Exhibit 5.2
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CREDIT AGREEMENT
dated as of
May 31, 2002
among
WIRE ONE TECHNOLOGIES, INC., as Borrower,
The Lenders Party Hereto,
and
JPMORGAN CHASE BANK,
as Administrative and Collateral Agent
and Arranger
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions..........................................................1
SECTION 1.01. Defined Terms..........................................1
SECTION 1.02. Classification of Loans and Borrowings................21
SECTION 1.03. Terms Generally.......................................21
SECTION 1.04. Accounting Terms; GAAP................................22
ARTICLE II The Credits.........................................................22
SECTION 2.01. Commitments...........................................22
SECTION 2.02. Loans and Borrowings..................................23
SECTION 2.03. Requests for Borrowings...............................24
SECTION 2.04. Letters of Credit.....................................25
(a) General........................................25
(b) Notice of Issuance, Amendment, Renewal,
Extension; Certain Conditions..................25
(c) Expiration Date................................25
(d) Participations.................................25
(e) Reimbursement..................................26
(f) Obligations Absolute...........................27
(g) Disbursement Procedures........................27
(h) Interim Interest...............................28
SECTION 2.05. Funding of Borrowings.................................28
SECTION 2.06. Interest Elections....................................29
SECTION 2.07. Termination and Reduction of Commitments..............30
SECTION 2.08. Repayment of Loans; Evidence of Debt..................31
SECTION 2.09. Prepayment of Loans...................................31
SECTION 2.10. Fees..................................................33
SECTION 2.11. Interest..............................................34
SECTION 2.12. Alternate Rate of Interest............................34
SECTION 2.13. Increased Costs.......................................35
SECTION 2.14. Break Funding Payments................................36
SECTION 2.15. Taxes.................................................37
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs..............................................38
SECTION 2.17. Mitigation Obligations................................40
ARTICLE III Representations and Warranties......................................40
SECTION 3.01. Existence and Power...................................40
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SECTION 3.02. Corporate and Governmental Authorization; No
Contravention.........................................40
SECTION 3.03. Binding Effect........................................41
SECTION 3.04. Financial Information.................................41
SECTION 3.05. Litigation............................................41
SECTION 3.06. Compliance with ERISA.................................41
SECTION 3.07. Taxes.................................................42
SECTION 3.08. Environmental Compliance..............................42
SECTION 3.09. Properties............................................43
SECTION 3.10. Compliance with Laws and Agreements...................43
SECTION 3.11. Investment and Holding Company Status.................43
SECTION 3.12. Full Disclosure.......................................44
SECTION 3.13. Security Interest.....................................44
SECTION 3.14. Solvency..............................................44
SECTION 3.15. Employee Matters......................................45
SECTION 3.16. Use of Proceeds.......................................45
SECTION 3.17. Subsidiaries..........................................45
SECTION 3.18. No Change in Credit Criteria or Collection Policies...45
ARTICLE IV Conditions..........................................................45
SECTION 4.01. Effective Date........................................45
SECTION 4.02. Each Credit Event.....................................48
ARTICLE V Affirmative Covenants...............................................48
SECTION 5.01. Information...........................................48
SECTION 5.02. Maintenance of Property; Insurance....................51
SECTION 5.03. Compliance with Laws..................................52
SECTION 5.04. Inspection of Property, Books and Records.............52
SECTION 5.05. Use of Proceeds.......................................52
SECTION 5.06. Environmental Matters.................................53
SECTION 5.07. Taxes.................................................53
SECTION 5.08. Security Interests....................................53
SECTION 5.09. Existence; Conduct of Business........................53
SECTION 5.10. Litigation and Other Notices..........................53
SECTION 5.11. Additional Grantors and Guarantors....................54
SECTION 5.12. Maintain Operating Accounts...........................54
ARTICLE VI Negative Covenants..................................................55
SECTION 6.01. Indebtedness..........................................55
SECTION 6.02. Liens.................................................56
SECTION 6.03. Fundamental Changes...................................57
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SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions..........................................58
SECTION 6.05. Prepayment or Modification of Indebtedness;
Modification of Operating Documents...................59
SECTION 6.06. Restricted Payments...................................59
SECTION 6.07. Transactions with Affiliates..........................59
SECTION 6.08. Restrictive Agreements................................59
SECTION 6.09. Capital Expenditures..................................60
SECTION 6.10. Leverage Ratio........................................60
SECTION 6.11. Fixed Charge Coverage.................................61
SECTION 6.12. EBITDA................................................61
SECTION 6.13. Rental Obligations....................................61
ARTICLE VII Events of Default...................................................62
ARTICLE VIII The Administrative Agent............................................64
ARTICLE IX Miscellaneous.......................................................67
SECTION 9.01. Notices...............................................67
SECTION 9.02. Waivers; Amendments...................................68
SECTION 9.03. Expenses; Indemnity; Damage Waiver....................69
SECTION 9.04. Successors and Assigns................................70
SECTION 9.05. Survival..............................................73
SECTION 9.06. Counterparts; Integration; Effectiveness..............74
SECTION 9.07. Severability..........................................74
SECTION 9.08. Right of Setoff.......................................74
SECTION 9.09. GOVERNING LAW; Jurisdiction; Consent to Service
of Process............................................75
SECTION 9.10. WAIVER OF JURY TRIAL..................................75
SECTION 9.11. Headings..............................................76
SECTION 9.12. Confidentiality.......................................76
SECTION 9.13. Interest Rate Limitation..............................76
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SCHEDULES
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Schedule 2.01 -- Commitments
Schedule 3.05 -- Disclosed Matters as to Litigation
Schedule 3.08 -- Disclosed Matters as to Environmental Compliance
Schedule 5.01(i) -- Borrowing Base Certificate
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.04 -- Existing Investments
Schedule 6.08 -- Existing Restrictions
Schedule 6.13 -- Rental Obligations
EXHIBITS
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Exhibit A -- Form of Assignment and Assumption
Exhibit B -- Form of Opinion of Borrower's Counsel
Exhibit C -- Form of Promissory Note
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CREDIT AGREEMENT dated as of May 31, 2002, among WIRE ONE TECHNOLOGIES,
INC., a Delaware corporation, the LENDERS party hereto, and JPMORGAN CHASE BANK,
as Administrative and Collateral Agent and Arranger.
The Borrower has applied to the Lenders for Loans (such terms and all
other capitalized terms used in this paragraph having the respective meanings
ascribed to such terms hereinafter) up to an aggregate principal amount not in
excess of $25,000,000 outstanding at any time and from time to time during the
Availability Period. The proceeds of the Loans shall be used solely for the
Borrower's and its Subsidiaries' working capital, to refinance existing
Indebtedness on the Effective Date and general corporate purposes. The Borrower
and Guarantors will provide Collateral in accordance with the provisions of this
Agreement and the other Financing Documents. The Lenders are severally, and not
jointly, willing to extend such Loans to the Borrower subject to the terms and
conditions hereinafter set forth. Accordingly, the Borrower, the Lenders and the
Administrative Agent hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means JPMorgan Chase Bank, in its capacity as
administrative and collateral agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the
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Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate or the
Federal Funds Effective Rate shall be effective from and including the effective
date of such change in the Prime Rate, the Base CD Rate or the Federal Funds
Effective Rate, respectively.
"Applicable Rate" means with respect to any ABR Loan or Eurodollar Loan,
(i) if such day occurs on or after the Effective Date and prior to
the delivery of the first financial statements referred to in clause (ii)
below, (x) with respect to Loans that are Eurodollar Loans, 3.00% and (y)
with respect to Loans that are ABR Loans, 0.75%; and
(ii) if such day occurs on or after the date upon which the Borrower
shall have delivered to the Administrative Agent the financial statements
required to be delivered for the fiscal period ended December 31, 2002
pursuant to Section 5.01(a),
the rate as set forth below that corresponds to the Leverage Ratio of the
Borrower and its Subsidiaries on a consolidated basis as of the last day of, and
for, the four consecutive fiscal quarters most recently ended prior to such day
for which financial statements shall have been delivered to the Administrative
Agent as required pursuant to Sections 5.01(a) or (b) hereof, together with the
corresponding compliance certificate required pursuant to Section 5.01(c)
hereof; provided that if the Borrower shall fail to timely deliver such
statements and certificates for any such fiscal quarter period or during the
continuance of an Event of Default, then the Applicable Rate with respect to ABR
Loans and Eurodollar Loans shall be determined for the period (x) from and
including the date upon which such financial statements and certificate were
required to be delivered to but excluding the date upon which financial
statements and a certificate complying with Section 5.01(a) or (b) and Section
5.01(c) or (y) from and including the date from which such Event of Default
shall have occurred but excluding the date upon which such Event of Default is
cured or waived as if the applicable Leverage Ratio of the Borrower and its
Subsidiaries was greater than 3.00:1.00:
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Leverage Ratio ABR Spread Eurodollar Spread for
for Loans Loans
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Greater than 3.00:1.00 1.00% 3.25%
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Less than 3.00:1.00 but equal 0.75% 3.00%
to or greater than 2.50:1.00
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Less than 2.50:1.00 but equal 0.50% 2.75%
to or greater than 2.00:1.00
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Less than 2.00:1.00 0.25% 2.50%
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"Assessment Rate" means, for any day, the annual assessment rate in effect
on such day that is payable by a member of the Bank Insurance Fund classified as
"well-capitalized" and within supervisory subgroup "B" (or a comparable
successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation for insurance
by such Corporation of time deposits made in dollars at the offices of such
member in the United States; provided that if, as a result of any change in any
law, rule or regulation, it is no longer possible to determine the Assessment
Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall
be determined by the Administrative Agent to be representative of the cost of
such insurance to the Lenders.
"Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Availability" means at any time (i) the lesser at such time of (A) the
total Commitment and (B) the Borrowing Base, minus (ii) the sum at such time of
(w) the unpaid principal balance of the Revolving Loans plus all accrued
interest, fees and expenses, (x) the LC Exposure, (y) the Availability Block and
(z) all Availability Reserves and Dilution Reserves; provided, however, that
from and after satisfaction of the Availability Block Criteria the subtraction
of the amount of the Availability Block in (ii)(y) above shall no longer be made
and instead the amount of the Availability Block shall be subtracted from the
Borrowing Base in (i)(B) above.
"Availability Block" means $2,500,000.
"Availability Block Criteria" means the Borrower's compliance with the
financial covenants set forth in Sections 6.09, 6.10, 6.11, 6.12 and 6.13 as
demonstrated from the financial statements and compliance certificates delivered
pursuant to Section 5.01 for any quarterly period from and after the quarterly
period ending June 30, 2003.
"Availability Period" means the period from and including the Effective
Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
"Availability Reserves" means, as of any date of determination, such
reserves in amounts as the Administrative Agent may from time to time establish
and revise (upward or downward) in good faith in accordance with its customary
credit policies: (a) to reflect events, conditions, contingencies or risks
which, as determined by the Administrative Agent, do, or are reasonably likely
to, materially adversely affect either (i) the Collateral or its value or (ii)
the security interests and other rights of the Administrative Agent or any
Lender in the Collateral (including the enforceability, perfection and priority
thereof), (b) to reflect the Administrative Agent's belief that any collateral
report or financial information furnished by or on behalf of the Borrower is or
may have been incomplete, inaccurate or misleading in any material respect, (c)
to reflect any Derivative Obligations, (d) in respect of any state of facts
which the Administrative
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Agent determines in good faith constitutes a Default or (e) "unearned warranty
income." For purposes hereof, "unearned warranty income" shall be calculated
monthly and shall mean with respect to any Customer the lesser of (x) the
Receivables balance for such Customer and (y) the unearned warranty income
attributed to such Customer; provided that the total unearned warranty income
for all Customers shall in no event exceed the amount shown on the Borrower's
books and records in its "unearned warranty income" account.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America.
"Borrower" means Wire One Technologies, Inc., a Delaware corporation.
"Borrowing" means Loans 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.
"Borrowing Base" shall have the meaning assigned to such term in Section
2.01.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" shall mean all expenditures for the acquisition or
leasing (pursuant to a capital lease) of assets or additions to equipment
(including replacements, capitalized repairs and improvements) which should be
capitalized under GAAP.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Cash Interest Expense" means with respect to the Borrower for any period,
Interest Expense for such period less all no-cash items constituting Interest
Expense during such period (including, without limitation, amortization of debt
discounts and payments of interest on Indebtedness by issuance of Indebtedness).
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"Casualty Event" shall mean, with respect to any property of the Borrower
or any of its Subsidiaries, any loss of title with respect to such property or
any loss or damage to or destruction of, or any condemnation or other taking
(including by any Governmental Authority) of, such property or any interruption
of the business of the Borrower or any Subsidiary which is covered by business
interruption insurance.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Change in Control" means (i) any person (as such term is defined in
Section 13(d)(3) of the Securities Exchange Act of 1934 as amended (the
"Exchange Act")) or group of related persons, together with affiliates thereof,
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act), directly or indirectly, of more than 30% of
Equity Interests with voting power of the Borrower; or (ii) the Borrower shall
cease to own 100% of all Equity Interests of its Material Subsidiaries.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.13(b), by any lending office of such Lender
or Issuing Bank or by such Lender's or the Issuing Bank's holding company, if
any) with any request, guideline or directive (whether or not having the force
of law) of any Governmental Authority made or issued after the date of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means all collateral on which a Lien is granted or purported
to be granted pursuant to any Financing Document.
"Commitment" means a Revolving Loan Commitment.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Customer" means and includes the account debtor or obligor with respect
to any Receivable.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
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"Derivative Obligations" means every obligation of a Person under any
forward contract, futures contract, swap, option or other financing agreement or
arrangement (including, without limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon interest rates, currency or
exchange rates or valuations.
"Dilution Factors" means with respect to the Borrower's Receivables for
any period, the aggregate amount of all gross deductions, credit memos, returns,
adjustments, allowances, bad debt write-offs, volume rebates (issued either as a
credit to the Customer's account balance or as a cash disbursement) and other
non-cash credits.
"Dilution Ratio" means with respect to the Borrower at any date, the
amount (expressed as a percentage) equal to (a) the aggregate amount of the
applicable Dilution Factors for the 12 most recently completed fiscal months
divided by (b) total gross sales for the 12 most recently completed fiscal
months.
"Dilution Reserve" means at any date of calculation by the Administrative
Agent, the applicable Dilution Ratio multiplied by the Eligible Receivables on
such date. A Dilution Reserve shall be calculated to the extent that the
Dilution Ratio, at any date, is in excess of 5%. The Dilution Reserve shall
equal the calculated Dilution Ratio in excess of 5%.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedules 3.05 and 3.08.
"dollars" or "$" refers to lawful money of the United States of America.
"EBITDA" means with respect to the Borrower for any period (a) the sum of
(i) Net Income, (ii) Interest Expense, (iii) Federal, state, local and foreign
income taxes and (iv) depreciation and amortization and other non-cash items
properly deductible in determining Net Income, in each case on a consolidated
basis for the Borrower and its Subsidiaries for such period, calculated in
accordance with GAAP, minus (b) non-cash items properly added in determining Net
Income for such period.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Eligible Inventory" means inventory of the Borrower comprised solely of
finished goods (and specifically excluding raw materials, work in process, spare
parts, refurbished goods, foreign inventory, supplies and capitalization costs)
which is, in the opinion of the Administrative Agent, not obsolete, slow-moving
or unmerchantable and is and at all times shall continue in good faith in
accordance with its customary credit policies to be acceptable to the
Administrative Agent in all respects; provided, however, that Eligible Inventory
shall in no event include inventory which (i) is on consignment, is not in
conformity with the representations and warranties made by the Borrower under
the Financing Documents or is not located at one of the addresses for locations
of Collateral set forth on Annex C to the Security Agreement and with
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respect to which the Administrative Agent has not been granted and has not
perfected a valid, first priority security interest, (ii) which is in transit or
(iii) has been returned or rejected by a Customer. Standards of eligibility may
be fixed and revised from time to time solely by the Administrative Agent in the
Administrative Agent's exclusive judgment exercised in good faith in accordance
with its customary credit policies. In determining eligibility, the
Administrative Agent may, but need not, rely on reports and schedules furnished
by the Borrower, but reliance by the Administrative Agent thereon from time to
time shall not be deemed to limit the right of the Administrative Agent to
revise standards of eligibility at any time as to both present and future
inventory of the Borrower. If at any time the Administrative Agent shall
determine in the exercise of its reasonable judgment that the sale of any
inventory may be restricted by reason of any licensing or distribution
agreements, then either the Borrower shall obtain a waiver letter, in form and
substance satisfactory to the Administrative Agent, with respect to the rights
of the Administrative Agent to sell or otherwise dispose of such inventory or
such inventory shall be removed as Eligible Inventory.
"Eligible Receivables" means Receivables created by the Borrower in the
ordinary course of business arising out of the sale or lease of goods or
rendition of services by the Borrower, which are and at all times shall continue
to be acceptable to the Administrative Agent in all respects. Standards of
eligibility may be fixed and revised from time to time solely by the
Administrative Agent in the Administrative Agent's exclusive judgment exercised
in good faith in accordance with its customary credit policies. In general,
without limiting the foregoing, a Receivable shall in no event be deemed to be
an Eligible Receivable unless: (a) all payments due on the Receivable have been
invoiced and the underlying goods shipped or services performed, as the case may
be; (b) the payment due on the Receivable is not more than 90 days past the
invoice date; (c) the payments due on more than 50% of all Receivables from the
same Customer are less than 90 days past the invoice date; (d) the Receivable
arose from a completed and bona fide transaction (and with respect to a sale of
goods, a transaction in which title has passed to the Customer) which requires
no further act under any circumstances on the part of the Borrower in order to
cause such Receivable to be payable in full by the Customer; (e) the Receivable
is in full conformity with the representations and warranties made by the
Borrower to the Administrative Agent and the Lenders with respect thereto and is
free and clear of all security interests and Liens of any nature whatsoever
other than any security interest deemed to be held by the Borrower or any
security interest created pursuant to the Security Agreement or permitted by
Section 6.02 hereof; (f) the Receivable constitutes an "account" or "chattel
paper" within the meaning of the Uniform Commercial Code of the state in which
the Borrower is located; (g) the Customer has not asserted that the Receivable,
and the Borrower is not aware that the Receivable, arises out of a xxxx and
hold, consignment or progress billing arrangement or is subject to any setoff,
contras, net-out contract, offset, deduction, dispute, credit, counterclaim or
other defense arising out of the transactions represented by the Receivables or
independently thereof and the Customer has finally accepted the goods from the
sale out of which the Receivable arose and has not objected to its liability
thereon or returned, rejected or repossessed any of such goods, except for
complaints made or goods returned in the ordinary course of business for which,
in the case of goods returned, goods of equal or greater value have been shipped
in return; (h) the Receivable arose in the ordinary course of business of the
Borrower; (i) the Customer is not (x) the United
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States government or the government of any state or political subdivision
thereof or therein, or any agency or department of any thereof (unless there has
been full compliance to the satisfaction of the Administrative Agent with any
applicable assignment of claims statute) or (y) an Affiliate of the Borrower or
any subsidiary of any thereof or a supplier or creditor of the Borrower or any
Subsidiary thereof (provided that such Receivable shall only be ineligible to
the extent of amounts payable by the Borrower or Subsidiary to such supplier or
outstanding to such creditor); (j) the Customer is a United States person or an
obligor in the United States or an obligor located in another jurisdiction if
the applicable Receivable is covered by a letter of credit or credit insurance
in favor of, or assigned to, the Administrative Agent in form and substance
satisfactory to the Administrative Agent; (k) the Receivable complies with all
material requirements of all applicable laws and regulations, whether Federal,
state or local (including, without limitation, usury laws and laws, rules and
regulations relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and
privacy); (l) to the knowledge of the Borrower, the Receivable is in full force
and effect and constitutes a legal, valid and binding obligation of the Customer
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and by general equity
principles; (m) the Receivable is denominated in and provides for payment by the
Customer in dollars (unless a currency swap or similar hedge approved by the
Administrative Agent has been entered into with respect to such Receivable the
effect of which is to cause payment to be denominated in dollars) and is payable
within the United States; (n) the Receivable has not been and is not required to
be charged off or written off as uncollectible in accordance with GAAP or the
customary business practices of the Borrower; (o) the Administrative Agent on
behalf of the Lenders possesses a valid, perfected first priority security
interest in such Receivable as security for payment of the obligations; (p) the
Receivable is not with respect to a Customer located in New Jersey, Minnesota,
West Virginia or any other state denying creditors access to its courts in the
absence of a Notice of Business Activities Report or other similar filing,
unless the Borrower either has qualified as a foreign corporation authorized to
transact business in such state or has filed a Notice of Business Activities
Report or similar filing with the applicable state agency for the then current
year; (q) an event as described in paragraph (g) or (h) of Article VII has not
occurred with respect to the Customer; and (r) the Administrative Agent is
reasonably satisfied with the credit standing of the Customer in relation to the
amount of credit extended. Notwithstanding the foregoing, all Receivables of any
single Customer which, in the aggregate, exceed 10% of the total Eligible
Receivables at the time of any such determination shall be deemed not to be
Eligible Receivables to the extent of such excess.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Materials or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of
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the Borrower or any Subsidiary directly or indirectly resulting from or based
upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"Equity Interests" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (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 of its Affiliates 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 of its ERISA Affiliates 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 Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article VII.
10
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender, any withholding tax that is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with Section 2.15(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to
Section 2.15(a).
"Facility Letter" means the letter agreement between the Borrower and the
Administrative Agent effective on the Effective Date authorizing certain
employees to handle certain of the credit operations contemplated by this
Agreement.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Fee Letter" means the letter dated April 26, 2002 between the Borrower
and the Administrative Agent setting forth certain fees to be paid by the
Borrower to the Administrative Agent.
"Financial Officer" means the president, chief financial officer,
principal accounting officer, treasurer or controller of the Borrower.
"Financing Documents" means this Agreement (including the Schedules and
Exhibits hereto), the Notes evidencing Loans, the Security Agreement, any
Guarantee and any other agreement hereafter created to which the Borrower or any
Guarantor is a party that provides for collateral security for any of the
obligations of the Borrower or any such Guarantor under any of the foregoing.
"Fixed Charge Coverage Ratio" means, with respect to the Borrower for any
period, the ratio of (i) Net Cash Flow for such period to (ii) Fixed Charge
Expense for such period.
11
"Fixed Charge Expense" means, with respect to the Borrower for any period,
the aggregate of (i) regularly scheduled principal payments of all Funded Debt
made or to be made by the Borrower and its Subsidiaries during such period, (ii)
dividends and other distributions during such period and (iii) Cash Interest
Expense during such period, in each case determined on a consolidated basis in
accordance with GAAP.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Funded Debt" means, with respect to the Borrower as of the date of
determination thereof, all Indebtedness of the Borrower and its Subsidiaries on
a consolidated basis outstanding at such time (including the current portion
thereof) which matures more than one year after the date of calculation, and any
such Indebtedness maturing within one year from such date of calculation
(including amounts outstanding in the final year of any Funded Debt) which is
renewable or extendable at the option of the obligor to a date more than one
year from such date and including in any event the Loans.
"GAAP" means generally accepted accounting principles in the United States
of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means 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, (a) 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, (b) 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, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) 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.
12
"Guarantor" means, collectively, each domestic Subsidiary executing and
delivering a Guarantee on the Effective Date and each Subsidiary which becomes a
Guarantor after the Effective Date.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty, (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances and
(k) all Derivative Obligations. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Interest Election Request" means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.06.
"Interest Expense" means, with respect to the Borrower for any period, the
interest expense of the Borrower and its Subsidiaries during such period
determined on a consolidated basis in accordance with GAAP, and shall in any
event include, without limitation, (i) the amortization of debt discounts, (ii)
the amortization of all fees payable in connection with the incurrence of
Indebtedness to the extent included in interest expense and (iii) the portion of
any Capitalized Lease Obligation allocable to interest expense.
"Interest Payment Date" means (a) with respect to any ABR Loan, the first
day of each month for the prior month then ended and (b) with respect to any
Eurodollar Loan, the last
13
day of the Interest Period applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurodollar Borrowing with an Interest Period of more
than three months' duration, each day prior to the last day of such Interest
Period that occurs at intervals of three months' duration after the first day of
such Interest Period.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter; provided, that (i) if any Interest Period would end on a day other
than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (ii) any Interest Period that commences on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Issuing Bank" means JPMorgan Chase Bank, in its capacity as the issuer of
Letters of Credit hereunder. The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall be
its pro rata (based on its Revolving Loan Commitment) of the total LC Exposure
at such time.
"Lenders" means the Persons listed on Schedule 2.01 and any other Person
that shall have become a party hereto pursuant to an Assignment and Assumption,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Assumption.
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement.
"Leverage Ratio" with respect to the Borrower means the ratio of (i)
Funded Debt as at such date to (ii) EBITDA for the period of four fiscal
quarters most recently ended on or prior to such date.
14
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the rate at which dollar deposits approximately
equal in principal amount to the Administrative Agent's portion of such
Eurodollar Borrowing and for a maturity equal to the applicable Interest Period
are offered in immediately available funds to the principal London office of the
Administrative Agent in the London interbank market at approximately 11:00 a.m.,
London time, two (2) Business Days prior to the first day of such Interest
Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and its Subsidiaries taken as a whole, (b) the ability of the
Borrower or any Guarantor to perform any of its obligations under this Agreement
and the other Financing Documents, taken as a whole, (c) the rights of or
benefits available to the Lenders or the Administrative Agent under this
Agreement and the other Financing Documents, taken as a whole, or (d) the
Administrative Agent's Lien on any material portion of the Collateral or the
priority of such Lien.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of any Derivative Obligations, of
any one or more of the Borrower and its Subsidiaries in an aggregate principal
amount exceeding $500,000. For purposes of determining Material Indebtedness,
the "principal amount" of the obligations of the Borrower or any Subsidiary in
respect of any Derivative Obligations at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Borrower or such
Subsidiary would be required to pay if such Derivative Obligations were
terminated at such time.
"Material Subsidiary" means any Subsidiary either (x) whose total assets
(based on book value) exceed $2,500,000 or (y) whose Net Income in any fiscal
year exceeds $250,000. On the Effective Date, none are Material Subsidiaries.
"Maturity Date" means May 31, 2005.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
15
"Net Amount of Eligible Inventory" means, at any time, the aggregate
value, computed at the lower of cost (on a FIFO basis) and current market value,
of Eligible Inventory of the Borrower.
"Net Amount of Eligible Receivables" means, at any time, without
duplication, the gross amount of Eligible Receivables at such time less to the
extent included in Eligible Receivables, (i) sales, excise or similar taxes and
(ii) to the extent not otherwise excluded from Eligible Receivables, returns,
discounts, claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding, available to or claimed by the Customers in respect
of such Eligible Receivables.
"Net Cash Flow" means, with respect to the Borrower for any period,
without duplication, (A) the sum for such period of (i) Net Income, (ii)
depreciation and amortization to the extent deducted in arriving at Net Income,
(iii) Cash Interest Expense, (iv) the change (expressed as a positive number in
the event of an increase or a negative number in the event of a decrease) in
deferred tax liabilities, (v) other noncash items properly deducted in arriving
at Net Income, and (vi) the change (expressed as a negative number in the event
of an increase or a positive number in the event of a decrease), if any, in
deferred tax assets minus (B) the sum for such period of (x) all Capital
Expenditures and (y) Federal, state, local and foreign income taxes paid in
cash.
"Net Income" means with respect to the Borrower for any period, the
consolidated income (or loss) of the Borrower for such period which shall be an
amount equal to net revenues and other proper items of income for the Borrower
less Federal, state, local and foreign income taxes, but excluding any
extraordinary gains or losses or any gains or losses from the sale or
disposition of assets other than in the ordinary course of business, all
computed and calculated in accordance with GAAP.
"Net Proceeds" means (a) with respect to the sale or other disposition of
any asset the excess, if any, of (i) the aggregate amount received in cash
(including any cash received by way of deferred payment pursuant to a note
receivable, other non-cash consideration or otherwise, but only as and when such
cash is so received) in connection with such sale or other disposition, over
(ii) the sum of (A) the amount of any Indebtedness which is secured by any such
asset or which is required to be, and is, repaid in connection with the sale or
other disposition thereof (other than Indebtedness hereunder), (B) the
reasonable out-of-pocket expenses and fees incurred with respect to legal,
investment banking, brokerage, advisor and accounting and other professional
fees, sales commissions and disbursements and all other reasonable fees,
expenses and charges, in each case actually incurred in connection with such
sale or disposition, (C) all income and transfer taxes payable in connection
with such sale or other disposition, whether actually paid or estimated to be
payable in cash in connection with such disposition or the payment of dividends
or the making of other distributions of the proceeds thereof and (D) reserves,
required to be established in accordance with GAAP or the definitive agreements
relating to such disposition, with respect to such disposition, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters
16
and liabilities under any indemnification obligations; (b) with respect to the
issuance, sale or other disposition of any stock or debt securities the excess
of (i) the aggregate amount received in cash (including any cash received by way
of deferred payment pursuant to a note receivable, other non-cash consideration
or otherwise, but only as and when such cash is so received) in connection with
such issuance, sale or other disposition, over (ii) the sum of (A) the
reasonable fees, commissions, discounts and other out-of-pocket expenses
including, without limitation, related legal, investment banking and accounting
fees and disbursements incurred in connection with such issuance, sale or other
disposition, and (B) all income and transfer taxes payable in connection with
such issuance, sale or other disposition, whether payable at such time or
thereafter; and (c) with respect to a Casualty Event, the aggregate amount of
proceeds received with respect to such Casualty Event, over the sum of (i) the
reasonable expenses incurred in connection therewith, (ii) the amount of any
Indebtedness (other than Indebtedness hereunder) secured by any asset affected
thereby and required to be, and in fact, repaid in connection therewith and
(iii) all income and transfer taxes payable, whether actually paid or estimated
to be payable, in connection therewith.
"Note" means any of the promissory notes executed pursuant to Section
2.08(e).
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"Participant" has the meaning assigned to such term in Section 9.04
hereof.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.07;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's and
other like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.07 and (ii) landlord's Liens arising by
operation of law which are subordinated to the Liens in favor of the
Administrative Agent;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations or letters of credit or guarantees issued in
respect thereof;
17
(d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business or
letters of credit or guarantees issued in respect thereof;
(e) judgment liens in respect of judgments that do not constitute an Event
of Default under clause (j) of Article VII;
(f) 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 Subsidiary;
(g) liens arising from UCC financing statements in respect of leases
permitted by this Agreement;
(h) liens in favor of custom and revenue authorities arising as a matter
of law to secure payment of custom duties in connection with the importation of
goods so long as such Liens attach only to the imported goods; and
(i) liens in favor of vendors of goods arising as a matter of law securing
the payment of the purchase price therefor so long as such Liens attach only to
the purchased goods.
provided that, except as provided for in clause (i) of this definition, the term
"Permitted Encumbrances" shall not include any Lien securing Indebtedness.
"Permitted Investments" means:
(a) 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 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;
(b) 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 or from Xxxxx'x Investors
Service, Inc.;
(c) 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 of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;
18
(d) investments in money market mutual funds having portfolio assets in
excess of $2,000,000,000 that comply with the criteria set forth in Securities
and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940 and
are rated AAA by Standard & Poor's and Aaa by Xxxxx'x Investors Service, Inc.;
(e) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above;
(f) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States of America, or any political subdivision or taxing
authority thereof, and rated at least A by Standard & Poor's or Xxxxx'x
Investors Service, Inc.; and
(g) with respect to any Person organized or conducting operations outside
of the United States, investments denominated in the currency of the
jurisdiction in which such Person is organized or conducting business which are
similar to the items specified in clauses (a) through (f) above (other than the
nationality of the governmental or non-governmental issuer or counterparty
involved).
"Permitted Overadvances" means involuntary overadvances not exceeding
$500,000 that may result from time to time due to the fact that any borrowing
formulas set forth in the Financing Documents were unintentionally exceeded
(whether at the time of any Loan or at the time of the issuance of any Letter of
Credit or otherwise) for any reason (other than the Administrative Agent's gross
negligence or willful misconduct), including Collateral believed to be eligible
in fact being or becoming ineligible and the return of uncollected checks or
other items applied to the reduction of the Loans, Letters of Credit or other
obligations, and overadvances made by the Administrative Agent without Lenders'
consent for up to 30 days after discovering the unintentional overadvance,
provided that the Administrative Agent does not during that period voluntarily
increase the amount by which the borrowing formulas had been exceeded as of the
start of that period. To the extent any Permitted Overadvances are made, each
Lender shall bear its pro rata (based on its Commitment) share thereof.
"Permits" has the meaning assigned to such term in Section 3.08(i) hereof.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means 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 the Borrower 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.
19
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by JPMorgan Chase Bank as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective from
and including the date such change is publicly announced as being effective.
"Receivables" means and includes all of a Person's accounts, instruments,
documents, chattel paper and general intangibles, whether secured or unsecured,
whether now existing or hereafter created or arising, and whether or not
specifically assigned to the Administrative Agent for its own benefit and/or the
ratable benefit of the Lenders.
"Register" has the meaning set forth in Section 9.04.
"Regulation U" means Regulation U of the Board, as the same is from time
to time in effect, and all official rulings and interpretations thereunder or
thereof.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders holding Loans, LC Exposure
and unused Commitments representing at least 51% of the unpaid principal amount
of Loans, LC Exposure and unused Commitments, all after giving effect to the
terms of Section 2.16(e).
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any Equity Interests in the
Borrower or any Subsidiary, or 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
any such Equity Interests or any option, warrant or other right to acquire any
such Equity Interests.
"Revolving Credit Commitment Fee" has the meaning set forth in Section
2.10(a).
"Revolving Credit Exposure" means, with respect to any Lender at any time,
the sum of the outstanding principal amount of such Lender's Loans and its LC
Exposure at such time.
"Revolving Loan Commitment" means, with respect to each Lender, the
commitment of such Lender to make Loans and to acquire participations in Letters
of Credit hereunder, expressed as an amount representing the maximum aggregate
amount of such Lender's Revolving Credit Exposure hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.07 or Section 2.09
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 9.04. The initial amount of each Lender's
Revolving Loan Commitment is set forth on Schedule 2.01, or in the Assignment
and Assumption pursuant to which such Lender shall have assumed its Revolving
20
Loan Commitment, as applicable. The initial aggregate amount of the Lenders'
Revolving Loan Commitments is $25,000,000. Effective upon the assignment of an
interest pursuant to Section 9.04, Schedule 2.01 may be amended by the
Administrative Agent to reflect such assignment.
"Security Agreement" means the Omnibus Pledge and Security Agreement dated
as of the date hereof, between and among the Borrower, the Guarantors and the
Administrative Agent, for its own benefit and for the ratable benefit of the
Lenders, as amended, modified or supplemented from time to time.
"Security Interests" means the security interests in the Collateral
granted under the Security Agreement to secure the Secured Obligations (as
defined therein).
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months,
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
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"Three-Month Secondary CD Rate" means, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day is not a Business Day, the next preceding Business Day) by
the Board through the public information telephone line of the Federal Reserve
Bank of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day) or, if such rate is not so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Transactions" means the execution, delivery and performance by the
Borrower of this Agreement, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder.
"Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
"Withdrawal Liability" means 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.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Type (e.g., a "Eurodollar
Loan"). Borrowings also may be classified and referred to by Type (e.g., an "ABR
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof' and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same
22
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith. In calculating
compliance with any of the financial covenants (and related definitions), any
amounts taken into account in making such calculations that were paid, incurred
or accrued in violation of any provision of this Agreement shall be added back
or deducted, as applicable, in order to determine compliance with such
covenants.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower from time to time
during the Availability Period in an aggregate principal amount that will not
result in such Lender's Revolving Credit Exposure exceeding such Lender's
Revolving Loan Commitment. Notwithstanding the foregoing, the aggregate
principal amount of Loans outstanding at any time to the Borrower shall not
exceed (1) the lesser of (A) the Revolving Loan Commitment and (B) an amount
equal to the sum of (i) eighty percent (80%) of the Net Amount of Eligible
Receivables, plus (ii) the lesser of (a) 80% of the net orderly liquidation
value by category of Eligible Inventory and (b) fifty percent (50%) of the Net
Amount of Eligible Inventory, but in no event more than $3,000,000 with respect
to Eligible Inventory (this clause (1)(B) referred to herein as the "Borrowing
Base") minus (2) the LC Exposure at such time (not to exceed $2,000,000 at any
time). The Borrowing Base will be computed monthly or more often as may
reasonably be requested by the Administrative Agent and a compliance certificate
from a Financial Officer of the Borrower presenting its computation will be
delivered to the Administrative Agent in accordance with Section 4.02 hereof.
The net orderly liquidation value by category of Eligible Inventory was
determined by Emerald Technology Valuations, LLC and will be used in determining
the Borrowing Base on the Effective Date. If by reason of any subsequent
appraisals conducted pursuant to Section 5.04 such net orderly liquidation value
shall change, the Administrative Agent may adjust such value, upward or
downward, consistent with the results of such appraisals. Subject to the
foregoing and within the foregoing limits, the
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Borrower may borrow, repay (or prepay) and reborrow Revolving Loans, on and
after the date hereof through the Availability Period, subject to the terms,
provisions and limitations set forth herein, including, without limitation, the
requirement that no Loan shall be made hereunder if the amount thereof exceeds
the Availability outstanding at such time (in each case, after giving effect to
the application of the proceeds of such Loan).
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as part of
a Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Revolving Loan Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Revolving Loan Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.
(b) Subject to Section 2.06, each Borrowing shall be comprised entirely of
ABR Loans or Eurodollar Loans as the Borrower may request in accordance
herewith. Each Lender at its option may make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in a minimum amount of $500,000 times the
number of Lenders and an aggregate amount that is an integral multiple of
$100,000. At the time that each ABR Borrowing is made, such Borrowing shall be
in an aggregate amount that is an integral multiple of $100,000 and not less
than $100,000 (except that the foregoing limitation shall not be applicable to
the extent that the proceeds of such Borrowing are requested to be disbursed to
the Borrower's controlled disbursement account maintained with the
Administrative Agent); provided that an ABR Revolving Borrowing may be in an
aggregate amount that is equal to the entire unused balance of the total
Revolving Loan Commitments or that is required to finance the reimbursement of
an LC Disbursement as contemplated by Section 2.04(e). Borrowings of more than
one Type may be outstanding at the same time; provided that there shall not at
any time be more than a total of five (5) Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.
SECTION 2.03. Requests for Borrowings. To request a Borrowing, the
Borrower shall notify the Administrative Agent of such request by writing,
facsimile or telephone (a) in the case of a Eurodollar Borrowing, not later than
12:00 noon, New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00
noon, New York City time, on the same Business Day of the proposed Borrowing;
provided that any such notice of an ABR Borrowing to finance the reimbursement
of an LC Disbursement as contemplated by Section 2.04(e) may be given not later
than 12:00 noon,
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New York City time, on the date of the proposed Borrowing. Each such Borrowing
Request shall be irrevocable and if given by telephone shall be confirmed
(except that no such confirmation will be required, unless requested by the
Administrative Agent, to the extent the proceeds of such Borrowing are
requested, or deemed to be requested (by reason of the occurrence of any
overdraft or overadvance), to be dispersed to Borrower's controlled disbursement
account maintained with the Administrative Agent) promptly by writing or fax to
the Administrative Agent of a written Borrowing Request in a form approved by
the Administrative Agent and signed by an authorized signer of the Borrower as
set forth in the Facility Letter. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:
(a) the aggregate amount of the requested Borrowing;
(b) the date of such Borrowing, which shall be a Business Day;
(c) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(d) in the case of a Eurodollar Borrowing, the initial Interest Period to
be applicable thereto, which shall be a period contemplated by the definition of
the term "Interest Period"; and
(e) the location and number of the Borrower's account to which funds are
to be disbursed, which shall comply with the requirements of Section 2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each applicable Lender of the details thereof
and of the amount of such Lender's Loan to be made as part of the requested
Borrowing.
SECTION 2.04. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Availability Period. In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any form
of letter of credit application or other agreement submitted by the Borrower to,
or entered into by the Borrower with, the Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by
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electronic communication, if arrangements for doing so have been approved by the
Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably in
advance of the requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Letter of Credit, or identifying the Letter
of Credit to be amended, renewed or extended, and specifying the date of
issuance, amendment, renewal or extension (which shall be a Business Day), the
date on which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of Credit, the name
and address of the beneficiary thereof and such other information as shall be
necessary to prepare, amend, renew or extend such Letter of Credit. If requested
by the Issuing Bank, the Borrower also shall submit a letter of credit
application on the Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the LC
Exposure shall not exceed $2,000,000 and (ii) after giving effect to the
issuance of such Letter of Credit, Availability shall not be less than zero.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension); provided that a Letter of
Credit may provide that its expiration date shall be automatically extended (but
not beyond the date specified in clause (ii) below) to a date not more than one
year after the then outstanding expiration date unless, at least a specified
number of days prior to such then existing expiration date, the Issuing Bank
shall have given the beneficiary thereof notice, in a form that may be specified
in such Letter of Credit, that such expiration date shall not be so extended,
and (ii) the date that is thirty Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby
grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender's pro rata (based on
its Revolving Loan Commitment) portion of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Administrative Agent, for the account of the Issuing Bank, such Lender's pro
rata (based on its Revolving Credit Commitment) portion of each LC Disbursement
made by the Issuing Bank and not reimbursed by the Borrower on the date due as
provided in paragraph (e) of this Section, or of any reimbursement payment
required to be refunded to the Borrower for any reason. Each Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this
paragraph in respect of Letters of Credit is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including any amendment,
renewal or extension of any Letter of Credit or the occurrence and continuance
of a Default or reduction or termination of the Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.
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(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 12:00 noon, New York City time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 12:00 noon, New York City time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 10:00
a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the date of receipt; provided that,
if such LC Disbursement is not less than $100,000, the Borrower may, subject to
the conditions to borrowing set forth herein, request in accordance with Section
2.03 that such payment be financed with an ABR Borrowing. If the Borrower fails
to make such payment when due, the Administrative Agent shall notify each Lender
of the applicable LC Disbursement, the payment then due from the Borrower in
respect thereof and such Lender's pro rata (based on its Revolving Loan
Commitment) portion thereof. Promptly following receipt of such notice, each
Lender shall pay to the Administrative Agent its pro rata (based on its
Revolving Credit Commitment) portion of the payment then due from the Borrower,
in the same manner as provided in Section 2.05 with respect to Loans made by
such Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to
the Issuing Bank the amounts so received by it from the Lenders. Promptly
following receipt by the Administrative Agent of any payment from the Borrower
pursuant to this paragraph, the Administrative Agent shall distribute such
payment to the Issuing Bank or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders
and the Issuing Bank as their interests may appear. Any payment made by a Lender
pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement
(other than the funding of ABR Loans as contemplated above) shall not constitute
a Loan and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall, to the fullest
extent permitted under applicable law, be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit or this
Agreement, or any term or provision therein, (ii) any draft or other document
presented under a Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect (other than under circumstances which constitute gross negligence or
willful misconduct on the part of the Issuing Bank as finally determined by a
court of competent jurisdiction), (iii) payment of the Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit (other than under circumstances
which constitute gross negligence or willful misconduct on the part of the
Issuing Bank as finally determined by a court of competent jurisdiction), or
(iv) any other event or circumstance whatsoever, whether or not similar to any
of the foregoing, that might, but for the provisions of this Section, constitute
a legal or equitable discharge of, or
27
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement,
then, unless the Borrower shall reimburse such LC Disbursement in full on the
date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that the Borrower reimburses such LC Disbursement, at
the rate per annum then applicable to ABR Loans; provided that, if the Borrower
fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of
this Section, then Section 2.11(c) shall apply. Interest accrued pursuant to
this paragraph shall be for the account of the Issuing Bank, except that
interest accrued on and after the date of payment by any Lender pursuant to
paragraph (c) of this Section to reimburse the Issuing Bank shall be for the
account of such Lender to the extent of such payment.
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SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower by promptly crediting the amount so received, in like funds, to
an account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower either one Business Day prior to the
Effective Date or in the applicable Borrowing Request; provided that ABR Loans
made to finance the reimbursement of an LC Disbursement as provided in Section
2.04(e) shall be remitted by the Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
SECTION 2.06. Interest Elections. (a) Each Borrowing on the Effective Date
shall be at the Alternate Base Rate and thereafter shall be of the Type
specified in the applicable Borrowing Request and, in the case of a Eurodollar
Borrowing, shall have an initial Interest Period as specified in such Borrowing
Request. The Borrower may elect to convert such Borrowing to a different Type or
to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election in writing or by facsimile
transmission or by telephone (confirmed in writing or by fax) by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the
29
Administrative Agent of a written Interest Election Request in a form approved
by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02;
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each applicable Lender of the details thereof
and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies Borrower, then, so long as an Event of Default
is continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) each Eurodollar Borrowing, unless repaid as
provided herein, shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
SECTION 2.07. Termination and Reduction of Commitments. (a) Unless
previously terminated, the Revolving Loan Commitments shall terminate on
the Maturity Date.
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(b) The Borrower may at any time terminate, or from time to time reduce,
the Revolving Loan Commitments; provided that (i) each reduction of the
Revolving Loan Commitments shall be in an amount that is an integral multiple of
$100,000 and not less than $500,000, (ii) the Borrower shall not terminate or
reduce the Revolving Loan Commitments if, after giving effect to any concurrent
prepayment of the Loans in accordance with Section 2.09, Availability would be
less than zero and (iii) if any such termination, or series of reductions which
occur more or less concurrently resulting in a termination, shall occur prior to
the first anniversary of the Effective Date, the Borrower shall pay to the
Administrative Agent, for the ratable benefit of the Lenders, a fee equal to
1-1/2% of the amount of the Revolving Loan Commitments so terminated (except
that no fee shall be payable to the Administrative Agent in its capacity as
Lender to the extent Borrower refinances the Revolving Loan Commitments with the
Administrative Agent or an Affiliate).
(c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Revolving Loan Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the applicable Lenders of the contents thereof. Each notice
delivered by the Borrower pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Revolving Loan Commitments
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Revolving Loan Commitments shall be permanent.
Each reduction of the Revolving Loan Commitments shall be made ratably among the
Lenders with Revolving Loan Commitments in accordance with their respective
Revolving Loan Commitments.
(d) Each such reduction of the Revolving Loan Commitments shall be made
ratably among the Lenders with Revolving Loan Commitments in accordance with
their respective Revolving Loan Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Loan on the
Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable
31
from the Borrower to each Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder for the account of the Lenders
and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b)
or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent 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.
(e) Unless all Lenders otherwise agree, the Loans of each Lender shall be
evidenced by a promissory note substantially in the form of Exhibit C (each, a
"Note"). The Borrower shall execute and deliver to each Lender a Note or Notes
payable to the order of such Lender with blanks completed to the satisfaction of
such Lender.
SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have the right
at any time and from time to time to prepay any Borrowing in whole or in part,
subject to prior notice in accordance with paragraph (b) of this Section;
provided, however, the Borrower shall make prepayments of the Loans from time to
time such that the Availability equals or exceeds zero at all times.
(b) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 12:00 noon, New York City
time three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Borrowing, not later than 12:00 noon, New York City time,
one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid; provided that, if a notice of
prepayment is given under the circumstances in which a conditional notice of
termination of the Revolving Loan Commitments is permitted as contemplated by
Section 2.07, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.07. Promptly following
receipt of any such notice relating to a Borrowing, the Administrative Agent
shall advise the applicable Lenders of the contents thereof. Each partial
prepayment of any Borrowing shall be in an amount that would be permitted in the
case of an advance of a Borrowing of the same Type as provided in Section 2.02
(except that the foregoing shall not be applicable (i) to the extent that the
payment is made from the operation of Borrower's controlled disbursement account
maintained with the Administrative Agent, (ii) to a prepayment in full of the
aggregate principal amount of a Borrowing then outstanding or (iii) to a
prepayment of Loans required to be made pursuant to the proviso to paragraph (a)
of this Section). Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.11.
(c) Within three (or in the case of clause (i) below, 30) Business Days of
(i) the sale or other disposition (including, without limitation, those arising
from a Casualty Event) of any assets of the Borrower or any of its Subsidiaries
(other than dispositions permitted
32
pursuant to Section 6.03(c)(ii)), (ii) the consummation of the issuance of any
equity interests of the Borrower or any Subsidiary (other than (x) equity
interests of any Subsidiary issued to the Borrower or any other Subsidiary in
accordance with the terms hereof or (y) equity interests of the Borrower not
resulting in a Change of Control and issued other than in a public offering or
widely distributed private offering) or (iii) the consummation of the issuance
of any debt securities of the Borrower or any Subsidiary (other than
Indebtedness permitted pursuant to Section 6.01), subject to Section 5.02(b),
the Borrower shall make a mandatory prepayment of the Loans in an amount equal
to 100% of the Net Proceeds received, any prepayment to be applied in accordance
with subparagraph (d), provided that no prepayment on account of any asset sale
or disposition referred to in clause (i) shall be required under this
subparagraph (c) if the Borrower informs the Administrative Agent no later than
30 days following the receipt of any Net Proceeds from such asset sale or
disposition of its or its Subsidiary's good faith intention to apply such Net
Proceeds to the acquisition of other assets or property consistent with the
business permitted to be conducted pursuant to Section 6.03(b) (including by way
of Investment) within 180 days following the receipt of such Net Proceeds, with
the amount of such Net Proceeds unused after such 180 day period being applied
to the Loans pursuant to subparagraph (f).
(d) Each prepayment of Loans required by subsection (c) of this Section
shall be made ratably among the Loans of the Lenders, and such prepayments shall
be made with respect to such Types of Loans as the Borrower may specify by
notice to the Administrative Agent at or before the time of such prepayment and
shall be applied to prepay the Loans comprising each such Type pro rata;
provided that, if no such timely specification is given by the Borrower, such
payment shall be allocated to such Type or Types as the Administrative Agent may
determine.
SECTION 2.10. Fees. (a) The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee of 3/8 of 1% (the
"Revolving Credit Commitment Fee"), which shall accrue at the Applicable Rate on
the daily amount of the unused Revolving Loan Commitment of such Lender during
the period from and including the Effective Date to but excluding the date on
which such Revolving Loan Commitment terminates. Accrued Revolving Credit
Commitment Fees shall be payable quarterly in arrears on the first day of
January, April, July and October of each year and on the date on which the
Revolving Loan Commitments terminate, commencing on the first such date to occur
after the date hereof. All Revolving Credit Commitment Fees shall be computed on
the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay to the Administrative Agent for the account
of each Lender a participation fee with respect to its participation in Letters
of Credit, which shall accrue for each day during the period from and including
the Effective Date to but excluding the later of the date on which such Lender's
Revolving Loan Commitment terminates and the date on which such Lender ceases to
have any LC Exposure, at 1/4 of 1% less than the Applicable Rate with respect to
interest on Eurodollar Loans for such day on the average daily amount of such
Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed
LC
33
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Revolving Loan Commitments
and the date on which there ceases to be any LC Exposure, as well as the Issuing
Bank's standard fees with respect to the issuance, amendment, renewal or
extension of any Letter of Credit or processing of drawings thereunder.
Participation fees accrued through and including the last day of March, June,
September and December of each year shall be payable on the third Business Day
following such last day, commencing on the first such date to occur after the
Effective Date; provided that all such fees shall be payable on the date on
which the Revolving Loan Commitments terminate and any such fees accruing after
the date on which the Revolving Loan Commitments terminate shall be payable on
demand. Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable to the Issuing Bank on demand. All participation fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees in the amounts set forth in the Fee Letter and any other fees in
the amounts and at the times separately agreed upon in writing between the
Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders. Absent any error in the
calculation thereof, fees paid shall not be refundable under any circumstances.
SECTION 2.11. Interest. (a) The Loans comprising each ABR Borrowing shall
bear interest for each day on which any principal of such Loans remains
outstanding at the Alternate Base Rate for such day plus the Applicable Rate for
such day.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest for
each day during each Interest Period applicable thereto at the Adjusted LIBO
Rate for such Interest Period plus the Applicable Rate for such day.
(c) Notwithstanding the foregoing, if a Default shall have occurred and be
continuing, then unless and until such Default shall have been cured or waived,
all outstanding Loans shall bear interest, after as well as before judgment, at
a rate per annum equal to 2% plus the rate otherwise applicable to such Loan as
provided in the preceding paragraphs of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan, on the Maturity Date and, upon termination
of the Revolving Loan Commitments; provided that (i) interest accrued pursuant
to paragraph (c) of this Section 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
34
the end of the current Interest Period therefor, accrued interest on such
Eurodollar Loan shall be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360
days, except that interest computed by reference to the Alternate Base Rate at
times when the Alternate Base Rate is based on the Prime Rate shall be computed
on the basis of a year of 365 days (or 366 in a leap year), and in each case
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO
Rate or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate, for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans included
in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy, as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request or Interest Election Request requests a
Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.
SECTION 2.13. Increased Costs. (a) If any Change in Law 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, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Eurodollar
35
Loan) or to increase the cost to such Lender or the Issuing Bank of
participating in, issuing or maintaining any Letter of Credit or to reduce the
amount of any sum received or receivable by such Lender or the Issuing Bank
hereunder (whether of principal, interest or otherwise with respect to its
Eurodollar Loans or its maintenance of, or participation in, Letters of Credit),
then the Borrower will pay to such Lender or the Issuing Bank, as the case may
be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or the Issuing Bank's capital or on the capital of
such Lender's or the Issuing Bank's holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit held
by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's or the Issuing Bank's policies and the policies
of such Lender's or the Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth in
reasonable detail the calculation of the amount or amounts necessary to
compensate such Lender or the Issuing Bank or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender or the Issuing Bank, as the case may be, the amount shown
as due on any such certificate on demand.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.14. Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto or (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
36
pursuant hereto (regardless of whether such notice may be revoked under Section
2.09(b) and is revoked in accordance therewith), then, in any such event, the
Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth in reasonable detail any amount or amounts that such Lender is
entitled to receive pursuant to this Section shall be delivered to the Borrower
and shall be conclusive absent manifest error. The Borrower shall pay such
Lender the amount shown as due on any such certificate within 10 days after
receipt thereof. Notwithstanding the foregoing, the Borrower shall not be
required to make any prepayment of a Eurodollar Borrowing pursuant to Section
2.09(c) until the last day of the Interest Period with respect thereto so long
as an amount equal to such prepayment is deposited by the Borrower into a cash
collateral account with the Administrative Agent and applied to such prepayment
on the last day of such Interest Period.
SECTION 2.15. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each Lender and
the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental
37
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent
on its own behalf or on behalf of a Lender or the Issuing Bank, shall be
conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or reduction
of withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.
(f) If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to Section 2.15, it shall pay over
such refund to the Borrower (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrower under this Section 2.15 with respect
to the Taxes or Other Taxes giving rise to such refund); provided, that the
Borrower, upon the request of the Administrative Agent or such Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event that the Administrative Agent
or such Lender is required to repay such refund to such Governmental Authority.
This section shall not be construed to require the Administrative Agent or any
Lender to make available its tax returns (or other information relating to its
taxes which it deems confidential) to the Borrower or any other Person.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.13, 2.14 or 2.15, or otherwise) prior to
12:00 noon, New York City time, on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time on
any date may, in the discretion of the Administrative Agent, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. The Administrative Agent may charge, when due and payable, the
Borrower's account with the Administrative Agent for all interest, principal and
Revolving Credit Commitment Fees or other fees owing to the Administrative
Agent, the Issuing Bank or the Lenders on or with respect to this Agreement
and/or Loans and other Financing Documents. All such payments shall be made to
the Administrative Agent at its offices at 1166 Avenue of the
38
Americas, New York, New York, except payments to be made directly to the Issuing
Bank as expressly provided herein and except that payments pursuant to Sections
2.13, 2.14, 2.15 and 9.03 shall be made directly to the Persons entitled
thereto. The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment hereunder shall be due on a day that
is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension; provided
that, in the case of any prepayment of principal of or interest on any
Eurodollar Loan, if such next succeeding Business Day would fall in the next
calendar month, the date for payment shall instead be the next preceding
Business Day. All payments hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or participations in LC Disbursements resulting in
such Lender receiving payment of a greater proportion of the aggregate amount of
its Loans and participations in LC Disbursements and accrued interest thereon
than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans and participations in LC Disbursements of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in LC
Disbursements; provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements to any
assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
39
(d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the Issuing Bank, as the
case may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.04(d) or (e), 2.05(b) or 2.16(c), then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender's obligations under such Sections
until all such unsatisfied obligations are fully paid. Until such Lender's
unsatisfied obligations are fully paid, such Lender shall be excluded from any
determination of Required Lenders under this Agreement.
SECTION 2.17. Mitigation Obligations. If any Lender requests compensation
under Section 2.13, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.15, then such Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.13 or 2.15, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. Existence and Power. The Borrower is a corporation
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all necessary powers required to carry on its business as now
conducted and, except where the failure to do so could not be reasonably
expected to result in a Material Adverse Effect, is
40
qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required.
SECTION 3.02. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Borrower of the Financing
Documents to which it is a party are within its corporate powers, have been duly
authorized by all necessary corporate action, require no action by or in respect
of, or filing with, any Governmental Authority (except as contemplated by the
Security Agreement) and do not contravene, or constitute a default under, any
provision of material applicable law or material regulation or of its charter or
bylaws or of any material agreement, judgment, injunction, order, decree or
other material instrument binding upon each or result in the creation or
imposition of any Lien on any material asset of the Borrower or any of its
Subsidiaries (except the Security Interests).
SECTION 3.03. Binding Effect. This Agreement and the other Financing
Documents to which it is a party constitute valid and binding agreements of the
Borrower, in each case enforceable in accordance with their respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or moratorium or other similar laws relating to the enforcement
of creditors' rights generally and by general equitable principles.
SECTION 3.04. Financial Information. (a) The Borrower has heretofore
furnished to the Administrative Agent financial statements of the Borrower for
the three month period ended March 31, 2002, prepared by management and for the
fiscal years ended December 31, 1999, December 31, 2000 and December 31, 2001,
audited by BDO Xxxxxxx, LLP, independent public accountants. Such financial
statements present fairly in all material respects the financial condition and
results of operations of the Borrower as of the dates and for the periods
indicated, and such financial statements disclose in accordance with GAAP all
material liabilities, direct or contingent, of the Borrower as of the dates
thereof.
(b) The Borrower has heretofore furnished to the Administrative Agent
quarterly for the 2002 through 2005 fiscal years projected income statements,
balance sheets and cash flows, together with a schedule demonstrating
prospective compliance with all financial covenants, all in form and substance
reasonably satisfactory to the Lenders in their good faith judgment, all such
projections disclosing all assumptions made by the Borrower in formulating such
projections and giving effect to the Transactions. The projections are based
upon reasonable estimates and assumptions, all of which are reasonable in light
of the conditions which existed at the time the projections were made, have been
prepared on the basis of the assumptions stated therein, and reflect as of the
Effective Date the good faith estimate of the Borrower of the results of
operations and other information projected therein, provided that no
representation is made that the assumptions will prove to be correct.
(c) Since December 31, 2001, there has been no material adverse change in
the business, prospects, assets, operations or financial condition of the
Borrower and its consolidated Subsidiaries, considered as a whole, except that
for the fiscal quarter ended March 31, 2002, the financial statements of the
Borrower showed a loss.
41
SECTION 3.05. Litigation. Except for the Disclosed Matters, there is no
action, suit or proceeding pending against, or to the knowledge of the Borrower
threatened against or affecting, the Borrower or any of its Subsidiaries before
any arbitrator or any Governmental Authority, that (i) could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect, or (ii) which would in any material respect draw into question the
enforceability of any of the Financing Documents, taken as a whole.
SECTION 3.06. Compliance with ERISA. Each of the Borrower and its
Subsidiaries and each ERISA Affiliate has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue Code with respect to
each Plan and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code with respect to each Plan, and has
not incurred any liability under Title IV of ERISA (i) to the PBGC other than a
liability to the PBGC for premiums under Section 4007 of ERISA or (ii) in
respect of a Multiemployer Plan which has not been discharged in full when due.
SECTION 3.07. Taxes. To the extent applicable, each of the Borrower and
its Subsidiaries has filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by it and has paid all
taxes stated to be due in such returns or pursuant to any assessment received by
it, except for taxes the amount, applicability or validity of which is being
contested in good faith by appropriate proceedings. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of taxes
or other similar governmental charges, additions to taxes and any penalties and
interest thereon are, in the opinion of the Borrower, adequate.
SECTION 3.08. Environmental Compliance. (a) Except for Disclosed Matters,
(i) the Borrower and its Subsidiaries have, obtained, or made timely
application for, all permits, certificates, licenses, approvals,
registrations and other authorizations (collectively "Permits") which are
required under all applicable Environmental Laws and are necessary for
their operations and are in compliance with the terms and conditions of
all such Permits, except where the failure to obtain such Permits or to
comply with their terms would not have, individually or in the aggregate,
a Material Adverse Effect;
(ii) no notice, notification, demand, request for information,
citation, summons, complaint or order has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or review is
pending, or to the Borrower's knowledge, threatened by any governmental
entity or other Person with respect to any (A) alleged violation by the
Borrower or any Subsidiary of any Environmental Law, (B) alleged failure
by the Borrower or any Subsidiary to have any Permits required in
connection with the conduct of its business or to comply with the terms
and conditions thereof, (C) any generation, treatment, storage, recycling,
transportation or disposal of any Hazardous Materials or (D) release of
42
Hazardous Materials, except where such event or events would not have,
individually or in the aggregate, a Material Adverse Effect;
(iii) to the knowledge of the Borrower, all oral or written
notifications of a release of Hazardous Materials required to be filed
under any applicable Environmental Law have been filed or are in the
process of being filed by or on behalf of the Borrower or any Subsidiary;
(iv) no property now owned or leased by the Borrower or any
Subsidiary and, to the knowledge of the Borrower, no such property
previously owned or leased or any property to which the Borrower or any
Subsidiary has, directly or indirectly, transported or arranged for the
transportation of any Hazardous Materials, is listed or, to the Borrower's
knowledge, proposed for listing, on the National Priorities List
promulgated pursuant to CERCLA, or CERCLIS (as defined in CERCLA) or any
similar state list or is the subject of federal, state or local
enforcement actions or, to the knowledge of the Borrower, other
investigations which may lead to claims against the Borrower or any
Subsidiary for clean-up costs, remedial work, damage to natural resources
or personal injury claims, including, but not limited to, claims under
CERCLA, except where such listings or investigations would not have,
individually or in the aggregate, a Material Adverse Effect;
(v) there are no Liens under or pursuant to any applicable
Environmental Laws on any real property or other assets owned or leased by
the Borrower or any Subsidiary, and no government actions have been taken
or, to the knowledge of the Borrower, are in process which could subject
any of such properties or assets to such Liens.
(b) For purposes of this Section, the terms "Borrower" and "Subsidiary"
shall include any business or business entity (including a corporation) which is
a predecessor, in whole or in part, of the Borrower or any Subsidiary.
SECTION 3.09. Properties. (a) Each of the Borrower and its Subsidiaries
has good title to, or valid leasehold interests in, all its real and personal
property material to its business, except for minor defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes.
(b) To the knowledge of the Borrower, each of the Borrower and its
Subsidiaries owns, or is licensed to use, all trademarks, trade names,
copyrights, patents and other intellectual property material to its business,
and the use thereof by the Borrower and its Subsidiaries does not, to the
knowledge of the Borrower, infringe upon the rights of any other Person, except
for any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
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SECTION 3.10. Compliance with Laws and Agreements. Each of the Borrower
and its Subsidiaries is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, and each has
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, except where the failure to
do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.11. Investment and Holding Company Status. Neither the Borrower
nor any of its Subsidiaries is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.12. Full Disclosure. All information furnished by the Borrower
to the Administrative Agent or any Lender for purposes of or in connection with
this Agreement or any of the Transactions is, taken as whole and in light of the
circumstances under which such information is furnished, true and accurate in
all material respects on the date as of which such information is furnished, and
true and accurate in all material respects on the date as of which such
information is stated or certified. It is understood that the foregoing is
limited to the extent that (i) projections have been made in good faith by the
management of the Borrower and in the view of the Borrower's management are
reasonable in light of all information known to management as of the Effective
Date, and (ii) no representation or warranty is made as to whether the projected
results will be realized.
SECTION 3.13. Security Interest. The Security Agreement creates and grants
to the Administrative Agent, for its own benefit and for the benefit of the
Lenders, a legal, valid and perfected first priority (except as permitted
pursuant to Section 6.02 hereof) Lien in the Collateral identified therein. Such
Collateral is not subject to any other Liens whatsoever, except Liens permitted
by Section 6.02 hereof.
SECTION 3.14. Solvency. (a) The fair salable value of the business of the
Borrower and its consolidated Subsidiaries is not less than the amount that will
be required to be paid on or in respect of the probable liability on the
existing debts and other liabilities (including contingent liabilities) of the
Borrower and its consolidated Subsidiaries, as they become absolute and mature.
(b) The assets of the Borrower and its Subsidiaries do not constitute
unreasonably small capital for the Borrower and its Subsidiaries to carry out
their business as now conducted and as proposed to be conducted including the
capital needs of the Borrower and its Subsidiaries, taking into account the
particular capital requirements of the business conducted by the Borrower and
its Subsidiaries and projected capital requirements and capital availability
thereof.
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(c) Neither the Borrower nor any of its Subsidiaries intends to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be received by the Borrower and any of its
Subsidiaries, and of amounts to be payable on or in respect of debt of the
Borrower and any of its Subsidiaries).
(d) Neither the Borrower nor any of its Subsidiaries believes that final
judgments against them in actions for money damages presently pending will be
rendered at a time when, or in an amount such that, they will be unable to
satisfy any such judgments promptly in accordance with their terms (taking into
account the maximum reasonable amount of such judgments in any such actions and
the earliest reasonable time at which such judgments might be rendered). The
cash flow of the Borrower and its consolidated Subsidiaries, after taking into
account all other anticipated uses of the cash of the Borrower and its
consolidated Subsidiaries (including the payments on or in respect of debt
referred to in paragraph (c) of this Section), will at all times be sufficient
to pay all such judgments promptly in accordance with their terms.
SECTION 3.15. Employee Matters. There are no strikes, slowdowns, work
stoppages or controversies pending or, to the knowledge of the Borrower,
threatened between the Borrower and its employees, other than employee
grievances arising in the ordinary course of business, none of which could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
SECTION 3.16. Use of Proceeds. All proceeds of each Borrowing under the
Revolving Loan Commitments shall be used solely to provide for working capital
requirements, repay Indebtedness on the Effective Date and general corporate
purposes.
SECTION 3.17. Subsidiaries. As of the Effective Date, the Borrower has no
Subsidiaries except for Allcomm Products Corp., VTC Resources Corp. and Wone
Travel Services Inc., all of which are wholly-owned.
SECTION 3.18. No Change in Credit Criteria or Collection Policies. There
has been no material change in credit criteria or collection policies concerning
Receivables of the Borrower and its Subsidiaries since December 31, 2001.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):
45
(a) The Administrative Agent (or its counsel) shall have received from
each party hereto either (i) a counterpart of this Agreement signed on behalf of
such party or (ii) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of Drinker Xxxxxx and Xxxxxxx LLP, counsel for the Borrower,
substantially in the form of Exhibit B, and covering such other matters relating
to the Borrower, this Agreement or the Transactions as the Required Lenders
shall reasonably request. The Borrower hereby requests such counsel to deliver
such opinion.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of the Borrower and
any Guarantors, the authorization of the Transactions and any other legal
matters relating to the Borrower and any Guarantors, this Agreement or the
Transactions, all in form and substance reasonably satisfactory to the
Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate of the
Borrower, dated the Effective Date and signed by the President, a Vice President
or a Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable, on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Borrower hereunder.
(f) The Administrative Agent (or its counsel) shall have received the
other Financing Documents, all in form and substance reasonably satisfactory to
the Administrative Agent and its counsel.
(g) With respect to any Liens not permitted pursuant to Section 6.02
hereof, the Administrative Agent shall have received termination statements in
form and substance satisfactory to it.
(h) Each document (including, without limitation, each Uniform Commercial
Code financing statement) required by law or requested by the Administrative
Agent to be filed, registered or recorded in order to create in favor of the
Administrative Agent for its own benefit and for the benefit of the Lenders a
first priority perfected Lien in the Collateral shall have been properly filed,
registered or recorded in each jurisdiction in which the filing, registration or
46
recordation thereof is so required or requested, or arrangements reasonably
satisfactory to the Administrative Agent for the filing, registering or
recording thereof shall have been made.
(i) The Administrative Agent shall have received the results of a search
of tax and other Liens, and judgments and of the Uniform Commercial Code filings
made with respect to the Borrower and each other grantor of Collateral in the
jurisdictions in which the Borrower and each such grantor is doing business
and/or in which any Collateral is located, and in which Uniform Commercial Code
filings have been, or are to be, made against the Borrower, and each such
grantor pursuant to paragraph (h) above.
(j) The Administrative Agent shall have received and determined to be in
form and substance satisfactory to it:
(i) the most recent (dated within thirty (30) days of the Effective
Date) aging of accounts receivable of the Borrower;
(ii) an opening Borrowing Base and evidence that the Borrower has
not less than $5,000,000 in unused Revolving Loan Commitments on the
Effective Date after giving effect to the transactions occurring on that
Date;
(iii) a copy of a field examination of the Borrower's and its
Subsidiaries' books and records;
(iv) evidence of the compliance by the Borrower with Section 5.02(b)
hereof, including, without limitation, the naming of the Administrative
Agent as loss payee and additional insured;
(v) the financial statements described in Section 3.04 hereof;
(vi) evidence of the repayment in full of, or the existence of
arrangements reasonably satisfactory to the Administrative Agent for the
repayment in full of, existing credit arrangements with respect to the
Collateral and the termination of all commitments to lend thereunder, and
the termination of all security interests securing such Indebtedness;
(vii) the results of an inventory valuation appraisal by Emerald
Technology Valuations, LLC, in form and substance reasonably satisfactory
to the Administrative Agent; and
(viii) the Facility Letter.
(k) The Administrative Agent shall have had the opportunity to conduct
customer and supplier checkings.
47
(l) The Borrower shall have executed and delivered to the Administrative
Agent a disbursement authorization letter with respect to the disbursement of
the proceeds of the Loans made on the Effective Date.
(m) The Administrative Agent shall have received such other documents, and
completed such other reviews, including, without limitation, material leases
(including, without limitation, the obtaining of landlord waivers) and
contracts, litigation and taxes, as the Administrative Agent or its counsel
shall reasonably deem necessary.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at
or prior to 3:00 p.m., New York City time, on June 15, 2002 (and, in the event
such conditions are not so satisfied or waived, the Commitments shall terminate
at such time).
SECTION 4.02. Each Credit Event. The obligation of any Lender to make a
Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction on such
date of the following conditions:
(a) The representations and warranties of the Borrower set forth in this
Agreement shall be true and correct on and as of the date of such Borrowing or
the date of issuance, amendment, renewal or extension of such Letter of Credit,
as applicable; provided that any such representations and warranties that by
their express terms are made as of a specific date shall be true and correct as
of such specific date.
(b) At the time of and immediately after giving effect to such Borrowing
or the issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing and the Borrower
shall otherwise be in compliance with the provisions of Section 2.01 or 2.04(b),
as applicable.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or been terminated and all LC
Disbursements have been reimbursed, the Borrower covenants and agrees with the
Lenders that:
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SECTION 5.01. Information. The Borrower will furnish to the Administrative
Agent and each of the Lenders:
(a) within 90 days after the end of each fiscal year, (i) a consolidated
balance sheet and consolidated income statement showing the financial position
of the Borrower and its Subsidiaries as of the close of such fiscal year and the
results of their operations during such year, and (ii) a consolidated statement
of shareholders' equity and a consolidated statement of cash flow, as of the
close of such fiscal year, comparing such financial position and results of
operations to such financial condition and results of operations for the
comparable period during the immediately preceding fiscal year, all the
foregoing financial statements to be audited by BDO Xxxxxxx, LLP or other
independent public accountants reasonably acceptable to the Administrative Agent
(which report shall not contain any going concern or similar qualification or
exception as to scope), and together with supplemental consolidating balance
sheets and statements of income, shareholders' equity and cash flow prepared by
such independent public accountants as being fairly stated in relation to such
audited financial statements taken as a whole and together with management's
discussion and analysis presented by the management of the Borrower and its
Subsidiaries;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, (i) unaudited consolidated balance
sheet of the Borrower and its Subsidiaries as of the end of such fiscal quarter,
together with the related consolidated statement of income for such fiscal
quarter and for the portion of the Borrower's fiscal year ended at the end of
such fiscal quarter and the related consolidated statement of cash flows and
consolidated changes in shareholders' equity for the portion of the Borrower's
fiscal year ended at the end of such fiscal quarter, setting forth in
comparative form the corresponding financial information as at the end of, and
for, the corresponding fiscal quarter of the Borrower's prior fiscal year and
the portion of the Borrower's prior fiscal year ended at the end of such
corresponding fiscal quarter, in each case certified by a Financial Officer of
the Borrower as presenting fairly in all material respects the financial
position and results of operations and cash flow of the Borrower and its
Subsidiaries in accordance with GAAP (except the absence of footnote
disclosure), in each case subject to normal year-end audit adjustments, and, for
such quarter then ending, management's discussion and analysis presented by the
management of the Borrower and its Subsidiaries;
(c) (i) concurrently with any delivery under (a) or (b), a management
discussion and analysis describing any differences between the reported
financial results under the financial statements delivered thereunder from the
budget required by (h) below, which shall include, among any other information
or explanation reasonably requested by the Administrative Agent, an explanation
of any revenues, EBITDA, Capital Expenditures and new or lost customers that
would assist the Lenders to better understand the results being reported and
(ii) concurrently with any delivery under (a) or (b), a certificate of the firm
or Person referred to therein (x) which certificate shall, in the case of the
certificate of a Financial Officer of the Borrower, certify that to the best of
his or her knowledge no Default has occurred (including calculations
demonstrating compliance, as of the dates of the financial statements being
furnished, with the covenants set forth in Sections 6.09, 6.10, 6.11, 6.12 and
6.13 hereof) and, if
49
such a Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto and (y)
which certificate, in the case of the certificate furnished by the independent
public accountants referred in paragraph (a) above, may be limited to accounting
matters and disclaim responsibility for legal interpretations, but shall in any
event state that to the best of such accountants' knowledge, as of the dates of
the financial statements being furnished no Default has occurred under any of
the covenants set forth in Sections 6.09, 6.10, 6.11 and 6.12 hereof and, if
such a Default has occurred, specifying the nature and extent thereof; provided,
however, that any certificate delivered concurrently with (a) above shall be
accompanied by a supplemental certificate confirming the accuracy of the
accountants' certificate (and shall in any event include calculations
demonstrating compliance with the covenants set forth in Sections 6.09, 6.10,
6.11,6.12 and 6.13 hereof) and signed by a Financial Officer of the Borrower;
(d) promptly after the same become publicly available, copies of such
registration statements, annual, periodic and other reports, and such proxy
statements and other information, if any, as shall be filed by the Borrower or
any of its Subsidiaries with the Securities and Exchange Commission pursuant to
the requirements of the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, if any;
(e) concurrently with any delivery under (a) above, a management letter
prepared by the independent public accountants who reported on the financial
statements delivered under (a) above, with respect to the internal audit and
financial controls of the Borrower and its Subsidiaries;
(f) (i) within 20 days of the end of each fiscal month, an aging schedule
of Receivables and reconciliation and accounts payable listing, (ii) within 30
days after the end of each fiscal quarter, a current customer list which shall
include addresses, (iii) concurrently with any delivery under (a) or (b) above,
a certificate signed by a Financial Officer of the Borrower calculating the
Applicable Rate test as of the date of the financial statements being furnished
and (iv) within three Business Days after the end of each week (but in no event
later than Wednesday), a report calculating ineligible Receivables and showing
sales, collections and debit and credit adjustments to Receivables, (v) at least
twice each month a report calculating the unearned warranty income reserve and
(vi) within 20 days after the end of each fiscal month, a report showing any
inventory designation, in each case in form and detail satisfactory to the
Administrative Agent;
(g) within 30 days prior to the beginning of each fiscal year, a summary
of business plans and financial operation projections (including, without
limitation, with respect to Capital Expenditures) for the Borrower and its
Subsidiaries for such fiscal year (including quarterly balance sheets,
statements of income and of cash flow) and annual projections through the
Maturity Date prepared by management and in form, substance and detail
(including, without limitation, principal assumptions provided separately in
writing) satisfactory to the Administrative Agent;
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(h) within 20 days after the end of each fiscal month, a certificate
substantially in the form of Schedule 5.05(i) hereto executed by a Financial
Officer of the Borrower demonstrating compliance as at the end of each month
with the Availability requirements, which shall include a Borrowing Base
calculation and inventory designation;
(i) as soon as practicable, copies of all material financial reports,
forms, filings, loan documents and financial information submitted to
governmental agencies and material financial reports distributed to its equity
holders;
(j) promptly upon becoming aware thereof, notice to the Administrative
Agent of the occurrence of any Default then continuing; and
(k) such other information as the Administrative Agent or any Lender may
reasonably request.
SECTION 5.02. Maintenance of Property; Insurance. (a) The Borrower will
keep, and will cause each Subsidiary to keep, all property useful and necessary
in its business as then conducted in good working order and condition, ordinary
wear and tear excepted.
(b) The Borrower will maintain, to the extent commercially available, (i)
physical damage insurance on substantially all its real and personal property in
the United States (including all Collateral and books and records relating to
any proceeds of Collateral) on an "All Risks" form subject to normal exclusions
(including the perils of flood and quake) on a repair and replacement cost basis
(or, in the case of idle properties, actual cash value basis) for all such
property in an amount not less than $23,000,000 (subject to a deductible amount
or retention not to exceed $1,000) and consequential loss coverage for extra
expense, (ii) public liability insurance (including products liability coverage)
in an amount not less than $2,000,000, and (iii) such other insurance coverage
in such amounts and with respect to such risks relating to the Borrower's
Collateral as the Required Lenders may reasonably request. All such insurance
shall be provided by insurers having an A.M. Best policyholders rating of not
less than A-. Prior to the Effective Date, the Borrower will cause the
Administrative Agent to be named as an insured party and loss payee, on behalf
of the Lenders, on each insurance policy covering risks relating to any of the
Collateral and books and records relating to any proceeds of Collateral and as
an additional insured on all other insurance. Each such insurance policy in
effect during the term of this Agreement shall include effective waivers by the
insurer of all claims for insurance premiums against the Administrative Agent or
any other Person entitled to the benefits of the Security Agreement, provide
that all insurance proceeds in excess of deductible amounts or retentions which
are payable in respect of losses relating to Collateral and books and records
shall be adjusted with and payable to the Administrative Agent (except so long
as no Default has occurred and is continuing any loss which is less than
$250,000 may be adjusted with and payable to the Borrower), and provide that no
cancellation or termination thereof shall be effective until at least 30 days
after receipt by the Administrative Agent of written notice thereof. The
Administrative Agent will consult with the Borrower before agreeing to any
adjustment of insurance proceeds covered by the preceding sentence. Net Proceeds
of insurance if not applied
51
to acquire other assets or property within the timelines provided in Section
2.09(c) hereof or in the case of business interruption insurance promptly
applied to the operation of Borrower's business shall be applied to prepay Loans
in accordance with Section 2.09(d) hereof. During the occurrence and continuance
of an Event of Default, the Net Proceeds of insurance shall be maintained in a
cash collateral account with the Administrative Agent and may be, upon notice to
the Borrower, setoff and applied to prepay outstanding principal and interest on
the Loans. The Borrower will deliver to the Administrative Agent (i) on the date
of the first Borrowing hereunder and within 95 days after the end of each fiscal
year of the Borrower, a certificate dated such date showing the total amount of
insurance coverage as of such date, (ii) from time to time true and complete
copies of such insurance policies of the Borrower (or, if the Borrower does not
have such insurance policies in its possession, evidence thereof) relating to
such insurance coverage as the Required Lenders through the Administrative Agent
may request, (iii) within 15 days of receipt of notice from any insurer, a copy
of any notice of cancellation or material adverse change in coverage from that
existing on the date of this Agreement and (iv) within 15 days of any
cancellation or nonrenewal of coverage by the Borrower, notice of such
cancellation or nonrenewal.
SECTION 5.03. Compliance with Laws. The Borrower will comply, and cause
each Subsidiary to comply, with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including, without
limitation, Environmental Laws and ERISA and the rules and regulations
thereunder) except where failure to comply would not have a Material Adverse
Effect, or where the necessity of compliance therewith is being contested in
good faith by appropriate proceedings.
SECTION 5.04. Inspection of Property, Books and Records. The Borrower will
keep, and will cause each Subsidiary to keep, proper books of record and account
reflecting its business and activities; and will permit, and will cause each
Subsidiary to permit, representatives of any Lender at such Lender's expense to
visit and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective officers, senior
employees and independent public accountants, all during normal business hours
and as often as may reasonably be desired; provided that the Borrower may, at
its option, have one or more employees or representatives present at any such
inspection, examination or discussion. At the Borrower's expense, the
Administrative Agent (x) shall have the right to audit, up to three times each
fiscal year (or as often as it may request upon the occurrence and continuance
of an Event of Default), the existence and condition of the Collateral and to
review compliance with the Financing Documents and (y) shall have the right to
retain an inventory appraiser to appraise the inventory Collateral once (or if
Availability should be less than $7,000,000, twice) each fiscal year (or as
often as it may request upon the occurrence and continuance of an Event of
Default).
SECTION 5.05. Use of Proceeds. The proceeds of the Loans made under this
Agreement will be used by the Borrower solely for working capital and Capital
Expenditures and general corporate purpose and on the Effective Date to repay
Indebtedness. None of such
52
proceeds will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any "margin stock"
within the meaning of Regulation U.
SECTION 5.06. Environmental Matters. The Borrower will promptly give to
the Lenders notice in writing of any complaint, order, citation or notice of
violation with respect to, or if the Borrower becomes aware of, (i) the
existence or alleged existence of a violation of any applicable Environmental
Law, (ii) any release into the environment, (iii) the commencement of any
cleanup pursuant to or in accordance with any applicable Environmental Law of
any Hazardous Materials, (iv) any pending legislative or threatened proceeding
for the termination, suspension or non-renewal of any permit required under any
applicable Environmental Law, (v) any property of the Borrower or any Subsidiary
that is or will be subject to a Lien imposed pursuant to any Environmental Law,
(vi) any pending legislative changes to existing Environmental Laws, and (vii)
any proposed acquisitions or leasing of property, which, in each of cases (i)
through (vii) above, individually or in the aggregate, would have a Material
Adverse Effect.
SECTION 5.07. Taxes. The Borrower will, and will cause each of its
Subsidiaries to, pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon the Borrower and its Subsidiaries or
upon their respective income or profits or in respect of their respective
property before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise, which, if unpaid,
would give rise to Liens upon such properties or any part thereof; provided,
however, that such payment and discharge shall not be required with respect to
(i) any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
the applicable party, shall have set aside on its books adequate reserves with
respect thereto, and such contest operates to suspend collection of the
contested tax, assessment, charge, levy or claims and enforcement of a Lien or
(ii) any tax, assessment, charge, levy or claims, the failure to pay and
discharge when due which, individually or in the aggregate would not have a
Material Adverse Effect.
SECTION 5.08. Security Interests. The Borrower will at all times take, or
cause to be taken, all actions necessary to maintain the Security Interests as
valid and perfected Liens, subject only to Liens permitted under Section 6.02,
and supply all information to the Administrative Agent necessary for such
maintenance.
SECTION 5.09. Existence; Conduct of Business. The Borrower will, and will
cause each of its Subsidiaries to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.03.
SECTION 5.10. Litigation and Other Notices. The Borrower will give the
Administrative Agent prompt written notice of the following:
53
(a) the issuance by any court or Governmental Authority of any injunction,
order, decision or other restraint prohibiting, or having the effect of
prohibiting, the making of the Loans, or invalidating, or having the effect of
invalidating, any provision of this Agreement or the other Financing Documents
that would materially adversely affect the Lenders' ability to enforce any
payment obligations hereunder, or the initiation of any litigation or similar
proceeding seeking any such injunction, order, decision or other restraint;
(b) the filing or commencement of any action, suit or proceeding against
the Borrower or any of its Subsidiaries, whether at law or in equity or by or
before any arbitrator or Governmental Authority, (i) which is material and is
brought by or on behalf of any Governmental Authority, or in which injunctive or
other equitable relief is sought or (ii) as to which it is probable (within the
meaning of Statement of Financial Accounting Standards No. 5) that there will be
an adverse determination and which, if adversely determined, would (A)
reasonably be expected to result in liability of Borrower or a Subsidiary
thereof in an aggregate amount of $250,000 or more, not reimbursable by
insurance, or (B) materially impairs the right of the Borrower or a Subsidiary
thereof to perform its material obligations under this Agreement, any Note or
any other Financing Document to which it is a party;
(c) any Default, specifying the nature and extent thereof and the action
(if any) which is proposed to be taken with respect thereto;
(d) notices given or received (with copies thereof) with respect to any
Subordinated Indebtedness; and
(e) any development in the business or affairs of the Borrower or any of
its Subsidiaries which has had or which is likely to have, in the reasonable
judgment of the Borrower, a Material Adverse Effect.
SECTION 5.11. Additional Grantors and Guarantors. The Borrower will, and
will cause its Subsidiaries to, promptly inform the Administrative Agent of the
creation or acquisition of any direct or indirect Subsidiary (subject to the
provisions of Section 6.04) and cause each direct or indirect Subsidiary not in
existence on the date hereof to enter into a Guarantee in form and substance
satisfactory to the Administrative Agent, and to execute the Security Agreement,
as applicable, as a grantor, and cause the direct parent of each such Subsidiary
to pledge all of the equity interests of such Subsidiary pursuant to the
Security Agreement and cause each such Subsidiary to pledge its accounts
receivable and all other assets pursuant to the Security Agreement. In
connection therewith, the Borrower or any applicable Subsidiary shall provide
such resolutions, certificates and opinions of counsel as shall be reasonably
requested by the Administrative Agent.
SECTION 5.12. Maintain Operating Accounts. Except as permitted pursuant to
the Security Agreement, the Borrower will, and will cause each of its
Subsidiaries to, maintain all of its operating accounts and cash management
arrangements (including the establishment of
54
lockboxes) with the Administrative Agent to the extent provided for in the
Security Agreement and on terms satisfactory to the Administrative Agent in its
sole discretion.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or been terminated and all LC Disbursements
have been reimbursed, the Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:
(a) Indebtedness created under the Financing Documents;
(b) Indebtedness existing on the date hereof and set forth in Schedule
6.01 and extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof or interest thereon or
fees related thereto and otherwise on substantially similar terms to such
existing Indebtedness;
(c) Indebtedness of the Borrower or any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the outstanding principal amount
thereof or interest thereon or fees related thereto; provided that (i) such
Indebtedness is incurred prior to or within 90 days after such acquisition or
the completion of such construction or improvement and (ii) the aggregate
principal amount of Indebtedness permitted by this clause (c) shall be in
compliance with Section 6.09;
(d) Indebtedness of any Person that becomes a Subsidiary after the date
hereof, in accordance with the terms hereof, provided that such Indebtedness
exists at the time such Person becomes a Subsidiary and is not created in
contemplation of or in connection with such Person becoming a Subsidiary and
provided, further, that the Borrower does not become liable for any such
Indebtedness;
(e) Indebtedness of the Borrower or any Subsidiary as an account party in
respect of trade letters of credit issued in the ordinary course of business;
55
(f) Indebtedness among the Borrower and its wholly-owned Subsidiaries
which are Guarantors arising as a result of intercompany loans pledged under the
Security Agreement, provided that the aggregate principal amount of all
Indebtedness owing to the Borrower or any such Guarantor shall not exceed
$250,000 at any time outstanding;
(g) Guarantees permitted by Section 6.04;
(h) Indebtedness subject to Liens permitted under Section 6.02(a) through
(f);
(i) Indebtedness owing to any insurance company in connection with the
financing of any insurance premiums permitted by such insurance company in the
ordinary course of business; and
(j) other unsecured Indebtedness (and if by Guarantee, without duplicate
counting of the amount guaranteed and the underlying Indebtedness) in an
aggregate principal amount not exceeding $500,000 at any time outstanding.
SECTION 6.02. Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower or any Subsidiary
existing on the date hereof and set forth in Schedule 6.02; provided that (i)
such Lien shall not apply to any other property or asset of the Borrower or any
Subsidiary and (ii) such Lien shall secure only those obligations which it
secures on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof or the interest
rate thereon or fees related thereto (except pursuant to the instrument creating
such Lien) and are on substantially similar terms;
(c) any Lien existing on any property or asset prior to the acquisition
thereof by the Borrower or any Subsidiary or existing on any property or asset
of any Person that becomes a Subsidiary after the date hereof prior to the time
such Person becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other
property or assets of the Borrower or any Subsidiary and (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Subsidiary, as the case may be and extensions,
renewals and replacements thereof that do not increase the outstanding principal
amount thereof or interest thereon or fees related thereto or otherwise alter
the terms of such Lien in any material respect;
56
(d) Liens on fixed or capital assets acquired, constructed or improved by
the Borrower or any Subsidiary; provided that (i) such security interests secure
Indebtedness permitted by clause (c) of Section 6.01, (ii) such security
interests and the Indebtedness secured thereby are incurred prior to or within
90 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 90% of the
cost of acquiring, constructing or improving such fixed or capital assets and
(iv) such security interests shall not apply to any other property or assets of
the Borrower or any Subsidiary;
(e) Liens created by the Financing Documents in favor of the
Administrative Agent and the Lenders;
(f) Liens securing obligations with respect to letters of credit permitted
under Section 6.01(e), provided that such Liens shall not apply to any property
other than the goods financed or paid for with the proceeds of such letters of
credit and documents of title in respect thereof; and
(g) licenses, leases or subleases permitted hereunder granted to others
not interfering in any material respect in the business of the Borrower or any
of its Subsidiaries.
SECTION 6.03. Fundamental Changes. (a) The Borrower will not, and will not
permit any Subsidiary to, 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) any of its assets, or the stock or other equity units of any of
its Subsidiaries (in each case, whether now owned or hereafter acquired), or
liquidate or dissolve; provided, however, that notwithstanding the foregoing,
any Subsidiary in existence on the Effective Date which is not a Material
Subsidiary may be liquidated or dissolved.
(b) The Borrower will not, and will not permit any of its Subsidiaries to,
(i) engage to any material extent in any business other than businesses of the
type conducted by the Borrower and its Subsidiaries on the date hereof and
businesses reasonably related thereto or (ii) change its fiscal year.
(c) Notwithstanding the foregoing, the Borrower and its Subsidiaries may
make:
(i) purchases and sales of inventory in the ordinary course;
(ii) (i) sales of assets (excluding capital stock of a Subsidiary)
and (ii) sales of worn out, obsolete, scrap or surplus assets not to
exceed for (i) and (ii) together $250,000 in the aggregate in any fiscal
year;
(iii) Capital Expenditures permitted by Section 6.09;
(iv) liquidations of Permitted Investments;
57
(v) Investments and Guarantees permitted by Section 6.04; and
(vi) dispositions of assets resulting from a Casualty Event.
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions.
The Borrower will not, and will not permit any of its Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person) 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) any assets
of any other Person constituting a business unit (collectively, "Investments"),
except:
(a) Permitted Investments and Investments that were Permitted Investments
when made;
(b) Investments outstanding on the Effective Date and, in the case of any
such Investment in an amount exceeding $100,000, identified in Schedule 6.04,
and any renewals, amendments and replacements thereof that do not increase the
amount thereof;
(c) Guarantees constituting Indebtedness permitted by Section 6.01;
(d) indemnities made and surety bonds issued in the ordinary course of
business;
(e) indemnities made in the Financing Documents;
(f) Investments by the Borrower, in wholly-owned Subsidiaries in existence
on the Effective Date, but not any increases therein;
(g) Guarantees made in the ordinary course of business; provided that such
Guarantees are not of Indebtedness for borrowed money except to the extent
permitted pursuant to Section 6.01 and otherwise could not in the aggregate
reasonably be expected to have a Material Adverse Effect;
(h) advances, loans or extensions of credit by the Borrower or any
Subsidiary to officers, directors, employees and agents of the Borrower or any
Subsidiary (i) in the ordinary course of business for travel, entertainment or
relocation expenses not to exceed $250,000 in the aggregate at any one time
outstanding and (ii) relating to indemnification or reimbursement of such
officers, directors, employees and agents in respect of liabilities relating to
their service in such capacities;
58
(i) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and supplier arising in the
ordinary course of business;
(j) accounts, chattel paper and notes receivable arising from the sale or
lease of goods or the performance of services in the ordinary course of
business;
(k) Capital Expenditures and Liens not prohibited by this Agreement; and
(l) other Investments not permitted under the foregoing clauses (a)
through (m) in an aggregate amount at any time outstanding not to exceed
$250,000.
SECTION 6.05. Prepayment or Modification of Indebtedness; Modification of
Operating Documents. (a) The Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly prepay, redeem, purchase or retire
before maturity any Indebtedness, other than Indebtedness incurred hereunder.
(b) The Borrower will not, and will not permit any of its Subsidiaries to,
modify, amend or alter their operating agreements, certificates or articles of
incorporation or other constitutive documents in a manner which could have a
Material Adverse Effect or would otherwise be materially disadvantageous to the
Lenders.
SECTION 6.06. Restricted Payments. The Borrower will not, and will not
permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except (a) the Borrower may
declare and pay dividends with respect to its Equity Interests payable solely in
additional Equity Interests, (b) Subsidiaries may declare and pay dividends
ratably with respect to their Equity Interests and (c) the Borrower may issue
its Equity Interests in connection with the exercise of warrants and stock
options presently outstanding or outstanding in the future.
SECTION 6.07. Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower or such Subsidiary than could
be obtained on an arm's-length basis from unrelated third parties, (b)
transactions between or among the Borrower and its wholly-owned Subsidiaries not
involving any other Affiliate, (c) any Restricted Payment permitted by Section
6.06, (d) loans and advances to officers, directors, employees and agents
permitted under Section 6.04(h), (e) fees and compensation paid to, and
customary indemnity and reimbursement provided on behalf of, officers,
directors, employees and agents of the Borrower or any of its Subsidiaries and
(f) employment agreements entered into by the Borrower or any of its
Subsidiaries in the ordinary course of business.
59
SECTION 6.08. Restrictive Agreements. The Borrower will not, and will not
permit any of its Subsidiaries to, 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 the Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or advances
to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Subsidiary; provided that (i) the foregoing shall not
apply to restrictions and conditions imposed by law or by this Agreement, (ii)
the foregoing shall not apply to restrictions and conditions existing on the
date hereof identified on Schedule 6.08 (but shall apply to any amendment or
modification expanding the scope of, any such restriction or condition), (iii)
the foregoing shall not apply to customary restrictions and conditions contained
in agreements relating to the sale of a Subsidiary or any asset pending such
sale, provided such restrictions and conditions apply only to the Subsidiary or
asset that is to be sold and such sale is permitted hereunder, (iv) clause (a)
of the foregoing shall not apply to restrictions or conditions imposed by any
agreement relating to Liens permitted by this Agreement if such restrictions or
conditions apply only to the property or assets subject to such permitted Lien
and (v) clause (a) of the foregoing shall not apply to customary provisions in
leases, licenses and other contracts restricting the assignment thereof.
SECTION 6.09. Capital Expenditures. The Borrower will not permit the
aggregate amount of payments made for Capital Expenditures of the Borrower and
its Subsidiaries on a consolidated basis, including Capitalized Lease
Obligations and Indebtedness secured by Liens permitted under Section 6.02(d)
hereof, to exceed the amounts set forth opposite the periods below:
Period Amount
------ ------
For the two quarter period ending
June 30, 2002 $3,000,000
For the three quarter period ending
September 30, 2002 $4,500,000
For the four quarter period ending
December 31, 2002 $6,000,000
For the fiscal year ending
December 31, 2003 and in each
fiscal year thereafter $6,000,000
SECTION 6.10. Leverage Ratio. The Borrower will not permit the Leverage
Ratio at any of the dates set forth below to be greater than the ratio set forth
below opposite such date:
60
Quarter Ending Ratio
-------------- -----
March 31, 2003 4.85:1.00
June 30, 2003 4.00:1.00
September 30, 2003 3.25:1.00
December 31, 2003 and the last day of each 2.75:1.00
fiscal quarter ending thereafter
SECTION 6.11. Fixed Charge Coverage. The Borrower will not permit the
Fixed Charge Coverage Ratio for any four consecutive fiscal quarter period
commencing with the period ending September 30, 2003 to be less than 2.25:1.00
or commencing with the period ending December 31, 2003 and at the end of each
fiscal quarter ending thereafter to be less than 3.50:1.00.
SECTION 6.12. EBITDA. The Borrower will not permit EBITDA for any of the
periods set forth below to be less than the respective amount set forth below
opposite such period:
Period Amount
------ ------
Two fiscal quarters ending ($1,600,000)
June 30, 2002
Three fiscal quarters ending ($1,000,000)
September 30, 2002
Four fiscal quarters ending $ 950,000
December 31, 2002
Four fiscal quarters ending $3,000,000
March 31, 2003
Four fiscal quarters ending $5,400,000
June 30, 2003
SECTION 6.13. Rental Obligations. The Borrower will not, and will not
permit any of its Subsidiaries to, incur, create, assume or permit to exist, in
respect of leases of real and personal property (other than finance leases),
rental obligations or other commitments thereunder to make any direct or
indirect payment, whether as rent or otherwise, for fixed or minimum rentals,
percentage rentals, property taxes, or insurance premiums, in an aggregate
amount for the Borrower and its Subsidiaries which exceed the amounts set forth
on Schedule 6.13 plus $500,000 in any fiscal year.
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ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan, the Revolving
Credit Commitment Fee or any other fee or any other amount (other than an amount
referred to in clause (a) of this Article) payable under this Agreement or any
other Financing Document, when and as the same shall become due and payable;
(c) any representation or warranty made or deemed made by the Borrower or
a Guarantor in the Financing Documents, or in any report, certificate, financial
statement or other document furnished pursuant to the Financing Documents, shall
prove to have been incorrect in any material respect as of the date when made or
deemed made;
(d) the Borrower shall fail to observe or perform any covenant, condition
or agreement contained in Section 5.01, 5.02 (with respect to insurance), 5.04
(with respect to audits), 5.05, 5.08, 5.09 (with respect to Borrower's
existence), 5.10(c) or 5.12 or in Article VI;
(e) the Borrower shall fail to observe or perform any covenant, condition
or agreement contained in this Agreement (other than those specified in clause
(a), (b) or (d) of this Article) or any other Financing Document, and such
failure shall continue unremedied for a period of 10 Business Days;
(f) default shall be made with respect to any Material Indebtedness of the
Borrower or any Subsidiary or Guarantor (excluding Indebtedness outstanding
hereunder) if the effect of any such default shall be to accelerate, or to
permit (with or without the giving of notice, the lapse of time or both) the
holder or obligee of such Indebtedness (or any trustee on behalf of such holder
or obligee) at its option to accelerate the maturity of such Indebtedness;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Subsidiary or Guarantor or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or Guarantor or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;
62
(h) the Borrower or any Subsidiary or Guarantor shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (g) of this Article, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or Guarantor
or for a substantial part of its assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors or (vi) take any action
for the purpose of effecting any of the foregoing;
(i) the Borrower or any Subsidiary shall become unable, admit in writing
its inability or fail generally to pay its debts as they become due;
(j) one or more judgments for the payment of money in an aggregate amount
in excess of $100,000 (not covered by insurance where the carrier has accepted
responsibility) shall be rendered against the Borrower, any Subsidiary or any
combination thereof and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to attach or levy upon any
material assets of the Borrower or any Subsidiary to enforce any such judgment;
(k) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse Effect;
(l) a Change in Control shall occur;
(m) any of the Financing Documents shall for any reason cease to be, or
shall be asserted by any Person obligated thereunder not to be, a legal, valid
and binding obligation of such Person, or any Lien on any material portion of
the Collateral purported to be created by any of such Financing Documents shall
for any reason cease to be, or be asserted by any Person granting any such Lien
not to be a valid, first priority perfected Lien (except to the extent otherwise
permitted under any of the Financing Documents);
(n) any material damage to, or loss, theft or destruction of, any material
Collateral, whether or not insured, or any strike, lockout, labor dispute,
embargo, condemnation, act of God or public enemy, or other casualty continuing
for more than 30 consecutive days beyond the coverage of any applicable business
interruption insurance, if in the case of any of the foregoing, any such event
or circumstance could reasonably be expected to have a Material Adverse Effect;
(o) the filing of any Lien for taxes exceeding individually or in the
aggregate $50,000;
63
then, and in every such event (other than an event with respect to the Borrower
described in clause (g) or (h) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take any one
or more of the following actions, at the same or different times: (i) terminate
the Revolving Loan Commitments, and thereupon the Revolving Loan Commitments
shall terminate immediately, (ii) declare the Loans then outstanding to be due
and payable in whole (or in part, in which case any principal not so declared to
be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and all fees and other obligations of the Borrower
accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower, (iii) require that the Borrower deposit cash
collateral to the extent of the L/C Exposure or (iv) exercise any other rights
or remedies available under the Financing Documents or applicable law; and in
case of any event with respect to the Borrower described in clause (g) or (h) of
this Article, the Revolving Loan Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
The Administrative Agent
Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent both as administrative agent and collateral
agent and authorizes the Administrative Agent to take such actions on its behalf
and to exercise such powers as are delegated to the Administrative Agent by the
terms hereof and the other Financing Documents, together with such actions and
powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder and under the other
Financing Documents shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent and such bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Borrower or
any Subsidiary or other Affiliate thereof as if it were not the Administrative
Agent hereunder.
The Administrative Agent shall not have any duties or obligations except
those expressly set forth herein or in the other Financing Documents. Without
limiting the generality of the foregoing, (a) the Administrative Agent shall not
be subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (b) the Administrative Agent shall not
have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or
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thereby that the Administrative Agent is required to exercise in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02), and (c) except
as expressly set forth herein, the Administrative Agent shall not have any duty
to disclose, and shall not be liable for any failure to disclose, any
information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity. The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02) or in the
absence of its own gross negligence or wilful misconduct. The Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
written notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement, (ii) the contents of any
certificate, report or other document delivered hereunder or in connection
herewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement or any other
agreement, instrument or document, or (v) the satisfaction of any condition set
forth in Article IV or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all of its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
With respect to the release of Collateral, the Lenders hereby irrevocably
authorize the Administrative Agent, at its option and in its discretion, to
release any Lien granted to or held by the Administrative Agent upon any
property covered by this Agreement or the other Financing Documents (i) upon
termination or expiration of the Commitments, the payment and satisfaction
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of all obligations arising with respect to the Loans, all fees and expenses, the
expiration or termination of all the Letters of Credit and the reimbursement of
all LC Disbursements; or (ii) constituting property being sold or disposed of in
compliance with the provisions of the Financing Documents (and the
Administrative Agent may rely in good faith conclusively on any certificate
stating that the property is being sold or disposed of in compliance with the
provisions of the Financing Documents, without further inquiry); provided,
however, that (x) the Administrative Agent shall not be required to execute any
release on terms which, in the Administrative Agent's opinion, would expose the
Administrative Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (y) such release shall not in any manner discharge, affect or impair any
Liens upon all interests retained, all of which shall continue to constitute
part of the property covered by the Financing Documents.
With respect to perfecting security interests in Collateral which, in
accordance with Article 9 of the Uniform Commercial Code or any comparable
provision of any Lien perfection statute in any applicable jurisdiction, can be
perfected only by possession, each Lender hereby appoints each other Lender its
agent for the purpose of perfecting such interest. Should any Lender (other than
the Administrative Agent) obtain possession of any such Collateral, such Lender
shall notify the Administrative Agent, and, promptly upon the Administrative
Agent's request, shall deliver such Collateral to the Administrative Agent or in
accordance with the Administrative Agent's instructions. Each Lender agrees that
it will not have any right individually to enforce or seek to enforce this
Agreement or any other Financing Document or to realize upon any Collateral for
the Loans, it being understood and agreed that such rights and remedies may be
exercised only by or with the approval of the Administrative Agent.
In the event that a petition seeking relief under Title 11 of the United
States Code or any other Federal, state or foreign bankruptcy, insolvency,
liquidation or similar law is filed by or against the Borrower or any other
Person obligated under the Financing Document, the Administrative Agent is
authorized, to the fullest extent permitted by applicable law, to file a proof
of claim on behalf of itself and the Lenders in such proceeding for the total
amount of obligations owed by such Person. With respect to any such proof of
claim which the Administrative Agent may file, each Lender acknowledges that
without reliance on such proof of claim, such Lender shall make its own
evaluation as to whether an individual proof of claim must be filed in respect
of such obligations owed to such Lender and, if so, take the steps necessary to
prepare and timely file such individual claim.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, with the approval of the
Borrower (not to be unreasonably withheld, except that no such approval shall be
required upon the occurrence and continuance of an Event of Default), to appoint
a successor. If no successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may,
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on behalf of the Lenders and the Issuing Bank, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank with such an office. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Borrower
and such successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any related agreement or any
document furnished hereunder or thereunder. Each Lender acknowledges the
potential conflict of interest of each other Lender as a result of Lenders
holding disproportionate interests in the Loans, and expressly consents to and
waives any claim based upon such conflict of interest.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 00 Xxxxxxxx Xxxx, Xxxxxxx, XX 00000,
Attention of Xxxxxxxxxxx X. Xxxxxxx (Telecopy No. 603-896-6344) with copies to
the Borrower at 000 Xxxx Xxxxxx, Xxxxxxxx, XX 00000, Attention of Xxxxxxxx
Xxxxxxxx, Esq. (Telecopy No. 973-932-3352), and with copies for informational
purposes only to Drinker Xxxxxx & Xxxxxxx, LLP, 000 Xxxxxx Xxxxx, Xxxxxxx Xxxx,
XX 00000, Attention of Xxxxx X. Xxxxxxxxxxx, Esq. (Telecopy No. 973-360-9831);
(b) if to the Administrative Agent, to JPMorgan Chase Bank, 1166 Avenue of
the Xxxxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000, Attention of Xxxxxxx Xxxxxxxx,
Account Officer
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(Telecopy No. 212-899-2929) with copies for information purposes only to Xxxxxxx
X. Xxxxxxx, Esq., Xxxx Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(Telecopy No. 212-836-6475); and
(c) if to any other Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.
(d) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.
(e) Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Issuing Bank and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent, any Lender or the Issuing Bank may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan,
Note or LC Disbursement or reduce the rate of interest thereon, or reduce any
fees payable hereunder, without the written consent of each Lender directly
affected thereby, (iii) postpone the Maturity Date or the scheduled date of
payment of the principal amount of any
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Loan (other than pursuant to Section 2.09(c) hereof) or LC Disbursement, or any
interest thereon, or any fees payable hereunder, or reduce the amount of, waive
or excuse any such payment or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender directly affected
thereby, (iv) change Section 2.16(b) or (c) in a manner that would alter the pro
rata sharing of payments required thereby, without the written consent of each
Lender, (v) increase any percentage or amount contained in the definition of
Borrowing Base, release all or a material portion of the Collateral or make
overadvances other than Permitted Overadvances without the written consent of
each Lender, (vi) release any Guarantee (other than in accordance with its
terms) without the written consent of each Lender or (vii) change any of the
provisions of this Section or the definition of "Required Lenders" or any other
provision hereof specifying the number or percentage of Lenders required to
waive, amend or modify any rights hereunder or make any determination or grant
any consent hereunder, without the written consent of each Lender; provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent or the Issuing Bank hereunder
without the prior written consent of the Administrative Agent or the Issuing
Bank, as the case may be.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses incurred by the Administrative
Agent and its Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent, in connection with the
syndication of the credit facilities provided for herein, the preparation of
this Agreement or any amendments, modifications or waivers requested by the
Borrower of the provisions hereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder and (iii) during the continuance of a Default, all
out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or
any Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section, or in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.
(b) The Borrower shall indemnify the Administrative Agent, the Issuing
Bank and each Lender, and each Related Party of any of the foregoing Persons
(each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or Letter of Credit or the use of the proceeds therefrom (including any refusal
by the Issuing Bank to honor a demand for payment under a
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Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any property
owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required to be
paid by it to the Administrative Agent or the Issuing Bank under paragraph (a)
or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent or the Issuing Bank, as the case may be, such Lender's pro
rata share (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought and based upon the outstanding principal balance
of the Revolving Credit Exposure) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent or the Issuing Bank in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including an Affiliate of the Issuing Bank that issues any Letter of Credit)
and, to the extent expressly contemplated hereby, the Related Parties of each of
the Administrative Agent, the Issuing Bank and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
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(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below,
any Lender may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the Borrower
shall be required for an assignment to a Lender, an Affiliate of a
Lender or, if an Event of Default under Article VII has occurred and
is continuing, any other assignee; and
(B) the Administrative Agent, provided that no consent of the
Administrative Agent shall be required for an assignment to an
assignee that is a Lender immediately prior to giving effect to such
assignment.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender's Commitment or Loans, the amount of
the Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 unless each of the Borrower
and the Administrative Agent otherwise consent, provided that no
such consent of the Borrower shall be required if an Event of
Default under Article VII has occurred and is continuing;
(B) each partial assignment shall be made as an assignment of
a proportionate part of all the assigning Lender's rights and
obligations under this Agreement;
(C) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500; and
(D) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date
specified in each Assignment and Assumption the assignee thereunder shall
be a party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement
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(and, in the case of an Assignment and Assumption covering all of the
assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled
to the benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any assignment or
transfer by a Lender of rights or obligations under this Agreement that
does not comply with this Section 9.04 shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights
and obligations in accordance with paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as an agent
of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment
of, and principal amount of the Loans and LC Disbursements owing to, each
Lender pursuant to the terms hereof from time to time (the "Register").
The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by
the Borrower, the Issuing Bank and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in
paragraph (b) of this Section, any Note or Notes subject to such
assignment and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Assumption and record the information contained therein in
the Register. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph. Upon notice to the Borrower, at the Borrower's expense, the
Borrower shall execute and deliver to the Administrative Agent in exchange
for such surrendered Notes, new Notes to the order of the assignee in an
amount equal to the portion of the Commitment assumed by it pursuant to
such Assignment and Assumption and, if the assigning Lender has retained
any Commitment hereunder, new Notes to the order of the assigning Lender
in an amount equal to the Commitment retained by it hereunder.
(c) (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or
more banks or other entities (a "Participant") in all or a portion of such
Lender's rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it); provided that (A)
such Lender's obligations under this Agreement shall remain unchanged, (B)
such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations and (C) the Borrower, the
Administrative Agent, the Issuing Bank and the other Lenders shall
continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement. Any agreement
or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any
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provision of this Agreement; provided that such agreement or instrument
may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in
the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees, to the
fullest extent permitted under applicable law, that each Participant shall
be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section. To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.16(c) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.15 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is
made with the Borrower's prior written consent. A Participant that would
be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.15 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 2.15(e) as though it
were a Lender.
(d) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement and the Notes issued to such
Lender to secure obligations of such Lender, including any pledge or assignment
to secure obligations to a Federal Reserve Bank, and this Section shall not
apply to any such pledge or assignment of a security interest; provided that no
such pledge or assignment of a security interest shall release a Lender from any
of its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and the issuance of any Letters of Credit regardless of any investigation made
by any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.13, 2.14, 2.15 and 9.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the Commitment
or the termination of this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which
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shall constitute an original, but all of which when taken together shall
constitute a single contract. This Agreement, the other Financing Documents and
any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof, and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
or its Subsidiaries against any of and all the obligations of the Borrower or
its Subsidiaries now or hereafter existing under this Agreement held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement and although such obligations may be unmatured. The rights
of each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.09. GOVERNING LAW; Jurisdiction; Consent to Service of Process.
(a) THIS AGREEMENT, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATION
LAW OF THE STATE OF NEW YORK, SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAWS
PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court for the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such
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action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Administrative Agent, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement
against the Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, rating agencies, portfolio management servicers, legal counsel and
other advisors (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any
75
other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Borrower
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
from a source other than the Borrower. For the purposes of this Section,
"Information" means all information received from the Borrower relating to the
Borrower or its business, other than any such information that is available to
the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential
basis prior to disclosure by the Borrower; provided that, in the case of
information received from the Borrower after the date hereof, such information
is clearly identified at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
WIRE ONE TECHNOLOGIES, INC., Borrower
By:
--------------------------------------
Name:
Title:
JPMORGAN CHASE BANK, individually and as
Administrative and Collateral Agent, and as
Arranger
By:
--------------------------------------
Name:
Title:
SCHEDULE 2.01
Commitments
================================================================================
Approximate Percentage
Revolving of Total Revolving
Lender Loan Commitment Loan Commitments
------ --------------- ----------------
--------------------------------------------------------------------------------
JPMorgan Chase Bank $25,000,000 100%
0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx, Account
Officer
================================================================================