ii) Agent shall have received evidence, in form and substance
satisfactory to Agent, including, without limitation, a certificate of
ownership executed by the Secretary of Borrower with respect to Xxxxxx
XxXxxxxx'x share ownership of Borrower and each other Financial Party)
that Xxxxxx XxXxxxxx, Borrower or the applicable Guarantor is the
majority owner of the applicable Financial Party;
(q) if such Receivable arises in connection with the purchase
of advertisements from a media source, then Borrower or a Scheduled
Affiliate shall be solely responsible for payment of all advertisements
purchased by Borrower or such Scheduled Affiliates from such media
source and such media source shall not have recourse against the
Customer with respect to any such payment; and
(r) is otherwise satisfactory to Agent as determined in good
faith by Agent in the reasonable exercise of its discretion.
12
"Eligible Unbilled Receivables" means and includes each (i) Recruitment
Media Billing Receivable and Media Billing Receivable until the earlier of the
invoice date or 60 days after Publication Date, (ii) Close Date Receivable where
the Publication Date is less than 60 days in the future and (iii) Cycle Billing
which is not unpaid more than 360 days from the first invoice date with respect
thereto, and the first invoice date is not later than one month after
Publication Date and in each case which would constitute an Eligible Receivable
except that it has not been documented by an invoice but which shall not be
duplicative of Eligible Receivables. An Eligible Unbilled Receivable shall
become an Eligible Receivable once it is invoiced.
"Equipment" means and includes all of Borrower's now owned or hereafter
acquired and owned equipment, machinery and goods (excluding Inventory), whether
or not constituting fixtures, including, without limitation: plant and office
equipment, tools, dies, parts, data processing equipment, furniture and trade
fixtures, trucks, trailers, loaders and other vehicles and all replacements and
substitutions therefore and all accessions thereto.
"Event of Default" means the occurrence of any of the events set forth
in Section 18.
"Existing Ancillary Agreements" shall mean collectively, the Original
ARM Agreement and all other documents, instruments and agreements executed and
delivered in connection therewith.
"Federal Funds Rate" means, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by Bank from three Federal funds brokers of recognized
standing selected by Bank.
"Financial Party" and collectively, "Financial Parties" means Borrower
and any Scheduled Affiliate.
"Fiscal Quarter" means each quarterly accounting period of Borrower
during any Fiscal Year.
"Foreign Collateral" means the Canadian Collateral provided by the
Canadian Subsidiaries, the U.K. Collateral provided by the U.K. Subsidiaries and
any other assets, guaranties or guaranty security agreements granted or
delivered by a Foreign Subsidiary as collateral security for the Foreign
Subsidiary Obligations.
"Foreign Indebtedness" means Indebtedness (other than Indebtedness owed
to Lenders or their Affiliates) incurred by a Financial Party which is not a
Domestic Person.
"Foreign Losses" shall mean the aggregate balance of all Foreign
Subsidiary Obligations, following the acceleration thereof, and after
application of all Foreign Subsidiary Collections
13
through the date upon which Agent advises the Lender that in the exercise of
Agent's reasonable judgment, no further material Foreign Subsidiary Collection
will be realized.
"Foreign Receivables" shall mean Receivables of a Foreign Subsidiary.
"Foreign Secured Facility" shall have the meaning set forth in Section
6(c) of this Agreement.
"Foreign Subsidiary" shall mean a Subsidiary which is not a Domestic
Person.
"Foreign Subsidiary Collections" shall mean any payment or amount
realized or recovered or otherwise received on any Foreign Collateral in respect
of Foreign Subsidiary Obligations.
"Foreign Subsidiary Credit Agreements" shall mean any and all
agreements evidencing Foreign Subsidiary Obligations.
"Foreign Subsidiary Lender" shall mean BNY UK, with respect to UK
Subsidiary Obligations, the Canadian Lender, with respect to Canadian Subsidiary
Obligations, and any other holder of any Foreign Subsidiary Obligations.
"Foreign Subsidiary Obligations" shall mean all Indebtedness owing to a
Foreign Subsidiary Lender by any Subsidiary of Borrower which is not a Domestic
Person, including, without limitation, all U.K. Subsidiary Obligations and
Canadian Subsidiary Obligations.
"Formula Amount" shall have the meaning set forth in Section 2.1(a).
"Funded Indebtedness" means for Borrower on a Consolidated Basis
liabilities for borrowed money, including, without limitation, undrawn or
unreimbursed letters of credit (to the extent such letters of credit are not
specifically secured one hundred percent by cash or cash equivalents or to the
extent such letters of credit secure liabilities for borrowed money) and
Capitalized Lease Obligations.
"GAAP" means generally accepted accounting principles, practices and
procedures in the United States of America in effect from time to time.
"General Intangibles" means and includes all of Borrower's now owned or
hereafter acquired general intangibles as said term is defined in the Uniform
Commercial Code in effect in the State of New York including, without
limitation, trademarks, tradenames, tradestyles, trade secrets, equipment
formulation, manufacturing procedures, quality control procedures, product
specifications, patents, patent applications, copyrights, registrations,
contract rights, choses in action, causes of action, corporate or other business
records, inventions, designs, goodwill, claims under guarantees, licenses,
franchises, tax refunds, tax refund claims, computer programs, computer data
bases, computer program flow diagrams, source codes, object codes, customer
lists and all other intangible property of every kind and nature.
14
"Guarantor" means individually, each of the Persons listed on Schedule
1(B) and any other Person who may hereafter guarantee payment or performance of
the whole or any part of the Obligations and "Guarantors" means collectively all
such Persons.
"Guarantor Security Agreements" means collectively, each Security
Agreement executed by a Guarantor in favor of Agent, as same may be amended,
modified, supplemented or ratified from time to time.
"Guaranty Agreements" means collectively, (i) the Amended and Restated
Guaranties and Guaranties described on Exhibit 1.1 which are executed by each
Guarantor in favor of Agent and (ii) such other Guaranties of the Obligations as
shall be executed and delivered hereafter from time to time by a Guarantor.
"Hazardous Substance" means, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"Incipient Event of Default" means any act or event which, with the
giving of notice or passage of time or both, would constitute an Event of
Default.
"Indebtedness" means as to any Person (without duplication):
(a) any indebtedness for borrowed money which such Person has
directly or indirectly created, incurred or assumed; and
(b) any indebtedness, whether or not for borrowed money,
secured by any Lien in respect of property owned by such Person, whether or not
such Person has assumed or become liable for the payment of such indebtedness;
and
(c) any indebtedness, whether or not for borrowed money,
including any capital lease obligation, with respect to which such Person has
become directly or indirectly liable and which represents or has been incurred
to finance the purchase price (or a portion thereof) of any property or services
or business acquired by such Person, whether by purchase, consolidation, merger
or otherwise (excluding accounts payable incurred in the ordinary course of
business, if (i) such accounts payable are not more than 150 days past due or
(ii) such accounts payable are more than 150 days past due, are being contested
in good faith, and would not, in accordance with GAAP, appear as Indebtedness on
a balance sheet of such person); and
(d) any indebtedness of any other Person of the character
referred to in subdivision (a), (b) or (c) of this definition with respect to
which the Person whose Debt is being determined has become liable by way of a
guaranty.
15
"Intercompany Loans" shall mean loans or other extensions of credit or
financial accommodations which are made by Borrower to any of its direct or
indirect Subsidiaries or Affiliates.
"Interest Coverage Ratio" shall mean with respect to any period for
Borrower on a Consolidated Basis, the ratio of (A) EBITDA minus Capital
Expenditures made during such period to the extent not financed from the
proceeds of a Loan to (B) interest expense of Borrower on a Consolidated Basis
for such period.
"Interest Period" shall have the meaning set forth in Section 2.12(c)
hereof.
"Interest Rate Agreement" shall mean any interest rate protection
agreement, interest rate commodity or currency future, interest rate option,
interest rate cap or other interest rate, commodity or currency hedge
arrangement, to or under which Borrower or its Subsidiaries is a party or a
beneficiary on the date hereof or becomes a party or a beneficiary after the
date hereof.
"Inventory" means and includes all of Borrower's now owned or hereafter
acquired goods, merchandise and other personal property, wherever located, to be
furnished under any contract of service or held for sale or lease, all raw
materials, work in process, artwork, finished goods and materials and supplies
(including but not limited to art supplies) of any kind, nature or description
which are or might be used or consumed in Borrower's business or used in selling
or furnishing such goods, merchandise and other personal property, and all
documents of title or other documents representing them.
"Lender" and "Lenders" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and assigns.
"Lender Settlement Date" shall mean the Closing Date and thereafter
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.
"Letters of Credit" shall have the meaning set forth in Section 2.7.
"Letter of Credit Fees" shall have the meaning set forth in Section
3(c)(iv).
"LC Reserve" shall mean an amount at any time equal to the aggregate
face amount of outstanding Letters of Credit.
"LIBO Rate" shall mean, relative to any day for the then current
Interest Period relating to any LIBO Rate Loan, the rate of interest quoted by
the Bank two (2) Business Days prior to the first day of such Interest Period
for the offering by the Bank to prime commercial banks in the London interbank
Eurodollar market of Dollar deposits in immediately available funds for a period
equal to such Interest Period and in an amount equal to the amount of such LIBO
Rate Loan.
16
"LIBO Rate Loan" shall mean the Loans or any portion thereof bearing
interest at a rate of interest determined by reference to the LIBO Rate.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien, charge, claim or encumbrance, or
preference, priority or other security agreement or preferential arrangement in
respect of any asset of the Borrower or any Subsidiary of the Borrower of any
kind or nature whatsoever including, without limitation, any conditional sale or
other title retention agreement, any lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement under the Uniform Commercial Code or comparable
law of any jurisdiction.
"Loans" means the Revolving Credit Advances (including Alternate
Currency Loans), Letters of Credit and unreimbursed drawings thereunder and all
other extensions of credit hereunder.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
Borrower on a Consolidated Basis, (b) the ability of the Financial Parties,
taken as a whole, to pay any of the Loans or any of the other Obligations in
accordance with the terms of the Agreement or any Ancillary Agreement, (c) the
Collateral or Agent's Liens, on behalf of itself and Lenders, on the Collateral
or the priority of such Liens, or (d) Agent's or any Lender's rights and
remedies under the Agreement and the Ancillary Agreements.
"Matured Funds Rate" means the rate of interest, announced by BNY from
time to time, as the rate applicable to matured funds, such rate to be adjusted
automatically on the effective date of any change in such rate as announced by
BNY.
"Maximum Loan Amount" means at any time, $175,000,000 less the
outstanding balance of U.K. Subsidiary Obligations and Canadian Subsidiary
Obligations. The Maximum Loan Amount shall be subject to adjustment from time to
time as set forth in Section 2.6 hereof.
"Media Billing Receivables" means Receivables (other than Recruitment
Media Billing Receivables) where the Receivable is not invoiced until the
Publication Date has passed, generally because the Borrower must deliver to the
Customer a copy of the advertisement which appears in the directory publication
with the invoice.
"Minimum Volume Charges" shall have the meaning set forth in Section
4(b)(ii).
"Net Face Amount" of Receivables or Affiliate Receivables means the
gross face invoice amount thereof, less returns, discounts (the calculation of
which shall be determined by Agent where optional terms are given), anticipation
or any other unilateral deductions taken by Customers, and credits and
allowances to Customers of any nature.
"Net Worth" at a particular date means (a) the aggregate amount of all
assets of Borrower on a Consolidated Basis as may be properly classified as such
in accordance with GAAP
17
consistently applied (including such assets as are properly classified as
intangible assets under GAAP), less (b) the aggregate amount of all liabilities
of Borrower on a Consolidated Basis.
"Obligations" means and includes all Loans, all advances, debts,
liabilities, obligations, covenants and duties owing by Borrower to (a) all
Lenders (other than BNY) direct or indirect, absolute or contingent, due or to
become due, contractual or tortious, liquidated or unliquidated, whether
existing by operation of law or otherwise now existing or hereafter arising
under or as a result of this Agreement, the Ancillary Agreements and any
Interest Rate Agreement entered into with any Lender (other than BNY) (or any
Affiliate of a Lender (other than BNY)), together with all reasonable expenses
and reasonable attorneys fees chargeable to Borrower's Account or incurred by a
Lender in connection with Borrower's Account whether provided for herein or in
any Ancillary Agreement and (b) BNY (or any corporation that directly or
indirectly controls or is controlled by or is under common control with BNY) of
every kind and description (whether or not evidenced by any note or other
instrument and whether or not for the payment of money or the performance or
non-performance of any act), direct or indirect, absolute or contingent, due or
to become due, contractual or tortious, liquidated or unliquidated, whether
existing by operation of law or otherwise now existing or hereafter arising
including, without limitation, any debt, liability or obligation owing from
Borrower to others which BNY may have obtained by assignment or otherwise and
further including, without limitation, all interest, charges or any other
payments Borrower is required to make by law or otherwise arising under or as a
result of this Agreement, the Ancillary Agreements and any Interest Rate
Agreement entered into with a BNY Company, together with all reasonable expenses
and reasonable attorneys' fees chargeable to Borrower's Account or incurred by
Lender in connection with Borrower's Account whether provided for herein or in
any Ancillary Agreement. "Obligations" shall also include all Canadian
Subsidiary Obligations and U.K. Subsidiary Obligations and all other
obligations, advances, debts, liabilities, covenants and duties owed by any
Subsidiary of Borrower to a BNY Company or another Foreign Subsidiary Lender.
"Original Owner" means Xxxxxx XxXxxxxx.
"Partial Quarter" shall have the meaning set forth in Section 4(b)(ii).
"Permitted Liens" means (i) liens of carriers, warehousemen, mechanics
and materialmen incurred in the ordinary course of business securing sums not
overdue; (ii) liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, relating to employees, securing sums (a) not
overdue or (b) being diligently contested in good faith provided that adequate
reserves with respect thereto are maintained on the books of Borrower in
conformity with GAAP, (iii) liens in favor of Agent on behalf of Lenders and
Lender Affiliates or Persons party to an Interest Rate Agreement permitted
hereunder, (iv) liens for taxes (a) not yet due or (b) being diligently
contested in good faith, provided that adequate reserves with respect thereto
are maintained on the books of Borrower in conformity with GAAP, (v) liens
placed on equipment or on any fixed assets (a) within 180 days of their
acquisition to secure a portion of the purchase price thereof or (b) which are
being leased under a Capitalized Lease provided any such lien shall not encumber
any other property of Borrower, (vi) liens securing borrowings under a
18
Foreign Secured Facility pursuant to Section 6(c) and (vii) liens specified on
Schedule 1(A) hereto.
"Permitted Period" shall have the meaning provided in Section 2.1(d)
hereof.
"Permitted Unsecured Indebtedness" shall mean Unsecured Indebtedness
which complies with each of the following requirements: (A) at the time of and
immediately after giving effect to such Unsecured Indebtedness, there shall not
have occurred an Event of Default or Incipient Event of Default, (B) such
Unsecured Indebtedness shall not require any covenants, financial or otherwise,
which are more burdensome or restrictive than those set forth in this Agreement
and (C) if at the time of incurrence or at any time thereafter the outstanding
principal balance of such Unsecured Indebtedness is equal to or exceeds
$15,000,000 in the aggregate, then by its terms such Unsecured Indebtedness
shall expressly provide that (1) following the occurrence of an Incipient Event
of Default or Event of Default, (x) the Borrower shall make no partial payment
or repayment in full of such Unsecured Indebtedness, whether in cash, in kind,
in securities or in any other property ("Distribution") and, (y) following
receipt of notice from Agent of the occurrence of an Event of Default or
Incipient Event of Default ("BNY Default Notice") the holders of Unsecured
Indebtedness (the "Unsecured Creditor") shall not be entitled to receive or
retain any Distribution, (2) the Unsecured Creditor shall not exercise any
remedies, commence any action or proceeding to recover any amounts due or to
become due or accelerate the maturity of such Unsecured Indebtedness
(collectively, "Creditor Remedies"), in the case of (1) and (2) above, for a
period of one-hundred twenty (120) days following receipt by the Unsecured
Creditor of a BNY Default Notice or the receipt by Agent of an Unsecured
Creditor Default Notice (as hereafter defined), provided that the foregoing
limitation on the exercise of Creditor Remedies shall not be applicable
following the maturity or acceleration of all the Obligations and (3) the
Unsecured Creditor shall deliver notice to Agent, simultaneously with any
delivery to Borrower, of the occurrence of a default or event of default with
respect to the Unsecured Indebtedness and its intention to exercise Creditor
Remedies with respect to the Unsecured Indebtedness (an "Unsecured Creditor
Default Notice").
"Person" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prime Rate" means the prime commercial lending rate of Bank as
publicly announced in New York, New York to be in effect from time to time, such
rate to be adjusted automatically, without notice, on the effective date of any
change in such rate. This rate of interest is determined from time to time and
is neither tied to any external rate of interest or index nor does it
necessarily reflect the lowest rate of interest actually charged to any
particular class or category of customers.
"Projections" means, with respect to Borrower on a Consolidated Basis
and on a consolidating basis, forecasted: (a) balance sheets; (b) profit and
loss statements; and (c) cash flow statements; all prepared on a Subsidiary by
Subsidiary or division by division basis, if applicable, and otherwise
consistent with the historical financial statements of Borrower, together with
appropriate supporting details and a statement of underlying assumptions.
19
"Publication Date" shall mean (a) with respect to directory
publications, the date on which such issue takes effect (by way of example the
Publication Date for the Dover Area of New Jersey July 1998 to June 1999 Yellow
Book would be July 1, 1998), (b) with respect to publications other than
directory publications, the date on which such publication is released to the
general public, and (c) with respect to TV, radio and other electronic media,
the date an advertisement is aired to the general public.
"Purchasing Lender" shall have the meaning set forth in Section 15
hereof.
"Quarterly Minimum" means $100,000,000.
"Receivables" means and includes all of Borrower's now owned or
hereafter acquired accounts and contract rights (including, without limitation,
Affiliate Receivables acquired by Borrower, Receivables which are not documented
by an invoice, Recruitment Media Billing Receivables and Media Billing
Receivables), instruments, insurance proceeds, documents, chattel paper, letters
of credit and Borrower's rights to receive payment thereunder, any and all
rights to the payment or receipt of money or other forms of consideration of any
kind at any time now or hereafter owing or to be owing to Borrower, all proceeds
thereof and all files in which a Financial Party has any interest whatsoever
containing information identifying or pertaining to any of Borrower's
Receivables, together with all of Borrower's rights to any merchandise which is
represented thereby, and all Borrower's right, title, security and guaranties
with respect to each Receivable, including, without limitation, all rights of
stoppage in transit, replevin and reclamation and all rights as an unpaid
vendor.
"Receivables Advance Rate" shall have the meaning set forth in Section
2.1(a)(y)(i).
"Recruitment Media Billing Receivables" shall mean Receivables (other
than Media Billing Receivables) arising out of recruitment advertising services
where the Receivable is not invoiced until the respective advertisement has been
published in the newspaper, magazine, or other publication or where the
advertisement has been broadcast on the radio, television or other electronic
media.
"Required Lenders" shall mean (i) Lenders holding at least fifty-one
percent (51%) in aggregate principal amount of the Loans outstanding at that
time or (ii) if a single Lender holds fifty-one percent (51%) or more of the
Loans outstanding, the lender holding at least fifty-one (51%) in principal
amount of Loans outstanding at that time plus one additional Lender.
"Retained Goods" shall have the meaning set forth in Section 8(h).
"Revolving Credit Advances" shall mean all Loans (including Dollar
Loans and Alternate Currency Loans) made hereunder other than Letters of Credit.
"Scheduled Affiliates" shall mean those Persons which are listed on
Schedule 1(B) and which are Guarantors hereunder as well as those Scheduled
Affiliates that hereafter become Guarantors and Scheduled Affiliates hereunder
upon written notice to Agent and execution of all necessary documentation by
such Scheduled Affiliate.
20
"Settlement Date" means with respect to all Receivables and Affiliate
Receivables, the same day on which the applicable Receivable or Affiliate
Receivable is actually collected by Agent.
"Sterling" and the sign "L" mean the lawful currency of the
United Kingdom.
"Sterling Loans" shall mean, as applicable, (i) Domestic Sterling Loans
and (ii) UK Subsidiary Loans.
"Stock Pledge Agreement" shall mean the Stock Pledge Agreement executed
by Borrower dated November 4, 1997, as amended.
"Subsidiary" of any Person means a corporation or other entity 50% or
more of whose shares of stock or other ownership interests having ordinary
voting power (other than stock or other ownership interests having such power
only by reason of the happening of a contingency) to elect a majority of the
directors of such corporation, or other Persons performing similar functions for
such entity, are owned, directly or indirectly, by such Person.
"Subsidiary Stock" shall mean the issued and outstanding shares of
stock of each Subsidiary directly owned by Borrower.
"Term" means the Closing Date through and including November ___, 2003,
subject to acceleration upon the occurrence of an Event of Default hereunder or
other termination hereunder.
"TMP Canada" shall mean TMP Worldwide Ltd., an Ontario corporation.
"TMP UK" shall mean TMP Worldwide Holdings Limited.
"Total Commitments" shall mean the sum of the U.S. Commitments, the
U.K. Commitments and the Canadian Commitments.
"Total Commitment Percentage" of any Lender or Foreign Subsidiary
Lender shall mean the percentage of the aggregate of the Total Commitments
constituted by its Total Commitment and as set forth opposite such Lender's or
Foreign Subsidiary Lender's name on Exhibit 1.3(A) under the caption "Total
Commitment Percentage", as same may be adjusted upon any assignment by a Lender
pursuant to Section 15 hereof.
"U.K. Base Rate" shall mean the base commercial lending rate of Lloyds
Bank Plc., as publicly announced in London, England to be in effect from time to
time, such rate to be adjusted automatically, without notice, on the effective
date of any change in such rate.
"U.K. Base Rate Loans" shall mean the Sterling Loans or any portion
thereof bearing interest at a rate of interest determined by reference to the
U.K. Base Rate.
21
"U.K. Collateral" shall mean all of the assets (both real and personal)
of Borrower and each of its Subsidiaries which are subject to liens or security
interests described in the U.K. Security Documents.
"U.K. Commitment" shall mean BNY UK's obligation to make U.K.
Subsidiary Loans in an amount not to exceed the amounts set forth in the U.K.
Credit Agreements, as such amount may be reduced from time to time as provided
therein.
"U.K. Credit Agreements" shall mean the Invoice Discounting Agreements
between each of the U.K. Subsidiaries and BNY UK pursuant to which BNY UK makes
Sterling Loan accommodations to the U.K. Subsidiaries and all other agreements
executed in connection therewith.
"U.K. Guaranty" shall mean the guaranty issued by Borrower or a
Guarantor of the obligations of the U.K. Subsidiaries to BNY UK under the U.K.
Credit Agreement.
"U.K. LIBO Rate" shall mean the rate of interest equal to the offered
quotation notified to the Agent by the Bank's London branch, two (2) Business
Days prior to the first day of each calendar quarter for the offering by the
Bank's London branch to prime commercial banks in the London interbank market
for Sterling deposits in immediately available funds for a period equal to one
month.
"U.K. Receivables" means and includes all of each U.K. Subsidiary's now
owned or hereafter acquired accounts and contract rights, instruments, insurance
proceeds, documents, chattel paper, letters of credit and each U.K. Subsidiary's
rights to receive payment thereunder, any and all rights to the payment or
receipt of money or other forms of consideration of any kind at any time now or
hereafter owing or to be owing to a U.K. Subsidiary, all proceeds thereof and
all files in which any U.K. Subsidiary has any interest whatsoever containing
information identifying or pertaining to any of a U.K. Subsidiary's Receivables,
together with all of such U.K. Subsidiary's rights to any merchandise which is
represented thereby, and all of such U.K. Subsidiary's right, title, security
and guaranties with respect to each U.K. Receivable, including, without
limitation, all rights of stoppage in transit, replevin and reclamation and all
rights as an unpaid vendor.
"U.K. Security Documents" shall mean each of the debentures executed by
each U.K. Subsidiary in favor of BNY UK pursuant to which BNY UK is granted a
Lien upon the U.K. Collateral as security for the U.K. Subsidiary Obligations
and any guaranty and guaranty security agreement executed by Borrower or any
other Person as collateral security for the U.K. Subsidiary Obligations, each as
same may be amended, modified, supplemented or ratified from time to time.
"U.K. Subsidiaries" shall mean Xxxxxx Xxxxxx, TMP UK, TMP Worldwide
Limited, Lonsdale Advertising Services Limited, MSL International Limited and
MSL Advertising Services Limited.
22
"U.K. Subsidiary Loans" shall mean loans made by BNY UK to the U.K.
Subsidiaries in accordance with the U.K. Credit Agreements.
"U.K. Subsidiary Obligations" shall have the meaning given to the term
"Obligations" under the U.K. Credit Agreements.
"Unbilled Receivables" shall mean Receivables which have not been
documented by an invoice.
"Unsecured Creditor" shall mean any holder of Unsecured Indebtedness.
"Unsecured Indebtedness" shall mean Indebtedness of a Person which is
not secured by any assets of such Person.
"U.S. Commitment" shall mean, as to each Lender, its obligation to make
Loans to Borrower pursuant to the terms of this Agreement in an amount not to
exceed at any one time outstanding the amount set forth opposite such Lender's
name on Exhibit 1.3 under the heading "U.S. Commitment", as such amount may be
reduced or increased upon any assignment by or to such Lender pursuant to
Section 15 hereof.
"U.S. Commitment Percentage" of any Lender shall mean the percentage of
the aggregate of Loans to Borrower constituted by its U.S. Commitment, as more
fully described on Exhibit 1.3(B) as same may be adjusted upon any assignment by
a Lender pursuant to Section 15 hereof.
"Volume" shall have the meaning set forth in Section 4(b)(ii).
"Week" shall mean the time period commencing with a Wednesday and
ending on the following Tuesday.
"Year 2000 Issue" means the material failure of computer software,
hardware and firmware systems and equipment containing embedded computer chips
to properly receive, transmit, process, manipulate, store, retrieve, re-transmit
or in any other way utilize data and information due to the occurrence of the
year 2000 or the inclusion of dates on or after January 1, 2000.
(B) Accounting Terms. Any accounting terms used in this Agreement which
are not specifically defined shall have the meanings customarily given them in
accordance with GAAP.
(C) Other Terms. All other terms used in this Agreement and defined in
the Uniform Commercial Code as adopted in the State of New York, shall have the
meaning given therein unless otherwise defined herein.
11
2. Loans; Letters of Credit.
2.1. Revolving Credit Advances
23
(a) Formula Amount. Subject to the terms and conditions set
forth herein and in the Ancillary Agreements, each Lender, severally
and not jointly, shall make Revolving Credit Advances to Borrower from
time to time during the Term which, in aggregate amounts outstanding at
any time equal such Lender's U.S. Commitment Percentage of (but not
exceeding such Lender's U.S. Commitment) the lesser of (x) the Maximum
Loan Amount less the aggregate amount of outstanding Letters of Credit
and unreimbursed drawings under Letters of Credit or (y) an amount
equal to the sum of:
(i) 90%, subject to the provisions of Section 2.1(d)
hereof ("Receivables Advance Rate") of the net face amount of
Eligible Receivables and Eligible Unbilled Receivables, minus
(ii) the aggregate amount of outstanding Letters of
Credit, minus
(iii) the aggregate amount of unreimbursed drawings
under Letters of Credit, minus
(iv) such reserves as Agent may reasonably deem
proper and necessary from time to time in the exercise of its
good faith judgment.
The sum of 2.1(a)(y)(i), minus (ii) minus (iii) minus (iv) shall be
referred to as the "Formula Amount".
(b) Dollar Loans and Alternate Currency Loans. Revolving
Credit Advances may be (i) Dollar Loans in which case they may be made
as one or more (A) Alternate Base Rate Loans, (B) LIBO Rate Loans or
(C) any combination thereof, (ii) in Agent's discretion, Alternate
Currency Loans, in which case they may be made as one or more (A)
Alternate Currency Base Rate Loans, (B) Alternate Currency LIBO Rate
Loans or (C) any combination thereof, provided, however, in no event
shall
(1) the aggregate outstanding principal balance of
(a) Domestic Sterling Loans (determined on the basis of the
Dollar Equivalent of each Sterling Loan) exceed $50,000,000
less the outstanding balance of the Dollar Equivalent of U.K.
Subsidiary Obligations and (b) Domestic Canadian Loans
(determined on the basis of the Dollar Equivalent of each
Canadian Loan) exceed $10,000,000 less the outstanding balance
of the Dollar Equivalent of Canadian Subsidiary Obligations,
(2) the sum of (a) Domestic Sterling Loans plus (b)
Domestic Canadian Loans plus (c) U.K. Subsidiary Obligations
plus (d) Canadian Subsidiary Obligations (each determined on
the basis of the Dollar Equivalent thereof) plus (e) any other
Alternate Currency Loans exceed a Dollar Equivalent amount
equal to 50% of the aggregate outstanding amount of Revolving
Credit Advances or such larger amount as Agent in its sole
discretion deems acceptable, or
24
(3) the sum of (a) Revolving Credit Advances
consisting of Dollar Loans plus (b) Revolving Credit Advances
consisting of the Dollar Equivalent of Alternate Currency
Loans plus (c) the aggregate amount of outstanding Letters of
Credit plus (d) the aggregate amount of unreimbursed drawings
under Letters of Credit exceed the lesser of (x) the Maximum
Loan Amount or (y) the Formula Amount.
(c) Permitted Overadvances. Notwithstanding the limitations
set forth above, BNY, for its own account, retains the right to lend
Borrower from time to time such amounts in excess of such limitations
as BNY may determine in its sole discretion. The term "BNY
Overadvances" means voluntary overadvances made by BNY in its sole
discretion which shall (A) be designated by BNY as a BNY Overadvance,
(B) be due and payable to BNY on demand (subject to the last sentence
of this subsection (c)), (C) not exceed $7,500,000 at any time
outstanding, (D) be secured by the Collateral on a basis junior to all
other Obligations of Borrower hereunder and (E) not result in the then
aggregate Revolving Credit Advances outstanding exceeding the Maximum
Loan Amount. BNY shall not demand repayment of a BNY Overadvance,
unless after giving effect to such repayment the then aggregate
outstanding principal balance of outstanding Loans (including any BNY
Overadvances) is less than the lesser of (A) the Maximum Loan Amount or
(B) the Formula Amount.
(d) Discretionary Rights. Borrower acknowledges that the good
faith exercise of Agent's discretionary rights hereunder may result
during the Term in one or more increases or decreases in the
Receivables Advance Rate and Borrower hereby consents to any such
increases or decreases which may limit or restrict advances requested
by Borrower.
2.2. (a) Canadian Subsidiary Loans. Canadian Subsidiary Loans shall be
made solely pursuant to and in accordance with the Canadian Credit Agreement.
(b) UK Subsidiary Loans. UK Subsidiary Loans shall be made solely
pursuant to and in accordance with the U.K. Credit Agreements.
2.3. Charges to Borrower's Account.
(a) On the date that any interest, fees, costs, charges or
commissions to Agent or any Lender are due, Borrower shall thereby be
deemed to have requested, and Agent is hereby authorized at its
discretion to make and charge to Borrower's Account, a Revolving Credit
Advance to Borrower as of such date in an amount equal to such unpaid
interest, fees, costs, charges or commissions.
(b) Any sums expended by Agent or any Lender due to Borrower's
failure to perform or comply with its obligations under this Agreement,
including but not limited to the payment of taxes, insurance premiums
or leasehold obligations, shall be charged to Borrower's Account as a
Revolving Credit Advance and added to the Obligations.
2.4. Statement of Account. Agent will account to Borrower monthly with
a statement of all Loans and other advances, charges and payments made pursuant
to this Agreement
25
("Borrower's Account"), and such account rendered by Agent shall be deemed
final, binding and conclusive unless Agent is notified by Borrower in writing to
the contrary within sixty (60) days of the date each account was rendered
specifying the item or items to which objection is made.
2.5. Disbursement of Loan Proceeds. All Loans shall be disbursed from
whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrower to Agent and Lenders,
shall be charged to Borrower's Account. During the Term, Borrower may use the
Revolving Credit Advances by borrowing, prepaying and reborrowing, all in
accordance with the terms and conditions hereof. The proceeds of each Revolving
Credit Advance requested by the Borrower or deemed to have been requested by the
Borrower shall, with respect to requested Revolving Credit Advances to the
extent the Lenders make such Revolving Credit Advances be made available to
Borrower on the day so requested by way of credit to Borrower's operating
account at such bank as Borrower may designate following notification to Agent,
in immediately available federal or other immediately available funds or, with
respect to Revolving Credit Advances deemed to have been requested, be disbursed
to the Agent in payment of outstanding Obligations.
2.6. Maximum Loan Amount; Adjustment of Maximum Loan Amount. The
aggregate balance of Loans outstanding at any time shall not exceed the lesser
of (x) the Maximum Loan Amount or (y) the Formula Amount. Upon Borrower's
written request, the $175,000,000 limit on the Maximum Loan Amount may be
increased to an amount not to exceed $225,000,000 effective upon the
satisfaction of each of the following conditions: (i) no Incipient Event of
Default or Event of Default shall have occurred and be continuing, (ii) each
such increase in the Maximum Loan Amount shall be made in increments of
$10,000,000, (iii) Borrower shall pay Agent for the benefit of Lenders
participating in such increase a fee equal to one quarter of one percent (0.25%)
of the amount of each increase (the "Line Increase Fee") and (iv) Required
Lenders shall consent in writing to each such increase provided that no Lender
shall be required to increase its Commitment Percentage or its Commitment
without its prior written consent and provided further that each dissenting
Lender hereby consents to any reduction in its Commitment Percentage resulting
from any such increase in the Maximum Loan Amount. The Line Increase Fee shall
be paid to Agent for the benefit of Lenders in proportion to each Lender's pro
rata share of such increase.
2.7. Letters of Credit. Subject to the terms and conditions hereof,
Agent shall (a) issue or cause the issuance of Letters of Credit ("Letters of
Credit") provided, however, that Agent will not be required to issue or cause to
be issued any Letters of Credit to the extent that the face amount of such
Letters of Credit would then cause the sum of (i) the outstanding Revolving
Credit Advances plus (ii) outstanding Letters of Credit (with the requested
Letter of Credit being deemed to be outstanding for purposes of this
calculation) plus (iii) unreimbursed portion of drawn Letters of Credit to
exceed the lesser of (x) the Maximum Loan Amount or (y) the Formula Amount which
is calculated as if the requested Letter of Credit had been issued. The maximum
amount of outstanding Letters of Credit under this Agreement, the U.K. Credit
Agreement and the Canadian Credit Agreement shall not exceed $25,000,000
(including the Dollar Equivalent of any Alternate Currency Letters of Credit) in
the aggregate at any time. All disbursements or payments related to Letters of
Credit shall be deemed to be Revolving Credit Advances (and to the extent so
deemed shall not be considered unreimbursed pursuant to clause
26
(iii) of this Section 2.7) and shall bear interest at the applicable Contract
Rate; Letters of Credit that have not been drawn upon shall not bear interest.
Letters of Credit shall be subject to the terms and conditions set forth in the
Letter of Credit and Security Agreement attached hereto as Exhibit 2.7.
2.8. Issuance of Letters of Credit.
(a) Borrower may request Agent to issue or cause the issuance
of a Letter of Credit by delivering to Agent Agent's standard form of
Letter of Credit and Security Agreement together with Bank's standard
form of Letter of Credit Application (collectively, the "Letter of
Credit Application"), completed to the satisfaction of Agent; and such
other certificates, documents and other papers and information as Agent
may reasonably request.
(b) Each Letter of Credit shall, among other things, (i)
provide for the payment of sight drafts when presented for honor
thereunder in accordance with the terms thereof and when accompanied by
the documents described therein and (ii) have an expiry date not later
than twelve (12) months after such Letter of Credit's date of issuance
and in no event later than the last day of the Term. Each Letter of
Credit Application and each Letter of Credit shall be subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 (except that
after January 1, 1998 each Standby Letter of Credit issued thereafter
shall be subject instead to ISP98), and any amendments or revision
thereof and, to the extent not inconsistent therewith, the laws of the
State of New York.
2.9. Requirements For Issuance of Letters of Credit.
(a) In connection with the issuance of any Letter of Credit
Borrower shall indemnify, save and hold Agent and each Lender harmless
from any loss, cost, expense, or liability, including, without
limitation, payments made by Agent and any Lender, and expenses and
reasonable attorneys' fees incurred by Agent or any Lender arising out
of, or in connection with, any Letter of Credit to be issued or created
for Borrower. Borrower shall be bound by Agent's or any issuing or
accepting bank's regulations and good faith interpretations of any
Letter of Credit issued or created for Borrower's Account, although
this interpretation may be different from Borrower's own; and neither
Agent nor any Lender, nor the bank which opened the Letter of Credit,
nor any of its correspondents shall be liable for any error,
negligence, or mistakes, whether of omission or commission, in
following Borrower's instructions or those contained in any Letter of
Credit or of any modifications, amendments or supplements thereto or in
issuing or paying any Letter of Credit, except for Agent's or any
Lender's or such correspondents' willful misconduct.
(b) Borrower shall authorize and direct any bank which issues
a Letter of Credit at Agent's direction to name Borrower as the
"Account Party" therein and to deliver to Agent all instruments,
documents, and other writings and property received by the bank
pursuant to the Letter of Credit and to accept and rely upon Agent's
instructions and agreements with respect to all matters arising in
connection with the Letter of Credit, the application therefor or any
acceptance therefor.
27
(c) In connection with all Letters of Credit issued or caused
to be issued by Agent under this Agreement, Borrower hereby appoints
Agent, or its designee, as its attorney, with full power and authority
(i) to sign and/or endorse Borrower's name upon any warehouse or other
receipts, letter of credit applications and acceptances; (ii) to sign
Borrower's name on bills of lading; (iii) to clear Inventory through
the United States of America Customs Department ("Customs") in the name
of Borrower or Agent or Agent's designee, and to sign and deliver to
Customs officials powers of attorney in the name of Borrower for such
purpose; and (iv) to complete in Borrower's name or Agent's, or in the
name of Agent's designee, any order, sale or transaction, obtain the
necessary documents in connection therewith, and collect the proceeds
thereof. Neither Agent nor its attorneys will be liable for any acts or
omissions nor for any error of judgment or mistakes of fact or law,
except for Agent's or its attorney's willful misconduct. This power,
being coupled with an interest, is irrevocable as long as any Letters
of Credit remain outstanding.
(d) Each Lender shall to the extent of the percentage amount
equal to the product of such Lender's U.S. Commitment Percentage times
the aggregate amount of all unreimbursed reimbursement obligations with
respect to the Letters of Credit be deemed to have irrevocably
purchased an undivided participation in each such unreimbursed
reimbursement obligation. In the event that at the time a disbursement
is made the outstanding balance of Revolving Credit Advances exceeds or
would exceed, with the making of such disbursement, the lesser of the
Maximum Loan Amount or the Formula Amount, and such disbursement is not
reimbursed by Borrower within two (2) Business Days, Agent shall
promptly notify each Lender and upon Agent's demand each Lender shall
pay to Agent such Lender's proportionate share of such unreimbursed
disbursement together with such Lender's proportionate share of Agent's
unreimbursed costs and expenses relating to such unreimbursed
disbursement. Upon receipt by Agent of a repayment from Borrower of any
amount disbursed by Agent for which Agent had already been reimbursed
by the Lenders, Agent shall deliver to each of the Lenders that
Lender's pro rata share of such repayment. Each Lender's participation
commitment shall continue until the last to occur of any of the
following events: (A) Agent ceases to be obligated to issue Letters of
Credit hereunder; (B) no Letter of Credit issued hereunder remains
outstanding and uncancelled or (C) all Persons (other than Borrower)
have been fully reimbursed for all payments made under or relating to
Letters of Credit.
2.10. Use of Proceeds. Borrower shall use the proceeds of the Loans to
provide for its and its Subsidiaries' working capital needs and general
corporate purposes and to finance permitted acquisitions as provided herein.
2.11. Repayment of Loans.
(a) Subject to Section 2.1(c) hereof with respect to BNY
Overadvances, Borrower shall be required to (i) make a mandatory
prepayment hereunder (or post cash collateral for outstanding Letters
of Credit in accordance with Section 3(c)(iii)) at any time that the
aggregate outstanding principal balance of the Loans made by Lenders to
Borrower hereunder is in excess of the lesser of the (x) Maximum Loan
Amount or (y) Formula Amount in an amount equal to such excess, and
(ii) repay on the expiration of the Term (x) the then
28
aggregate outstanding principal balance of Revolving Credit Advances
made by any Lender to Borrower hereunder together with accrued and
unpaid interest, fees, charges and commissions and (y) all other
amounts owed any Lender under this Agreement and the Ancillary
Agreements.
(b) Subject to Section 2.1(c) hereof with respect to BNY
Overadvances, each payment (including each prepayment) by Borrower on
account of the principal of and interest on the Revolving Credit
Advances, shall be applied to the Revolving Credit Advances pro rata
according to the U.S. Commitment Percentages of the Lenders. Except as
expressly provided herein, all payments (including prepayments) to be
made by Borrower on account of principal, interest and fees shall be
made without set-off or counterclaim and shall be made to Agent on
behalf of the Lenders, in each case on or prior to 2:00 P.M., New York
time, in Dollars, with respect to Dollar Loans and in the applicable
Alternate Currency with respect to Alternate Currency Loans and in
immediately available funds.
(c) Unless Agent shall have been notified by telephone,
confirmed in writing, by any Lender that such Lender will not make the
amount which would constitute its U.S. Commitment Percentage of the
Loans available to Agent, Agent may (but shall not be obligated to)
assume that such Lender shall make such amount available to Agent and,
in reliance upon such assumption, make available to Borrower a
corresponding amount. Agent will promptly notify Borrower of its
receipt of any such notice from a Lender. If such amount is made
available to Agent on a date after a Lender Settlement Date, such
Lender shall pay to Agent on demand an amount equal to the product of
(i) the daily average federal funds rate (computed on the basis of a
year of 360 days) during such period as quoted by Agent, times (ii)
such amount, times (iii) the number of days from and including such
Lender Settlement Date to the date on which such amount becomes
immediately available to Agent. A certificate of Agent submitted to any
Lender with respect to any amounts owing under this paragraph (c) shall
be conclusive, in the absence of manifest error. If such amount is not
in fact made available to Agent by such Lender within three (3)
Business Days after such Lender Settlement Date, Agent shall be
entitled to recover such an amount, with interest thereon following
such three (3) Business Day period at the rate per annum then
applicable to Revolving Credit Advances hereunder, on demand from
Borrower; provided, however, that Agent's right to such recovery shall
not prejudice or otherwise adversely affect Borrower's rights (if any)
against such Lender.
(d) If on any date the aggregate amount of Loans, based upon
the Dollar Equivalent thereof, shall exceed the lesser of the Maximum
Loan Amount and the Formula Amount, Borrower shall prepay the Loans in
an aggregate principal amount such that immediately after giving effect
thereto, the aggregate amount of Loans shall not exceed the lesser of
the Maximum Loan Amount and Formula Amount based on the Dollar
Equivalent thereof. In addition, if on any date that the Dollar
Equivalent is required to be calculated pursuant to Section 29, the
outstanding principal balance of (i) Alternate Currency Loans
(including Domestic Sterling Loans and Domestic Canadian Loans)
(determined on the basis of the Dollar Equivalent thereof) shall exceed
a Dollar Equivalent amount equal to fifty percent (50%) of the
outstanding amount of Revolving Credit Advances, (ii) Domestic Sterling
Loans (determined on the basis of the Dollar Equivalent thereof) shall
exceed $50,000,000, or (iii) Domestic Canadian Loans (determined on the
basis of the Dollar Equivalent thereof) shall exceed $10,000,000,
Borrower shall prepay such Alternate Currency Loans in an aggregate
29
principal amount such that immediately after giving effect thereto, the
outstanding principal balance of the Alternate Currency Loans, Domestic
Sterling Loans and Domestic Canadian Loans (determined on the basis of
the Dollar Equivalent thereof) shall not exceed the limits set forth in
subsections (i), (ii) and (iii) above. Agent may increase each of the
limits set forth in subsections (i), (ii) and (iii) above in the
exercise of its sole discretion provided that at the time of such
increase and after giving effect to any additional Alternate Currency
Loans, the outstanding balance of Alternate Currency Loans does not
exceed a Dollar Equivalent amount equal to fifty percent (50%) of the
outstanding amount of Revolving Credit Advances or such larger amount
as Agent in its discretion deems acceptable. Borrower shall indemnify
Agent and each Lender and hold Agent and each Lender harmless from and
against any and all losses or expenses that Agent and Lenders may
sustain or incur as a consequence of any change in the applicable
exchange rate affecting any Alternate Currency Loans.
2.12. Procedure for Revolving Credit Advances.
(a) Notice of Borrowing; Alternate Base Rate Loans. Borrower
may (subject to the provisions of Sections 2.12(b) and (c) below), by
telephonic notice (or at Agent's request by written notice) to Agent
("Borrowing Notice"), request a borrowing of Revolving Credit Advances
which bear interest at the Alternate Base Rate or the Alternate
Currency Base Rate prior to 1:00 P.M. New York time (i) on the Business
Day of its request to incur, on that day, a Dollar Loan and (ii) at
least one (1) Business Day prior to the date of borrowing specified in
its request to incur a Domestic Canadian Loan or a Domestic Sterling
Loan and (iii) at least three (3) Business Days prior to the date of
borrowing specified in its request to incur any other Alternate
Currency Loan. The Borrowing Notice shall specify (i) the date of the
proposed borrowing (which shall be a Business Day), (ii) that portion
of the Revolving Credit Advances then being requested which are to be
(A) Dollar Loans and, if so, whether such borrowing is to consist of
one or more Alternate Base Rate Loans, LIBO Rate Loans or a combination
thereof or (B) as Alternate Currency Loans and, if so, whether such
borrowing is to consist of (1) a Domestic Sterling Loan, Domestic
Canadian Loan, an Alternate Currency Loan other than a Domestic
Sterling Loan or a Domestic Canadian Loan or a combination thereof and
(2) one or more Alternate Currency Base Rate Loans, Alternate Currency
LIBO Rate Loans or a combination thereof and (iii) the amount to be
borrowed, which amount shall be at least (A) $500,000 or an integral
multiple of $100,000 with respect to Alternate Base Rate Loans, (B)
(pound)250,000 or an integral multiple of (pound)100,000 with respect
to U.K. Base Rate Loans, (C) Cdn 100,000 or an integral multiple of Cdn
50,000 with respect to Canadian Base Rate Loans and (D) such amounts
and such integral amounts as Agent may require in its discretion with
respect to all other Alternate Currency Loans (but in no event greater
than a Dollar Equivalent equal to $250,000 or an integral multiple of
$100,000).
(b) Alternate Currency Loans. Alternate Currency Loans shall
be made at Agent's sole discretion and, notwithstanding the provisions
of paragraph (a) above, (i) Borrower and Agent may establish an
alternative procedure in the United Kingdom for the requesting and
making of Domestic Sterling Loans and (ii) Agent shall not be obligated
to accept Borrower's request for (A) a Domestic Sterling Loan at any
time that the U.K. Subsidiaries shall have the right to request an
advance under the U.K. Credit Agreement or (B) a Domestic Canadian Loan
at any time that the Canadian Subsidiaries shall have the right to
request an advance under the
30
Canadian Credit Agreement. All Revolving Credit Advances shall be
disbursed in the currency in which such Loan is to be made from
whichever office or other place Agent or the Alternate Currency Bank
may designate from time to time by notice to Borrower and, together
with any and all other Obligations of Borrower to Lenders, shall be
charged to Borrower's Account on Agent's books. Promptly upon receipt
of notice from Borrower of its request for an Alternate Currency Loan
or to continue an Alternate Currency Loan, Agent shall determine
whether the requested Alternate Currency will be readily available to
the Alternate Currency Bank in the interbank eurocurrency market in the
normal course of business in the amount and for the Interest Period
requested. Agent shall notify Borrower two (2) Business Days prior to
the effective date of the requested Alternate Currency Loan of the
determination made as to the availability of the requested Alternate
Currency and the related Alternate Currency Base Rate or Alternate
Currency LIBO Rate. If Agent notifies Borrower that such requested
Alternate Currency is available, the obligation to make or continue any
Alternate Currency Loan shall nevertheless be subject to the condition
that there shall have occurred no change in circumstances in the
interbank eurocurrency market after such notification and prior to the
first day of the relevant Interest Period, which change of circumstance
would, in the reasonable opinion of Agent or the Alternate Currency
Bank, make it impractical for the requested Alternate Currency Loan to
be made or continued in such Alternate Currency. If Agent or the
Alternate Currency Bank so determines that such a circumstance has
occurred in the interbank eurocurrency market or if Agent or the
Alternate Currency Bank determines that the requested Alternate
Currency is not readily available to it, Agent shall promptly notify
Borrower thereof and such Alternate Currency Loan shall not be made,
and any such continuation shall not be effected in such Alternate
Currency; and any Alternate Currency Loan outstanding in such Alternate
Currency that Borrower shall have so requested to be continued in such
Alternate Currency shall be repaid at the end of the then current
Interest Period, in the case of an Alternate Currency LIBO Rate Loan,
or within two (2) Business Days, in the case of an Alternate Currency
Base Rate Loan. Borrower may not request that any Alternate Currency
Loan originally made in one Alternate Currency be subsequently
converted into another Alternate Currency but must repay such Alternate
Currency Loan and, subject to the terms and conditions of this
Agreement, may reborrow in the other Alternate Currency. Any and all
Obligations due and owing hereunder may be charged to Borrower's
Account and shall constitute Revolving Credit Advances.
(c) LIBO Rate Loans. Notwithstanding the provisions of (a)
above, in the event Borrower desires to obtain a LIBO Rate Loan or an
Alternate Currency LIBO Rate Loan, it shall give Agent at least three
(3) Business Days' prior written notice; specifying (i) the date of the
proposed borrowing (which shall be a Business Day), (ii) the type of
borrowing and the amount to be borrowed, which amount on the date of
such Loan shall be not less than (A) $1,000,000 and be an integral
multiple of $500,000 with respect to LIBO Rate Loans, (B) Cdn 250,000
and be an integral multiple of Cdn 100,000 with respect to Canadian
LIBO Rate Loans and (C) such amounts and such integral amounts as Agent
may require in its discretion with respect to all other Alternate
Currency LIBO Rate Loans (but in no event greater than a Dollar
Equivalent equal to $250,000 or an integral multiple of $100,000), and
(iii) the duration of the first Interest Period therefor. "Interest
Periods" for LIBO Rate Loans and Alternate Currency LIBO Rate Loans
shall be for one, two, three or six months. No LIBO Rate Loan or
Xxxxxxxxx
00
Xxxxxxxx XXXX Rate Loan shall be made available to Borrower during the
continuance of an Incipient Event of Default or an Event of Default.
(d) Interest Periods. Each Interest Period of a LIBO Rate Loan
or an Alternate Currency LIBO Rate Loan shall commence on the date such
LIBO Rate Loan or Alternate Currency LIBO Rate Loan is made and shall
end on such date as Borrower may elect as set forth in (c)(iii) above
provided that:
(i) any Interest Period which would otherwise end on
a day which is not a Business Day shall be the next preceding
or succeeding Business Day as is the Bank's or the Alternate
Currency Bank's custom in the market to which such LIBO Rate
Loan or Alternate Currency LIBO Rate Loan relates;
(ii) no Interest Period shall end after the last day
of the Term; and
(iii) any Interest Period which begins on a day for
which there is no numerically corresponding day in the
calendar month during which such Interest Period is to end,
shall (subject to clause (i) above) end on the last day of
such calendar month.
Borrower shall elect the initial Interest Period applicable to a LIBO
Rate Loan or an Alternate Currency LIBO Rate Loan by its notice of borrowing
given to Agent pursuant to Section 2.12(a) or by its notice of conversion given
to Agent pursuant to Section 2.12(e), as the case may be. Borrower shall elect
the duration of each succeeding Interest Period by giving irrevocable written
notice to Agent of such duration not less than three (3) Business Days prior to
the last day of the then current Interest Period applicable to such LIBO Rate
Loan or Alternate Currency LIBO Rate Loan. If Agent does not receive timely
notice of the Interest Period elected by Borrower, Borrower shall be deemed to
have elected to convert such LIBO Rate Loan to an Alternate Base Rate Loan and
such Alternate Currency Loan to an Alternate Currency Base Rate Loan, in each
case subject to Section 2.12(e) hereof.
(e) Conversion. Provided that no Event of Default shall have
occurred and be continuing, Borrower may convert any LIBO Rate Loan,
Alternate Currency LIBO Rate Loan, Alternate Base Rate Loan or
Alternate Currency Base Rate Loan into a loan of another type in the
same aggregate principal amount provided that any conversion of a LIBO
Rate Loan or Alternate Currency LIBO Rate Loan shall be made only on
the last Business Day of the then current Interest Period applicable to
such LIBO Rate Loan. If Borrower desires to convert a Loan, it shall
give Agent not less than three (3) Business Days' prior written notice
to convert from an Alternate Base Rate Loan or Alternate Currency Base
Rate Loan to a LIBO Rate Loan or Alternate Currency LIBO Rate Loan or
one (1) Business Day's prior written notice to convert from a LIBO Rate
Loan or Alternate Currency LIBO Rate Loan to an Alternate Base Rate
Loan or Alternate Currency Base Rate Loan, specifying the date of such
conversion, the loans to be converted and if the conversion is from an
Alternate Base Rate Loan or Alternate Currency Base Rate Loan to any
LIBO Rate Loan or Alternate Currency LIBO Rate Loan, the duration of
the first Interest Period therefor. After giving effect to each such
conversion, there shall not be outstanding more than twenty (20) LIBO
Rate Loans and Alternate Currency LIBO Rate Loans, in the aggregate.
32
(f) Prepayment of LIBO Rate Loans. At its option and upon
three (3) Business Days' prior written notice, Borrower may prepay the
LIBO Rate Loans or the Alternate Currency LIBO Rate Loans in whole at
any time, with accrued interest on the principal being prepaid to the
date of such repayment. In the event that any prepayment of a LIBO Rate
Loan or Alternate Currency LIBO Rate Loan is required or permitted on a
date other than the last Business Day of the then current Interest
Period with respect thereto, Borrower shall indemnify Agent, Lenders
and the Alternate Currency Bank therefor in accordance with Section
2.12(g) hereof. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Agent, any Lender or
the Alternate Currency Bank to Borrower shall be conclusive absent
manifest error.
(g) Indemnification. Borrower shall indemnify Agent, Lenders
and the Alternate Currency Bank and hold Agent, Lenders and the
Alternate Currency Bank harmless from and against any and all losses or
expenses that Agent and Lenders and the Alternate Currency Bank may
sustain or incur as a consequence of any prepayment, conversion of or
any default by Borrower in the payment of the principal of or interest
on any LIBO Rate Loan or Alternate Currency LIBO Rate Loan or failure
by Borrower to complete a borrowing of, a prepayment of or conversion
of or to a LIBO Rate Loan or an Alternate Currency LIBO Rate Loan after
notice thereof has been given, including (but not limited to) any
interest payable by Agent, Lenders or the Alternate Currency Bank to
lenders of funds obtained by it in order to make or maintain its LIBO
Rate Loans and Alternate Currency LIBO Rate Loans hereunder.
3. Interest and Fees.
(a) Rate of Interest; Applicable Margin.
(i) Except as modified by Section 3(a)(iii) below,
interest on Revolving Credit Advances shall be paid to Agent
for the benefit of the Lenders in arrears on the last day of
each quarter with respect to Alternate Base Rate Loans and
Alternate Currency Base Rate Loans and at the end of each
Interest Period with respect to LIBO Rate Loans and Alternate
Currency LIBO Rate Loans or for LIBO Rate Loans and Alternate
Currency LIBO Rate Loans with an interest period in excess of
three months, at the earlier of (i) the three month
anniversary date of the commencement of such LIBO Rate Loan or
Alternate Currency LIBO Rate Loan or (ii) the end of the
Interest Period. Interest charges shall be computed on the
actual principal of Revolving Credit Advances outstanding
during the month (the "Monthly Advances") at a rate per annum
equal to the applicable Contract Rate. Whenever subsequent to
the date of this Agreement, the Alternate Base Rate or the
Alternate Currency Base Rate is increased or decreased, the
applicable Contract Rate for Alternate Base Rate Loans or
Alternate Currency Base Rate Loans, as the case may be, shall
be similarly changed without notice or demand of any kind by
an amount equal to the amount of such change in the Alternate
Base Rate or Alternate Currency Base Rate during the time such
change or changes remain in effect. Notwithstanding anything
in this Agreement to the contrary, the Applicable Margin for
Canadian Base Rate Loans and U.K. Base Rate Loans shall be
increased or decreased as the case may be, on the first day of
each calendar quarter, such that the Contract Rate for (i)
Canadian Base Rate Loans shall be equal to ten (10) basis
points in excess of the Contract Rate for one month Canadian
LIBO Rate
33
Loans in effect on the first Business Day of each quarter and
(ii) the Contract Rate for UK Base Rate Loans shall be equal
to the UK LIBO Rate for an Interest Period equal to one month
plus the Applicable Margin for Alternate Currency LIBO Rate
Loans in effect on the first Business Day of each quarter
provided that the Contract Rate for Canadian Base Rate Loans
and UK Base Rate Loans shall thereafter be increased or
decreased, as the case may be, upon any increase or decrease
of the Canadian Prime Rate and the UK Base Rates,
respectively.
(ii) Interest shall be computed on the basis
of actual days elapsed over a 360-day year.
(iii) Upon the occurrence and during the continuance
of an Event of Default, at Agent's option, interest shall be
payable at the Default Rate; provided, however, that the
Default Rate shall not be imposed until the expiration of a
period of thirty (30) days from the date of occurrence of any
Event of Default described in Section 18(c) of this
Agreement.
(iv) Notwithstanding the foregoing, in no
event shall interest exceed the maximum rate permitted under
any applicable law or regulation, and if any provision of this
Agreement or an Ancillary Agreement is in contravention of any
such law or regulation, such provision shall be deemed amended
to provide for interest at said maximum rate and any excess
amount shall either be applied, at Lender's option, to the
outstanding Loans in such order as Lender shall determine or
refunded by Lender to Borrower.
(v) Borrower shall pay principal, interest and all
other amounts payable hereunder, or under any Ancillary
Agreement, without any deduction whatsoever, including, but
not limited to, any deduction for any set-off or counterclaim.
(vi) So long as no Incipient Event of Default or
Event of Default shall have occurred and be continuing, the
Applicable Margin shall be increased or decreased, as the case
may be, prospectively, as provided in the definition of
Applicable Margin, as of the first day of the first month that
occurs more than five (5) days after delivery of Borrower's
financial statements delivered pursuant to Section 11 hereof,
based upon the ratios of Funded Indebtedness to EBITDA with
respect to the four (4) fiscal quarters then ended as reported
upon in the applicable financial statements. Notwithstanding
anything in this Agreement to the contrary, during the first
two consecutive fiscal quarters following the Closing Date the
Applicable Margin shall not exceed (a) (.875%) with respect to
LIBO Rate Loans and Alternate Currency LIBO Rate Loans,
(b) zero percent (0%) with respect to Alternate Base Rate
Loans, (c) (-0.775%) with respect to Canadian Base Rate Loans
and (d) (1.025%) with respect to U.K. Base Rate Loans. For
purposes of determining the Applicable Margin, Funded
Indebtedness and EBITDA shall be calculated on a pooling of
interest basis in accordance with GAAP from the commencement
of the four (4) fiscal quarter period then ended and being
reported upon, giving pro forma effect to Acquisitions made in
compliance with subsections 12.3(f) and (g), subject to
satisfaction of either one of the following conditions:
(A) Agent (or a BNY Company, solely with
respect to collateral securing Foreign Subsidiary
Obligations) shall have obtained and maintain either
(1) a perfected, first priority security interest in
100% of the Receivables of the
34
acquired company and each of its Subsidiaries or
(2) a pledge of 100% of the issued shares of each
acquired company which is a Domestic Person or at
least 65% of the issued shares of each acquired
company which is not a Domestic Person; or
(B) Agent (or the BNY Companies, solely
with respect to collateral securing Foreign
Subsidiary Obligations) shall have obtained and
shall maintain a security interest in (by having a
perfected, first priority security interest in
Receivables and/or a pledge of 100% of the issued
shares of each Subsidiary which is a Domestic Person
or at least 65% of the issued shares of each Foreign
Subsidiary) at least 85% of all Receivables of
Borrower on a Consolidated Basis.
To the extent Borrower demonstrates to
Agent's satisfaction that applicable laws
make a pledge of the shares or Receivables
of a Foreign Subsidiary illegal, impractical
or overly burdensome or costly, Borrower may
satisfy the requirements of subsection (A)
above by providing a pledge of 100% of the
shares of a Subsidiary which is U.S. holding
company for such Foreign Subsidiary.
(b) Intentionally Omitted.
(c) Fees.
(i) Unused Line Fee. In the event the average
closing daily unpaid balances of all Loans plus
the Dollar Equivalent of the outstanding balance
of Foreign Subsidiary Obligations during any
calendar month is less than $175,000,000 (as same
may be increased upon any increase in the Maximum
Loan Amount pursuant to Section 2.6 hereof),
Borrower shall pay to Agent, for the ratable
benefit of Lenders and Foreign Subsidiary Lenders,
a fee at a rate per annum equal to the Applicable
Margin for the Unused Line Fee of the amount by
which $175,000,000 (as same may be increased upon
any increase in the Maximum Loan Amount pursuant
to Section 2.6 hereof) exceeds such average daily
unpaid balance. Any Risk Participation purchased
or funded by the Lenders pursuant to Section 28(m)
shall not, for purposes of such Unused Line Fee,
be deemed to be usage of a Commitment or
outstanding Loans. Such fee shall be calculated on
the basis of a year of 360 days and actual days
elapsed, and shall be charged to Borrower's
Account on the first day of each month with
respect to the prior month.
(ii) Arranging Fee. Borrower shall pay Agent, for
the ratable benefit of Lenders, on the Closing
Date and on the date of each increase in the
Maximum Loan Amount (subject to Section 2.6) an
arranging fee equal to one quarter of one percent
(.25%) of the Maximum Loan Amount.
(iii) Letter of Credit Fees. Borrower shall pay
Agent, for the ratable benefit of Lenders, (i) (A)
for issuing or causing the issuance of a standby
Letter of Credit, a fee computed at a rate per
annum equal to the Applicable Margin for Standby
Letters of Credit of the outstanding amount
thereof from time to time and (B) for issuing or
causing the issuance of a
35
Letter of Credit that is not a standby Letter of Credit, a
fee equal to 1/4% of the original and each increase in the
face amount thereof for each 30 days or part thereof of
its term (the fees set forth in (A) and (B)
referred to as "Letter of Credit Fees") and (ii)
Bank's other customary charges payable in
connection with Letters of Credit as in effect
from time to time (which charges shall be
furnished to Borrower by Agent upon request). Such
fees and charges shall be payable (i) in the case
of any Letter of Credit, on its opening, (ii) in
the case of a standby Letter of Credit, (A)
monthly thereafter in advance and (B) upon each
increase in the outstanding amount thereof and
(iii) in the case of any Letter of Credit that is
not a standby Letter of Credit, at the time of
each increase in face amount thereof. Any such
charge in effect at the time of a particular
transaction shall be the charge for that
transaction, notwithstanding any subsequent change
in Bank's prevailing charges for that type of
transaction. All Letter of Credit Fees payable
hereunder shall be deemed earned in full on the
date when the same are due and payable hereunder
and shall not be subject to rebate or proration
upon the termination of this Agreement for any
reason. For purposes of calculating any fees
payable hereunder any amount which is denominated
in a currency other than Dollars shall be valued
based on the Dollar Equivalent. Upon the
occurrence and during the continuance of an Event
of Default, at Agent's option Letter of Credit
Fees shall be payable at a rate equal to one
percent (1%) in excess of the Letter of Credit
Fees set forth above; provided, however that such
default rate shall not be imposed until the
expiration of a period of thirty (30) days from
the date of occurrence of any Event of Default
described in Section 18(c) of this Agreement.
On demand, after the occurrence and during the
continuance of an Event of Default, Borrower will cause
cash to be deposited and maintained in an account with
Agent, as cash collateral, in an amount equal to one
hundred percent (100%) of the outstanding Letters of
Credit, and Borrower hereby irrevocably authorizes Agent,
in its discretion, on Borrower's behalf and in Borrower's
name, to open such an account and to make and maintain
deposits therein, or in an account opened by Borrower, in
the amounts required to be made by Borrower, out of the
proceeds of Receivables or other Collateral or out of any
other funds of Borrower coming into any Lender's possession
at any time. Agent will invest such cash collateral (less
applicable reserves) in such short-term money-market items
as to which Agent and Borrower mutually agree and the net
return on such investments shall be credited to such
account and constitute additional cash collateral. Borrower
may not withdraw amounts credited to any such account
except upon payment and performance in full of all
Obligations and termination of this Agreement or when an
Event of Default ceases to exist.
(d) Increased Costs. In the event that any applicable law,
treaty or governmental regulation, or any change therein or in the
interpretation or application thereof, or compliance by any Lender (for
purposes of this Section 3(d), the term "Lender" shall include any
Lender, any corporation or bank controlling Lender and any Alternate
Currency Bank) with any request or directive (whether or not having the
force of law) from any central bank or other financial, monetary or
other authority, shall:
(i) subject any Lender to any tax of any kind
whatsoever with respect to this Agreement or change the basis
of taxation of payments to any Lender of principal, fees,
interest or any other amount payable hereunder or under any
Ancillary Agreements (except for
36
changes in the rate of tax on the overall net income of any
Lender by the jurisdiction in which it maintains its principal
office);
(ii) impose, modify or hold applicable any reserve,
special deposit, assessment or similar requirement against
assets held by, or deposits in or for the account of, advances
or loans by, or other credit extended by, any office of any
Lender, including (without limitation) pursuant to Regulation
D of the Board of Governors of the Federal Reserve System; or
(iii) impose on any Lender any other condition with
respect to this Agreement or any Ancillary Agreements;
and the result of any of the foregoing is to increase the cost
to any Lender of making, renewing or maintaining its Loans
hereunder by an amount that any Lender deems to be material or
to reduce the amount of any payment (whether of principal,
interest or otherwise) in respect of any of the Loans by an
amount that any Lender deems to be material, then, in any case
Borrower shall promptly pay such Lender, upon its demand, such
additional amount as will compensate such Lender for such
additional cost or such reduction, as the case may be. Agent
shall certify the amount of such additional cost or reduced
amount to Borrower, and such certification shall be conclusive
absent manifest error.
(e) Capital Adequacy.
(i) In the event that Agent shall have determined
that any applicable law, rule, regulation or guideline
regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by Lender (for purposes of this Section 3(e), the
term "Lender" shall include any Lender, any corporation or
bank controlling any Lender and any Alternate Currency Bank)
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 any Lender's
capital as a consequence of its obligations hereunder to a
level below that which such Lender could have achieved but for
such adoption, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then, from time
to time, Borrower shall pay upon demand to such Lender such
additional amount or amounts as will compensate such Lender
for such reduction. In determining such amount or amounts,
such Lender may use any reasonable averaging or attribution
methods. The protection of this Section shall be available to
such Lender regardless of any possible contention of
invalidity or inapplicability with respect to the applicable
law, regulation or condition.
(ii) A certificate of Agent setting forth such amount
or amounts as shall be necessary to compensate Lender with
respect to Section 3(e) hereof when delivered to Borrower
shall be conclusive absent manifest error.
37
(f) Matured Funds. On the last day of each month during the
Term, BNY shall credit Borrower's Account with interest at the Matured
Funds Rate in effect during such month on the average daily balance
during such month of any amounts payable by BNY to Borrower hereunder
which are not drawn by Borrower on the Settlement Date.
(g) Withholding Taxes; Non-US Transferees.
(i) All sums payable by any Financial Party under
this Agreement shall be paid in full without set off or
counterclaim and free and clear of and without any deduction
or withholding for or on account of, any present or future
withholding or similar taxes.
(ii) If any Financial Party shall be required by law
to make any such deduction or withholding from any payment for
the account of Lender, then such Financial Party will ensure
that such deduction or withholding does not exceed the minimum
legal liability therefor and will forthwith pay to Agent or
any Lender such additional amount as will result in the
receipt by Agent or such Lender of the full amount which would
otherwise have been receivable hereunder had no such deduction
or withholding been made.
(iii) If a Financial Party pays any additional amount
referred to in sub-clause (ii) above ("tax payment") to Agent
or any Lender pursuant to the clause and Agent or such Lender,
in its absolute discretion, effectively obtains a refund of
that tax payment ("tax credit") which it is able to identify
as being attributable to that tax payment, then if it can, do
so without prejudicing the retention of that tax credit, Agent
or such Lender shall reimburse such Financial Party such
proportion of that tax credit as it determines will leave it
(after such reimbursement) in no better or worse position than
if that tax payment had not been required. Agent or such
Lender shall have complete discretion as to (a) whether to
claim any tax credit (and, if so, the extent, order and manner
of such claim) and (b) whether any amount is due from it
hereunder (and, if so, the amount and time of payment).
Neither Agent nor any Lender shall be obliged to disclose any
information regarding its tax affairs and computations.
(iv) Each Lender (or Transferee) that is not a
citizen or resident of the United States of America, a
corporation, partnership or other entity created or organized
in or under the laws of the United States of America (or any
jurisdiction thereof), or any estate or trust that is subject
to federal income taxation regardless of the source of its
income (a "Non-U.S. Lender") shall deliver to Borrower and
Agent (or, in the case of a Participant, to the Lender from
which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service Form 1001 or
Form 4224, or, in the case of a Non-U.S. Lender claiming
exemption from U.S. federal withholding tax under Section 871
(h) or 881(c) of the Code with respect to payments of
"portfolio interest", a Form W-8, or any subsequent versions
thereof or successors thereto (and, if such Non-U.S. Lender
delivers a Form W-8, an annual certificate representing that
such Non-U.S. Lender is not a "bank" for purposes of Section
881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of Borrower
and is not a controlled foreign corporation related to
Borrower (within the meaning of Section 864(d)(4) of the
Code)), properly completed and duly executed by such Non-U.S.
Lender claiming complete exemption from U.S. federal
withholding tax on all payments by Borrower under this
Agreement and the other Ancillary Agreements. Such forms shall
be
38
delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement) or, in the case of any
Participant, on or before the date such Participant purchases
the related participation). In addition, each Non-U.S. Lender
shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify Borrower at
any time it determines that it is no longer in a position to
provide any previously delivered certificate to Borrower (or
any other form of certification adopted by the U.S. taxing
authorities for such purpose).
(v) In the event that Agent shall have determined
that any applicable tax law, treaty or governmental
regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender necessitates
an amendment, modification or supplement to this Agreement,
Borrower will cooperate with Agent in completing any such
amendment, modification or supplement.
4. Accounts Receivables Management.
(a) BNY, for itself and not in its capacity as Agent, shall
perform accounts receivable management and record keeping services
("ARM Services") with respect to all Receivables and Affiliate
Receivables (excluding Foreign Receivables but including Receivables of
any U.S. Subsidiary of any Foreign Subsidiary). The procedure manual
BNY has delivered to Borrower describes BNY's current practices and
procedures regarding its ARM Services. BNY reserves the right to vary
such practices and procedures from time to time in its sole discretion.
BNY's liability to Borrower for any alleged failure on BNY's part to
provide adequate ARM Services shall be expressly limited to a refund of
commissions paid by Borrower during the period of such alleged failure
and BNY shall have no liability of any kind whatsoever for
consequential or other damages or penalties based upon any such alleged
failure on BNY's part unless BNY shall have significantly and
materially adversely departed from its published practices and
procedures. Borrower or BNY may, upon ninety (90) days prior written
notice, terminate BNY's right and obligation to provide ARM Services
regarding Borrower's Receivables and Affiliate Receivables, provided
that Borrower shall continue to remit the proceeds of such Receivables
or Affiliate Receivables to a Blocked Account maintained by Borrower in
accordance with Section 22 hereof. Upon an Event of Default and during
the continuance thereof, BNY itself or through BNY U.K. for itself and
not in its capacity as Agent may, in its sole discretion, perform the
ARM Services described herein with respect to U.K. Receivables as
described herein.
(b) Commission.
(i) In consideration of the ARM Services to be
provided by BNY hereunder, Borrower shall pay to BNY monthly,
for its own account and not in its capacity as Agent
hereunder, on the first day of each month with respect to the
prior month, a commission at the rate of .125% of the gross
face amount of each invoice evidencing Receivables and
Affiliate Receivables (including, at BNY's discretion, upon
the occurrence and during the continuance of an Event of
Default, U.K. Receivables) for which BNY is performing ARM
Services.
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(ii) Notwithstanding anything contained within the
foregoing subsection (i) to the contrary, the aggregate amount
of Receivables and Affiliate Receivables with respect to which
Borrower shall be obligated to pay commissions hereunder and
with respect to which Agent shall perform ARM Services
hereunder ("Volume") shall not be less than the Quarterly
Minimum (A) for each calendar quarter during the Term when BNY
is performing ARM Services (a "Contract Quarter") or (B) for
that part of the Contract Quarter during which BNY is
performing ARM Services in the event of termination of such
ARM Services prior to the end of a Contract Quarter (a
"Partial Quarter"), provided, however, if ARM Services are
terminated after the first day of a Contract Quarter, the
Volume with respect to which Borrower shall pay commissions
shall not be less than the sum of (1) the Quarterly Minimum
for the ninety (90) day period preceding the effective date of
the termination of ARM Services plus (2) the Quarterly Minimum
prorated for the number of days after the first day of the
month to the date such 90 day notice of termination is given
to BNY ((1) plus (2), collectively, an "ARM Termination
Partial Quarter"). By way of example, if any party delivers a
notice of termination on July 10 of any year, Borrower shall
pay commissions based upon (i) the Volume for the period from
July 10 to and including October 8 of such year, but in no
event shall the Volume for such period be less than the
Quarterly Minimum plus (ii) the Volume for the ten day period
from July 1 to July 10 but in no event shall the Volume for
such period be less than the prorated Quarterly Minimum. In
the event the Volume during any Contract Quarter, Partial
Quarter or ARM Termination Partial Quarter as applicable is
less than the Quarterly Minimum, then BNY shall charge to
Borrower's Account in an amount equal to the amount by which
the commission on the Quarterly Minimum exceeds the commission
on the Volume of the Contract Quarter, the Partial Quarter or
the ARM Termination Partial Quarter as applicable. The
foregoing amounts which BNY shall charge to Borrower's Account
are hereinafter referred to as "Minimum Volume Charges". BNY
shall compute the Minimum Volume Charges on a calendar
quarterly basis and charge Borrower's Account for the same on
the first day of the month following the end of such calendar
quarter or on the first day of the month following the
effective date of termination of ARM Services in the case of a
Partial Quarter or ARM Termination Partial Quarter.
5. Conditions.
5.1. Conditions to Initial Loans. Notwithstanding any other provisions
contained in this Agreement, the agreement of Agent and Lenders to make the
initial Loans requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Agent, immediately prior to or concurrently with the
making of such Loans, of the following conditions precedent:
(a) Loan Agreement. Agent shall have received counterparts of
this Agreement signed by each of the parties hereto.
(b) Closing Documents. Agent shall have received, in form and
substance satisfactory to Agent, executed Guaranty Agreements, Guaranty
Security Agreements, Stock Pledge Agreements and all other Ancillary
Agreements, in each case to the extent not currently existing, and each
of the other documents described in this Section 5.1, each in form and
substance satisfactory to Lenders;
40
(c) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing
statement) required by this Agreement, any Ancillary Agreement or under
law or reasonably requested by Agent to be filed, registered or
recorded in order to create, in favor of Agent, a perfected security
interest in or lien upon the Collateral shall have been properly filed,
registered or recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested, and
Agent shall have received an acknowledgment copy, or other evidence
satisfactory to it, of each such filing, registration or recordation
and satisfactory evidence of the payment of any necessary fee, tax or
expense relating thereto;
(d) Corporate Proceedings of Borrower. Agent shall have
received a copy of the resolutions in form and substance reasonably
satisfactory to Agent, authorizing (i) the execution, delivery and
performance of this Agreement and any related agreements (collectively
the "Documents") and (ii) the granting by Borrower and Guarantors of
the security interests in and liens upon the Collateral in each case
certified by the Secretary or an Assistant Secretary of Borrower or the
applicable Guarantor as of the Closing Date; and, such certificate
shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded as of the date of such
certificate;
(e) Incumbency Certificates of Borrower. Agent shall have
received a certificate of the Secretary or an Assistant Secretary of
Borrower and each Guarantor, dated the Closing Date, as to the
incumbency and signature of the officers of Borrower and such Guarantor
executing this Agreement or any Ancillary Agreement, any certificate or
other documents to be delivered by it pursuant hereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary;
(f) Certificates. Agent shall have received a copy of the
Articles or Certificate of Incorporation of Borrower and each
Guarantor, and all amendments thereto, certified by the Secretary of
State or other appropriate official of its jurisdiction of
incorporation together with copies of the By-Laws of Borrower and such
Guarantor;
(g) Good Standing Certificates. Agent shall have received good
standing certificates for Borrower and Guarantors dated not more than
10 days prior to the Closing Date, issued by the Secretary of State or
other appropriate official of Borrower's and each Guarantor's
jurisdiction of incorporation and each jurisdiction where the conduct
of Borrower's and each Guarantor's business activities or the ownership
of its properties necessitates qualification;
(h) Legal Opinion. Agent shall have received the executed
legal opinions of Fulbright & Xxxxxxxx L.L.P., counsel to Borrower,
each in form and substance satisfactory to Agent which shall cover such
matters incident to the transactions contemplated by this Agreement and
related agreements as Agent may reasonably require and Borrower hereby
authorizes and directs such counsel to deliver such opinions to Agent
and the Lenders;
(i) No Litigation. (i) No litigation, investigation or
proceeding before or by any arbitrator or governmental authority shall
be continuing or threatened against Borrower or against the officers or
directors of Borrower (A) in connection with this Agreement or the
41
Ancillary Agreements or any of the transactions contemplated thereby
and which, in the reasonable opinion of Agent, is deemed material or
(B) which if adversely determined, could, in the reasonable opinion of
Agent, have a Material Adverse Effect; and (ii) no injunction, writ,
restraining order or other order of any nature materially adverse to
Borrower or the conduct of its business or inconsistent with the due
consummation of the transactions contemplated by this Agreement shall
have been issued by any governmental authority;
(j) Fees. Agent shall have received all fees (including all
accrued fees and reasonable fees and expenses of counsel) payable to
Agent and the Lenders on or prior to the Closing Date. Agent shall have
the option to charge Borrower's Account for such fees.
(k) Payment Instructions. Agent shall have received written
instructions from Borrower directing the application of proceeds of the
initial Loans made pursuant to this Agreement;
(l) Consents. Agent shall have received any and all
governmental and third party consents necessary to permit the
effectuation of the transactions contemplated by this Agreement and the
Ancillary Agreements; and, Agent shall have received such consents and
waivers of such third parties as might assert claims with respect to
the Collateral, as Agent and its counsel shall deem necessary;
(m) No Material Adverse Effect. (i) Since June 30, 1998, there
shall not have occurred (x) any material adverse change in the
condition, financial or otherwise, operations, properties or prospects
of Borrower or any Guarantor which could have a Material Adverse
Effect, (y) no material damage or destruction to any of the Collateral
nor any material depreciation in the value thereof and (z) no event,
condition or state of facts which could have a Material Adverse Effect
and (ii) no representations made or information supplied to Agent or
any Lender shall have been proven to be inaccurate or misleading in any
material respect;
(n) Closing Certificate. Agent shall have received a closing
certificate signed by the Chief Financial Officer of Borrower dated as
of the date hereof, stating that (i) all representations and warranties
set forth in this Agreement and the Ancillary Agreements are true and
correct on and as of such date, (ii) Borrower is on such date in
compliance with all the terms and provisions set forth in this
Agreement and the other Documents and (iii) on such date no Incipient
Event of Default or Event of Default has occurred or is continuing;
(o) Financial Condition Certificate. Agent shall have received
an executed Financial Condition Certificate in the form attached hereto
as Exhibit 5.1(o).
(p) Projections. Agent shall have received the Projections
dated as of the Closing Date, copies of which are attached hereto as
Schedule 5.1(p), which Projections shall be prepared by the Chief
Financial Officer of Borrower in light of the past operations of its
businesses, and shall reflect projections for the five-year period
beginning on January 1, 1999 on a quarter by quarter basis for the
first year and on a year by year basis thereafter. The Projections are
based upon estimates and assumptions stated therein, all of which
Borrower believes to be reasonable and fair in light of current
conditions and current facts known to
42
Borrower and, as of the Closing Date, reflect Borrower's good faith and
reasonable estimates of the future financial performance of Borrower
and of the other information projected therein for the period set forth
therein.
(q) Information; Collateral Examination. Agent shall have
received all financial, business and other information regarding
Borrower and its Subsidiaries and their properties as Agent shall have
reasonably requested and all such information received by Agent prior
to the Closing Date shall be true and correct in all material respects.
(r) Warranties and Representations. All of the warranties and
representations contained in this Agreement or any Ancillary Agreement
shall be true and correct in all material respects on and as of the
date of such Revolving Credit Advance or issuance of Letters of Credit
as if made on such date and each request for a Revolving Credit Advance
or Letter of Credit shall constitute an affirmation by Borrower that
such warranties and representations are then true and correct in all
material respects in each case, except to the extent that such
warranties and representations either relate to an earlier date or
shall be untrue or incorrect solely as a result of occurrences
permitted under this Agreement or are consented to by Agent or the
Required Lenders in writing.
(s) No Default. No Event of Default shall have occurred or
will result from such Revolving Credit Advance or issuance of Letter of
Credit and no Incipient Event of Default shall have occurred which may
become an Event of Default or will result from such Revolving Credit
Advance or issuance of Letter of Credit.
(t) Ratification Agreement. Borrower, General Directory
Advertising Services, Inc. and M.S.I. - Market Support International,
Inc. shall execute and deliver to Agent a Reaffirmation, Ratification
and Amendment Agreement in the form attached hereto as Exhibit 5.1(t).
(u) UK Credit Agreement and Canadian Credit Agreement. The
Canadian Subsidiaries and the UK Subsidiaries and Borrower shall
execute and deliver amendments and supplements to the Canadian Credit
Agreement and the Canadian Security Documents and the UK Credit
Agreement and the UK Security Documents, each in forms satisfactory to
Canadian Lender and BNY UK, respectively.
(v) Other. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement shall be satisfactory in
form and substance to Agent, the Lenders and their counsel.
5.2 Conditions to All Loans. Notwithstanding any other provisions
contained in this Agreement, the making of each Revolving Credit Advance and
issuance of a Letter of Credit provided for in this Agreement shall be
conditioned upon the satisfaction of the matters set forth in this Section 5.2,
and each request by Borrower for a Revolving Credit Advance or Letter of Credit
shall constitute a representation to Agent and the Lenders that each such
condition set forth below has been met or satisfied.
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(a) Warranties and Representations. All of the warranties and
representations contained in this Agreement or any Ancillary Agreement
shall be true and correct in all material respects on and as of the
date of such Revolving Credit Advance or issuance of Letters of Credit
as if made on such date and each request for a Revolving Credit Advance
or Letter of Credit shall constitute an affirmation by Borrower that
such warranties and representations are then true and correct in all
material respects in each case, except to the extent that such
warranties and representations either relate to an earlier date or
shall be untrue or incorrect solely as a result of occurrences
permitted under this Agreement or are consented to by Agent or the
Required Lenders in writing.
(b) No Event of Default. No Event of Default shall have
occurred or will result from such Revolving Credit Advance or issuance
of Letter of Credit and no Incipient Event of Default shall have
occurred which may become an Event of Default or will result from such
Revolving Credit Advance or issuance of Letter of Credit.
6. Security Interest.
(a) To secure the prompt payment of the Obligations, Borrower
hereby acknowledges, confirms and agrees that Agent has and shall
continue to have for the benefit of the Lenders a continuing security
interest in and upon all Collateral heretofore granted to Agent
pursuant to the Original ARM Agreement and, to the extent not otherwise
granted to or held by Agent, hereby assigns, pledges and grants to
Agent, for the benefit of the Lenders (and to the Affiliates who are
party to Interest Rate Agreements) and BNY UK, BNY Canada and each
other Foreign Subsidiary Lender, a continuing security interest in and
to the Collateral, whether now owned or existing or hereafter acquired
or arising and wheresoever located (whether or not the same is subject
to Article 9 of the Uniform Commercial Code). All of Borrower's ledger
sheets, files, records, books of account, business papers and documents
relating to the Collateral shall, until delivered to or removed by
Agent, be kept by Borrower in trust for Agent until all Obligations
have been paid in full. Each confirmatory assignment schedule or other
form of assignment hereafter executed by Borrower shall be deemed to
include the foregoing grant, whether or not the same appears therein.
(b) Agent may file one or more financing statements disclosing
Agent's security interest in the Collateral without Borrower's
signature appearing thereon or Agent may sign on Borrower's behalf as
provided in Section 13 hereof. The parties agree that a carbon,
photographic or other reproduction of this Agreement shall be
sufficient as a financing statement. If any Receivable or Affiliate
Receivable becomes evidenced by a promissory note or any other
instrument for the payment of money, Borrower will immediately deliver
such instrument to Agent appropriately endorsed. Borrower will execute
any and all documents reasonably requested by Agent to Borrower to
effectuate the assignment of any and all tax refunds payable to
Borrower including, without limitation, powers of attorney.
(c) In the event Borrower requests Agent or a BNY Company to
provide a secured working capital lending facility to a Foreign
Subsidiary of Borrower (a "Foreign Secured Facility") and neither Agent
nor any BNY Company provides a written commitment to provide such
financing, on terms substantially similar to those contained herein,
within 30 days after
44
receipt by Agent of such request, Agent and such BNY Company shall
release its Liens, if any, upon the assets or stock of such Foreign
Subsidiary upon satisfaction of the following conditions: (i) Borrower
shall deliver to Agent a request in writing that Agent or the
applicable BNY Company release its Liens in the assets or stock of such
Foreign Subsidiary, (ii) Borrower shall deliver to Agent a copy of a
written commitment to provide a Foreign Secured Facility to such
Foreign Subsidiary from a replacement financial institution which
commitment shall provide as a condition that Agent or a BNY Company
release its Liens in the assets or stock of such Foreign Subsidiary as
a condition to providing such Foreign Secured Facility, (iii) Borrower
or such financial institution shall supply Agent, at Borrower's or such
financial institution's expense with the forms of any such release
documents to be executed by Agent or a BNY Company, (iv) such Foreign
Secured Facility shall be secured solely by the assets and/or stock of
such Foreign Subsidiary, or a guaranty by Borrower or another Financial
Party (to the extent permitted by Section 12.3(e) or a Letter of Credit
issued pursuant to Section 2.6, and (v) after giving effect to such
release, Agent and Lenders shall have either (A) a security interest in
85% of the Receivables of Borrower on a Consolidated Basis, (B) a
pledge of 100% of the stock of each Domestic Subsidiary and 65% of the
stock of each Foreign Subsidiary owning in the aggregate at least 85%
of all Receivables of Borrower on a Consolidated Basis, or (C) any
combination of (A) and (B), which results in Agent and Lenders having a
security interest (whether by lien or pledge of stock) in at least 85%
of the Receivables of Borrower on a Consolidated Basis.
7. Representations Concerning the Collateral. Borrower represents and
warrants (each of which such representations and warranties shall be deemed
repeated upon the making of each request for a Revolving Credit Advance and made
as of the time of each and every Revolving Credit Advance hereunder):
(a) all the Collateral (i) is owned by Borrower free and clear
of all claims, liens, security interests and encumbrances (including
without limitation any claims of infringement) except (A) those in
Agent's favor and (B) Permitted Liens and (ii) is not subject to any
agreement prohibiting the granting of a security interest or requiring
notice of or consent to the granting of a security interest;
(b) all Receivables and Affiliate Receivables (i) represent
complete bona fide transactions which require no further act under any
circumstances on Borrower's part to make such Receivables or Affiliate
Receivable payable by Customers other than the acts which must
reasonably and promptly in the ordinary course be taken by Borrower in
connection with Cycle Xxxxxxxx, Media Xxxxxxxx Receivables, Recruitment
Media Billing Receivables and Close Date Receivables with respect to
billing and delivery of invoices, (ii) to the best of Borrower's
knowledge, are not subject to any present, future or contingent
Disputes and (iii) do not represent xxxx and hold sales, consignment
sales, guaranteed sales, sale or return or other similar understandings
or obligations of any Scheduled Affiliate or Subsidiary of Borrower.
(c) that Borrower and the Scheduled Affiliates ("Obligated
Party") are solely responsible for payment of all advertising purchased
by the Obligated Party from such media source and that the media source
has no recourse against the Customer of an Obligated Party with respect
to any such payment.
45
8. Covenants Concerning the Collateral. During the Term, Borrower
covenants that it shall:
(a) not dispose of any of the Collateral whether by sale,
lease or otherwise except for the disposition or transfer of obsolete
and worn-out Equipment in the ordinary course of business during any
fiscal year and provided the proceeds of any such dispositions which
exceed $250,000 in the aggregate during any fiscal year (x) are used or
committed to be used to acquire replacement Equipment which is subject
to Agent's first priority security interest (subject to Permitted Liens
as described in clause (v) of the definition thereof) and which has a
fair market value not less than the Equipment which was disposed or
transferred or (y) to the extent not so used or committed to be used,
the proceeds of which are remitted to Agent in repayment of the
Obligations;
(b) not encumber, mortgage, pledge, assign or grant any
security interest in any Collateral or any of Borrower's other assets
to anyone other than Agent except (i) Permitted Liens and (ii) as set
forth on Schedule 1(A) attached hereto and made a part hereof.
(c) place notations upon Borrower's books of account and any
quarterly or annual financial statement prepared by Borrower to
disclose Agent's security interest in the Collateral;
(d) defend the Collateral against the claims and demands of
all parties.
(e) keep and maintain the Equipment in good operating
condition, except for ordinary wear and tear and obsolete or worn-out
Equipment, and shall make all necessary repairs and replacements
thereof so that the value and operating efficiency shall at all times
be maintained and preserved. Borrower shall not permit any such items
to become a fixture to real estate or accessions to other personal
property;
(f) not extend the payment terms of any Receivable without
prompt notice thereof to Agent;
(g) perform all other steps requested by Agent to create and
maintain in Agent's favor a valid perfected first security interest in
all Collateral (subject to Permitted Liens); and
(h) Borrower shall promptly upon request provide Agent with
duplicate originals of all credits which Borrower issues to its
Customers and immediately notify Agent of any merchandise returns or
Disputes. Borrower shall settle all Disputes at no cost or expense to
Lenders. Should Agent so elect, upon the occurrence of any Event of
Default, Agent may at any time in its discretion (i) withdraw
Borrower's authority to issue credits to its Customers without Agent's
prior written consent; (ii) litigate Disputes or settle them directly
with Customers on terms acceptable to Agent; or (iii) direct Borrower
to set aside and identify as Agent's property any returned or
repossessed merchandise or other goods which by sale resulted in
Receivables or Affiliate Receivables theretofore assigned to Agent
("Retained Goods"). All Retained Goods (and the proceeds thereof) shall
be (A) held by Borrower in trust for Agent as Agent's property,
46
(B) subject to Agent's security interest hereunder and (C) disposed of
only in accordance with Agent's express written instructions.
9. Collection and Maintenance of Collateral Records; Schedules. Agent
may at any time verify Receivables or Affiliate Receivables utilizing an audit
control company or any other agent of Agent. Agent will endeavor to conduct such
verifications without disclosing its relationship with Borrower and shall have
no liability to Borrower in the event of such disclosure except as a direct
result of Agent's gross (not mere) negligence or willful misconduct. Agent or
Agent's designee may notify Customers, at any time at Agent's sole discretion,
of Agent's security interest in Receivables or Affiliate Receivables. At any
time following the occurrence of an Event of Default or an Incipient Event of
Default or during any period in which BNY is performing ARM Services, Agent may
collect Receivables and Affiliate Receivables directly and charge the collection
costs and expenses to Borrower's Account, but, unless and until Agent does so or
gives Borrower other instructions, Borrower shall instruct all of its Customers
to make payments on account of Receivables or Affiliate Receivables to an
account under Agent's dominion and control, as provided by the terms of Section
22. To the extent Borrower receives any payments on account of Receivables or
Affiliate Receivables, it shall hold such payments for Agent's benefit in trust
as Agent's trustee and immediately deliver them to Agent in their original form
with all necessary endorsements or, as directed by Agent, deposit such payments
as directed by Agent pursuant to Section 22 hereof. Agent will credit
(conditional upon final collection) all such payments to Borrower's Account on
the Settlement Date. Borrower shall execute and deliver to Agent, at such
intervals as Agent may reasonably require, confirmatory written assignments of
Receivables and Affiliate Receivables, but Borrower's failure to execute and
deliver such written confirmatory assignments of such Receivables or Affiliate
Receivables shall not affect or limit Agent's security interest or other rights
in and to the Receivables or Affiliate Receivables. Borrower shall furnish at
Agent's request, copies of contracts, invoices or the equivalent, any original
shipping and delivery receipts for all merchandise sold or services rendered
including, without limitation, copies of all "tear sheets" (i.e., copies of all
advertisements placed for Customers) and such other documents and information as
Agent may require. All of Borrower's invoices shall bear the terms stated on the
applicable customer order, as submitted to Agent, and no change from the
original terms of such Customer order shall be made without the prior written
consent of Agent, provided that unless an Event of Default shall have occurred
and be continuing Borrower may extend the payment terms of a Customer order for
a period not to exceed 60 days from the payment period stated in such order.
Borrower shall provide Agent (i) on a monthly (within ten (10) Business Days
after the end of each month), or more frequent basis, as requested by Agent, a
summary report with respect to the Collateral, including but not limited to
Borrower's current Inventory and Unbilled Receivables, (ii) on a monthly (within
ten (10) Business Days after the end of each month), or more frequent basis, as
requested by Agent, accounts payable reports, (iii) on a monthly (within ten
(10) Business Days after the end of each month), or more frequent basis, as
requested by Agent, an aged trial balance of Borrower's existing accounts
payable to the media, (iv) on a monthly (within ten (10) Business Days after the
end of each month), or more frequent basis, as requested by Agent, a Borrowing
Base Certificate with respect to Unbilled Receivables, Unbilled Receivables
subject to Cycle Billing, Close Date Receivables, Media Billing Receivables and
Recruitment Media Billing Receivables and Foreign Receivables (other than U.K.
Receivables), each certified as true and accurate by Borrower's President, Chief
Financial Officer, Controller or Treasurer and
47
accompanied by such supporting detail as shall be requested by Agent in its
reasonable discretion. Borrower shall provide Agent on a daily basis, as and for
the prior day, a Borrowing Base Certificate with respect to all other billed
Receivables not described in clause (iv) of the previous sentence, updated to
reflect the most recent sales and collections of Borrower's yellow pages and
recruitment Receivables (which amount shall equal at least 70% of all
Receivables of Borrower) and certified as true and correct by Borrower's
President or Chief Financial Officer and accompanied by such supporting detail
and documentation as shall be requested by Agent in its reasonable discretion,
and (v) on a monthly basis (within ten (10) Business Days after the end of each
month) an aging report for 100% of all Receivables and 85% of Unbilled
Receivables. Borrower shall also deliver to Agent (at a location in the United
Kingdom to be identified in the applicable U.K. Credit Agreement) on a daily
basis as and for the prior day, a Borrowing Base Certificate with respect to U.K
Receivables updated to reflect the most recent sales and collections of Borrower
and U.K. Subsidiaries with respect to U.K. Receivables. Borrower shall provide
Agent, as Agent may reasonably request, such other schedules, documents and/or
information regarding the Collateral as Agent may require.
10. Inspections. At all times during normal business hours, Agent shall
have the right to (a) visit and inspect Borrower's properties and the
Collateral, (b) inspect, audit and make extracts from Borrower's relevant books
and records, including, but not limited to, management letters prepared by
independent accountants, and (c) discuss with Borrower's principal officers, and
independent accountants, Borrower's business, assets, liabilities, financial
condition, results of operations and business prospects; provided, however,
Agent shall not conduct such inspections more than two (2) times per year unless
an Event of Default has occurred and is continuing, in which event there shall
be no limitation on inspections and Borrower shall reimburse Agent for all
reasonable costs and disbursements incurred by Agent in the performance of such
audit during the continuation of such Event of Default. Borrower will deliver to
Agent any instrument necessary for Agent to obtain records from any service
bureau maintaining records for Borrower.
11. Financial Information. The Financial Parties shall provide Lenders
(a) as soon as available, but in any event within one hundred five (105) days
after the end of each fiscal year of the Financial Parties, a balance sheet as
at the end of such fiscal year and the related statements of income, retained
earnings and changes in cash flow for such fiscal year with respect to (1)
Borrower and its Subsidiaries on a consolidated and consolidating basis, (2)
Scheduled Affiliates (without duplication) on a combining and combined basis,
setting forth in comparative form the figures as at the end of and for the
previous fiscal year with respect to the Financial Parties on a similar basis,
which consolidated statements shall have been reported on by independent
certified public accountants who shall be satisfactory to Agent and shall be
accompanied by an unqualified audit report issued by such independent certified
public accountants provided, that, with respect to Scheduled Affiliates, to the
extent not included in Borrower's consolidated financial statements an audit
report shall be required only with respect to a Scheduled Affiliate (exclusive
of the reporting Persons described in (1) and (2) above) which has assets, as
reflected on its then most current balance sheet having a value in excess of
$10,000,000; (b) as soon as available, but in any event within sixty (60) days
after the close of each quarter, the balance sheet as at the end of such quarter
and the related statements of income, retained earnings and changes in cash flow
for such quarter with respect to (1) Borrower and its Subsidiaries on a
consolidated
48
basis, and (2) Scheduled Affiliates (without duplication) on a consolidating
basis, which have been internally prepared by the Chief Financial Officer for
each Financial Party. All financial statements required under (a) and (b) above
shall be prepared in accordance with GAAP, subject to year-end adjustments in
the case of quarterly statements and in accordance with applicable laws and
regulations of the Securities and Exchange Commission. Together with the
financial statements furnished pursuant to (a) above Borrower shall deliver a
certificate of Borrower's certified public accountants addressed to Agent
stating that (i) they have caused this Agreement and the Ancillary Agreements to
be reviewed and (ii) in making the examination necessary for the issuance of
such financial statements, nothing has come to their attention to lead them to
believe that any Event of Default or Incipient Event of Default exists and, in
particular, they have no knowledge of any Event of Default or Incipient Event of
Default or, if such is not the case, specifying such Event of Default or
Incipient Event of Default and its nature, when it occurred and whether it is
continuing. At the times the financial statements are furnished pursuant to (a)
and (b) above and at the end of each month during the Term, a certificate of
Borrower's Chief Financial Officer shall be delivered to Agent stating that to
the best knowledge of such officer no Event of Default or Incipient Event of
Default exists, or, if such is not the case, specifying such Event of Default or
Incipient Event of Default and its nature, when it occurred, whether it is
continuing and the steps being taken by Borrower with respect to such event and
such certificate shall have appended thereto calculations which set forth
Borrower's compliance with the requirements of Section 12.4. If any internally
prepared financial information, including that required under this paragraph, is
unsatisfactory to Agent in the exercise of its reasonable good faith judgment,
Agent may request that Borrower's independent certified public accountants
review same. In addition, Borrower shall provide Agent with such other reports
and documents as shall be reasonably requested including, but not limited to,
reports to stockholders, any documents filed with any governmental agencies or
stock exchanges and any management letters received by Borrower from its
accountants.
In addition to the foregoing financial statements, each Financial Party
shall furnish Agent prior to the beginning of each fiscal year commencing with
fiscal year 1999, a month by month projected operating budget and cash flow for
such fiscal year (including an income statement for each month and a balance
sheet as at the end of the last month in each fiscal quarter), such projections
to be accompanied by a certificate signed by Borrower's President or Chief
Financial Officer to the effect that such projections have been prepared on the
basis of sound financial planning practice consistent with past budgets and
financial statements and that such officer has no reason to question the
reasonableness of any material assumptions on which such projections were
prepared.
12.1 General Representations and Warranties. Borrower represents and
warrants (each of which such representations and warranties shall be deemed
repeated upon the making of a request for a Revolving Credit Advance and made as
of the time of each Revolving Credit Advance made hereunder), as follows:
(a) Formation and Qualification. Borrower and each Guarantor
is a corporation duly organized and validly existing under the laws of
its jurisdiction of organization and duly qualified and in good
standing in every other state or jurisdiction in which the nature of
49
Borrower's or such Guarantor's business requires such qualification
except where the failure to so qualify could not have a Material
Adverse Effect;
(b) Authority; Enforceable Obligation. (i) The execution,
delivery and performance of this Agreement and the Ancillary Agreements
(A) have been duly authorized, (B) are not in contravention of
Borrower's or any Guarantor's certificate of incorporation, by-laws or
of any indenture, agreement or undertaking to which Borrower or any
Guarantor is a party or by which Borrower or any Guarantor is bound and
(C) are within Borrower's and each Guarantor's corporate powers and
(ii) this Agreement and the Ancillary Agreements executed and delivered
by Borrower are Borrower's legal, valid and binding obligations,
enforceable in accordance with their terms;
(c) Executive Offices. It keeps and will continue to keep all
of its books and records concerning the Collateral at Borrower's
executive offices located at the addresses set forth on Schedule
12.1(c) hereof and will not move such books and records to any location
other than as set forth on Schedule 12.1(c) without giving Agent at
least thirty (30) days prior written notice;
(d) ERISA. Borrower has not received any notice that it is not
in full compliance with any of the requirements of the Employee
Retirement Income Security Act of 1974 ("ERISA"), and the regulations
and published interpretations thereunder and (i) Borrower has not
engaged in any Prohibited Transactions as defined in paragraph 406 of
ERISA and paragraph 4975 of the Internal Revenue Code, as amended; (ii)
Borrower has met all applicable minimum funding requirements under
paragraph 302 of ERISA in respect of its plans; (iii) Borrower has no
knowledge of any event or occurrence which would cause the Pension
Benefit Guaranty Corporation to institute proceedings under Title IV of
ERISA to terminate any employee benefit plan(s); (iv) Borrower has no
fiduciary responsibility for investments with respect to any plan
existing for the benefit of persons other than Borrower's employees;
and (v) Borrower has not withdrawn, completely or partially, from any
multi-employer pension plan so as to incur liability under the
Multiemployer Pension Plan Amendments Act of 1980;
(e) Solvency. The Borrower is solvent, able to pay its debts
as they mature, has capital sufficient to carry on its business and all
businesses in which it is about to engage and the fair salable value of
its assets (calculated on a going concern basis) is in excess of the
amount of its liabilities;
(f) No Litigation. Borrower has no pending or, to Borrower's
knowledge, threatened litigation, actions or proceeding which could
reasonably be expected to have a Material Adverse Effect;
(g) Financial Statements. All balance sheets and income
statements which have been delivered to Agent fairly, accurately and
properly state Borrower's financial condition on a basis consistent
with that of previous financial statements and there has been no change
in Borrower's financial condition as reflected in such statements since
the date thereof which could reasonably be expected to have a Material
Adverse Effect and such statements do not fail to disclose any fact or
facts which could reasonably be expected to have a Material Adverse
Effect;
50
(h) Patents, Trademarks, Copyrights and Licenses. (x) Borrower
possesses all of the licenses, patents, copyrights, trademarks,
tradenames and permits necessary to conduct its business, (y) there has
been no assertion or claim of violation or infringement with respect
thereof and (z) all such licenses, patents, copyrights, trademarks,
tradenames and permits are listed on Schedule 12.1(h);
(i) Accountants. Borrower has (i) advised its certified public
accountants that Agent and the Lenders will be relying on all financial
and other information prepared by such accountants and (ii) authorized
its accountants to confer directly from time to time with Agent;
(j) Year 2000 Issue. Borrower has reviewed the effect of the
Year 2000 Issue on the computer software, hardware and firmware systems
and equipment containing embedded microchips owned or operated by or
for the Borrower or used or relied upon in the conduct of their
business (including systems and equipment supplied by others or with
which such computer systems of the Borrower interface). The costs to
the Borrower of any reprogramming required as a result of the Year 2000
Issue to permit the proper functioning of such systems and equipment
and the proper processing of data, and the testing of such
reprogramming, and of the reasonably foreseeable consequences of the
Year 2000 Issue to Borrower (including systems and equipment supplied
by others) are not reasonably expected to result in an Incipient Event
of Default or Event of Default or to have a Material Adverse Effect.
12.2. Affirmative Covenants. Borrower covenants and agrees as follows:
(a) Compliance with Laws; Environmental Compliance. (i) the
operation of Borrower's business is and will continue to be in
compliance in all material respects with all applicable federal, state
and local laws, including but not limited to all applicable
environmental laws and regulations and Borrower shall not engage in any
business activity which has been adjudicated to have violated an
applicable state or federal statute relative to health, safety or
public morals.
(ii) Borrower will establish and maintain a system to
assure and monitor continued compliance with all applicable
environmental laws, which system shall include, if applicable,
periodic reviews of such compliance.
(iii) In the event Borrower obtains, gives or
receives notice of any release or threat of release of a
reportable quantity of any Hazardous Substances on its
property (any such event being hereinafter referred to as a
"Hazardous Discharge") or receives any notice of violation,
request for information or notification that it is potentially
responsible for investigation or cleanup of environmental
conditions on its property, demand letter or complaint, order,
citation, or other written notice with regard to any Hazardous
Discharge or violation of any environmental laws affecting its
property or Borrower's interest therein (any of the foregoing
is referred to herein as an "Environmental Complaint") from
any Person or entity, including any state agency responsible
in whole or in part for environmental matters in the state in
which such property is located or the United States
Environmental Protection Agency (any such person or entity
hereinafter the "Authority"), then Borrower shall, within five
(5) Business
51
Days, give written notice of same to Agent detailing facts and
circumstances of which Borrower is aware giving rise to the
Hazardous Discharge or Environmental Complaint and
periodically inform Agent of the status of the matter. Such
information is to be provided to allow Agent to protect its
security interest in the Collateral and is not intended to
create nor shall it create any obligation upon Agent with
respect thereto.
(iv) Borrower shall respond promptly to any Hazardous
Discharge or Environmental Complaint and take all necessary
action in order to safeguard the health of any Person and to
avoid subjecting the Collateral to any lien, charge, claim or
encumbrance. If Borrower shall fail to respond promptly to any
Hazardous Discharge or Environmental Complaint or Borrower
shall fail to comply with any of the requirements of any
environmental laws, Agent may, but without the obligation to
do so, for the sole purpose of protecting Agent's interest in
Collateral: (A) give such notices or (B) enter onto Borrower's
property (or authorize third parties to enter onto such
property) and take such actions as Agent (or such third
parties as directed by Agent) deem reasonably necessary or
advisable, to clean up, remove, mitigate or otherwise deal
with any such Hazardous Discharge or Environmental Complaint.
All reasonable costs and expenses incurred by Agent (or such
third parties) in the exercise of any such rights, including
any sums paid in connection with any judicial or
administrative investigation or proceedings, fines and
penalties, together with interest thereon from the date
expended at the Default Rate for Revolving Credit Advances
shall be paid upon demand by Borrower, and until paid shall be
added to and become a part of the Obligations secured by the
Liens created by the terms of this Agreement or any other
agreement between Agent and Borrower.
(v) Borrower shall defend and indemnify the Lenders
and hold the Lenders harmless from and against all loss,
liability, damage and expense, claims, costs, fines and
penalties, including attorney's fees, suffered or incurred by
Agent under or on account of any environmental laws,
including, without limitation, the assertion of any lien
thereunder, with respect to any Hazardous Discharge, the
presence of any hazardous substances affecting Borrower's
property, whether or not the same originates or emerges from
Borrower's property or any contiguous real estate, including
any loss of value of the Collateral as a result of the
foregoing except to the extent such loss, liability, damage
and expense is attributable to any Hazardous Discharge
resulting from actions on the part of Agent. Borrower's
obligations under this Section 12.2(a) shall arise upon the
discovery of the presence of any Hazardous Substances on
Borrower's property, whether or not any federal, state, or
local environmental agency has taken or threatened any action
in connection with the presence of any hazardous substances.
Borrower's obligation and the indemnifications hereunder shall
survive the termination of this Agreement.
(vi) For purposes of paragraph Section 12.2(a) all
references to Borrower's property shall be deemed to include
all of Borrower's right, title and interest in and to all
owned and/or leased premises;
(b) Taxes. Borrower will pay or discharge when due all taxes,
assessments and governmental charges or levies imposed upon it;
52
(c) Notification of Certain Events. Borrower will promptly
inform Agent in writing of: (i) the commencement of all proceedings and
investigations by or before and/or the receipt of any notices from, any
governmental or nongovernmental body and all actions and proceedings in
any court or before any arbitrator against or in any way concerning any
of Borrower's properties, assets or business, which could singly or in
the aggregate, reasonably be expected to have a Material Adverse
Effect; (ii) any amendment of Borrower's certificate of incorporation
or by-laws; (iii) any change in Borrower's business, assets,
liabilities, condition (financial or otherwise), results of operations
or business prospects which has had or could reasonably be expected to
have a Material Adverse Effect; (iv) any Event of Default or Incipient
Event of Default; (v) any default or any event which with the passage
of time or giving of notice or both would constitute a default under
any agreement for the payment of money to which Borrower is a party or
by which Borrower or any of Borrower's properties may be bound which
could reasonably be expected to have a Material Adverse Effect; (vi)
any change in the location of Borrower's executive offices; (vii) any
change in the location of Borrower's Inventory or Equipment, other than
obsolete or worn-out Equipment from the locations listed on Schedule
12.1(c) attached hereto, (viii) any change in Borrower's corporate
name; (ix) any material delay in Borrower's performance of any of its
obligations to any material Customer; (x) any assertion of any material
claims, offsets, counterclaims or Disputes by any Customer; (xi) any
material allowances, credits and/or other monies granted by it to any
Customer; (xii) all material adverse information known to Borrower
relating to the financial condition of any account debtor; and (xiii)
any material return of goods;
(d) Projections. All Projections of Borrower's performance
prepared by Borrower or at Borrower's direction and delivered to Agent
will represent, at the time of delivery to Agent, Borrower's best
estimate of Borrower's future financial performance and will be based
upon assumptions which are reasonable in light of Borrower's past
performance and then current business conditions;
(e) Insurance. Borrower will bear the full risk of loss from
any loss of any nature whatsoever with respect to the Collateral. At
its own cost and expense in amounts and with carriers reasonably
acceptable to Agent, it shall (i) keep all its insurable properties and
properties in which it has an interest insured against the hazards of
fire, flood, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is
required in Borrower's reasonable judgment to protect Borrower's
business including without limitation, business interruption insurance;
(ii) maintain a bond in such amounts as is customary in the case of
companies engaged in businesses similar to Borrower's insuring against
larceny, embezzlement or other criminal misappropriation of insured's
officers and employees who may either singly or jointly with others at
any time have access to the assets or funds of Borrower either directly
or through authority to draw upon such funds or to direct generally the
disposition of such assets; (iii) maintain public and product liability
insurance against claims for personal injury, death or property damage
suffered by others; (iv) maintain all such workmen's compensation or
similar insurance as may be required under the laws of any state or
jurisdiction in which Borrower is engaged in business; (v) furnish
Agent with (x) copies of all policies and upon Agent's request evidence
of the maintenance of such policies at least thirty (30) days before
any expiration date, and (y) appropriate loss payable endorsements in
form and substance satisfactory to Agent, naming Agent as loss payee
and providing that as to
53
Agent the insurance coverage shall not be impaired or invalidated by
any act or neglect of Borrower and the insurer will provide Agent with
at least thirty (30) days notice prior to cancellation. Borrower shall
instruct the insurance carriers that in the event of any loss
thereunder, the carriers shall make payment for such loss to Agent and
not to Borrower and Agent jointly. If any insurance losses are paid by
check, draft or other instrument payable to Borrower and Agent jointly,
Agent may endorse Borrower's name thereon and do such other things as
Agent may deem advisable to reduce the same to cash. Upon the
occurrence and during the continuance of an Event of Default, Agent is
hereby authorized to adjust and compromise claims. All loss recoveries
received by Agent upon any such insurance shall be applied to the
outstanding Revolving Credit Advances. Any surplus shall be paid by
Agent to Borrower or applied as may be otherwise required by law. To
the extent Agent or Lenders have made Loans against the value of any
Collateral which is the subject of any loss recovery, any deficiency
thereon shall be paid by Borrower to Agent, on demand;
(f) Guaranty Agreements. Borrower will cause each of (i) its
Scheduled Affiliates and Domestic Subsidiaries, (ii) each Guarantor and
(iii) any other Scheduled Affiliate or Domestic Subsidiary of any
Financial Party, to execute and deliver to Agent a Guaranty Agreement
and Guaranty Security Agreement;
(g) Agent's Rights to Bid. Agent shall be given a right to bid
on each and every secured institutional financing in excess of
$10,000,000 hereafter sought by a Financial Party or any Affiliate
(other than a director, officer, or 10% stockholder), provided that
such right shall not impair Borrower's right to select a secured
institutional financing based upon its general corporate and financial
requirements determined in its reasonable good faith discretion;
(h) BNY UK. Borrower covenants that BNY UK (or its affiliates)
shall be Borrower's and its U.K. Subsidiaries' sole secured working
capital lender in the United Kingdom;
(i) Landlord Waivers. Borrower shall use its best efforts to
obtain landlord, mortgagee or warehouseman agreements satisfactory to
Agent with respect to all premises leased by Borrower at which
Inventory and books and records are located and with respect to which
such an agreement is not currently in place;
(j) Invoice Notation. Borrower shall cause its invoices to or
its agreements with its Customers, representing at least 90% of all of
its Customers, to contain a notation to the effect that Borrower is
acting as a principal and not as such Customer's agent vis-a-vis
publishers; and
(k) Year 2000 Issue. Borrower shall take all necessary action
to complete in all material respects by September 30, 1999, the
reprogramming of computer software, hardware and firmware systems and
equipment containing embedded microchips owned or operated by or for
Borrower or used or relied upon in the conduct of their business
required as a result of the Year 2000 Issue to permit the proper
functioning of such computer systems and other equipment and the
testing of such systems and equipment, as so reprogrammed. At the
request of any
54
Lender, Borrower shall provide to all Lenders reasonable assurance of
its compliance with the preceding sentence.
12.3. Negative Covenants. Borrower covenants and agrees as follows:
(a) Indebtedness. Borrower will not nor will any other
Financial Party create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt) other than (i) Indebtedness to
Agent and Lenders, (ii) Indebtedness described on Schedule 12.3(a),
(iii) Indebtedness for Capital Expenditures and Capitalized Lease
Obligations, (iv) Permitted Unsecured Indebtedness, (v) Indebtedness
for Intercompany Loans incurred in accordance with Section 12.3(d),
(vi) Indebtedness pursuant to Foreign Secured Facilities in accordance
with Section 6(c) and (vii) Indebtedness in respect of Interest Rate
Agreements;
(b) Dividends. Borrower will not nor will any other Financial
Party declare, pay or make any dividend or distribution in cash on any
shares of their common stock or preferred stock or apply any of their
funds, property or assets to the purchase, redemption or other
retirement of any of their common or preferred stock; provided,
however, Borrower and any Financial Party may make any such dividend if
at the time of and after giving effect to such dividend there shall not
have occurred an Event of Default or Incipient Event of Default;
(c) Repayment of Indebtedness. Borrower will not nor will any
other Financial Party directly or indirectly, prepay any Indebtedness
for borrowed money (other than to Agent), or repurchase, redeem, retire
or otherwise acquire any of their indebtedness; provided, however,
Borrower and any Financial Party may make any such prepayment,
repurchase, redemption or retirement if at the time of and after giving
effect to such payment there shall not have occurred an Event of
Default or Incipient Event of Default.
(d) Loans. Borrower will not nor will any other Financial
Party make advances, loans or extensions of credit to any Person;
provided, however, Borrower and its Subsidiaries and Affiliates may
make Intercompany Loans so long as (i) no Event of Default or Incipient
Event of Default shall have occurred or would occur after giving effect
thereto and (ii) to the extent the aggregate amount of Intercompany
Loans to any Subsidiary or Affiliate exceeds $20,000,000, such
Indebtedness shall be evidenced by a demand note and shall be assigned
to Agent as collateral security for the Obligations in a manner
reasonably satisfactory to Agent; provided further that Intercompany
Loans shall not exceed at any time an aggregate amount equal to
$115,000,000 or an amount equal to $37,000,000 for each Intercompany
Loan.
(e) Guaranties. Borrower will not nor will any other Financial
Party become either directly or contingently liable upon the
obligations of any Person by assumption, endorsement or guaranty
thereof or otherwise other than the endorsement of checks in the
ordinary course of business except (i) as listed on Schedule 12.3(e)
and (ii) with respect to the issuance of the guaranties of indebtedness
of foreign Affiliates or Foreign Subsidiaries provided that at any
time, the maximum aggregate outstanding amount of indebtedness secured
by all such guaranties which are not guaranties of collection and which
were not in the sole judgment of Agent incurred by foreign Affiliates
or Foreign Subsidiaries on a fully secured basis shall not exceed
$20,000,000;
55
(f) Acquisitions. Borrower will not nor will any other
Financial Party acquire all or a portion of the assets or stock of any
Person (in one or more transactions) ("Acquisition") unless (i) such
Acquisition involves a Person engaged primarily in the business of
recruitment advertising, executive search, selection, national yellow
page advertising, other classified advertising or internet or related
business' ("Permitted Business"), (ii) if required by Agent, Agent,
Lenders and the BNY Companies shall have obtained a first priority
perfected security interest in either (a) all of the acquired assets or
(b) 100% of the stock in the case of a Domestic Subsidiary or 65% of
the stock in the case of a Foreign Subsidiary (subject to Permitted
Liens) provided that Borrower need not provide Agent, Lenders or the
BNY Companies a security interest in the assets of such acquired entity
to the extent Agent, Lenders or the BNY Companies have obtained and
maintain, after giving effect to the Acquisition, a security interest
(by having a first priority perfected security interest in the
Receivables and/or a pledge of either 100% of the stock of each
Domestic Subsidiary or 65% of the stock of each Foreign Subsidiary) in
at least 85% of all Receivables of Borrower on a Consolidated Basis as
prescribed in Section 3(a)(vi) hereof, and (iii) no Event of Default or
Incipient Event of Default shall have occurred and then be continuing
or would occur after giving effect to such Acquisition;
(g) Mergers. Borrower will not nor will any other Financial
Party enter into any merger, consolidation or other reorganization
("Merger") with or into any other Person or permit any other Person to
consolidate with or merge with it unless (i) Borrower, or a Subsidiary
of Borrower formed in accordance with Section 12.3(h), shall be the
surviving Person in such Merger, consolidation or reorganization, (ii)
the surviving Person shall be in compliance on a pro forma basis with
respect to each and every financial covenant set forth in Section 12.4
after giving effect to such Merger as of the end of the fiscal quarter
immediately preceding the fiscal quarter in which such Merger is taking
place, (iii) if required by Agent, Agent, Lenders and the BNY Companies
shall have either (A) a first priority perfected security interest in
100% of the Receivables of the surviving Person of the Merger or (B)
100% of the stock in the case of a Domestic Subsidiary or 65% of the
stock in the case of a Foreign Subsidiary of the surviving Person of
the Merger, including any Subsidiary formed in accordance with Section
12.3(h) to effect such Merger (in each case subject to Permitted Liens)
after giving effect to the Merger and (iv) no Event of Default shall
have occurred and then be continuing or would occur after giving effect
to the Merger;
(h) Formation of Subsidiaries. Borrower will not nor will any
other Financial Party (i) form any Domestic Subsidiary unless (A) at
the request of Agent, such Domestic Subsidiary delivers a Guaranty
Agreement and Guaranty Security Agreement each in the form delivered by
the existing Guarantors and (B) Agent shall have received all documents
it may reasonably require to establish compliance with each of the
foregoing conditions or (ii) enter into any partnership, joint venture
or similar arrangement which requires contributions of cash or assets
by any Financial Party in an amount greater than $250,000 per year;
(i) Nature of Business. Borrower will not nor will any other
Financial Party materially change the nature of the business in which
it is presently engaged;
56
(j) Fiscal Year and Accounting Charges. Borrower will not nor
will any other Financial Party change its fiscal year or make any
changes in accounting treatment and reporting practices without prior
written notice to Agent except as required by GAAP or in the tax
reporting treatment or except as required by law;
(k) Transactions with Affiliates. Borrower will not nor will
any other Financial Party, enter into any transaction with any
Affiliate, except in ordinary course of business on arms-length terms;
(l) Names; Tradenames. Borrower will not nor will any other
Financial Party xxxx Receivables under any name except the present name
of Financial Parties or such other tradenames as may be set forth on
Schedule 12.3(f) hereto;
(m) Margin Regulations. None of the proceeds of the Loans
hereunder will be used directly or indirectly to "purchase" or "carry"
"margin stock" or to repay indebtedness incurred to "purchase" or
"carry" "margin stock" within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in
effect;
(n) Payables. Not more than 10% of yellow pages publisher
media payables will be more than 60 days past due and not more than 10%
of newspaper and similar media accounts payable of Borrower will be
more than 30 days past due;
(o) Permitted Investments. Borrower shall not nor shall any
other Financial Party purchase or acquire obligations or stock of, or
any other interest in, or make any investment in any entity, except (A)
obligations issued or guaranteed by the United States of America or any
agency thereof, (B) commercial paper with maturities of not more than
180 days and a published rating of not less than A-1 or P-1 (or the
equivalent rating), (C) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of any Lender
that is a commercial bank or any other commercial bank if (x) such bank
has a combined capital and surplus of at least $500,000,000, or (y) its
debt obligations, or those of a holding company of which it is a
subsidiary, are rated not less than A (or the equivalent rating) by a
nationally recognized investment rating agency, (D) U.S. money market
funds that invest solely in obligations issued or guaranteed by the
United States of America or an Agency thereof, (E) Eurodollar time
deposits with financial institutions with a published rating of not
less than A-1 or P-1 (or the equivalent rating), (F) notes evidencing
amounts due from customers provided such notes have been delivered to
Agent as additional Collateral, (G) investments not in excess of
$15,000,000 in the aggregate at any time outstanding which consist of
cash or cash equivalents and which are made by a Financial Party in the
ordinary course of business, (H) investments permitted pursuant to
Section 12.3(f) hereof, and (I) investments in one or more
Subsidiaries, whether now existing or hereafter created, provided that
at the time of such investment no Event of Default has occurred or
would occur after giving effect thereto;
57
(p) Dilution. Dilution shall not exceed ten percent (10%) on a
cumulative basis for any three month period ending the last day of any
calendar month (as determined by Agent in the good faith exercise of it
sole discretion);
(q) Foreign Currency Contracts. Borrower shall not enter into
foreign currency exchange contracts involving an aggregate notional
amount in excess of an amount equal to 50% of the Net Worth of Borrower
on a Consolidated Basis as of the end of the most recent fiscal
quarter, provided that Borrower shall not enter into any foreign
currency contract (i) following the occurrence and during the
continuation of an Event of Default, or (ii) to the extent they are
speculative or not for a normal business purpose;
12.4. Financial Covenants
(a) Net Worth. Borrower shall not at any time permit Net Worth
to be less than the following amounts at the end of each fiscal quarter
during the following periods:
Period Amount
Closing Date through 12/31/98 $96,000,000
3/31/99 and as at the end of An amount equal to actual Net
each quarter thereafter Worth as at the previous fiscal quarter plus
an amount equal to fifty (50%) percent of
positive net income of Borrower on a
Consolidated Basis, but in no event less
than $100,000,000
(b) Interest Coverage Ratio. Borrower shall cause to be
maintained an Interest Coverage Ratio as at the end of each fiscal
quarter calculated on a rolling four (4) quarter basis with respect to
the four quarters then ended, of not less than the ratios set forth
below during periods set forth below:
Fiscal Quarters Ending Ratio
9/30/98 2.0 to 1
12/31/98 2.0 to 1
3/31/99 2.0 to 1
6/30/99 2.0 to 1
9/30/99 2.0 to 1
12/31/99 2.0 to 1
3/31/00 and as at the end 2.5 to 1
of each fiscal quarter thereafter
58
(c) Funded Indebtedness to EBITDA. Borrower shall cause to be
maintained a ratio of (i) Funded Indebtedness as at the end of each
fiscal quarter to (ii) EBITDA as of the end of each fiscal quarter
calculated on a rolling four (4) quarter basis with respect to the four
quarters then ended, of not greater than the ratios set forth below
during the periods set forth below:
Fiscal Quarter Ending Ratio
9/30/98 4.5 to 1
12/31/98 4.5 to 1
3/31/99 4.5 to 1
6/30/99 4.5 to 1
9/30/99 4.25 to 1
12/31/99 4.25 to 1
3/31/00 4.25 to 1
6/30/00 4.25 to 1
9/30/00 4.0 to 1
12/31/00 4.0 to 1
3/31/01 4.0 to 1
6/30/01 4.0 to 1
9/30/01 and as at the end of 3.75 to 1
each fiscal quarter thereafter
13. Power of Attorney. Borrower hereby appoints Agent or any other
Person whom Agent may designate as Borrower's attorney, with power to: (i)
endorse Borrower's name on any checks, notes, acceptances, money orders, drafts
or other forms of payment or security that may come into any Lender's
possession; (ii) sign Borrower's name on any invoice or xxxx of lading relating
to any Receivables, drafts against Customers, schedules and assignments of
Receivables, notices of assignment, financing statements and other public
records, verifications of account and notices to or from Customers; (iii) verify
the validity, amount or any other matter relating to any Receivable by mail,
telephone, telegraph or otherwise with Customers; (iv) execute customs
declarations and such other documents as may be required to clear Inventory
through Customs; (v) do all things necessary to carry out this Agreement, any
Ancillary Agreement and all related documents; and (vi) on or after the
occurrence and continuation of an Event of Default, notify the post office
authorities to change the address for delivery of Borrower's mail to an address
designated by Agent, and to receive, open and dispose of all mail addressed to
Borrower. Borrower hereby ratifies and approves all acts of the attorney.
Neither Agent nor the attorney will be liable for any acts or omissions or for
any error of judgment or mistake of fact or law. This power, being coupled with
an interest, is irrevocable so long as any Receivable which is assigned to Agent
or in which Agent has a security interest remains unpaid and until the
Obligations have been fully satisfied.
14. Expenses. Borrower shall pay all of Agent's out-of-pocket costs and
expenses, including without limitation reasonable fees and disbursements of
counsel retained or employed by Agent (up to an amount not to exceed $100,000)
and appraisers, in connection with the preparation, execution and delivery of
this Agreement and the Ancillary Agreements. After the
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Closing Date, Borrower shall also pay all of Agent's and each Lender's
reasonable fees and disbursements of counsel retained or employed by Agent in
connection with the due diligence review of any proposed acquisition by Borrower
or any of its subsidiaries or the preparation, execution or delivery of any
waiver, amendment or consent required as a result thereof. In addition,
following the occurrence and during the continuation of an Event of Default,
Borrower shall also pay all of Agent's and each Lender's out-of-pocket costs and
expenses, including without limitation reasonable fees and disbursements of
counsel retained or employed by Agent, in connection with (a) the preparation,
execution and delivery of any waiver, any amendment thereto or consent proposed
or executed in connection with the transactions contemplated by this Agreement
or the Ancillary Agreements, (b) Agent's obtaining performance of the
Obligations under this Agreement and any Ancillary Agreements, including, but
not limited to, the enforcement or defense of Agent's security interests,
assignments of rights and liens hereunder as valid perfected security interests,
(c) any attempt to inspect, verify, protect, collect, sell, liquidate or
otherwise dispose of any Collateral, and (d) any consultations in connection
with any of the foregoing.
15. Assignment By a Lender. (a) This Agreement shall be binding upon
and inure to the benefit of Borrower, Agent, each Lender, all future holders of
the Loans and their respective successors and assigns, except that Borrower may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of Agent and each Lender.
(b) Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and
from time to time sell participating interests in the Loans to other
financial institutions (each such transferee or purchaser of a
participating interest, a "Transferee"). Each Transferee may exercise
all rights of payment (including without limitation rights of set-off)
with respect to the portion of such Loans held by it or other
Obligations payable hereunder as fully as if such Transferee were the
direct holder thereof provided that Borrower shall not be required to
pay to any Transferee more than the amount which it would have been
required to pay to the Lender which granted an interest in its Loans or
other Obligations payable hereunder to such Transferee had such Lender
retained such interest in the Loans hereunder or other Obligations
payable hereunder and in no event shall Borrower be required to pay any
such amount arising from the same circumstances and with respect to the
same Loans or other Obligations payable hereunder to both such Lender
and such Transferee. Borrower hereby grants to any Transferee a
continuing security interest in any deposits, moneys or other property
actually or constructively held by such Transferee as security for the
Transferee's interest in the Loans.
(c) Any Lender may sell, assign or transfer all or any part of
its rights under this Agreement and the Ancillary Agreements to one or
more additional banks or financial institutions which are able to make
Loans with the prior written consent of Agent and Borrower which
consent shall not be unreasonably withheld, provided that Borrower
shall have no right to consent to any such sale or assignment (i) upon
the occurrence and during the continuance of an Event of Default and
(ii) from a Lender to an Affiliate of such Lender, and one or more of
such additional banks or financial institutions may commit to make
Loans hereunder (each a "Purchasing Lender"), pursuant to a Commitment
Transfer Supplement, executed by a Purchasing Lender, the transferor
Lender, and Agent and delivered to Agent for recording. Upon
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such execution, delivery, acceptance and recording, from and after the
transfer effective date determined pursuant to such Commitment Transfer
Supplement, (i) Purchasing Lender thereunder shall be a party hereto
and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender thereunder with a
Commitment Percentage and Commitment as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such
Commitment Transfer Supplement, be released from its obligations under
this Agreement, the Commitment Transfer Supplement creating a novation
for that purpose. Such Commitment Transfer Supplement shall be deemed
to amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of the Commitment Percentages and the Commitment,
if any, arising from the purchase by such Purchasing Lender of all or a
portion of the rights and obligations of such transferor Lender under
this Agreement and the Ancillary Agreements. If Borrower consents to
the addition of such Purchasing Lender, which consent shall not be
unreasonably withheld, it shall be deemed to have consented to the
resulting adjustment of the Commitment Percentages arising from the
purchase by such Purchasing Lender of all or a portion of the rights
and obligations of such transferor Lender under this Agreement and the
Ancillary Agreements. Borrower shall execute such further documents and
do such further acts and things in order to effectuate the foregoing.
Notwithstanding anything hereinabove to the contrary, no Lender shall
sell, assign or transfer its rights hereunder to any Purchasing Lender
unless such Lender has first given Agent thirty (30) days prior written
notice, during which period Agent shall have the option to repurchase
from such Lender its rights under this Agreement on the same basis as
provided to the proposed Purchasing Lender. If Agent exercises its
option, the parties shall execute a Commitment Transfer Supplement and
the transferor Lender shall be released from its obligations under the
Agreement to the extent provided in such Commitment Transfer
Supplement. In addition, in the event there shall occur a material
adverse change in the financial condition or affairs of any Lender,
Agent shall have the right to repurchase such Lender's rights under the
Agreement in the manner described above.
(d) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register (the
"Register") for the recordation of the names and addresses of the Loans
owing to each Lender from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and Borrower,
Agent and Lenders may treat each Person whose name is recorded in the
Register as the owner of the Loans recorded therein for the purposes of
this Agreement. The Register shall be available for inspection by
Borrower or any Lender at any reasonable time and from time to time
upon reasonable prior notice. Agent shall receive a processing fee in
the amount of $3,500 payable by the applicable Purchasing Lender upon
the effective date of each transfer or assignment to such Purchasing
Lender.
(e) Borrower authorizes each Lender to disclose to any
Transferee or Purchasing Lender and any prospective Transferee or
Purchasing Lender any and all financial information in such Lender's
possession concerning Borrower which has been delivered to such Lender
by or on behalf of Borrower pursuant to this Agreement or in connection
with such Lender's credit evaluation of Borrower and each Purchasing
Lender and any Transferee shall hold all non-public information
obtained pursuant to the requirements of this Agreement in accordance
with applicable federal and state securities laws and its customary
procedures for handling confidential information of this nature;
provided, however each Purchasing Lender or
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Transferee may disclose such confidential information (a) to its
examiners, affiliates, outside auditors, counsel and other professional
advisors, (b) to any other prospective Transferees, and (c) as required
or requested by any governmental authority or representative thereof or
pursuant to legal process.
16. Waivers. Borrower waives presentment and protest of any instrument
and notice thereof, notice of default and all other notices to which Borrower
might otherwise be entitled.
17. Term of Agreement. (a) This Agreement shall continue in full force
and effect until the expiration of the Term unless terminated by Agent or
Borrower as provided herein. The Term shall be extended for successive periods
of one (1) year each upon the written request of Borrower (a "Notice of
Renewal") and approval of all Lenders, which Notice of Renewal shall be
delivered to Agent and each Lender at least ninety (90) days prior to the
expiration of the initial Term or any renewal Term. Any Lender may elect to
renew its Commitments by giving Agent and Borrower written notice of its
intention to renew its Commitments not more than thirty (30) days after the
receipt of Borrower's Notice of Renewal. If any Lender fails to provide Agent
and Borrower written notice of its intention to renew within such thirty (30)
day period, such failure shall be deemed an election by such Lender not to renew
its Commitments and such Lender's Commitments shall be terminated as of the last
day of the initial Term or any renewal Term. Borrower hereby agrees to pay to
the Agent on the last day of initial Term or any renewal Term, for the account
of such non-renewing Lender, the principal amount of, and all accrued interest
on, such Lender's Commitment Percentages of all funded Loans, together with any
fees or other amounts owing to such non-renewing Lender under this Agreement. In
the event a Lender fails to renew its Commitments, the Term shall be extended
and the Total Commitments and the Maximum Loan Amount shall be reduced for such
renewal Term by the amount of such non-renewing Lender's Commitments.
(b) Borrower may terminate this Agreement at any time upon
ninety (90) days' prior written notice, provided, however, that either
Borrower or BNY may terminate BNY's continuing to conduct ARM Services
for Borrower pursuant to Section 4 of this Agreement by giving the
other party written notice of such termination at least 90 days prior
to the effective date of such termination ("Termination Date") (such
written notice shall not be given by Borrower more than once during any
rolling twelve month period).
18. Events of Default. The occurrence of any of the following shall
constitute an Event of Default:
(a) failure to make payment of any of the Obligations when due
when required hereunder;
(b) failure to pay any taxes in excess of $500,000 when due
unless such taxes are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been
provided on Borrower's books;
(c) failure to perform under and/or committing any breach of
this Agreement or any Ancillary Agreement or any other agreement
between Borrower and Agent (other than
62
any provision embodied in or covered by any other clause of Section 18)
and such failure or breach is not cured within 30 days following
receipt of notice of such failure or breach from Agent;
(d) occurrence of a default under any agreement to which
Borrower is a party with third parties which has or could reasonably be
expected to have a Material Adverse Effect, including all leases for
any premises where Inventory or Equipment is located;
(e) any representation, warranty or statement made by Borrower
hereunder, in any Ancillary Agreement, any certificate, statement or
document delivered pursuant to the terms hereof, or in connection with
the transactions contemplated by this Agreement should when made be
false or misleading in any material respect;
(f) an attachment or levy is made upon any of Borrower's
Receivables having an aggregate value in excess of $1,000,000 or upon
any of Borrower's other assets having an aggregate value in excess of
$5,000,000 or a judgment is rendered against Borrower or any of
Borrower's property involving a liability of more than $100,000 in
excess of insurance covering such liability, which shall not have been
vacated, discharged, stayed or bonded pending appeal within thirty (30)
days from the entry thereof;
(g) Agent shall have notified Borrower of any change in
Borrower's condition or affairs (financial or otherwise) which in
Agent's good faith opinion impairs the Collateral or the ability of
Borrower to perform its Obligations;
(h) any Lien created hereunder or under any Ancillary
Agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest (subject to Permitted Liens);
provided, however, that it shall not be an Event of Default if such
Lien covers less than $1,000,000 of Collateral other than Collateral
consisting of Receivables;
(i) if Borrower shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors,
(iii) commence a voluntary case under the federal bankruptcy laws (as
now or hereafter in effect), (iv) be adjudicated a bankrupt or
insolvent, (v) file a petition seeking to take advantage of any other
law providing for the relief of debtors, (vi) acquiesce to, or fail to
have dismissed, within forty-five (45) days, any petition filed against
it in any involuntary case under such bankruptcy laws, or (vii) take
any action for the purpose of effecting any of the foregoing;
(j) Borrower shall admit either orally or in writing its
inability, or be generally unable to pay its debts as they become due
or cease operations of its present business;
(k) any material Subsidiary or any Guarantor (or any Affiliate
whose accounts receivable are Affiliate Receivables hereunder) shall
(i) apply for or consent to the appointment of, or the taking
possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (ii) admit in writing
its inability, or be generally unable, to pay its debts as they become
due or cease operations of its present business, (iii) make a general
63
assignment for the benefit of creditors, (iv) commence a voluntary case
under the federal bankruptcy laws (as now or hereafter in effect), (v)
be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to
take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, within forty-five (45)
days, any petition filed against it in any involuntary case under such
bankruptcy laws, or (viii) take any action for the purpose of effecting
any of the foregoing;
(l) Borrower directly or indirectly sells, assigns, transfers,
conveys, or suffers or permits to occur any sale, assignment, transfer
or conveyance of any assets of Borrower in excess of $5,000,000 in the
aggregate during any fiscal year of Borrower or any interest therein,
except as permitted herein;
(m) a default that has not been cured within any applicable
grace period by Borrower in the payment, when due, of any principal of
or interest on any indebtedness for money borrowed exceeding
$1,000,000;
(n) if any Guarantor attempts to terminate, challenges the
validity of, or its liability under any Guaranty Agreement or Guarantor
Security Agreement;
(o) should any Guarantor default in its obligations under any
Guaranty Agreement or any Guarantor Security Agreement or if any
proceeding shall be brought to challenge the validity, binding effect
of any Guaranty Agreement or any Guarantor Security Agreement, or
should any Guarantor breach any representation, warranty or covenant
contained in any Guaranty Agreement or any Guarantor Security Agreement
or should any Guaranty Agreement or Guarantor Security Agreement cease
to be a valid, binding and enforceable obligation;
(p) there shall occur a Change of Control;
(q) Borrower or another person involved in the media industry
(such person to be mutually agreed upon by Borrower and Agent) shall
advise Lender that there is a change in (i) the laws, regulations or
rules regulating the media industry or in the interpretation or
application of such laws, regulations or rules, (ii) the technology
utilized by the media industry or (iii) the organization of or policies
or procedures employed by the media industry, which shall have a
Material Adverse Effect;
(r) Any of Borrower's eight largest yellow pages publishers,
which at any time singularly account for more than 20% of the
outstanding aggregate amount of payable then due from Borrower to all
of its yellow pages publishers, require payment by Borrower to such
publisher less than 30 days after issuance from the invoice date
thereof.
(s) Any of Borrowers newspaper publishers, which at any time
singularly account for more than 15% of the outstanding aggregate
amount of payables then due from Borrower to all of its newspaper
publishers, require payment by Borrower to such publisher less than 25
days after issuance from the invoice date thereof.
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(t) More than twenty percent (20%) of the aggregate amount of
Receivables and Affiliate Receivables shall at any time not constitute
Eligible Receivables as determined by Agent in the good faith exercise
of its sole discretion;
(u) As of the end of any fiscal year, Borrower and the
Scheduled Affiliates shall have lost customers during the course of
such fiscal year which in the aggregate accounted for more than 10% of
sales for such fiscal year (such calculations to take into account the
addition of new customers during such fiscal year);
(v) If Borrower and/or any Scheduled Affiliates shall default
in any of their obligations to any newspaper publisher or yellow pages
publisher which shall cause Borrower or such Affiliate to be unable to
complete orders from customers in accordance with applicable purchase
orders; or
(w) There should occur a default or an event of default under
the Canadian Credit Agreement, or any Canadian Security Agreement, or
the UK Credit Agreement or any UK Security Agreement or any other
Ancillary Agreement.
19. Remedies. (a) Upon the occurrence of (i) an Event of Default
pursuant to Section 18(i) or 18(k) herein, all Obligations shall be immediately
due and payable and this Agreement shall be deemed terminated; (ii) upon the
occurrence and continuation of any other of the Events of Default, Agent may,
and upon request of Required Lenders, shall have the right to terminate the
Commitments and demand repayment in full of all Obligations, whether or not
otherwise due and (iii) the filing of a petition against any Borrower in any
involuntary case under any state or federal bankruptcy laws the obligations of
the Lenders to make Loans hereunder shall be terminated other than as may be
required by appropriate order of the bankruptcy court having jurisdiction over
Borrower. Until all Obligations have been fully satisfied, Agent shall retain
its security interest in all Collateral. Agent shall have, in addition to all
other rights provided herein, the rights and remedies of a secured party under
the Uniform Commercial Code, and under other applicable law, all other legal and
equitable rights to which Agent may be entitled, including without limitation,
the right to take immediate possession of the Collateral, to require Borrower to
assemble the Collateral, at Borrower's expense, and to make it available to
Agent at a place designated by Agent which is reasonably convenient to both
parties and to enter any of the premises of Borrower or wherever the Collateral
shall be located, with or without force or process of law, and to keep and store
the same on said premises until sold (and if said premises be the property of
Borrower, Borrower agrees not to charge Agent for storage thereof for a period
up to at least sixty (60) days after sale or disposition of said Collateral).
Further, Agent may, at any time or times after default by Borrower, sell and
deliver all Collateral held by or for Agent at public or private sale for cash,
upon credit or otherwise, at such prices and upon such terms as Agent, in
Agent's sole discretion, deems advisable or Agent may otherwise recover upon the
Collateral in a commercially reasonable manner as Agent, in its sole discretion,
deems advisable. In addition, upon the occurrence of an Event of Default,
Borrower shall pledge, and shall cause its direct or indirect Subsidiaries to
pledge to Agent 100% of the issued shares of any such direct or indirect
Subsidiary which is a Domestic Person and 65% of the issued shares of any such
direct or indirect Subsidiary which is not a Domestic Person, in each case as
may be required by Agent as additional security for the Obligations. Except as
to that part of the
65
Collateral which is perishable or threatens to decline speedily in nature or is
of a type customarily sold on a recognized market, the requirement of reasonable
notice shall be met if such notice is mailed postage prepaid to Borrower at
Borrower's address as shown in Agent's records, at least ten (10) days before
the time of the event of which notice is being given. Agent may be the purchaser
at any sale, if it is public. In connection with the exercise of the foregoing
remedies, Agent is granted permission to use all of Borrower's trademarks,
tradenames, tradestyles, patents, patent applications, licenses, franchises and
other proprietary rights which are used in connection with (a) Inventory for the
purpose of disposing of such Inventory and (b) Equipment for the purpose of
completing the manufacture of unfinished goods. The proceeds of sale shall be
applied first to all costs and expenses of sale, including attorneys' fees, and
second to the payment (in whatever order Agent elects) of all Obligations;
provided that all payments, shall be applied first, to the U.S. Commitments pro
rata according to the respective U.S. Commitment Percentages of the Lenders
until paid in full and then to the repayment of BNY Overadvances until paid in
full and second to the outstanding balance of Foreign Subsidiary Obligations
(and Borrower's guaranty thereof) remaining after application of Foreign
Collections. Agent will return any excess to Borrower and Borrower shall remain
liable to Agent for any deficiency.
20. Waiver; Cumulative Remedies. Failure by Agent to exercise any
right, remedy or option under this Agreement or any supplement hereto or any
other agreement between Borrower and Agent or delay by Agent in exercising the
same, will not operate as a waiver; no waiver by Agent will be effective unless
it is in writing and then only to the extent specifically stated. Agent's rights
and remedies under this Agreement will be cumulative and not exclusive of any
other right or remedy which Agent may have.
21. Application of Payments. Each Financial Party irrevocably waives
the right to direct the application of any and all payments at any time or times
hereafter received by Agent from or on such Financial Party's behalf and each
Financial Party hereby irrevocably agrees that Agent shall have the continuing
exclusive right to apply and reapply any and all payments received at any time
or times hereafter against the Obligations hereunder in such manner as Agent may
deem advisable notwithstanding any entry by Agent upon any of Agent's books and
records.
22. Establishment of a Lockbox Account, Dominion Account. All proceeds
of Collateral shall, at the direction of Agent, be deposited by each Financial
Party into a lockbox account, dominion account or such other "blocked account"
("Blocked Accounts") as Agent may require pursuant to an arrangement with such
bank as may be selected by Borrower and be reasonably acceptable to Agent.
Borrower shall and shall cause each Financial Party to issue to any such bank an
irrevocable letter of instruction directing said bank to transfer such funds so
deposited to Agent, either to any account maintained by Agent at said bank or by
wire transfer to appropriate account(s) of Agent. All funds deposited in such
"blocked account" shall immediately become the property of Agent and the
Borrower shall and shall cause each Financial Party to obtain the agreement by
such bank to waive any offset rights against the fund so deposited. Agent
assumes no responsibility for such "blocked account" arrangement, including
without limitation, any claim of accord and satisfaction or release with respect
to deposits accepted by any bank thereunder. Alternatively, upon the occurrence
of an Event of Default or
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in the event a Blocked Account is not created as provided above, Agent may
establish depository accounts ("Depository Accounts") in the name of Agent at a
bank or banks for the deposit for such funds and Borrower shall and shall cause
each Financial Party to deposit all proceeds of Receivables or cause same to be
deposited, in kind, in such Depository Accounts of Agent in lieu of depositing
same to the Blocked Accounts.
23. Revival. Borrower further agrees that to the extent Borrower makes
a payment or payments to Agent, which payment or payments or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
then, to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made.
24. Notices. Any notice or request hereunder may be given to Borrower
or Agent at the respective addresses set forth below or as may hereafter be
specified in a notice designated as a change of address under this paragraph.
Any notice or request hereunder shall be given by registered or certified mail,
return receipt requested, or by overnight mail or by telecopy (confirmed by
mail). Notices and requests shall be, in the case of those by mail or overnight
mail, deemed to have been given when deposited in the mail or with the overnight
mail carrier, and, in the case of a telecopy, when confirmed.
Notices shall be provided as follows:
If to Agent: BNY Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx
Xxxxx Xxxxxxx, Esq.
Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: Xxxx & Hessen LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier (000) 000-0000
67
If to Borrower: TMP Worldwide Inc.
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx,
Vice Chairman
Xxxxx X. Xxxxxxxxxx,
Vice President and
General Counsel
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to: Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
25. Governing Law and Waiver of Jury Trial. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. AGENT SHALL HAVE THE RIGHTS AND REMEDIES OF A SECURED PARTY UNDER
APPLICABLE LAW INCLUDING, BUT NOT LIMITED TO, THE UNIFORM COMMERCIAL CODE OF NEW
YORK. BORROWER AGREES THAT ALL ACTIONS AND PROCEEDINGS RELATING DIRECTLY OR
INDIRECTLY TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR ANY OTHER OBLIGATIONS
SHALL BE BROUGHT IN THE FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW
YORK OR, AT AGENT'S OPTION, IN ANY OTHER COURTS LOCATED IN NEW YORK STATE AS
AGENT MAY SELECT AND THAT SUCH COURTS ARE CONVENIENT FORUMS AND BORROWER SUBMITS
TO THE PERSONAL JURISDICTION OF SUCH COURTS. BORROWER WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS THAT SERVICE OF PROCESS UPON BORROWER MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT
BORROWER'S ADDRESS APPEARING ON AGENT'S RECORDS, AND SERVICE SO MADE SHALL BE
DEEMED COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED. BOTH
PARTIES HERETO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BETWEEN BORROWER AND AGENT AND BORROWER WAIVES THE RIGHT TO ASSERT IN ANY ACTION
OR PROCEEDING INSTITUTED BY AGENT WITH REGARD TO THIS AGREEMENT OR ANY OF THE
OBLIGATIONS (EXCEPT TO THE EXTENT THAT THE LAWS OF THE SELECTED FORUM REQUIRE
ASSERTION OR LOSS OR FORFEITURE THEREOF) ANY OFFSETS OR COUNTERCLAIMS WHICH IT
MAY HAVE.
26. Limitation of Liability. Borrower acknowledges and understands that
in order to assure repayment of the Obligations hereunder Agent may be required
to exercise any and all of Agent's rights and remedies hereunder and agrees that
neither Agent nor any of Agent's agents shall be liable for acts taken or
omissions made in connection herewith or therewith except for actual bad faith.
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27. Entire Understanding. (a) This Agreement and the Ancillary
Agreements contain the entire understanding between Borrower, Agent and each
Lender and supersedes all prior agreements and understandings, if any, relating
to the subject matter hereof. Any promises, representations, warranties or
guarantees not herein contained and hereinafter made shall have no force and
effect unless in writing, signed by Borrower's, Agent's and each Lender's
respective officers or authorized representatives. Neither this Agreement nor
any portion or provisions hereof may be changed, modified, amended, waived,
supplemented, discharged, cancelled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing, signed by the
party to be charged. Borrower acknowledges that it has been advised by counsel
in connection with the execution of this Agreement and Ancillary Agreements and
is not relying upon oral representations or statements inconsistent with the
terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of
the Required Lenders, and Borrower may, subject to the provisions
hereof, from time to time enter into written supplemental agreements to
this Agreement or the Ancillary Agreements executed by Borrower, for
the purpose of adding or deleting any provisions or otherwise changing,
varying or waiving in any manner the rights of the Lenders, Agent or
Borrower thereunder or the conditions, provisions or terms thereof or
waiving any Event of Default thereunder, but only to the extent
specified in such written agreements; provided, however, that Agent
may, without the consent of any Lender, enter into any supplemental
agreement to amend Section 4 hereof or to execute on behalf of Lenders
such releases, intercreditor agreements or other agreements or
documents it deems necessary in its sole judgment with respect to
purchase money security interests on specific Equipment of Borrower;
and provided, further that no such supplemental agreement shall,
without the consent of all the Lenders:
(i) increase the Commitment Percentages or the
Commitments of any Lender; provided, however that Required
Lenders may consent to the increase in the Maximum Loan
Amount and the resulting changes in Commitments and
Commitment Percentages in accordance with Section 2.6.
(ii) increase the Maximum Loan Amount, any sublimits
hereunder or the Receivables Advance Rate.
(iii) extend the maturity of any note or the due date
for any amount payable hereunder, or decrease the rate of
interest or reduce any fee payable by Borrower to Lenders
pursuant to this Agreement.
(iv) alter the definition of the term Required Lenders
or Eligible Receivables or alter, amend or modify the second
sentence of Section 17 or any provision of this Section 27.
(v) release any Collateral during any Calendar Year
having an aggregate value in excess of $2,500,000, provided
that consent of all Lenders shall be required
69
for the release of any Collateral to the extent such release
results in or would result in an overadvance.
(vi) change the rights and duties of Agent.
Any such supplemental agreement shall apply equally to each of the Lenders and
shall be binding upon Borrower, the Lenders, Agent and all future holders of the
Obligations. In the case of any waiver, Borrower, Agent and the Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
28. Regarding Agent.
(a) Appointment. Each Lender hereby designates BNY to act as
Agent for such Lender under this Agreement and the Ancillary
Agreements. Each Foreign Subsidiary Lender hereby designates BNY to act
as Agent for such Foreign Subsidiary Lender. Each Lender and Foreign
Subsidiary Lender hereby irrevocably authorizes Agent to take such
action on its behalf under the provisions of this Agreement and the
Ancillary Agreements and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or
required of Agent by the terms hereof and thereof and such other powers
as are reasonably incidental thereto and Agent shall hold all
Collateral, payments of principal and interest, fees (except the fees
set forth in Section 4(b) and any other fee specifically payable to
Agent or BNY solely for its account), charges and collections (without
giving effect to any collection days) received pursuant to this
Agreement, for the ratable benefit of Lenders and the Foreign
Subsidiary Lenders in accordance with their respective Total Commitment
Percentages. Agent may perform any of its duties hereunder by or
through its agents or employees. As to any matters not expressly
provided for by this Agreement Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding; provided, however, that Agent
shall not be required to take any action which exposes Agent to
liability or which is contrary to this Agreement or the Ancillary
Agreements or applicable law unless Agent is furnished with an
indemnification reasonably satisfactory to Agent with respect thereto.
(b) Nature of Duties. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and
the Ancillary Agreements. Neither Agent nor any of its officers,
directors, employees or agents shall be (i) liable for any action taken
or omitted by them as such hereunder or in connection herewith, unless
caused by their gross negligence (but not mere negligence) or willful
misconduct or gross (not mere) negligence, or (ii) responsible in any
manner for any recitals, statements, representations or warranties made
by Borrower or any officer thereof contained in this Agreement, or in
any of the Ancillary Agreements or in any certificate, report,
statement or other document referred to or provided for in, or received
by Agent under or in connection with, this Agreement or any of the
Ancillary Agreements or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of
70
this Agreement, or any of the Ancillary Agreements or for any failure
of Borrower to perform its obligations hereunder. Agent shall not be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any of the Ancillary Agreements, or to
inspect the properties, books or records of Borrower. The duties of
Agent as respects the Loans to Borrower shall be mechanical and
administrative in nature; Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender; and
nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon Agent any obligations in
respect of this Agreement except as expressly set forth herein.
(c) Payments by Lenders. Notwithstanding anything to the
contrary contained herein, commencing with the first Business Day
following the Closing Date, each borrowing of Revolving Credit Advances
shall be advanced by Agent and each payment by Borrower on account of
Revolving Credit Advances shall be applied first to those Revolving
Credit Advances made by Agent. On or before 1:00 P.M., New York time,
on each Lender Settlement Date commencing with the first Lender
Settlement Date following the Closing Date, Agent and the Lenders shall
make certain payments as follows: (I) if the aggregate amount of new
Revolving Credit Advances made by Agent during the preceding Week
exceeds the aggregate amount of repayments applied to outstanding
Revolving Credit Advances during such preceding Week, then each Lender
shall provide Agent with funds in an amount equal to its U.S.
Commitment Percentage of the difference between (w) such Revolving
Credit Advances and (x) such repayments and (II) if the aggregate
amount of repayments applied to outstanding Revolving Credit Advances
during such Week exceeds the aggregate amount of new Revolving Credit
Advances made during such Week, then Agent shall provide each Lender
with its U.S. Commitment Percentage of the difference between (y) such
repayments and (z) such Revolving Credit Advances.
(i) Each Lender shall be entitled to earn interest at
the applicable Contract Rate on outstanding Revolving Credit
Advances which it has funded.
(ii) Promptly following each Lender Settlement Date,
Agent shall submit to each Lender a certificate with respect
to payments received and Loans made during the Week
immediately preceding such Lender Settlement Date. Such
certificate of Agent shall be conclusive in the absence of
manifest error.
(d) Excess Payments. If any Lender or Participant (a
"benefitted Lender") shall at any time receive any payment of all or
part of its Loans or interest thereon, or receive any Collateral in
respect thereof (whether voluntarily or involuntarily or by set-off) in
a greater proportion than any such payment to and Collateral received
by any other Lender, if any, in respect of such other Lender's Loans,
or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such benefited
Lender shall purchase for cash from the other Lenders such portion of
each such other Lender's Loans, or shall provide such other Lender with
the benefits of any such Collateral, or the proceeds thereof, as shall
be necessary to cause such benefited Lender to share the excess payment
or benefits of such Collateral or proceeds ratably with each of the
Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefited Lender,
71
such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest. Each
Lender so purchasing a portion of another Lender's Loans may exercise
all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Lender were
the direct holder of such portion.
(e) Lack of Reliance and Resignation. Independently and
without reliance upon Agent or any other Lender, each Lender has made
and shall continue to make (i) its own independent investigation of the
financial condition and affairs of Borrower and its Subsidiaries in
connection with the making and the continuance of the Loans hereunder
or the loans made under the Foreign Subsidiary Credit Agreements (the
"Foreign Loans") and the taking or not taking of any action in
connection herewith or therewith, and (ii) its own appraisal of the
creditworthiness of Borrower. Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide
any Lender with any credit or other information with respect thereto,
whether coming into its possession before making of the Loans or the
Foreign Loans or at any time or times thereafter except as shall be
provided by Borrower or a Subsidiary of Borrower pursuant to the terms
hereof and thereof. Agent shall not be responsible to any Lender for
any recitals, statements, information, representations or warranties
herein or in any agreement, document, certificate or a statement
delivered in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectability or sufficiency of
this Agreement, any Ancillary Agreement or any Foreign Subsidiary
Credit Agreement, or of the financial condition of Borrower or any
Subsidiary, or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions
of this Agreement, the Note, the Ancillary Agreements or any Foreign
Subsidiary Credit Agreement or the financial condition of Borrower, or
the existence of any Event of Default or any Incipient Event of
Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrower and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrower.
Any such successor Agent shall succeed to the rights, powers and duties
of Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent. After any Agent's resignation as Agent, the provisions of this
Section 28 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
(f) Certain Rights of Agent. If Agent shall request
instructions from Lenders or Foreign Subsidiary Lenders with respect
to any act or action (including failure to act) in connection with this
Agreement or any Ancillary Agreement, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent
shall have received instructions from the Required Lenders; and Agent
shall not incur liability to any Person by reason of so refraining.
Without limiting the foregoing, Lenders and Foreign Subsidiary Lenders
shall not have any right of action whatsoever against Agent as a
result of its acting or refraining from acting hereunder in accordance
with the instructions of the Required Lenders.
72
(g) Reliance. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message,
cablegram, order or other document or telephone message believed by it
to be genuine and correct and to have been signed, sent or made by the
proper person or entity, and, with respect to all legal matters
pertaining to this Agreement and the Ancillary Agreements and its
duties hereunder, upon advice of counsel selected by it. Agent may
employ agents and attorneys-in-fact and shall not be liable for the
default or misconduct of any such agents or attorneys-in-fact selected
by Agent with reasonable care.
(h) Notice of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Incipient Event of Default
or Event of Default hereunder or under the Ancillary Agreements, unless
Agent has received notice from a Lender or Borrower referring to this
Agreement or the Ancillary Agreements, describing such Incipient Event
of Default or Event of Default and stating that such notice is a
"notice of default". In the event that Agent receives such a notice,
Agent shall give notice thereof to Lenders. Agent shall take such
action with respect to such Incipient Event of Default or Event of
Default as shall be reasonably directed by the Required Lenders;
provided, that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Incipient
Event of Default or Event of Default as it shall deem advisable in the
best interests of Lenders.
(i) Indemnification. To the extent Agent is not reimbursed and
indemnified by Borrower, each Lender will reimburse and indemnify Agent
in proportion to its respective portion of the Loans (or, if no Loans
are outstanding, according to its U.S. Commitment Percentage), from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, fees or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against Agent in performing its duties
hereunder, provided that, Lenders shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from
Agent's gross (but not mere) negligence or willful misconduct.
(j) Agent in its Individual Capacity. With respect to the
obligation of Agent to lend under this Agreement, the Loans made by it
shall have the same rights and powers hereunder as any other Lender and
as if it were not performing the duties as Agent specified herein; and
the term "Lender" or any similar term shall, unless the context clearly
otherwise indicates, include Agent in its individual capacity as a
Lender. Agent may engage in business with Borrower as if it were not
performing the duties specified herein, and may accept fees and other
consideration from Borrower for services in connection with this
Agreement or otherwise without having to account for the same to
Lenders.
(k) Delivery of Document. To the extent Agent receives
documents and information from Borrower pursuant to the terms of this
Agreement or any Foreign Subsidiary Credit Agreement, Agent will
promptly furnish such documents and information to Lenders.
(l) Borrower's Undertaking to Agent. Without prejudice to
their respective obligations to the Lenders under the other provisions
of this Agreement, Borrower hereby
73
undertakes with Agent to pay to Agent from time to time on demand all
amounts from time to time due and payable by it for the account of
Agent or the Lenders or any of them pursuant to this Agreement to the
extent not already paid. Any payment made pursuant to any such demand
shall pro tanto satisfy Borrower's obligations to make payments for the
account of the Lenders or the relevant one or more of them pursuant to
this Agreement.
(m) Risk Participation.
(1) Each Lender shall, to the extent of the
percentage amount equal to the product of such
Lender's Total Commitment Percentage times the
aggregate amount of all Foreign Losses be deemed to
have irrevocably purchased an undivided risk
participation (the "Risk Participation") in all such
outstanding Foreign Losses, provided, however, that
at no time shall the sum of such Lender's Risk
Participation (whether or not funded) plus the
principal balance of its outstanding Loans exceed
such Lender's Total Commitment. The Risk
Participation shall be payable from time to time by
each Lender to Agent on demand following receipt of
notice by such Lender of the incurrence by a BNY
Company of Foreign Losses and the amount thereof (a
"Payment Event"). Except with respect to the
continued payment of the Unused Line Fee in Section
3(c), Lenders shall not be entitled to any fees
relating to the purchase of the Risk Participation.
Each Lender's funding of its Risk Participation shall
be in U.S. Dollars.
(2) Whenever, at any time after any Lenders
have purchased a Risk Participation, the Agent or any
applicable BNY Company receives any payment on
account of the Foreign Losses, the Agent on behalf of
the Lenders or such applicable BNY Company will pay
(net of all applicable withholding taxes) to the
Lenders, their pro rata share of such payment;
provided, however, that in the event that any such
payment received by the Agent or such applicable BNY
Company shall be required to be returned by Agent or
such applicable BNY Company such Lenders shall return
to the Agent the portion thereof previously
distributed to them.
(3) Each Lender's Risk Participation shall
continue until the last to occur of any of the
following events: (A) the BNY Companies cease to be
obligated to make loans to Borrowers' foreign
Subsidiaries in accordance with the Foreign
Subsidiary Credit Agreements; (B) no Foreign
Subsidiary Obligations remain outstanding or (C) all
Persons (other than Borrower or any of its foreign
Subsidiaries) have been fully reimbursed for all
payments made under or relating to such Foreign
Subsidiary Obligations. The obligation of each Lender
to make payments to Agent and of Agent to make
payments to the Lender in accordance with the
provisions of this Section 28(m) shall be absolute
and unconditional. All payments to be made hereunder
by any Lender to Agent or by any BNY Company or Agent
to any Lender shall be made without any set-off,
deduction withholding or retention whatsoever. To the
extent that any
74
Lender on the one hand, or Agent or any BNY Company
on the other hand, makes or is obliged to make any
such deduction, withholding or retention such Lender
on the one hand, or Agent or any BNY Company on the
other hand shall forthwith make such further payment
to the recipient as may be required so that the
recipient receives in aggregate a sum equal to the
payment which should have been made by such Lender on
the one hand, or Agent or any BNY Company on the
other hand, hereunder if such deduction, withholding
or retention had not been made.
(4) Agent and the applicable BNY Company
will have the exclusive right to manage, perform and
enforce the terms of the Foreign Subsidiary Credit
Agreements and to exercise and enforce all privileges
and rights exercisable or enforceable by it
thereunder, for the joint benefit of the applicable
BNY Company and each other Lender, according to
Agent's and such BNY Company's discretion and the
exercise of its business judgment. Agent and the
applicable BNY Company may amend or modify any
Foreign Subsidiary Credit Agreements or waive its
rights thereunder, provided, that neither Agent nor
any BNY Company shall waive an Event of Default under
the Foreign Subsidiary Credit Agreement without the
consent of Required Lenders; provided further, no
such amendment, modification or waiver shall, without
the consent of all Lenders:
(i) increase the Commitment Percentages
or the Commitments of any Lender; provided,
however that Required Lenders may consent to the
increase in the Maximum Loan Amount and the
resulting changes in Commitments and Commitment
Percentages in accordance with Section 2.6.
(ii) increase the maximum amount of
Foreign Subsidiary Loans permitted to be made
pursuant to any Foreign Subsidiary Credit
Agreement or the advance rates against eligible
collateral therein;
(iii) extend the maturity of any note or
the due date for any amount payable thereunder;
(iv) release any Foreign Subsidiary
Collateral during any Calendar Year having an
aggregate value in excess of $2,500,000.
29. Determination of Dollar Equivalent. For purposes of this Agreement,
the Dollar Equivalent of each Alternate Currency Loan designated in an Alternate
Currency shall be recalculated (i) on each borrowing of an Alternate Currency
Loan, (ii) on each date that the Maximum Loan Amount or the Formula Amount is
reduced and (iii) on the last Business Day of each month. The Dollar Equivalent
for each Alternate Currency Loan shall remain in effect until the same is
recalculated by Agent as provided above and notice of such recalculation is sent
to
75
Borrower. Agent shall promptly notify Borrower and the Lenders of each such
determination of the Dollar Equivalent for each Alternate Currency Loan.
30. European Monetary Union. It is hereby acknowledged that during the
term of this Agreement the United Kingdom may adopt a single European currency
as its lawful currency in place of Sterling as part of the anticipated European
Economic and Monetary Union. It is hereby acknowledged and agreed that
"Sterling", as defined herein, shall include any such successor currency and
that conversion into such successor currency shall be made at the official rate
of conversion on the date on which Sterling is so replaced, and that the
denomination of the original currency shall be retained hereunder for so long as
it is legally permissible. It is hereby further acknowledged and agreed that the
provisions of this Agreement relating to Sterling Loans shall remain in full
force and effect upon such conversion, and that neither the introduction of a
single European currency, the replacement of Sterling thereby, the fixing of the
official rate of conversion, nor any economic consequences resulting therefrom
shall give rise to any right to terminate, contest, cancel, modify or
renegotiate the provisions of this Agreement.
31. Deliveries. Notwithstanding the method of delivery of any document,
certificate, report or other writing delivered hereunder by Borrower or any of
its officers or directors, such items shall be deemed to have been delivered by
United States mail.
32. Additional Documents. Execute and deliver to Agent, upon request,
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purposes, terms or conditions of this Agreement.
33. Severability. Wherever possible each provision of this Agreement or
the Ancillary Agreements shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement or the
Ancillary Agreements shall be prohibited by or invalid under applicable law such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
thereof.
34. Captions. All captions are and shall be without substantive meaning
or content of any kind whatsoever.
35. Counterparts; Telecopied Signatures. This Agreement may be executed
in any number of and by different parties hereto, on separate counterparts, all
of which when so executed, shall be deemed an original, but all such
counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
36. Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
76
37. Instrument for the Payment of Money. The Borrower hereby
acknowledges that this Loan Agreement shall be deemed to constitute an
instrument for the payment of money, and consents and agrees that any Lender or
the Agent, at its sole option, in the event of a dispute by Borrower in the
payment of any moneys due hereunder, shall have the right to bring motion-action
under New York CPLR Section 3213.
[INTENTIONAL END OF PAGE; SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
TMP WORLDWIDE INC.
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice President
BNY FINANCIAL CORPORATION,
as Agent and as Lender
By: /s/ Xxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxx
-------------------------
Title:
-------------------------
DEUTSCHE FINANCIAL SERVICES
CORPORATION, as Lender
By: /s/ Xxxxxx X. Xxxxxxx, XX
-------------------------------
Name: Xxxxxx X. Xxxxxxx, XX
-------------------------
Title: Vice President
-------------------------
FLEET BANK, N.A.
as Lender
By: /s/ Xxxxxx X. Xxxx
-------------------------------
Name: Xxxxxx X. Xxxx
-------------------------
Title: Vice President
-------------------------
FIFTH THIRD BANK
as Lender
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxx
-------------------------
Title: AVP
-------------------------
00
XXXXXXXX XXXX XX XXXXXX
as Lender
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
-------------------------
Title: Vice President
-------------------------
79
BNY FINANCIAL LIMITED
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxx
-------------------------
Title: Attorney-in-fact
-------------------------
XXX XXXXXXXXX XXXXXXXXXXX - XXXXXX
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxx
-------------------------
Title: Vice President
-------------------------
80
Schedule A - Proposed Mergers
Lenders consent to and waive the following proposed mergers:
Xxxxxxxx Direct, Inc. into Borrower
BTD Acquisition, Inc into Interdict Inc.
CPC Acquisition Corp. into Interdirect, Inc.
Interdirect, Inc into Borrower
Online Career Management, Inc. into Volando, Inc.
Stackig, Inc. into Borrower
TASA Holdings International A.G. into Borrower
Xxxxxxx, Xxxxx & Xxxxxxx, Inc. into Borrower
81
EXHIBIT 1.3
COMMITMENTS
A. Total Commitments:
----------------
Total Total Commitment
Commitment Percentage
----------- ----------------
BNY Companies $115,000,000 65.7143%
(BNY Financial Corporation,
BNY Financial Corporation - Canada
and BNY Financial Limited)
Deutsche Financial Services $ 25,000,000 14.2857%
Corporation
Fleet Bank, N.A. $ 15,000,000 8.5714%
Fifth Third Bank $ 10,000,000 5.7142%
National Bank of Canada $ 10,000,000 5.7142%
B. U.S. Commitments*:
------------------
U.S.
Commitment
----------
BNY Financial Corporation $115,000,000 minus the Dollar Equivalent
Of the outstanding balance
of U.K.
Subsidiary Loans and Canadian Subsidiary
Loans
Deutsche Financial Services
Corporation $ 25,000,000
Corporation
Fleet Bank, N.A. $ 15,000,000
Fifth Third Bank $ 10,000,000
National Bank of Canada $ 10,000,000
82
C. U.K. Commitments:
BNY Financial Limited $ 50,000,000 100%
(or Sterling Equivalent)
D. Xxxxxxxx Xxxxxxxxxxx:
XXX Xxxxxxxxx Xxxxxxxxxxx - Xxxxxx $ 10,000,000 100%
(or Canadian Equivalent)
*The U.S. Commitment Percentage of any Lender other than BNY at any time shall
be determined according to the following formula:
US Commitment Percentage = TCP x TO
---------
USLO
Where:
TCP = Total Commitment Percentage of such Lender
TO = Total Loans plus Foreign Subsidiary Loans outstanding for all
Lenders and Foreign Subsidiary Lenders
USLO = U.S. Loans outstanding for all Lenders
*The U.S. Commitment Percentage of BNY at any time shall be determined according
to the following formula:
BNY US Commitment Percentage = 100% - the sum of the U.S. Commitment Percentages
for all Lenders other than BNY
83
SCHEDULE A
Schedule 1(A) Permitted Liens
Schedule 1(B) Guarantors
Schedule 5.1(p) Projections
Schedule 12.1(c) Executive Offices
Schedule 12.1(h) Licenses, Patents, Trademarks and Copyrights
Schedule 12.3(a) Indebtedness
Schedule 12.3(e) Guaranties
84
