EXHIBIT 10.68
READ-RITE CORPORATION
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of December 24, 2002 and
entered into by and among READ-RITE CORPORATION, a Delaware corporation,
("Company"), THE LENDERS LISTED ON THE SIGNATURE PAGES HEREOF (each
individually referred to herein as a "Lender" and collectively as "Lenders"),
and SPECIAL VALUE INVESTMENT MANAGEMENT, LLC, as administrative agent for
Lenders (in such capacity, "Administrative Agent").
R E C I T A L S
WHEREAS, Lenders, at the request of Company, have agreed to
extend certain credit facilities to Company, the proceeds of which will be
used to provide financing for working capital requirements of Company and its
Subsidiaries;
WHEREAS, Company desires to secure all of the Obligations
hereunder and under the other Loan Documents by granting to Administrative
Agent, on behalf of Lenders, a First Priority Lien on substantially all of its
personal and mixed property, including a pledge of all of the capital stock of
its Domestic Subsidiaries, and certain of its real property; and
WHEREAS, the Domestic Subsidiaries of Company have agreed to
guarantee the Obligations hereunder and under the other Loan Documents and to
secure their guaranties by granting to Administrative Agent, on behalf of
Lenders, a First Priority Lien on substantially all of their personal and
mixed property, including a pledge of all of the capital stock of their
Domestic Subsidiaries, and certain of their real property:
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Company, Lenders and
Administrative Agent agree as follows:
Section 1. DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this
Agreement shall have the following meanings:
"ACCOUNTS" means as to any Person, all of such Person's now
owned or hereafter acquired or arising accounts, as defined in the UCC,
including any rights to payment for the sale or lease of goods or rendition of
services, whether or not they have been earned by performance.
"ACCOUNTS COLLATERAL VALUE" means, as of any date of
determination, (i) the value determined by multiplying the net book value of
each of the Eligible Accounts at such date of determination by the applicable
advance rate therefore, and subject to sublimits, as specified in Schedule 1.1
annexed hereto, minus (ii) such reserves, including rent reserve and a
dilution reserve, as Administrative Agent in the exercise of its reasonable
commercial discretion may determine.
"ADDITIONAL MORTGAGED PROPERTY" has the meaning set forth in
subsection 6.9.
"ADDITIONAL MORTGAGES" has the meaning set forth in
subsection 6.9.
"ADMINISTRATIVE AGENT" has the meaning assigned to that term
in the introduction to this Agreement and also means and includes any
successor Administrative Agent appointed pursuant to subsection 9.5A.
"AFFECTED LENDER" has the meaning assigned to that term in
subsection 2.6C.
"AFFECTED LOANS" has the meaning assigned to that term in
subsection 2.6C.
"AFFILIATE", as applied to any Person, means any other
Person directly or indirectly controlling, controlled by, or under common
control with, that Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled
by" and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.
"AGENTS" means Administrative Agent and Collateral Agent and
other agents.
"AGGREGATE COLLATERAL VALUE" means, as of any date of
determination, (i) the sum of (a) Company's Cash and Cash Equivalents in the
Blocked Account, (b) the Accounts Collateral Value, (c) the Domestic PP&E
Value and (d) through and including January 31, 2003, $486,000 and $0 at all
other times, minus (ii) (e) for the period from and after February 1, 2003,
through and including March 26, 2003 only, $300,000 and (f) from and after
March 27, 2003, $175,000.
"AGREEMENT" means this Credit Agreement dated as of December
24, 2002, as it may be amended, supplemented or otherwise modified from time
to time.
"APPROVED FUND" means a Fund that is administered or managed
by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an
Affiliate of an entity that administers or manages a Lender.
"APPLICABLE ASSET SALE PROCEEDS" means:
(a) in the case of any Tape Group Assets, 0% of the
applicable Net Asset Sale Proceeds;
(b) in the case of obsolete or worn out equipment
disposed of in the ordinary course of business, but only to the extent that,
after giving effect to such disposition the Aggregate Collateral Value, is
equal to or greater than the aggregate principal amount of the outstanding
Loans, 0% of the applicable Net Asset Sale Proceeds;
(c) in the case of licenses of Intellectual Property
(other than one time payments for exclusive licenses), 0% of the applicable
Net Asset Sale Proceeds;
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(d) in the case of any sales of Intellectual Property,
or one time payments received in connection with the grant of an exclusive
license, 50% of the applicable Net Asset Sale Proceeds; and
(e) in the case of any Asset Sale other than Asset
Sales covered by clauses (a)-(d), 100% of the applicable Net Asset Sale
Proceeds.
"ASSET SALE" means the sale (and, in the case of
Intellectual Property, license on an exclusive or non-exclusive basis) by
Company or any of its Subsidiaries to any Person other than Company or any of
its wholly-owned Subsidiaries of (i) any of the stock of any of Company's
Subsidiaries, (ii) substantially all of the assets of any division or line of
business of Company or any of its Subsidiaries, or (iii) any other assets
(whether tangible or intangible) of Company or any of its Subsidiaries (other
than (a) inventory sold in the ordinary course of business, (b) sales,
assignments, transfers or dispositions of accounts in the ordinary course of
business for purposes of collection, and (c) any such other assets to the
extent that the aggregate value of such assets sold in any single transaction
or related series of transactions in any Fiscal Year of Company is equal to
$250,000 or less).
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in
substantially the form of Exhibit XI annexed hereto.
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor
statute.
"BASE RATE" means, at any time, the higher of (i) the Prime
Rate or (ii) the rate which is 1/2 of 1% in excess of the Federal Funds
Effective Rate. Any change in the Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective on the effective date
of such change.
"BASE RATE LOANS" means Loans bearing interest at rates
determined by reference to the Base Rate as provided in subsection 2.2A.
"BASE RATE MARGIN" means the margin over the Base Rate to be
used, if applicable, in determining the rate of interest of Base Rate Loans
pursuant to subsection 2.2A.
"BLOCKED ACCOUNT" shall have the meaning set forth in
subsection 6.11B.
"BLOCKED ACCOUNT AGREEMENTS" shall have the meaning set
forth in subsection 6.11B.
"BUSINESS DAY" means (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of California or is a day
on which banking institutions located in such state are authorized or required
by law or other governmental action to close, and (ii) with respect to all
notices, determinations, fundings and payments in connection with the
Eurodollar Rate or any Eurodollar Rate Loans, any day that is a Business Day
described in clause (i) above and that is also a day for trading by and
between banks in Dollar deposits in the London interbank market.
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"CAPITAL LEASE", as applied to any Person, means any lease
of any property (whether real, personal or mixed) by that Person as lessee
that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of that Person.
"CAPITAL STOCK" means the capital stock or other equity
interests of a Person, excluding any debt security convertible or exchangeable
into such equity interests.
"CASH" means money, currency or a credit balance in a
Deposit Account.
"CASH EQUIVALENTS" means, as at any date of determination,
(i) marketable securities (a) issued or directly and unconditionally
guaranteed as to interest and principal by the United States Government or (b)
issued by any agency of the United States the obligations of which are backed
by the full faith and credit of the United States, in each case maturing
within one year after such date; (ii) marketable direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof, in each case maturing within
one year after such date and having, at the time of the acquisition thereof,
the highest rating obtainable from either Standard & Poor's ("S&P") or Xxxxx'x
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit, time deposits, eurodollar time
deposits, overnight bank deposits or bankers' acceptances maturing within one
year after such date and issued or accepted by any Lender or by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (v) shares of any money market mutual fund that
(a) has at least 95% of its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of
not less than $500,000,000, and (c) has the highest rating obtainable from
either S&P or Moody's.
"CHANGE IN CONTROL" means any of the following: (i) any
Person, or "group" (within the meaning of Rules 13d-3 and 13d-5 under the
Exchange Act), shall have acquired beneficial ownership of Capital Stock of
Company (or other securities convertible into or exchangeable for such Capital
Stock) representing 35% or more of the combined voting power of all Capital
Stock of Company entitled to vote in the election of directors of Company,
other than Capital Stock having such power only by reason of the happening of
a contingency; (ii) during any period of 12 consecutive months the occurrence
of a change in the composition of the Board of Directors of Company such that
a majority of the directors then in office are not Continuing Directors. As
used herein, the term "beneficially own" or "beneficial ownership" shall have
the meaning set forth in the Exchange Act and the rules and regulations
promulgated thereunder.
"CLOSING DATE" means the date on which the initial Loans are
made.
"CLOSING DATE MORTGAGED PROPERTY" has the meaning set forth
in subsection 4.1L.
"CLOSING DATE MORTGAGES" has the meaning set forth in
subsection 4.1L.
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"COLLATERAL" means, collectively, all of the real, personal
and mixed property (including Capital Stock) in which Liens are purported to
be granted pursuant to the Collateral Documents as security for the
Obligations.
"COLLATERAL ACCOUNT" has the meaning assigned to that term
in the Security Agreement.
"COLLATERAL AGENT" shall mean any Collateral Agent appointed
by the Administrative Agent or the Lenders and also includes any successor
Collateral Agent appointed pursuant to Subsection 9.5A.
"COLLATERAL DOCUMENTS" means the Security Agreement, the
Mortgages, the Blocked Accounts Agreements, and all other instruments or
documents delivered by any Loan Party pursuant to this Agreement or any of the
other Loan Documents in order to grant to Administrative Agent, on behalf of
Lenders, a Lien on any real, personal or mixed property of that Loan Party as
security for the Obligations.
"COLLATERAL VALUE CERTIFICATE" means a certificate setting
forth the calculation of Aggregate Collateral Value substantially in the form
of Exhibit VII annexed hereto.
"COMMITMENT TERMINATION DATE" means September 30, 2003
unless the Commitments are sooner terminated in accordance herewith.
"COMMITMENTS" means the commitments of Lenders to make Loans
as set forth in subsection 2.1A.
"COMPANY" has the meaning assigned to that term in the
introduction to this Agreement.
"COMPANY FUNDING ACCOUNT" means Account No. 4518-111083 at
Xxxxx Fargo Bank, 000 Xxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxxxxxxxxx Branch, or such
other account as Company shall designate from time to time in writing to
Administrative Agent, any such change in accounts to be effective 10 Business
Days after receipt of such notice by Administrative Agent.
"COMPLIANCE CERTIFICATE" means a certificate substantially
in the form of Exhibit VIII annexed hereto.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period,
the sum of the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of Company and
its Subsidiaries) by Company and its Subsidiaries during that period that, in
conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated statement of cash
flows of Company and its Subsidiaries. For purposes of this definition, the
purchase price of equipment that is purchased simultaneously with the trade-in
of existing equipment or with insurance proceeds shall be included in
Consolidated Capital Expenditures only to the extent of the gross amount of
such purchase price less the credit granted by the seller of such equipment
for the equipment being traded in at such time or the amount of such proceeds,
as the case may be.
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"CONSOLIDATED NET WORTH" means, as at any date of
determination, the sum of the capital stock and additional paid-in capital
plus (i) retained earnings (or minus accumulated deficits) of Company and its
Subsidiaries on a consolidated basis (ii) non-cash non-recurring restructuring
charges incurred after the Closing Date, (iii) non-cash special charges
against assets incurred after the Closing Date; (iv) non-cash asset impairment
charges incurred after the Closing Date, and (v) non-cash charges relating to
the issuance or exercise of the Warrants, in each case determined in
conformity with GAAP.
"CONTINGENT OBLIGATION", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of
another that such obligation of another will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of
such obligation will be protected (in whole or in part) against loss in
respect thereof, (ii) with respect to any letter of credit issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings, or (iii) under Hedge Agreements. Contingent
Obligations shall include (a) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of
the obligation of another, (b) the obligation to make take-or-pay or similar
payments if required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the
obligation of another through any agreement (contingent or otherwise) (1) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (2) to maintain the solvency or any balance
sheet item, level of income or financial condition of another if, in the case
of any agreement described under subclauses (1) or (2) of this sentence, the
primary purpose or intent thereof is as described in the preceding sentence.
The amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if less, the amount to
which such Contingent Obligation is specifically limited.
"CONTINUING DIRECTOR" means (i) each member of Company's
Board of Directors on the Closing Date, and (ii) any other person who is
elected or appointed by a majority of directors then in office who are
themselves Continuing Directors.
"CONTRACTUAL OBLIGATION", as applied to any Person, means
any provision of any Security issued by that Person or of any material
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.
"CONTROL ACCOUNT" has the meaning assigned to that term in
subsection 6.11A.
"CURRENCY AGREEMENT" means any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap or
other similar agreement or arrangement to which Company or any of its
Subsidiaries is a party.
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"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or
similar account maintained with a Person engaged in the business of banking,
including a savings bank, savings and loan association, credit union or trust
company.
"DOLLARS" and the sign "$" mean the lawful money of the
United States of America.
"DOMESTIC PP&E VALUE" means 50% of the amount determined by
Administrative Agent to be the orderly liquidation value, net of all costs of
sale and promotion, including 120 days rent for the facilities containing such
Eligible PP&E, of the Eligible PP&E of Company, in each case based on the most
recent appraisal delivered pursuant to Section 4.1G or Section 6.5.
"DOMESTIC SUBSIDIARY" means any Subsidiary of Company that
is incorporated or organized under the laws of the United States of America,
any state thereof or in the District of Columbia.
"ELIGIBLE ACCOUNTS" means the amount of the Accounts of
Company (net of any deposits or unapplied cash held by Company in respect of
Accounts) which the Administrative Agent in the exercise of its reasonable
commercial discretion determines to be Eligible Accounts. Without limiting the
discretion of the Administrative Agent to establish other criteria of
ineligibility, Eligible Accounts shall not, unless the Administrative Agent in
its sole discretion elects, include any Account:
(a) with respect to which more than 90 days have
elapsed since the date of the original invoice therefor or which is more than
60 days past due;
(b) Accounts with payment terms greater than net 45
days (but only to the extent that all such Accounts in the aggregate exceed
20% of the Eligible Accounts);
(c) with respect to which any of the representations,
warranties, covenants, and agreements related to such Accounts contained in
the Security Agreement are incorrect or have been breached in any material
respect;
(d) with respect to which Account (or any other Account
due from such account debtor), in whole or in part, a check, promissory note,
draft, trade acceptance or other instrument for the payment of money has been
received, presented for payment and returned uncollected for any reason;
(e) which represents a progress billing (as hereinafter
defined) or as to which Company has extended the time for payment without the
consent of the Administrative Agent; for the purposes hereof, "progress
billing" means any invoice for goods sold or leased or services rendered under
a contract or agreement pursuant to which the account debtor's obligation to
pay such invoice is conditioned upon Company's completion of any further
performance under the contract or agreement;
(f) with respect to which any one or more of the
following events has occurred to the account debtor on such Account: death or
judicial declaration of incompetency
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of an account debtor who is an individual; the filing by or against the
account debtor of an Insolvency Proceeding or of any formal or informal
proceeding for the dissolution or liquidation of, settlement of claims
against, or winding up of affairs of, the account debtor; the sale,
assignment, or transfer of all or substantially all of the assets of the
account debtor; the nonpayment generally by the account debtor of its debts as
they become due; or the cessation of the business of the account debtor as a
going concern;
(g) if 50% or more of the aggregate Dollar amount of
outstanding Accounts owed at such time by the account debtor thereon is
classified as ineligible under any other clause of this definition;
(h) accounts with respect to which the account debtor
either (i) does not maintain its chief executive office in the United States,
or (ii) is not organized under the laws of the United States or any state
thereof, or (iii) is the government of any foreign country or sovereign state,
or of any state, province, municipality, or other political subdivision
thereof, or of any department, agency, public corporation, or other
instrumentality thereof, unless (x) the Account is supported by an irrevocable
letter of credit satisfactory to Administrative Agent (as to form, substance,
and issuer or domestic confirming bank) that has been delivered to Agent and
is directly drawable by Administrative Agent, (y) the Account is covered by
credit insurance in form, substance, and amount, and by an insurer,
satisfactory to Administrative Agent; provided that this clause shall not
apply to Accounts on which any of Samsung Electronics Co., Ltd., Western
Digital Malaysia, Maxtor Singapore or Kaifa are the account debtors or (z) is
otherwise subject to arrangements satisfactory to Administrative Agent in its
reasonable commercial discretion;
(i) owed by an account debtor which is an Affiliate or
employee of Company or a Subsidiary;
(j) owed by an account debtor to which Company or any
of its Subsidiaries, is indebted in any way, or which is subject to any right
of setoff or recoupment by the account debtor, unless the account debtor has
entered into an agreement acceptable to the Administrative Agent to waive
setoff rights; or if the account debtor thereon has disputed liability or made
any claim with respect to any other Account due from such account debtor; but
in each such case only to the extent of such indebtedness, setoff, recoupment,
dispute, or claim;
(k) owed by the government of the United States of
America, or any department, agency, public corporation, or other
instrumentality thereof, unless the Federal Assignment of Claims Act of 1940,
as amended (31 U.S.C. Section 3727 et seq.), and any other steps necessary or
desirable to perfect or protect the Administrative Agent's Liens therein, have
been complied with to the Agent's reasonable satisfaction with respect to such
Account;
(l) owed by any state, municipality, or other political
subdivision of the United States of America, or any other country, or any
department, agency, public corporation, or other instrumentality thereof and
as to which the Administrative Agent determines that its Lien therein is not
or cannot be perfected;
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(m) which represents a sale on a xxxx-and-hold,
guaranteed sale, sale and return, sale on approval, consignment, or other
repurchase or return basis;
(n) which is evidenced by a promissory note or other
instrument or by chattel paper;
(o) if the Administrative Agent believes, in the
exercise of its reasonable judgment, that the prospect of collection of such
Account is impaired or that the Account may not be paid by reason of the
account debtor's financial inability to pay;
(p) with respect to which the account debtor is located
in any state requiring the filing of a Notice of Business Activities Report or
similar report in order to permit Company to seek judicial enforcement in such
State of payment of such Account, unless Company has qualified to do business
in such state or has filed a Notice of Business Activities Report or
equivalent report for the then current year;
(q) which arises out of a sale not made in the ordinary
course of Company's business;
(r) with respect to which the goods giving rise to such
Account have not been shipped and delivered to and accepted by the account
debtor or the services giving rise to such Account have not been performed by
Company, and, if applicable, accepted by the Account Debtor, or the account
debtor revokes its acceptance of such goods or services, or for which a
chargeback or debit memo exists;
(s) which is not subject to a First Priority Lien in
favor of the Administrative Agent for the benefit of the Lenders; or
(t) that is not payable in U.S. Dollars or is (except
for Accounts specified in the proviso to clause (h) of the definition of
Eligible Accounts) a COD/cash account.
"ELIGIBLE ASSIGNEE" means (i) any Lender, any Affiliate of
any Lender and any Approved Fund of any Lender; and (ii) (a) a commercial bank
organized under the laws of the United States or any state thereof; (b) a
savings and loan association or savings bank organized under the laws of the
United States or any state thereof; (c) a commercial bank organized under the
laws of any other country or a political subdivision thereof; provided that
(1) such bank is acting through a branch or agency located in the United
States or (2) such bank is organized under the laws of a country that is a
member of the Organization for Economic Cooperation and Development or a
political subdivision of such country; and (d) any other entity that is an
"accredited investor" (as defined in Regulation D under the Securities Act)
that extends credit or buys loans as one of its businesses including insurance
companies, mutual funds and lease financing companies; provided that neither
Company, nor any Affiliate of Company, nor any competitor in the same business
or any similar or related business to Company or its Subsidiaries shall be an
Eligible Assignee.
"ELIGIBLE PP&E" means, as of any date of determination,
property, plant and equipment owned by Company on which Administrative Agent
has a First Priority Lien, included in the most current appraisal received by
Administrative Agent pursuant to
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subsection 4.1G or 6.5, adjusted by deducting the orderly liquidation value,
as determined by Administrative Agent in its sole discretion, of any assets
included in such appraisal that have been sold, transferred or otherwise
disposed of, or condemned or destroyed, since the date of such appraisal.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as
defined in Section 3(3) of ERISA which is or was maintained or contributed to
by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates.
"ENVIRONMENTAL CLAIM" means any notice of violation, claim,
action, suit, proceeding, demand, abatement order or other order or directive
(conditional or otherwise), by any Government Authority or any other Person
against the Company, arising (i) pursuant to or in connection with any actual
or alleged violation of any Environmental Law, (ii) in connection with any
Hazardous Materials or any actual or alleged Hazardous Materials Activity, or
(iii) in connection with any actual or alleged damage, injury, threat or harm
to health, safety, natural resources or the environment.
"ENVIRONMENTAL LAWS" means any and all current or future
statutes, ordinances, orders, rules, regulations, guidance documents,
judgments, Governmental Authorizations, or any other requirements of any
Government Authority relating to (i) environmental matters, including those
relating to any Hazardous Materials Activity, (ii) the generation, use,
storage, transportation or disposal of Hazardous Materials, or (iii)
occupational safety and health, industrial hygiene, land use or the protection
of human, plant or animal health or welfare, in any manner applicable to
Company or any of its Subsidiaries or any Facility.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor thereto.
"ERISA AFFILIATE", as applied to any Person, means (i) any
corporation that is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Internal Revenue Code of which that Person is
a member; (ii) any trade or business (whether or not incorporated) that is a
member of a group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which that Person is
a member; and (iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member. Any former ERISA Affiliate of a
Person or any of its Subsidiaries shall continue to be considered an ERISA
Affiliate of such Person or such Subsidiary within the meaning of this
definition with respect to the period such entity was an ERISA Affiliate of
such Person or such Subsidiary and with respect to liabilities arising after
such period for which such Person or such Subsidiary could be liable under the
Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder with
respect to any Pension Plan (excluding those for which the provision for
30-day notice to the PBGC has been waived by regulation); (ii) the failure to
meet the minimum funding standard of Section 412 of the Internal Revenue Code
with respect to any Pension Plan (whether or not waived in accordance with
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Section 412(d) of the Internal Revenue Code) or the failure to make by its due
date a required installment under Section 412(m) of the Internal Revenue Code
with respect to any Pension Plan or the failure to make any required
contribution to a Multiemployer Plan; (iii) the provision by the administrator
of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of
intent to terminate such plan in a distress termination described in Section
4041(c) of ERISA; (iv) the withdrawal by Company, any of its Subsidiaries or
any of their respective ERISA Affiliates from any Pension Plan with two or
more contributing sponsors or the termination of any such Pension Plan
resulting in liability pursuant to Section 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which might constitute grounds under
ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan; (vi) the imposition of liability on Company, any of its
Subsidiaries or any of their respective ERISA Affiliates pursuant to Section
4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of
ERISA; (vii) the withdrawal of Company, any of its Subsidiaries or any of
their respective ERISA Affiliates in a complete or partial withdrawal (within
the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if
there is any potential liability therefor, or the receipt by Company, any of
its Subsidiaries or any of their respective ERISA Affiliates of notice from
any Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Section 4041A or 4042 of ERISA; (viii) the assertion of a
material claim (other than routine claims for benefits) against any Employee
Benefit Plan other than a Multiemployer Plan or the assets thereof, or against
Company, any of its Subsidiaries or any of their respective ERISA Affiliates
in connection with any Employee Benefit Plan; (ix) receipt from the Internal
Revenue Service of notice of the failure of any Pension Plan (or any other
Employee Benefit Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue
Code, or the failure of any trust forming part of any Pension Plan to qualify
for exemption from taxation under Section 501(a) of the Internal Revenue Code;
or (x) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of
the Internal Revenue Code or pursuant to ERISA with respect to any Pension
Plan.
"EURODOLLAR RATE" means, for any Interest Rate Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate
per annum obtained by dividing (i) (A) the rate per annum (rounded upward to
the nearest 1/16 of one percent) that appears on the Dow Xxxxx Markets
(Telerate) page 3750 (or such other comparable page as may, in the opinion of
Administrative Agent, replace such page for the purpose of displaying such
rate) as the interbank offered rate for Dollar deposits with maturities
comparable to such Interest Period as of approximately 11:00 a.m. (London
time) on such Interest Rate Determination Date or (B) if such rate is not
available at such time for any reason, the rate determined by the
Administrative Agent as the rate of interest (rounded upward to the nearest
1/16 of one percent) that would be offered to first class banks in the
interbank Eurodollar market by major banks for Dollar deposits of amounts in
same day funds comparable to the principal amount of the Eurodollar Rate Loans
for which the Eurodollar Rate is then being determined with maturities
comparable to such Interest Period as of approximately 11:00 A.M. (Los Angeles
time) on such Interest Rate Determination Date by (ii) a percentage equal to
100% minus the stated maximum rate of all reserve requirements (including any
marginal, emergency, supplemental, special or other reserves) applicable on
such Interest Rate Determination Date to any member bank of the Federal
Reserve
11
System in respect of "Eurocurrency liabilities" as defined in Regulation D (or
any successor category of liabilities under Regulation D).
"EURODOLLAR RATE LOANS" means Loans bearing interest at
rates determined by reference to the Eurodollar Rate as provided in subsection
2.2A.
"EURODOLLAR RATE MARGIN" means the margin over the
Eurodollar Rate used in determining the rate of interest of Eurodollar Rate
Loans pursuant to subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in
Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"FACILITIES" means any and all real property (including all
buildings, fixtures or other improvements located thereon) now, hereafter or
heretofore owned, leased, operated or used by Company or any of its
Subsidiaries.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a
fluctuating interest rate equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by Administrative
Agent from three Federal funds brokers of recognized standing selected by
Administrative Agent.
"FIRST PRIORITY" means, with respect to any Lien purported
to be created in any Collateral pursuant to any Collateral Document, that (i)
such Lien is perfected and has priority over any other Lien on such Collateral
(other than Liens permitted pursuant to subsections 7.2A(i) and (ii), and (ii)
such Lien is the only Lien (other than Liens permitted pursuant to subsection
7.2) to which such Collateral is subject.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its
Subsidiaries ending on the last Sunday of September or the first Sunday of
October of each calendar year. For purposes of this Agreement, any particular
Fiscal Year shall be designated by reference to the calendar year in which
such Fiscal Year ends.
"FOREIGN PLAN" means any employee benefit plan maintained by
Company or any of its Subsidiaries that is mandated or governed by any law,
rule or regulation of any Government Authority other than the United States of
America, any state thereof or any other political subdivision thereof.
"FOREIGN SUBSIDIARY" means any Subsidiary of Company that is
not a Domestic Subsidiary.
12
"FUND" means any Person (other than a natural Person) that
is (or will be) engaged in making, purchasing, holding or otherwise investing
in commercial loans and similar extensions of credit in the ordinary course of
its business.
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting principles
set forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GOVERNING BODY" means the board of directors or other body
having the power to direct or cause the direction of the management and
policies of a Person that is a corporation, partnership, trust or limited
liability company.
"GOVERNMENT AUTHORITY" means any political subdivision or
department thereof, any other governmental or regulatory body, commission,
central bank, board, bureau, organ or instrumentality or any court, in each
case whether federal, state, local or foreign.
"GOVERNMENTAL AUTHORIZATION" means any permit, license,
registration, authorization, plan, directive, consent, order or consent decree
of or from, or notice to, any Government Authority.
"GUARANTIES" means the Subsidiary Guaranty.
"HAZARDOUS MATERIALS" means (i) any chemical, material or
substance at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", "acutely hazardous waste", "radioactive waste", "biohazardous waste",
"pollutant", "toxic pollutant", "contaminant", "restricted hazardous waste",
"infectious waste", "toxic substances", or any other term or expression
intended to define, list or classify substances by reason of properties
harmful to health, safety or the indoor or outdoor environment (including
harmful properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws);
(ii) any oil, petroleum, petroleum fraction or petroleum derived substance;
(iii) any drilling fluids, produced waters and other wastes associated with
the exploration, development or production of crude oil, natural gas or
geothermal resources; (iv) any flammable substances or explosives; (v) any
radioactive materials; (vi) any asbestos-containing materials; (vii) urea
formaldehyde foam insulation; (viii) electrical equipment which contains any
oil or dielectric fluid containing polychlorinated biphenyls; (ix) pesticides;
and (x) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any Government Authority or which may or
could pose a hazard to the health and safety of the owners, occupants or any
Persons in the vicinity of any Facility or to the indoor or outdoor
environment.
13
"HAZARDOUS MATERIALS ACTIVITY" means any past, current,
future or threatened activity, event or occurrence involving any Hazardous
Materials, including the use, manufacture, possession, storage, holding,
presence, existence, location, Release, threatened Release, discharge,
placement, generation, transportation, processing, construction, treatment,
abatement, removal, remediation, disposal, disposition or handling of any
Hazardous Materials, and any corrective action or response action with respect
to any of the foregoing.
"HEDGE AGREEMENT" means an Interest Rate Agreement or a
Currency Agreement designed to hedge against fluctuations in interest rates or
currency values, respectively.
"INDEBTEDNESS", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with respect
to Capital Leases that is properly classified as a liability on a balance
sheet in conformity with GAAP, (iii) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money, (iv) any obligation owed for all or any part of the deferred
purchase price of property or services (excluding any such obligations
incurred under ERISA), which purchase price is (a) due more than six months
from the date of incurrence of the obligation in respect thereof or (b)
evidenced by a note or similar written instrument, (v) Synthetic Lease
Obligations, and (vi) all indebtedness secured by any Lien on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to
the credit of that Person. Obligations under Interest Rate Agreements and
Currency Agreements constitute (1) in the case of Hedge Agreements, Contingent
Obligations, and (2) in all other cases, Investments, and in neither case
constitute Indebtedness. Notwithstanding the foregoing, in no event shall (i)
intra-day or overnight obligations, netting services, overdraft protection or
similar facilities in the ordinary course of business of such Person
(including any guaranties thereof), or (ii) any trade payables in the ordinary
course (and not overdue by more than 90 days) of business of such Person
constitute "Indebtedness."
"INDEMNIFIED LIABILITIES" has the meaning assigned to that
term in subsection 10.3.
"INDEMNITEE" has the meaning assigned to that term in
subsection 10.3.
"INSIGNIFICANT SUBSIDIARY" means a Subsidiary having assets
with a book value equal to or less than $500,000.
"INTELLECTUAL PROPERTY" means all patents, trademarks,
tradenames, copyrights, technology, software, know-how and processes used in
or necessary for the conduct of the business of Company and its Subsidiaries
as currently conducted that are material to the condition (financial or
otherwise), business or operations of Company and its Subsidiaries, taken as a
whole.
"INTEREST PAYMENT DATE" means (i) with respect to any Base
Rate Loan, each March 15, June 15, September 15, and December 15 of each year,
commencing on the first such date to occur after the Closing Date, and also
the date said Base Rate Loan converts to a
14
Eurodollar Rate Loan in accordance with subsection 2.2A, and (ii) with respect
to any Eurodollar Rate Loan, the last day of each Interest Period applicable
to such Loan.
"INTEREST PERIOD" has the meaning assigned to that term in
subsection 2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement or arrangement to which Company or any of its
Subsidiaries is a party.
"INTEREST RATE DETERMINATION DATE", with respect to any
Interest Period, means the second Business Day prior to the first day of such
Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter, and any
successor statute.
"INVESTMENT" means (i) any direct or indirect purchase or
other acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (including any Subsidiary of
Company), (ii) any direct or indirect redemption, retirement, purchase or
other acquisition for value, by any Subsidiary of Company from any Person
other than Company or any of its Subsidiaries, of any equity Securities of
such Subsidiary, (iii) any direct or indirect loan, advance (other than
advances to employees for moving, entertainment and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business) or
capital contribution by Company or any of its Subsidiaries to any other
Person, including all indebtedness and accounts receivable from that other
Person that are not current assets or did not arise from sales to that other
Person in the ordinary course of business, or (iv) Interest Rate Agreements or
Currency Agreements not constituting Hedge Agreements. The amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment
(other than adjustments for the repayment of, or the refund of capital with
respect to, the original principal amount of any such Investment).
"IP COLLATERAL" means, collectively, the Intellectual
Property that constitutes Collateral under the Security Agreement.
"JOINT VENTURE" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form.
"KAIFA" means Shenzen Kaifa Technology Co., a company
organized under the laws of the Peoples Republic of China.
"KAIFA ACCOUNTS AGREEMENTS" means agreements entered into
after the Closing Date by Kaifa, Administrative Agent, Company, Western
Digital Malaysia and Western Digital Corporation governing the payment and
disbursement procedures for Accounts owed by Kaifa to Company and Accounts
owed by Western Digital to Kaifa, in form and substance satisfactory to
Administrative Agent in its sole discretion.
"LANDLORD CONSENT AND ESTOPPEL", with respect to any
Leasehold Property, shall mean a Landlord Consent and Estoppel in the form
annexed hereto as Exhibit II.
15
"LEASEHOLD PROPERTY" means any leasehold interest of any
Loan Party (other than a Foreign Subsidiary) as lessee under any lease of real
property, other than any such leasehold interest designated from time to time
by Administrative Agent in its sole discretion as not being required to be
included in the Collateral.
"LENDER" and "LENDERS" means the Persons identified as
"Lenders" and listed on the signature pages of this Agreement, together with
their successors and permitted assigns pursuant to subsection 10.1.
"LIEN" means any lien, mortgage, pledge, assignment for
security, security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any option,
trust or other preferential arrangement having the practical effect of any of
the foregoing.
"LOAN" or "LOANS" means one or more of the Term Loans.
"LOAN DOCUMENTS" means this Agreement, the Notes, the
Guaranties and the Collateral Documents.
"LOAN PARTY" means each of Company and any of Company's
Subsidiaries from time to time executing a Loan Document, and "Loan Parties"
means all such Persons, collectively.
"MARGIN STOCK" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse
effect upon the business, operations, properties, assets, condition (financial
or otherwise) or prospects of Company and its Subsidiaries taken as a whole or
(ii) the impairment of the ability of any Loan Party to perform, or of
Administrative Agent or Lenders to enforce, the Obligations.
"MATERIAL CONTRACT" means any contract or other arrangement
to which Company or any of its Subsidiaries is a party (other than the Loan
Documents) for which breach, nonperformance, cancellation or failure to renew
could have a Material Adverse Effect.
"MORTGAGE" means (i) a security instrument (whether
designated as a deed of trust or a mortgage or by any similar title) executed
and delivered by any Loan Party, substantially in the form of Exhibit XVII
annexed hereto, in each case with such changes thereto as may be recommended
by Administrative Agent's local counsel based on local laws or customary local
mortgage or deed of trust practices, or (ii) at Administrative Agent's option,
in the case of an Additional Mortgaged Property, an amendment to an existing
Mortgage, in form satisfactory to Administrative Agent, adding such Additional
Mortgaged Property to the Real Property Assets encumbered by such existing
Mortgage, in either case as such security instrument or amendment may be
amended, supplemented or otherwise modified from time to time. "Mortgages"
means all such instruments, including the Closing Date Mortgages and any
Additional Mortgages, collectively.
16
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan that is
a "multiemployer plan" as defined in Section 3(37) of ERISA.
"NET ASSET SALE PROCEEDS", with respect to any Asset Sale,
means Cash payments (including any Cash received by way of deferred payment
pursuant to, or by monetization of, a note receivable or otherwise, but only
as and when so received) received from such Asset Sale, net of any bona fide
direct costs incurred in connection with such Asset Sale, including (i) income
taxes reasonably estimated to be actually payable within two years of the date
of such Asset Sale as a result of any gain recognized in connection with such
Asset Sale, (ii) payment of the outstanding principal amount of, premium or
penalty, if any, and interest on any Indebtedness (other than the Loans) that
is secured by a Lien on the stock or assets in question and that is required
to be repaid under the terms thereof as a result of such Asset Sale and (iii)
a reasonable reserve for and adjustments in respect of sale price or any
indemnification payments (fixed or contingent) attributable to seller's
indemnities and representations and warranties to purchaser in respect of such
Asset Sale undertaken by Company or any of its Subsidiaries in connection with
such Asset Sale and (iv) all payments and distributions required to be made to
minority interest holders in subsidiaries or joint ventures as a result of
such Asset Sale.
"NET INSURANCE/CONDEMNATION PROCEEDS" means any Cash
payments or proceeds received by Company or any of its Subsidiaries (i) under
any business interruption or casualty insurance policy in respect of a covered
loss thereunder or (ii) as a result of the taking of any assets of Company or
any of its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of
any actual and reasonable documented costs incurred by Company or any of its
Subsidiaries in connection with the adjustment or settlement of any claims of
Company or such Subsidiary in respect thereof.
"NET SECURITIES PROCEEDS" means the cash proceeds (net of
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including reasonable legal fees and expenses) from the
issuance of Capital Stock of Company or any of its Subsidiaries.
"NON-US LENDER" means a Lender that is organized under the
laws of any jurisdiction other than the United States or any state or other
political subdivision thereof.
"NOTES" means one or more of the Term Notes.
"NOTICE OF BORROWING" means a notice substantially in the
form of Exhibit I annexed hereto.
"OBLIGATIONS" means all obligations of every nature of each
Loan Party from time to time owed to Administrative Agent, Collateral Agent,
Lenders or any of them under the Loan Documents, whether for principal,
interest, fees, expenses, indemnification or otherwise.
"OFFICER" means the president, chief executive officer, an
executive or senior vice president, chief financial officer, treasurer,
general partner (if an individual), managing member (if an individual) or
other individual appointed by the Governing Body or the Organizational
17
Documents of a corporation, partnership, trust or limited liability company to
serve in a similar capacity as the foregoing.
"OFFICER'S CERTIFICATE", as applied to any Person that is a
corporation, partnership, trust or limited liability company, means a
certificate executed on behalf of such Person by one or more Officers of such
Person or one or more Officers of a general partner or a managing member if
such general partner or managing member is a corporation, partnership, trust
or limited liability company.
"OPERATING LEASE", as applied to any Person, means any lease
(including leases that may be terminated by the lessee at any time) of any
property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"ORGANIZATIONAL DOCUMENTS" means the documents (including
Bylaws, if applicable) pursuant to which a Person that is a corporation,
partnership, trust or limited liability company is organized.
"PARTICIPANT" means a purchaser of a participation in the
rights and obligations under this Agreement pursuant to subsection 10.1C.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, that is subject to Section 412 of the Internal Revenue
Code or Section 302 of ERISA, and, for purposes of subsection 8.10 only, any
Foreign Plan.
"PERMITTED ENCUMBRANCES" means the following types of Liens
(excluding any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of
the Internal Revenue Code or by ERISA, any such Lien imposed by a Government
Authority in connection with any Foreign Plan, any such Lien relating to or
imposed in connection with any Environmental Claim, and any such Lien
expressly prohibited by any applicable terms of any of the Collateral
Documents):
(i) Liens for taxes, assessments or governmental
charges or claims the payment of which is not, at the time, required by
subsection 6.3;
(ii) statutory or common law Liens of landlords,
statutory Liens and rights of set-off of banks or other financial
institutions, statutory Liens of carriers, warehousemen, mechanics, repairmen,
workmen and materialmen, and other Liens imposed by law, in each case incurred
in the ordinary course of business (a) for amounts not yet overdue or (b) for
amounts that are overdue and that (in the case of any such amounts overdue for
a period in excess of 5 days) are being contested in good faith by appropriate
proceedings, so long as (1) such reserves or other appropriate provisions, if
any, as shall be required by GAAP shall have been made for any such contested
amounts, and (2) in the case of a Lien with respect to any portion of the
Collateral, such contest proceedings conclusively operate to stay the sale of
any portion of the Collateral on account of such Lien;
18
(iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money), so long as no foreclosure, sale or similar proceedings have
been commenced with respect to any portion of the Collateral on account
thereof;
(iv) any attachment or judgment Lien not constituting an
Event of Default under subsection 8.8;
(v) licenses (with respect to Intellectual Property and
other property), leases or subleases granted to third parties by the Company
and its Subsidiaries in the ordinary course of business (excluding Company's
leased facility located at 00000 Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxx) and not
interfering in any material respect with the ordinary conduct of the business
of Company or any of its Subsidiaries or resulting in a material diminution in
the value of any Collateral as security for the Obligations;
(vi) easements, rights-of-way, restrictions,
encroachments, and other minor defects or irregularities in title, in each
case which do not and are not reasonably expected to interfere in any material
respect with the ordinary conduct of the business of Company or any of its
Subsidiaries or resulting in a material diminution in the value of any
Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor
under any lease not prohibited by this Agreement, (b) Lien or restriction that
the interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease to
any Lien or restriction referred to in the preceding clause (b), so long, as
to leases of Leasehold Properties that are Material Contracts, as the holder
of such Lien or restriction agrees to recognize the rights of such lessee or
sublessee under such lease;
(viii) Liens arising from filing UCC financing statements
relating solely to leases not prohibited by this Agreement;
(ix) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(x) any zoning or similar law or right reserved to or
vested in any governmental office or agency to control or regulate the use of
any real property;
(xi) Liens granted pursuant to the Collateral Documents;
(xii) Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating, reciprocal
easement or similar agreements entered into in the ordinary course of business
of Company and its Subsidiaries;
(xiii) Liens on insurance proceeds in favor of insurance
companies granted solely as security for financed premiums; and
19
(xiv) customary Liens granted in favor of a trustee to
secure fees and other amounts owing to such trustee under an indenture or
other agreement pursuant to which Indebtedness permitted by Section 7.1 is
issued.
"PERSON" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies,
limited liability partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
(whether federal, state or local, domestic or foreign, and including political
subdivisions thereof) and agencies or other administrative or regulatory
bodies thereof.
"PLEDGED COLLATERAL" means, collectively, the "Pledged
Collateral" as defined in the Security Agreement.
"POTENTIAL EVENT OF DEFAULT" means a condition or event
that, after notice or lapse of time or both, would constitute an Event of
Default.
"PRIME RATE" means the rate published in The Wall Street
Journal as the "prime rate". If the publication of The Wall Street Journal is
discontinued or publication of the prime rate in The Wall Street Journal is
discontinued, Lender shall, in its sole discretion, designate some other daily
financial or governmental publication of national circulation as the source of
this information. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer.
"PROCEEDINGS" means any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration.
"PRO RATA SHARE" means with respect to all payments,
computations and other matters relating to the Loans of any Lender, the
percentage obtained by dividing (x) the Term Loan Exposure of that Lender by
(y) the aggregate Term Loan Exposure of all Lenders, as the applicable
percentage may be adjusted by assignments permitted pursuant to subsection
10.1. The initial Pro Rata Share of each Lender is set forth opposite the name
of that Lender in Schedule 2.1 annexed hereto.
"PTO" means the United States Patent and Trademark Office or
any successor or substitute office in which filings are necessary or, in the
opinion of Administrative Agent, desirable in order to create or perfect Liens
on any IP Collateral.
"QUICK ASSETS" means at any time of determination the sum of
Company's Cash, Cash Equivalents and Eligible Accounts.
"REAL PROPERTY ASSET" means, at any time of determination,
any interest then owned by any Loan Party (other than any Foreign Subsidiary)
in any real property.
"RECORDED LEASEHOLD INTEREST" means a Leasehold Property
with respect to which a Record Document (as hereinafter defined) has been
recorded in all places necessary or desirable, in Administrative Agent's
reasonable judgment, to give constructive notice of such Leasehold Property to
third-party purchasers and encumbrancers of the affected real property.
20
For purposes of this definition, the term "Record Document" means, with
respect to any Leasehold Property, (a) the lease evidencing such Leasehold
Property or a memorandum thereof, executed and acknowledged by the owner of
the affected real property, as lessor, or (b) if such Leasehold Property was
acquired or subleased from the holder of a Recorded Leasehold Interest, the
applicable assignment or sublease document, executed and acknowledged by such
holder, in each case in form sufficient to give such constructive notice upon
recordation and otherwise in form reasonably satisfactory to Administrative
Agent.
"REGISTRATION RIGHTS AGREEMENT" means Registration Rights
Agreement dated December 24, 2002 among Company and Lenders relating to
Company's common stock issuable upon exercise of the Warrants.
"REGULATION D" means Regulation D of the Board of Governors
of the Federal Reserve System, as in effect from time to time.
"RELEASE" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge,
dispersal, dumping, leaching or migration of Hazardous Materials into the
indoor or outdoor environment (including the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), including the movement of any Hazardous Materials through the air,
soil, surface water or groundwater.
"REQUISITE LENDERS" means Lenders having or holding more
than 50% of the sum of the aggregate Term Loan Exposure of all Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of Company now or hereafter outstanding, except a dividend payable
solely in shares of that class of stock to the holders of that class, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of stock
of Company now or hereafter outstanding, (iii) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options or other rights
to acquire shares of any class of stock of Company now or hereafter
outstanding, and (iv) any payment or prepayment of principal of, premium, if
any, or interest on, or redemption, purchase, retirement, defeasance
(including in-substance or legal defeasance), sinking fund or similar payment
with respect to, any Subordinated Indebtedness.
"SECURITIES" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated, certificated or uncertificated, or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of
the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as
amended from time to time, and any successor statute.
21
"SECURITY AGREEMENT" means the Security Agreement executed
and delivered on the Closing Date, substantially in the form of Exhibit XIV
annexed hereto, as such Security Agreement may thereafter be amended,
supplemented or otherwise modified from time to time.
"SOLVENT", with respect to any Person, means that as of the
date of determination both (i)(a) the then fair saleable value of the property
of such Person is (1) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (2) not less than the amount that
will be required to pay the probable liabilities on such Person's then
existing debts as they become absolute and due considering all financing
alternatives and potential asset sales reasonably available to such Person;
(b) such Person's capital is not unreasonably small in relation to its
business or any contemplated or undertaken transaction; and (c) such Person
does not intend to incur, or believe (nor should it reasonably believe) that
it will incur, debts beyond its ability to pay such debts as they become due;
and (ii) such Person is "solvent" within the meaning given that term and
similar terms under applicable laws relating to fraudulent transfers and
conveyances. For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all of
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
"SUBORDINATED INDEBTEDNESS" means (i) Company's 6-1/2%
Convertible Subordinated Notes due 2004 and (ii) any other Indebtedness of
Company incurred from time to time and subordinated in right of payment to the
Obligations in a manner satisfactory to the Requisite Lenders.
"SUBSIDIARY", with respect to any Person, means any
corporation, partnership, trust, limited liability company, association, Joint
Venture or other business entity of which more than 50% of the total voting
power of shares of stock or other ownership interests entitled (without regard
to the occurrence of any contingency) to vote in the election of the members
of the Governing Body is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"SUBSIDIARY GUARANTOR" means Read-Rite International and any
Domestic Subsidiary of Company that executes and delivers a counterpart of the
Subsidiary Guaranty on the Closing Date or from time to time thereafter
pursuant to subsection 6.8.
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty executed
and delivered by Read-Rite International and existing Domestic Subsidiaries of
Company on the Closing Date and to be executed and delivered by additional
Domestic Subsidiaries of Company from time to time thereafter in accordance
with subsection 6.8, substantially in the form of Exhibit XIII annexed hereto,
as such Subsidiary Guaranty may hereafter be amended, supplemented or
otherwise modified from time to time.
"SUPPLEMENTAL COLLATERAL AGENT" has the meaning assigned to
that term in subsection 9.1B.
"SYNTHETIC LEASE OBLIGATION" means the monetary obligation
of a Person under (a) a so-called synthetic, off-balance sheet or tax
retention lease, or (b) an agreement for the use
22
or possession of property creating obligations that do not appear on the
balance sheet of such Person but which, upon the insolvency or bankruptcy of
such Person, would be characterized as the indebtedness of such Person
(without regard to accounting treatment).
"TAPE GROUP ASSETS" means all of Company's and its
Subsidiaries' right, title and interest in all tangible and intangible assets
that are used in connection with the manufacture or sale of magnetoresistive
and inductive tape heads and all inventory (including work-in-process and
finished goods) consisting of magnetoresistive and inductive tape heads.
"TAX" or "TAXES" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature and whatever
called, by any Governmental Authority, on whomsoever and wherever imposed,
levied, collected, withheld or assessed, including interest, penalties,
additions to tax and any similar liabilities with respect thereto; except
that, in the case of a Lender, there shall be excluded (i) taxes that are
imposed on the overall net income or net profits (including franchise taxes
imposed in lieu thereof) (a) by the United States, (b) by any other Government
Authority under the laws of which such Lender is organized or has its
principal office or maintains its applicable lending office, or (c) by any
jurisdiction solely as a result of a present or former connection between such
Lender and such jurisdiction (other than any such connection arising solely
from such Lender having executed, delivered or performed its obligations or
received a payment under, or enforced, any of the Loan Documents), and (ii)
any branch profits taxes imposed by the United States or any similar tax
imposed by any other jurisdiction in which such Lender is located.
"TERM LOANS" means the Loans made by Lenders to Company
pursuant to subsection 2.1(A)(i).
"TERM LOAN COMMITMENT" means the commitment of a Lender to
make a Term Loan to Company pursuant to subsection 2.1A(i), and "Term Loan
Commitments" means such commitments of all Lenders in the aggregate.
"TERM LOAN EXPOSURE" means, as of any date of determination
(i) prior to the termination of the Term Loan Commitments, the sum of the
undrawn portion of that Lender's Term Loan Commitment, and the aggregate
outstanding principal amount of the Term Loans of that Lender, and (ii) after
the termination of the Term Loan Commitments, the aggregate outstanding
principal amount of the Term Loans of that Lender.
"TRANSACTION COSTS" means the fees, costs and expenses
payable by Company on or before the Closing Date in connection with the
transactions contemplated by the Loan Documents.
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.
"WARRANTS" means those certain Warrants to Purchase Common
Stock dated December 24, 2002 to purchase (subject to adjustment as provided
therein) an aggregate of 24,102,271 shares of Company's common stock.
23
"WHOLLY-OWNED SUBSIDIARY" means a Subsidiary all of the
shares of stock or other ownership interests of which are owned by Company or
another Wholly-Owned Subsidiary of Company with the exception of any shares or
ownership interest required by law to be held by (i) directors or managers to
qualify them to have such positions or (ii) other Persons residing in the
applicable jurisdiction.
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement. Except as otherwise expressly provided in this
Agreement, all accounting terms not otherwise defined herein shall have the
meanings assigned to them in conformity with GAAP. Financial statements and
other information required to be delivered by Company to Lenders pursuant to
clauses (ii) and (iii) of subsection 6.1 shall be prepared in accordance with
GAAP as in effect at the time of such preparation (and delivered together with
the reconciliation statements provided for in subsection 6.1(v)). Calculations
in connection with the definitions, covenants and other provisions of this
Agreement shall utilize GAAP as in effect on the date of determination,
applied in a manner consistent with that used in preparing the financial
statements referred to in subsection 5.3. If at any time any change in GAAP
would affect the computation of any financial ratio or requirement set forth
in any Loan Document, and Company, Administrative Agent or Requisite Lenders
shall so request, Administrative Agent, Lenders and Company shall negotiate in
good faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of Requisite
Lenders), provided that, until so amended, such ratio or requirement shall
continue to be computed in accordance with GAAP prior to such change therein
and Company shall provide to Administrative Agent and Lenders reconciliation
statements provided for in subsection 6.1(v).
1.3 Other Definitional Provisions and Rules of Construction.
A. Any of the terms defined herein may, unless the
context otherwise requires, be used in the singular or the plural, depending
on the reference.
B. References to "Sections" and "subsections" shall be
to Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided.
C. The use in any of the Loan Documents of the word
"include" or "including", when following any general statement, term or
matter, shall not be construed to limit such statement, term or matter to the
specific items or matters set forth immediately following such word or to
similar items or matters, whether or not nonlimiting language (such as
"without limitation" or "but not limited to" or words of similar import) is
used with reference thereto, but rather shall be deemed to refer to all other
items or matters that fall within the broadest possible scope of such general
statement, term or matter.
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; Notes.
A. Commitments. Subject to the terms and conditions
of this Agreement and in reliance upon the representations and warranties of
Company herein set forth, each Lender hereby severally agrees to make the
Loans as described in subsection 2.1A.
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(i) Term Loans. Each Lender severally agrees
to lend to Company from time to time during the period from and including the
Closing Date to but excluding the Commitment Termination Date an amount not
exceeding its Pro Rata Share of the aggregate amount of the Term Loan
Commitments to be used for the purposes identified in subsection 2.5A;
provided that Company shall not request, and Lenders shall have no commitment
to make, any Loan if, after giving effect thereto, the aggregate principal
amount of Loans outstanding would exceed the Aggregate Collateral Value at
such time. The amount of each Lender's Term Loan Commitment is set forth
opposite its name on Schedule 2.1 annexed hereto and the aggregate amount of
the Term Loan Commitments is $30,000,000; provided that the Term Loan
Commitments of Lenders shall be adjusted to give effect to any assignments of
the Term Loan Commitments pursuant to subsection 10.1B. Each Lender's Term
Loan Commitment shall expire immediately and without further action on the
Commitment Termination Date to the extent Term Loans have not been made on or
before that date. Amounts borrowed under this subsection 2.1A(i) and
subsequently repaid or prepaid may not be reborrowed.
B. Borrowing Mechanics. Loans made on any Funding Date
(shall be in an aggregate minimum amount of $1,000,000 and multiples of
$1,000,000 in excess of that amount. Whenever Company desires that Lenders
make Loans it shall deliver to Administrative Agent a duly executed Notice of
Borrowing with an attached certificate of Aggregate Collateral Value no later
than 10:00 A.M. (Los Angeles time) at least three Business Days in advance of
the proposed Funding Date.
Company shall notify Administrative Agent prior to the
funding of any Loans in the event that any of the matters to which Company is
required to certify in the applicable Notice of Borrowing is no longer true
and correct as of the applicable Funding Date, and the acceptance by Company
of the proceeds of any Loans shall constitute a re-certification by Company,
as of the applicable Funding Date, as to the matters to which Company is
required to certify in the applicable Notice of Borrowing.
A Notice of Borrowing shall be irrevocable and Company shall
be bound to make a borrowing as requested in such Notice.
C. Disbursement of Funds. All Loans under this
Agreement shall be made by Lenders simultaneously and proportionately to their
respective Pro Rata Shares, it being understood that neither Administrative
Agent nor any Lender shall be responsible for any default by any other Lender
in that other Lender's obligation to make a Loan requested hereunder nor shall
the Commitment of any Lender to make a Loan requested be increased or
decreased as a result of a default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder. Promptly after receipt by
Administrative Agent of a Notice of Borrowing pursuant to subsection 2.1B (or
telephonic notice in lieu thereof), Administrative Agent shall notify each
Lender, as the case may be, of the proposed borrowing. Each such Lender shall
make the amount of its Loan available to Company on the applicable Funding
Date by causing an amount of same day funds in Dollars to be transferred to
the Company Funding Account.
D. Notes. Company shall execute and deliver on the
Closing Date to Lenders a Note substantially in the form of Exhibit IV annexed
hereto to evidence each Lender's Term
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Loans in the principal amount of that Lender's Term Loan Commitment. All Loans
made against the Notes, the rates of interest and Interest Periods applicable
to such Loans shall be recorded by each Lender on its books and records or, at
its option in any instance, endorsed on a schedule to such Note and the unpaid
principal balance and status, rates and Interest Periods so recorded or
endorsed by the Lenders shall be prima facie evidence (absent manifest error)
in any court or other proceeding brought to enforce any Note of the principal
amount remaining unpaid thereon, the status of the Loans evidenced thereby and
the interest rates and Interest Periods applicable thereto; provided that the
failure of any Lender to record any of the foregoing shall not limit or
otherwise affect the obligation of Company to repay the principal amount of
the Notes together with accrued interest thereon.
Administrative Agent may deem and treat the payee of any
Note as the owner thereof for all purposes hereof unless and until an
Assignment Agreement effecting the assignment or transfer thereof shall have
been accepted by Administrative Agent as provided in subsection 10.1B(ii). Any
request, authority or consent of any person or entity who, at the time of
making such request or giving such authority or consent, is the holder of any
Note shall be conclusive and binding on any subsequent holder, assignee or
transferee of that Note or of any Note or Notes issued in exchange therefor.
2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of
subsections 2.6 and 2.7, (x) each Term Loan funded on the Closing Date from
that date and (y) as to all other Term Loans, from and after the first day of
the term thereof that (subject to the special provisions of this subsection
2.2) is a 3, 6, 9 or 12 month anniversary of the date that is the Closing Date
(each, an "Interest Period Date"), shall bear interest on the unpaid principal
amount thereof through maturity (whether by acceleration or otherwise) at a
rate determined by reference to the Eurodollar Rate. Each Term Loan that is
made on a date other than an Interest Period Date shall initially bear
interest at the rate determined by reference to the Base Rate from the date
made until the next succeeding Interest Period Date.
Subject to the provisions of subsections 2.2E, 2.2G and 2.7, the Term Loans
shall bear interest from their respective Funding Dates through maturity as
follows:
(i) if a Eurodollar Rate Loan, then at the sum
of the Eurodollar Rate plus 10% per annum.
(ii) if a Base Rate Loan, then at the sum of
the Base Rate plus 9% per annum;
B. Interest Periods.
(i) Each Term Loan bearing interest at the
Eurodollar Rate shall consist of successive three month interest periods (each
an "Interest Period"), provided that:
(a) each successive Interest Period
shall commence on the day on which the next preceding Interest Period expires;
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(b) if an Interest Period would
otherwise expire on a day that is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day; provided that, if any Interest
Period would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day; and
(c) any Interest Period that begins
on the last Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar month
provided that no Interest Period shall extend beyond the maturity date of the
Loans.
(ii) Each Term Loan that is not made on the
Closing Date or an Interest Period Date shall have an initial interest period
commencing on its Funding Date and ending on the next succeeding Interest
Period Date.
C. Interest Payments. Subject to the provisions of
subsection 2.2E, interest on each Loan shall be payable in arrears on and to
each Interest Payment Date applicable to that Loan, upon any prepayment of
that Loan (to the extent accrued on the amount being prepaid) and at maturity
(including final maturity).
D. [intentionally omitted]
E. Default Rate. Upon the occurrence and during the
continuation of any Event of Default, the outstanding principal amount of all
Loans and, to the extent permitted by applicable law, any interest payments
thereon not paid when due and any fees and other amounts then due and payable
hereunder, shall during such period bear interest (including post-petition
interest in any proceeding under the Bankruptcy Code or other applicable
bankruptcy laws) payable upon demand at a rate that is 2% per annum in excess
of the interest rate otherwise payable under this Agreement with respect to
the applicable Loans (or, in the case of any such fees and other amounts, at a
rate which is 2% per annum in excess of the interest rate otherwise payable
under this Agreement for Loans at the Eurodollar Rate). In addition, and
without limiting the generality of the foregoing, any principal payments on
the Loans not paid when due and, to the extent permitted by applicable law,
any interest payments on the Loans or any fees or other amounts owed hereunder
not paid when due, in each case whether at stated maturity, by notice of
prepayment, by acceleration or otherwise, shall thereafter bear interest
(including post-petition interest in any proceeding under the Bankruptcy Code
or other applicable bankruptcy laws) payable on demand at a rate which is 2%
per annum in excess of the interest rate otherwise payable under this
Agreement with respect to the applicable Loans (or, in the case of any such
fees and other amounts, at a rate which is 2% per annum in excess of the
interest rate otherwise payable under this Agreement for Loans at Eurodollar
Rate). Payment or acceptance of the increased rates of interest provided for
in this subsection 2.2E is not a permitted alternative to timely payment and
shall not constitute a waiver of any Event of Default or otherwise prejudice
or limit any rights or remedies of Administrative Agent or any Lender.
F. Computation of Interest. Interest on the Loans
shall be computed on the basis of a 360-day year and twelve 30 days months, in
each case for the actual number of days
27
elapsed in the period during which it accrues. In computing interest on any
Loan, the date of the making of such Loan or the first day of each Interest
Period applicable to such Loan shall be included, and the date of payment of
such Loan or the expiration date of an Interest Period applicable to such Loan
shall be excluded.
G. Maximum Rate. Notwithstanding the foregoing
provisions of this subsection 2.2, in no event shall the rate of interest
payable by Company with respect to any Loan exceed the maximum rate of
interest permitted to be charged under applicable law.
2.3 Fees.
A. [intentionally omitted.]
B. Funding Fee. On the Closing Date Company shall pay
a funding supplement of $1,500,000 of which $600,000 shall be paid to the
Lenders in proportion to their Pro Rata Shares and $900,000 shall be paid to
Administrative Agent.
C. Other Fees. Company agrees to pay to
Administrative Agent such fees and expense reimbursements (including the fees
and expenses of the Collateral Agent and of auditors and appraisers), in the
amounts and at the times separately agreed upon between Company and
Administrative Agent.
2.4 Repayments, Prepayments and General Provisions Regarding
Payments; Application of Proceeds of Collateral and Payments
Under Subsidiary Guaranty.
A. Scheduled Payments of Term Loans. Company shall pay
the outstanding principal of all Loans in full on December 23, 2005.
B. Prepayments.
(i) Voluntary Prepayments. Company may, upon
not less than five Business Days prior written or telephonic notice given to
Administrative Agent by 12:00 Noon (Los Angeles time) on the date required
and, if given by telephone, promptly confirmed in writing to Administrative
Agent (which original written or telephonic notice Administrative Agent will
promptly transmit by telefacsimile or telephone to each Lender for the Loans
to be prepaid), at any time and from time to time prepay the Term Loans, in
whole but not in part. Notice of prepayment having been given as aforesaid,
the principal amount of all Term Loans, together with the Prepayment Fee
thereon, shall become due and payable on the prepayment date specified
therein.
(ii) Prepayment Fee. With respect to any
prepayment of the principal amount of Term Loans, the Company shall, in
addition to the amount prepaid, pay to each Lender a prepayment fee (the
"Prepayment Fee") in an amount equal to the positive difference, if any, of
(i) the present value on the date of prepayment of the principal amount of
such prepayment plus interest thereon at the Deemed Rate (as hereinafter
defined) for the remaining term of the Loans, absent the prepayment,
discounted to said date using a discount rate equal to the Treasury Rate (as
hereinafter defined) plus 0.50% per annum, less (ii) the then outstanding
principal balance thereunder, absent the prepayment.
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For purposes hereof, "Deemed Rate" shall mean a fixed rate
per annum equal to the sum of (i) Eurodollar Rate as in effect as of two
Business Days prior to the prepayment date (as if a Eurodollar Rate Loan for
an Interest Period was to be made on the prepayment date) plus (ii) the
Eurodollar Rate Margin. For purposes of the Deemed Rate, the Interest Payment
Dates thereof shall be the same dates as that for Base Rate Loans and the
maturity shall be the maturity date of Base Rate Loans.
For purposes hereof, "Treasury Rate" shall mean the yield of
the United States government treasury notes with the closest matching maturity
to the Interest Period assumed for the Deemed Rate as of two (2) Business Days
prior to the prepayment date as published in The Wall Street Journal (and if
more than one such issue, the issue with the coupon rate closest to the Deemed
Rate). If the publication of The Wall Street Journal is discontinued or
publication of the yield of United States treasury notes in The Wall Street
Journal is discontinued, Lender shall, in its reasonable discretion, designate
some other daily financial or governmental publication of national circulation
as the source of this information.
If the Obligations are accelerated for any reason,
including, without limitation, because of default, sale, transfer or
encumbrance (including that by operation of law or otherwise), the Prepayment
Fee set forth above will also be due and payable as though said indebtedness
was voluntarily prepaid. COMPANY EXPRESSLY WAIVES THE PROVISIONS OF ANY
PRESENT OR FUTURE STATUTE OR LAW WHICH PROHIBITS OR MAY PROHIBIT THE
COLLECTION OF THE FOREGOING PREPAYMENT FEE IN CONNECTION WITH ANY SUCH
ACCELERATION, INCLUDING, WITHOUT LIMITATION, CALIFORNIA CIVIL CODE SECTION
2954.10.
Company expressly agrees that: (i) the Prepayment Fee
provided for herein is reasonable; (ii) the Prepayment Fee shall be payable
notwithstanding the then prevailing market rates at the time payment is made;
(iii) there has been a course of conduct between Lenders and Company giving
specific consideration in this transaction for such agreement to pay the
Prepayment Fee; and (iv) Company shall be estopped hereafter from claiming
differently than as agreed to in this paragraph. Company expressly
acknowledges that its agreement to pay the Prepayment Fee to Lenders as herein
described is a material inducement to Lenders to make the Term Loans.
(iii) Mandatory Prepayments. The Loans shall be
prepaid in the amounts and under the circumstances set forth below, all such
prepayments and/or reductions to be applied as set forth below:
(a) Prepayments From Applicable Asset
Sale Proceeds. No later than the date of receipt by Company or any of its
Subsidiaries of Applicable Asset Sale Proceeds in respect of any Asset Sale,
if any, Company shall either (1) prepay the Loans (plus the applicable
Prepayment Fee), in which case the provisions of subsection 2.4(B)(i) shall
apply, or (2), so long as no Potential Event of Default or Event of Default
shall have occurred and be continuing and to the extent that aggregate
Applicable Asset Sale Proceeds from the Closing Date through the date of
determination that have not been used to prepay Loans or reinvested as
permitted hereunder do not exceed $1,000,000, deliver to Administrative Agent
an Officer's Certificate setting forth (x) that portion of such Applicable
Asset Sale Proceeds that Company or
29
such Subsidiary intends to reinvest in equipment or other productive assets of
the general type used in the business of Company and its Subsidiaries within
180 days of such date of receipt and (y) the proposed use of such portion of
the Applicable Asset Sale Proceeds and such other information with respect to
such reinvestment as Administrative Agent may reasonably request, and Company
shall, or shall cause one or more of its Subsidiaries to, promptly and
diligently apply such portion to such reinvestment purposes. In addition,
Company shall, no later than 180 days after receipt of such Applicable Asset
Sale Proceeds that have not theretofore been applied to the Obligations or
that have not been so reinvested as provided above, make a prepayment of the
Loans in the full amount of all such unreinvested Applicable Asset Sale
Proceeds.
(b) Prepayments and Reductions from
Net Insurance/Condemnation Proceeds. No later than the first Business Day
following the date of receipt by Administrative Agent or by Company or any of
its Subsidiaries of any Net Insurance/Condemnation Proceeds that are required
to be applied to prepay the Loans (plus the applicable Prepayment Fee)
pursuant to the provisions of subsection 6.4C, Company shall prepay the Loans
in an aggregate amount equal to the amount of such Net Insurance/Condemnation
Proceeds.
(c) Prepayment Fee. With respect to
any mandatory prepayment under this subsection 2.4B(iii), Company shall, in
addition to the amount prepaid, pay to each Lender a Prepayment Fee on the
principal amount prepaid calculated pursuant to subsection 2.4B(ii).
(d) Calculations of Net Proceeds
Amounts; Additional Prepayments and Reductions Based on Subsequent
Calculations. Concurrently with any prepayment of the Loans pursuant to
subsections 2.4B(iii)(a) or (b), Company shall deliver to Administrative Agent
an Officer's Certificate demonstrating the calculation of the amount of the
applicable Applicable Asset Sale Proceeds or Net Insurance/Condemnation
Proceeds, as the case may be, that gave rise to such prepayment and/or
reduction. In the event that Company shall subsequently determine that the
actual amount was greater than the amount set forth in such Officer's
Certificate, Company shall promptly make an additional prepayment of the Loans
in an amount equal to the amount of such excess, and Company shall
concurrently therewith deliver to Administrative Agent an Officer's
Certificate demonstrating the derivation of the additional amount resulting in
such excess.
(e) Application of Prepayments. Any
prepayments pursuant to subsection 2.4B(iii) shall be applied to prepay the
Term Loans on a pro rata basis (in accordance with the respective outstanding
principal amounts thereof).
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments
by Company of principal, interest, fees and other Obligations shall be made in
Dollars in same day funds, without defense, setoff or counterclaim, free of
any restriction or condition, and transferred to the account of each Lender
specified on Schedule 2.1 not later than 11:00 a.m. (Los Angeles time) on the
date due; funds received by Lenders after that time on such due date shall be
deemed to have been paid by Company on the next succeeding Business Day. Any
Lender may change the
30
account to which payments are to be made to it pursuant to the notice
provisions of subsection 10.8.
(ii) Application of Payments to Principal and
Interest. Except as provided in subsection 2.2C, all payments in respect of
the principal amount of any Loan shall include payment of accrued interest on
the principal amount being repaid or prepaid, and all such payments (and, in
any event, any payments in respect of any Loan on a date when interest is due
and payable with respect to such Loan) shall be applied to the payment of
interest before application to principal.
(iii) [Intentionally omitted.]
(iv) Payments on Business Days. Whenever any
payment to be made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding Business Day
and such extension of time shall be included in the computation of the payment
of interest hereunder or of the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees
that before disposing of any Note held by it, or any part thereof (other than
by granting participations therein), that Lender will make a notation thereon
of all Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided that
the failure to make (or any error in the making of) a notation of any Loan
made under such Note shall not limit or otherwise affect the obligations of
Company hereunder or under such Note with respect to any Loan or any payments
of principal or interest on such Note.
D. Application of Proceeds of Collateral and Payments
after Event of Default. Upon the occurrence and during the continuation of an
Event of Default, if requested by Requisite Lenders (a) all payments received
on account of the Obligations, whether from Company, from any Guarantor or
otherwise, shall be applied by Administrative Agent against the Obligations
and (b) all proceeds received by Administrative Agent in respect of any sale
of, collection from, or other realization upon all or any part of the
Collateral under any Collateral Document may, in the discretion of
Administrative Agent, be held by Administrative Agent as Collateral for,
and/or (then or at any time thereafter) applied in full or in part by
Administrative Agent against, the applicable Secured Obligations (as defined
in such Collateral Document), in each case in the following order of priority:
(i) to the payment of all costs and expenses
of such sale, collection or other realization, all other expenses, liabilities
and advances made or incurred by Administrative Agent and Collateral Agent in
connection therewith, and all amounts for which Administrative Agent and
Collateral Agent is entitled to compensation (including the fees described in
subsection 2.3), reimbursement and indemnification under any Loan Document and
all advances made by Administrative Agent and Collateral Agent thereunder for
the account of the applicable Loan Party, and to the payment of all costs and
expenses paid or incurred by Administrative Agent and Collateral Agent in
connection with the Loan Documents, all in
31
accordance with subsections 9.4, 10.2 and 10.3 and the other terms of this
Agreement and the Loan Documents;
(ii) thereafter, to the extent of any excess
such proceeds, to the payment of all other Obligations for the ratable benefit
of the Lenders thereof (subject to the provisions of subsection 2.4C(ii)
hereof); and
(iii) thereafter, to the extent of any excess
such proceeds, to the payment to or upon the order of such Loan Party or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
2.5 Use of Proceeds
A. Loans. The proceeds of the Loans shall be used by
Company for working capital purposes.
B. Margin Regulations. No portion of the proceeds of
any borrowing under this Agreement shall be used by Company or any of its
Subsidiaries in any manner that might cause the borrowing or the application
of such proceeds to violate Regulation U, Regulation T or Regulation X of the
Board of Governors of the Federal Reserve System or any other regulation of
such Board or to violate the Exchange Act, in each case as in effect on the
date or dates of such borrowing and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. Determination of Applicable Interest Rate. As soon
as practicable after 10:00 A.M. (Los Angeles time) on each Interest Rate
Determination Date, Administrative Agent shall determine (which determination
shall, absent manifest error, be conclusive and binding upon all parties) the
interest rate that shall apply to the Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company
and each Lender.
B. Inability to Determine Applicable Interest Rate. In
the event that Administrative Agent shall have determined (which determination
shall be conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date that by reason of circumstances affecting the London
interbank Eurodollar market adequate and fair means do not exist for
ascertaining the interest rate applicable to such Loans on the basis provided
for in the definition of Eurodollar Rate, Administrative Agent shall on such
date give notice (by telefacsimile or by telephone confirmed in writing) to
Company and each Lender of such determination, whereupon (i) no Loans may be
made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances
giving rise to such notice no longer exist and (ii) any Notice of Borrowing
given by Company with respect to the Loans in respect of which such
determination was made shall be deemed to be for a Base Rate Loan.
32
C. Illegality or Impracticability of Eurodollar Rate
Loans. In the event that on any date any Lender shall have determined (which
determination shall be conclusive and binding upon all parties hereto but
shall be made only after consultation with Company and Administrative Agent)
that the making, maintaining or continuation of its Eurodollar Rate Loans (i)
has become unlawful as a result of compliance by such Lender in good faith
with any law, treaty, governmental rule, regulation, guideline or order (or
would conflict with any such treaty, governmental rule, regulation, guideline
or order not having the force of law even though the failure to comply
therewith would not be unlawful) or (ii) has become impracticable, or would
cause such Lender material hardship, as a result of contingencies occurring
after the date of this Agreement which materially and adversely affect the
London interbank Eurodollar market or the position of such Lender in that
market, then, and in any such event, such Lender shall be an "Affected Lender"
and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Administrative Agent of such
determination (which notice Administrative Agent shall promptly transmit to
each other Lender). Thereafter (a) the obligation of the Affected Lender to
make Loans as Eurodollar Rate Loans shall be suspended until such notice shall
be withdrawn by the Affected Lender, (b) to the extent such determination by
the Affected Lender relates to a Eurodollar Rate Loan then being requested by
Company pursuant to a Notice of Borrowing, the Affected Lender shall make such
Loan as a Base Rate Loan, (c) the Affected Lender's obligation to maintain its
outstanding Eurodollar Rate Loans (the "Affected Loans") shall be terminated
at the earlier to occur of the expiration of the Interest Period then in
effect with respect to the Affected Loans or when required by law, and (d) the
Affected Loans shall automatically convert into Base Rate Loans on the date of
such termination.
D. Compensation For Breakage or Non-Commencement of
Interest Periods. Company shall compensate each Lender, upon written request
by that Lender (which request shall set forth in reasonable detail the basis
for requesting such amounts) pursuant to subsection 2.8, for all reasonable
losses, expenses and liabilities (including any interest paid by that Lender
to lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans
and any loss, expense or liability sustained by that Lender in connection with
the liquidation or re-employment of such funds) which that Lender may sustain:
(i) if for any reason (other than a default by that Lender) a borrowing of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Notice
of Borrowing or a telephonic request therefor, (ii) if any prepayment or other
principal payment of any of its Eurodollar Rate Loans (including any
prepayment or conversion occasioned by the circumstances described in
subsection 2.6C) occurs on a date prior to the last day of an Interest Period
applicable to that Loan, (iii) if any prepayment of any of its Eurodollar Rate
Loans is not made on any date specified in a notice of prepayment given by
Company, or (iv) as a consequence of any other default by Company in the
repayment of its Eurodollar Rate Loans when required by the terms of this
Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may
make, carry or transfer Eurodollar Rate Loans at, to, or for the account of
any of its branch offices or the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate
Loans. Calculation of all amounts payable to a Lender under this subsection
2.6 and under subsection 2.7A shall be made as though that Lender had funded
each of its Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
33
of Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate
Loan and having a maturity comparable to the relevant Interest Period, whether
or not its Eurodollar Rate Loans had been funded in such manner.
2.7 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs. Subject to the
provisions of subsection 2.7B (which shall be controlling with respect to the
matters covered thereby), in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination
of a court or other Government Authority, in each case that becomes effective
after the date hereof, or compliance by such Lender with any guideline,
request or directive issued or made after the date hereof by any central bank
or other Government Authority (whether or not having the force of law):
(i) subjects such Lender to any additional Tax
with respect to this Agreement or any of its obligations hereunder (including
with respect to maintaining any Commitment hereunder) or any payments to such
Lender of principal, interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any
reserve, special deposit, compulsory loan, insurance charge or similar
requirement against assets held by, or deposits or other liabilities in or for
the account of, or advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Lender (other than any such
reserve or other requirements with respect to Eurodollar Rate Loans that are
reflected in the definition of Eurodollar Rate); or
(iii) imposes any other condition (other than
with respect to Taxes) on or affecting such Lender or its obligations
hereunder or the London interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender
of agreeing to make, making or maintaining its Loans or Commitments or to
reduce any amount received or receivable by such Lender with respect thereto;
then, in any such case, Company shall promptly pay to such Lender, upon
receipt of the statement referred to in subsection 2.8A, such additional
amount or amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as such Lender in its sole discretion
shall determine) as may be necessary to compensate such Lender for any such
increased cost or reduction in amounts received or receivable hereunder.
B. Taxes.
(i) Payments to Be Free and Clear. All sums
payable by Company under this Agreement and the other Loan Documents shall be
paid free and clear of, and without any deduction or withholding on account
of, any Tax imposed, levied, collected, withheld or assessed by or within the
United States of America or any political subdivision in or of the
00
Xxxxxx Xxxxxx xx Xxxxxxx or any other jurisdiction from or to which a payment
is made by or on behalf of Company or by any federation or organization of
which the United States of America or any such jurisdiction is a member at the
time of payment; and
(ii) Grossing-up of Payments. If Company or any
other Person is required by law to make any deduction or withholding on
account of any such Tax from any sum paid or payable by Company to
Administrative Agent or any Lender under any of the Loan Documents:
(a) Company shall notify
Administrative Agent of any such requirement or any change in any such
requirement as soon as Company becomes aware of it;
(b) Company shall pay any such Tax
when such Tax is due, such payment to be made (if the liability to pay is
imposed on Company) for its own account or (if that liability is imposed on
Administrative Agent or such Lender, as the case may be) on behalf of and in
the name of Administrative Agent or such Lender;
(c) the sum payable by Company in
respect of which the relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that, after the making of
that deduction, withholding or payment, Administrative Agent or such Lender,
as the case may be, receives on the due date a net sum equal to what it would
have received had no such deduction, withholding or payment been required or
made; and
(d) within 30 days after paying any
sum from which it is required by law to make any deduction or withholding, and
within 30 days after the due date of payment of any Tax which it is required
by clause (b) above to pay, Company shall deliver to Administrative Agent
evidence satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant taxing or
other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after the
date on which such Lender became a Lender in any such requirement for a
deduction, withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from that in
effect on the date on which such Lender became a Lender, in respect of
payments to such Lender.
(iii) Evidence of Exemption from U.S.
Withholding Tax.
(a) Each Non-US Lender shall deliver
to Administrative Agent and to Company, on or prior to the Closing Date (in
the case of each Lender listed on the signature pages hereof) or on or prior
to the date of the Assignment Agreement pursuant to which it becomes a Lender
(in the case of each other Lender), and at such other times as may be
necessary in the determination of Company or Administrative Agent (each in the
reasonable exercise of its discretion), two original copies of Internal
Revenue Service Form W-8BEN or W-8ECI (or any successor forms) properly
completed and duly executed by such Lender, or, in the case of a Non-US Lender
claiming exemption from United States federal withholding tax under Section
871(h) or 881(c) of the Internal Revenue Code with respect to payments of
"portfolio interest", a form W-8BEN, and, in the case of a Lender that has
certified in writing to
35
Administrative Agent that it is not a "bank" (as defined in Section
881(c)(3)(A) of the Internal Revenue Code), a certificate of such Lender
certifying that such Lender is not (i) a "bank" for purposes of Section 881(c)
of the Internal Revenue Code, (ii) a ten-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of Company or
(iii) a controlled foreign corporation related to Company (within the meaning
of Section 864(d)(4) of the Internal Revenue Code) in each case together with
any other certificate or statement of exemption required under the Internal
Revenue Code or the regulations issued thereunder to establish that such
Lender is not subject to United States withholding tax with respect to any
payments to such Lender of interest payable under any of the Loan Documents.
(b) Each Non-US Lender, to the extent
it does not act or ceases to act for its own account with respect to any
portion of any sums paid or payable to such Lender under any of the Loan
Documents (for example, in the case of a typical participation by such
Lender), shall deliver to Administrative Agent and to Company, on or prior to
the Closing Date (in the case of each Lender listed on the signatures pages
hereof), on or prior to the date of the Assignment Agreement pursuant to which
it becomes a Lender (in the case of each other Lender), or on such later date
when such Lender ceases to act for its own account with respect to any portion
of any such sums paid or payable, and at such other times as may be necessary
in the determination of Company or Administrative Agent (each in the
reasonable exercise of its discretion), (1) two original copies of the forms
or statements required to be provided by such Lender under subsection
2.7B(iii)(a), properly completed and duly executed by such Lender, to
establish the portion of any such sums paid or payable with respect to which
such Lender acts for its own account that is not subject to United States
withholding tax, and (2) two original copies of Internal Revenue Service Form
W-8IMY (or any successor forms) properly completed and duly executed by such
Lender, together with any information, if any, such Lender chooses to transmit
with such form, and any other certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued thereunder, to
establish that such Lender is not acting for its own account with respect to a
portion of any such sums payable to such Lender.
(c) Each Non-US Lender hereby agrees,
from time to time after the initial delivery by such Lender of such forms,
whenever a lapse in time or change in circumstances renders such forms,
certificates or other evidence so delivered obsolete or inaccurate in any
material respect, that such Lender shall promptly (1) deliver to
Administrative Agent and to Company two original copies of renewals,
amendments or additional or successor forms, properly completed and duly
executed by such Lender, together with any other certificate or statement of
exemption required in order to confirm or establish that such Lender is not
subject to United States withholding tax with respect to payments to such
Lender under the Loan Documents and, if applicable, that such Lender does not
act for its own account with respect to any portion of such payment, or (2)
notify Administrative Agent and Company of its inability to deliver any such
forms, certificates or other evidence.
(d) Company shall not be required to
pay any additional amount to any Non-US Lender under clause (c) of subsection
2.7B(ii), (1) with respect to any Tax required to be deducted or withheld on
the basis of the information, certificates or statements of exemption such
Lender chooses to transmit with an Internal Revenue Service Form W-8IMY
pursuant to subsection 2.7B(iii)(b)(2) or (2) if such Lender shall have failed
to satisfy the requirements of clause (a), (b) or (c)(1) of this subsection
2.7B(iii); provided that if such Lender
36
shall have satisfied the requirements of subsection 2.7B(iii)(a) on the date
such Lender became a Lender, nothing in this subsection 2.7B(iii)(d) shall
relieve Company of its obligation to pay any amounts pursuant to subsection
2.7B(ii)(c) in the event that, as a result of any change in any applicable law,
treaty or governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Lender is no longer
properly entitled to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Lender is not subject to
withholding as described in subsection 2.7B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall
have determined that the adoption, effectiveness, phase-in or applicability
after the date hereof of any law, rule or regulation (or any provision
thereof) regarding capital adequacy, or any change therein or in the
interpretation or administration thereof by any Government Authority charged
with the interpretation or administration thereof, or compliance by any Lender
with any guideline, request or directive regarding capital adequacy (whether
or not having the force of law) of any such Government Authority, has or would
have the effect of reducing the rate of return on the capital of such Lender
or any corporation controlling such Lender as a consequence of, or with
reference to, such Lender's Loans to a level below that which such Lender or
such controlling corporation could have achieved but for such adoption,
effectiveness, phase-in, applicability, change or compliance (taking into
consideration the policies of such Lender or such controlling corporation with
regard to capital adequacy), then from time to time, within five Business Days
after receipt by Company from such Lender of the statement referred to in
subsection 2.8A, Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction.
2.8 Statement of Lenders; Events Affecting Certain Funding
Sources of Loans; Obligation of Lenders and Issuing Lenders
to Mitigate.
A. Statements. Each Lender claiming compensation or
reimbursement pursuant to subsection 2.6D, 2.7 or 2.8B shall deliver to
Company (with a copy to Administrative Agent) a written statement, setting
forth in reasonable detail the basis of the calculation of such compensation
or reimbursement, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
B. Events Affecting Certain Funding Sources of Loans.
If any Lender is funding its Term Loans through a credit agreement, line of
credit or other loan arrangement ("funding source agreement") which contains
provisions similar to those set forth in subsections 2.6, 2.7A and/or 2.7C and
such Lender is required by the terms of such funding source agreement to pay
to one or more lenders under such funding source agreement increased amounts
similar to those payable under subsections 2.6D, 2.7A or 2.7C, then Company
shall promptly pay to such Lender, upon receipt of the statement referred to
in subsection 2.8A, such additional amount or amounts as may be necessary to
compensate such Lender for the increased amounts payable under such funding
source agreement, as such increased amounts are reasonably apportioned by such
Lender to the Term Loans made by such Lender. Such Lender may assume for
purposes of apportioning such increased amounts that the Loans made hereunder
by such Lender were funded entirely by borrowings under such funding source
agreement.
Section 3. [INTENTIONALLY OMITTED]
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Section 4. CONDITIONS TO LOANS
The obligations of Lenders to make Loans hereunder are
subject to the satisfaction of the following conditions.
4.1 Conditions to Term Loans. The obligations of Lenders to make
the Term Loans to be made on the Closing Date are, in addition to the
conditions precedent specified in subsection 4.2, subject to prior or
concurrent satisfaction of the following conditions:
A. Loan Party Documents. On or before the Closing
Date, Company shall, and shall cause each other Loan Party to, deliver to
Administrative Agent with sufficient originally executed copies, where
appropriate, for each Lender the following with respect to Company or such
Loan Party, as the case may be, each, unless otherwise noted, dated the
Closing Date:
(i) Copies of the Organizational Documents of
such Person, certified by the Secretary of State of its jurisdiction of
organization or, if such document is of a type that may not be so certified,
certified by the secretary or similar officer of the applicable Loan Party,
together with a good standing certificate from the Secretary of State of its
jurisdiction of organization and each other state in which such Person is
qualified to do business and, to the extent generally available, a certificate
or other evidence of good standing as to payment of any applicable franchise
or similar taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Closing Date;
(ii) Resolutions of the Governing Body of such
Person approving and authorizing the execution, delivery and performance of
the Loan Documents to which it is a party, certified as of the Closing Date by
the secretary or similar officer of such Person as being in full force and
effect without modification or amendment;
(iii) Signature and incumbency certificates of
the officers of such Person executing the Loan Documents to which it is a
party;
(iv) Executed originals of the Loan Documents
to which such Person is a party;
(v) An executed copy of the Intercompany
Claims Agreement in the form annexed hereto as Exhibit X; and
(vi) Such other documents as Administrative
Agent may reasonably request.
B. Fees and Expenses. Company shall have paid to
Administrative Agent and the Lenders the respective fees payable on the
Closing Date referred to in subsection 2.3, and any amounts payable under
subsection 10.2 as of the Closing Date.
C. Corporate and Capital Structure. The corporate
organizational structure of Company and its Subsidiaries shall be as set forth
on Schedule 4.1C annexed hereto.
38
D. Representations and Warranties; Performance of
Agreements. Company shall have delivered to Administrative Agent an Officer's
Certificate, in form and substance satisfactory to Administrative Agent, to
the effect that the representations and warranties in Section 5 are true,
correct and complete in all material respects on and as of the Closing Date to
the same extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that
such representations and warranties were true, correct and complete in all
material respects on and as of such earlier date) and that Company shall have
performed in all material respects all agreements and satisfied all conditions
which this Agreement provides shall be performed or satisfied by it on or
before the Closing Date except as otherwise disclosed to and agreed to in
writing by Administrative Agent.
E. Pro Forma Financial Statements and Projections. On
or before the Closing Date, Lenders shall have received from Company (i) a pro
forma balance sheet as of November 30, 2002, giving effect to the transactions
contemplated hereby, including issuance of the Warrants, which pro forma
balance sheet shall be in form and substance reasonably satisfactory to
Administrative Agent, and (ii) financial projections for the three Fiscal
Years commencing September 30, 2002, which projections shall be in form
reasonably satisfactory to Administrative Agent, accompanied by an Officer's
Certificate certifying that such projections were prepared in good faith on
the basis of facts believed to be accurate and assumptions believed to be
reasonable at the time made.
F. Opinions of Counsel to Loan Parties. Lenders shall
have received originally executed copies of one or more favorable written
opinions of Wilson, Sonsini, Xxxxxxxx & Xxxxxx, counsel for Loan Parties, in
form and substance reasonably satisfactory to Administrative Agent and its
counsel, dated as of the Closing Date and setting forth substantially the
matters in the opinions designated in Exhibit IX annexed hereto and as to such
other matters as Administrative Agent acting on behalf of Lenders may
reasonably request (this Credit Agreement constituting a written request by
Company to such counsel to deliver such opinions to Lenders).
G. PP&E Appraisal. Lenders shall have received an
appraisal of Company's Eligible PP&E performed by Emerald Valuation Technology
and satisfactory to Administrative Agent.
H. Evidence of Insurance. Administrative Agent shall
have received a certificate from Company's insurance broker or other evidence
satisfactory to it that all insurance required to be maintained pursuant to
subsection 6.4 is in full force and effect and that Administrative Agent on
behalf of Lenders has been named as additional insured and/or loss payee
thereunder to the extent required under subsection 6.4.
I. Necessary Governmental Authorizations and Consents;
Expiration of Waiting Periods, Etc. Company shall have obtained all
Governmental Authorizations and all consents of other Persons, in each case
that are necessary or advisable in connection with the transactions
contemplated by the Loan Documents and the continued operation of the business
conducted by Company and its Subsidiaries in substantially the same manner as
conducted prior to the Closing Date. Each such Governmental Authorization and
consent shall be in full force and effect, except in a case where the failure
to obtain or maintain a Governmental Authorization
39
or consent, either individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. All applicable waiting
periods shall have expired without any action being taken or threatened by any
competent authority that would restrain, prevent or otherwise impose adverse
conditions on the transactions contemplated by the Loan Documents or the
financing thereof. No action, request for stay, petition for review or
rehearing, reconsideration, or appeal with respect to any of the foregoing
shall be pending, and the time for any applicable Government Authority to take
action to set aside its consent on its own motion shall have expired.
J. [Intentionally omitted.]
K. Security Interests in Personal and Mixed Property.
To the extent not otherwise satisfied pursuant to subsection 4.1L,
Administrative Agent shall have received evidence satisfactory to it that
Company and Subsidiary Guarantors shall have taken or caused to be taken all
such actions, executed and delivered or caused to be executed and delivered
all such agreements, documents and instruments, and made or caused to be made
all such filings and recordings (other than the filing or recording of items
described in clauses (ii), (iii) and (iv) below) that may be necessary or, in
the opinion of Administrative Agent, desirable in order to create in favor of
Administrative Agent, for the benefit of Lenders, a valid and (upon such
filing and recording) perfected First Priority security interest in the entire
personal and mixed property Collateral. Such actions shall include the
following:
(i) Stock Certificates and Instruments.
Delivery to Administrative Agent of (a) certificates (which certificates shall
be accompanied by irrevocable undated stock powers, duly endorsed in blank and
otherwise satisfactory in form and substance to Administrative Agent)
representing all Capital Stock pledged pursuant to the Security Agreement and
(b) all promissory notes or other instruments (duly endorsed, where
appropriate, in a manner satisfactory to Administrative Agent) evidencing any
Collateral;
(ii) Lien Searches and UCC Termination
Statements. Delivery to Administrative Agent of (a) the results of a recent
search, by a Person satisfactory to Administrative Agent, of all effective UCC
financing statements and fixture filings and all judgment and tax lien filings
which may have been made with respect to any personal or mixed property of any
Loan Party, together with copies of all such filings disclosed by such search,
and (b) UCC termination statements duly executed by all applicable Persons for
filing in all applicable jurisdictions as may be necessary to terminate any
effective UCC financing statements or fixture filings disclosed in such search
(other than any such financing statements or fixture filings in respect of
Liens permitted to remain outstanding pursuant to the terms of this
Agreement);
(iii) UCC Financing Statements and Fixture
Filings. Delivery to Administrative Agent naming Administrative Agent on
behalf of the Lenders of UCC financing statements duly executed by each
applicable Loan Party (if required) with respect to all personal and mixed
property Collateral of such Loan Party, for filing in all jurisdictions as may
be necessary or, in the opinion of Administrative Agent, desirable to perfect
the security interests created in such Collateral pursuant to the Collateral
Documents;
40
(iv) PTO Cover Sheets, Etc. Delivery to
Administrative Agent naming Administrative Agent on behalf of the Lenders of
all cover sheets or other documents or instruments required to be filed with
the PTO in order to create or perfect Liens in respect of any IP Collateral;
(v) Blocked Account and Control Agreements.
Delivery to Administrative Agent naming Administrative Agent on behalf of the
Lenders of such blocked account and control agreements with financial
institutions and other Persons in order to establish control and/or perfect
Liens in respect of Deposit Accounts, securities accounts and other Collateral
pursuant to the Collateral Documents;
L. Closing Date Mortgage.
(i) Closing Date Mortgage. A fully executed
and notarized Mortgage (the "Closing Date Mortgage"), in proper form for
recording in the appropriate place, encumbering Company's leased facilities
located at 00000 Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxx (the "Closing Date Mortgaged
Property");
(ii) [intentionally omitted];
(iii) Landlord Consents and Estoppels; Recorded
Leasehold Interests. In the case of each Closing Date Mortgaged Property
consisting of a Leasehold Property, (a) a Landlord Consent and Estoppel with
respect thereto and (b) evidence that such Leasehold Property is a Recorded
Leasehold Interest;
M. [intentionally omitted]
N. Warrants. The Warrants and the Registration Rights
Agreement shall have been duly executed and delivered.
O. Account Debtor Contact Information. Company shall
have delivered to Administrative Agent up-to-date contact information
(including name, title, address, telephone and telefacsimile numbers and
e-mail address) for the primary payment contact at for account debtors
representing the five largest Accounts in the aggregate of Company.
4.2 Conditions to All Loans. The obligations of Lenders to make
Loans on each Funding Date are subject to the following further conditions
precedent:
A. Administrative Agent shall have received before
that Funding Date, in accordance with the provisions of subsection 2.1B:
(i) An originally executed Notice of
Borrowing, in each case signed by a duly authorized Officer of Company; and
(ii) An originally executed Collateral Value
Certificate, which shall be satisfactory to Administrative Agent,
demonstrating that, giving effect the amount of the Loans being requested, the
aggregate principal amount of all Loans will not exceed the
41
Aggregate Collateral Value as of the date thereof, together with such
supporting detail as the Administrative Agent may request in its reasonable
discretion.
B. As of that Funding Date:
(i) The representations and warranties
contained herein and in the other Loan Documents shall be true, correct and
complete in all material respects on and as of that Funding Date to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in
which case such representations and warranties shall have been true, correct
and complete in all material respects on and as of such earlier date;
provided, that where a representation and warranty is already qualified as to
materiality, such materiality qualifier shall be disregarded for purposes of
this condition;
(ii) No event shall have occurred and be
continuing or would result from the consummation of the borrowing contemplated
by such Notice of Borrowing that would constitute an Event of Default or a
Potential Event of Default;
(iii) Each Loan Party shall have performed in
all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before that
Funding Date;
(iv) No order, judgment or decree of any
arbitrator or Government Authority shall purport to enjoin or restrain any
Lender from making the Loans to be made by it on that Funding Date.
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and
to make the Loans Company represents and warrants to each Lender:
5.1 Organization, Powers, Qualification, Good Standing, Business
and Subsidiaries.
A. Organization and Powers. Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Company has all requisite power and authority to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents to which it is a
party and to carry out the transactions contemplated thereby.
B. Qualification and Good Standing. Company is
qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, except in jurisdictions where the failure to be so qualified or in
good standing has not had and could not reasonably be expected to result in a
Material Adverse Effect.
C. Conduct of Business. Company and its Subsidiaries
are engaged only in the businesses permitted to be engaged in pursuant to
subsection 7.11.
42
D. Subsidiaries. All of the Subsidiaries of Company as
of the Closing Date and their jurisdictions of organization are identified in
Schedule 5.1 annexed hereto, as said Schedule 5.1 may be supplemented from
time to time pursuant to the provisions of subsection 6.1(xv). The Capital
Stock of each of the Subsidiaries of Company identified in Schedule 5.1
annexed hereto (as so supplemented) is duly authorized, validly issued, fully
paid and nonassessable and none of such Capital Stock constitutes Margin
Stock. Each of the Subsidiaries of Company identified in Schedule 5.1 annexed
hereto (as so supplemented) is a corporation, partnership, trust or limited
liability company duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of organization set forth therein, has
all requisite power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted, and is
qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, in each case except where failure to be so qualified or in good
standing or a lack of such power and authority has not had and could not
reasonably be expected to result in a Material Adverse Effect. Schedule 5.1
annexed hereto (as so supplemented) correctly sets forth the ownership
interest of Company and each of its Subsidiaries in each of the Subsidiaries
of Company identified therein.
5.2 Authorization of Borrowing, Warrants, Reg. Rights Agreement,
etc.
A. Authorization of Borrowing. The execution,
delivery and performance of the Loan Documents, the Registration Rights
Agreement and the Warrants have been duly authorized by all necessary action
on the part of each Loan Party that is a party thereto.
B. No Conflict. The execution, delivery and
performance by Loan Parties of the Loan Documents, the Registration Rights
Agreement and the Warrants to which they are parties and the consummation of
the transactions contemplated thereby do not and will not (i) violate any
provision of any law or any governmental rule or regulation applicable to
Company or any of its Subsidiaries, the Organizational Documents of Company or
any of its Subsidiaries or any order, judgment or decree of any court or other
Government Authority binding on Company or any of its Subsidiaries, (ii)
violate, result in a breach of or constitute (with due notice or lapse of time
or both) a default under any Contractual Obligation of Company or any of its
Subsidiaries, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Company or any of its
Subsidiaries (other than any Liens created under any of the Loan Documents in
favor of Administrative Agent on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of Company or any of its Subsidiaries, except for such
approvals or consents which will be obtained on or before the Closing Date and
disclosed in writing to Lenders and except, in each case, to the extent such
violation, conflict, Lien or failure to obtain such approval or consent could
not reasonably be expected to result in a Material Adverse Effect.
C. Governmental Consents. The execution, delivery and
performance by Loan Parties of the Loan Documents, the Registration Rights
Agreement and the Warrants to which they are parties and the consummation of
the transactions contemplated by the Loan Documents do not and will not
require any Governmental Authorization other than those previously obtained,
or contemplated by the Registration Rights Agreement and except for
43
filings and recordings with respect to Collateral to be made, or otherwise
delivered to the Administrative Agent for filing and/or recordation as of the
Closing Date.
D. Binding Obligation. Each of the Loan Documents,
the Registration Rights Agreement and the Warrants has been duly executed and
delivered by each Loan Party that is a party thereto and is the legally valid
and binding obligation of such Loan Party, enforceable against such Loan Party
in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
E. Capitalization. Schedule 5.2 annexed hereto sets
forth a true, correct and complete description of the authorized Capital Stock
of Company and the number of shares of each class of Capital Stock issued and
outstanding as of the date hereof. All of the issued and outstanding shares of
Capital Stock of Company have been duly authorized and are validly issued,
fully paid and non-assessable. There are no preemptive or other similar rights
to subscribe for or to purchase any such Capital Stock. Except as set forth on
Schedule 5.2, as of the date hereof, there are: (i) no outstanding warrants,
options or other rights to subscribe for or acquire, or any securities or
other agreements convertible into or exchangeable for, Capital Stock of
Company; (ii) no voting trusts or other agreements or undertakings with
respect to the voting of the Capital Stock of Company; (iii) no obligations or
rights (whether fixed or contingent) on the part of Company any of its
directors or officers, or any other Person to purchase, repurchase, redeem or
"put" any outstanding shares of the Capital Stock of Company; and (iv) no
agreements to which Company is a party granting any registration rights with
respect to any Capital Stock of Company. Except as set forth on Schedule 5.2,
no additional shares of Capital Stock of Company will become issuable to any
Person pursuant to any "anti-dilution" provisions of any issued and
outstanding securities or other agreement of Company on account of the
issuance of the Warrants, the exercise of the Warrants or the application of
the "anti-dilution" provisions contained in the Warrants.
5.3 Financial Condition; SEC Reports.
A. Financial Statements. Company has delivered to
Lenders the financial statements and information of Company set forth in
Schedule 4.1E. All such financial statements were prepared in conformity with
GAAP and fairly present, in all material respects, the financial position (on
a consolidated basis) of the Company and its consolidated Subsidiaries as at
the respective dates thereof and the results of operations and cash flows (on
a consolidated basis) of the entities described therein for each of the
periods then ended, subject, in the case of any such unaudited financial
statements, to the absence of footnotes and changes resulting from audit and
normal year-end adjustments. Neither Company nor any of its Subsidiaries has
(and will not have following the funding of the initial Loans) any Contingent
Obligation, contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment that, as of the Closing Date, is not
reflected in the foregoing financial statements or the notes thereto and, as
of any Funding Date subsequent to the Closing Date, is not reflected in the
most recent financial statements delivered to Lenders pursuant to subsection
6.1 or the notes thereto and that, in any such case, is material in relation
to the business, operations, properties, assets, condition (financial or
otherwise) or prospects of Company or any of its Subsidiaries. Except as
specified
44
in Schedule 4.1E, neither Company nor any of its Subsidiaries has delayed or
deferred payment on any obligation or liability more than 45 days past the
originally stated due date.
B. SEC Reports. Company has timely filed (or received
appropriate extensions of) all 10-K, 10-Q and other reports (including
exhibits) definition proxy statements and other reports required to be filed
by it under the Exchange Act since January 1, 2000. Each such filing (i) as of
its date, complied in all material respects with the requirements of the
Exchange Act, and (ii) does not (as amended or supplemented, if applicable)
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading.
5.4 No Material Adverse Change; No Restricted Junior Payments.
Except as set forth in Schedule 5.4, since June 30, 2002, no event or change
has occurred that has resulted in or evidences, either in any case or in the
aggregate, a Material Adverse Effect. Except as set forth on Schedule 5.4,
since September 29, 2002, neither Company nor any of its Subsidiaries has
directly or indirectly declared, ordered, paid or made, or set apart any sum
or property for, any Restricted Junior Payment or agreed to do so except as
permitted by subsection 7.5.
5.5 Title to Properties; Liens; Real Property; Intellectual
Property.
A. Title to Properties; Liens. Each of Company and its
Domestic Subsidiaries has (i) good, sufficient and legal title to (in the case
of fee interests in real property), (ii) valid leasehold interests in (in the
case of leasehold interests in real or personal property), or (iii) good title
to (in the case of all other personal property), all of their respective
properties and assets reflected in the financial statements referred to in
subsection 5.3 or in the most recent financial statements delivered pursuant
to subsection 6.1, in each case except for assets disposed of since the date
of such financial statements in the ordinary course of business or as
otherwise permitted under subsection 7.7. Except as permitted by this
Agreement, all such properties and assets are free and clear of Liens. In
addition to, and not in lieu of the foregoing, the Company has good title to
all of its properties and assets which were set forth in the Schedules
delivered to Emerald Valuation Technology by the Company for purposes of the
Eligible PP&E appraisal conducted by Emerald Valuation Technology in
accordance with subsection 4.1.G, free and clear of all Liens other than
Permitted Encumbrances.
B. Real Property. As of the Closing Date, Schedule 5.5
annexed hereto contains a true, accurate and complete list of all of Company's
and its Domestic Subsidiaries (i) fee interests in any Real Property Assets,
and (ii) leases, subleases or assignments of leases (together with all
amendments, modifications, supplements, renewals or extensions of any thereof)
affecting each Real Property Asset, regardless of whether a Loan Party is the
landlord or tenant (whether directly or as an assignee or successor in
interest) under such lease, sublease or assignment. Except as specified in
Schedule 5.5 annexed hereto, each agreement listed in clause (ii) of the
immediately preceding sentence is in full force and effect and Company does
not have knowledge of any default that has occurred and is continuing
thereunder, and each such agreement constitutes the legally valid and binding
obligation of each applicable Loan Party, enforceable against such Loan Party
in accordance with its terms, except as enforcement may be
45
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable
principles.
C. Intellectual Property. As of the Closing Date,
Company and its Subsidiaries own or have the right to use, all Intellectual
Property used in the conduct of their business, except where the failure to
own or have such right to use in the aggregate could not reasonably be
expected to result in a Material Adverse Effect. No claim has been asserted
and is pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does Company know of any valid basis for any such
claim, except for such claims that in the aggregate could not reasonably be
expected to result in a Material Adverse Effect. The use of such Intellectual
Property by Company and its Subsidiaries does not infringe on the rights of
any Person, except for such claims and infringements that, in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
United States federal and state registrations of and applications for
Intellectual Property, that are owned by Company or any of its Subsidiaries on
the Closing Date are described on Schedule 5.5 annexed hereto. Schedule 5.5
also contains a list of all material licenses of Intellectual Property held by
Company or any of its Subsidiaries on the Closing Date, and a summary of the
Intellectual Property rights covered by such licenses.
5.6 Litigation; Adverse Facts. Except as set forth in Schedule
5.6 annexed hereto, there are no Proceedings (whether or not purportedly on
behalf of Company or any of its Subsidiaries) at law or in equity, or before
or by any court or other Government Authority (including any Environmental
Claims) that are pending or, to the knowledge of Company, threatened against
or affecting Company or any of its Subsidiaries or any property of Company or
any of its Subsidiaries and that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. Neither Company
nor any of its Subsidiaries (i) is in violation of any applicable laws
(including Environmental Laws) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, or (ii) is
subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or other Government
Authority that, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect.
5.7 Payment of Taxes. Except to the extent permitted by
subsection 6.3, all material tax returns and reports of Company and its
Subsidiaries required to be filed by any of them have been timely filed, and
all taxes shown on such tax returns to be due and payable and all assessments,
fees and other governmental charges upon Company and its Subsidiaries and upon
their respective properties, assets, income, businesses and franchises that
are due and payable have been paid when due and payable. Company knows of no
proposed tax assessment against Company or any of its Subsidiaries that is not
being actively contested by Company or such Subsidiary in good faith and by
appropriate proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have
been made or provided therefor.
5.8 Performance of Agreements; Material Contracts.
A. Except as set forth in schedule 5.8, neither
Company nor any of its Subsidiaries is in default in the performance,
observance or fulfillment of any of the obligations,
46
covenants or conditions contained in any of its Contractual Obligations, and
no condition exists that, with the giving of notice or the lapse of time or
both, would constitute such a default, except where the consequences, direct
or indirect, of such default or defaults, if any, could not reasonably be
expected to result in a Material Adverse Effect.
B. Schedule 5.8 contains a true, correct and complete
list of all the Material Contracts in effect on the Closing Date. Except as
described on Schedule 5.8, all such Material Contracts are in full force and
effect and no defaults currently exist thereunder, except where the
consequences of such defaults could not reasonably be expected to have a
Material Adverse Effect.
5.9 Governmental Regulation. Neither Company nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Investment Company Act of 1940 or
under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion
of the Obligations unenforceable.
5.10 Securities Activities.
A. Neither Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan,
not more than 25% of the value of the assets (either of Company only or of
Company and its Subsidiaries on a consolidated basis) subject to the
provisions of subsection 7.2 or 7.7 or subject to any restriction contained in
any agreement or instrument, between Company and any Lender or any Affiliate
of any Lender, relating to Indebtedness and within the scope of subsection
8.2, will be Margin Stock.
5.11 Employee Benefit Plans.
A. Company, each of its Subsidiaries and each of their
respective ERISA Affiliates are in material compliance with all applicable
provisions and requirements of ERISA and the regulations and published
interpretations thereunder with respect to each Employee Benefit Plan, and
have performed all material obligations under each Employee Benefit Plan. Each
Employee Benefit Plan that is intended to qualify under Section 401(a) of the
Internal Revenue Code is so qualified.
B. No ERISA Event has occurred or is reasonably
expected to occur.
C. Except to the extent required under Section 4980B
of the Internal Revenue Code, no Employee Benefit Plan provides health or
welfare benefits (through the purchase of insurance or otherwise) for any
retired or former employee of Company, any of its Subsidiaries or any of their
respective ERISA Affiliates.
D. Neither Company nor any Subsidiary or any of their
ERISA Affiliates has adopted or maintains currently or at any time a Pension
Plan.
47
E. Neither Company nor any of its Subsidiaries or
their respective ERISA Affiliates is currently or was at any time a
participating employer in any Multiemployer Plan.
F. As of the date hereof, Company and its Subsidiaries
have made full payment when due of all required contributions to any Foreign
Plan.
5.12 Certain Fees. Except as set forth in Schedule 5.12, no
broker's or finder's fee or commission will be payable with respect to this
Agreement or any of the transactions contemplated hereby, and Company hereby
indemnifies Lenders against, and agrees that it will hold Lenders harmless
from, any claim, demand or liability for any such broker's or finder's fees
alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
5.13 Environmental Protection. Except as set forth in Schedule
5.13 annexed hereto:
(i) neither Company nor any of its
Subsidiaries nor any of their respective Facilities or operations are subject
to any outstanding written order, consent decree or settlement agreement with
any Person relating to (a) any Environmental Law, (b) any Environmental Claim,
or (c) any Hazardous Materials Activity;
(ii) neither Company nor any of its
Subsidiaries has received any letter or request for information under Section
104 of the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. Section 9604) or any comparable state law for which there is
currently any unresolved liability;
(iii) there are and, to Company's knowledge,
have been no conditions, occurrences, or Hazardous Materials Activities that
could reasonably be expected to form the basis of a material Environmental
Claim against Company or any of its Subsidiaries; and
(iv) compliance with all current or reasonably
foreseeable future requirements pursuant to or under Environmental Laws would
not, individually or in the aggregate, be reasonably expected to result in a
Material Adverse Effect.
5.14 Employee Matters. There is no strike or work stoppage in
existence or to the knowledge the Company or any of its Subsidiaries
threatened involving Company or any of its Subsidiaries that could reasonably
be expected to result in a Material Adverse Effect.
5.15 Solvency. Each Loan Party is and, upon the incurrence of any
Obligations by such Loan Party on any date on which this representation is
made, will be, Solvent.
5.16 Matters Relating to Collateral.
A. Creation, Perfection and Priority of Liens. The
execution and delivery of the Collateral Documents by Loan Parties, together
with the actions taken on or prior to the date hereof pursuant to subsections
4.1L, 6.8 and 6.9 are effective to create in favor of Administrative Agent for
the benefit of Lenders, as security for the respective Secured Obligations (as
defined in
48
the applicable Collateral Document in respect of any Collateral), a valid
First Priority Lien on all of the Collateral, and all filings and other
actions necessary or desirable to perfect and maintain the perfection and
First Priority status of such Liens have been duly made or taken and remain in
full force and effect, other than the filing of any UCC financing statements
delivered to Administrative Agent for filing (but not yet filed) and the
periodic filing of UCC continuation statements in respect of UCC financing
statements filed by or on behalf of Administrative Agent.
B. Governmental Authorizations. No authorization,
approval or other action by, and no notice to or filing with, any Government
Authority is required for either (i) the pledge or grant by any Loan Party of
the Liens purported to be created in favor of Administrative Agent pursuant to
any of the Collateral Documents or (ii) the exercise by Administrative Agent
of any rights or remedies in respect of any Collateral (whether specifically
granted or created pursuant to any of the Collateral Documents or created or
provided for by applicable law), except for filings or recordings contemplated
by subsection 5.16A and except as may be required, in connection with the
disposition of any Pledged Collateral, by laws generally affecting the
offering and sale of securities.
C. Absence of Third-Party Filings. Except such as may
have been filed in favor of Administrative Agent as contemplated by subsection
5.16A and to evidence permitted lease obligations and other Liens permitted
pursuant to subsection 7.2, (i) no effective UCC financing statement, fixture
filing or other instrument similar in effect covering all or any part of the
Collateral is on file in any filing or recording office and (ii) no effective
filing covering all or any part of the IP Collateral is on file in the PTO.
D. Margin Regulations. The pledge of the Pledged
Collateral pursuant to the Collateral Documents does not violate Regulation T,
U or X of the Board of Governors of the Federal Reserve System.
E. Information Regarding Collateral. All information
supplied to Administrative Agent by or on behalf of any Loan Party with
respect to any of the Collateral (in each case taken as a whole with respect
to any particular Collateral) is accurate and complete in all material
respects.
5.17 Disclosure. No representation or warranty of Company or any
of its Subsidiaries contained in any Loan Document or in any other document,
certificate or written statement furnished to Lenders by or on behalf of
Company or any of its Subsidiaries for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material
fact or, taken as a whole, omits to state a material fact (known to Company,
in the case of any document not furnished by it) necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances in which the same were made. Any projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by Company to be reasonable at the time
made, it being recognized by Lenders that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results
(it being understood that forecasts and projections by their nature involve
approximations and uncertainties). There are no facts known to Company (other
than matters of a general economic nature) that, individually or in the
aggregate, could reasonably be expected to
49
result in a Material Adverse Effect and that have not been disclosed herein or
in such other documents, certificates and statements furnished to Lenders for
use in connection with the transactions contemplated hereby.
Section 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all
of the Loans and other Obligations (other than inchoate expense reimbursement
and indemnity obligations), unless Requisite Lenders shall otherwise (i) give
prior written consent, or (ii) with respect to subsection 6.1, specifically
request that delivery of any item or items specified therein be suspended
until further request, Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 6.
6.1 Financial Statements and Other Reports. Company will
maintain, and cause each of its Subsidiaries to maintain, a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in conformity with
GAAP. Company will deliver to Administrative Agent:
(i) Events of Default, etc.: promptly upon any
Officer of Company obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or becoming
aware that any Lender has given any notice (other than to Administrative
Agent) or taken any other action with respect to a claimed Event of Default or
Potential Event of Default, (b) that any Person has given any notice to
Company or any of its Subsidiaries or taken any other action with respect to a
claimed default or event or condition of the type referred to in subsection
8.2, (c) [intentionally omitted] or (d) of the occurrence of any event or
change that has caused or evidences, either in any case or in the aggregate, a
Material Adverse Effect, an Officer's Certificate specifying the nature and
period of existence of such condition, event or change, or specifying the
notice given or action taken by any such Person and the nature of such claimed
Event of Default, Potential Event of Default, default, event or condition, and
what action Company has taken, is taking and proposes to take with respect
thereto;
(ii) Monthly and Quarterly Financials: as soon
as available and in any event within 20 days after the end of each month and
within 45 days after the end of each Fiscal Quarter, (a) the consolidated and
consolidating for quarterly periods only balance sheet of Company and its
Subsidiaries as at the end of such fiscal period and the related consolidated
and consolidating for quarterly periods only statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries for such
fiscal period and for the period from the beginning of the then current Fiscal
Year to the end of such fiscal period, setting forth in each case in
comparative form the corresponding figures for the corresponding periods of
the previous Fiscal Year and the corresponding figures from the Financial Plan
for the current Fiscal Year, to the extent prepared for such fiscal period,
all in reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the financial
condition of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows (if applicable) for the
periods indicated, subject to changes resulting from audit and normal year-end
adjustments and the absence of footnotes, and
50
(b) within 45 days after the end of each Fiscal Quarter, a narrative report
describing the operations of Company and its Subsidiaries in the form prepared
for presentation to senior management for such fiscal period and for the
period from the beginning of the then current Fiscal Year to the end of such
fiscal period (which requirement shall be satisfied by the Management's
Discussion and Analysis in Company's Quarterly Report on Form 10-Q for the
Fiscal Quarter then ended);
(iii) Year-End Financials: as soon as available
and in any event within 90 days after the end of each Fiscal Year, (a) the
consolidated and consolidating balance sheets of Company and its Subsidiaries
as at the end of such Fiscal Year and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows of
Company and its Subsidiaries for such Fiscal Year, setting forth in each case
in comparative form the corresponding figures for the previous Fiscal Year and
the corresponding figures from the Financial Plan for the Fiscal Year covered
by such financial statements, all in reasonable detail and certified by the
chief financial officer of Company that they fairly present, in all material
respects, the financial condition of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows for
the periods indicated, (b) a narrative report describing the operations of
Company and its Subsidiaries in the form prepared for presentation to senior
management for such Fiscal Year (which requirement shall be satisfied by the
Management's Discussion and Analysis in Company's Annual Report on Form 10-K
for the Fiscal Year then ended), and (c) in the case of such consolidated
financial statements, a report thereon of Ernst & Young, LLP or other
independent certified public accountants of recognized national standing
selected by Company and satisfactory to Administrative Agent, which report
shall be unqualified, shall express no doubts about the ability of Company and
its Subsidiaries to continue as a going concern, and shall state that such
consolidated financial statements fairly present, in all material respects,
the consolidated financial position of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows for
the periods indicated in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise disclosed in such financial statements)
and that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with generally
accepted auditing standards;
(iv) Compliance Certificates: together with
each delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (ii) and (iii) above, (a) an Officer's Certificate of Company
stating that the signer has reviewed the terms of this Agreement and have
made, or caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of Company and its Subsidiaries
during the accounting period covered by such financial statements and that
such review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the existence
as at the date of such Officer's Certificate, of any condition or event that
constitutes an Event of Default or Potential Event of Default, or, if any such
condition or event existed or exists, specifying the nature and period of
existence thereof and what action Company has taken, is taking and proposes to
take with respect thereto; (b) a Compliance Certificate demonstrating in
reasonable detail compliance during and at the end of the applicable
accounting periods with the restrictions contained in Section 7, in each case
to the extent compliance with such restrictions is required to be tested at
the end of the applicable accounting period; and (c) a Collateral Value
51
Certificate calculated as of the end of the applicable period, together with
such supporting detail as the Administrative Agent may request in its
reasonable discretion;
(v) Reconciliation Statements: if, as a result
of any change in accounting principles and policies from those used in the
preparation of the audited financial statements referred to in subsection 5.3,
the consolidated financial statements of Company and its Subsidiaries
delivered pursuant to subdivisions (ii) or (iii) of this subsection 6.1 will
differ in any material respect from the consolidated financial statements that
would have been delivered pursuant to such subdivisions had no such change in
accounting principles and policies been made, then (a) together with the first
delivery of financial statements pursuant to subdivision (ii) or (iii) of this
subsection 6.1 following such change, consolidated financial statements of
Company and its Subsidiaries for (y) the current Fiscal Year to the effective
date of such change and (z) the two full Fiscal Years immediately preceding
the Fiscal Year in which such change is made, in each case prepared on a pro
forma basis as if such change had been in effect during such periods, and (b)
together with each delivery of financial statements pursuant to subdivision
(ii) or (iii) of this subsection 6.1 following such change, if required
pursuant to subsection 1.2, a written statement of the chief accounting
officer or chief financial officer of Company setting forth the differences
(including any differences that would affect any calculations relating to the
financial covenants set forth in subsection 7.6) which would have resulted if
such financial statements had been prepared without giving effect to such
change;
(vi) Accountants' Certification: together with
each delivery of consolidated financial statements of Company and its
Subsidiaries pursuant to subdivision (iii) above, a written statement by the
independent certified public accountants giving the report thereon (a) stating
that their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting matters,
(b) stating whether, in connection with their audit examination, any condition
or event that constitutes an Event of Default or Potential Event of Default
has come to their attention and, if such a condition or event has come to
their attention, specifying the nature and period of existence thereof;
provided that such accountants shall not be liable by reason of any failure to
obtain knowledge of any such Event of Default or Potential Event of Default
that would not be disclosed in the course of their audit examination, and (c)
stating that based on their audit examination nothing has come to their
attention that causes them to believe either or both that the information
contained in the certificates delivered therewith pursuant to subdivision (iv)
above is not correct or that the matters set forth in the Compliance
Certificates delivered therewith pursuant to clause (b) of subdivision (iv)
above for the applicable Fiscal Year are not stated in accordance with the
terms of this Agreement;
(vii) Accountants' Reports: promptly upon
receipt thereof (unless restricted by applicable professional standards),
copies of all reports submitted to Company by independent certified public
accountants in connection with each annual, interim or special audit of the
financial statements of Company and its Subsidiaries made by such accountants,
including any comment letter submitted by such accountants to management in
connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly
upon their becoming available, copies of (a) all financial statements,
reports, notices and proxy statements
52
sent or made available generally by Company to its security holders or by any
Subsidiary of Company to its security holders other than Company or another
Subsidiary of Company, and (b) all regular and periodic reports and all
registration statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by Company or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority;
(ix) Litigation or Other Proceedings: (a)
promptly upon any Officer of Company obtaining knowledge of (1) the
institution of, or non-frivolous threat of, any Proceeding against or
affecting Company or any of its Subsidiaries or any property of Company or any
of its Subsidiaries not previously disclosed in writing by Company to Lenders
or (2) any material development in any Proceeding that, in any case:
(x) if adversely determined, could
reasonably be expected to result in a Material Adverse Effect; or
(y) seeks to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief as a
result of, the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters (subject to the preservation of the attorney-client and
other applicable privileges);
(x) ERISA Events: promptly upon becoming aware
of the occurrence of or forthcoming occurrence of any ERISA Event, a written
notice specifying the nature thereof, what action Company, any of its
Subsidiaries or any of their respective ERISA Affiliates has taken, is taking
or proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or the
PBGC with respect thereto;
(xi) ERISA Notices: with reasonable promptness,
copies of (a) all notices received by Company, any of its Subsidiaries or any
of their respective ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (b) copies of such other documents or
governmental reports or filings relating to any Employee Benefit Plan as
Administrative Agent shall reasonably request;
(xii) Account Contact Parties: as soon as
practicable, written notice of any change in the contact information for any
of account debtors representing Company's five largest Accounts in the
aggregate;
(xiii) Insurance: as soon as practicable after
any material change in insurance coverage maintained by Company and its
Subsidiaries notice thereof to Administrative Agent specifying the changes and
reasons therefor;
(xiv) Governing Body: with reasonable
promptness, written notice of any change in the Governing Body of Company;
53
(xv) New Subsidiaries: promptly upon any Person
becoming a Subsidiary of Company, a written notice setting forth with respect
to such Person (a) the date on which such Person became a Subsidiary of
Company and (b) all of the data required to be set forth in Schedule 5.1
annexed hereto with respect to all Subsidiaries of Company (it being
understood that such written notice shall be deemed to supplement Schedule 5.1
annexed hereto for all purposes of this Agreement);
(xvi) Material Contracts: promptly, and in any
event within ten Business Days after any Material Contract of Company or any
of its Subsidiaries is terminated or amended in a manner that is materially
adverse to Company or such Subsidiary, as the case may be, or any new Material
Contract is entered into, a written statement describing such event with
copies of such material amendments or new contracts, and an explanation of any
actions being taken with respect thereto; provided, that this subsection (xvi)
shall not apply to purchase orders entered into in the ordinary course of
business; provided, further, that Company shall promptly deliver such
statement and explanation with respect to any purchase orders upon the request
of Administrative Agent;
(xvii) Payments; promptly, and in any event not
later than two Business Days after the date paid, notice that Company has paid
in full the monthly rent and the other amounts then due under Company's lease
to the Closing Date Mortgaged Property, or if all or any portion of the
amounts then due under such lease were not paid, an explanation of the reasons
for non-payment and how Company proposes to deal with the delinquency.
(xviii) Other Information: with
reasonable promptness, such other information and data with respect to Company
or any of its Subsidiaries as from time to time may be reasonably requested by
any Lender.
6.2 Existence, etc. Except as permitted under subsection 7.7,
Company will, and will cause each of its Subsidiaries to, at all times
preserve and keep in full force and effect its existence and all rights and
franchises material to its business; provided, however that neither Company
nor any of its Subsidiaries shall be required to preserve any such right or
franchise if the preservation thereof is no longer desirable in the conduct of
the business of Company or such Subsidiary, as the case may be, and that the
loss thereof is not disadvantageous in any material respect to Company and its
Subsidiaries, taken as a whole.
6.3 Payment of Taxes and Claims; Tax.
A. Company will, and will cause each of its
Subsidiaries to, pay all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or in respect of any of its
income, businesses or franchises before any penalty accrues thereon, and all
claims (including claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or may become a Lien
upon any of its properties or assets, prior to the time when any penalty or
fine shall be incurred with respect thereto; provided that no such charge or
claim need be paid if it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as (i) such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor and (ii) in the case of a
charge or claim which has or may become a Lien
54
against any of the Collateral, such proceedings conclusively operate to stay
the sale of any portion of the Collateral to satisfy such charge or claim.
B. Company will not, nor will it permit any of its
Subsidiaries to, file or consent to the filing of any consolidated income tax
return with any Person (other than Company or any of its Subsidiaries).
6.4 Maintenance of Properties; Insurance; Application of Net
Insurance/ Condemnation Proceeds.
A. Maintenance of Properties. Company will, and will
cause each of its Subsidiaries to, maintain or cause to be maintained in good
repair, working order and condition, ordinary wear and tear excepted, all
material properties owned or leased by Company and its Subsidiaries (including
all Intellectual Property) and from time to time will make or cause to be made
all appropriate repairs, renewals and replacements thereof (provided, however,
as to all leased Real Property Assets, Company and its Subsidiaries shall not
be required to perform any repairs or maintenance that is not its
responsibility under the applicable lease documents if Company or the
applicable Subsidiary is diligently pursuing its rights against the party that
has such responsibility).
B. Insurance. Company will maintain or cause to be
maintained, with financially sound and reputable insurers, such public
liability insurance, third party property damage insurance, business
interruption insurance and casualty insurance with respect to liabilities,
losses or damage in respect of the assets, properties and businesses of
Company and its Subsidiaries as may customarily be carried or maintained under
similar circumstances by corporations of established reputation engaged in
similar businesses, in each case in such amounts (giving effect to
self-insurance), with such deductibles, covering such risks and otherwise on
such terms and conditions as shall be customary for corporations similarly
situated in the industry. Company will use its best efforts to obtain and
thereafter maintain such additional public liability insurance, third party
property damage insurance, business interruption insurance and casualty
insurance as Administrative Agent may reasonably request.
C. Application of Net Insurance/Condemnation Proceeds.
(i) Business Interruption Insurance. Upon
receipt by Company or any of its Subsidiaries of any business interruption
insurance proceeds constituting Net Insurance/Condemnation Proceeds, (a) so
long as no Event of Default or Potential Event of Default shall have occurred
and be continuing, Company or such Subsidiary may retain and apply such Net
Insurance/Condemnation Proceeds for working capital purposes, and (b) if an
Event of Default or Potential Event of Default shall have occurred and be
continuing, Company shall apply an amount equal to such Net
Insurance/Condemnation Proceeds to prepay the Loans as provided in subsection
2.4B;
(ii) Net Insurance/Condemnation Proceeds
Received by Company. Upon receipt by Company or any of its Subsidiaries of any
Net Insurance/Condemnation Proceeds other than from business interruption
insurance, (a) so long as no Event of Default or Potential Event of Default
shall have occurred and be continuing, Company shall, or shall cause
55
one or more of its Subsidiaries to, promptly and diligently apply such Net
Insurance/Condemnation Proceeds to pay or reimburse the costs of repairing,
restoring or replacing the assets in respect of which such Net
Insurance/Condemnation Proceeds were received, or to acquire other property or
assets used in a business otherwise permitted pursuant to Section 7.11, or, to
the extent not so applied, to prepay the Loans as provided in subsection 2.4B,
and (b) if an Event of Default or Potential Event of Default shall have
occurred and be continuing, Company shall apply an amount equal to such Net
Insurance/Condemnation Proceeds to prepay the Loans as provided in subsection
2.4B.
(iii) Net Insurance/Condemnation Proceeds
Received by Administrative Agent. Upon receipt by Administrative Agent of any
Net Insurance/Condemnation Proceeds as loss payee, to the extent (1) the
aggregate amount of such Net Insurance/Condemnation Proceeds received (and
reasonably expected to be received) by Administrative Agent in respect of any
covered loss does not exceed $1,000,000, (unless an Event of Default shall
have occurred and be continuing), Administrative Agent shall deliver such Net
Insurance/Condemnation Proceeds to Company, and Company shall, or shall cause
one or more of its Subsidiaries to, promptly apply such Net
Insurance/Condemnation Proceeds to the costs of repairing, restoring, or
replacing the assets in respect of which such Net Insurance/Condemnation
Proceeds were received, or to acquire other property or assets used in a
business otherwise permitted pursuant to Section 7.11, which assets shall be
granted as Collateral under the Security Agreement, and (2) if the aggregate
amount of Net Insurance/Condemnation Proceeds received (and reasonably
expected to be received) by Administrative Agent in respect of any covered
loss exceeds $1,000,000, (unless an Event of Default shall have occurred and
be continuing), Administrative Agent shall hold such Net
Insurance/Condemnation Proceeds pursuant to the terms of the Security
Agreement and, so long as Company or any of its Subsidiaries proceeds
diligently to repair, restore or replace the assets of Company or such
Subsidiary in respect of which such Net Insurance/Condemnation Proceeds were
received or to acquire other property or assets used in a business otherwise
permitted pursuant to Section 7.11, which assets shall be granted as
Collateral under the Security Agreement, Administrative Agent shall from time
to time disburse to Company or such Subsidiary from the Collateral Account, to
the extent of any such Net Insurance/Condemnation Proceeds remaining therein
in respect of the applicable covered loss, amounts necessary to pay the cost
of such repair, restoration or replacement after the receipt by Administrative
Agent of invoices or other documentation reasonably satisfactory to
Administrative Agent relating to the amount of costs so incurred and the work
performed (including, if required by Administrative Agent, lien releases and
architects' certificates); provided, however that if at any time
Administrative Agent reasonably determines (A) that Company or such Subsidiary
is not proceeding diligently with such repair, restoration or replacement or
(B) that such repair, restoration or replacement cannot be completed with the
Net Insurance/Condemnation Proceeds then held by Administrative Agent for such
purpose, together with funds otherwise available to Company for such purpose,
or that such repair, restoration or replacement cannot be completed within 180
days after the receipt by Administrative Agent of such Net
Insurance/Condemnation Proceeds, Administrative Agent shall, and Company
hereby authorizes Administrative Agent to, apply such Net Insurance/
Condemnation Proceeds to prepay the Loans as provided in subsection 2.4B.
6.5 Inspection Rights; Appraisals and Audits. Company shall, and
shall cause each of its Subsidiaries to, permit any authorized representatives,
agents or independent contractors
56
designated by Administrative Agent or any Lender at the expense of Company to
visit and inspect any of the properties of Company or of any of its
Subsidiaries, to inspect, copy and take extracts from its and their financial
and accounting records, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested;
provided, however, that when an Event of Default exists, any such activities
can be undertaken without advance notice. Administrative Agent may perform, or
cause to be performed, at the expense of Company, verifications, audits and
appraisals of the assets of and properties of Company and its Subsidiaries as
provided in the Security Agreement. Notwithstanding anything to the contrary
in this Section 6.5, except after the occurrence and during the continuance of
any Event of Default, Company and its Subsidiaries will not be required to
disclose, permit the inspection, examination or making of extracts, or
discussion of, any document, information or other matter that (i) in respect
of which disclosure to the Administrative Agent or any of the Lenders (or
their designated representatives) is then prohibited by Law or any agreement
binding on Company or any of its Subsidiaries or (ii) is subject to
attorney-client or similar privilege or constitutes attorney work product.
6.6 Compliance with Laws, etc. Company shall comply, and shall
cause each of its Subsidiaries to comply, with the requirements of all
applicable laws, rules, regulations and orders of any Government Authority
(including all Environmental Laws), noncompliance with which could reasonably
be expected to result in, individually or in the aggregate, a Material Adverse
Effect.
6.7 Environmental Matters.
A. Environmental Disclosure. Company will deliver to
Administrative Agent and Lenders:
(i) Environmental Audits and Reports. As soon
as practicable following receipt thereof, copies of all environmental audits,
investigations, analyses and reports of any kind or character, in the
Company's possession or custody, whether prepared by personnel of Company or
any of its Subsidiaries or by independent consultants, governmental
authorities or any other Persons, with respect to significant environmental
matters at any Facility that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect or with respect
to any Environmental Claims that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect;
(ii) Notice of Certain Releases, Remedial
Actions, Etc. Promptly upon the occurrence thereof, written notice describing
in reasonable detail (a) any Release required to be reported to any federal,
state or local governmental or regulatory agency under any applicable
Environmental Laws, (b) any remedial action taken by Company or any other
Person in response to (1) any Hazardous Materials Activities the existence of
which could reasonably be expected to result in one or more Environmental
Claims having, individually or in the aggregate, a Material Adverse Effect, or
(2) any Environmental Claims that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, and (c)
Company's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of any Facility that
57
could cause such Facility or any part thereof to be subject to any material
restrictions on the ownership, occupancy, transferability or use thereof under
any Environmental Laws;
(iii) Written Communications Regarding
Environmental Claims, Releases, Etc. As soon as practicable following the
sending or receipt thereof by Company or any of its Subsidiaries, a copy of
any and all written communications with respect to (a) any Environmental
Claims that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect, (b) any Release required to be reported
to any federal, state or local governmental or regulatory agency, and (c) any
request for information from any governmental agency that suggests such agency
is investigating whether Company or any of its Subsidiaries may be potentially
responsible for any Hazardous Materials Activity that could reasonably be
expected to result in material liability to the Company or its Subsidiaries;
and
(iv) Notice of Certain Proposed Actions Having
Environmental Impact. Prompt written notice describing in reasonable detail
(a) any proposed acquisition of stock, assets, or property by Company or any
of its Subsidiaries that could reasonably be expected to (1) expose Company or
any of its Subsidiaries to, or result in, Environmental Claims that could
reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect or (2) affect the ability of Company or any of its
Subsidiaries to maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their respective
operations and (b) any proposed action to be taken by Company or any of its
Subsidiaries to modify current operations in a manner that could reasonably be
expected to subject Company or any of its Subsidiaries to any material
additional obligations or requirements under any Environmental Laws.
B. Company's Actions Regarding Hazardous Materials
Activities, Environmental Claims and Violations of Environmental Laws.
(i) Remedial Actions Relating to Hazardous
Materials Activities. Company shall, in compliance with all applicable
Environmental Laws, promptly undertake, and shall cause each of its
Subsidiaries promptly to undertake, any and all investigations, studies,
sampling, testing, abatement, cleanup, removal, remediation or other response
actions necessary to remove, remediate, clean up or xxxxx as required by
Environmental Laws, any Hazardous Materials Activity on, under or about any
Facility that is in violation of any Environmental Laws or that presents a
material risk of giving rise to a material Environmental Claim; and
(ii) Actions with Respect to Environmental
Claims and Violations of Environmental Laws. Company shall promptly take, and
shall cause each of its Subsidiaries promptly to take, any and all actions
necessary to (i) cure any material violation of applicable Environmental Laws
by Company or its Subsidiaries and (ii) make an appropriate response to any
Environmental Claim against Company or any of its Subsidiaries and discharge
any obligations it may have to any Person thereunder.
58
6.8 Execution of Subsidiary Guaranty and Personal Property
Collateral Documents After the Closing Date.
A. Execution of Subsidiary Guaranty and Personal
Property Collateral Documents. In the event that any Person becomes a Domestic
Subsidiary of Company after the date hereof, Company will promptly notify
Administrative Agent of that fact and cause such Domestic Subsidiary to
execute and deliver to Administrative Agent a counterpart of the Subsidiary
Guaranty and Security Agreement and to take all such further actions and
execute all such further documents and instruments (including actions,
documents and instruments comparable to those described in subsection 4.1L) as
may be necessary or, in the opinion of Administrative Agent, desirable to
create in favor of Administrative Agent, for the benefit of Lenders, a valid
and perfected First Priority Lien on substantially all of the personal and
mixed property assets of such Domestic Subsidiary described in the applicable
forms of Collateral Documents. In addition, as provided in the Pledge
Agreement, Company shall, or shall cause the Subsidiary that owns the Capital
Stock of such Person, to execute and deliver to Administrative Agent a
supplement to the Pledge Agreement and to deliver to Administrative Agent all
certificates representing such Capital Stock of such Person (accompanied by
irrevocable undated stock powers, duly endorsed in blank).
B. Subsidiary Organizational Documents, Legal
Opinions, Etc. Company shall deliver to Administrative Agent, together with
such Loan Documents, (i) certified copies of such Domestic Subsidiary's
Organizational Documents, together with, a good standing certificate from the
Secretary of State of the jurisdiction of its organization and each other
state in which such Person is qualified to do business and, to the extent
generally available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate
taxing authority of each of such jurisdiction, each to be dated a recent date
prior to their delivery to Administrative Agent, (ii) a certificate executed
by the secretary or similar officer of such Domestic Subsidiary as to (a) the
fact that the attached resolutions of the Governing Body of such Domestic
Subsidiary approving and authorizing the execution, delivery and performance
of such Loan Documents are in full force and effect and have not been modified
or amended and (b) the incumbency and signatures of the officers of such
Domestic Subsidiary executing such Loan Documents, (iii) an executed
supplement to the Security Agreement evidencing the pledge of the Capital
Stock of such Domestic Subsidiary by Company or a Domestic Subsidiary of
Company that owns such Capital Stock, accompanied by certificate evidencing
such Capital Stock, together with an irrevocable undated stock powers duly
endorsed in blank and satisfactory in form and substance to Administrative
Agent, and (iv) a favorable opinion of counsel to such Domestic Subsidiary, in
form and substance reasonably satisfactory to Administrative Agent and its
counsel, as to (a) the due organization and good standing of such Domestic
Subsidiary, (b) the due authorization, execution and delivery by such Domestic
Subsidiary of such Loan Documents, (c) the enforceability of such Loan
Documents against such Domestic Subsidiary and (d) such other matters
(including matters relating to the creation and perfection of Liens in any
Collateral pursuant to such Loan Documents) as Administrative Agent may
reasonably request, all of the foregoing to be satisfactory in form and
substance to Administrative Agent and its counsel.
59
6.9 Matters Relating to Additional Real Property Collateral.
A. Additional Mortgages, Etc. From and after the
Closing Date, in the event that (i) Company or any Subsidiary Guarantor acquires
any fee interest in real property or any Leasehold Property or (ii) at the time
any Person becomes a Subsidiary Guarantor, such Person owns or holds any fee
interest in real property or any Leasehold Property, in the case of clause (ii)
above excluding any such Real Property Asset the encumbrancing of which requires
the consent of any applicable lessor or (in the case of clause (ii) above)
then-existing senior lienholder, where Company and its Subsidiaries have
attempted in good faith, but are unable, to obtain such lessor's or senior
lienholder's consent (any such non-excluded Real Property Asset described in the
foregoing clause (i) or (ii) being an "Additional Mortgaged Property"), if
requested by Administrative Agent, Company or such Subsidiary Guarantor shall
deliver to Administrative Agent, as soon as practicable after such Person
acquires such Additional Mortgaged Property or becomes a Subsidiary Guarantor,
as the case may be, a fully executed and notarized Mortgage (an "Additional
Mortgage"), in proper form for recording in all appropriate places in all
applicable jurisdictions, encumbering the interest of such Loan Party in such
Additional Mortgaged Property; and such opinions that may be reasonably required
by Administrative Agent.
6.10 [Intentionally omitted.]
6.11 Deposit Accounts, Lockboxes and Cash Management Systems.
A. Company shall, and shall cause each of its
Domestic Subsidiaries to, use and maintain its Deposit Accounts and cash
management systems in a manner satisfactory to Administrative Agent. As used
herein, a "Control Account" means a Deposit Account with respect to which
Company or the applicable Domestic Subsidiary, as the case may be, has (i)
delivered to Administrative Agent an agreement, satisfactory in form and
substance to Administrative Agent and executed by the financial institution at
which such Deposit Account is maintained, pursuant to which such financial
institution confirms and acknowledges Administrative Agent's security interest
in such Deposit Account and waives its rights to set-off with respect to amounts
in such Deposit Account (other than rights of set-off with respect to customary
fees and expenses associated with such Deposit Account) and (ii) taken all other
steps necessary or, in the opinion of Administrative Agent, desirable to ensure
that Administrative Agent has a perfected security interest in and dominion and
control over such Deposit Account. Company shall not permit funds to be on
deposit in any Deposit Account of Company and its Domestic Subsidiaries that is
not a Control Account except (a) to secure corporate credit cards at any time
not to exceed $250,000, (b) for payroll and reimbursable employee expenses
funded only on a pay period by pay period basis, and (c) exclusively for funds
dedicated to Company's Employee Stock Purchase Plan. Company shall not permit
the aggregate amount on deposit in all Deposit Accounts of its Foreign
Subsidiaries at any time to exceed $5,000,000. A true and complete list of all
Deposit Accounts maintained by Company, its Domestic Subsidiaries and Read-Rite
International is annexed hereto as Exhibit 6.11A. Company shall promptly
supplement Schedule 6.11A if any new Deposit Account is established by any of
such entities.
B. In addition, Company shall maintain or establish
the Control Account identified on Schedule 6.11B as lock box-type accounts
(the "Blocked Account") over which
60
Administrative Agent shall have sole dominion and control in accordance with
agreements with such depositary institution, in form and substance reasonably
satisfactory to Administrative Agent and executed by the financial institution
at which such Control Account is maintained (the "Blocked Account
Agreements"). Company shall, and shall require its Subsidiaries to, (i)
require in writing and otherwise take all reasonable steps to ensure that the
account debtors on all of their respective Accounts forward payments of
amounts owed on such Accounts directly to the designated Blocked Account and
(ii) promptly deposit into the appropriate Blocked Account any payments
received by any of them from an account debtor on an Account in the form
received if a check or draft or by wire transfer if received in cash or by
wire transfer. Company shall be entitled to withdraw funds from a Blocked
Account only if and to the extent that (x) no Event of Default shall have
occurred and be continuing and (y) Company shall have delivered to the
depository bank and Administrative Agent a Collateral Value Certificate
(together with such supporting detail as the Administrative Agent may request
in its reasonable discretion) demonstrating that, after giving effect to the
requested withdrawal of funds, the Aggregate Collateral Value shall be equal
to or greater than the aggregate principal amount of the Term Loans
outstanding at such time.
6.12 Additional Equity Investment. Company shall use its best
commercial efforts to obtain not less than $15,000,000 in Net Securities
Proceeds on or before the date that is 60 days subsequent to the Closing Date.
6.13 Environmental Assessments. Not more than 30 days after any
written request by Administrative Agent (but not more than two times during
the term of the Loans), Company shall deliver reports and other information,
in form, scope and substance reasonably satisfactory to Administrative Agent,
regarding environmental matters relating to the company's leased facility
located at 00000 Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxx, which reports shall include
(I) a Phase I environmental assessment for such Facilities which (a) conforms
to the ASTM Standard Practice for Environmental Site Assessments: Phase I
Environmental Site Assessment Process, E 1527, (b) was conducted by one or
more environmental consulting firms reasonably satisfactory to Administrative
Agent, and (c) is accompanied by an estimate of the reasonable worst-case cost
of investigating and remediating and Hazardous Materials Activity identified
in such Phase I environmental assessment as giving rise to an actual or
potential violation of any Environmental Law or as presenting a material risk
of giving rise to a material Environmental Claim, and (ii) a current
compliance audit setting forth an assessment of Company's, its Subsidiaries'
and such Facilities' current and past compliance with Environmental Laws and
an estimate of the cost of rectifying any non-compliance with current
Environmental Laws identified therein and the cost of compliance with
reasonably anticipated future Environmental Laws.
6.14 Warrant Valuation. Company will cooperate in good faith with
Administrative Agent on the determination of the value of the Warrants for tax
and accounting purposes, it being understood and agreed that such valuation is
subject to the concurrence of Company's independent accountants.
6.15 Amendment of Read-Rite Thailand Debt. On or before January
12, 2003, Company will cause the maturity date and scheduled amortization of
the loan agreement between Read-Rite Thailand and Thai Farmers Bank in the
aggregate principal amount of approximately 600,000,000 Baht ($14,457,000) to
be extended such that 50% of such indebtedness is scheduled
61
to become due not earlier than the first day of Company's second Fiscal
Quarter in Fiscal Year 2004, and the remainder of such indebtedness is
scheduled to become due not earlier than the first day of Company's fourth
Fiscal Quarter in Fiscal Year 2004.
Section 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all
of the Loans and other Obligations (other than inchoate expense reimbursement
and indemnity obligations), unless Requisite Lenders shall otherwise give
prior written consent, Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 7.
7.1 Indebtedness. Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or
guaranty, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(i) Company may become and remain liable with
respect to the Obligations;
(ii) Company and its Subsidiaries may become
and remain liable with respect to Contingent Obligations permitted by
subsection 7.4 and, upon any matured obligations actually arising pursuant
thereto, the Indebtedness corresponding to the Contingent Obligations so
extinguished;
(iii) Company and its Subsidiaries may become
and remain liable with respect to Indebtedness (a) to finance the acquisition
of assets or (b) in respect of Capital Leases, in an amount not to exceed in
the aggregate $25,000,000 at any time outstanding;
(iv) Company may become and remain liable with
respect to Indebtedness to any of its direct or indirect Wholly-Owned
Subsidiaries, and any direct or indirect Wholly-Owned Subsidiary of Company
may become and remain liable with respect to Indebtedness to Company or any
other Wholly-Owned Subsidiary of Company; provided that (a) all such
intercompany Indebtedness shall be evidenced by promissory notes, (b) all such
intercompany Indebtedness owed by Company to any of its Subsidiaries shall be
subordinated in right of payment to the payment in full of the Obligations
pursuant to the terms of the applicable promissory notes or an intercompany
subordination agreement, (c) any payment by any Subsidiary of Company under
any guaranty of the Obligations shall result in a pro tanto reduction of the
amount of any intercompany Indebtedness owed by such Subsidiary to Company or
to any of its Subsidiaries for whose benefit such payment is made, and (d) the
aggregate principal amount of all Indebtedness (excluding (I) any Indebtedness
existing as of the Closing Date and (II) Investments permitted by Section
7.3(xi) to the extent the same also constitute Indebtedness) of all Foreign
Subsidiaries of Company to Company and its Domestic Subsidiaries shall not
exceed $250,000 at any time outstanding;
(v) Company and its Subsidiaries, as
applicable, may remain liable with respect to Indebtedness described on
Schedule 7.1;
62
(vi) Foreign Subsidiaries of Company may become
and remain liable with respect to other Indebtedness in an aggregate principal
amount not to exceed $10,000,000 at any time outstanding;
(vii) Company may become and remain liable with
respect to (a) other unsecured Indebtedness (other than past due trade
payables constituting "Indebtedness" as defined in this Agreement) in an
aggregate principal amount not to exceed $1,000,000 at any time outstanding
and (b) unsecured Indebtedness consisting of past due trade payables
constituting Indebtedness in an aggregate principal amount that, together with
the aggregate principal amount of past due trade payables constituting
Indebtedness described on Schedule 7.1, shall not exceed $1,500,000 at any
time outstanding; and
(viii) Indebtedness of any Foreign Subsidiary
payable to any other Foreign Subsidiary.
7.2 Liens and Related Matters.
A. Prohibition on Liens. Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist any Lien on or with respect to any property or asset
of any kind (including any document or instrument in respect of goods or
accounts receivable) of Company or any of its Subsidiaries, whether now owned
or hereafter acquired, or any income or profits therefrom, or file or permit
the filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the UCC or under any similar recording or notice statute,
except:
(i) Permitted Encumbrances;
(ii) Liens on any asset existing at the time of
acquisition of such asset by Company or a Subsidiary, or Liens to secure the
payment of all or any part of the purchase price of an asset upon the
acquisition of such asset by Company or a Subsidiary or to secure any
Indebtedness permitted by subsection 7.1(iii) incurred by Company or a
Subsidiary at the time of or with ninety days after the acquisition of such
asset, which Indebtedness is incurred for the purpose of financing all or any
part of the purchase price thereof; provided, however, that such Liens shall
apply only to the asset so acquired and proceeds thereof;
(iii) Liens described in Schedule 7.2 annexed
hereto; and
(iv) Liens against assets of Foreign
Subsidiaries securing Indebtedness of Foreign Subsidiaries permitted by
subsection 7.1(vi); provided that such Liens do not attach to any Collateral.
B. Intentionally Omitted.
C. No Further Negative Pledges. Neither Company nor
any of its Subsidiaries shall enter into any agreement (other than an
agreement prohibiting only the creation of Liens securing Subordinated
Indebtedness) prohibiting the creation or assumption of any Lien upon any of
its properties or assets, whether now owned or hereafter acquired, except
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with respect to specific property encumbered to secure payment of particular
Indebtedness or to be sold pursuant to an executed agreement with respect to
an Asset Sale.
D. No Restrictions on Subsidiary Distributions to
Company or Other Subsidiaries. Company will not, and will not permit any of
its Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any such Subsidiary to (i) pay dividends or make any other distributions on
any of such Subsidiary's Capital Stock owned by Company or any other
Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or
advances to Company or any other Subsidiary of Company, or (iv) transfer any
of its property or assets to Company or any other Subsidiary of Company,
except in each case (a) as provided in this Agreement, (b) as may be provided
in an agreement with respect to an Asset Sale; (c) in agreements evidencing
Indebtedness permitted by Section 7.1(v) that impose restrictions on such
Subsidiary's rights under such agreements and any property governed by such
agreements and refinancings of such Indebtedness that contain restrictions of
the type described in clauses (i) through (iv) of this subsection that are no
more restrictive than those in the refinanced Indebtedness, (d) by reason of
customary provisions restricting assignments, subletting or other transfers
contained in leases, licenses, joint venture agreements and similar agreements
entered into in the ordinary course of business, and (e) existing by virtue
of, or arising under, applicable law, regulation, order, approval, license,
permit or similar restriction, in each case issued or imposed by a
Governmental Authority.
7.3 Investments; Acquisitions. Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, make or own any
Investment in any Person, including any Joint Venture, or acquire, by purchase
or otherwise, all or substantially all the business, property or fixed assets
of, or Capital Stock or other ownership interest of any Person, or any
division or line of business of any Person except:
(i) Company and its Subsidiaries may make and
own Investments in Cash Equivalents;
(ii) Company and its Subsidiaries may make
intercompany loans to the extent permitted under subsection 7.1(iv);
(iii) Company and its Subsidiaries may make
Consolidated Capital Expenditures permitted by subsection 7.8;
(iv) Company and its Subsidiaries may continue
to own the Investments owned by them and described in Schedule 7.3 annexed
hereto;
(v) Company may make and own additional
Investments consisting of capital contributions in its Subsidiary Guarantors
that are Domestic Subsidiaries not to exceed $100,000 in the aggregate;
(vi) Company and its Domestic Subsidiaries may
make and own other Investments involving strategic Investments, including
Joint Ventures, in an aggregate amount not to exceed at any time for all such
Investments of $2,000,000;
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(vii) Company may acquire and hold obligations
of one or more officers or other employees of Company or its Subsidiaries in
connection with such officers' or employees' acquisition of shares of
Company's common stock, so long as no cash is actually advanced by Company or
any of its Subsidiaries to such officers or employees in connection with the
acquisition of any such obligations;
(viii) Company and its Subsidiaries may receive
and hold promissory notes and other non-cash consideration received in
connection with any Asset Sale permitted by subsection 7.7;
(ix) Company and its Subsidiaries may acquire
Securities in connection with the satisfaction or enforcement of Indebtedness
or claims due or owing to Company or any of its Subsidiaries or as security
for any such Indebtedness or claim;
(x) Investments consisting of deposits,
prepayments and other credits to suppliers made in the ordinary course of
business consistent with the past practices of Company and its Subsidiaries;
(xi) Investments consisting of extensions of
credit in the nature of accounts receivable, prepaid royalties or expenses or
notes receivable arising from the sale or lease of goods or services in the
ordinary course of business, or performance or similar deposits arising in the
ordinary course of business, and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to the
extent reasonably necessary to prevent or limit loss;
(xii) commission, entertainment, relocation,
payroll, travel and similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business in an aggregate
amount not to exceed $500,000 at any time; and
(xiii) Investments otherwise permitted pursuant
to Section 7.7B(iii).
7.4 Contingent Obligations. Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create or become or
remain liable with respect to any Contingent Obligation, except:
(i) Subsidiaries of Company may become and
remain liable with respect to Contingent Obligations in respect of the
Subsidiary Guaranty;
(ii) Company and its Subsidiaries may become
and remain liable with respect to Contingent Obligations in respect of
commercial letters of credit in an aggregate amount not to exceed at any time
$500,000 and Contingent Obligations in respect of standby letters of credit in
an aggregate amount not to exceed at any time $500,000;
(iii) Company and its Subsidiaries may become
and remain liable with respect to Contingent Obligations under guarantees in
the ordinary course of business of the obligations of suppliers, customers,
franchisees and licensees of Company and its Subsidiaries in an aggregate
amount not to exceed at any time $5,000,000;
65
(iv) Company may become and remain liable with
respect to Contingent Obligations in respect of any Indebtedness of Company or
any of its Subsidiaries permitted by subsection 7.1;
(v) Company and its Subsidiaries, as
applicable, may remain liable with respect to Contingent Obligations described
on Schedule 7.4;
(vi) Company and its Subsidiaries may incur
Contingent Obligations consisting of Hedge Agreements in the ordinary course
of business; and
(vii) Company and its Subsidiaries may become
and remain liable with respect to other Contingent Obligations; provided that
the maximum aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such Contingent Obligations shall at no time
exceed $1,000,000.
7.5 Restricted Junior Payments. Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, declare, order,
pay, make or set apart any sum for any Restricted Junior Payment; provided
that (a) if no Event of Default or Potential Event of Default has occurred and
is continuing Company may make regularly scheduled payments of interest,
principal and premium, if any, in respect of any Subordinated Indebtedness in
accordance with the terms of, and only to the extent required by, and subject
to the subordination provisions contained in, the indenture or other agreement
pursuant to which such Subordinated Indebtedness was issued, as such indenture
or other agreement may be amended from time to time to the extent permitted
under subsection 7.12; (b) if no Event of Default has occurred and is
continuing, Company and its Subsidiaries may pay intercompany Subordinated
Indebtedness permitted by Section 7.1(iv); (c) if no Event of Default has
occurred and is continuing, Company may purchase, repurchase, redeem, defease,
acquire or retire for value (i) any non-cash rights distributed in connection
with any stockholder rights plan and (ii) any outstanding warrants, options or
other rights to acquire shares of any class of stock of Company in exchange
for other warrants, options or other rights to acquire shares of any class of
capital stock; (d) Company may acquire Capital Stock of Company in connection
with the exercise of stock options or stock appreciation rights by way of
cashless exercise or in connection with the satisfaction of withholding tax
obligations; (e) Company may purchase fractional shares of the Capital Stock
of Company arising out of stock dividends, splits or combinations or business
combinations; and (f) Company may honor any request by a holder of any
Subordinated Indebtedness of Company or any of its Subsidiaries to convert
such Subordinated Indebtedness into common stock of the Company and make cash
payments in lieu of fractional shares in connection with any such conversion
of any Subordinated Indebtedness into common stock of the Company.
7.6 Financial Covenants.
A. Minimum Consolidated Net Worth. Company shall not
permit Consolidated Net Worth on the last day of any Fiscal Quarter to be less
than (a) $40,000,000 plus (b) 50% of any Net Securities Proceeds received by
Company after the Closing Date.
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B. Minimum Quick Ratio. Company shall not permit Company's Quick
Assets at any time to be less than 50% of the aggregate principal amount of Term
Loans outstanding at such time.
7.7 Restriction on Fundamental Changes; Asset Sales.
A. Company shall not, and shall not permit any of its
Subsidiaries to, alter the legal structure of Company or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), whether now owned or hereafter acquired, except:
(i) any Subsidiary of Company may be merged with or into
Company or any wholly-owned Subsidiary Guarantor, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one transaction
or a series of transactions, to Company or any wholly-owned Subsidiary
Guarantor; provided that, in the case of such a merger, Company or such
wholly-owned Subsidiary Guarantor shall be the continuing or surviving Person;
and
(ii) any Foreign Subsidiary of Company may be merged with or
into any other Foreign Subsidiary or be liquidated, wound up or dissolved, or
all or any part of its business, property or assets may be conveyed, sold,
leased, transferred or otherwise disposed of, in one transaction or a series of
transactions any other Foreign Subsidiary of Company.
B. Company shall not, and shall not permit any of its
Subsidiaries to convey, sell, lease or sub-lease (as lessor or sublessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets (including its
notes or receivables and Capital Stock of a Subsidiary, whether newly issued or
outstanding), whether now owned or hereafter acquired, except:
(i) Company and its Domestic Subsidiaries may sell or
otherwise dispose of assets in transactions that do not constitute Asset Sales
and (b) Company's foreign Subsidiaries may sell or otherwise dispose of assets
that do not constitute Collateral; provided that in each case the consideration
received for such assets shall be in an amount at least equal to the fair market
value thereof (determined in good faith by the board of directors of Company);
(ii) Company and its Subsidiaries may dispose of obsolete,
worn out or surplus equipment or other property in the ordinary course of
business;
(iii) Company and its Subsidiaries may (a) sell Company's Tape
Group Assets in one or more transactions and (b) make other Asset Sales of
assets having a fair market value not in excess of $250,000 in any fiscal year
of Company; provided that in each instance (a) the consideration received for
such assets shall be in an amount at least equal to the fair market value
thereof; (b) not less than 90% of the consideration received shall be cash; (c)
the Net Sale Proceeds of such Asset Sales shall be applied as required by
subsection 2.4B(iii)(a) or subsection 2.4D; and (d) any notes received for the
balance of the consideration shall be pledged to Administrative Agent;
67
(iv) in order to resolve disputes that occur in the ordinary
course of business, Company and its Subsidiaries may discount or otherwise
compromise for less than the face value thereof, notes or accounts receivable;
(v) Company or a Subsidiary may sell or dispose of shares of
Capital Stock of any of its Subsidiaries in order to qualify members of the
Governing Body of the Subsidiary if required by applicable law or if otherwise
required by applicable law;
(vi) the granting of Liens permitted pursuant to Section 7.2;
(vii) the licensing of Intellectual Property or know-how on
commercially reasonable terms and in the ordinary course of business;
(viii) the surrender or waiver of litigation rights or
settlement, release or surrender of tort or other litigation claims of any kind
made in good faith;
(ix) any disposition by a Subsidiary to Company or by a
Foreign Subsidiary to a Subsidiary or from a Domestic Subsidiary to another
Wholly-Owned Domestic Subsidiary; and
(x) cash in connection with the payment of trade payables,
ordinary operating expenses and other similar payments made in the ordinary
course of business.
7.8 Consolidated Capital Expenditures. Company shall not, and shall not
permit its Subsidiaries to, make or incur Consolidated Capital Expenditures, in
any Fiscal Year indicated below, in an aggregate amount in excess of the
corresponding amount (the "Maximum Consolidated Capital Expenditures Amount")
set forth below opposite such Fiscal Year; provided that the Maximum
Consolidated Capital Expenditures Amount for any Fiscal Year shall be increased
by an amount equal to the excess, if any, of the Maximum Consolidated Capital
Expenditures Amount for the previous Fiscal Year (without giving effect to any
adjustment in accordance with this proviso) over the actual amount of
Consolidated Capital Expenditures for such previous Fiscal Year; provided,
further that in no event shall the amount of such increase exceed 30% of the
Maximum Consolidated Capital Expenditures Amount for such previous Fiscal Year
(prior to any adjustment in accordance with this proviso):
MAXIMUM CONSOLIDATED
FISCAL YEAR CAPITAL EXPENDITURES
----------- --------------------
2003 $32,000,000
2004 $40,000,000
2005 $60,000,000
7.9 Transactions with Shareholders and Affiliates. Company shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly, enter
into or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with any holder of 5%
or more of any class of equity Securities of Company or with
68
any Affiliate of Company, on terms that are less favorable to Company or that
Subsidiary, as the case may be, than those that might be obtained at the time
from Persons who are not such a holder or Affiliate; provided that the foregoing
restriction shall not apply to (i) any transaction between Company and any of
its Wholly-Owned Subsidiaries or between any of its Wholly-Owned Subsidiaries,
(ii) reasonable and customary fees paid to members of the Governing Bodies of
Company and its Subsidiaries, (iii) compensation arrangements and benefit plans
for officers and other employees of Company and its Subsidiaries entered into or
maintained or established in the ordinary course of business, (iv) transactions
described in Schedule 7.9 annexed hereto and (v) any Investment made in
accordance with Section 7.3.
7.10 Sales and Lease-Backs. Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, become or remain liable as
lessee or as a guarantor or other surety with respect to any lease, whether an
Operating Lease or a Capital Lease, of any property (whether real, personal or
mixed), whether now owned or hereafter acquired, (i) that Company or any of its
Subsidiaries has sold or transferred or is to sell or transfer to any other
Person (other than Company or any of its Subsidiaries) or (ii) that Company or
any of its Subsidiaries intends to use for substantially the same purpose as any
other property that has been or is to be sold or transferred by Company or any
of its Subsidiaries to any Person (other than Company or any of its
Subsidiaries) in connection with such lease; provided that Company and its
Subsidiaries may become and remain liable as lessee, guarantor or other surety
with respect to any such lease if and to the extent that Company or any of its
Subsidiaries would be permitted to enter into, and remain liable under, such
lease to the extent that the transaction would be permitted under subsection
7.1, assuming the sale and lease back transaction constituted Indebtedness in a
principal amount equal to the gross proceeds of the sale.
7.11 Conduct of Business. From and after the Closing Date, Company shall
not, and shall not permit any of its Subsidiaries to, engage in any business
other than (i) the businesses engaged in by Company and its Subsidiaries on the
Closing Date and similar or related businesses and (ii) such other lines of
business as may be consented to by Requisite Lenders.
7.12 Amendments of Documents Relating to Subordinated Indebtedness.
Company shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of any Subordinated Indebtedness, or make any payment
consistent with an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate on such Subordinated
Indebtedness, change (to earlier dates) any dates upon which payments of
principal or interest are due thereon, change any event of default or condition
to an event of default with respect thereto (other than to eliminate any such
event of default or increase any grace period related thereto), change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions thereof (or of any guaranty thereof), or change any
collateral therefor (other than to release such collateral), or if the effect of
such amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to confer
any additional rights on the holders of such Subordinated Indebtedness (or a
trustee or other representative on their behalf) which would be adverse to
Company or Lenders.
7.13 Fiscal Year. Company shall not change its Fiscal Year-end from
the last Sunday of September or first Sunday in October.
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7.14 No Restrictions on Warrants. Company shall not, and shall not
permit any of its Subsidiaries to, enter into, or change or amend, any
agreement, indenture or other document relating to any Indebtedness, or the
terms of any Capital Stock to restrict Company's performance of any provision of
the Warrants, including the making of any cash payment contemplated thereby.
7.15 Severance or Termination Arrangements. Company shall not, without
the consent of the Requisite Lenders, adopt, or amend or modify, any agreement,
plan or other arrangement, or Company policy, providing severance or termination
compensation to its employees or directors in any respect that increases the
amount of such consideration above the levels provided as of the date of this
Agreement.
Section 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of
Default") shall occur:
8.1 Failure to Make Payments When Due. Failure by Company to pay any
installment of principal of any Loan when due, whether at stated maturity, by
acceleration, by notice of voluntary prepayment, by mandatory prepayment or
otherwise; or failure by Company to pay any interest on any Loan or any fee or
any other amount due under this Agreement within five days after the date due;
or
8.2 Default in Other Agreements.
(i) Failure of Company or any of its Subsidiaries to pay when
due any principal of or interest on or any other amount payable in respect of
one or more items of Indebtedness (other than Indebtedness referred to in
subsection 8.1) or Contingent Obligations in an individual principal amount of
$250,000 or more or with an aggregate principal amount of $500,000 or more, in
each case beyond the end of any grace period provided therefor; or
(ii) breach or default by Company or any of its Subsidiaries
with respect to any other material term of (a) one or more items of Indebtedness
or Contingent Obligations in the individual or aggregate principal amounts
referred to in clause (i) above, (b) any loan agreement, mortgage, indenture or
other agreement relating to such item(s) of Indebtedness or Contingent
Obligation(s), if the effect of such breach or default is to cause, or to permit
the holder or holders of that Indebtedness or Contingent Obligation(s) (or a
trustee on behalf of such holder or holders) to cause, that Indebtedness or
Contingent Obligation(s) to become or be declared due and payable prior to its
stated maturity or the stated maturity of any underlying obligation, as the case
may be (upon the giving or receiving of notice, lapse of time, both, or
otherwise) or (c) the lease for the Closing Date Mortgaged Property.
8.3 Breach of Certain Covenants. Failure of Company to perform or
comply with any term or condition contained in subsection 2.5 or 6.2 or Section
7 of this Agreement; or
8.4 Breach of Warranty. Any representation, warranty, certification or
other statement made by Company or any of its Subsidiaries in any Loan Document
or in any statement or certificate at any time given by Company or any of its
Subsidiaries in writing
70
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made or deemed made; or
8.5 Other Defaults Under Loan Documents, etc. Any Loan Party shall
default in the performance of or compliance with any term contained in this
Agreement or any of the other Loan Documents, other than any such term referred
to in any other subsection of this Section 8, or under the Warrants or the
Registration Rights Agreement and such default shall not have been remedied or
waived within 20 Business Days after the earlier of (i) an Officer of Company or
such Loan Party becoming aware of such default or (ii) receipt by Company and
such Loan Party of notice from Administrative Agent, Collateral Agent or any
Lender of such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a
decree or order for relief in respect of Company or any of its Subsidiaries
(other than an Insignificant Subsidiary) in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, which decree or order is not stayed; or any
other similar relief shall be granted under any applicable federal or state law;
or
(ii) an involuntary case shall be commenced against Company or
any of its Subsidiaries (other than an Insignificant Subsidiary) under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
Company or any of its Subsidiaries (other than an Insignificant Subsidiary), or
over all or a substantial part of its property, shall have been entered; or
there shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Company or any of its Subsidiaries (other than an
Insignificant Subsidiary) for all or a substantial part of its property; or a
warrant of attachment, execution or similar process shall have been issued
against any substantial part of the property of Company or any of its
Subsidiaries (other than an Insignificant Subsidiary), and any such event
described in this clause (ii) shall continue for 60 days unless dismissed,
bonded or discharged;
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Company or any of its Subsidiaries (other than an
Insignificant Subsidiary) shall have an order for relief entered with respect to
it or commence a voluntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an involuntary case, or to
the conversion of an involuntary case to a voluntary case, under any such law,
or shall consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or
Company or any of its Subsidiaries (other than an Insignificant Subsidiary)
shall make any assignment for the benefit of creditors; or
(ii) Company or any of its Subsidiaries (other than an
Insignificant Subsidiary) shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts become due; or
the Governing Body of Company or any of its Subsidiaries
71
(other than an Insignificant Subsidiary) (or any committee thereof) shall adopt
any resolution or otherwise authorize any action to approve any of the actions
referred to in clause (i) above or this clause (ii);
8.8 Judgments and Attachments. Any money judgment, writ or warrant of
attachment or similar process involving (i) in any individual case an amount in
excess of $250,000 or (ii) in the aggregate at any time an amount in excess of
$500,000 (in either case not adequately covered by insurance as to which a
solvent and unaffiliated insurance company has acknowledged coverage) shall be
entered or filed against Company or any of its Subsidiaries (other than an
Insignificant Subsidiary) or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of 60 days (or in any
event later than five days prior to the date of any proposed sale thereunder).
8.9 Dissolution. Any order, judgment or decree shall be entered against
Company or any of its Subsidiaries (other than an Insignificant Subsidiary)
decreeing the dissolution or split up of Company or that Subsidiary (other than
an Insignificant Subsidiary) and such order shall remain undischarged or
unstayed for a period in excess of 30 days; or
8.10 Employee Benefit Plans. There shall occur one or more ERISA Events
or similar events in respect of any Foreign Plans, that individually or in the
aggregate results in or might reasonably be expected to result in liability of
Company, any of its Subsidiaries or any of their respective ERISA Affiliates in
excess of $500,000 during the term of this Agreement; or
8.11 Material Adverse Effect. Any event or change shall occur that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect; or
8.12 Change in Control. A Change in Control shall have occurred; or
8.13 Invalidity of Subsidiary Guaranty; Failure of Security; Repudiation
of Obligations. At any time after the execution and delivery thereof, (i) the
Subsidiary Guaranty any Guaranty for any reason, other than the satisfaction in
full of all Obligations, shall cease to be in full force and effect (other than
in accordance with its terms) or shall be declared to be null and void, (ii) any
Collateral Document shall cease to be in full force and effect (other than by
reason of a release of Collateral thereunder in accordance with the terms hereof
or thereof, the satisfaction in full of the Obligations or any other termination
of such Collateral Document in accordance with the terms hereof or thereof) or
shall be declared null and void, or Collateral Agent shall not have or shall
cease to have a valid and perfected First Priority Lien in any Collateral
purported to be covered thereby, in each case for any reason other than the
failure of Administrative Agent, Collateral Agent or any Lender to take any
action within its control, or (iii) any Loan Party shall contest the validity or
enforceability of any Loan Document in writing or deny in writing that it has
any further liability, including with respect to future advances by Lenders,
under any Loan Document to which it is a party; or
8.14 Repudiation of Credit Enhancements. (i) Any party providing credit
enhancement, such as credit insurance, letters of credit and guaranties from
parent or affiliated companies of account debtors on Accounts, for the benefit
of Company and/or the Lenders in respect of Accounts of Company or its
Subsidiaries, shall repudiate or terminate the same, or if
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any party shall contest the validity or enforceability of any of the same in
writing or deny in writing that it is further obligated or has any further
liability including with respect to new Accounts of the relevant account debtors
or if any such enhancement shall expire by its terms without a replacement
providing identical coverage in all material respects, and (ii) after giving
effect to such repudiation, termination, contest, denial or expiration of credit
enhancement by adjusting the Accounts Collateral Value, as the case may be, of
the affected Accounts in accordance with the provisions of Schedule 1.1 annexed
hereto, the Aggregate Collateral Value, as so adjusted, is not equal to or
greater than the aggregate principal amount of outstanding Loans, and such
resulting deficiency in Aggregate Collateral Value in any instance is not fully
cured (whether by restoration of the applicable credit enhancement or other
means) within ten days.
THEN (i) upon the occurrence of any Event of Default described
in subsection 8.6 or 8.7, each of (a) the unpaid principal amount of and accrued
interest on the Loans, (b) (intentionally omitted), and (c) all other
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind, all of which are
hereby expressly waived by Company, and the obligation of each Lender to make
any Loan hereunder and the Commitments thereof shall thereupon terminate, and
(ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) through (c) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan hereunder and the Commitments thereof
shall thereupon terminate.
Notwithstanding anything contained in the preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
clause (ii) of such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than
non-payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended,
directly or indirectly, to benefit Company, and such provisions shall not at any
time be construed so as to grant Company the right to require Lenders to rescind
or annul any acceleration hereunder or to preclude Administrative Agent or
Lenders from exercising any of the rights or remedies available to them under
any of the Loan Documents, even if the conditions set forth in this paragraph
are met.
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Section 9. ADMINISTRATIVE AGENT AND AGENTS
9.1 Appointment.
A. Appointment of Administrative Agent. Special Value Investment
Management, LLC is hereby appointed Administrative Agent hereunder and under the
other Loan Documents. Each Lender hereby authorizes Administrative Agent to act
as its agent in accordance with the terms of this Agreement and the other Loan
Documents. Administrative Agent agrees to act upon the express conditions
contained in this Agreement and the other Loan Documents, as applicable. The
provisions of this Section 9 are solely for the benefit of Administrative Agent
and Lenders and no Loan Party shall have rights as a third party beneficiary of
any of the provisions thereof. In performing its functions and duties under this
Agreement, Administrative Agent shall act solely as an agent of Lenders and does
not assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for Company or any other Loan Party.
B. Appointment of Supplemental Collateral Agents. It is the purpose
of this Agreement and the other Loan Documents that there shall be no violation
of any law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as agent or trustee in such
jurisdiction. It is recognized that in case of litigation under this Agreement
or any of the other Loan Documents, and in particular in case of the enforcement
of any of the Loan Documents, or in case Administrative Agent or Collateral
Agent deems that by reason of any present or future law of any jurisdiction it
may not exercise any of the rights, powers or remedies granted herein or in any
of the other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that Administrative Agent
or Collateral Agent appoint an additional individual or institution as a
separate trustee, co-trustee, collateral agent or collateral co-agent (any such
additional individual or institution being referred to herein individually as a
"Supplemental Collateral Agent" and collectively as "Supplemental Collateral
Agents").
In the event that Administrative Agent or Collateral Agent appoints
a Supplemental Collateral Agent with respect to any Collateral, (i) each and
every right, power, privilege or duty expressed or intended by this Agreement or
any of the other Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent or Collateral Agent with respect to such Collateral shall
be exercisable by and vest in such Supplemental Collateral Agent to the extent,
and only to the extent, necessary to enable such Supplemental Collateral Agent
to exercise such rights, powers and privileges with respect to such Collateral
and to perform such duties with respect to such Collateral, and every covenant
and obligation contained in the Loan Documents and necessary to the exercise or
performance thereof by such Supplemental Collateral Agent shall run to and be
enforceable by Administrative Agent or Collateral Agent, as the context may
require, or such Supplemental Collateral Agent, and (ii) the provisions of this
Section 9 and of subsections 10.2 and 10.3 that refer to Administrative Agent or
Collateral Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to Administrative Agent or Collateral Agent
shall be deemed to be references to Administrative Agent or Collateral Agent, as
the context may require, and/or such Supplemental Collateral Agent, as the
context may require.
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Should any instrument in writing from Company or any other Loan
Party be required by any Supplemental Collateral Agent so appointed by
Administrative Agent or Collateral Agent for more fully and certainly vesting in
and confirming to him or it such rights, powers, privileges and duties, Company
shall, or shall cause such Loan Party to, execute, acknowledge and deliver any
and all such instruments promptly upon request by Administrative Agent or
Collateral Agent. In case any Supplemental Collateral Agent, or a successor
thereto, shall die, become incapable of acting, resign or be removed, all the
rights, powers, privileges and duties of such Supplemental Collateral Agent, to
the extent permitted by law, shall vest in and be exercised by Administrative
Agent or Collateral Agent, as the context may require, until the appointment of
a new Supplemental Collateral Agent.
9.2 Powers and Duties; General Immunity.
X. Xxxxxx; Duties Specified. Each Lender irrevocably authorizes each
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Loan Documents as are
specifically delegated or granted to said Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. Each Agent shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other Loan Documents. Each Agent
may exercise such powers, rights and remedies and perform such duties by or
through its agents or employees. No Agent shall have, by reason of this
Agreement or any of the other Loan Documents, a fiduciary relationship in
respect of any Lender or Company; and nothing in this Agreement or any of the
other Loan Documents, expressed or implied, is intended to or shall be so
construed as to impose upon Agent any obligations in respect of this Agreement
or any of the other Loan Documents except as expressly set forth herein or
therein.
B. No Responsibility for Certain Matters. No Agent shall be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by such Agent to Lenders or by or on
behalf of Company to such Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of Company or any other Person liable for the
payment of any Obligations, nor shall such Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or as to the existence or possible
existence of any Event of Default or Potential Event of Default. Anything
contained in this Agreement to the contrary notwithstanding, Administrative
Agent shall not have any liability arising from confirmations of the amount of
outstanding Loans or the component amounts thereof.
C. Exculpatory Provisions. No Agent or any of its officers,
directors, members, employees or agents shall be liable to Lenders for any
action taken or omitted by such Agent under or in connection with any of the
Loan Documents except to the extent caused by such Agent's gross negligence or
willful misconduct. An Agent shall be entitled to refrain from any act or the
taking of any action (including the failure to take an action) in connection
with this
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Agreement or any of the other Loan Documents or from the exercise of any power,
discretion or authority vested in it hereunder or thereunder unless and until
such Agent shall have received instructions in respect thereof from Requisite
Lenders (or such other Lenders as may be required to give such instructions
under subsection 10.6) and, upon receipt of such instructions from Requisite
Lenders (or such other Lenders, as the case may be), such Agent shall be
entitled to act or (where so instructed) refrain from acting, or to exercise
such power, discretion or authority, in accordance with such instructions.
Without prejudice to the generality of the foregoing, (i) each Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for Company and its Subsidiaries), accountants,
experts and other professional advisors selected by it; and (ii) no Lender shall
have any right of action whatsoever against an Agent as a result of such Agent
acting or (where so instructed) refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of Requisite
Lenders (or such other Lenders as may be required to give such instructions
under subsection 10.6).
D. Agents Entitled to Act as Lender. The agency hereby created shall
in no way impair or affect any of the rights and powers of, or impose any duties
or obligations upon, an Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans, an Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not performing the duties and functions delegated to it
hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless
the context clearly otherwise indicates, include each Agent in its individual
capacity. An Agent and its Affiliates may accept deposits from, lend money to,
acquire equity interests in and generally engage in any kind of commercial
banking, investment banking, trust, financial advisory or other business with
Company or any of its Affiliates as if it were not performing the duties
specified herein, and may accept fees and other consideration from Company for
services in connection with this Agreement and otherwise without having to
account for the same to Lenders.
9.3 Independent Investigation by Lenders; No Responsibility For
Appraisal of Creditworthiness. Each Lender agrees that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans hereunder and that
it has made and shall continue to make its own appraisal of the creditworthiness
of Company and its Subsidiaries. No Agent shall have any duty or responsibility,
either initially or on a continuing basis, to make any such investigation or any
such appraisal on behalf of Lenders or to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter, and no Agent
shall have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
9.4 Right to Indemnity. Each Lender, in proportion to its Pro Rata
Share, severally agrees to indemnify each Agent and its officers, directors,
employees, agents, attorneys, professional advisors and Affiliates to the extent
that any such Person shall not have been reimbursed by Company, for and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including counsel fees and disbursements and
fees and disbursements of any financial advisor engaged by Agents) or
disbursements of any
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kind or nature whatsoever which may be imposed on, incurred by or asserted
against an Agent or and other such Persons in exercising the powers, rights and
remedies of an Agent or performing duties of an Agent hereunder or under the
other Loan Documents or otherwise in its capacity as Agent in any way relating
to or arising out of this Agreement or the other Loan Documents; provided that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of an Agent resulting from such Agent's gross negligence or
willful misconduct. If any indemnity furnished to an Agent or any other such
Person for any purpose shall, in the opinion of such Agent, be insufficient or
become impaired, such Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.
9.5 Successor Agents.
A. Successor Agents. Any Agent may resign at any time by giving 30
days' prior written notice thereof to Lenders and Company and an Agent may be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to Company and Administrative Agent and signed
by Requisite Lenders. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five Business Days' notice to
Company, to appoint a successor Administrative Agent or Collateral Agent, as
appropriate. Upon the acceptance of any appointment as Administrative Agent or
Collateral Agent, as appropriate hereunder by a successor Administrative Agent
or Collateral Agent, as appropriate, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Agent and the retiring or removed Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Agent's resignation or removal hereunder as an Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was an Agent under this Agreement.
B. [Intentionally omitted.]
9.6 Collateral Documents and Guaranties. Each Lender hereby further
authorizes Administrative Agent, on behalf of and for the benefit of Lenders, to
enter into each Collateral Document as secured party and to be the agent for and
representative of Lenders under the Subsidiary Guaranty, and each Lender agrees
to be bound by the terms of each Collateral Document and the Subsidiary
Guaranty; provided that Administrative Agent shall not (i) enter into or consent
to any material amendment, modification, termination or waiver of any provision
contained in any Collateral Document or the Subsidiary Guaranty or (ii) release
any Collateral (except as otherwise expressly permitted or required pursuant to
the terms of this Agreement or the applicable Collateral Document), in each case
without the prior consent of Requisite Lenders (or, if required pursuant to
subsection 10.6, all Lenders); provided further, however, that, without further
written consent or authorization from Lenders, Administrative Agent may execute
any documents or instruments necessary to (a) release any Lien encumbering any
item of Collateral that is the subject of a sale or other disposition of assets
permitted by this Agreement or to which Requisite Lenders have otherwise
consented, (b) release any Subsidiary Guarantor from the Subsidiary Guaranty if
all of the Capital Stock of such Subsidiary Guarantor is sold to any Person
(other than an Affiliate of Company) pursuant to a sale or other disposition
permitted hereunder or to which Requisite Lenders have otherwise consented or
(c) subordinate the Liens
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of Administrative Agent, on behalf of Lenders, to any Liens permitted by
subsection 7.2(ii). Anything contained in any of the Loan Documents to the
contrary notwithstanding, Company, Administrative Agent and each Lender hereby
agree that (1) no Lender shall have any right individually to realize upon any
of the Collateral under any Collateral Document or to enforce any Guaranty, it
being understood and agreed that all powers, rights and remedies under the
Collateral Documents and the Guaranties may be exercised solely by
Administrative Agent for the benefit of Lenders in accordance with the terms
thereof, and (2) in the event of a foreclosure by Administrative Agent on any of
the Collateral pursuant to a public or private sale, Administrative Agent or any
Lender may be the purchaser of any or all of such Collateral at any such sale
and Administrative Agent, as agent for and representative of Lenders (but not
any Lender or Lenders in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing) shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Obligations as a credit on account of the purchase price for
any collateral payable by Administrative Agent at such sale.
9.7 [Intentionally omitted.]
9.8 Administrative Agent May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to Company or any of the Subsidiaries of Company,
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether Administrative Agent shall have made any demand on
Company) shall be entitled and empowered, by intervention in such proceeding or
otherwise
(i) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the Loans and any other
Obligations that are owing and unpaid and to file such other papers or documents
as may be necessary or advisable in order to have the claims of Lenders and
Agents (including any claim for the reasonable compensation, expenses,
disbursements and advances of Lenders and Agents and their agents and counsel
and all other amounts due Lenders and Agents under subsections 2.3 and 10.2)
allowed in such judicial proceeding; and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to Administrative Agent and, in the event that
Administrative Agent shall consent to the making of such payments directly to
Lenders, to pay to Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of Agents and their agents
and counsel, and any other amounts due Agents under subsections 2.3 and 10.2.
Nothing herein contained shall be deemed to authorize Administrative
Agent to authorize or consent to or accept or adopt on behalf of any Lender any
plan of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lenders or
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to authorize Administrative Agent to vote in respect of the claim of any Lender
in any such proceeding.
Section 10. MISCELLANEOUS
10.1 Successors and Assigns; Assignments and Participations in Loans
and Letters of Credit.
A. General. This Agreement shall be binding upon the parties hereto
and their respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of Lenders (it being
understood that Lenders' rights of assignment are subject to the further
provisions of this subsection 10.1). Neither Company's rights or obligations
hereunder nor any interest therein may be assigned or delegated by Company
without the prior written consent of all Lenders (and any attempted assignment
or transfer by Company without such consent shall be null and void). 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 and, to the extent expressly contemplated hereby, the
Affiliates of each of the Agents and Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.
B. Assignments.
(i) Amounts and Terms of Assignments. Any Lender may assign to
one or more Eligible Assignees all or any portion of its rights and obligations
under this Agreement; provided that (a), except (1) in the case of an assignment
of the entire remaining amount of the assigning Lender's rights and obligations
under this Agreement or (2) in the case of an assignment to a Lender or an
Affiliate of a Lender or an Approved Fund of a Lender, the principal amount of
Loans and/or Commitment subject to each such assignment shall not be less than
$1,000,000, unless each of Administrative Agent and, so long as no Event of
Default has occurred and is continuing, Company otherwise consents (each such
consent not to be unreasonably withheld or delayed), (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 with respect to the Loan or
the Commitment assigned, (c) the parties to each assignment shall execute and
deliver to Administrative Agent an Assignment Agreement, together with a
processing and recordation fee of $3,500 (unless the assignee is an Affiliate or
an Approved Fund of the assignor, in which case no fee shall be required), and
the Eligible Assignee, if it shall not be a Lender, shall deliver to
Administrative Agent information reasonably requested by Administrative Agent,
including such forms, certificates or other evidence, if any, with respect to
United States federal income tax withholding matters as the assignee under such
Assignment Agreement may be required to deliver to Administrative Agent pursuant
to subsection 2.7B(iii) and (d), except in the case of an assignment to another
Lender, an Affiliate of a Lender or an Approved Fund of a Lender, Administrative
Agent and, if no Event of Default has occurred and is continuing, Company, shall
have consented thereto (which consent shall not be unreasonably withheld). Upon
such execution, and delivery and consent, from and after the effective date
specified in such Assignment Agreement, (y) the assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and (z) the
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assigning Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment Agreement,
relinquish its rights (other than any rights which survive the termination of
this Agreement under subsection 10.9B) and be released from its obligations
under this Agreement (and, in the case of an Assignment Agreement covering all
or the remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto). The assigning
Lender shall, upon the effectiveness of such assignment or as promptly
thereafter as practicable, surrender its Notes, if any, to Administrative Agent
for cancellation, and thereupon new Notes shall, if so requested by the assignee
and/or the assigning Lender in accordance with subsection 2.1E, be issued to the
assignee and/or to the assigning Lender, substantially in the form of Exhibit
IV, Exhibit V or Exhibit VI annexed hereto, as the case may be, with appropriate
insertions, to reflect the new Commitments and/or outstanding Loans of the
assignee and/or the assigning Lender. Other than as provided in subsection
2.1A(iv) and subsection 10.5, any assignment or transfer by a Lender of rights
or obligations under this Agreement that does not comply with this subsection
10.1B 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 subsection
10.1C;
(ii) Acceptance by Administrative Agent. Upon its receipt of
an Assignment Agreement executed by an assigning Lender and an assignee
representing that it is an Eligible Assignee, together with the processing fee
referred to in subsection 10.1B(i) and any forms, certificates or other evidence
with respect to United States federal income tax withholding matters that such
assignee may be required to deliver to Administrative Agent pursuant to
subsection 2.7B(iii), Administrative Agent shall, if Administrative Agent has
and Company have consented to the assignment evidenced thereby (in each case to
the extent such consent is required pursuant to subsection 10.1B(i)), (a) accept
such Assignment Agreement by executing a counterpart thereof as provided therein
(which acceptance shall evidence any required consent of Administrative Agent to
such assignment), and (b) give prompt notice thereof to Company. Administrative
Agent shall maintain a copy of each Assignment Agreement delivered to and
accepted by it as provided in this subsection 10.1B(ii); and
(iii) Deemed Consent by Company. If the consent of Company to
an assignment or to an Eligible Assignee is required hereunder (including a
consent to an assignment which does not meet the minimum assignment thresholds
specified in subsection 10.1B(i)), Company shall be deemed to have given its
consent five Business Days after the date notice thereof has been delivered by
the assigning Lender (through Administrative Agent) unless such consent is
expressly refused by Company prior to such fifth Business Day.
C. Participations. Any Lender may, without the consent of, or notice
to, Company or Administrative Agent, sell participations to one or more Persons
(other than a natural Person or Company or any of its Affiliates or any
competitor in the same business or any similar or related business to Company or
its Subsidiaries) in all or a portion of such Lender's rights and/or obligations
under this Agreement; provided that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) Company, Administrative Agent and 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
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the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any 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
directly affecting (i) the extension of the scheduled final maturity date of any
Loan allocated to such participation or (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to such participation.
Subject to the further provisions of this subsection 10.1C, Company agrees that
each Participant shall be entitled to the benefits of subsections 2.6D and 2.7
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection 10.1B. To the extent permitted by law, each
Participant also shall be entitled to the benefits of subsection 10.4 as though
it were a Lender, provided such Participant agrees to be subject to subsection
10.5 as though it were a Lender. A Participant shall not be entitled to receive
any greater payment under subsections 2.6D and 2.7 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 Company's prior written consent. A Participant that would be a Non-US
Lender if it were a Lender shall not be entitled to the benefits of subsection
2.7 unless Company is notified of the participation sold to such Participant and
such Participant agrees, for the benefit of Company, to comply with subsection
2.7B(iii) as though it were a Lender.
D. Pledges and Assignments. Any Lender may at any time pledge or
assign a security interest in all or any portion of its Loans, and the other
Obligations owed to such Lender, to secure obligations of such Lender, including
without limitation any pledge or assignment to secure obligations to any Federal
Reserve Bank; provided that (i) no Lender shall be relieved of any of its
obligations hereunder as a result of any such assignment or pledge and (ii) in
no event shall any assignee or pledgee be considered to be a "Lender" or be
entitled to require the assigning Lender to take or omit to take any action
hereunder.
E. Information. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
F. Agreements of Lenders. Each Lender listed on the signature pages
hereof hereby agrees (i) that it is an Eligible Assignee described in clause
(ii) of the definition thereof; (ii) that it has experience and expertise in the
making of loans such as the Loans; and (iii) that it will make its Loans for its
own account in the ordinary course of its business and without a view to
distribution of such Loans within the meaning of the Securities Act or the
Exchange Act or other federal securities laws (it being understood that, subject
to the provisions of this subsection 10.1, the disposition of such Loans or any
interests therein shall at all times remain within its exclusive control). Each
Lender that becomes a party hereto pursuant to an Assignment Agreement shall be
deemed to agree that the agreements of such Lender contained in Section 2(c) of
such Assignment Agreement are incorporated herein by this reference.
10.2 Expenses. Whether or not the transactions contemplated hereby shall
be consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of negotiation, preparation and execution of the Loan
Documents and any consents, amendments, waivers or other modifications thereto,
whether or not such consents, amendments, waivers or modifications become
effective; (ii) all the costs of furnishing all opinions by counsel
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for Company (including any opinions requested by Agents or Lenders as to any
legal matters arising hereunder) and of Company's performance of and compliance
with all agreements and conditions on its part to be performed or complied with
under this Agreement and the other Loan Documents including with respect to
confirming compliance with environmental, insurance and solvency requirements;
(iii) the reasonable fees, expenses and disbursements of counsel to any Agent
(including allocated costs of internal counsel) in connection with the
negotiation, preparation, execution and administration of the Loan Documents and
any consents, amendments, waivers or other modifications thereto and any other
documents or matters requested by Company, whether or not such consents,
amendments, waivers or modifications become effective; (iv) all the actual costs
and reasonable expenses of creating and perfecting Liens in favor of
Administrative Agent on behalf of Lenders pursuant to any Collateral Document,
including filing and recording fees, expenses and taxes, stamp or documentary
taxes, search fees, title insurance premiums, and reasonable fees, expenses and
disbursements of counsel to Administrative Agent and of counsel providing any
opinions that Administrative Agent or Requisite Lenders may request in respect
of the Collateral Documents or the Liens created pursuant thereto; (v) all the
actual costs and reasonable expenses (including the reasonable fees, expenses
and disbursements of any auditors, accountants or appraisers and any
environmental or other consultants, advisors and agents employed or retained by
Administrative Agent or its counsel) of obtaining and reviewing any appraisals
provided for under subsection 4.1 or 6.9B and any environmental audits or
reports provided for under subsection 4.1J or 6.9A; (vi) all the actual costs of
obtaining any rating of, or valuation quotations for, the Loans; (vii) the costs
incurred by Agents in establishing and maintaining the Kaifa Accounts Agreements
and the Blocked Account Agreements, and of monitoring and auditing the Accounts;
(viii) the costs incurred by Agents in connection with the custody or
preservation of any of the Collateral; and (ix) all costs and expenses,
including reasonable attorneys' fees (including allocated costs of internal
counsel) and costs of settlement, incurred by Agents and Lenders in enforcing
any Obligations of or in collecting any payments due from any Loan Party
hereunder or under the other Loan Documents (including in connection with the
sale of, collection from, or other realization upon any of the Collateral or the
enforcement of the Guaranties) or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings.
10.3 Indemnity. In addition to the payment of expenses pursuant to
subsection 10.2, whether or not the transactions contemplated hereby shall be
consummated, Company agrees to defend (subject to Indemnitees' selection of
counsel), indemnify, pay and hold harmless Agents and Lenders, and the officers,
directors, employees, agents and Affiliates of Agents and Lenders (collectively
called the "Indemnitees"), from and against any and all Indemnified Liabilities
(as hereinafter defined); provided that Company shall not have any obligation to
any Indemnitee hereunder with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise solely from the gross negligence or
willful misconduct of that Indemnitee as determined by a final judgment of a
court of competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively, any
and all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or xxxxx any Hazardous Materials
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Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby (including Lenders' agreement to
make the Loans hereunder or the use or intended use of the proceeds thereof, of
any present or future de jure or de facto Government Authority, or any
enforcement of any of the Loan Documents (including any sale of, collection
from, or other realization upon any of the Collateral or the enforcement of the
Guaranties)), (ii) the statements contained in the commitment letter delivered
by any Lender to Company with respect thereto, or (iii) any Environmental Claim
or any Hazardous Materials Activity relating to or arising from, directly or
indirectly, any past or present activity, operation, land ownership, or practice
of Company or any of its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and
hold harmless set forth in this subsection 10.3 may be unenforceable in whole or
in part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
10.4 Set-Off; Security Interest in Deposit Accounts. In addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence of any Event of Default each
Lender is hereby authorized by Company at any time or from time to time, without
notice to Company or to any other Person (subject to the provisions of the last
sentence of this subsection 10.4), any such notice being hereby expressly
waived, to set off and to appropriate and to apply (subject to the provisions of
the last sentence of this subsection 10.4) any and all deposits (general or
special, including Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by that Lender or any Affiliate of such
Lender to or for the credit or the account of Company and each other Loan Party
against and on account of the obligations and liabilities of Company or any
other Loan Party to that Lender (or any Affiliate of such Lender) or to any
other Lender (or any Affiliate of any other Lender) under this Agreement, and
the other Loan Documents, including all claims of any nature or description
arising out of or connected with this Agreement or any other Loan Document,
irrespective of whether or not (i) that Lender shall have made any demand
hereunder or (ii) the principal of or the interest on the Loans or any other
amounts due hereunder shall have become due and payable pursuant to Section 8
and although said obligations and liabilities, or any of them, may be contingent
or unmatured. Company hereby further grants (subject to the provisions of the
last sentence of this subsection 10.4) to Administrative Agent and each Lender a
security interest in all deposits and accounts maintained with Administrative
Agent or such Lender as security for the Obligations. Notwithstanding the
foregoing provisions to the contrary, no Lender (or any Affiliate otherwise
authorized pursuant to the provisions hereof), shall exercise any right of
setoff or other similar
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action without the express written consent of the Administrative Agent;
provided, that the foregoing limitation is for the express benefit of the
Administrative Agent and Lenders and no other Person shall be a beneficiary
thereof or have any rights in connection therewith.
10.5 Ratable Sharing. Lenders hereby agree among themselves that if any
of them shall, whether by voluntary payment (other than a voluntary prepayment
of Loans made and applied in accordance with the terms of this Agreement), by
realization upon security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the enforcement of any
right under the Loan Documents or otherwise, or as adequate protection of a
deposit treated as cash collateral under the Bankruptcy Code, fees and other
amounts then due and owing to that Lender hereunder or under the other Loan
Documents (collectively, the "Aggregate Amounts Due" to such Lender) that is
greater than the proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify Administrative Agent and each
other Lender of the receipt of such payment and (ii) apply a portion of such
payment to purchase assignments (which it shall be deemed to have purchased from
each seller of an assignment simultaneously upon the receipt by such seller of
its portion of such payment) of the Aggregate Amounts Due to the other Lenders
so that all such recoveries of Aggregate Amounts Due shall be shared by all
Lenders in proportion to the Aggregate Amounts Due to them; provided that if all
or part of such proportionately greater payment received by such purchasing
Lender is thereafter recovered from such Lender upon the bankruptcy or
reorganization of Company or otherwise, those purchases shall be rescinded and
the purchase prices paid for such assignments shall be returned to such
purchasing Lender ratably to the extent of such recovery, but without interest.
Company expressly consents to the foregoing arrangement and agrees that any
purchaser of an assignment so purchased may exercise any and all rights of a
Lender as to such assignment as fully as if that Lender had complied with the
provisions of subsection 10.1B with respect to such assignment. In order to
further evidence such assignment (and without prejudice to the effectiveness of
the assignment provisions set forth above), each purchasing Lender and each
selling Lender agree to enter into an Assignment Agreement at the request of a
selling Lender or a purchasing Lender, as the case may be, in form and substance
reasonably satisfactory to each such Lender.
10.6 Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Agreement or of the Notes, and no consent to any
departure by Company therefrom, shall in any event be effective without the
written concurrence of Requisite Lenders; provided that no such amendment,
modification, termination, waiver or consent shall, without the consent of (a)
each Lender with Obligations directly affected (whose consent shall be
sufficient for any such amendment, modification, termination or waiver without
the consent of Requisite Lenders (1) reduce the principal amount of any Loan,
(2) postpone the scheduled final maturity date of any Loan, (3) postpone the
date on which any interest or any fees are payable, or (4) decrease the interest
rate borne by any Loan (other than any waiver of any increase in the interest
rate applicable to any of the Loans pursuant to subsection 2.2E) or the amount
of any fees payable hereunder (including any change in the manner in which any
financial ratio used in determining any interest rate or fee is calculated that
would result in a reduction of any such rate or fee); (b) each Lender, (1)
change in any manner the definition of "Pro Rata Share" or the definition of
"Requisite Lenders" (except for any changes resulting solely from an increase in
Commitments approved by Requisite Lenders), (2) change in any manner any
provision of this
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Agreement that, by its terms, expressly requires the approval or concurrence of
all Lenders, (3) increase the maximum duration of Interest Periods permitted
hereunder, (4) release any Lien granted in favor of Administrative Agent with
respect to 25% or more in aggregate fair market value of the Collateral or
release any Subsidiary Guarantor from its obligations under the Subsidiary
Guaranty, in each case other than in accordance with the terms of the Loan
Documents, (5) increase the amount of any of the Commitments; or (6) change in
any manner or waive the provisions contained in subsection 8.1 or this
subsection 10.6. In addition, (i) any amendment, modification, termination or
waiver of any of the provisions contained in Section 4 shall be effective only
if evidenced by a writing signed by or on behalf of Administrative Agent and
Requisite Lenders, (ii) no amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
Lender which is the holder of that Note, and (iii) no amendment, modification,
termination or waiver of any provision of Section 9 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of Administrative Agent shall be effective without the written
concurrence of Administrative Agent . Administrative Agent may, but shall have
no obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Company in any case
shall entitle Company to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.6 shall be binding upon each
Lender at the time outstanding, each future Lender and, if signed by Company, on
Company.
10.7 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of an Event of Default or Potential Event of Default if
such action is taken or condition exists.
10.8 Notices; Effectiveness of Signatures. Unless otherwise specifically
provided herein, any notice or other communication herein required or permitted
to be given shall be in writing and may be personally served, or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile in complete and legible form, or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Administrative Agent shall not be effective
until received. For the purposes hereof, the address of each party hereto shall
be as set forth under such party's name on the signature pages hereof or (i) as
to Company and Administrative Agent, such other address as shall be designated
by such Person in a written notice delivered to the other parties hereto and
(ii) as to each other party, such other address as shall be designated by such
party in a written notice delivered to Administrative Agent. Electronic mail may
be used to distribute routine communications, such as financial statements and
other information as provided in subsection 6.1; provided, however, that no
signature with respect to any notice, request, agreement, waiver, amendment or
other document or any notice that is intended to have binding effect may be sent
by electronic mail.
85
Loan Documents and notices under the Loan Documents may be
transmitted and/or signed by telefacsimile. The effectiveness of any such
documents and signatures shall, subject to applicable law, have the same force
and effect as an original copy with manual signatures and shall be binding on
all Loan Parties, Agents and Lenders. Administrative Agent may also require that
any such documents and signature be confirmed by a manually-signed copy thereof;
provided, however, that the failure to request or deliver any such
manually-signed copy shall not affect the effectiveness of any facsimile
document or signature.
10.9 Survival of Representations, Warranties and Agreements.
A. All representations, warranties and agreements made herein
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
B. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of Company set forth in subsections 2.6D, 2.7,
10.2, 10.3, 10.4 (except for the penultimate sentence of such subsection), 10.17
and 10.18 and the agreements of Lenders set forth in subsections 9.2C, 9.4, 10.5
and 10.18 shall survive the payment of the Loans and the termination of this
Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of an Agent or any Lender in the exercise of any power,
right or privilege hereunder or under any other Loan Document shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other power, right or privilege. All rights and remedies existing under this
Agreement and the other Loan Documents are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside. Neither any Agent nor any Lender
shall be under any obligation to marshal any assets in favor of Company or any
other party or against or in payment of any or all of the Obligations. To the
extent that Company makes a payment or payments to Administrative Agent or
Lenders (or to Administrative Agent for the benefit of Lenders), or Agents or
Lenders enforce any security interests or exercise their rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 Severability. In case any provision in or obligation under this
Agreement or the Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights; Damage
Waiver. The obligations of Lenders hereunder are several and no Lender shall be
responsible for the
86
obligations or Commitments of any other Lender hereunder. Nothing contained
herein or in any other Loan Document, and no action taken by Lenders pursuant
hereto or thereto, shall be deemed to constitute Lenders, or Lenders and
Company, as a partnership, an association, a Joint Venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled to protect and
enforce its rights arising out of this Agreement and it shall not be necessary
for any other Lender to be joined as an additional party in any proceeding for
such purpose.
To the extent permitted by law, Company 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 (including, without limitation, subsection 2.1C hereof), any other
Loan Document, any transaction contemplated by the Loan Documents, any Loan or
the use of proceeds thereof.
10.14 Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
10.15 Applicable Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING
SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW.
10.16 Construction of Agreement; Nature of Relationship. Each of the
parties hereto acknowledges that (i) it has been represented by counsel in the
negotiation and documentation of the terms of this Agreement, (ii) it has had
full and fair opportunity to review and revise the terms of this Agreement,
(iii) this Agreement has been drafted jointly by all of the parties hereto, and
(iv) neither Administrative Agent nor any Lender or other Agent has any
fiduciary relationship with or duty to Company arising out of or in connection
with this Agreement or any of the other Loan Documents, and the relationship
between Administrative Agent, the other Agents and Lenders, on one hand, and
Company, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor. Accordingly, each of the parties hereto acknowledges and
agrees that the terms of this Agreement shall not be construed against or in
favor of another party.
10.17 Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA,
COUNTY AND CITY OF LOS ANGELES. BY EXECUTING AND DELIVERING THIS AGREEMENT,
COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
87
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION
10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH PROCEEDING
IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN THE
COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE
FULLEST EXTENT PERMISSIBLE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION
410.40 OR OTHERWISE.
10.18 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED.
The scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction, including contract claims, tort claims, breach of duty claims
and all other common law and statutory claims. Each party hereto acknowledges
that this waiver is a material inducement to enter into a business relationship,
that each has already relied on this waiver in entering into this Agreement, and
that each will continue to rely on this waiver in their related future dealings.
Each party hereto further warrants and represents that it has reviewed this
waiver with its legal counsel and that it knowingly and voluntarily waives its
jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO
88
THE LOANS MADE HEREUNDER. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.
10.19 Confidentiality. Each Lender shall hold all non-public information
obtained pursuant to the requirements of this Agreement in accordance with such
Lender's customary procedures for handling confidential information of this
nature, it being understood and agreed by Company that in any event a Lender may
make disclosures (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, 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 Government
Authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any 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 subsection 10.19, to (i) any Eligible Assignee of or
participant in, or any prospective Eligible Assignee of or Participant in, any
of its rights or obligations under this Agreement or (ii) any direct or indirect
contractual counterparty or prospective counterparty (or such contractual
counterparty's or prospective counterparty's professional advisor) to any credit
derivative transaction relating to obligations of Company, (g) with the consent
of Company, (h) to the extent such information (i) becomes publicly available
other than as a result of a breach of this subsection 10.19 or (ii) becomes
available to Administrative Agent or any Lender on a nonconfidential basis from
a source other than Company and that no written or oral communications from
counsel to an Agent and no information that is or is designated as privileged or
as attorney work product may be disclosed to any Person unless such Person is a
Lender or a participant hereunder; provided that, unless specifically prohibited
by applicable law or court order, each Lender shall notify Company of any
request by any Government Authority or representative thereof (other than any
such request in connection with any examination of the financial condition of
such Lender by such Government Authority) for disclosure of any such non-public
information prior to disclosure of such information; and provided, further that
in no event shall any Lender be obligated or required to return any materials
furnished by Company or any of its Subsidiaries. In addition, Administrative
Agent and Lenders may disclose the existence of this Agreement and information
about this Agreement to market data collectors, similar service providers to the
lending industry, and service providers to Administrative Agent and Lenders.
10.20 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements hereto or in connection herewith may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Agreement shall become
effective upon the execution of a counterpart hereof by each of the parties
hereto.
10.21 Press Releases. Except as required by law, neither Company nor
Administrative Agent shall issue any press release or other public announcement
concerning this Agreement or
89
the transactions contemplated hereby without giving the other the opportunity to
review and approve the same.
[Remainder of page intentionally left blank]
90
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
READ-RITE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
Notice Address:
00000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Phone:
--------------------------------------
Fax:
----------------------------------------
ADMINISTRATIVE AGENT:
SPECIAL VALUE INVESTMENT MANAGEMENT, LLC
By: XXXXXXXXXX & CO., LLC
Its: Managing Member
By: /s/ Xxxxxx X Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Principal
Notice Address:
c/x Xxxxxxxxxx & Co., LLC
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
LENDERS:
SPECIAL VALUE BOND FUND II, LLC
By: SVIM/MSM II, LLC
Its: Managing Member
By: XXXXXXXXXX & CO., LLC
Its: Managing Member
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Principal
Notice Address:
c/x Xxxxxxxxxx & Co., LLC
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
SPECIAL VALUE ABSOLUTE RETURN FUND, LLC
By: SVAR/MM, LLC
Its: Managing Member
By: SPECIAL VALUE INVESTMENT
MANAGEMENT, LLC
Its: Managing Member
By: XXXXXXXXXX & CO., LLC
Its: Managing Member
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Principal
Notice Address:
c/x Xxxxxxxxxx & Co., LLC
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
