<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission file number 0-27512
CSG SYSTEMS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 47-0783182
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5251 DTC PARKWAY, SUITE 625
ENGLEWOOD, COLORADO 80111
(Address of principal executive offices, including zip code)
(303) 796-2850
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
------ ------
Shares of common stock outstanding at July 31, 1996: 25,496,323.
TOTAL OF SEQUENTIALLY NUMBERED PAGES: 15
EXHIBIT INDEX ON SEQUENTIALLY NUMBERED PAGE: 15
1
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CSG SYSTEMS INTERNATIONAL, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
Part I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995.................................................... 3
Condensed Consolidated Statements of Operations for the Three and
Six Months Ended June 30, 1996 and 1995 ................................. 4
Condensed Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1996 and 1995............................................. 5
Notes to Condensed Consolidated Financial Statements..................... 6 - 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................... 8 - 12
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K......................................... 13
Signatures............................................................... 14
Index to Exhibits........................................................ 15
</TABLE>
2
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CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
ASSETS (unaudited)
------
<S> <C> <C>
Current Assets:
Cash and cash equivalents................................................................ $ 4,294 $ 3,603
Accounts receivable-
Trade-
Billed, net of allowance of $486 and $521............................................ 30,176 22,400
Unbilled............................................................................. 1,306 803
Other.................................................................................. 1,319 1,925
Deferred income taxes.................................................................... 102 -
Other current assets..................................................................... 1,675 585
------------ ------------
Total current assets................................................................... 38,872 29,316
------------ ------------
Equipment and furniture, net of depreciation of $8,091 and $5,759......................... 10,313 9,881
Investment in discontinued operations..................................................... 732 2,732
Acquired software, net of amortization of $17,417 and $11,917............................. 15,583 21,083
Noncompete agreements and goodwill, net of amortization of $9,096 and $6,154.............. 28,759 25,657
Client contracts and related intangibles, net of amortization of $6,481 and $4,433........ 11,799 13,846
Deferred income taxes..................................................................... 1,344 -
Other assets.............................................................................. 1,737 3,038
------------ ------------
Total assets............................................................................. $ 109,139 $ 105,553
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Current maturities of long-term debt..................................................... $ 10,000 $ 10,000
Customer deposits........................................................................ 5,977 5,505
Trade accounts payable................................................................... 11,893 6,110
Accrued liabilities...................................................................... 6,097 4,421
Deferred revenue......................................................................... 2,283 622
Accrued income taxes..................................................................... 1,042 -
Other current liabilities................................................................ 370 299
------------ ------------
Total current liabilities.............................................................. 37,662 26,957
------------ ------------
Long-term debt, net of current maturities................................................. 30,000 75,068
Deferred revenue.......................................................................... 5,199 2,531
Redeemable convertible preferred stock, par value $.01 per share: zero shares and
9,500,000 shares authorized; zero shares and 8,999,999 shares issued and outstanding..... - 62,985
Stockholders' equity:
Preferred stock, par valule $.01 per share; 10,000,000 shares and zero shares
authorized; zero shares issued and outstanding......................................... - -
Common stock, par value $.01 per share; 100,000,000 shares and 50,000,000 shares
authorized; 25,496,323 shares and 4,243,000 shares issued and outstanding.............. 255 42
Additional paid-in-capital............................................................... 111,309 7,720
Deferred employee compensation........................................................... (1,424) (4,968)
Notes receivable from employee stockholders.............................................. (976) (976)
Accumulated deficit...................................................................... (72,886) (63,806)
------------ ------------
Total stockholders' equity (deficit)................................................... 36,278 (61,988)
------------ ------------
Total liabilities and stockholders' equity............................................... $ 109,139 $ 105,553
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
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CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS-UNAUDITED
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Quarter ended Six months ended
------------------------- ------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1996
------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
Total revenues........................................................... $ 30,431 $ 24,092 $ 57,188 $ 46,936
Expenses:
Cost of revenues:
Cost of services..................................................... 14,369 11,556 27,200 22,917
Amortization of acquired software.................................... 2,751 2,750 5,501 5,500
Amortization of customer contracts and related intangibles........... 1,023 1,023 2,046 2,046
----------- ---------- ----------- ----------
Total cost of revenues............................................. 18,143 15,329 34,747 30,463
----------- ---------- ----------- ----------
Operating expenses:
Research and development............................................. 4,792 3,386 9,348 6,466
Selling and marketing................................................ 1,570 773 2,990 1,431
General and administrative:
General and administrative......................................... 3,146 2,685 6,428 4,980
Amortization of noncompete agreements and goodwill................. 1,519 1,420 2,939 2,840
Stock-based employee compensation.................................. 97 34 3,374 34
Depreciation......................................................... 1,246 1,375 2,436 2,676
----------- ---------- ----------- ----------
Total operating expenses........................................... 12,370 9,673 27,515 18,427
----------- ---------- ----------- ----------
Total expenses........................................................... 30,513 25,002 62,262 48,890
----------- ---------- ----------- ----------
Operating loss....................................................... (82) (910) (5,074) (1,954)
----------- ---------- ----------- ----------
Other income (expense):
Interest expenses.................................................... (870) (2,245) (2,610) (4,677)
Interest income...................................................... 256 145 485 319
----------- ---------- ----------- ----------
Total other........................................................ (614) (2,100) (2,125) (4,358)
----------- ---------- ----------- ----------
Loss before income taxes, extraordinary item and discontinued operations. (696) (3,010) (7,199) (6,312)
Income tax (provision) benefit......................................... - - - -
----------- ---------- ----------- ----------
Loss before extraordinary item and discontinued operations............... (696) (3,010) (7,199) (6,312)
Extraordinary loss from early extinguishment of debt..................... - - (1,260) -
Discontinued operations:
Loss from operations................................................... - (939) - (2,090)
Loss from disposition.................................................. - - - -
----------- ---------- ----------- ----------
Total loss from discontinued operations:........................... - (939) - (2,090)
----------- ---------- ----------- ----------
Net loss................................................................. $ (696) $ (3,949) $ (8,459) $ (8,402)
=========== ========== =========== ==========
Net loss per share:
Loss before extraordinary item and discontinued operations............. $ (0.03) (0.14) $ (0.30) $ (0.28)
Extraordinary loss from early extinguishment of debt................... - - (0.05) -
Loss from discontinued operations...................................... - (0.04) - (0.09)
----------- ---------- ----------- ----------
Net loss............................................................... $ (0.03) $ (0.18) $ (0.30) $ (0.28)
=========== ========== =========== ==========
Weighted average common shares and equivalents........................... 25,532,945 22,494,748 24,490,889 22,494,748
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
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CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Six months ended
--------------------------------------
June 30, June 30,
1996 1995
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................................... $ (8,459) $ (8,402)
Adjustments to reconcile net loss to net cash
provided by operating activities-
Depreciation..................................................... 2,436 2,676
Amortization..................................................... 10,901 10,855
Stock-based employee compensation................................ 3,374 34
Extraordinary loss from early extinguishment of debt............. 1,260 -
Loss from discontinued operations................................ - 2,090
Changes in operating assets and liabilities:
Trade accounts receivable, net.................................. (5,999) (841)
Other receivables............................................... 835 394
Deferred income taxes........................................... (1,446) -
Other current assets and noncurrent assets...................... (1,374) (221)
Customer deposits............................................... 472 743
Trade accounts payable and accrued liabilities.................. 3,315 (1,178)
Deferred revenue................................................ 4,329 (46)
Other current liabilities....................................... 71 (17)
------------- -------------
Net cash provided by operating activities..................... 9,715 6,087
------------- -------------
Cash flows from investing activities:
Purchases of equipment and furniture, net.......................... (2,715) (2,524)
Acquisition of businesses, net of cash acquired.................... (3,518) -
Net investment in discontinued operations.......................... 2,000 (1,629)
------------- -------------
Net cash used in investing activities......................... (4,233) (4,153)
------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock............................. 44,794 243
Purchase and cancellation of common stock.......................... (20) -
Payment of dividends for redeemable convertible preferred stock.... (4,497) -
Payments on long-term debt......................................... (45,068) (3,750)
------------- -------------
Net cash used in financing activities......................... (4,791) (3,507)
-------------- --------------
Net increase (decrease) in cash and cash equivalents................ 691 (1,573)
Cash and cash equivalents, beginning of period...................... 3,603 6,650
------------- -------------
Cash and cash equivalents, end of period............................ $ 4,294 $ 5,077
============= =============
Supplemental disclosures of cash flow information:
Cash paid (received) during the period for-
Interest.......................................................... $ 2,666 $ 3,914
Income taxes...................................................... $ (653) $ 1,121
Supplemental disclosure of noncash financing activities:
During March 1996, the Company converted 8,999,999 shares of redeemable convertible preferred stock
into 17,999,998 shares of common stock.
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
<PAGE>
CSG SYSTEMS INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The condensed consolidated financial statements at June 30, 1996 and for the
three and six months then ended are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim period. The condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto, together with management's discussion and analysis
of financial condition and results of operations, contained in the Company's
Form S-1 Registration Statement filed with the Securities and Exchange
Commission (Registration No. 333-244). The results of operations for the three
and six months ended June 30, 1996 are not necessarily indicative of the results
for the entire year ending December 31, 1996.
2. RECLASSIFICATION OF PRIOR PERIOD AMOUNTS
Certain December 31, 1995 amounts have been reclassified to conform with the
June 30, 1996 presentation.
3. STOCKHOLDERS' EQUITY
The Company completed an initial public offering (IPO) of common stock in March
1996. The Company sold 3,335,000 shares of common stock at an initial public
offering price of $15 per share, resulting in net proceeds to the Company, after
deducting underwriting discounts and offering expenses, of approximately
$44,794,000. As of the closing of the IPO, all of the 8,999,999 outstanding
shares of redeemable convertible Series A Preferred Stock were automatically
converted into 17,999,998 shares of common stock.
4. NET LOSS PER SHARE
Net loss per common and equivalent share for the three and six months ended June
30, 1996, is based on the weighted average number of shares of common stock and
common equivalent shares related to redeemable convertible Series A Preferred
Stock. Common equivalent shares related to stock options have been excluded from
the weighted average number of shares as the effect is antidilutive. Pursuant to
Securities and Exchange Commission Staff Accounting Bulletin No. 83, all shares
and options issued during the twelve-month period prior to the Company's IPO
have been treated as if they were outstanding for all periods presented,
including periods in which the effect is antidilutive.
5. EXTRAORDINARY LOSS
The Company used $40.3 million of the IPO proceeds to repay a portion of
outstanding bank indebtedness (the Indebtedness). Upon repayment of the
Indebtedness, the Company recorded an extraordinary loss of $1.3 million for the
write-off of deferred financing costs.
6
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6. ACQUISITION
On June 28, 1996, the Company acquired the capital stock of Bytel Limited, a
United Kingdom-based company which provides customer management software systems
to the cable and telecommunications industries. The total purchase price was
approximately $4.7 million consisting of cash payments of approximately $3.1
million and assumption of certain payables to one of the sellers of
approximately $1.6 million. The cash portion of the purchase price was paid out
of corporate funds. The acquisition was accounted for under the purchase method.
7
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CSG SYSTEMS INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
The following table sets forth certain financial data and the percentage of
total revenues of the Company for the periods indicated (in thousands):
<TABLE>
<CAPTION>
Quarter ended June 30, Six Months ended June 30,
----------------------------------------- ------------------------------------------
1996 1995 1996 1995
------------------ ------------------ ------------------ -------------------
% of % of % of % of
Amount Revenue Amount Revenue Amount Revenue Amount Revenue
------ ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues.................... $30,431 100.0% $24,092 100.0% $57,188 100.0% $46,936 100.0%
Expenses:
Cost of revenues:
Cost of services.............. 14,369 47.2% 11,556 48.0% 27,200 47.6% 22,917 48.8%
Amortization of acquired
software..................... 2,751 9.0% 2,750 11.4% 5,501 9.6% 5,500 11.7%
Amortization of customer
contracts and related
intangibles.................. 1,023 3.4% 1,023 4.2% 2,046 3.6% 2,046 4.4%
------- ----- ------- ----- ------- ----- ------- -----
Total cost of revenues...... 18,143 59.6% 15,329 63.6% 34,747 60.8% 30,463 64.9%
------- ----- ------- ----- ------- ----- ------- -----
Operating expenses:
Research and development..... 4,792 15.7% 3,386 14.1% 9,348 16.3% 6,466 13.8%
Selling and marketing........ 1,570 5.2% 773 3.2% 2,990 5.2% 1,431 3.0%
General and administrative:
General and administrative.. 3,146 10.3% 2,685 11.1% 6,428 11.2% 4,980 10.6%
Amortization of noncompete
agreements and goodwill.... 1,519 5.0% 1,420 5.9% 2,939 5.1% 2,840 6.1%
Stock-based employee
compensation............... 97 0.3% 34 0.1% 3,374 5.9% 34 0.1%
Depreciation................. 1,246 4.1% 1,375 5.7% 2,436 4.3% 2,676 5.7%
------- ----- ------- ----- ------- ----- ------- -----
Total operating expenses......... 12,370 40.6% 9,673 40.1% 27,515 48.0% 18,427 39.3%
------- ----- ------- ----- ------- ----- ------- -----
Total expenses.............. 30,513 100.2% 25,002 103.7% 62,262 108.8% 48,890 104.2%
------- ----- ------- ----- ------- ----- ------- -----
Operating loss............... (82) (0.2)% (910) (3.7)% (5,074) (8.8)% (1,954) (4.2)%
------- ----- ------- ----- ------- ----- ------- -----
Other income (expense):
Interest expense............. (870) (2.9)% (2,245) (9.3)% (2,610) (4.6)% (4,677) (10.0)%
Interest income.............. 256 0.8% 145 0.6% 485 0.8% 319 0.7%
------- ----- ------- ----- ------- ----- ------- -----
Total other................. (614) (2.1)% (2,100) (8.7)% (2,125) (3.8)% (4,358) (9.3)%
------- ----- ------- ----- ------- ----- ------- -----
Loss before income taxes,
extraordinary item and
discontinued operations........ (696) (2.3)% (3,010) (12.4)% (7,199) (12.6)% (6,312) (13.5)%
Income tax (provision)
benefit...................... - - - - - - - -
------- ----- ------- ----- ------- ----- ------- -----
Loss before extraordinary item
and discontinued operations.... (696) (2.3)% (3,010) (12.4)% (7,199) (12.6)% (6,312) (13.5)%
Extraordinary loss from early
extinguishment of debt......... - - - - (1,260) (2.2)% - -
Discontinued operations:
Loss from operations........... - - (939) (3.9)% - - (2,090) (4.5)%
Loss from disposition.......... - - - - - - - -
------ ----- ------- ----- ------- ----- ------- -----
Total loss from
discontinued operations... - - (939) (3.9)% - - (2,090) (4.5)%
------ ----- ------- ----- ------- ----- ------- -----
Net loss........................ $ (696) (2.3)% $(3,949) (16.3)% $(8,459) (14.8)% $(8,402) (18.0)%
====== ===== ======= ===== ======= ===== ======= =====
</TABLE>
8
<PAGE>
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
Revenues. Revenues increased 26.3% from $24.1 million in the three months ended
June 30, 1995, to $30.4 million in the three months ended June 30, 1996, due
primarily to increased revenue from the Company's existing processing and
related ancillary services and increased revenue from new software products and
professional services. The increase in revenue from processing and related
ancillary services is due primarily to an increased number of customers of the
Company's clients which were serviced by the Company and increased revenue per
customer. Customers serviced as of June 30, 1995 and 1996, were 17.2 million
and 18.1 million, respectively. The increase in the number of customers was due
primarily to internal customer growth experienced by existing clients and the
addition of new clients. Revenue per customer increased due to annual price
increases included in client contracts and increased usage of ancillary services
by existing clients. New software products, consisting primarily of license
fees from Advanced Customer Service Representative (ACSR(TM)) and CSG Vantage
Point(TM)the Company's data warehouse product), and professional services
generated $2.8 million of revenue for the three months ended June 30, 1996.
Cost of Services. Cost of services increased 24.3% from $11.6 million in the
three months ended June 30, 1995, to $14.4 million in the three months ended
June 30, 1996, due primarily to the increased number of customers of the
Company's clients serviced by the Company with its existing processing and
related ancillary services and the cost to provide the new software products and
professional services.
As a percentage of revenues, cost of services decreased from 48.0% in the three
months ended June 30, 1995, to 47.2% in the three months ended June 30, 1996.
The decrease in cost of services as a percentage of revenue is due primarily to
the increased gross margin per customer for existing processing and related
ancillary services, which resulted primarily from annual price increases
included in customer contracts exceeding the corresponding cost to provide such
services and increased usage of ancillary services by existing customers.
Research and Development Expense. Research and development expense increased
41.5% from $3.4 million in the three months ended June 30, 1995, to $4.8 million
in the three months ended June 30, 1996, due primarily to continued efforts on
several products which are in development, including CSG Phoenix(TM) and a
telephony billing solution product, and to enhancements of the Company's
existing products. The increase in expense consists primarily of increases in
salaries, benefits, and other programming-related expenses. To date, the
Company has not capitalized any software development costs. The Company intends
to continue to increase its research and development expenditures.
Selling and Marketing Expense. Selling and marketing expense increased 103.1%
from $0.8 million in the three months ended June 30, 1995, to $1.6 million in
the three months ended June 30, 1996. As a percentage of revenues, selling and
marketing expense increased from 3.2% in the three months ended June 30, 1995,
to 5.2% in the three months ended June 30, 1996. The increase in expense is due
primarily to a realignment of the Company's sales force. Following the change
of ownership of the Company in late 1994, a substantial portion of the previous
sales force was terminated during the three months ended March 31, 1995, and
senior management focused on sales responsibilities in 1995. The Company began
building a new direct sales force in mid-1995 and has added additional staff
since that time. The Company intends to expand its sales force throughout
1996, and selling and marketing expense will increase.
General and Administrative Expense. General and administrative (G&A) expense
increased 17.2% from $2.7 million in the three months ended June 30, 1995, to
$3.1 million in the three months ended June 30, 1996. As a percentage of
revenues, G&A expense decreased from 11.1% in the three months ended June 30,
1995, to 10.3% in the three months ended June 30, 1996. The increase in expense
relates primarily to the development of the Company's management team and to
related administrative staff added during 1995 and the first six months of 1996
to support the Company's growth. The decrease in G&A expense as a percentage of
revenue is due primarily to increased leverage from the larger revenue base in
relation to the level of G&A expenses incurred during the during the three
months ended June 30, 1996. The Company does not intend to significantly
increase its administrative staff during the remainder of 1996.
Interest Expense. Interest expense decreased by 61.2% from $2.2 million in the
three months ended June 30, 1995, to $0.9 million in the three months ended June
30, 1996, with the decrease attributable primarily to scheduled principal
9
<PAGE>
payments on the Company's long-term debt, the retirement of $40.3 million of
long-term debt with proceeds from the IPO in March 1996, and a decrease in
interest rates as a result of the Company favorably amending its long-term
credit facility with its banks in April 1996 in conjunction with the $40.3
million retirement of long-term debt.
Discontinued Operations. The loss of $0.9 million in the three months ended
June 30, 1995, relates to the Company's investment in Anasazi Inc., which was
disposed of during the third quarter of 1995.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
Revenues. Revenues increased 21.8% from $46.9 million in the six months ended
June 30, 1995, to $57.2 million in the six months ended June 30, 1996, due
primarily to increased revenue from the Company's existing processing and
related ancillary services and increased revenue from new software products and
professional services. The increase in processing and related ancillary
services is due primarily to an increased number of customers of the Company's
clients which were serviced by the Company and increased revenue per customer.
The increase in the number of customers was due primarily to internal customer
growth experienced by existing clients and the addition of new clients. Revenue
per customer increased due to annual price increases included in client
contracts and increased usage of ancillary services by existing clients. New
software products, consisting primarily of license fees from ACSR(TM) and CSG
Vantage Point(TM), and professional services generated $2.9 million of revenue
for the six months ended June 30, 1996.
Cost of Services. Cost of services increased 18.7% from $22.9 million in the
six months ended June 30, 1995, to $27.2 million in the six months ended June
30, 1996, due primarily to the increased number of customers of the Company's
clients serviced by the Company with its existing processing and related
ancillary services and the cost to provide the new software products and
professional services.
As a percentage of revenues, cost of services decreased from 48.8% in the six
months ended June 30, 1995, to 47.6% in the six months ended June 30, 1996. The
decrease in cost of services as a percentage of revenue is due primarily to the
increased gross margin per customer for existing processing and related
ancillary services, which resulted primarily from annual price increases
included in customer contracts exceeding the corresponding cost to provide such
services and increased usage of ancillary services by existing customers.
Research and Development Expense. Research and development expense increased
44.6% from $6.5 million in the six months ended June 30, 1995, to $9.3 million
in the six months ended June 30, 1996, due primarily to continued efforts on
several products which are in development, including CSG Phoenix(TM) and a
telephony billing solution product, and to enhancements of the Company's
existing products. The increase in expense consists primarily of increases in
salaries, benefits, and other programming-related expenses. To date, the
Company has not capitalized any software development costs. The Company intends
to continue to increase its research and development expenditures.
Selling and Marketing Expense. Selling and marketing expense increased 108.9%
from $1.4 million in the six months ended June 30, 1995, to $3.0 million in the
six months ended June 30, 1996. As a percentage of revenues, selling and
marketing expense increased from 3.0% in the six months ended June 30, 1995, to
5.2% in the six months ended June 30, 1996. The increase in expense is due
primarily to a realignment of the Company's sales force. Following the change
of ownership of the Company in late 1994, a substantial portion of the previous
sales force was terminated during the three months ended March 31, 1995, and
senior management focused on sales responsibilities in 1995. The Company began
building a new direct sales force in mid-1995 and has added additional staff
since that time. The Company intends to expand its sales force throughout
1996, and selling and marketing expense will increase.
General and Administrative Expense. General and administrative (G&A) expense
increased 29.1% from $5.0 million in the six months ended June 30, 1995, to $6.4
million in the six months ended June 30, 1996. As a percentage of revenues, G&A
expense increased from 10.6% in the six months ended June 30, 1995, to 11.2% in
the six months ended June 30, 1996. The increase in expense relates primarily
to the development of the Company's management team and to related
administrative staff added during 1995 and the first six months of 1996 to
support the Company's growth. The Company does not intend to significantly
increase its administrative staff during the remainder of 1996.
10
<PAGE>
Stock-Based Employee Compensation. Stock-based employee compensation of $3.4
million in the six months ended June 30, 1996 relates to purchases of the
Company's common stock through performance stock purchase agreements with
executive officers and key employees. The Company has the option to repurchase
the shares upon the occurrence of certain events, principally termination of
employment with the Company. The shares were to be released from the repurchase
option on November 30, 2001. The structure of the performance stock agreements
required "variable" accounting for the related shares until the performance
conditions were removed, thereby establishing a measurement date of October 19,
1995. At that date, the Company recorded total deferred compensation of $5.8
million. The deferred compensation was being recognized as stock-based employee
compensation expense on a straight-line basis through November 30, 2001. Upon
the completion of the Company's initial public offering (IPO) of its common
stock in March 1996, shares owned by certain executive officers were no longer
subject to the repurchase option. In addition, the repurchase option for the
remaining performance stock shares decreases 20% annually over a five-year
period, commencing on the later of the employee's employment date or November
30, 1994. As a result, approximately $3.2 million of stock-based employee
compensation expense was recorded in the month the IPO was completed. Annual
stock-based employee compensation expense related to these shares subsequent to
the IPO will be approximately $0.4 million until December 31, 2000.
Interest Expense. Interest expense decreased by 44.2% from $4.7 million in the
six months ended June 30, 1995, to $2.6 million in the six months ended June 30,
1996, with the decrease attributable to scheduled principal payments on the
Company's long-term debt, the retirement of $40.3 million of long-term debt with
proceeds from the IPO in March 1996, and a decrease in interest rates as a
result of the Company favorably amending its long-term credit facility with its
banks in April 1996 in conjunction with the $40.3 million retirement of long-
term debt.
Extraordinary Loss From Early Extinguishment Of Debt. Upon the repayment of the
$40.3 million of long-term debt with IPO proceeds, the Company recorded an
extraordinary charge of $1.3 million for the write-off of deferred financing
costs attributable to the portion of the long-term debt repaid.
Discontinued Operations. The loss of $2.1 million in the six months ended June
30, 1995, relates to the Company's investment in Anasazi Inc., which was
disposed of during the third quarter of 1995.
General
- -------
The Company's existing contract with Tele-Communications, Inc. (TCI), which was
scheduled to expire December 31, 1996, has been extended automatically by its
terms for one additional year. TCI, a significant client, is developing an in-
house billing system, and the Company expects TCI's in-house system to replace
the Company's system in the future.
The first delivery of CSG Phoenix(TM), which is the Company's next generation
customer care and billing system for the converging communications industries,
is scheduled in the fourth quarter of 1996. The Company expects to install a
beta site in the first quarter of 1997. The CSG Phoenix(TM) system is being
developed on a three-tier client/server, object-oriented architecture. The
system is being developed to enable clients to quickly deploy new convergence
services such as voice, video and data, and to support millions of customers at
a single site. The statements regarding timing of the Company's delivery of CSG
Phoenix(TM) and the installation of a beta site in the first quarter of 1997 are
forward-looking statements. The actual timing is subject to delay due to the
variety of factors inherent in the development and initial implementation of a
new, complex software system. Installation is also subject to factors relating
to the integration of the new system with the client's existing systems.
Income Taxes
- ------------
As of June 30, 1996, the Company has net deferred tax assets of approximately
$23.7 million. Based on the Company's history of operating losses, the Company
has recorded a valuation allowance of $22.3 million, primarily for deferred tax
assets related to future deductible temporary differences since realization of
these benefits is not sufficiently assured as of June 30, 1996.
The Company expects a net loss for 1996 and anticipates recognizing a deferred
tax benefit for this and prior operating losses and other net deferred tax
assets only to the extent the Company has a current tax provision. Thus, the
Company
11
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anticipates no income tax expense will be recognized in 1996. Although
the Company expects to incur a net loss in 1996, the Company expects to pay
income taxes in 1996, due primarily to differences in the timing of recognition
of the amortization of intangible assets for financial reporting and tax
purposes.
The Company intends to analyze the realizability of the net deferred tax assets
at each future reporting period. Such analysis may indicate that the
realization of various deferred tax benefits is more likely than not and,
therefore, the amount of deferred tax assets recognized may be increased.
Liquidity and Capital Resources
- -------------------------------
As of June 30, 1996, the Company's principal sources of liquidity included cash
and cash equivalents of $4.3 million. The Company also has a revolving bank
line of credit in the amount of $5.0 million of which there were no borrowings
outstanding. The line of credit expires December 31, 2000.
During the six months ended June 30, 1996, the Company generated $9.7 million in
net cash flow from operating activities and received a $2.0 million principal
payment on a note receivable from Anasazi Inc. Cash generated from these
sources was used to fund capital expenditures of $2.7 million, to fund
acquisitions of $3.5 million and to repay long-term debt of $4.7 million. Also,
in March 1996, the Company sold 3,335,000 shares of common stock at an initial
public offering price of $15 per share, resulting in net proceeds to the
Company, after deducting underwriting discounts and offering expenses, of
approximately $44.8 million. The net proceeds from the IPO were used to repay
long-term debt of $40.3 million and to pay accrued dividends of $4.5 million on
redeemable convertible Series A Preferred Stock. In conjunction with the $40.3
million repayment of long-term debt, the Company decreased the interest rates on
its long-term debt by favorably amending its credit facility with its banks in
April 1996. As of the closing of the IPO, all of the 8,999,999 outstanding
shares of redeemable convertible Series A Preferred Stock were automatically
converted into 17,999,998 shares of common stock, at which time the accrued
dividends became payable.
Although the Company expects to incur a net loss in 1996, the Company expects to
pay income taxes in 1996, due primarily to differences in the timing of
recognition of the amortization of intangible assets for financial reporting and
tax purposes.
The Company believes that cash generated from operations and the amount
available under the revolving bank line of credit will be sufficient to meet its
anticipated cash requirements for operations, income taxes, debt service, and
anticipated capital expenditures for the current year.
12
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CSG SYSTEMS INTERNATIONAL, INC.
PART II. OTHER INFORMATION
Items 1 - 5. None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.05 Amended and Restated Loan Agreement among CSG Systems Inc.,
certain lenders, and Banque Paribas, as Agent, dated
April 26, 1996.
11.01 Statement re: Computation of Per Share Earnings
27.01 Financial Data Schedule (EDGAR Version Only)
(b) Reports on Form 8-K
None
13
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SIGNATURES
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 5, 1996
CSG SYSTEMS INTERNATIONAL, INC.
/s/ Neal C. Hansen
- ----------------------------------
Neal C. Hansen
Chairman and Chief Executive Officer
(Principal Executive Officer)
/s/ David I. Brenner
- ----------------------------------
David I. Brenner
Executive Vice President and Chief Financial
Officer
(Principal Financial Officer)
/s/ Randy R. Wiese
- ----------------------------------
Randy R. Wiese
Controller and Principal Accounting Officer
(Principal Accounting Officer)
14
<PAGE>
CSG SYSTEMS INTERNATIONAL, INC.
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
2.05 Amended and Restated Loan Agreement among CSG Systems, Inc.,
certain lenders, and Banque Paribas, as Agent, dated April 26,
1996
11.01 Statement re: Computation of Per Share Earnings
27.01 Financial Data Schedule (EDGAR Version Only)
15
<PAGE>
==============================================
AMENDED AND RESTATED LOAN AGREEMENT
among
CSG SYSTEMS, INC.
and
THE LENDERS NAMED HEREIN
and
BANQUE PARIBAS,
AS AGENT
April 26, 1996
==============================================
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TABLE OF CONTENTS
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Article I Definitions............................................................................ 1
Section 1.1 Defined Terms.............................................................. 1
Section 1.2 Other Interpretive Provisions.............................................. 24
(a) Accounting Terms........................................................... 24
(b) Other Terms................................................................ 24
(c) Performance; Time.......................................................... 25
(d) Laws....................................................................... 25
(e) Rounding................................................................... 25
(f) Schedules and Exhibits..................................................... 25
Article II The Credits............................................................................ 25
Section 2.1 Amounts and Terms of Commitments........................................... 25
2.1.1 Term Facility.............................................................. 25
(a) General Provisions Relating to Term Facility Loans................ 26
(b) Permitted Uses of Term Facility Loan Proceeds..................... 26
(c) Other Provisions Effective Upon the Second Closing................ 26
2.1.2 Revolving Credit Facility.................................................. 27
(a) Limitation on Each Lender's Obligation............................ 27
(b) Funding of Revolving Loans to the Agent........................... 27
(c) Disbursement of Revolving Loans to the Borrower................... 28
(d) Over Advances..................................................... 28
(e) General Provisions Relating to Revolving Loans.................... 28
(f) Permitted Uses of Revolving Loan Proceeds......................... 28
Section 2.2 Notes...................................................................... 29
(a) Term Facility Notes........................................................ 29
(b) Revolving Loan Notes....................................................... 29
(c) Notations in the Lenders' Books and Records................................ 29
Section 2.3 Repayment of Principal Amount of Loans..................................... 29
(a) Repayment of the Term Facility Loans....................................... 29
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(b) Repayment of Revolving Loans...................................... 29
Section 2.4 Payment of Interest on the Loans.................................. 29
(a) The Term Facility Loans........................................... 30
(b) Revolving Loans................................................... 30
(c) Interest Payment Dates............................................ 30
(d) Interest Upon Events of Default................................... 30
(e) Limitations on Interest Rates..................................... 30
Section 2.5 Procedure for the Borrowing of Revolving Loans.................... 30
Section 2.6 Conversion and Continuation Elections............................. 31
Section 2.7 Optional Prepayments.............................................. 33
Section 2.8 Mandatory Prepayments............................................. 33
(a) Dispositions...................................................... 33
(b) Replacement or Refinancing Funded Debt............................ 34
(c) Early Termination of Billing Service Agreements................... 34
(d) General........................................................... 34
Section 2.9 Commitment Fee for Providing Revolving Commitments................ 34
Section 2.10 Calculation of Interest........................................... 35
Section 2.11 Payments.......................................................... 35
Section 2.12 Payment on Non-Business Days...................................... 35
Section 2.13 Application of Payments........................................... 35
Section 2.14 Distribution of Payments.......................................... 36
Section 2.15 The Agent's Right to Assume Funds Available for Loans............. 36
Section 2.16 The Agent's Right to Assume Payments Will be Made by the
Borrower.......................................................... 36
Article III Taxes, Yield Protection And Illegality....................................... 37
Section 3.1 Taxes............................................................. 37
Section 3.2 Illegality........................................................ 40
Section 3.3 Increased Costs................................................... 41
Section 3.4 Inability to Determine Rates...................................... 41
Section 3.5 Prepayment of LIBOR Loans......................................... 41
Section 3.6 Capital Requirements.............................................. 42
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Section 3.7 Certificates of Lenders.................................................... 43
Section 3.8 Substitution of Lenders.................................................... 43
Section 3.9 Survival................................................................... 43
Article IV Conditions Precedent To The Second Closing And The Making Of
Loans.................................................................................. 43
Section 4.1 Conditions Precedent to the Second Closing................................. 43
(a) Corporate Documents........................................................ 43
(i) The Borrower...................................................... 43
(ii) Holdings.......................................................... 44
(iii) IntelliTEK........................................................ 44
(b) Loan Documents............................................................. 45
(i) This Agreement.................................................... 45
(ii) Term Facility Notes............................................... 45
(iii) Designation of Responsible Persons................................ 45
(iv) Reaffirmation of Guaranty......................................... 45
(c) Return of Tranche-A Notes and Tranche-B Notes.............................. 45
(d) Payoff Letters............................................................. 45
(e) Repayment of Obligations................................................... 46
(f) Opinion of the Borrower's Counsel.......................................... 46
(g) Title Policies............................................................. 46
(h) UCC Searches............................................................... 46
(i) UCC Amendments and Notices................................................. 46
(j) The Borrower's Bring-Down Certificate...................................... 46
(k) Amendment Fee.............................................................. 46
(l) Officer's Certificate...................................................... 46
(m) Other Documents............................................................ 47
Section 4.2 The Making of Revolving Loans.............................................. 47
Article V The Borrower's Representations And Warranties.......................................... 47
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Section 5.1 Organization, Power and Authority of the Borrower................. 47
Section 5.2 Organization, Power and Authority of the Borrower's Subsidiaries.. 47
Section 5.3 Loan Documents and Notes Authorized; Binding Obligations.......... 48
Section 5.4 No Conflict....................................................... 48
Section 5.5 Capital Structure................................................. 48
Section 5.6 Financial Condition............................................... 48
Section 5.7 No Material Adverse Change........................................ 49
Section 5.8 Ownership of Properties........................................... 49
Section 5.9 Executive Offices; Trade Names.................................... 49
Section 5.10 Litigation........................................................ 49
Section 5.11 Material Documents; Third Party Consents.......................... 49
Section 5.12 No Government Consents Needed..................................... 50
Section 5.13 Persons Signing Authorized........................................ 50
Section 5.14 Solvency.......................................................... 50
Section 5.15 Employment and Labor Agreements................................... 50
Section 5.16 ERISA............................................................. 50
Section 5.17 Labor Matters..................................................... 50
Section 5.18 Margin Regulations................................................ 51
Section 5.19 Taxes............................................................. 51
Section 5.20 Schedule of Deposit Accounts...................................... 51
Section 5.21 Intellectual Property Rights...................................... 51
Section 5.22 Other Regulations................................................. 51
Section 5.23 Nature of Representations and Warranties.......................... 52
Article VI Insurance..................................................................... 52
Section 6.1 Insurance by the Borrower......................................... 52
Section 6.2 General Insurance Requirements.................................... 52
(a) Workers' Compensation Insurance................................... 52
(b) Commercial General Liability...................................... 52
(c) Automobile Liability Insurance.................................... 53
(d) Excess Insurance.................................................. 53
(e) 53
(f) Property Damage Insurance......................................... 53
(g) Extra Expense/Business Interruption Insurance..................... 53
(h) ERISA Insurance................................................... 53
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Section 6.3 Endorsements...................................................... 53
Section 6.4 Conditions........................................................ 54
Section 6.5 Evidence of Insurance............................................. 54
Section 6.6 No Duty of Lender to Verify....................................... 54
Article VII Affirmative Covenants Of The Borrower........................................ 55
Section 7.1 Records and Reports............................................... 55
(a) Quarterly Borrower-Prepared Financial Statements.................. 55
(b) Annual Audited Financial Statements............................... 55
(c) Accountants' Statement............................................ 56
(d) Compliance Certificate............................................ 56
(e) Borrowing Base Certificate........................................ 56
(f) Monthly Reports................................................... 56
(g) Financial Forecasts............................................... 56
(h) SEC Filings....................................................... 57
(i) Other Reports..................................................... 57
(j) Notices........................................................... 57
(k) Termination Events/Prohibited Transaction......................... 57
(l) ERISA............................................................. 57
(m) Pension Plans..................................................... 58
(n) Tax Returns....................................................... 58
(o) Other Information................................................. 58
Section 7.2 Maintenance of Rights and Properties.............................. 58
(a) Maintenance of Existence and Rights............................... 58
(b) Maintenance of Properties......................................... 58
Section 7.3 Taxes and Other Liabilities....................................... 58
Section 7.4 Inspection of Books and Records................................... 59
Section 7.5 Inspection and Audit of Collateral................................ 59
Section 7.6 Compliance With Laws.............................................. 59
Section 7.7 Agreements........................................................ 59
Section 7.8 Supplemental Disclosure........................................... 59
Section 7.9 Further Assurances................................................ 59
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Article VIII Negative Covenants Of The Borrower............................................ 60
Section 8.1 Limitation on Liens............................................... 60
Section 8.2 Consolidations and Mergers........................................ 62
Section 8.3 Loans and Investments............................................. 62
Section 8.4 Limitation on Indebtedness........................................ 63
Section 8.5 Transactions with Affiliates...................................... 63
Section 8.6 Use of Proceeds................................................... 63
Section 8.7 Lease Obligations................................................. 64
Section 8.8 Capital Expenditures.............................................. 64
Section 8.9 Restricted Dividends and Distributions............................ 64
Section 8.10 Dividends, Distributions and Loans to Holdings.................... 65
Section 8.11 Modification of Certain Agreements................................ 65
Section 8.12 Maintenance of Business........................................... 65
Section 8.13 ERISA............................................................. 66
Section 8.14 No Use of any Lender's Name....................................... 66
Section 8.15 Accounting Changes................................................ 66
Article IX Financial Covenants Of The Borrower........................................... 66
Section 9.1 Maximum Leverage Ratio............................................ 67
Section 9.2 Minimum Fixed Charge Coverage Ratio............................... 67
Section 9.3 Minimum Adjusted Net Worth........................................ 67
Article X Events Of Default And Remedies................................................ 67
Section 10.1 Events of Default................................................. 67
(a) Installments of Principal......................................... 67
(b) Other Payments.................................................... 67
(c) Cross Defaults.................................................... 68
(d) Representations and Warranties.................................... 68
(e) Specific Defaults................................................. 68
(f) Other Defaults.................................................... 68
(g) Insolvency; Voluntary Proceedings................................. 68
(h) Involuntary Proceedings........................................... 69
(i) Material Adverse Change........................................... 69
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(j) Monetary Judgments................................................ 69
(k) Non-Monetary Judgments............................................ 69
(l) Collateral........................................................ 69
(m) Rate Contracts.................................................... 69
(n) Governmental Action............................................... 70
(o) Holdings Defaults................................................. 70
Section 10.2 Waiver of Default................................................. 70
Section 10.3 Remedies.......................................................... 70
Section 10.4 Set-Off........................................................... 71
(a) Rights of Set-Off................................................. 71
(b) Required Lenders' Consent to Set-Off Required..................... 71
Section 10.5 Sharing of Payments............................................... 71
Section 10.6 Rights and Remedies Cumulative.................................... 72
Article XI The Agent..................................................................... 72
Section 11.1 Appointment and Authorization..................................... 72
Section 11.2 Delegation of Duties.............................................. 72
Section 11.3 Liability of Agent................................................ 72
Section 11.4 Reliance by the Agent............................................. 73
Section 11.5 Notice of Default................................................. 73
Section 11.6 Credit Decision................................................... 73
Section 11.7 Indemnification................................................... 74
Section 11.8 Agent in Individual Capacity...................................... 75
Section 11.9 Successor Agent................................................... 75
Section 11.10 Collateral Matters................................................ 75
Article XII Miscellaneous................................................................. 76
Section 12.1 Amendments and Waivers............................................ 76
Section 12.2 Notices........................................................... 77
Section 12.3 No Waiver by Agent or the Lenders................................. 77
Section 12.4 Entire Agreement; Construction.................................... 78
Section 12.5 Indemnification................................................... 78
Section 12.6 Costs and Expenses................................................ 79
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Section 12.7 Reliance by the Lenders........................................... 79
Section 12.8 Marshalling; Payments Set Aside................................... 79
Section 12.9 No Set-Offs by the Borrower....................................... 80
Section 12.10 Successors and Assigns............................................ 80
Section 12.11 Assignments, Participations, Etc.................................. 80
Section 12.12 Headings.......................................................... 82
Section 12.13 Severability...................................................... 82
Section 12.14 Notification of Addresses, Lending Offices, Etc................... 82
Section 12.15 No Third Parties Benefitted....................................... 82
Section 12.16 Relationship of Parties........................................... 83
Section 12.17 Time.............................................................. 83
Section 12.18 Counterparts...................................................... 83
Section 12.19 Equitable Relief.................................................. 83
Section 12.20 Notice of Claims; Claims Bar...................................... 83
Section 12.21 Waiver of Punitive Damages........................................ 84
Section 12.22 Governing Law..................................................... 84
Section 12.23 Waiver of Jury Trial.............................................. 84
Section 12.24 No Novation....................................................... 84
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INDEX OF SCHEDULES
Schedule 1.1 - Term Facility Commitments
Schedule 1.2 - Revolving Commitments
Schedule 2 - Disclosure Schedule
INDEX OF EXHIBITS
Exhibit A.1 - Form of Term Facility Note
Exhibit A.2 - Form of Revolving Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion/Continuation
Exhibit D - Form of Compliance Certificate
Exhibit E - Form of Borrowing Base Certificate
Exhibit F - Form of Assignment and Acceptance
Exhibit G - Designation of Responsible Persons
Exhibit H - Non-Bank Lender Tax Certificate
Exhibit I - Form of Parent Term Note
ix
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AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT is entered into as of April 26,
1996, by and among CSG SYSTEMS, INC., a Delaware corporation formerly known as
Cable Services Group, Inc. (the "Borrower"), the LENDERS (as defined below) and
BANQUE PARIBAS, not in its individual capacity but solely in its capacity as the
Agent (as defined below). This Amended and Restated Loan Agreement amends,
restates and supersedes in its entirety the Original Loan Agreement, as defined
and set forth below.
RECITALS
A. The Borrower, the Lenders and the Agent desire to amend and restate in
its entirety that certain Loan Agreement dated as of November 30, 1994, as
amended by that certain Amendment No. 1 to Loan Agreement dated as of April 14,
1995 and that certain Amendment No. 2 to Loan Agreement dated as of August 30,
1995, (as so amended, the "Original Loan Agreement"), by and among the Borrower,
the Lenders, certain other financial institutions (which were Lenders (as such
term is defined in the Original Loan Agreement) under the Original Loan
Agreement but are not continuing as Lenders under this Agreement) and the Agent.
B. The Lenders have agreed to make and maintain the credit described in
this Agreement only on the terms, subject to the conditions and in reliance on
the representations and warranties set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants set forth below, and intending to be legally bound, the parties hereto
agree as follows:
AUTO NUMBERING BEGINS HERE ARTICLE I
DEFINITIONS
I.1 DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings:
"Accounts" means all accounts receivable now owned or hereafter received or
acquired by or belonging or owing to the Borrower arising out of goods sold or
services rendered by the Borrower in the Ordinary Course of Business.
1
<PAGE>
"Acquisition" means any transaction, or any series of related transactions,
by which the Borrower or any of its Subsidiaries directly or indirectly (a)
acquires any ongoing business or all or substantially all of the assets of any
firm, partnership, joint venture, corporation or division thereof, whether
through the purchase of assets, a merger or otherwise, or (b) acquires (in one
transaction or as the most recent transaction in a series of transactions)
control of at least a majority of the Stock of a corporation having ordinary
voting power for the election of directors, or (c) acquires control of fifty
percent (50.0%) or more of the ownership interest in any partnership, limited
liability company or joint venture.
"Acquisition-Related Expenses" means, as calculated on a consolidated basis
for the Borrower and its Subsidiaries for any period in accordance with GAAP,
each of the following expense items: (a) amortization of software acquired by
the Borrower for use in the Business, (b) amortization of Billing Service
Agreements between the Borrower and its Billing Service Customers and related
intangible assets, (c) amortization of non-competition agreements, (d)
amortization of goodwill, (e) expenses in respect of equity-based employee
compensation, (f) extraordinary items for early extinguishment of debt and (g)
non-cash amortization incurred from Investments by the Borrower in the Business
pursuant to SECTION 8.3(D).
"Adjusted Initial Equity Investment" means an amount equal to $35,644,000.
"Adjusted LIBOR" means, for each Interest Period in respect of LIBOR Loans
comprising part of the same Borrowing, an interest rate per annum (rounded
upward to the nearest 1/16th of one percent (0.0625%)) determined pursuant to
the following formula:
LIBOR
Adjusted LIBOR = ------------------------------------
1.00 - Enrodollar Reserve Percentage
The Adjusted LIBOR shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.
"Adjusted Net Worth" means, as calculated on a consolidated basis for the
Borrower and its Subsidiaries as of any date of determination, the sum of (a)
the Adjusted Initial Equity Investment and (b) Cumulative Adjusted Net Income.
"Affected Lender" has the meaning set forth in SECTION 3.8.
"Affiliate" means, with respect to any Person, each other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such Person (excluding any trustee under, or any committee with
responsibility for administering, any Pension Plan or Employee Benefit Plan). A
Person shall be deemed to be "controlled by" any other Person if such other
Person possesses, directly or indirectly, power (a) to vote five percent (5.0%)
or
2
<PAGE>
more of the securities (on a fully diluted basis) having ordinary voting power
for the election of directors, managing general partners or managing members or
(b) to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.
"Affiliate Agreements" means the separate agreements entered into between
FDC, FDR, FDT or another Affiliate of FDC, on the one hand, and the Borrower, on
the other hand, listed on ITEM 5.11 of the DISCLOSURE SCHEDULE, providing for
the rendering of various printer maintenance, credit card processing and
authorization, overflow mailing, PBX, collection, marketing and other services.
"Agent" means Banque Paribas solely when acting in its capacity as the
Agent under any of the Loan Documents and any successor Agent.
"Agent-Related Persons" means Banque Paribas and any successor Agent
appointed pursuant to SECTION 11.9, together with their respective Affiliates,
and the officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
"Agent's Payment Office" means the address for payments set forth on the
signature page hereto in relation to the Agent or such other address as the
Agent may from time to time specify in accordance with SECTION 12.2.
"Aggregate Commitments" means the combined Commitments of the Lenders in
the aggregate principal amount of Forty-Five Million Dollars ($45,000,000).
"Aggregate Revolving Commitment" means the combined Revolving Commitments
of the Lenders in the initial aggregate principal amount of Five Million Dollars
($5,000,000).
"Aggregate Term Facility Commitment" means the combined Term Facility
Commitments of the Lenders in the aggregate principal amount of Forty Million
Dollars ($40,000,000).
"Agreement" means the Original Loan Agreement, as amended and restated by
this Amended and Restated Loan Agreement dated as of April 26, 1996, including
all amendments, modifications and supplements hereto and all appendices,
exhibits and schedules to any of the foregoing, and shall refer to the Agreement
as the same may be in effect from time to time.
"Anasazi" has the meaning set forth in SECTION 8.3(B).
"Applicable Margin" means:
(A) with respect to (i) Base Rate Term Facility Loans, zero percent
(0.00%), and (ii) LIBOR Term Facility Loans, one percent (1.00%);
3
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(B) with respect to (i) Base Rate Revolving Loans, zero percent
(0.00%), and (ii) LIBOR Revolving Credit Loans, one percent (1.00%).
"Assignee" has the meaning set forth in SUBSECTION 12.11(A).
"Assignment and Acceptance" has the meaning specified in SUBSECTION
12.11(A).
"Attorney Costs" means and includes all fees and disbursements of any law
firm or other external counsel, the allocated cost of internal legal services
and all disbursements of internal counsel.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978, as
codified under Title 11 of the United States Code, and the Bankruptcy Rules
promulgated thereunder.
"Base Rate" means for any day, the higher of (a) the per annum floating
rate established by Banque Paribas as its "prime rate" for domestic (United
States) commercial loans in effect on such day, and (b) one-half percent (0.50%)
in excess of the Federal Funds Rate in effect on such day. Banque Paribas' prime
rate is a rate set by Banque Paribas based upon various factors, including
Banque Paribas' costs and desired return, general economic conditions and other
factors, and is neither directly tied to an external rate of interest or index
or necessarily the lowest or best rate of interest actually charged by Banque
Paribas at any given time to any customer or particular class of customers for
any particular credit extension. Banque Paribas may make commercial or other
loans at rates of interest at, above or below its prime rate.
"Base Rate Loan" means a Loan that bears interest based on the Base Rate.
"Base Rate Revolving Loan" has the meaning set forth in SUBSECTION
2.1.2(E).
"Base Rate Term Facility Loan" has the meaning set forth in SUBSECTION
2.1.1(A).
"Billing Service Agreement" means any subscriber billing service agreement
entered into by the Borrower with any Person, pursuant to which the Borrower
provides subscriber management, billing, statement mailing, reporting, tele-
marketing, pay-per-view itemization, processing, printing, support or other
similar services.
"Billing Service Agreement Termination" means the exercise by any Billing
Service Customer of any right contained in such Billing Service Customer's
Billing Service Agreement to terminate such Billing Service Agreement prior to
its stated expiration date.
"Billing Service Agreement Termination Proceeds" means all proceeds
obtained by the Borrower, including early termination fees, liquidated damages
or other amounts (net of deconversion costs) upon or with respect to the
occurrence of a Billing Service Agreement Termination.
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"Billing Service Customer" means any Person who has entered into a Billing
Services Agreement with the Borrower.
"Borrowing" means a borrowing under this Agreement consisting of Loans made
to the Borrower on the same day by the Lenders pursuant to ARTICLE II.
"Borrowing Base" means an amount equal to the value of eighty percent
(80.0%) of the Borrower's Eligible Accounts.
"Borrowing Base Certificate" means a certificate signed by the Borrower's
chief financial officer or Controller/Principal Accounting Officer,
substantially in the form set forth in EXHIBIT E, completed with appropriate
insertions and attachments for the purpose of having such certificate disclose
the matters certified therein and the method of computation thereof.
"Business" means the business of providing subscriber management services,
billing and statement mailing services, management reporting, live voice
operator tele-marketing services, Cableperks and billing statement inserts,
refund check processing, pay-per-view itemization, insert printing, decision
support services, VIP services and other similar services and developing and
licensing related software to multiple cable system operators, direct broadcast
satellite television operators, cable programming providers, video dial tone
providers, telephony and telephone system operators and on-line service
providers.
"Business Day" means any day other than a Saturday, Sunday or other day on
which banking institutions in the States of California, Nebraska, Illinois or
New York are authorized or required by law or other governmental action to
close, except that if any determination of a "Business Day" shall relate to a
LIBOR Loan, the term "Business Day" shall mean a day on which dealings are
carried on in the London interbank market.
"Capital Expenditures" means all payments for any fixed assets or
improvements or for replacements, substitutions or additions thereto, that have
a useful life of more than one (1) year and which are required to be capitalized
under GAAP.
"Capital Lease" means, as to any Person, any lease of any Property by such
Person as lessee that is classified and accounted for as a "capital lease" on
the balance sheet of such Person prepared in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP,
would appear on a balance sheet of such Person in respect of such Capital Lease
or otherwise be disclosed in a note to such balance sheet.
"Cash Equivalents" means:
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(A) securities issued or unconditionally guaranteed or insured by
the United States Government or any agency or any State thereof and backed by
the full faith and credit of the United States or such State having maturities
of not more than six (6) months from the date of acquisition;
(B) certificates of deposit, time deposits, Eurodollar time
deposits, repurchase agreements, reverse repurchase agreements, or bankers'
acceptances, having in each case a tenor of not more than six months, issued by
any Lender, or by any nationally or state chartered commercial bank or any
branch or agency of a foreign bank licensed to conduct business in the United
States having combined capital and surplus of not less than $100,000,000 whose
short term securities are rated at least A-1 by Standard & Poor's Corporation
and P-1 by Moody's Investors Service, Inc.; and
(C) commercial paper of an issuer rated at least A-1 by Standard &
Poor's Corporation or P-1 by Moody's Investors Service Inc. and in either case
having a tenor of not more than six (6) months.
"Chandler Road Property" means all of the Borrower's right, title and
interest in and to the real property located at 14301 Chandler Road, Omaha,
Nebraska, leased by the Borrower from Nebco, Inc., including all improvements
located on such property and all easements and other rights appurtenant to such
property.
"Charges" means all federal, state, county, city, municipal, local, foreign
or other governmental taxes, levies, assessments, charges or claims, in each
case then due and payable, upon or relating to (a) the Collateral, (b) the
Loans, (c) the Borrower's employees, payroll, income or gross receipts, (d) the
Borrower's ownership or use of any of its Properties or assets or (e) any other
aspect of the Borrower's business.
"Code" means the Internal Revenue Code of 1986, as amended, the Treasury
Regulations adopted thereunder and the Treasury Regulations proposed thereunder
(to the extent Agent, at its sole discretion, reasonably determines that such
proposed regulations set forth the regulations that apply in the circumstances).
"Collateral" means all Property and interests in Property, and all proceeds
thereof now owned or hereafter acquired by the Borrower in or upon which a Lien
now or hereafter exists in favor of the Lenders or the Agent, for the benefit of
the Lenders, whether under this Agreement or under any other document executed
by any such persons and delivered to the Agent or the Lenders.
"Collateral Documents" means, collectively, (a) the Leasehold Deeds of
Trust, the Security Agreement, the Pledge Agreement, the separate Grants of IP
Security Interests, the Financing Statements and all other agreements,
assignments, documents and instruments from
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time to time executed and delivered by the Borrower granting, assigning or
transferring or otherwise evidencing of relating to any Lien granted, assigned
or transferred to the Agent or any Lender pursuant to or in connection with the
transactions contemplated by this Agreement, and (b) any amendments,
supplements, modifications, renewals, restatements, replacements,
consolidations, substitutions and extensions of any of the foregoing.
"Commitments" means, for each Lender, its Term Facility Loan Commitment and
its Revolving Commitment, if any.
"Commitment Percentage" means, as to any Lender, the percentage equivalent
of such Lender's Term Facility Commitment or Revolving Commitment divided by the
Aggregate Term Facility Commitment or Aggregate Revolving Commitment, as
applicable.
"Compliance Certificate" means a certificate signed by the Borrower's chief
financial officer or Controller/Principal Accounting Officer, substantially in
the form set forth in EXHIBIT D, with such changes therein as the Agent may from
time to time reasonably request for the purpose of having such certificate
disclose the matters certified therein and the method of computation thereof.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), co-made or discounted or sold with recourse by that Person,
or in respect of which that Person is otherwise directly or indirectly liable,
including any such obligation for which that Person is in effect liable through
any agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise
acquire such primary obligations or any property constituting direct or indirect
security therefor, or (b) to advance or provide funds (i) for the payment or
discharge of any such primary obligation (whether in the form of loans,
advances, capital stock purchases, capital contributions or otherwise), or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, or (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold harmless
the holder of any such primary obligation against loss in respect thereof, or
(e) to make payment for any products, materials or supplies or for any
transportation, services or lease regardless of the non-delivery or non-
furnishing thereof, in any such case if the purpose or intent of such agreement
is to provide assurance that such obligation 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. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determined amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably
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anticipated liability in respect thereof as determined by such person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guaranty or other support
arrangement.
"Continuation Date" means any date on which the Borrower elects to continue
a LIBOR Loan into another Interest Period.
"Conversion Date" means any date on which the Borrower elects to convert a
Base Rate Loan to a LIBOR Loan or a LIBOR Loan to a Base Rate Loan.
"Copyrights" means all copyrights, whether registered or unregistered, held
pursuant to the laws of the United States, any State thereof or of any other
country, including all registrations, applications and recordings in respect
thereof in the federal Copyright Office or with any other Governmental
Authority.
"CSG Employee Stock Purchase Plan" means the CSG Employee Stock Purchase
Plan adopted by the Board of Directors of Holdings on February 14, 1995.
"Cumulative Adjusted Net Income" means, as calculated on a consolidated
basis for the Borrower and its Subsidiaries as of any date, cumulative Net
Income since the Second Closing Date, adjusted for (a) Acquisition-Related
Expenses and (b) a pro forma tax provision based on a thirty-eight percent
(38.0%) tax rate, each such adjustment being calculated on a cumulative basis
since the Second Closing Date.
"Default" means any event or circumstance which, with the giving of notice,
the lapse of time, or both, would (if not cured or otherwise remedied during
such time) constitute an Event of Default.
"Designated Deposit Account" means a deposit account maintained by the
Borrower with Norwest Bank Nebraska, N.A. (account number 1155026349) or such
other depository institution as the Borrower shall from time to time designate
by written notice to the Agent, which designation shall be subject to the
Agent's prior written approval.
"Designation of Responsible Persons" means a Designation of Responsible
Persons dated the Second Closing Date, executed by the president of the
Borrower, substantially in the form of EXHIBIT G, identifying the officers of
the Borrower as having authority to request, convert or continue Loans
hereunder.
"Disclosure Schedule" means SCHEDULE 2.
"Disposition" means the sale, lease, conveyance or other disposition by the
Borrower of any of its Property or other assets in a single transaction or
related series of transactions, other than sales of inventory in the Ordinary
Course of Business.
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"Dollars", "dollars" and "$" each mean lawful money of the United States of
America.
"Domestic Lending Office" means, with respect to each Lender, the office of
that Lender designated as such in the signature pages hereto or such other
office of the Lender as it may from time to time specify to the Borrower and the
Agent.
"Due Inquiry" means any and all inquiry, investigation and analysis which a
prudent Person would undertake and complete with diligence with the intent of
coming to an understanding appropriate to the scope of importance of the subject
to which the inquiry relates.
"EBITDA" means, as calculated on a consolidated basis for the Borrower and
its Subsidiaries for any period as of any date of determination, the sum of (a)
Net Income, plus (b) all amounts treated as expenses for depreciation and the
amortization of intangibles of any kind to the extent included in the
determination of Net Income, plus (c) all accrued taxes on or measured by income
to the extent included in the determination of Net Income, plus (d) Net Interest
Expense to the extent included in the determination of Net Income.
"Eligible Accounts" means, at any time, the aggregate of the Borrower's
Accounts, excluding, however:
(A) all Accounts in respect of which full payment has not been
received within ninety (90) days of the invoice date;
(B) all Accounts as to which the goods, merchandise or other
personal property or the rendition of services has not been fully and completely
delivered or performed;
(C) all Accounts against which the account debtor or any other
Person obligated to make payment thereon asserts any defense, offset,
counterclaim or other right to avoid or reduce the liability represented by such
Accounts;
(D) all Accounts as to which the account debtor or other Person
obligated to make payment thereon is insolvent, subject to bankruptcy or
receivership proceedings or has made an assignment for the benefit of creditors
or whose credit standing is unacceptable to the Agent and the Agent has so
notified Borrower;
(E) all Accounts in which an Affiliate of the Borrower is the
account debtor;
(F) all Accounts for any account debtor who comprises thirty
percent (30.0%) or more of Borrower's total Accounts;
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(G) all Accounts of any Governmental Agency or foreign account
debtor unless the Agent, on behalf of the Lenders, has received a Lien in and to
such Accounts which is perfected;
(H) in the event ten percent (10.0%) or more of the Accounts of any
account debtor in respect of which full payment has not been received within 120
days of the invoice date;
(I) any Account for which any portion of the payment thereof is due
more than sixty (60) days after the invoice date; and
(J) any Account which the Agent in its reasonable discretion shall
deem not to qualify as an Eligible Account.
"Eligible Assignee" means (a) a commercial bank organized under the laws of
the United States, or any state thereof, and having a combined capital and
surplus of at least $100,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country, and
having a combined capital and surplus of at least $100,000,000, provided that
such bank is acting through a branch or agency located in the United States, and
(c) any Lender Affiliate.
"Employee Benefit Plan" means any Pension Plan and any employee welfare
benefit plan, as defined in Section 3(1) of ERISA, that is maintained for the
employees of any Person or any ERISA Affiliate of such Person.
"Employee Side Letter Agreements" means the separate side letter agreements
entered into between any FDC, FDR or the Borrower, on the one hand, and
Holdings, on the other hand, and listed on ITEM 5.11 of the DISCLOSURE SCHEDULE,
relating to employee matters.
"Environmental Indemnity" means the Environmental Indemnity dated as of the
Original Closing Date, executed and delivered by the Borrower and Anasazi Inc.
in favor of and to each of the Lenders and the Agent.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means, as applied to any Person, any trade or business
(whether or not incorporated) which is a member of a group of which that Person
is a member and which is under common control within the meaning of the
regulations promulgated under Section 414 of the Code.
"Eurodollar Reserve Percentage" means the reserve percentage (expressed as
a decimal, rounded upward to the nearest 1/100th of one percent (0.01%)) in
effect on the date LIBOR for
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such Interest Period is determined (whether or not applicable to any Lender)
under regulations issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities") having a term
comparable to such Interest Period.
"Event of Default" means any of the events or circumstances set forth in
SECTION 10.1.
"Event of Loss" means, with respect to any Property having a net book value
in excess of $500,000, any of the following: (a) any material loss, destruction
or damage of such Property or (b) any actual condemnation, seizure or taking, by
exercise of the power of eminent domain or otherwise, of such Property, or
confiscation of such Property or the requisition of the use of such Property.
"FDC" means First Data Corporation, a Delaware corporation.
"FDR" means First Data Resources, Inc., a Delaware corporation and a
wholly-owned Subsidiary of FDC.
"FDT" means First Data Technologies, Inc., a Delaware corporation and a
wholly-owned Subsidiary of FDC.
"Federal Funds Rate" means, for any period, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds Effective Rate". If on
any relevant day the appropriate rate for such previous day is not yet published
in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day
will be the arithmetic mean of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m., New York Time, on that day by each of
three leading brokers of Federal funds transactions in New York City selected by
the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"Financing Statements" means the UCC-1 financing statements and fixture
filings and UCC-2 amendments, duly executed by the Borrower, as debtor, in favor
of the Agent, for the benefit of the Lenders, as secured party, and duly filed
with the Governmental Authorities required by the Agent.
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"Fiscal Quarter" means each fiscal quarter of the Borrower ending on each
March 31, June 30, September 30 and December 31, unless quarters ending on
different dates are consented to in writing in advance by the Agent.
"Fiscal Year" means each fiscal year of the Borrower ending on each
December 31, unless a fiscal year ending on a different date is consented to in
writing in advance by the Agent.
"Fixed Charges" means, as calculated for the Borrower and its Subsidiaries
for any period as of any date of determination, the sum of (a) Net Interest
Expense, plus (b) all taxes on or measured by income actually paid, plus (c)
scheduled amortization of Funded Debt, determined on an historical basis
(regardless of whether such amounts were actually paid).
"Fixed Charge Coverage Ratio" means, as calculated quarterly as of the last
day of each Fiscal Quarter on a rolling four (4) quarter basis, the ratio of (a)
Operating Cash Flow to (b) Fixed Charges.
"Form 1001" has the meaning set forth in SUBSECTION 3.1(G).
"Form 4224" has the meaning set forth in SUBSECTION 3.1(G).
"Funded Debt" means, for the Borrower as of any date of determination, the
total amount of all interest bearing obligations (including all issued and
undrawn letters of credit), which obligations shall include the principal amount
outstanding under all Loans advanced by the Lenders hereunder, but shall
specifically exclude Capital Lease Obligations.
"Funding Date" means with respect to any proposed Borrowing hereunder, the
date funds are advanced to Borrower for any Loan.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Person as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means (a) any federal, state, county or municipal
government, or political subdivision thereof, (b) any governmental or quasi-
governmental agency, authority, board, bureau, commission, department,
instrumentality or public body, (c) any court or administrative tribunal or (d)
with respect to any Person, any arbitration tribunal or other non-governmental
authority to whose jurisdiction that Person has consented.
"Grants of IP Security Interests" means each of the (a) Grant of Security
Interest (Patents), dated the Original Closing Date, executed by the Borrower
and duly filed with the federal Patent and Trademark Office, (b) Grant of
Security Interest (Trademarks), dated the
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Original Closing Date, executed by the Borrower and duly filed with the federal
Patent and Trademark Office and (c) Grant of Security Interest (Copyrights),
dated the Original Closing Date, executed by the Borrower and duly filed with
the federal Copyright Office, in each case with respect to the Liens granted to
the Agent, for the benefit of the Lenders, in the Security Agreement.
"Gross Interest Expense" means, as calculated on a consolidated basis for
the Borrower and its Subsidiaries for any period as at any date of
determination, cash interest expense for such period (including all commissions,
discounts, fees and other charges under letters of credit and similar
instruments and under any Rate Contract) classified and accounted for in
accordance with GAAP.
"Holdings" means CSG Systems International, Inc. (formerly named CSG
Holdings, Inc.), a Delaware corporation.
"Holdings Collateral Documents" means, collectively, the Holdings Security
Agreement, the Holdings Financing Statements and each other agreement,
assignment, document or instrument executed and delivered by Holdings granting,
assigning or transferring or otherwise evidencing or relating to a Lien to or in
favor of the Agent or any Lender.
"Holdings Financing Statements" means the UCC-1 financing statements duly
executed by Holdings, as debtor, in favor of the Agent, for the benefit of the
Lenders, as secured party, and duly filed with the Governmental Authorities
required by the Agent.
"Holdings Guaranty" means the Guaranty dated as of the Original Closing
Date, executed by Holdings in favor of the Lenders and the Agent.
"Holdings Security Agreement" means the Security and Pledge Agreement dated
as of the Original Closing Date, by and between Holdings and the Agent, for the
benefit of the Lenders.
"Indebtedness" means, as to any Person, (a) all indebtedness of such Person
for borrowed money, including, without limitation, all amounts outstanding under
this Agreement and any of the other Loan Documents, (b) all Capital Leases of
such Person, (c) to the extent of the outstanding Indebtedness thereunder, all
obligations of such Person that is evidenced by a promissory note or other
instrument representing an extension of credit to such Person, whether or not
for borrowed money, (d) all obligations of such Person for the deferred purchase
price of Property or services (other than trade or other accounts payable in the
ordinary course of business in accordance with customary industry terms), (e)
all obligations of such Person of the nature described in clauses (a), (b), (c)
or (d), above, and not otherwise included therein that is secured by a Lien on
assets of such Person, whether or not that Person has assumed such obligation or
whether or not such obligation is non-recourse to the credit of such Person, but
only to the extent of the fair market value of the assets so subject to the
Lien, (f) all obligations of such Person arising under acceptance facilities or
under facilities for the discount of accounts
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receivable of such Person, (g) all obligations of such Person to reimburse the
issuer of any letter of credit issued for the account of such Person upon which
a draw has been made, (h) all obligations of such Person to a counterparty under
any Rate Contract and (i) all Contingent Obligations of such Person.
"Indemnified Matters" has the meaning set forth in SECTION 12.5.
"Indemnitees" has the meaning set forth in SECTION 12.5.
"Insolvency Proceeding" means (a) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors, in each of case (a) and (b) undertaken under federal, state or
foreign law, including the Bankruptcy Code.
"Intellectual Property" means all Copyrights, Trademarks, Patents, trade
secrets, customer lists, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, software, data bases, data, skill, expertise,
recipes, experience, processes, models, drawings, materials and records.
"IntelliTEK" means IntelliTEK Computer Corporation, a Delaware corporation
and a wholly-owned Subsidiary of the Borrower.
"Interest Differential" means, with respect to any prepayment of a LIBOR
Loan on a day other than an Interest Payment Date on which such LIBOR Loan
matures, the difference between (a) the per annum interest rate payable with
respect to such LIBOR Loan as of the date of the prepayment and (b) the Adjusted
LIBOR on, or as near as practicable to, the date of the prepayment for a LIBOR
Loan commencing on such date and ending on the last day of the applicable
Interest Period. The determination of the Interest Differential by the Agent
shall be conclusive in the absence of manifest error.
"Interest Payment Date" means, with respect to any LIBOR Loan, the last day
of each Interest Period applicable to such Loan and, with respect to Base Rate
Loans, the last Business Day of each Fiscal Quarter and each date a Base Rate
Loan is converted into a LIBOR Loan; provided, however, that if any Interest
Period for a LIBOR Loan exceeds three (3) months, interest shall also be paid on
the date which falls three (3) months after the beginning of such Interest
Period.
"Interest Period" means, as to any LIBOR Loan, the period commencing on the
date of such LIBOR Loan and ending on with respect to LIBOR Loans, the
numerically corresponding
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day (or, if there is no numerically corresponding day, on the last day) in the
calendar month that is one (1), two (2), three (3) or six (6) months thereafter,
in each case as the Borrower may elect; provided, however, that (a) no Interest
Period with respect to any LIBOR Term Facility Loan shall end later than the
Term Facility Maturity Date, (b) no Interest Period with respect to any LIBOR
Revolving Loan shall end later than the Revolving Credit Maturity Date, (c) if
an Interest Period would end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the immediately preceding Business Day, and
(d) interest shall accrue from and including the first Business Day of an
Interest Period to but excluding the last Business Day of such Interest Period.
"Interest Rate Determination Date" means each date for calculating the
LIBOR for purposes of determining the interest rate in respect of an Interest
Period. The Interest Rate Determination Date shall be the second Business Day
prior to the first day of the related Interest Period for such LIBOR Loan.
"Investment" means, when used in connection with any Person, any investment
by or of that Person, whether by means of purchase or other acquisition of
securities of any other Person or by means of loan, advance, capital
contribution, guaranty or other debt or equity participation or interest, or
otherwise, in any other Person, including any partnership and joint venture
interests of such Person in any other Person. The amount of any Investment
shall be the original principal or capital amount thereof less all returns of
principal or equity thereon (and without adjustment by reason of the financial
condition of such other Person) and shall, if made by the transfer or exchange
of Property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such Property.
"Investment Company Act" means the Investment Company Act of 1940, as
amended (15 U.S.C. (S) 80a-1 et seq.).
"IRS" means the Internal Revenue Service and any successor thereto.
"Leasehold Deeds of Trust" means each of the (a) Leasehold Deed of Trust,
Assignment of Leases and Rents and Fixture Filing dated the Original Closing
Date, executed by the Borrower, as trustor, to the Title Company, as trustee,
for the beneficial interest of the Agent, for the benefit of the Lenders, caused
to be recorded in the Mortgage Records of the County of Douglas, Nebraska,
covering all of the Borrower's right, title and interest in the North Park
(Building 6) Property, and the (b) Leasehold Deed of Trust, Assignment of Leases
and Rents and Fixture Filing dated the Original Closing Date, executed by the
Borrower, as trustor, to the Title Company, as trustee, for the beneficial
interest of the Agent, for the benefit of the Lenders, caused to be recorded in
the Mortgage Records of the County of Douglas, Nebraska, covering all of the
Borrower's right, title and interest in the Chandler Road Property.
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"Lender Affiliate" means a Person engaged primarily in the business of
commercial banking and that is an Affiliate of a Lender or of a Person of which
a Lender is an Affiliate.
"Lender Certificate" means has the meaning set forth in SECTION 4.1(C).
"Lenders" means the financial institutions which have executed signature
pages to this Agreement and such other Assignee financial institutions as shall
hereafter execute and deliver an Assignment and Acceptance with respect to all
or any portion of the Commitments and the Loans advanced and maintained pursuant
to the Commitments, in each case pursuant to and in accordance with SECTION
12.11.
"Lending Office" means, with respect to any Lender, the office or offices
of the Lender specified as its "Domestic Lending Office" opposite its name on
the applicable signature page hereto, or such other office or offices of the
Lender as it may from time to time notify the Borrower and the Agent.
"Leverage Ratio" means, as calculated quarterly as of the last day of each
Fiscal Quarter on a rolling four (4) Fiscal Quarter basis, the ratio of (a)
Total Indebtedness to (b) EBITDA.
"LIBOR" means, with respect to any Loan to be made, continued as or
converted into a LIBOR Loan, the London Inter-Bank Offered Rate (determined by
the Agent), rounded upward to the nearest 1/16th of one percent (0.0625%), at
which Dollar deposits are offered to Banque Paribas by major banks in the London
interbank market at or about 11:00 a.m., London Time, on the Interest Rate
Determination Date with respect to such Loan in an aggregate amount
approximately equal to the amount of such Loan and for a period of time
comparable to the number of days in the applicable Interest Period. The
determination of LIBOR by the Agent shall be conclusive in the absence of
manifest error.
"LIBOR Loan" means a Loan that bears interest based on Adjusted LIBOR.
"LIBOR Revolving Loan" has the meaning set forth in SUBSECTION 2.1.2(E).
"LIBOR Term Facility Loan" has the meaning set forth in SUBSECTION
2.1.1(A).
"Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment
for security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any Property, including any agreement to grant any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature of
a security interest, and the filing of or agreement to file or deliver any
financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.
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"Loan" means an extension of credit made by a Lender pursuant to ARTICLE
II, and may be a Base Rate Loan or a LIBOR Loan, depending upon the context.
"Loan Documents" means this Agreement, the Notes, the Collateral Documents,
the Environmental Indemnity, the Holdings Guaranty, the Holdings Collateral
Documents, the Paribas Side Letter and any and all other agreements (including,
without limitation, any Rate Contract), documents and instruments from time to
time executed and delivered by or on behalf or in support of the Borrower to the
Agent, any Lender or their respective authorized designee evidencing or
otherwise relating to the Loans as the same may from time to time be amended,
modified, supplemented, extended or renewed.
"Mandatory Prepayment" means any mandatory prepayment of the principal
amount of Term Facility Loans made pursuant to SECTION 2.8.
"Margin Regulations" means, collectively, Regulations G, T, U and X adopted
by the Federal Reserve Board (12 C.F.R. Parts 207, 220, 221 and 224,
respectively).
"Material Adverse Change" means any set of circumstances or events which
(a) has or could reasonably be expected to have any material adverse effect
whatsoever upon the validity or enforceability of any Loan Document, (b) is or
could reasonably be expected to be material and adverse to the condition
(financial or otherwise) or business operations of the Borrower, (c) materially
impairs or could reasonably be expected to materially impair the ability of the
Borrower to perform its Obligations or (d) materially impairs or could
reasonably be expected to materially impair the ability of the Agent or any
Lender to enforce any of its legal remedies pursuant to the Loan Documents.
"Maximum Availability" has the meaning set forth in SECTION 2.1.2.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Person or any Affiliate of such
Person is making, or is obligated to make, contributions or has made, or been
obligated to make, contributions within the preceding five (5) years.
"Net Income" means, as calculated on a consolidated basis for the Borrower
and its Subsidiaries for any period as at any date of determination, the net
income (or loss) from continuing operations, determined in accordance with GAAP,
of the Borrower and its Subsidiaries for such period taken as a single
accounting period.
"Net Interest Expense" means, as calculated on a consolidated basis for the
Borrower and its Subsidiaries for any period as at any date of determination,
(a) Gross Interest Expense, less (b) interest income for that period and Rate
Contract payments received.
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"Net Issuance Proceeds" means, in respect of any issuance of debt or
equity, cash proceeds and non-cash proceeds received or receivable in connection
therewith, net of reasonable out-of-pocket costs and expenses paid or incurred
in connection therewith in favor of any Person not an Affiliate of the Borrower,
except as are paid or payable to any such Affiliate upon fair and reasonable
terms that are duly approved by the disinterested members of the Borrower's
board of directors, fully disclosed to the Agent and no less favorable to the
Borrower than would obtain in a comparable arm's length transaction with a
Person not an Affiliate of the Borrower, such costs and expenses to be
consistent with standard investment bank practices for similar issuances.
"Net Proceeds" means proceeds in cash, checks or other cash equivalent
financial instruments (including Cash Equivalents) as and when received by the
Person making a Disposition, net of (a) the direct costs relating to such
Disposition excluding amounts payable to the Borrower or any Affiliate of the
Borrower, except as are paid or payable to any such Affiliate upon fair and
reasonable terms that are duly approved by the disinterested members of the
Borrower's board of directors, fully disclosed to the Agent and no less
favorable to the Borrower than would obtain in a comparable arm's length
transaction with a Person not an Affiliate of the Borrower, (b) sale, use or
other transaction taxes paid or payable as a result thereof and (c) amounts
required to be applied to repay principal, interest and prepayment premiums and
penalties on Indebtedness secured by a Permitted Lien on the asset which is the
subject of such Disposition. "Net Proceeds" shall also include proceeds paid on
account of any Event of Loss, net of (i) all money actually applied to repair or
reconstruct the damaged property or property affected by the condemnation or
taking, (ii) all of the costs and expenses reasonably incurred in connection
with the collection of such proceeds, award or other payments and (iii) any
amounts retained by or paid to parties having superior rights to such proceeds,
awards or other payments.
"North Park (Building 6) Property" means all of the Borrower's right, title
and interest in and to the real property located at North Park, Second Edition,
Building 6, Omaha, Nebraska, leased by the Borrower from NPS Limited
Partnership, including all improvements located on such property and all
easements and other rights appurtenant to such property.
"Note" means any Term Facility Note or Revolving Note, and any and all
replacements, extensions, substitutions and renewals of any such promissory
note.
"Notice of Borrowing" means a notice given by the Borrower to the Agent in
accordance with SECTION 2.5, substantially in the form of EXHIBIT B, with
appropriate insertions.
"Notice of Conversion/Continuation" means a notice given by the Borrower to
the Agent in accordance with SECTION 2.6, substantially in the form of EXHIBIT
C, with appropriate insertions.
"Obligations" means all loans, advances, debts, liabilities and
obligations, for monetary amounts owing by the Borrower to the Lenders or the
Agent, whether due or to become due,
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matured or unmatured, liquidated or unliquidated, contingent or non-contingent,
and all covenants and duties regarding such amounts, of any kind or nature,
present or future, whether or not evidenced by any note, agreement or other
instrument, arising under or in respect of any of the Loan Documents or under or
in respect of any Rate Contract. This term includes, without limitation, all
principal, interest (including interest that accrues after the commencement
against the Borrower of any action under the Bankruptcy Code), fees, including,
without limitation, any and all arrangement fees, loan fees, commitment fees,
agent fees and any and all other fees, expenses, costs or other sums (including
Attorney Costs) chargeable to the Borrower under any of the Loan Documents.
"Operating Cash Flow" means, as calculated on a consolidated basis for the
Borrower and its Subsidiaries for any period as at any date of determination,
(a) EBITDA, less (b) permitted Capital Expenditures actually made (as opposed to
committed).
"Operating Lease" means, with respect to any Person, any lease of any
Property by such Person as lessee (including leases which may be terminated by
the lessee at any time) that is, or should be classified and accounted for as an
"operating lease" on the balance sheets, or notes thereto, of such Person
prepared in accordance with GAAP.
"Operating Lease Obligations" means, with respect to any Operating Lease,
the amount of the obligations of the lessee thereunder that, in accordance with
GAAP, would appear on a balance sheet of such Person in respect of such
Operating Lease or otherwise be disclosed in a note to such balance sheet.
"Opinion of the Borrower's Counsel" means the favorable written legal
opinion of Abrahams, Kaslow & Cassman, special counsel to the Borrower and
Holdings, addressed to the Lenders and the Agent.
"Ordinary Course of Business" means, in respect of any transaction
involving the Borrower, the ordinary course of the Borrower's business, as
conducted by the Borrower in accordance with past practice and undertaken by the
Borrower in good faith and not for purposes of evading any covenant or
restriction in any Loan Document.
"Organizational Documents" means, for any corporation, the certificate or
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
and all applicable resolutions of the board of directors (or any committee
thereof) of such corporation.
"Original Loan Agreement" has the meaning set forth in Recital A of this
Agreement.
"Original Closing" means the time at which each of the conditions precedent
set forth in SECTION 4.1 of the Original Loan Agreement were duly satisfied by
the Borrower, as determined by the Lenders, in their sole discretion.
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"Original Closing Date" means November 30, 1994, the date on which the
Original Closing occurred.
"Originating Lender" has the meaning set forth in SECTION 12.11(D).
"Other Taxes" has the meaning specified in SUBSECTION 3.1(B).
"Over Advance" has the meaning set forth in SECTION 2.1.2(D).
"Parent Financing Statements" means the UCC-1 financing statements duly
executed by Holdings, as debtor, in favor of the Borrower, as secured party, and
duly filed with the same Governmental Authorities as the Holdings Financing
Statements.
"Parent Loans" means (a) the intercompany loan made by the Borrower, as
successor in interest to CSG Acquisition Corporation, to Holdings in the
original principal amount of Two Million Dollars ($2,000,000), (b) the
intercompany loan made by the Borrower to Holdings in the original principal
amount of Five Hundred Sixty-Five Thousand Dollars ($565,000) and (c) the
intercompany loan made by the Borrower to Holdings in the original principal
amount of Seven Hundred Seventy Thousand Dollars ($770,000), each of which loans
is evidenced by its respective Parent Term Note.
"Parent Term Notes" means (a) the Parent Term Note dated the Original
Closing Date, executed by Holdings in favor of the Borrower, as successor in
interest to CSG Acquisition Corporation, in the original principal amount of Two
Million Dollars ($2,000,000), (b) the Parent Term Note dated March 24, 1995
executed by Holdings in favor of the Borrower in the original principal amount
of Five Hundred Sixty-Five Thousand Dollars ($565,000) and (c) the Parent Term
Note dated May 15, 1995 executed by Holdings in favor of the Borrower in the
original principal amount of Seven Hundred Seventy Thousand Dollars ($770,000).
"Paribas Side Letter" means the side letter relating to fees dated the
Original Closing Date, between the Borrower, as successor in interest to CSG
Acquisition Corporation, and Banque Paribas.
"Participant" has the meaning set forth in SECTION 12.11(D).
"Patents" means all letters patent of, or rights corresponding thereto in,
the United States or any other county, all registrations and recordings thereof,
and all applications for letters patent of, or rights corresponding thereto in,
the United States or any other country, including registrations, recordings and
applications in the federal Patent and Trademark Office or with any other
Governmental Authority.
"Payoff Letter" has the meaning set forth in SECTION 4.1(D).
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"PBGC" means the Pension Benefit Guaranty Corporation and any successor
thereto.
"Pension Plan" means any employee pension benefit plan, as defined in
Section 3(2) of ERISA, that is maintained for the employees of any Person or any
ERISA Affiliate of such Person, other than a Multiemployer Plan.
"Permitted Liens" has the meaning set forth in SECTION 8.1.
"Permitted Title Exceptions" means, collectively, all matters listed on
SCHEDULE B as permitted exceptions to the Title Policies.
"Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or Governmental Authority.
"Pledge Agreement" means the Stock Pledge Agreement dated as of the
Original Closing Date, executed by the Borrower in favor of the Agent, on behalf
of the Lenders.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.
"Public Utility Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended (15 U.S.C. (S) 79 et seq.).
"Rate Contract" means an interest rate and currency cap or other agreement
or arrangements designed to provide protection against fluctuations in interest
or currency exchange rates; provided that such agreement or arrangement does not
create or give rise to any additional or contingent liability for the buyer of
such cap or other agreement or arrangement other than the upfront premium
payment.
"Reaffirmation of Guaranty" means the Reaffirmation of Guaranty dated the
Second Closing Date, executed by Holdings in favor of the Lenders, reaffirming
Holdings' obligations under the Holdings Guaranty and Holdings Collateral
Documents.
"Replacement Lender" has the meaning set forth in SECTION 3.8.
"Required Lenders" means at any time Lenders then holding at least sixty-
six and two-thirds percent (66.67%) of the then aggregate unpaid principal
amount of all Loans then outstanding or, if no Loans are then outstanding,
Lenders then having at least sixty-six and two-thirds percent (66.67%) of the
Aggregate Commitments.
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"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule, regulation, guideline or determination of an arbitrator
or of a Governmental Authority, in each case applicable to or binding upon the
Person or any of its Property or to which the Person or any of its Property is
subject.
"Responsible Person" means the Persons identified by the Borrower on a
Designation of Responsible Persons as having authority to request, convert or
continue Loans hereunder.
"Restricted Tax Payments" has the meaning set forth in SECTION 8.9.
"Revolving Commitment" means, as to each Lender, the amount set forth on
SCHEDULE 1.2 next to such Lender's name.
"Revolving Credit Maturity Date" means December 31, 2000.
"Revolving Credit Facility" means the Five Million Dollar ($5,000,000)
revolving credit facility described in SECTION 2.1.2 to be provided to the
Borrower by the Lenders having a Revolving Commitment according to each such
Lender's Commitment Percentage.
"Revolving Loan" means a Loan advanced to the Borrower pursuant to SECTION
2.1.2 by the Lenders under their Revolving Commitments according to their
respective Commitment Percentage, which Revolving Loan may be in the form of
either a Base Rate Revolving Loan or a LIBOR Revolving Loan.
"Revolving Note" means a promissory note dated the Original Closing Date,
executed by the Borrower and payable to the order of each Lender in the stated
principal amount of such Lender's Revolving Commitment, substantially in the
form of EXHIBIT A.2.
"SEC" means the Securities and Exchange Commission and any successor
thereto.
"Second Closing" means the time at which each of the conditions precedent
set forth in SECTION 4.1 shall have been duly satisfied by the Borrower, as
determined by the Lenders, in their discretion.
"Second Closing Date" means the date on which the Second Closing occurs.
"Security Agreement" means the Security Agreement dated as of the Original
Closing Date, executed by the Borrower and the Agent, for the benefit of the
Lenders.
"Services Agreement" means the Services Agreement dated as of October 26,
1994 between FDT and the Borrower.
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"Solvent" means, as to any Person at any time, that (a) the fair value of
the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code and, in the alternative, for purposes of the
California Uniform Fraudulent Transfer Act; (b) the present fair saleable value
of the Property of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become
absolute and matured; (c) such Person is able to realize upon its Property and
pay its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business; (d)
such Person does not intend to, and does not believe that it will, incur debts
or liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in a business or a transaction for
which such Person's property would constitute unreasonably small capital.
"Stock" means all shares, options, warrants, interests, participations or
other equivalents (regardless of how designated) of or in a corporation or
equivalent entity, whether voting or nonvoting, including common stock,
preferred stock, or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the SEC under the
Securities Exchange Act of 1934, as amended).
"Subsidiary" of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than fifty percent (50.0%) of the voting stock or other equity interests (in the
case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof.
"Taxes" has the meaning set forth in SUBSECTION 3.1(A).
"Term Facility" means the Forty Million Dollar ($40,000,000) term facility
described in SECTION 2.1.1 to be provided to the Borrower by the Lenders having
a Term Facility Commitment according to each such Lender's Commitment
Percentage.
"Term Facility Loan" means a Loan advanced to the Borrower pursuant to
SECTION 2.1.1 by the Lenders under their Term Facility Commitments according to
their respective Commitment Percentage, which Term Facility Loan may be in the
form of a Base Rate Term Facility Loan or a LIBOR Term Facility Loan.
"Term Facility Commitment" means, as to each Lender, the amount set forth
on SCHEDULE 1.1 next to such Lender's name.
"Term Facility Maturity Date" means December 31, 2000.
"Term Facility Note" means a promissory note dated the Second Closing Date,
executed by the Borrower and payable to the order of each Lender in the original
principal amount of such
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Lender's Term Facility Commitment, substantially in the form of EXHIBIT A.1,
which note, together with the other Term Facility Notes, replace and are
substitute notes for the Tranche-A Term Notes and the Tranche-B Term Notes
previously executed and delivered by the Borrower to the Lenders (as defined in
the Original Loan Agreement) having Tranche-A Term Loan Commitments and Tranche-
B Term Loan Commitments, respectively.
"Termination Event" means (a) a "reportable event" described in Section
4043 of ERISA and the regulations issued thereunder (other than a reportable
event not subject to the provision for 30-day notice to the PBGC under such
regulations), or (b) the withdrawal of the Borrower or any of its ERISA
Affiliates from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a
notice of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA, or (d) the institution
of proceedings to terminate a Pension Plan by the PBGC, or (e) any other event
or condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan.
"Title Company" means Commonwealth Land Title Company.
"Total Indebtedness" means, as calculated on a consolidated basis for the
Borrower and its Subsidiaries as of any date of determination, the total
Indebtedness of the Borrower and its Subsidiaries.
"Total Liabilities" means, as calculated on a consolidated basis for the
Borrower and its Subsidiaries as of any date of determination, the total
liabilities of the Borrower and its Subsidiaries.
"Trademarks" means all trademarks, tradenames, corporate names, business
names, trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and any applications in
connection therewith, including registrations, recordings and applications in
the federal Patent and Trademark Office or with any other Governmental
Authority.
"Tranche-A Term Loan" means a Loan advanced to the Borrower pursuant to
SECTION 2.1.1 of the Original Loan Agreement by the Lenders under their Tranche-
A Term Loan Commitments according to their respective Commitment Percentage (as
such terms are defined in the Original Loan Agreement).
"Tranche-A Term Loan Commitment" means, as to each Lender, the amount set
forth on SCHEDULE 1.1 of the Original Loan Agreement next to such Lender's name.
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"Tranche-A Term Loan Note" means a promissory note dated the Original
Closing Date, executed by the Borrower and payable to the order of each Lender
in the original principal amount of such Lender's Tranche-A Term Loan
Commitment.
"Tranche-B Term Loan" means a Loan advanced to the Borrower pursuant to
SECTION 2.1.1 of the Original Loan Agreement by the Lenders under their Tranche-
B Term Loan Commitments according to their respective Commitment Percentage (as
such terms are defined in the Original Loan Agreement).
"Tranche-B Term Loan Commitment" means, as to each Lender, the amount set
forth on SCHEDULE 1.1 of the Original Loan Agreement next to such Lender's name.
"Tranche-B Term Loan Note" means a promissory note dated the Original
Closing Date, executed by the Borrower and payable to the order of each Lender
in the original principal amount of such Lender's Tranche-B Term Loan
Commitment.
"Transferee" has the meaning specified in SUBSECTION 12.11(E).
"UCC" means the Uniform Commercial Code as the same may, from time to time,
be in effect in the State of California; provided, however, in the event that,
by reason of mandatory provisions of law, any and all of the attachment,
perfection or priority of the Lien of the Agent, for the benefit of the Lenders,
in and to the Collateral is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than the State of California, the term "UCC" shall mean
the Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provision.
"Upstream Loan" means an investment in the form of an intercompany loan or
related series of intercompany loans made by the Borrower to Holdings, provided
that such loans are evidenced by one or more promissory notes substantially in
the form of EXHIBIT I, which promissory note(s) shall then be assigned to the
Agent as additional Collateral.
"Upstream Dividend" means the declaration and payment by the Borrower to
Holdings of dividends or related series of dividends on account of the
Borrower's Stock.
1.2 OTHER INTERPRETIVE PROVISION
(A) ACCOUNTING TERMS. Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given such term in accordance with GAAP, and all financial data
required to be submitted by this Agreement shall be prepared and computed,
unless otherwise specifically provided herein, in accordance with GAAP. That
certain terms or computations are explicitly modified by the phrase "in
accordance with GAAP" shall in no way be construed to limit the foregoing. In
the event that GAAP
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changes during the term of this Agreement such that the covenants contained in
ARTICLE IX would then be calculated in a different manner or with different
components, (a) the parties hereto agree to amend this Agreement in such
respects as are necessary to conform those covenants as criteria for evaluating
the Borrower's financial condition to substantially the same criteria as were
effective prior to such change in GAAP and (b) the Borrower shall be deemed to
be in compliance with the covenants contained in the aforesaid subsections
during the sixty (60) day period following any such change in GAAP if and to the
extent that the Borrower would have been in compliance therewith under GAAP as
in effect immediately prior to such change.
(B) OTHER TERMS. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein. The
words "herein," "hereof" and "hereunder" and other words of similar import refer
to this Agreement as a whole, including the Attachments, Exhibits and Schedules
attached to this Agreement, all of which are by this reference incorporated into
this Agreement, and not to any particular provision of this Agreement. The term
"including" is not limiting and means "including, without limitation," and
"including but not limited to." The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices and other
writings, however evidenced. The term "or" is disjunctive; the term "and" is
conjunctive. The term "shall" is mandatory; the term "may" is permissive.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns stated in
the masculine, feminine or neuter gender shall include the masculine, feminine
and the neuter.
(C) PERFORMANCE; TIME. Whenever any performance obligation
hereunder (other than a payment obligation) shall be stated to be due or
required to be satisfied on a day other than a Business Day, such performance
shall be made or satisfied on the next succeeding Business Day. In the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each mean
"to but excluding", and the word "through" means "to and including." If any
provision of this Agreement refers to any action taken or to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
interpreted to encompass any and all means, direct or indirect, of taking, or
not taking, such action.
(D) LAWS. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting the statute or regulation.
(E) ROUNDING. Any financial ratios required to be maintained by
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number (with a
round-up if there is no nearest number) to the number of places by which such
ratio is expressed in this Agreement.
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(F) SCHEDULES AND EXHIBITS. Any reference to an "Article,"
"Section," "Subsection," "Attachment," "Schedule" or "Exhibit" shall refer to
the relevant Article, Section or Subsection of or Attachment, Schedule or
Exhibit to this Agreement, unless specifically indicated to the contrary.
II
THE CREDITS
II.1 AMOUNTS AND TERMS OF COMMITMENTS.
II.1.1 TERM FACILITY. Upon the terms, subject to the conditions and
in reliance upon the representations and warranties of the Borrower set forth in
this Agreement and in the other Loan Documents, each Lender having a Term
Facility Commitment severally agrees to advance Loans of immediately available
funds (each such Loan being a Term Facility Loan) upon the satisfaction of all
conditions precedent to the Second Closing set forth in SECTION 4.1 to the
Borrower in an aggregate principal amount equal to such Lender's Term Facility
Commitment. Each of the Lenders, as of the Second Closing, maintains either or
both a Tranche-A Term Loan Commitment and Tranche-B Term Loan Commitment and has
extended and maintains outstanding certain Tranche-A Loans and Tranche-B Term
Loans, as the case may be. Each Lender having a Term Facility Commitment shall
fund its Term Facility Commitment hereunder by (i) maintaining its then
outstanding Tranche-A Term Loans, if any, and Tranche-B Term Loans, if any, and
(ii) advancing Loans to the Agent's Payment Office, for the benefit of the
Borrower, an amount equal to the difference between such Lender's Term Facility
Commitment and the aggregate principal amount then maintained by such Lender
under its Tranche-A Term Loan Commitment and Tranche-B Term Loan Commitment. On
the Second Closing, the Agent shall, and the Borrower hereby irrevocably and
unconditionally authorizes and consents to the same, debit the Agent's Payment
Office in the amount of such Loans so advanced and apply such amounts ratably to
the Tranche-A Term Loans and the Tranche-B Term Loans then outstanding. It is
intended that the aggregate of all such Loan amounts deposited in the Agent's
Payment Office pursuant to this SECTION 2.1.1 shall be sufficient to repay the
aggregate principal amount of the Tranche-A Term Loans and the Tranche-B Term
Loans then outstanding exclusive of the Tranche-A Term Loans and the Tranche-B
Term Loans maintained by the Lenders. Upon the repayment of such Tranche-A Term
Loans and such Tranche-B Term Loans, the remaining Tranche-A Term Loans and
Tranche-B Term Loans and the new Loans advanced pursuant to this SECTION 2.1.1
shall collectively for all purposes of this Agreement, be referred to, and be
deemed to be, Term Facility Loans under the Term Facility.
(A) GENERAL PROVISIONS RELATING TO TERM FACILITY LOANS. Each
Term Facility Loan made by a Lender under the Term Facility shall, at the
Borrower's option in accordance with the terms of this Agreement, be either in
the form of a Base Rate Loan or a LIBOR Loan (each such Loan being a "Base Rate
Term Facility Loan" or a "LIBOR Term
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Facility Loan," as the case may be); provided that at no time may the Borrower
maintain LIBOR Term Facility Loans outstanding in more than five (5) separate
Interest Periods. The Borrower shall repay the principal amount of the Term
Facility Loans in the amounts and in the manner set forth in SECTION 2.3(A) and
pay interest accrued on the Term Facility Loans at the rates and in the manner
set forth in SECTION 2.4. The Borrower may, at its option, prepay all or any
portion of the Term Facility Loans as set forth in SECTION 2.7. In addition, the
Term Facility Loans shall be subject to Mandatory Prepayments in accordance with
SECTION 2.8.
(B) PERMITTED USES OF TERM FACILITY LOAN PROCEEDS. The
Borrower shall use the Term Facility Loan proceeds only for the purpose
described in the introductory paragraph to this SECTION 2.1.1.
(C) OTHER PROVISIONS EFFECTIVE UPON THE SECOND CLOSING. The
Borrower understands, acknowledges and agrees that if as of the Second Closing
and the funding of the new Loans under this SECTION 2.1.1 any of the Tranche-A
Term Loans or Tranche-B Term Loans is being maintained as a LIBOR Loan and the
Second Closing Date is not the last day of the Interest Period applicable to
such LIBOR Loan, then to the extent that such LIBOR Loan is being prepaid (such
as with the proceeds of the new Loans) the Borrower shall pay any applicable
breakage costs in accordance with SECTION 3.5 of the Original Loan Agreement.
The Lenders and the Agent acknowledge and agree that upon the Second Closing,
(including the satisfaction of all conditions precedent to the Second Closing
set forth in SECTION 4.1), (1) the Anasazi Guaranty and each of the Anasazi
Collateral Documents, and the Liens created thereunder in favor of the Agent,
shall be deemed terminated and Anasazi shall have no further obligations
thereunder (except for any rights of indemnification thereunder which shall
survive such termination), (2) the Agent shall cooperate with the Borrower to
execute and deliver to the Borrower, for the benefit of Anasazi, UCC termination
statements with respect to each of the Anasazi Financing Statements and
termination letters with respect to the Anasazi Grants of IP Security Interests,
(3) the Agent shall cooperate with the Borrower to execute and deliver to the
Borrower, for the benefit of Anasazi, UCC amendments with respect to each of the
Intercompany Financing Statements and modification letters with respect to the
Intercompany Grants of IP Security Interests, in each case reassigning to the
Borrower the Agent's assigned interest as secured party under the Intercompany
Collateral Documents, (4) the Agent shall return to the Borrower the executed
originals of the Parent Term Notes for cancellation and (5) the Agent shall
cooperate with the Borrower to execute and deliver to the Borrower, for the
benefit of Holdings, UCC amendments with respect to each of the Parent Financing
Statements, reassigning to the Borrower the Agent's assigned interest as secured
party (in each case as such terms are defined in the Original Loan Agreement).
II.1.2 REVOLVING CREDIT FACILITY. Upon the terms, subject to the
conditions and in reliance upon the representations and warranties of the
Borrower set forth in this Agreement and in the other Loan Documents, each
Lender which has made a Revolving Commitment severally agrees to make Loans of
immediately available funds to the Borrower (each such Loan being a Revolving
Loan), on a revolving basis, from the Original Closing until the Business Day
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immediately preceding the Revolving Credit Maturity Date, in an aggregate
principal amount not to exceed at any one time the lesser of (a) such Lender's
Revolving Commitment or (b) an amount equal to such Lender's Commitment
Percentage of the Borrowing Base (obtained by multiplying (1) the Borrowing Base
by (2) such Lender's Commitment Percentage), as more fully set forth in this
SECTION 2.1.2 (the lesser of (a) the Aggregate Revolving Commitment or (b) the
Borrowing Base being the "Maximum Availability"). For the purpose of determining
the amount of the Borrowing Base available at any one time, the amount available
shall be the total amount of the Borrowing Base as set forth in the Borrowing
Base Certificate delivered to the Agent pursuant to SECTION 4.2(A) with respect
to such requested Borrowing.
(A) LIMITATION ON EACH LENDER'S OBLIGATION. With respect to
any Borrowing of Revolving Loans requested by the Borrower pursuant to a
complying Notice of Borrowing delivered to the Agent pursuant to SECTION 2.6,
each Lender's obligation to advance funds in the form of Revolving Loans to the
Borrower shall be limited to an amount equal to the Lender's Commitment
Percentage of such Borrowing (obtained by multiplying the Borrowing amount by
the Lender's Commitment Percentage).
(B) FUNDING OF REVOLVING LOANS TO THE AGENT. Following the
Agent's receipt of a complying Notice of Borrowing and the Agent's determination
that the conditions precedent to a requested Borrowing set forth in ARTICLE IV
have been duly satisfied, the Agent shall promptly notify each Lender having a
Revolving Commitment of (i) the amount of the requested Borrowing and such
Lender's Commitment Percentage thereof and (ii) the requested Funding Date,
which (1) if a LIBOR Loan is requested, shall be no earlier than the second
Business Day following the date on which the Agent so notifies such Lender and,
(2) if a Base Rate Loan is requested shall be no earlier than the following
Business Day. Not later than 11:00 a.m., San Francisco Time, on the requested
Funding Date, each Lender having a Revolving Commitment shall have advanced its
Revolving Loan to the Agent at the Agent's Payment Office in immediately
available funds. The Agent's determination that the conditions precedent to any
Borrowing have been duly satisfied shall be conclusive and binding on all
Lenders for purposes of determining when the Lenders shall be obligated to
advance funds to the Agent; provided, however, (A) no Lender shall have any
liability to the Borrower for the failure of such Lender to advance funds for
any Loan unless and until each condition precedent to the applicable Borrowing
has been duly satisfied or has been waived in writing by Required Lenders, and
(B) the Borrower shall have no right to enforce any obligation of a Lender to
fund any Loan unless and until each condition precedent to the applicable
Borrowing has been duly satisfied or has been waived in writing by Required
Lenders.
(C) DISBURSEMENT OF REVOLVING LOANS TO THE BORROWER. On the
requested Funding Date, the Agent shall disburse in immediately available funds
to the Borrower's Designated Deposit Account an amount equal to the Revolving
Loans advanced to the Agent's Payment Office with respect to such Borrowing.
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(D) OVER ADVANCES. If at any time and for any reason the
aggregate principal amount of the Revolving Loans then outstanding shall exceed
the Maximum Availability (the amount of such excess, if any, being an "Over
Advance"), the Borrower shall immediately repay the full amount of such Over
Advance, together with all interest accrued thereon.
(E) GENERAL PROVISIONS RELATING TO REVOLVING LOANS. Each
Revolving Loan made by a Lender hereunder shall, at the Borrower's option in
accordance with the terms of this Agreement, be either in the form of a Base
Rate Loan or a LIBOR Loan (each such Loan being a "Base Rate Revolving Loan" or
a "LIBOR Revolving Loan," as the case may be). Borrower shall repay the
principal amount of the Revolving Loans in the amounts and in the manner set
forth in SECTION 2.3(B) and pay interest accrued on the Revolving Loans at the
rates and in the manner set forth in SECTION 2.4. Amounts borrowed by the
Borrower under the Revolving Commitments may be repaid and, prior to the
Revolving Credit Maturity Date and subject to the applicable terms and
conditions precedent to Borrowings hereunder, reborrowed.
(F) PERMITTED USES OF REVOLVING LOAN PROCEEDS. The Borrower
shall use the Revolving Loan proceeds only for the purpose of funding working
capital and other general corporate needs.
II.2 NOTES.
(A) TERM FACILITY NOTES. The Term Facility Loans made by each
Lender shall be evidenced by a Term Facility Note executed by the Borrower and
made payable to the order of such Lender in the stated principal amount equal to
its Term Facility Commitment.
(B) REVOLVING LOAN NOTES. The Revolving Loans made by each Lender
shall be evidenced by a Revolving Loan Note executed by the Borrower and made
payable to the order of such Lender in the stated principal amount equal to its
Revolving Commitment.
(C) NOTATIONS IN THE LENDERS' BOOKS AND RECORDS. Each Lender shall
make notations in its books and records regarding the date, amount and maturity
of each Loan made by it and the amount of each repayment or prepayment of
principal and payment of interest made by the Borrower with respect to such
Loan. Each Lender is irrevocably authorized by the Borrower to endorse its Notes
and each Lender's record shall be conclusive absent manifest error; provided,
however, that the failure of a Lender to make, or an error in making, such a
notation with respect to any Loan shall not limit or otherwise affect the
Obligations of the Borrower hereunder or under any such Note to such Lender.
II.3 REPAYMENT OF PRINCIPAL AMOUNT OF LOANS.
(A) REPAYMENT OF THE TERM FACILITY LOANS. Subject to the terms of
this Agreement relating to optional prepayments and Mandatory Prepayments of
Term Facility Loans
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and the acceleration of maturities, the Borrower shall repay the principal
amount of the Term Facility Loans in nineteen (19) quarterly principal
installments, due and payable on each March 31, June 30, September 30 and
December 31, with the first such quarterly principal installment being due and
payable on June 30, 1996 and the final such quarterly principal installment,
together with all accrued and unpaid interest and other amounts chargeable to
the Borrower under or with respect to the Term Facility, being due and payable
on the Term Facility Maturity Date, in the following principal amounts:
<TABLE>
<CAPTION>
Principal Amount
Quarterly Installments of Each Installment
---------------------- -------------------
<S> <C>
1 - 7 $2,500,000
8 - 15 $2,000,000
16 - 19 (Term Facility Maturity Date) $1,625,000
</TABLE>
(B) REPAYMENT OF REVOLVING LOANS. Subject to the terms of this
Agreement relating to optional earlier repayments of Revolving Loans and the
acceleration of maturities, the Borrower shall repay the Lenders the entire
outstanding principal amount of the Revolving Loans on the Revolving Credit
Maturity Date.
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II.4 PAYMENT OF INTEREST ON THE LOANS.
(A) THE TERM FACILITY LOANS. Subject to SUBSECTION 2.4(D), each
Term Facility Loan shall bear interest on the outstanding principal amount
thereof from the date when made, continued or converted until paid in full at a
rate per annum equal to the Base Rate or the Adjusted LIBOR, as the case may be,
plus the Applicable Margin.
(B) REVOLVING LOANS. Subject to SUBSECTION 2.4(D), each Revolving
Loan shall bear interest on the outstanding principal amount thereof from the
date when made, continued or converted until paid in full at a rate per annum
equal to the Base Rate or the Adjusted LIBOR, as the case may be, plus the
Applicable Margin.
(C) INTEREST PAYMENT DATES. Interest on each Loan shall be paid
in arrears on each Interest Payment Date. Interest shall also be paid on the
date of any prepayment of any Loans pursuant to this Agreement for the portion
of the Loans so prepaid and upon payment (including prepayment) in full thereof.
(D) INTEREST UPON EVENTS OF DEFAULT. Upon the occurrence of an
Event of Default and so long as such Event of Default shall continue, including
after acceleration (whether before or after entry of judgment), the Borrower
shall, at the option of Required Lenders, pay interest on the principal amount
of each Loan then outstanding at a rate per annum which is determined by adding
two percent (2.00%) to the Applicable Margin applicable to such Loan; provided,
however, that if any continuing Event of Default is an Event of Default under
either SUBSECTIONS 10.1(A) or (B) (relating to payment defaults), the Borrower
shall instead pay interest on the principal amount of each Loan then outstanding
at a rate per annum which is determined by adding three percent (3.00%) to the
Applicable Margin applicable to such Loan. Such rates of interest applicable
following the occurrence and during the existence of an Event of Default are
alternative, not cumulative, rates of interest.
(E) LIMITATIONS ON INTEREST RATES. Notwithstanding any provision in
this Agreement, the Notes or any of the other Loan Documents, the total
liability for payments in the nature of interest shall not exceed the applicable
limits imposed by any applicable federal or state interest rate laws. If any
payments in the nature of interest, additional interest and other charges made
hereunder or under any of the Loan Documents are held to be in excess of the
applicable limits imposed by any applicable federal or state law, the amount
held to be in excess shall be considered payment of principal under the Notes
and the indebtedness evidenced thereby shall be reduced by such amount in the
inverse order of maturity so that the total liability for payments in the nature
of interest, additional interest and other charges shall not exceed the
applicable limits imposed by any applicable federal or state interest rate laws.
II.5 PROCEDURE FOR THE BORROWING OF REVOLVING LOANS.
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(A) Each Borrowing of Revolving Loans shall be made upon the
Borrower's irrevocable written notice delivered to the Agent in the form of a
Notice of Borrowing, executed by a Responsible Person of the Borrower, with
appropriate insertions (which Notice of Borrowing must be received by the Agent
prior to 10:00 a.m., San Francisco Time, (i) three (3) Business Days prior to
the requested Funding Date, in the case of LIBOR Revolving Loans, and (ii) one
(1) Business Day prior to the requested Funding Date, in the case of Base Rate
Revolving Loans), specifying:
(A) the amount of the Borrowing, which shall be in integral
multiples of One Hundred Thousand Dollars ($100,000) and, if LIBOR
Revolving Loans are requested, in an aggregate minimum principal
amount of Five Hundred Thousand Dollars ($500,000) or any integral
multiple of $100,000 in excess thereof;
(B) the requested Funding Date, which shall be a Business Day;
(C) whether the Borrowing is to be comprised of LIBOR
Revolving Loans or Base Rate Revolving Loans; and
(D) the duration of the Interest Period applicable to any such
LIBOR Revolving Loans included in such notice. If the Notice of
Borrowing shall fail to specify the duration of the Interest Period
for any Borrowing comprised of LIBOR Revolving Loans, such Interest
Period shall be three (3) months.
(B) Upon receipt of the Notice of Borrowing, the Agent will
promptly notify each Lender having a Revolving Commitment of the amount of such
Lender's Commitment Percentage of the requested Borrowing.
(C) Each Lender having a Revolving Commitment will make the amount
of its Commitment Percentage of the Borrowing available to the Agent for the
account of the Borrower at the Agent's Payment Office by 11:00 a.m., San
Francisco Time, on the Funding Date requested by the Borrower in funds
immediately available to the Agent. The proceeds of all such Loans will then be
made available to the Borrower on the Funding Date by the Agent by wire transfer
at the Designated Deposit Account. No Borrowing of Revolving Loans shall be
deemed made to the Borrower, and no interest shall accrue on any such Borrowing,
until the related funds have been deposited in the Designated Deposit Account.
(D) Unless the Lenders having a Revolving Commitment shall
otherwise consent, during the existence of a Default or Event of Default, the
Borrower may not elect to have a Revolving Loan made as a LIBOR Loan.
II.6 CONVERSION AND CONTINUATION ELECTIONS.
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(A) The Borrower may upon irrevocable written notice to the Agent:
(I) elect to convert on any Business Day, any Base Rate Term
Facility Loans (or any part thereof in an amount equal to Three Million Dollars
($3,000,000) or any integral multiple of $100,000 in excess thereof) into LIBOR
Term Facility Loans; or
(II) elect to convert on any Interest Payment Date any LIBOR
Term Facility Loans maturing on such Interest Payment Date (or any part thereof
in an amount that is in an integral multiple of $100,000) into Base Rate Term
Facility Loans; or
(III) elect to continue on any Interest Payment Date any LIBOR
Term Facility Loans maturing on such Interest Payment Date (or any part thereof
in an amount equal to Three Million Dollars ($3,000,000) or any integral
multiple of $100,000 in excess thereof); or
(IV) elect to convert on any Business Day, any Base Rate
Revolving Loans (or any part thereof in an amount equal to Five Hundred Thousand
Dollars ($500,000) or any integral multiple of $100,000 in excess thereof) into
LIBOR Revolving Loans; or
(V) elect to convert on any Interest Payment Date any LIBOR
Revolving Loans maturing on such Interest Payment Date (or any part thereof in
an amount that is in an integral multiple of $100,000) into Base Rate Revolving
Loans; or
(VI) elect to continue on any Interest Payment Date any LIBOR
Revolving Loans maturing on such Interest Payment Date (or any part thereof in
an amount equal to Five Hundred Thousand Dollars ($500,000) or any integral
multiple of $100,000 in excess thereof);
provided, that if the aggregate amount of LIBOR Term Facility Loans or LIBOR
Revolving Loans shall have been reduced, by payment, prepayment, or conversion
of part thereof, to be less than $3,000,000 or $500,000, respectively, such
LIBOR Loans shall automatically convert into Base Rate Loans, and on and after
such date the right of the Borrower to continue such Loans as, and convert such
Loans into, LIBOR Loans shall terminate.
(B) The Borrower shall deliver a Notice of Conversion/Continuation
in accordance with SECTION 12.2 to be received by the Agent prior to 10:00 a.m.,
San Francisco Time, at least (i) three Business Days in advance of the
Conversion Date or Continuation Date, if any Loans are to be converted into or
continued as LIBOR Loans; and (ii) one Business Day in advance of the Conversion
Date, if any Loans are to be converted into Base Rate Loans; specifying:
(A) the proposed Conversion Date or Continuation Date;
(B) the aggregate amount of Loans to be converted or
continued;
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<PAGE>
(C) the nature of the proposed conversion or continuation; and
(D) the duration of the requested Interest Period.
(C) If upon the expiration of any Interest Period applicable to any
LIBOR Loans, the Borrower has failed to select a new Interest Period to be
applicable to such LIBOR Loans, the Borrower shall be deemed to have elected to
continue such LIBOR Loans into LIBOR Loans having an Interest Period equal to
one (1) month.
(D) Upon receipt of a Notice of Conversion/Continuation, the Agent
will promptly notify each Lender thereof, or, if no timely notice is provided by
the Borrower, the Agent will promptly notify each Lender of the details of any
automatic conversion. All conversions and continuations shall be made according
to each Lender's applicable Commitment Percentage of the outstanding principal
amounts of the Loans with respect to which the notice was given.
(E) Unless the Required Lenders shall otherwise consent, during the
existence of a Default or Event of Default, the Borrower may not elect to have a
Loan converted into or continued as a LIBOR Loan.
II.7 OPTIONAL PREPAYMENTS. Subject to SECTION 3.5, the Borrower may, at
any time or from time to time, upon at least five (5) Business Days' notice to
the Agent, ratably prepay Term Facility Loans, in whole or in part, in amounts
of $500,000 or any multiple of $100,000 in excess thereof. Such notice of
prepayment shall specify the date and amount of such prepayment and whether such
prepayment is of Base Rate Loans or LIBOR Loans, or any combination thereof.
Such notice shall be irrevocable and the Agent shall promptly notify each Lender
thereof and of such Lender's Commitment Percentage of such prepayment. If such
notice is given by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the
specified prepayment date, together with accrued interest to such date on the
principal amount prepaid and any amounts required pursuant to SECTION 3.5. The
principal amount of each optional prepayment shall be applied pro rata to the
scheduled installments for repayment of the Term Facility Loan.
II.8 MANDATORY PREPAYMENTS.
(A) DISPOSITIONS. Notwithstanding anything to the contrary set
forth in this Agreement, in addition to the Mandatory Prepayments of principal
set forth in SUBSECTIONS 2.8(B) and (C), the Borrower shall prepay principal
amounts outstanding under the Term Facility Loans in an amount equal to one
hundred percent (100.0%) of the Net Proceeds obtained by the Borrower from (i)
any Disposition having an aggregate book value in excess of One Million Dollars
($1,000,000) or (ii) any Event of Loss. Notwithstanding anything to the
contrary set forth in this Agreement, if any Disposition (regardless of the net
book value of such
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<PAGE>
Disposition) causes the total value of all Dispositions made, closed or
completed over the term of this Agreement commencing with the Second Closing
Date to equal or exceed Five Million Dollars ($5,000,000), then the Borrower
shall prepay principal amounts outstanding under the Term Facility Loans in an
amount equal to one hundred percent (100.0%) of the Net Proceeds obtained by the
Borrower from such Disposition and from any and all Dispositions to occur
thereafter. For the calculation of each such Mandatory Prepayment required under
this SUBSECTION 2.8(B), there shall be excluded from the amounts otherwise
required to be prepaid an amount equal to the Net Proceeds from any Disposition
or Event of Loss to the extent that the Borrower uses such Net Proceeds during
the next succeeding six (6) months to (i) acquire replacement Property of
similar, in the Required Lenders' reasonable discretion, kind and type, or (ii)
acquire any other fixed assets consistent with, and to be used in, the Business
as currently conducted. The Mandatory Prepayment, if any, required under this
SUBSECTION 2.8(B) with respect to any Disposition or any Event of Loss shall be
due and payable on the last day of the Fiscal Quarter during which occurs the
six-month anniversary of the closing of such Disposition or the occurrence of
such Event of Loss. The amount of such prepayment shall be applied to the Term
Facility Loans pro rata to the scheduled installments for repayment of the Term
Facility Loans.
(B) REPLACEMENT OR REFINANCING FUNDED DEBT. Notwithstanding
anything to the contrary set forth in this Agreement, in addition to the
Mandatory Prepayments of principal set forth in SUBSECTIONS 2.8(A) and (C), the
Borrower shall prepay principal amounts outstanding under the Term Facility
Loans in an amount equal to one hundred percent (100.0%) of the Net Proceeds
obtained from any new Funded Debt obtained by the Borrower for the purpose of
replacing or refinancing all or any portion of the Obligations, which amounts
shall be prepaid under this SUBSECTION 2.8(B) on the same day as receipt thereof
by the Borrower pro rata to the scheduled installments for repayment of the Term
Facility Loans.
(C) EARLY TERMINATION OF BILLING SERVICE AGREEMENTS.
Notwithstanding anything to the contrary set forth in this Agreement, in
addition to the Mandatory Prepayments of principal set forth in SUBSECTIONS
2.8(A) and (B), the Borrower shall prepay principal amounts outstanding under
the Term Facility Loans in an amount equal to one hundred percent (100.0%) of
Billing Service Agreement Termination Proceeds in connection with any Billing
Service Agreement Termination in which such Billing Service Agreement
Termination Proceeds equal or exceed One Million Five Hundred Thousand Dollars
($1,500,000). Notwithstanding anything to the contrary set forth in this
Agreement, if any Billing Service Agreement Termination (regardless of the
amount of Billing Service Agreement Termination Proceeds received by the
Borrower in connection with such Billing Service Agreement Termination) causes
the total value of all Billing Service Agreement Termination Proceeds received
by the Borrower over the term of this Agreement to equal or exceed Five Million
Dollars ($5,000,000), then the Borrower shall prepay principal amounts
outstanding under the Term Facility Loans in an amount equal to one hundred
percent (100.0%) of the Billing Service Agreement Termination Proceeds in
connection with such Billing Service Agreement Termination and from any and all
Billing Service Agreement Terminations to occur thereafter. Any Mandatory
Prepayments under this
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<PAGE>
SUBSECTION 2.8(C) shall be made within two (2) Business Days of the Borrower's
receipt of such Billing Service Agreement Termination Proceeds. The amount of
such prepayment shall be applied to the Term Facility Loans pro rata to the
scheduled installments for repayment of the Term Facility Loans.
(D) GENERAL. Any prepayments pursuant to this SECTION 2.8 shall be
applied first to any Base Rate Loans then outstanding and then to LIBOR Loans
with the shortest Interest Periods remaining.
II.9 COMMITMENT FEE FOR PROVIDING REVOLVING COMMITMENTS. In consideration
of the Lenders' agreement to commit to make the Loans available to the Borrower
as contemplated by this Agreement, the Borrower agrees to pay to the Agent, on
behalf of and for the ratable benefit of the Lenders according to their
respective Commitment Percentage of the Aggregate Revolving Commitments, a
commitment fee in an amount equal to three-eighths of one percent (0.375%) per
annum of the average daily difference between the Aggregate Revolving Commitment
and the sum of the aggregate outstanding principal amount of Revolving Loans,
due and payable quarterly in arrears on the last day of each Fiscal Quarter,
with the final such payment due and payable on the Revolving Loan Maturity Date.
II.10 CALCULATION OF INTEREST. Interest on the Loans shall be computed on
the basis of a 365-day year for all Base Rate Loans and a 360-day year for all
LIBOR Loans and the actual number of days elapsed in the period during which
such interest accrues. In computing interest on any Loan, the date of the making
of such Loan shall be included and the date of payment shall be excluded;
provided, however, that if any Loan is repaid on the same day on which it is
made, such day shall be included in computing interest on such Loan. Each change
in the interest rate of the Base Rate Loans based on changes in the Base Rate
and each change in the interest rate of LIBOR Loans based on changes in the
Eurodollar Reserve Percentage shall be effective on the effective date of such
change and to the extent of such change. The Agent shall give the Borrower
prompt notice of any such change in the Base Rate or Eurodollar Reserve
Percentage; provided, however, that any failure by the Agent to provide the
Borrower with notice hereunder shall not affect the Lenders' right to make
changes in the interest rate of the Base Rate Loans based on changes in the Base
Rate or changes in the interest rate of LIBOR Loans based on changes in the
Eurodollar Reserve Percentage.
II.11 PAYMENTS. All repayments or prepayments of principal and all
payments of interest, fees, costs, expenses and other sums chargeable to the
Borrower under this Agreement, the Notes or any of the other Loan Documents
shall be in lawful money of the United States of America in immediately
available funds and delivered to the Agent, on behalf and for the benefit of the
Lenders, not later than 10:00 a.m., San Francisco Time, on the date due at the
Agent's Payment Office. Payments received after such time shall be deemed to
have been received on the next immediately succeeding Business Day.
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<PAGE>
II.12 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be made under
this Agreement, the Notes or any of the other Loan Documents shall be stated to
be due on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall in such case be
included in the computation of the payment of interest thereon.
II.13 APPLICATION OF PAYMENTS. Except as otherwise expressly provided
in this Agreement or in any other Loan Document, all payments shall be applied
in the following order: (a) then due and payable fees, costs and expenses; (b)
then due and payable interest payments and Mandatory Prepayments; and (c) then
due and payable principal payments and optional prepayments. Notwithstanding
the generality of the preceding sentence, all payments received by the Agent as
a result of a foreclosure or other realization on or of the Collateral shall be
allocated and applied ratably to the Term Facility Loans and the Revolving Loans
in accordance with the principal Loan amounts then outstanding. In addition,
each Lender is authorized to, and at its sole option may, for the benefit of the
Lenders and the Agent, make advances on behalf of the Borrower for payment of
any and all fees, expenses, charges, costs, principal and interest incurred
hereunder or under the other Loan Documents. To the extent permitted by law,
all amounts advanced by any Lender hereunder or under other provisions of the
Loan Documents shall accrue interest thereon at the Base Rate.
II.14 DISTRIBUTION OF PAYMENTS. The Agent shall immediately distribute to
each Lender, at such address as each Lender shall designate, its respective
interest in all repayments and prepayments of principal and all payments of
interest, loan fees, commitment fees and other fees, expenses and costs received
by the Agent on the same day and in the same type of funds as payment was
received. In the event the Agent does not distribute such payments on the same
day received, such payment shall accrue interest at the Federal Funds Rate,
which shall be payable by the Agent. The Agent shall indemnify and hold the
Borrower harmless from any claim for overnight interest by any Lender under this
SECTION 2.14.
II.15 THE AGENT'S RIGHT TO ASSUME FUNDS AVAILABLE FOR LOANS. Unless the
Agent shall have been notified by any Lender no later than the Business Day
prior to the respective Funding Date of any Loan that such Lender does not
intend to make available to the Agent immediately available funds equal to such
Lender's Commitment Percentage of the total principal amount of such Loan, the
Agent may assume that such Lender has advanced funds in the amount of such Loan
to the Agent on the applicable Funding Date and the Agent may, in reliance upon
such assumption, make available to the Borrower corresponding funds. The Agent
agrees to give prompt notice to the Borrower in the event it advances funds on
behalf of a Lender under this SECTION 2.15; provided, that failure to give such
notice shall in no way limit, restrict or otherwise affect the Borrower's
obligations or the Agent's or any Lender's rights or remedies under this
Agreement and the other Loan Documents. If the Agent has made funds available to
the Borrower based on such assumption and such Loan is not in fact made
available to the Agent by such Lender, the Agent shall be entitled to recover
the corresponding amount of such Loan on demand from such Lender. If such Lender
does not promptly pay such corresponding amount
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upon the Agent's demand, the Agent shall notify the Borrower and the Borrower
shall repay such Loan to the Agent. The Agent also shall be entitled to recover
from such Lender interest on such Loan in respect of each day from the date such
Loan was made by the Agent to the Borrower to the date such corresponding amount
is recovered by the Agent at the Federal Funds Rate, and the Agent shall
indemnify and hold harmless the Borrower from any claim for such interest.
II.16 THE AGENT'S RIGHT TO ASSUME PAYMENTS WILL BE MADE BY THE BORROWER.
Unless the Agent shall have been notified by the Borrower prior to the date on
which any payment to be made by the Borrower hereunder is due that the Borrower
does not intend to remit such payment, the Agent may, in its discretion, assume
that the Borrower has remitted such payment when so due and the Agent may, in
its discretion and in reliance upon such assumption, make available to each
Lender on such payment date an amount equal to such Lender's Commitment
Percentage of such assumed payment. If the Borrower has not in fact remitted
such payment to the Agent, each Lender shall forthwith on demand repay to the
Agent the amount of such assumed payment made available to such Lender, together
with interest thereon in respect of each date from and including the date such
amount was made available by the Agent to such Lender to the date such amount is
repaid to the Agent at the Federal Funds Rate.
III
TAXES, YIELD PROTECTION AND ILLEGALITY
III.1 TAXES.
(A) Subject to SUBSECTION 3.1(H), any and all payments by the
Borrower to the Lenders or the Agent under this Agreement shall be made free and
clear of, and without deduction or withholding for, any and all present or
future taxes, fees, duties, levies, imposts, deductions, charges or
withholdings, whatsoever imposed by any Governmental Authority, excluding, in
the case of each Lender and the Agent, such taxes as are imposed on or measured
by the net income of any Lender or the Agent by any jurisdiction under the laws
of which such Lender or the Agent, as the case may be, is organized or maintains
a Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes").
(B) In addition, the Borrower shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Documents (hereinafter referred to as "Other Taxes").
(C) Subject to SUBSECTION 3.1(A) and 3.1(H), if any Taxes or Other
Taxes are directly asserted or imposed against any Lender or the Agent, the
Borrower shall indemnify and
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hold harmless such Lender and the Agent for the full amount of the Taxes or
Other Taxes (including any Taxes or Other Taxes asserted or imposed by any
jurisdiction on amounts payable under this SECTION 3.1) paid by the Lender or
the Agent and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted or imposed. Payment under this
indemnification shall be made within thirty (30) days from the date the Lender
or the Agent makes written demand therefor (provided that the Borrower shall
have the right to contest in good faith any such Taxes or Other Taxes through
appropriate proceedings so long as the amount of such Taxes or Other Taxes so
contested plus interest for such period of contest, as reasonably estimated by
the Lender or the Agent, shall be deposited into an escrow account on terms
reasonably satisfactory to the Lender or the Agent pending final determination
of the contest). The Lender in its discretion also may, but shall not be
obligated to, pay such Taxes or Other Taxes and the Borrower will promptly pay
such additional amounts (including any penalties, interest or expenses, except
for, in the event the Lender fails to deliver notice of such assertion of Taxes
or Other Taxes to the Borrower within ninety (90) days after it has received
notice of such assertion or imposition of Taxes or Other Taxes, any such
penalties, interest or expenses which would not have arisen but for the failure
of the Lender to so notify the Borrower of such assertion or imposition of Taxes
or Other Taxes) as is necessary in order that the net amount received by the
Lender after the payment of such Taxes or Other Taxes (including any Taxes on
such additional amount) shall equal the amount the Lender would have received
had not such Taxes or Other Taxes been asserted or imposed.
(D) If the Borrower shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, then, subject to SUBSECTION 3.1(H):
(I) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this SECTION 3.1) such Lender or the Agent,
as the case may be, receives an amount equal to the sum it would have
received had no such deduction or withholding been made;
(II) the Borrower shall make such deduction or withholding;
and
(III) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law.
(E) Within thirty (30) days after the date of any payment by the
Borrower of Taxes or Other Taxes, the Borrower shall furnish to the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
(F) If the Borrower fails to pay any Taxes or Other Taxes when due
to the appropriate taxing authority or fails to furnish to the Agent the
required receipts or other
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required documentary evidence, the Borrower shall indemnify the Lender for any
incremental Taxes or Other Taxes, interest or penalties that may become payable
by the Lender as a result of any such failure.
(G) Each of the Agent and any Lender which is a foreign person
(i.e., a person other than a United States person for United States Federal
income tax purposes) agrees that:
(I) in the case of any Lender which is a "bank" within the
meaning of Section 881(c)(3)(A) of the Code,
(A) it shall, no later than the Second Closing Date
(or, in the case of a Lender which becomes a party hereto pursuant to
SECTION 12.11 after the Second Closing Date, the date upon which the Lender
becomes a party hereto) deliver to the Borrower through the Agent two (2)
accurate and complete signed originals of IRS Form 4224 or any successor
thereto ("Form 4224"), or two accurate and complete signed originals of IRS
Form 1001 or any successor thereto ("Form 1001"), as appropriate, in each
case indicating that the Lender is on the date of delivery thereof entitled
to receive payments of principal, interest and fees under this Agreement
free from withholding of United States Federal income tax;
(B) if at any time the Agent or such Lender makes any
changes necessitating a new Form 4224 or Form 1001, it shall within thirty
(30) days after such change becomes effective deliver to the Borrower
through the Agent in replacement for, or in addition to, the forms
previously delivered by it hereunder, two accurate and complete signed
originals of Form 4224; or two accurate and complete signed originals of
Form 1001, as appropriate, in each case indicating that the Lender is on
the date of delivery thereof entitled to receive payments of principal,
interest and fees under this Agreement free from withholding of United
States Federal income tax;
(II) in the case of any Lender other than a Lender described
in clause (i) above,
(A) it shall, no later than the Second Closing Date
(or, in the case of a Lender which becomes a party hereto pursuant to
SECTION 12.11 after the Second Closing Date, the date upon which the Lender
becomes a party hereto) deliver to the Borrower through the Agent two (2)
accurate and complete signed originals of a certificate substantially in
the form of Exhibit H hereto (any such certificate, a "Non-Bank Lender Tax
Certificate") and two accurate and complete signed originals of IRS Form W-
8 or any successor thereto ("Form W-8") certifying to such Lender's legal
entitlement (assuming compliance by the Borrower with the terms of this
Agreement) to an exemption whereby the Lender is on the date of delivery
thereof entitled to receive
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payments of principal, interest and fees under this Agreement free from
withholding of United States Federal income tax;
(B) if at any time the Agent or such Lender makes any
changes necessitating a new Form W-8, it shall within thirty (30) days
after such change becomes effective deliver to the Borrower through the
Agent in replacement for, or in addition to, the forms previously delivered
by it hereunder, two accurate and complete signed originals of IRS Form W-8
or any successor thereto ("Form W-8") certifying to such Lender's legal
entitlement (assuming compliance by Borrower with the terms of this
Agreement) to an exemption whereby the Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees under
this Agreement free from withholding of United States Federal income tax;
(III) it shall, before or within thirty (30) days after the
occurrence of any event (including the passing of time but excluding any
event mentioned in (i) or (ii), above) requiring a change in or renewal of
the most recent Form 4224, Form 1001 or Form W-8 previously delivered by
such Lender, deliver to the Borrower through the Agent two accurate and
complete original signed copies of Form 4224, Form 1001 or Form W-8 in
replacement for the forms previously delivered by the Lender; and
(IV) it shall, promptly upon the Lender's or the Agent's
reasonable request to that effect, deliver to the Lender or the Agent (as
the case may be) such other forms or similar documentation as may be
required from time to time by any applicable law, treaty, rule or
regulation in order to establish such Lender's tax status for withholding
purposes.
(H) The Borrower will not be required to pay any additional amounts
in respect of United States Federal income tax pursuant to SUBSECTION 3.1(D) to
the Agent or any Lender for the account of any Lending Office of such Lender:
(I) if the obligation to pay such additional amounts would
not have arisen but for a failure by such Lender to comply with its
obligations under SUBSECTION 3.1(G) in respect of such Lending Office;
(II) if such Lender shall have delivered to the Borrower a
Form 4224, Form 1001 or Form W-8 in respect of such Lending Office pursuant
to SUBSECTION 3.1(G), and such Lender shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income tax
in respect of payments by the Borrower hereunder for the account of such
Lending Office for any reason other than a change in United States law or
regulations or in the official interpretation of such law or regulations by
any Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force of law) after the
date of delivery of such form.
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(I) If, at any time, the Borrower requests any Lender to deliver
any forms or other documentation in addition to those required pursuant to
SUBSECTION 3.1(G)(IV), then the Borrower shall, on demand of such Lender through
the Agent, reimburse such Lender for any costs and expenses (including
reasonable attorney fees) reasonably incurred by such Lender in the preparation
or delivery of such forms or other documentation.
(J) If the Borrower is required to pay additional amounts to any
Lender or the Agent pursuant to SUBSECTION 3.1(D), then such Lender shall use
its reasonable best efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Lender which may thereafter accrue if such change in
the judgment of such Lender is not otherwise disadvantageous to such Lender.
III.2 ILLEGALITY.
(A) If any Lender shall determine that the introduction of any
Requirement of Law, or any change in any Requirement of Law or in the
interpretation or administration thereof, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Lender or its Lending Office to make LIBOR Loans, then, on notice
thereof by the Lender to the Borrower through the Agent, the obligation of that
Lender to make LIBOR Loans shall be suspended until the Lender shall have
notified the Agent and the Borrower that the circumstances giving rise to such
determination no longer exists.
(B) If a Lender shall determine that it is unlawful to maintain any
LIBOR Loan, the Borrower shall prepay in full all LIBOR Loans of that Lender
then outstanding, together with interest accrued thereon, either on the last day
of the Interest Period thereof if the Lender may lawfully continue to maintain
such LIBOR Loans to such day, or immediately, if the Lender may not lawfully
continue to maintain such LIBOR Loans, together with any amounts required to be
paid in connection therewith pursuant to SECTION 3.5.
(C) If the Lender is required to prepay any LIBOR Loan immediately
as provided in SUBSECTION 3.2(B), then concurrently with such prepayment, the
Borrower shall borrow from the affected Lender, in the amount of such repayment,
a Base Rate Loan.
(D) Before giving any notice to the Agent pursuant to this SECTION
3.2, the affected Lender shall designate a different Lending Office with respect
to its LIBOR Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Lender, be
illegal or otherwise disadvantageous to the Lender.
III.3 INCREASED COSTS. If any Lender shall determine that, due to
either (a) the introduction of or any change (other than any change by way of
imposition of or increase in reserve requirements included in the calculation of
the LIBOR) in or in the interpretation of any Requirement of Law or (b) the
compliance with any guideline or request from any central bank
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or other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Lender of agreeing to make or making,
funding or maintaining any LIBOR Loans, then the Borrower shall be liable for,
and shall from time to time, upon demand therefor by such Lender, pay to such
Lender such additional amounts as are sufficient to compensate such Lender for
such increased costs. Notwithstanding anything to the contrary contained in this
SECTION 3.3, the Borrower shall not be obligated to compensate any Lender for
any such increased costs to the extent such increased costs were incurred during
or are otherwise attributable to any period of time more than 180 days prior to
the date on which such Lender delivered its written certificate to the Borrower
pursuant to SECTION 3.7 for compensation for such costs.
III.4 INABILITY TO DETERMINE RATES. If the Agent shall have determined
that for any reason adequate and reasonable means do not exist for ascertaining
the LIBOR for any requested Interest Period with respect to a proposed LIBOR
Loan or that the LIBOR applicable for any requested Interest Period with respect
to a proposed LIBOR Loan does not adequately and fairly reflect the cost to the
Lenders of funding such Loan, the Agent will forthwith give notice of such
determination to the Borrower and each Lender. Thereafter, the obligation of the
Lenders to make or maintain LIBOR Loans, as the case may be, hereunder shall be
suspended until the Agent, upon the instruction of the Required Lenders, revokes
such notice in writing. Upon receipt of such notice, the Borrower may revoke any
Notice of Borrowing or Notice of Conversion/Continuation then submitted by it.
If the Borrower does not revoke such notice, the Lenders shall make, convert or
continue the Loans, as proposed by the Borrower, in the amount specified in the
applicable notice submitted by the Borrower, but such Loans shall be made,
converted or continued as Base Rate Loans instead of LIBOR Loans, as the case
may be.
III.5 PREPAYMENT OF LIBOR LOANS. In the event that the Borrower prepays or
is required to prepay any LIBOR Loan by acceleration or otherwise or fails to
draw down or convert to a LIBOR Loan after giving notice thereof, the Borrower
agrees to reimburse each Lender for its expenses, funding losses due to such
prepayment or failure to draw. The Borrower and the Lenders hereby agree that
such expenses and funding losses shall consist of the sum of the discounted
monthly differences for each month during the applicable or requested Interest
Period, calculated as follows for each such month:
(A) principal amount of such LIBOR Loan times (number of days
between the date of prepayment and the last day in the applicable Interest
Period divided by 360), times the applicable Interest Differential; plus
(B) all actual out-of-pocket expenses (other than those taken into
account in the calculation of the Interest Differential) incurred by the Lenders
and the Agent (excluding allocations of any expense internal to the Lenders and
the Agent) and reasonably attributable to such payment or prepayment; provided
that no prepayment fee shall be payable (and no credit or rebate shall be
required) if the product of the foregoing formula is not a positive number.
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III.6 CAPITAL REQUIREMENTS. If any Lender shall determine that any
change after the date of this Agreement in any law, rule, regulation or
guideline adopted pursuant to or arising out of the July 1988 report of the
Basle Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards," or the
adoption after the date hereof of any other Requirement of Law regarding capital
adequacy, or any change after the date of this Agreement in any of the foregoing
or in the enforcement or interpretation or administration of any of the
foregoing by any Governmental Authority charged with the enforcement or
interpretation or administration thereof, or compliance by any Lender (or any
Lending Office of the Lender) or the Lender's holding company with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such Governmental Authority, has the effect of reducing the rate of
return on the Lender's capital or on the capital of the Lender's holding
company, if any, as a consequence of the maintaining of any of its Commitments
or the making or maintaining any Loan under this Agreement to a level below that
which the Lender or the Lender's holding company could have achieved but for
such adoption, change or compliance (taking into consideration the Lender's
policies and the policies of the Lender's holding company with respect to
capital adequacy) by an amount deemed by the Lender to be material, then, upon
written demand by the Lender, the Borrower shall pay to the Lender, from time to
time such additional amount or amounts as will compensate the Lender or the
Lender's holding company for any such reduction suffered. Without affecting its
rights under this SECTION 3.6 or any other provision of this Agreement, the
Lender agrees that if there is any increase in any cost to or reduction in any
amount receivable by the Lender with respect to which the Borrower would be
obligated to compensate the Lender pursuant to this SECTION 3.6, the Lender
shall use reasonable efforts to select an alternative Lending Office which would
not result in any such increase in any cost to or reduction in any amount
receivable by the Lender; provided, however, that the Lender shall not be
obligated to select an alternative Lending Office if the Lender determines that
(a) as a result of such selection the Lender would be in violation of any
Requirement of Law, or would incur additional costs or expenses, or (b) such
selection would be inadvisable for regulatory reasons. Notwithstanding anything
to the contrary contained in this SECTION 3.6, the Borrower shall not be
obligated to indemnify or compensate any Lender for any reduction in Bank's rate
of return on its capital as a consequence of such Lender's obligations hereunder
to the extent the same arose or were incurred during or are otherwise
attributable to any period of time more than 180 days prior to the date on which
such Lender delivered its written certificate to the Borrower pursuant to
SECTION 3.7 for indemnification or compensation for such reduction.
III.7 CERTIFICATES OF LENDERS. Any Lender claiming reimbursement or
compensation pursuant to this ARTICLE III shall deliver to the Borrower (with a
copy to the Agent) a certificate setting forth in reasonable detail the amount
payable and the basis therefor to the Lender hereunder. Such certificate shall
be conclusive and binding on the Borrower in the absence of manifest error.
III.8 SUBSTITUTION OF LENDERS. Upon the receipt by the Borrower from any
Lender (an "Affected Lender") of a claim for compensation pursuant to SECTIONS
3.1, 3.3, 3.5 or 3.6, the
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Borrower may: (a) request the Affected Lender to use its best efforts to obtain
a replacement bank or financial institution satisfactory to the Borrower to
acquire and assume all or part of such Affected Lender's Loans and Commitments
(a "Replacement Lender"), (b) request one more of the other Lenders to acquire
and assume all or part of such Affected Lender's Loans and Commitments or (c)
designate a Replacement Lender. Any such designation of a Replacement Lender
under clause (a) or (c) shall be subject to the prior written consent of the
Agent (which consent shall not be unreasonably withheld or delayed).
III.9 SURVIVAL. The agreements and obligations of the Borrower in this
ARTICLE III shall survive the payment of all other Obligations.
IV
CONDITIONS PRECEDENT TO THE SECOND CLOSING AND THE MAKING OF LOANS
IV.1 CONDITIONS PRECEDENT TO THE SECOND CLOSING. The Second Closing
shall occur upon the prior satisfaction of each of the conditions precedent set
forth in this SECTION 4.1, as determined by the Lenders and the Agent (all Loan
Documents and other documents to be delivered to the Agent or any Lender
pursuant to this SECTION 4.1 shall be subject to prior approval as to form and
substance (including as to results) by the Lenders and the Agent).
(A) CORPORATE DOCUMENTS. The Agent shall have received originals of
each of the following:
(I) THE BORROWER. A certificate executed by the Secretary of
the Borrower, dated the Second Closing Date, certifying (1) that the Borrower
has the authority to execute, deliver and perform its obligations under each of
the Loan Documents to which the Borrower is a party, (2) that attached behind
EXHIBIT A to such certificate is a true, correct and complete copy of the
certificate of incorporation of the Borrower certified by the Secretary of State
of the State of Delaware as of a date not more than twenty (20) days prior to
the Second Closing Date, (3) that attached behind EXHIBIT B to such certificate
is a true, correct and complete copy of the bylaws and each other Organizational
Document of the Borrower then in full force and effect, (4) that attached behind
EXHIBIT C to such certificate is a certificate of the Secretary of State of each
of the States of Delaware, Colorado, Kansas, Massachusetts, Michigan, Nebraska,
New Jersey, New York, Utah and Virginia and each other state where the failure
of the Borrower to so qualify would, with reasonable likelihood, result in a
Material Adverse Change, dated as of a date not more than twenty (20) days prior
to the Second Closing Date, stating that the Borrower is a corporation in good
standing in such states, (5) the name(s) of the officer(s) of the Borrower
authorized to execute Loan Documents on behalf of the Borrower, together with a
sample of the true signatures of such officer(s), (6) that attached behind
EXHIBIT D to such certificate is a true, correct and complete copy of the
resolutions adopted by the board of directors of the Borrower then in full force
and effect authorizing the execution, delivery and performance by the Borrower
of each of the Loan Documents required
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by this Agreement to which the Borrower is a party, (7) that attached behind
EXHIBIT E to such certificate is a true, correct and complete statement of the
authorized and issued stock of the Borrower, by class, number and record and, if
different, beneficial owner (including voting rights, as determined on both an
undiluted and fully diluted basis), and (8) that the Lenders may conclusively
rely on such certificate unless and until the Borrower shall have delivered to
the Agent a further certificate canceling or amending such prior certificate.
(II) HOLDINGS. A certificate executed by the secretary of
Holdings, solely in his capacity as such, dated the Second Closing Date,
certifying (1) that Holdings has the authority to execute, deliver and perform
its obligations under each of the Loan Documents to which Holdings is a party,
(2) that attached behind EXHIBIT A to such certificate is a true, correct and
complete copy of the certificate of incorporation of Holdings certified by
Secretary of State of the State of Delaware as of a date not more than twenty
(20) days prior to the Second Closing Date, (3) that attached behind EXHIBIT B
to such certificate is a true, correct and complete copy of the bylaws and each
other Organizational Document of Holdings then in full force and effect, (4)
that attached behind EXHIBIT C to such certificate is a certificate of the
Secretary of State of the States of Delaware, Colorado and Nebraska and each
other state in which the failure by Holdings to so qualify would, with
reasonable likelihood, result in a Material Adverse Change, dated as of a date
not more than twenty (20) days prior to the Second Closing Date, stating that
Holdings is a corporation in good standing in such state, (5) the name(s) of the
officer(s) of Holdings authorized to execute Loan Documents on behalf of
Holdings, together with a sample of the true signatures of such officer(s), (6)
that attached behind EXHIBIT D to such certificate is a true, correct and
complete copy of the resolutions adopted by the board of directors of Holdings
then in full force and effect authorizing the execution, delivery and
performance by Holdings of each of the Loan Documents required by this Agreement
to which Holdings is a party, and (7) that the Lenders may conclusively rely on
such certificate unless and until Holdings shall have delivered to the Agent a
further certificate canceling or amending such prior certificate.
(III) INTELLITEK. A certificate executed by the secretary of
IntelliTEK, dated the Second Closing Date, certifying (1) that attached behind
EXHIBIT A to such certificate is a true, correct and complete copy of the
certificate of incorporation of IntelliTEK, certified by the Secretary of State
of the State of Delaware as of a date not more than twenty (20) days prior to
the Second Closing Date, (2) that attached behind EXHIBIT B to such certificate
is a true, correct and complete copy of the bylaws and each other Organizational
Document of IntelliTEK then in full force and effect, (3) that attached behind
EXHIBIT C to such certificate is a Certificate of Secretary of State of the
States of Delaware and Nebraska and each other state where the failure of
IntelliTEK to so qualify would, with reasonable likelihood, result in a Material
Adverse Change, dated as of a date not more than twenty (20) days prior to the
Second Closing Date, stating that IntelliTEK is a corporation in good standing
in such State, (4) that attached behind EXHIBIT D to such certificate is a true,
correct and complete statement of the authorized and issued Stock of IntelliTEK
by class, number and record and, if different, beneficial owner (including
voting rights, as determined on both an undiluted and fully diluted basis), and
(5) that
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the Lenders may conclusively rely on such certificate and its attached exhibits
unless and until IntelliTEK shall have delivered to the Agent canceling or
amending such prior certificate.
(B) LOAN DOCUMENTS. The Agent shall have received originals of each
of the following Loan Documents:
(I) THIS AGREEMENT. This Agreement, duly executed by the
Borrower, each of the Lenders and the Agent, together with all completed
SCHEDULES to this Agreement.
(II) TERM FACILITY NOTES. Separate Term Facility Notes, duly
executed by the Borrower to each of the Lenders having a Term Facility
Commitment in the original principal amount of such Lender's Term Facility
Commitment;
(III) DESIGNATION OF RESPONSIBLE PERSONS. A Designation of
Responsible Persons, duly executed by the president or chief financial officer
of the Borrower.
(IV) REAFFIRMATION OF GUARANTY. The Reaffirmation of
Guaranty, duly executed and delivered by Holdings.
(C) RETURN OF TRANCHE-A NOTES AND TRANCHE-B NOTES. The Agent shall
have received originals of each Tranche-A Term Loan Note and Tranche-B Term Loan
Note delivered from each of the Lenders under (and as such term is defined in)
the Original Loan Agreement accompanied by a certificate from such Lender (each
such certificate referred to as a "Lender Certificate") granting to the Agent
the authority to mark such notes "Canceled" upon the face of such notes upon
written confirmation from such Lender that the entire Obligations (as such term
is defined in the Original Loan Agreement) evidenced by such Note have either
been repaid in full or rolled over into one or more Term Facility Loans in
accordance with this Agreement.
(D) PAYOFF LETTERS. The Agent shall have received from each of the
Lenders under (and as such term is defined in) the Original Agreement a letter
(a "Payoff Letter") detailing amounts owed to such Lender in respect of unpaid
principal, accrued but unpaid interest, unpaid fees and all other amounts owed
in respect of such Lender's Tranche-A Term Loan Note and Tranche-B Term Loan
Note, as applicable.
(E) REPAYMENT OF OBLIGATIONS. The Agent shall have received from
the Borrower as of the Second Closing Date, for the benefit of each of the
Lenders under (and as such term in defined in) the Original Loan Agreement which
shall not be continuing as Lenders under this Agreement, in immediately
available funds, such amounts as are necessary to repay all of the Obligations
(as such term is defined in the Original Agreement), including, without
limitation, breakage fees as provided in SECTION 3.5 of the Original Agreement,
in respect of the
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Tranche-A Term Loan Notes and Tranche-B Term Loan Notes of such Lenders, as such
amounts appear in the Payoff Letters.
(F) OPINION OF THE BORROWER'S COUNSEL. The Agent shall have
received an originally executed Opinion of the Borrower's Counsel.
(G) TITLE POLICIES. The Agent shall have had such endorsements
issued to it by the Title Company with respect to the issuance to the Agent, for
the benefit of the Lenders, of separate ALTA lenders' policies of leasehold
title insurance insuring the first priority of the Lien (subject only to the
Permitted Title Exceptions) granted in favor of the Title Company, as trustee,
for the benefit of the Agent, in the Borrower's leasehold interest in and to the
Chandler Road Property and the North Park (Building 6) Property, respectively,
as the Agent shall reasonably require.
(H) UCC SEARCHES. The Agent shall have received certified copies,
dated as of a recent date, of form UCC-3 requests for copies or information
listing all effective financing statements which name the Borrower, Holdings, or
IntelliTEK as debtor and which are filed with the appropriate Governmental
Authorities in the States of Nebraska and Colorado.
(I) UCC AMENDMENTS AND NOTICES. The Agent shall have received
executed UCC amendments and notices to depository institutions and issuers of
insurance policies, executed by the Borrower or Holdings, as the Agent shall
reasonably request.
(J) THE BORROWER'S BRING-DOWN CERTIFICATE. The Agent shall have
received a certificate dated the Second Closing Date, executed by the chief
executive officer or the chief financial officer of the Borrower, on behalf of
the Borrower, certifying that:
(I) no Default or Event of Default has occurred and is
continuing; and
(II) the representations and warranties of the Borrower
contained in ARTICLE V of this Agreement are true, accurate and complete as of
the Second Closing Date (except to the extent such representations and
warranties are made as of an earlier date, in which case they shall be true,
accurate and complete in all material respects as of such earlier date).
(K) AMENDMENT FEE. The Agent shall have received, in immediately
available funds, for the ratable benefit of the Lenders, an amendment fee in the
amount of $56,250.
(L) OFFICER'S CERTIFICATE. The Agent shall have received a
certificate, executed by the chief executive officer or the chief financial
officer of the Borrower, certifying that the Parent Loans have been repaid in
full from the Net Proceeds of the most recent public offering of the common
stock of Holdings.
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(M) OTHER DOCUMENTS. The Agent or the Lenders shall have received
such other documents and information from the Borrower as the Lenders may
reasonably request.
IV.2 THE MAKING OF REVOLVING LOANS. The obligation of the Lenders having
Revolving Commitments to advance any Borrowing of Revolving Loans is subject to
the satisfaction of the following further conditions precedent:
(A) The Agent shall have received a Notice of Borrowing, with
appropriate insertions, executed by a Responsible Person.
(B) No event shall have occurred and be continuing or would result
from the making of any Revolving Loan on such Funding Date which constitutes a
Default or an Event of Default under this Agreement.
(C) The Agent shall have received such other instruments and
documents as it may have reasonably requested from the Borrower in connection
with the requested Borrowing.
V
THE BORROWER'S REPRESENTATIONS AND WARRANTIES
The Borrower hereby warrants and represents to the Agent and each Lender as
follows, and agrees that each of said warranties and representations shall be
deemed to continue so long as any of the Commitments shall be available
hereunder or any Loan or other payment Obligation shall remain unpaid or
unsatisfied, and shall apply anew to the making of each Loan.
V.1 ORGANIZATION, POWER AND AUTHORITY OF THE BORROWER. The Borrower is
a corporation duly organized and validly existing under the laws of the State of
Delaware, is duly qualified to do business and is in good standing in each
jurisdiction where the failure of the Borrower to so qualify would, with
reasonable likelihood, result in a Material Adverse Change and has full power
and authority and holds all material requisite governmental licenses, permits
and other approvals to enter into and perform its obligations under this
Agreement, the Notes, each of the Collateral Documents, each of the other Loan
Documents to which it is a party, the Paribas Side Letter and to own and hold
under lease its Property and to conduct its business substantially as currently
conducted by it and such business as contemplated to be conducted by it upon and
following the transactions contemplated by the Loan Documents.
V.2 ORGANIZATION, POWER AND AUTHORITY OF THE BORROWER'S SUBSIDIARIES.
Each of the Borrower's Subsidiaries is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation, is duly
qualified to do business and is in good standing in each jurisdiction where the
failure to so qualify would, with reasonable likelihood, result in a Material
Adverse Change and has full power and authority and holds all requisite
governmental licenses, permits and other approvals to own and hold under lease
its Properties and to conduct
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its business substantially as currently conducted by it and such business as
contemplated to be conducted by it upon and following the transactions
contemplated by the Loan Documents.
V.3 LOAN DOCUMENTS AND NOTES AUTHORIZED; BINDING OBLIGATIONS. The
execution, delivery and performance of this Agreement, each of the Collateral
Documents, the Environmental Indemnity and each of the other Loan Documents to
which it is a party, and the execution, delivery and payment of the Notes have
been duly authorized by all necessary and proper action on the part of the
Borrower. The Loan Documents constitute legally valid and binding obligations
of the Borrower enforceable against the Borrower in accordance with their
respective terms, except as enforcement thereof may be limited by bankruptcy,
insolvency or other laws affecting the enforcement of creditors' rights
generally.
V.4 NO CONFLICT. The execution, delivery and performance of this
Agreement, the Collateral Documents, the Environmental Indemnity and each of the
other Loan Documents to which the Borrower is a party, and the execution,
delivery and payment of the Notes will not contravene any provision of the
Borrower's Organizational Documents and will not (a) to the best of the
Borrower's knowledge, after Due Inquiry, contravene, conflict with or violate
any Requirement of Law, (b) contravene, conflict or violate any applicable
order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority and (c) violate or result in the breach of, or constitute
a default under any loan or credit agreement, indenture or other document (which
documents are, in the aggregate, material) to which the Borrower is a party or
by which the Borrower or its Property and assets may be bound or affected. The
Borrower is not in violation or breach of or default under any Requirement of
Law, order, writ, judgment, injunction, decree, determination or award or any
contract, agreement, lease, license, indenture or other instrument to which it
is a party, the non-compliance with, the violation or breach of or the default
under could with reasonable likelihood result in a Material Adverse Change.
V.5 CAPITAL STRUCTURE. ITEM 5.5 of the DISCLOSURE SCHEDULE sets forth
each of the stockholders of the Borrower and each of its Subsidiaries, together
with the jurisdiction of formation or organization, the capital accounts and
ownership interests (including voting partnership interests or authorized and
issued capital stock, as applicable, of each such Person), by class and number
and including the percentage of each class legally owned or to be owned by such
Person as of the Second Closing Date. Except as set forth in ITEM 5.5 of the
DISCLOSURE SCHEDULE, there are no options, warrants, rights to purchase or
similar rights covering the stock interests in the Borrower or any of its
Subsidiaries.
V.6 FINANCIAL CONDITION. All balance sheets, all statements of
operations, of stockholders' equity and changes in cash flow, and other
financial data (other than projections) which have been furnished to the Agent
for the purposes of or in connection with this Agreement or the other Loan
Documents have been prepared in accordance with GAAP consistently applied
throughout the periods involved and present fairly the financial condition of
the entities involved as of the dates thereof and the results of their
operations for the periods covered thereby. All
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balance sheets, all statements of operations, of stockholders' equity and of
changes in cash flow, and other financial data (other than projections) which
shall hereafter be furnished to the Agent for the purposes of or in connection
with this Agreement or any of the other Loan Documents will be prepared in
accordance with GAAP consistently applied throughout the periods involved and
will present fairly the financial condition of the entities involved as of the
dates thereof and the result of their operations for the periods covered
thereby. All projections which have been or shall be furnished to the Agent for
purposes of or in connection with this Agreement or any of the other Loan
Documents have been, and shall represent, the Borrower's management's best
estimates of future performance, based upon historical financial information and
reasonable assumptions of management.
V.7 NO MATERIAL ADVERSE CHANGE. Since December 31, 1995, there has been
no Material Adverse Change except as disclosed in ITEM 5.7 of the DISCLOSURE
SCHEDULE.
V.8 OWNERSHIP OF PROPERTIES. The Borrower owns good and marketable
title to all of the Collateral, free and clear of all Liens, charges or claims,
except the Permitted Liens.
V.9 EXECUTIVE OFFICES; TRADE NAMES. The current location of the
Borrower's chief executive office and principal place of business is set forth
in ITEM 5.9 to the DISCLOSURE SCHEDULE. The Borrower has not since July 31,
1994 used and does not presently use a trade name other than as listed on ITEM
5.9 of the DISCLOSURE SCHEDULE.
V.10 LITIGATION. Except as disclosed in ITEM 5.10 of the DISCLOSURE
SCHEDULE, there are no claims, actions, suits, proceedings or other litigation
pending or, to the best of the Borrower's knowledge, threatened against the
Borrower or any of Borrower's Property at law or in equity before any
Governmental Authority or, to the best of the Borrower's knowledge, any
investigation by any Governmental Authority of the Borrower's affairs or
Properties which could, if adversely determined, with reasonable likelihood
result in a Material Adverse Change. Other than any liability incident to the
litigation or proceedings disclosed in ITEM 5.10 of the DISCLOSURE SCHEDULE, the
Borrower does not have any contingent liabilities which are material and which
are not provided for or disclosed in the most recent financial statements
delivered to the Agent.
V.11 MATERIAL DOCUMENTS; THIRD PARTY CONSENTS. ITEM 5.11 of the
DISCLOSURE SCHEDULE lists each of the material agreements (including each
Billing Services Agreement, the Services Agreement and each of the other
Affiliate Agreements, and each of the Employee Side Letter Agreements),
contracts, leases, licenses (including licenses or sublicenses of Intellectual
Property) and other documents of the Borrower. Except as further set forth on
ITEM 5.11 of the DISCLOSURE SCHEDULE, no approval, authorization or consent of
any Billing Service Customer, FDC or any of its Affiliates which is party to an
Affiliate Agreement, any licensor, sublicensor, licensee or sublicensee of the
Borrower's Intellectual Property, the lessor of the Chandler Road Property or
the North Park (Building 6) Property or other trustee or holder of any
indebtedness or obligation of the Borrower or of any other Person under any such
document is required to be
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obtained by the Borrower in order to make or consummate the transactions
contemplated by the Loan Documents, except as has already been obtained.
V.12 NO GOVERNMENT CONSENTS NEEDED. Except for the filing of not yet due
tax returns and reports or as have already been obtained, no certificate,
authorization, permit consent, approval, order, license, exemption from, or
filing or registration or qualification with, any Governmental Authority is or
will be required to authorize, or is otherwise required in connection with:
(A) the execution and delivery by the Borrower of, and the payment
and performance by the Borrower of its Obligations under the Loan Documents; and
(B) the maintenance and preservation of the Liens described in and
granted by the Borrower pursuant to the Loan Documents.
V.13 PERSONS SIGNING AUTHORIZED. The Persons signing the Loan Documents
on behalf of the Borrower are fully authorized to execute the Loan Documents and
have been designated as Responsible Persons in writing to the Agent.
V.14 SOLVENCY. The Borrower is Solvent.
V.15 EMPLOYMENT AND LABOR AGREEMENTS. Except as set forth on ITEM 5.15
to the DISCLOSURE SCHEDULE, there are no employment agreements covering
management of the Borrower and there are no collective bargaining agreements or
other labor agreements covering any employees of the Borrower. A true and
complete copy of each such agreement has been furnished to the Agent.
V.16 ERISA. All Employee Benefit Plans of the Borrower are listed on
ITEM 5.16 of the DISCLOSURE SCHEDULE. All Pension Plans of the Borrower,
including terminated Pension Plans, that are intended to be qualified under
Section 401(a) of the Code have been determined by the IRS to be qualified. All
Pension Plans existing as of the date hereof continue to be so qualified. No
"reportable event" (as defined in Section 4043 of ERISA) has occurred and is
continuing with respect to any Pension Plan for which the thirty-day notice
requirement may not be waived other than those of which the appropriate
Governmental Authority has been notified. All Employee Benefit Plans of the
Borrower have been operated in all material respects in accordance with their
terms and applicable law, including ERISA, and no "prohibited transaction" (as
defined in ERISA and the Code) that would result in any material liability to
the Borrower has occurred with respect to any such Employee Benefit Plan.
V.17 LABOR MATTERS. There are no strikes or other labor disputes against
the Borrower or any of Subsidiaries, or, to the best of the Borrower's
knowledge, threatened against the Borrower, or any of its Subsidiaries, which
could with reasonable likelihood result in a Material Adverse Change.
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V.18 MARGIN REGULATIONS. The Borrower does not own any "margin security"
as that term is defined in the Margin Regulations, and the proceeds of the Loans
will be used only for the purposes contemplated in this Agreement hereunder.
None of the Loans will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the Loans to
be considered a "purpose credit" within the meaning of the Margin Regulations.
V.19 TAXES. All material federal, state, and local tax returns, reports
and statements required to be filed by the Borrower have been filed with the
appropriate Governmental Authorities and all Charges and other impositions shown
thereon to be due and payable by the Borrower have been paid prior to the date
on which any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof, or any such fine, penalty, interest, late charge or loss has
been paid, or the Borrower is contesting its liability therefore in good faith
and has fully reserved all such amounts in the financial statements delivered to
the Agent pursuant to SECTION 7.1. Proper and accurate amounts have been
withheld by the Borrower from its employees for all periods in full and complete
compliance with the tax, social security and unemployment withholding provisions
of applicable federal, state, local and foreign law and such withholdings have
been timely paid to the respective Governmental Authorities. The Borrower has
not executed or filed with the IRS or any other Governmental Authority any
agreement or other document extending, or having the effect of extending, the
period for assessment or collection of any Charges.
V.20 SCHEDULE OF DEPOSIT ACCOUNTS. ITEM 5.20 of the DISCLOSURE
SCHEDULE lists all banks and other depository institutions at which the Borrower
maintains deposit and other accounts, including the name and address of each
depository institution and the Person in whose name the account is held, and a
description and number of the account.
V.21 INTELLECTUAL PROPERTY RIGHTS. The Borrower possesses and owns all
necessary Intellectual Property rights and all licenses or sublicenses of
Intellectual Property which are material to the conduct of its business as
contemplated by the Merger Agreement and the Loan Documents, each of which is
listed, together with applicable federal, state or foreign application and
registration numbers, on ITEM 5.21 of the DISCLOSURE SCHEDULE. The Borrower
conducts its business without infringement or, to the best of Borrower's
knowledge, after Due Inquiry, claim of infringement of any Intellectual Property
right of others, except where such infringement or claim of infringement could
not with reasonable likelihood result in a Material Adverse Change. There is no
infringement or, to the best of the Borrower's knowledge, after Due Inquiry,
claim of infringement by others of any Intellectual Property owned, licensed or
sublicensed by the Borrower.
V.22 OTHER REGULATIONS. The Borrower is not: (a) a "public utility
company" or a "holding company," or an "affiliate" or a "subsidiary company" of
a "holding company," or an
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"affiliate" of such a "subsidiary company," as such terms are defined in the
Public Utility Holding Company Act or (b) an "investment company," or an
"affiliated person" of, or a "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act.
V.23 NATURE OF REPRESENTATIONS AND WARRANTIES. The Borrower certifies to
the Agent and each Lender that all representations and warranties made in this
Agreement and all other Loan Documents are true and correct in all material
respects and do not contain any untrue statement of a material fact or omit any
material fact necessary to make any such representation or warranty not
misleading. All such representations and warranties shall continue and survive
so long as any of the payment Obligations have not been satisfied or shall
remain outstanding. Each request by the Borrower for a Borrowing and each
continuation of a LIBOR Loan into another LIBOR Loan and each conversion of a
LIBOR Loan into a Base Rate Loan or a Base Rate Loan into a LIBOR Loan shall
constitute an affirmation that all such representations and warranties remain
true and correct in all material respects and shall not contain any untrue
statement of a material fact or omit any material fact necessary to make any
such representation or warranty not misleading as of the date thereof. Each
representation and warranty made in this Agreement, in any other Loan Documents,
and in any other document delivered to the Agent or any Lender by the Borrower,
shall be deemed to have been relied upon by the Agent and the Lenders
notwithstanding any investigation, inspection or inquiry theretofore or
thereafter made by or on behalf of the Agent or any Lender, or any funding of
Loans by the Lenders.
VI
INSURANCE
VI.1 INSURANCE BY THE BORROWER. The Borrower shall obtain at its own
expense and maintain in full force and effect at all times set forth in SECTION
6.2 with insurance carriers authorized to do business in the State of Nebraska
with a Best's Key Rating Guide rating of A - X or better policies of insurance
with limits and coverage sufficient to satisfy the provisions set forth in this
ARTICLE IV, with limits and coverage provisions sufficient to satisfy the
requirements set forth below.
VI.2 GENERAL INSURANCE REQUIREMENTS. The Borrower shall maintain in full
force and effect at all times so long as any Commitment shall be available
hereunder or any Loan or other payment Obligation shall remain unpaid or
unsatisfied, all of the following:
(A) WORKERS' COMPENSATION INSURANCE. As required by applicable
state laws, workers' compensation insurance, including employer's liability
insurance with a $1,000,000 minimum limit per accident.
(B) COMMERCIAL GENERAL LIABILITY. Commercial general liability
insurance on an occurrence basis against claims for personal injury (including
bodily injury and death) and
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property damage. Such insurance shall provide coverage for products-completed
operations, blanket contractual, explosion, collapse and underground coverage,
broad form property damage and personal injury insurance with a $1,000,000
minimum limit per occurrence for combined bodily injury and property damage and
a $2,000,000 aggregate annual limit (provided that if, as a result of the
payment of any claims in respect of Anasazi under policies of insurance required
pursuant to this SUBSECTION 6.2(B), the availability of insurance under such
aggregate annual limit shall be reduced below $1,000,000 for any Fiscal Year,
the Borrower agrees to purchase such insurance as is necessary to re-establish
the availability of insurance up to a $1,000,000 aggregate annual limit for such
Fiscal Year).
(C) AUTOMOBILE LIABILITY INSURANCE. Automobile liability
insurance against claims for personal injury (including bodily injury and death)
and property damage covering all owned, leased non-owned and hired motor
vehicles, including loading and unloading, with a $1,000,000 minimum limit per
occurrence for combined bodily injury and property damage.
(D) EXCESS INSURANCE. Excess liability insurance on an
occurrence basis covering claims in excess of and following the terms of the
underlying insurance as set forth in the foregoing SUBSECTIONS 6.2(A), (B) and
(C) with a $10,000,000 minimum limit per occurrence and a $15,000,000 aggregate
annual limit.
(E) The amounts of insurance required in the foregoing SUBSECTIONS
6.2 (A), (B), (C) and (D) may be satisfied by the Borrower purchasing coverage
in the amounts specified or by any combination thereof, so long as the total
amount of insurance meets the requirements specified above.
(F) PROPERTY DAMAGE INSURANCE. In addition to the insurance
required pursuant to the Leasehold Deeds of Trust, property damage insurance on
an all-risk basis, including coverage against damage or loss caused by flood (as
to the Chandler Road Property and the North Park (Building 6) Property),
providing coverage for the Chandler Road Property and the North Park (Building
6) Property in a minimum aggregate amount equal to the "full replacement value"
of such Properties (except a sublimit in the amount of $1,000,000 per occurrence
shall be permitted for flood).
(G) EXTRA EXPENSE/BUSINESS INTERRUPTION INSURANCE. Extra
expense/business interruption insurance covering $5,000,000 of the actual loss
sustained of the Borrower arising from a loss insured by the policies of
insurance required under this SECTION 6.2.
(H) ERISA INSURANCE. Fidelity coverage in an amount to cover the
employee dishonesty insurance requirements with respect to pension and welfare
funds under any Pension Plan.
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VI.3 ENDORSEMENTS. All policies of liability, property, and extra
expense/business interruption insurance to be maintained by the Borrower shall
provide for waivers of subrogation in favor of the Agent and each Lender and
their respective officers, employees and agents. All policies of liability
insurance required to be maintained by the Borrower under SECTION 6.2 shall be
endorsed as follows:
(A) To provide a severability of interest or cross liability
clause (with wording to the effect coverage applies as though separate policies
had been issued to each insured);
(B) That the insurance shall be primary and not excess to or
contributing with any insurance or self-insurance maintained by the Agent or any
Lender;
(C) To name the Agent and each Lender and their respective
officers, employees, agents as additional insureds, except for workers'
compensation insurance.
VI.4 CONDITIONS.
(A) The Borrower shall promptly notify the Lender of any loss
covered by any insurance maintained pursuant to SECTION 6.2.
(B) All policies of property insurance required to be maintained
pursuant to SECTION 6.2 shall provide that the proceeds of such policies shall
be payable to the Agent, on behalf and for the ratable benefit of the Lenders,
pursuant to a standard first mortgage endorsement substantially equivalent to
the New York Standard Mortgage Endorsement or Lenders Loss Payable Endorsement
438 BFU, without contribution. All policies (other than in respect to liability
or workers compensation insurance) shall insure the interests of the Agent and
the Lenders regardless of any breach or violation by the Borrower of warranties,
declarations or conditions contained in such policies, any action or inaction of
the Borrower or others.
(C) All policies of insurance required to be maintained pursuant
to this ARTICLE VI shall provide the Agent with at least thirty (30) days' prior
written notice of reduction, cancellation, expiration or lapse.
VI.5 EVIDENCE OF INSURANCE. On an annual basis at each policy
anniversary, the Borrower shall furnish the Agent with approved certification of
all required insurance. Such certification shall be executed by each insurer or
by an authorized representative of each insurer where it is not practical for
such insurer to execute the certificate itself. Such certification shall
identify underwriters, the type of insurance, the insurance limits and the
policy term and shall specifically list the special provisions enumerated for
such insurance required by this ARTICLE VI. Upon request, the Borrower will
promptly furnish the Lender with copies of all insurance policies, binders and
cover note or other evidence of such insurance required by this ARTICLE VI.
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VI.6 NO DUTY OF LENDER TO VERIFY. No provision of this ARTICLE VI or any
other provision of this Agreement shall impose on the Agent or the Lenders any
duty or obligation to verify the existence or adequacy of the insurance coverage
maintained by the Borrower, nor shall the Agent or any Lender be responsible for
any representations or warranties made by or on behalf of the Borrower to any
insurance company or underwriter.
VII
AFFIRMATIVE COVENANTS OF THE BORROWER
The Borrower covenants and agrees that, so long as any Commitment shall be
available hereunder or any Loan or other payment Obligation shall remain unpaid
or unsatisfied, unless Required Lenders shall otherwise waive compliance in
writing:
VII.1 RECORDS AND REPORTS. The Borrower shall maintain a system of
accounting administered in accordance with sound business practices to permit
preparation of financial statements in conformity with GAAP, and deliver to the
Agent and each Lender:
(A) QUARTERLY BORROWER-PREPARED FINANCIAL STATEMENTS. As soon as
practicable and in any event within forty-five (45) days after the end of each
Fiscal Quarter for the first three Fiscal Quarters of each Fiscal Year and
concurrent with the annual audited financial statements furnished pursuant to
SUBSECTION 7.1(B) for the fourth Fiscal Quarter in each Fiscal Year, (i) a
consolidated balance sheet of the Borrower as at the end of such period and as
at the end of the immediately preceding Fiscal Year, (ii) a consolidated
statement of operations of the Borrower for such Fiscal Quarter and for such
Fiscal Year to date, setting forth in each case in comparative form the figures
for the corresponding periods of the previous Fiscal Year and (iii) a
consolidated statement of cash flows of the Borrower for such Fiscal Year to
date, setting forth in comparative form the figures for the corresponding period
for the immediately preceding Fiscal Year, all in reasonable detail and
certified by the chief financial officer or Controller/Principal Accounting
Officer of the Borrower that they (1) are complete and fairly present the
financial condition of the Borrower as at the dates indicated and the results of
its operations and changes in their cash flow for the periods indicated, (2)
disclose all liabilities of the Borrower that are required to be reflected or
reserved against under GAAP, whether liquidated or unliquidated, fixed or
contingent and (3) have been prepared in accordance with GAAP, subject to the
absence of footnotes and changes resulting from audit and normal year-end
adjustment;
(B) ANNUAL AUDITED FINANCIAL STATEMENTS. As soon as practicable
and in any event within ninety (90) days after the end of each Fiscal Year, a
consolidated balance sheet of the Borrower as at the end of such year and the
related consolidated statements of operations, stockholders' equity and cash
flows of the Borrower for such Fiscal Year, setting forth in each case, in
comparative form the figures for the previous year, all in reasonable detail and
in the case of such financial statements, accompanied by a report thereon of
Arthur Andersen, LLP or
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other independent public accountants of recognized national standing selected by
the Borrower and reasonably satisfactory to the Agent, which report shall not
contain an adverse opinion, a disclaimer of opinion or be qualified or limited
because of a restricted or limited examination by such accountant of any
material portion of the Borrower's records and shall state that such financial
statements present fairly the financial position of the Borrower as at the dates
indicated and the results of its operations and changes in its financial
position for the periods indicated in conformity with GAAP and that the
examination by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards, certified by the chief financial officer or Controller/Principal
Accounting Officer of the Borrower;
(C) ACCOUNTANTS' STATEMENT. Together with each delivery of
financial statements of the Borrower pursuant to SUBSECTION 7.1(B), a written
statement by the independent public accountants giving the report thereon (i)
stating that their audit examination has included a review of the terms of this
Agreement and the Notes as they relate to accounting matters, (ii) stating
whether, in connection with their audit examination, any condition or event
which constitutes a Default or an Event of Default as it relates to accounting
matters 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 Default or Event of Default that would not be
disclosed in the course of their audit examination, and (iii) stating that based
on their audit examination nothing has come to their attention which causes them
to believe that either or both the information contained in the certificates as
they relate to accounting matters delivered therewith pursuant to SUBSECTION
7.1(B), is not correct or that the matters set forth in the Compliance
Certificates delivered therewith for the applicable Fiscal Year are not stated
in accordance with the terms of this Agreement;
(D) COMPLIANCE CERTIFICATE. As soon as practicable and in any
event within forty-five (45) days after the end of each Fiscal Quarter for the
first three Fiscal Quarters of each Fiscal Year and concurrent with the annual
audited financial statements furnished pursuant to SUBSECTION 7.1(B) for the
fourth Fiscal Quarter in each Fiscal Year, a Compliance Certificate dated as of
the last day of such Fiscal Quarter, duly executed by the chief financial
officer or Controller/Principal Accounting Officer of the Borrower, with
appropriate insertions satisfactory to the Agent;
(E) BORROWING BASE CERTIFICATE. As soon as practicable and in any
event within fifteen (15) Business Days after the end of each calendar month, a
Borrowing Base Certificate dated as of the last day of each month, duly executed
by the chief financial officer of the Borrower, with appropriate insertions
satisfactory to the Agent;
(F) MONTHLY REPORTS. As soon as practicable and in any event
within fifteen (15) Business Days after the end of each calendar month, a
monthly Borrower-prepared balance sheet, statement of operations and statement
of cash flows and a monthly operating report prepared by the Borrower, including
information as to the entry into new, the renewal or
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extension of, or receipt of notice of termination or actual termination or
expiration of, any Billing Service Agreement.
(G) FINANCIAL FORECASTS. As soon as practicable and in any event
fifteen (15) days prior to the last day of each Fiscal Year, financial
forecasts, including a projected balance sheet and statement of operations and
statement of cash flows of the Borrower, in each case set forth on a monthly
basis for the following Fiscal Year, and a five (5) year forecasted statement of
operations set forth on an annual basis, and including a substantive description
of each of the material underlying assumptions used in preparing such
consolidated financial forecasts, as prepared by management of the Borrower;
(H) SEC FILINGS. Promptly upon transmission thereof, copies of
all prospectuses and regular and periodic financial information, proxy materials
and other information and reports, if any, which the Borrower, Holdings or any
of their Subsidiaries shall file with the SEC or any Governmental Authorities
substituted therefor or which the Borrower, Holdings or any of their
Subsidiaries shall send to its stockholders.
(I) OTHER REPORTS. Promptly upon receipt thereof, copies of all
reports submitted to the Borrower by independent public accountants in
connection with each annual, interim or special audit of the financial
statements of the Borrower made by such accountants, including the comment
letter submitted by such accountants to management in connection with their
annual audit;
(J) NOTICES. Promptly upon any officer of the Borrower obtaining
knowledge (i) of any condition or event which constitutes a Default or an Event
of Default under this Agreement, (ii) that any Person has given any notice to
the Borrower or taken any other action with respect to a claimed default or
event or condition of the type referred to in SUBSECTION 10.1(C), (iii) of the
institution of any litigation or investigation by any Person, including any
Governmental Authority involving any alleged (regardless of whether insured)
liability of the Borrower equal to or greater than $500,000 or any adverse
determination in any litigation involving a potential liability of the Borrower
equal to or greater than $500,000, (iv) of receipt of any notice of default or
notice of termination from any Billing Service Customer in respect of any
Billing Service Agreement having remaining contracted for payments aggregating
in excess of $5,000,000 or (v) of any Material Adverse Change, a certificate of
a Responsible Person of the Borrower specifying the notice given or action taken
by such Person and the nature of such claimed Default, Event of Default, event
or condition and what action the Borrower has taken, is taking and proposes to
take with respect thereto;
(K) TERMINATION EVENTS/PROHIBITED TRANSACTION. Promptly upon
becoming aware of the occurrence of any (i) Termination Event in connection with
any Pension Plan or (ii) "prohibited transaction" (as such term is defined in
ERISA and the Code) in connection with any Employee Benefit Plan or any trust
created thereunder, a written notice specifying the nature thereof, what action
the Borrower has taken, is taking or proposes to take with respect thereto, and,
when known, any action taken or threatened by the IRS or the PBGC with respect
thereto;
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(L) ERISA. With reasonable promptness, copies of (i) all notices
received by the Borrower or any of its ERISA Affiliates of the PBGC's intent to
terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, (ii) each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) filed by the Borrower or any of its ERISA Affiliates with the
IRS with respect to each Pension Plan covering employees of the Borrower and
(iii) all notices received by the Borrower or any of its ERISA Affiliates from a
Multiemployer Plan sponsor concerning the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA;
(M) PENSION PLANS. Promptly upon receipt by the Borrower, any
challenge by the IRS to the qualification under Section 401 or 501 of the Code
of any Pension Plan;
(N) TAX RETURNS. Upon the request of the Agent or any Lender,
copies of all federal, state, local and foreign tax returns and reports in
respect of income, franchise or other taxes on or measured by income (excluding
sales, use or like taxes) filed by or on behalf of the Borrower; and
(O) OTHER INFORMATION. With reasonable promptness, such other
reports, information and data, including lists of Property and accounts,
budgets, agreements with insurers, forecasts and reports, with respect to
Borrower as from time to time may be reasonably requested by the Agent or any
Lender.
All financial statements of the Borrower to be delivered by the Borrower to
the Agent pursuant to this SECTION 7.1 will be complete and correct and present
fairly the financial condition of the Borrower as of the date thereof; will
disclose all liabilities of the Borrower that are required to be reflected or
reserved against under GAAP, whether liquidated or unliquidated, fixed or
contingent; and will have been prepared in accordance with GAAP. All tax
returns submitted to the Agent by the Borrower will, to the best of the
Borrower's knowledge, be true and correct. The Borrower hereby agrees that each
time it submits a financial statement or tax return to the Agent, the Borrower
shall be deemed to represent and warrant to the Lenders that such financial
statement or tax return complies with all of the preceding requirements set
forth in this paragraph.
VII.2 MAINTENANCE OF RIGHTS AND PROPERTIES. The Borrower shall:
(A) MAINTENANCE OF EXISTENCE AND RIGHTS. Maintain and
preserve in full force and effect its corporate existence and all rights,
licenses, leases, qualifications, privileges, franchises and other authority
adequate for the conduct of its business except where the lapsing of any of the
foregoing could not with reasonable likelihood result in a Material Adverse
Change; and
(B) MAINTENANCE OF PROPERTIES. Maintain, preserve and protect its
properties, assets, equipment and facilities in good order and working repair
and condition
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(taking into consideration ordinary wear and tear) and from time to time make,
or cause to be made, all needful and proper repairs, renewals and replacements
thereto.
VII.3 TAXES AND OTHER LIABILITIES. Promptly pay and discharge all
Charges when due and payable, except (a) such as may be paid thereafter without
penalty or (b) such as may be contested in good faith by appropriate proceedings
and for which an adequate reserve has been established and is maintained in
accordance with GAAP. The Borrower shall promptly notify the Agent of any
material challenge, contest or proceeding pending by or against the Borrower
before any taxing authority.
VII.4 INSPECTION OF BOOKS AND RECORDS. From time to time during normal
business hours and upon reasonable notice (except that if an Event of Default
shall have occurred and be continuing, no such notice is required), permit the
Agent or any Lender or any agent, representative or employee thereof, to examine
and make copies of and abstracts from the financial records and books of account
of the Borrower and to discuss the affairs, finances and accounts of the
Borrower with any of its executive officers to the extent any of the foregoing
may be relevant to the Borrower's obligations under the Loan Documents. All such
inspections pursuant to this SECTION 7.4 shall be at the Borrower's expense.
VII.5 INSPECTION AND AUDIT OF COLLATERAL. From time to time during
normal business hours and upon reasonable notice (except that if an Event of
Default shall have occurred and be continuing, no such notice is required)
permit the Agent or any agent, representative or employee thereof, to conduct
periodic inspections and audits of the Collateral. Only one such inspection and
audit of the Collateral pursuant to this SECTION 7.5 during any calendar year
shall be at the Borrower's expense (except that if and so long as an Event of
Default shall have occurred and be continuing, such limitation shall not apply
and all inspections and audits conducted during the continuation of an Event of
Default shall be at the Borrower's expense).
VII.6 COMPLIANCE WITH LAWS. Exercise due diligence in order to comply
with the requirements of all applicable Requirements of Laws, non-compliance
with which could with reasonable likelihood result in a Material Adverse Change;
provided, however, that Borrower may appeal or contest any act, regulation,
judgment, order, decree or direction in any reasonable manner which shall not,
in the opinion of Required Lenders, adversely affect the Lenders' rights
hereunder or adversely affect the priority of the Agent's or any Lender's Lien
in, on and to any of the Collateral.
VII.7 AGREEMENTS. Perform, within all required time periods (after
giving effect to any applicable grace periods), all of its obligations and
enforce all of its rights under each agreement to which it is a party, including
any leases to which it is a party, where the failure to so perform and enforce
which could with reasonable likelihood result in a Material Adverse Change. The
Borrower shall not terminate or modify any provision of any agreement to which
it is a party with respect to which such termination or modification which could
with reasonable likelihood result in a Material Adverse Change.
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VII.8 SUPPLEMENTAL DISCLOSURE. From time to time (in the event that such
information is not otherwise delivered by the Borrower to the Agent or the
Lenders pursuant to this Agreement), so long as there are Obligations
outstanding hereunder, disclose to the Agent in writing any material matter
hereafter arising which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described by Borrower under the
terms of this Agreement or any of the other Loan Documents or which is necessary
to correct any information set forth or described by the Borrower hereunder or
thereunder or in connection herewith which has been rendered inaccurate thereby.
VII.9 FURTHER ASSURANCES. In addition to the obligations and
documents which this Agreement expressly requires the Borrower to execute,
acknowledge, deliver and perform, the Borrower shall execute and acknowledge (or
cause to be executed and acknowledged) and deliver to the Agent all documents,
and take all actions, that may be reasonably requested by the Agent or the
Lenders from time to time to confirm the rights created or now or hereafter
intended to be created under the Loan Documents, to protect and further the
validity, priority and enforceability of the Liens created under the Collateral
Documents, to subject to the Liens created under the Collateral Documents any
Property intended by the terms of any Loan Document to be covered by the
Collateral Documents, or otherwise to carry out the purposes of the Loan
Documents and the transactions contemplated thereunder.
VIII
NEGATIVE COVENANTS OF THE BORROWER
The Borrower hereby covenants and agrees that, so long as any Lender shall
have any Commitment hereunder, or any Loan or other payment Obligation shall
remain unpaid or unsatisfied, unless the Required Lenders waive compliance in
writing:
VIII.1 LIMITATION ON LIENS. The Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, make, create, incur,
assume or suffer to exist any Lien upon or with respect to any part of its
Property, whether now owned or hereafter acquired, other than the following
(collectively, the "Permitted Liens"):
(A) Liens created under any Loan Document in favor of the Agent or
any Lender;
(B) the Permitted Title Exceptions;
(C) other Liens existing as of the Second Closing Date disclosed
on ITEM 8.1 of the DISCLOSURE SCHEDULE, provided that the obligations secured
thereby do not increase;
(D) Liens for taxes, fees, assessments or other governmental
Charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is
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permitted by this Agreement, provided that no notice of lien has been filed or
recorded under the Code;
(E) Liens (other than any Lien imposed by ERISA and other than on
the Collateral) consisting of pledges or deposits required in the Ordinary
Course of Business in connection with workers' compensation, unemployment
insurance and other social security legislation;
(F) Liens securing Capital Lease Obligations on assets subject to
such Capital Leases, provided that such Capital Leases are permitted under
SUBSECTION 8.7(B);
(G) purchase money Liens on any Property acquired or held by the
Borrower or its Subsidiaries in the Ordinary Course of Business, other than the
Collateral, securing Indebtedness incurred or assumed for the purpose of
financing all or any part of the cost of acquiring such Property; provided that
(i) any such Lien attaches to such Property concurrently with or within twenty
(20) days after the acquisition thereof, and (ii) such Lien attaches solely to
the Property so acquired in such transaction;
(H) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the Ordinary Course
of Business which are not delinquent or remain payable without penalty or which
are being contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the Property
subject thereto;
(I) Liens securing (i) the non-delinquent performance of bids,
trade contracts (other than for borrowed money) or statutory obligations, (ii)
Contingent Obligations in respect of surety and appeal bonds, and (iii) other
non-delinquent obligations of a like nature, in each case incurred in the
Ordinary Course of Business, provided all such Liens in the aggregate would not
(even if enforced) with reasonable likelihood result in a Material Adverse
Change;
(J) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the Ordinary Course of Business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the Property subject thereto or interfere
with the ordinary conduct of the businesses of the Borrower and its
Subsidiaries;
(K) Leases or subleases granted to others not interfering with the
ordinary conduct of the Company's business or the business of any of its
Subsidiaries;
(L) Any interest or title of a lessor;
(M) Any money judgment, writ or warrant of attachment or similar
process entered or filed against the Company or any of its Subsidiaries if the
judgment it secures shall, within thirty (30) days after the entry thereof, have
been discharged or execution thereof stayed
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pending appeal, or shall have been discharged within thirty (30) days after the
expiration of such stay;
(N) Liens arising solely by virtue of any contractual or statutory
or common law provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Borrower in excess of those set forth by regulations promulgated
by the Federal Reserve Board, and (ii) such deposit account is not intended by
the Company or any of its Subsidiaries to provide collateral to the depository
institution; and
(O) Liens securing Indebtedness arising under any Rate Contract
permitted pursuant to SUBSECTION 8.4(B).
(P) Liens other than the Liens referred to above securing
Indebtedness, obligations or other liabilities in an aggregate amount not to
exceed $500,000.
VIII.2 CONSOLIDATIONS AND MERGERS. The Borrower shall not merge or
consolidate with or into, directly or indirectly, whether by operation of law or
otherwise, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person.
VIII.3 LOANS AND INVESTMENTS. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make, purchase or acquire any Investment in,
any Person or make any advance, loan, extension of credit or capital
contribution to any Person, including any Affiliate of the Borrower, or make any
commitment with respect to any of the foregoing, except for:
(A) investments in Cash Equivalents;
(B) the existing Investment in the Series A Preferred Stock of
Anasazi Inc., a Delaware corporation ("Anasazi") existing as of the Second
Closing Date and additional loans and other Investments in Anasazi not to exceed
$1,000,000 in the aggregate;
(C) Investments of the Net Issuance Proceeds of new cash equity
raised by the Borrower subsequent to the Second Closing; provided that such Net
Issuance Proceeds are invested in the Business, including any Acquisition of any
Person engaged in the same Business; and provided further that no Event of
Default shall have occurred and be continuing at the time any such Investment is
made;
(D) Investments in an amount equal to $15,000,000; provided that
such amounts are invested in the Business, including any Acquisition of any
Person engaged in the same or similar Businesses; and provided further that no
Event of Default shall have occurred and be continuing at the time any such
Investment is made;
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(E) Investments in the form of any Rate Contract entered into with
any counterparty;
(F) loans and other advances of money made to officers or
employees of the Borrower or IntelliTEK with respect to the relocation of such
Persons to other facilities of the Borrower in an aggregate principal amount not
to exceed $500,000 during any Fiscal Year;
(G) loans made to officers or employees of the Borrower solely for
the purpose of financing the purchase by such Person of Stock of Holdings in an
aggregate principal amount not to exceed $250,000; and
(H) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or the rendering of
services in the Ordinary Course of Business;
(I) Investments not otherwise expressly permitted by this SECTION
8.3 in the aggregate amount not to exceed $500,000.
VIII.4 LIMITATION ON INDEBTEDNESS. The Borrower shall not create, and
shall not permit any of its Subsidiaries to, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(A) Indebtedness incurred pursuant to this Agreement, the Notes
and the other Loan Documents;
(B) Indebtedness incurred pursuant to any Rate Contract entered
into with any counterparty;
(C) accounts payable to trade creditors for goods and services and
current operating liabilities (not the result of the borrowing of money)
incurred in the Ordinary Course of Business in accordance with customary terms
and paid within the specified time, unless contested in good faith by
appropriate proceedings and reserved for in accordance with GAAP;
(D) Indebtedness existing on the Second Closing Date and set forth
in ITEM 8.4 of the DISCLOSURE SCHEDULE;
(E) endorsements for collection or deposit in the Ordinary Course
of Business;
(F) Indebtedness incurred in connection with Capitalized Leases
and Operating Leases permitted pursuant to SECTION 8.7;
(G) Indebtedness secured by Liens permitted under SECTION 8.1(G)
in an aggregate principal amount not to exceed $1,000,000; and
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(H) In addition to the other Indebtedness permitted under this
SECTION 8.4, unsecured Indebtedness in the aggregate principal amount
outstanding at any time not to exceed $5,000,000.
VIII.5 TRANSACTIONS WITH AFFILIATES. The Borrower shall not, and shall not
permit any of its Subsidiaries to, enter, directly or indirectly, into or be a
party to any agreement or transaction (including the purchase, sale, lease or
exchange of any Property or the rendering of any services) with any Affiliate of
the Borrower, except (a) as set forth on ITEM 8.5 to the DISCLOSURE SCHEDULE and
(b) in the Ordinary Course of Business and upon fair and reasonable terms that
are approved by the Borrower's board of directors, fully disclosed to the Agent
and no less favorable to the Borrower than would obtain in a comparable arm's
length transaction with a Person not an Affiliate of the Borrower.
VIII.6 USE OF PROCEEDS. The Borrower shall use the Loan proceeds only for
the purposes described in SECTION 2.1 and in no event shall use any portion of
such proceeds, directly or indirectly, (a) to purchase or carry Margin Stock,
(b) to repay or otherwise refinance indebtedness of the Borrower or others
incurred to purchase or carry Margin Stock, (c) to extend credit for the purpose
of purchasing or carrying any Margin Stock or (d) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Securities and Exchange
Act of 1934.
VIII.7 LEASE OBLIGATIONS. The Borrower shall not, and shall not permit any
of its Subsidiaries to, create or suffer to exist any obligations for the
payment of rent for any Property under lease or agreement to lease, except for:
(A) Operating Leases entered into by the Borrower or any such
Subsidiary in the Ordinary Course of Business; and
(B) Capital Leases entered into by the Borrower or any such
Subsidiary to finance the acquisition of equipment; provided that the aggregate
annual rental payments for all such Capital Lease Obligations shall not exceed
$3,000,000 in any Fiscal Year.
VIII.8 CAPITAL EXPENDITURES. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make or commit to make Capital Expenditures
during any of the following Fiscal Years in excess of the following amounts:
<TABLE>
<CAPTION>
FISCAL YEAR PERMITTED CAPITAL EXPENDITURES
<S> <C>
1996 $7,500,000
1997 $8,000,000
1998 $8,500,000
1999 $9,000,000
2000 $9,500,000
</TABLE>
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plus any unutilized portion of the immediately preceding year's permitted
capital expenditures not to exceed $1,500,000 in any year.
VIII.9 RESTRICTED DIVIDENDS AND DISTRIBUTIONS. The Borrower shall not, and
shall not suffer or permit any of its Subsidiaries (other than a wholly-owned
Subsidiary) to, declare or make any dividend payment or other distribution of
assets, properties, cash, rights, obligations or securities on account of any
shares of any class of its Stock, or purchase, redeem or otherwise acquire for
value any shares of its Stock or any warrants, rights or options to acquire such
shares, now or hereafter outstanding; provided, however, that the Borrower may
declare and pay dividends to Holdings expressly for the purpose of funding the
repurchase of "Restricted Stock" and "Performance Stock" sold pursuant to the
CSG Employee Stock Purchase Plan from a holder of such stock whose employment
with Holdings and its Affiliates has terminated, provided that the repurchase
price paid for any such Restricted Stock or Performance Stock shall not exceed,
in the case of Performance Stock, the purchase price initially paid by such
Person for such Performance Stock or, in the case of Restricted Stock, the
higher of the purchase price initially paid by such Person for such Restricted
Stock or the Book Value (as defined in the applicable purchase agreement) of
such Restricted Stock. Notwithstanding anything to the contrary contained in the
immediately preceding sentence, in the event that the Borrower's federal and
state income tax liability shall be paid by Holdings on a consolidated or
combined basis, the Borrower may from time to time make cash distributions to
Holdings for payment of the Borrower's federal and state income tax liability in
respect of the net income of the Borrower (the "Restricted Tax Payments"),
subject to compliance with the following conditions and limitations:
(A) No such Restricted Tax Payment may be made more than ten (10)
Business Days prior to the due date for such tax liability;
(B) The aggregate amount of such Restricted Tax Payments to
Holdings in respect of any period shall not exceed the amount that would be
payable by the Borrower if it were to file a separate return. The amount of each
Restricted Tax Payment shall be calculated in a manner consistent with the
practice of corporate taxpayers making such payments).
VIII.10 DIVIDENDS, DISTRIBUTIONS AND LOANS TO HOLDINGS.
Notwithstanding anything to the contrary in SECTIONS 8.3 AND 8.9 of this
Agreement, and in addition to the other Investments, dividends and distributions
permitted to be made under such provisions, the Borrower may:
(A) make one or more Upstream Loans; and
(B) pay one or more Upstream Dividends;
provided, however, that the Borrower shall not make or pay any Upstream Loan or
Upstream Dividend, as the case may be, in an amount exceeding $2,500,000; and
provided, further, that
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no Upstream Loan (regardless of the amount of such Upstream Loan) or Upstream
Dividend (regardless of the amount of such Upstream Dividend) shall be made or
paid if, after giving effect to such Upstream Loan or Upstream Dividend, the
total amount of all Upstream Loans and Upstream Dividends over the term of this
Agreement, commencing with the Second Closing Date, would equal or exceed
$5,000,000.
VIII.11 MODIFICATION OF CERTAIN AGREEMENTS. The Borrower shall not,
without the prior written approval of Required Lenders, amend, supplement or
modify or consent to any amendment, supplement or other modification of any of
the terms or provisions contained in, or applicable to any of the material
Organizational Documents of the Borrower, except that Required Lenders' prior
approval shall not be required for any amendment, supplement or modification
which does not in any material way, adversely affect the Borrower's ability to
pay and perform the Obligations or the Agent's or any Lender's rights or
remedies under any of the Loan Documents.
VIII.12 MAINTENANCE OF BUSINESS. The Borrower shall not engage in any
business other than the Business and other activities normally associated with
the operation of the Business.
VIII.13 ERISA.
(A) Neither the Borrower nor any ERISA Affiliate of the Borrower
shall incur any obligation to contribute to a Pension Plan required by a
collective bargaining agreement or as a consequence of the acquisition of an
ERISA affiliate, unless (i) the Borrower or such ERISA Affiliate shall notify
the Agent in writing that it intends to incur such obligation and (ii) after the
Agent's receipt of such notice, the Agent notifies the Borrower that Required
Lenders consent to the establishment or maintenance of, or the Borrower's
incurring an obligation to contribute to, the Pension Plan, which consent may
not unreasonably be withheld or delayed but may be subject to such reasonable
conditions as Required Lenders may require.
(B) If the Borrower or any ERISA Affiliate of the Borrower incurs
any obligation to contribute to any Pension Plan, then the Borrower shall not
(i) terminate, or permit such ERISA Affiliate to terminate, any Pension Plan so
as to result in any liability that might have or result in a Material Adverse
Change or (ii) make or permit such ERISA Affiliate to make a complete or partial
withdrawal (within the meaning of Section 4201 of ERISA) from any Multiemployer
Plan so as to result in any liability that might have or result in a Material
Adverse Change.
VIII.14 NO USE OF ANY LENDER'S NAME. The Borrower shall not use or
authorize any other Person to use any Lender's name or marks in any press
releases, signage, publication or other publicity or medium, including any
prospectus (but excluding any necessary or appropriate filings or submissions to
Governmental Authorities, including the filing of this Agreement with the SEC
solely as an exhibit evidencing an existing material agreement of the Borrower),
without the Agent's or such Lender's advance written authorization.
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VIII.15 ACCOUNTING CHANGES. The Borrower shall not make any
significant change in accounting treatment or reporting practices, except as
required by GAAP.
IX
FINANCIAL COVENANTS OF THE BORROWER
The Borrower covenants and agrees that so long as any Loans shall be
outstanding hereunder or any Commitment shall be available hereunder, unless
Required Lenders shall otherwise consent in writing, the Borrower shall perform
all of the following financial covenants. In connection with performance of
Borrower's obligations under this ARTICLE IX, the Borrower agrees and
understands that (except as expressly provided herein) all covenants under this
ARTICLE IX shall be subject to quarterly compliance (as measured as of the last
day of each Fiscal Quarter), and in each case review by the Lenders of the
respective Fiscal Quarter's consolidated financial statements delivered to the
Agent by the Borrower pursuant to SUBSECTION 7.1(A).
IX.1 MAXIMUM LEVERAGE RATIO. The Borrower shall not permit its Leverage
Ratio, as measured as of the last day of each Fiscal Quarter, to be not greater
than the following:
<TABLE>
<CAPTION>
MAXIMUM
PERIOD LEVERAGE RATIO
<S> <C>
March 31, 1996 2.25:1.00
June 30, 1996 2.20:1.00
September 30, 1996 2.00:1.00
December 31, 1996 1.75:1.00
March 31, 1997 and
thereafter 1.50:1.00
</TABLE>
IX.2 MINIMUM FIXED CHARGE COVERAGE RATIO. The Borrower shall not permit
its Fixed Charge Coverage Ratio, as measured on the last day of each Fiscal
Quarter occurring during the period from January 1, 1996 through September 30,
1996 to be less than 1.00:1.00 and thereafter to be less than 1.25:1.00.
IX.3 MINIMUM ADJUSTED NET WORTH. The Borrower shall not permit its
Adjusted Net Worth, as measured as of the last day of each Fiscal Quarter, to be
less than an amount equal to the sum of (a) $33,408,000, plus (b) an amount
equal to fifty percent (50.0%) of Cumulative Adjusted Net Income.
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X
EVENTS OF DEFAULT AND REMEDIES
X.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an Event of Defaul t:
(A) INSTALLMENTS OF PRINCIPAL. The Borrower fails to pay any
scheduled installment of principal under this Agreement or any of the Notes on
the date such installment shall become due and payable; or
(B) OTHER PAYMENTS. The Borrower fails to pay any installment of
interest on any Loan or any of the other Obligations of the Borrower to the
Lenders or the Agent arising under this Agreement, the Notes or any of the other
Loan Documents when and as the same shall become due and payable, whether by
acceleration or otherwise, and such failure shall not have been cured within
five (5) calendar days; or
(C) CROSS DEFAULTS. The Borrower (i) fails to make any payment in
respect of any Indebtedness having an aggregate principal amount (including
undrawn committed or available amounts and including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more than
$1,000,000 when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) and such failure continues after the
applicable grace or notice period, if any, specified in the document relating
thereto on the date of such failure; or (ii) fails to perform or observe any
other material condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such
Indebtedness, and such failure continues after the applicable grace or notice
period, if any, specified in the document relating thereto on the date of such
failure if the effect of such failure, event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity (or any
Contingent Obligation to become payable or cash collateral in respect thereof to
be demanded); or
(D) REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made by or on behalf of the Borrower in this Agreement or any statement
or certificate at any time given in writing pursuant hereto or in connection
herewith shall be false, misleading or incomplete in any material respect when
made; or
(E) SPECIFIC DEFAULTS. The Borrower fails or neglects to perform,
keep or observe any term, covenant or agreement contained in ARTICLE VIII (other
than SECTION 8.1) or ARTICLE IX; or
(F) OTHER DEFAULTS. Subject to SUBSECTIONS 10.1(A), (B) and (E),
the Borrower fails or neglects to perform, keep or observe any other term,
covenant, provision or
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agreement contained in this Agreement or in any of the other Loan Documents or
any other document or agreement executed by the Borrower in connection therewith
and the same has not been cured to Required Lenders' satisfaction within ten
(10) calendar days after the Borrower shall become aware thereof, whether by
written notice from the Agent or any Lender or otherwise, or should reasonably
have been aware thereof; provided that if such Default is not reasonably
susceptible to cure within ten (10) days, then the Borrower shall have such
additional time as it reasonably takes to effect such cure, but in no event
longer than thirty (30) days from the occurrence of such Default, so long as the
Borrower promptly commences and diligently pursues such cure; or
(G) INSOLVENCY; VOLUNTARY PROCEEDINGS. The Borrower or any of its
Subsidiaries (other than IntelliTEK) (i) ceases or fails to be Solvent, or
generally fails to pay, or admits in writing its inability to pay, its debts as
they become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily liquidates, dissolves or ceases to
conduct its business in the ordinary course; (iii) commences any Insolvency
Proceeding with respect to itself; or (iv) takes any action to effectuate or
authorize any of the foregoing; or
(H) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Borrower or any of its Subsidiaries
(other than IntelliTEK), or any writ, judgment, warrant of attachment, execution
or similar process, is issued or levied against a substantial part of the
Borrower's or any such Subsidiary's Properties, and any such proceeding or
petition shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded
within forty-five (45) days after commencement, filing or levy; (ii) the
Borrower or any such Subsidiary admits the material allegations of a petition
against it in any Insolvency Proceeding, or an order for relief (or similar
order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the
Borrower or any such Subsidiary acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion of its
Property or business; or
(I) MATERIAL ADVERSE CHANGE. A Material Adverse Change shall have
occurred; or
(J) MONETARY JUDGMENTS. One or more final (non-interlocutory)
judgments, orders or decrees shall be entered against the Borrower involving in
the aggregate a liability (not covered by independent third-party insurance) as
to any single or related series of transactions, incidents or conditions, in
excess of $250,000, and the same shall remain unsatisfied, unvacated and
unstayed pending appeal for a period of thirty (30) days after the entry
thereof; or
(K) NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or
decree shall be rendered against the Borrower which does or would reasonably be
expected to result in a Material Adverse Change, and there shall be any period
of thirty (30) consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
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(L) COLLATERAL. Any of the Loan Documents shall for any reason
other than the satisfaction in full of the Obligations thereunder cease to be,
or be asserted by the Borrower not to be, a legal, valid and binding obligation
of the Borrower, enforceable in accordance with its terms, or any of the Liens
purported to be created by any of the Collateral Documents with respect to any
of the Collateral shall for any reason, other than the satisfaction in full of
the Obligations thereunder, cease to be, or be asserted by the Borrower not to
be, a first priority, validly perfected Lien (subject to the Permitted Liens),
and such occurrence has not been cured to Required Lenders' satisfaction within
ten (10) days after the Borrower shall have received notice of such failure from
the Agent or any Lender or within thirty (30) days of when the Borrower shall
have become aware thereof (whichever period is less); or
(M) RATE CONTRACTS. The Borrower shall breach or default under any
Rate Contract, if the effect of such breach or default is to allow the
counterparty to proceed against, or otherwise realize from, the Borrower or any
Collateral to satisfy any claim of the counterparty against the Borrower in
respect of such Rate Contract; or
(N) GOVERNMENTAL ACTION. Any Governmental Authority enters a
decree, order or ruling ("Government Action") which will materially and
adversely affect the Borrower's financial condition, operations or ability to
perform or pay its Obligations unless the Borrower, within thirty (30) days from
the earlier of the date (a) the Borrower first discovers it is the subject of
such Government Action or (b) the Agent or any Lender or any Governmental
Authority gives notice of such Government Action, takes such steps as are
necessary to obtain relief (including by means of discharge, dismissal or
release, as appropriate) from such Government Action. For the purpose of this
SUBSECTION 10.1(N), "Government Action" shall include (i) any decree, order, or
ruling entered by a Governmental Authority resulting in a monetary liability on
the part of the Borrower of more than $500,000 which is not paid or discharged
within thirty (30) days from the date of entry or (ii) any disqualification of
or other limitation on the operation of the Borrower which in the reasonable
determination of the Required Lenders, could with reasonable likelihood result
in a Material Adverse Change.
(O) HOLDINGS DEFAULTS. An "Event of Default" as defined in any of
the Holdings Guaranty or any Holdings Collateral Document shall occur, or the
Holdings Guaranty or any Holdings Collateral Document shall for any reason be
partially (including with respect to future advances) or wholly revoked or
invalidated, or otherwise cease to be in full force and effect, or Holdings or
any other Person shall contest in any manner the validity or enforceability
thereof, or any event described in clauses (G) and (H), above, shall occur with
respect to Holdings.
X.2 WAIVER OF DEFAULT. Any Event of Default may be waived only with the
written consent of Required Lenders; except that an Event of Default under any
of SUBSECTIONS 10.1(A), 10.1(B), 10.1(G) or 10.1(H) may only be waived with the
written consent of all Lenders. Any Event of Default so waived shall be deemed
to have been cured and not to be continuing; but no
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such waiver shall be deemed a continuing waiver or shall extend to or affect any
subsequent like default or impair any rights arising therefrom.
X.3 REMEDIES. Upon the occurrence and continuance of any Default or
Event of Default, the Lenders shall have no obligation to advance money or
extend any additional credit to or for the benefit of the Borrower, whether in
the form of Loans or otherwise. In addition, upon the occurrence and during the
continuance of an Event of Default, the Lenders or the Agent, on behalf and for
the ratable benefit of the Lenders, may, at the option of Required Lenders, do
any one or more of the following, all of which are hereby authorized by the
Borrower:
(A) Make advances of Revolving Loans after the occurrence of any
Event of Default, without thereby waiving their right to demand payment of the
Obligations under this Agreement, the Notes or any of the other Loan Documents,
or any other rights or remedies described in this Agreement, and without
liability to make any other or further advances, notwithstanding the Agent's or
any Lender's previous exercise of any such rights and remedies;
(B) Declare all or any of the Obligations of the Borrower under
this Agreement, the Notes, the other Loan Documents and any other instrument
executed by the Borrower pursuant to the Loan Documents to be immediately due
and payable, and upon such declaration such obligations so declared due and
payable shall immediately become due and payable; provided that if such Event of
Default is under SUBSECTIONS 10.1(G) or (H), then all of the Obligations shall
become immediately due and payable forthwith without the requirement of any
notice or other action by the Lenders or the Agent;
(C) Terminate this Agreement (and the Commitments of the Lenders
set forth herein) as to any future liability or obligation of the Lenders, but
without affecting the Lenders' rights in and to Liens in and on the Collateral;
and
(D) Exercise, in addition to all other rights and remedies granted
hereunder, any and all rights and remedies granted under the Collateral
Documents and other Loan Documents or otherwise available at law or in equity.
X.4 SET-OFF.
(A) RIGHTS OF SET-OFF. Regardless of the adequacy of any
Collateral but subject to SUBSECTION 10.4(B), during the continuance of an Event
of Default, any deposits or other sums credited by or due from any Lender to the
Borrower may be set off against the Obligations and any and all other
liabilities, direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, of the Borrower to the Lenders.
(B) REQUIRED LENDERS' CONSENT TO SET-OFF REQUIRED. Each Lender
agrees that it shall not, and that it shall not attempt to, exercise any right
of set-off, banker's lien or similar remedy against any of the Property of the
Borrower without the prior written consent of Required Lenders.
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X.5 SHARING OF PAYMENTS. If, other than as expressly provided elsewhere
herein, any Lender shall receive from the Borrower or any other source
whatsoever on account of the Loans made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, bankers' lien,
counterclaim, cross-action, enforcement of any claim evidenced by this Agreement
or any of the other Loan Documents or by proof thereof in any case under the
Bankruptcy Code or similar proceeding or otherwise) which is in excess of its
respective Commitment Percentage of payments on account of the Term Facility
Loans or the Revolving Loans, as the case may be, obtained by all the Lenders
with respect to such Loans, such Lender shall forthwith (a) notify the Agent of
such fact and (b) make such dispositions and arrangements with each other Lender
with respect to such excess, either by way of distribution until the amount of
such excess has been exhausted, assignment of claims, subrogation or otherwise,
as shall result in each such Lender receiving in respect of the amounts due such
Lender, under this Agreement its ratable share of such payments; provided,
however, that if all or any part of such excess payment is thereafter recovered
from such Lender, such disposition and arrangements shall be rescinded and the
amount restored to the extent of such recovery, but without interest.
X.6 RIGHTS AND REMEDIES CUMULATIVE. The Lenders' and the Agent's rights
and remedies under this Agreement shall be cumulative. The Lenders and the Agent
shall have all other rights and remedies not inconsistent herewith as provided
by law or in equity. No exercise by any Lender or the Agent of one right or
remedy shall be deemed an election. No delay by any Lender or the Agent shall
constitute a waiver, election or acquiescence by such party.
XI
THE AGENT
XI.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby irrevocably
appoints, designates and authorizes Banque Paribas as the Agent under this
Agreement and under each of the other Loan Documents and irrevocably authorizes
the Agent to take such action on its behalf under and subject to the provisions
of this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent.
XI.2 DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The
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Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
XI.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (a)
be liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document (except for its own
gross negligence or willful misconduct), or (b) be responsible in any manner to
any of the Lender for any recital, statement, representation or warranty made by
the Borrower or Affiliate of the Borrower, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document, or
for the value of any Collateral or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Borrower or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the Properties,
books or records of the Borrower or any of the Borrower's Affiliates.
XI.4 RELIANCE BY THE AGENT.
(A) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Borrower), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Required
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
(B) For purposes of determining compliance with the conditions
precedent specified in ARTICLE IV, each Lender that has executed this Agreement
or shall hereafter execute and deliver an Assignment and Acceptance in
accordance with SECTION 12.11(A) shall be deemed to have consented to, approved
or accepted or to be satisfied with each document or other matter either sent by
the Agent to such Lender for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Lender, unless an officer of the Agent responsible for the
transactions contemplated by the Loan Documents shall have received notice from
the Lender prior to the initial Borrowing specifying its objection thereto and
either such objection shall not have been withdrawn by notice to the
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Agent to that effect or the Lender shall not have made available to the Agent
the Lender's ratable portion of such Borrowing.
XI.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent on behalf and for the benefit of the Lenders, unless the
Agent shall have received written notice from a Lender or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Agent receives such
a notice, the Agent shall give notice thereof to the Lenders. The Agent shall
take such action with respect to such Default or Event of Default as shall be
requested by the Required Lenders in accordance with ARTICLE X; provided,
however, that unless and until the Agent shall have received any such request,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem in the best interest of the Lenders.
XI.6 CREDIT DECISION. Each Lender expressly acknowledges that none of
the Agent-Related Persons has made any representation or warranty to it and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Borrower, shall be deemed to constitute any representation or warranty by
the Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Borrower, and all applicable bank
regulatory laws relating to the transactions contemplated thereby, and made its
own decision to enter into this Agreement and extend credit to the Borrower
under and pursuant to this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Borrower
which may come into the possession of any of the Agent-Related Persons.
XI.7 INDEMNIFICATION. Whether or not the transactions contemplated
hereby shall be consummated, the Lenders shall indemnify upon demand the Agent-
Related Persons (to the extent not reimbursed by or on behalf of the Borrower
and without limiting the obligation of the Borrower to do so), ratably from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind
whatsoever which may at any time (including at any time following the repayment
of the Loans and the termination or resignation of the related Agent) be imposed
on, incurred by or asserted against
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any such Person in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any such Person
under or in connection with any of the foregoing; provided, however, that no
Lender shall be liable for the payment to the Agent-Related Persons of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse the Agent upon demand for its ratable share of any
costs or other out-of-pocket expenses (including Attorney Costs) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrower. Without limiting
the generality of the foregoing, if the IRS or any other Governmental Authority
of the United States or other jurisdiction asserts a claim that the Agent did
not properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason), such Lender shall indemnify the Agent fully for all
amounts paid, directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this SECTION 11.7,
together with all costs and expenses (including Attorney Costs). The obligation
of the Lenders in this SECTION 11.7 shall survive the payment of all
Obligations.
XI.8 AGENT IN INDIVIDUAL CAPACITY. Banque Paribas and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrower and its Affiliates as
though Banque Paribas were not the Agent hereunder and without notice to or
consent of the Lenders. With respect to its Loans, Banque Paribas shall have the
same rights and powers under this Agreement as any other Lender and may exercise
the same as though it were not the Agent, and the terms "Lender" and "Lenders"
shall include Banque Paribas in its individual capacity.
XI.9 SUCCESSOR AGENT. The Agent may, and at the request of the Required
Lenders shall, resign as Agent upon thirty (30) days' notice to the Borrower and
the Lenders. If the Agent shall resign as Agent under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Borrower, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this ARTICLE XI and
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SECTIONS 12.5 and 12.6 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is thirty
(30) days following a retiring Agent's notice of resignation, the retiring
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of the Agent hereunder until such time,
if any, as the Required Lenders appoint a successor agent as provided for above.
XI.10 COLLATERAL MATTERS.
(A) The Agent is authorized on behalf of all the Lenders, without
the necessity of any notice to or further consent from the Lenders, from time to
time to take any action with respect to any Collateral, the Collateral Documents
or the Holdings Collateral Documents, which may be necessary to perfect and
maintain perfected the security interest in and Liens upon the Collateral
granted pursuant to the Collateral Documents or the Holdings Collateral
Documents.
(B) The Lenders irrevocably authorize the Agent, at its option and
in its discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment in full of all
Loans and all other Obligations payable under this Agreement and under any other
Loan Document; (ii) constituting Property sold or to be sold or disposed of as
part of or in connection with any disposition permitted hereunder; (iii)
constituting Property in which the Borrower owned no interest at the time the
Lien was granted or at any time thereafter; (iv) constituting Property leased to
the Borrower under a lease which has expired or been terminated in a transaction
permitted under this Agreement or is about to expire and which has not been, and
is not intended by the Borrower to be, renewed or extended; (v) consisting of an
instrument evidencing Indebtedness or other debt instrument, if the indebtedness
evidenced thereby has been paid in full; or (vi) if approved, authorized or
ratified in writing by the Required Lenders or all the Lenders, as the case may
be, as provided in SUBSECTION 12.1(F). Upon request by the Agent at any time,
the Lenders will confirm in writing the Agent's authority to release particular
types or items of Collateral pursuant to this SUBSECTION 11.10(B). Required
Lenders may also deliver written directions to the Agent not to take any
specific action permitted by this SUBSECTION 11.10(B) and, following receipt of
such notice, but subject to the other terms of this ARTICLE XI, the Agent shall
cease from taking such action.
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XII
MISCELLANEOUS
XII.1 AMENDMENTS AND WAIVERS. No amendment, modification or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Borrower therefrom, shall be effective unless
the same shall be in writing and signed by the Required Lenders and acknowledged
by the Agent, and then such waiver shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no such waiver, amendment, or consent shall, unless in writing and signed by all
the Lenders and acknowledged by the Agent, do any of the following:
(A) increase or extend the Commitment of any Lender (or reinstate
any Commitment terminated pursuant to SUBSECTION 10.3) or subject any Lender to
any additional obligations;
(B) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due to the Lenders (or any of them) hereunder or
under any Loan Document (including in respect of any Mandatory Prepayment);
(C) reduce the principal of, or the rate of interest specified
herein on any Loan, or of any fees or other amounts payable hereunder or under
any Loan Document;
(D) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for the Lenders or
any of them to take any action hereunder;
(E) amend this SECTION 12.1; or
(F) release all or any substantial part of the Collateral except as
otherwise may be provided in the Collateral Documents or except where the
consent of the Required Lenders only is specifically provided for;
(G) discharge or release Holdings from the Obligations;
and, provided further that no amendment, modification, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Required Lenders or
all the Lenders, as the case may be, affect the rights or duties of the Agent
under this Agreement or any other Loan Document.
XII.2 NOTICES.
(A) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly otherwise
provides, by facsimile
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transmission, provided that any matter transmitted by the Borrower by facsimile
(i) shall be immediately confirmed by a telephone call to the recipient at the
number specified on the applicable signature page hereof, and (ii) shall be
followed promptly by a hard copy original thereof) and mailed, faxed or
delivered, to the address or facsimile number specified for notices on the
applicable signature page hereof; or, as directed to the Borrower or the Agent,
to such other address as shall be designated by such party in a written notice
to the other parties, and as directed to each other party, at such other address
as shall be designated by such party in a written notice to the Borrower and the
Agent.
(B) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next day) delivery, or transmitted by facsimile machine,
respectively, or if delivered, upon delivery, except that notices pursuant to
ARTICLE II or ARTICLE XI shall not be effective until actually received by the
Agent.
(C) The Borrower and the Lenders acknowledge and agree that any
agreement of the parties to receive certain notices by telephone and facsimile
is for their mutual benefit and convenience. Any party shall be entitled to
rely on the authority of any Person purporting to be a Person authorized by any
other party to give such notice and the party relying on such authorization
shall not have any liability to any other Person on account of any action taken
or not taken by such party in reliance upon such telephonic or facsimile notice.
The obligation of the Borrower to repay the Loans shall not be affected in any
way or to any extent by any failure by the Agent to receive written confirmation
of any telephonic or facsimile notice or the receipt by the Agent of a
confirmation which is at variance with the terms understood by the Agent to be
contained in the telephonic or facsimile notice.
XII.3 NO WAIVER BY AGENT OR THE LENDERS. No failure or delay on the part
of the Agent or any Lender in the exercise of any power, right or privilege
under this Agreement, the Notes or any of the other Loan Documents 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 right, power or privilege.
XII.4 ENTIRE AGREEMENT; CONSTRUCTION.
(A) This Agreement, the Notes and each of the other Loan Documents
dated as of the date hereof, taken together, constitute and contain the entire
agreement among the Borrower, the Lenders and the Agent and supersede any and
all prior agreements, negotiations, correspondence, understandings and
communications among the parties, whether written or oral, respecting the
subject matter hereof.
(B) This Agreement is the result of negotiations between and has
been reviewed by each of the Borrower, the Lenders executing this Agreement as
of the Second Closing Date and the Agent and their respective counsel;
accordingly, this Agreement shall be deemed to be the product of the parties
hereto, and no ambiguity shall be construed in favor of
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or against the Borrower, the Lenders or the Agent. The Borrower, the Lenders and
the Agent each severally agree that they intend the literal words of this
Agreement and the other Loan Documents and that no parol evidence shall be
necessary or appropriate to establish Borrower's, any Lender's or the Agent's
actual intentions.
XII.5 INDEMNIFICATION. To the fullest extent permitted by law, the
Borrower agrees to protect, indemnify, defend and hold harmless the Agent, each
Lender and each of their respective directors, officers, employees and agents
and any Person who controls any of them within the meaning of the federal, state
and foreign securities laws (each an "Indemnitee" from and against any
liabilities, losses, obligations, damages, penalties, expenses or costs of any
kind or nature and from any suits, judgments, claims or demands (including in
respect of or for Attorney Costs and other reasonable fees and other
disbursements of counsel for and consultants of such Indemnitees in connection
with any investigative, administrative or judicial proceeding, whether or not
such Indemnitees shall be designated a party thereto) based on any federal,
state, local or foreign law or other statutory regulation, including securities,
environmental and commercial law or other statutory regulation, which arises
under common law or at equitable cause or on contract or otherwise on account of
or in connection with any matter or thing or any action or failure to act by
Indemnitees, or any of them, arising out of or relating to the Loan Documents or
any agreement or instrument executed pursuant to the Loan Documents, except to
the extent such liability arises from the willful misconduct or gross negligence
of any of the Indemnitees (collectively, the "Indemnified Matters"). Upon
receiving knowledge of any suit, claim or demand asserted by any Person that the
Agent or any Lender believes is covered by this indemnity, the Agent or such
Lender shall give the Borrower notice of the matter and an opportunity to defend
it, at the Borrower's sole cost and expense, with legal counsel of the
Borrower's choice, which legal counsel shall be reasonably satisfactory to the
Agent and the Lenders. The Agent or Lenders may also require the Borrower to
defend the matter. The obligations of the Borrower under this SECTION 12.5
shall survive the payment and performance of the Obligations and the termination
of this Agreement. To the extent that the undertaking to indemnify, pay and
hold harmless set forth in this SECTION 12.5 may be unenforceable because it is
violative of any law or public policy, the Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Matters incurred by the Indemnitees.
XII.6 COSTS AND EXPENSES. The Borrower shall, whether or not the
transactions contemplated hereby shall be consummated:
(A) pay or reimburse Banque Paribas (including in its capacity as
the Agent) within thirty (30) days after demand for all costs and expenses
incurred by Banque Paribas (including in its capacity as the Agent) in
connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any other Loan Document and
any other documents prepared in connection herewith (including any commitment
letter and related documents preceding this Agreement) or therewith, and the
consummation of the transactions contemplated hereby and thereby, including the
reasonable Attorney Costs
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incurred by Banque Paribas (including in its capacity as the Agent) with respect
hereto and thereto;
(B) pay or reimburse the Agent and each Lender within thirty (30)
days after demand for all costs and expenses incurred by them in connection with
the enforcement, attempted enforcement, or preservation of any rights or
remedies (including in connection with any "workout" or restructuring regarding
the Loans, and including in any Insolvency Proceeding or appellate proceeding)
under this Agreement, any other Loan Document, and any such other documents,
including Attorney Costs incurred by the Agent and any Lender; and
(C) pay or reimburse Banque Paribas (including in its capacity the
Agent) within thirty (30) days after demand for all audit, environmental
inspection and review, search and filing, registration and recording, costs,
fees and expenses, incurred or sustained by Banque Paribas (including in its
capacity the Agent) in connection with the matters referred to under clauses (A)
and (B) of this SECTION 12.6.
XII.7 RELIANCE BY THE LENDERS. All covenants, agreements, representations
and warranties made herein by the Borrower shall, notwithstanding any
investigation by the Lenders or the Agent be deemed to be material to and to
have been relied upon by the Lenders.
XII.8 MARSHALLING; PAYMENTS SET ASIDE. The Lenders shall be under no
obligation to marshall any assets in favor of the Borrower or any other person
or against or in payment of any or all of the Obligations. To the extent that
(a) the Borrower makes a payment or payments to the Lenders or the Agent, or (b)
the Lenders or (c) the Agent, on behalf and for the benefit of the Lenders,
enforces their or its Liens or exercises their or its rights of set-off, and
such payment or payments or the proceeds of such enforcement or set-off or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under the Bankruptcy Code or under any other similar federal or
state law, common law or equitable cause, then to the extent of such recovery
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or set-off had not occurred.
XII.9 NO SET-OFFS BY THE BORROWER. All sums payable by the Borrower
pursuant to this Agreement, the Notes or any of the other Loan Documents shall
be payable without notice or demand and shall be payable in United States
Dollars without set-off or reduction of any manner whatsoever.
XII.10 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Lender.
XII.11 ASSIGNMENTS, PARTICIPATIONS, ETC.
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(A) Any Lender may, with the written consent of the Borrower (at
all times other than during the existence of an Event of Default in which event
Borrower's consent shall not be required) and the Agent (and written notice to
each other Lender), which consents shall not be unreasonably withheld, at any
time assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Borrower or the Agent shall be required in connection
with any assignment and delegation by any Lender to a Lender Affiliate of such
Lender) (each an "Assignee") all of the Loans, the Commitments and the other
rights and obligations of such Lender hereunder or any ratable part thereof, in
a minimum amount of $5,000,000; provided, however, that (i) the Borrower and the
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (A) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Borrower
and the Agent by such Lender and the Assignee; (B) such Lender and its Assignee
shall have delivered to the Borrower and the Agent an Assignment and Acceptance
in the form of EXHIBIT F ("Assignment and Acceptance") together with any Note or
Notes subject to such assignment and (C) the assignor Lender or Assignee has
paid to the Agent a processing fee in the amount of $2,500; provided that no
processing fee shall be charged for any assignment to a Lender or a Lender
Affiliate, and further provided that the Borrower shall not pay any fees or
costs in connection with such assignment.
(B) From and after the date that the Agent notifies the assigning
Lender that it has received an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents.
(C) Within five (5) Business Days after its receipt of notice by
the Agent that it has received an executed Assignment and Acceptance and payment
of the processing fee, the Borrower shall execute and deliver to the Agent, new
Notes on the same terms and conditions as the original Notes evidencing such
Assignee's assigned Loans and Commitments and, if the
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assignor Lender has retained a portion of its Loans and its Commitments,
replacement Notes in the principal amount of the Loans retained by the assignor
Lender (such Notes to be in exchange for, but not in payment of, the Notes held
by such Lender). Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement, shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitments allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(D) Any Lender may at any time sell to one or more commercial banks
or other Persons not Affiliates of the Borrower (a "Participant") participating
interests in any Loans, the Commitment of that Lender and the other interests of
that Lender (the "Originating Lender") hereunder and under the other Loan
Documents; provided, however, that (i) the Originating Lender's obligations
under this Agreement shall remain unchanged, (ii) the Originating Lender shall
remain solely responsible for the performance of such obligations, (iii) the
Borrower and the Agent shall continue to deal solely and directly with the
Originating Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no
Lender shall transfer or grant any participating interest under which the
Participant shall have rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Documents, except to
the extent such amendment, consent or waiver would require unanimous consent of
the Lenders as described in clauses (A), (C) and (D) of the first proviso to
SECTION 12.1. In the case of any such participation, the Participant shall be
entitled to the benefit of SECTIONS 3.1, 3.3, 3.5, 3.6, 12.1 (but solely with
respect to those matters set forth in clauses (A), (C) and (D) thereof requiring
the consent of all Lenders), and 12.5 as though it were also a Lender hereunder,
and if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of set-
off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interests
were owing directly to it as a Lender under this Agreement.
(E) Each Lender agrees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
identified as "confidential" by the Borrower and provided to it by the Borrower,
or by the Agent on the Borrower's behalf, in connection with this Agreement or
any other Loan Document, and neither it nor any of its Affiliates shall use any
such information for any purpose or in any manner other than pursuant to the
terms contemplated by this Agreement; except to the extent such information (i)
was or becomes generally available to the public other than as a result of a
disclosure by the Lender, or (ii) was or becomes available on a non-confidential
basis from a source other than the Borrower, provided that such source is not
bound by a confidentiality agreement with the Borrower known to the Lender;
provided, however, that any Lender may disclose such information (A) at the
request or pursuant to any requirement of any Governmental Authority to which
the Lender is subject or in connection with an examination of such Lender by any
such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions
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<PAGE>
of any applicable Requirement of Law; and (D) to such Lender's independent
auditors and other professional advisors, provided that such auditors and
professional advisors shall be required to similarly protect the confidentiality
of such information. Notwithstanding the foregoing, the Borrower authorizes each
Lender to disclose to any Participant or Assignee (each, a "Transferee") and to
any prospective Transferee, such financial and other information in such
Lender's possession concerning the Borrower which has been delivered to Agent or
the Lenders pursuant to this Agreement or which has been delivered to the Agent
or the Lenders by the Borrower in connection with the Lenders' credit evaluation
of the Borrower prior to entering into this Agreement; provided that, unless
otherwise agreed by the Borrower, such Transferee agrees in writing to such
Lender to keep such information confidential to the same extent required of the
Lenders hereunder.
(F) Notwithstanding any other provision contained in this Agreement
or any other Loan Document to the contrary, any Lender may assign all or any
portion of the Loans or Notes held by it to any Federal Reserve Bank or the
United States Treasury as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank, provided that any payment in respect of
such assigned Loans or Notes made by the Borrower to or for the account of the
assigning or pledging Bank in accordance with the terms of this Agreement shall
satisfy the Borrower's obligations hereunder in respect to such assigned Loans
or Notes to the extent of such payment. No such assignment shall release the
assigning Bank from its obligations hereunder.
XII.12 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.
XII.13 SEVERABILITY. Whenever possible, each provision of this Agreement,
the Notes and each of the other Loan Documents shall be interpreted in such a
manner as to be valid, legal and enforceable under the applicable law of any
jurisdiction. Without limiting the generality of the foregoing sentence, in case
any provision of this Agreement, the Notes or any of the other Loan Documents
shall be invalid, illegal or unenforceable under the applicable law of any
jurisdiction, the validity, legality and enforceability of the remaining
provisions, or of such provision in any other jurisdiction, shall not in any way
be affected or impaired thereby.
XII.14 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Lender shall
notify the Agent in writing of any changes in the address to which notices to
the Lender should be directed, of addresses of its Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
XII.15 NO THIRD PARTIES BENEFITTED. This Agreement is made and entered
into for the sole protection and legal benefit of the Borrower, the Lenders and
the Agent, and their permitted successors and assigns, and except as otherwise
expressly provided in this Agreement, no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of
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<PAGE>
action or claim in connection with, this Agreement or any of the other Loan
Documents. Neither the Agent nor any Lender shall have any obligation to any
Person not a party to this Agreement or other Loan Documents.
XII.16 RELATIONSHIP OF PARTIES. The relationship between the Borrower, on
the one hand, and the Lenders and the Agent, on the other, is, and at all time
shall remain solely that of a borrower and lenders. Neither the Lenders nor the
Agent shall under any circumstances be construed to be partners or joint
venturers of the Borrower or any of its Affiliates; nor shall the Lenders nor
the Agent under any circumstances be deemed to be in a relationship of
confidence or trust or a fiduciary relationship with the Borrower or any of its
Affiliates, or to owe any fiduciary duty to the Borrower or any of its
Affiliates. The Lenders and the Agent do not undertake or assume any
responsibility or duty to the Borrower or any of its Affiliates to select,
review, inspect, supervise, pass judgment upon or otherwise inform the Borrower
or any of its Affiliates of any matter in connection with its or their Property,
any Collateral held by the Agent or any Lender or the operations of the Borrower
or any of its Affiliates. The Borrower and each of its Affiliates shall rely
entirely on their own judgment with respect to such matters, and any review,
inspection, supervision, exercise of judgment or supply of information
undertaken or assumed by any Lender or the Agent in connection with such matters
is solely for the protection of the Lenders and Agent and neither the Borrower
nor any Affiliate is entitled to rely thereon.
XII.17 TIME. Time is of the essence as to each term or provision of this
Agreement and each of the other Loan Documents.
XII.18 COUNTERPARTS. This Agreement and any amendments, waivers, consents
or supplements hereto 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.
XII.19 EQUITABLE RELIEF. The Borrower recognizes that, in the event the
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, the Notes or any of the other Loan Agreements,
any remedy at law may prove to be inadequate relief to the Lenders or the Agent;
therefore, the Borrower agrees that the Lenders or the Agent, if the Lenders so
request, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
XII.20 NOTICE OF CLAIMS; CLAIMS BAR. THE BORROWER HEREBY AGREES THAT IT
SHALL GIVE PROMPT NOTICE AFTER BECOMING AWARE OF ANY CLAIM OR CAUSE OF ACTION IT
BELIEVES IT HAS, OR MAY SEEK TO ASSERT OR ALLEGE AGAINST ANY LENDER OR THE
AGENT, WHETHER SUCH CLAIM IS BASED IN LAW OR EQUITY, ARISING UNDER OR RELATED TO
THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS OR TO THE LOANS (OR
THE COLLATERAL THEREFOR) CONTEMPLATED HEREBY OR THEREBY OR ANY ACT OR OMISSION
TO ACT BY ANY LENDER OR THE AGENT WITH RESPECT HERETO OR THERETO, AND THAT IF IT
SHALL FAIL TO GIVE SUCH NOTICE TO THE AGENT PRIOR TO THE FIRST ANNIVERSARY OF
HAVING BECOME AWARE OF ANY SUCH CLAIM OR CAUSE OF ACTION, IT SHALL BE DEEMED TO
HAVE WAIVED, AND SHALL BE FOREVER BARRED FROM
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<PAGE>
BRINGING OR ASSERTING SUCH CLAIM OR CAUSE OF ACTION IN ANY SUIT, ACTION OR
PROCEEDING IN ANY COURT OR BEFORE ANY GOVERNMENTAL AGENCY.
XII.21 WAIVER OF PUNITIVE DAMAGES. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN THIS AGREEMENT, THE BORROWER HEREBY AGREES THAT IT SHALL
NOT SEEK FROM THE LENDERS OR THE AGENT, UNDER ANY THEORY OF LIABILITY,
INCLUDING, WITHOUT LIMITATION, ANY THEORY IN TORTS, ANY PUNITIVE DAMAGES.
XII.22 GOVERNING LAW. Except as otherwise expressly provided in any of the
Loan Documents, in all respects, including all matters of construction, validity
and performance, this Agreement and the Obligations arising hereunder shall be
governed by, and construed and enforced in accordance with, the laws of the
State of California applicable to contracts made and performed in such state,
without regard to the principles thereof regarding conflict of laws, and any
applicable laws of the United States of America.
XII.23 WAIVER OF JURY TRIAL. THE BORROWER, EACH LENDER AND THE AGENT,
HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO
ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OF THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.
XII.24 NO NOVATION. This Amended and Restated Loan Agreement is not
intended to be, and shall not be construed to create, a novation or accord and
satisfaction, and, except as otherwise provided herein, the Original Agreement,
as executed and delivered on November 30, 1994, and amended prior to the
execution hereof, shall remain in full force and effect. Without limiting the
generality of the foregoing, ARTICLE III and SECTIONS 12.5 and 12.6 of the
Original Agreement shall survive the effectiveness of the Agreement and shall
remain enforceable against the Borrower.
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WITNESS the due execution hereof by the respective duly authorized officers
of the undersigned as of the date first written above.
BORROWER CSG SYSTEMS, INC.,
a Delaware corporation
By:_____________________________________________
Printed name: David I. Brenner
Title: Chief Financial Officer
Notices to be sent to:
CSG Systems, Inc.
2525 North 117th Avenue
P.O. Box 34965
Omaha, Nebraska 68134
Attention: Randy Wiese, Controller/Principal
Accounting Officer
Telephone: 402/431-7574
Facsimile: 402/431-7254
with a copy to:
CSG Systems International, Inc.
5251 DTC Parkway, Suite 625
Englewood, Colorado 80111
Attention: David Brenner, Chief Financial Officer
Telephone: 303/796-2856
Facsimile: 303/796-2881
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AGENT BANQUE PARIBAS
By:______________________________________________
Lee S. Buckner, Group Vice President
By:______________________________________________
Robert N. Pinkerton, Vice President
Agent's Payment Office:
Bank of America, NT & SA
ABA No. 1210-0035-8
San Francisco, California
for credit to: Banque Paribas
Los Angeles Agency
Account No.: 62902-10150
Notices to be sent to:
Banque Paribas
101 California Street, Suite 3150
San Francisco, CA 94111
Attention: Lee S. Buckner,
Group Vice President
Telephone: 415/398-6811
Facsimile: 415/398-4240
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LENDERS BANQUE PARIBAS
By:____________________________________________
Lee S. Buckner, Group Vice President
By:____________________________________________
Robert N. Pinkerton, Vice President
Domestic Lending Office:
Banque Paribas
2029 Century Park East, Suite 3900
Los Angeles, CA 90067
Attention: Shirley Williams
Telephone: 310/551-7300
Facsimile: 310/556-8759
Notices to be sent to:
Banque Paribas
101 California Street, Suite 3150
San Francisco, CA 94111
Attention: Lee S. Buckner, Group Vice President
Telephone: 415/398-6811
Facsimile: 415/398-4240
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BANQUE NATIONALE DE PARIS
By:______________________________________________
Judith A. Dowling, Vice President
Notices to be sent to:
Banque Nationale de Paris
180 Montgomery Street, 3rd Floor
San Francisco, CA 94104
Attention: Judith Dowling, Vice President
Telephone: 415/956-0707
Facsimile: 415/296-8954
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NATIONAL CITY BANK
By:____________________________________________________
Renold D. Thompson, Jr., Senior Vice President
Notices to be sent to:
National City Bank
1900 East 9th Street, 10th Floor
Cleveland, OH 44114
Attention: Renold D. Thompson, Jr., Senior Vice
President
Telephone: 216/575-2419
Facsimile: 216/575-9396
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NORWEST BANK COLORADO, N.A.
By:_________________________________________
Sandra Sauer, Vice President
Notices to be sent to:
Norwest Bank of Colorado, N.A.
1740 Broadway
Denver, CO 80274-8673
Attention: Sandra Sauer, Vice President
Telephone: 303/863-5341
Facsimile: 303/863-6670
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<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME
TRUST
By:___________________________________________________
Jeffrey Maillet, Senior Vice President
Notices to be sent to:
Van Kampen American Capital Prime Rate Income Trust
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: Jeffrey Maillet, Senior Vice President
Telephone: 708/684-6438
Facsimile: 708/684-6740
With a copy to:
Hopkins & Sutter
Three First National Plaza
37th Floor
Chicago, IL 60602
Attention: John Powers, Esq.
Telephone: 312/558-6752
Facsimile: 312/588-6538
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UNION BANK OF CALIFORNIA, N.A.
By:___________________________________________
Robert Wilson, Vice President
Notices to be sent to:
Union Bank of California, N.A.
400 California Street, 17th Floor
San Francisco, CA 94104
Attention: Robert Wilson, Vice President
Telephone: 415/765-2744
Facsimile: 415/765-3146
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Exhibit 11.01
CSG SYSTEMS INTERNATIONAL, INC.
STATEMENT OF NET LOSS PER COMMON AND EQUIVALENT SHARE
<TABLE>
<CAPTION>
<S> <C>
For the three months ended June 30, 1996:
Weighted average common shares outstanding............................................... 25,532,945
-----------
Shares used in computation............................................................... 25,532,945
-----------
Net Loss................................................................................. $ (696,000)
-----------
Net loss per common and equivalent share................................................. $ (0.03)
-----------
For the three months ended June 30, 1995:
Weighted average common shares outstanding............................................... 4,243,000
Common equivalent shares from stock options
granted during the twelve-month period prior to
the Company's initial public offering.................................................. 251,750
Common equivalent shares attributable to:
Redeemable convertible Series A Preferred Stock.................................... 17,999,998
-----------
Shares used in computation............................................................... 22,494,748
-----------
Loss before discontinued operations...................................................... $ 3,010,000)
Loss from discontinued operations........................................................ (939,000)
-----------
Net Loss................................................................................. $(3,949,000)
-----------
Net loss per common and equivalent share:
Loss before discontinued operations................................................ $ (0.14)
Loss from discontinued operations.................................................. (0.04)
-----------
Net Loss............................................................................... $ (0.18)
-----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-Q as
of June 30, 1996 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,294
<SECURITIES> 0
<RECEIVABLES> 33,287
<ALLOWANCES> 486
<INVENTORY> 0
<CURRENT-ASSETS> 38,872
<PP&E> 18,404
<DEPRECIATION> 8,901
<TOTAL-ASSETS> 109,139
<CURRENT-LIABILITIES> 37,662
<BONDS> 30,000
<COMMON> 255
0
0
<OTHER-SE> 36,023
<TOTAL-LIABILITY-AND-EQUITY> 109,139
<SALES> 0
<TOTAL-REVENUES> 30,431
<CGS> 0
<TOTAL-COSTS> 18,143
<OTHER-EXPENSES> 4,792
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 870
<INCOME-PRETAX> (696)
<INCOME-TAX> 0
<INCOME-CONTINUING> (696)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (696)
<EPS-PRIMARY> (.03)<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1> EPS is Basic EPS as common stock equivalents are antidilutive.
</FN>
</TABLE>
