EXHIBIT 10.50
CREDIT AGREEMENT
BY AND BETWEEN
GREENFIELD ONLINE, INC.
AND
COMMERCE BANK, N.A.
----------------------------
$25,000,000
----------------------------
DATED: APRIL 6, 2005
TABLE OF CONTENTS
1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.............................................................. 1
1.1 Definitions.................................................................................... 1
1.2 Principles of Construction..................................................................... 18
2. AMOUNT AND TERMS OF LOANS............................................................................... 20
2.1 Commitments.................................................................................... 20
2.2 Loans and Advances............................................................................. 20
2.3 Notes.......................................................................................... 20
2.4 Procedure for Borrowing........................................................................ 21
2.5 Termination and Reduction of Commitments....................................................... 21
2.6 Repayments and Prepayments of the Loans........................................................ 22
2.7 Use of Proceeds................................................................................ 23
2.8 Payments....................................................................................... 24
3. INTEREST, FEES, YIELD PROTECTIONS, ETC.................................................................. 24
3.1 Interest Rate and Payment Dates................................................................ 24
3.2 Interest Elections............................................................................. 26
3.3 Fees........................................................................................... 27
3.4 Concerning Interest Periods.................................................................... 27
3.5 Indemnification for Loss....................................................................... 28
3.6 Capital Adequacy............................................................................... 28
3.7 Reimbursement for Increased Costs.............................................................. 28
3.8 Increased Costs; Illegality.................................................................... 29
3.9 Substituted Interest Rate...................................................................... 30
3.10 Taxes.......................................................................................... 31
4. REPRESENTATIONS AND WARRANTIES.......................................................................... 32
4.1 Subsidiaries; Capitalization................................................................... 32
4.2 Existence and Power............................................................................ 32
4.3 Authority and Execution........................................................................ 32
4.4 Binding Agreement.............................................................................. 33
4.5 Litigation..................................................................................... 33
4.6 Required Consents.............................................................................. 33
4.7 Absence of Defaults; No Conflicting Agreements................................................. 33
4.8 Compliance with Applicable Laws................................................................ 34
4.9 Taxes.......................................................................................... 34
4.10 Governmental Regulations....................................................................... 34
4.11 Federal Reserve Regulations; Use of Loan Proceeds.............................................. 35
4.12 ERISA.......................................................................................... 35
4.13 Financial Statements........................................................................... 35
4.14 Property....................................................................................... 36
4.15 Authorizations................................................................................. 36
4.16 Environmental Matters.......................................................................... 36
4.17 Insurance...................................................................................... 37
4.18 Solvency....................................................................................... 37
4.19 Absence of Certain Restrictions................................................................ 38
4.20 No Misrepresentation........................................................................... 38
4.21 Security Interest and Liens.................................................................... 38
4.22 Labor Matters.................................................................................. 39
4.23 Accounts Receivable............................................................................ 39
4.24 The Ciao Acquisition........................................................................... 39
5. CONDITIONS.............................................................................................. 40
5.1 Effective Date................................................................................. 40
5.2 Each Advance................................................................................... 44
6. AFFIRMATIVE COVENANTS................................................................................... 45
6.1 Financial Statements and Other Information..................................................... 45
6.2 Maintenance of Corporate Existence; Maintenance of Licenses, Permits and Authorizations........ 47
6.3 Maintenance of Properties...................................................................... 47
6.4 Insurance...................................................................................... 47
6.5 Books and Records; Inspection Rights........................................................... 47
6.6 Notice of Material Events...................................................................... 48
6.7 Payment of Obligations......................................................................... 49
6.8 Compliance with Laws........................................................................... 49
6.9 Use of Proceeds................................................................................ 49
6.10 Governmental Consents and Approvals............................................................ 49
6.11 Environmental Matters.......................................................................... 50
6.12 Notice of Certain Changes...................................................................... 50
6.13 Information Regarding Collateral............................................................... 50
6.14 Additional Subsidiaries........................................................................ 51
6.15 Additional Collateral.......................................................................... 51
6.16 Eligible Liquid Assets......................................................................... 51
6.17 Accounts....................................................................................... 51
6.18 Post Effective Date Documents.................................................................. 52
6.19 Further Assurances............................................................................. 52
7. NEGATIVE COVENANTS...................................................................................... 53
7.1 Limitation on Indebtedness..................................................................... 53
7.2 Limitation on Guarantees....................................................................... 53
7.3 Limitation on Liens............................................................................ 54
7.4 Fundamental Changes............................................................................ 54
7.5 Limitation on Certain Transactions with Affiliates............................................. 55
7.6 Asset Sales.................................................................................... 55
7.7 Sale and Leaseback Transactions................................................................ 56
7.8 Investments, Loans, Advances, Guarantees and Acquisitions...................................... 56
7.9 Change of Location............................................................................. 56
7.10 ERISA Obligations.............................................................................. 57
7.11 Restrictive Agreements......................................................................... 57
7.12 Amendment of Material Documents................................................................ 57
7.13 Minimum EBITDA................................................................................. 57
7.14 Prepayments of Indebtedness.................................................................... 57
7.15 Distributions.................................................................................. 58
8. DEFAULT................................................................................................. 58
8.1 Events of Default.............................................................................. 58
8.2 Contract Remedies.............................................................................. 60
9. OTHER PROVISIONS........................................................................................ 61
9.1 Amendments and Waivers......................................................................... 61
9.2 Notices........................................................................................ 61
9.3 No Waiver; Cumulative Remedies................................................................. 63
9.4 Survival of Representations and Warranties and Certain Obligations............................. 63
9.5 Expenses....................................................................................... 63
9.6 Lending Offices................................................................................ 64
9.7 Assignments, Participations.................................................................... 64
9.8 Indemnity...................................................................................... 65
9.9 Limitation of Liability........................................................................ 66
9.10 Counterparts................................................................................... 66
9.11 Set-off........................................................................................ 66
9.12 Construction................................................................................... 67
9.13 Governing Law.................................................................................. 67
9.14 Headings Descriptive........................................................................... 67
9.15 Severability................................................................................... 67
9.16 Integration.................................................................................... 67
9.17 Consent to Jurisdiction........................................................................ 68
9.18 Intentionally Deleted.......................................................................... 68
9.19 No Limitation on Service or Suit............................................................... 68
9.20 WAIVER OF TRIAL BY JURY........................................................................ 68
SCHEDULES
Schedule 4.1 Subsidiaries; Capitalization
Schedule 4.6 Consents
Schedule 4.7 Defaults; Conflicts
Schedule 4.17 Insurance
Schedule 7.1 Indebtedness
Schedule 7.2 Guarantees
Schedule 7.3 Liens
Schedule 7.8 Investments
Schedule 7.11 Restrictive Agreements
EXHIBITS
Exhibit A-1 Form of Term Note
Exhibit A-2 Form of Revolving Note
Exhibit B Form of Borrowing Base Certificate
Exhibit C Form of Borrowing Request
Exhibit D Form of Guaranty
Exhibit E Form of Notice of Continuation/Conversion
Exhibit F-1 Form of Borrower Security Agreement
Exhibit F-2 Form of Guarantor Security Agreement
Exhibit G Form of Joinder
Exhibit H Form of Intellectual Property Security
Agreement
CREDIT AGREEMENT
CREDIT AGREEMENT, dated April 6, 2005, by and between GREENFIELD ONLINE,
INC., a Delaware corporation (the "BORROWER") and COMMERCE BANK N.A. (the
"LENDER").
The Borrower has requested the Lender to extend credit to the Borrower and
the Lender is willing to do so subject to the terms and conditions set forth
herein.
Accordingly, for good and valuable consideration, the parties hereto agree
as follows:
1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.
1.1 Definitions.
As used in this Agreement, terms defined in the preamble have the
meanings therein indicated, and the following terms have the following meanings:
"ACCOUNTANTS": Pricewaterhouse Coopers (or any successor thereto),
or such other firm of independent certified public accountants of recognized
national standing selected by the Borrower and acceptable to the Lender.
"ACCOUNT RECEIVABLE": any right of the Borrower to payment for goods
sold or services rendered, whether now existing or hereafter arising.
"ACCUMULATED FUNDING DEFICIENCY": as defined in Section 302 of
ERISA.
"ADVANCE": Revolving Loans or the Term Loan, as applicable, of the
same Type made, converted or continued on the same date and, in the case of
Eurodollar Loans, as to which a single Interest Period is in effect.
"AFFECTED ADVANCE": as defined in Section 3.9.
"AFFILIATE": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, control of a Person shall mean the
power, direct or indirect, (i) to vote 5% or more of the securities or other
interests having ordinary voting power for the election of directors or other
managing Persons thereof or (ii) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"AGREEMENT": this Credit Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"APPLICABLE LENDING OFFICE": (i) in the case of Prime Advances, the
Lender's Domestic Lending Office and (ii) in the case of Eurodollar Advances,
the Lender's Eurodollar Lending Office.
"APPLICABLE MARGIN": at all times (i) with respect to all Prime
Advances, 0.75%, and (ii) with respect to all Eurodollar Advances, the
Eurodollar Rate for the applicable Interest Period plus 3.50%.
"AUTHORIZED SIGNATORY": as to (i) any Person which is a corporation,
the chairman of the board, the president, any vice president, the chief
financial officer, the secretary or any other officer (acceptable to the Lender)
of such Person and (ii) any Person which is not a corporation, the general
partner or other Managing Person thereof or a duly authorized representative of
such Managing Person (acceptable to the Lender).
"AVAILABLE REVOLVING COMMITMENT AMOUNT": at any time an amount equal
to (i) the lesser of the Revolving Commitment Amount and (ii) the Borrowing Base
Amount at such time minus the Revolving Credit Exposure.
"AVAILABILITY PERIOD": the period from and including the Effective
Date to but excluding the earlier of the Maturity Date and the date of
termination of the Revolving Commitment.
"BOARD": the Board of Governors of the Federal Reserve System of the
United States.
"BORROWER SECURITY AGREEMENT": the Security Agreement, substantially
in the form of Exhibit G-1, dated the date hereof, between the Borrower and the
Lender, as the same may be amended, supplemented or otherwise modified from time
to time.
"BORROWING BASE AMOUNT": as of any date of determination, an amount
equal to the Borrowing Base Percentage of the book value of Eligible Receivables
based upon the Borrowing Base Certificate most recently delivered to the Lender
under Section 5.2(f) or Section 6.1(g) (less, in each case, reserves with
respect to such Eligible Receivables which the Lender may deem necessary from
time to time in Bank's commercially reasonable discretion under then existing
circumstances). Notwithstanding anything to the contrary in this definition, if
the Borrower shall fail to deliver to the Lender a Borrowing Base Certificate on
or prior to any date required hereby, the Borrowing Base Amount shall be deemed
to be zero ($0.00) from and including such date to the date of delivery to the
Lender of such Borrowing Base Certificate.
"BORROWING BASE CERTIFICATE": a certificate, duly executed by a
Financial Officer of the Borrower and in the form of Exhibit B.
2
"BORROWING BASE PERCENTAGE": initially 80% and, thereafter, such
percentage as the Lender may determine, in its sole discretion, based upon the
most recent audit of the Collateral.
"BORROWING DATE": the date of the making, conversion or continuation,
as the case may be, of any Loan.
"BORROWING REQUEST": a request for an Advance in the form of Exhibit C.
"BUSINESS DAY": (i) for all purposes other than as set forth in clause
(ii) below, any day other than a Saturday, a Sunday or a day on which commercial
banks located in New York City are authorized or required by law or other
governmental action to close, and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Advances, any day which is a Business Day described in clause (i)
above and which is also a day on which funding in the Dollars between banks may
be carried on in London, England.
"CAPITAL EXPENDITURES": with respect to any Person, expenditures
(whether paid in cash or other consideration or accrued as a liability and
including in all events all amounts expended or capitalized under Capital Leases
but excluding any amount representing capitalized interest) for fixed or capital
assets (excluding any capitalized interest and any such asset acquired in
connection with normal replacement and maintenance programs properly charged to
current operations and excluding any replacement assets acquired with the
proceeds of insurance) made by such Person.
"CAPITAL LEASE": with respect to any Person, any lease of property
(whether real, personal or mixed) by such Person as lessee which, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of such
Person.
"CAPITAL LEASE OBLIGATIONS": with respect to any Person, obligations of
such Person under Capital Leases or capitalized licenses or other intangibles
accounted for as liabilities in accordance with GAAP.
"CAPITAL STOCK": as to any Person, all shares, interests, partnership
interests, limited liability company interests, participations, rights in or
other equivalents (however designated) of such Person's equity (however
designated) and any rights, warrants or options exchangeable for or convertible
into such shares, interests, participations, rights or other equity.
"CFC": means a "controlled foreign corporation" as such term is defined
in the Code.
"CHANGE IN CONTROL": one or both of the following events:
3
(i) the acquisition of ownership, directly or indirectly,
beneficially or of record, in a single transaction or a series of related
transactions and other than through purchases in the public market by any person
or group of voting shares entitled to exercise more than 50% of the total power
of all outstanding voting shares of the Borrower (including any voting shares
which are not then outstanding of which such person or group is deemed the
beneficial owner); and
(ii) if the Borrower shall fail to have legal and beneficial
title to 100% of the Capital Stock of each of its Subsidiaries.
For purposes of this definition, (a) the terms "person" and "group"
shall have the respective meanings ascribed thereto in Sections 13(d) and
14(d)(2) of the Exchange Act, (b) the term "beneficial owner" shall have the
meaning ascribed thereto in Rule 13d-3 under the Exchange Act and (c) the term
"voting shares" shall mean outstanding shares of any class or classes (however
designated) of Capital Stock of the Parent Borrower entitled to vote generally
in the election of members of the Managing Person thereof.
"CIAO ACQUISITION": means the acquisition of all or substantially
all of the outstanding capital stock of Ciao AG, a stock corporation under
German law ("CIAO"), through a holding company structure composed of two German
companies ("SUB" and "SUB 2"; Sub will be owned in its entirety by the
Corporation, and Sub 2 will be owned in its entirety by Sub), from the
shareholders of Ciao pursuant to the terms of a Share Purchase Agreement dated
April 6, 2005, by and between Greenfield Online, Inc., Ciao, the shareholders of
Ciao as the Sellers, Greenfield Online, Inc.'s wholly-owned acquisition
subsidiary SRVY Acquisition GmbH, and SRVY Acquisition GmbH's wholly owned
subsidiary Ciao Holding GmbH as Buyers, and the Company Trustee (as identified
therein).
"CIAO ACQUISITION AGREEMENT": means that certain Share Purchase
Agreement dated April 6, 2005, by and between Greenfield Online, Inc., Ciao AG,
the shareholders of Ciao as the Sellers, Greenfield Online, Inc.'s wholly-owned
acquisition subsidiary SRVY Acquisition GmbH and SRVY Acquisition GmbH's wholly
owned subsidiary Ciao Holding GmbH as Buyers, and the Company Trustee (as
identified therein).
"CODE": the Internal Revenue Code of 1986, as the same may be
amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.
"COLLATERAL": the Property in which a security interest is granted
under the Security Agreement.
"COMMITMENT FEE": as defined in Section 3.3(a).
4
"COMMITMENTS": collectively, the Revolving Commitment and the Term
Commitment.
"COMPENSATORY INTEREST PAYMENT": as defined in Section 3.1(d).
"CONSOLIDATED": the Borrower and its Subsidiaries which are
consolidated for financial reporting purposes.
"CONSOLIDATED EBITDA": with respect to any Person for any period,
net income of such Person and its subsidiaries for such period, determined on a
Consolidated basis in accordance with GAAP, but before any cumulative effect of
accounting changes, plus, without duplication and to the extent deducted in
determining such net income, the sum of:
(i) Consolidated Interest Expense of such Person for such
period;
(ii) the aggregate amount of taxes expensed for such period;
(iii) the aggregate amount attributable to depreciation and
amortization for such period;
(iv) the aggregate amount of extraordinary or non-recurring
non-cash losses during such period;
(v) the aggregate amount of compensation paid to officers and
employees of the Borrower to the extent paid solely in the Capital Stock of the
Borrower; and
(vi) the aggregate amount of extraordinary cash and non-cash
charges not to exceed $750,000 during any consecutive twelve month period;
minus, without duplication and to the extent added in determining
such net income for such period, extraordinary or non-recurring gains during
such period.
"CONSOLIDATED INTEREST EXPENSE": with respect to any fiscal period,
the amount of cash interest accrued on, and with respect to, Consolidated Debt
(including, without limitation, amortization of debt discount and imputed
interest on Capital Leases), as determined on a Consolidated basis in accordance
with GAAP.
"CONVERSION DATE": the date on which, (i) a Eurodollar Advance is
converted to an Prime Advance, (ii) a Eurodollar Advance is converted to a new
Eurodollar Advance or (iii) all or a portion of an Prime Advance is converted to
a Eurodollar Advance.
5
"DEBT ISSUANCE": means the issuance of any Indebtedness for borrowed
money by the Borrower or any of its Subsidiaries other than the public issuance
or private placement of convertible notes or bonds or similar securities.
"DEFAULT": any event or condition which constitutes an Event of
Default or which, with the giving of notice, the lapse of time, or any other
condition, would, unless cured or waived, become an Event of Default.
"DISTRIBUTIONS": (i) any dividend or other distribution by the
Borrower or any Guarantor (whether in cash, securities or other property) with
respect to any shares of any class of equity securities of the Borrower or any
Guarantor, or (ii) any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of (a) any such
shares of equity securities of the Borrower or any Guarantor or (b) any option,
warrant or other right to acquire any such shares of equity securities of the
Borrower or any Guarantor or (iii) any payment of interest on or principal of
any subordinated Indebtedness.
"DOLLARS" and "$": lawful currency of the United States.
"DOMESTIC LENDING OFFICE": initially, the office of the Lender
listed in Section 9.2; thereafter, such other office of the Lender through which
it shall be making or maintaining Prime Advances, as reported by the Lender to
the Borrower.
"EFFECTIVE DATE": the date on which the conditions specified in
Section 5.1 are satisfied.
"ELIGIBLE LIQUID ASSETS": means the following assets held in one or
more collateral accounts or in which the Lender otherwise has a perfected, first
priority security interest (i) cash, (ii) cash equivalents, and (iii) the
following types of marketable securities for which there can be obtained a
publicly quoted fair market value: U.S. government securities, and municipal
bonds, provided, however, that no bond shall come within this definition of
"Eligible Liquid Assets" unless such bond has a BBB or better rating from S&P,
or a Baa2 or better rating from ▇▇▇▇▇'▇.
"ELIGIBLE RECEIVABLE": any Account Receivable which conforms to the
representations and warranties contained in the Security Agreement and as to
which the following requirements have been fulfilled to the reasonable
satisfaction of the Lender:
(a) the Borrower has lawful title to such Account Receivable,
subject to the Lien granted to the Lender pursuant to the Borrower Security
Agreements;
(b) such Account Receivable arose through the sale of finished
goods or merchandise or the rendition of services by the Borrower;
6
(c) the goods or merchandise, the sale of which gave rise to
such Account Receivable, have been shipped, or the services, the rendition of
which gave rise to such Account Receivable, have been performed;
(d) such Account Receivable shall have had excluded therefrom
(i) any portion that is subject to any written dispute, offset, counterclaim or
other claim or defense on the part of the account debtor or to any written claim
on the part of the account debtor denying liability with respect to such Account
Receivable, and (ii) any returns, discounts, claims, credits and allowances;
(e) no return, rejection or repossession of the merchandise in
respect of such Account Receivable has occurred;
(f) the Borrower has the full and unqualified right to assign
and grant a security interest in such Account Receivable under and pursuant to
the Borrower Security Agreement;
(g) such Account Receivable is evidenced by an invoice
rendered to the account debtor and no portion of such Account Receivable is
evidenced by any chattel paper, promissory note or other instrument;
(h) such Account Receivable is subject to a fully perfected
first priority security interest in favor of the Lender pursuant to the Borrower
Security Agreement;
(i) no portion of such Account Receivable is subject to any
security interest or Lien in favor of any Person other than the Lien of the
Lender pursuant to the Borrower Security Agreement or a Permitted Lien;
(j) such Account Receivable did not arise out of a transaction
with a Subsidiary or any employee, officer, agent, director, shareholder or
Affiliate of the Borrower;
(k) the Borrower is not aware of any reorganization,
bankruptcy, receivership, custodianship, insolvency or other like condition in
respect of the account debtor of such Account Receivable;
(l) such Account Receivable has not been outstanding more than
90 days from the date of the invoice therefor;
(m) such Account Receivable is payable in Dollars;
(n) such Account Receivable does not arise from an account
debtor in respect of which more than 25% of such account debtor's Account
Receivables have been outstanding longer than the maximum period allowable under
clause (l) hereof;
7
(o) the account debtor with respect to such Account Receivable
is not any foreign government, the United States of America, any State,
political subdivision, department, agency or instrumentality thereof, unless, if
such account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, upon the Lender's
request, the Federal Assignment of Claims Act of 1940, as amended, or any
similar State or local law, if applicable, has been complied with in a manner
satisfactory to the Lender;
(p) the Lender is, and continues to be, reasonably satisfied
with the credit standing of the account debtor in relation to the amount of
credit extended;
(q) such Account Receivable is from an account debtor resident
of the United States, including operating entities of foreign entities which are
formed or organized under the laws of any of the United States;
(r) such Account Receivable was not purchased or otherwise
acquired by the Borrower as applicable, other than through the sale of finished
goods and merchandise or through the rendition of services by the Borrower as
applicable; and
(s) such Account Receivable, when added to all other Accounts
Receivable of the same account debtor, does not exceed 25% of the total Accounts
Receivable of the Borrower.
"EMPLOYEE BENEFIT PLAN": an employee benefit plan within the meaning
of Section 3(3) of ERISA maintained, sponsored or contributed to by any of the
Loan Parties.
"ENVIRONMENTAL LAWS": any and all federal, state and local laws
relating to the environment, the use, storage, transporting, manufacturing,
handling, discharge, disposal or recycling of hazardous substances, materials or
pollutants or industrial hygiene, and including, without limitation, (i) the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 USCA Section 9601 et seq.; (ii) the Resource Conservation and
Recovery Act of 1976, as amended, 42 USCA Section 6901 et seq.; (iii) the Toxic
Substance Control Act, as amended, 15 USCA Section 2601 et seq.; (iv) the Water
Pollution Control Act, as amended, 33 USCA Section 1251 et seq.; (v) the Clean
Air Act, as amended, 42 USCA Section 7401 et seq.; (vi) the Hazardous Materials
Transportation Authorization Act of 1994, as amended, 49 USCA Section 5101 et
seq. and (vii) all rules, regulations, judgments, decrees, injunctions and
restrictions thereunder and any analogous state law.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations issued thereunder, as
from time to time in effect.
8
"ERISA AFFILIATE": when used with respect to an Employee Benefit
Plan, ERISA, the PBGC or a provision of the Code pertaining to employee benefit
plans, any Person which is a member of any group of organizations within the
meaning of Sections 414(b) or 414(c) of the Code (or, solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, Sections 414(m) or 414(o) of the Code) of which any Loan Party or
any Subsidiary of a Loan Party is a member.
"ERISA EVENT": (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any ERISA Affiliate of any liability
under Title IV of ERISA with respect to the termination of any Plan; (e) the
receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any ERISA Affiliate of any liability with respect to the withdrawal
or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by
the Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"EURODOLLAR": when used in reference to any Loan or Advance, refers
to whether such Loan bears interest at a rate of interest based upon the
Eurodollar Rate.
"EURODOLLAR LENDING OFFICE": initially, the office of the Lender
listed in Section 9.2; thereafter, such other office of the Lender through which
it shall be making or maintaining Eurodollar Advances, as reported by the Lender
to the Borrower.
"EURODOLLAR RATE": with respect to the Interest Period relating to a
Eurodollar Advance, the rate per annum (rounded, if necessary, to the next
higher 1/16 of 1%) equal to the arithmetic mean of the offered rates for
deposits in U.S. Dollars for a period comparable to such Interest Period which
appear on the Telerate Page 3750 (or such other page as may replace such page on
such service for the purpose of displaying Eurodollar) as of 11:00 a.m. (London
time) on the day that is two Business Days prior to the first day of such
Interest Period. If fewer than two rates appear on the Telerate Page 3750,
Eurodollar shall mean for the Interest Period relating to a Eurodollar Advance,
the rate per annum (rounded, if necessary, to the next higher 1/16 of 1%) at
which the Bank offers deposits in U.S. Dollars for a period comparable to such
Interest Period and in an amount equal to the outstanding principal amount of
such Eurodollar Advance to leading
9
banks in the London interbank eurodollar market as of 11:00 a.m. (London time)
on the day that is two Business Days prior to the first day of such Interest
Period.
"EVENT OF DEFAULT": as defined in Section 8.1.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended.
"EXISTING DEBT": any and all obligations due and owing by the Loan
Parties to Silicon Valley Bank.
"FEES": as defined in Section 2.8(a).
"FINANCIAL OFFICER": as to any Person, the chief financial officer
of such Person or such other officer as shall be satisfactory to the Lender.
"FINANCIAL STATEMENTS": as defined in Section 4.13.
"GAAP": generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and in the statements and
pronouncements of the Financial Accounting Standards Board or in such other
statement by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination, consistently applied.
"GOVERNMENTAL AUTHORITY": any foreign, federal, state, municipal or
other government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof, or any court or arbitrator.
"GUARANTEE": of or by any Person (the "GUARANTOR"): any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (i) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (ii) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor as to enable the primary obligor to pay such
Indebtedness or other obligation or (iv) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation, provided that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business. The term
"Guaranteed" has a meaning correlative thereto.
10
"GUARANTORS": (i) each Subsidiary of the Borrower (other than a CFC)
listed in Schedule 4.1, and (ii) any Person that becomes a Subsidiary of the
Borrower other than a CFC.
"GUARANTOR SECURITY AGREEMENT": the Security Agreement,
substantially in the form of Exhibit G-2, dated the date hereof, by and among
the Guarantors and the Lender, and any security agreement executed and delivered
pursuant to Section 6.13, as each may be amended, supplemented or otherwise
modified from time to time.
"GUARANTY": the Guaranty, substantially in the form of Exhibit D,
dated the date hereof, among the Guarantors and the Lender and any guaranty
executed and delivered pursuant to Section 6.13, as each may be amended,
supplemented or otherwise modified from time to time.
"HAZARDOUS SUBSTANCE": any hazardous or toxic substance, material or
waste, including, but not limited to, (i) those substances, materials, and
wastes listed in the United States Department of Transportation Hazardous
Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as
hazardous substances (40 CFR Part 302) and amendments thereto and replacements
thereof and (ii) any substance, pollutant or material defined as, or designated
in, any Environmental Law as a "hazardous substance," "toxic substance,"
"hazardous material," "hazardous waste," "restricted hazardous waste,"
"pollutant," "toxic pollutant" or words of similar import.
"HEDGING AGREEMENT": any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
"HIGHEST LAWFUL RATE": the maximum rate of interest, if any, that at
any time or from time to time may be contracted for, taken, charged or received
by the Lender on the Notes, or which may be owing to the Lender pursuant to the
Loan Documents under the laws applicable to the Lender and this transaction.
"HOLDING COMPANY": as defined in Section 3.6.
"INDEBTEDNESS": as to any Person, at a particular time, all items
which constitute, without duplication, (i) indebtedness for borrowed money, (ii)
indebtedness in respect of the deferred purchase price of Property (other than
trade payables incurred in the ordinary course of business), (iii) indebtedness
evidenced by notes, bonds, debentures or similar instruments, (iv) obligations
with respect to any conditional sale or title retention agreement, (v)
indebtedness arising under acceptance facilities and the amount available to be
drawn under all letters of credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder to the extent such Person shall
not have reimbursed the issuer in respect of the issuer's payment thereof, (vi)
all liabilities secured by any Lien on any Property owned by such Person even
though such Person has not assumed or otherwise become liable for the payment
thereof (other than carriers',
11
warehousemen's, mechanics', repairmen's or other like non-consensual statutory
Liens arising in the ordinary course of business), (vii) Capital Lease
Obligations, (viii) obligations under interest rate or foreign currency hedging
arrangements at market value, (ix) all obligations of such Person in respect of
Capital Stock subject to mandatory redemption or redemption at the option of the
holder thereof, in whole or in part, and (x) all Guarantees of such Person in
respect of any of the foregoing.
"INDEMNIFIED LIABILITIES": as defined in Section 9.5.
"INDEMNIFIED PERSON": as defined in Section 9.8.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT": the Intellectual
Property Security Agreement, substantially in the form of Exhibit H, between the
Borrower, each Guarantor and the Lender, as the same may be amended,
supplemented or otherwise modified from time to time.
"INTEREST PAYMENT DATE": (i) as to any Prime Advance, the last day
of each month commencing on the first of such days to occur after the Effective
Date, (ii) as to any Eurodollar Advance, the last day of the Interest Period
applicable thereto, (iii) as to the Term Loan, the Term Loan Maturity Date, and
(iv) as to all Revolving Advances, the Revolving Maturity Date.
"INTEREST PERIOD": with respect to any Eurodollar Advance requested
by the Borrower, (i) initially, the period commencing on the Borrowing Date and
ending on the first Business Day of the month following the month in which the
Borrowing Date occurs; and (ii) thereafter, one, two or three month periods each
commencing on the first Business Day of each month; provided, however, that (1)
if any Interest Period would otherwise end on a day which is not a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end on the
immediately preceding Business Day and (2) any Interest Period which 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) shall end on the last Business Day of a calendar month and (3) no
Interest Period may expire after the Revolving Maturity Date or the Term Loan
Maturity Date. Interest Periods shall be subject to the provisions of Section
3.4.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit or
preferential arrangement, encumbrance, lien (statutory or other), or other
security agreement or security interest of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement and any capital or financing lease having substantially the same
economic effect as any of the foregoing.
12
"LOAN" or "LOANS": individually, each loan made by the Lender to the
Borrower pursuant to this Agreement and collectively, the loans made by the
Lender to the Borrower pursuant to this Agreement.
"LOAN DOCUMENTS": collectively, this Agreement, the Notes, the
Guaranty, the Security Documents, and each other agreement, instrument or
document executed or delivered pursuant hereto.
"LOAN PARTIES": the Borrower and the Guarantors.
"MANAGING PERSON": with respect to any Person that is (i) a
corporation, its board of directors, (ii) a limited liability company, its board
of control, managing member or members, (iii) a limited partnership, its general
partner, (iv) a general partnership or a limited liability partnership, its
managing partner or executive committee or (v) any other Person, the managing
body thereof or other Person analogous to the foregoing.
"MARGIN STOCK": any "margin stock", as defined in Regulation U of
the Board, as amended, supplemented or otherwise modified from time to time.
"MATERIAL ADVERSE CHANGE": a material adverse change in (i) the
condition (financial or otherwise), operations, business, Property or assets of
the Loan Parties, taken as a whole (ii) the ability of each of the Loan Parties
to perform its obligations under the Loan Documents to which it is a party or
(iii) the ability of the Lender to enforce the Loan Documents.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (i) the
condition (financial or otherwise), operations, business, Property or assets of
the Loan Parties, taken as a whole, (ii) the ability of each of the Loan Parties
to perform its obligations under the Loan Documents to which it is a party or
(iii) the ability of the Lender to enforce the Loan Documents.
"MOODY'S": ▇▇▇▇▇'▇ Investors Service, Inc., or any successor
thereto.
"MULTIEMPLOYER PLAN": a Pension Plan which is a multiemployer plan,
as defined in Section 4001(a)(3) of ERISA.
"NOTES": as defined in Section 2.3(b).
"NOTICE OF CONTINUATION/CONVERSION": a notice substantially in the
form of Exhibit F.
"OBLIGATIONS": (i) the due and punctual payment of (a) principal of
and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether
13
allowed or allowable in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, and (b) all other monetary obligations, including fees, commissions,
costs, expenses and indemnities, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), of the Borrower
or any Guarantor to the Lender, or that are otherwise payable to the Lender,
under this Agreement and the other Loan Documents and (ii) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Borrower or any Guarantor under or pursuant to this Agreement and the other Loan
Documents.
"ORGANIZATIONAL DOCUMENTS": as to any Person which is (i) a
corporation, the certificate or articles of incorporation and by-laws of such
Person, (ii) a limited liability company, the limited liability company
agreement or similar agreement of such Person, (iii) a partnership, the
partnership agreement or similar agreement of such Person, or (iv) any other
form of entity or organization, the organizational documents analogous to the
foregoing.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any Governmental Authority
succeeding to the functions thereof.
"PENSION PLAN": at any date of determination, any Employee Benefit
Plan (including a Multiemployer Plan), the funding requirements of which (under
Section 302 of ERISA or Section 412 of the Code) are, or at any time within the
six years immediately preceding such date, were in whole or in part, the
responsibility of any Loan Party, any Subsidiary of a Loan Party or any ERISA
Affiliate.
"PERMITTED INVESTMENTS": (i) direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by, the
United States of America (or by any agency thereof to the extent that such
obligations are backed by the full faith and credit of the United States of
America), in each case maturing within one year from the date of acquisition
thereof; (ii) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from Standard & Poor's Ratings or from Moody's; (iii)
investments in certificates of deposit, banker's acceptances and time deposits
maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States that has a combined capital and surplus and undivided
profits of not less than $500,000,000 at the date of acquisition; and (iv) fully
collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (i) of
14
this definition and entered into with a financial institution satisfying the
criteria described in clause (iii) of this definition.
"PERMITTED LIEN": a Lien permitted to exist under Section 7.3.
"PERSON": any individual, firm, partnership, limited liability
company, joint venture, corporation, association, business enterprise, joint
stock company, unincorporated association, trust, Governmental Authority or any
other entity, whether acting in an individual, fiduciary, or other capacity, and
for the purpose of the definition of "ERISA AFFILIATE", a trade or business.
"PLAN": any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which any Loan Party
or any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PRIME": when used in reference to any Loan or Advance, refers to
whether such Loan bears interest at a rate determined by reference to the Prime
Rate.
"PRIME RATE": shall mean a fluctuating rate per annum equal to the
prime rate of interest as published in the Money Rates column of the Wall Street
Journal or any successor column or section of such periodical from time to time.
Any change in the Prime Rate shall take effect on the date of the change in the
Prime Rate. The Borrower acknowledges that the Prime Rate is not necessarily the
lowest rate at which the Lender may make loans or other extensions of credit.
"PROHIBITED TRANSACTION": a transaction which is prohibited under
Section 4975 of the Code or Section 406 of ERISA and not exempt under Section
4975 of the Code or Section 408 of ERISA.
"PROPERTY": all types of real, personal, tangible, intangible or
mixed property.
"REAL PROPERTY": all real property owned or leased by the Loan
Parties.
"REGULATORY CHANGE": (i) the introduction or phasing in of any law,
rule or regulation after the Effective Date, (ii) the issuance or promulgation
after the Effective Date of any directive, guideline or request from any central
bank or United States or foreign Governmental Authority (whether or not having
the force of law), or (iii) any change after the Effective Date in the
interpretation of any existing law, rule, regulation, directive, guideline or
request by any central bank or United States or foreign Governmental Authority
charged with the administration thereof.
15
"REPORTABLE EVENT": with respect to any Pension Plan, (i) any event
set forth in Sections 4043(c) (other than a Reportable Event as to which the 30
day notice requirement is waived by the PBGC under applicable regulations),
4062(c) or 4063(a) of ERISA or the regulations thereunder, (ii) an event
requiring the Loan Parties, any Subsidiary of a Loan Party or any ERISA
Affiliate to provide security to a Pension Plan under Section 401(a)(29) of the
Code, or (iii) any failure to make any payment required by Section 412(m) of the
Code.
"REVOLVING COMMITMENT": the Lender's undertaking during the
Availability Period to make Revolving Loans, subject to the terms and conditions
hereof, in an aggregate outstanding principal amount not exceeding at any time
(i) the Revolving Commitment Amount, or (ii) the Borrowing Base, whichever is
less.
"REVOLVING COMMITMENT AMOUNT": $15,000,000, as reduced from time to
time pursuant to Section 2.5.
"REVOLVING CREDIT EXPOSURE": at any time, the sum of the aggregate
outstanding principal amount of the Revolving Loans at such time.
"REVOLVING LOAN": a Loan referred to in Section 2.1(b) and made
pursuant to Section 2.4.
"REVOLVING MATURITY DATE": April 6, 2008
"REVOLVING NOTE": as defined in Section 2.3(b).
"SALE AND LEASEBACK TRANSACTION": any transaction or series of
related transactions pursuant to which a Person sells or transfers any Property
in connection with the leasing, or the resale against installment payments, of
such Property to the seller or transferor.
"SECURITY AGREEMENT": collectively, the Borrower Security Agreement
and the Guarantor Security Agreement.
"SECURITY DOCUMENTS": collectively, the Security Agreement, the
Guaranty, any UCC-1 Financing Statement delivered, filed or to be filed to
perfect or continue the security interests created thereby and any other
instruments, agreements and documents executed and delivered in connection
therewith.
"SOLVENT": with respect to any Person on a particular date, the
condition that on such date, (i) the fair value of the Property of such Person
is greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (ii) the present fair salable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured, (iii) such Person does not intend to, and does not believe
16
that it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature, and (iv) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's Property would constitute an unreasonably
small amount of capital. For purposes of this definition, the amount of any
contingent liability at any time shall be computed as the amount that, in light
of all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability after
taking into account probable payments by co-obligors.
"SPECIAL COUNSEL": ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, special counsel to
the Lender.
"STANDARD & POOR'S": Standard & Poor's Ratings Services, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereto.
"SUBSIDIARY": as to any Person, any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which such Person or any Subsidiary of such Person, directly or indirectly,
either (i) in respect of a corporation, owns or controls more than 50% of the
outstanding Capital Stock having ordinary voting power to elect a majority of
the Managing Person, irrespective of whether a class or classes shall or might
have voting power by reason of the happening of any contingency, or (ii) in
respect of an association, partnership, limited liability company, joint venture
or other business entity, is entitled to share in more than 50% of the profits
and losses, however determined.
"TAXES": any and all present or future income, stamp or other taxes,
levies, imposts, duties, fees, assessments, deductions, withholdings, or other
charges of whatever nature, now or hereafter imposed, levied, collected,
withheld, or assessed by any jurisdiction, or by any department, agency, state
or other political subdivision thereof or therein.
"TELERATE PAGE 3750": the display page so designated on the Dow
▇▇▇▇▇ Telerate Service (or such other page as may replace that page on that
service), or such other service as may be nominated as the information vendor
for purposes of displaying rates or prices comparable to the Eurodollar Rate.
"TERM COMMITMENT": the commitment of the Lender to make the Term
Loan hereunder. The amount of the Lender's Term Commitment is $10,000,000.
"TERM LOAN": the Loan referred to in Section 2.1(a) and made
pursuant to Section 2.4.
"TERM LOAN MATURITY DATE": April 6, 2008
"TERM NOTE": as defined in Section 2.3(a).
17
"TERMINATION EVENT": with respect to any Pension Plan, (i) a
Reportable Event, (ii) the termination of a Pension Plan, or the filing of a
notice of intent to terminate a Pension Plan, or the treatment of a Pension Plan
amendment as a termination under Section 4041(c) of ERISA, (iii) the institution
of proceedings to terminate a Pension Plan under Section 4042 of ERISA, or (iv)
the appointment of a trustee to administer any Pension Plan under Section 4042
of ERISA.
"TYPE": when used in reference to any Loan or Advance, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Advance, is determined by reference to the Eurodollar Rate or the Prime Rate.
"UNFUNDED PENSION LIABILITIES": with respect to any Pension Plan, at
any date of determination, the amount determined by taking the accumulated
benefit obligation, as disclosed in accordance with Statement of Accounting
Standards No. 87, "Employers' Accounting for Pensions", over the fair market
value of Pension Plan assets.
"UNITED STATES": the United States of America (including the States
thereof and the District of Columbia).
"UNQUALIFIED AMOUNT": as defined in Section 3.1(d).
"UNRECOGNIZED RETIREE WELFARE LIABILITY": with respect to any
Employee Benefit Plan that provides postretirement benefits other than pension
benefits, the amount of the transition obligation, as determined in accordance
with Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," as of the most recent
valuation date, that has not been recognized as an expense in an income
statement of the Loan Parties, provided that prior to the date such Statement is
applicable to the Loan Parties, such amount shall be based on an estimate made
in good faith of such transition obligation.
"UPFRONT FEES" as defined in Section 3.3(a).
"WITHDRAWAL LIABILITY": liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
1.2 Principles of Construction.
(a) For purposes of this Agreement, Loans may be classified and
referred to by class (e.g., a "REVOLVING LOAN") or by Type (e.g., a "EURODOLLAR
LOAN") or by class and Type (e.g., a "EURODOLLAR REVOLVING LOAN"). Advances also
may be classified and referred to by class (e.g., a "REVOLVING ADVANCE") or by
Type (e.g., a "EURODOLLAR ADVANCE") or by class and Type (e.g., a "EURODOLLAR
REVOLVING ADVANCE" or a "EURODOLLAR TERM ADVANCE").
18
(b) All terms defined in a Loan Document shall have the meanings
given such terms therein when used in the other Loan Documents or any
certificate, opinion or other document made or delivered pursuant thereto,
unless otherwise defined therein.
(c) As used in the Loan Documents and in any certificate, opinion or
other document made or delivered pursuant thereto, accounting terms not defined
in Section 1.1, and accounting terms partly defined in Section 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP.
If at any time any change in GAAP would affect the computation of any financial
ratio or requirement set forth in this Agreement, the Lender and the Borrower
shall negotiate in good faith to amend such ratio or requirement to reflect such
change in GAAP, provided that, until so amended, (i) such ratio or requirement
shall continue to be computed in accordance with GAAP prior to such change
therein and (ii) the Borrower shall provide to the Lender financial statements
and other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.
(d) The words "hereof", "herein", "hereto" and "hereunder" and
similar words when used in a Loan Document shall refer to such Loan Document as
a whole and not to any particular provision thereof, and Section, schedule and
exhibit references contained therein shall refer to Sections thereof or
schedules or exhibits thereto unless otherwise expressly provided therein.
(e) The phrase "may not" is prohibitive and not permissive.
(f) Unless the context otherwise requires, words in the singular
number include the plural, and words in the plural include the singular.
(g) Unless specifically provided in a Loan Document to the contrary,
any reference to a time shall refer to such time in New York City.
(h) Unless specifically provided in a Loan Document to the contrary,
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each means "to but excluding".
(i) References in any Loan Document to a fiscal period shall refer
to that fiscal period of the Borrower.
(j) Reference to "determination" or "determined", shall mean, unless
otherwise specified, a commercially reasonable determination under all the then
exiting circumstances.
19
2. AMOUNT AND TERMS OF LOANS.
2.1 Commitments.
(a) Subject to the terms and conditions hereof, the Lender agrees to
make a Term Loan to the Borrower on the Effective Date in a principal amount
equal to the Term Commitment.
(b) Subject to the terms and conditions set forth herein, the Lender
agrees to make Revolving Loans to the Borrower from time to time during the
Availability Period. The aggregate principal amount of all Revolving Loans at
any one time outstanding shall never exceed (a) the lesser of (i) the Borrowing
Base Amount at such time or (ii) the Revolving Commitment Amount. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, repay and reborrow Revolving Loans.
2.2 Loans and Advances.
(a) Each Revolving Loan shall be made as part of an Advance
consisting of Revolving Loans made by the Lender and the Term Loan shall be made
as part of a single Advance made by the Lender on the Effective Date.
(b) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Advance if the Interest Period requested with respect thereto would end
after the Maturity Date.
2.3 Notes.
(a) The Term Loan made by the Lender shall be evidenced by a
promissory note of the Borrower, substantially in the form of Exhibit A-1, with
appropriate insertions therein as to date and principal amount (as indorsed or
modified from time to time, the "TERM NOTE"), payable to the order of the Lender
for the account of its Applicable Lending Office, dated the Effective Date, and
in a stated principal amount equal to the Term Loan.
(b) The Revolving Loans made by the Lender shall be evidenced by a
promissory note of the Borrower, substantially in the form of Exhibit A-2, with
appropriate insertions therein (as indorsed or modified from time to time, the
"REVOLVING NOTE"; and together with the Term Note, individually, a "NOTE" and,
collectively, the "NOTES"), payable to the order of the Lender for the account
of its Applicable Lending Office, dated the Effective Date, and in a stated
principal amount equal to the Revolving Commitment.
20
2.4 Procedure for Borrowing.
(a) To request the Term Loan, the Borrower shall notify the Lender
of such request by telephone not later than 11:00 a.m., New York City time on
the Effective Date of the proposed Term Loan. The telephonic Borrowing Request
for the Term Loan shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Lender of a written Borrowing Request signed by the
Borrower. Such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.2:
1. the aggregate amount of the requested Advance; and
2. the date of such Advance, which shall be a Business Day;
(b) To request a Revolving Loan Advance, the Borrower shall notify
the Lender of such request by telephone not later than 11:00 a.m., New York City
time, on the date of the proposed Revolving Loan Advance. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Lender of a written Borrowing Request signed by the
Borrower. Each such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.2:
1. the aggregate amount of the requested Advance; and
2. the date of such Advance, which shall be a Business Day.
(c) The Term Loan and any Revolving Loans made on the Effective Date
shall be made as a Eurodollar Advance having an Interest Period of one month.
(d) Subject to the satisfaction of the terms and conditions of this
Agreement, as determined by the Lender, the Advances shall be made available on
the Borrowing Date to the Borrower by the Lender at the office of the Lender
specified in Section 9.6 by crediting the account of the Borrower on the books
of such office with the amount of such requested Advance.
2.5 Termination and Reduction of Commitments.
(a) Unless previously terminated, the Revolving Commitment shall
terminate on the Revolving Maturity Date.
(b) The Borrower may, at its option, at any time terminate, or from
time to time reduce, the Revolving Commitment, provided that (i) the Borrower
shall not terminate or reduce the Revolving Commitment if, after giving effect
to any concurrent repayment of the Revolving Loans in accordance with Section
2.6, the aggregate outstanding principal amount of the Revolving Credit Exposure
would exceed the
21
Revolving Commitment; and (ii) each such reduction shall be in an amount that is
an integral multiple of $50,000 and not less than $50,000.
(c) The Borrower shall notify the Lender of any election to
terminate or reduce the Revolving Commitment under subsection 2.5(b) at least
three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Each notice
delivered by the Borrower pursuant to this Section 2.5 shall be irrevocable. Any
termination or reduction of the Revolving Commitment hereunder shall be
permanent.
2.6 Repayments and Prepayments of the Loans.
(a) The principal amount of the Term Loan shall be payable in
thirty-five (35) equal consecutive monthly installments on the first day of each
month, commencing on May 1, 2005, each in the amount of $277,778, with a final
payment on the Term Loan Maturity Date equal to the remaining unpaid principal
amount of the Term Loan, together with accrued interest therein.
(b) The unpaid principal amount of the Revolving Loans shall be
payable in full on the Revolving Maturity Date.
(c) The Borrower may, at its option, prepay the Term Loan without
premium or penalty (but subject to Sections 3.3(b) and 3.5), in full at any time
or in part from time to time by notifying the Lender in writing (i) in the case
of Prime Advances, on the date of the proposed prepayment; and (ii) in the case
of Eurodollar Advances, at least three Business Days prior to the proposed
prepayment. The Borrower's notice shall set forth the amount to be prepaid and
the date of prepayment. Each such notice shall be irrevocable and the amount
specified in each such notice shall be due and payable on the date specified,
together with accrued interest to the date of such payment on the amount
prepaid. Each partial prepayment of the Term Loan pursuant to this subsection
shall be in an aggregate principal amount of $100,000 or such amount plus a
whole multiple of $100,000 in excess thereof, or, if less, the outstanding
principal balance of the Term Loan. After giving effect to any partial
prepayment with respect to Eurodollar Advances which were made (whether as the
result of a borrowing or a conversion), the outstanding principal balance of
such Eurodollar Advances shall exceed (subject to Section 3.4) $100,000 or such
amount plus a whole multiple of $50,000 in excess thereof. Each prepayment of
the Term Loan shall be applied to the remaining installments of principal
required under subsection 2.6(a) in the inverse order of the maturity thereof.
(d) The Borrower may, at its option, prepay the Revolving Loans
without premium or penalty, in full at any time or in part from time to time by
notifying the Lender in writing on or before the proposed prepayment date. The
Borrower's notice shall set forth the amount to be prepaid and the date of
prepayment. Each such notice shall be irrevocable and the amount specified in
each such notice shall be due and payable on the date specified, together with
accrued interest to the date of such payment
22
on the amount prepaid. Each partial prepayment of the Revolving Loans pursuant
to this subsection shall be in an aggregate principal amount of $50,000 or such
amount plus a whole multiple of $50,000 in excess thereof, or, if less, the
outstanding principal balance of the Revolving Loans.
(e) If any time prior to the Maturity Date the aggregate amount of
all Revolving Credit Exposure shall exceed the Borrowing Base, the Borrower
shall immediately repay the Lender such amount as may be necessary to eliminate
such excess, and the failure of the Borrower to make and the Lender to receive
such payment shall constitute an Event of Default hereunder.
(f) In the event of any partial reduction or termination of the
Revolving Commitment pursuant to Section 2.5(b), then (i) at or prior to the
date of such reduction or termination, the Lender shall notify the Borrower of
the aggregate outstanding principal amount of the Revolving Loans and (ii) if
such sum would exceed the Revolving Commitment after giving effect to such
reduction or termination, then the Borrower shall, on the date of such reduction
or termination, repay the Revolving Loans in an amount sufficient to eliminate
such excess.
(g) Simultaneously with each prepayment or repayment of a Loan, the
Borrower shall prepay all accrued interest on the amounts prepaid or repaid
through the date of prepayment. The Borrower shall indemnify the Lender in
accordance with Section 3.5 in connection with any such prepayment or repayment.
(h) The Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the debt of the Borrower to the Lender
resulting from each Loan made by the Lender, including the amounts of principal
and interest payable and paid to the Lender from time to time hereunder. The
entries made in the accounts maintained pursuant to this subsection shall, to
the extent not inconsistent with any entries made in any Note, be prima facie
evidence of the existence and amounts of the obligations recorded therein,
provided that the failure of the Lender to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
2.7 Use of Proceeds.
(a) The proceeds of the Term Loan shall be used to finance the Ciao
Acquisition and for working capital purposes of the Borrower.
(b) The proceeds of the Revolving Loans shall be used (i) to repay
the Existing Debt; and (ii) for the working capital purposes of the Borrower;
provided, however, in no event shall the proceeds of the Revolving Loans be used
to purchase any of the Capital Stock of the Borrower.
23
(c) Notwithstanding anything to the contrary contained in any Loan
Document, no part of the proceeds of the Loans shall be used, directly or
indirectly, for a purpose which violates any law, including, without limitation,
the provisions of Regulations T, U or X of the Board, as amended.
2.8 Payments.
(a) Each payment (including each prepayment and repayment) of
principal and interest on any Loan, of the Commitment Fee, and of all of the
other fees to be paid to the Lender in connection with this Agreement (the
Commitment Fee, and all of such other fees, being sometimes hereinafter
collectively referred to as the "FEES") shall be made by the Borrower prior to
3:00 p.m. on the date such payment is due to the Lender at the Lender's office
specified in Section 9.6, in each case in immediately available funds and
without set-off or counterclaim. The failure of the Borrower to make any such
payment by 3:00 p.m. shall not constitute a Default, provided that such payment
is made on such due date, but any such payment made after 3:00 p.m. on such due
date shall be deemed to have been made on the next Business Day for the purpose
of calculating interest on amounts outstanding on such Loan.
(b) If any payment hereunder or under any Note shall be due and
payable on a day which is not a Business Day, the due date thereof (except as
otherwise provided in the definition of Interest Period) shall be extended to
the next Business Day and (except with respect to payments in respect of the
Fees) interest shall be payable at the applicable rate specified herein during
such extension, provided, however that if such next Business Day is after the
Maturity Date any such payment shall be due on the immediately preceding
Business Day.
3. INTEREST, FEES, YIELD PROTECTIONS, ETC.
3.1 Interest Rate and Payment Dates.
(a) Prime Revolving Advances and Prime Term Advances shall, in each
case, bear interest on the unpaid principal amount thereof from the date made to
the date such Advance is paid in full at the Prime Rate plus the Applicable
Margin.
(b) Eurodollar Term Advances shall bear interest on the unpaid
principal amount thereof from the date made to the date such Advance is paid in
full at the Eurodollar Rate for the Interest Period in effect for such Advance
plus the Applicable Margin.
(c) Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing, then, so long as such Event of Default is
continuing, all principal of each Loan and each fee and other amount then due
and payable by the Borrower hereunder shall bear interest, after as well as
before judgment, at a rate per annum equal to (i) in the case of principal of
any Loan, 3% plus the rate otherwise applicable to such
24
Loan as provided in the subsection 3.1(a) or 3.1(b) or (ii) in the case of any
other amount, 3% plus the Prime Rate plus the Applicable Margin. For purposes of
the preceding sentence, the rate applicable pursuant to Section 3.1(a) or 3.1(b)
to any overdue principal, interest or other amount payable under the Loan
Documents shall be in the case of an overdue principal balance of any Eurodollar
Advance, the applicable Eurodollar Rate plus the Applicable Margin until the
last day of the applicable Interest Period (or the earlier termination thereof
pursuant to this Agreement) and thereafter at the Prime Rate plus the Applicable
Margin and in all other cases, the Prime Rate plus the Applicable Margin. All
such interest shall be payable on demand.
(d) At no time shall the interest rate payable on any Loan, together
with the Fees and all other amounts payable under the Loan Documents to the
Lender, to the extent the same are construed to constitute interest, exceed the
Highest Lawful Rate. If for any period during the term of this Agreement, any
amount paid to the Lender under the Loan Documents, to the extent the same shall
(but for the provisions of this Section 3.1(d)) constitute or be deemed to
constitute interest, would exceed the maximum amount of interest permitted by
the Highest Lawful Rate during such period (such amount being hereinafter
referred to as an "UNQUALIFIED AMOUNT"), then (i) such Unqualified Amount shall
be applied or shall be deemed to have been applied as a prepayment of the Loans,
and (ii) if in any subsequent period during the term of this Agreement, all
amounts payable under the Loan Documents to the Lender in respect of such period
which constitute or shall be deemed to constitute interest shall be less than
the maximum amount of interest permitted by the Highest Lawful Rate during such
period, then the Borrower shall pay to the Lender in respect of such period an
amount (each a "COMPENSATORY INTEREST PAYMENT") equal to the lesser of (x) a sum
which, when added to all such amounts, would equal the maximum amount of
interest permitted by the Highest Lawful Rate during such period, and (y) an
amount equal to the Unqualified Amount less all other Compensatory Interest
Payments made in respect thereof.
(e) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan, provided that (i) interest accrued
pursuant to subsection 3.1(c) shall be payable on demand, (ii) in the event of
any repayment or prepayment of any Eurodollar Loan, accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
(f) Interest on all Advances shall be calculated on the basis of a
360-day year, in each case, for the actual number of days elapsed. Any change in
the interest rate on the Loans resulting from a change in the Prime Rate or
reserve requirements shall become effective as of the opening of business on the
day on which such change shall become effective. Each determination of the Prime
Rate, or a Eurodollar Rate by the Lender pursuant to this Agreement shall be
conclusive and
25
binding on all parties hereto absent manifest error. The Borrower acknowledges
that to the extent interest payable on Prime Advances is based on the Prime
Rate, such rate is only one of the bases for computing interest on loans made by
the Lender, and by basing interest payable on Prime Advances on the Prime Rate,
the Lender has not committed to charge, and the Borrower has not in any way
bargained for, interest based on a lower or the lowest rate at which the Lender
may now or in the future make loans to other borrowers.
3.2 Interest Elections.
(a) Each Advance initially shall be of the Type specified in Section
2.4(c). Thereafter, unless the Borrower delivers a timely Notice of
Continuation/Conversion prior to the end of the Interest Period applicable
thereto, then, at the end of such Interest Period, such Advance shall be
continued as a Eurodollar Advance for an Interest Period of one month.
Notwithstanding any contrary provision hereof, if an Event of Default has
occurred and is continuing no outstanding Advance may be converted to or
continued as a Eurodollar Advance.
(b) (i) The Borrower may elect from time to time to convert the
entire Term Loan or the entire Revolving Loan to a Prime Advance by giving the
Lender at least one Business Day's prior irrevocable notice of such election,
provided, that any such conversion shall be made on the last day of the Interest
Period applicable to each such Eurodollar Advance and provided that such
conversion may be elected by the Borrower on a day other than the last day of
the Interest Period applicable thereto as long as the Borrower shall have made
all payments incurred in connection with Section 3.5 hereof prior to any such
conversion.
(ii) The Borrower may also elect from time to time to convert
the entire Term Loan or the entire Revolving Loans to a Eurodollar Advances
having an Interest Period of two or three months by giving the Lender at least
three Business Days' prior irrevocable notice of such election, specifying the
Interest Period relating thereto, provided that (i) any conversion of an Advance
to a Eurodollar Advance shall be made on a Business Day described in clause (ii)
of the definition thereof and (ii) any conversion of a Eurodollar Advance on a
day other than the last day of the Interest Period applicable thereto shall be
accompanied by any amounts due to the Lender under Section 3.5 hereof.
(iii) Each such notice shall be irrevocable and shall be given
by the delivery by telecopy of a Notice of Continuation/Conversion (confirmed
promptly, and in any event within five Business Days, by the delivery to the
Lender of a Notice of Continuation/Conversion manually signed by the Borrower).
26
3.3 Fees.
(a) The Borrower agrees to pay to the Lender on the Effective Date
non-refundable upfront fees in an amount equal to 1% of the Revolving Commitment
and 1% of the Term Loan Commitment (collectively, the "UPFRONT FEES").
(b) The Borrower shall pay to the Lender a commitment fee (the
"COMMITMENT FEE"), during the period from the Effective Date through the date on
which the Revolving Commitment terminates at a rate per annum equal to 1/8% of
the average daily unused portion of the Available Revolving Commitment Amount
during the immediately prior fiscal quarter of the Borrower. Accrued commitment
fees with respect to the Revolving Commitment shall be payable quarterly in
arrears on the last day of each June, September, December and March of each
year, on the Revolving Maturity Date, on each date on which the Revolving
Commitment is permanently reduced and on the date on which the Revolving
Commitment terminates, commencing on the first such date to occur after the date
hereof.
(c) In the event the Borrower shall make prepayments of principal of
the Term Loan in excess of the scheduled amortization payments required under
Section 2.6(a) from any Debt Issuance, the Borrower shall pay at the time of any
such prepayment a premium on such prepaid amounts of one percent (1%).
(d) The Borrower agrees to pay to the Lender a late fee equal to 5%
of the amount of any payment which is not paid when due under this Agreement.
(e) All Fees under Section 3.3(b) shall be computed on the basis of
a year of 360 days and shall be payable for the actual number of days elapsed.
3.4 Concerning Interest Periods.
Notwithstanding any other provision of any Loan Document:
(a) No Interest Period selected in respect of the conversion of any
Term Eurodollar Advance shall end after the Maturity Date.
(b) The Borrower shall select Interest Periods such that, on each
date that a mandatory scheduled principal payment is required to be made
pursuant to Section 2.6(a), the outstanding principal balance of each Prime
Advance comprising all or a portion of the Term Loan plus each Eurodollar
Advance comprising all or a portion of the Term Loan the applicable Interest
Period of which shall end on or before such date, shall equal or exceed the
aggregate principal balance of the Term Loan required to be paid on such date
pursuant to Section 2.6(a).
(c) The Borrower shall not be permitted to have more than five
Eurodollar Advances outstanding at any one time, it being agreed that each
borrowing of
27
a Eurodollar Advance pursuant to a single Borrowing Request shall constitute the
making of one Eurodollar Advance for the purpose of calculating such limitation.
3.5 Indemnification for Loss.
Notwithstanding anything contained herein to the contrary, if the
Borrower shall fail for any reason to borrow or convert an Advance after it
shall have given notice to do so in which it shall have requested a Eurodollar
Advance pursuant to Section 2.4 or 3.2, or if a Eurodollar Advance shall be
terminated or converted for any reason prior to the last day of the Interest
Period applicable thereto, or if any repayment or prepayment of the principal
amount of a Eurodollar Advance is made by the Borrower for any reason on a date
which is prior to the last day of the Interest Period applicable thereto, the
Borrower shall indemnify the Lender against, and pay on demand directly to the
Lender the amount (calculated by the Lender using any method chosen by the
Lender which is customarily used by the Lender for such purpose) for similar
Loans equal to any loss or out-of-pocket expense suffered by the Lender as a
result of such failure to borrow or convert, or such termination, repayment or
prepayment, including any loss, cost or expense suffered by the Lender in
liquidating or employing deposits acquired to fund or maintain the funding of
such Eurodollar Advance, or redeploying funds prepaid or repaid, in amounts
which correspond to such Eurodollar Advance, and any internal processing charge
customarily charged by the Lender in connection therewith. A certificate of the
Lender setting forth the amount of any loss, cost or expense suffered by the
Lender shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay the Lender the amount shown as due on any
such certificate within 20 days after receipt thereof or receipt of a revised
certificate correcting any manifest error in the first such certificate.
3.6 Capital Adequacy.
If the Lender determines that any Regulatory Change regarding
capital requirements of the Lender or the Lender's holding company (the "HOLDING
COMPANY") has the effect of reducing the rate of return on the Lender's or such
Holding Company's capital, or the asset value to the Lender or such Holding
Company of the Loans made or maintained by the Lender, in either case to a level
below that which the Lender or such Holding Company could have achieved or would
thereafter be able to achieve but for such Regulatory Change (after taking into
account the Lender's or such Holding Company's policies regarding capital
adequacy) by an amount deemed by the Lender to be material to the Lender or the
Holding Company, then, within 20 days after demand by the Lender, the Borrower
shall pay to the Lender or such Holding Company such additional amount or
amounts as shall be sufficient to compensate the Lender or such Holding Company,
as the case may be, for such reduction.
3.7 Reimbursement for Increased Costs.
If the Lender shall determine that a Regulatory Change:
28
(a) does or shall subject it to any Taxes of any kind whatsoever
with respect to any Eurodollar Advances or its obligations under this Agreement
to make Eurodollar Advances, or change the basis of taxation of payments to it
of principal, interest or any other amount payable hereunder in respect of its
Eurodollar Advances, or impose on the Lender any other condition, including any
Taxes required to be withheld from any amounts payable under the Loan Documents
(except for imposition of, or change in the rate of, tax on the overall net
income of the Lender); or
(b) does or shall impose, modify or make applicable any reserve,
special deposit, compulsory loan, assessment, increased cost or similar
requirement against assets held by, or deposits of, or advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
the Lender in respect of its Eurodollar Advances which is not otherwise included
in the determination of a Eurodollar Rate;
and the result of any of the foregoing is to increase the cost to the Lender of
making, renewing, converting or maintaining its Eurodollar Advances or its
commitment to make such Eurodollar Advances, or to reduce any amount receivable
hereunder in respect of its Eurodollar Advances, then, in any such case, the
Borrower shall pay the Lender within 20 days after demand therefor, such
additional amounts as is sufficient to compensate the Lender for such additional
cost or reduction in such amount receivable which the Lender deems to be
material as determined by the Lender. No failure by the Lender to demand, and no
delay in demanding, compensation for any increased cost shall constitute a
waiver of its right to demand such compensation at any time. A statement setting
forth the calculations of any additional amounts payable pursuant to this
Section 3.7 submitted by the Lender to the Borrower shall be conclusive absent
manifest error.
3.8 Increased Costs; Illegality.
(a) If any Regulatory Change shall:
(i) Impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, the Lender (except any such reserve
requirement reflected in the Eurodollar Rate); or
(ii) Impose on the Lender or the interbank market any other
condition affecting this Agreement or any Eurodollar Advances made by the
Lender;
and the result of any of the foregoing shall be to increase the cost to the
Lender of making or maintaining any Eurodollar Advance (or of maintaining its
obligation to make any such Advance) or to reduce the amount of any sum received
or receivable by the Lender hereunder (whether of principal, interest or
otherwise), then the Borrower shall pay to the Lender such additional amount or
amounts as will compensate the Lender for such additional costs incurred or
reduction suffered.
29
(b) A certificate of the Lender setting forth the amount or amounts
necessary to compensate the Lender or the Holding Company, as the case may be,
as specified in Section 3.6 or subsection 3.8(a) shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
the Lender the amount shown as due on any such certificate within 20 days after
receipt thereof or receipt of a revised certificate correcting any manifest
error in the first such certificate.
(c) Notwithstanding any other provision of this Agreement, if, after
the date of this Agreement, any Regulatory Change shall make it unlawful for the
Lender to make or maintain any Eurodollar Advance or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Advance, then,
by written notice to the Borrower:
(i) the Lender may declare that Eurodollar Advances will not
thereafter (for the duration of such unlawfulness) be made by the Lender
hereunder (or be continued for additional Interest Periods), whereupon any
request to continue a Eurodollar Advance for an additional Interest Period
shall be deemed a request for an Prime Advance (or a request to convert a
Eurodollar Advance into an Prime Advance), unless such declaration shall
be subsequently withdrawn; and
(ii) the Lender may require that all outstanding Eurodollar Advances
made by it be converted to Prime Advances, in which event all such
Eurodollar Advances shall be automatically converted to Prime Advances, as
of the effective date of such notice as provided in the last sentence of
this subsection 3.8(c).
In the event the Lender shall exercise its rights under clauses (i) or (ii) of
this subsection 3.8(c), all payments and prepayments of principal that would
otherwise have been applied to repay the Eurodollar Advances that would have
been made by the Lender or the converted Eurodollar Advances of such Lender
shall instead be applied to repay the Prime Advances made by the Lender in lieu
of, or resulting from the conversion of, such Eurodollar Advances, as
applicable. For purposes of this subsection 3.8(c), a notice to the Borrower by
the Lender shall be effective as to each Eurodollar Advance made by the Lender,
if lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Advance; in all other cases such notice shall be effective on the
date of receipt by the Borrower.
3.9 Substituted Interest Rate.
If prior to the commencement of any Interest Period for a Eurodollar
Advance the Lender shall have determined (which determination shall be
conclusive and binding upon the Borrower), with respect to (i) any portion of a
Loan that the Borrower has requested be made as Eurodollar Advances or (ii)
Eurodollar Advances that will result from the requested continuation of any
portion of the Advances as Eurodollar Advances (each, an "AFFECTED ADVANCE"),
that by reason of circumstances affecting the
30
interbank market either adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate applicable pursuant to Section 3.1 or the
Lender shall have determined (which determination shall be conclusive and
binding on the Borrower) that the applicable Eurodollar Rate will not adequately
and fairly reflect the cost to the Lender of maintaining or funding loans
bearing interest based on such Eurodollar Rate, the Lender shall promptly notify
the Borrower (by telephone or otherwise, to be promptly confirmed in writing) of
such determination, on or, to the extent practicable, prior to the Effective
Date or the requested Conversion Date for such Affected Advances. If the Lender
shall give such notice, (a) any Affected Advances shall be made as Prime
Advances, (b) the Advances (or any portion thereof) that were to have been
continued as Affected Advances shall be converted into Prime Advances and (c)
any outstanding Affected Advances shall be converted, on the last day of the
then current Interest Period with respect thereto, to Prime Advances. Until any
notice under clauses (i) or (ii), as the case may be, of this Section 3.9 has
been withdrawn by the Lender (by notice to the Borrower promptly upon either (x)
the Lender having determined that such circumstances affecting the interbank
market no longer exist and that adequate and reasonable means do exist for
determining the Eurodollar Rate pursuant to Section 3.1 or (y) the Lender having
determined that circumstances no longer render Advances (or any portion thereof)
Affected Advances), no further Eurodollar Advances shall be required to be made
by the Lender, nor shall the Borrower have the right to convert or continue all
or any portion of a Loan to or as Eurodollar Advances.
3.10 Taxes.
(a) All payments made by the Borrower under the Loan Documents shall
be made free and clear of, and without reduction for or on account of, any Taxes
required by law to be withheld from any amounts payable under the Loan Documents
other than Taxes imposed on the net income of the Lender. In the event that the
Borrower is prohibited by law from making payments hereunder free of deductions
or withholdings, then the Borrower shall pay such additional amounts to the
Lender as may be necessary in order that the actual amounts received by the
Lender in respect of interest and any other amounts payable under the Loan
Documents after deduction or withholding (and after payment of any additional
Taxes or other charges due as a consequence of the payment of such additional
amounts) shall equal the amount that would have been received if such deduction
or withholding were not required.
(b) The Borrower agrees to pay any current or future stamp or
documentary Taxes or any other excise or property Taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or any amendment, supplement or modification of, or
any waiver or consent under or in respect of, the Loan Documents or otherwise
with respect to, the Loan Documents.
31
4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender to enter into this Agreement and to make the
Loans, the Borrower and each Guarantor (to the extent applicable) makes the
following representations and warranties to the Lender:
4.1 Subsidiaries; Capitalization.
As of the Effective Date, (a) the Borrower has the domestic
Subsidiaries and the foreign Subsidiaries set forth on Schedule 4.1 hereto; and
(b) Schedule 4.1 also sets forth, as of the Effective Date, (i) the authorized,
issued and outstanding Capital Stock and beneficial and record ownership
structure of the Borrower, (ii) the authorized, issued and outstanding Capital
Stock and beneficial and record ownership structure of each Guarantor and (iii)
the exact legal name and jurisdiction of incorporation of each Guarantor. All
outstanding Capital Stock of each Loan Party is free and clear of all Liens, and
is duly authorized, validly issued, fully paid and nonassessable. As of the
Effective Date, except as set forth on Schedule 4.1, (1) none of the Loan
Parties has issued any securities convertible into, or options or warrants for,
any common or preferred equity securities thereof and (2) there are no
agreements, voting trusts or understandings binding upon any of the Loan Parties
with respect to the voting securities of any of the Loan Parties or affecting in
any manner the sale, pledge, assignment or other disposition thereof, including
any right of first refusal, option, redemption, call or other right with respect
thereto, whether similar or dissimilar to any of the foregoing.
4.2 Existence and Power.
Each Loan Party is duly organized or formed and validly existing in
good standing under the laws of the jurisdiction of its incorporation or
formation, has all requisite power and authority to own or lease its Property
and to carry on its business as now conducted and as proposed to be conducted
during the term of this Agreement, and is in good standing and authorized to do
business in each jurisdiction in which the nature of the business conducted
therein or the Property owned by it therein makes such qualification necessary,
except where such failure to qualify could not reasonably be expected to have a
Material Adverse Effect.
4.3 Authority and Execution.
(a) The Borrower has full legal power and authority to borrow the
Loans.
(b) Each Loan Party has full legal power and authority to enter
into, execute, deliver and perform the Loan Documents to which it is a party all
of which have been duly authorized by all proper and necessary corporate,
partnership or other applicable action and each Loan Party is in full compliance
with its Organizational Documents and the execution, delivery and performance by
the Loan Parties of the Loan
32
Documents does not conflict with any of the terms of such Loan Party's
Organizational Documents. Each Loan Party has duly executed and delivered the
Loan Documents to which it is a party.
4.4 Binding Agreement.
The Loan Documents (other than the Notes) constitute, and the Notes,
when issued and delivered pursuant hereto for value received, will constitute,
the valid and legally binding obligations of the Loan Parties, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and general
principles of equity (whether considered in an action of law or in equity).
4.5 Litigation.
There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending or, to the knowledge of the
Borrower, threatened, against the Borrower, any Guarantor or any of their
respective assets that (a) could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect; (b) call into question the validity
or enforceability of, or otherwise seek to invalidate, any Loan Document, or
might, individually or in the aggregate, materially and adversely affect any of
the transactions contemplated by any Loan Document; or (c) seek to (or is
expected to) rescind, terminate, revoke, cancel, withdraw, suspend, modify or
withhold any necessary license, permit or authorization of any of the Loan
Parties.
4.6 Required Consents.
Except as set forth in Schedule 4.6, no consent, authorization or
approval of, filing with, notice to, or exemption by, stockholders or holders of
any other equity interest, any Governmental Authority or any other Person is
required to authorize the Loans or is required in connection with the execution,
delivery and performance of the Loan Documents to which any Loan Party is a
party or is required as a condition to the validity or enforceability of the
Loan Documents to which any of the same is a party.
4.7 Absence of Defaults; No Conflicting Agreements.
(a) No Loan Party is in default under any mortgage, indenture,
contract or agreement to which it is a party or by which it or any of its
Property is bound, the effect of which default could reasonably be expected to
have a Material Adverse Effect. Except as set forth in Schedule 4.7, the
execution, delivery or carrying out of the terms of the Loan Documents will not
constitute a default under, or result in the creation or imposition of, or
obligation to create, any Lien (other than a Permitted Lien) upon any Property
of any Loan Party or result in a breach of or require the mandatory repayment of
33
or other acceleration of payment under or pursuant to the terms of any such
mortgage, indenture, contract or agreement.
(b) No Loan Party is a party to any agreement (other than the Loan
Documents) which could have a Material Adverse Effect.
(c) None of the Loan Parties is in default with respect to any
judgment, order, writ, injunction, decree or decision of any Governmental
Authority which default could reasonably be expected to have a Material Adverse
Effect. The execution, delivery and performance of the Loan Documents by the
Loan Parties will not conflict with any law, rule, regulation, judgment, order,
decree or agreement.
4.8 Compliance with Applicable Laws.
Each of the Loan Parties is in compliance in all material respects
with all statutes, regulations, rules and orders of all Governmental Authorities
(including, but not limited to, ERISA and all Environmental Laws) which are
applicable to each such Loan Party, a violation of which could reasonably be
expected to have a Material Adverse Effect.
4.9 Taxes.
Each of the Loan Parties has filed or caused to be filed all tax
returns required to be filed and has paid, or has made adequate provision for
the payment of, all taxes shown to be due and payable on said returns or in any
assessments made against it (other than those being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
set aside on its books in accordance with GAAP) which would be material to the
Loan Parties, and no tax Liens have been filed with respect thereto. The
charges, accruals and reserves on the books of the Loan Parties with respect to
all taxes are, to the best knowledge of the Borrower, adequate for the payment
of such taxes, and the Borrower knows of no unpaid assessment which is due and
payable against any of the Loan Parties or any claims being asserted which could
reasonably be expected to have a Material Adverse Effect, except such thereof as
are being contested in good faith by appropriate proceedings and for which
adequate reserves have been set aside in accordance with GAAP.
4.10 Governmental Regulations.
None of the Loan Parties or any Person controlled by, controlling,
or under common control with, any of the Loan Parties, is subject to regulation
under the Public Utility Holding Company Act of 1935, as amended, the Federal
Power Act, as amended, the Investment Company Act of 1940, as amended or any
other regulation under any law which would limit or otherwise affect the ability
of the Borrower to borrow the Loans under this Agreement.
34
4.11 Federal Reserve Regulations; Use of Loan Proceeds.
None of the Loan Parties is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock. After giving effect to the making of
the Loans, Margin Stock will constitute less than 25% of the assets (as
determined by any reasonable method) of the Loan Parties in the aggregate. No
part of the proceeds of the Loans shall be used, directly or indirectly, to
purchase or carry Margin Stock or otherwise for a purpose which violates any
law, including, without limitation, the provisions of Regulation T, U or X of
the Board, as amended.
4.12 ERISA.
Neither a Reportable Event nor an "accumulated funding deficiency"
(within the meaning of Section 412 of the Code or Section 302 of ERISA) has
occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Pension Plan other
than a Multiemployer Plan, and each Pension Plan has complied in all material
respects with the applicable provisions of ERISA and the Code, where the
liability which could be reasonably expected to result could have a Material
Adverse Effect; provided, however, that with respect to any Multiemployer Plan,
such representation is made only to the knowledge of the Borrower. No
termination of a Plan pursuant to Section 4041(c) or 4042 of ERISA has occurred,
and no Lien in favor of the PBGC or a Pension Plan has arisen, during such
five-year period. The present value of all accrued benefits under each Plan
(based on those assumptions used to fund such Plans) did not, as of the last
annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such
accrued benefits by a material amount. Neither the Borrower nor any ERISA
Affiliate has had a complete or partial withdrawal from any Multiemployer Plan
and to the knowledge of the Borrower, neither the Borrower nor any ERISA
Affiliate would become subject to any liability under ERISA if the Borrower or
any such ERISA Affiliate were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made which liability could be reasonably
expected to result could have a Material Adverse Effect. No such Multiemployer
Plan is in reorganization or insolvent.
4.13 Financial Statements.
The Borrower heretofore has furnished to the Lender a copy of (a)
the audited balance sheet of each Loan Party as of December 31, 2004, and the
related statements of operations, stockholder's equity and cash flows for the
fiscal year then ended, in each case reported on by the Accountants, and (b) the
unaudited balance sheet of each Loan Party as of December 31, 2004, and the
related statements of operations, stockholder's equity and cash flows for the
fiscal quarters then ended, each as certified by the Financial Officer of each
such Loan Party (collectively, with the related notes and schedules, the
"FINANCIAL STATEMENTS"). The Financial Statements fairly present the
35
financial condition and results of the operations of the Loan Parties as of the
dates and for the periods indicated therein (subject, in the case of such
unaudited statements, to normal year-end adjustments) and have been prepared in
conformity with GAAP. Except as reflected in the Financial Statements or in the
notes thereto, none of the Loan Parties has any obligation or liability of any
kind (whether fixed, accrued, contingent, unmatured or otherwise) which, in
accordance with GAAP, should have been shown on the Financial Statements and was
not. Since the date of the Financial Statements, each of the Loan Parties has
conducted its business only in the ordinary course and there has been no
Material Adverse Change.
4.14 Property.
(a) Each of the Loan Parties has good and marketable title to all of
its Property, title to which is material to the such Loan Party, subject to no
Liens, except Permitted Liens.
(b) Each of the Loan Parties has a valid leasehold interest in all
Property, a leasehold interest in which is material to any such Loan Party,
subject to no Liens, except Permitted Liens. Each of such leases is in full
force and effect and there exists no defaults or events of default thereunder.
(c) Each of the Loan Parties owns, or is entitled to use, all
trademarks, trade names, copyrights, patents and other intellectual property
material to its business, and to the knowledge of each Loan Party the use
thereof by such Loan Party (i) does not infringe upon the rights of any other
Person; or (ii) result in a claim by any other Person.
4.15 Authorizations.
Each of the Loan Parties possesses or has the right to use all
franchises, licenses, permits, authorizations and other rights as are material
and necessary for the conduct of its business, and with respect to which it is
in compliance, with no known conflict with the valid rights of others which
could reasonably be expected to have a Material Adverse Effect. All of such
franchises, licenses, permits, authorizations and other rights are in full force
and effect and no event has occurred which permits or, to the best knowledge of
the Borrower, after notice or the lapse of time or both, or any other condition,
could reasonably be expected to permit, the revocation or termination of any
such franchise, license, permit, authorization or other right which revocation
or termination could reasonably be expected to have a Material Adverse Effect.
4.16 Environmental Matters.
(a) No Hazardous Substances have been generated or manufactured on,
transported to or from, treated at, stored at or discharged by the Borrower or,
to the best of the Borrower's actual knowledge, by any current or former owner
or leaseholder, from any Real Property in violation of any Environmental Laws;
no Hazardous
36
Substances have been discharged by the Borrower or, to the best of the
Borrower's actual knowledge, by any current or former owner or leaseholder, into
subsurface waters under any Real Property in violation of any Environmental
Laws; no Hazardous Substances have been discharged by the Borrower or, to the
best of the Borrower's actual knowledge, by any current or former owner or
leaseholder, from any Real Property on or into Property or waters (including
subsurface waters) adjacent to any Real Property in violation of any
Environmental Laws; and there are not now, nor to the Borrower's actual
knowledge, has there ever been, on any Real Property any underground or above
ground storage tanks regulated under any Environmental Laws that are not in
compliance with all Environmental Laws.
(b) No Loan Party (i) has received written notice of any claim,
demand, suit, action, proceeding, event, condition, report, directive, Lien,
violation, non-compliance or investigation indicating or concerning any
potential or actual liability (including, without limitation, potential
liability for enforcement, investigatory costs, cleanup costs, government
response costs, removal costs, remedial costs, natural resources damages,
Property damages, personal injuries or penalties) arising in connection with:
(x) any non-compliance with or violation of the requirements of any applicable
Environmental Laws, or (y) the presence of any Hazardous Substance on any Real
Property (or any Real Property previously owned by any Loan Party) in violation
of any Environmental Laws or the release or threatened release of any Hazardous
Substance into the environment in violation of any Environmental Laws, (ii) has
received written notice that it has any threatened or actual liability in
connection with the presence of any Hazardous Substance on any Real Property (or
any Real Property previously owned by any Loan Party) or the release or
threatened release of any Hazardous Substance into the environment in violation
of any Environmental Laws, (iii) has received written notice of any federal or
state investigation evaluating whether any remedial action is needed to respond
to the presence of any Hazardous Substance on any Real Property (or any Real
Property previously owned by any Loan Party) or a release or threatened release
of any Hazardous Substance into the environment for which any Loan Party is or
may be liable, or (iv) has received written notice that any Loan Party is or may
be liable to any Person under any Environmental Law.
4.17 Insurance.
Schedule 4.17 sets forth a description of all insurance maintained
by or on behalf of the Loan Parties as of the Effective Date. All premiums in
respect of such insurance that are due and payable have been paid.
4.18 Solvency.
(a) Immediately after giving effect to the transactions contemplated
by the Loan Documents, the Loan Parties are and will be Solvent.
37
(b) After the incurrence of the obligations under the Loan
Documents, no Loan Party will not have incurred debts beyond the ability to pay
such debts as they mature, and the cash available to each Loan Party, after
taking into account all other anticipated uses of such cash, is anticipated to
be sufficient to pay all such amounts on or in respect of the debts of each such
Loan Party, as the case may be, when such amounts are required to be paid.
(c) After the incurrence of the obligations under the Loan
Documents, each Loan Party will have sufficient capital to conduct their present
or proposed business, and none of the Loan Parties will not be left with
unreasonably small capital with which to conduct their present or proposed
business.
4.19 Absence of Certain Restrictions.
No indenture, certificate of designation for preferred stock,
agreement or instrument to which any Loan Party is a party (other than this
Agreement), prohibits or limits in any way, directly or indirectly the ability
of any Guarantor to make Distributions or repay any Indebtedness to the
Borrower.
4.20 No Misrepresentation.
No representation or warranty contained in any Loan Document and no
certificate or report from time to time furnished by the Borrower or any Loan
Party in connection with the transactions contemplated thereby, contains or will
contain a misstatement of material fact, or, to the best knowledge of the
Borrower, omits or will omit to state a material fact required to be stated in
order to make the statements therein contained not misleading in the light of
the circumstances under which made, provided that any projections or pro-forma
financial information contained therein are based upon good faith estimates and
assumptions believed by the Borrower to be reasonable at the time made, it being
recognized by the Lender that such projections as to future events are not to be
viewed as facts, and that actual results during the period or periods covered
thereby may differ from the projected results.
4.21 Security Interest and Liens.
(a) Each Security Agreement is effective to create in favor of the
Lender, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral (as defined in such Security
Agreement , subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law and, when (i) the property constituting such Collateral (for
which possession is required for perfection) is delivered to the Lender, (ii)
the financing statements in appropriate form are filed in the offices specified
on Schedule 6 to the Perfection Certificate and (iii) all other applicable
filings under the Uniform Commercial Code or otherwise that are required under
the Loan
38
Documents are made, the security interests and liens granted pursuant to each
Security Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the grantors thereunder in such
Collateral, in each case prior and superior in right to any other Person, other
than with respect to Liens expressly permitted by Section 7.3.
(b) When each Security Agreement is filed in the United States
Patent and Trademark Office and the United States Copyright Office, the security
interests and liens granted pursuant to each Security Agreement shall constitute
a fully perfected Lien on, and security interest in, all right, title and
interest of the Borrower and the Guarantors in the Intellectual Property (as
defined in each Security Agreement) in which a security interest may be
perfected by filing, recording or registering a security agreement, financing
statement or analogous document in the United States Patent and Trademark Office
or the United States Copyright Office, as applicable, in each case prior and
superior in right to any other Person, other than with respect to Liens
expressly permitted by Section 7.3.
4.22 Labor Matters.
As of the Effective Date, there are no strikes, lockouts or
slowdowns against any Loan Party pending or, to the knowledge of any Loan Party,
threatened. The hours worked by and payments made to employees of each Loan
Party have not been in violation of the Fair Labor Standards Act or any other
applicable Federal, state, local or foreign law dealing with such matters. All
material payments due from each Loan Party, or for which any claim may be made
against each Loan Party, on account of wages and employee health and welfare
insurance and other benefits, have been paid or accrued as a liability on the
books of such Loan Party. The consummation of the transactions contemplated by
the Loan Documents will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which any Loan Party is bound.
4.23 Accounts Receivable.
None of the Accounts Receivable of the Borrower is evidenced by a
promissory note or other instrument which has not been delivered to the Lender.
4.24 The Ciao Acquisition
The Borrower has heretofore delivered to the Lender a true, correct
and complete copy of the Ciao Acquisition Agreement. The Ciao Acquisition
Agreement has not been amended or modified and sets forth the entire agreement
among the parties thereto with respect to the subject matter thereof. No party
to the Ciao Acquisition Agreement has waived the fulfillment of any material
condition precedent set forth therein to the consummation of the Ciao
Acquisition Agreement, no party has failed to perform any of its material
obligations thereunder or under any instrument or document
39
executed and delivered in connection therewith, and the Borrower has no actual
knowledge that any of the representations or warranties of the Ciao contained in
the Ciao Acquisition Agreement were false or misleading in any material respect
when made or when reaffirmed on the date hereof. Except as set forth on Schedule
4.24, no consent or approval, authorization or declaration of any governmental
authority, bureau or agency, is or will be required in connection with the Ciao
Acquisition Agreement. Except as set forth on Schedule 4.24, neither the
execution and delivery of the Ciao Acquisition Agreement, nor the performance by
the Borrower or its Subsidiaries' obligations thereunder, will violate any
provision of law or will conflict with or result in a breach of, or create (with
or without the giving of notice or lapse of time, or both) a default under, any
agreement to which the Borrower or any of its Subsidiaries are a party or by
which it is bound or any of its properties is affected other than breaches or
violations that individually or collectively could not reasonably be expected to
have a Material Adverse Effect. The Borrower will acquire upon the consummation
of the Ciao Acquisition Agreement valid, legal and marketable title to all the
assets to be transferred pursuant thereto and heretofore owned by the Ciao,
except with respect to shares related to the Known Lawsuit (as defined in the
Ciao Acquisition Agreement) free and clear of any Lien, except for the Liens
created and granted by the Security Documents and Permitted Encumbrances.
5. CONDITIONS.
5.1 Effective Date.
The effectiveness of this Agreement shall be subject to the
fulfillment of the following conditions precedent to the satisfaction of the
Lender:
(a) The Lender shall have received a certificate, dated the
Effective Date, of the Secretary or an Assistant Secretary of the Borrower:
(i) attaching resolutions of its Board of Directors, and, if
necessary, its shareholders then in full force and effect authorizing the
execution, delivery and performance of this Agreement, the Notes, the Guarantee,
the Security Documents, the other Loan Documents, and the related transactions
contemplated in connection herewith and therewith,
(ii) attaching the by-laws and certificate of incorporation of
the Borrower and each Guarantor,
(iii) certifying that no amendment or modification of the
Borrower's or any Guarantor's by-laws or certificate of incorporation has
occurred except as attached to such certificate;
(iv) certifying as to the incumbency and signatures of those
of its officers authorized to act with respect to this Agreement, the Notes, the
Guarantee, the
40
Security Documents and each other Loan Document, upon which certificate the
Lender may conclusively rely until it shall have received a further certificate
of the Secretary of the Borrower and each Subsidiary canceling or amending such
prior certificate; and
(v) attaching a certificate of good standing with respect to
the Borrower and each Guarantor as of a recent date issued by the Secretary of
State of the state of its incorporation.
(b) The Lender shall have received counterparts of this Agreement
duly executed by the Borrower.
(c) The Lender shall have received each of the Notes, duly executed
by an Authorized Signatory of the Borrower.
(d) The Lender shall have received the Security Agreements, duly
executed by an Authorized Signatory of the Borrower and each Guarantor and dated
the Effective Date, together with the following, if available on or prior to the
Effective Date:
(i) stock certificates representing 65% of the shares of
capital stock of all foreign Subsidiaries, in each case, owned by or on behalf
of any Loan Party as of the Effective Date;
(ii) any promissory notes and other instruments evidencing all
loans, advances and other debt owed or owing to any Loan Party as of the
Effective Date;
(iii) stock powers and instruments of transfer, endorsed in
blank, with respect to such stock certificates, promissory notes and other
instruments; and
(iv) all instruments and other documents, including Uniform
Commercial Code financing statements, required by law or reasonably requested by
the Lender to be filed, registered or recorded to create or perfect the Liens
intended to be created under the Security Agreement.
(e) The Lender shall have received counterparts of the Guaranty duly
executed by each of the Guarantors.
(f) The Lender shall have received an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇ LLP, counsel to the Borrower and the Guarantors, addressed to the Lender
(and permitting Special Counsel to rely thereon), and dated the Effective Date,
in form and substance satisfactory to the Lender. It is understood that such
opinion is being delivered to the Lender upon the direction of the Borrower and
the Guarantors and that the Lender may and will rely on such opinion.
(g) The Lender shall have received Uniform Commercial Code, tax,
bankruptcy and judgment lien search reports with respect to each applicable
public office
41
where Liens are or may be filed disclosing that there are no Liens of record in
such official's office covering any Collateral or showing the Borrower or any
Guarantor as debtor thereunder (other than Permitted Liens) and a certificate of
the Borrower signed by an Authorized Signatory thereof, dated the Effective
Date, certifying that, upon the making of the Loans there will exist no Liens on
the Collateral other than Permitted Liens.
(h) There shall be no injunction, writ, preliminary restraining
order or other order of any nature issued by any Governmental Authority in any
respect materially and adversely affecting the transactions provided for in the
Loan Documents and no action or proceeding by or before any Governmental
Authority has been commenced and is pending or, to the knowledge of the
Borrower, threatened, seeking to prevent or delay the transactions contemplated
by the Loan Documents or challenging any other terms and provisions hereof or
thereof or seeking any damages in connection therewith, and the Lender shall
have received a certificate, in all respects satisfactory to the Lender, of an
Authorized Signatory of the Borrower to the foregoing effect.
(i) All approvals and consents of all Persons required to be
obtained in connection with the consummation of the transactions contemplated by
the Loan Documents shall have been obtained and shall be in full force and
effect, and all required notices have been given and all required waiting
periods shall have expired, and the Lender shall have received a certificate, in
all respects satisfactory to the Lender, of an Authorized Signatory of the
Borrower to the foregoing effect.
(j) The Lender shall have received a certificate of a Financial
Officer of the Borrower, dated the Effective Date, in all respects satisfactory
to the Lender certifying that after giving effect to the Loans to be made on the
Effective Date, to the best knowledge of such Financial Officer, the Borrower
and each Guarantor is Solvent.
(k) The Lender shall have (i) received a pay-off-letter from the
holder of the Existing Debt, in form and substance satisfactory to the Lender
and (ii) confirmed that (1) prior to or simultaneously with the making of the
Loans on the Effective Date, the Borrower shall have fully repaid all Existing
Debt and all agreements with respect thereto shall have been cancelled or
terminated, and (2) the holder of the Existing Debt shall have confirmed that,
upon repayment of the Existing Debt, all Liens on the assets of the Borrower and
Guarantors, if any, securing the Existing Debt shall be deemed terminated and
shall have agreed to file or to authorize the Borrower to file any UCC or other
statements necessary or appropriate to effect such termination.
(l) The Lender shall have received each of the following, which
shall be in form and substance satisfactory to the Lender: (i) financial
statements of the Loan Parties for the fiscal year ending December 31, 2004,
certified by the Financial Officer of such Loan Party, and (ii) projections
covering the period from the Effective Date to the Maturity Date.
42
(m) The Lender shall have received an audit of the Collateral, which
audit to be paid for by the Borrower and acceptable to the Lender in all
respects.
(n) The Lender shall have received and be satisfied with the
completed aged schedule of Accounts Receivable.
(o) All fees payable to the Lender on the Effective Date, including
without limitation, the Upfront Fees, shall have been paid by the Borrower and
all filing fees and recording fees shall have been paid by the Borrower.
(p) The fees and expenses of Special Counsel in connection with the
preparation, negotiation and closing of the Loan Documents shall have been paid
by the Borrower.
(q) The Lender shall have received a certificate dated the Effective
Date, duly executed by an Authorized Signatory of the Borrower, certifying that
(i) no Default has occurred and is continuing or would result from the making of
any Loan, (ii) the representations and warranties contained in the Loan
Documents are true and correct on and as of the Effective Date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall have been true and
correct on and as of such earlier date, (iii) no Material Adverse Change or
material adverse condition in the business, assets, operations, properties,
condition (financial or otherwise), liabilities (including contingent
liabilities), prospects or material agreements of the Borrower or any of the
Guarantors has occurred since December 31, 2004 and (iv) the Borrower has
complied and is in compliance with all of the terms, covenants and conditions of
the Loan Documents.
(r) The Lender shall have received evidence satisfactory to it that
the consummation by the Lender of the transactions contemplated by the Loan
Documents (including, but not limited to, the making of the Loans, if any, the
use of the proceeds thereof and the granting of liens and security interests in
the Collateral pursuant to the Security Documents) will not result in any
violation by the Lender of any requirement of law or any regulation.
(s) The Lender shall have received a certificate of all insurance
maintained by the Borrower and the Guarantors in form and substance and in
amounts reasonably satisfactory to the Lender together with endorsements naming
the Lender as loss payee.
(t) The Lender shall have received in form and substance
satisfactory to the Lender a Borrowing Base Certificate, duly completed and
setting forth the calculations required thereby, as of the Effective Date.
(u) The Lender shall have received confirmation satisfactory to it
that (i) the Borrower has established its primary domestic operating account and
its primary
43
investment and cash management accounts at an office of the Lender and (ii) the
accounts established by the Borrower at an office of the Lender are subject to
the security interests granted pursuant to the Borrower Security Agreement and
that such amounts have not less than $10,000,000 of Eligible Liquid Assets.
(v) The Lender shall have received a copy of the definitive Ciao
Acquisition Agreement, which shall not have been amended or modified except with
the prior written consent of the Lender, and a copy of all filings made by the
Borrower and the Ciao with the Securities and Exchange Commission with respect
to the Ciao Acquisition and together with a certificate signed on behalf of the
Borrower by a Financial Officer of the Borrower's, dated as of the Effective
Date, stating that:
(i) the directors and shareholders of Ciao have approved the
Ciao Acquisition Agreement;
(ii) all regulatory consents and approvals for the Ciao
Acquisition have been obtained and all waiting periods with respect thereto have
expired and all consents set forth in the Ciao Acquisition Agreement have been
obtained;
(iii) there exists no injunction or temporary restraining
order which would prohibit the making of the Loans or the consummation of the
Ciao Acquisition or the other transactions contemplated by this Agreement; and
there exists no litigation which would reasonably be expected to result in a
Material Adverse Effect (after giving effect to the Ciao Acquisition) taken as a
whole; and
(iv) all conditions to the consummation of the Ciao
Acquisition in accordance with the Ciao Acquisition Agreement have been
satisfied or waived other than the payment of the cash consideration for the
purchase price.
(w) The Lender shall have received a form of authorization to charge
account duly executed by the Borrower.
(x) The Lender shall have received such other documents, each in
form and substance reasonably satisfactory to the Lender, as the Lender shall
reasonably require.
5.2 Each Advance.
The obligation of the Lender to make any Advance is subject to the
satisfaction of the following conditions precedent to the satisfaction of the
Lender:
(a) The representations and warranties contained in each Loan
Document shall be true and correct in all material respects on and as of the
date of such Advance (and immediately after giving effect to such Advance),
except to the extent such representations and warranties specifically relate to
an earlier date, in which case such
44
representations and warranties shall have been true and correct on and as of
such earlier date and the Lender shall have received a certificate dated as of
such borrowing date certifying as to the foregoing.
(b) At the time of and immediately after giving effect to such
Advance, no Default shall have occurred and be continuing and the Lender shall
have received a certificate dated as of such borrowing date certifying as to the
foregoing.
(c) The Lender shall have received a Borrowing Request meeting the
requirements of Section 2.4(a) and duly executed by a Financial Officer.
(d) The Lender shall have received evidence satisfactory to it that
the intended use of proceeds of the Loans by the Borrower is in accordance with
Section 2.7 hereof.
(e) The Lender shall have received evidence satisfactory to it that
the making of the Loans by the Lender and the use of proceeds thereof by the
Borrower will not result in any violation by the Lender of any requirement of
law or any regulation.
(f) The Lender shall have received a Borrowing Base Certificate.
(g) The Lender shall have received such other documentation and
assurances as shall be reasonably required by it in connection with such
Advance.
Each Advance shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in subsections (a) and
(b) of this Section 5.2.
6. AFFIRMATIVE COVENANTS.
Each of the Borrower and the Guarantors covenants and agrees that so
long as the Commitments remain in effect or any of the Obligations remain unpaid
and unless otherwise consented to in writing by the Lender:
6.1 Financial Statements and Other Information.
Each of the Borrower and the Guarantors shall keep proper books of
record and account in which full, true and correct entries shall be made in
accordance with GAAP consistently applied throughout the periods involved, and
the Loan Parties shall furnish to the Lender:
(a) As soon as available but in any event not later than 120 days
after the end of each fiscal year of the Borrower (commencing with the fiscal
year ending December 31, 2004), the audited Consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such financial year and related
audited statements of income,
45
cash flows and members' equity, setting forth in each case in comparative form
the corresponding figures as at the end of and for the preceding fiscal year,
all in reasonable detail prepared in accordance with GAAP applied on a basis
consistently maintained throughout the periods involved and reported on by the
Accountants (without a "going concern" or like qualification or exception and
without qualification or exception as to the scope of such audit) together with
copies of any auditor's opinions, reliance letters or internal management
letters;
(b) As soon as available but in any event not later than 45 days
after the end of each of the first three fiscal quarters of each fiscal year,
the unaudited Consolidated balance sheet and related statements of income, cash
flows and members' equity of the Borrower and its Subsidiaries as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
prepared by the management of the Borrower, setting forth in each case in
comparative form the figures for the corresponding fiscal quarter end, and
period or periods, of the previous fiscal year, all certified by one of its
Financial Officers as presenting fairly in all material respects the financial
condition and results of operations of the Borrower in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments together with
copies of any internal management letters;
(c) Concurrently with any delivery of financial statements under
subsections 6.1(a) and 6.1(b), a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth reasonably detailed
calculations demonstrating compliance with Sections 6.16, and 7.13, and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the date of the Financial Statements and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate;
(d) Within 15 days after the last day of each month, a Borrowing
Base Certificate, duly completed and setting forth the calculations required
thereby, as of such last day together with a completed aged schedule of Accounts
Receivable, each in form and substance satisfactory to the Lender;
(e) Promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or any Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be;
(f) As soon as available, copies of all material reports, notices
and other materials sent by the Borrower or any Guarantor to, or received by the
Borrower or any Guarantor from, its members (or stockholders, as applicable),
Pension Plans or any
46
Governmental Authorities (including, but not limited to, PBGC, the Internal
Revenue Service, the United States Department of Labor and any Federal, state or
local environmental protection agencies) which have or could reasonably be
expected to have a Material Adverse Effect; provided that, so long as the
Borrower is a reporting company under the Exchange Asset, the delivery of the
items described in subsection (e) shall satisfy the requirements of this
subsection (f);
(g) Within 10 days of the receipt thereof, a copy of any management
letter issued to the Borrower by the Accountants; and
(h) With reasonable promptness, such other information with respect
to the business, assets, financial position or results of operations of the
Borrower and the Guarantors as the Lender may from time to time reasonably
request.
6.2 Maintenance of Corporate Existence; Maintenance of Licenses, Permits
and Authorizations.
Each of the Borrower and the Guarantors shall do or cause to be done
all things necessary to preserve, renew and maintain in full force and effect
its corporate existence and the rights, licenses, permits, privileges,
franchises and authorizations material to the conduct of its business.
6.3 Maintenance of Properties.
(a) Each of the Borrower and the Guarantors shall keep and maintain
all Property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
(b) Each of the Borrower and the Guarantors shall maintain and
protect its ownership of, or right to use, all trademarks, trade names,
copyrights, patents and other intellectual property material to its business, in
each case free of any claims or infringements by any other Person.
6.4 Insurance.
Each of the Borrower and the Guarantors shall maintain, with
financially sound and reputable insurers, insurance on its property and
insurance against liabilities in such amounts and against such risks as are
usually carried by companies of similar size engaged in the same or a similar
business and such other insurance as is required pursuant to the terms of the
Security Documents.
6.5 Books and Records; Inspection Rights.
Each of the Borrower and Guarantors will keep proper books or record
and account in which full, true and correct entries are made of all dealings and
47
transactions in relation to its business and activities. Each of the Borrower
and the Guarantors shall permit, (a) representatives of the Lender at the
Borrower's expense, upon reasonable written notice, to visit and inspect any of
its properties and examine and take abstracts from its records and books of
account and to discuss its business with its executive officers, solely for the
purpose of assessing the financial condition and credit-worthiness of the
Borrower and the Guarantors, during usual working hours not more than one (1)
time per year unless the Lender has reasonable grounds to believe that a
Material Adverse Change has occurred, and in such event, as often as may
reasonably be required; and (b) at such times as the Lender may reasonably
require, representatives of the Lender to conduct, at the Borrower's expense, an
audit of the Collateral. In connection with this Section 6.5, the Lender shall
use its reasonable efforts to minimize interference with the Borrower's and the
Guarantors' businesses.
6.6 Notice of Material Events.
The Borrower and each Guarantor, to the extent applicable, shall
promptly give notice to the Lender, including brief particulars, of:
(a) the occurrence of a Default hereunder;
(b) the occurrence of any default, event of default or acceleration
under any other instrument or other agreement to which any Loan Party is a party
and which evidences, secures or governs Indebtedness that is material to such
Loan Party;
(c) the passage of any statute, the publication of any decree or
order, the promulgation of any regulation thereunder or interpretation thereof
which, in the judgment of the Borrower, might have a Materially Adverse Effect;
(d) the institution of any litigation, proceeding or investigation
(or the threat thereof) against or affecting any Loan Party or any of their
respective assets which (i) could reasonably be expected to have a Material
Adverse Effect; (ii) questions the validity or enforceability of any Loan
Document; or (iii) seeks to (or is expected to) rescind, terminate, revoke,
cancel, withdraw, suspend, modify or withhold any license, permit or
authorization material to the business of such Loan Party;
(e) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect;
(f) any lapse, refusal to renew or extend or other termination of
any material license, permit, franchise or other authorization issued to any
Loan Party by any Person or Governmental Authority, which lapse, refusal or
termination, could reasonably be expected to result in a Material Adverse
Effect;
48
(g) the issuance by any Loan Party of any Capital Stock resulting in
cash proceeds or the incurrence of any Indebtedness by any such Loan Party not
permitted under Section 7.1;
(h) the occurrence of any insured damage to any material portion of
any Collateral or the commencement of any action or proceeding for the taking of
any Collateral or any part thereof or interest therein under power of eminent
domain or by condemnation or similar proceeding if the value thereof exceeds
$50,000; or
(i) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Change or Material Adverse Effect.
6.7 Payment of Obligations.
Each of the Borrower and the Guarantors shall pay, discharge and
perform, at or before the fixed or extended maturity thereof, all of its or
their respective material obligations and liabilities, including, without
limitation, liabilities in respect of leases, Indebtedness permitted hereunder
or for Taxes, except any of such obligations or liabilities which are being
contested in good faith and by appropriate proceedings, and appropriate reserves
with respect thereto required in accordance with GAAP shall have been set aside
on its or their respective books.
6.8 Compliance with Laws.
Each of the Borrower and the Guarantors shall comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to it or
its property (including, but not limited to, ERISA and all Environmental Laws),
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
6.9 Use of Proceeds.
The Borrower shall use the proceeds of the Loans only for the
purposes set forth in Section 2.7.
6.10 Governmental Consents and Approvals.
The Borrower shall promptly obtain and use all reasonable efforts to
keep in force and shall comply in all material respects with all such approvals,
consents, orders and authorizations by and licenses from, give all such notices
to, register, enroll and file all such documents with, and take all such other
actions with respect to, any Governmental Authority.
49
6.11 Environmental Matters.
Each of the Borrower and the Guarantors shall take all actions
reasonably necessary to comply with all Environmental Laws and Regulations
applicable to it or its business, assets or properties, and shall not knowingly
permit or suffer any violation of Environmental Laws and Regulations by any
third party lessee in connection with its lease of its assets or properties,
which Environmental Laws and Regulations, if violated, or which violation, as
the case may be, could have a Material Adverse Effect on the Collateral or on
the business, operations or financial position of the Loan Parties.
6.12 Notice of Certain Changes.
Subject to Section 7.9, each of the Borrower and the Guarantors will
furnish to the Lender prompt written notice of any change in (a) its legal name
or in any trade name used to identify it in the conduct of its business or in
the ownership of its properties, (b) its jurisdiction of organization or the
location of its chief executive office, its principal place of business, any
office in which it maintains its books or records, (c) its identity or
organizational structure or (d) its organizational identification number or its
Federal Taxpayer Identification Number.
6.13 Information Regarding Collateral.
(a) The Borrower will furnish to the Lender prompt written notice of
any change in (i) the legal name of any Loan Party or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) the location of the chief executive office of any Loan Party,
its principal place of business, any office in which it maintains books or
records relating to Collateral owned or held by it or on its behalf or any
office or facility at which Collateral owned or held by it or on its behalf with
an aggregate book value in excess of $25,000 is located (including the
establishment of any such new office or facility), (iii) the identity or
organizational structure of any Loan Party such that a filed financing statement
becomes misleading or (iv) the Federal Taxpayer Identification Number of any
Loan Party. The Borrower agrees not to effect or permit any change referred to
in the preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the Lender to
continue at all times following such change to have a valid, legal and perfected
security interest in all the Collateral.
(b) Each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to clauses (a) and
(b) of Section 6.1, the Borrower shall deliver to the Lender a certificate of a
Financial Officer (i) setting forth the information required pursuant to
Sections 1, 2 and 8 of the Perfection Certificate or confirming that there has
been no change in such information since the date of the Perfection Certificate
or the date of the most recent certificate delivered pursuant to this Section,
and (ii) certifying that the Loan Parties are in compliance with all of the
terms of the Security Agreement.
50
6.14 Additional Subsidiaries.
In the event that on or after the Effective Date, any Person shall
become a Subsidiary, the Borrower shall (a) notify the Lender in writing thereof
within ten Business Days thereof, (b) unless such Subsidiary is a CFC, cause
such Person to execute and deliver to the Lender a Guaranty in the form of
Exhibit D attached hereto and a Joinder in the form of Exhibit G, within five
Business Days thereafter, (c) unless such Subsidiary is a CFC, cause such Person
to execute and deliver to the Lender a Security Agreement in the form of Exhibit
F-2 attached hereto within five Business Days thereafter, (d) cause any shares
of Capital Stock of such new Subsidiary owned by or on behalf of any Loan Party
(other than any Loan Party that is a CFC) to be pledged pursuant to the Security
Agreement within five Business Days thereafter (e) cause each such new
Subsidiary (if it is not a CFC) to deliver to the Lender any shares of Capital
Stock owned by or on behalf of such new Subsidiary in any other Subsidiary
within five Business Days after such Subsidiary is formed or acquired (except
that if such Subsidiary is a CFC, not more than 65% of such Capital Stock shall
be required to be pledged under this Section 6.14 or the Security Agreement) and
(f) unless such Subsidiary is a CFC, deliver to the Lender a Perfection
Certificate with respect to such Subsidiary, and such certificates, instruments
and opinions as the Lender may request.
6.15 Additional Collateral.
If after the Effective Date, any Loan Party acquires any property
which would constitute Collateral, the Borrower shall, and shall cause each such
other Loan Party to, execute any and all documents, agreements and instruments,
and take all such further actions (including the filing and recording of
financing statements, fixture filings, mortgages, deeds of trust and other
documents), that may be required under any applicable law, or which the Lender
may reasonably request, to grant, preserve, protect or perfect the Liens created
or intended to be created by the Security Documents or the validity or priority
of any such Lien, all at the expense of the Borrower.
6.16 Eligible Liquid Assets.
The Borrower shall at all times maintain in accounts at the Lender
subject to the security interests granted under the Borrower Security Agreement
Eligible Liquid Assets having a value (in the reasonable judgment of the Lender)
of not less than $10,000,000.
6.17 Accounts.
The Borrower shall maintain at offices of the Lender its primary
domestic operating account and its primary investment and cash management
accounts.
51
6.18 Post Effective Date Documents
The Borrower shall deliver to the Lender, within thirty days after
the Effective Date:
(a) a copy of the Borrower's and each Guarantor's certificate of
incorporation, certified as of a recent date by the Secretary of State of the
state of its incorporation;
(b) to the extent not delivered on the Effective Date, each of the
items described in Sections 5.1(d) (i)-(iv);
(c) a completed Perfection Certificate, dated the date of delivery
and signed by the President, a Vice President or a Financial Officer of the
Borrower together with all attachments contemplated thereby, including the
results of a search of the Uniform Commercial Code (or equivalent) filings made
with respect to the Loan Parties in the jurisdictions contemplated by the
Perfection Certificate and copies of the financing statements (or similar
documents) disclosed by such search and evidence reasonably satisfactory to the
Lender that the Liens indicated by such financing statements (or similar
documents) are permitted by Section 7.3 or have been released;
(d) The Intellectual Property Security Agreement duly executed by an
Authorized Officer of the Borrower and each Guarantor.
6.19 Further Assurances.
Each of the Borrower and the Guarantors shall, at any time and from
time to time, without expense to the Lender, execute, acknowledge (if
appropriate) and deliver, or cause to be executed, acknowledged (if appropriate)
and delivered, any and all of such further assurances and other instruments and
will take or cause to be taken such other action, as may be reasonably required
by the Lender, as necessary to maintain, preserve, safeguard and continue their
respective rights and interests hereunder. Each of the Borrower and the
Guarantors hereby irrevocably authorizes the Lender to file (without the
Borrower's or any Guarantor's signature) any financing statement or similar
document pursuant to the Uniform Commercial Code as enacted and in force in any
jurisdiction within, or subject to, the jurisdiction of the United States and
any analogous document under legislation of like import or purpose for the time
being in force, in any other country, the filing of which may be reasonably
necessary to perfect, protect or continue any of the respective rights of the
Lender hereunder and under the other Loan Documents.
52
7. NEGATIVE COVENANTS.
Each of the Borrower and the Guarantors hereby covenants and agrees
that so long as the Commitments remain in effect or any of the Obligations
remain unpaid, without the prior written consent of the Lender:
7.1 Limitation on Indebtedness.
Neither the Borrower nor any Guarantor shall create, incur, assume,
guarantee or otherwise become or remain liable in respect of any Indebtedness,
other than:
(a) the Indebtedness under the Loan Documents;
(b) Indebtedness existing on the date hereof and set forth in
Schedule 7.1, including any extensions, renewals or replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof;
(c) subject to subsection (d) below, Indebtedness with respect to
Capital Lease Obligations and other purchase money Indebtedness; provided, that
any such Indebtedness shall not exceed the lesser of the purchase price or the
fair market value of the asset so financed;
(d) other Indebtedness of the Borrower or any Guarantor; provided,
however, the aggregate outstanding amount of Indebtedness incurred pursuant to
subsection (c) and this subsection (d) shall not exceed $1,000,000; and
(e) Indebtedness of any Subsidiary to the Borrower or of any
Subsidiary to any other Subsidiary, provided that, any such Indebtedness (i) is
evidenced by a note or other instrument that is delivered to the Lender and (ii)
is subordinated to the Obligations pursuant to a subordination agreement in form
and substance satisfactory to the Lender.
7.2 Limitation on Guarantees.
Neither the Borrower nor any Guarantor shall, at any time, have
Guarantees outstanding, other than:
(a) Guarantees of the Indebtedness of the Borrower to the Lender;
(b) Guarantees existing on the date hereof and set forth on Schedule
7.2, including any extensions, renewals or replacements of any such Guarantees
that do not increase the amount of the obligation Guaranteed; and
(c) Guarantees of Indebtedness permitted under Section 7.1.
53
7.3 Limitation on Liens.
Neither the Borrower nor any Guarantor shall create, incur, assume
or suffer to exist, any Lien upon any of its property, assets, income or
profits, present or future, except:
(a) Liens securing the Obligations;
(b) Liens for Taxes not yet delinquent or which are being contested
in good faith by appropriate proceedings (and for the payment of which adequate
reserves are provided);
(c) carriers', warehousemen's, mechanics', suppliers',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business which are being contested in good faith by appropriate proceedings;
(d) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
(e) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of the Borrower or any Guarantor;
(f) any Lien on any property or asset of the Borrower or any
Guarantor existing on the date hereof and set forth in Schedule 7.3, provided
that (i) such Lien shall not apply to any other property or asset of the
Borrower or any Guarantor and (ii) such Lien shall secure only those obligations
which it secures on the date hereof and any extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof; and
(g) Liens securing Indebtedness permitted under Section 7.1 and not
described in Sections 7.3(a) through (f) provided such Liens are subordinated to
Liens securing the Obligations pursuant to a subordination agreement in form and
substance satisfactory to the Lender.
7.4 Fundamental Changes.
(a) Neither the Borrower nor any Guarantor shall merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its
assets, or all or substantially all of the equity securities of any of its
Subsidiaries (in each case, whether now owned or hereafter
54
acquired), or liquidate or dissolve, except that, if at the time thereof and
immediately after giving effect thereto, no Default shall have occurred and be
continuing:
(i) any Guarantor may merge into the Borrower in a transaction
in which the Borrower is the surviving entity and any Guarantor may merge into
or consolidate with any other Guarantor;
(ii) the Borrower may sell, transfer, lease or otherwise
dispose of its assets to any Guarantor; and
(iii) any Guarantor may sell, transfer, lease or otherwise
dispose of its assets to the Borrower or any other Guarantor.
(b) Neither the Borrower nor any Guarantor shall engage to any
material extent in any business other than businesses of the type conducted by
the Borrower and the Guarantors on the Effective Date and businesses or
activities that are substantially similar, related or incidental thereto.
7.5 Limitation on Certain Transactions with Affiliates.
Neither the Borrower nor any Guarantor shall sell, transfer, lease
or otherwise dispose (including pursuant to a merger) any property or assets to,
or purchase, lease or otherwise acquire (including pursuant to a merger) any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, shareholders, members, directors or officers, except (a) at
prices and on terms and conditions not less favorable to the Borrower or such
Guarantor (as determined in good faith by the Borrower) than could be obtained
on an arms-length basis from unrelated third parties; and (b) in the ordinary
course of business.
7.6 Asset Sales.
Neither the Borrower nor any Guarantor shall sell, transfer, lease
or otherwise dispose (including pursuant to a merger) of any asset, including
any equity securities, nor will the Borrower or any Guarantor issue any
additional shares of its equity securities, except:
(a) sales, transfers and other dispositions of products, inventory,
used or surplus equipment, in each case in the ordinary course of business; and
(b) sales, transfers, leases and other dispositions permitted to be
made pursuant to Section 7.4.
55
7.7 Sale and Leaseback Transactions.
Neither the Borrower nor any Guarantor shall enter into any
arrangement, directly or indirectly, with any Person for any Sale and Leaseback
Transaction.
7.8 Investments, Loans, Advances, Guarantees and Acquisitions.
Neither the Borrower nor any Guarantor shall purchase, hold or
acquire (including pursuant to any merger) any Capital Stock, evidences of
Indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions (including pursuant to
any merger)) any assets of any other Person constituting a business unit, or
purchase, hold or acquire any "derivative", except:
(a) Permitted Investments;
(b) Investments or loans existing on the date hereof and set forth
in Schedule 7.8;
(c) investments made by the Borrower in the Capital Stock of the
Guarantors;
(d) Guarantees permitted to be incurred pursuant to Section 7.2; and
(e) Investments by the Borrower in Subsidiaries formed or acquired
after the Effective Date, provided that (1) concurrently with the formation or
acquisition of any such Subsidiary, the Borrower shall have compiled with
Sections 6.14 and 6.18(b) and (2) after giving effect to any such Investments
and any loans to Subsidiaries made pursuant to Section 7.1(e), not more that 55%
of the assets and revenues of the Borrower and its Subsidiaries on a
Consolidated basis are owned and earned by Subsidiaries which are CFCs.
7.9 Change of Location.
Neither the Borrower nor any Guarantor shall change the jurisdiction
of its organization or change the location of its principal place of business or
the office where it keeps its corporate records and books of account or open a
new office or change the location of any Collateral in each case without giving
at least thirty (30) days' prior written notice to the Lender, specifying the
address of such new location or new office.
56
7.10 ERISA Obligations.
Neither the Borrower nor any Guarantor shall become obligated,
directly or contingently, under or in respect of any pension or other employee
benefit plan which is subject to the provisions of Title IV of ERISA which could
reasonably be expected to have a Material Adverse Effect.
7.11 Restrictive Agreements.
Neither the Borrower nor any Guarantor shall, directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon: (a) the
ability of any Loan Party to create, incur or permit to exist any Lien (other
than Permitted Liens) upon any of its property or assets; (b) any Guarantor to
make any Distributions with respect to any shares of its Capital Stock; or (c)
any Guarantors to make or repay loans or advances to the Borrower or to
Guarantee Indebtedness of the Borrower, provided that (i) the foregoing shall
not apply to restrictions and conditions imposed by law or by this Agreement and
(ii) the foregoing shall not apply to restrictions and conditions existing on
the date hereof identified on Schedule 7.11 (but shall apply to any extension,
renewal, amendment or modification expanding the scope of any such restriction
or condition).
7.12 Amendment of Material Documents.
Neither the Borrower nor any Guarantor shall amend, modify or waive
any of its rights under its certificate of incorporation, by-laws or other
Organizational Documents, other than amendments, modifications or waivers that
would not reasonably be expected to have a Material Adverse Effect.
7.13 Minimum EBITDA.
The Borrower shall not permit as of the last day of each fiscal
quarter of the Borrower EBITDA for the twelve months then ended to be less than
$20,000,000.
7.14 Prepayments of Indebtedness.
Neither the Borrower nor any Guarantor shall (a) pay, prepay,
redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof in any manner, or make any payment in violation of any subordination
terms of, any Indebtedness (other than the prepayment of the Loans in accordance
with the terms of this Agreement) or (b) amend, modify or change in any manner
any term or condition of any Indebtedness if such amendment, modification or
change could reasonably be expected to have a Material Adverse Effect.
57
7.15 Distributions.
The Borrower will not, and will not permit any of the Subsidiaries
to, declare or make, or agree to pay for or make, directly or indirectly, any
Distributions, except that (a) the Borrower may declare and pay dividends with
respect to its Capital Stock payable solely in additional shares of its Capital
Stock, (b) any Subsidiary may declare and pay dividends with respect to its
Capital Stock to the Borrower or any other Subsidiary and (c) any Subsidiary may
return Investments or repay Indebtedness to the Borrower or to any other
Subsidiary.
8. DEFAULT.
8.1 Events of Default.
The following shall each constitute an "EVENT OF DEFAULT" hereunder:
(a) The failure of the Borrower to make any payment of principal on
any Note within five days of the date such payment is due and payable; or
(b) The failure of the Borrower to make any payment of interest,
Fees, expenses or other amounts payable under any Loan Document or otherwise to
the Lender with respect to the loan facilities established hereunder within five
(5) days of the date when due and payable; or
(c) Any representation or warranty made by any Loan Party (or by an
officer thereof on its behalf) in any Loan Document or in any certificate,
report, opinion (other than an opinion of counsel), financial statement or other
document delivered or to be delivered pursuant thereto, shall prove to have been
incorrect or misleading (whether because of misstatement or omission) in any
material respect when made or deemed made or delivered or furnished; or
(d) The failure of any Loan Party to observe or perform any covenant
or agreement contained in Sections 6.2, 6.6, 6.9 or Section 7; or
(e) The failure of any Loan Party to observe or perform any other
term, covenant, or agreement contained in any Loan Document and such failure
shall have continued unremedied for a period of 30 days after such Loan Party
shall have obtained knowledge thereof, provided however, that (other than with
respect to the covenant contained in Section 6.1 hereof) in the event the Loan
Party cannot complete the cure of the default within such 30-day period, the
Loan Party shall have an additional period, not to exceed 30 days to cure such
default, provided that the Loan Party has commenced the cure of the default
during the initial 30-day period and thereafter diligently pursues the cure of
such default to completion and provided further, that in no event shall the Loan
Party have a period of more than 60 days to cure such default; or
58
(f) Liabilities and/or other obligations of the Borrower (other than
its obligations under the Notes) or any other Loan Party, whether as principal,
guarantor, surety or other obligor, for the payment of any Indebtedness or
operating leases in an aggregate amount in excess of $100,000 shall become or
shall be declared to be due and payable prior to the expressed maturity thereof,
or shall not be paid when due and after the expiration of any grace period for
the payment thereof, or any holder of any such obligation shall have the right
to declare such obligation due and payable prior to the expressed maturity
thereof or as a consequence of the occurrence or continuation of any event or
condition, the Borrower or any other Loan Party has become obligated to purchase
or repay any Indebtedness before its regularly scheduled maturity date;
(g) Any license, franchise, permit, authorization, right, approval
or agreement of the Borrower or any other Loan Party is not renewed, or is
suspended, revoked or terminated and the non-renewal, suspension, revocation or
termination thereof would have a Material Adverse Effect (unless such license,
franchise, permit, authorization, right, approval or agreement is renewed or
obtained prior to the occurrence of a Material Adverse Effect); or
(h) The Borrower or any other Loan Party shall suspend or
discontinue its business, make an assignment for the benefit of creditors,
generally not be paying its debts as such debts become due, admit in writing its
inability to pay its debts as they become due, file a voluntary petition in
bankruptcy, become insolvent (however such insolvency shall be evidenced), file
any petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment of debt, liquidation or dissolution or similar relief
under any present or future statute, law or regulation of any jurisdiction,
petition or apply to any tribunal for any receiver, custodian or any trustee for
any substantial part of its Property, be the subject of any such proceeding
filed against it which remains undismissed for a period of 60 days, file any
answer admitting or not contesting the material allegations of any such petition
filed against it or any order, judgment or decree approving such petition in any
such proceeding, seek, approve, consent to, or acquiesce in any such proceeding,
or in the appointment of any trustee, receiver, sequestrator, custodian,
liquidator, or fiscal agent for it, or any substantial part of its Property, or
an order is entered appointing any such trustee, receiver, custodian, liquidator
or fiscal agent and such order remains in effect for 60 days, or take any formal
action for the purpose of effecting any of the foregoing or looking to the
liquidation or dissolution of the Borrower or such other Loan Party; or
(i) An order for relief is entered under the United States
bankruptcy laws or any other decree or order is entered by a court having
jurisdiction adjudging the Borrower or any other Loan Party bankrupt or
insolvent, approving as properly filed a petition seeking reorganization,
liquidation, arrangement, adjustment or composition of or in respect of the
Borrower or any other Loan Party under the United States bankruptcy laws or any
other applicable Federal or state law, appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official) of the
Borrower or any
59
other Loan Party or of any substantial part of the Property of any thereof, or
ordering the winding up or liquidation of the affairs of the Borrower or any
other Loan Party, and any such decree or order continues unstayed and in effect
for a period of 60 days; or
(j) Judgments or decrees against the Borrower or any other Loan
Party aggregating in excess of $100,000 shall remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of 30 days; or
(k) The occurrence of an Event of Default as defined in any of the
Security Documents; or
(l) Any Loan Document shall cease, for any reason, to be in full
force and effect, or the Borrower or any other Loan Party or any other party
thereto shall so assert in writing or shall disavow any of its obligations
thereunder; or
(m) (i) Any Termination Event shall occur; (ii) any Accumulated
Funding Deficiency, whether waived, shall exist with respect to any Pension
Plan; (iii) any Person shall engage in any Prohibited Transaction involving any
Employee Benefit Plan; (iv) the Borrower, any other Loan Party or any ERISA
Affiliate shall fail to pay when due an amount which is payable by it to the
PBGC or to a Pension Plan under Title IV of ERISA; (v) the imposition of any tax
under Section 4980B(a) of the Code; (vi) the assessment of a civil penalty with
respect to any Employee Benefit Plan under Section 502(c) of ERISA; (vii) or any
other event or condition shall occur or exist with respect to an Employee
Benefit Plan which in the case of clauses (i) through (vii) would, individually
or in the aggregate, have a Material Adverse Effect; or
(n) The Borrower or any Guarantor shall fail to comply with any
Environmental Laws, the failure of which would have a Material Adverse Effect;
or
(o) any Lien purported to be created under any Security Document
shall cease to be, or shall be asserted by the Borrower or any other Loan Party
or any other party thereto not to be, a valid and perfected Lien on any
Collateral, with the priority required by the Security Documents other than as a
result of Lender's failure to file any financing statement or continuation
statement; or
(p) the occurrence of a Material Adverse Change; or
(q) the occurrence of a Change in Control.
8.2 Contract Remedies.
Upon the occurrence of an Event of Default or at any time thereafter
during the continuance thereof, (a) if such event is an Event of Default
specified in clause (i) or (j) of Section 8.1, the Commitments shall immediately
and automatically terminate and the Loans, all accrued and unpaid interest
thereon and all other amounts owing under
60
the Loan Documents shall immediately and automatically become due and payable,
and the Lender may exercise any and all remedies and other rights provided in
the Loan Documents, and (b) if such event is any other Event of Default, any or
all of the following actions may be taken: the Lender may, by notice to the
Borrower, declare the Commitments to be terminated forthwith, whereupon such
Commitments shall immediately terminate, and the Lender may, by notice of
default to the Borrower, declare the Loans, all accrued and unpaid interest
thereon and all other amounts owing under the Loan Documents to be due and
payable forthwith, whereupon the same shall immediately become due and payable,
and the Lender may, exercise any and all remedies and other rights provided in
the Loan Documents. Except as otherwise provided in this Section 8.2,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived. The Borrower hereby further expressly waives and covenants not
to assert any appraisement, valuation, stay, extension, redemption or similar
laws, now or at any time hereafter in force which might delay, prevent or
otherwise impede the performance or enforcement of any Loan Document.
9. OTHER PROVISIONS.
9.1 Amendments and Waivers.
The Lender and the Borrower may, from time to time, enter into
written amendments, supplements or modifications of the Loan Documents and the
Lender may execute and deliver to any such parties a written instrument waiving
or a consent to a departure from, on such terms and conditions as the Lender may
specify in such instrument, any of the requirements of the Loan Documents or any
Default or Event of Default and its consequences. In the case of any waiver, the
parties to the applicable Loan Document, the Lender shall be restored to its
former position and rights hereunder and under the outstanding Notes and other
Loan Documents to the extent provided for in such waiver, and any Default or
Event of Default waived shall not extend to any subsequent or other Default or
Event of Default, or impair any right consequent thereon. The Loan Documents may
not be amended orally or by any course of conduct.
9.2 Notices.
All notices, requests and demands to or upon the respective parties
to the Loan Documents to be effective shall be in writing and, unless otherwise
expressly provided therein, shall be deemed to have been duly given or made when
delivered by hand, one Business Day after having been sent by overnight courier
service, or when deposited in the mail, first-class postage prepaid, or, in the
case of notice by telecopy, when sent, addressed as follows in the case of the
Borrower or the Lender or addressed to such other addresses as to which the
Lender may be hereafter notified by the respective parties thereto:
61
The Borrower:
Greenfield Online, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
VP Corporate Development
and General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
The Lender:
Commerce Bank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: 212-238-3100
except that any notice, request or demand by the Borrower to or upon the Lender
pursuant to Sections 2.4 or 3.2 shall not be effective until received. Any party
to a Loan Document may rely on signatures of the parties thereto which are
transmitted by telecopy or other electronic means as fully as if originally
signed.
62
9.3 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of
the Lender, any right, remedy, power or privilege under any Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges under the Loan Documents
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
9.4 Survival of Representations and Warranties and Certain Obligations.
(a) All representations and warranties made under the Loan Documents
and in any document, certificate or statement delivered pursuant thereto or in
connection therewith shall survive the execution and delivery of the Loan
Documents, except for changes which, either singly or in the aggregate, will not
have a Material Adverse Effect, and except for the representations and
warranties contained in Section 4.1 and 4.6 which shall be true and correct as
of the date hereof.
(b) The obligations of the Borrower under Sections 3.5, 3.6, 3.7,
3.8, 3.9, 3.10, 9.5 and 9.8 shall survive the termination of the Commitments and
the payment of the Loans, and all other amounts payable under the Loan
Documents.
9.5 Expenses.
The Borrower shall (a) pay or reimburse the Lender for all its
out-of-pocket costs and expenses reasonably incurred in connection with the
negotiation, development, preparation and execution of the Loan Documents and
any amendment, supplement or modification thereto (whether or not executed or
effective), any documents prepared in connection therewith and the consummation
of the transactions contemplated thereby, including, without limitation, (i) the
reasonable fees and disbursements of Special Counsel; and (ii) the fee incurred
by the Lender in connection with the audit of the Collateral, which fee shall
not exceed $3,000.00 and (b) pay or reimburse the Lender for all of its costs
and expenses incurred in connection with any Default or Event of Default and any
enforcement or collection proceedings resulting therefrom or in connection with
the negotiation of any restructuring or "work-out" (whether consummated or not)
of the obligations of the Borrower under any of the Loan Documents and the
enforcement of this Section 9.5 including, without limitation, the fees and
disbursements of Special Counsel; and (c) pay, indemnify and hold the Lender and
each of its officers, directors and employees harmless from and against any and
all other liabilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including, without limitation, reasonable counsel fees and
disbursements) with respect to the enforcement and performance of the Loan
Documents, the use of the proceeds of the Loans and the enforcement and
performance of the provisions of any subordination agreement involving
63
the Lender (all the foregoing, collectively, the "INDEMNIFIED LIABILITIES") and,
if and to the extent that the foregoing indemnity may be unenforceable for any
reason, the Borrower shall make the maximum payment not prohibited under
applicable law; provided, however, that the Borrower shall have no obligation to
pay Indemnified Liabilities to the Lender arising from the finally adjudicated
gross negligence or willful misconduct of the Lender or claims between one
indemnified party and another indemnified party. The agreements in this Section
9.5 shall survive the termination of the Commitments of the Lender and the
payment of all amounts payable under the Loan Documents.
9.6 Lending Offices.
(a) The Lender shall have the right at any time and from time to
time to transfer a Loan to a different office, provided that the Lender shall
promptly notify the Borrower of any such change of office. Such office shall
thereupon become the Lender's Domestic Lending Office or Eurodollar Lending
Office, as the case may be, provided, however, that the Lender shall not be
entitled to receive any greater amount under Sections 3.5, 3.6, 3.7, 3.9 and
3.10, as a result of a transfer of a Loan to a different office of the Lender
than it would be entitled to immediately prior thereto unless such claim would
have arisen even if such transfer had not occurred.
(b) The Lender agrees that, upon the occurrence of any event giving
rise to any increased cost or indemnity under Sections 3.5, 3.6, 3.7, 3.8, 3.9
and 3.10 with respect to the Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of the Lender) to
designate another lending office for the Loan affected by such event, provided
that such designation is made on such terms that the Lender and its lending
office suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of any such
Section. Nothing in this Section 9.6 shall affect or postpone any of the
obligations of the Borrower or the right of the Lender provided in Sections 3.5,
3.6, 3.7, 3.8, 3.9 and 3.10.
9.7 Assignments, Participations.
(a) This Agreement shall be binding upon, and shall inure to the
benefit of, the Borrower and the Lender and their respective successors assigns,
as applicable except that the Borrower may not assign or transfer their rights
or obligations hereunder. The Lender may assign, or sell participations in, all
or any part of its rights and obligations under this Agreement to another bank
or other entity, in which event (i) in the case of an assignment, upon written
notice thereof by the Lender to the Borrower, the assignee shall have, to the
extent of such assignment (unless otherwise provided therein), the same rights,
benefits and obligations as it would have if it were the Lender hereunder; and
(ii) in the case of a participation, the participant shall have no rights under
the Loan Documents. The agreement executed by the Lender in favor of the
participant shall not give the participant the right to require the Lender to
take or omit to take any
64
action hereunder except action directly relating to (i) the extension of a
payment date with respect to any portion of the principal of or interest on any
amount outstanding hereunder allocated to such participant, (ii) the reduction
of the principal amount outstanding hereunder or (iii) the reduction of the rate
of interest payable on such amount or any amount of fees payable hereunder to a
rate or amount, as the case may be, below that which the participant is entitled
to receive under its agreement with the Lender. The Lender may furnish any
information concerning the Borrower or any Guarantor in the possession of the
Lender from time to time only to assignees and participants (including
prospective assignees and participants).
(b) In addition to the assignments and participations permitted
under paragraph (a) above, the Bank may assign and pledge all or any portion of
its Loans and Notes to (i) any affiliate of the Lender or (ii) any Federal
Reserve Bank as Collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank. No such assignment shall release the assigning Bank
from its obligations hereunder.
9.8 Indemnity.
The Borrower agrees to defend, protect, indemnify, and hold harmless
the Lender, its Affiliates and each of the respective officers, directors,
employees, agents and controlling persons of each of the foregoing (each an
"INDEMNIFIED PERSON" and, collectively, the "INDEMNIFIED PERSONS") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel to such Indemnified Persons in connection with any
investigative, administrative or judicial proceeding, whether direct, indirect
or consequential and whether based on any federal or state laws or other
statutory regulations, including, without limitation, securities and commercial
laws and regulations, under common law or at equitable cause, or on contract or
otherwise, including any liabilities and costs under Environmental Laws,
Federal, state or local health or safety laws, regulations, or common law
principles, arising from or in connection with the past, present or future
operations of the Borrower or its predecessors in interest, or the past, present
or future environmental condition of the Property of any Loan Party, the
presence of asbestos-containing materials at any such Property, or the release
or threatened release of any Hazardous Substance into the environment from any
such Property) in any manner relating to or arising out of the Loan Documents,
any commitment letter or fee letter executed and delivered by any Loan Party
and/or the Lender, the capitalization of any Loan Party, the Commitments, the
making of, management of and participation in the Loans, the use or intended use
of the proceeds of the Loans hereunder, provided that the Borrower shall have no
obligation under this Section 9.8 to an Indemnified Person with respect to any
of the foregoing to the extent found in a final judgment of a court having
jurisdiction to have resulted primarily out of the gross negligence or willful
misconduct of such Indemnified Person or arising solely
65
from claims between one such Indemnified Person and another such Indemnified
Person. The indemnity set forth herein shall be in addition to any other
obligations or liabilities of the Borrower to each Indemnified Person under the
Loan Documents or at common law or otherwise, and shall survive any termination
of the Loan Documents, the expiration of the Commitments and the payment of all
Indebtedness of the Borrower under the Loan Documents.
9.9 Limitation of Liability.
No claim may be made by the Borrower, any other Loan Party or any
other Person against the Lender or any directors, officers, employees or agents
of the Lender for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by any Loan Document,
or any act, omission or event occurring in connection therewith, unless arising
out of the Lender's gross negligence or willful misconduct and the Borrower,
each Loan Party or other Person hereby waives, releases and agrees not to ▇▇▇
upon any claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor, except if arising out of the Lender's
gross negligence or willful misconduct.
9.10 Counterparts.
Each Loan Document (other than the Notes) may be executed by one or
more of the parties thereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
document. It shall not be necessary in making proof of any Loan Document to
produce or account for more than one counterpart signed by the party to be
charged. A counterpart of any Loan Document or to any document evidencing, and
of any an amendment, modification, consent or waiver to or of any Loan Document
transmitted by telecopy shall be deemed to be an originally executed
counterpart. A set of the copies of the Loan Documents signed by all the parties
thereto shall be deposited with each of the Borrower and the Lender. Any party
to a Loan Document may rely upon the signatures of any other party thereto which
are transmitted by telecopy or other electronic means to the same extent as if
originally signed.
9.11 Set-off.
In addition to any rights and remedies of the Lender provided by
law, upon the occurrence of an Event of Default and the acceleration of the
obligations owing in connection with the Loan Documents, or at any time upon the
occurrence and during the continuance of an Event of Default under Section
8.1(a) or 8.1(b), the Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
not prohibited by applicable law, to set-off and apply against any indebtedness,
whether matured or unmatured, of the Borrower to the Lender any amount owing
from the Lender to the Borrower at, or at any time after, the
66
happening of any of the above-mentioned events. To the extent not prohibited by
applicable law, the aforesaid right of set-off may be exercised by the Lender
against the Borrower or against any trustee in bankruptcy, custodian, debtor in
possession, assignee for the benefit of creditors, receiver, or execution,
judgment or attachment creditor of the Borrower or against anyone else claiming
through or against the Borrower or such trustee in bankruptcy, custodian, debtor
in possession, assignee for the benefit of creditors, receiver, or execution,
judgment or attachment creditor, notwithstanding the fact that such right of
set-off shall not have been exercised by the Lender prior to the making, filing
or issuance, or service upon the Lender of, or of notice of, any such petition,
assignment for the benefit of creditors, appointment or application for the
appointment of a receiver, or issuance of execution, subpoena, order or warrant.
9.12 Construction.
Each party to a Loan Document represents that it has been
represented by counsel in connection with the Loan Documents and the
transactions contemplated thereby and that the principle that agreements are to
be construed against the party drafting the same shall be inapplicable.
9.13 Governing Law.
The Loan Documents and the rights and obligations of the parties
thereunder shall be governed by, and construed in accordance with, the internal
laws of the State of New York, without regard to principles of conflict of laws,
but including Section 5-1401 of the General Obligations Law.
9.14 Headings Descriptive.
Section headings have been inserted in the Loan Documents for
convenience only and shall not be construed to be a part thereof.
9.15 Severability.
Every provision of the Loan Documents is intended to be severable,
and if any term or provision thereof shall be invalid, illegal or unenforceable
for any reason, the validity, legality and enforceability of the remaining
provisions thereof shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction.
9.16 Integration.
All exhibits to a Loan Document shall be deemed to be a part
thereof. The Loan Documents embody the entire agreement and understanding
between the Borrower and the Lender with respect to the subject matter thereof
and supersede all prior
67
agreements and understandings between the Borrower and the Lender with respect
to the subject matter thereof.
9.17 Consent to Jurisdiction.
Each party to a Loan Document hereby irrevocably submits to the
non-exclusive jurisdiction of any New York State or Federal court sitting in the
City of New York over any suit, action or proceeding arising out of or relating
to the Loan Documents. Each party to a Loan Document hereby irrevocably waives,
to the fullest extent permitted or not prohibited by law, any objection which it
may now or hereafter have to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that any such suit, action or
proceeding brought in such a court has been brought in an inconvenient forum.
The Borrower hereby agrees that a final judgment in any such suit, action or
proceeding brought in such a court, after all appropriate appeals, shall be
conclusive and binding upon it.
9.18 Intentionally Deleted.
9.19 No Limitation on Service or Suit.
Nothing in the Loan Documents or any modification, waiver, consent
or amendment thereto shall affect the right of the Lender to serve process in
any manner permitted by law or limit the right of the Lender to bring
proceedings against the Borrower in the courts of any jurisdiction or
jurisdictions in which the Borrower may be served.
9.20 WAIVER OF TRIAL BY JURY.
EACH OF THE LENDER, THE BORROWER AND THE GUARANTORS HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREIN. FURTHER, THE
BORROWER AND THE GUARANTORS HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF
THE LENDER, OR THE LENDER, OR COUNSEL TO THE LENDER, HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK
TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. THE BORROWER AND THE
GUARANTORS ACKNOWLEDGE THAT THE LENDER HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS SECTION 9.20.
[remainder of page intentionally left blank]
68
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
GREENFIELD ONLINE, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
EACH OF THE FOLLOWING GUARANTORS WITH
RESPECT TO SECTIONS 4, 6, 7 AND 9 ONLY:
ZING WIRELESS, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
[________________________]
By: __________________________________
Name:
Title:
[ADD ADDITIONAL GUARANTORS]
COMMERCE BANK, N.A.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
2
