AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
by and among
XXXXXX HIGHLAND GROUP, INC.
and
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
as Borrowers,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
XXXXX FARGO FOOTHILL, INC.
as the Arranger and Administrative Agent
Dated as of June 25, 2003
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Agreement"),
is entered into as of June 25, 2003, between and among, on the one hand, the
lenders identified on the signature pages hereof (such lenders, together with
their respective successors and assigns, are referred to hereinafter each
individually as a "Lender" and collectively as the "Lenders"), and XXXXX FARGO
FOOTHILL, INC. (formerly known as FOOTHILL CAPITAL CORPORATION), a California
corporation, as the arranger and administrative agent for the Lenders ("Agent"),
and, on the other hand, XXXXXX HIGHLAND GROUP, INC., a Delaware corporation
("Parent"), and each of Parent's Subsidiaries identified on the signature pages
hereof (such Subsidiaries, together with Parent, are referred to hereinafter
each individually as a "Borrower", and individually and collectively, jointly
and severally, as "Borrowers").
WHEREAS, Agent, Lenders, and Borrowers have entered into certain financing
arrangements pursuant to a Loan and Security Agreement dated as of March 31,
2003 (the "Existing Loan Agreement", together with all supplements thereto and
all other "Loan Documents" as referred to therein, collectively, the "Existing
Financing Agreements"); and
WHEREAS, Agent, Lenders and Borrowers wish to amend and restate the
Existing Financing Agreements in their entirety so as to permit the joinder of
and assumption of the "Obligations" (as defined therein) by additional Borrowers
and to permit certain other modifications to the Existing Financing Agreements,
all on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing, the mutual conditions
and agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree, effective as of the date hereof, that the Existing Loan Agreement is
hereby amended and restated in its entirety as provided below and further agree,
effective as of the date hereof, as follows (the covenants, warranties and
agreements of Borrowers, except as otherwise expressly set forth herein, being
joint and several):
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall have
the following definitions:
"Account Report Base" means, as of any date of determination, the sum of
the unused Borrowing Base plus cash on hand in the aggregate for all Borrowers.
"Account Debtor" means any Person who is or who may become obligated under,
with respect to, or on account of, an Account, chattel paper, or a General
Intangible.
"Accounts" means all of Borrowers' now owned or hereafter acquired right,
title, and interest with respect to "accounts" (as that term is defined in the
Code), and any and all supporting obligations in respect thereof.
"Activation Date" means the date on which the conditions set forth in
Section 3.2 have been fulfilled to the satisfaction of Agent, in its Permitted
Discretion, or waived by Agent and Lenders.
"Additional Borrower" has the meaning set forth in Section 2.16.
"Additional Documents" has the meaning set forth in Section 4.4.
"Administrative Borrower" has the meaning set forth in Section 17.9.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as applied to any Person, any other Person who, directly
or indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, in any event: (a) any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed to control such Person; (b)
each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person; and (c) each partnership or joint venture in which a
Person is a partner or joint venturer shall be deemed to be an Affiliate of such
Person.
"Agent" means Foothill, solely in its capacity as agent for the Lenders
hereunder, and any successor thereto.
"Agent's Account" means an account at a bank designated by Agent from time
to time as the account into which Borrowers shall make all payments to Agent for
the benefit of the Lender Group and into which the Lender Group shall make all
payments to Agent under this Agreement and the other Loan Documents; unless and
until Agent notifies Administrative Borrower and the Lender Group to the
contrary, Agent's Account shall be that certain deposit account bearing account
number 323-266193 and maintained by Agent with The Chase Manhattan Bank, 4 New
Xxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, ABA #000000000.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
"Agent's Liens" means the Liens granted by Borrowers to Agent for the
benefit of the Lender Group under this Agreement or the other Loan Documents.
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"Agent-Related Persons" means Agent together with its Affiliates, officers,
directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Prepayment Premium" means, as of any date of determination, an
amount equal to 1% times the Maximum Revolver Amount, on the date immediately
prior to the date of determination for each full or partial period of twelve
months concluding on an anniversary of the Closing Date remaining until the
Maturity Date; provided, however, that if the outstanding principal balance of
Advances is prepaid and the Commitments are terminated with (i) the proceeds and
as a result of a private placement of subordinated debt, or an equity offering,
or a sale of all or substantially all of the assets or stock of any Borrower,
then the Applicable Prepayment Premium shall be an amount equal to .25% times
the Maximum Revolver Amount on the date immediately prior to the date of
determination for each full or partial period of twelve months concluding on an
anniversary of the Closing Date remaining until the Maturity Date; or (ii) the
proceeds of a refinancing made available to Borrowers by a commercial banking
unit of Xxxxx Fargo, then the Applicable Prepayment Premium shall be an amount
equal to 0% times the Maximum Revolver Amount on the date immediately prior to
the date of determination for each full or partial period of twelve months
concluding on an anniversary of the Closing Date remaining until the Maturity
Date. Notwithstanding anything to the contrary set forth herein, HH Australia
may refinance its Obligations to Lender Group at any time upon 30 days prior
written notice to Agent without incurring the Applicable Prepayment Premium,
provided that the terms of such refinancing of HH Australia's Obligations shall
be on terms and conditions satisfactory to Agent in its Permitted Discretion.
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance in the form
of Exhibit A-1.
"Australian Consolidation Date" has the meaning set forth in Section 6.17.
"Australian Employee Benefit Laws" means the Superannuation Industry
(Supervision) Xxx 0000 and the Superannuation Industry (Supervision) Regulations
1994 (Commonwealth of Australia).
"Australian Guarantor" means, individually, each Guarantor designated as an
"Australian Guarantor" on Schedule G-1 attached hereto.
"Australian Security" means each charge, mortgage or other security given
over the assets of HH Australia or an Australian Guarantor in favor of the
Agent.
"Australian Security Documents" means the Australian Securities and such
other agreements, instruments and documents as may be required by Agent to
create and perfect the security interest of Agent on behalf of the Lenders in
any assets of Borrowers and Guarantors located in Australia.
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"Authorized Person" means any officer or other employee of Administrative
Borrower.
"Availability" means, as of any date of determination, if such date is a
Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that Borrowers are entitled to borrow as Advances under Section 2.1
(after giving effect to all then outstanding Obligations and all sublimits and
reserves applicable hereunder).
"Bankruptcy Code" means, as applicable,
(i) the United States Bankruptcy Code,
(ii) The Bankruptcy and Insolvency Act (Canada),
(iii) The Companies' Creditors Arrangement Act (Canada), or
(iv) any similar legislation in the United Kingdom or Australia
or any other relevant jurisdiction,
in each case as in effect from time to time.
"Base LIBOR Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/16%), on the basis of the rates at which Dollar deposits are offered
to major banks in the London interbank market on or about 11:00 a.m. (California
time) 2 Business Days prior to the commencement of the applicable Interest
Period, for a term and in amounts comparable to the Interest Period and amount
of the LIBOR Rate Loan requested by Administrative Borrower in accordance with
this Agreement, which determination shall be conclusive in the absence of
manifest error.
"Base Rate" means, the rate of interest announced within Xxxxx Fargo at its
principal office in San Francisco as its "prime rate", with the understanding
that the "prime rate" is one of Xxxxx Fargo's base rates (not necessarily the
lowest of such rates) and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto and is
evidenced by the recording thereof after its announcement in such internal
publication or publications as Xxxxx Fargo may designate.
"Base Rate Loan" means each portion of an Advance that bears interest at a
rate determined by reference to the Base Rate.
"Base Rate Margin" means 0.25 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35)
of ERISA) or a benefit plan under Canadian Employee Benefit Law or Australian
Employee Benefit Laws for which any Borrower or any Subsidiary or ERISA
Affiliate of any Borrower has been an
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"employer" (as defined in Section3(5) of ERISA) or has held equivalent status
under Canadian Employee Benefit Laws or Australian Employee Benefit Laws within
the past six years.
"Board of Directors" means the board of directors (or comparable managers)
of Parent or any committee thereof duly authorized to act on behalf thereof.
"Books" means all of each Borrower's now owned or hereafter acquired books
and records (including all of its Records indicating, summarizing, or evidencing
its assets (including the Collateral) or liabilities, all of its Records
relating to its business operations or financial condition, and all of its goods
or General Intangibles related to such information).
"Borrower" and "Borrowers" have the respective meanings set forth in the
preamble to this Agreement and will also include any Subsidiary of Parent that
becomes a Borrower after the Activation Date pursuant to Section 2.16.
"Borrowing" means a borrowing hereunder consisting of Advances made on the
same day by the Lenders (or Agent on behalf thereof), or by Swing Lender in the
case of a Swing Loan, or by Agent in the case of an Agent Advance.
"Borrowing Base" has the meaning set forth in Section 2.1(a).
"Borrowing Base Certificate" means a certificate in the form of Exhibit
B-1.
"Business Day" means any day that is not a Saturday, Sunday, or other day
on which national banks are authorized or required to close, except that, if a
determination of a Business Day shall relate to a LIBOR Rate Loan, the term
"Business Day" also shall exclude any day on which banks are closed for dealings
in Dollar deposits in the London interbank market.
"Canadian Borrower" means, individually and collectively, either Xxxxxx
Highland Group Search, Inc., Xxxxx Xxxxxx and Associates Inc., or 3057313 Nova
Scotia Company.
"Canadian Employee Benefit Laws" means the Canadian Pension Plan Act
(Canada), the Pension Benefit Act (Ontario), the Health Insurance Act (Ontario),
the Employment Standard Act (Ontario) and any federal, provincial or local
counterparts or equivalents, in each case, as amended from time to time.
"Canadian Employee Plans" means all employee benefit, health, welfare,
supplemental unemployment benefit, bonus, pension, profit sharing, deferred
compensation, stock compensation, stock purchase, retirement, hospitalization
insurance, medical, dental, legal, disability, and similar plans or arrangements
relating to the employees or former employees of HH Canada other than any plans
or benefits under Canadian Employee Benefit Laws.
"Canadian Income Tax Act" means the Income Tax Act (Canada), R.S.C. 1985
c.1 (5th Supp.), as amended from time to time.
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"Canadian Pledge Agreement" means that certain Stock Pledge Agreement
executed and delivered by Xxxxxx Highland Group Search, Inc. in favour of Agent,
for the benefit of the Lender Group, in form and substance satisfactory to
Agent.
"Canadian Security Agreement" means that certain Security Agreement
executed and delivered by the Canadian Borrowers in favour of Agent, for the
benefit of the Lender Group in form and substance satisfactory to Agent.
"Canadian Security Documents" means the Canadian Pledge Agreement, the
Canadian Security Agreement, and such other agreements, instruments and
documents as may be required by Agent to create and perfect the security
interest of Agent on behalf of Lenders in any Collateral located in Canada.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented by
obligations under Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Xxxxx'x,
(c) commercial paper maturing no more than 1 year from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or Xxxxx'x, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or Xxxxx'x
or by a creditworthy banking institution located outside the United States, or
(ii) certificates of deposit less than or equal to $100,000 in the aggregate
issued by any other bank insured by the Federal Deposit Insurance Corporation.
"Cash Management Account" has the meaning set forth in Section 2.7(a).
"Cash Management Agreements" means those certain cash management service
agreements, in form and substance satisfactory to Agent, each of which is among
a Borrower, Agent, and one of the Cash Management Banks.
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
"Change of Control" means (a) any "person" or "group" (within the meaning
of Sections 13(d) and 14(d) of the Exchange Act), becomes the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
25%, or more, of the Stock of Parent having the right to vote for the election
of members of the Board of Directors, or (b) a majority of the
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members of the Board of Directors do not constitute Continuing Directors, or (c)
any Borrower ceases to directly own and control 100% of the outstanding capital
Stock of each of its Subsidiaries extant as of the Closing Date.
"Closing Date" means March 31, 2003.
"Closing Date Business Plan" means the set of Projections of Borrowers for
the 3 year period following the Closing Date (on a year by year basis, and for
the 1 year period following the Closing Date, on a month by month basis), in
form and substance (including as to scope and underlying assumptions)
satisfactory to Agent.
"Code" means the New York Uniform Commercial Code, as in effect from time
to time.
"Collateral" means all of each Borrower's now owned or hereafter acquired
right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) money or other assets of each such Borrower that now or hereafter
come into the possession, custody, or control of any member of the Lender Group,
and
(j) the proceeds and products, whether tangible or intangible, of any
of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, Records,
money, deposit accounts, or other tangible or intangible property resulting from
the sale, exchange, collection, or other disposition of any of the foregoing, or
any portion thereof or interest therein, and the proceeds thereof.
"Collateral Access Agreement" means a landlord waiver, bailee letter, or
acknowledgment agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in the Equipment or Inventory, in each case, in form and substance satisfactory
to Agent.
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"Collections" means all cash, checks, notes, instruments, and other items
of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of Borrowers.
"Commitment" means, with respect to each Lender, its Commitment, and, with
respect to all Lenders, their Commitments, in each case as such Dollar amounts
are set forth beside such Lender's name under the applicable heading on Schedule
C-1 or on the signature page of the Assignment and Acceptance pursuant to which
such Lender became a Lender hereunder in accordance with the provisions of
Section 14.1
"Compliance Certificate" means a certificate substantially in the form of
Exhibit C-1 delivered by the chief financial officer of Parent to Agent.
"Consolidation Date" has the meaning set forth in Section 6.17.
"Consolidation Plan" means a plan of consolidation and dissolution of
Subsidiaries by Borrowers in form and substance satisfactory to Agent in its
Permitted Discretion, which plan may be modified by Borrowers from time to time
in accordance with Section 6.17.
"Continuing Director" means (a) any member of the Board of Directors who
was a director (or comparable manager) of Parent on the Activation Date, and (b)
any individual who becomes a member of the Board of Directors after the
Activation Date if such individual was appointed or nominated for election to
the Board of Directors by a majority of the Continuing Directors, but excluding
any such individual originally proposed for election in opposition to the Board
of Directors in office at the Activation Date in an actual or threatened
election contest relating to the election of the directors (or comparable
managers) of Parent (as such terms are used in Rule 14a-11 under the Exchange
Act) and whose initial assumption of office resulted from such contest or the
settlement thereof.
"Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by the applicable Borrower, Agent,
and the applicable securities intermediary with respect to a Securities Account
or a bank with respect to a deposit account.
"Daily Balance" means, with respect to each day during the term of this
Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account maintained by any
Borrower.
"Default" means an event, condition, or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance (or
other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
8
"Defaulting Lender Rate" means (a) the Base Rate for the first 3 days from
and after the date the relevant payment is due, and (b) thereafter, at the
interest rate then applicable to Advances that are Base Rate Loans (inclusive of
the Base Rate Margin applicable thereto).
"Designated Account" means account number 00000000 maintained by
Administrative Borrower with the Designated Account Bank.
"Designated Account Bank" means Fifth Third Bank, 00 Xxxxxxxx Xxxxxx Xxxxx,
Xxxxxxxxxx, Xxxx 00000.
"Designated Subsidiary" has the meaning set forth in Section 6.17.
"Dilution" means, as of any date of determination, a percentage, based upon
the experience of the immediately prior six months, that is the result of
dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising
allowances, credits, or other dilutive items with respect to the Accounts during
such period, by (b) Borrowers' xxxxxxxx with respect to Accounts during such
period.
"Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.
"Dollars" or "$" means United States dollars.
"Domestic Borrower" means a Borrower organized under the laws of the United
States, any of the United States, or the District of Columbia.
"Domestic Guarantor" means a Guarantor organized under the laws of the
United States, any of the United States, or the District of Columbia.
"Due Diligence Letter" means the due diligence letter sent by Agent's
counsel to counsel to Administrative Borrower, together with Administrative
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, Parent's and its
Subsidiaries consolidated net earnings (or loss), minus extraordinary gains,
plus interest expense, income taxes, and depreciation and amortization for such
period, as determined in accordance with GAAP.
"Eligible Accounts" means those Accounts created by one of Borrowers in the
ordinary course of its business, that arise out of its sale of goods or
rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made by Borrowers under the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the criteria set forth below; provided, however, that such criteria may be fixed
and revised or varied according to country of origin from time to time by Agent
in Agent's Permitted
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Discretion to address the results of any audit performed by Agent from time to
time after the Closing Date. In determining the amount to be included, Eligible
Accounts shall be calculated net of customer deposits and unapplied cash
remitted to Borrowers. Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within 90 days
of original invoice date or Accounts with selling terms of more than 60 days,
(b) Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an employee,
Affiliate, or agent of any Borrower,
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a xxxx and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars, or, with respect to
Accounts created by a Foreign Borrower, the national currency of such Foreign
Borrower or Euros (subject to Section 2.18),
(f) Accounts with respect to which the Account Debtor either (i) does
not maintain its chief executive office in the United States or, with respect to
Accounts owing to a Foreign Borrower, the country of origin of such Borrower
(provided that, at any time, promptly upon Agent's request, such Borrower shall
execute and deliver, or cause to be executed and delivered, such other
agreements, instruments and documents as may be required by Agent to perfect the
security interests of Agent in those accounts of an Account Debtor with its
Chief Executive Office or principal place of business in a country other than
the United States in accordance with applicable federal, national, and local
laws in which such Chief Executive office or principal place of business is
located and take or cause to be taken such other and further actions as Agent
may request to enable Agent as secured party with respect thereto to collect
such Accounts), or (ii) is not organized under the laws of the United States or
any state thereof or, with respect to Accounts owing to a Foreign Borrower, the
country of origin of such Borrower, or (iii) is the government of any foreign
country or sovereign state, or of any state, province, municipality, or other
political subdivision thereof, or of any department, agency, public corporation,
or other instrumentality thereof, unless (y) the Account is supported by an
irrevocable letter of credit satisfactory to Agent (as to form, substance, and
issuer or domestic confirming bank) that has been delivered to Agent and is
directly drawable by Agent, or (z) the Account is covered by credit insurance in
form, substance, and amount, and by an insurer, satisfactory to Agent.
(g) Accounts with respect to which the Account Debtor is either (i)
the United States, the United Kingdom, Canada, or Australia or any department,
agency, or instrumentality of the United States, the United Kingdom, Canada, or
Australia (exclusive, however, of
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Accounts with respect to which the applicable Borrower has complied, to the
reasonable satisfaction of Agent, with the Assignment of Claims Act, 31 USC ss.
3727 or the Financial Administration Act (Canada)), or (ii) any state of the
United States or Australia or province of Canada (exclusive, however, of (y)
Accounts owed by any state that does not have a statutory counterpart to the
Assignment of Claims Act or the Financial Administration Act (z) Accounts owed
by any state that does have a statutory counterpart to the Assignment of Claims
Act or the Financial Administration Act as to which the applicable Borrower has
complied to Agent's satisfaction),
(h) Accounts with respect to which the Account Debtor is a creditor of
any Borrower, has or has asserted a right of setoff, has disputed its liability,
or has made any claim with respect to its obligation to pay the Account, to the
extent of such claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total obligations
owing to Borrowers exceed 10% of all Eligible Accounts, to the extent of the
obligations owing by such Account Debtor in excess of such percentage,
(j) Accounts with respect to which the Account Debtor is subject to an
Insolvency Proceeding, is not Solvent, has gone out of business, or as to which
a Borrower has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,
(k) Accounts with respect to which the Account Debtor is located in
the states of New Jersey, Minnesota, or West Virginia (or any other state that
requires a creditor to file a business activity report or similar document in
order to bring suit or otherwise enforce its remedies against such Account
Debtor in the courts or through any judicial process of such state), unless the
applicable Borrower has qualified to do business in New Jersey, Minnesota, West
Virginia, or such other states, or has filed a business activities report with
the applicable division of taxation, the department of revenue, or with such
other state offices, as appropriate, for the then-current year, or is exempt
from such filing requirement,
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(m) Accounts that are not subject to a valid and perfected first
priority Agent's Lien,
(n) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or
(o) Accounts that represent the right to receive progress payments or
other advance xxxxxxxx that are due prior to the completion of performance by
the applicable Borrower of the subject contract for goods or services.
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"Eligible Transferee" means (a) a commercial bank organized under the laws
of the United States, or any state thereof, and having total assets in excess of
$250,000,000, (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender that was
party hereto as of the Closing Date, (e) so long as no Event of Default has
occurred and is continuing, any other Person approved by Agent and
Administrative Borrower, and (f) during the continuation of an Event of Default,
any other Person approved by Agent.
"Environmental Actions" means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations or alleged violations of
Environmental Law or releases of Hazardous Materials from (a) any assets,
properties, or businesses of any Borrower or any predecessor in interest, (b)
from adjoining properties or businesses, or (c) from or onto any facilities
which received Hazardous Materials generated by any Borrower or any predecessor
in interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, permit,
binding and enforceable guideline, binding and enforceable written policy or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Borrowers, relating to the environment, human health, employee health and
safety, or Hazardous Materials, including CERCLA; RCRA; the Federal Water
Pollution Control Act, 33 USC ss. 1251 et seq.; the Toxic Substances Control
Act, 15 USC, ss.2601 et seq.; the Clean Air Act, 42 USC ss. 7401 et seq.; the
Safe Drinking Water Act, 42 USC. ss. 3803 et seq.; the Oil Pollution Act of
1990, 33 USC. ss.2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 USC. ss.11001 et seq.; the Hazardous Material
Transportation Act, 49 USC ss.1801 et seq.; and the Occupational Safety and
Health Act, 29 USC. ss.651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); the Canadian Environmental Protection Act
(Canada); the Fisheries Act (Canada); the Transportation of Dangerous Goods Act
(Canada); the Environmental Protection Act (Ontario); the Ontario Water
Resources Act; the Waste Management Act (British Columbia); the Environmental
Quality Act (Quebec); and any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any Environmental Action.
12
"Environmental Lien" means any Lien in favor of any Governmental Authority
for Environmental Liabilities and Costs.
"Equipment" means all of Borrowers' now owned or hereafter acquired right,
title, and interest with respect to equipment, machinery, machine tools, motors,
furniture, furnishings, fixtures, vehicles (including motor vehicles), tools,
parts, goods (other than consumer goods, farm products, or Inventory), wherever
located, including all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of a Borrower under
IRC Section 414(b), (b) any trade or business subject to ERISA whose employees
are treated as employed by the same employer as the employees of a Borrower
under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any organization subject to ERISA that is a member of an
affiliated service group of which a Borrower is a member under IRC Section
414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of
the IRC, any Person subject to ERISA that is a party to an arrangement with a
Borrower and whose employees are aggregated with the employees of a Borrower
under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any determination
thereof is to be made, equal to Availability minus the aggregate amount, if any,
of all trade payables of Borrowers aged in excess of their historical levels
with respect thereto and all book overdrafts in excess of their historical
practices with respect thereto, in each case as determined by Agent in its
Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in effect from
time to time.
"Excluded Subsidiary" means any Subsidiary that either (a) is a Designated
Subsidiary or (b) is neither a Borrower nor a Material Subsidiary.
"Existing Financing Agreements" has the meaning set forth in the recitals
to this Agreement.
"Existing Loan Agreement" has the meaning set forth in the recitals to this
Agreement.
"Fee Letter" means that certain fee letter, dated as of even date herewith,
between Borrowers and Agent, in form and substance satisfactory to Agent.
"FEIN" means Federal Employer Identification Number.
13
"Foothill" means Xxxxx Fargo Foothill, Inc., a California corporation.
"Foreign Borrower" means a Borrower organized under the laws of a
jurisdiction other than any of the United States or the District of Columbia.
"Foreign Guarantor" means a Guarantor organized under the laws of a
jurisdiction other than any of the United States or the District of Columbia.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.
"General Intangibles" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to general intangibles
(including payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, Internet domain
names, Internet domain name registrations, literature, reports, catalogs, money,
deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), and any and all supporting obligations in respect thereof, and any
other personal property other than goods, Accounts, Investment Property, and
Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.
"Governmental Authority" means any federal (including the federal
governments of the United States, Canada and Australia), state, provincial,
local, or other governmental or administrative body, instrumentality,
department, or agency or any court, tribunal, administrative hearing body,
arbitration panel, commission, or other similar dispute-resolving panel or body.
"Guarantee and Debenture" means a guarantee and debenture executed or to be
executed by HH UK in favor of Agent, in form and substance satisfactory to
Agent.
"Guarantor" and "Guarantors" means, individually and collectively but
subject to Section 6.17, each of the Material Subsidiaries of any Borrower set
forth on Schedule G-1 attached hereto and any other Material Subsidiary of any
Borrower which is not itself a Borrower.
"Guaranty" means a general continuing guaranty executed and delivered by a
Guarantor or any Guarantors in favor of Agent, for the benefit of the Lender
Group, in form and substance satisfactory to Agent.
14
"Hazardous Materials" means (a) substances that are defined or listed in,
or otherwise classified pursuant to, any Environmental Law as "hazardous
substances," "hazardous materials," "hazardous wastes," "toxic substances," or
any other formulation intended to define, list, or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, or "EP toxicity", (b) oil, petroleum, or
petroleum derived substances, natural gas, natural gas liquids, synthetic gas,
drilling fluids, produced waters, and other wastes associated with the
exploration, development, or production of crude oil, natural gas, or geothermal
resources, (c) any flammable substances or explosives or any radioactive
materials, and (d) asbestos in any form or electrical equipment that contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of 50 parts per million, and any other substance, the storage,
manufacture, disposal, treatment, generation, use, transportation, remediation,
release into or concentration in the environment of which is prohibited,
controlled, regulated or licensed by any Governmental Authority under any
Environmental Law.
"HH Australia" means, collectively, Xxxxxx Global Resources (Aust) Pty
Ltd., Xxxxxx Trade & Industrial Services Pty Ltd., Hudson Trade & Industrial
Solutions Pty Ltd., Xxxxxx Global Resources (Newcastle) Pty Ltd., and Highland
Partners (Aust) Pty Ltd.
"HH Canada" means, collectively, Xxxxxx Highland Group Search, Inc., Xxxxx
Xxxxxx and Associates Inc., and 3057313 Nova Scotia Company.
"HH UK" means, collectively, Highland Partners Limited (incorporated in
England and Wales with company number 02800884) and Xxxxxx Global Resources
Limited (incorporated in England and Wales with company number 03203655).
"HH US" means, collectively, Xxxxxx Highland Group, Inc., Xxxxxx Highland
Group Global Resources America, Inc., Xxxxxx Highland Group Global Resources
Holdings, Inc., and Xxxxxx Highland Group Global Resources Management, Inc.
"Indebtedness" means, without duplication, (a) all obligations of a
Borrower for borrowed money, (b) all obligations of a Borrower evidenced by
bonds, debentures, notes, or other similar instruments and all reimbursement or
other obligations of a Borrower in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations of a Borrower under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of a Borrower, irrespective
of whether such obligation or liability is assumed, (e) all obligations of a
Borrower for the deferred purchase price of assets (other than trade debt
incurred in the ordinary course of a Borrower's business and repayable in
accordance with customary trade practices), and (f) any obligation of a Borrower
guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse to a Borrower)
any obligation of any other Person, it being understood that the amount of any
guaranty of an operating lease or obligation shall be deemed to be equal to the
amount of the liability under such guaranty.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
15
"Indemnified Person" has the meaning set forth in Section 11.3.
"Insolvency Proceeding" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code or under any other state,
provincial or federal bankruptcy or insolvency law, assignments for the benefit
of creditors, formal or informal moratoria, compositions, extensions generally
with creditors, or proceedings seeking reorganization, arrangement, or other
similar relief.
"Intangible Assets" means, with respect to any Person, that portion of the
book value of all of such Person's assets that would be treated as intangibles
under GAAP.
"Intercompany Subordination Agreement" means a subordination agreement
executed and delivered by Borrowers and Agent, the form and substance of which
is satisfactory to Agent.
"Interest Period" means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan and ending 1, 2, or
3 months thereafter; provided, however, that (a) if any Interest Period would
end on a day that is not a Business Day, such Interest Period shall be extended
(subject to clauses (c)-(e) below) to the next succeeding Business Day, (b)
interest shall accrue at the applicable rate based upon the LIBOR Rate from and
including the first day of each Interest Period to, but excluding, the day on
which any Interest Period expires, (c) any Interest Period that would end on a
day that is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (d) with respect
to an Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period), the Interest Period shall end on the
last Business Day of the calendar month that is 1, 2, or 3 months after the date
on which the Interest Period began, as applicable, and (e) Borrowers (or
Administrative Borrower on behalf thereof) may not elect an Interest Period
which will end after the Maturity Date.
"Inventory" means all Borrowers' now owned or hereafter acquired right,
title, and interest with respect to inventory, including goods held for sale or
lease or to be furnished under a contract of service, goods that are leased by a
Borrower as lessor, goods that are furnished by a Borrower under a contract of
service, and raw materials, work in process, or materials used or consumed in a
Borrower's business.
"Investment" means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising from the
sale of goods or rendition of services in the ordinary course of business
consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
16
"Investment Property" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to "investment property" as
that term is defined in the Code, and any and all supporting obligations in
respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from time to
time.
"Issuing Lender" means Foothill or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs or
L/C Undertakings pursuant to Section 2.12.
"Law (or Laws)" means, in respect to Canada, Australia, the United Kingdom,
the United States of America and any other country, all published laws,
statutes, codes, ordinances, decrees, rules, regulations, by-laws, judicial or
arbitral or administrative or ministerial or departmental or regulatory
judgements, orders, decisions, rulings or awards, including general principles
of common and civil law, and conditions of any grant of approval, permission,
authority or license of any court, Governmental Authority, statutory body or
self-regulatory authority, and the term "applicable" with respect to those laws
and in the context that refers to one or more Persons, that those Laws apply to
that Person or Persons or its or their business, undertaking, property or
securities.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender pursuant to a
Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of the Lenders
(including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including taxes,
and insurance premiums) required to be paid by a Borrower under any of the Loan
Documents that are paid or incurred by the Lender Group, (b) fees or charges
paid or incurred by Agent in connection with the Lender Group's transactions
with Borrowers, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, and UCC and PPSA searches and including searches with the
patent and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
Collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
real estate surveys, real estate title policies and endorsements, and
environmental audits, (c) costs and expenses incurred by Agent in the
disbursement of funds to or for the
17
account of Borrowers (by wire transfer or otherwise), (d) charges paid or
incurred by Agent resulting from the dishonor of checks, (e) reasonable costs
and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses of
Agent related to audit examinations of the Books to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
(g) reasonable costs and expenses of third party claims or any other suit paid
or incurred by the Lender Group in enforcing or defending the Loan Documents or
in connection with the transactions contemplated by the Loan Documents or the
Lender Group's relationship with any Borrower or any guarantor of the
Obligations, (h) Agent's and each Lender's reasonable fees and expenses
(including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, or amending the Loan Documents, and (i) Agent's and
each Lender's reasonable fees and expenses (including attorneys fees) incurred
in terminating, enforcing (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning any Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such Lender,
together with such Lender's Affiliates, and the officers, directors, employees,
and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the context
requires.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus 100% of the
amount of outstanding time drafts accepted by an Underlying Issuer as a result
of drawings under Underlying Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate Loan, the
rate per annum determined by Agent (rounded upwards, if necessary, to the next
1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by (b) 100%
minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the
effective day of any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears interest at a
rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means 2.00 percentage points.
"Lien" means any interest in an asset securing an obligation owed to, or a
claim by, any Person other than the owner of the asset, whether such interest
shall be based on the common
18
law, statute, or contract, whether such interest shall be recorded or perfected,
and whether such interest shall be contingent upon the occurrence of some future
event or events or the existence of some future circumstance or circumstances,
including the lien or security interest arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement, security
agreement, conditional sale or trust receipt, or from a lease, consignment, or
bailment for security purposes and also including reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases, and other title exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Cash Management Agreements, the
Control Agreements, the Disbursement Letter, the Due Diligence Letter, the Fee
Letter, the Guaranties, the Letters of Credit, the Officers' Certificate, the
Stock Pledge Agreement, the Trademark Security Agreement, the Intercompany
Subordination Agreement, the UK Security Documents, the Subsidiary Documents,
the Australian Security Documents, the Canadian Security Documents, any note or
notes executed by a Borrower in connection with this Agreement and payable to a
member of the Lender Group, and any other agreement entered into, now or in the
future, by any Borrower and the Lender Group in connection with this Agreement.
"Material Adverse Change" means (a) a material adverse change in the
business, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Borrowers taken as a whole, (b) a material
impairment of a Borrower's ability to perform its obligations under the Loan
Documents to which it is a party or of the Lender Group's ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of the Agent's Liens with respect to the Collateral
as a result of an action or failure to act on the part of a Borrower.
"Material Jurisdiction" mean any of the United States or any State thereof,
the United Kingdom, Australia or any State thereof, Canada or any province
thereof, Belgium, New Zealand, the Netherlands, or France.
"Material Subsidiary" means any Subsidiary that (a) is not a Borrower and
(b) is organized under the laws of a Material Jurisdiction.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Australia Amount" means an amount equal to $15,000,000.
"Maximum Canada Amount" means an amount equal to $5,000,000.
"Maximum Revolver Amount" means an amount equal to $50,000,000.
"Maximum UK Amount" means an amount equal to $25,000,000.
"Minimum Availability" has the meaning set forth in Section 7.21.
19
"Negotiable Collateral" means all of Borrowers' now owned and hereafter
acquired right, title, and interest with respect to letters of credit, letter of
credit rights, instruments, promissory notes, drafts, documents, and chattel
paper (including electronic chattel paper and tangible chattel paper), and any
and all supporting obligations in respect thereof.
"Obligations" means all loans, Advances, debts, principal, interest
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), contingent reimbursement obligations with respect to
outstanding Letters of Credit, premiums, liabilities (including all amounts
charged to Borrowers' Loan Account pursuant hereto), obligations, fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued), lease payments, guaranties, covenants,
and duties of any kind and description owing by Borrowers to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and including all interest not
paid when due and all Lender Group Expenses that Borrowers are required to pay
or reimburse by the Loan Documents, by law, or otherwise. Any reference in this
Agreement or in the Loan Documents to the Obligations shall include all
amendments, changes, extensions, modifications, renewals replacements,
substitutions, and supplements, thereto and thereof, as applicable, both prior
and subsequent to any Insolvency Proceeding.
"Officers' Certificate" means the representations and warranties of
officers form submitted by Agent to Administrative Borrower, together with
Borrowers' and Guarantors' completed responses to the inquiries set forth
therein, the form and substance of such responses to be satisfactory to Agent.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the preamble to this Agreement.
"Participant" has the meaning set forth in Section 14.1(e).
"Permitted Capital Investment" means an Investment in the form of equity in
a Subsidiary or Affiliate of a Borrower or Guarantor organized under the laws of
a jurisdiction other than a Material Jurisdiction made for purposes of
permitting such Subsidiary or Affiliate to comply with capital requirements
under applicable local Law, so long as:
(a) no Default or Event of Default exists at the time of the making of
such Investment or would exist after giving effect thereto,
(b) Agent has received not less than fourteen (14) days prior written
notice of the making of such Investment,
(c) the contribution of additional equity is legally required,
20
(d) such Investment is immediately returned to the contributing
Borrower, Guarantor, or Subsidiary of a Borrower or Guarantor as a loan; and
(e) such loan is subject to an Intercompany Subordination Agreement in
favor of the Agent and the Lenders.
"Permitted Discretion" means a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured asset-based lender)
business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by Borrowers
of Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of the applicable Borrower's business, (b) sales by Borrowers of
Inventory to buyers in the ordinary course of business, (c) the use or transfer
of money or Cash Equivalents by Borrowers in a manner that is not prohibited by
the terms of this Agreement or the other Loan Documents, (d) transfers of assets
from a Guarantor (or an Excluded Subsidiary) to a Guarantor, or a Guarantor (or
an Excluded Subsidiary) to a Borrower, or a Borrower to a Borrower organized in
the same country as the Borrower transferring such assets, provided Agent has
received thirty days prior notice (five days at all times prior to the
Activation Date) and (e) the licensing by Borrowers, on a non-exclusive basis,
of patents, trademarks, copyrights, and other intellectual property rights in
the ordinary course of the applicable Borrower's business.
"Permitted Investments" means (a) investments in Cash Equivalents, (b)
investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) investments by any Borrower or Guarantor in any other Borrower or
Guarantor, provided that if any such investment is in the form of Indebtedness,
such Indebtedness investment shall be subject to the terms and conditions of an
Intercompany Subordination Agreement, (e) Permitted Subsidiary Investments, (f)
Permitted Capital Investments, (g) Investments in Subsidiaries (other than
Borrowers and Guarantors) not otherwise permitted pursuant to clauses (e) and
(f) hereof in an aggregate amount not exceeding $2,500,000 in any fiscal
quarter, and (h) Investments by any Subsidiary that is neither a Borrower nor a
Guarantor in any Borrower or other Subsidiary of Parent.
"Permitted Liens" means (a) Liens held by Agent for the benefit of Agent
and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the
interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
Liens arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of Borrowers' or their Subsidiaries' business and not in connection with the
borrowing of money, and which Liens either (i) are for sums not yet delinquent,
or (ii) are the subject of Permitted Protests, (g) Liens arising from deposits
made in connection with obtaining worker's compensation or other unemployment
insurance, (h) Liens or deposits to secure performance of bids, tenders, or
leases incurred in the ordinary course of Borrowers' or their
21
Subsidiaries' business and not in connection with the borrowing of money, (i)
Liens granted as security for surety or appeal bonds in connection with
obtaining such bonds in the ordinary course of Borrowers' or their Subsidiaries'
business, (j) Liens resulting from any judgment or award that is not an Event of
Default hereunder, (k) Liens with respect to the Real Property Collateral that
are exceptions to the commitments for title insurance issued in connection with
the Mortgages, as accepted by Agent, and (l) with respect to any Real Property
that is not part of the Real Property Collateral, easements, rights of way, and
zoning restrictions that do not materially interfere with or impair the use or
operation thereof by Borrowers or their Subsidiaries.
"Permitted Protest" means the right of the applicable Borrower to protest
any Lien (other than any such Lien that secures the Obligations), taxes (other
than payroll taxes or taxes that are the subject of a United States, Canadian,
or Australian federal or provincial tax lien or a tax lien of the United
Kingdom), or rental payment, provided that (a) a reserve with respect to such
obligation is established on the Books in such amount as is required under GAAP,
(b) any such protest is instituted promptly and prosecuted diligently by the
applicable Borrower in good faith, and (c) Agent is satisfied that, while any
such protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate amount outstanding at any one time not in excess of $20,000,000.
"Permitted Subsidiary Investments" means loans, advances or transfers of
cash in the ordinary course of business from a Borrower or a Guarantor to a
Subsidiary of Parent, so long as:
(a) no Default or Event of Default exists at the time of the making of
such loan, advance, or transfer of cash or would exist after giving effect
thereto,
(b) Borrowers have aggregate Excess Availability greater than $0 as of
the date of such loan, advance or transfer of cash and immediately after giving
effect thereto,
(c) both before and after giving effect to the making of such loan,
advance or transfer of cash, the Person that is acting as the transferor with
respect thereto is Solvent,
(d) both before and after giving effect to the making of such loan,
advance or transfer of cash, all of the Subsidiaries (other than Subsidiaries
that are Borrowers or Guarantors), taken as a whole, do not have cash or Cash
Equivalents in excess of $8,000,000 in the aggregate (or the Dollar equivalent
thereof) for more than three consecutive Business Days, and
(e) the making of such loan, advance or transfer of cash shall not
cause the aggregate amount of all loans, advances or transfers of cash made by
all Borrowers to
22
all Subsidiaries (other than Subsidiaries that are Borrowers or Guarantors) as
Permitted Subsidiary Investments in any fiscal quarter to exceed $20,000,000.
"Person" means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than Real
Property.
"PPSA" means the Personal Property Security Act of the applicable Canadian
province or provinces in respect of any Canadian Borrower.
"Projections" means Parent's forecasted (a) balance sheets, (b) profit and
loss statements, and (c) cash flow statements, all prepared on a consistent
basis with Parent's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.
"Pro Rata Share" means, with respect to all matters (including the
indemnification obligations arising under Section 16.7), the percentage obtained
by dividing (i) such Lender's Commitment by (ii) the aggregate amount of
Commitments of all Lenders; provided, however, that, in each case, in the event
all Commitments have been terminated, Pro Rata Share shall be determined
according to the Commitments in effect immediately prior to such termination.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Real Property" means any estates or interests in real property (other than
leased real property) now owned or hereafter acquired by any Borrower and the
improvements thereto.
"Record" means information that is inscribed on a tangible medium or which
is stored in an electronic or other medium and is retrievable in perceivable
form.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.
"Report" has the meaning set forth in Section 16.17.
23
"Required Availability" means Excess Availability and cash and Cash
Equivalents subject to Cash Management Agreements in an amount of not less than
$45,000,000 after payment of all fees, expenses and other charges then due under
this Agreement and the other Loan Documents.
"Required Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate 66 2/3% of the Commitments, or if the Total Commitments have been
terminated irrevocably, 66 2/3 % of the Obligations then outstanding.
"Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Revolver Usage" means, as of any date of determination, the sum of (a) the
then extant amount of outstanding Advances, plus (b) the then extant amount of
the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of Credit, all
reimbursement obligations of Borrowers to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrowers,
whether by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission and any
successor thereto.
"Securities Account" means a "securities account" as that term is defined
in the Code.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
"Share Mortgage" means a share mortgage executed or to be executed in favor
of Agent by each Subsidiary of Parent which owns any shares in any other
Subsidiary of Parent incorporated in England and Wales in respect of such
shares.
"Solvent" means, with respect to any Person on a particular date, that such
Person is not insolvent (as such term is defined in the Uniform Fraudulent
Conveyance Act).
24
"Spin-Off" means the transaction pursuant to which TMP has distributed one
hundred percent (100%) of the shares of common stock of Parent to its
shareholders in a tax-free spin-off in accordance with that certain Information
Statement filed by TMP with the SEC on March 14, 2003.
"Stock" means all shares, options, warrants, interests, participations, or
other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).
"Stock Pledge Agreement" means a stock pledge agreement, in form and
substance satisfactory to Agent, executed and delivered by each Borrower or
Guarantor that owns Stock of a Subsidiary of Parent.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Subsidiary Documents" means the Guaranty, Trademark Security Agreement and
General Security Agreement (or comparable documents with respect to each Foreign
Guarantor) executed by each Guarantor with or in favor of Agent and any other
agreement entered into, now or in the future, by any Guarantor and the Lender
Group in connection with this Agreement.
"Swing Lender" means Foothill or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Syndication Modifications" has the meaning set forth in Section 14.1(h).
"Tangible Net Worth" means, as of any date of determination, the result of
(a) the total stockholder's equity of Parent and its Subsidiaries, minus (b) the
sum of (i) all Intangible Assets of Parent and its Subsidiaries, (ii) all of
Parent's prepaid expenses, and (iii) all amounts due to Parent and its
Subsidiaries from Affiliates.
"Taxes" has the meaning set forth in Section 16.11(e).
"TMP" means TMP Worldwide, Inc., a Delaware corporation, now known (as of
May 1, 2003) as Monster Worldwide, Inc.
"TMP Documents" means, collectively, the TMP Loan Agreement, the
Distribution Agreement, the Transition Services Agreement, the Tax Separation
Agreement, and the Security
25
Agreement (if any), all dated on or about March 31, 2003, between Parent and
TMP, and any other agreement, instrument, or document executed by Parent and TMP
in connection with the Spin-Off or evidencing, governing, or affecting the
allocation of assets or business operations of Parent and its Subsidiaries after
the Spin-Off.
"TMP Loan Agreement" means that certain Loan Agreement between Parent as
borrower and TMP as lender dated on or about March 31, 2003.
"Trademark Security Agreement" means a trademark security agreement
executed and delivered by each Borrower to Agent and by each Guarantor, as Agent
shall determine, to Agent, the form and substance of which is satisfactory to
Agent.
"UK Security Documents" means the Guarantee and Debenture, the Share
Mortgages and such other agreements, instruments and documents as may be
required by Agent to create and perfect the security interest of Agent on behalf
of Lenders in any Collateral located in the United Kingdom.
"Underlying Issuer" means a third Person which is the beneficiary of an L/C
Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has been issued
by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a national
banking association.
1.2 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this
26
Agreement unless otherwise specified. Any reference in this Agreement or in the
other Loan Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to any Person
shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein or in the other Loan Documents shall
be satisfied by the transmission of a Record and any Record transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
(a) Subject to the terms and conditions of this Agreement, and during
the term of this Agreement, each Lender agrees (severally, not jointly or
jointly and severally) to make advances ("Advances") to Borrowers in an amount
at any one time outstanding not to exceed such Lender's Pro Rata Share of an
amount equal to the lesser of (i) the Maximum Revolver Amount less the Letter of
Credit Usage, or (ii) the Borrowing Base less the Letter of Credit Usage. For
purposes of this Agreement, "Borrowing Base," as of any date of determination,
shall mean the result of:
(y) 85% of the amount of Eligible Accounts, less the amount, if
any, of the Dilution Reserve, minus
(z) the aggregate amount of reserves, if any, established by
Agent under Section 2.1(b).
Notwithstanding the foregoing formula, the portion of Eligible Accounts
created by HH Australia prior to the Activation Date may not exceed $5,000,000
for purposes of determining the Borrowing Base.
(b) Anything to the contrary in this Section 2.1 notwithstanding,
Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that Borrowers are required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay under any Section
of this Agreement or any other Loan Document, (ii) an amount, as determined by
Agent in its Permitted Discretion, equal to the aggregate amount of all of
Borrowers' then accrued or incurred and unpaid payroll and payroll taxes, which
reserve amount, in addition to all of Agent's other rights hereunder, may be
increased by Agent from time to time, including for any deviation from any
Borrowers' past
27
practices with respect to such payroll and payroll taxes, and (iii) amounts
owing by Borrowers to any Person to the extent secured by a Lien on, or trust
over, any of the Collateral (other than any existing Permitted Lien set forth on
Schedule P-1 which is specifically identified thereon as entitled to have
priority over the Agent's Liens), which Lien or trust, in the Permitted
Discretion of Agent likely would have a priority superior to the Agent's Liens
(such as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad
valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral.
(c) The Lenders shall have no obligation to make additional Advances
hereunder to the extent such additional Advances would cause the Revolver Usage
to exceed (i) the lesser of (x) the Maximum Revolver Amount or (y) the Borrowing
Base, or (ii) an amount equal to the aggregate amount of proceeds of Borrowers'
Accounts collected, in good and available funds, during the sixty-five
consecutive day period immediately prior to Administrative Borrower's request
for such Advance.
(d) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
2.2 Country Limits. Notwithstanding anything in Section 2.1 or elsewhere in
this Agreement to the contrary, and subject to Section 2.16 and Section 2.17 of
this Agreement, Revolver Usage by or for the direct benefit or use of (a) HH UK
may not exceed the Maximum UK Amount, (b) HH Canada may not exceed the Maximum
Canada Amount, and (c) HH Australia may not exceed the Maximum Australia Amount.
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day prior to the date that is the requested Funding Date in the
case of a request for an Advance specifying (i) the amount of such Borrowing,
and (ii) the requested Funding Date, which shall be a Business Day; provided,
however, that in the case of a request for Swing Loan in an amount of
$5,000,000, or less, such notice will be timely received if it is received by
Agent no later than 10:00 a.m. (California time) on the Business Day that is the
requested Funding Date) specifying (i) the amount of such Borrowing, and (ii)
the requested Funding Date, which shall be a Business Day. At Agent's election,
in lieu of delivering the above-described written request, any Authorized Person
may give Agent telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing within 24 hours of the giving of
such notice.
(b) Agent's Election. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, to
have the terms of Section 2.3(c) apply to such requested Borrowing, or if the
Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to
28
make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to have the
terms of Section 2.3(c) apply to such requested Borrowing.
(c) Making of Advances.
(i) Promptly after receipt of a request for a Borrowing
pursuant to Section 2.3(a), Agent shall notify the Lenders, not later
than 1:00 p.m. (California time) on the Business Day immediately
preceding the Funding Date applicable thereto, by telecopy, telephone,
or other similar form of transmission, of the requested Borrowing.
Each Lender shall make the amount of such Lender's Pro Rata Share of
the requested Borrowing available to Agent in immediately available
funds, to Agent's Account, not later than 10:00 a.m. (California time)
on the Funding Date applicable thereto. After Agent's receipt of the
proceeds of such Advances, upon satisfaction of the applicable
conditions precedent set forth in Section 3 hereof, Agent shall make
the proceeds thereof available to Administrative Borrower on the
applicable Funding Date by transferring immediately available funds
equal to such proceeds received by Agent to Administrative Borrower's
Designated Account; provided, however, that, subject to the provisions
of Section 2.3(i), Agent shall not request any Lender to make, and no
Lender shall have the obligation to make, any Advance if Agent shall
have actual knowledge that (1) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on
the requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (2) the requested Borrowing would exceed
the Availability on such Funding Date.
(ii)Unless Agent receives notice from a Lender on or prior
to the Activation Date or, with respect to any Borrowing after the
Activation Date, at least one (1) Business Day prior to the date of
such Borrowing, that such Lender will not make available as and when
required hereunder to Agent for the account of Borrowers the amount of
that Lender's Pro Rata Share of the Borrowing, Agent may assume that
each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but
shall not be so required), in reliance upon such assumption, make
available to Borrowers on such date a corresponding amount. If and to
the extent any Lender shall not have made its full amount available to
Agent in immediately available funds and Agent in such circumstances
has made available to Borrowers such amount, that Lender shall on the
Business Day following such Funding Date make such amount available to
Agent, together with interest at the Defaulting Lender Rate for each
day during such period. A notice submitted by Agent to any Lender with
respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available, such
payment to Agent shall constitute such Lender's Advance on the date of
Borrowing for all purposes of this Agreement. If such amount is not
made available to Agent on the Business Day following the Funding
Date, Agent will notify Administrative Borrower of such failure to
fund and, upon demand by Agent, Borrowers shall pay such amount to
Agent for Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to
the interest rate applicable at the time to the Advances composing
such Borrowing. The failure of any Lender to make any Advance on any
Funding Date shall
29
not relieve any other Lender of any obligation hereunder to make an
Advance on such Funding Date, but no Lender shall be responsible for
the failure of any other Lender to make the Advance to be made by such
other Lender on any Funding Date.
(ii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrowers to Agent for the
Defaulting Lender's benefit, and, in the absence of such transfer to
the Defaulting Lender, Agent shall transfer any such payments to each
other non-Defaulting Lender member of the Lender Group ratably in
accordance with their Commitments (but only to the extent that such
Defaulting Lender's Advance was funded by the other members of the
Lender Group) or, if so directed by Administrative Borrower and if no
Default or Event of Default had occurred and is continuing (and to the
extent such Defaulting Lender's Advance was not funded by the Lender
Group), retain same to be re-advanced to Borrowers as if such
Defaulting Lender had made Advances to Borrowers. Subject to the
foregoing, Agent may hold and, in its Permitted Discretion, re-lend to
Borrowers for the account of such Defaulting Lender the amount of all
such payments received and retained by it for the account of such
Defaulting Lender. Solely for the purposes of voting or consenting to
matters with respect to the Loan Documents, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's Commitment
shall be deemed to be zero. This Section shall remain effective with
respect to such Lender until (x) the Obligations under this Agreement
shall have been declared or shall have become immediately due and
payable, (y) the non-Defaulting Lenders, Agent, and Administrative
Borrower shall have waived such Defaulting Lender's default in
writing, or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent all amounts owing by Defaulting
Lender in respect thereof. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any
Lender, to relieve or excuse the performance by such Defaulting Lender
or any other Lender of its duties and obligations hereunder, or to
relieve or excuse the performance by Borrowers of their duties and
obligations hereunder to Agent or to the Lenders other than such
Defaulting Lender. Any such failure to fund by any Defaulting Lender
shall constitute a material breach by such Defaulting Lender of this
Agreement and shall entitle Administrative Borrower at its option,
upon written notice to Agent, to arrange for a substitute Lender to
assume the Commitment of such Defaulting Lender, such substitute
Lender to be acceptable to Agent. In connection with the arrangement
of such a substitute Lender, the Defaulting Lender shall have no right
to refuse to be replaced hereunder, and agrees to execute and deliver
a completed form of Assignment and Acceptance Agreement in favor of
the substitute Lender (and agrees that it shall be deemed to have
executed and delivered such document if it fails to do so) subject
only to being repaid its share of the outstanding Obligations
(including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind
whatsoever; provided further, however, that any such assumption of the
Commitment of such Defaulting Lender shall not be deemed to constitute
a waiver of any of the Lender Groups' or Borrowers' rights or remedies
against any such Defaulting Lender arising out of or in relation to
such failure to fund.
(d) Making of Swing Loans.
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(i) In the event Agent shall elect, with the consent of
Swing Lender, as a Lender, to have the terms of this Section 2.3(d)
apply to a requested Borrowing as described in Section 2.3(b), Swing
Lender as a Lender shall make such Advance in the amount of such
Borrowing (any such Advance made solely by Swing Lender as a Lender
pursuant to this Section 2.3(d) being referred to as a "Swing Loan"
and such Advances being referred to collectively as "Swing Loans")
available to Borrowers on the Funding Date applicable thereto by
transferring immediately available funds to Administrative Borrower's
Designated Account. Each Swing Loan is an Advance hereunder and shall
be subject to all the terms and conditions applicable to other
Advances, except that no such Swing Loan shall be eligible for the
LIBOR Option and all payments on any Swing Loan shall be payable to
Swing Lender as a Lender solely for its own account (and for the
account of the holder of any participation interest with respect to
such Swing Loan). Subject to the provisions of Section 2.3(i), Agent
shall not request Swing Lender as a Lender to make, and Swing Lender
as a Lender shall not make, any Swing Loan if Agent has actual
knowledge that (i) one or more of the applicable conditions precedent
set forth in Section 3 will not be satisfied on the requested Funding
Date for the applicable Borrowing unless such condition has been
waived, or (ii) the requested Borrowing would exceed the Availability
on such Funding Date. Swing Lender as a Lender shall not otherwise be
required to determine whether the applicable conditions precedent set
forth in Section 3 have been satisfied on the Funding Date applicable
thereto prior to making, in its sole discretion, any Swing Loan.
(ii)The Swing Loans shall be secured by the Agent's Liens,
shall constitute Advances and Obligations hereunder, and shall bear
interest at the rate applicable from time to time to Advances that are
Base Rate Loans.
(e) Agent Advances.
(i) Agent hereby is authorized by Borrowers and the Lenders,
from time to time in Agent's sole discretion, (1) after the occurrence
and during the continuance of a Default or an Event of Default, or (2)
at any time that any of the other applicable conditions precedent set
forth in Section 3 have not been satisfied, to make Advances to
Borrowers on behalf of the Lenders that Agent, in its Permitted
Discretion deems necessary or desirable (A) to preserve or protect the
Collateral, or any portion thereof, (B) to enhance the likelihood of
repayment of the Obligations, or (C) to pay any other amount
chargeable to Borrowers pursuant to the terms of this Agreement,
including Lender Group Expenses and the costs, fees, and expenses
described in Section 10 (any of the Advances described in this Section
2.3(e) shall be referred to as "Agent Advances"). Each Agent Advance
is an Advance hereunder and shall be subject to all the terms and
conditions applicable to other Advances, except that no such Agent
Advance shall be eligible for the LIBOR Option and all payments
thereon shall be payable to Agent solely for its own account (and for
the account of the holder of any participation interest with respect
to such Agent Advance).
(ii) The Agent Advances shall be repayable on demand and
secured by the Agent's Liens granted to Agent under the Loan
Documents, shall constitute Advances
31
and Obligations hereunder, and shall bear interest at the rate
applicable from time to time to Advances that are Base Rate Loans.
(f) Settlement. It is agreed that each Lender's funded portion of the
Advances is intended by the Lenders to equal, at all times, such Lender's Pro
Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent,
Swing Lender, and the other Lenders agree (which agreement shall not be for the
benefit of or enforceable by Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so
determined by Agent, (1) on behalf of Swing Lender, with respect to
each outstanding Swing Loan, (2) for itself, with respect to each
Agent Advance, and (3) with respect to Collections received, as to
each by notifying the Lenders by telecopy, telephone, or other similar
form of transmission, of such requested Settlement, no later than 2:00
p.m. (California time) on the Business Day immediately prior to the
date of such requested Settlement (the date of such requested
Settlement being the "Settlement Date"). Such notice of a Settlement
Date shall include a summary statement of the amount of outstanding
Advances, Swing Loans, and Agent Advances for the period since the
prior Settlement Date. Subject to the terms and conditions contained
herein (including Section 2.3(c)(iii)): (y) if a Lender's balance of
the Advances, Swing Loans, and Agent Advances exceeds such Lender's
Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of
a Settlement Date, then Agent shall, by no later than 12:00 p.m.
(California time) on the Settlement Date, transfer in immediately
available funds to the account of such Lender as such Lender may
designate, an amount such that each such Lender shall, upon receipt of
such amount, have as of the Settlement Date, its Pro Rata Share of the
Advances, Swing Loans and Agent Advances, and (z) if a Lender's
balance of the Advances, Swing Loans, and Agent Advances is less than
such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent
Advances as of a Settlement Date, such Lender shall no later than noon
(California time) on the Settlement Date transfer in immediately
available funds to the Agent's Account, an amount such that each such
Lender shall, upon transfer of such amount, have as of the Settlement
Date, its Pro Rata Share of the Advances, Swing Loans, and Agent
Advances. Such amounts made available to Agent under clause (z) of the
immediately preceding sentence shall be applied against the amounts of
the applicable Swing Loan or Agent Advance and, together with the
portion of such Swing Loan or Agent Advance representing Swing
Lender's Pro Rata Share thereof, shall constitute Advances of such
Lenders. If any such amount is not made available to Agent by any
Lender on the Settlement Date applicable thereto to the extent
required by the terms hereof, Agent shall be entitled to recover for
its account such amount on demand from such Lender together with
interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Swing
Loans, and Agent Advances as of a Settlement Date, Agent shall,
32
as part of the relevant Settlement, apply to such balance the portion
of payments actually received in good funds by Agent with respect to
principal, interest, fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a
net amount is owed to any such Lender after such application, such net
amount shall be distributed by Agent to that Lender as part of such
next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no
Agent Advances or Swing Loans are outstanding, may pay over to Swing
Lender any payments received by Agent, that in accordance with the
terms of this Agreement would be applied to the reduction of the
Advances, for application to Swing Lender's Pro Rata Share of the
Advances. If, as of any Settlement Date, Collections received since
the then immediately preceding Settlement Date have been applied to
Swing Lender's Pro Rata Share of the Advances other than to Swing
Loans, as provided for in the previous sentence, Swing Lender shall
pay to Agent for the accounts of the Lenders, and Agent shall pay to
the Lenders, to be applied to the outstanding Advances of such
Lenders, an amount such that each Lender shall, upon receipt of such
amount, have, as of such Settlement Date, its Pro Rata Share of the
Advances. During the period between Settlement Dates, Swing Lender
with respect to Swing Loans, Agent with respect to Agent Advances, and
each Lender (subject to the effect of letter agreements between Agent
and individual Lenders) with respect to the Advances other than Swing
Loans and Agent Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the daily
amount of funds employed by Swing Lender, Agent, or the Lenders, as
applicable.
(g) Notation. Agent shall record on its books the principal amount of
the Advances owing to each Lender, including the Swing Loans owing to Swing
Lender, and Agent Advances owing to Agent, and the interests therein of each
Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) Lenders' Failure to Perform. All Advances (other than Swing Loans
and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
(i) Optional Overadvances. Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as
applicable, and Agent or Swing Lender, as applicable, may, but is not obligated
to, knowingly and intentionally, continue to make Advances (including Swing
Loans) to Borrowers notwithstanding that an Overadvance exists or thereby would
be created, so long as (i) after giving effect to such Advances (including a
Swing Loan), the Revolver Usage does not exceed the Borrowing Base by
33
more than $3,000,000, (ii) after giving effect to such Advances (including a
Swing Loan) the outstanding Revolver Usage (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender Group Expenses) does
not exceed the Maximum Revolver Amount, and (iii) at the time of the making of
any such Advance (including a Swing Loan), Agent does not believe, in good
faith, that the Overadvance created by such Advance will be outstanding for more
than 90 days. The foregoing provisions are for the exclusive benefit of Agent,
Swing Lender, and the Lenders and are not intended to benefit Borrowers in any
way. The Advances and Swing Loans, as applicable, that are made pursuant to this
Section 2.3(i) shall be subject to the same terms and conditions as any other
Advance or Swing Loan, as applicable, except that they shall not be eligible for
the LIBOR Option and the rate of interest applicable thereto shall be the rate
applicable to Advances that are Base Rate Loans under Section 2.6(c) hereof
without regard to the presence or absence of a Default or Event of Default.
(i) In the event Agent obtains actual knowledge that the
Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such excess,
Agent shall notify Lenders as soon as practicable (and prior to making
any (or any additional) intentional Overadvances (except for and
excluding amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) unless Agent determines that prior notice would
result in imminent harm to the Collateral or its value), and the
Lenders thereupon shall, together with Agent, jointly determine the
terms of arrangements that shall be implemented with Borrowers and
intended to reduce, within a reasonable time, the outstanding
principal amount of the Advances to Borrowers to an amount permitted
by the preceding paragraph. In the event Agent or any Lender disagrees
over the terms of reduction or repayment of any Overadvance, the terms
of reduction or repayment thereof shall be implemented according to
the determination of the Required Lenders.
(ii) Each Lender shall be obligated to settle with Agent as
provided in Section 2.3(f) for the amount of such Lender's Pro Rata
Share of any unintentional Overadvances by Agent reported to such
Lender, any intentional Overadvances made as permitted under this
Section 2.3(i), and any Overadvances resulting from the charging to
the Loan Account of interest, fees, or Lender Group Expenses.
2.4 Payments.
(a) Payments by Borrowers.
(i) Except as otherwise expressly provided herein, all
payments by Borrowers shall be made to Agent's Account for the account
of the Lender Group and shall be made in immediately available funds,
no later than 11:00 a.m. (California time) on the date specified
herein. Any payment received by Agent later than 11:00 a.m.
(California time), shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall
continue to accrue until such following Business Day.
(ii)Unless Agent receives notice from Administrative
Borrower prior to the date on which any payment is due to the Lenders
that Borrowers will not make such payment
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in full as and when required, Agent may assume that Borrowers have
made (or will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender
on such due date an amount equal to the amount then due such Lender.
If and to the extent Borrowers do not make such payment in full to
Agent on the date when due, each Lender severally shall repay to Agent
on demand such amount distributed to such Lender, together with
interest thereon at the Defaulting Lender Rate for each day from the
date such amount is distributed to such Lender until the date repaid.
(b) Apportionment and Application of Payments.
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan Documents
(including letter agreements between Agent and individual Lenders),
aggregate principal and interest payments shall be apportioned ratably
among the Lenders (according to the unpaid principal balance of the
Obligations to which such payments relate held by each Lender) and
payments of fees and expenses (other than fees or expenses that are
for Agent's separate account, after giving effect to any letter
agreements between Agent and individual Lenders) shall be apportioned
ratably among the Lenders having a Pro Rata Share of the type of
Commitment or Obligation to which a particular fee relates. All
payments shall be remitted to Agent and all such payments (other than
payments received while no Default or Event of Default has occurred
and is continuing and which relate to the payment of principal or
interest of specific Obligations or which relate to the payment of
specific fees), and all proceeds of Accounts or other Collateral
received by Agent, shall be applied as follows:
(A) first, to pay any Lender Group Expenses then due to
Agent under the Loan Documents, until paid in full,
(B) second, to pay any Lender Group Expenses then due to the
Lenders under the Loan Documents, on a ratable basis, until paid
in full,
(C) third, to pay any fees then due to Agent (for its
separate accounts, after giving effect to any letter agreements
between Agent and the individual Lenders) under the Loan
Documents until paid in full,
(D) fourth, to pay any fees then due to any or all of the
Lenders (after giving effect to any letter agreements between
Agent and individual Lenders) under the Loan Documents, on a
ratable basis, until paid in full,
(E) fifth, to pay interest due in respect of all Agent
Advances, until paid in full,
(F) sixth, ratably to pay interest due in respect of the
Advances (other than Agent Advances) and the Swing Loans until
paid in full,
35
(G) seventh, to pay the principal of all Agent Advances
until paid in full,
(H) eighth, to pay the principal of all Swing Loans until
paid in full,
(I) ninth, to pay the principal of all Advances until paid
in full,
(J) tenth, if an Event of Default has occurred and is
continuing, to Agent, to be held by Agent, for the ratable
benefit of Issuing Lender and Lenders as cash collateral in an
amount up to 105% of the then extant Letter of Credit Usage until
paid in full,
(K) eleventh, to pay any other Obligations until paid in
full, and
(L) twelfth, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable
law.
(ii) Agent promptly shall distribute to each Lender,
pursuant to the applicable wire instructions received from each Lender
in writing, such funds as it may be entitled to receive, subject to a
Settlement delay as provided in Section 2.3(h).
(iii) In each instance, so long as no Default or Event of
Default has occurred and is continuing, Section 2.4(b) shall not be
deemed to apply to any payment by Borrowers specified by Borrowers to
be for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to the
terms thereof, including loan fees, service fees, professional fees,
interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest
on interest, and expense reimbursements, whether or not the same would
be or is allowed or disallowed in whole or in part in any Insolvency
Proceeding.
(v) To the extent to which the proceeds of any Collateral
are realized under two or more Australian Securities, some of which
contain provisions limiting the maximum amount recoverable under such
Australian Security to a specified sum (a "Limited Australian
Security") and some of which contain no such limit (an "Unlimited
Australian Security"), those proceeds will, to the maximum extent
permitted by law, be deemed to have been recovered under, and be
applied in accordance with the provisions of, the Unlimited Australian
Security.
(vi) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that
such priority provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each
other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms and provisions of this Section 2.4
shall control and govern.
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2.5 Overadvances. If, at any time or for any reason, the amount of
Obligations owed by Borrowers to the Lender Group pursuant to Sections 2.1 and
2.12 is greater than either the Dollar or percentage limitations set forth in
Sections 2.1, 2.2, or 2.12, (an "Overadvance"), Borrowers immediately shall pay
to Agent, in cash, the amount of such excess, which amount shall be used by
Agent to reduce the Obligations in accordance with the priorities set forth in
Section 2.4(b). In addition, Borrowers hereby promise to pay the Obligations
(including principal, interest, fees, costs, and expenses) in Dollars in full to
the Lender Group as and when due and payable under the terms of this Agreement
and the other Loan Documents.
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
(a) Interest Rates. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof as follows (i) if the relevant Obligation is an Advance that is
a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR
Rate Margin, and (ii) otherwise, at a per annum rate equal to the Base Rate plus
the Base Rate Margin.
The foregoing notwithstanding, at no time shall any portion of the
Obligations bear interest on the Daily Balance thereof at a per annum rate less
than 4.25%. To the extent that interest accrued hereunder at the rate set forth
herein would be less than the foregoing minimum daily rate, the interest rate
chargeable hereunder for such day automatically shall be deemed increased to the
minimum rate.
(b) Letter of Credit Fee. Borrowers shall pay Agent (for the ratable
benefit of the Lenders with a Commitment, subject to any letter agreement
between Agent and individual Lenders), a Letter of Credit fee (in addition to
the charges, commissions, fees, and costs set forth in Section 2.12(e)) which
shall accrue at a rate equal to 2.5% per annum times the Daily Balance of the
undrawn amount of all outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the continuation of
an Event of Default (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit)
that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof at a per annum
rate equal to 4 percentage points above the per annum rate otherwise
applicable hereunder, and
(ii)the Letter of Credit fee provided for above shall be
increased to 4 percentage points above the per annum rate otherwise
applicable hereunder.
(d) Payment. Interest, Letter of Credit fees, and all other fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month at any time that Obligations or Commitments are outstanding. Borrowers
hereby authorize Agent, from time to time, without prior notice to Borrowers, to
charge such interest and fees, all Lender Group Expenses (as and when incurred),
the charges, commissions, fees, and costs provided for in
37
Section 2.12(e) (as and when accrued or incurred), the fees and costs provided
for in Section 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document to Borrowers' Loan Account,
which amounts thereafter constitute Advances hereunder and shall accrue interest
at the rate then applicable to Advances hereunder. Any interest not paid when
due shall be compounded by being charged to Borrowers' Loan Account and shall
thereafter constitute Advances hereunder and shall accrue interest at the rate
then applicable to Advances that are Base Rate Loans hereunder.
(e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall
the interest rate or rates payable under this Agreement, plus any other amounts
paid in connection herewith, exceed the highest rate permissible under any law
that a court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrowers are and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrowers
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.
2.7 Cash Management .
(a) Borrowers shall establish and maintain cash management services of
a type and on terms satisfactory to Agent at one or more of the banks set forth
on Schedule 2.7(a) (each a "Cash Management Bank"), and shall request in writing
and otherwise take such reasonable steps to ensure that all of its Account
Debtors forward payment of the amounts owed by them directly to such Cash
Management Bank, and (ii) deposit or cause to be deposited promptly, and in any
event no later than the first Business Day after the date of receipt thereof,
all Collections (including those sent directly by Account Debtors to a Cash
Management Bank) into bank accounts subject to Cash Management Agreements (each
a "Cash Management Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and Borrowers, in form and substance acceptable
to Agent. Each such Cash Management Agreement shall provide, among other things,
that (i) all items of payment deposited in such Cash Management Account and
proceeds thereof are held by such Cash Management Bank agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other
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items of payment, and (iii) upon receipt of written notice from Agent, such Cash
Management Bank immediately will forward by daily sweep all amounts in the
applicable Cash Management Account to the Agent's Account. Unless an Event of
Default has occurred and is continuing, Agent will not exercise its control over
(1) Cash Management Accounts located in the United States until such time as
Revolver Usage exceeds $15,000,000, and (2) all other Cash Management Accounts,
together with Cash Management Accounts located inside the United States, until
such time as Revolver Usage exceeds $20,000,000. Agent shall discontinue the
exercise of its control over (1) Cash Management Accounts located in the United
States if Revolver Usage fails to exceeds $15,000,000, and (2) all other Cash
Management Accounts, together with Cash Management Accounts located inside the
United States, if Revolver Usage fails to exceeds $20,000,000, in each case for
a period of sixty (60) consecutive days, provided that nothing herein shall
affect Agent's right to reinstate its control over such Cash Management
Agreements upon any subsequent occurrence of excesses of Revolver Usage as
described in the immediately preceding sentence or upon the occurrence and
during the continuation of an Event of Default.
(c) So long as no Default or Event of Default has occurred and is
continuing, Administrative Borrower may amend Schedule 2.7(a) to add or replace
a Cash Management Account Bank or Cash Management Account; provided, however,
that such prospective Cash Management Bank shall be satisfactory to Agent and
Agent shall have consented in writing in advance to the opening of such Cash
Management Account with the prospective Cash Management Bank, and prior to the
time of the opening of such Cash Management Account, Borrowers and such
prospective Cash Management Bank shall have executed and delivered to Agent a
Cash Management Agreement. Borrowers shall close any of their Cash Management
Accounts (and establish replacement cash management accounts in accordance with
the foregoing sentence) promptly and in any event within 30 days of notice from
Agent that the creditworthiness of any Cash Management Bank is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from Agent that the operating performance,
funds transfer, or availability procedures or performance of the Cash Management
Bank with respect to Cash Management Accounts or Agent's liability under any
Cash Management Agreement with such Cash Management Bank is no longer acceptable
in Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral accounts,
with all cash, checks and similar items of payment in such accounts securing
payment of the Obligations, and in which Borrowers are hereby deemed to have
granted a Lien to Agent.
2.8 Crediting Payments; Float Charge. The receipt of any payment item by
Agent (whether from transfers to Agent by the Cash Management Banks pursuant to
the Cash Management Agreements or otherwise) shall not be considered a payment
on account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 11:00 a.m.
39
(California time). If any payment item is received into the Agent's Account on a
non-Business Day or after 11:00 a.m. (California time) on a Business Day, it
shall be deemed to have been received by Agent as of the opening of business on
the immediately following Business Day. From and after the Closing Date, Agent
shall be entitled to charge Borrowers for one (1) Business Day of "clearance" or
"float" at the rate applicable to Base Rate Loans under Section 2.6 on all
Collections that are received by Borrowers and Guarantors (regardless of whether
forwarded by the Cash Management Banks to Agent). This across-the-board one (1)
Business Day clearance or float charge on all Collections is acknowledged by the
parties to constitute an integral aspect of the pricing of the financing of
Borrowers and shall apply irrespective of whether or not there are any
outstanding monetary Obligations; the effect of such clearance or float charge
being the equivalent of charging one (1) Business Day of interest on such
Collections. The parties acknowledge and agree that the economic benefit of the
foregoing provisions of this Section 2.8 shall be for the exclusive benefit of
Agent.
2.9 Designated Account. Agent is authorized to make the Advances and
Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
Section 2.6(d). Administrative Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrowers and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Administrative Borrower,
any Advance, Agent Advance, or Swing Loan requested by Borrowers and made by
Agent or the Lenders hereunder shall be made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrowers (the "Loan Account")
on which Borrowers will be charged with all Advances (including Agent Advances
and Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrowers or for
Borrowers' account, the Letters of Credit issued by Issuing Lender for
Borrowers' account, and with all other payment Obligations hereunder or under
the other Loan Documents, including, accrued interest, fees and expenses, and
Lender Group Expenses. In accordance with Section 2.8, the Loan Account will be
credited with all payments received by Agent from Borrowers or for Borrowers'
account, including all amounts received in the Agent's Account from any Cash
Management Bank. Agent shall render statements regarding the Loan Account to
Administrative Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements shall be presumed to be correct and accurate and
constitute an account stated between Borrowers and the Lender Group absent
manifest error unless, within 30 days after receipt thereof by Administrative
Borrower, Administrative Borrower shall deliver to Agent written objection
thereto describing the error or errors contained in any such statements.
2.11 Fees. Borrowers shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
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(a) Unused Line Fee. On the first day of each month during the term of
this Agreement, an unused line fee in the amount equal to .50% per annum times
the result of (a) the Maximum Revolver Amount, less (b) the sum of (i) the
average Daily Balance of Advances that were outstanding during the immediately
preceding month, plus (ii) the average Daily Balance of the Letter of Credit
Usage during the immediately preceding month,
(b) Fee Letter Fees. As and when due and payable under the terms of
the Fee Letter, Borrowers shall pay to Agent the fees set forth in the Fee
Letter, and
(c) Audit, Appraisal, and Valuation Charges. For the separate account
of Agent, audit, appraisal, and valuation fees and charges as follows, a fee of
$850 pay day, per auditor, plus out-of-pocket expenses for each financial audit
of a Borrower performed by personnel employed by Agent, and the actual charges
paid or incurred by Agent if it elects to employ the services of one or more
third Persons to perform financial audits of Borrowers, to establish electronic
collateral reporting systems for Borrowers, or to assess a Borrower's business
valuation. Prior to the occurrence of a Default or an Event of Default, audits
of Collateral shall be performed by Agent or its designees on a calendar
quarterly basis, or more frequently as determined by Agent in its Permitted
Discretion.
2.12 Letters of Credit.
(a) Subject to the terms and conditions of this Agreement, the Issuing
Lender agrees to issue letters of credit for the account of Borrowers (each, an
"L/C") or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an "L/C Undertaking") with respect to
letters of credit issued by an Underlying Issuer (as of the Closing Date, the
prospective Underlying Issuer is to be Xxxxx Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Administrative Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the
Issuing Lender) to the Issuing Lender and Agent (reasonably in advance of the
requested date of issuance, amendment, renewal, or extension) a notice
requesting the issuance of an L/C or L/C Undertaking, or identifying the L/C or
L/C Undertaking to be amended, renewed, or extended, the date of issuance,
amendment, renewal, or extension, the date on which such L/C or L/C Undertaking
is to expire, the amount of such L/C or L/C Undertaking, the name and address of
the beneficiary thereof (or of the Underlying Letter of Credit, as applicable),
and such other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by the Issuing Lender,
Borrowers also shall be an applicant under the application with respect to any
Underlying Letter of Credit that is to be the subject of an L/C Undertaking. The
Issuing Lender shall have no obligation to issue a Letter of Credit if any of
the following would result after giving effect to the requested Letter of
Credit:
(i) the Letter of Credit Usage would exceed the Borrowing
Base less the then extant amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $20,000,000, or
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(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the then extant amount of outstanding Advances.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Activation Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall have an expiry date no later
than 30 days prior to the Maturity Date and all such Letters of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
(i) the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance
hereunder, Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender agrees to fund its Pro Rata Share of
any Advance deemed made pursuant to the foregoing subsection on the same terms
and conditions as if Borrowers had requested such Advance and Agent shall
promptly pay to Issuing Lender the amounts so received by it from the Lenders.
By the issuance of a Letter of Credit (or an amendment to a Letter of Credit
increasing the amount thereof) and without any further action on the part of the
Issuing Lender or the Lenders, the Issuing Lender shall be deemed to have
granted to each Lender, and each Lender shall be deemed to have purchased, a
participation in each Letter of Credit, in an amount equal to its Pro Rata Share
of the Risk Participation Liability of such Letter of Credit, and each Lender
agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro
Rata Share of any payments made by the Issuing Lender under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of each L/C Disbursement made by
the Issuing Lender and not reimbursed by Borrowers on the date due as provided
in clause (a) of this Section, or of any reimbursement payment required to be
refunded to Borrowers for any reason. Each Lender acknowledges and agrees that
its obligation to deliver to Agent, for the account of the Issuing Lender, an
amount equal to its respective Pro Rata Share pursuant to this Section 2.12(b)
shall be absolute and
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unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or Default or the failure to satisfy any
condition set forth in Section 3 hereof. If any Lender fails to make available
to Agent the amount of such Lender's Pro Rata Share of any payments made by the
Issuing Lender in respect of such Letter of Credit as provided in this Section,
Agent (for the account of the Issuing Lender) shall be entitled to recover such
amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Each Borrower agrees to be bound
by the Underlying Issuer's regulations and interpretations of any Underlying
Letter of Credit or by Issuing Lender's interpretations of any L/C issued by
Issuing Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrowers' instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group.
(d) Each Borrower hereby authorizes and directs any Underlying Issuer
to deliver to the Issuing Lender all instruments, documents, and other writings
and property received by such Underlying Issuer pursuant to such Underlying
Letter of Credit and to accept and rely upon the Issuing Lender's instructions
with respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by the
Issuing Lender relating to Underlying Letters of Credit shall be Lender Group
Expenses for purposes of this Agreement and immediately shall be reimbursable by
Borrowers to Agent for the account of the Issuing Lender.
(f) If by reason of (i) any change in any applicable law, treaty,
rule, or regulation or any change in the interpretation or application thereof
by any Governmental Authority, or (ii) compliance by the Underlying Issuer or
the Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental
43
Authority or monetary authority including, Regulation D of the Federal Reserve
Board as from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of
Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13 LIBOR Option .
(a) Interest and Interest Payment Dates. In lieu of having interest
charged at the rate based upon the Base Rate, Borrowers shall have the option
(the "LIBOR Option") to have interest on all or a portion of the Advances
charged at the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the
earliest of (i) the last day of the Interest Period applicable thereto, (ii) the
occurrence of an Event of Default in consequence of which the Required Lenders
or Agent on behalf thereof elect to accelerate the maturity of the Obligations,
(iii) termination of this Agreement pursuant to the terms hereof, or (iv) the
first day of each month that such LIBOR Rate Loan is outstanding. On the last
day of each applicable Interest Period, unless Administrative Borrower properly
has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrowers no
longer shall have the option to request that Advances bear interest at the LIBOR
Rate and Agent shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder.
(b) LIBOR Election.
(i) Administrative Borrower may, at any time and from time
to time, so long as no Event of Default has occurred and is
continuing, elect to exercise the LIBOR Option by notifying Agent
prior to 11:00 a.m. (California time) at least 3 Business Days prior
to the commencement of the proposed Interest Period (the "LIBOR
Deadline"). Notice of Administrative Borrower's election of the LIBOR
Option for a permitted
44
portion of the Advances and an Interest Period pursuant to this
Section shall be made by delivery to Agent of a LIBOR Notice received
by Agent before the LIBOR Deadline, or by telephonic notice received
by Agent before the LIBOR Deadline (to be confirmed by delivery to
Agent of a LIBOR Notice received by Agent prior to 5:00 p.m.
(California time) on the same day. Promptly upon its receipt of each
such LIBOR Notice, Agent shall provide a copy thereof to each of the
Lenders.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each Borrower
shall indemnify, defend, and hold Agent and the Lenders harmless
against any loss, cost, or expense incurred by Agent or any Lender as
a result of (a) the payment of any principal of any LIBOR Rate Loan
other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of
any LIBOR Rate Loan other than on the last day of the Interest Period
applicable thereto, or (c) the failure to borrow, convert, continue or
prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice
delivered pursuant hereto (such losses, costs, and expenses,
collectively, "Funding Losses"). Funding Losses shall, with respect to
Agent or any Lender, be deemed to equal the amount determined by Agent
or such Lender to be the excess, if any, of (i) the amount of interest
that would have accrued on the principal amount of such LIBOR Rate
Loan had such event not occurred, at the LIBOR Rate that would have
been applicable thereto, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period therefor), minus (ii) the amount
of interest that would accrue on such principal amount for such period
at the interest rate which Agent or such Lender would be offered were
it to be offered, at the commencement of such period, Dollar deposits
of a comparable amount and period in the London interbank market. A
certificate of Agent or a Lender delivered to Administrative Borrower
setting forth any amount or amounts that Agent or such Lender is
entitled to receive pursuant to this Section shall be conclusive
absent manifest error.
(iii) Borrowers shall have not more than 5 LIBOR Rate Loans
in effect at any given time. Borrowers only may exercise the LIBOR
Option for LIBOR Rate Loans of at least $1,000,000 and integral
multiples of $500,000 in excess thereof.
(c) Prepayments. Borrowers may prepay LIBOR Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections in accordance with Section
2.4(b) or for any other reason, including early termination of the term of this
Agreement or acceleration of the Obligations pursuant to the terms hereof, each
Borrower shall indemnify, defend, and hold Agent and the Lenders and their
Participants harmless against any and all Funding Losses in accordance with
clause (b) above.
(d) Special Provisions Applicable to LIBOR Rate.
45
(i) The LIBOR Rate may be adjusted by Agent with respect to
any Lender on a prospective basis to take into account any additional
or increased costs to such Lender of maintaining or obtaining any
eurodollar deposits or increased costs due to changes in applicable
law occurring subsequent to the commencement of the then applicable
Interest Period, including changes in tax laws (except changes of
general applicability in corporate income tax laws) and changes in the
reserve requirements imposed by the Board of Governors of the Federal
Reserve System (or any successor), excluding the Reserve Percentage,
which additional or increased costs would increase the cost of funding
loans bearing interest at the LIBOR Rate. In any such event, the
affected Lender shall give Administrative Borrower and Agent notice of
such a determination and adjustment and Agent promptly shall transmit
the notice to each other Lender and, upon its receipt of the notice
from the affected Lender, Administrative Borrower may, by notice to
such affected Lender (y) require such Lender to furnish to
Administrative Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount of
such adjustment, or (z) repay the LIBOR Rate Loans with respect to
which such adjustment is made (together with any amounts due under
clause (b)(ii) above).
(ii) In the event that any change in market conditions or
any law, regulation, treaty, or directive, or any change therein or in
the interpretation of application thereof, shall at any time after the
date hereof, in the reasonable opinion of any Lender, make it unlawful
or impractical for such Lender to fund or maintain LIBOR Advances or
to continue such funding or maintaining, or to determine or charge
interest rates at the LIBOR Rate, such Lender shall give notice of
such changed circumstances to Agent and Administrative Borrower and
Agent promptly shall transmit the notice to each other Lender and (y)
in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be
deemed to be the last day of the Interest Period of such LIBOR Rate
Loans, and interest upon the LIBOR Rate Loans of such Lender
thereafter shall accrue interest at the rate then applicable to Base
Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR
Option until such Lender determines that it would no longer be
unlawful or impractical to do so.
(e) No Requirement of Matched Funding. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
2.14 Capital Requirements . If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of
46
reducing the return on such Lender's or such holding company's capital as a
consequence of such Lender's Commitments hereunder to a level below that which
such Lender or such holding company could have achieved but for such adoption,
change, or compliance (taking into consideration such Lender's or such holding
company's then existing policies with respect to capital adequacy and assuming
the full utilization of such entity's capital) by any amount deemed by such
Lender to be material, then such Lender may notify Administrative Borrower and
Agent thereof. Following receipt of such notice, Borrowers agree to pay such
Lender on demand the amount of such reduction of return of capital as and when
such reduction is determined, payable within 90 days after presentation by such
Lender of a statement in the amount and setting forth in reasonable detail such
Lender's calculation thereof and the assumptions upon which such calculation was
based (which statement shall be deemed true and correct absent manifest error).
In determining such amount, such Lender may use any reasonable averaging and
attribution methods.
2.15 Joint and Several Liability of Borrowers .
(a) Each of Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Agent and the Lenders under this Agreement,
for the mutual benefit, directly and indirectly, of each of Borrowers and in
consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.
(b) Each of Borrowers, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 2.15), it being the intention of the
parties hereto that all the Obligations shall be the joint and several
obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Persons composing Borrowers will make such payment with respect to, or
perform, such Obligation.
(d) The Obligations of each Person composing Borrowers under the
provisions of this Section 2.15 constitute the absolute and unconditional, full
recourse Obligations of each Person composing Borrowers enforceable against each
such Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each
Person composing Borrowers hereby waives notice of acceptance of its joint and
several liability, notice of any Advances or Letters of Credit issued under or
pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,
47
generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Person composing Borrowers hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or Lenders at any time or times
in respect of any default by any Person composing Borrowers in the performance
or satisfaction of any term, covenant, condition or provision of this Agreement,
any and all other indulgences whatsoever by Agent or Lenders in respect of any
of the Obligations, and the taking, addition, substitution or release, in whole
or in part, at any time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of any Person
composing Borrowers. Without limiting the generality of the foregoing, each of
Borrowers assents to any other action or delay in acting or failure to act on
the part of any Agent or Lender with respect to the failure by any Person
composing Borrowers to comply with any of its respective Obligations, including,
without limitation, any failure strictly or diligently to assert any right or to
pursue any remedy or to comply fully with applicable laws or regulations
thereunder, which might, but for the provisions of this Section 2.15 afford
grounds for terminating, discharging or relieving any Person composing
Borrowers, in whole or in part, from any of its Obligations under this Section
2.15, it being the intention of each Person composing Borrowers that, so long as
any of the Obligations hereunder remain unsatisfied, the Obligations of such
Person composing Borrowers under this Section 2.15 shall not be discharged
except by performance and then only to the extent of such performance. The
Obligations of each Person composing Borrowers under this Section 2.15 shall not
be diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Person composing Borrowers or any Agent or Lender. The joint and several
liability of the Persons composing Borrowers hereunder shall continue in full
force and effect notwithstanding any absorption, merger, amalgamation or any
other change whatsoever in the name, constitution or place of formation of any
of the Persons composing Borrowers or any Agent or Lender.
(f) Each Person composing Borrowers represents and warrants to Agent
and Lenders that such Borrower is currently informed of the financial condition
of Borrowers and of all other circumstances which a diligent inquiry would
reveal and which bear upon the risk of nonpayment of the Obligations. Each
Person composing Borrowers further represents and warrants to Agent and Lenders
that such Borrower has read and understands the terms and conditions of the Loan
Documents. Each Person composing Borrowers hereby covenants that such Borrower
will continue to keep informed of Borrowers' financial condition, the financial
condition of other guarantors, if any, and of all other circumstances which bear
upon the risk of nonpayment or nonperformance of the Obligations.
(g) The provisions of this Section 2.15 are made for the benefit of
the Agent, the Lenders and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all of the Persons
composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing Borrowers or
to resort to any other source or means of
48
obtaining payment of any of the Obligations hereunder or to elect any other
remedy. The provisions of this Section 2.15 shall remain in effect until all of
the Obligations shall have been paid in full or otherwise fully satisfied. If at
any time, any payment, or any part thereof, made in respect of any of the
Obligations, is rescinded or must otherwise be restored or returned by any Agent
or Lender upon the insolvency, bankruptcy or reorganization of any of the
Persons composing Borrowers, or otherwise, the provisions of this Section 2.15
will forthwith be reinstated in effect, as though such payment had not been
made.
(h) Each of the Persons composing Borrowers hereby agrees that it will
not enforce any of its rights of contribution or subrogation against the other
Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
the Agent or the Lenders with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations have been
paid in full in cash. Any claim which any Borrower may have against any other
Borrower with respect to any payments to any Agent or Lender hereunder or under
any other Loan Documents are hereby expressly made subordinate and junior in
right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.
(i) Each of the Persons composing Borrowers hereby agrees that, after
the occurrence and during the continuance of any Default or Event of Default,
the payment of any amounts due with respect to the indebtedness owing by any
Borrower to any other Borrower is hereby subordinated to the prior payment in
full in cash of the Obligations. Each Borrower hereby agrees that after the
occurrence and during the continuance of any Default or Event of Default, such
Borrower will not demand, xxx for or otherwise attempt to collect any
indebtedness of any other Borrower owing to such Borrower until the Obligations
shall have been paid in full in cash. If, notwithstanding the foregoing
sentence, such Borrower shall collect, enforce or receive any amounts in respect
of such indebtedness, such amounts shall be collected, enforced and received by
such Borrower as trustee for the Lender Group, and such Borrower shall deliver
any such amounts to Agent for application to the Obligations in accordance with
Section 2.4(b).
2.16 Additional Borrowers . Any Subsidiary may, with the consent of Agent
and Lenders, join this Agreement as a Borrower (an "Additional Borrower") for
all purposes hereunder (expressly including, without limitation, all purposes
set forth in and subject to all terms and conditions of Section 2.15), upon
delivery to the Agent of (i) an appropriate amendment or instrument of joinder
and (ii) such items described in Section 3.1 and Section 3.2 as are applicable
to such Additional Borrower. Agent and Lenders may, in their sole and absolute
discretion, establish maximum amounts for Revolver Usage by Additional Borrowers
that are Foreign Borrowers as provided in Section 2.2. Nothing herein shall be
deemed to commit Agent or Lenders to consent to the addition or joinder of any
particular or individual Additional Borrower.
49
2.17 Foreign Currencies . All Advances shall be made and all Letters of
Credit denominated in Dollars. Agent and Lenders shall permit the conversion by
Borrower of any Advance made by or for or Letter of Credit issued for the direct
benefit or use of a Foreign Borrower to a currency other than Dollars by means
of a foreign exchange facility provided by an Affiliate of Agent, provided that
(a) such currency is freely available for purchase or exchange in international
currency markets, (b) the making of such Advance or issuance of such Letter of
Credit does not otherwise violate any term or condition of this Agreement or the
other Loan Documents, and (c) for purposes of determining Revolver Usage, all
amounts of Advances and Letters of Credit to or for the direct benefit or use of
Foreign Borrowers shall be calculated in Dollar equivalents as of the date such
Advance is made.
2.18 Foreign Accounts . Agent may, in its discretion, discount the amount
of any Accounts that are not payable in Dollars by an amount deemed appropriate
in Agent's sole and absolute discretion to account for currency exchange risks
and such other factors affecting perfection, enforceability, collection, credit
risk, or political risk or other risks as Agent may determine, or create or
apply such reserves in respect of Accounts not payable in Dollars as Agent deems
appropriate in its Permitted Discretion.
2.19 Interest Act (Canada); Criminal Rate of Interest; Nominal Rate of
Interest. Notwithstanding anything to the contrary contained in this Agreement
or in any other Loan Document, solely to the extent that a court of competent
jurisdiction finally determines that the calculation or determination of
interest payable by a Canadian Borrower in respect of the Obligations pursuant
to this Agreement and the other Loan Documents shall be governed by the laws of
the province of Ontario or the federal laws of Canada:
(a) Whenever interest payable by a Canadian Borrower is calculated on
the basis of a period which is less than the actual number of days in a calendar
year, each rate of interest determined pursuant to such calculation is, for the
purposes of the Interest Act (Canada), equivalent to such a rate multiplied by
the actual number of days in the calendar year in which such rate is to be
ascertained and divided by the number of days used as the basis of such
calculation.
(b) In no event shall the aggregate "interest" (as defined in Section
347 of the Criminal Code, R.S.C. 1985, c. C-46, as the same shall be amended,
replaced or re-enacted from time to time) payable by a Canadian Borrower to
Agent or any Lender under this Agreement or any other Loan Document exceed the
effective annual rate of interest on the "credit advances" (as defined in that
section) under this Agreement or such other Loan Document lawfully permitted
under that section and, if any payment, collection or demand pursuant to this
Agreement or any other Loan Document in respect of "interest" (as defined in
that section) is determined to be contrary to the provisions of that section,
such payment, collection or demand shall be deemed to have been made by mutual
mistake of Agent, Lenders and a Canadian Borrower and the amount of such payment
or collection shall be refunded by Agent and Lenders to such Canadian Borrower.
For the purposes of this Agreement and each other Loan Document to which a
Canadian Borrower is a party, the effective annual rate of interest payable by
such Canadian Borrower shall be determined in accordance with generally accepted
actuarial practices and principles over the term of the loans on the basis of
annual compounding for the lawfully
50
permitted rate of interest and, in the event of dispute, a certificate of a
Fellow of the Canadian Institute of Actuaries appointed by Agent of the account
of such Canadian Borrower will be conclusive for the purpose of such
determination in the absence of evidence to the contrary.
(c) All calculations of interest payable by a Canadian Borrower under
this Agreement or any other Loan Document are to be made on the basis of the
nominal interest rate described herein and therein and not on the basis of
effective yearly rates or on any other basis which gives effect to the principle
of deemed reinvestment of interest. The parties acknowledge that there is a
material difference between the stated nominal interest rates and the effective
yearly rates of interest and that they are capable of making the calculations
required to determine such effective yearly rates of interest.
2.20 Currency; Judgement. This is an international financial transaction in
which the specification of a currency and payment in New York, New York is of
the essence. Dollars shall be the currency of account in the case of all
payments pursuant to or arising under this Agreement or under any other Loan
Document, and all such payments shall be made to Agent's Account in New York,
New York in immediately available funds. To the fullest extent permitted by
applicable Law, the obligations of each Borrower to the Lender Group under this
Agreement and under the other Loan Documents shall not be discharged by any
amount paid in any other currency or in a place other than to Agent's Account in
New York, New York to the extent that the amount so paid after conversion under
this Agreement and transfer to New York, New York does not yield the amount of
Dollars in New York, New York due under this Agreement and under the other Loan
Documents. If, for the purposes of obtaining judgement in any court, it is
necessary to convert a sum due hereunder in Dollars into another currency (the
"Other Currency"), to the fullest extent permitted by applicable Law, the rate
of exchange used shall be that at which the Other Currency on the Business Day
preceding that on which final judgement is given. The obligation of each
Borrower in respect of any such sum due from it to the Lender Group hereunder
shall, notwithstanding any judgement in such Other Currency, be discharged only
to the extent that, on the Business Day immediately following the date on which
Agent receives any sum adjudged to be so due in the Other Currency, Agent may,
in accordance with normal banking procedures, purchase Dollars with the Other
Currency. If the Dollars so purchased are less that the sum originally due to
the Lender Group in Dollars, each Borrower agrees, as a separate obligation and
notwithstanding any such judgement, to indemnify the Lender Group against such
loss, and if the Dollars so purchased exceed the sum originally due to the
Lender Group in Dollars, the Lender Group agrees to remit to Borrowers such
excess.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to Agreement. The obligation of the Lender Group
(or any member thereof) to enter into this Agreement and to provide the
Commitments hereunder is subject to the fulfillment, to the satisfaction of
Agent as determined in its Permitted Discretion, of each of the conditions
precedent set forth below:
(a) the Closing Date shall have occurred on or before March 31, 2003,
51
(b) Agent shall have received all financing statements required by
Agent, in form and content satisfactory to Agent, with respect to the Collateral
and authorized to be filed by Borrowers,
(c) Agent shall have received each of the following documents, in form
and substance satisfactory to Agent, duly executed, and each such document shall
be in full force and effect:
(i) the Due Diligence Letter responses with respect to the
Borrowers,
(ii) the Fee Letter,
(iii) the Guarantee and Debenture duly executed by HH UK,
and
(iv) the Officers' Certificate for each Borrower.
(d) Agent shall have received a certificate from the Secretary of each
Borrower attesting to the resolutions of such Borrower's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which such Borrower is a party and authorizing specific
officers or agents of such Borrower to execute the same;
(e) Agent shall have received copies of each Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with respect to
each Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Borrower, which certificate shall indicate that such Borrower is in good
standing in such jurisdiction;
(g) Agent shall have received certificates of status with respect to
each Borrower, each dated within 30 days of the Closing Date, such certificates
to be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;
(h) Agent shall have received copies of the executed TMP Documents in
form and substance satisfactory to Agent, certified as true and correct and in
full force and effect by an authorized officer of Parent;
(i) TMP and Parent shall have received all necessary consents to the
Spin-Off and the Spin-Off shall have become effective;
(j) Agent shall have received opinions of counsel to Borrowers in form
and substance satisfactory to Agent;
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(k) Agent shall have received satisfactory evidence (including a
certificate of the chief financial officer of Parent) that all tax returns
required to be filed by Borrowers have been timely filed and all taxes upon
Borrowers or their properties, assets, income, and franchises (including Real
Property taxes and payroll taxes) have been paid prior to delinquency, except
such taxes that are the subject of a Permitted Protest;
(l) Agent shall have completed its business, legal, and collateral due
diligence, including a collateral audit and review of Borrowers' books and
records and verification of Borrowers' representations and warranties to the
Lender Group, the results of which shall be satisfactory to Agent;
(m) TMP shall have agreed to provide or continue all letters of credit
required by Borrower as of the Closing Date;
(n) Parent shall have in place a capital and legal structure
satisfactory to Agent in all respects;
(o) Agent shall have received Borrowers' Closing Date Business Plan
and projections together with a certificate of the chief financial officer of
Parent stating that the Closing Date Business Plan has been prepared on a
reasonable basis and in good faith and is based on assumptions believed by
Parent to be reasonable at the time made and from the best information then
available to Parent;
(p) Borrowers shall have received all licenses, approvals or evidence
of other actions required by any Governmental Authority in connection with the
execution and delivery by Borrowers of this Agreement or any other Loan Document
or with the consummation of the transactions contemplated hereby and thereby;
(q) that certain Third Amended and Restated Accounts Receivable
Management and Security Agreement by and among GMAC Commercial Finance LLC as
successor in interest to BNY Financial Corporation and TMP dated November 5,
1998, as modified, amended, or supplemented, shall have terminated;
(r) No Default or Event of Default shall have occurred and be
continuing on the Closing Date, nor shall either result from the effectiveness
of this Agreement;
(s) no Material Adverse Change shall have occurred; and
(t) Borrowers shall pay all costs, fees and expenses owing to Agent
and Lenders on and as of the Closing Date.
3.2 Conditions Precedent to the Initial Extension of Credit . The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent in its Permitted Discretion, of
each of the conditions precedent set forth below; provided that, if all of the
conditions set forth in this Section 3.2 are not satisfied as determined by
Agent in its Permitted Discretion, on or before the date that is 90 days after
the Closing Date, then this
53
Agreement and the other Loan Documents shall be automatically terminated and the
Lender Group shall have no further obligations of any kind hereunder or
thereunder:
(a) the Activation Date shall occur on or before the date occurring
ninety (90) days after the Closing Date;
(b) Each of the conditions set forth in Section 3.1 shall have been
and continue at all times to be satisfied and Agent shall have received a
certificate of the chief executive officer of Parent dated as of the Activation
Date stating the same;
(c) Agent shall have completed a takeover audit of Borrowers by the
Activation Date, the results of which shall be satisfactory to Agent in its
Permitted Discretion.
(d) Agent shall have received all financing statements required by
Agent, duly authorized for filing by the applicable Guarantors, and Agent shall
have received searches reflecting the filing of all such financing statements;
(e) Agent shall have received each of the following documents, in form
and substance satisfactory to Agent, duly executed or authorized to be filed, as
appropriate, and each such document shall be in full force and effect:
(i) the Stock Pledge Agreements, together with all
certificates representing the shares of Stock pledged thereunder for
each Material Subsidiary of any Borrower except as provided in Section
6.17, as well as Stock powers with respect thereto endorsed in blank,
(ii) the Trademark Security Agreements,
(iii) the Share Mortgage together with all share
certificates and executed transfers in blank in respect of all shares
charged by it and the Guarantee and Debenture,
(iv) the Control Agreements,
(v) the Cash Management Agreements together with
verifications of the balances of the Cash Management Accounts subject
thereto as of the day prior to the Activation Date, it being
acknowledged and agreed by Borrowers that, as an additional condition
to the day prior to the Activation Date, as of the Activation Date not
less that $15,000,000 of Borrowers' cash shall be subject to Control
Agreements (including Cash Management Agreements),
(vi) UCC termination statements and other documentation
evidencing the termination by any prior secured parties of their
respective Liens in and to the properties and assets of Borrowers and
each Guarantor,
(vii) the Guaranties and the Subsidiary Documents,
54
(viii) Collateral Access Agreements from all lessors of Real
Property where any Borrower maintains its Chief Executive Office and
Equipment maintaining Books and Records or keeps its Books and Records
for its business or operations (other than HH UK),
(ix) Collateral Access Agreements in favor of Agent from all
of Borrowers' information technology lessors,
(x) the Australian Security Documents, and
(xi) the Canadian Security Documents;
(f) Agent shall have received completed reference checks with respect
to Borrowers' senior management, the results of which are satisfactory to Agent
in its sole discretion;
(g) Agent shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.8, the form and
substance of which shall be satisfactory to Agent;
(h) Agent shall have received a certificate from the Secretary or
Assistant Secretary of each Guarantor attesting to the resolutions of such
Guarantor's Board of Directors authorizing its execution, delivery, and
performance of the Loan Documents to which such Guarantor is a party and
authorizing specific officers of such Guarantor to execute the same;
(i) Agent shall have received copies of each Guarantor's Governing
Documents, as amended, modified, or supplemented to the Activation Date,
certified by the Secretary or Assistant Secretary of such Guarantor;
(j) Agent shall have received a certificate of status with respect to
each Guarantor, dated within 10 days of the Activation Date, such certificate to
be issued by the appropriate officer of the jurisdiction of organization of such
Guarantor, which certificate shall indicate that such Guarantor is in good
standing in such jurisdiction;
(k) Agent shall have received certificates of status with respect to
each Guarantor, each dated within 30 days of the Activation Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Guarantor) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
(l) Agent shall have received additional opinions of counsel to
Borrowers (including, without limitation, HH Australia and HH Canada) and
Guarantors pertaining to such matters as Agent may determine as of the
Activation Date, in form and substance satisfactory to Agent;
(m) Borrowers shall have the Required Availability as of the
Activation Date after giving effect to the payment of all costs, fees and
expenses then due to Agent and/or any
55
Lender hereunder or under the other Loan Documents and the contemplated initial
Advances hereunder;
(n) Borrower shall deliver to Agent, in form and content satisfactory
to Agent, an opening balance sheet as of the effective date of the Spin-Off,
reviewed by an independent certified public accountant and in form and content
satisfactory to Agent in its Permitted Discretion, together with evidence
satisfactory to Agent in its Permitted Discretion that Borrowers and their
Subsidiaries have had available cash and Cash Equivalents in an aggregate amount
not less than $40,000,000 at some time prior to the Activation Date;
(o) Agent shall have received UCC, tax lien, and judgment searches for
all domestic jurisdictions (and the non-domestic equivalents of such searches
including, without limitation, the PPSA except as provided in Section 3.5(c)) in
which Borrower and each Guarantor and Collateral may be located, the results of
which searches show the recording of Agent's security interests and otherwise
shall be satisfactory to Agent in its Permitted Discretion;
(p) The TMP Loan Agreement and the Security Agreement between Parent
and TMP entered into in contemplation of the Spin-Off shall have been
terminated, all obligations to TMP thereunder shall have been indefeasibly paid
and satisfied in full and all liens granted thereunder shall have been
terminated;
(q) Borrowers shall have executed and delivered all documents required
by Agent and shall have satisfied all other conditions established by Agent in
its Permitted Discretion to cause HH Australia and HH Canada to become Borrowers
hereunder;
(r) Agent shall have received and reviewed all of Borrowers' material
contracts including without limitation all seller notes payable by a Borrower or
any of its Subsidiaries and the results of such review shall be satisfactory to
Agent in its Permitted Discretion;
(s) Agent shall have received the Consolidation Plan certified by an
officer of Parent as true and correct as of the Activation Date;
(t) Borrowers shall have delivered to Agent an organizational chart
for Borrowers and their Subsidiaries that is true and correct as of the
Activation Date,
(u) No material adverse change shall have occurred in Borrowers'
financial condition or prospects or in the value of the Collateral,
(v) No default or event which, with the giving of notice or passage of
time, or both, would be a default shall have occurred and be continuing under
any agreement governing indebtedness of any Borrower or any other material
agreement of any Borrower; and
(w) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent.
56
3.3 Conditions Precedent to all Extensions of Credit . The obligation of
the Lender Group (or any member thereof) to make all Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:
(a) the aggregate cash on hand of Borrowers and their Subsidiaries is
less than $15,000,000;
(b) the representations and warranties contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects on
and as of the date of such extension of credit, as though made on and as of such
date (except to the extent that such representations and warranties relate
solely to an earlier date);
(c) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(d) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against any
Borrower, Agent, any Lender, or any of their Affiliates; and
(e) no Material Adverse Change shall have occurred.
3.4 Term . This Agreement shall become effective upon the execution and
delivery hereof by Borrowers, Agent, and the Lenders and shall continue in full
force and effect for a term ending on March 31, 2006 (the "Maturity Date"). The
foregoing notwithstanding, the Lender Group, upon the election of the Required
Lenders, shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 Condition Subsequent to the Activation Date. The obligation of the
Lender Group (or any member thereof) to continue to make Advances (or otherwise
extend credit hereunder) is subject to fulfillment of the conditions subsequent
set forth below within the applicable time periods set forth below, the failure
of Borrowers to so perform or cause to be performed constituting an Event of
Default):
(a) within ninety (90) days of the Activation Date, Borrowers shall
close or cause to be closed the account of HH Australia at ANZ Bank and shall
deliver to Agent evidence satisfactory to Agent in its Permitted Discretion of
the closing of such account;
(b) within ninety (90) days of the Activation Date, Borrowers shall
obtain Collateral Access Agreements with respect to premises occupied by HH
Canada at at 00 Xxxx Xxxxxx Xxxx, Xxxxx 0000, Xxxxxxx, and by HH Australia at 00
Xxxxx Xxxxx, 000 Xxxx Xxxxxx, Xxxxxx and 000 Xxxxxxx Xxxxxx, Xxxxxxxxx; and
57
(c) within ninety (90) days of the Activation Date, Agent shall have
received statutory PPSA searches for all Canadian jurisdictions in which
Borrowers and Collateral may be located, the results of which searches show the
recording of Agent's security interests and otherwise shall be satisfactory to
Agent in its Permitted Discretion
3.6 Effect of Termination. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to any outstanding Letters of Credit) immediately shall become due
and payable without notice or demand. No termination of this Agreement, however,
shall relieve or discharge Borrowers of their duties, Obligations, or covenants
hereunder and the Agent's Liens in the Collateral shall remain in effect until
all Obligations have been fully and finally discharged and the Lender Group's
obligations to provide additional credit hereunder have been terminated. When
this Agreement has been terminated and all of the Obligations have been fully
and finally discharged and the Lender Group's obligations to provide additional
credit under the Loan Documents have been terminated irrevocably, Agent will, at
Borrowers' sole expense, execute and deliver any UCC and PPSA termination
statements, lien releases, mortgage releases, re-assignments of trademarks,
discharges of security interests, and other similar discharge or release
documents (and, if applicable, in recordable form) as are reasonably necessary
to release, as of record, the Agent's Liens and all notices of security
interests and liens previously filed by Agent with respect to the Obligations.
3.7 Early Termination by Borrowers . Borrowers have the option, at any time
upon 90 days prior written notice by Administrative Borrower to Agent, to
terminate this Agreement by paying to Agent, for the benefit of the Lender
Group, in cash, the Obligations (including either (i) providing cash collateral
to be held by Agent in an amount equal to 105% of the then extant Letter of
Credit Usage, or (ii) causing the original Letters of Credit to be returned to
the Issuing Lender), in full, together with the Applicable Prepayment Premium
(to be allocated based upon letter agreements between Agent and individual
Lenders). If Administrative Borrower has sent a notice of termination pursuant
to the provisions of this Section, then the Commitments shall terminate and
Borrowers shall be obligated to repay the Obligations (including either (i)
providing cash collateral to be held by Agent in an amount equal to 105% of the
then extant Letter of Credit Usage, or (ii) causing the original Letters of
Credit to be returned to the Issuing Lender), in full, together with the
Applicable Prepayment Premium, on the date set forth as the date of termination
of this Agreement in such notice. In the event of the termination of this
Agreement and repayment of the Obligations at any time prior to the Maturity
Date, for any other reason, including (a) termination upon the election of the
Required Lenders to terminate after the occurrence of an Event of Default, (b)
foreclosure and sale of Collateral, (c) sale of the Collateral in any Insolvency
Proceeding, or (iv) restructure, reorganization or compromise of the Obligations
by the confirmation of a plan of reorganization, or any other plan of
compromise, restructure, or arrangement in any Insolvency Proceeding, then, in
view of the impracticability and extreme difficulty of ascertaining the actual
amount of damages to the Lender Group or profits lost by the Lender Group as a
result of such early termination, and by mutual agreement of the parties as to a
reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrowers shall pay the Applicable Prepayment Premium to
58
Agent (to be allocated based upon letter agreements between Agent and individual
Lenders), measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each Borrower (other than HH Australia)
hereby grants to Agent, for the benefit of the Lender Group, a continuing
security interest in all of its right, title, and interest in all currently
existing and hereafter acquired or arising Personal Property Collateral in order
to secure prompt repayment of any and all of the Obligations in accordance with
the terms and conditions of the Loan Documents and in order to secure prompt
performance by Borrowers of each of their covenants and duties under the Loan
Documents. The Agent's Liens in and to the Personal Property Collateral shall
attach to all Personal Property Collateral (other than that of HH Australia)
without further act on the part of Agent or Borrowers. Anything contained in
this Agreement or any other Loan Document to the contrary notwithstanding,
except for Permitted Dispositions, Borrowers have no authority, express or
implied, to dispose of any item or portion of the Collateral.
4.2 Negotiable Collateral . In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, each Borrower that has granted a security interest
under section 4.1, immediately upon the request of Agent, shall endorse and
deliver physical possession of such Negotiable Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral
.. At any time after the occurrence and during the continuation of an Event of
Default, Agent or Agent's designee may, in respect of each Borrower that has
granted the Agent a security interest under section 4.1 and each Borrower that
has executed an Australian Security, (a) notify Account Debtors of Borrowers
that the Accounts, chattel paper, or General Intangibles have been assigned to
Agent or that Agent has a security interest therein, or (b) collect the
Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent or a Cash Management Bank in their original form as received by the
applicable Borrower.
4.4 Delivery of Additional Documentation Required . At any time upon the
request of Agent, Borrowers shall execute and deliver to Agent, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents (the "Additional
Documents") that Agent may request in its Permitted Discretion, in form and
substance satisfactory to Agent, to perfect and continue perfected or better
perfect the Agent's Liens in the Collateral (whether now owned or hereafter
arising or acquired), to create and perfect Liens in favor of Agent in any Real
Property acquired after the Closing Date, and in order to fully consummate all
of the transactions contemplated hereby and under the other Loan Documents. To
the maximum extent permitted by applicable law, each Borrower authorizes Agent
to execute any such Additional Documents in the applicable Borrower's name and
59
authorize Agent to file such executed Additional Documents in any appropriate
filing office. In addition, on such periodic basis as Agent shall require,
Borrowers shall (a) provide Agent with a report of all new patentable,
copyrightable, or trademarkable materials acquired or generated by Borrowers
during the prior period, (b) cause all patents, copyrights, and trademarks
acquired or generated by Borrowers that are not already the subject of a
registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of Borrowers' ownership thereof,
and (c) cause to be prepared, executed, and delivered to Agent supplemental
schedules to the applicable Loan Documents to identify such patents, copyrights,
and trademarks as being subject to the security interests created thereunder.
4.5 Power of Attorney . Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or xxxx of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) send requests for verification of Accounts, (d)
endorse such Borrower's name on any Collection item that may come into the
Lender Group's possession, (e) at any time that an Event of Default has occurred
and is continuing, make, settle, and adjust all claims under such Borrower's
policies of insurance and make all determinations and decisions with respect to
such policies of insurance in accordance with Section 6.8(b), and (f) at any
time that an Event of Default has occurred and is continuing, settle and adjust
disputes and claims respecting the Accounts, chattel paper, or General
Intangibles directly with Account Debtors, for amounts and upon terms that Agent
determines to be reasonable, and Agent may cause to be executed and delivered
any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and the Lender
Group's obligations to extend credit hereunder are terminated.
4.6 Right to Inspect . Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter to inspect the Books and to check, test, and appraise the
Collateral in order to verify Borrowers' financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.
4.7 Control Agreements . Each Borrower agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
and, if to another securities intermediary, unless each of the applicable
Borrower, Agent, and the substitute securities intermediary have entered into a
Control Agreement. No arrangement contemplated hereby or by any Control
Agreement in respect of any Securities Accounts or other Investment Property
shall be modified by Borrowers without the prior written consent of Agent. Upon
the occurrence and during the continuance of a Default or Event of Default,
Agent may notify any securities
60
intermediary to liquidate the applicable Securities Account or any related
Investment Property maintained or held thereby and remit the proceeds thereof to
the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, each
Borrower makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects, as of the
date hereof, and shall be true, correct, and complete, in all material respects,
as of the Activation Date, and at and as of the date of the making of each
Advance (or other extension of credit) made thereafter, as though made on and as
of the date of such Advance (or other extension of credit) (except to the extent
that such representations and warranties relate solely to an earlier date) and
such representations and warranties shall survive the execution and delivery of
this Agreement:
5.1 No Encumbrances. Each Borrower has good and indefeasible title to its
Collateral and the Real Property, and as of the Activation Date, all Collateral
shall be free and clear of Liens except for Permitted Liens.
5.2 Eligible Accounts. The Eligible Accounts are bona fide existing payment
obligations of Account Debtors created by the sale and delivery of Inventory or
the rendition of services to such Account Debtors in the ordinary course of
Borrowers' business, owed to Borrowers without defenses, disputes, offsets,
counterclaims, or rights of return or cancellation. As to each Eligible Account,
such Account is not:
(a) owed by an employee, Affiliate, or agent of a Borrower,
(b) on account of a transaction wherein goods were placed on
consignment or were sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a xxxx and hold, or on any other terms by reason of which the
payment by the Account Debtor may be conditional,
(c) payable in a currency other than Dollars (except as provided under
Section 2.18),
(d) owed by an Account Debtor that has or has asserted a right of
setoff, has disputed its liability, or has made any claim with respect to its
obligation to pay the Account,
(e) owed by an Account Debtor that is subject to any Insolvency
Proceeding or is not Solvent or as to which a Borrower has received notice of an
imminent Insolvency Proceeding or a material impairment of the financial
condition of such Account Debtor,
(f) on account of a transaction as to which the goods giving rise to
such Account have not been shipped and billed to the Account Debtor or the
services giving rise to such Account have not been performed and accepted by the
Account Debtor,
(g) a right to receive progress payments or other advance xxxxxxxx
that are due prior to the completion of performance by the applicable Borrower
of the subject contract for goods or services, and
61
(h) an Account that has not been billed to the customer.
5.3 Locations; Leases. Borrowers conduct their respective businesses and
maintain or store their respective Books and Records at the locations set forth
on Schedule 5.3. Each such location is leased by Parent or a Borrower and each
Borrower's chief executive office and locations of Books and Records are or will
be by the Activation Date subject to Collateral Access Agreements executed by
the applicable lessor in favor of Agent granting Agent such access and other
rights as it deems necessary and appropriate in its sole discretion in order to
protect the interests of Agent and the Lenders in the Collateral. Each such
lease is set forth on Schedule 5.3.
5.4 Equipment. All of the Equipment is used or held for use in Borrowers'
business and is fit for such purposes.
5.5 Location of Inventory and Equipment. The Equipment is not stored with a
bailee, warehouseman, or similar party and is located only at the locations
identified on Schedule 5.5.
5.6 Inventory Records. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7 Location of Chief Executive Office; FEIN. The chief executive office of
each Borrower is located at the address indicated in Schedule 5.7 and each
Borrower's FEIN (or, with respect to each Foreign Borrower, any comparable
national identification number) is identified in Schedule 5.7.
5.8 Due Organization and Qualification; Subsidiaries.
(a) Each Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any nation, state or province where the failure to be so qualified
reasonably could be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of each Borrower, by class, and, as
of the Activation Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 5.8(b),
there are no subscriptions, options, warrants, or calls relating to any shares
of each Borrower's capital Stock, including any right of conversion or exchange
under any outstanding security or other instrument. No Borrower is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate list of
each Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction
of their organization; (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries; and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by the applicable Borrower. All of the outstanding capital Stock
of each such Subsidiary has been validly issued and is fully paid and
non-assessable.
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(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Borrower or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
5.9 Due Authorization; No Conflict.
(a) As to each Borrower, the execution, delivery, and performance by
such Borrower of this Agreement and the Loan Documents to which it is a party
have been duly authorized by all necessary action on the part of such Borrower.
(b) As to each Borrower, the execution, delivery, and performance by
such Borrower of this Agreement and the Loan Documents to which it is a party do
not and will not (i) violate any provision of federal, national, state,
provincial, or local law or regulation applicable to any Borrower, the Governing
Documents of any Borrower, or any order, judgment, or decree of any court or
other Governmental Authority binding on any Borrower, (ii) conflict with, result
in a breach of, or constitute (with due notice or lapse of time or both) a
default under any material contractual obligation of any Borrower, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of Borrower, other than Permitted Liens, or
(iv)require any approval of any Borrower's interestholders or any approval or
consent of any Person under any material contractual obligation of any Borrower.
(c) Other than the filing of financing statements, fixture filings,
and NASDAQ disclosure statements, and the filing of copies of the Australian
Securities with the Australian Securities & Investment Commission, the
execution, delivery, and performance by each Borrower of this Agreement and the
Loan Documents to which such Borrower is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority or other Person.
(d) As to each Borrower, this Agreement and the other Loan Documents
to which such Borrower is a party, and all other documents contemplated hereby
and thereby, when executed and delivered by such Borrower will be the legally
valid and binding obligations of such Borrower, enforceable against such
Borrower in accordance with their respective terms, except as enforcement may be
limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights generally.
(e) The Agent's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor of the
Loan Documents to which it is a party have been duly authorized by all necessary
action on the part of such Guarantor.
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(g) The execution, delivery, and performance by each Guarantor of the
Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, national, state, provincial, or local law or regulation
applicable to such Guarantor, the Governing Documents of such Guarantor, or any
order, judgment, or decree of any court or other Governmental Authority binding
on such Guarantor, (ii) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation of such Guarantor, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of such Guarantor, other than Permitted Liens, or (iv) require any
approval of such Guarantor's interestholders or any approval or consent of any
Person under any material contractual obligation of such Guarantor.
(h) The execution, delivery, and performance by each Guarantor of the
Loan Documents to which such Guarantor is a party do not and will not require
any registration with, consent, or approval of, or notice to, or other action
with or by, any Governmental Authority or other Person.
(i) The Loan Documents to which each Guarantor is a party, and all
other documents contemplated hereby and thereby, when executed and delivered by
such Guarantor will be legally valid and binding obligations of such Guarantor,
enforceable against such Guarantor in accordance with their respective terms,
except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.
5.10 Litigation . Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers, threatened against Borrowers, or any of their Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrowers, or any of their Subsidiaries, as applicable,
reasonably could not be expected to result in a Material Adverse Change.
5.11 No Material Adverse Change . All financial statements relating to
Borrowers or Guarantors that have been delivered by Borrowers or Guarantors to
the Lender Group have been prepared in accordance with GAAP (except, in the case
of unaudited financial statements, for the lack of footnotes and being subject
to year-end audit adjustments) and present fairly in all material respects,
Borrowers' (or Guarantors', as applicable) financial condition as of the date
thereof and results of operations for the period then ended. There has not been
a Material Adverse Change with respect to Borrowers (or Guarantors, as
applicable) since the date of the latest financial statements submitted to the
Lender Group on or before the Closing Date.
5.12 Fraudulent Transfer .
(a) Each Borrower is Solvent.
(b) No transfer of property is being made by any Borrower and no
obligation is being incurred by any Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrowers.
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5.13 Employee Benefits.
(a) Except as set forth in Schedule 5.13(b-1), the Borrowers do not
have any liability under any Benefit Plan. Schedule 5.13(b-1) lists all Benefit
Plans of the Borrowers.
(b) Schedule 5.13(b-2) lists all Canadian Employee Plans.
(c) All of the Canadian Employee Plans are and have been established
and administered in all respects in accordance with all Laws applicable to the
Canadian Employee Plans. To the best of Borrowers' knowledge, no fact or
circumstance exists that could adversely affect the tax-exempt status of a
Canadian Employee Plan to the extent applicable. Each Benefit Plan, to the
extent applicable, is in compliance in all material respects with the applicable
provisions of ERISA, the IRC, Canadian Employee Benefit Laws, Australian
Employee Benefit Laws and other federal, state, provincial or national law. Each
Benefit Plan which is intended to qualify under Section 401(a) of the IRC has
received a favorable determination letter from the IRS and to the best of each
Borrower's knowledge, nothing has occurred which would cause the loss off such
qualification.
(d) There are no pending, or to the best of any Borrower's knowledge,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Benefit Plan. There has been no non-exempt prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Benefit Plan which could be reasonably expected to subject the Borrowers to
any material liability.
(e) No Benefit Plans in respect of HH Canada have been promised or
will be made or promised by HH Canada before the Closing Date.
(g) Each Borrower, for itself and its Subsidiaries, has furnished to
Agent true, correct and complete copies of all the Benefit Plans subject to
ERISA, Canadian Employee Benefit Laws, or Australian Employee Benefit Laws, as
applicable, as amended as of the date hereof and such other documentation and
information with respect to such Benefit Plans as Lenders may request from time
to time.
(h) Each Borrower, for itself and its Subsidiaries, to the extent
applicable has made all required contributions to any Benefit Plan subject to
Section 412 of the IRC, and no application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the IRC has been made with
respect to any Benefit Plan.
5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a) to
Borrowers' knowledge, none of Borrowers' properties or assets has ever been used
by Borrowers or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such production, storage, handling, treatment, release or transport was in
violation, in any material respect, of applicable Environmental Law, (b) to
Borrowers' knowledge, none of Borrowers' properties or assets has ever been
designated or identified in any manner pursuant to any Environmental Law,
statute as a Hazardous Materials disposal site, (c) none of Borrowers have
received notice that a Lien arising under any Environmental Law has attached to
any revenues or to any Real Property owned or operated by
65
Borrowers, and (d) none of Borrowers have received a summons, citation, order,
notice, notice of Environmental Action or directive from the Environmental
Protection Agency or any other Governmental Authority concerning any action or
omission by any Borrower resulting in the releasing or disposing of Hazardous
Materials into the environment.
5.15 Brokerage Fees. Except as set forth on Schedule 5.15, Borrowers have
not utilized the services of any broker or finder in connection with Borrowers'
obtaining financing from the Lender Group under this Agreement and no brokerage
commission or finders fee is payable by Borrowers in connection herewith.
5.16 Intellectual Property. Each Borrower owns, or holds licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and licenses that
are necessary to the conduct of its business as currently conducted. Attached
hereto as Schedule 5.16 is a true, correct, and complete listing of all material
patents, patent applications, trademarks, trademark applications, copyrights,
and copyright registrations as to which each Borrower is the owner or is an
exclusive licensee.
5.17 Leases. Borrowers enjoy peaceful and undisturbed possession under all
leases material to the business of Borrowers and to which Borrowers are a party
or under which Borrowers are operating. All of such leases are valid and
subsisting and no material default by Borrowers exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of the DDAs of each Borrower,
including, with respect to each depository (i) the name and address of that
depository, and (ii) the account numbers of the accounts maintained with such
depository. Borrower shall from time to time update Schedule 5.18 on not less
than thirty (30) days advance written notice to Agent.
5.19 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Borrowers in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrowers in writing to the Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections represent, and as of
the date on which any other Projections are delivered to Agent, such additional
Projections represent Borrowers' good faith best estimate of its future
performance for the periods covered thereby.
5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete list
of all Indebtedness of each Borrower outstanding immediately prior to the
Activation Date that is to remain outstanding after the Activation Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
5.21 Payments to Employees and Others. Each Borrower has paid or accrued as
a liability on the books of such Borrower, all material payments due from such
Borrower to any
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employee, independent contractor, Person or Governmental Authority on account of
workers' compensation, wages, vacation pay, RRSP contributions, or other
compensation and, as applicable, employee health and welfare insurance and other
benefits.
5.22 Withholdings and Remittances. Each Canadian Borrower has withheld from
each payment made to any of its present or former employees, officers and
directors, and to all Persons who are non-residents of Canada for the purposes
of the Canadian Income Tax Act all amounts required by Law to be withheld,
including without limitation all payroll deductions required by Law to be
withheld, and furthermore, has remitted such withheld amounts within the
prescribed periods to the appropriate Governmental Authority. Each Canadian
Borrower has remitted all Canada Pension Plan contributions, provincial pension
plan contributions, employment insurance premiums, employer health taxes and
other taxes payable by it in respect of its employees and has remitted such
amounts to the proper Governmental Authority with the time required under the
applicable Law.
5.23 Interrelated Entities. Parent is the direct and beneficial owner or
indirect owner and holder of all of the issued and outstanding Stock of the
other Borrowers and Guarantors. Parent and the other Borrowers and Guarantors
make up a related organization of various entities constituting a single
economic and business enterprise so that Borrowers and Guarantors share an
identity of interests such that any benefit received by any one of them benefits
the others. Certain of Borrowers and Guarantors render services to or for the
benefit of other Borrowers and Guarantors, purchase or sell and supply goods to
or from or for the benefit of the others, make loans, advances and provide other
financial accommodations to or for the benefit of the other Borrowers and
Guarantors (including, inter alia, the payment by Borrowers and Guarantors of
creditors of the other Borrowers and Guarantors and guarantees by Borrowers and
Guarantors of Indebtedness of the other Borrowers and Guarantors and provide
administrative, marketing, payroll and management services to or for the benefit
of the other Borrowers and Guarantors). Borrowers and Guarantors have
centralized accounting and legal services and certain Borrowers and Guarantors
share certain common officers and directors.
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations,
Borrowers shall and shall cause each of their respective Subsidiaries to do all
of the following:
6.1 Accounting System . Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent.
6.2 Collateral Reporting . Provide Agent (and if so requested by Agent,
with copies for each Lender) with the following documents at the following times
in form satisfactory to Agent:
Daily (a) notice of all disputes or claims in excess of
$1,000,000.
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Monthly (a) a detailed calculation of the Borrowing Base
(not later than (including detail regarding those Accounts that are not
the 10th day of Eligible Accounts),
each month)
(b) a detailed aging, by total, of the Accounts,
together with a reconciliation to the detailed
calculation of the Borrowing Base previously
provided to Agent,
(c) a calculation of Dilution for the prior month,
(d) a statement of Collections for the prior month,
and
(e) a summary from HH UK of its preferential
creditors, and
(f) a summary of Borrowers' accounts payable
(segregated between payroll and other) and any book
overdraft.
Quarterly a report regarding each Borrower's due and payable
value added taxes,
Upon request by
Agent
(a) copies of invoices in connection with the
Accounts, credit memos, remittance advices, deposit
slips, shipping and delivery documents in
connection with the Accounts and, for Equipment
acquired by Borrowers, purchase orders and
invoices,
(b) such other reports as to the Collateral, or the
financial condition of Borrowers as Agent may
request, and
(c) a detailed listing of each Borrower's
customers, which customer information is
specifically identified and requested by Agent from
time to time.
and, with respect to Accounts, a sales journal for each Borrower, collection
journal for each Borrower and each Subsidiary, and credit register for each
Borrower since the most recent such report and a calculation of the Borrowing
Base as of such date, in accordance with the following schedule:
At all times from the Closing Date through the Monthly for all Borrowers
date occurring 90 days after the Activation Date
Thereafter:
At all times the Account Report Base is greater Monthly for all Borrowers
than $35,000,000
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At all times the Account Report Base is equal Biweekly for HH US and HH UK
to or less than $35,000,000 but greater Monthly for HH Australia and
than $25,000,000 HH Canada
At all times the Account Report Base is equal Weekly for HH US and HH UK
to or less than $25,000,000 but greater Biweekly for HH Australia and
than $20,000,000 HH Canada
At all times the Account Report Base is equal Daily for HH US and HH UK
to or less than $20,000,000 Weekly for HH Australia and
HH Canada
In addition, each Borrower agrees, at each such Borrower's expense, to
cooperate fully with Agent to facilitate and implement a system of electronic
collateral reporting in order to provide electronic reporting of each of the
items set forth above. All costs, fees and expenses incurred by Agent in
connection with the facilitation and implementation of such electronic
collateral reporting system shall be reimbursed to Agent by Borrowers on Agent's
demand, shall constitute part of the Obligations and shall be secured by the
Collateral.
6.3 Financial Statements, Reports, Certificates . Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 30 days (45 days in
the case of a month that is the end of one of the first 3 fiscal quarters in a
fiscal year) after the end of each month during each of Parent's fiscal years,
(i) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering Parent's and its
Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer of
Parent to the effect that:
(A) the financial statements delivered hereunder have been
prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and
fairly present in all material respects the financial condition
of Parent and its Subsidiaries,
(B) the representations and warranties of Borrowers
contained in this Agreement and the other Loan Documents are true
and correct in all material respects on and as of the date of
such certificate, as though made on and as of such date (except
to the extent that such representations and warranties relate
solely to an earlier date), and
(C) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent of
any non-compliance, describing such non-compliance as to which he
or she may have knowledge and what action Borrowers have taken,
are taking, or propose to take with respect thereto), and
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(D) there are no unpaid payroll or payroll taxes that have
become due from any Borrower or Guarantor and stating the accrued
amount of unpaid payroll and payroll taxes that have not yet
become due, and
(iii) for each month that is the date on which a financial
covenant in Section 7.20 is to be tested, a Compliance Certificate
demonstrating, in reasonable detail, compliance at the end of such
period with the applicable financial covenants contained in Section
7.20, and
(b) as soon as available, but in any event within 90 days after the
end of each of Parent's fiscal years,
(i) financial statements of Parent and its Subsidiaries for
each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to Agent
and the Lenders stating that such accountants do not have knowledge of
the existence of any Default or Event of Default under Section 7.20,
(c) as soon as available, but in any event within 30 days prior to the
start of each of Parent's fiscal years,
(i) copies of Borrowers' Projections, in form and substance
(including as to scope and underlying assumptions) satisfactory to
Agent, in its sole discretion, for the forthcoming 3 years, year by
year, and for the forthcoming fiscal year, month by month, certified
by the chief financial officer of Parent as being such officer's good
faith best estimate of the financial performance of Parent and its
Subsidiaries during the period covered thereby,
(d) if and when filed by any Borrower,
(i) 10-Q quarterly reports, Form 10-K annual reports, and
Form 8-K current reports,
(ii) any other filings made by any Borrower with the SEC or
any comparable Governmental Authority having regulatory jurisdiction
over any Foreign Borrower,
(iii) copies of Borrowers' federal income tax returns, and
any amendments thereto, filed with the Internal Revenue Service or,
with respect to any Foreign Borrower, any comparable Governmental
Authority responsible for internal revenue, and
(iv) any other information that is provided by Parent to its
shareholders generally,
70
(e) if and when filed by any Borrower and as requested by Agent,
satisfactory evidence of payment of applicable excise taxes in each jurisdiction
in which (i) any Borrower conducts business or is required to pay any such
excise tax, (ii) where any Borrower's failure to pay any such applicable excise
tax would result in a Lien on the properties or assets of any Borrower, or (iii)
where any Borrower's failure to pay any such applicable excise tax reasonably
could be expected to result in a Material Adverse Change,
(f) as soon as a Borrower has knowledge of any event or condition that
constitutes a Default or an Event of Default, notice thereof and a statement of
the curative action that Borrowers propose to take with respect thereto.
(g) upon the request of Agent, any other report reasonably requested
relating to the financial condition of Borrowers.
(h) In addition to the financial statements referred to above,
Borrowers agree to deliver financial statements prepared on a basis to be
determined prior to the Activation Date and that no Borrower, or any Subsidiary
of a Borrower, will have a fiscal year different from that of Parent. Borrowers
agree that their independent certified public accountants are authorized to
communicate with Agent and to release to Agent whatever financial information
concerning Borrowers that Agent reasonably may request. Each Borrower waives the
right to assert a confidential relationship, if any, it may have with any
accounting firm or service bureau in connection with any information requested
by Agent pursuant to or in accordance with this Agreement, and agree that Agent
may contact directly any such accounting firm or service bureau in order to
obtain such information.
6.4 Guarantor Reports . Cause each Guarantor to deliver its annual
financial statements at the time when Parent provides its audited financial
statements to Agent and copies of all federal income tax returns (or comparable
national returns for Foreign Guarantors) as soon as the same are available and
in any event no later than 30 days after the same are required to be filed by
law.
6.5 Allowance. Cause allowances as between Borrowers and their Account
Debtors, to be on the same basis and in accordance with the usual customary
practices of the applicable Borrower, as they exist at the time of the execution
and delivery of this Agreement.
6.6 Maintenance of Properties . Maintain and preserve all of its properties
which are necessary or useful in the proper conduct to its business in good
working order and condition, ordinary wear and tear excepted, and comply at all
times with the provisions of all leases to which it is a party as lessee, so as
to prevent any loss or forfeiture thereof or thereunder.
6.7 Taxes . Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers
or any of their assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrowers
will make timely payment or deposit of all tax payments and withholding taxes
required of it by applicable laws, including the Canadian Income Tax Act and
laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and
federal or provincial income taxes, or
71
other taxes as may be applicable to any
Foreign Borrower, and will, upon request, furnish Agent with proof satisfactory
to Agent indicating that the applicable Borrower has made such payments or
deposits. Borrowers shall deliver satisfactory evidence of payment of applicable
excise taxes in each jurisdictions in which any Borrower is required to pay any
such excise tax.
6.8 Insurance.
(a) At Borrowers' expense, maintain insurance respecting its property
and assets wherever located, covering loss or damage by fire, theft, explosion,
and all other hazards and risks as ordinarily are insured against by other
Persons engaged in the same or similar businesses. Borrowers also shall maintain
business interruption, public liability, and product liability insurance, as
well as insurance against larceny, embezzlement, and criminal misappropriation.
All such policies of insurance shall be in such amounts and with such insurance
companies as are reasonably satisfactory to Agent. Borrowers shall deliver
copies of all such policies to Agent with a satisfactory lender's loss payable
endorsement naming Agent as primary loss payee as its interests may appear or
additional insured, as appropriate. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 30 days prior
written notice to Agent in the event of cancellation of the policy for any
reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice of any loss
covered by such insurance. After the occurrence and during the continuation of
an Event of Default, Agent shall have the exclusive right to adjust any losses
payable under any such insurance policies in excess of $50,000, without any
liability to Borrowers whatsoever in respect of such adjustments. Any monies
received as payment for any loss under any insurance policy mentioned above
(other than liability insurance policies) or as payment of any award or
compensation for condemnation or taking by eminent domain, shall be paid over to
Agent to be applied at the option of the Required Lenders either to the
prepayment of the Obligations or shall be disbursed to Administrative Borrower
under staged payment terms reasonably satisfactory to the Required Lenders for
application to the cost of repairs, replacements, or restorations. Any such
repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items or
property destroyed prior to such damage or destruction.
(c) Borrowers shall not take out separate insurance concurrent in form
or contributing in the event of loss with that required to be maintained under
this Section 6.8, unless Agent is included thereon as named insured with the
loss payable to Agent under a lender's loss payable endorsement or its
equivalent. Administrative Borrower immediately shall notify Agent whenever such
separate insurance is taken out, specifying the insurer thereunder and full
particulars as to the policies evidencing the same, and copies of such policies
promptly shall be provided to Agent.
6.9 Location of Equipment . Keep the Equipment used in the maintenance or
storage of Borrowers' Books and Records only at the locations identified on
Schedule 5.5; provided, however, that Administrative Borrower may amend Schedule
5.5 so long as such amendment occurs by written notice to Agent not less than 30
days prior to the date on which
72
such Equipment is moved to such new location, so long as such new location is
within the continental United States with respect to HH US and within the
applicable home countries of Borrowers organized and operating outside the
United States, and so long as, at the time of such written notification, the
applicable Borrower provides any financing statements, fixture filings or other
instruments or documents necessary to perfect and continue perfected the Agent's
Liens on such assets and also provides to Agent a Collateral Access Agreement
except with respect to HH UK.
6.10 Compliance with Laws . Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.
6.11 Leases . Pay when due all rents and other amounts payable under any
leases to which any Borrower is a party or by which any Borrower's properties
and assets are bound, unless such payments are the subject of a Permitted
Protest.
6.12 Brokerage Commissions . Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrowers' obtaining
financing from the Lender Group under this Agreement. Borrowers agree and
acknowledge that payment of all such brokerage commissions or finders fees shall
be the sole responsibility of Borrowers, and each Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrowers' obtaining financing from the
Lender Group under this Agreement.
6.13 Existence . At all times preserve and keep in full force and effect
each Borrower's valid existence and good standing and any rights and franchises
material to Borrowers' businesses.
6.14 Environmental .
(a) Keep any property either owned or operated by any Borrower free of
any Environmental Liens or post bonds or other financial assurances sufficient
to satisfy the obligations or liability evidenced by such Environmental Liens,
(b) comply, in all material respects, with Environmental Laws and provide to
Agent documentation of such compliance which Agent reasonably requests, (c)
promptly notify Agent of any release of a Hazardous Material of any reportable
quantity from or onto property owned or operated by any Borrower and take any
Remedial Actions required to xxxxx said release or otherwise to come into
compliance with applicable Environmental Law, and (d) promptly provide Agent
with written notice within 10 days of the receipt of any of the following: (i)
notice that an Environmental Lien has been filed against any of the real or
personal property of any Borrower, (ii) commencement of any Environmental Action
or notice that an Environmental Action will be filed against any Borrower, and
(iii) notice of a violation, citation, or other administrative order which
reasonably could be expected to result in a Material Adverse Change.
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6.15 Disclosure Updates . Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgment,
filing, or recordation thereof.
6.16 Pro Forma Statements . Deliver to Agent, in form and content
satisfactory to Agent, a pro forma balance sheet for Borrowers, which pro forma
balance sheet shall be in form and content satisfactory to Agent in its
Permitted Discretion, and which pro forma balance sheet shall reflect that,
after giving effect to the initial Advances hereunder, Borrowers are Solvent.
Contemporaneously therewith, Borrowers shall deliver a writing to Agent, in form
and substance satisfactory to Agent, confirming that Borrowers are paying their
debts as they become due, acknowledging and confirming the enforceability of the
Loan Documents as against Borrowers and that Borrowers are jointly and severally
bound hereunder, without offset, defense or counterclaim, and ratifying Agent's
first priority, perfected security interests in and liens upon the Collateral.
6.17 Consolidation of Subsidiaries. Cause the Consolidation Plan to be
implemented by the commencement, filing, or other required legal actions in
respect thereof of all necessary and appropriate proceedings, applications, or
documents, and to be consummated no later than (a) December 31, 2004 for
Subsidiaries organized under the laws of Australia or any Australian state and
of Xxxxxx Development Ltd. and Maldon Holdings, Ltd. (such date hereinafter the
"Australian Consolidation Date") and (b) June 30, 2004 for all other
Subsidiaries (such date hereinafter the "Consolidation Date"), provided that
(a) Borrowers shall diligently pursue and prosecute any and all
actions required to consummate the Consolidation Plan, including, without
limitation, obtaining any required consents;
(b) Notwithstanding anything in this Agreement to the contrary, from
the Activation Date to the Consolidation Date or the Australian Consolidation
Date, as applicable, no Subsidiary designated in the Consolidation Plan (as in
effect from time to time) as to be dissolved or (unless it is to be the
surviving entity) consolidated (each a "Designated Subsidiary") shall be or be
deemed a Guarantor or shall be required to execute and deliver Subsidiary
Documents or to deliver the items identified in Section 3.2(h), (i), (j), and
(k) to Agent; and
(c) With respect to any Designated Subsidiary that is not dissolved or
consolidated before the Consolidation Date or the Australian Consolidation Date,
as applicable, and that otherwise would be a Material Subsidiary, on or before
the Consolidation Date or the Australian Consolidation Date, or appropriate,
Borrowers shall cause the execution and delivery of Subsidiary Documents and the
delivery of all other documents evidencing proper corporate organization, good
standing, and authorization as required with respect to Guarantors as of the
Activation Date and any other agreements,
74
instruments and documents as Agent may require to record and/or perfect security
interests in such Designated Subsidiary's stock and assets as applicable. No
Subsidiary shall be a "Designated Subsidiary" as of and after the Consolidation
Date or the Australian Consolidation Date, as applicable to such Subsidiary.
(d) Borrowers may amend or modify the Consolidation Plan from time to
time, provided that (1) Borrowers may not make a change affecting the status of
a Borrower or a Material Subsidiary without the consent of Agent (which consent
shall not be unreasonably withheld or delayed), (2) Borrowers shall notify Agent
not less frequently than quarterly of any change affecting the status of any
Subsidiary other than a Borrower or a Material Subsidiary, and (3) no Designated
Subsidiary that is to be liquidated or dissolved under the Consolidation Plan
may conduct ongoing business operations during any period in which it is a
Designated Subsidiary.
6.18 Additional Guarantors. Cause each Excluded Subsidiary that becomes a
Material Subsidiary to become a Guarantor by execution and delivery of
appropriate Subsidiary Documents, together with such documents evidencing proper
corporate organization, good standing, and authorization as are required under
Section 3.2 with respect to Guarantors as of the Activation Date and any other
agreements, instruments and documents as Agent may require to record and/or
perfect security interests in such Subsidiary's assets.
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations,
Borrowers will not and will not permit any of their respective Subsidiaries to
do any of the following:
7.1 Indebtedness . Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20;
(c) Permitted Purchase Money Indebtedness;
(d) refinancings of Indebtedness incurred under this Agreement and the
other Loan Documents by HH Australia; and
(e) refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b) and (c) of this Section 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not, in Agent's judgment,
materially impair the prospects of repayment of the Obligations by Borrowers or
materially impair Borrowers' creditworthiness, (ii) such refinancings, renewals,
or extensions do not result in an increase in the principal amount of, or
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interest rate with respect to, the Indebtedness so refinanced, renewed, or
extended, (iii) such refinancings, renewals, or extensions do not result in a
shortening of the average weighted maturity of the Indebtedness so refinanced,
renewed, or extended, nor are they on terms or conditions, that, taken as a
whole, are materially more burdensome or restrictive to the applicable Borrower,
and (iv) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension Indebtedness must be
include subordination terms and conditions that are at least as favorable to the
Lender Group as those that were applicable to the refinanced, renewed, or
extended Indebtedness.
(f) Indebtedness composing Permitted Investments.
(g) Guaranties of obligations of Subsidiaries in an aggregate amount
not exceeding $10,000,000 outstanding at any one time, it being understood that
the amount of any guaranty of an operating lease or obligation shall be deemed
to be equal to the amount of the liability under such guaranty.
7.2 Liens . Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 Restrictions on Fundamental Changes .
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock except as permitted under this
Agreement.
(b) Liquidate, windup, or dissolve itself (or suffer any liquidation
or dissolution), except, so long as (i) no Default or Event of Default has
occurred and is continuing or would directly result, (ii) Agent has received not
less than thirty (30) days advance written notice (but five (5) days advance
written notice at all times prior to the Activation Date), and (iii) no Material
Adverse Change would result:
(i) a Borrower or Guarantor may (x) merge or consolidate
with a Borrower provided an existing Borrower is the surviving
company, (y) merge or consolidate with a Guarantor, provided any
existing Borrower involved in such merger or consolidation is the
surviving company, or (z) liquidate, windup, or dissolve within a
reasonable period of time after the conveyance of all of its assets to
either another Borrower or a Guarantor, provided that a Borrower may
not convey all or substantially all of its assets to a Guarantor; and
(ii) an Excluded Subsidiary may (x) merge or consolidate
with a Borrower or Guarantor provided such Borrower or Guarantor is
the surviving company, or (y) liquidate, windup, or dissolve within a
reasonable period of time after the conveyance of all of its assets to
either a Borrower, a Guarantor, or another Excluded Subsidiary.
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(c) Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets except as expressly permitted under this
Agreement.
(d) Cause or suffer any Guarantor to enter into any merger or
consolidation other than with a Borrower or another Guarantor except as
otherwise permitted under this Agreement.
(e) Cause or suffer any Excluded Subsidiary to enter into any merger
or consolidation other than with a Borrower, a Guarantor, or another Excluded
Subsidiary.
(f) Cause or suffer any Guarantor to convey, sell, lease, license,
assign, transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its assets other than to a Borrower
or another Guarantor or as otherwise expressly permitted under this Agreement.
(g) Cause or suffer any Excluded Subsidiary to convey, sell, lease,
license, assign, transfer, or otherwise dispose of, in one transaction or a
series of transactions, all or any substantial part of its assets other than to
a Borrower, a Guarantor, or another Excluded Subsidiary or as otherwise
expressly permitted under this Agreement.
7.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of the assets of
any Borrower.
7.5 Change Name. Change any Borrower's or Guarantor's name, FEIN (or
comparable identification number with respect to any Foreign Borrower or Foreign
Guarantor), corporate structure or identity, or add any new fictitious name;
provided, however, that a Borrower or Guarantor may change its name upon at
least 30 days (but at all times prior to the Activation Date 5 days) prior
written notice by Administrative Borrower to Agent of such change and so long
as, at the time of such written notification, such Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected Agent's Liens.
7.6 Guarantee. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrowers or which
are transmitted or turned over to Agent or guarantees of Subsidiary obligations
permitted under Section 7.1(g).
7.7 Nature of Business. Make any change in the principal nature of
Borrowers' business.
7.8 Prepayments and Amendments .
(a) Except in connection with a refinancing permitted by Section
7.1(d), prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness
of any Borrower, other than the Obligations in accordance with this Agreement,
and
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(b) Except in connection with a refinancing permitted by Section
7.1(d), directly or indirectly, amend, modify, alter, increase, or change any of
the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness permitted under Sections
7.1(b) or (c).
7.9 Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.10 Subsidiaries. Organize or create any Subsidiary.
7.11 Distributions. Other than distributions or declaration and payment of
dividends by a Borrower to another Borrower or by a Subsidiary to a Borrower or
a Guarantor, make any distribution or declare or pay any dividends (in cash or
other property, other than common Stock) on, or purchase, acquire, redeem, or
retire any of any Borrower's Stock, of any class, whether now or hereafter
outstanding.
7.12 Accounting Methods. Modify or change its method of accounting (other
than as may be required to conform to GAAP) or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage of
Borrowers' or Guarantors' accounting records without said accounting firm or
service bureau agreeing to provide Agent information regarding the Collateral or
Borrowers' or Guarantors' financial condition.
7.13 Investments. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment, or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Borrowers shall not have Permitted Investments (other than
accounts subject to Control Agreements, payroll accounts, and intercompany
transfers otherwise permitted under this Agreement) in excess of $500,000
outstanding at any one time unless the applicable Borrower and the applicable
securities intermediary or bank have entered into Control Agreements or similar
arrangements governing such Permitted Investments, as Agent shall determine in
its Permitted Discretion, to perfect (and further establish) the Agent's Liens
in such Permitted Investments, and Borrowers shall not make or permit any
Guarantor or Material Subsidiary to make any Investments of any kind in any
Designated Subsidiary that is to be liquidated or dissolved under the
Consolidation Plan except for Investments in de minimis amounts that are
necessary and appropriate to provide for such liquidation or dissolution.
7.14 Transactions with Affiliates or TMP. Directly or indirectly enter
into or permit to exist any transaction with any Affiliate of any Borrower or
TMP or any Affiliate of TMP except for transactions that are in the ordinary
course of Borrowers' business, upon fair and reasonable terms, that are fully
disclosed to Agent, and that are no less favorable to Borrowers than would be
obtained in an arm's length transaction with a non-Affiliate. It is expressly
acknowledged and agreed that the Transaction Services Agreement between TMP and
Parent dated March 31, 2003 is not violative of this Section 7.14.
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7.15 Suspension. Suspend or go out of a substantial portion of its
business except as otherwise permitted under this Agreement.
7.16 [INTENTIONALLY OMITTED].
7.17 Use of Proceeds. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, (i) to support the Spin-Off and (ii) to pay
transactional fees, costs, and expenses incurred in connection with this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, for its lawful and permitted purposes.
7.18 Change in Location of Chief Executive Office; Equipment with Bailees.
In the case of any Borrower or Guarantor, relocate its chief executive office to
a new location without Administrative Borrower providing 30 days prior written
notification thereof to Agent and so long as, at the time of such written
notification, the applicable Borrower provides any financing statements or
fixture filings necessary to perfect and continue perfected the Agent's Liens
and (in the case of any Borrower other than HH UK or any Guarantor) also
provides to Agent a Collateral Access Agreement with respect to such new
location. The Equipment shall not at any time now or hereafter be stored with a
bailee, warehouseman, or similar party without Agent's prior written consent.
7.19 Securities Accounts. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Borrowers agree to not transfer assets out of any Securities
Account; provided, however, that, so long as no Event of Default has occurred
and is continuing or would result therefrom, Borrowers may use such assets (and
the proceeds thereof) to the extent not prohibited by this Agreement.
7.20 Financial Covenants.
(a) Fail to maintain:
(i) Minimum EBITDA. EBITDA, measured on a month-end or
quarter-end basis as set forth below, of not less than the required
amount set forth in the following table (in thousands) for the
applicable month set forth opposite thereto;
Applicable Amount Applicable Amount Applicable Amount Applicable
2003 2004 2005 Month
---- ---- ---- -----
NA ($25,895) $14,000 January
NA ($27,363) $15,000 February
NA ($20,600) $17,100 March
($7,425) ($15,359) $18,000 April
($11,547) ($10,534) $19,000 May
($11,000) ($5,000) $20,400 June
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($15,869) ($1,109) $21,000 July
($20,313) $1,734 $22,000 August
($16,750) $4,800 $24,950 September
($17,329) $7,508 $26,000 October
($17,035) $10,250 $27,000 November
($18,750) $13,000 $30,000 December
EBITDA shall be determined: (a) from the Closing Date until the date of
determination for the first twelve calendar months occurring after the Closing
Date, on a trailing basis for the number of full calendar months elapsed since
the Closing Date, and (b) thereafter on a trailing twelve-month basis. Prior to
the first month-end occurring on or after the Activation Date, EBITDA shall be
measured (x) on a month-end basis at all times that the Account Report Base is
less than $20,000,000 and (y) on a quarter-end basis at all other times. From
and after the first month-end occurring on or after the Activation Date, EBITDA
shall be measured (x) on a month-end basis at all times that the Account Report
Base is less than $30,000,000 and (y) on a quarter-end basis at all other times.
Agent shall establish required minimum amounts for periods ending after December
31, 2005 on the basis of 75% of projections of EBITDA for such periods delivered
by Borrower and accepted by Agent in its Permitted Discretion, but in any event
in amounts not less than $30,000,000 for such periods.
(b) Make:
(i) Capital Expenditures. Capital expenditures in any fiscal
year in excess of (x) $8,800,000 for Borrowers' fiscal 2003, (y)
$8,800,000 for Borrowers' fiscal 2004, and (z) $8,800,000 for
Borrowers' fiscal 2005. So long as, as of the end of any fiscal year
of Borrowers, no Event of Default then exists or has occurred and is
continuing, the amount of capital expenditures permitted in such
fiscal year which remains unused may be added to the permitted amount
of capital expenditures in the immediately following fiscal year.
7.21 Minimum Availability . Immediately prior to and at all times after
giving effect to the making of any Advance or the issuance of any L/C or L/C
Undertaking under this Agreement, fail to maintain an unused Borrowing Base,
after giving effect to any Requested Revolver Usage, of not less than
$15,000,000 ("Minimum Availability"); provided, that if Borrowers fail to
achieve $5,000,000 of Availability from Eligible Accounts generated solely by HH
Canada and HH Australia on or before the Activation Date, in addition to Agent's
other rights and remedies hereunder, Agent may increase the Minimum Availability
set forth in this Section in its Permitted Discretion.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
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8.1 If Borrowers or any Guarantors fail to pay when due and payable or when
declared due and payable, all or any portion of the Obligations (whether of
principal, interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due the
Lender Group, reimbursement of Lender Group Expenses, or other amounts
constituting Obligations); it being acknowledged that, prior to the earliest to
occur of a Default, an Event of Default or the Activation Date, notwithstanding
anything to the contrary set forth herein on in any of the other Loan Documents,
it shall not be an Event of Default hereunder if all fees and charges payable to
the Lender Group, the reimbursement of the Lender Group Expenses and other
amounts constituting Obligations are paid by Borrowers to Agent in good and
available funds five (5) Business Day after the date on which Agent provides
Borrowers with notice from time to time of the amounts of such Obligations due;
8.2 If Borrowers or any Guarantors fail to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in this Agreement
or in any of the other Loan Documents;
8.3 If any material portion of any Borrower's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person, provided the foregoing
shall not apply to any attachment before judgment (conservatoir beslag) on any
assets of any Subsidiary organized under the laws of the Netherlands provided
such attachment before judgment is lifted within 21 days;
8.4 If an Insolvency Proceeding is commenced by any Borrower or any of its
Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against any Borrower, or any
of its Subsidiaries, and any of the following events occur: (a) the applicable
Borrower or the Subsidiary consents to the institution of the Insolvency
Proceeding against it, (b) the petition commencing the Insolvency Proceeding is
not timely controverted, (c) the petition commencing the Insolvency Proceeding
is not dismissed within 45 calendar days of the date of the filing thereof;
provided, however, that, during the pendency of such period, Agent (including
any successor agent) and each other member of the Lender Group shall be relieved
of their obligation to extend credit hereunder, (d) an interim trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
any Borrower or any of its Subsidiaries, or (e) an order for relief shall have
been entered therein;
8.6 If any Borrower or any of its Subsidiaries is enjoined, restrained, or
in any way prevented by court order from continuing to conduct all or any
material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any Borrower's or any of its Subsidiaries' assets by the United
States, or any department, agency, or instrumentality thereof, or by any state,
county, municipal, or governmental agency, or by and foreign government or
governmental agency, or if any taxes or debts owing at any time hereafter
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to any one or more of such entities becomes a Lien, whether xxxxxx or otherwise,
upon any Borrower's or any of its Subsidiaries' assets and the same is not paid
on the payment date thereof;
8.8 If a judgment or other claim in excess of $250,000 becomes a Lien or
encumbrance upon any material portion of any Borrower's or any of its
Subsidiaries' properties or assets;
8.9 If there is a default in any material agreement to which any Borrower
or any of its Subsidiaries is a party (including, without limitation, the TMP
Documents) and such default (a) occurs at the final maturity of the obligations
thereunder, or (b) results in a right by the other party thereto, irrespective
of whether exercised, to accelerate the maturity of the applicable Borrower's or
its Subsidiaries' obligations thereunder, to terminate such agreement, or to
refuse to renew such agreement pursuant to an automatic renewal right therein;
8.10 If any Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11 If any misstatement or misrepresentation exists now or hereafter in
any warranty, representation, statement, or Record made to the Lender Group by
any Borrower, its Subsidiaries, or any officer, employee, agent, or director of
any Borrower or any of its Subsidiaries;
8.12 If the obligation of any Guarantor under its Guaranty is limited or
terminated by operation of law or by such Guarantor thereunder;
8.13 If this Agreement or any other Loan Document that purports to create a
Lien, shall, for any reason, fail or cease to create a valid and perfected and,
except to the extent permitted by the terms hereof or thereof, first priority
Lien on or security interest in the Collateral covered hereby or thereby; or
8.14 Any provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by any Borrower, or a proceeding shall be commenced by any Borrower,
or by any Governmental Authority having jurisdiction over any Borrower, seeking
to establish the invalidity or unenforceability thereof, or any Borrower shall
deny that any Borrower has any liability or obligation purported to be created
under any Loan Document.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies . Upon the occurrence, and during the continuation,
of an Event of Default, the Required Lenders (at their election but without
notice of their election and without demand) may authorize and instruct Agent to
do any one or more of the following on behalf of the Lender Group (and Agent,
acting upon the instructions of the Required Lenders, shall do the same on
behalf of the Lender Group), all of which are authorized by Borrowers:
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(a) Declare all Obligations, whether evidenced by this Agreement, by
any of the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit of
Borrowers under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents as to
any future liability or obligation of the Lender Group, but without affecting
any of the Agent's Liens in the Collateral and without affecting the
Obligations;
(d) Settle or adjust disputes and claims directly with Account Debtors
for amounts and upon terms which Agent considers advisable, and in such cases,
Agent will credit the Loan Account with only the net amounts received by Agent
in payment of such disputed Accounts after deducting all Lender Group Expenses
incurred or expended in connection therewith;
(e) Exercise any rights given to Agent under any Australian Security,
including enforcing any such Australian Security;
(f) Without notice to or demand upon any Borrower or Guarantor, make
such payments and do such acts as Agent considers necessary or reasonable to
protect its security interests in the Collateral. Each Borrower agrees to
assemble the Personal Property Collateral if Agent so requires, and to make the
Personal Property Collateral available to Agent at a place that Agent may
designate which is reasonably convenient to both parties. Each Borrower
authorizes Agent to enter the premises where the Personal Property Collateral is
located, to take and maintain possession of the Personal Property Collateral, or
any part of it, and to pay, purchase, contest, or compromise any Lien that in
Agent's determination appears to conflict with the Agent's Liens and to pay all
expenses incurred in connection therewith and to charge Borrowers' Loan Account
therefor. With respect to any of Borrowers' owned or leased premises, each
Borrower hereby grants Agent a license to enter into possession of such premises
and to occupy the same, without charge, in order to exercise any of the Lender
Group's rights or remedies provided herein, at law, in equity, or otherwise.
(g) Without notice to any Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of any Borrower held by the
Lender Group (including any amounts received in the Cash Management Accounts),
or (ii) Indebtedness at any time owing to or for the credit or the account of
any Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and deposits of any
Borrower held by the Lender Group, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Personal Property Collateral.
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Each Borrower hereby grants to Agent a license or other right to use, without
charge, such Borrower's labels, patents, copyrights, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any property of a similar
nature, as it pertains to the Personal Property Collateral, in completing
production of, advertising for sale, and selling any Personal Property
Collateral and such Borrower's rights under all licenses and all franchise
agreements shall inure to the Lender Group's benefit;
(j) Sell (or, in the case of Personal Property Collateral subject to
an Australian Security, appoint a receiver or attorney in accordance with such
Australian Security to sell) the Personal Property Collateral at either a public
or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including Borrowers'
premises) as Agent (or, in the case of Personal Property Collateral subject to
an Australian Security, the receiver or attorney appointed by the Agent)
determines is commercially reasonable. It is not necessary that the Personal
Property Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the Personal
Property Collateral as follows:
(i) Agent shall give Administrative Borrower (for the
benefit of the applicable Borrower) a notice in writing of the time
and place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the
Personal Property Collateral, the time on or after which the private
sale or other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Administrative Borrower as provided in Section 12,
at least 10 days before the earliest time of disposition set forth in
the notice; no notice needs to be given prior to the disposition of
any portion of the Personal Property Collateral that is perishable or
threatens to decline speedily in value or that is of a type
customarily sold on a recognized market,
provided that, in the case of a disposition of Personal Property Collateral
pursuant to an Australian Security, the disposition of that Personal Property
Collateral and the giving of notices in relation to such disposition will be
governed by the terms of the applicable Australian Security;
(l) Agent, on behalf of the Lender Group may credit bid and purchase
at any public sale;
(m) Agent may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Collateral or to operate same and, to
the maximum extent permitted by law, may seek the appointment of such a receiver
without the requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and remedies
available to it at law or in equity pursuant to any other Loan Documents; and
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(o) Any deficiency that exists after disposition of the Personal
Property Collateral as provided above will be paid immediately by Borrowers. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Agent to Administrative Borrower (for the benefit of the applicable
Borrower).
Notwithstanding any other provision of this Agreement, nothing in this Section
9.1 shall permit Agent, when exercising its rights to the property of HH
Australia or an Australian Guarantor under this Agreement or an Australian
Security, to act in a manner contrary to the laws of Australia.
9.2 Remedies Cumulative . The rights and remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
Borrowers' Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 6.8 hereof, obtain and maintain insurance policies of the
type described in Section 6.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which each such Borrower may in any way be liable.
11.2 The Lender Group's Liability for Collateral . Each Borrower hereby
agrees that: (a) so long as the Lender Group complies with its obligations, if
any, under the Code, Agent shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the
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Collateral, (ii) any loss or damage thereto occurring or arising in any manner
or fashion from any cause, (iii) any diminution in the value thereof, or (iv)
any act or default of any carrier, warehouseman, bailee, forwarding agency, or
other Person, and (b) all risk of loss, damage, or destruction of the Collateral
shall be borne by Borrowers.
11.3 Indemnification . Each Borrower shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons with respect to each
Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto (all the foregoing, collectively,
the "Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrowers were required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as the Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
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If to Administrative
Borrower: XXXXXX HIGHLAND GROUP, INC.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxx
Executive Vice President and
Chief Financial Officer
Fax No. 000-000-0000
with copies to: XXXXX & XXXXXXX
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attn: Xxxxxxxx Xxxxxx III, Esq.
Fax No. 000.000.0000
If to Agent: XXXXX FARGO FOOTHILL, INC.
Xxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Business Finance Division Manager
Fax No. 000.000.0000
with copies to: OTTERBOURG, STEINDLER, HOUSTON
& XXXXX, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax No. 000.000.0000
Agent and Borrowers may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that notices sent by
the Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED
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UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND THE LENDER GROUP
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND THE LENDER GROUP REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations .
(a) Any Lender may, with the written consent of Agent (provided that
no written consent of Agent shall be required in connection with any assignment
and delegation by a Lender to an Eligible Transferee), assign and delegate to
one or more assignees (each an "Assignee") all, or any ratable part of all, of
the Obligations, the Commitments and the other rights and obligations of such
Lender hereunder and under the other Loan Documents, in a minimum amount of
$5,000,000; provided, however, that Borrowers and Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to Administrative Borrower and Agent by such Lender
and the Assignee, (ii) such Lender and its Assignee have delivered to
Administrative Borrower and Agent an Assignment and Acceptance in form and
substance satisfactory to Agent, and (iii) the assignor Lender or Assignee has
paid to Agent for Agent's separate account a processing fee in the amount of
$5,000. Anything
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contained herein to the contrary notwithstanding, the consent of Agent shall not
be required (and payment of any fees shall not be required) if such assignment
is in connection with any merger, consolidation, sale, transfer, or other
disposition of all or any substantial portion of the business or loan portfolio
of such Lender.
(b) From and after the date that Agent notifies the assignor Lender
(with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
(except with respect to Section 11.3 hereof) and be released from its
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall affect
a novation between Borrowers and the Assignee.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance and receipt and acknowledgment by Agent of
such fully executed Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
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(e) Any Lender may at any time, with the written consent of Agent,
sell to one or more commercial banks, financial institutions, or other Persons
not Affiliates of such Lender (a "Participant") participating interests in its
Obligations, the Commitment, and the other rights and interests of that Lender
(the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or a material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums; and (v) all amounts
payable by Borrowers hereunder shall be determined as if such Lender had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. The rights of any Participant only shall be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrowers or
Borrowers' business.
(g) Any other provision in this Agreement notwithstanding, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation
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A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR ss.203.14, and
such Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
(h) Notwithstanding anything to the contrary contained herein,
Borrowers hereby acknowledges that as of the date of this Agreement, Agent is
attempting to syndicate up to $20,000,000 of the Maximum Revolver Amount from
Persons, other than Foothill, to provide financial accommodations as a "Lender"
hereunder and, in connection therewith, certain modifications or amendments to
this Agreement and the other Loan Documents may be required if Agent determines,
in its Permitted Discretion, that the structure, terms, pricing or amount of the
financial accommodations provided for hereunder are necessary for Agent to
successfully syndicate the transactions hereunder ("Syndication Modifications").
Borrowers hereby agree that each Borrower and its Subsidiaries shall enter into
an amendment to this Agreement with Agent and Lenders reflecting such
Syndication Modifications, which amendment shall be in form and substance
satisfactory to Agent and Lenders in all respects. Borrowers acknowledges that
Agent and Lenders are entering into this Agreement on the date hereof in
reliance upon the Borrower's Agreements set forth in this Section 14.1(h).
14.2 Successors . This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers . No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,
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(c) reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required to take
any action hereunder,
(e) amend this Section or any provision of the Agreement providing for
consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section 16.12,
(g) change the definition of "Required Lenders",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower or Guarantor from any obligation for the
payment of money, or
(j) change the definition of Borrowing Base or the definitions of
Eligible Accounts, Maximum US Amount, Maximum UK Amount, Maximum Canada Amount,
Maximum Australia Amount or Maximum Revolver Amount or change Section 2.1(b), or
(k) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.
15.2 Replacement of Holdout Lender . If any action to be taken by the
Lender Group or Agent hereunder requires the unanimous consent, authorization,
or agreement of all Lenders, and a Lender ("Holdout Lender") fails to give its
consent, authorization, or agreement, then Agent, upon at least 5 Business Days
prior irrevocable notice to the Holdout Lender, may permanently replace the
Holdout Lender with one or more substitute Lenders (each, a "Replacement
Lender"), and the Holdout Lender shall have not right to refuse to be replaced
hereunder. Such notice to replace the Holdout Lender shall specify an effective
date for such replacement, which date shall not be later than 15 Business Days
after the date such notice is given.
Prior to the effective date of such replacement, the Holdout Lender and
each Replacement Lender shall execute and deliver an Assignment and Acceptance
Agreement,
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subject only to the Holdout Lender being repaid its share of the outstanding
Obligations (including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind whatsoever.
If the Holdout Lender shall refuse or fail to execute and deliver any such
Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 No Waivers; Cumulative Remedies . No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or, any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 Appointment and Authorization of Agent . Each Lender hereby designates
and appoints Foothill as its representative under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 16. The
provisions of this Section 16 are solely for the benefit of Agent, and the
Lenders, and Borrowers shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights
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or powers to Agent, Lenders agree that Agent shall have the right to exercise
the following powers as long as this Agreement remains in effect: (a) maintain,
in accordance with its customary business practices, ledgers and records
reflecting the status of the Obligations, the Collateral, the Collections, and
related matters, (b) execute or file any and all financing or similar statements
or notices, amendments, renewals, supplements, documents, instruments, proofs of
claim, notices and other written agreements with respect to the Loan Documents,
(c) make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections as
provided in the Loan Documents, (e) open and maintain such bank accounts and
cash management accounts as Agent deems necessary and appropriate in accordance
with the Loan Documents for the foregoing purposes with respect to the
Collateral and the Collections, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Borrowers, the
Obligations, the Collateral, the Collections, or otherwise related to any of
same as provided in the Loan Documents, and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to the Loan Documents.
16.2 Delegation of Duties . Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 Liability of Agent . None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.
16.4 Reliance by Agent . Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it
94
deems appropriate and until such instructions are received, Agent shall act, or
refrain from acting, as it deems advisable. If Agent so requests, it shall first
be indemnified to its reasonable satisfaction by Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.
16.5 Notice of Default or Event of Default . Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a "notice of default." Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 16.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
16.6 Credit Decision . Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrowers and any other
Person
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party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, reasonable attorneys fees
and expenses, costs of collection by outside collection agencies and auctioneer
fees and costs of security guards or insurance premiums paid to maintain the
Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders
for such expenses pursuant to the Loan Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from Collections
received by Agent to reimburse Agent for such out-of-pocket costs and expenses
prior to the distribution of any amounts to Lenders. In the event Agent is not
reimbursed for such costs and expenses from Collections received by Agent, each
Lender hereby agrees that it is and shall be obligated to pay to or reimburse
Agent for the amount of such Lender's Pro Rata Share thereof. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of Borrowers and without limiting the obligation of Borrowers to do so),
according to their Pro Rata Shares, from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct nor
shall any Lender be liable for the obligations of any Defaulting Lender in
failing to make an Advance or other extension of credit hereunder. Without
limitation of the foregoing, each Lender shall reimburse Agent upon demand for
such Lender's ratable share of any costs or out-of-pocket expenses (including
attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 Agent in Individual Capacity . Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though Foothill were not Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding
Borrowers or their Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrowers or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such
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information to them. The terms "Lender" and "Lenders" include Foothill in its
individual capacity.
16.9 Successor Agent . Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 Lender in Individual Capacity . Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
16.11 Withholding Taxes .
(a) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and
Administrative Borrower:
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(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (a) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a "bank"
as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
shareholder (within the meaning of Section 881(c)(3)(B) of the IRC),
or (III) a controlled foreign corporation described in Section
881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form W-8BEN,
before the first payment of any interest under this Agreement and at
any other time reasonably requested by Agent or Administrative
Borrower;
(ii) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed IRS Form W-8BEN before the first payment of any interest
under this Agreement and at any other time reasonably requested by
Agent or Administrative Borrower;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the first payment of any interest is due under this Agreement
and at any other time reasonably requested by Agent or Administrative
Borrower;
(iv) such other form or forms as may be required under the
IRC or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form W-8BEN and such
Lender sells, assigns, grants a participation in, or otherwise transfers all or
part of the Obligations of Borrowers to such Lender, such Lender agrees to
notify Agent of the percentage amount in which it is no longer the beneficial
owner of Obligations of Borrowers to such Lender. To the extent of such
percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no longer
valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or
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indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section, together with all costs and expenses (including attorneys
fees and expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.
(e) All payments made by Borrowers hereunder or under any note or
other Loan Document will be made without setoff, counterclaim, or other defense,
except as required by applicable law other than for Taxes (as defined below).
All such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender or Agent or applicable
lending office, or any branch or affiliate thereof, or (ii) to the extent that
such tax results from a change in the circumstances of the Lender, including a
change in the residence, place of organization, or principal place of business
of the Lender, or a change in the branch or lending office of the Lender
participating in the transactions set forth herein) and all interest, penalties
or similar liabilities with respect thereto (all such non-excluded taxes,
levies, imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, each Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any note, including any amount paid pursuant to this Section 16.11(e)
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein; provided, however, that Borrowers shall not
be required to increase any such amounts payable to Agent or any Lender (i) that
is not organized under the laws of the United States, if such Person fails to
comply with the other requirements of this Section 16.11, or (ii) if the
increase in such amount payable results from Agent's or such Lender's own
willful misconduct or gross negligence. Borrowers will furnish to Agent as
promptly as possible after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by
Borrowers. In the event that Agent or any Lender receives a refund,
reimbursement, or other form of relief from a taxing authority in respect of any
Tax paid by Borrowers hereunder, Borrowers shall receive a credit,
reimbursement, or comparable relief in the amount of such relief received by
Agent or such Lender.
16.12 Collateral Matters .
(a) The Lenders hereby irrevocably authorize Agent, at its option and
in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrowers
of all Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if Administrative
Borrower certifies to Agent that the sale or disposition is permitted under
Section 7.4 of this Agreement or the other Loan Documents (and Agent may rely
conclusively on any such certificate, without further inquiry), (iii)
constituting property in which no Borrower owned any interest at the time the
security interest was granted or at any time
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thereafter, or (iv) constituting property leased to a Borrower under a lease
that has expired or is terminated in a transaction permitted under this
Agreement. Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written authorization of
(y) if the release is of all or substantially all of the Collateral, all of the
Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or
Administrative Borrower at any time, the Lenders will confirm in writing Agent's
authority to release any such Liens on particular types or items of Collateral
pursuant to this Section 16.12; provided, however, that (1) Agent shall not be
required to execute any document necessary to evidence such release on terms
that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrowers in respect of)
all interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by Borrowers or is cared for,
protected, or insured or has been encumbered, or that the Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.
16.13 Restrictions on Actions by Lenders; Sharing of Payments .
(a) Each of the Lenders agrees that it shall not, without the express
consent of Agent, and that it shall, to the extent it is lawfully entitled to do
so, upon the request of Agent, set off against the Obligations, any amounts
owing by such Lender to Borrowers or any deposit accounts of Borrowers now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by Agent, take or cause to
be taken any action, including, the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral the purpose of which is, or could be, to give
such Lender any preference or priority against the other Lenders with respect to
the Collateral.
(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations arising under, or relating to, this Agreement or
the other Loan Documents, except for any such proceeds or payments received by
such Lender from Agent pursuant to the terms of this Agreement, or (ii)payments
from Agent in excess of such Lender's ratable portion of all such distributions
by Agent, such Lender promptly shall (1) turn the same over to Agent, in kind,
and
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with such endorsements as may be required to negotiate the same to Agent, or in
immediately available funds, as applicable, for the account of all of the
Lenders and for application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to the other
Lenders so that such excess payment received shall be applied ratably as among
the Lenders in accordance with their Pro Rata Shares; provided, however, that if
all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.14 Agency for Perfection . Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the UCC can be perfected only by possession. Should any Lender obtain possession
of any such Collateral, such Lender shall notify Agent thereof, and, promptly
upon Agent's request therefor shall deliver such Collateral to Agent or in
accordance with Agent's instructions.
16.15 Payments by Agent to the Lenders . All payments to be made by Agent
to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 Concerning the Collateral and Related Loan Documents . Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information. By becoming a party to this Agreement,
each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by Agent, and
Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,
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(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrowers
and will rely significantly upon the Books, as well as on representations of
Borrowers' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrowers that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee or Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; provided,
however, that, unless prohibited by applicable law, statute, regulation, or
court order, such Lender shall notify Administrative Borrower of any request by
any court, governmental or administrative agency, or pursuant to any subpoena or
other legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or conclusion the indemnifying Lender may reach or draw from any Report
in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrowers, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrowers, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative Borrower a statement regarding the Loan Account, Agent shall
send a copy of such statement to each Lender.
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16.18 Several Obligations; No Liability. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to any Borrower or any other Person for any failure
by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
16.19 Legal Representation of Agent. In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, Otterbourg,
Steindler, Houston & Xxxxx, P.C. ("OSH&R") only has represented and only shall
represent Foothill in its capacity as Agent and as a Lender. Each other Lender
hereby acknowledges that OSH&R does not represent it in connection with any such
matters.
17. ACKNOWLEDGMENT AND RESTATEMENT
17.1 Continuing Obligations. HH US and HH UK hereby acknowledge, confirm
and agree that they have been obligated under the terms and conditions of the
Existing Loan Agreement and continue to be obligated under the terms and
conditions of this Agreement. HH Australia and HH Canada hereby acknowledge,
confirm and agree that they shall be obligated as Borrowers under the terms and
conditions of this Agreement in all respects. Borrowers hereby acknowledge,
confirm and agree that each of them are directly, jointly, and severally
obligated to Agent and the Lender Group for all Obligations without offset,
defense or counterclaim of any kind, nature or description whatsoever.
17.2 Acknowledgements.
(a) Each Borrower hereby acknowledges, confirms and agrees that Agent,
on behalf of the Lender Group, has and shall continue to have a security
interest in and lien upon the Collateral heretofore granted to Agent pursuant to
the Existing Financing Agreements to secure the Obligations, as well as any
Collateral granted under this Agreement or under any of the other Loan Documents
or otherwise granted to or held by Agent.
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(b) The liens and security interests of Agent in the Collateral shall
be deemed to be continuously granted and perfected from the earliest date of the
granting and perfection of such liens and security interests, whether under the
Existing Agreements, this Agreement or any of the other Loan Documents.
17.3 Existing Agreement. Each individual Borrower comprising HH US and HH
UK hereby acknowledges, confirms and agrees that: each of the Existing Financing
Agreements executed by such Borrower has been duly executed and is in full force
and effect as of the date hereof and the agreements and obligations of such
Borrower contained in the Existing Financing Agreements constitute the legal,
valid and binding obligations of such Borrower enforceable against it in
accordance with their respective terms and such Borrower has no valid defense to
the enforcement of such obligations and Agent is entitled to all of the rights
and remedies provided for in the Existing Financing Agreements.
17.4 Restatement. Except as otherwise stated in Section 17.2 hereof and
this Section 17.4, as of the date hereof, the terms, conditions, agreements,
covenants, representations and warranties set forth in the Existing Financing
Agreements are hereby amended and restated in their entirety, and as so amended
and restated, replaced and superseded, by the terms, conditions, agreements,
covenants, representations and warranties set forth in this Agreement and the
other Loan Documents, except that nothing herein or in the other Loan Documents
shall impair or adversely affect the continuation of the joint and several
liability of Borrowers for the Obligations heretofore granted, pledged and/or
assigned to Agent. The amendment and restatement contained herein shall not, in
any manner, be construed to constitute payment of, or impair, limit, cancel or
extinguish, or constitute a novation in respect of, the indebtedness and other
obligations and liabilities of Borrowers evidenced by or arising under the
Existing Financing Agreements, and the liens and security interests securing
such indebtedness and other obligations and liabilities, which shall not in any
manner be impaired, limited, terminated, waived or released.
18. GENERAL PROVISIONS.
18.1 Effectiveness . This Agreement shall be binding and deemed effective
when executed by Borrowers, Agent, and each Lender whose signature is provided
for on the signature pages hereof.
18.2 Section Headings . Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
18.3 Interpretation . Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
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18.4 Severability of Provisions . Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
18.5 Amendments in Writing . This Agreement only can be amended by a
writing in accordance with Section 15.1.
18.6 Counterparts; Telefacsimile Execution . This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
18.7 Revival and Reinstatement of Obligations . If the incurrence or
payment of the Obligations by any Borrower or Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers or Guarantors automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
18.8 Integration . This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
18.9 Parent as Agent for Borrowers . Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry
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out the purposes of this Agreement. It is understood that the handling of the
Loan Account and Collateral of Borrowers in a combined fashion, as more fully
set forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group. To
induce the Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 17.9 with respect to any liability that has been finally determined
by a court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Agent-Related Person or Lender-Related
Person, as the case may be.
106
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
XXXXXX HIGHLAND GROUP, INC.,
a Delaware corporation, as Parent and a Borrower
By: _____________________________
Title: _____________________________
XXXXXX HIGHLAND GROUP GLOBAL
RESOURCES AMERICA, INC.,
a Florida corporation, as a Borrower
By: _____________________________
Title: _____________________________
XXXXXX HIGHLAND GROUP GLOBAL
RESOURCES HOLDINGS, INC.,
a Delaware corporation, as a Borrower
By: _____________________________
Title: _____________________________
XXXXXX HIGHLAND GROUP GLOBAL
RESOURCES MANAGEMENT, INC.,
a Pennsylvania corporation, as a Borrower
By: _____________________________
Title: _____________________________
XXXXXX GLOBAL RESOURCES LIMITED,
a company incorporated under the laws of England
and Wales, as a Borrower
By: _____________________________
Title: _____________________________
107
HIGHLAND PARTNERS LIMITED,
a company incorporated under the laws of England
and Wales, as a Borrower
By: _____________________________
Title: _____________________________
XXXXXX GLOBAL RESOURCES (AUST)
PTY LTD., a corporation organized
under the laws of New South Wales, as a Borrower
By: _____________________________
Title: _____________________________
XXXXXX TRADE & INDUSTRIAL SERVICES
PTY LTD., a corporation organized under the laws
of Victoria, as a Borrower
By: _____________________________
Title: _____________________________
HUDSON TRADE & INDUSTRIAL
SOLUTIONS PTY LTD., a corporation organized
under the laws of Victoria, as a Borrower
By: _____________________________
Title: _____________________________
XXXXXX GLOBAL RESOURCES
(NEWCASTLE) PTY LTD., a corporation organized
under the laws of Victoria, as a Borrower
By: _____________________________
Title: _____________________________
HIGHLAND PARTNERS (AUST) PTY LTD., a
corporation organized under the laws of New South
Wales, as a Borrower
By: _____________________________
Title: _____________________________
000
XXXXXX XXXXXXXX GROUP SEARCH,
INC., a corporation organized under
the laws of Ontario, as a Borrower
By: _____________________________
Title: _____________________________
XXXXX XXXXXX AND ASSOCIATES INC., a
corporation organized under the laws of Ontario,
as a Borrower
By: _____________________________
Title: _____________________________
3057313 NOVA SCOTIA COMPANY, a
unlimited liability corporation organized under
the laws of Nova Scotia, as a Borrower
By: _____________________________
Title: _____________________________
XXXXX FARGO FOOTHILL, INC.,
a California corporation, as Agent
and as a Lender
By: _____________________________
Title: _____________________________
109
TABLE OF CONTENTS
DEFINITIONS AND CONSTRUCTION 1
Definitions 1
Accounting Terms 26
Code 26
Construction 26
Schedules and Exhibits 27
LOAN AND TERMS OF PAYMENT 27
Revolver Advances 27
Country Limits. 28
Payments 34
Cash Management 38
Crediting Payments; Float Charge 39
Designated Account 40
Maintenance of Loan Account; Statements of Obligations 40
Fees 40
Letters of Credit 41
LIBOR Option 44
Capital Requirements 46
Joint and Several Liability of Borrowers 47
Additional Borrowers 49
Foreign Currencies 50
Foreign Accounts 50
CONDITIONS; TERM OF AGREEMENT 51
Conditions Precedent to the Initial Extension of Credit 53
Conditions Precedent to all Extensions of Credit 57
Term 57
Effect of Termination 58
Early Termination by Borrowers 58
CREATION OF SECURITY INTEREST 59
Grant of Security Interest 59
Negotiable Collateral 59
Collection of Accounts, General Intangibles, and Negotiable Collateral 59
Delivery of Additional Documentation Required 59
Power of Attorney 60
Right to Inspect 60
Control Agreements 60
REPRESENTATIONS AND WARRANTIES 61
No Encumbrances 61
Eligible Accounts 61
Locations; Leases. 62
Equipment 62
Location of Inventory and Equipment 62
Inventory Records 62
Location of Chief Executive Office; FEIN 62
Due Organization and Qualification; Subsidiaries 62
Due Authorization; No Conflict 63
Litigation 64
No Material Adverse Change 64
Fraudulent Transfer 64
Environmental Condition 65
Brokerage Fees 66
i
Intellectual Property 66
Leases 66
DDAs 66
Complete Disclosure 66
Indebtedness 66
AFFIRMATIVE COVENANTS 67
Accounting System 67
Collateral Reporting 67
Financial Statements, Reports, Certificates 69
Guarantor Reports 71
Allowance. 71
Maintenance of Properties 71
Taxes 71
Insurance 72
Location of Equipment 72
Compliance with Laws 73
Leases 73
Brokerage Commissions 73
Existence 73
Environmental 73
Disclosure Updates 74
Pro Forma Statements 74
Guarantor Reports 75
NEGATIVE COVENANTS 75
Indebtedness 75
Liens 76
Restrictions on Fundamental Changes 76
Disposal of Assets 77
Change Name 77
Guarantee 77
Nature of Business 77
Prepayments and Amendments 77
Change of Control 78
Distributions 78
Accounting Methods 78
Investments 78
Transactions with Affiliates or TMP 78
Suspension 79
[INTENTIONALLY OMITTED] 79
Use of Proceeds 79
Change in Location of Chief Executive Office; Equipment with Bailees 79
Securities Accounts 79
Financial Covenants 79
Minimum Availability 80
EVENTS OF DEFAULT 80
THE LENDER GROUP'S RIGHTS AND REMEDIES 82
Rights and Remedies 82
Remedies Cumulative 85
TAXES AND EXPENSES 85
WAIVERS; INDEMNIFICATION 85
Demand; Protest; etc. 85
The Lender Group's Liability for Collateral 85
Indemnification 86
NOTICES 86
CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER 87
ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS 88
ii
Assignments and Participations 88
Successors 91
AMENDMENTS; WAIVERS 91
Amendments and Waivers 91
Replacement of Holdout Lender 92
No Waivers; Cumulative Remedies 93
AGENT; THE LENDER GROUP 93
Appointment and Authorization of Agent 93
Delegation of Duties 94
Liability of Agent 94
Reliance by Agent 94
Notice of Default or Event of Default 95
Credit Decision 95
Costs and Expenses; Indemnification 96
Agent in Individual Capacity 96
Successor Agent 97
Lender in Individual Capacity 97
Withholding Taxes 97
Collateral Matters 99
Restrictions on Actions by Lenders; Sharing of Payments 100
Agency for Perfection 101
Payments by Agent to the Lenders 101
Concerning the Collateral and Related Loan Documents 101
Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information 101
Several Obligations; No Liability 103
Legal Representation of Agent 103
ACKNOWLEDGEMENT AND RESTATEMENT 103
GENERAL PROVISIONS 104
Effectiveness 104
Section Headings 104
Interpretation 104
Severability of Provisions 105
Amendments in Writing 105
Counterparts; Telefacsimile Execution 105
Revival and Reinstatement of Obligations 105
Integration 105
Parent as Agent for Borrowers 105
iii
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule C-1 Commitments
Schedule G-1 Guarantors
Schedule P-1 Permitted Liens
Schedule 2.7(a) Cash Management Banks
Schedule 5.3 Office Locations; Leases
Schedule 5.5 Locations of Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.13 ERISA Plans
Schedule 5.14 Environmental Matters
Schedule 5.15 Brokerage Fees
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
iv
